SSI Ltd today reported a 77 per cent fall in its net profit at Rs 4.06 crore for the third quarter ended March 2002 compared with Rs 17.6 crore during the corresponding quarter last fiscal.
Total revenue declined by 45 per cent to Rs 56.9 crore against Rs 103.7 crore in January-March 2001, mainly on account of 63 per cent drop in revenue from training business.
Commenting on the results, Kalpathi S. Suresh, chairman and CEO, said that average fee realisation per student had dropped by 15 per cent, adding that enrolment had also dropped to 30,492 students from 40,005 students as on December 2001. "We are seeing the first signs of recovery in the software services business", he added.
The consolidated revenue (including its US-based subsidiary, SSI North America) from software services has shown a sequential (quarter-on-quarter) increase of 1 per cent to Rs 65.2 crore for the quarter ended March 2002. Revenue from training services, however, dropped by 33 per cent to Rs 20.8 crore on a sequential basis.
For the three months ended March 2002, operating margin for the training and software services businesses were 2.5 per cent and 6.3 per cent, respectively, compared with 12.2 per cent and 6.1 per cent in the previous quarter. While software services operating margin increased marginally by 20 basis points, training business margin fell by over 9.7 per cent in the last three months.
Asked about the possibility of hiving of training business as a strategic business unit, Suresh said that 'linkages' between the training and software units had dropped significantly because of 'glut' in the software services market. "We are evaluating different options in this changed environment", he said.
Suresh said that the fourth quarter (April- June) will be challenging for training business and they would seek to protect the top line through increased institutional focus. At present, institutional sales contributed around 18 per cent of revenue from training business. "In software services, we would seek to deepen our relationship with existing clients", he said.
The company spent Rs 32.54 crore towards capital expenditure during the third quarter. This was part financed through a loan of Rs 75 crore for completion of the offshore development centre (ODC) in Chennai. SSI, at the end of March 2002, had cash balance of Rs 198.7 crore and debt of Rs 133.5 crore.
The company had borrowed $15 million (around Rs 72 crore) from State Bank of Mauritius to meet the working capital needs of SSI North America.
