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Rank 18: Silverline Technologies: Integration Issues

author-image
DQI Bureau
New Update
Ravi Subramanian
Chairman & MD

Kumar Subramanian



Vice-chairman


& Director

Mark Fiato



Senior V-P



(Sales and Marketing)


Norman D’Souza


V-P (Corporate Finance)


Dilip Londhe


V-P (Human Resources)



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Mumbai-based Silverline Technologies jumped in rankings from #36 to

#18 in financial 2001-02, thanks largely to bringing all its 100% subsidiaries

into the revenue reporting fold. Unlike previous years, the company included the

revenue figures of Silverline Technologies Inc (based in the US), Sky Capital

International (based in Hong Kong), Seranova (based out of India), and the

newly-acquired E-com Server Inc. Revenues grew 10% during the year to Rs 780

crore, but net profit took a beating–down 66% to Rs 41 crore. Silverline’s

operating margins, which have fallen steadily over the last few years, touched a

low of 7%.

Performance

Highlights
Onsite revenues are at a high 70% of exports,



due to a largely maintenance-oriented business
The main target vertical is banking and finance, bringing in 27% of revenues. The telecom sector accounts for another 11% of overall sales
Strengths
The revenues of parent company Silverline Technologies and subsidiary Seranova are on the upswing
Weaknesses
Heavily dependent on low-margin maintenance and legacy systems work
Integration with Seranova taking too long
Silverline

Technologies Ltd.
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Startup:

1992
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Products &

services:
Custom

application,



maintenance, enterprise application integration, datawarehousing,
e-business and CRM
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Branches: 13

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Address:

1405 Maker Chambers V, Nariman Point, Mumbai 400 021
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Tel:

2049161
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Fax:

2021131
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WebSite:

silverline.com

Despite the jump in rankings, it was a tough year for the company. In 2000,

Silverline, which was largely a mainframes and legacy systems maintenance

company, acquired Seranova–a pure play e-biz solution provider–from

Intelligroup. The merger wasn’t an easy one, and was made all the more

difficult by the fact that both entities were roughly equal in size. The long

integration process since has hit overall growth, and last year, the company

laid off 500 of the 2,300 employees of the combined entity–a whopping 22% of

the total workforce.

Also, to rationalize accounting issues for the merged entity, the company

temporarily changed its accounting year from March-April to June-July for just

this one year. The revenues of Silverline’s Hong Kong-based subsidiary, Sky

Capital International–primarily into maintenance, professional services and

old-style body-shopping–crashed by nearly 74%, from Rs 504 crore to Rs 132

crore.

The only good news came in the shape of growing revenues from its US

subsidiary and Seranova. Silverline was listed on the New York Stock Exchange in

June 2000 and recently announced plans to raise equity by $30 million through

either the global depository receipts or ADS route. But with the market looking

the way it does today–tremulous, shaky and still trying to shrug its way out

of the long slowdown–and with Silverline’s numbers looking the way they do

at the moment, perhaps a little patience would pay off greater dividends.

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