CMC plans strategy for higher margins

CMC Ltd, a wholly-owned subsidiary of Tata Consultancy Services (TCS), is reworking its strategy to achieve operating margins in the region of 12-15 per cent by the end of fiscal 2007, according to Ramanathan Ramanan, managing director and chief executive officer, CMC. The company's annual operating margin stood at 8.55 per cent as on March 31, 2007.

"We are trying to bring about a change in business strategy. The domestic market contributes around 70 per cent of our total revenues. We are trying to work on our business model to get equal revenue contributions from the domestic and international operations," Ramanan said on the sidelines of a press conference in Chennai recently.

The company, which had a major focus on provision of computer hardware and networking equipment, is consciously trying to strike a balance between equipment sales and provision of services.

Initially, 70 per cent of CMC's revenues came from equipment and the rest from services, whereas now 55 per cent of its revenues come from equipment sales.

Ramanan said the company would focus further on sales of products and equipment, which will also fetch additional service revenues.

The company is focusing on ports and cargo, banking and financial institutions, transportation and logistics management, general insurance and biometrics, according to Ramanan.

In addition, it is also looking to tap opportunities in the retail space with many players going for national retail rollouts.

CMC's profit after tax for the year ended March 31, 2007, was Rs 64.1 crore, as against Rs 44.1 crore a year ago. Total income stood at Rs 994.40 crore, as against Rs 857.76 crore in the fiscal 2006.