Zensar Technologies (504067) Q4 96/97 earnings summary

Executive summary

• Restructuring largely completed over the 18 months ended 30 Sep 1997: software transferred to a subsidiary, Pune hardware manufacturing closed, and Systems Division downsized.

• Reported PBT of Rs909.46 lakh and PAT of Rs759.46 lakh were supported by non-operating gains, while operating activities recorded a loss; period comparisons are distorted by the 18-month reporting period and business transfer.

• Borrowings declined from Rs65.80 crore at 31 Mar 1996 to Rs30.12 crore at 30 Sep 1997; the restructuring also moved the business outside BIFR's purview.

Financial highlights

• Total income was Rs16,235.04 lakh for 18 months; PBT Rs909.46 lakh and PAT Rs759.46 lakh, versus a Rs2,288.19 lakh loss before tax and Rs2,258.12 lakh loss after tax in the prior 12 months.

• Operating loss was Rs2,326 lakh; results included Rs2,000 lakh non-compete compensation, Rs524.40 lakh software-business sale profit, and Rs1,999.73 lakh profit on investment sale.

• Sales, rental and other services reached Rs10,734 lakh; Systems and Engineering Services turnover was Rs88.7 crore versus Rs77.2 crore in 1995-96, despite order-execution delays.

• Operating cash flow was Rs1,194.82 lakh; investing cash flow Rs3,029.08 lakh and financing cash outflow Rs3,599.14 lakh. Closing cash and equivalents were Rs945.53 lakh.

Outlook and guidance

• The separate software business was expected to deliver substantial revenue and profit growth in 1997-98 and later years, with international-market development initiatives underway.

• Systems and Engineering Services had improved and was near cash-positive before interest; future plans were being developed amid rising competition and changing technology.

• Management expected surplus-property disposals to further improve the financial position, though real-estate weakness had limited sales progress.