US slowdown hits Sierra Optima performance

IRIS

The turnover of Sierra Optima Ltd. for the third quarter ended December 2001 declined by 57 per cent to Rs 4.46 crore and the company has posted a net loss of Rs 0.46 crore. The slowdown in the US economy has affected the company severely as it contributes around 65 per cent to the company`s turnover. In addition, the foreign promoter, Sierra Atlantic, who holds 25.5 per cent of Sierra Optima stake, terminated its pending service requisitions for all outstanding purchase orders by a 90-day written notice to the company in December 2001. This is attributed to the economic downturn and recessionary conditions in the US which will severely affect the company`s turnover and net profit.

To prevent further erosion in shareholder value, the company board plans to reduce the share capital from Rs 3.3 crore (divided into 33,00,000 equity shares of Rs 10 each) to Rs 0.84 crore (divided into 8,42,300 equity shares of Rs 10 each). It plans to cancel and extinguish all shares other than those held by Sierra Atlantic, Inc, at Rs 75.10 per share (being the aggregate of the par value of the share and the premium), subject to dividend distribution tax of Rs 6.03 per share resulting in a net pay out of Rs 69.07 per share.

The software services contributed around 91 per cent to the turnover during the third quarter ended December 2001 and the balance came from software distribution.

The scrip had a 52-week high of Rs 217.75 and a low of Rs 31.9. The scrip was quoted at Rs 65 (January 18, 2002) while it traded around 11 times its annualised nine months earnings per share (EPS) of Rs 5.7.