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January 15, 2000


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'If you want to do it, you have to do it yourself -- fast': V Chandrasekharan of PSEL on the secret of his company's success.

A lot of business restructuring is going on now at Pentafour Software and Exports Limited, the world's third largest multimedia major. For just some time ago, in an attempt to recast itself as a global multimedia leader, PSEL transferred its software business division as a going concern to its group company, Pentafour Communications Limited.

Email this story to a friend. Recently, the Roncarelli survey, the benchmark annual report of the computer animation industry, ranked Pentafour the third largest and best multi-media company in the world, the number one and two ranks being Lucas Digital/ ILM, USA and Disney Studios, USA, respectively.

Pentafour is the only Asian infotech company to be rated by the Roncarelli report, which praised the company's quality of performance, richness of infrastructure, credibility of the corporate, the turnaround time, the upgradation and usage of the state-of-the-art technology.

Formed in 1991, PSEL has become one of the names to reckon with in the Indian infotech industry. During 1998-99, the company achieved a turnover of Rs 5,308 million with a net profit of Rs 1,191 million.

As the millennium draws to a close, Pentafour is clearly focusing on its core business -- multimedia -- for which it has few competitors in the country. But the potential of multimedia, particularly in India, is immense. As the producer of the largest number of films in the world, India has a good stock of people-engineers, artists and CAD professionals-who can understand the business faster.

In the new year, Pentafour's thrust is to be on e-commerce, e-business, extended ERP, supply chain solutions, photo-realistic virtual humans in entertainment, multi-lingual lip-synching, high-speed rendering procedures, and seamless integration of 2D and 3D images. A full-fledged research and development is also on in the company in the areas of image processing, CD titles on the Internet, on-line training through cable television, web browsing through television, Internet phone and multi-part movies.

Pentafour's headquarters in Madras is naturally buzzing with activity. In its corporate house, situated at Kodambakam, PSEL chairman and managing director V Chandrasekaran is fine-tuning a blueprint for a series of acquisitions, particularly in Asia and Europe.

In its state-of-the-art Digital Imaging Center at Kelambakkam, hundreds of engineers are busy creating rich 2D/3D animation and special effects for the entertainment industry in India and Hollywood. The Digital Imaging Center has been involved in a number of projects for the Indian movie industry.

The center is equipped with state-of-the-art equipment, including Kodak's Cineon, Discreet Logic's Flint & Avid's Media Illusion for effects and compositing of live action & computer graphics. It has trained manpower to cater to the requirements of the industry, both within India and abroad. In its various offices across India and the globe -- in places like Singapore, the US, United Kingdom and Japan -- special projects for prestigious clients like Rich Animation, Funimation, Amritraj Solomon Productions and Enandu TV are being given the final touches. And the vision for all this emanates from Chandrasekaran. In an interview to George Iype, the Pentafour chairman and managing director outlines the future the company is preparing for. Excerpts from the interview:

Pentafour has transferred its software business division to Pentafour Communications Limited. What is the strategy?

Financial institutions, our investors, our overseas well-wishers and customers have been suggesting that we take away the software division from Pentafour Software and Exports Limited. Finally we have decided to shift our software business to Pentafour Communications to ensure that our business -- that is, the entertainment graphic sector -- is different from the software business.

Being in this field for the last 26 years, for me whether it is the input is banking insurance or entertainment, if the output is digital, I use the computer as the processor. But our international investors did not want the general software division to mixed with the entertainment graphic sector. The strategy is to position the company as a nice player in the area of entertainment through the big screen (films), small screen (television) and personal screen (computers).

So it is business restructuring time in Pentafour...

Yes, very much. We are moving ahead with the plan that from 2000 onwards, the business has to be looked at differently because the business is becoming more and more web-enabled and digital in nature.

Previously engineering was hydraulic, electronic, electrical, mechanical... But these days it is digital. Electronics is 90 per cent hardware and 10 per cent software. But digital is 10 per cent hardware and 90 per cent software. So we have felt the need to look at our company differently. Multimedia is a niche industry.

Being an early and consistent player in the industry, Pentafour Software has already established its stands with the quality-conscious Hollywood industry. The Roncarelli report ranking is authentic proof of our company's vision for the future. We are indeed happy to engage in healthy competition with our peers in the Hollywood industry and will strive towards nothing but the best both in our services and our performance.

Are you going in for a name change for the flagship company, Pentafour Software and Exports Limited?

Not at present, perhaps. But later at some point of time, yes we will go for a name change to reflect the business of multimedia we are in. Changing the name of a reputed company like ours is a very sensitive issue as all the stake-holders have to be involved in the process.

We are one of the leading providers of software solutions in India, with a strong focus in providing client/server and multimedia based IT solutions for the world market. With a revenue of US $ 126 million for the period of 1998-99, we have emerged as the second largest software export house (ranked by the Indian government's Electronics & Computer Software Export Promotion Council) operating out of India with an international network of offices spread across Australia, Canada, Japan, Mauritius, Singapore, Thailand, United Kingdom and United States. We are listed on the Luxembourg Stock Exchange, the London Stock Exchange and all major stock exchanges in India.

You are also on an acquisition spree. Recently, you bought Singapore-based Animasia Singapore and its subsidiary, Kingdom Animasia.

Our acquisitions have been primarily targeted to aid the skills required by Pentafour in the 2D and 3D areas and to generate and further innovate the creative architecture of animation. We have allocated US $ 100 million to acquire the right companies in the next two to three years. One reason for such acquisition is that we do 80 per cent of our business with the United States, 10 per cent with Europe and 10 per cent with Asia.

But if you look at statistics of most companies, it is 60 per cent with the US, 20 per cent with Europe and 20 per cent with Asia. If we want to come into the same statistics of business, we have to increase our output, especially in Europe and Asia. We have also identified three-four companies in the US for acquisition. It is best to acquire companies to with rich pre-production, production, post-production, marketing and distribution skills.

But your emphasis and focus will remain with multimedia...

Yes, in future Pentafour software will be entertainment graphics because our strength lies in big screens, small screens and personal screens. We are also fine-tuning our operations into the core areas of films, broadcasting, video, compact disc, digital versatile disc and Internet entertainment.

Are you also going to get into technology such as electronic design automaton, web enabled services?

Certainly, with the software division shifting to Pentafour Communications, we will focus more on electronic design automation and web-enabled services. We have big plans for Internet broadcasting, in which Pentafour will provide the content and entertainment. Our business and technology alliances with Apple, Dell, Eastman Kodak, IBM, SSA, SYNON and Silicon Graphics will help us ensure that our vast pool of skill-based software professionals is exposed to multiple platforms and computing facilities so that we can offer the most comprehensive IT solutions.

Our Software Development Park in Madras -- with platforms ranging from the IBM ES/9000 to RS/6000 and from Silicon Graphics Onyx to DEC Alpha systems and Intel PCs and servers, and high-speed telecommunication links with global offices -- is a dedicated offshore facility. Our professionals there carry out development work for clients across the globe at a fraction of the cost for on-site development solutions.

Why did you choose Madras as your investment destination?

There are many reasons why I set up Pentafour's headquarters in Madras. One is that when I came back from the US in the early nineties, going back to Madras -- where I was born and bought up -- was a homecoming. So I decided to start the operations in this city. Secondly, no other city offers the kind of infotech skills that Madras -- or Tamil Nadu -- offers. The technology that we work with is low-, medium- and high-end and we need the right people to grasp it. It is very easy to get skills of higher nature here.

There are more than 100 engineering colleges in Tamil Nadu, besides the Indian Institute of Technology in Madras, from where more than 22,000 engineers come out every year. Madras also offers cheap accommodation for employees and good education facilities for their children. The city is such that you can lead a village-cum-city life Madras. The city is also never starved of entertainment.

Do you think the governments -- at the Centre and the state -- are providing the basic infrastructure for IT companies to grow?

When I started Pentafour in 1991, nobody here was talking about IT. I did not depend on the government to provide me with infrastructure. I created that myself. We built the first software part in Kelambakkam in 1994 along with residential facilities. In IT industry, there is only one rule: if you want to do it, you have to do it yourself -- fast. Don't expect anything from the government.

I agree I am in the business of producing software. But I expect the government to build the necessary infrastructure like water, electricity, roads and communication. What IT industry does not want from government is money. What we need is basic infrastructure.

Do you think the government has realised this?

To a certain extent, yes. But the government is aware that IT projects have to be implemented in time. I would say this awareness within the government is all due to the Y2K problem. The Indian government and governments across the world woke up all because of the Y2K problem. But the Y2K problem will not be over by January 1. Everybody has dealt with the programming side. But the problem can come through the operating system, the hardware and networking. The happy thing is that India has recognized that IT is our strength. Now we have an IT minister. The government has allocated a Rs one billion venture capital fund for IT growth. Most of the states have now IT secretaries. Indians are traditionally good at mind products and I am happy that the government has finally realised this.

What are suggestions to make India an infotech superpower in the new millennium?

The first priority is to make schools and colleges more infotech-oriented. I told you that India is a great country in mind products. But today companies like ours spend money on training people and then employing them. Which, in other words, means that actual productivity takes place only after a year or two. What we should do is to provide students with computer knowledge and skills in schools and colleges so that by the time they come out, they are fit for employment. Unfortunately, we do everything these days.

We teach them, train them and then employ them. Today India has been recognized as one of the best in IT industry. For India, marketing of IT is not required, only selling is. But for this, we need to create the right IT people.

I was scanning through the syllabi of some colleges recently. What the students there are taught are old computer languages. The sad thing is that in some of our colleges, IT is taught like they are teaching swimming through correspondence. Today the IT boom is here. We have to spread this boom to the villages so that everybody in the country uses computers like a pen or a calculator. We don't require blackboards in schools these days. What we require are computers.

But the penetration of computers in India is very low.

The government has to do two things to increase this penetration of computers and Internet into more households. First, the communication facility -- telecom -- should be opened up. Secondly, the government should do away with the duty on computers. Today the government is charging nearly 40 per cent duty on computers. But it should actually drastically bring down prices of computers so that people can buy PCs the way they do television sets now. There should be government schemes promoting computers.

For instance, if person takes a bond or an LIC policy, he is entitled tax deduction to the tune of Rs 10,000. Similarly, there should be scheme that if one buys a computer, he is entitled to a similar concession.

The Internet boom can do wonders, especially in government sector. Ministers can check online whether his orders have been executed without going the bureaucratic route. Files will not be lost. The government can move from to a more effective system through the Internet.

Do you think the progress of India in the next millennium will be through IT?

The figures will answer that question. In 1990, what the IT industry produced in India was worth just Rs 1.25 billion. Today it has galloped to 160 billion. In the 1950s, Americans revolutionized the telecom industry. In the 1970s, Japanese revolutionized the auto industry. In the 1980s, Koreans and Taiwanese revolutionized the electronics industry. In the late nineties and 2000 Indians will revolutionize the IT industry.

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