Financial Daily from THE HINDU group of publications
Tuesday, Jun 25, 2002
Financial Daily from THE HINDU group of publications Tuesday, Jun 25, 2002 |
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Info-Tech
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Outlook PSI Data sees pressure on profitability Vishwanath Kulkarni
BANGALORE, June 24 PSI Data Systems Ltd, an A.V. Birla Group company, expects the mounting pressure on pricing and increased competition to impact its profitability in the short term. ``Though the long-term outlook is promising, the medium-term is not clearly visible,'' the company said in its annual report. For the 15-month ended March 31, the company reported a loss of Rs 13 crore on a turnover of Rs 96.81 crore. Europe and the US accounted for 50.46 per cent and 32.12 per cent of the company's revenues respectively, while the domestic market accounted for 15.28 per cent. The company was severely impacted in two of its major markets. While the downturn in US resulted in non-utilisation of resources, thus adding to cost, the domestic market, which was hit by multiple scams affected the capital markets resulting in reduced investment in e-broking, depositories and related services. ``Unexpectedly, some of our major clients in Europe devastated by the severe meltdown, recoursed to financial insolvency. This further compounded the problems, causing as they did, a substantial drain on the company's profits,'' said Mr Kumar Mangalam Birla, Chairman, PSI, in the report. To rein in the losses, the company has embarked on a drive towards cost reduction and is streamlining operations alongside optimising manpower utilisation. The acquisition of Birla Technologies Ltd (BTL) is expected to spur the company's growth as it has widened PSI's range of offerings. PSI acquired a 99.91 per cent stake in BTL for Rs 11.26 crore, which focuses on IT consultancy, turnkey solution, migration, conversion and e-com solutions. Though the shift towards offshore outsourcing is becoming more pronounced, pricing pressure remains a major threat for the company, leading to lower realisations. With the outsourcing market looking up, PSI with its positioning as a domain-specific technology company believes that it is well placed to take advantage of the turnaround expected in the IT services sector.
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