9 – The Doctor’s Delight

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MD:
Dr. NIRMAL JAIN

Consider the statistics. This company was on the brink of a disaster. Domestic
business was slackening off, exports were stable, but growing at a rate lesser than the
overall IT industry, its market reputation was in tatters…all this just 18 months ago.

Eighteen months later, in the second successive year, it
has declared a net profit of over 10 percent, declared a consistent dividend to its
shareholders, consolidated its marketshare, and grown by leaps and bounds.

Rescuing Tata Infotech Ltd (formerly known as Tata
Unisys Ltd) from the brink of oblivion is the current managing director and chief steward
Nirmal Jain. In his own inimitable but quiet way, Jain has ensured that the financial
performance
tatainf1.jpg (11928 bytes)of this Tata company remains strong. The stock markets have responded in kind and
the TIL stock has been on a northward trajectory for the last six months.

What caused this transformation? Jain ascribes it,
modestly as he will, to a changing computing scenario. He also admits the fact that
Unisys’ departure has been a blessing of sorts, in the sense that the company is now
free to focus on the other platforms. For one, Jain has ended TIL’s honeymoon with
the standalone PC market. The alternative has been to focus

S T R A T
E G Y

  • To position TIL as a systems integrator providing
    end-to-end solutions in domestic and international markets, focusing on manufacturing and
    services markets predominantly.

T A C T I C S

  • Has got away from box business.
  • Has focused on building whole solutions, even if they are
    small orders.
  • Has focused on building skills by getting into NT and
    other non-Unisys platforms.
  • Has focused on training as a key result area.

O B J E C T I V E S

  • To finally focus on SI as a single business, while
    everything else, like education, software distribution etc., funnels into that.
  • To sustain a growth rate of over 50 percent at the
    topline.
  • To maintain the Profit After Tax of over 10 percent.
  • To grow the education business by a factor higher than
    the company’s growth.
  • Will put lower emphasis on software distribution,
    especially at the retail level.

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

  • Revenues grow 56.8 percent, while expenditure remains 8.5
    percent to sales.
  • Net profit maintained at 10.5 percent of sales.
  • Training revenues at Rs 37 crore.
  • Complete focus on SI–both domestic and
    international.
  • Software exports Rs 172 crore, 52 percent of total
    revenues.
  • Dependence on the US down, non-US sales 47 percent of
    exports.
  • Good lead in banking & finance segment.

PRODUCTS AND SERVICES: Systems,
Networking, Packaged Software, Maintenance, Training
* AGENCY OPERATIONS: Microsoft, SCO,
Uniplex, MapInfo
* START-UP
YEAR:
1978
l EMPLOYEES: 3200
* QUALITY CERTIFICATION: ISO
9000
* ADDRESS: Manish
Commercial Center, 216 A, Dr Annie Besant Road, Mumbai 400025
* TEL: 4933560 * FAX: 4950381
*
WEB SITE:
www.tatainfotech.co.in

on accounts where the company could win Systems
Integration (SI) projects. While the strategy did not actually pay dividends last year, it
has at least taken the pressure off the company for box-moving—something in which TIL
did not fare too well in the past. Nevertheless, TIL did do well enough to sell a little
over 2,800 systems domestically and exported a similar number. As a consequence, its
domestic box business jumped close to 50 percent. However, something that Jain will have
to focus on is the software distribution business. If anything, the software distribution
business may be the millstone around TIL’s neck. Jain admits this and says that his
plan is to finally jettison the software distribution and concentrate on value-added
solution selling, in which the company has good experience.

This is evident from the fact that close to two-thirds
of the revenues have come in from manufacturing and services. The latter has contributed
to more than half the company’s revenues for the last year. A great contributor to
its services market penetration has been its banking solution Signbank, which has opened
up many a door for the company to provide total solutions to customers in the financial
market.

An interesting part of TIL’s performance has been a
reduction in the exports to the US (from 70 to 58 percent) and an increase in the offshore
content in software exports (from 26 to 30 percent). As a result, TIL was able to maintain
and augment its profitability. At a time when the Asian meltdown is causing concern, TIL
increased its exports to that region to about 18 percent. However, as the Asian economies
show no sign of recovery in the near term, this percentage will perforce move downward and
the current year may once again witness TIL’s focus on the US market.

With a very clear strategy of entering into the SI
markets in India and abroad, Jain clearly is positioning his company for the domestic SI
business—as and when it takes off. For the present year, TIL will focus on extending
its total solutions expertise in the areas where it has competitive advantage, i.e.
manufacturing and services.

One area where TIL has made a dent is high-end training,
especially Y2K, where it grew by 80 percent. The company’s education wing, TULEC, has
expanded while maintaining its focus on longer-term and higher-end courses.

tatainf2.jpg (21629 bytes)At the same time, its defocus from iron-peddling has had an expected
result—a 5-percent dip in the maintenance revenues. The good news here is that there
was a start made on facilities management.

The better news is in the area of custom software and
consultancy, where a 65-percent growth wiped out all the little dips and warts that any
restructuring process will entail. In a market where the number of Unisys systems is
either stable or dipping, TIL’s growth is evidence of the company going
cross-platform. For instance, in the current year, the focus is likely to be on Unix and
NT besides other platforms. In order to gain expertise on NT, the fastest growing market
currently in the enterprise segment, the company is getting ready by training a
significant amount of its manpower on NT.

Next stop is the Internet. TIL has drawn a three-pronged
strategy to tap the power of the Web. While presently there are no services being offered,
TIL plans to include content hosting, EDI using the Web, technology supply and support,
and providing virtual private network services over the Internet.

Services or not, technology and skills upgradation are
right on top of mind of Jain, who once told DATAQUEST: "You cannot keep technology
away from a techie." Going by his performance, the good Doctor certainly knows his
medicine.

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