Sify Technologies Ltd (SIFY) 2010 Q2 法說會逐字稿

Greetings and welcome to the Sify Technologies second quarter 2010-2011 financial results conference call. (Operator Instructions) It is now my pleasure to introduce your host, Christopher Chu with Grayling. Thank you, Mr. Chu. You may begin.

Thank you, operator. I would like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I'm joined on the call today by Raju Vegesna, Chairman and CEO, CVS Suri, Chief Operating Officer, and MP Vijay Kumar, Chief Financial Officer, of Sify Technologies. Following our comments on the results, there will be an opportunity for questions. If you do not have a copy of our press release, please call Grayling at 646-284-9100 and we will have one sent to you. Alternatively, you may obtain a copy of the release at the investor information section on the Company's corporate website at www.sifycorp.com. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the investor information section of the Sify corporate website.

Some of the financial measure referred to during this call and in the earnings release may include non-GAAP measures. Sify's results for the year are according to the international financial reporting standards for IFRS and will differ somewhat from GAAP announcements made in previous years. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and reconciliation of such non-GAAP measures and on these differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will remain available on Sify's website.

Before we continue, I would like to point out that certain statements contained in the earnings release and on this call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the Company seeks protection afforded by the Private Securities Litigation Act of 1995. These risks include a variety of factors including competitive development and risk factors listed from time to time in the Company's SEC reports and public releases.

Those listed are intended to identify certain principle factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of all risks and uncertainties inherent to the Company's business. I would now like to introduce Mr. Raju Vegesna, Chairman and CEO of Sify. Raju?

Okay. Thank you, Chris. Good morning and thank you for joining us on the call. I will comment with opening remarks on our performance for the second quarter ending September 30, 2010. Despite the challenges that the industry faced over the last two years, I am satisfied with the progress we are making on our strategic and business objectives. Our entire approach has been to chase the game plan as follows. Expand our network reach to tap into the customers in the far corners of the country, expand our offerings [technology] including the [management services], to make a difference to our customers' business, expand our customer base by offering custom-based solutions for new segments of customers like government and SMEs, improve our financial performance by getting the best use of dollars by consolidating our technology and support initiatives optimizing cost, focus on our core business where the enterprise [play]. So our COO, Mr. Suri, will give you the specifics on each of these objectives later on in this call. I now request Vijay Kumar, our chief financial officer, to take you through our financial performance for the quarter in greater detail.

Thank you, Raju, and hello, everyone. I shall now discuss our financial performance in a detailed manner. Revenue for the quarter was $38.16 million, 1.3% lower than $38.69 million in the same quarter of the previous year and 1% lower than prior quarters. Our enterprise and international business has showed some growth over prior year, but the overall performance was pulled down by the consumer business which sell by 33% over the prior year.

On the gross profit margin, our non-GAAP gross margins for the quarter were 38%, which is lower than prior year by 1%, due to the significant impact of our consumer business where margins have come down. However, our enterprise gross margins have improved by 3% over the prior quarter. As regards net loss, for the quarter was $3.38 million compared to a net loss of $2.62 million in the same quarter previous year.

Cash on hand at the end of quarter was at $7.9 million as available line of credit and cash generated from operations in the quarter was at $0.62 million against $1.13 million over the previous quarter. We have tightened up on our receivables and systematic focus and follow-through has resulted in production both on the customer receivables and tax refund receivables front. Savings initiatives on the procurement front have resulted in early yields on cost of bandwidth, AMCs, and equipment. Further work is on and to employ reverse auctioning tools to bring about further savings.

There has been a delay in the filing of our Form 20-F for last financial years with the SEC on account of a pending accounting-related matter of our associate entity MF Global Sify in which Sify Technologies has a [29.85%] minority interest. This is currently under discussion. I will now hand over to Suri, who will take you through the business initiatives during the second quarter. Suri?

Thank you, Vijay, and good morning, everyone. I will now take you through the [effects] of how we have operationalized the objectives outlined by Raju earlier. Our network outreach has expanded to 622 centers and we are increasingly able to not only serve smaller customers in off-country locations, but also customers who themselves have a wide network of branches like banks. I have the satisfaction of reporting to you our recent engagements with [Pinabinson] Bank and [Lahabar] Bank. Our offerings of cloud computing, cloud storage, and virtualization and our ability to deliver managed services across the spectrum of business enables us to improve the productivity of the enterprise organization.

Our engagement with the Government of Maharashtra on the cloud platform and with Getit, Ananda Bazaar Patrika is founded on the premise that Raju has outlined.

We have capped into the government sector with our data center practice and the SME segments with pay-as-you-use models. Our engagement with the governments of [Tupura, Mahalia, Siken, Charkin, and Kalia] stands testimony to the feasibility as a niche player in this segment. In the enterprise business segment, as you are aware, we have five core businesses, mainly connected with the data centers, voice, enterprise applications, and systems integration. Our investments continue to be in these core areas by adding new points of presence, acquiring capacity as a consortium member of undersea cables, growing our data centers and data center practice, and setting up and managing access gateway for an undersea cable landing at Mumbai.

The consumer play is an added service on top of the enterprise infrastructure. You will have read that as part of the consumer focus, we are also targeting many businesses and small office home offices where we are offering connectivity-only models and wax services B-linked from connectivity. We have merged the executive teams of our portals and access business for synergizing and building better entities between them.

Simultaneously, we are recasting our current travel portfolio and associated costs in relation to the scale of business. We are further strengthening our managed services delivery team based on the strong opportunities emerging both in the domestic and international markets. Focused practice lines are being set up and fresh talent [inducted] to service the same. To date our partnership with our competitors is not an options, it's a requirement. To improve the return on assets and to leverage each other's competencies, partnerships include strategic types on government front, both domestic and international, as also in the national long distance and systems integration space. Our tie-ups with IBM, [Wiplo], and HP in the systems integration solutioning and delivery is a case in point. Often our partners' customers are also our customers. I will now hand over to Raju for his closing comments. Raju?

Thank you, Suri. I foresee great opportunities in the markets in the next two to three years and we are all well prepared to ride on the next [inflection] point as the [average]. We remain focused on technical innovation as we deploy cutting-edge technologies to deliver the best-in-class services to our customers. I will now hand over the operator for questions. Operator?

Thank you. (Operator Instructions) Gentlemen, it appears we have no questions. Do you have any closing comments?

So thank you, everyone, for joining us on the call and we look forward to interacting with you on the third quarter around this time and thereafter. Thank you. Bye now.

Ladies and gentlemen, this does conclude today's teleconference. You may disconnect your lines at this time and we thank you for your participation.