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Tata Infotech to invest in BPO

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CIOL Bureau
New Update

"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.

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"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.

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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

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