Financial Daily from THE HINDU group of publications
Monday, Aug 01, 2005
Mastek to increase focus on US operations
Raja Simhan T.E.
Mr Ashank Desai, Chairman
Mumbai , July 31
MASTEK Ltd is increasing its focus on the US market. It recently shifted its Chief Operating Officer, Mr Sudhakar Ram, to boost the US operations, according to Mr Ashank Desai, Chairman, Mastek.
The Rs 577-crore Mumbai-based software services company hopes to increase revenue from the US to around 50 per cent from the present 30 per cent in the next couple of years, he told mediapersons recently at the company's Mahape centre in New Mumbai.
Revenue from the UK, which is currently around 70 per cent for Mastek, would not reduce with increased US focus. However, revenue from the US will come faster than the UK, he said.
"We had good business coming from the US during June quarter," he said.
For the fourth quarter ended June 30, the company reported a net profit of Rs 14.7 crore (Rs 11.9 crore) on revenues of Rs 155.9 crore (Rs 131.1 crore).
The US operations sequentially grew by 9 per cent over January-March 2005 quarter while the European operations registered a sequential growth of 3 per cent, he said.
In the US, the company strengthened its sales and business development efforts to focus specifically on insurance industry by inducting three specialists with experience of business development in the insurance and healthcare industries.
Currently, there are around 500 employees focussed on the US with 80 per cent offshore and the rest onsite, he said.
According to Mr Desai, Mastek is reforming itself to become a larger Indian player in the software services. By global standards having 3,000 people is not a small company.
"However, we are not happy to be a mid-size company, and need to become larger," he said.
Mr Desai said that in the last three years, Mastek reported a 28.2 per cent compounded annual growth rate in revenue compared to a 26.8 per cent reported by the Nasscom top 20 companies, and a 21.1 per cent growth by the industry. "We have definitely done as good or better than the industry," he said.
"Our core competency is to do larger, complex projects such as the London Congestion charge, and continue to focus on such projects.
To do such complex projects, it is important to understand customers' vision, needs and provide unique business solutions capabilities," he said.
`We paid too much attention to domestic industry'
MASTEK was established in 1982, a year after Infosys was incorporated and both went public in 1992.
Infosys today employs around 40,000 employees with revenues of over Rs 7,000 crore for 2004-05 while Mastek is a mid-size firm with around 3,000 employees and revenues of Rs 155 crore.
When asked reasons for this wide gap when both were incorporated at the same time, Mr Desai said, "We paid too much attention to the domestic industry for a long time while our competitors focussed on exports and grew faster. We would not be able to catch up with large firms, but would definitely sustain in the industry for a longer period," he said.
One should also look at the fact that Mastek has been in the top 20 of Nasscom's list for many years.
Many of the companies that were in the same list a few years ago have vanished long ago, he said.
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