Outsourcing Contract Spurs Cmc

The shares of CMC rose 6.94 per cent to close at Rs 551 after hitting an intra-day high of Rs 557 on reports that the company has bagged a Rs 84 crore contract for outsourcing in partnership with Tata Consultancy Services.

The stock of the computer software and hardware maintenance major notched up volumes of 3.28 lakh shares on the Bombay Stock Exchange and National Stock Exchange combined.

As per reports, the contract has been bagged by CMC's wholly owned subsidiary Baton Rouge International. This is in addition to various contracts bagged by CMC in partnership with TCS, particularly in port and cargo management solutions ranging between $2 million and $19 million in the UK, the US, Malaysia and South East Asia.

 

Earlier, Tata group software companies Tata Consultancy Services (TCS) and CMC jointly won the Adani Ports' Integrated Port Management Systems project for computerisation of its bulk cargo needs at Mundra port. TCS is the largest software exporter from India.

Analysts say the company is expected to witness further growth following improved synergies with TCS and the Tata group. These synergies will accelerate replication of CMC's products and services to larger geographies thus helping it enhance its customer base.

CMC is a leading information technology solutions and computer hardware and software maintenance company involved in the design, development and implementation of software technologies and applications.

It also provides professional services for export and procurement, installation, commissioning, warranty and maintenance of imported and indigenous computer systems, education and training and networking services. For these activities, the company has five different strategic business units (SBUs). Besides, the company has a wholly-owned subsidiary, Baton Rouge International, in the US.

Earlier, CMC stated that it expects profits to double in 2002-03 on the back of the new projects garnered. CMC expects margins to rise 20 per cent and sales to grow 25-30 per cent in FY 2002-03. Since January 2002, CMC is reported to have won five contracts - including one in partnership with TCS that is valued at $32 million. The orders are expected to boost its performance in 2002-03. The Tata group acquired CMC in October 2001 and at present hold 51 per cent stake.

For the quarter ended 30 June 2002, CMC registered a 116 per cent rise in net profit to Rs 6.63 crore compared with Rs 3.07 crore in the corresponding period last year. Net sales increased 7.88 per cent to Rs 96.74 crore from Rs 89.67 crore in JQ 2001.

The surge in net profit was purely owing to the company's enhanced operational efficiencies as well as creation and replication of software products and solutions for identified and vertical markets.