CMC CHAIRMAN SPEECH 27/06/08

1. ability, required so essential to operate in a competitive Dear Shareholders,
environment. This was a major challenge for the new
Good afternoon and a warm welcome to the 32nd
management. Your Company had a strong ability to
Annual General Meeting of your Company. On behalf
create ground-up solutions for complex applications
of all CMCites, I thank you all for your continued trust,
and basic R&D, but lacked ability to leverage the same
encouragement and support to the Company and its
for larger commercial benefit of the company. The
management.
Company had also not looked beyond Indian shores
aggressively to exploit the opportunities being offered
Financial Performance
by a globalised market. The Company was operating
Your Company had a good year (2007-08) with
at very low margins and the challenge was to change
improved profitability and strong cash flow. In this year,
the mind-set of people to more performance
your company earned a total consolidated operating
orientation. There were issues relating to evaluation
revenue of Rs. 1065 crore and a standalone revenue
processes for business opportunities which resulted in
of Rs. 977 crore. It earned EBIDTA of Rs. 113 crore
some old receivables ultimately turning bad. People
registering an increase of 24% over last year. Net profit
evaluation process also required to be fine-tuned to
of the company was Rs. 88 crore, an increase of 38%
encourage performance orientation and motivation.
over last year. Profit Before Tax (PBT) has increased
by 38% from Rs. 85 crore to Rs. 117 crore. Your Company has over the past 7 years taken a
number of initiatives with the help of TCS to address
I am happy to inform you that the Earning Per Share
these identified areas of improvement and has
(EPS) stands as Rs. 58.23 an increase by 38% from
benefited immensely:
last year figure of Rs. 42.31. In view of increased
profits, your Board has recommended an increase in 1. Improving the People processes by imbibing the
dividend rate to 110% compared to 80% in the previous best practices from TCS, including performance
year. evaluation model SPEED. The per person
productivity measured as value added per person
I am happy to inform you that this year your company
month increased from Rs. 95000 per person month
has had significant improvement in cash collection and
in Financial Year 2002 to Rs. 136,000 per person
ended the year with cash and cash equivalence of
month in Financial Year 2008, an increase of 43%.
Rs.119 crore against more than Rs. 90 crore of
borrowing two years ago. Your company s Investments 2. Implementation of Ultimatix the ERP from TCS,
increased from Rs. 8.18 crore in 2007 to Rs. 103.81 which has completely digitized all the key business
crore in 2008, on account of investment of surplus processes.
funds amounting to Rs. 95.63 crore in short term
3. Implementation of Tata Business Excellence
instruments of mutual funds.
Model (TBEM), which promotes continuous
This greater financial strength has been endorsed by improvement across the Company with focus on
external agencies. Credit rating agency ICRA core values such as agility; focus on future and
assessed your Company s short term and long term systems perspective.
exposures in compliance with BASEL II norms and
4. Successfully synergizing with TCS to win very
have assigned an A1+ rating - indicating the highest-
large mission mode Govt projects in India and
credit-quality for short term debt instruments - and a
successfully leveraging CMC assets in International
LAA rating (indicating high-credit-quality) for long term
markets. Your Company earned 40% of its operating
exposure for both fund based as well as non-fund
revenue through TCS-Go To Market synergy in
based exposure.
Financial Year 2008.
Journey So Far Under Tata Fold
5. TCS s global reach is being leveraged to widen the
Your Company came under the Tata fold about 7 years
customer base in the international market. The
ago in 2001. At that time your Company was primarily
percentage of International business has increased
focused on Government business, most of which was
from 14% in Financial Year 2002 to 29% in Financial
being given without competition. Your company had a
Year 2008.
purchase and price preference from government
clients. As a result, there was a lack of market facing
Chairman's Speech
CMC Limited
Your IT Partner
Tuesday, June 24, 2008
Bharatiya Vidya Bhavan Auditorium
Hyderabad
nd
32 Annual General Meeting

2. !6. Key financial indices have improved significantly, Knowledge Process outsourcing in the areas of
especially the working capital management. Logistics, publishing, insurance, financial
Debtors level is reduced from 100 days revenue to 83 services, utility and legal
days.
!Education and training

7. There has been focus on improvement in quality of
India s engineering capabilities are being recognized
revenue resulting in improved profitability. Profit
globally especially in the defense, electronic,
Before Tax improved from 9% in Financial Year 2002
transportation, and automotive sectors. It is envisaged
to 12% in Financial Year 2008.
that there is going to be an increased leverage of
8. There has also been improvement in value to embedded system outsourcing to India and your
shareholders. Earnings per share increased by Company stands to gain in that process.
162% from Rs. 22 in Financial Year 2002 to Rs. 58 in
There is reason for optimism in certain specific
Financial Year 2008. Increase in rate of Dividend
verticals like ports and cargo, transportation as well as
from 40% in Fincnaial Year 2002 to 110% proposed
core banking in the Middle East and African market.
for Financial Year 2008.
Opportunities also exist in projects related to census,
identity management, security and surveillance
The Way Ahead systems in various countries. There is a major thrust on
Having said this, we feel there is need for us to look E-Governance in many of the emerging economies
ahead and plan an even better future. As you all know, and including Middle East and Africa, and your
the Industry is facing a very challenging business company will work towards capitalizing on them.
environment. There has been a slowdown in some
Your company and TCS together, offer to the market,
western economies led by the US. India faces rising
both domestic as well as International, an unparalleled
inflation; the rise in price of oil has contributed to the
range of offerings. The companies have come together
inflation rate touching its highest level in last 13 years.
in the Indian market and have executed very large and
We are monitoring the situation closely. In spite of this,
complex projects in the Government space. The
we believe that Your Company is uniquely positioned,
synergistic partnership has resulted in getting valuable
with its synergies with TCS, to address some of the
breakthroughs in International markets in the area of
emerging domestic and international opportunities.
Ports automation, embedded systems and IT enabled
India s economic progress has helped open up
services. All of these would be further accelerated so
infrastructure sectors like roads, airports and sea
as to achieve the full potential of the combined
ports. Further Government moves towards
strengths of TCS and CMC.
implementation of e-Governance and Mission mode
projects also offers opportunities, the recent initiative
Your Company is focusing on strengthening of the
of e-Passport Seva is one such example of the intent of
management team at all levels to create an agile and
Government of India. Again recent policy initiatives to
effective organization to exploit the emerging
make Indian companies more competitive including
opportunities. TCS has provided necessary support by
the new policy on Special Economic Zone has opened
deputing new Chief Operating officer in your Company.
up new opportunities. Indian corporates are
As you are aware, at present the CEO and CFO have
benchmarking themselves with leading global players
been on deputation from TCS. Some more
in terms of quality of processes and competitiveness.
organizational changes have been carried out
including appointing a head of US operations of your
All of these developments are going to drive increase
Company. At Board level, your Company has inducted
in IT spend.
Ms. Kalpana Morparia, Vice Chair Insurance
To address these opportunities Your Company will Securities & Asset Management, ICICI Group, as
focus on five strategic areas, namely: Independent Director from March, 2008. Ms. Kalpana

Morparia s extensive experience in banking and
!Leveraging of software solutions in the areas of
finance will enrich the deliberations of the CMC Board
Ports, Transportation, Insurance, Biometric,
and I am sure that her contribution and counsel will be
Locator Based Solutions, like Nirdeshak and
of great value to the company in the years to come. I
Vehicle Tracking System, and e-Governance
urge you to please join me in welcoming Ms. Morparia
! on the Board of Directors of your Company. Earlier Mr. Embedded Systems
CB Bhave resigned from the Board of directors of your
!Infrastructure management, managed services,
Company, consequent to his appointment as
facility management and some new areas of
Chairman of SEBI. I wish to put on record our deep
growth, especially the infrastructure
appreciation of contributions made by Mr. Bhave over
management in new digital townships and SEZs
last 6 years as independent Director of your Company.
Chairman's Speech

3. Chairman's Speech
Managing skills and resources stakeholders and business associates and I convey
Your company is in a knowledge intensive business my sincere thanks to our customers, suppliers,
and therefore people management is extremely bankers, auditors, legal advisors, consultants and all
important. While at an organization level your other business associates and the Government and
company aims for delivery excellence and various authorities for their continued support, interest
optimization of manpower utilization, for instance key and confidence in the Company and its Management.
HR processes have been automated to improve
Thank you
productivity. The major thrust continues in the effort to
invest in training and increasing the Learning and S RAMADORAI
Development opportunities for every staff member. CHAIRMAN
Greater thrust has been given to employee
Place: Hyderabad
engagement activities during the current year. I would
Date: June 24, 2008
like to commend the employee contribution which has
Note: This does not purport to be proceedings of the been the cornerstone of the Company s growth over
32nd AGM held on 24.06.2008.the years.
Business Excellence and Quality
Initiatives
Your Company continues its journey on the path of
business excellence using Tata Business Excellence
Model (TBEM), which was adopted four years back.
The adoption of the model entails promoting
continuous improvement across the Company. During
the year, CMC Center was assessed at SEI CMMI
Level 3 while its automotive group was assessed at
level 3 against Pathfinder Automotive Spice Model
(ISO/IEC 15504). Your Company intends to pursue
such third party assessments with progressive
increase in scope as well as, at higher maturity levels.
Corporate Sustainability
Your Company remains committed to core Tata values
of giving back to the community . There has been
active promotion and support to staff members to
volunteer for activities related to community services.
The Company has chosen to focus its efforts towards
helping under privileged and physically challenged
children. Your company organizes medical checkups,
sports activities and also helps their institutions with
volunteers and financial support. During the year
under review, your Company also organized a Special
Athletic Event 2007 for the mentally challenged
children. The Company participates in community
development programmes at the Tata Group level. The
Company believes in social equality and has adopted
a policy on Affirmative Action for Scheduled Castes
and Scheduled Tribes Community.
Acknowledgements
I am reminded of a line I read In the end, all business
operations can be reduced to three words: people,
products and profits. Your company continually
strives to address all three.
I once again convey my heartfelt thanks to all our
shareholders for their continued trust and confidence
in the Management of the Company. My gratitude is
due to my colleagues on the Board for their valuable
guidance. The Company has come out with yet
another successful year due to the strong support of all