"Tata Infotech will be looking at improving its profitability and
business in the coming year by investing in the fast-growing business process
outsourcing (BPO) business," Farrokh K Kavarana, chairman, Tata Infotech,
told myiris.com. He announced this in a gathering at the company’s annual
general meeting in Mumbai. However, he refused to disclose any details on the
size and collaborations for the venture, though he said the likelihood of the
capacity of the BPO centre to have at least one thousand seats was very strong.
"Tata Infotech has been in the business of IT services. This business,
according to a Nasscom-McKinsey report, grew by 29 percent against IT-enabled
services business that grew by 77 percent in 2001-02. Hence, we will be looking
at shifting our focus to IT-enabled services," informed Kavarana, while
speaking to shareholders.
The company, whose businesses currently includes System Integration, Electro-
mechanical contract manufacturing and education services, will be looking at
stimulating its bottomline growth. "We will not be chasing the topline,"
said Kavarana.
"In 2001-02, our star-performer has been our Manufacturing Services
division, registering a growth of 46 per cent. Revenue from exports represents
93 per cent of this sector`s total revenue and it grew by 49 per cent to clock
at Rs 37.68 crore from Rs 25.30 crore in 2000-01," informed Kavarana.
There has been an 8 per cent decline in the revenues of Tata Infotech and its
net profit has fallen by 26 per cent. The decline has been attributed to the bad
performance of the company’s System Integration and Educational services
businesses.
Following a 65 per cent fall in PBT (profit before tax), Tata Infotech is now
evaluating every aspect of its business. "The effects of this restructuring
and re-evaluation will be seen in the second half of the current financial
year," assured Kavarana. Explaining the reason for the low profitability of
the company, Kavarana said the company had under-performed in both the short-
and medium-term and there were several of its employees were benched with no
work.
With the termination of its contract with Wausau of the US for the
manufacture of ATM machines on account of lack of adequate progress, Tata
Infotech has been scouting for new partners for entering into new agreements for
the same.
In the education services business, Tata Infotech has tied-up with the
University of Mumbai to provide teachers and the material in the premises of the
university. The company paid an interim dividend of 40 per cent and has not
declared any final dividend. "The interim dividend was paid to avoid it
being taxed in the hands of our shareholders after the finance minister decided
to tax dividend income," said Kavarana.
Source: IRIS