CMC Limited

International Academy of Management & Entrepreneurship

Smita N Wankhede PGPM/0911/044 2009-2011

CMC Limited
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.


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 systemsengineering 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

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.

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

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)

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


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.


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)


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


 

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 Balance Sheet Column2 in Rs. Cr. CMC Column3 Column4 Column5 Column6 Moser Baer Mar '09 168.31 168.31 0 0 1,515.07 0 1,683.38 1,487.53 854.88 2,342.41 4,025.79 Moser Baer Mar '09 Spice Mobiles Mar '09 22.39 22.39 0 0 54.31 0 76.7 1.72 0 1.72 78.42 Spice Mobiles Mar '09

HCL Info Redington

Mar '09 Sources Of Funds Total Share Capital Equity Share Capital Share Application Money Preference Share Capital Reserves Revaluation Reserves Networth Secured Loans Unsecured Loans Total Debt Total Liabilities 15.15 15.15 0 0

Jun '09 34.24 34.24 0 0

Mar '09 77.87 77.87 0 0

367.36 1,098.12 536.52 0 0 0 382.51 1,132.36 614.39 0 101.85 156.82 34.49 125 133.09 34.49 226.85 289.91 417 1,359.21 904.3 CMC HCL Info Redington Mar '09 Jun '09 Mar '09

Application Of Funds Gross Block Less: Accum. Depreciation Net Block Capital Work in Progress Investments Inventories Sundry Debtors Cash and Bank Balance Total Current Assets Loans and

159.82 77.76 82.06 14.87 128.06 15.38 227.25 33.7 276.33 386.75
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234.1 83.47 150.63 9.5 276.1 888.26 1,498.26 198.67 2,585.19 315.17

55.2 0 55.2 10.28 320.93 273.45 645.02 55.96 974.43 78.56

4,757.05 2,317.42 2,439.63 167.15 277.01 629.67 351.28 62.75 1,043.70 393.69

7.06 2.06 5 0.05 10.08 25.03 51.86 12.69 89.58 25.23

Advances Fixed Deposits Total CA, Loans & Advances Deffered Credit Current Liabilities Provisions Total CL & Provisions Net Current Assets Miscellaneous Expenses Total Assets Contingent Liabilities Book Value (Rs)

0.32 663.4 0 246.72 224.65 471.37 192.03 0 417.02 37.83 252.49

4.32 2,904.68 0 1,899.81 81.89 1,981.70 922.98 0 1,359.21 57.18 66.14

0 1,052.99 0 493.39 41.71 535.1 517.89 0 904.3 517.27 78.9

371.41 1,808.80 0 531.09 135.72 666.81 1,141.99 0 4,025.78 743.92 100.02

43.3 158.11 0 87.23 7.61 94.84 63.27 0 78.4 7.46 10.28

_ 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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_ 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


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

Balance sheet as on March 31, 2009
Schedule ref SOURCES OF FUNDS 1. SHAREHOLDERS' FUNDS (a) Share Capital 1 (b) Reserves & Surplus 2 2. LOAN FUNDS (a) Secured Loans (b) Unsecured Loans Year ended Year ended 31.3.09 31.3.08 Rs./000s Rs./000s 151,500 3,673,649 3,825,149 344,940 4,170,089 151,500 2,883,804 3,035,304 289,345 3,324,649



4. 5. 6.

APPLICATION OF FUNDS FIXED ASSETS {a) Gross Block [b] Less:Depreciation [c] Net Block (d) Capital Work in Progress INVESTMENTS DEFERRED TAX ASSETS (See note 17) CURRENT ASSETS, LOANS & ADVANCES
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4 1,598,209 777,611 820,598 148,680 1,280,601 29,149 1,450,420 765,619 684,801 162,709 1,038,098 36,088


(a) Inventories (b) Sundry debtors (c) Unbilled revenues (d) Cash and bank balances (e) Loans and advances 7.

6 7 8 9

153,792 2,272,471 989,737 340,236 1,107,232 4,863,468

198,687 2,235,268 1,099,459 234,240 933,270 4,700,924

2,358,685 2,683,702 613,722 614,269 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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Less : current liabilities and 10 provisions (a) Current Liabilities (b) Provisions

Amount available for appropriations 8. APPROPRIATIONS (a) General Reserve (b) Proposed Dividend (c) Tax on Proposed Dividend (d) Balance carried to Balance Sheet

2,705,252 3,760,970

2,106,213 2,988,448

105,572 227,250 38,621 3,389,527

88,224 166,650 28,322 2,705,252

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.

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

www.cmcltd.com www.google.com

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