2010

CMC Limited

International
Academy Smita N
of Wankhede
Management PGPM/0911/044
& 2009-2011
Entrepreneurship
 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)
Kodak India
National Stock Exchange (NSE)
OTTO India
Philips Software Centre
Cognizant Technology

International customers
CDBL, Bangladesh
Digital Equipment Corporation, USA
Kuwait Stock Exchange
London Underground Limited, UK
Mauritius Police

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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

Positioning Strategy

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 CMC Competitors Analysis

Column1 Column2 Column3 Column4 Column5 Column6

Balance Sheet in Rs. Cr.
CMC HCL Info Redington Moser Spice
Baer 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 0 0 0 0 0
Money
Preference Share 0 0 0 0 0
Capital
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 Spice
Baer Mobiles
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. 77.76 83.47 0 2,317.42 2.06
Depreciation
Net Block 82.06 150.63 55.2 2,439.63 5
Capital Work in 14.87 9.5 10.28 167.15 0.05
Progress
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 33.7 198.67 55.96 62.75 12.69
Balance
Total Current 276.33 2,585.19 974.43 1,043.70 89.58
Assets
Loans and 386.75 315.17 78.56 393.69 25.23
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Advances
Fixed Deposits 0.32 4.32 0 371.41 43.3
Total CA, Loans & 663.4 2,904.68 1,052.99 1,808.80 158.11
Advances
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 & 471.37 1,981.70 535.1 666.81 94.84
Provisions
Net Current Assets 192.03 922.98 517.89 1,141.99 63.27
Miscellaneous 0 0 0 0 0
Expenses
Total Assets 417.02 1,359.21 904.3 4,025.78 78.4

Contingent 37.83 57.18 517.27 743.92 7.46

Liabilities
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 Year ended Year ended
ref 31.3.09 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
DEFERRED TAX ASSETS
5. 29,149 36,088
(See note 17)
CURRENT ASSETS,
6.
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
Less : current liabilities and
7. 10
provisions
(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 Year ended
31.3.09 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 13 7,014,170 8,637,447
OTHER EXPENSES
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
PROVISION FOR
6.
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
BALANCE BROUGHT
7.
FORWARD FROM
PREVIOUS YEAR 2,705,252 2,106,213

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 2,705,252 2,106,213
Amount available for 3,760,970 2,988,448
appropriations

8. APPROPRIATIONS
(a) General Reserve 105,572 88,224
(b) Proposed Dividend 227,250 166,650
(c) Tax on Proposed 38,621 28,322
Dividend
(d) Balance carried to 3,389,527 2,705,252
Balance Sheet

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

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