MPS Limited

71 Pages·2015·1.95 MB·English

POISED TO CAPITALISE ON
NEW OPPORTUNITIES_
MPS LIMITED
45THANNUAL REPORT 2014-15
POISED TO
KEY INFORMAT ION_
CAPITALISE ON NEW
Chairman
Mr. Nishith Arora
OPPORTUNITIES
Vice Chairman & Independent Director
Mr. D. E. Udwadia
Independent Director
Mr. Ashish Dalal
Independent Director
Mr. Vijay Sood
Chief Executive Offi cer & Whole Time Director
Mr. Rahul Arora
This Annual Report explains how MPS
Chief Financial Offi cer
Mr. Sunit Malhotra Limited intends to capitalize on emerging
Company Secretary
Mr. Hitesh Kumar Jain opportunities in the global publishing
Auditors
industry.
Messrs Deloitte Haskins & Sells
7th fl oor, Building 10, Tower B
DLF Cyber City Complex The global publishing industry holds out
DLF City Phase II
Gurgaon 122 022 exciting upsides for publishing companies
Haryana
that can adapt with speed to the evolving
Bankers
BNP PARIBAS technology-driven industry environment.
Salarpuria Windsor, Ground Floor, No.3, Ulsoor Road, Bengaluru – 560 042, Karnataka
Kotak Mahindra Bank Limited
MPS Limited is attractively poised to ride
Kotak Aerocity , Asset Area 9, 1st Floor, Corporate Banking, Ibis Commercial Block,
Hospitality district, IGI Airport, New Delhi - 110 037
this transition through timely acquisitions,
Corporate Offi ce
C 35, Sector 62, Noida 201 307, Uttar Pradesh deeper presence in the world’s largest
Registered Offi ce
publishing market and sizable available
RR Towers IV, Super A, 16/17, Thiru-vi-ka Industrial Estate, Guindy, Chennai – 600 032
Other Offi ces resources to drive its inorganic growth
• HMG Ambassador, 137 Residency Road, Bengaluru – 560025, Karnataka
• 340 Udyog Vihar, Phase IV, Gurgaon, Haryana 122016 agenda.
• Ground Floor NSIC Bhavan, STP Complex, Okhla Industrial Estate, New Delhi 110 020
• 33, IT Park, Sahastradhara Road, Dehradun - 248001, Uttarakhand
The combination of these initiatives is
USA
1717 NE 42nd Avenue, Suite 2101, Portland, Oregon 97213 expected to catalyse growth, margins and
Subsidiary
MPS North America LLC shareholder value.
5750 Major Blvd., Suite 100, Orlando, Fl 32819
Registrars and share transfer agents
Cameo Corporate Services Limited
Subramanian Building, 1, Club House Road, Chennai – 600002
(cid:3)Corporate overview (cid:3)Management Reports (cid:3)Financial statements
(cid:123)(cid:3)02_Corporate Identity (cid:123)(cid:3)12_Management (cid:123)(cid:3)74_Standalone
(cid:123)(cid:3)04_Chairman’s Message Discussion and Analysis Financial Statements
(cid:123)(cid:3)06_Management Overview (cid:123)(cid:3)22_Notice (cid:123)(cid:3)102_Consolidated
(cid:123)(cid:3)08_Business Model (cid:123)(cid:3)32_Directors’ Report Financial Statements
(cid:123)(cid:3)11_Financial Summary (cid:123)(cid:3)59_Corporate (cid:123)(cid:3)131_Attendance Slip
Governance Report and Proxy Form
MPS LIMITED 01
ANNUAL REPORT ANNUAL REPORT 2014-15
CORPORATE IDENTITY_
Service offerings print and online products that encompass MPS Database & Directory Publishing
Books and journals publishing services: order fulfillment, customer support and services: MPS provides services that involve
MPS LIMITED AIMS TO EMERGE AS ONE OF MPS provides a diverse range of prepress subscription management. the creation of databases, production services
publishing services for the educational, for database and directory publishers as well
MPS Technologies: MPS uses its in-house
THE FASTEST GROWING SERVICE PROVIDERS IN professional, STM, academic and trade as the preparation of high-quality print, online
software development division to provide
publishers. and mobile advertisements.
distinctive, innovative and customized
THE GLOBAL PUBLISHING INDUSTRY. THE COMPANY
Digital services: MPS provides services to software solutions to publishers. Listing
PROVIDES COMPLETE END-TO-END PUBLISHING publishers related to the transformation Learning and New Media services: MPS MPS Limited shares are listed and actively
of content from various input formats to develops engaging and interactive digital traded on the NSE (National Stock Exchange
SOLUTIONS ACROSS THE AUTHOR-TO-READER VALUE multiple digital formats, including e-Books. learning solutions for educational publishers of India Limited) and BSE (BSE Limited). The
MPS 360 customer services: MPS provides by using multimedia tools to be used as market capitalization of MPS Ltd. as on March
CHAIN. complete end-to-end customer support learning aids. 31, 2015 was H1759 cr.
and subscription management services for
OUR SERVICES INCLUDE CONTENT DEVELOPMENT,
PRINT AND DIGITAL PUBLISHING SERVICES,
Presence
TECHNOLOGY SOLUTIONS, RICH MEDIA PRODUCTS
AND CUSTOMER SERVICES FOR EDUCATIONAL, TRADE,
04 01
AND SCHOLARLY PUBLISHERS.
01
0203
MAKING MPS A ONE-STOP DESTINATION FOR SOME 02
03
OF THE LARGEST PUBLISHING COMPANIES IN THE
04
WORLD_
05
05 06
India USA
01 Delhi 01 Portland [OR]
02 Gurgaon 02 Champaign [IL]
Lineage Management Major acquisitions by MPS North
03 Noida [Headquarter] 03 Effingham [IL]
MPS Limited is a Group Company of ADI The Company is headed by Mr. Nishith Arora America, LLC
04 Dehradun 04 Durham [NC]
BPO Services Ltd. The Company was (Executive Chairman), Rahul Arora (Chief 2013: Element LLC, based in Orlando (US),
05 Bengaluru 05 Orlando [FL]
acquired from Macmillan UK, which, in Executive Officer) and supported by a senior specialises in publishing services for the
06 Chennai
turn, had been acquired by Verlagsgruppe professional management team that heads education sector, focusing on the pre-K and
Georg von Holtzbrinck, Germany, in 1999. strategic business units and key functions. K-12 segments.
A rich combination of domain insights and Clientele
Credentials 2014: Electronic Publishing Services Inc
technology capabilities has enabled MPS to
emerge as one of the leading publishing MPS Limited has been certified by ISO (EPS) is a leading US-based service provider
services outsourcing companies. 9001:2008 for quality, ISO/IEC 27001:2005 for to the higher educational and professional
information security and PCI Data Security publishing markets.
Standard (PCI DSS) for its credit card payment 2015: TSI Evolve (US) specializes in the
gateways. reading discipline with a history of working
with leading publishing majors (McGraw-Hill,
Pearson, Triumph Learning, Worth Publishing,
HMH and Cengage among others).
The Group has integrated these entities,
widened service offerings, added marquee
clients and extended into newer geographies.
02 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 03
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15
CHAIRMAN’S
We possess technology capabilities
to not only address the conventional
OVERVIEW
segment (journals and books) but also Our forward-looking strategy_
to create technology-intensive platforms
and workflow management system for Enhance the number of projects where we are the core vendor
smaller publishers. Leverage the full value of our US acquisitions
Two, we have restructured our presence Acquire more companies with complementary capabilities
across strategic business units that Increase our technology-intensive platform offerings
makes it possible for these businesses to Mine customer accounts deeper
There is an exciting transformation result is that the sales of printed books few, promising these few vendors larger
be provided with adequate resources to
sweeping the global publishing is stagnating, digitized content as a volumes in exchange for lower costs,
grow sustainably on the one hand and
industry, creating uncertainty for proportion of overall publisher revenues selecting vendors who can provide a
be accountable in terms of deliverables
conventional business models on the has increased. While the growth of the wider services bandwidth, preferring to
to the overall company on the other. As capital through a QIP issue, which was Optimism
one hand and empowering those who global publishing industry is now in work with technology-driven vendors,
part of this reorganization, the Company subscribed to by HDFC Mutual Fund At MPS, we are optimistic of our prospects
are prepared to move and adapt with the low single-digits, a number of older shortlisting vendors who possess a track
has reallocated responsibilities with my and Goldman Sachs (amongst others), for the various reasons mentioned in my
speed on the other. publisher business models need to record of faster turnaround and, in turn,
role as Chairman divorced from day to reposing confidence in our business overview. During the current Financial
transform the way they do business, else selecting to focus largely on branding,
Changes day operations and focused on strategy, model and strategy. Year, the first full year following all three
survival could be an issue. technology and marketing and using
Consider some of the changes that we their sales and distribution reach to carve acquisitions, their integration and the Five, the growth that could accrue from acquisitions, we expect to enhance our
see in our everyday lives. As an extension of this reality, library out a larger market. long-term fiscal health of the MPS Group. this point onwards for all the reasons I presence in the US market. We expect to
budgets are being pruned, universities Rahul Arora as CEO will manage and mine our customer accounts deeper and
have mentioned above can be addressed
When we need our children to study are changing their procurement systems, Sweet spot grow the current operations in India and adequately with our current resources. enhance revenues from margin-accretive
something, we are more likely to get on alternative learning opportunities are At MPS, we recognise the need to the US while continuing to engage with Over the last few years, we have technology products and services. In
to educational sites than just rely on a increasing and assessment platforms are strengthen the business of our customers our client base. invested in people and processes while terms of acquisitions, we expect to
text book. making appraisals immediate, interactive far beyond a mere wage arbitrage Three, our businesses are growing and consolidating our physical presence. We attract companies/businesses with
When we need to study something as and dynamic. opportunity. We need to delight likely to do even better. Our largest feel there is still operating headroom to complementary competencies that add
value to our client offerings.
part of a course. There is a good possibility customers through every engagement. customer accounts are growing; revenues enhance people productivity. We are
Adapting to change
that we may be more comfortable We need to graduate towards processes from our ten largest customers increased presently running most of our facilities on In view of these possibilities, we are
So what are some of these large
downloading the information from a site and systems that make the delivery of from 75 to 81 per cent in 2014-15 even as a single-shift basis and there is attractive optimistic about our future. What we
publishing houses really doing to adapt
owned by a publisher. projects and services dependable and our Consolidated Total Revenue increased operating leverage for us to increase have reported in the last few years was
and stay competitive?
predictable. 13 per cent. Besides, following the head count without needing to rent attractive; what we could now deliver
When we study downloaded text, we
Faced with the current challenges, a acquisition of three companies based in or buy additional facility. The scope for may be truly exciting.
are more likely to seek related references MPS is at the sweet spot of a global
number of global publishing houses are the US (providing us with customer-facing expansion at Dehradun is considerable.
than merely browse through the text. inflection point for a number of reasons.
opting to create some content in-house executives across business segments), we
In the last Financial Year, MPS reported yet
When we seek downloaded content, but progressively outsourcing a larger One, there is a growing customer now possess an even stronger presence in Nishith Arora
another year of profitable growth. Even as
it is increasingly possible that we may part of their requirements. A number preference to work with companies the largest publishing market in the world, Chairman
our revenue increased 13.48 per cent to
need the information on a tablet or of companies that never considered that provide complete end-to-end which should make it possible for us to H223.87 cr, our Profit After Tax increased
a smartphone rather than a desktop outsourcing are beginning to do so, a solutions. MPS provides the widest enhance customer confidence, market from H42.14 cr. to H61.44 cr. Our Earnings per
computer. welcome trend. They are evolving into complement of services – technology share and revenues.
Share (on the diluted post-QIP placement)
content providers for increasingly used services, project management, content
All this is driving change in the global Four, towards the later part of 2014-15, increased from H25.05 to H36.38.
platforms by users. They are rationalizing enrichment services and digital services
publishing industry faster than ever. The we mobilized H150 cr in growth
their vendors, selecting to work with a – among global companies of our scale.
04 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 05
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15
MANAGEMENT
OVERVIEW, 2014-15
Q: Was the management pleased Q: How did the Company address locations to competitive locations like companies (Element, EPS and TSI) that with the blessings of the leading through a mix of service and product
with the Company’s performance these challenges leading to yet Dehradun, raising the headcount at the possess competencies in complementary customers of those organizations, solutions. At a time when the large global
during the year under review? another year of profitable growth? latter location from 618 to 915 during the educational spaces. Besides, these translating into revenue visibility. publishers are rationalising their vendors
The MPS management was fairly pleased At MPS, profitable growth was not Financial Year 2014-15. acquisitions would strengthen our and promising them larger volumes in
Q: How does the Company expect
with the Company’s working. Even derived from any single factor; it was In a business where marketing costs are presence on US soil, enhance customer to strengthen its performance in exchange for lower realisations, MPS is
as the global business and customer derived from a combination of a number high, we successfully mined our existing confidence and graduate US revenues of Financial Year 2015-16? attractively placed to carve out a larger
ethnev iCroonmmpeanntys repreomrteaidn eitds 4thch saulclecnegssinivge, oyef ainrsi taiantdiv edsu rtihnagt twhee yineiatria utendd earc rreovsise wth. e cspuestnodminegr,s asfo ar rea sulaltr goef wshhiacrhe reovf enthueeisr oreuvre snuubessid tioa rtyh fer onmex 9t lpeevre cl. ent of our total Tcuhset oCmomer pmaninyin egx pweilcl tasc cthoautn st tfroorn ag learr gUeSr smlicaeke oitfs creuvsteonmueesr s tmhaotr e ccaonm ppeottietinvteia.lly
year of profitable growth. This reality was In a business that is continuously from our ten largest customers increased Q: How does the Company expect wallet share. The Company has capped Q: What is the Company’s vision?
marked by a percentage increase in our evolving based on widening customer from 75 per cent in Financial Year 2013- to unleash value from these its manpower cost as a percentage of At MPS, we are particularly pleased about
profits being higher than the percentage needs, we created new technology-led 14 to 81 per cent in Financial Year 2014- acquisitions in the Financial Year revenue, exercising its judgment with the bandwidth of competencies that we
increase in our revenues, which is a products that helped plug portfolio 15 (on a larger revenue base). 2015-16? regard to hiring or outsourcing. The possess today. Our understanding is
succinct reflection of our positioning and gaps and strengthen the holistic value In a business where solutions are We are optimistic of how the acquisitions increased marketing of MPSTrak and that few of our peer companies enjoy
competitive advantage. of our offerings. This helped increase our evolving from the conventional to the will drive our US revenues for a number MPSInsight as standalone products are revenues that are higher than our
Q: What were some of the revenues 13.48 per cent to H223.87 cr in contemporary, we further consolidated of reasons. The US is our single largest expected to generate increased product existing topline, so our first objective
challenges addressed by the the Financial Year 2014-15. technology revenues. market, so a stronger customer interface revenues. Our proven competence in will be to play catch-up and get to
Company during the year under In a business where people costs will make it possible for us to generate the Fulfillment niche is expected to the higher level through organic and
review? account for the largest single revenue A combination of these initiatives made larger revenues from this region. During enhance revenues. The result is that the inorganic initiatives. At MPS, we have
it possible to become increasingly the acquisitions, we were prudent to Company expects increased revenues to created valuable currency in our market
It would appear from our performance expenditure, we were able to moderate
profitable, with each round of revenue acquire only the customers, employees strengthen margins. capitalization, which made it possible
that the external environment was our people costs from 56 per cent of
growth. and brand – no hidden liabilities – so to mobilize H150 cr through a QIP in the
smooth. However, the reality was the revenues in the Financial Year 2011-12 to
Q: What is the basis of the
we have begun to generate value from later part of the last Financial Year, with
opposite. For one, there was a greater 42 per cent of revenues in the Financial Q: In what way did the Company Company’s optimism?
these companies with minimal gestation. the express intention to acquire more
expectation from our shareholders that Year 2014-15. This rationalization was strengthen its competitive position
The Company was cautious in the price It would be relevant to mention that companies and fast-track our growth.
we would sustain profitable growth achieved through a more precise during the year under review?
paid for these acquisitions and bought wage arbitrage as the principal basis We are attractively placed to leverage
with higher percentage numbers on allocation of a person to job, productivity The MPS management recognised them while they were close to their of the Company’s growth is no longer our considerable operating headroom
a larger revenues base. The Company benchmarking and ongoing output that over the last few years its cost respective breakeven points, creating relevant. The Company is one of the available with us in the form of physical
needed to make responsible market measurement with the objective to management had been adequately a potentially remarkable upside for us. most specialized global service providers space at our units, our technology-
disclosures by walking the thin line that enhance organization throughput. moderated and the room to explore Because these acquisitions were made within its industry niche. The biggest cost driven scalability and our established
could service analyst needs without In a business where customers are further gains in this area was relatively in complementary business spaces, we centre for a large publisher lies in the turnaround competence.
affecting competitiveness. The Company always seeking to derive a superior limited. On the contrary, the time had expect to provide a complete bouquet production segment, which accounts for
was faced with increasing requests for value proposition from their vendors, now come to aggressively increase of offerings that will strengthen our MPS’s core competence. Over time, the
performance guidance (which it declined we selected to increasingly allocate revenues. The biggest initiative in this proposition as one-stop service provider. Company has established its competence
to provide). work from higher-cost urban Indian regard comprised acquisitions of US Best of all, our acquisitions were made in moderating costs within this segment
How we performed in 2014-15
223.87 13.48% 42%
Revenues and
Raised growth Prudent
profitability
capital acquisition
(in H cr) Revenues in the Financial Rise in revenues in the Financial Moderating people costs from
MPS mobilised H150 cr through a QIP Even in a challenging environment, MPS prudently acquired only the
Year 2014-15 against H197.28 cr in Year 2014-15 to H223.87 cr 56 per cent of revenues in the MPS reported its fourth successive
in the Financial Year 2014-15, with customers, employees and brand – no
the Financial Year 2013-14 Financial Year 2011-12 to 42 per the express intention to acquire more year of profitable growth, with a higher hidden liabilities. This resulted in value
percentage increase in our profits
cent of revenues in the Financial companies and fast-track our growth. generation from these companies with
than the percentage increase in our
minimal gestation.
Year 2014-15 revenues.
06 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 07
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15
OUR
Geographic focus various delivery centres in India, who, in with prudent manning and productivity-
At MPS, we feel that the presence in turn, are plugged into employees across enhancing processes. The result is that
BUSINESS MODEL
the right geographies can be business- workstations. This seamless customer- revenues per worker increased from
critical. On the one hand, we expect to-workstation extension makes it H55,400 in the Financial Year 2011-12 to
to grow our marketing presence in possible to provide continuous customer H66,000 in the Financial Year 2014-15;
regions (North America and Europe) that assurance of projects status at all times, people cost as a proportion of revenues
are marked by the largest publishing identify probable bottlenecks and declined from 56 per cent in the Financial
companies and rising business costs inspire proactive course correction. The Year 2011-12 to 42 per cent in the
(hence the need for outsourcing), robustness of this model is showcased Financial Year 2014-15.
The story of MPS Limited can be transformation is threatening the For instance, our purchase cost for three where we can generate the largest in rising overall revenues and larger
Customer engagement
segregated into two parts – pre- existence of conventional companies, it is acquisitions cumulatively amounted to business volumes. We strengthened this revenues per customer.
acquisition and post-acquisition. opening new and exciting opportunities H15 cr, representing just 17 per cent of our geographic positioning through three At MPS, the basis of our customer
for those adapting to change. aggregate net cash flow from operating acquisitions in North America in the Core vendor engagement has extended far beyond
In the pre-acquisition phase of the
activities of H88 cr earned in the last two last two years. On the other hand, we At MPS, our objective is not merely to a wage arbitrage opportunity. In an
Company’s existence, MPS Limited was Focus years. Besides, the Company selected to expect to grow our presence in locations be a vendor, but to evolve into a core environment where our customers need
part of Macmillan UK . Globally, Macmillan At MPS, we are a focused player providing consciously moderate employee costs: (Dehradun, for instance) where it would vendor for large publishing companies. to adapt with speed to fast-changing
UK was acquired by Verlagsgruppe Georg services and products addressing the from 56 per cent of revenues in the be possible to deliver first-rate quality at This core vendorship would be more in environments arising out of the
von Holtzbrinck in 1999, following which growing needs of the global publishing Financial Year 2011-12 to 42 per cent of one of the lowest operating costs (people the form of an active partnership where convergence of the internet, mobility and
the latter company decided to disinvest industry. Over the years, this focus revenues in the Financial Year 2014-15. and space). The combination of the a multi-year engagement is underlined virtual interactivity, our services enhance
its Indian business in due course. The has strengthened our brand among The result of this conservatism has been two has helped create an opportunity by a collaborative ethos where a service their responsiveness. In an environment
Company was sold to the current customers and investors. a virtually negative working capital cycle, value chain that is translating into a provider like us is completely focused where customers need to become more
promoters of MPS Ltd in October 2011.
absence of debt on our books, moderate superior customer value proposition and on strengthening the business of our profitable, we have reduced operating
As a result, MPS Ltd inherited the multi- Sustainable growth
capital expenditure, attractive return attractive MPS profitability. customers rather than merely providing costs with the objective of passing this
decade knowledge capital of Macmillan At MPS, we believe we will endure as a on capital employed (81 per cent in the them with a service. We are happy to benefit to customers in exchange for
UK, which continues to be a defining business if we leave adequate value on Financial Year 2014-15) and growing free Offshoring model report that we had two major successes progressively larger multi-year offshoring
aspect of its business model. the table for our vendors, customers, cash from operating activities (H50.36 cr At MPS, we recognise that our major in this regard in 2014-15. We inherited volumes. In an environment where
In the post-acquisition phase, the employees and ourselves. A long- in the Financial Year 2014-15). customers are based in North America a core vendor relationship through our customers are rationalizing vendors, we
promoters of MPS Ltd invested specific termism guides our decision making. while our service delivery capabilities TSI acquisition; in another account, we seek to strengthen existing customer
priorities, such as moderating costs, We have invested in our business with Customer focus are based in India. We have selected to emerged as a core vendor through a relationships and mine deeper with the
strengthening revenues and enhancing the objective to enhance sustainability. At MPS, we are focusing on opportunities connect the two – customers and vendor multi-vendor appraisal process at a time objective to upsell and cross-sell and,
overall competitiveness. More specifically, This overarching objective is reflected in coming out of the 50 largest global – through an offshoring model adapted when the customer was rationalizing in doing so, carve out a larger share of
it identified guidelines on how it would every decision that we have taken – the publishing companies. These companies to the needs of our business. We have vendors. their spending. In a number of large
conduct business and how it would not, acquisitions, the need to enhance our provide volume and value assignments. deployed a customer interfacing team customers, we grew our presence from
laying the foundations of its business presence in North America, our overall They provide us with adequate room to in the US, the world’s largest market. Productivity focus one segment to three segments within
model (explained in this section). cost structure, the industry spaces that make a significant cost difference. They Their primary responsibility will be map At MPS, we recognise that as large a few years.
we have selected to be present in, and provide visibility and excellent reference emerging and existing customer needs, publishing companies strive to enhance
The enunciation of the business model our preference to remain extensively that can help widen the business. enhance customer confidence of our their viability, they will seek lower costs Multi-segment revenues
is important in the context of the under-borrowed. These decisions have The proportion of revenues from our presence in that region and continue from their vendors. The reality is that At MPS, we have selected to position
Company’s operating landscape. The helped us report profitable growth for, ten largest customers increased from communicating with customers about project realisations are declining. At MPS, ourselves as an end-to-end solutions
global publishing industry is passing the last four successive years. 75 per cent per cent revenues in the evolving competencies within our we are offering customers with a superior provider. We believe that this positioning
through a decisive transformation. As Financial Year 2013-14 to 81 per cent Company. Members of this customer price-value proposition, wherein we are achieves a number of business
Liquidity priority
educational delivery evolves from the in the Financial Year 2014-15. However, interfacing team are even present in compensated by larger projects from advantages: primarily, it strengthens
conventional and printed format to At MPS, we pursue a resource-light the Company also expects to leverage the US, and are serviced by a different our existing customers. Besides, we have our brand in the international markets,
virtual and online equivalents, there is approach model, which is reflected in its technology competence to address team in the US who possess a real-time reinforced our competitiveness through it provides clients the assurance that
a greater priority for business models our decision to buy or rent space, our the growing needs of a number of small understanding of our service delivery the extension of our presence in lower we possess complete competencies, it
to completely transform. Even as this terms of trade, our cost management publishers. centres in India. This second US team cost locations (Dehradun accounting provides them with convenience should
and the prudent price for acquisitions. for 915 of our 2792 employees) coupled they select to move us from one business
works extensively with a team across our
The validation of our business model The tangible results of our business model

12% 45% 63% 81% 127.42 223.87 (8.81) 61.44
Return on Return on capital Return on capital Return on capital Revenues, FY10 Revenues, FY15 Profit after tax, Profit after tax,
capital employed, employed, in employed, employed, in Financial (in H cr) (in H cr) FY10 (in H cr) FY15 (in H cr)
from Jan 2011- Financial Year in Financial Year 2014-15 (excluding
Mar 2012 2012-13 Year 2013-14 funds raised in the QIP)
(Standalone) (Standalone) (Consolidated) (Consolidated)
08 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 09
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15
FINANCIAL
segment to another without needing justify their place within our offerings matter of prudence, we seek to acquire
to change vendors, de-risks us from a because they complete our bouquet only those companies where the skill
temporary decline in a probable market and as business environments evolve, sets are complementary to ours, where SUMMARY_
and provides us with a diverse revenue their relevance could increase. Journals the acquisition enjoys the approval of
mix (services, annuity and products). accounted for the largest revenue slice longstanding customers, indicating
at 33 per cent in 2014-15, a prudent that they would continue to work with
Technology emphasis
balance of value and volume, followed the acquired companies following Revenue (H cr)
At MPS, we recognise that as downstream by books at 26 per cent and MPS North management transition. We acquire
customer environment evolves from America, LLC (cumulative mix of our with the perspective that the end result 2011-12 191.00
conventional print to the virtual media, acquired companies) at 9 per cent. We will be shareholder value-accretive. We 2012-13 163.99
a number of legacy capabilities will need are particularly optimistic that MPS focus on the right price to be paid that 2013-14 197.28
to be replaced with technology-enabled Technologies could far outgrow its 8 per can accelerate the break-even point of 2014-15 223.87
offerings. Over the years, the Company cent share of revenues in 2014-15 across the acquisition using our knowledge
invested in this technology space the foreseeable future. and operational scale. We have acquired EBIDTA (H cr)
through the creation of a distinctive all companies through accruals (no
strategic business unit. The Company’s Acquisitions debt). We acquired only the brand, 2011-12 26.54
strong suite of SAAS (software At MPS, there is a perceptible shift in employee profile and customer list of the 2012-13 47.90
as a service) comprises workflow our sector as companies seek to move acquisition target and not the Company, 2013-14 69.63
management (MPSTrak), editing and project responsibilities from in-house to liberating the Company from the risk 2014-15 91.12
automated composition (MPS DigiCore) outside service providers. There could of hidden liabilities. Besides, we do not
and business analytics (MPS Insight). be two ways of addressing this growing acquire with the objective to move jobs Post-tax profit (H cr)
The creation of technology-enabled offshoring quantum: respond organically to India; on the contrary, we select to 2011-12 10.87
platforms will address a growing as and when the Balance Sheet permits, retain the teams within the acquired 2012-13 31.89
market for small publishers, evolving or restructure the Balance Sheet, acquire companies, making it possible to protect 2013-14 42.14
the Company towards higher margins companies with complementary last-mile customer familiarity. 2014-15 61.44
and the complex technology end, capabilities and grow size/capabilities
strengthening the brand. faster. At MPS, we have selected the Financial integrity
EBIDTA margin (%)
latter strategy. This strategy works well At MPS, we recognize that a robust
Value-addition
for us; the management possesses a Balance Sheet represents a credible 2011-12 13.90
At MPS, one of the critical drivers of competence in the identification of foundation that eventually translates 2012-13 29.21
our success is our revenue mix. We do prudent targets and turning companies into credible stakeholder value. The 2013-14 35.29
not wish to be present in spaces where around. In 2015, we made a QIP, Company enjoys a return on equity of 2014-15 40.70
we can derive the largest volumes; we mobilized H150 cr and expect to acquire 58 per cent (2014-15, without factoring
wish to be present in spaces that can companies with an attractive customer the late-year QIP mobilization of H150 PAT margin (%)
generate an optimal mix of volume and mix, market presence and capabilities. cr), which is considerably higher than
value. However, we recognise that some We expect that this inorganic approach what shareholders would have expected 2011-12 5.69
business segments may be presently will make it possible for the Company to to generate from alternative investment 2012-13 19.45
low on the volume-value matrix, but grow faster over the next few years. As a forms. The Company has zero debt. 2013-14 21.36
2014-15 27.44
1Our first phase 2Our second phase 3Our third phase 4Our fourth phase Cash profit (H cr)
(2011-12) (2012-13) (2013-14 and 2014-15) (2015 -16 onwards)
2011-12 21.55
2012-13 39.25
(cid:131) The current promoters (cid:131) Rationalised senior (cid:131) Acquisition of three (cid:131) Consolidation of
2013-14 47.43
acquired the Company management layer. companies in North America acquired competencies
2014-15 66.89
in October 2011. (cid:131) Strengthened (cid:131) Embarked on aggressive and add value to our
(cid:131) Loss making position Dehradun operations revenue expansion focus. client offerings.
ROCE (%)
in 2010. (cid:131) Rationalized wage (cid:131) Strengthened revenue visibility (cid:131) Mine customer
(cid:131) Focused on internal cost as a proportion of through multi-year contracts. accounts deeper. 2011-12 12
restructuring. revenues. (cid:131) Increased customers and (cid:131) Focus on revenue 2012-13 45
(cid:131) No major Capex (cid:131) EBIDTA margin customer mining. acceleration and higher 2013-14 63
incurred strengthened from 13.90 (cid:131) Revenues from top ten margins. 2014-15 81
(cid:131) Company reported per cent in the Financial customers increased - 75 (cid:131) Increase our
profit in the Financial Year 2011-12 to 29.21 per cent in the Financial Year technology-intensive Earnings per share (H)
Year 2011-12 per cent in the Financial 2013-14 to 81 per cent in the platform offerings
2011-12 6.46
Year 2012-13. Financial Year 2014-15. (cid:131) Focus on inorganic
(cid:131) EBIDTA margin strengthened growth with 2012-13 18.96
2013-14 25.05
from 29.21 per cent in the complementary
Financial Year 2012-13 to 40.70 capabilities 2014-15 36.38
per cent in the Financial Year
(Note: ROCE for the Financial Year 2014-15 is calculated excluding funds raised from QIP.
2014-15.
2011-12 data is for 15 months from January 1, 2011 to March 31, 2012.
2011-12 and 2012-13 are standalone data and 2013-14 and 2014-15 are consolidated data.)
10 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 11
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15
MANAGEMENT DISCUSSION
which has added to its range of services Risks and concerns cent, from H194 cr to H230 cr (including
for school education publishers. MPS In any business, risks and opportunities revenue related forex loss/gain), PBT
AND ANALYSIS
North America, LLC, also acquired the are inseparable. The Company’s Directors increased from H64 cr to H85 cr (33
business of New York-based Electronic and management keep this in mind per cent), (excluding an exceptional
Publishing Services Inc. in October, while taking decisions to ensure that income of H8 cr). The Company raised
2014, to add content creation and other stakeholders are not adversely affected. no debt, met its acquisition and capital
capabilities in the higher education The Company’s Risk Management expenditure requirements through
space. More recently, MPS North America, team comprises various departmental internally generated funds, and also paid
LLC, acquired the business of TSI Evolve heads, who meet regularly to identify an enhanced dividend of H22 per share
Global economic overview large number of suppliers with an annual strong focus on technology, workflow Inc, which strengthens the Company’s processes that are exposed to risks, (H17 per share in the previous year).
The Financial Year 2014-15 witnessed revenue of under H50 cr, and suppliers management, and high-quality content position in the reading segment of the determine mitigation strategies to
Material developments in the
a slowdown in the global economy. in the H50-200 cr annual revenue range creation, production, transformation, school education market. counter these risks and closely monitor
Human resources / Industrial
Slower growth in the developed make up the middle of the pyramid. and delivery services supplied from their implementation. These have been
In addition to traditional content- relations
economies was accompanied by Global publishers have seen many multiple regions. Indeed, the publishing discussed in the risk management
processing services, MPS Limited has MPS saw a significant increase in
moderated GDP growth in the emerging external factors impacting their business services companies of tomorrow with full section of the Annual Report.
a strong suite of SAAS (software as a manpower at Dehradun, where the
economies. The US and the UK improved models. On the STM journals side, open spectrum capabilities will increasingly
service) offerings including workflow Internal control systems headcount is now 915. During the last
their economic outlooks on the back of access is being embraced by many clone the publishing clients that they
management (MPSTrak), editing and The Company has well-documented three years, an experienced team of
accommodative monetary policies and publishers, resulting in a larger volume serve.
automated composition (MPS DigiCore), policy guidelines, defined authority around 50 people, transferred from
a significant reduction in energy costs. of articles being published even as Company overview and business analytics (MPS Insight). levels, and an exhaustive budgetary ADI BPO Services Limited to MPS, has
The euro zone witnessed a significant subscription revenue remains under MPS Limited provides content creation, These software services help MPS add control system to ensure adequate been, supplemented by the transfer
slowdown with a fall in aggregate pressure. On the higher education production, transformation, and more publishing customers beyond its internal checks and control levels. The of key employees from other MPS
demand and concerns over Greek side, the decline of print revenue and technology services to global academic, traditional customer base of large global Company has implemented SAP, an locations. There was large-scale hiring
bankruptcy. sluggish revenue growth on the digital scientific, and educational publishers. publishers such as Macmillan, Elsevier, ERP System, to have adequate internal of experienced talent as well as hiring of
The spike in commodity prices that side has seen publishers struggle with The Group has a team of over 2,850 Cengage Learning, and McGraw-Hill. control. freshers trained in well-equipped facilities
started in early 2000 saw a major waning their business models. And the school employees based at offices in Bengaluru, at Dehradun. As a result, MPS developed
in the Financial Year 2014-15 with declines publishing market remains cyclical. Chennai, Delhi, Gurgaon, Noida, and MPS Limited is committed to providing The Company appointed Grant Thornton a broad spectrum of capabilities at
in the prices of major commodities. On the trade side, self-publishing has Dehradun in India and at Portland (OR), quality products to its customers and has as the Internal Auditors for the Financial Dehradun for books, journals, digital
Crude prices nosedived during the past made with Amazon and other platforms Orlando (FL), Durham (NC), Effingham received various quality accreditations, Year 2014-15. The Internal Audit function services, and technology. We anticipate
five years with prices declining in excess supporting self-publishing. (IL), and Champaign (IL) in the US. including ISO 9001:2008 Quality ensures that the system of recording and further increases in the headcount at
of 50 per cent within a span of mere five In response to market dynamics, there Management System for providing reporting, internal controls and checks, Dehradun. At the same time, we continue
months. It is expected that this trend will has been a flurry of restructuring Established as an Indian subsidiary of full service prepress and content safeguarding and protection of assets to leverage our experienced manpower
catalyse global economic revival and activities at the publishers end: the Macmillan (Holdings) Limited in 1970, transformation services for publishers in time are adequate and proper and at Bengaluru, Chennai, Gurgaon, Delhi,
lead to significant gains for oil-importing revival of HMH through a chapter 11 the Company has evolved over its 45 of periodicals and ISO/TEC 27001:2005 as mandated by the Audit Committee. and Noida.
nations. process, the purchase of McGraw-Hill year history to become one of the most information security system for providing The Internal Auditor reports to the Audit
experienced and dominant players in the publishing solutions worldwide Committee. The manpower in our US offices increased
Going forward, global growth is likely to Education by Apollo, the restructuring of publishing services outsourcing space. to publishers, including support The Management and the Audit to over 50, all highly experienced
accelerate to around 3 per cent in 2015 debt at Cengage through a chapter 11 The equity shares of the Company are departments. Committee of the Board review the publishing professionals. This gives
and touch around 3.3 per cent by 2017. process, and the merger of Penguin and listed on BSE and NSE. In October 2011, findings and recommendations of the us added depth with experienced
ITnhdeu gslotrbya sl tpruubcltisuhrieng sector RSiamnidlaormly, Hoonu set.he publishing services tBhPeO CSoemrvpicaensy Liwmaitse da cfqroumire dM abcym iAllaDnI Ma PQSIP Loimf Hit1e5d0 hcra st hraetc seanwtl yp acrotimcippalettioedn irnetveiernwa lt hea uaddiet quteaacmy o f ainntde rnpael rcioodnitcraolllsy, ceuxpsteocmt teor- lfeavceinrgag ree stohuisr ceevse nin m thoere U aSs. Wwee
Publishing is a global business estimated supplier side, MPS was purchased by ADI (Holdings) Limited. Mr. Nishith Arora is from HDFC Mutual Fund, Goldman internal audit, and management control go along.
to be in excess of USD 500 billion. BPO Services Limited from Macmillan, the largest shareholder and promoter of Sachs, and other investors. This will allow systems so as to be in line with changing Industrial relations remained cordial
However, the publishers that MPS has Aptara was purchased by Ienergizer, an ADI BPO Services Limited. The Company’s the Company to address acquisition requirements. throughout the year. The aim continues
traditionally worked with operate in the 80 per cent stake in SPI was purchased experienced and talented team has opportunities and benefit from the to be to train, develop professional
global academic and educational market by CVC Capital Partners from Philippines responded favourably to the new consolidation taking place in the Financial performance with respect excellence, and improve the competence
segments that are together estimated Long Distance Company, and Lumina management and direction. The core publishing services space. to Operational Performance level of employees. The number of
to be around USD 100 billion. India is Datamatics was created by folding management team, including Chairman, The Company performed well during people employed by MPS increased to
estimated to receive an estimated USD Datamatics data conversion services into Executive Directors, and the Senior the Financial Year 2014-15. While 2792 during the year.
1.2 to USD 1.5 billion of outsourced PMG. The next round of consolidation has Management, are working in tandem consolidated revenue grew 18.5 per
work from publishers, and is by far the started with MPS purchasing Element, to sustain the growth momentum by
largest supplier. The Indian publishing EPS, and TSI and assembling funds for leveraging on the Company’s wide range
outsourcing business has grown at 15 further acquisitions. of services, technology capabilities, and Economic and Industry Data Links
per cent per year over the past 10 years All these changes mean that some cost competitiveness. Global Outlook for Growth of GDP 2015 - 2025 https://www.conference-board.org/data/globaloutlook/index.cfm?id=27451
as per various industry estimates and publishing services companies will Global Business Outlook – Region wise https://www.conference-board.org/data/globaloutlook/
MPS Limited incorporated a wholly
this growth momentum is expected to emerge stronger through the process The Book Business, Worldwide http://www.internationalpublishers.org/images/reports/2014/IPA-annual-
owned subsidiary, MPS North America,
be maintained in the coming years as and be the market leaders of the future. report-2014.pdf - Refer Page 13
LLC, in USA in May 2013. MPS North
publishers outsource additional services The successful publishing services Title Production across countries and continents http://www.internationalpublishers.org/images/reports/2014/IPA-annual-
America, LLC, has made three acquisitions
to their Indian suppliers. companies are likely to be end-to- report-2014.pdf - Refer Page 16
in the education publishing services
end players servicing the needs of World’s 56 Largest Book Publishers 2014 http://www.publishersweekly.com/pw/by-topic/industry-news/financial-reporting/
The supply base in India is fragmented, space in the last two years. MPS North
the academic, educational, and self- article/63004-the-world-s-56-largest-book-publishers-2014.html
with just a few suppliers with annual America LLC acquired the business of
publishing market segments with a
revenue in excess of H200 cr. There are a Orlando-based Element LLC in July, 2013,
12 POISED TO CAPITALISE ON CORPORATE01 MANAGEMENT12 FINANCIAL74 MPS LIMITED 13
NEW OPPORTUNITIES_ OVERVIEW REPORTS STATEMENTS ANNUAL REPORT ANNUAL REPORT 2014-15