Investors >> Chairman's Speech

  18th Annual General Meeting, 29th September, 2003
'An obsession with winning across all levels & functions'

Dear Shareholders,

HTMT delivered one of its best performances in 2002-03. It posted record growth in its total revenue, IT income and profits. The total revenue increased by 57% to Rs.115 Crores from Rs. 73 Crores and IT income by 82% to Rs. 100 Crores from Rs. 55 Crores in 2001-02. Our core values of customer focused service, quality, dependability and people empowerment constituted the underlying DNA that made us achieve these healthy results and propel us closer to realize our vision of becoming Scale Player and Leader in Information Technology.

The Company has also attained success in developing differentiation finger prints that distinguish it in areas like strong process capability, cost effective delivery, innovation, infrastructure and execution.

The consolidated revenues of the Company & its subsidiaries posted a growth of 32% from Rs. 164 Crores in 2001-02 to Rs. 217 Crores in 2002-03.

The net profit rose by 86% from Rs. 31 Crores to Rs. 58 Crores. The growth in the businesses of the conglomerate was due to their being closely related and capturing synergy in operation.

Business Environment

The Indian ITES BPO industry has shown remarkable growth in capacity in the last two years. The setting up of captive centers by MNCS, emergence of venture funded third party ITES firms and established software companies getting into ITES arena are fundamentally changing the competitive landscape in the industry putting pressure on margins. Appreciation of Indian Rupee vis-à-vis US Dollar, continued downturn in the global economy, competition from countries like China and Philippines and geo-political risks and protectionism as also backlash against offshoring work to India are the other threats looming large on the horizon. However, worldwide spending on BPO services are projected to grow at an overall compounded annual growth rate of 11% to US$ 1.2 trillion by 2006.
Since India has barely scratched the surface of the business on offer and the key driver for BPO activity has been cost reduction, the long-term potential of the industry in general and companies like HTMT in particular remains robust. HTMT also has made strides in securing fresh orders in the IT services space. Our IT enabled services capability supported by technology and domain expertise in IT services will enable us to extend new sets of service offerings and end-to-end solutions.

Governmental Support

India has made steady progress in the post liberalization period, thanks to several initiatives taken by the Government to strengthen the IT, communication and entertainment infrastructure. Business Environment Governmental Support Considering the ever increasing contribution of IT and ITES industry to the growth of Indian economy, the Government should create a conducive regulatory environment for exports and further strengthen the infrastructure and manpower base.

The Conditional Access System (CAS), which has been made mandatory by the Government, will lead to the fostering of an equitable and transparent relationship between the four parties involved in television transmission and distribution process viz: broadcasters, MSOs, local cable operators and consumers. CATV industry has been demanding tax benefits available for telecom infrastructure providers to reduce the burden on consumers.
The Government should consider acceding to the request of the industry, as it is part of the information and communication infrastructure.

The temporary reduction of import duty now granted on set-top-boxes to 5% till 30th September, 2003 is a step in the right direction. It is hoped that the reduction in duty would be made permanent in the interest of consumers.

Subsidiaries and Associates

The purpose of bringing the privately held media and telecommunication businesses under the umbrella of HTMT was to make the Company a real convergence play and unlock the value latent in the businesses to create wealth for its shareholders.

Kudelski SA, Switzerland has recently agreed to take 2.41% in the equity of HTMT's flagship subsidiary viz: IndusInd Media and Communications Limited (IMC) for about US$ 12 million, giving IMC a valuation of approximately US$ 500 million (Rs.2300 crores).

Nagravision, Kudelski's subsidiary, will become a technology partner with IMC and supply its state of the art conditional access system. HTMT holds 62.07% of IMC's equity through its fully owned subsidiary InNetwork Entertainment Limited.

The Company's associate, Fascel Ltd., the largest cellular services provider in the Gujarat circle is growing from strength to strength. The recent sale of Kotak Mahindra's 11% stake in Fascel at Rs. 92 crores reported some time back to provides a benchmark valuation of Rs. 169 crores for HTMT's 20.2% effective stake in Fascel, which was acquired through share swap on merger of a privately held Hinduja Group company with itself in 2001-02. The recent improvement in prospects of cellular industry coupled with the revival of capital markets will further enhance the value of this investment.

The Company's fully owned internet subsidiary, In2cable (India) Ltd and IMC, are in the vanguard of the revolution of utilizing IMC's broadband cable network and making high speed broadband internet connectivity an utility service like gas or electricity which, instead of delivering power, will deliver on-line entertainment such as music and movies.
A. P. Hinduja
Place : Mumbai
Date : 29th September, 2003