Xerox Modicorp In Return On Sales Prop-Up Plan

"We want to bring our ROS in line with Xerox's worldwide ROS," Xerox Modicorp managing director H N Nanani said.

Though known to be a professionally managed company, the company's low profit margins had baffled analysts for long.

Xerox Modicorp has adopted a three-pronged strategy to attain its goal. First, the company has set itself a target of growing at a compounded annual growth rate of 25 per cent for the next three years. "This will double our turnover from the current Rs 700 crore to Rs 1,400 crore," Nanani said.

Second, the company has given a new thrust to its higher-end business which includes providing services to other companies using digital convergence and its documentation products. "We will be providing end-to-end total documentation solutions to companies," Nanani said.

 

At present, only 15 per cent of the company's turnover comes from high-end products and industry solutions operations

According to Nanani, "By 2003-end, 40 per cent of our turnover should come from these high-end businesses."

Xerox Modicorp wants to replicate the success it has met with in the telecom sector. According to Nanani, the documentation systems for the billing operations of almost 80 per cent of the cellular operators has been put in place by Xerox Modicorp. Globally, Xerox Corporation has identified 17 industries such as health care, finance, banking, telecom, graphics and education, where it can offer similar solutions.

Third, the company has decided to cut its SAG (selling, administration and general expenses) from 18 per cent of sales to 15 per cent. The entire cut will be affected at the lower end channel sales where the SAG will be reduced from 12 per cent to 9 per cent. "This will be done by re-deploying staff from the lower-end to the higher-end businesses," Nanani said.

Xerox Modicorp is a 68:25 joint venture between Xerox and Modicorp with seven per cent shares held by the public.