13 – Shackled, But Sprinting

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MD: RAMESH D GROVER

In a year  when domestic IT growth and profit has been under pressure,
Government spending slashed, public-sector structuring questioned, and employee attrition
and recruitment a worrying internal issue, the performance of this company can be
appreciated. The main reason for the continuing positive performance of this
service-oriented organization is its breadth of expertise along a few core competencies.

Started more than twenty years ago, the core competence of this public-sector IT
organization remains its experience base with hardware systems and software development.
These competencies have led the organization to create its business units, which include
customer service, systems integration, training and education, international operations
and INDONET.

cmcltd2.jpg (12613 bytes)The customer service business unit
contributed the largest share-55 percent-of the total revenue in 1997-98. Out of this
large share, 29 percent came from the supply of equipment and the balance from
installation and maintenance. As the primary undertaker for supply, installation, and
maintenance of IT equipment in Government and public-sector organizations, CMC currently
has the expertise to maintain equipment from 40 different global vendors at 150 service
locations. This support capability is claimed to be one of the largest in the world. Over
the last two years, the client base for customer services has grown to include the Indian
Railways, Indian Meteorological Department, National Remote Sensing Center, Indian Oil
Corp., Defence Research Development Organization, and Indian Council of Agricultural
Research.

S T R A T E G Y
  • To meet growing expectations from domestic and global customers.
  • To focus on domain expertise gained in select areas.
  • To move toward greater autonomy in management functioning.

T A C T I C S

  • To focus on cutting-edge technologies through vendor alliances.
  • Increase number of offices outside the country.
  • Develop local alliances with vendors, providing related solutions in international
    markets.
  • Focus on product marketing more than project marketing.
  • Represent to the Government the need to divest its holding.

O B J E C T I V E S

  • To increase its share in the domestic banking and finance market.
  • To penetrate the ERP market as a Baan solution provider.
  • To reduce project overrun delays.
  • To increase the number of training franchisees.
  • To build competency centers for new technologies and products.

P E R F O R M A N C E H I G H L I G H T S

  • Revenue growth at 62.7 percent; profit after tax grows from Rs 2.57 crore in 1996-97 to
    Rs 6.36 crore in 1997-98.
  • Exports grow from Rs 34.2 crore in 1996-97 to Rs 55.1 crore in 1997-98.
  • Largest contribution to revenue from customer service at Rs 167.7 crore.

Factsheet

PRODUCTS AND SERVICES: Systems Integration, Networking, Software
Development, Consultancy, Training l START-UP YEAR: 1976 l EMPLOYEES: 2813 l QUALITY
CERTIFICATION: ISO 9000 (CMC Center, Hyderabad) l ADDRESS: 1 Ring Road, Kilokri, Opposite
Maharani Bagh, New Delhi 110014 l TEL: 6830087

l FAX: 6844652 l WEB SITE: www.cmcltd.com

Amongst its other competencies is software development, with strong domain
expertise in ports, transportation, freight operations, and banking and finance. CMC
capitalizes on these competencies through its systems integration business unit. In
1997-98, the contribution from the systems integration unit to the total turnover was the
second highest, at 33 percent. In the last few years, CMC had accepted projects of varying
domain expertise, as an extension of its service conditions with government and
semi-government clients. However, project overruns due to employee attrition, multiple
points of authority in government-client organizations and limited understanding of IT
applications in these organizations have forced it to limit such new ventures. Instead, in
the next few years, CMC will concentrate on achieving revenues from its tested products in
these areas. These products include TC4, SWIFT in banking; VECTOR for stock exchanges;
MACH, CALM for freight management at ports; OASYS for the oil sector; ARTS, IMPRESS for
railways; FACTS for police; CRYSTAL for mining; and FADHS for air defence.

Amongst its major systems integration orders in 1997-98 were the freight operation
information system for the railways; central depository accounting system for the Bombay
Stock Exchange; fingerprint analysis and tracing systems for the police forces; global
positioning systems for vehicles, automation of the National Games and development of the
web-site for the Election Commission.

With the need to establish itself in the global market, CMC has attempted to penetrate
the US market through its acquired subsidiary Baton Rouge. This subsidiary has been mostly
providing banking and finance solutions to the US market. Revenue from this subsidiary
grew by 61 percent in 1997-98.

With the basis of a relatively sound global market expansion strategy, exports grew by
61 percent in 1997-98 with an increase of contribution from 15 percent in 1996-97 to 19
percent in 1997-98. Some important global projects included computerization of the
Chittagong Stock Exchange in Bangladesh; implementation of port management at Bremerhaven cmcltd3.jpg (21474 bytes)in Germany; and Train scheduling system for London
Underground among others.

CMC has set for itself an ambitious target of Rs 700 crore by the year 2000. Among its
immediate plans for business development is leveraging on its alliance with Baan for ERP
services in the domestic and global markets. It has also formed an alliance with Sun and
started a Java Competency Center at its R&D facility in Hyderabad. With Compuware, it
has tied up for its UNIFACE range of client server and Internet products.

A limiting factor in CMC’s growth today is leadership. At present there is some dispute
over this issue and the matter is now subjudice. Unfortunately, this has jeopardized most
decision-making. Another hindrance to the company’s growth stems primarily from the
81-percent stake held by the Government, which limits board management functioning,
employee salary structure and related attrition, proactive decision-making, investments,
and other long-term thinking. Nevertheless, if the recent thrust on disinvestment bears
fruit, CMC may well be on its way to becoming an IT ratna by the end of the century.

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