Bright Future in the Making

Despite the growth in this vertical,

there are only a few companies that are totally focused on this activity that

have reached a critical size of over Rs 100 crore. This is probably because this

vertical requires relatively higher capital investment than the rest of the

software services sector and consequently, smaller companies are not able to

make the requisite investments to reach a critical mass.

According to NASSCOM, Content development, Animation and CAD/CAM/GIS services

are estimated to grow in the range of $2.5-3 bn by 2008 (approx Rs 19,550 crore).

India's strengths in the CAD/CAM/GIS service area are similar to other ITeS

services and the growing domestic market adds another dimension to our selling

proposition.

It is estimated that of the $7 bn global GIS industry, USA accounts for $2.5

bn. With the increasing level of sophistication in automotives and industrial

machinery, CAD/CAM services for digitizing, designing and software development

in these areas is also growing.

The three major public companies that operate in the CAD/CAM/GIS and

engineering services segment are Infotech Enterprises, Rolta, and Geometric

Software. Other companies that have significant revenue contribution from these

services include TCS, Satyam Computer Services, Patni Computer Services, and

PentaSoft Technologies that are listed. Since data relating to their CAD/CAM/GIS

business is not available, these have not been included.

Infotech Enterprises: Impressive Growth



Infotech Enterprises is a software services company based in Hyderabad that
delivers solutions to manufacturing, utilities, telecommunications,

transportation and local government markets. The company currently provides

engineering services, Internet/Intranet services and executes software projects

and creates digital road networks for the densely populated cities in the world

to enable car drivers to navigate from point-to-point in the shortest possible

time.

Infotech

has designed and deployed navigation technology to support fleet management,

transportation and logistics applications in addition to its creation of IPR

relating to spatial products and technologies. The company is present globally

in 17 locations and has several centers of excellence in engineering services

with specific focus on the aerospace industry in addition to providing design

analysis, manufacturing and after-market support for some of the most

sophisticated aircraft engines in the world.

Infotech's performance was impressive for the first quarter ended June

2005. The consolidated revenues grew 35% to Rs 78.3 crore, as compared to Rs 58

crore for the same period last year. The net profit for the same period saw a

105% leap amounting to Rs 9.8 crore, as compared to Rs 4.8 crore y-o-y. Infotech

Enterprises entered into a strategic alliance with Ten Sails to offer solutions,

services and technology to its founder corporation Smallworld.

As a result of the alliance, Infotech was appointed by North Delhi Power

Limited to implement Smallworld GIS technology within the organization for GIS

mapping of the entire distribution network and provide GIS based solutions for

operations resource management. During the quarter, the company inaugurated a

geospatial production facility in US, which will be managed by Infotech's

American subsidiary, VARGIS to execute the recently awarded government mapping

contracts. The share of Infotech Enterprises is currently trading at Rs 328.

Rolta India: Modest Rise in Revenues



The Mumbai-based company is a provider of services in the CAD/CAM/GIS

conversion area, in addition to manufacturing and selling engineering

workstations and providing Internet services. Rolta caters to the needs of the

customers in areas such as geo-engineering, plant and mechanical design

automation and enterprise application integration that includes integrating and

web-enabling engineering and business applications, smart cards, eSecurity and

data warehousing and mining. The company earns majority of its revenues from

domestic operations providing CAD/CAM solutions to central and state government

and their agencies.

For the three-month period ended June 2005, Rolta's revenues grew 6% to Rs

102.6 crore as against Rs 96.5 crore for the same period in the previous year.

The net profit also grew 47% to Rs 24.7 crore.

During

the quarter under review, Rolta India won GIS projects exceeding Rs 200 crore to

be executed domestically.

Stone & Webster Rolta Limited, a JV between Shaw's affiliate, Stone

& Webster and Rolta India was awarded the Engineering services contract for

the fifth gas-cracking furnace at Reliance's IPCL Gandhar Petrochemical

complex at Gujarat.

Rolta is currently trading at Rs 164 and is expected to remain subdued in the

near term.

Geometric Software: In Good Health



It provides end-to-end product life cycle management solutions for

mechanical design, manufacturing and industrial markets through the three

strategic business units, namely Geometry, Information Management and

Collaborative Engineering.

The company also offers services based on CATIA, eMatrix, and other

CAD/CAM/CAE/PDM software platforms. Geometric and Dassault Systemes have formed

a subsidiary company, 3D PLM Software Solutions, to provide software development

services for the Dassault group.

For

the quarter ended June 2005, Geometric posted consolidated revenues of Rs 48.6

crore, up 39%, as compared to Rs 35 crore during the similar period last year.

Revenue from execution of projects was Rs 41.7 crore, contributing 86% of the

total quarterly revenues. Sale of products during the quarter contributed the

balance 14%. Revenues from the US contributed 62% of the quarterly revenues

amounting to Rs 30.1 crore followed by Europe and the rest of the world

contributing 24% and 14% respectively.

Geometric's operating profit margins continued to decline, mainly due to

increase in personnel costs, traveling costs, and other expenses on staff

welfare activities. Net profit was Rs 7.8 crore, up 53% over the same period

last year. Currently, the shares of the company are trading at Rs 119.