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1
Satyam Computer Services Ltd
2
Certain statements in this presentation and subsequent
discussion concerning our future growth are forward looking
statements which involve a number of risks and uncertainties
that could cause actual results to differ materially from those in
such forward looking statements. The risks and uncertainties
relating to these statements include, but are not limited to, risks
and uncertainties as described in our filings filed with the United
States SEC.
Forward looking statements
3
Brief Introduction
1H FY05 Highlights
Business Environment
Strategy for Growth
Agenda
4
Established in 1987, 16872 professionals, in 45 countries
Provides Value-added end-to-end IT Solutions
Over 350 Customers, Include 6 of Fortune Global10 and 109 of Fortune 500
Revenue CAGR of 61.35% from FY 1997 to 2004
SEI-CMM Level 5 assessed in March, 1999
Golden Peacock Award for Excellence in Corporate Governance
eSCM for BPO developed with Carnegie Mellon University
The profile of a Global Company
5
A Pioneer…
First & only Lead Auditor for eSCM
Adoption of Verticalization and a customer-centric organizational Structure
Among the first to be certified under BS 7799 for ISMS
Pioneered ITES quality framework – eSCM
Among world’s first 10 companies to get SEI-CMM Level 5 assessment
Set-up India’s first private ISP – SIFY
First IT company to get ITAA certification
First Indian Co. to set-up dedicated satellite link
Pioneered delivery of offshore service (John Deere & Co.)
Forming Alliances with best of breed technology vendors very early on
Leading the way has been the hallmark of Satyam
6
Enterprise Application Deployment and Integration Data WarehousingBusiness Intelligence SCM CRM Knowledge Management
Product Development Services Embedded Systems RoboticsChip Design R&D Services
Strategic IT Consulting
Software Development & Maintenance
Business Process Outsourcing
Infrastructure Management Services (IMS)
…providing end-to-end services
7
20 development centers spread across the globe. Operations in 45 countries, 6 continents
…with a presence across the globe
8
REVENUE DISTRIBUTION BY TECHNOLOGY REVENUE DISTRIBUTION BY GEOGRAPHY
ROW
North America
EuropeJapan
73.34%
10.98%
13.71% 1.97%
REVENUE DISTRIBUTION BY INDUSTRY
18.45%
31.44%
18.27%
13.90% 11.82%
6.12%
Manufacturing
Healthcare
Telecom
Insurance
Others
Banking & Financial Services
Packaged Software Implementation
Software Maintenance
Engineering Design Services
46.59% 23.56%
3.63%
26.22%
Software Design Development
…with a consistent performance
155
267
363418
553
3169
103 95121
0
100
200
300
400
500
600
2000 2001 2002 2003 2004
US
$ m
n
Revenue ProfitFigs as per Indian GAAP
Figs for FY 2004
Figs for FY 2004
Figs for FY 2004
9
8 of the top 10 Auto majors
7 of the top 10 Electronics and Electrical Equipment Manufacturers
6 of the top 10 Pharmaceutical companies
4 of the top 5 Networking and Other Communication Equipment
Manufacturers
3 of the top 5 Healthcare companies
2 of the top 5 Securities companies
…and trusted by
10
Customer Centric, Business Focused Organisation Structure
Regional Business Units (RBU)
Non-HierarchicalCollaborative Promotes Entrepreneurship
Horizontal Competency Units (HCU)
• Automotive
• Banking& Financial Services
• Healthcare, Insurance & Pharmaceuticals
• Manufacturing
• Retail
• Telecom
• Infrastructure
• Media & Entertainment
• Semiconductor
• Travel, Transportation & Logistics
• Energy & Utilities
• Government & Public Services
• Canada
• Continental Europe
• Middle East, Africa, India
• Asia Pacific
Vertical Business Units (VBU)Shared Services (SSU)
• Infrastructure Management Services (IMS)
• Enterprise Applications and Business Intelligence Solutions (EABIS)
• SAP Solutions
• Consulting and Enterprise Solutions
• Hi-Tech Solutions
• Engineering Services
• Microsoft Solutions Group
• Network and Systems
• Commercial & Contracts
• Corporate Services
• Internal Audit
• Internal Information Systems & Platinum Process group (PPG)
• Corporate Communications
• Legal
11
1H FY05 Highlights
Brief Introduction
Business Environment
Strategy for Growth
Agenda
12
Buoyant Revenue Growth
Broad-based growth across geographies, verticals and customers
Revenue growth of 10% and EPS growth of 9% in Q2 surpassed guidance
The CQGR of revenue based on trailing 4 quarters has grown from 4.64% in Q2 2004 to 9.11% in Q2 2005
Revenue contribution from Europe has increased from 12.90% to 16.00% in the past 5 quarters
Witnessing enhanced opportunities in Enterprise Solutions
13
Improved Customer Traction
20 1814 13
40 4036
32
52 5348
45
0
10
20
30
40
50
60
2002 2003 2004 Q2 05
Top Top 5 Top 10
59 55
77
1219 24 29
16
97
996
0
25
50
75
100
125
2002 2003 2004 Q2 05
US$mn US$5 mn US$10 mn
US$ million customersRevenue contribution
Reduced client concentration
Wider range of services coupled with better relationship management has helped
in “mining” of existing customers
The threshold revenue limit for entry into top 10 has increased by 87% vis-à-vis
corresponding quarter last year
14
Changing Growth Profile
5.00%
10.04%11.56%
10.48% 9.95%
13.67%
2.07%
18.14%
0%2%4%6%8%
10%12%14%16%18%20%
2002 2003 2004 Q2 05
Focus on new markets - growth enabler and a risk mitigant
Creation of new markets by accelerating growth in newer verticals (Transportation, Healthcare, Retail)
During past 5 quarters TIMES have grown at a rate higher than the company’s growth rate
New Verticals
TIMES
15
Quality Customer BaseFortune Global 500 customers
37
58
81
109
101
0
25
50
75
100
125
2001 2002 2003 2004 Q2 05
70 F Global 500 customers added in the last 3 years – reflects ability to compete favourably with global IT service providers
Enhanced ability to forge partnerships reflected in quality customer addition in newer verticals also
Working with 6 of the top 10 pharma companies Acquired 14 customers including 6 F Global 500 companies in first year of
operations in Retail
Ability to partner with global organizations is driving growth
16
Wage Inflation
Onsite hike of 4% in April 2004
Offshore hike of 18%-20% in October 2004
Operating
Margins
Overcoming Margin Challenges
Operational Excellence
Focus on increasing utilisation
Lowering delivery Costs - Intake of trainees – 4210 trainees (40%) recruited during last 6 quarters
Shift towards offshore
Managing Fixed bid engagements better
Pricing
Stabilized
New customers added at higher than average rates
In Q2, negotiations were favorable
High value and newer services have the potential for premium
Cost Management
21.36%
19.75%
18.37%17.93%
16.56%16.00%
18.00%
20.00%
22.00%
Q2 2004 Q3 2004 Q4 2004 Q1 2005 Q2 2005
SG&A as a % of reveneue
17
16 active customers of which 14 are existing customers of
Satyam.
Associate strength at the end of Q2 is 1350
Total seating capacity of 1500
Q2 2005 revenue of US$ 2.40 mn
Revenue guidance for FY 2005 at US$12 m.
Expect to break even by end of this fiscal
Nipuna
High potential for cross selling of services across entire customer base
18
FY 2005 : Guidance
Introduction of US GAAP Guidance for convenience of investors
Indian GAAP (Standalone)Particulars
Software Revenue 3097 - 3146 3268 - 3312 3415 - 3428(Rs. In crores) (21.9% - 23.8%) (28.6% - 30.3%) ( 34.4% - 34.9%)
EPS (Rs. Per share) 20.28 - 20.62 21.71 - 22.06 22.61 - 22.76(17.9% - 19.9%) (26.2% - 28.3%) (31.4% - 32.3%)
US GAAP (Consolidated)Particulars
Revenue 733 - 743 767 - 770(In $ Mn) (29.5% - 31.1%) (35.4% - 36.0%)
EPADS (In US Cents) 95 - 96 95 - 96(31.9% - 33.3%) 31.9% - 33.3%
At the end of Q2 2005
At the end of Q4 2004
At the end of Q1 2005
At the end of Q1 2005
At the end of Q2 2005
19
Business Environment
Brief Introduction
1H FY05 Highlights
Strategy for Growth
Agenda
20
STATE OF THE MARKET
Increased Outsourcing
Vendor Partnerships
Level Playing Field
Movement to India
Vendor Consolidation
Vendors brand equity – critical
Vendors partnering for Large deals
Long-term and deep partnerships
More Organizations are outsourcing – big & small
Expanded outsourced services portfolio
Increased breadth and depth of outsourced services
Increased volume of services outsourced
Stringent Due-Diligence exercises
Contract & Solution merit wins
Indian companies and MNCs perceived on par
Long-term and pro-active benefits win
Brand Equity counts
Many Organizations moving into India
Partnering with local entities
Setting up Captive units
Big5 & others moving-in big-time
Market Drivers
21
Changing Characteristics
Vendor to Partner
Increased Expectations
Looking beyond cost advantage
Consulting – upstream services
New & changed Sourcing Patterns
Changed interest levels
Vendor Managers to CXO involvement
Comprehensive Selection Criteria
Increased Capabilities
Cover wider geography
Provide solutions to complex problems
Expanded service offerings
Delivery capability – people processes and depth
Measured Governance
Concrete measurements to Relationship evaluation
Greater Transparency & control of operations
Comprehensive Frameworks / working models
CUSTOMER
SPEAK
Customer Expectations
22
Stable Pricing
Package Solutions Focus
Offshore clearly mainstream
Business Partner Focus
More Inclined to customize packages than build from scratch
Solution integration as an extension of interest
Some New Deals coming in at higher than average prices
No out-of-turn renegotiations
High Value and Newer services have the potential for premium
Willingness consider a broad range of services from Offshore
Laggard Industries also adopting offshore as a strategy
Scale and Maturity seen as differentiators
Domain Awareness increasingly expected and assumed
Offshore players considered business partners
Relationship maturity makes a difference
SERVICES
PORTFOLIO
Business Climate
23
Complex Business Solutions
Deeper Competencies
Leading Brands
Demanding Customers
Increased upstream services
Increased Technology and domain depth
Ability to manage large engagements
Ability and track-record of solving complex problems
Needs cutting across wider tech and domain areas
Specialist knowledge of Industry native products
Branded and reputed companies
Leadership in segments of technology and industries
Proven Service & delivery excellence
Big names and bigger needs
Large deal management capabilities
Abilities to follow the customer everywhere
LEADERSHIP
ASPIRATION
Competitive Trends
24
Brief Introduction
1H FY05 Highlights
Business Environment
Strategy for Growth
Agenda
25
STATE OF THE MARKET
CUSTOMER SPEAK
BUSINESS CLIMATE
COMPETITIVE TRENDS
BUSINESS STRATEGY
Vertical Focus
Regional Approach
Branding
Partnership Model
Strategies for Growth
26
Evolution from RELATIONSHIPS to PARTNERSHIPS
Managing Relationships – Highest
Maturity Level
Upstream Involvement
Leadership Enhancement
Investment in markets and opportunities
Partnership Model
Convert every Platinum Relationship into Partnerships
27
Build on Traditional Strengths
Invest in Partnerships
Niche Solutions for Industry Hot Topics
Invest in Growth Engines
Capitalize on Strong Momentum
Focus on Aggressive Growth in promising Verticals
Competitive differentiation through innovation
Vertical Focus
28
Regional Approach
Enhanced Focus on Europe Increased Traction due to Wide Adaptation of Global Delivery Model in
Europe Structured for Acceleration Vertical Focus to Capitalize on Strengths
Near Shore Options Toronto Near Shore already in Operation Continued focus on China as Near shore for Far East Operations in Budapest to commence shortly
“Follow the Customer” Model Increased instances Global MSAs Other Regions of Growth
29
Brand Enhancement
Enhanced Stakeholder Perception
Stakeholder Summits
Publicize Significant Accomplishments
Segmented and Focused Branding
Collaborative Forums by Industry Segment
Advisory Committees consisting of industry Leaders
Media Events
Industry recognition from market research firms
30
Global Services Delivery Poised for a Paradigm Shift
Business Value Creation Capabilities will determine Quality and
Quantity of Growth
Multi-pronged Strategy of Growth to Take Advantage of the
Opportunities
Satyam is Well Positioned to deliver “What the Business
Demands”
Summary