While the business accounted for more than 25 per cent of its turnover in 1998-99, the company has decided to opt out of it and adapt and gear up for suitable business models with a view to generate better profits in the longer-term. BFL is in the process of shifting its focus to the high-margin business of ERP implementation, e-commerce and consultancy services. This will drive its future growth.

The company is also looking at acquiring product companies, especially those in the services business.The company recently acquired a nine-year-old German healthcare software company, Complex Systeme, for $1.5 million. The German company has a turnover of $1 million and has established 75 clients. The strategic acquisitions will give BFL access to new areas and markets or, at worse, just supplement the company's strengths. In early 1998, Baring India investments, a Mauritius-based private equity fund promoted by the ING group, took control of BFL's affairs from the Keshav Bangur group. Unlike other Indian software companies, BFL is not run by technocrats or professionals but the company's performance in the last fiscal speaks of quality management.

BFL staged a turnaround in fiscal 1999 by posting a net profit of over Rs 25 crore through re-organisation of its business. For the year ended March 31, 1998, BFL incurred a loss of nearly Rs 11 crore. High growth in the coming years will be mainly on two counts, namely low base in the current year and support of the Barings group. BFL is planning to increase itsexposure to the advance centre for excellence (ACE), e-commerce, euro conversion services and product development in future. According to analysts, the company is now geared to service bigger clients. The company enjoys a strong relationship with large IT spenders like Compaq and Fed Express. Baring, itself, sources nearly $1 billion of its software needs from BFL.

With the company expected to double its turnover in the next couple of years, the downslide in the stock provides investors with an excellent opportunity to enter the stock. With the company re-organising its business to focus on high-end products and achieve the SEI-CMM Level 4 this year, the opportunity should not be missed. With the domestic software industry continuing to grow at 40 per cent and BFL expected to outperform the industry, investment can be made in the scrip with a long-term view. The company is working towards change in the product mix, which can put the company in the big league.