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June 10, 1997


CMC plans ventures with NCR, Baan

CMC Limited is planning to enter into joint ventures with its overseas alliance partners, NCR Corporation and Baan.

CMC, which has strategic alliance with NCR and Baan for worldwide distribution of its software products, is exploring the possibility of forming separate companies with them.

CMC Chairman and Managing Director K K Krishnan Kutty said CMC's management is waiting for a report from I-Sec in this regard.

The report will make a full scrutiny of CMC's financial strength and provide necessary guidance to it regarding dilution of equity and raising of loans.

Kutty said that the company has paid off a substantial part of its bad debt and tax liabilities last year from sale of assets. Currently, CMC's debt-equity ratio after the finalisation of last fiscal's result stands as 1.2:1, he added.

Kutty said that the company is laying more emphasis on export of its software products which he considers to be significant from the point of view of overall growth. He stated that CMC is targeting a turnover of Rs 600 million from exports in the current fiscal.

In the last fiscal, the company has earned Rs 350 million from sales abroad, Kutty said. CMC is also planning to make an investment worth Rs 250 million during the current fiscal. On this, Kutty said that this investment would be primarily made for enhancing productivity and upgrading basic requirements such as hardware and software used by technical personnel of the company.

The investment requirement of CMC for the Ninth Plan period is Rs 1.25 billion. Of this, CMC is expected to generate Rs 700 million from its internal accruals.

Significantly, CMC has recorded a turnover of approximately Rs 2.28 billion with a net profit of Rs 38 million in the last fiscal. And, the company has set itself a target of Rs 2.9 billion by the end of current financial.

Kutty said that CMC would move more into the low-end computer market from its earlier focus on the high-end segment. This has been necessitated by greater penetration of low-end personal computers in the country, he claimed.

It will also try to give a bigger boost to its educational wing. The company intends to spend Rs 250 million over the next three years on the development of various programmes for its training courses.

It will concentrate on expansion through the franchisee route. In the hardware division, it will continue as spare component supplier to foreign computer manufacturers like Compaq, Hewlett Packard and IBM.

This is the only growth prospect for domestic hardware manufacturers of the country.

- Compiled from the Indian media

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