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Mastek - Steaming ahead

Apr 14, 2000

Mastek Limited has announced a four hundred per cent jump in net profits for the nine months ended March 2000. Net Income has gone up from Rs 3,995 m to 6,939 m and net profits have gone up from Rs 378 m to Rs 1,835 m. In view of the excellent results the company announced a 1:1 bonus in January 2000. Mastek Limited founded in 1982 is a publicly held global IT solutions company. It has recorded a compounded average growth rate of 60%.

What is particularly commendable is that the company has achieved this quantum increase in net profits despite doubling of employee costs - a key component for software companies and accelerated depreciation policies to take in to account increased obsolescence leading to doubling of depreciation provided.

In order to cash in on the opportunities provided by the liberalisation of the takeover norms (now Indian companies can acquire overseas companies upto ten times their net worth) it is shortly coming out with an American Depository Receipt issue.

Another notable feature relating to the company is the fact that it has derived a whopping 44% of its income for the current year from e-commerce, which is clearly the field from which maximum revenues are going to be drawn. Even leading information technology majors such as Infosys and Satyam have drawn only 20% of their total income from such areas.

One of its five leading clients has decided to considerably downsize the extent of offshore services rendered. The company has more than compensated for the loss by adding 18 new customers during the last quarter. The other heartening features of the company are:

  • Even geographical spread of business over North America, Europe and Southeast and Far East.
  • 6,000 man-years of experience, which shall give it the edge over newer entrants to the IT field.
  • SEI CMM Level of 4 likely to be upgraded to 5 shortly.
  • Preponderance of Fortune 1000 clients.
  • Attractive Employee Stock Option Scheme in place which will keep down attrition rates.
  • Y2k projects accounted for only 2% of its revenue, which means that there is no threat to the company’s revenue stream in future now that the bug is conquered.
Thus an extremely bright future lies ahead of the company, given the software boom in the country and the whole world.

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