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July 2, 1997


New KLG facilities in Gurgaon, New Bombay

The New Delhi-based KLG System Limited has set up new facilities in the Electronics City of Gurgaon and New Bombay. These are equipped with Pentium computers and UNIX workstations, networking and Internet connectivity.

KLG has also set up an office in Vadodara. "The facilities at Gurgaon and New Bombay and the offices at Calcutta and Vadodara are owned by the company in addition to the facilities in Delhi. The company has moved into larger facility in Madras," company sources said, adding that Bangalore and Pune offices are to be merged with the office in Madras and New Bombay respectively.

The sources also said the company reported a fall in its net profit due to manpower costs and project delays. Though the gross revenues increased to Rs 64.2 million for the year ended December 31, 1996, from Rs 56.2 million in 1995, the net profit after tax decreased to Rs 7.36 million from Rs 13.7 million in the previous year.

"The decrease in profits is attributable to various reasons. The completion of a project was delayed by about seven months due to delay in the company's IPO and consequently funds being available only by December 95. While the company commissioned new software development and technical support facilities in June 1996, it increased its staff strength from 45 to 78 personnel in 1996.

In the IT industry, the recruitment process takes an average of three months before a new employee joins and training takes three to four months thereafter.

The recruitment was made to coincide with the commissioning of new facilities and therefore employees started to join services from May 1996 onward. The additional expenses in manpower did not result in a corresponding increase in sales and adversely affected profitability.

Also, an increase in R&D expenses, training and business overheads were not commensurate to increase in business. Sales in the second half were also lukewarm due to recessionary market conditions, the sources said.

Regarding recent developments in the company, the sources said that to better address the needs of its clients, KLG organised its business into various strategic business units - computer-aided design and engineering. Project management, manufacturing systems, earth sciences and education.

"The SBUs have helped further develop and co-ordinate the domain-specific expertise, products and services required by our clients. The SBUs have adopted a solution-oriented approach in our development, integration, marketing and servicing," the sources said.

- Compiled from the Indian media

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