CMC Ltd to invest Rs 445 cr to widen presence in South India

To meet the requirement of rapid growth in future, CMC Limited, a Tata group enterprise which is into systems engineering and integration, is investing Rs 445 crore in an SEZ (special economic zone) facility in Hyderabad.

“We are creating 13,000 seats for our SEZ operations, of which 1,500 will be used by CMC directly while the remaining will be leased out to TCS. While the first two phases of the SEZ campus are already operational, Phase-III will be ready by August 2013,” R Ramanan, managing director and chief executive of CMC, told Business Standard.

CMC currently employs about 10,000, including contracting strength, both for its Indian and global operations. It has close to 2,500 employees in Hyderabad. Besides having facilities in Mumbai, New Delhi and Bangalore, the company recently started its 300-seater SEZ unit in Kolkata, where around 60 seats were occupied now. Ramping up the company’s SEZ operations on the back of the increasing international projects, CMC chief financial officer JK Gupta said, would give them a tax advantage. “At the end of this year, we expect to be operating at 26-27 per cent of tax. It may take around three years to come back to a tax of below 20 per cent,” he added.

The company, which was acquired by Tata Consultancy Services (TCS) in 2001, saw a decline in its net profit to Rs 152 crore, from Rs 179 crore in FY11, due to a hike in effective tax rate from 15.3 per cent to 31.1 per cent. This was on account of discontinuation of concessional tax treatment for software technology parks (STPs).

CMC clocked revenues of Rs 1,467 crore in FY12, with 50 per cent of flowing in from the US, 10 per cent from other international geographies and the rest from the domestic market.

Stating that the company had now launched CMC 3.0, an initiative resulting in developing a suite of products like intelligence enterprise systems, Ramanan said the company was working towards combining and integrating Genesis, its core general insurance package, with the emerging technologies of cloud, mobility, big data and analytics. “We have close to 150 people associated with our innovation group, working on multiple verticals like Genesis, GPS products and e-governance solutions. Each of these products will have elements of cloud and analytical capabilities,” he said.

On the status of its engagement with the unique identification (UID) project, Ramanan said that the company had been awarded a digitisation project. “Because of the resolution of the UID authorities and so on, which right now is still pending, that project is in the state of suspension.”

According to him, the company has recently rolled out a pilot project on a commercial basis for the Karnataka Road Transport Corporation, which involved 500 buses in Mysore city being equipped with real-time, GPS-based passenger information systems. A similar project has also been implemented across Indian Oil Corporation Limited’s fleet of 20,000 tankers, which enabled the corporation to track the vehicles besides preventing fuel pilferage.

“We are already in talks with other state road transport corporations and organisations, which are in different stages of evaluation. While request for proposals (RFPs) are being floated in few states, others are in the initial stages of discussion,” Ramanan said.