Going Great Guns

If the performance of the Indian software sector in the first six months of

the current fiscal ended September 30, 2004 is any indicator, the good days are

back with a bang. The published results of eight companies (of which we

present the top five below)-TCS, Wipro, Infosys, HCL Infosystems, Satyam, HCL

Technologies, CMC and MphasiS-augur that the tech sector revival has

definitely arrived in India. On a cumulative basis, the top eight companies

achieved sales of Rs 18,382.7 crore, which is 53% higher than the figures for

the same period last year. Operating profits grew by 60% y-o-y, while net

profits advanced 48% to Rs 4,092.1 crore as compared to the figures for the

same period last year.

TCS



The recently listed Tata-group company has been in top spot in sales for the

first six months of the year. TCS achieved sales of Rs. 4,594.3 crore for the

six months of the current fiscal, registering a 43% growth. Operating profit for

the same period amounted to Rs. 1302.8 crore, up 66% and the net profit amounted

to Rs. 791.8 crore, up 16%. Revenues from the US for the half-year ended

September 2004 contributed 60%, amounting to Rs 2,754.4 crore, followed by

India, which contributed 22%, amounting to Rs 1,029.3. Europe contributed 12% of

the total half yearly revenues, amounting to Rs 565.9 crore, whereas the rest of

the world contributed the balance 6%, amounting to Rs 244.7 crore. Revenues from

consultancy services rendered by TCS amounted to Rs 4,365.5 crore, contributing

95% of the half-yearly total, whereas the balance 5% of the revenues were earned

from the sale of software licenses, which amounted to Rs 228.8 crore. In order

to focus independently on the BPO services, TCS sold its 50% stake in the BPO JV

with HDFC, Intelenet Global Services, for around Rs 161 crore before the IPO.

Wipro



The Bangalore-based IT major has taken the second place in sales for the

first six months of the year. The company achieved sales of Rs 3,755.6 crore,

47% over the sales in the same period last year. Operating profit margins (OPM)

advanced 7%, and net profit grew by 74% to reach Rs 768.7 crore as compared to

the first six months of the previous year. The company's three geographic

segments, USA, India and the rest of the world, contributed 53%, 22% and 25% of

the revenues, amounting to Rs 1,973.6 crore, Rs. 836.8 crore and Rs. 937.2 crore

respectively, with increased contribution from USA over the last year. The

company signed a five-year deal with AXA Australia amounting, to AUD17 mn to

provide application maintenance and development services to support the wealth

management and financial protection products. Wipro also won a multi-year

contract for application maintenance, support and development of Loyalty Gate's

business critical loyalty application, used for providing loyalty services to

three leading European airlines. The company expects revenues of $347 mn for the

quarter ending 31 December 2004.

Infosys



The Bangalore-based software major Infosys is in the third place for sales

for the first six months of the year. The company achieved sales of Rs 3,266.7

crore, 45% higher over the sales in the previous year. The operating profit

margin grew 43% and the net profit grew by 44% to reach Rs 835.7 crore as

compared to the first six months of the previous year. Revenues for overseas

business activities continued to contribute the major portion of the total

revenues amounting to Rs 3,212.7 crore, up 45% y-o-y. Revenues from domestic

activities also grew 28%, amounting to Rs 54 crore as compared to Rs 42.1 crore

for the half-year ended September 2004. 61 clients were added during the six

months and the company's top 10 clients contributed 38% of the revenues. The

employee strength as on 30 September 2004 was 32,949. The company had 37,79,250

sq ft of space, accommodating 19,900 seats and 9,87,000 sq ft under completion,

accommodating 7,540 seats. The company estimates to earn revenues of Rs

1,869-1,882 crore for the quarter ending December 2004. Revenue for the next

fiscal 2005 is projected to be between Rs 7,132-7,160 crore.

HCL Infosystems Limited



This Shiv Nadar Group company achieved sales of Rs 2,861.3 crore for the

first six months of the year, up 146% as compared to sales in the previous year.

OPM declined by 14 basis points to take operating profits to Rs 111.3 crore

during the six months of the current year as compared to the same period in the

previous year. Net profit increased by 59% to reach Rs. 89 crore as compared to

the first six months of the previous year. HCL Infosystems recently won a Rs 76

crore order from the Department of School Education, Punjab, comprising 18,200

PCs, servers, printers and UPSs. In addition, HCL will supply, install and

maintain the IT Infrastructure in 1,287 government schools both in rural and

urban areas across the state of Punjab as part of this project. On the

enterprise business front, HCL bagged large orders from the New India

Co-operative Bank, Oriental Insurance Company, Central Bank of India, United

Bank of India, Seimens, Sun Pharmaceuticals, ELCOT, Larsen & Toubro, TVS

Electronics, the Chennai Election Commission, Elgi Equipments, HFCL HDFC

Standard Life Insurance and NALCO Industries, to name a few.

Satyam Computer Services



The company achieved sales of Rs 1,641.9 crore for the six months of the

current fiscal, up 40% over the sales in the same period of the previous year.

Operating profit for the period amounted to Rs 406.9 crore, which was 26% higher

than the achievement in the first six months of the previous year. Net profit

jumped by 55% to reach Rs 1,137.4 crore. Satyam launched its largest Global

Development Center (GDC) outside of India in Melbourne, Australia, to serve as a

major technological development and software support center for the company's

Asia Pacific operations, which is in addition to its first Australian

development center in Sydney in November 2001. The revenues for the financial

year ending March 2005 are expected to be in the range of Rs 3,350-Rs 3500 crore,

and net profits, Rs 690-730 crore.