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Biz Wealth Creator1
 

Biz Wealth Creator1

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    Biz Wealth Creator1 Biz Wealth Creator1 Document Transcript

    • Read on ................................... Wealth Creators of India located and called it Little India. It put up a 64 Kbps connection Satyam Computers: between the two buildings and forbade its 50 odd engineers from ever physically going to the client’s Contributing to India’s Software Success premises. It was an unusual beginning but it worked and worked well enough to become an - KenSource I idea that is the backbone of the whole software industry today. f there is one industry, which today one of the most respected Satyam today within a very short span has names in the software industry is What began, as a hobby is one covered a lot of space in the quite interesting. Satyam was set- of the most successful software Indian economy, it is the up by B Ramalinga Raju, a farmer’s companies in the world today. software industry. Though son who initially owned a spinning Satyam has converted itself into a Indian expertise in many other mill, then dabbled in real estate global consulting and IT Service fields also has been remarkable in business before settling down to Company offering a wide array of the recent past, the success of the his current profession as a software solutions across a range of key software industry far surpasses entrepreneur. Satyam initially did verticals and horizontals. The others when it comes to evaluating only body shopping and provided company has been a pioneer in the contribution of the sector to the contract services. Raju after setting up exclusive development overall economy. Indian completing his B.Com from Loyola facilities for global players who companies in the software sector College in Vijaywada, Raju did an intend to outsource IT initiatives. have carved out a niche for MBA from the Ohio University. Located across the country these themselves in the world and are After the death of his grandfather, centers are state of the art facilities today reckoned as one of the most he returned to take charge of the equipped with the best formidable players in that family business, which by then was connectivity and infrastructure to business. One such story is that into agriculture and construction. provide IT solutions to its clients. of the Hyderabad-based Satyam The late 80’s evoked his interest in Some time back the company Computer Services Limited. The IT, which prompted him to set up introduced a unique model called company has come a long way a company for that more as a the RightSourcing Model. This since its inception in 1987 and hobby rather than a profession. delivery model provides today boasts of a global client base Soon the visionary in Mr. Raju customers the optimum in excess of 350 customers with realised the high potential of the IT combination of onsite, offshore and over 100 of them from the Fortune business and thus began the offsite delivery. The company was 500 list. All along, its successful success story of Satyam. The solid India’s first private sector player in journey the company has forged background provided by his the ISP business (Internet Service alliances with nearly 50 business family went a long way in enabling Provider business) under its and technology leaders in the the entrepreneur in Raju at taking subsidiary company Satyam world and has a presence in almost big risks and still getting along just Infoway. Sify Broadband is now 45 countries worldwide. Ranked fine in life. Satyam was one of the among the leading broadband among the top 10 “best companies first Indian companies if not the providers in the country. to work for in India” in an industry first to experiment with the idea of The company serves customers survey by Business Today – Mercer outsourcing when in 1991 its first across various verticals including – TNS, Satyam has been among the Fortune 500 client John Deere & Co Automotive, Banking & Financial top 5 software players in the gave a go ahead to the idea of Services, Energy & Utility, country ever since the software initiating an offshore project. It Healthcare & Insurance, story began doing the rounds. hired a building on the outskirts of Manufacturing, Retail, The origin of a company that is Molin (Illinois) where JD & Co was Advanc'edge MBA December 2004
    • Read on ................................... Construction, etc. It provides crore) up 28% from the same Satyam has not enjoyed any customers with a wide range of period last year and 9% above the major margin expansion during services, which include; June quarter profit of Rs 173.48 the quarter. Operating profit was Application Services, Business crore. up by 33% over the year ago period Operational Income Intelligence & Data Warehousing, at Rs 220.80 crore (Rs 166.57 crore). Business Process Outsourcing, Operational revenue has shown Sequentially it rose by 11% over the Consulting & Enterprise Solutions, a remarkably good growth this June quarter profit of Rs 198.83 Embedded Systems, Engineering quarter. At Rs 848.10 crore (Rs crore. However, for the last 4 Solutions, ERP, Oracle, PeopleSoft, 598.49 crore), income from quarters OPM has stagnated at SAP, GIS, HiTech Solutions, operations was up 42% from the 26%. Other income, Interest and Managed IT Services, Microsoft year ago period. Sequentially it depreciation provisioning Solutions Group, Quality was up 10% from the June quarter Consulting, Silicon Design income of Rs 771.50 crore. Income Other income, which showed a Services, Enterprise Storage from Banking, Financial Services & remarkable growth during the Solutions etc. Insurance (BFSI) was up 18% while June quarter, was down 36% from newer verticals like healthcare the year ago period and 22% The core management team have registered a 25% sequential sequentially. Depreciation Members Of Board Of Directors growth. BPO activity is picking up remained flat sequentially and was Executives Directors: with Rs 11.05 crore coming in as down 9% from the year ago period Mr. B. Ramalinga Raju revenue from this segment. at Rs 25.84 crore (Rs 28.47 crore). (Chairman) Operational costs (in crores) Profitability Mr. B. Rama Raju (Managing Director) Sep-03 Jun-04 Sep-04 YoYGrowth SeqGrowth Non-Executive Directors: Personnel Mr. V. P. Rama Rao, IAS Cost 304.04 434.34 486.80 60% 12% (Retd.) Dr. (Mrs.) Mangalam Op & Srinivasan Admin Cost 127.88 138.33 140.50 10% 2% Prof. Krishna G. Palepu Total 431.92 572.67 627.30 45% 10% Mr. Vinod Dham Though revenue growth has Growth in operational revenues Latest Financial Performance been decent during the last two has been eclipsed by a higher rise Satyam came out with excellent quarters, higher operational costs in the operational cost. This growth numbers for the 2QE have eaten into it. For the 2Q coupled with declining other September 04. Total income at Rs overall operational cost was up income hit profit growth. PBT was 872.03 crore (Rs 636.08 crore) was 45% over the year ago period at Rs up 25% from the year ago period up 37% from the year ago period. 627.30 crore (Rs 431.92 crore). (8% sequentially) at Rs 218.73 crore Sequentially income was up 9% Sequentially, the same rose by 10% (Rs 175.50 crore). After a tax from the preceding quarter income over the June quarter cost of Rs provision of Rs 29.94 crore (Rs of Rs 802.26 crore. Against this, the 572.67 crore. This higher rise in the 27.91 crore), net profit was Rs total expenditure of the company costs has been primarily on 188.78 crore (Rs 147.59 crore). was up by a slightly higher account of a 60% rise in the Sequentially the same rose by 9% percentage restricting profit employee cost (12% sequentially). over the June quarter profit of Rs growth. Total cost was up 40% Other operating and 173.48 crore. Though Satyam’s from the year ago period and 9% administrative expenses were up growth rates have been decent, the sequentially at Rs 683.25 crore (Rs 10% over the same period last year company has not been able to 488.49 crore) resulting in a net (2% sequentially). maintain the same growth Margins profit of Rs 188.78 crore (Rs 147.59 momentum as in the June quarter. Advanc'edge MBA December 2004
    • Read on ................................... Outlook corresponding period. Rs 390 levels discounts its Valuation The company has further September quarter annualized EPS revised its FY 05 guidance The stock is currently trading at of Rs 23.78 by 16 times. upwards and expects revenues to be in the range of Rs 3415 to Rs 3428 Satyam Technology Center crore, a growth of 34% to 35% over the previous year. With EPS expected to go up to Rs 22.76 the expected net profit stands revised to Rs 718 crore to Rs 723 crore, a growth of 29% to 30% over the F Y 04 Sep-04 F Y 03 Dec-03 Mar-04 Jun-04 Sep-03 2,023.65 2,541.55 771.50 848.10 662.70 720.71 Sales Turnover (in crores) 598.49 Operational Expenditure (in 1,405.12 1,848.97 572.67 627.30 488.91 530.88 crores) 431.92 618.53 692.58 198.83 220.80 173.79 189.83 Operating Profit (in crores) 166.57 26% 31% 27% 26% 26% 26% OPM 28% 23.93 27.86 81.73 28.45 5.00 30.77 Other Income (in crores) 37.59 872.03 2,051.51 2,623.28 691.15 725.70 802.26 Total Income (in crores) 636.08 774.31 229.59 244.73 646.39 202.24 194.82 PBIDT (in crores) 204.16 0.72 0.75 0.20 0.16 0.18 0.18 Interest (in crores) 0.19 124.18 111.62 25.96 25.84 28.27 25.41 Depreciation (in crores) 28.47 521.48 661.94 203.44 218.73 173.79 169.24 Profit before Tax (in crores) 175.50 29.94 61.60 106.15 27.92 28.39 29.96 Tax (in crores) 27.91 Total Expenditure (in 1,591.63 2,067.49 628.78 683.25 545.28 584.85 crores) 488.49 188.78 459.88 555.79 145.87 140.85 173.48 PAT (in crores) 147.59 - - 152.46 - - - Extraordinaries - 555.79 173.48 188.78 307.42 145.87 140.85 PAT Including E O’s 147.59 62.91 63.52 63.36 63.52 62.91 63.25 Equity 62.91 9.77 17.50 21.90 23.78 18.55 17.81 EPS 18.77 390.00 310.00 390.00 320.00 325.00 310.00 MARKET PRICE 215.00 22 14 16 32 17 18 PE 11 Advanc'edge MBA December 2004