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September 10, 1997


For mart's sake

Silicon Graphics Systems India Limited, a wholly owned subsidiary of the $4 billion Silicon Graphics, USA, has drawn up plans to pump in about $22.5 million for India market development over the next three years.

These investments are to be generated from the Indian outfit itself.

General Manager Sundar Iyer said that the company had decided to invest about 20 per cent of its revenues earned in the country in market development activities.

The company, which recorded a turnover of $18.6 million during the year ended June, has fixed revenue targets of $25 million, $37 million and $50 million for the next three years. Twenty per cent of these revenues works out to about $22.5 million.

SGSI has already invested about $4.5 million from its previous years' revenues in market development efforts in the country.

It has also finalised plans to invest $3.5 million in setting up its offices in Delhi and Bombay. It is also likely to set up more offices in Pune, Hyderabad, Madras and Calcutta.

SGSI has already invested about $3 million in infrastructural facilities. This includes a plant in Gurgaon for the assembly of about 1,000 units of desktop workstations per year, namely Indys and O2s. Silicon Graphics has targeted a gross profit margin of at least 50 per cent and a net margin of 15 per cent in any country that it operates in.

However, India is to be treated as an exception. SGSI will be content with a gross margin of 32 per cent and a net of about 4 per cent. This increases the leverage for market development expenditure.

According to Iyer, the enterprise segment which today accounts for only about 15 per cent of the company's revenues in the country, is likely to grow the fastest. The CAD/CAM segment brings in about 35 per cent of its turnover and the education research and visual reality and prototyping markets bring in 25 per cent each.

He said the Internet market is expected to grow at a fast clip. Silicon Graphics was among the first global IT players to set up shop in India in 1993.

It specialises in interactive computing systems and provides a range of products from low-end to high-end desktop models.

- Compiled from the Indian media

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