Sales in the first quarter of 1999-2000, stood at Rs 77.78 crore, up 27 per cent compared to Rs 61.24 crore for the corresponding period last year. Engineering services account for a lion's share of net revenues, contributing 49.63 per cent, with Global's Software and Internet Services Group coming a second in the contribution stakes with 31.34 per cent. The other income of Rs 2.21 crore in the first quarter is higher as compared to Rs 0.25 crore thanks largely to sale of some fixed assets.

Stringent cost control and a change in the sales mix (lower sales of consumer telecom and products) have also helped Global keep a check on expenses. In fact, expenditure has only increased 18.96 per cent to Rs 48.32crore for the quarter ended June 1999. Net interest and financial charges have also dipped from Rs 7.90 crore to Rs 6.38 crore, mainly due to the company's efforts in refinancing high cost debt and reducing the debt component.

Depreciation, however, has been a drain on earnings increasing from Rs 6.07 crore last year to Rs 11.30 crore for the first quarter ended June 1999. This company sources attribute to the fact that accelerated depreciation has been provided from April 1, 1999, on the remaining estimated useful life of the fixed asset, which has resulted in an additional depreciation of Rs 4.62 crore for the first quarter. Had this not been done, profits would have been higher by that amount.

For the future, the company has initiated development of industry vertical solutions in the areas of payment gateways, strategic sourcing and E-commerce solutions. The globalisation initiative which has begun in 1995 with the opening of a subsidiary in Mauritius and a branch office in Singapore is also nowgathering steam with offices already opened in New Zealand and joint venture in the Middle East. During the current year the company is also looking at concentrating on Africa and has plans to open resource centres in USA and Europe.

INSIGHT
On a firm wicket

A company which started with the marketing of single line phones and EPABX's, Global Tele-Systems is now poised to breach the gap to the next level in software solutions. The logical diversification into high margin telecom engineering services, networking and software businesses has ensured a high growth rate.

But perhaps most important from a long-term perspective, would be GTL's new focus on the globalisation of its operations. What with offices already set up in Singapore, Mauritius and the Middle East, GTL plans to leverage the existent relationship with the Indian multinationals, to attract their international parents. Thus, with a clientele reading like a virtual directory of corporate India, Global Tele-Systems appears to bebatting on a firm wicket. However, in the interim, it could be the business from private telecom provider like Hughes that hold the key to GTL's profitabilities.

-- Percy Dubash