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Global Tele net profit surges. - Views on News from Equitymaster
 
 
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  • Apr 24, 2000

    Global Tele net profit surges.

    Global Tele-Systems Limited has shown an increase of 17% in sales and 261% in net profits for the current financial year ended 31st March 2000.

    Global Tele-systems is a company which was incorporated in 1987 and is actively engaged in software, internet, e-commerce and telecom services. For the current year sales were Rs 8.04 bn and net profit was Rs 2.28 bn.

    A heartening feature of the current years performance for the company which started as a purely telecom based company is the fact that there has been a 66% growth in revenue from internet, e-commerce and software services which are high growth areas with high revenues. Such revenue now comprises 51% of total revenue.

    Operating margins for the current year have improved from 23% to 33% for the current year. Net margins have improved from 11.73% for the previous year to 17.3% for the current year.

    What is noteworthy is that the company has chosen to adopt the accelerated depreciation model and has increased depreciation for the current year from Rs 400 m to Rs 730 m.

    The company has repaid debt by redeeming debentures to the tune of Rs 1800 m, thereby literally making the company debt free. This will eliminate interest burden for the company.

    The company has a surplus of Rs 3000 m which it proposes to use towards acquisitions locally as well as abroad.

    It has also tied up with Enron corporation for an engineering performance contract for laying optic fibre backbone.

    On the exports front the company’s revenue has gone up from Rs 220 m for the previous year to Rs 1,230 m for the current year.

    The company has shown a distinct shift from product oriented revenue to services oriented revenue which it hopes to grow in the future.

    Due to better working capital management inventory held has come down to 30 days of cost of production as opposed to 85 days previously.

    However it must be mentioned that the company has derived a substantial extraordinary income for the current year without which the net operating profits would have grown by only 68%. This method seems to be adopted by most companies these days to boost their bottomline in order to ensure better valuations for their forthcoming issues.

     

     

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