16 CMC The Basket Approach

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The
company focused on economically viable projects and geographies, including the
global information technology market instead of taking up only social obligation
projects. It clocked a growth of 36% compared to 17% during 1998-99, closing its
book for the last fiscal with a revenue of Rs 470 crore. The company also posted
substantial growth in terms of profit after tax (PAT) and profit before tax (PBT)–76%
and 69%, respectively–while its value addition grew by 28%. Earning per share
too jumped from around Rs 5 to Rs 9. And while CMC has set a target of Rs 567
crore for fiscal 2000-01, it is working towards crossing the Rs 1,000-crore mark
by 2002.

The
key factor for CMC’s growth was the company’s ability to focus on its wide
range of products. The company formed five strategic business units (SBUs)–customer
services, systems integration, international operations, indonet, and education
and training. Also, not content with its share in the global market, it went a
step further and created three separate marketing SBUs with their footprints
spreading across the Middle-East, southeast Asia and Europe.

The
services sector contributed the biggest chunk to the total revenue–Rs 313
crore or 67%. While the overall strategy of the company was to add value to its
services, it also laid much emphasis on facilities management. Third-party
maintenance continued as usual to remain the breadwinner for its customer
services SBU, with some of the major orders for the company coming from Indian
Railways, National Stock Exchange and ADA Bangalore. CMC’s strategy of
entering different vertical industrial segments also paid off well, with the
systems integrator SBU showing a remarkable growth of 64%. The last fiscal also
witnessed tremendous growth in new sectors of fingerprint analysis, insurance,
depository and freight management through its packaged software.

The company’s focus on systems integration and
implementation of its packaged software saw its international SBU consolidate
its market share. Another area where CMC continued to realize gains on its
previous year’s success was its marine cargo handling system (MACH). The
company bagged a major turnkey order from the Malaysian Port of Tanjung Pelepas
competing against 16 global vendors on an international tender.

Its major achievement, however, was a huge order for
electronic data interchange (EDI) that it bagged amidst stiff competition from
industry leaders like VSNL and Global Telesystems. The company also tied up with
nationalized banks to offer credit card services on its Indonet network, besides
helping the Election Commission of India process election results and developing
a website for Indian Railways. The company also forayed into new areas like
e-governance and ecommerce, which showed good promise, thanks to the new-found
love for these from several state governments.

Its education and training SBU, on the other hand, suffered a major jolt in
the face of stiff competition from leading players like NIIT, Aptech and SSI.
Though this was attributed more to the aggressive marketing strategies adopted
by its rivals rather than any lacunae in the quality of its products, the last
fiscal saw CMC’s revenue growth rate from education and training drop by 32%–from
57% during 1998-99 to 25% in the last fiscal. Also, a high number of franchisee
centers led to lower margins in this segment. DQ