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SSI ups investments in subsidiaries

NetScribes/Salil Panchal

SSI Ltd's investments in subsidiaries and other companies have risen to Rs 1.15 billion in June 2000, from an approximate Rs 750 million in the year ago month. SSI has invested in companies like Clientsoft, Indigo, SSIT Europe, Agenda Netmarketing, Inndsoft Systekh, Netfinex.com India and Ceat Financial Services.

SSI has subsidiaries in Europe, Singapore and Australia, which have been set up to boost the software development and consulting business. Clientsoft is its subsidiary in the US engaged in providing services to other US-based clients.

SSI is contemplating a relook at investments in Clientsoft. This has been prompted by a slowdown of operations in the US which could impact Clientsoft's profitability. "If we think that it can potentially affect our consolidated profitability, we will scale down Clientsoft operations before margins turn negative due to overstaffing,'' an official said.

SSI has made investments of Rs 7.7 million in Clientsoft. Clientsoft sales for the period ended June 30, 2000, stood at Rs 546.2 million ($ 11.6 million) and net profit at Rs 12.1 million.

Clientsoft has some high-profile infotech and manufacturing companies as its clients. The list includes Oracle Corporation, Microsoft Corp, Sun Microsystems, 3Com, AT&T, Deloitte and Touche, General Motors and GE Supply. ClientSoft provides staff augmentation services to customers in the US.

Regarding Netfinex.com, SSI has said that after making investments of Rs 200 million (as on June 2000), no fresh investments have been made. Netfinex.com's main project is set to commence in January-February 2001. Netfinex contributed Rs 134.7 million in revenues for the year ended June 30, 2000. For the quarter ended September 30, 2000, it contributed Rs 31.7 million.

These details were disclosed in an internal presentation to leading financial institutions and mutual funds last week.

The SSI scrip has suffered bearish sentiments on the local bourses in recent months. On Thursday, it closed at Rs 1,730 on the Bombay Stock Exchange, down 41.65 per cent from Rs 2,964.7 on September 8, 2000. The pressure on the stock is due to uncertainty over the completion of Albion Orion's acquisition.

"We see potential to improve market penetration. However, we will consider only factors like return on capital, utilisation of resources and higher margins to evaluate further investments," a senior SSI official said.

Investments in SSIT Europe stand at Rs 7.09 million, while those in Agenda Netmarketing stand at Rs 36 million and in Inndsoft Systekh Rs 31.5 million. SSI's investments in Netfinex.com India are Rs 200 million.

The company has also clarified that the process of consolidating the operations of Indigo with those of SSI, is on, and will be completed over the next three weeks. SSI has invested Rs 127.8 million in Indigo.

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