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Of Bears and Bulls

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DQI Bureau
New Update

Wipro



Market Capitalization: Rs 32,480 crore



Bangalore based Wipro leads the pack with a market capitalization of Rs 32,480
crore. Wipro’s performance over the past four quarters was decent despite the

global shake-up in the telecom business. Services in the telecom vertical forms

a substantial part of its software revenues. The # 1 market capitalized IT

company and also the largest in terms of revenues, sees a bright future in the

IT enabled services. The acquisition of Call Center/BPO Company–Spectramind

e-Services during the year is a step towards becoming a comprehensive IT

solutions provider.

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Although Wipro is talked about as being overpriced in comparison to Infosys,

which has better growth-potential, it has managed to maintain the top position

in market capitalization. Wipro, along with TCS, won a $ 70 million per year

outsourcing order from Lehman Brothers, which is the second major contract won

by the company after the $ 70 million system integration project from the UK

based Lattice group. With the acquisition of Spectramind and US based AMS, Wipro

is unlikely to slip from its top seat.

Infosys Technologies

Market Capitalization: Rs 26,067 crore



The stellar second quarter performance by Infosys
Technologies has almost signaled signs of a recovery in the IT sector. Infosys

Technologies has managed to meet its guidance every quarter since the last year

but the performance for the second quarter ended 2002 was truly outstanding. The

resignation of US global sales and marketing officer Phaneesh Murthy after an

ex-employee filed a case against him and the company, alleging sexual harassment

had little impact on the company’s performance and its stock price remained

largely unaffected.

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Infosys was trading at Rs 3179 last year and touched a low of

Rs 2156 during the month of October 2001. It touched a high of Rs 4850 when its

third quarter results proved better than expectations. It declined to touch a

low of Rs 2935 in August 2002 but has since shown a gradual recovery. Its first

quarter June 2002 results reflected signs of stability in its performance. In

the first quarter, Infosys’ revenues jumped 12% q-o-q to Rs 764.62 crore

whereas the net profit was up 3% q-o-q to Rs 216.85 crore. However, the second

quarter results beat the street expectations. Infosys reported revenues of Rs

879.58 crore, up 35% y-o-y and 15% q-o-q. Its net profit of Rs 225.77 crore was

up 12% y-o-y and 4% q-o-q. Infosys added 18 new clients and 1,806 employees

during the second quarter. Infosys expects the third quarter revenues at around

Rs 900 crore and full year March 2003 revenues of about Rs 3,450 crore. The

target seems achievable and considering the aggressive employee addition during

the second quarter, the company is slated to achieve the set targets easily.

Infosys’ foray into the BPO space has begun generating revenues. Progeon

Ltd, their BPO arm, posted a turnover of Rs 2 crore during the quarter with an

employee strength of just 287. Post the announcement of the second quarter

results, the share price of Infosys jumped from Rs 3,500 to cross the Rs 4,000

mark.

Satyam Computer Services

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Market Capitalization: Rs 7,465 crore



While Satyam Computer Services may not meet its guidelines
for fiscal 2003, it has maintained sequential growth in the topline during the

last two quarters. And not wanting to be left behind in the BPO bandwagon,

Satyam has forayed into this IT enabled space by forming Nipuna, a Business

Process Outsourcing company.

Satyam reported a 7% q-o-q jump in revenues to Rs 499.14

crore in the second quarter ended September 2002. Its net profit, excluding the

sale of stakes in the JV with GE, fell 4% sequentially to Rs 103.61 crore.

During the quarter Satyam added 23 new customers and in the past one year, it

has added 22 Fortune 500 customers. Satyam sold off its 50% stake in the JV with

GE for Rs 14.55 crore and also reduced its holding in Satyam Infoway from 57% to

35%. The equity reduction would take place consequent to fresh issuance of

equity amounting to $ 20 million to Softbank Asia Infrastructure Fund and

Venture Tech. Satyam expects to close fiscal 2003 with revenues of approximately

Rs 2,100 crore and a net profit of Rs 495 crore. Its 200-seater BPO subsidiary,

Nipuna was inaugurated in October 2002.

Satyam’s share movement has been highly volatile. Satyam touched a low of

Rs 120 in the month of September 2001 and a high of Rs 301 during January 2002.

The share price dipped below the Rs 250 mark in May 2002 to touch a low of Rs

192 in August 2002. It currently trades at Rs 237 and has a market

capitalization of Rs 7,465 crore.

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HCL Technologies

Market Capitalization: Rs 4,754 crore



The highly tech focused company made a few changes in its
business model by entering the enterprise business, reducing its focus on

technology work and aggressively acquiring companies or entering joint ventures

to improve its performance. While HCL Technologies has been able to sustain its

topline performance, the bottomline continues to dip on rapidly increasing

costs, indicating the need for the topline to grow at a much higher rate.

HCL Technologies’ disappointing performance in the fourth

quarter ended June 2002 and in the quarter ended September 2002 led to a sharp

decline in its share price. While the company has managed to improve its

revenues, the net profit has shown negative growth over the past few quarters In

the fourth quarter ended June 2002, HCL Tech’s revenues stood at Rs 432.30

crore, up 17% y-o-y and 6% q-o-q. Its net profit however slipped 19% y-o-y and

20% q-o-q to Rs 124.17 crore. In the full year ended June 2002, HCL Tech’s

revenues jumped 16% to Rs 1629.27 crore whereas its net profit went up by 4% to

Rs 442.91 crore. In the first quarter ended September 2002, HCL Tech reported

revenues of Rs 442.44 crore, up 2% q-o-q and 19% y-o-y. It’s net profit stood

at Rs 74.84 crore, down 26% q-o-q and 33% y-o-y.

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HCL Technology decided to focus on acquisition / JVs to make

inroads in the enterprise and application services arena. The company’s

strategy of entering into joint ventures, alliances, and acquisitions seems to

be paying off, atleast as far as their contribution to the performance is

concerned. In the fourth quarter, revenues from these initiatives formed 16% of

the total revenues and grew by 37%. HCL Tech was perhaps the only aggressive

acquirer amongst the Indian IT companies during the year. Having formed a JV

alliance with Deutsche Software last year, the company recently acquired US

based IT Services company–Gulf Computers, formed a 51:49 joint venture with

Jones Apparel Group (JAG), a Fortune 500 company, another with m a partners, a

consulting firm in the financial space, acquired 35.5% stake in Aquila

Technologies and entered into a strategic alliance with Sento Corporation.

HCL Tech touched a low of Rs 103 during September 2001 and a high of Rs 324

in January 2002. It has since declined on poor quarterly performances and

currently trades at Rs 165 with its market capitalization at Rs 4,754 crore. HCL

Technologies management capability and ability to nurture and integrate

operations would decide the future for this company.

i-Flex Solutions

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Market Capitalization: Rs 2,327 crore



Mumbai based i-Flex, a subsidiary of Citibank, recently came
out with a public issue of Rs 210 crore, offering shares with a face value of Rs

5 at Rs 530 each. Listed during August, the company’s share price dipped to

below the offer price but has gradually improved as news of fresh orders and the

excellent second quarter results pushed the share price up. The company is

currently ranked among the top 5 market-capitalized companies and perhaps the

only one successful in software products

i-Flex focuses on the niche banking and financial services

industry, and its flagship product–Flexcube has been ranked as the world’s

second largest selling wholesale back-office banking systems in the

International Banking Systems (IBS) UK Sales League Tables for 1999, 2000 and

2001.

In the full year ended March 2002, i-Flex achieved consolidated revenues of

Rs 435.72 crore, out of which 60% came from the products segment and the balance

from software services. In products, the company garnered around 98% of the

revenues from FLEXCUBE. iFlex achieved consolidated revenues of Rs 167.69 crore,

up 64% y-o-y and 28% q-o-q. i-Flex was listed at Rs 549 in July 2002 and touched

a low of Rs 435 within the first few days. The share price has since improved

performance on the bourse and buoyed by the excellent second quarter results,

has crossed Rs 630. i-Flex is gaining confidence among individuals as well as

institutional investors and is likely to cross the Rs 700 mark soon.

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Digital GlobalSoft

Market Capitalization: Rs 1,591 crore



With the successful acquisition of Compaq Computer Corp by
Hewlett Packard a few months back, Digital is once again in the limelight as

investors continue to argue over the future of the company as an entity.

According to market rumors HP would like to de-list the company and merge it

with HP-ISO, a 100% software subsidiary already operating in India. However,

Digital maintains that HP would not de-list it and the process of merger would

take place anytime in the next two quarters

The merger process would have an interim negative impact on

the performance of the company as is evident from the company’s second quarter

results. With the management focusing on integration, Digital witnessed a

sequential de-growth in net profit after a spate of excellent quarterly

performances in the last two years.

One of the star performers since the past two years, Digital

reported a turnover of Rs 332.11 crore and a net profit of Rs 92.67 crore for

the full year ended March 2002. In the first quarter, its revenue grew 2% q-o-q

to Rs 96.10 crore whereas its net profit grew 4% q-o-q to Rs 27.60 crore. In the

second quarter ended September 2002, revenues were down 1% sequentially to Rs

94.87 crore whereas the net profit was down 4% to Rs 21.37 crore. Digital

achieves major revenues from its parent company but has gradually reduced its

dependence on its parents by acquiring non-HP clients during the past one year.

However, the acquisition of Compaq by HP is expected to create more

opportunities for Digital.

Digital recovered from a low of Rs 206 in September 2001 to touch a high of

Rs 780 in May 2002. The share has since declined and touched a low of Rs 457 in

October 2002 courtesy rumors of possible de-listing of its shares from the stock

exchange. Digital currently trades at Rs 484 and is likely to be range bound

until there is clarity regarding its future.

Mphasis BFL

Market Capitalization: Rs 935 crore



After the merger of BFL software with Mphasis, the company
has been through a tough time with regard to integrating the operations. The

process has paid off well as the company has stabilized its operations in the

services segment and also seen a sharp improvement in the performance of its

call center subsidiary–MsourceE.

Mphasis BFL closed the quarter ended September 2002 with a net profit of Rs

16.14 crore. While revenues were higher by 35% y-o-y and 15% q-o-q, the net

profit was up by 61% y-o-y and 16% q-o-q. The performance includes the

financials of its BPO subsidiary MsourceE, which had an excellent second

quarter. Revenues of MsourceE 14.58 crore in the quarter ended June 2002 to Rs

22.38 crore in the quarter ended September 2002. MsourceE, which managed to

break even last quarter with profit of Rs 22 lakhs reported a net profit of Rs

1.20 crore. On the other hand, the software services too reported a 7%

sequential growth at Rs 80.55 crore after three flat quarters. Mphasis’ share

touched a low of Rs 73 in September 2001. The performance in the second quarter

pushed the share price to above Rs 500 levels. Mphasis has stabilized at the

level of Rs 540 and has a market capitalization of Rs 935.22 crore. With

expectation of improved performance in the second half of fiscal 2003, the share

price is unlikely to see a downside from the current levels.

Polaris Software Labs

Market Capitalization: Rs 775 crore



Listed a couple of years ago and a prominent player in the
BFSI space, Chennai based Polaris Software is slated to leap into the top league

of Indian Software companies once it finally merges Orbitech Solutions with

itself. Orbitech, a 93.25% subsidiary of the Citigroup, would be merged with

Polaris at a ratio of 42.65 shares of Polaris for every 100 shares of Orbitech.

Post merger, Citibank will hold a 44% stake in merged Polaris Software Labs.

Incidentally, Citibank holds 43% stake in i-Flex Solutions. Orbitech closed

fiscal 2002 with revenues of Rs 320 crore whereas the consolidated revenues of

Polaris were Rs 280 crore.

Polaris’ performance has however been unimpressive since

last year with revenues moving at a flat rate since the past six quarters In the

first quarter ended June 2002, revenues stood at Rs 70.54 crore, flat y-o-y and

up 5% q-o-q. Whereas in the second quarter ended September 2002, revenues stood

at Rs 75.89 crore, up 8% q-o-q and 4% y-o-y. The net profit in the second

quarter fell 35% q-o-q and 41% y-o-y to Rs 9.27 crore. Polaris achieves 75% of

the revenues from BFSI and has an active clientele base of 106 with Citibank

being the major client.

The news of the merger with Orbitech changes in the merger ratio and

unimpressive quarterly performance impacted the share price of Polaris during

last year. While the announcement of the merger pulled up the stock price, poor

results led to profit bookings. It moved in a range of Rs 175-220 until May 2002

when the announcement of a possible merger with Orbitech pulled the stock price

to a high of Rs 281. Polaris has since declined after poor performance and

currently trades at Rs 151.

Moser Baer (India)

Market Capitalization: Rs 677 crore



It was a power packed performance by this Delhi based leading
player of recordable and erasable compact disks (CD), digital versatile discs (DVD)

and the leader in floppy diskettes. Moser Baer is the lowest cost manufacturer

of CDRs in the world and is expanding its capacity at a rapid pace. The company

has increased the capacity of CDs to 760 million units perannum and is focusing

on the fast growing DVD market. The prices of CDs have been on the downturn

since the past few months, which affected its performance in the second quarter

of current fiscal. The company nevertheless expects 27% growth in the bottom

line in March 2003.

Moser Baer witnessed a sharp decline in its operating margins

in the second quarter ended September 2002. The second quarter net profit fell

4% q-o-q and 2% y-o-y to Rs 53.15 crore on a turnover of Rs 215.32 crore, which

was up 11% q-o-q and up by 29% y-o-y. Moser Baer’s operating margins fell from

49% in the quarter ended June 2002 to 43% in the quarter ended September 2002.

It closed fiscal 2002 with revenues of Rs 678.60 crore.

Moser Baer jumped from a low of Rs 214 in September 2001 to a high of Rs 365

in February 2002 on improved performance in the third quarter ended December

2001. With the prices of CDRs coming under pressure in 2002 Moser Baer witnessed

pressure on its operating margins. The share price has been on a gradual decline

and the performance of the second quarter led to massive offloading. Moser Baer’s

share price dipped below the Rs 200 mark and is currently trading at around Rs

140.

e-Serve International

Market Capitalization: Rs 632 crore



Formerly known as Citicorp Securities & Investments Ltd,
e-Serve International, provides transaction processing solutions, customer care

solutions and technology services to companies engaged in banking, insurance,

capital markets, mutual funds and e-markets. A part of the Citigroup, e-Serve

provides services predominantly to its parent company Citibank across the globe.

Citibank Overseas Investment Corporation, currently holds 44.38% equity in

e-Serve.

e-Serve’s witnessed a sharp improvement in the

profitability during the fourth quarter of fiscal 2002. While the revenues were

up 6% q-o-q to Rs 59.80 crore in the quarter ended March 2002, net profit leaped

85% q-o-q to Rs 5.50 crore. In the first quarter ended June 2002, revenues were

down by a percent to Rs 58.93 crore and net profit up 1% q-o-q to Rs 5.57 crore.

Similarly, in the second quarter ended September 2002, revenues jumped 3% q-o-q

to Rs 60.88 crore and net profit was up 6% to Rs 5.88 crore.

e-Serve was trading at Rs 160 in September 2001 with extremely low volumes.

The share began its upward journey to its peak at Rs 666 in the month of May

2002. e-Serve has since moved in a range of Rs 500 to Rs 570 and currently

trades at Rs 509. With sufficient business flow and increasing export revenues,

e-Serve is expected to sustain and improve its performance in the current

fiscal.

CMC



CMC provides services in hardware maintenance, system

integration, third party maintenance, networking services, education, and

training. CMC was recently acquired by Tata’s IT arm, Tata Consultancy

Services (TCS) from the government of India. TCS acquired the 51% stake from the

government at Rs 157 per share and came out with an open offer to acquire

another 20% stake from the public at Rs 281 per share. The open offer received

lukewarm response.

CMC closed fiscal 2002 with revenues of Rs 546.70 crore and a net profit of

Rs 33.64 crore. The company achieves substantial revenues from systems

integration in the domestic market and from government and related agencies with

predictably the January-March quarter making the highest contribution to its

turnover. CMC achieved revenues of Rs 208.35 crore and a net profit of Rs 13.11

crore in the quarter ended March 2002. In the first quarter ended June 2002,

revenues were up 8% y-o-y to Rs 96.75 crore whereas the net profit was up 116%

to Rs 6.64 crore. The performance in the second quarter was poor with revenues

declining 2% y-o-y to Rs 131.07 crore and net profit declining by 50% to Rs 5.20

crore. The second quarter results led to massive selling in the company’s

shares.

GTL




GTL is a comprehensive player in the Network Engineering and

IT Services industry providing software development and services, deployment of

IT infrastructure for Internet and telecom companies, call center and managed

network services, VPN and software development services. The company’s

services under the Network Engineering Services include network deployment,

installation, and operations on a turnkey basis to telecom services providers

and the IT Services Division. In the IT Services division, GTL provides services

in software development, maintenance and support, project management, data

centers, VPN, managed networks, network consultancy and network security.

GTL’s performance in the last six quarters has seen

revenues moving at a snail’s pace amidst volatile profitability. GTL’s

revenues for the full year ended March 2002 stood at Rs 547.81 crore and net

profit at Rs 102.04. In the first quarter ended June 2002, GTL’s revenues were

up 7% sequentially to Rs 146.04 crore but net profit was down 22% sequentially

at Rs 24.55 crore. Similarly, in the second quarter ended September 2002, while

the revenues grew 4% q-o-q to Rs 151.66 crore, net profits fell 28% q-o-q to Rs

17.70 crore.

Hughes Software Systems



The global slowdown in the telecom spending took its toll on

telecom focused software company Hughes Software Systems. Hughes provides

communications-related software services, products, and solutions to the global

communication OEMs. The company is a part of Hughes Network Systems (HNS), which

in turn is a part of US based Hughes Electronics Corporation. Hughes achieves

revenues from products, HNS related business and services to non-HNS clients.

Hughes has entered the BPO space and has signed its first contract with the

DirecWay Product Line of HNS to provide technical help desk

Hughes’ topline has been on the decline since last year as telecom spending

declined sharply and major telecom and communication vendors were forced to cut

the work force due to massive losses. Hughes revenues declined 3% q-o-q to Rs 58

crore in the fourth quarter ended March 2002 and further by 18% to Rs 47.40

crore in the first quarter ended June 2002. Its net profit too fell sequentially

by 12% to Rs 12.70 crore and 65% to Rs 4.40 crore in the quarters ended March

2002 and June 2002 respectively. Hughes has however shown some signs of recovery

with its revenues increasing 10% q-o-q to Rs 52.10 crore and net profit by 89%

q-o-q to Rs 8.30 crore in the second quarter ended September 2002.

Mastek



The Mumbai based Mastek provides software services in the

United States, UK/Europe, and the Asia-Pacific region through its three

subsidiaries. The Mastek group’s performance has been mixed in the last couple

of years, first due to the economic slow down in the Asia-Pacific region and

then the events in United States. Mastek currently focuses and achieves major

revenues from the European region and is making efforts to improve its

performance in the US region. Mastek recently entered into a JV with Deloitte

Consulting to provide software services to the clients of Deloitte.

Mastek closed the full year ended June 2002 with revenues of Rs 288.09 crore,

up 10% over previous year. Its net profit jumped 352% to Rs 38.23 crore thanks

to the improved performance in the second half. In the first quarter ended

September 2001, Mastek reported revenues of Rs 91.63 crore, up 43% y-o-y and 2%

q-o-q. Net profit in the first quarter stood at Rs 15.25 crore, up 271% y-o-y

and down 25% q-o-q. While 60% of the revenues came from the European operation,

the US market contributed 26% of the revenues.

NIIT



Delhi based NIIT has been severely hit by the global slowdown

in the IT sector last year. A major player in the IT education segment and

software services, NIIT saw a sharp fall in revenues in the IT education segment

as layoffs in the software sector and oversupply led to a slump in the demand

for IT education. NIIT’s software services segment, which traditionally moved

at lower than the industry rate too felt the brunt of the slowdown, which led a

sharp fall in the company’s revenues and profitability. Although, NIIT has

seen recovery in the IT education segment in the past couple of quarters, a

full-scale recovery is ruled out in the immediate future.

NIIT closed the year ended September 2001 with revenues of Rs 1138.90 crore

and net profit of Rs 71.10 crore. The performance of the education segment has

been improving in the past three-quarters. Revenues from IT education have

increased from Rs 74.23 crore in the quarter ended December 2001 to Rs 81.40

crore in the quarter ended March 2002 and further improved by 13% sequentially

to Rs 9.20 crore in the third quarter ended June 2002. However, revenues from

software services were flat in the third quarter ended June 2002 at Rs 96.40

crore after they had improved 5% sequentially in the second quarter ended March

2002.

Rolta India




Rolta is a leader in the engineering software services

segment and its operations include manufacturing and sales of engineering

workstations and providing solutions in the CAD/CAM/GIS conversion area. The

company is engaged in providing AM/FM and GIS, Plant Design Automation (PDA) and

Mechanical Design Automation (MDA) and e-services. It derives major revenues

from domestic operations providing CAD/CAM solutions to state government and its

agencies. Moreover, it has an exclusive tie up with Integraph, the worldwide

leader in AM/FM and GIS and also for providing on-site and off-site services on

Integraph’s Plant Design System (PDS).

Rolta closed the year ended December 2001 with revenues of Rs 300.81 crore

and a net profit of Rs 105.45 crore. In the nine months ended September 2002,

the company has clocked revenues of Rs 200.95 crore, which include inter

division sales, and net profit of Rs 76.75 crore. In the third quarter ended

September 2002, while revenues were flat at Rs 60.15 crore, the net profit fell

32% to Rs 20.42 crore.

VisualSoft Technologies



Once tipped to give tough fight to the IT majors, VisualSoft

Technologies was hurt by the dotcom burst as it achieved almost 50% of its

revenues from Internet related products. As the product revenues slumped,

VisualSoft strategy to focus on the services segment seems to be paying off.

Hyderabad-based VisualSoft is slowly making a comeback with improved performance

and the focus on more stable services rather than fast growing but risky

products has proved to be the right decision.

VisualSoft witnessed sequential decline in the revenues and profits until the

second quarter of fiscal 2002. The company has since reported sequential growth.

VisualSoft’s revenues in the first quarter ended June 2002 grew 8%

sequentially to Rs 27.87 crore whereas the net profit was 14% up at Rs 7.37

crore. In the second quarter ended September 2002, revenues were up 7% q-o-q to

Rs 29.91 crore and the net profit went up 9% sequentially to Rs 8.07 crore. The

company’s operating margins too have improved from 21% in the second quarter

of fiscal 2002 to 34% in the second quarter of fiscal 2003. Revenues from

products, which formed 8% of total revenues in March 2002, were down to 4% of

total revenues in the second quarter.

Tata Infotech



The Tata group company is largely into software consultancy

and services in the area of insurance and banking, manufacturing and commercial,

public sector, transportation telecommunications and health, and system

integration apart from providing IT education. Once amongst the major players in

the Indian IT industry in terms of revenues, Tata Infotech’s performance has

been disappointing both during and after the software boom.

While most of the major IT players have been able to sustain their

performance, Tata Infotech has continued to slip on disappointing quarterly

performances. Tata Infotech’s performance for the year ended March 2002 was

disappointing compared to the previous year. Tata Infotech reported revenues of

Rs 475.10 crore and net profit of Rs 20.50 crore in the year ended March 2002,

down by 8% and 23% respectively. In the first quarter ended June 2002, Tata

Infotech also reported poor performance with revenues declining 27% y-o-y and

16% q-o-q to Rs 95.79 crore. The company reported a loss of Rs 1.13 crore as

against a profit of Rs 6.92 crore in the immediate previous quarter and Rs 5.42

crore in the corresponding quarter last year.

Mascot



Bangalore-based Mascot is a part of the Nasdaq-listed iGate
and one of the major software services exporters in the country. The company

provides software solutions in the area of application maintenance outsourcing,

E-business, business intelligence, ERP, and mobile commerce. It is yet to

stabilize its performance and offer tough competition to its peers. Despite

having a massive offshore facility in India, Mascot achieves almost 63% of the

revenues from onsite activities and 50% of the total revenues from one client–GE,

which has affected its financial performance as well as the price movement on

the bourses.

For the year ended March 2002, Mascot achieved revenues of Rs 407.38 crore

and a net profit of Rs 45.36 crore, which were higher by 20% and lower by 3%

respectively over the previous year. While the first quarter performance for the

period ended June 2002 was decent with revenues and profit growing sequentially

by 3%, the performance in the second quarter was disappointing. In the quarter

ended September 2002, Mascot reported revenues of Rs 89.32 crore, down 20% y-o-y

and 2% q-o-q. Its net profit stood at Rs 6.31 crore, down 55% y-o-y and 22%

sequentially. Operating margins declined from 9% to 8.28% due to higher direct

cost relating to onsite activity. The lack of performance had an adverse impact

on the share price, which declined sharply after the announcement of the

results.

Tata Elxsi (India)




Tata Elxsi provides design and development services in

technologies that include visual computing, networking and communications,

embedded systems and storage management, Internet, Intranet and groupware. The

company also provides system integration solutions in CAD / CAM, film, video and

broadcast, network design and implementation, and scientific and commercial

computing.

Tata Elxsi’s profitability was impressive for the year ended March 2002

despite a small dip in revenues which were down 6% to Rs 129.80 crore. The net

profit was up 21% to Rs 16.75 crore indicating that margins in niche segments

were not so badly affected as compared to the rest of the sector. In the quarter

ended June 2002, revenues were down 12% y-o-y to Rs 24.71 crore but up 83% y-o-y

at Rs 2.88 crore. The performance in the second quarter was however

disappointing with revenues sliding 8% y-o-y to Rs 27.59 crore and net profit

declining by 9% y-o-y to Rs 2.89 crore

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