The company also witnessed a 72.8 per cent drop in net profit (including provisions) at Rs 2.95 crore compared with Rs 10.8 crore during the same period last year.

There has been a drastic fall of 52.9 per cent in revenues from products and services at Rs Rs 40.2 crore while software exports looked up during the quarter registering a jump of 21.8 per cent at Rs 18.1 crore.

Digital was merged with Compaq Computer Corporation worldwide in June 1998. In India, Digital has a presence in domestic computer products and services market and exports, Compaq's Indian subsidiary is mainly into computer products.

The Digital India board has approved the plan to sell its domestic computer products and services business to Compaq India for a cash consideration of Rs 83 crore plus a non-compete fee of Rs 5crore. The board said this move will enhance the shareholder value.

It has also chalked out a plan to restructure its business. As per the plan, Digital India will become an independent software and services exports company with cash resources of over Rs 150 crore for funding the future growth.

The company aims to become India's largest listed MNC software exports company and also will have Compaq as its largest shareholder. Compaq will continue to remain as Digital's largest customer.

Digital India's new board includes four new nominees of Compaq and four independent directors. Kannankote Srikanth will take over as its new chairman and Som Mittal as managing director. Chairman of Hinditron, Hemant Sonawala will be the deputy chairman.

A sub-committee of the board will appoint a new chief executive, probably a senior IT industry figure. A new team will look after the software and services exports and draw up a new business strategy.

The products and services that move to Compaq include Alphabusiness line, customers services operation, network and system and integration and operational management services.

According Som Mittal, the company enjoys the support of Compaq as an investor and a customers. Digital has been supplying software to service only the captive requirements of Compaq, which will be extended further through the `preferred supplier' status.

Of the existing 835 people in Digital India, 305 are currently in the software and services exports business and 530 are with the domestic computer products and services business. This 530 strong team will move to Compaq India as a result of the transaction and there will be no job loss, according to Som Mittal.

These proposals are subject to shareholder approval at an extraordinary general meeting to be held on May 31, 1999.

According to Som Mittal, Digital's strengths like three worldclass software technology parks in Bangalore, staff of over 300 qualified software engineers, three dedicated links to US and France and advancedcomputing infrastructure.