2010

Smita N Wankhede PGPM/0911/044

2009-2011

CMC Limited

International

Academy

of

Management

&

Entrepreneurship

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CMC Limited INTRODUCTION

The systems integration (SI) strategic business unit (SBU) develops software and offers services like business process re-engineering study, systems study, system design, systems integration, software maintenance, training, handholding support, turnkey project management, etc.

CMC is one of the leading systems integrators in the country. SI SBU has a successful product base in a variety of application areas, and has consolidated its position in the domestic market through its turnkey solutions.

CMC has established application specific development centres (ASDCs) to bring thrust and focus to this area. Key application areas in the western region are securities, insurance, banking, power and shipping.

CMC's strong infrastructural base includes in-house development platforms like Tandem, IBM, HP, Sun, Digital, NCR and the nationwide public data network, Indonet (now called ITES).

CMC keep pace with the very latest technology advancements and have set up competency centers in technology areas like Java, e-Commerce, enterprise resource planning (ERP) and pervasive computing. Its extensive industry knowledge, infrastructural strengths and wide spectrum of information technology skills has enabled CMC to execute a number of significant projects in different economic sectors. These range from complex feasibility studies, hardware installation and support, to the design and implementation of total turnkey solutions.

Globalisation of the products and services is a major thrust area for CMC. Our subsidiary, CMC Americas (formerly Baton Rouge International), a US based company, serves as a front-end for CMC's thrust towards globalisation and business development in North America. It provides comprehensive solutions for banking and finance. Other geographical areas are handled by CMC's international operations SBU, including offshore and onsite projects, professional services and IT solutions in niche areas.

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HISTORY

CMC was incorporated on December 26, 1975, as the 'Computer Maintenance Corporation Private Limited'. The Government of India held 100 per cent of the equity share capital. On August 19, 1977, it was converted into a public limited company.

In 1978, when IBM wound up its operations in India, CMC took over the maintenance of IBM installations at over 800 locations around India and, subsequently, maintenance of computers supplied by other foreign manufacturers as well. Taking over the activities of IBM in India, including many of its employees, helped the company to imbibe a service-oriented culture. This is demonstrated by our long-standing customer associations and our ability to provide high-quality and reliable service.

In 1980, we perceived the need for total IT system solutions in India, and acquired a 'solutions' orientation. We aligned our focus with the government's thrust on IT development activities. A significant milestone in our transition from a hardware maintenance company to a complete end-to-end IT solutions provider was 'Project Interact' (International Education and Research for Applications of Computer Technology), a UN project involving design, development and systems-engineering of real-time, computer-based systems dedicated to applications in the areas of power distribution, railway freight operations management, and meteorology.

As we evolved along the value chain, CMC forayed into systems integration, interfacing, installation, commissioning, software development, as well as education and training, on a national basis. Our R&D facility was set up in 1982, to undertake competency development in niche areas in the frontiers of technology, to provide us the cutting edge. Today, our R&D facility is housed in our Hyderabad campus, and develops advanced solutions in areas such as real-time systems, embedded systems and pervasive computing.

To reflect our diversified business activities, we renamed ourselves 'CMC Limited', and obtained a fresh certificate of incorporation dated August 27, 1984.

Following a spurt in the global demand for IT services in the early 1990s, particularly in the United States, we decided to expand our operations and market our product and service offerings in these markets. Towards

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this end, in 1991, we acquired Baton Rouge International Inc, USA (it was subsequently renamed CMC Americas, Inc, in 2003), one of the first cross-border acquisitions by an Indian IT firm.

In 1992, the Indian government divested 16.69 per cent of CMC's equity to the General Insurance Corporation of India and its subsidiaries who, in turn, sold part of their stake to the public in 1996. In 1993, CMC's shares were listed on the Hyderabad Stock Exchange and the Bombay Stock Exchange (BSE).

To service and develop our clientele in the UK and Europe, we opened a branch office in London, in 2000. The next year, the government divested 51 per cent of CMC's equity to Tata Sons Ltd, through a strategic sale, and CMC became a part of the Tata group.

In line with our strategy of offering our products and services globally, in 2003, we opened a branch office in Dubai to tap the hitherto unexplored markets of West Asia and Africa.

In 2004, the government divested its remaining 26.5 per cent stake in CMC to the public.

MILESTONES

2005

CMC Centre, Hyderabad, Southern Region (Bangalore, Chennai & Hyderabad), Northern Region (Delhi, Lucknow, Bhopal, Indore &

Raipur) and Eastern Region are assessed SEI CMM Level 5 for Systems Integration

DQ Rates TCS-CMC as No. 1 in IT Services

CMC signs The Brand Equity-Business Promotion (BE-BP) agreement with Tata Sons Ltd. This agreement is an institutionalised process in the

Tata Group to drive relationship between Tata Sons and the signatory company. It is to collectively and cooperatively promote the TATA

BRAND which would match the brand equity of international brand names

CMC in line with TCS' business processes and practices implemented Ultimatix. Through the Ultimatix portal, all applications (Oracle Finance

& Oracle HR modules) are accessible from one single window.

BOLT, an online trading system, developed and implemented by CMC in March 1995 for BSE, completed 10 years of operations

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2004

CMC ties up with Xilinx (the world's largest supplier of programmable logic solutions) to establish Xilinx' 1st development center in Hyderabad

called Xilinx-CMC India Development Center (XIDC)

The Government of India divested its remaining 26.5 per cent stake in CMC

CMC awarded the Gold certification from Cisco Systems, for customer satisfaction, training, support and specialization

CMC's VOICE project adjudged the first runner-up in the best eGovernance projects category at the CSI-Nihilent eGovernance Awards

2003-04

2003

Renamed subsidiary, BRI, as 'CMC Americas, Inc'

Opened Dubai Branch office

CMC completes the 'India Census 2001' project of scanning and file creation of 228 million household forms

2002

CMC Centre awarded the ISO 9001:2000 Certificate by STQC. Certification services for a period of three years

Northern region division of our systems integration SBU certified ISO 9001:2000 by STQC, for a period of three years

Western region (SI) assessed SEI CMM Level 5 (quality level 5 of the capability maturity model for software, version 1.1 of the Software

Engineering Institute, Carnegie Mellon University, USA)

Eastern region (SI) assessed SEI CMM Level 4

Tata Business Excellence Model (TBEM) adopted

2001

Tata Sons Limited acquired a 51 per cent stake. CMC ceased to be a public sector enterprise. The board of the company was reconstituted

2000

Opened London branch office

1995

Reorganisation of business into five strategic business units (SBUs)

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1993

CMC listed on the Indian bourses

1992

The Government of India partially divested its holdings in CMC

1991

Acquired Baton Rouge International Inc, USA (BRI, later renamed in 2003 as CMC Americas, Inc) to focus on international markets

1986

Aligned business focus along vertical markets like transportation, mining, power and banking

Implemented project IMPRESS, an online passenger reservations system for the Indian Railways

Set up Indonet — a countrywide data network (renamed as ITeS)

1985

First foray into biometrics, conceptualising an automatic fingerprint recognition system

1984

Diversified our activities to include turnkey projects, IT education and software development. Renamed ourselves as 'CMC Limited'

1982

Set up a research and development facility to develop competencies in the frontier areas of technology

1981

Commenced work on Project Interact, a UN-funded project

1978

Took up the maintenance of 800 IBM installations over India. Initiated training courses, predominantly for customers

1977

Became a public limited company

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Business Model

Organization Structure

The business of CMC is organized around four strategic business units. The first is the customer services division, where the company provides services like infrastructure development and management, networking management, third party maintenance and networking consultancy.

The systems integration division is involved in activities like software development, maintenance and systems consultancy. The ITES division has offerings like data management services, facilities management, web design, hosting and electronic data interchange.

Finally, the education & training division offers courses in IT through the company's own and franchisee centers.

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Marketing Analysis

1.Govt. Dominated market _ Slow decision-making process 2.Sluggish growth in Govt. Sector 3.Competition from local PC manufacturers 4.Emergence of new competition 5.Non-Conventional payment models - e.g. Lease, BOOT, Rental 6.ASP model 7.pricing pressure - depleting margins Technology _ High multiplier effect on CMC’s share in total business segment growth _ Embedded systems _ Remote Infrastructure Management System(RIMS) _ BPO/IT Outsourcing _ Network Operating Centre (NOC)

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PRODUCT PROFILE

1. Banking and finance-

ALM: Asset-liability management

BRAINS 2000: Branch automated information system

TC/4: Total concept banking system

Treasury management system (domestic)

Treasury management system (forex)

BOLT: BSE's online trading system

DTSS: Derivatives trading and settlement system

VECTOR: Versatile engine for centralized trading and online reporting

VeDAS: Versatile depository and accounting system

2. e-governance –

Healthcare

Law enforcements

Water resource management

Finance

Power utilities

General administration

3. Insurance

4. Mining

5. Shipping

6. Power

7. Transportation

8. Embedded systems

9. e-Commerce

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PKI Payment systems

Other e-Commerce products

Services and Solution

ITES IT-enabled services (ITeS) strategic business unit (SBU) targets at offering diverse data management and processing services. INDONET, formerly called the first public data network in India, was established in 1980s chiefly to offer email and online services. The SBU now provides a complete business process outsourcing solutions to its diverse range of clientele. BPO Areas of Business Process Outsourcing that CMC Ltd expertise in:

Data Processing and Workflow Solutions Data Evaluation eRecruitment Processing services Digitization and Forms Processing - using OMR/OCR/ICR

solutions Data Warehousing Data Migration National e-Governance projects Managed Data services and hosting services PKI based digital signatures and security solutions Electronic Data Interchange (EDI services)

Target Customers

Public / government sector

Bangalore Development Authority (BDA)

Bank of Baroda

Bharat Petroleum Corporation Limited (BPCL)

Bharat Sanchar Nigam Limited (BSNL)

Defence and Research Development Organisation

Delhi Development Authority (DDA)

Department of Space, Government of India

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Election Commission of India

Gas Authority of India Limited (GAIL)

Ghaziabad Development Authority (GDA)

Indian Meteorological Department

Indian Oil Corporation Limited (IOCL)

Indian Police Services

Indian Railways

Institute for Development & Research in Banking Technology (IDRBT)

Lok Sabha (lower house of the Indian Parliament)

National Insurance Company (NIC)

New India Assurance Company (NIA)

New Okhla Industrial Development Authority (NOIDA)

Northern Coalfields Limited (NCL)

Oil & Natural Gas Corporation (ONGC)

Registrar General of India

Reserve Bank of India

State Electricity Boards all over India

United India Insurance Company (UIIC)

Private sector

Bombay Stock Exchange (BSE)

Cognizant Technology

Kodak India

National Stock Exchange (NSE)

OTTO India

Philips Software Centre

International customers

CDBL, Bangladesh

Digital Equipment Corporation, USA

Kuwait Stock Exchange

London Underground Limited, UK

Mauritius Police

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Positioning Strategy

Ministry of Education, Sri Lanka

National Bank of Bahrain

Port of Bremerhaven, Germany

Port of Felixstowe, UK

PTP, Malaysia

SUN Microsystems, USA

Tanzania Police

Toshiba Electronics

TRW, Germany & UK

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CMC Competitors Analysis

Mar '09 Jun '09 Mar '09 Mar '09 Mar '09

Application Of

Funds

Gross Block 159.82 234.1 55.2 4,757.05 7.06

Less: Accum.

Depreciation

77.76 83.47 0 2,317.42 2.06

Net Block 82.06 150.63 55.2 2,439.63 5

Capital Work in

Progress

14.87 9.5 10.28 167.15 0.05

Investments 128.06 276.1 320.93 277.01 10.08

Inventories 15.38 888.26 273.45 629.67 25.03

Sundry Debtors 227.25 1,498.26 645.02 351.28 51.86

Cash and Bank

Balance

33.7 198.67 55.96 62.75 12.69

Total Current

Assets

276.33 2,585.19 974.43 1,043.70 89.58

Loans and 386.75 315.17 78.56 393.69 25.23

Column1 Column2 Column3 Column4 Column5 Column6

Balance Sheet in Rs. Cr.

CMC HCL Info Redington Moser

Baer

Spice

Mobiles

Mar '09 Jun '09 Mar '09 Mar '09 Mar '09

Sources Of Funds

Total Share Capital 15.15 34.24 77.87 168.31 22.39

Equity Share Capital 15.15 34.24 77.87 168.31 22.39

Share Application

Money

0 0 0 0 0

Preference Share

Capital

0 0 0 0 0

Reserves 367.36 1,098.12 536.52 1,515.07 54.31

Revaluation Reserves 0 0 0 0 0

Networth 382.51 1,132.36 614.39 1,683.38 76.7

Secured Loans 0 101.85 156.82 1,487.53 1.72

Unsecured Loans 34.49 125 133.09 854.88 0

Total Debt 34.49 226.85 289.91 2,342.41 1.72

Total Liabilities 417 1,359.21 904.3 4,025.79 78.42

CMC HCL Info Redington Moser

Baer

Spice

Mobiles

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Advances

Fixed Deposits 0.32 4.32 0 371.41 43.3

Total CA, Loans &

Advances

663.4 2,904.68 1,052.99 1,808.80 158.11

Deffered Credit 0 0 0 0 0

Current Liabilities 246.72 1,899.81 493.39 531.09 87.23

Provisions 224.65 81.89 41.71 135.72 7.61

Total CL &

Provisions

471.37 1,981.70 535.1 666.81 94.84

Net Current Assets 192.03 922.98 517.89 1,141.99 63.27

Miscellaneous

Expenses

0 0 0 0 0

Total Assets 417.02 1,359.21 904.3 4,025.78 78.4

Contingent

Liabilities

37.83 57.18 517.27 743.92 7.46

Book Value (Rs) 252.49 66.14 78.9 100.02 10.28

CMC-SWOT

Strengths _ Business model, combines both Hardware maintenance, IT services & IP portfolio for international and domestic markets _ Successful transition from hardware maintenance provider to a solution provider of full cycle complex projects _ Multi-faceted experience _ Leverage on domain skills to provide IT-centric solutions _ Largest third party Maintenance Company in India _ Repository of ready packages/software that can be replicated _ Large client base, serviced over the years, that can be efficiently leveraged for greater wallet share through cross-selling _ Trusted and Respected brand – Combination of ethics & culture of the TATA group and positive PSU legacy

_ Opportunities _ Growth through value addition and synergies _ Surging domestic IT demand _ Potential for leveraging domestic skills in international market and with private sector clients _ Leveraging product suites in various projects _ Platform to launch and bid for large end-to-end IT

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Weaknesses _ Revenues mainly from price-sensitive domestic business _ High exposure to government entities (Railways, Ports, Defence, Customs) _ End-user industries and complex nature of projects lead to long sales cycles _ Pressure on employee costs _ CS/SI businesses witnessing emerging models with higher capital intensity

_ Threats _ Global IT companies entering Indian market expected to intensify competition _ Revenues dependent on IT spending budgets

CMC- VALUE PROPOSITION

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VALUE CHAIN

SUPPORT NETWORK-

_ NEWGEN & Fortune Informatics - Document Management and work flow solutions _ Top Image Systems, Israel - ICR / OCR imaging solutions _ Inspira Sw - Asset and Infrastructure Management _ DPS Technologies - CAD / CAE / GIS Solutions _ Newtec, Belgium - 2 way satellite based digital video broadcast Solutions _ TISL - Datacenter management _ Tata Net - Satellite based IP network _ Data strip, UK - card based identity solutions

QUALITY MANAGEMENT

Quality is a factor that is today taken as assumed. But, at CMC Limited, we do not take anything for granted. We are committed to creating value for customers through our Information Technology services and products, and we assure this through the quality systems that we have built into our organization. CMC subscribes to the Tata Quality Management philosophy and a quality management system in line with ISO 9001.

This is the way in which we have built global quality:

We have evolved quality measures for all life-cycle phases of services and products.

We have set up systems, procedures and standards to minimise errors, defects and rework, and to continually improve quality levels.

We make decisions based on quality considerations.

Certification of quality standards In its pursuit of excellence, the company has developed a quality management system in line with ISO 9001:2000 standards and implemented it at the CMC R&D Centre in Hyderabad, India.

In June 2002, the Hyderabad R&D Centre was awarded the coveted ISO 9001 certificate for three years by STQC certification services , for its application-specific development centres — the international systems group, ports and cargo, and research and development. The scope of the

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certification covers analysis, design, development, testing, customisation, installation and maintenance of general-purpose or custom-built software, embedded systems and services, including on-site consultancy services.The certification has been renewed in June 2005 for a period of three years. In September 2002, our northern region (system integer) operations received an ISO 9001:2000 certificate from STQC for a period of three years. The scope of this certification covers software design, development, maintenance and system integration, including turnkey projects.

Our western region (Systems Integration) operations have been assessed at SEI CMM Level 5 (level 5 of the capability maturity model for software, ver 1.1 by the Software Engineering Institute, Carnegie Mellon University, USA).

Our CS SBU has in place a process for continuous enhancement of skill levels of its staff, through certifications in all areas of service offerings, including technology certifications for HP, Cisco, Unix, Oracle, etc.

In January 2005, two of the company's units, the Hyderabad R&D Centre and Southern Region and in December 2005 Northern and Eastern Region Systems Integration Business Unit were assessed at Level 5 of the Capability Maturity Model (CMM) of the Software Engineering Institute (SEI), at Carnegie Mellon University, Pittsburgh, PA, USA.

All our delivery centres are targeted to achieve CMMI compliance.

Quality fraternity CMC is a member of the Confederation of Indian Industry (CII), and takes part in developing and propagating nation-wide total quality management (TQM) understanding and practice. The training programmes and seminars conducted by CMC professionals provide an opportunity for sharing experience and learning more about quality methods, with co-practitioners.

Business excellence We have adopted the Tata Business Excellence Model (TBEM) as a framework for achieving organisational excellence. The framework is a holistic approach to excellence in management practices and is based on the Malcolm Baldrige award process for companies in the US. Companywide awareness programmes have been initiated and various internal assessors have been qualified by Tata Quality Management Services (TQMS).

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CORE COMPETENCIES

1. Banking, finance and insurance 2. Stock exchanges and securities industries 3. Ports and cargo 4. Power 5. Fingerprint identification systems 6. Mining applications

FINANCIAL STATEMENT

Balance sheet as on March 31, 2009

Schedule

ref

Year ended

31.3.09

Year ended

31.3.08

SOURCES OF FUNDS Rs./000s Rs./000s

1. SHAREHOLDERS' FUNDS

(a) Share Capital 1 151,500 151,500

(b) Reserves & Surplus 2 3,673,649 2,883,804

3,825,149 3,035,304

2. LOAN FUNDS

(a) Secured Loans - - -

(b) Unsecured Loans 3 344,940 289,345

4,170,089 3,324,649

APPLICATION OF FUNDS

3. FIXED ASSETS 4

{a) Gross Block 1,598,209 1,450,420

[b] Less:Depreciation 777,611 765,619

[c] Net Block 820,598 684,801

(d) Capital Work in Progress 148,680 162,709

4. INVESTMENTS 5 1,280,601 1,038,098

5. DEFERRED TAX ASSETS

(See note 17) 29,149 36,088

6. CURRENT ASSETS,

LOANS & ADVANCES

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(a) Inventories 6 153,792 198,687

(b) Sundry debtors 7 2,272,471 2,235,268

(c) Unbilled revenues 989,737 1,099,459

(d) Cash and bank balances 8 340,236 234,240

(e) Loans and advances 9 1,107,232 933,270

4,863,468 4,700,924

7. Less : current liabilities and

provisions 10

(a) Current Liabilities 2,358,685 2,683,702

(b) Provisions 613,722 614,269

2,972,407 3,297,971

8. NET CURRENT ASSETS 1,891,061 1,402,953

4,170,089 3,324,649

Profit and loss account for the year ended March 31, 2009

Schedule ref Year ended 31.3.09

Year ended 31.3.08

Rs./000s Rs./000s

INCOME

1. SALES AND SERVICES 11 8,204,547 9,771,947

2. OTHER INCOME 12 198,092 118,957

8,402,639 9,890,904

EXPENDITURE

3. OPERATING AND OTHER EXPENSES

13 7,014,170 8,637,447

4. DEPRECIATION 4 92,949 78,690

5. INTEREST(net) 14 18,799 3,623

7,125,918 8,719,760

PROFIT BEFORE TAX 1,276,721 1,171,144

6. PROVISION FOR TAXES

- Current income tax 197,839 272,769

- Deferred income tax 6,939 1,391

- Fringe benefit tax 16,225 14,749

PROFIT AFTER TAX 1,055,718 882,235

7. BALANCE BROUGHT FORWARD FROM

PREVIOUS YEAR 2,705,252 2,106,213

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2,705,252 2,106,213

Amount available for appropriations

3,760,970 2,988,448

8. APPROPRIATIONS

(a) General Reserve 105,572 88,224

(b) Proposed Dividend 227,250 166,650

(c) Tax on Proposed Dividend

38,621 28,322

(d) Balance carried to Balance Sheet

3,389,527 2,705,252

FUTURE OUTLOOK AND INITIATIVES

i. Company will continue to develop competence in identified areas to keep pace with these fast changing technologies. This will help the Company to retain its technology edge and agility to meet market requirements in increasingly competitive situation. ii. Company will also develop solutions for various market segments integrating these technologies. More specifically some of key solution.

INITIATIVES

1. Integration of mobile technology in Company's Insurance offering. 2. Use of Biometrics technology in civilian applications. 3. Development of Mobile technology based solutions for Retail and Banking sector. 4. Technology upgrades for existing SCADA and GPS products. 5. Investment in our ITeS and Digitization solutions

BIBLIOGRAPHY

www.cmcltd.com

www.google.com