The Financial Wizards

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Wipro Ltd
The software and hardware giant has reached the first position
having topped the list for sales, profits, and gross block. Even though on growth
parameters the company may not be on the top positions, its sheer size has ensured that
Wipro tops the list. Its sales have shown a moderate growth of 13 percent over the
previous year, while profits have jumped 87 percent and asset growth has reached 21
percent. Though these figures are substantial for a company with a sales turnover of Rs
1,462 crore, they do not compare very well with its younger rivals. Wipro, however, should
be able to show better growth next year as its massive investments into software
infrastructure come into place and it is able to get the full benefit of a possible
recovery in the hardware line-up. The company’s future plans of a possible ADR and
continuing growth in the software business should ensure its position in the top five
slots next year as well.

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Pentafour Software & Exports Ltd
Third on this list of illustrious companies is Pentafour
Software which, despite its size and profitability, still draws some doubts in the minds
of both the investor as well as the IT professionals. Of course, its performance has been
more than wonderful. Its profits at Rs 68.37 crore for the current year put it only a
shade below that of Wipro, while in sales too it gets the fifth position. The company’s
asset size at Rs 330.50 crore earns it the second position on this account. An asset
growth of 87 percent at its size is surely creditable. Sales growth too at a whopping 67
percent puts this company at a higher rank than the # 1, Wipro. Though at a comfortable 19
percent, the ROCE is the factor which has put down the company a few notches down the top

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NIIT is another leader of this pack with the second highest
profits of Rs 67.89 crore and the fourth position for sales. Even on the growth front, the
company is building up its assets fast at 34 percent while sales growth at 42 percent at
this high level of sales is surely commendable. The company’s mix of business with
training, software services, and product development and the synergy derived from their
integration enabled it to drive superior returns of 27 percent ROCE during fiscal 1996-97
which ended on September 30, 1997. If the company had a year ending in March like others
on the list, its position would have surely been even better.

As Infosys, which is # 4 on the list, moves into higher
ground with a massive jump in investments expected in the near future, growth plateau for
NIIT is still far away. However, like other big companies, the growth it has been able to
generate is still less than some of the smaller companies in the field and consequently in
terms of sales growth its rank is 25th in the list. The rank in profit growth is better at
17, indicating the improving profitability of its operations.

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Infosys Technologies Ltd
The darling of the investors comes a few steps behind in this
list once again due to lower growth in sales and profits compared to the smaller
companies. Surprisingly, the company has not topped any of the lists despite a uniformly
good performance in each of the segment. This brings out the true merit of Infosys with
its all round performance. It makes the right investments in infrastructure, marketing,
and people to maintain its growth year after year. While the company does not have the
highest sales or profit growth, it makes up with its overall size of profits and sales in
the sample. Infosys has always been a big investor in infrastructure and, probably,
already has the best one among the Indian companies. It realizes that with increasing
price competition, the level of investments into hardware, software, and telecom
infrastructure would become a critical factor for success. With a major capital
expenditure plan in place for fiscal 1998-99, Infosys will remain a leading light of the
list in the next year as well. No wonder, its shares quote at a whopping over 50 times its
earnings for the current year-making it the highest valued company in the IT sector.

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Satyam Computer Services Ltd
Despite sizable sales of over Rs 89 crore in the
previous year, this Secunderabad-based company saw a 100-percent jump in the sales which
touched Rs 178.49 crore and an 87-percent jump in the net profits for the year 1998. This
massive growth has ensured Satyam the # 5 position in the overall rankings. Over the
years, Satyam Computer has positioned itself as one of the top software companies in
India. Once again here, the prime reason for the position has been investments in
infrastructure over the years. This year, the company grew its gross block by 85 percent
thereby ensuring it continues to grow at higher-than-industry rates. With Y2K business
growing by the day and diversification into domestic consulting and networking business,
the Satyam Group of companies is surely ready for the next millennium.

The weakness of the company is a low ROCE, which despite
being a a reasonable 18.8 percent is way down the ranks. The low ROCE of the company is
primarily because its massive investments in fixed assets and continuing increase in staff
is yet to get fully reflected in increased sales and profitability.

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Cybertech Systems & Software Ltd
This little known Mumbai-based company can be called a
challenge to the big players. Cybertech Systems & Software Ltd has achieved the second
position in the listings, thanks to a mindboggling profit growth of 1228 percent.
Similarly, the company saw a ROCE of 48 percent keeping the other players, which are far
bigger in size and profits, at bay. Due to its short history and, while the company is low
down in profits and sales figures, its growth figures are stupendous. Its ROCE too is high
as the company has a very high operating margin and had lower asset base in the year ended
March 31, 1997. The company which operates primarily in the SAP training area is poised
for further growth in future. A subsidiary of US-based Cybertech International, which
recently took majority stake in the company, it went public only in 1996. The company has
set up a major facility in Thane and is likely to move into other software services area
as well. With excellent results for the current year as well, this company is well set to
enter the big league of IT companies in not too a distant future.

Altos India Ltd
While this company has been going through tough times
in the recent months, its performance for the 15 months ended December 1996, was
encouraging. Of course its second position in terms of sales is creditable, it must be
pointed out that this is for a period of 15 months against 12-month periods for most
companies. The company also has the 10th position in terms of gross block and the 21st
position in terms of profits. These figures underscore the uncertain world of business. A
company which performed reasonably well in 1996 is today a relic of the past. A
trailblazer in terms of making a mark in hardware exports, Altos’ poor health in that
period can be seen from the negative growth in profits and a low ROCE of 12 percent. This
means that the company would find it difficult to service loans at 14-15 percent and the
rest is now history. Financial numbers do indicate what is likely to happen in future. If
a company has a poor ROCE, it must find ways of improving it soon as over a period of time
it will find it difficult to service loans it has taken. On the other hand, companies with
high ROCE would do well to seek more loans to make even higher returns for its owners.

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Unicorp Industries
Like some of its counterparts in the industry, Delhi-based
Unicorp Industries is also making a transition from being a mere box seller to that of
providing a wide range of services in networking and software services, among others.
Consequently, the company has made a major expansion in the infrastructure to move up the
value chain. The company invested a massive Rs 8 crore during the year 1996-97 to set up
infrastructure facilities at Gurgaon where it has its EHTP. Consequently, its gross block
increased by an astounding 188 percent which has catapulted the company to this position.
On other parameters such as profit growth, the company has done well despite being in a
sector where profits are difficult to come by. The company’s profits increased by 52
percent to reach Rs 6.51 crore for the year ended September 1997 against an achievement of
Rs 4.29 crore in the previous year. In terms of sales growth, Unicorp has made commendable
progress-clocking 54 percent over the previous year. Given the wafer thin margins in the
sector as well as a significant increase in assets, the ROCE remains at a marginal 16.31

A heavy investment into the trade receivables also saw the
company facing some financial problems of late, forcing the management to put in
additional funds into the company through a preferential issue. The future of the company
depends on its ability to transform itself from a hardware vendor to a full-service
systems integrator. As margins in the hardware sector move further Southward, time for
such a transition is running out fast.

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HCL Insys
While HCL ranks # 3 in terms of both sales and profits, HCL
Insys stands # 9 in the overall rankings. To put it bluntly, HCL Insys’ performance during
the period ended June 1997 was simply poor. The company clocked a turnover of Rs 637.90
crore which was 5 percent lower than the previous year. The major shock came in the
profits which touched a low of Rs 5.10 crore, down by 57 percent over the previous year.
No wonder, the growth rankings places HCL Insys at # 53 in terms of sales and 46th in
terms of profits. Given its large size, HCL is # 8 in the assets which increased by 23
percent during the period. Stiff competition from both the MNCs and the domestic companies
as well as the assemblers took a toll on the company’s performance, putting severe
pressure on net margins which dropped down to a measly 0.82 percent of the turnover. This
poor performance of 1997 does not leave HCL Insys out of the race of the super performers
for next year. With transition plans in position to move the company into a systems
integrator and an ERP specialist, HCL should do a lot better in 1998. This is already
evident from its first-half performance which has been very good.

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Aptech Ltd
Effects of competition in the education business were
reflected in the sales of Aptech, the computer training giant. However, the company made
it to # 10, thanks to increasing investment in infrastructure which grew by 50 percent
from a modest Rs 28.36 crore for the year ended December 31, 1997. Aptech, however,
reported a moderate improvement of 24 percent in revenues which stood at Rs 201.83 crore.
Similar growth was also witnessed in the profits of the company. It held 11th position in
the individual segments of sales and profits respectively. Over the past few years, Aptech
and its arch rival NIIT have held a dominant position in the education market. Though the
emergence of new players may not seriously affect Aptech, considering its vast 900-plus
branch network, margins may remain depressed. The company’s consulting division is yet to
take off in terms of revenue generation. Revenues from Apple Consultancy division were
less than 2 percent of the overall revenues. Almost 95 percent of the centers of Aptech
are franchised which explains the excellent ROCE of 37 percent, given the low investment
in owned facilities against NIIT’s ROCE of 27 percent. As Aptech makes new investments,
ROCE would probably get depressed at least in the medium term.

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Digital Equipment (India) Ltd
The 16th-ranked Digital Equipment (India) is one of the major
MNCs operating in one of the most competitive sector in India. With the global takeover of
Digital by Compaq, DEIL is now a 51-percent subsidiary of Compaq. However, it continues to
maintain its separate identity in India and the Digital brand continues to exist. Digital
Equipment (India) operates independent of Compaq India and has strong presence in the
high-end systems market. The company is also involved in software exports which
contributes approximately 25 percent of its total revenues.

During 1996-1997, sales increased by just 10 percent.
However, improved operating profit margins from 14 percent to 16 percent resulted in the
profit growth of 25 percent. This also resulted in the improvement in the ROCE, which went
up from 36 percent to 44 percent.

Digital Equipment stood at the 24th position in terms of
profit growth and the fifth in terms of ROCE. This is a great achievement for a company
which has a 75 percent turnover contribution from hardware operations. In terms of sales,
the company has the sixth position while on the profits scale the company it gets seventh
position. With access to the well-developed distribution network of Compaq, DEIL has an
excellent chance to improve its market penetration in the hardware field. Also there are
possibilities in increase of software orders with the new relationship with Compaq. All
this adds up to a better future of the company in the near term.

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Orient Information Technology
In the last two years, Mumbai-based Orient Information
Technology has managed stellar growth in sales and profitability. Starting from a very low
base, the company has moved rapidly to report sales of Rs 6.42 crore in 1997. At the same
time, in terms of profit growth, sales growth, and asset growth, the company’s performance
takes it to the # 4 position in the respective lists. While sales have grown at 192
percent, profits have risen by 159 percent. Assets too have shown an increase of 137
percent. This indicates that the company, despite being an on-site operator, is keen to
develop its infrastructure and move up the value chain. The ROCE is, however, not that
high at 20 percent. This can be attributed to the fact that the high investments made in
infrastructure are yet to bring in the profits.

As Orient looks into the future to carve out a niche for
itself both in the onsite and offshore markets, the company is making further investments
in setting up marketing offices overseas. With the current shortage of staff plaguing the
Western world and the expanding reach of Orient, the future is still quite rosy for this
upcoming company.

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Rolta India Ltd
At # 13 is Mumbai-based Rolta India, a major player in
CAD/CAM and GIS conversion services markets. The company is now moving into top gear after
somewhat lackluster performance in the past. However, for the year ended December 31, 1997
the company managed to grow sales by a moderate 11.22 percent to reach Rs 82.49 crore.
Consequently, in sales growth Rolta ranked # 45. At the same time, profit and asset growth
have been far better. The company’s profits leaped 36 percent to reach Rs 28.32 crore and
put Rolta in the sixth position as far as profits were concerned. The company also made
significant investments into fixed assets which increased by 42 percent heralding the
increasing focus on its export-related digital mapping services. Given its already large
asset base at Rs 59 crore in the previous year, Rolta is now the seventh largest in terms
of gross block in the list.

Rolta’s ROCE, however, remains constant at 18 percent,
given its fairly large receivables position as well as investments in assets. With a
significant jump in profits expected in the current year, the ROCE figures are also slated
to improve.

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Tata Infotech Ltd

Ever since Unisys divested its stake in Tata Infotech
(erstwhile Tata Unisys Ltd), the company has seen changes in its fortune. One of the many
software companies of the Tata Group, Tata Infotech is engaged in software exports, agency
and own software products, systems integration, as well as education. The company’s
revenues for the year ended March 31, 1997 increased 21 percent to Rs 207.41 crore whereas
net profits rose 8 percent. It stood at # 10 in terms of sales and net profit. Revenues
from exports were approximately 55 percent of the total revenues. The company investment
in gross block increased by 16 percent putting it down by a few rungs in the overall

The company is moving away from the standalone hardware
business and instead focusing on its systems integration and software services business.
This should improve the profitability of the company as margins from the hardware division
are meager. The tie-up with Baan as its authorized center partner will also boost
revenues. Tata Infotech has already announced spectacular performance for the year ended
March 1998 and also issued 1:1 bonus shares during 1997-98. With a buoyant mood in the
company, growth, which has been missing in turnover and profits figures for some time, is
likely to revive the company and push it upward in the performance reckonings.

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Moser Baer (India) Ltd
At 20th position is Moser Baer (India) the manufacturer of
floppies. Riding the boom in the IT industry, this company has managed to clock a
42-percent growth in sales to reach Rs 60 crore and 32 percent growth in the profits for
the year ended March 31, 1997. The company made substantial investments in its
manufacturing facilities which took up its gross block by 74 percent.

This growth got the company the ninth position in asset
growth. With further plans to manufacture compact disks, the company’s gross block should
move up further in the near term. The company’s ROCE stood at 14 percent against 21
percent in the previous year, thanks primarily to the investments made.

Operating in a low-margin area, the growth in the company’s
profits by 32 percent on a sales growth of 42 percent is also commendable. With new
capacity coming up in the near term, it has some more growth to look forward to in the
coming years.

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Binary Semantics Pvt. Ltd
At # 17 is Delhi-based Binary Semantics. The company
distributes products for companies like Novell, Microsoft etc and is also engaged in
software and software products development. However, approximately 85 percent of the
turnover comes from its distribution business. During 1996- 1997, Binary Semantics clocked
a turnover of Rs 20 crore, 39 percent more than the previous year. Profits grew more
rapidly at 44 percent to close the year at Rs 65 lakh. As a move to increase the
profitability and revenues, Binary Semantics is investing in a 100-percent EOU at Gurgaon.
In 1996-97, its investment in gross block increased by 142 percent earning the third
position for the company in the asset growth parameter. However, ROCE of the company fell
from 23 percent to 16 percent as the expansion is yet to bear fruit. The margins from
distribution are low as is evident from the profitability figures. With the commencement
of the activity at its new offshore facility the profitability should get a boost and so
should its ROCE.

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Nucleus Software Exports Ltd
This company, which has otherwise been a poor performer on
most parameters, managed to get this ranking primarily because of its investments made in
infrastructure. The company increased its gross assets substantially in 1996-97. Sales of
the company grew at 18 percent, which is way below the industry standards. The company’s
profits too are marginal at Rs 0.19 crore which incidentally were down by 80 percent over
the previous year. The company’s return on capital employed is also a pathetic 2 percent
which surely would have meant trouble for the company. This company’s operations include
both software exports as well as marketing of some NBFC packages developed by the company.
With the financial services markets in the doldrums, the company has been forced to change
its plans and focus more on overseas market.

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The first private limited company in this list, Eurolink also
has the highest sales growth, 762 percent, an achievement which made it reach the top 10
of this list. The company primarily into ERP/MRP area also has the distinction of being
the only top 10 company which has converted from losses to profits. The company achieved
profits of Rs 0.23 crore on sales of Rs 7.24 crore for the year 1996-97. Against this the
company notched up sales of just Rs 0.84 crore in the previous year.

The poor profitability of the company despite operating in
the exports arena is both a surprise and a matter of concern. The high staffing costs for
the company, which stood at over Rs 3 crore, is the main culprit for this low
profitability. With poor cash accruals the growth of the company may get stunted in future
unless fresh investments are made into the company or the company is able to improve its
profitability. The company is unlikely to continue to same growth rate in future and may
lose its position in this list.

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Leading Edge Systems
Another of the Mumbai-based companies to have made it to the
big league within a very short period of time, Leading Edge reported a whopping ROCE of 50
percent for the year ended March 31, 1997. This is complemented by a 103-percent growth in
sales, a 162-percent growth in net profits, and a 66 percent growth in assets. The figures
are enough to put the company in the sixth position for sales growth, the 12th position
for asset growth, and the third position for profit growth in the list. In the past, the
company primarily operated on onsite and offsite projects from its US office. Onsite and
offsite business contribute almost 70 percent of the company’s turnover. The company is
now setting up a 20,000 sq. ft facility in Mumbai to move into the offshore arena as well.
With a few orders already clinched, this action should see Leading Edge move up the value
chain. Meanwhile, the company has carved out a subsidiary for its domestic operations
which have not grown at the same pace as its exports. This subsidiary provides solutions
for the financial services sector and remains small player in the market at present.

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Silverline Industries Ltd
This company has been in the news due to the rapid movement in
its share price as well as the offer it made to its shareholders. The company has now
become a subsidiary of Subra Holdings Inc., a US-based company. Despite such activities in
the bourses, the company sales for 1997 actually fell by 10 percent to reach Rs 77.33
crore. The company also performed poorly on profit growth front with profits growing at a
measly 8 percent. While the company ranks high on sales, assets as well as profits, the
growth of Silverline is out of line with companies of a similar size. In spite of fairly
large profits of Rs 22.11 crore, the company has only invested an additional Rs 8 crore in
new assets which would mean the growth in future years could also be stunted.

However, Silverline, which is primarily into onsite
operations as well some domestic operations, has been a darling of the speculators, and
its share price has moved up from Rs 15-20 levels to reach three-digit figures in the
recent past.

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Citicorp Information Technology Ltd
This Mumbai-based associate company of Citibank has found a
place for itself in the list of mid-market companies which have reached top 20 companies
by the sheer power of their growth. The company achieved a sales figure of Rs 53.55 crore
for the year ended March 31, 1997. It also earned profits of Rs 19.35 crore on this
turnover, giving it a 130-percent jump in profits over the previous period. This
achievement is bettered by only 4 other companies in the list. The company’s efficient
operations is also proven by a ROCE of 47 percent, which is highest among the companies of
its size.

CITIL provides solutions for the banking and financial
services sector and has a number of successful products in its portfolio for generalized
and specific banking operations. The company has been awarded with SEI CMM Level 4
certification and is now moving on to providing consulting services to the banking world.

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Sierra Optima
Hyderabad-based Sierra Optima, a relatively small company
engaged in software development and providing consulting services and marketing packaged
software stands at # 14. Sierra Optima continued with the performance it reported the
previous year ended March 31, 1996. Following a 184-percent increase in the turnover
previous year, albeit on a low base. In 1996-97, the company sales jumped 147 percent to
Rs 4.56 crore which was higher by 147 percent against the previous year. This ensured the
company 5th rank in the sales growth terms. Similarly, net profits jumped 98 percent to Rs
1.53 crore. This also placed the company in the 5th rank of the profits growth list. The
company also made significant investments into infrastructure which saw a 79 percent
growth in gross block. The company thus entered the top 10 ranks in growth ratios but
missed the overall No. 10 position because of its small size. The most prominent feature
of the performance was the improvement in the ROCE to 28 percent against 15 percent last

With another dose of investments likely in the current
fiscal as well its maturing capabilities in the Oracle domain, Sierra Optima will see
further consolidation of its position in the IT sector.

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Software Solutions Integrated Ltd
This Chennai-based training company has been growing at breakneck speed. The company has
achieved 11th position in sales growth on a base of Rs 23.11 crore for the year ended June
30, 1997. The company’s profit growth at 28 percent, despite a massive expansion plan with
substantial interest outflows, is also commendable. The company’s asset growth at 74
percent put it at the 10th position in the list of asset growers.

Despite such high investments, the company’s return on
capital employed is a high 43 percent, putting the company in 6th position in terms of
ROCE. This achievement is really what has moved the company up the ranking ladder. The
company has been expanding its centers at a frantic pace trying to catch up with the
dominators of the field. To further finance its branch expansion, the company has resorted
to a preferential issue to FIIs and other institutions. This should allow the company to
grow as fast as it has done in the past.

While it embarks on its next plan of expansion, the company
faces increasing competition as the training market is getting saturated with training
companies. While the market continues to grow, especially at the higher end, growth for
Software Solutions will probably come at the cost of profitability. To be able to attract
students, the company is already spending substantially on ads, which may affect the
bottomline in the medium term.

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This public sector company which closed the fiscal 1997 with a
turnover of Rs 224.08 crore is the sixth largest in terms of assets. However, on sales
ranking it gets 12th position and 25th position on the profits ladder. The company has a
poor ROCE of just 9.23 percent because of poor margins in its businesses. It also falters
on the growth parameters.

The company sales grew by 29 percent but its profit growth
was negative for the year. This was primarily because the company in 1995-96 accrued
substantial cashflows from the sale of its Mumbai properties. CMC ranked poorly on the
asset growth front which went up by just 4 percent. All this has resulted in an overall
poor rank for this company. With increasing pressures from employee separations and lack
of funds, this company is headed for harder times, despite being in a sunrise industry.
Unless the Government takes steps to privatize it, troubles for the company are not going
to end easily. At the same time, it has made plans for substantial increase in investments
over the next five years and should these materialize, CMC is more than likely to move up
the ranking ladder.

SRA Systems
Chennai-based SRA Systems is one of the smaller companies to
have reached this position for their high growth. The company has achieved a growth of 86
percent in sales for the year ended March 31, 1997. Profits have shown a growth of 83
percent while its gross block has increased by 74 percent over the previous period. The
company’s ROCE is somewhat on the moderate side compared to these growth figures at 25
percent. This is nevertheless commendable considering the massive increase in assets that
has taken place over the period.

The company which is mainly into offshore and onsite
operations is an example for other software companies to follow as we know that even in
the current year the company has performed well. In software today, growth follows
investment and if the fruits of this growth are re-deployed in building better and more
extensive infrastructure, the results are astounding. While the sales of the company are
still moderate at Rs 10.01 crore for year ended March 31, 1997 the lower-than-industry
profit margins at 14 percent indicate that SRA is yet to take benefit of economies of
scale. As the company’s sales increase, its profit margins should look a lot better in
future years.

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DSQ Software Ltd
This software major has been a loser as far as growth for the
year ended March 31, 1997 over the previous period is concerned. The company achieved
sales of Rs 63.91 crore and profits of Rs 15.15 crore during the period. The company’s
gross block stood at Rs 53.41 crore at the end of the period. With these figures the
company achieved fairly comfortable rankings on sales, profits and assets. While its
profits and assets stand in the 12th position in their respective lists, by sales DSQ is
in 20th rank. However, when we come to growth figures the company’s performance is not
encouraging. Sales growth is pegged at 11 percent while profit growth is 12 percent for
the period. Asset growth at 16 percent also puts back the company a few notches.

At the same time the company’s return on capital employed
at 24 percent has pushed up its rank a few positions. DSQ, which is primarily into
software services and is based at Chennai, has however performed well after these results
and continues to do better business in the current year.

Kale Consultants Pvt. Ltd
Mumbai-based Kale Consultants, which has been on the IT scene
for some time, has shown excellent profit growth and return on capital employed for the
year ended 31st March 1998. The company achieved profits of Rs 2.41 crore on sales of Rs
12.48 crore. While sales growth was moderate at 37 percent in comparison with some of the
other companies, profits grew by 90 percent putting it in the 7th position in terms of
profit growth. The company also made substantial investments into gross block which went
up by 59 percent to reach Rs 8.33 crore. This investment was mainly in setting up software
development facilities at Pune. The company’s return on capital employed at 22 percent is
also commendable considering that major asset building had taken place during the year and
the benefits of the expansion are yet to show up in the bottomline.

With forays into new markets in the Asia Pacific region and
the new banking solution package being launched this year, the company can look forward to
even better performance next year.

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IIS Infotech Ltd
Delhi-based IIS Infotech Ltd, which is into software services
and training has been relegated to this position primarily because of its poor asset
growth during the period. The company achieved sales of Rs 39.73 crore which were 52
percent over the previous period. The profits for the year at Rs 8.69 crore grew by 30
percent which is the 8th highest in the list. However the company’s asset growth has been
poor, which at 23 percent is 31st on the list.

During the current year, controlling stake in the company
has been taken over by a one-time client of the company: FI Group of UK. This takeover saw
the company’s share climb up in the market substantially to reach three digit figures in
no time. With substantial investments in subsidiaries and new facilities, growth for this
company is likely to be a lot better in the coming years.

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Spectra Innovations Pvt. Ltd
Spectra, which is engaged in the distribution business of hard
disks and other IT products, has shown tremendous growth for the period ended 31st March
1997. The company achieved a sales growth of 69 percent to reach a turnover of Rs 11.74
crore. In terms of profitability, however, the company is a poor performer. The company
achieved profit of Rs 0.06 crore for 1997 which is the same as the profits for the
previous year. The company’s return on capital employed is negative, at -41 percent,
indicating that the company is making losses on its operations. This really typifies the
problems of the hardware distribution sector which has been beset with ever-rising
marketing costs while margins remain wafer-thin. Thus, in spite of increases in sales
turnover, profits don’t seem to be moving at all and companies find it difficult to fund
the working capital required to service the growing sales.

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Aftek Business Machines
This Mumbai-based hardware and software company had a
relatively lackluster 1996-97 despite increasing the accounting period to fifteen months.
The company posted profits of Rs 1.23 crore on sales of Rs 7.73 crore. This achievement
puts it in the 48th and 38th positions in sales and profits respectively. The company’s
sales growth was negative at -1.3 percent on an annualized basis. Profit growth followed
suit at -30 percent. The poor performance took the company down the ranks, despite a
fairly good asset growth of 77 percent. This asset growth gets the company the eighth
position under this parameter.

Aftek, originally an assembler of PCs, now distributes IBM
and Tatung-based Sun compatibles. It has also developed a PDA for specialized
applications. Other than hardware, the company also operates in the TPM and software
services markets. With a possible large order for its PDA as well as improving software
exports Aftek hopes to do better in the current 1998-99 fiscal.

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