Birlasoft (BSOFT) Q4 98/99 earnings summary

Executive summary

• FY ended June 30, 1999: revenue rose 57% to Rs 250.62 million; profit before tax increased 77% to Rs 33.64 million. Excluding extraordinary interest on public-issue proceeds, profit growth was 53%.

• Offshore delivery and a broader project mix supported growth, while two major clients’ changing policies created a significant order-pipeline gap and hurt Q1 FY2000 revenue and profit.

• Business expansion included a US subsidiary, a Middle East joint venture, stronger UK and Europe operations, and new activity in India; the US was expected to contribute 40% of revenue in FY2000.

Financial highlights

• Sales and income reached Rs 250.62 million versus Rs 159.58 million in FY1998; total expenses were Rs 203.71 million versus Rs 123.19 million.

• Profit before interest, tax and depreciation was Rs 46.91 million; interest and financial charges were Rs 2.98 million, depreciation Rs 10.29 million, and PBT Rs 33.64 million.

• Profit after tax was Rs 33.63 million versus Rs 19.01 million; reported profit growth was 77%, or 53% excluding extraordinary interest earned on public-issue proceeds.

• Export revenue was Rs 236.71 million, domestic revenue Rs 13.40 million; total foreign-exchange earnings were Rs 193.86 million.

Outlook and guidance

• FY2000 revenue contribution from US operations was expected to rise to 40%, supported by web-enablement, offshore development centers, data warehousing, and relationships with large IT spenders.

• A Middle East joint venture was incorporated and expected to become operational soon; Dubai operations were being established, with Oracle Applications and OLAP opportunities.

• Self-assessment under SEI-CMM was planned for mid-2000, with a target of Level 4; ISO 9001 certification had been held since September 1997.

• Management identified mergers and acquisitions as a possible growth route and established processes to evaluate opportunities.