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Tata Infotech building overseas direct marketing network news
Pradeep Rane
21 June 2004

Mumbai: Tata Infotech Ltd(TIL) is focussing on building its overseas direct marketing network to push growth in the system integration business. The business, which was earlier hit by problems faced by its key customer Unisys and the lack of effective direct marketing set-up overseas, is likely to see a 15% growth in the coming years.

TIL managed to improve its performance in the last year with a strong focus cost control and investment in strengthening its overseas direct marketing network.

Besides Unisys, the erstwhile joint venture partner and key client, has turned around through stringent cost control measures.

It is expected that the improvement to the growth prospects of Unisys globally will provide good opportunities for TIL due to its long-term relationship. Further, the system integration business is on the growth path and the increased business prospects from some of its other key clients like Motorola and Diebold will ensure that the growth is sustainable for the next two years.

"The company''s investments and efforts in strengthening its overseas direct marketing network should start generating positive results as we go forward," says analysts with IDBI Capital Market. "Since TIL has the necessary repository of knowledge from conceptualisation to designing to implementation for the customer,we believe there is a good growth opportunity for the company to seize it," analysts said.

Also the company see the manufacturing segment putting up a better performance. In the manufacturing segment,TIL manufactures range of microprocessor based products,printed circuit board assemblies,contract manufacturing of complex electro mechanical products.

However, the most exhilarating story lies in its contract manufacturing agreement signed in 2002 with Diebold of US - a global leader in the integrated financial service systems. TIL manufactures Diebold - ATM ''s (automated teller machines) for the distribution of Diebold ATM ''s in India and to other parts of south and south east Asia.

Since the retail banking is in its infancy in India,it is believed that there is a growing opportunity to sell ATM ''s and manage the same as we go forward. Another positive development for TIL has been the addition of new customers and the prospective strong clientele in future.

The company is looking forward to some big deals through its existing customer base,which includes the likes of Motorola,Unisys and Diebold.

TIL has made a strong turnaround in the last fiscal (FY04) with a revenue growth of 29%YoY,against a decline of 4.6%in FY03 over FY02. Of the 3 major lines of business - system integration (78%of FY04 revenues), manufacturing services (19%)have shown decent to strong growth rates in FY04,however the performance of the IT training business continues to be lackluster for the third consecutive year.

Tata Infotech has made a successful and profitable entry into the business process outsourcing services by taking up a 40% stake in SITEL India (50%subsidiary of SITEL Corporation,USA)at a cost of Rs107mn.The call centre business is expected to scale up significantly, post the November,once the backlash against outsourcing eventually subsides. the business process outsourcing services by taking up a 40%stake in SITEL India (50%USA)at a cost of Rs107mn.

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Tata Infotech building overseas direct marketing network