September 28, 2004
Ladies and Gentlemen,
It gives me a great pleasure to welcome you all to the 18th Annual General Meeting of Kale Consultants Limited. The Director's report, Auditors report and audited accounts with notes thereon are with you for some time and request your kind permission to take them as read.
Your company has completed the restructuring planned in the year under consideration. We looked at our business mix and decided to focus all of our efforts on GLOBAL and SYNERGISTIC offerings. Your company decided that we would concentrate our energies in Travel and Airlines segments which by their very nature are really GLOBAL and have quite strong complementary offerings between themselves which help to garner new business with possible overlapping customer base.
For the year under consideration, the company recorded total revenues of Rs 481.37 million as compared to Rs 507.01 million in the previous year, despite the revenue loss due to the restructuring initiative. The discontinued business had contributed Rs. 152 million in the last financial year. The core business of Airline products and services has continued to show steady growth with a 5 year CAGR of 32%.The Company had a PAT of Rs 31.66 million, compared to Rs 31.42 million last year, despite the lower top line. This reflects the improved profitability of the restructured business and the promise it holds for future for sustained growth & profitability.
Your company has finished implementation of the enterprise-wide cargo solution CSP ™ Rel 2 at Seoul based Asiana Airlines. The solution is at use in a mission critical 24x7 environment over 50 stations and 500 users world-wide. This marks an important landmark indicating the successful launch of our offerings in the Cargo operations. This should open up opportunities for the state of the art cargo management offering for clients worldwide.
As we had stated last year we have expanded the service offering in the Managed Process Service (MPS) business from Revenue Accounting to Audit Services to include Ticket Proration, Cargo Sales Audit and Interline Billing among others. We have seen significant client interest in these services and by having marquee customers for each of these services we hope to seize new opportunities with these offerings as growth engines propelling the company visibility and prosperity.
The airlines industry is now witnessing an increased demand on travel after a long time, which is a very welcome sign. Commercial aviation activities generate over $100 Billion in revenue in North American markets alone while the Travel & Tourism industry account for over 8% GDP in western countries. Results for the first six months of 2004 of airline Industry indicate increases of 20.4% in international passenger traffic and 13.0% in cargo over 2003. This augurs well for your company due to increase in the transactions that would be handled by the airline clients. Cargo traffic is expected to increase with the economic growth and increasing world trade. It should also be stimulated by the development of global e-commerce and manufacturing trends such as just-in-time delivery, which requires more materials to be shipped rapidly. Your company provides solutions to both the Passenger as well as Cargo management space and is well positioned for capitalizing these growth opportunities.
Simultaneously the cost pressures on large airlines however are increasing due to the competition from new and nimble airlines with lower cost structures and flexible operations. The airline industry faces many challenges like fixed cost control, cash preservation and cautious growth. As a result Airlines are quite keen to explore ways for cost reductions and business transformations leading to added efficiency. Our ability to transform some of the fixed costs into variable costs in line with the business volume does present an attractive proposition for the industry. This is an opportunity for your company and we are well equipped for this. We have now strengthened our brand recognition globally with airline industry as witnessed from the fact that our product APEX has been chosen as the global standard by IATA for its First & Final initiative. This is one of the few instances where a product “Made in India ” has made a mark on global industry standards. Our complete set of offerings from Consulting, software development; packaged software products to Managed processing services allow our clients to engage us with multiple options as per their unique needs. This enables us to engage in multiple assignments with the same clients as the comfort and confidence levels increase. This trend is quite visible and has helped us to build multi layer multi service relationships leading to revenue streams spanning across multiple years. The resultant deep understanding of the business of our clients in turn has provided us an opportunity to steeply increase our involvement towards identifying and delivering significant value additions to our clients.
The Travel Technology Division has added new dimension for the growth of the company. With the travel domain skills and state-of-the-art technology expertise, this Division creates innovative and path breaking applications by combining the power of internet technology with demanding needs of travel consumers. It has strengthened our ability to serve both the Travel suppliers, Operators, travel agents and consumers with our solutions. Here we are providing the cutting edge technology to provide a competitive edge to our clients in a very tough market environment. The propensity of increased travel across the globe only enhances our opportunities in software projects as well as BPO services for the Travel segment.
The road ahead is as any ambitious journey undertaken full of both challenges and possibilities. The Airline industry is faced with new issues and opportunities and look upon us as reliable partner in progress to help them address the issues and seize the opportunities. We have done this effectively in past and with new technology, excellent infrastructure and professional colleagues we would strive to exceed their expectations. Our endeavor is becoming the “value innovators” for our clients. By developing customer focused niche competencies and leveraging our own products to offer processing services we would ensure that the company would operate at top end of the value chain. Our unique business model would continue to generate momentum for expanding the deep client relationships while acquiring new clientele.
Our goals for the next year include significant increase in new clients while enriching our current clients with technological adoptions to provide them with a competitive edge. Our synergy to provide both Travel and airline solutions should also provide attractive proposition for our prospective clients. We would continue to judiciously invest into technology, branding, infrastructure and processes to provide true world-class offerings. With some uplift and stability of the airline industry your company should see significant growth in near future.
I thank all of our stakeholders- Clients, Colleagues and Corporate stockholders- business partners, Bankers, RBI, NASSCOM, and various government authorities for the constant encouragement and support throughout the year. I also like to thank the efforts of all the Kale Consultants colleagues for their total dedication and hard work. I am sure that with this continued support we would see fruits of the years of preparation in near future.
Thank You,
Narendra H. Kale
Chairman,
Kale Consultants Limited |
