BFL: Changing focus
(MBFL), software service up a commendable performance , in the year
up to March 2001. Not long ago the then California-based MphasiS
and Bangalore-based BFL, as separate entities, suffered from their
excessive dependence on a handful of clients and neglect of marketing
quarter to March 2001, MBFL has done well with revenue at Rs 51.1
crore, up 51 per cent over that in corresponding quarter of last
year. Ever since Barings Pie held equity stake in both MphasiS and
BFL and merged the two companies to form - MphasiS-BFL things have
changed considerably within a year, Prior to their merger, both
of them were incurring losses. Barings held 52 per cent of BFL's
equity and was also a shareholder in MphasiS.
new entity, MBFL, prorides end to end e-business solutions, end
has focused on catering to the financial sector (banking, brokerage
and insurance), the retail industry, media and telecommunications,
tech- nology companies and logistics and supply chain management.
Jaithirth (Jerry) Rao, had earlier claimed that the results should
reflect the synergy between the two companies by leveraging the
combined strengths, without diluting the expertise that the individual
company brought. And not surprisingly, the performance is in line
merger, MBFL has reported a 43 per cent increase in its revenue
to Rs 173 crore for the fiscal ended March 2001. Profit before tax
stands airs 22 crore, substantially higher than Rs 1.2 crore achieved
is despite the slowdown in the US markets, US accounts for 70 per
cent of the company's revenues, while Europe contributes 20 per
cent and the balance comes from Asia-Pacific.The turnaround has
been achieved primarily by an increase in productivity, higher price
realisation from solution business and higher capacity utilisation
at yearly average of 66 per cent (55 per cent). Apart from this,
substantial depreciation in the rupee value helped gains from foreign
exchange on BSE (in Rs) 115 transaction to the tune of Rs 2.2 crore.
They alone accounted for 60 per cent of the other Income.
According to the company release, its employee
strength stands reduced in software solution and services to 1,243
as compared to 1.308 employees in the previous year. However, employees
In the MphasiS BPO - the call center subsidiary of MBFL - were 178
as on March 31, 2001 as against 37 in the previous year.
moves on to higher value addition, it has very lira- Red number
of customers. Presently, its customer size has increased from 45
to 64 during the period under review.
the company has strategically restricted every client revenue exposure,
no client exceeds 10 percen to MBFL rev.
ten clients contribute anywhere between 60 per cent to 80 per cent.
The client list includes a large global airline, world's largest
broker - age houses, the largest credit card companies in the US,
the fastest growing bank in Japan. the largest bank in the Middle
East. A publishing gain in Europe and a large European Bank About
three quarters, ie 75 per cent business Is repeat business.
was expected to close the year above $60 million and the next year
(FY02) at $100 million plus. Although the company so far has neither
experienced any cutback in demand for its services nor any pressure
to revise its billing rates, but considering the slow - down in
the US, It may have to pull up its socks to achieve the set target.
taken initiative to pursue European and Japanese markets aggressively.
That strategy should dilute the impact of demand contraction in
the US. The company has a modest market penetration in the financial
sector and has yet to penetrate mutual fund and insurance sectors
in the US.
Also its second initiative to strengthen and expand
the India-based subsidiary, MphasiS BPO, must add to Its topline,
MphasiS BPO, which has four customers, achieved revenues of $1.12
million in the year ended March 31.200I and $0.59 million in the
fourth quarter. The financials of MBFL (unconsolidated) as per GAAP
include in tar company revenues of $ 3.1 million and $4.8 million.In
the quarter and financial year ended March 31,2001 respectively.
on the conservative side, has decided to show amortisation of goodwill
in the consolidated income statement,in the future the company may
not benefit from this provision According to the latest FASB (Financial
Accounting Standards Board) proposal, the company can dispense with
the amortization of goodwill entirely.