Plan to raise Rs 250 cr to fund future acquisitions: Majesco

http://m.moneycontrol.com/news/business/plan-to-raise-rs-250-cr-to-fund-future-acquisitions-majesco_6771441.html

30 May 2016 12:54 PM | Source: CNBC-TV18

Majesco’s board has approved the company’s plan to raise Rs 250 crore via Qualified Institutional Placement (QIP) route. The board also raised the foreign institutional investors (FII) limit in Majesco to 40 percent. 

The resolution to raise funds is subject to shareholders’ approval. The funds raised will be used towards expansion of both organic and inorganic businesses, says Farid Kazani, Managing Director & Chief Financial Officer of the company. 

Majesco is evaluating few companies in digital and front-end system space with revenue size of USD 10-20 million, Kazani says. The company closed FY16 with USD 15.4 million debt and cash flow of USD 10 million. 

Kazani is confident that the company will meet its FY18 guidance of USD 220-225 million and gross margins of 49-50 percent.

Below is the verbatim transcript of Farid Kazani’s interview with Reema Tendulkar & Nigel D'Souza on CNBC-TV18.

Nigel: Rs 250 crore is exactly what you are looking to raise, why exactly are you looking to raise this and also could you tell us how are things looking now in your balance sheet? How much of cash do you have in your books, how are things looking?

A: This is enabling resolution which the board has approved for raising up to Rs 250 crore which is subject to shareholder approval. We had in our last year, closed the year with almost of 42 percent growth and we are expecting to kind of grow further both organic and inorganic and bring acquisitions to kind of propel the growth where we see opportunities largely in the north America insurance business. 

So, the fund raise is going to be typically in terms of growing our business both organically and inorganically.

As of today we have in the books of Majesco roughly around USD 14 million of debt and cash of roughly around USD 10 million so, at some point of time we would like to kind of ensure that the growth is taken care of by mix of both debt and equity. 

Reema: Are you already in conversation with potential companies that you would like to acquire? Will you use the entire Rs 250 crore, are you open to perhaps taking on some more debt in increasing the size of the acquisition? Give us some colour of what the company’s strategy is on the merger and acquisition (M&A) front?

A: There are some acquisitions that we are evaluating which are in flight and these acquisitions obviously range between a USD 10-25 million in terms of revenue size. This is something which we have been working towards and our expectations to look at acquisition that will help improve our capabilities to deliver a much better suite of solutions for our insurance clients. 

So, while we are looking at acquisitions in the space of digital and frontend systems, our expectation is whenever the acquisitions because it is all linked to closure times and in terms of valuations so, whenever it happens we would prefer to have the cash in hand or the funding in hand to make those kind of acquisitions possible.

Nigel: You are saying that you are looking at companies that will help your revenues by around USD 10-20 million. Last year you did roughly around the USD 115 million thereabouts on the topline, but your outlook for the next couple of years says that you are going to be looking at around USD 220 million? How exactly do you reach that mark, some part of it will come in through acquisitions yes, but the other part of your business we expected to grow so robust here?

A: Traditionally, if you see our business in the insurance side has grown upwards of 20 percent on a compound annual growth rate (CAGR) basis and if you look at the current year though we closed at USD 115 million in Majesco India consolidated ended up with a very strong order backlog position of USD 73 million. 

This gives us good confidence to see a very good organic growth. We will need to kind of work towards acquisitions so while we have a goal which we have set for 2018 at USD 200-225 it is going to be with driving strong organic growth and doing some acquisitions. 

Reema: According to your internal target of 2018 you are also expecting significantly higher EBITDA margins, Currently, it what closed to about 1 percent odd. You are expected to move up to double digits what will be the key driver? 

A: There will be multiple drivers to that. One is as I mentioned there has to be a good build up of the revenue which will see a good expansion in the gross margins. 

So, while we closed our gross margins at closer to 45 in this year we are expecting that at the base of the revenue we should get to around 49-50 percent on the gross margins. Coupled with that there will be a strong operating leverage with spends that we do on the product development and Selling, General, Administrative and Other Expenses (SG&A) that will help us to get to the double digits in the margins.

Crompton seeks to breeze past Havells in premium fan market

http://www.thehindubusinessline.com/companies/crompton-seeks-to-breeze-past-havells-in-premium-fan-market/article8641608.ece

G BALACHANDAR

CHENNAI, MAY 24:  

Crompton aims to displace Havells from the top position in the premium fan category during this fiscal, aided by favourable market, strengthened distribution and brand spend.

The company, which is the leader in the ₹6,200-crore domestic fan market, is presently trailing behind Havells in the premium fan (priced above ₹2,500) segment.

“This fiscal has started well for the fan market. We have been growing 12-13 per cent year-on-year, while the industry’s growth has been lower.

“In the premium segment, we have been doing well and that was one of the drivers for our better-than-industry growth. In premium fans too, we have grown three times that of segment growth,” Rangarajan Sriram, Vice-President, Crompton Fans, told BusinessLine.

Crompton’s market share is reported to have increased 3-4 per cent in the premium segment, but the company couldn’t provide the present market share number.

Higher growth

“We hope to gain lead in one or two quarters in the premium segment as our growth has been three-four times that of the industry growth,” Sriram added.

While Crompton aims to sell more high-end products to cash in on robust demand, it is also expanding its reach in locations where its distribution is weak.

The company expects higher brand spend also to result in more sales conversion this fiscal. With its three-pronged plan, the company aims to improve its overall share in the fan market by 3-4 per cent in the near term. Its current domestic market share is estimated at less than 30 per cent.

(This article was published on May 24, 2016)

Crompton Greaves Consumer Electrical - Transcript of con call held on 19 May 2016

http://corporates.bseindia.com/xml-data/corpfiling/AttachLive/EE21FCE1_97F4_49F5_858A_E4568600F78A_155812.pdf

Sumitomo likely to acquire 44% stake in Excel Crop Care

http://economictimes.indiatimes.com/industry/banking/finance/sumitomo-likely-to-acquire-44-stake-in-excel-crop-care/articleshow/52392474.cms

Sumitomo likely to acquire 44% stake in Excel Crop Care

By Sugata Ghosh & Dia Rekhi, ET Bureau | 23 May, 2016, 02.05AM IST

MUMBAI: Japanese conglomerate Sumitomo is at an advanced stage of negotiations to acquire a substantial equity stake in Excel Crop Care , a Mumbai-headquartered listed company. The proposed deal could pave the way for the Japanese group to own about 44% shares of the pesticides and agrochemicals company for a total consideration ofRs 1,200-1,300 crore. 

Sumitomo plans to buy out stake of Excel promoters — the Shroff family — holding 24.7% equity as well as two financial investors together owning close to 19% of the shares. ET's email to Dipesh Shroff, managing director of Excel Crop Care, and Sumitomo Chemical went unanswered. 

There have been several rounds of talks between officials of Sumitomo Chemical and the Excel management, and indications are that the deal may be signed in June. Nufarm, the Australian crop protection and specialist seeds company, owns more than 14% and is likely to retain its strategic stake in Excel Crop Care. 

According to a report by Avendus Capital, global players are looking at India to increase their market share, add to their product portfolio , and strengthen their supply base in specialty and agrochemicals. "The Indian agrochemicals market is expected to grow rapidly (about 12% CAGR over 2014-19) with increase in farmer awareness, improvement in rural income and increase in pressure for improving productivity," said Preet Mohan Singh, executive director, Avendus Capital. 

The Shroffs are also the promoters of Excel Industries, a specialty chemicals company, and co-promoters of Aimco Pesticides in which they control a little over 25%. Before entering into any agreement with Sumitomo, the Shroffs are expected to conclude the inter se transfer of their holding to the other promoter family of Aimco. Excel Crop Care has 1.13% equity interest in Excel Industries. 

Besides Shroffs, the other two shareholders of Excel Crop Care who may sell their shares to Sumitomo are Ratnabali Capital Markets (holding 14.99%) and Ratnabali Investments (3.95%). Among the institutional shareholders of Excel Crop Care are Life Insurance Corporation (6.58%) and DSP Blackrock (1.92%). 

Excel Crop Care's consolidated net profit for the quarter ended March 31, 2016 was Rs 7.6 crore as against Rs 1.7 crore in the year ago period, on total income of Rs 188.6 crore (Rs 205.6 crore). The Excel Crop Care stock has been trading at around Rs 1,109, against 52-week high and low of Rs 1,247 and Rs 750, respectively. 

M&A activities in sectors like agro and specialty chemicals is expected to pick up, said Avendus, adding that the stride towards food security will also increase the significance of agrochemicals. An estimated 85% of India's crop loss (worth close to $20 billion) is caused by pest infestation, disease and weeds and is prevented by the use of agrochemicals. 

India exports agrochemicals to countries like the us , France, the Netherlands, Belgium, Germany, Brazil, Colombia, China, Vietnam and Indonesia.

‘Nifty may touch 13,000 in three years’ - Porinju Veliyath

http://www.thehindubusinessline.com/portfolio/your-money/nifty-may-touch-13000-in-three-years/article8633203.ece

Common sense is more important than number crunching today

“We are a very resourceful nation that needs to be guided well by politicians. We can add a trillion dollar to our market capitalisation over the next two to three years,” says Porinju Veliyath, MD & Portfolio Manager, Equity Intelligence India, in a chat with BusinessLine. Edited excerpts:

From a law background, you have moved to fund management now. How did you make this transition?

Equity has been my passion since college days. I used to be a regular at the public library in Kochi during the ’80s, was inspired by stories of CEOs, the size of corporations and the value of brands.

After graduating in law, I took the next train to Mumbai, the capital of capital markets, and started my career as a floor trader at Uday Kotak (Kotak Securities) in 1990.

It was an exciting journey. I worked with Parag Parikh Securities during the late ’90s, got exposed to institutional dealing, equity research and fund management. I returned to Kochi, my hometown, in 1999.

What was your first investment after returning to Kochi?

Back home, I was amazed to see the market cap of Geojit Securities at ₹2.5 crore — a professionally managed futuristic business — available at below book value, four times the price-earnings multiple and 6 per cent dividend yield.

I invested most of my money by acquiring nearly 8 per cent of the company’s equity. The market cap moved to ₹3,000 crore in a few years and now quotes at ₹800 crore (bullish now).

Kitex Garments was another Kerala company that surprised me with two times the price-earnings multiple.

I bought significant stake under portfolio management system at around ₹30 crore market cap, which moved up to ₹5,000 crore and is currently valued at ₹2,200 crore (well-priced).

What are the lessons you learnt from the market in the last 25 years? What is your advice for investors who plan to remain invested in equities for the next 25 years?

Keep investing, simple! We don’t know how the world will look like in the next five years, but one can predict with reasonable precision how India will be in five years! Look at the big picture; India is too small with a $2-trillion economy and has a long way to go.

Keep your eyes and ears open for ideas, which are in abundance in the world’s fastest growing economy.

With export growth stagnant and debt levels high (among both public and private sectors), what are the opportunities in the capital market over the next five, 10, 20 years?

I think these are not such vital parameters, considering the global economic scenario, to measure the health of the Indian economy. China’s overall debt is around three times GDP compared to India’s roughly one time.

Our public debt is around 50 per cent; of this, external debt would be less than 2 per cent. It would be meaningless to look at the absolute export data without considering the global economic scenario and the fall in crude prices.

I think imports have also fallen and our trade deficit is near a yearly low.

Do you think debt investments will start getting higher priority compared to equity?

Equity as an asset class has beaten all other asset classes historically, be it debt, gold or real estate, and will continue to outperform in the future.

Equity exposure by Indians is unsustainably low and I expect it to catch up significantly, going forward.

Where do you think Nifty will be in the next two years?

I am not a technical guy, but Nifty at 8,000 looks like a rational bottom. If you adjust for inflation, the market is still at least 15 per cent below the January 2008 levels.

This is without considering the progress companies have made in the last eight years. I would be surprised if the Nifty doesn't go to 12,000-13,000 in two-three years.

Which sectors are you bullish on?

From a stock-picking point of view, I am bullish on every sector, given the structure and dynamism of the Indian economy. I am a bottom-up stock picker and a value investor.

One should look at beaten-down sectors with curable negatives; companies with decent balance sheet and quality assets which can survive the operating challenges. Infrastructure stocks can be multi-baggers once the hurdles are crossed.

What is your investment philosophy?

I am a pure value investor in Indian equities and don’t believe in the word investment philosophy. Simple common sense and wisdom works better than philosophy when it comes to investing.

Who is your favourite investment guru?

Chandrakanth Sampath, who is no more.

I learnt a lot from him in the initial days of my career.

(This article was published on May 22, 2016)

To focus on premium value-added products: MD CGCEL

Src : http://www.moneycontrol.com/news/business/to-focuspremium-value-added-products-crompton-electricals_6648761.html

May 13, 2016, 11.55 AM | Source: CNBC-TV18 

To focus on premium value-added products: Crompton Electricals While all businesses of the company are growing at a healthy pace, the company hopes to grow its market share significantly in the fans segment, says Shantanu Khosla, MD of Crompton Greaves Consumer Electricals.

Crompton Greaves Consumer Electricals is focusing on improving revenue by expanding premium value-added products, said Shantanu Khosla, MD, in an interview to CNBC-TV18 post the Crompton Greaves' demerged entity’s listing on the stock exchange on Friday.

While all businesses of the company are growing at a healthy pace, the company hopes to grow its market share significantly in the fans segment, Khosla said.  

On any prospective plan to move away from the Crompton Greaves brand name and on royalty payments, he said they would instead try to make the brand stronger. There is no impact of royalty now or in future, he added.

The debt position (currently around Rs 700 crore) is comfortable considering the cash flows, he said, adding the company will focus on cost efficiencies and scaling possibilities to improve margins though.

Below is the verbatim transcript of Shantanu Khosla's interview with Nisha Poddar on CNBC-TV18.

Q: What is your strategy going forward because profitability and market share are the two things that you will need to balance out? How are you going to do that?

A: There are few things which will help us drive both and we do believe we can drive both. First, we will work to drive our revenue but we will work to drive our revenue by focusing on disproportionate growth in value added premier propositions. Second, we believe that with the demerger and the focus on consolidation will bring efficiencies across all cost buckets.

Q: You spoke about premium products, so that means you are also going head-on with your competition Havells India in this particular space. How is the competition panning out in your space and could you give us some mix of premium products, more high value-added and the ones which you are operating in. Is there a mix that you have in mind?

A: I won't get into specific numbers in terms of the mix but we do expect the premium value-added products to grow faster than the others. The way we will do this is through innovation and better meeting consumer needs.

Q: So fans, lightings, pumps, appliances are the various categories you exist in. Where is the most amount of growth coming in for you?

A: We are quite fortunate that all our businesses are growing nicely. Some businesses of ours such as appliances are relatively small. So the small base makes growth look bigger. One area which is significant growth opportunity, not just for us but the industry also is LED lighting, which is starting from a small base and gives us the opportunity to transform the industry.

Q: In fans you said there is a new product launch and how much is the target in terms of market share and ramp up in margins that you are looking at from that particular segment?

A: We expect to grow our market share significantly. We do expect that this will be disproportionate from the premium end of the business.

Q: What about the brand. You are going to continue with the Crompton Greaves brand and any sort of impact on your balance sheet because of any royalty in future also, if that can come up with the erstwhile promoters of Crompton Greaves?

A: There is no impact of any royalty now or in the future. The Crompton brand is something that we believe has got outstanding values. We believe that it has the breadth in the equity to cover a large breadth of consumer electrical business. We are focused on making that brand even more relevant and stronger in the future. 

Q: What about debt - Rs 700 crore. Are you going to refinance that for lower cost and how are you going to take this debt equity forward?

A: We are comfortable with our debt. We believe that it is an appropriate level of debt given the cash flows which we have. We will always be looking at opportunities to reduce cost on every element.

Q: 50 percent of your manufacturing is done in-house. Are you also progressing towards more efficient sourcing now? Is that the right thinking in the company that is happening which the market believes?

A: We are looking at efficiencies in sourcing but I would like to point out that sourcing is beyond just factories; sourcing include the entire supply chain, so it is also warehouses, distributors, logistics, vendor based at the back. We see significant opportunity in that whole area.

Q: A word on margins because market is bothered about the margin picture when it comes to comparing with market share because you also have a big competition. What is going to be your biggest thrust in terms of margins progressing to more value-added products in all the categories that you are involved in?

A: Largely yes, it will be an overall focus but there is also going to be a significant focus on cost efficiencies and scaling possibilities. We do see that margins will stay a focus area for us.

Q: Any targets on that?

A: Of course we have internal targets but I would not be comfortable sharing our targets. Suffice to say at this point as I said our expectation is to grow our topline faster than competition and at the same time make sure that our bottomline grows at the same pace as our topline or slightly ahead of it. 

Q: Any word on open offer even though it is from the promoter side?

A: I have nothing to add on the open offer.

CGCEL lists on the exchanges

In spite of the markets tanking, CGCEL seems to have had a decent listing. There are no sellers available in both the exchanges.

As of 12:20 IST 13-May-2016

Src : http://profit.ndtv.com/news/market/article-crompton-greaves-consumer-electricals-sinks-20-on-listing-1405805

However, Crompton Greaves Consumer Electricals shares were trading higher than analysts' expectations; analysts polled by NDTV Profit expected Crompton Greaves Consumer Electricals to list between Rs 110-120. 

Crompton Greaves Consumer Electricals' estimated FY17 earnings per share (EPS) is Rs 4.7, which translate to a valuation of 29 times price earnings. Crompton Greaves Consumer Electricals' peers V-Guard, Bajaj Electricals and Havells trade at 26.5, 16 and 32 times their price earnings.  

Analysts expect Crompton Greaves Consumer Electricals' valuation to improve and match with the valuation of Havells India going ahead. 

"Over a period of time, it (Crompton Greaves Consumer Electricals ) should come closer to Havells' trading multiple. In last five years, there is actually no difference between Havells' and Crompton Greaves Consumer Electricals' top-line growth, which means the brand strength of Crompton is extremely good/as good as Havells," said Inderjeetsingh Bhatia, associate director at Macquarie Capital Securities.  

"This (Crompton) is a much older brand, around 30-40 years old. Crompton's return ratios are even slightly better than Havells' because of the fact that they follow an asset light model compared to Havells. Crompton outsources most of the production, whereas Havells does most of the production in-house to have control over quality," Mr Bhatia told NDTV Profit. 

Ten Lessons from One of the World’s Most Legendary Investors - John Templeton

Src : http://dailyreckoning.com/ten-lessons-one-worlds-legendary-investors/

Buying cheap is step one.

But there are other important lessons from Templeton’s career. And they may surprise you…

Step 2) He was happy to hold high levels of cash and bonds when cheap stocks were hard to come by. In 1969, he had a third of his fund in cash/bonds because the high-flying market did not offer many cheap stocks. He was not a market timer, but he stuck to his knitting even if this meant trailing the market when it went nuts.

Step 3) His field was the world. Templeton went where the opportunity was. For example, he invested heavily in Japan in the early 1970s when it was out of style to do so. There he found rapidly growing companies trading at cheap prices. In 1974, he had 62% of his fund in Japanese stocks. Meanwhile, the World Equity Index, a benchmark for global markets, had just a 12% weighting in Japan.

Step 4) He was not afraid to change his mind. By 1978, he had less than 10% of his fund in Japanese stocks. As the stocks grew pricey, he sold them. By 1989, when the World Equity Index had a 40% weight in Japan, Templeton’s weight was 0%. The Japanese market would never recover the heights it climbed in 1989. What’s important here: Templeton did not wed himself to any of his ideas. Everything was for sale at the right price.

Step 5) He was not afraid to concentrate his holdings. He often made big bets on things he had high conviction in. In 1969, for example, his largest holding was 15% of his fund. And as I discussed above, he once had over 60% of his fund in Japanese stocks. This was a pattern throughout his career.

Step 6) He traveled — a lot. Templeton wrote that it was important travel abroad not only to find ideas but also to learn about the world. “[Travel] teaches us to question the economic theories and fads popular here,” he wrote. “It gives us deeper respect for the fact that the most unexpected things can happen and often do.” (Bill and I certainly do more than our share of traveling.)

Step 7) His performance improved when he moved away from Wall Street. Templeton moved to the Bahamas in 1968. There he worked alone, over a thousand miles from Wall Street. Sometimes he would do his research for only a couple of hours a day. He was patient and thoughtful. Many great investors today work off Wall Street.

Step 8) He wasn’t good all the time. This is critical to understand. The best investors often have periods where they look bad. Templeton was no different. His fund lost money in 10 of those 38 years — almost 25% of the time!

From 1971 to 1975, he trailed the market in three years out of five. Every time he did, the media would write stories about how he lost his touch. Incredibly, for the first 10 years of the fund’s life, Templeton trailed the MSCI World Index. Today’s impatient investors would likely fire such a manager.

Step 9) He held his stocks for four to five years on average. He also urged his investors to judge him on five-year returns. Few investors hold their stocks for even a year or two. They are like gardeners pulling up their tomato plants before they get their tomatoes.

Step 10) His best years as an investor were his last 20 years. And he quit running his fund when he was almost 80 years old. I told Bill he has a lot of years yet!

Crompton Greaves to list on 13-May-2016

http://www.bseindia.com/downloads/ipo/2016510114548Part%205%20%20Information%20Memorandum%20Signed%20MAY%2006%202016.pdf

Some information from the IM

The verticals

Electric Lighting

Electric Fans

Water Pumps

Manufacturing Units

Board of Directors

Key Managerial Persons

Financials

Max Ventures to enter hospitality space

http://economictimes.indiatimes.com/industry/services/hotels-/-restaurants/max-ventures-to-enter-hospitality-space-with-azure-stake-buy-commits-rs-33-5-crore-investment/articleshow/52230739.cms

Max Ventures to enter hospitality space with Azure stake buy, commits Rs 33.5 crore investment

By Arun Kumar, ET Bureau | 12 May, 2016, 04.33AM IST

EW DELHI: Max Ventures and Industries (MVIL) owned by serial entrepreneur Analjit Singh is venturing into the hospitality space with a binding agreement to buy a minority stake in Delhi-based Azure Hospitality, which runs a pan-Asian restaurant chain under the Mamagoto brand, said two people familiar with the development. "Azure Hospitality is raising $10 million in the second round of funding from MVIL and Goldman Sachs," said the one of the persons. 

"MVIL has committed to invest Rs 33.50 crore or $5 million for acquiring 11.2% stake in Azure Hospitality," the person said. Earlier this January, Singh, 62, the promoter of Max India resigned as chairman of most of his holdings and group companies in a move aimed at inducting professional managers to run his sprawling business empire. 

He remains the chairman of MVIL and owns 40% of it, but has made an open offer to raise his shareholding upto 74%. Singh has been pushing MVIL to become a key player in incubating and promoting new business ventures for the group. Sahil Vachani, managing director of MVIL and also Singh's son-in-law, confirmed that the company has invested $5 million in Azure Hospital for a minority stake. He refused to divulge details of the investment. 

"MVIL is looking at four verticals — packaging, education, real estate and investments (picking up minority stake in)," Vachani said. "We are looking at providing growth capital and synergy to investee companies," he added. Rahul Khanna, co-founder Azure Hospitality did not respond to queries from ET until press time on Wednesday. 

Goldman Sachs that had invested $10 million in April 2015 has also invested additional $5 million in Azure Hospitality," the second source said. After this round of funding, the original promoters will have between 50% and 60% stake in Azure Hospitality while Goldman Sachs will have around 35% stake, the source said. 

The company launched two budget brands — Rollmaal and Speedy Chow — in 2013 to diversify the business. Both are quick service restaurant chains with Speedy Chow focusing on Chinese cuisine and Rollmaal on Indian offerings. 

Currently, the firm operates in five markets — Delhi-NCR, Mumbai, Bengaluru, Hyderabad and Chennai — and has a staff strength of 750. It is also looking to expand to tier I and II towns and also overseas with a launch expected in the UAE shortly. 

Azure Hospitality is likely to report a turnover of Rs 140 crore during the current fiscal and is being valued by the incoming investors at Rs 300 crore, said the first person cited above. "Azure is a zero debt company and is making reasonable operating profit consistently," the person added. 

In the past, Analjit Singh is also believed to have backed Chez Nini, an upscale French bistro in New Delhi's tony Mehar Chand Market. 

Majesco US Q4 results

Src : http://investors.majesco.com/file/Index?KeyFile=34263024

Majesco Announces Fiscal 2016 Year-End Financial Results

Company Release - 5/10/2016 4:15 PM ET

Fourth Quarter Revenue up 48.8%

Fiscal 2016 Revenue up 42.9%

Year End Order Backlog up 14.1% sequentially to $71.9 Million

MORRISTOWN, N.J.--(BUSINESS WIRE)-- Majesco, a global provider of core insurance software, consulting and services for insurance business transformation, today announced its financial results for the fiscal 2016 fourth quarter and fiscal year ended March 31, 2016.

“Fiscal 2016 has created a solid foundation and path to scale our business plan with significant progress across all key performance indicators,” commented Ketan Mehta, CEO and Co-Founder. “As we have stated previously, year one of our growth journey was dedicated to investing in our business to drive order book growth and market penetration. I am pleased with our results as the investments we made in our products, sales, marketing and infrastructure, have resulted in 43% increase in revenues, 47% increase in order backlog and 17 new customer wins during the year. In addition, I am particularly encouraged by the 9.1% increase in revenue we achieved on a sequential quarter basis.

“As we enter the new fiscal year, we are focused on our customer’s implementation success, revenue growth and profitability to achieve our 2018 goal of delivering revenue of $ 200 to $ 225 million and EBIDTA of over 12%.

“We continue to gain momentum across mid-market, start-up and tier 1 carriers with our core, digital, data, distribution and cloud businesses and I am excited to share more about our plans for the future at our May 11, 2016 investor day.”

Financial Highlights

For the fourth quarter ended March 31, 2016

• Revenue for the fourth quarter ended March 31, 2016 increased 48.8% to $32.3 million as compared to $21.7 million in the corresponding quarter of last year. The growth was primarily driven by favourable momentum in Majesco’s P&C and L&A business, new customer wins, expanding customer relationships during the year, and the addition of Cover-All. On a sequential basis, fourth quarter revenue increased 9.1% compared to $29.6 million for the quarter ended December 31, 2015.
• Gross profit was $14.4 million (44.7% of revenue) for the fourth quarter ended March 31, 2016, compared to $7.1 million (32.5% of revenue) for the quarter ended March 31, 2015. The 12.2 percentage point increase in gross margin was primarily due to the increase in revenues, a favorable mix of higher margin business and a 6.5% margin impact in the fourth quarter of 2015 due to the termination by a customer of a project in the India Asia Pacific geography for which a reserve had been taken in the quarter ended March 31, 2015.
• Research and development expenses were $4.6 million (14.3% of revenue) during the fourth quarter ended March 31, 2016 as compared to $2.5 million (11.4% of revenue) during the quarter ended March 31, 2015, largely on account of planned product investments in both the P&C and L&A segments.
• SG&A expenses were $10.5 million (32.6% of revenue) during the fourth quarter ended March 31, 2016 as compared to $5.4 million (25.0% of revenue) during the quarter ended March 31, 2015. The increased SG&A expense for the fiscal 2016 fourth quarter was primarily due to the expansion of Majesco’s global sales and marketing infrastructure and the impact of the merger with Cover-All.
• Adjusted EBITDA for the fourth quarter ended March 31, 2016 was $0.4 million (1.3% of revenue) as compared to $1.3 million (5.8% of revenue) during the quarter ended March 31, 2015.
• Net loss for the fourth quarter ended March 31, 2016 was $1.5 million, or ($0.04) per share as compared to a net loss of $0.9 million, or ($0.03) per share for the quarter ended March 31, 2015.
  
  
  EBITDA and Adjusted EBITDA are non-GAAP measures. Reconciliation tables of EBITDA and Adjusted EBITDA as used in this press release to GAAP are included in the financial section of this press release.

For the fiscal year ended March 31, 2016

• Revenue for the fiscal year ended March 31, 2016 increased 42.9% to $113.3 million as compared to $79.3 million for the fiscal year ended March 31, 2015.
• Gross profit was $50.5 million (44.5% of revenue) for the fiscal year ended March 31, 2016, compared to $30.5 million (38.5% of revenue) for the fiscal year ended March 31, 2015. The improvement in gross margin was primarily due to good revenue momentum in Majesco’s P&C and L&A businesses.
• Research and development expenses were $16.3 million (14.4% of revenue) for the fiscal year ended March 31, 2016 as compared to $10.3 million (13.0% of revenue) for the fiscal year ended March 31, 2015.
• SG&A expenses were $38.2 million (33.7% of revenue) for the fiscal year ended March 31, 2016 as compared to $21.0 million (26.5% of revenue) for the fiscal year ended March 31, 2015.
• Adjusted EBITDA for the fiscal year ended March 31, 2016 was $0.6 million (0.5% of revenue) as compared to $3.0 million (3.8% of revenue) for the fiscal year ended March 31, 2015.
• Net loss for the fiscal year ended March 31, 2016 was $3.6 million or ($0.10) per share as compared to a net loss of $0.7 million, or ($0.02) per share for the fiscal year ended March 31, 2015.

Balance Sheet

• Majesco had cash and cash equivalents of $6.2 million at March 31, 2016, compared to $6.5 million at March 31, 2015, and $9.7 million at December 31, 2015.
• Total debt at March 31, 2016 was $13.8 million, compared to $4.5 million at March 31, 2015, and $12.0 million at December 31, 2015.

Operating Highlights

• The company added three new clients during the quarter resulting in a total of 17 new client wins for the fiscal year. This included Maine Mutual Group, a mid-market insurer, selecting Majesco P&C Suite and Majesco Business Analytics in the Cloud; UNUM, a tier one insurer, selecting Majesco L&A Policy and Majesco Billing; QBE, a top 20 insurer selecting Majesco Billing, Policy Admin and Business Analytics in the cloud; and Clear Blue Financial Holdings, a new start-up, selecting Majesco Data Services and Majesco Digital Services. The total client count as of March 31, 2016 stands at 149.
• In addition, Majesco expanded its relationship with a number of existing client accounts, including two tier 1 insurers highlighting progress with our cross sale strategy. This included the expanding relationship with Homesite to support their broadening product portfolio and geographical presence in the U.S. and Hallmark Financial Services who selected Majesco’s Policy for P&C as their strategic enterprise platform for the Hallmark Commercial Insurance Solutions division.
• Majesco announced the release of Majesco Testing Services that includes strategic test consulting, insurance automation framework and digital testing framework.
• The 12-month backlog at March 31, 2016 was $71.9 million as compared to $63.0 million at December 31, 2015, up 14.1% reflecting strong growth momentum and higher by 47% as compared to March 31, 2015.
• Majesco announced its expanding partnership ecosystem with the additions of Business Agility and Splice software strengthening the portfolio of offerings to clients and cloud business model.