X O Tronic was set up as a joint venture between the Talwar family and Astronic of US. An export oriented unit (EOU) with buy-back arrangements with the multinational electronic companies.The company is planning to diversify into software solutions in e-commerce, web-based solutions, ERP and customised software re-engineering and development.

Gurgoan-based Rs 30-crore company is expected to earn around Rs 1.2 crore from its software services in the current fiscal. Analysts expect the company to report a marginal operating profit and a turnover of Rs 30-crore turnover in year 1999-2000. But they expect with the company moving into high margin software solutions business the company can easily earn a net profit of around Rs 5 crore and doubled its turnover to Rs 60 crore in fiscal 2000-2001.

Although the company is diversifying into software but it also has plans to invest about Rs 4 crore within the next six months to add two more assembly lines of printed circuit boards. According an analyst with a foreign brokerage house, ``Going by the company's track record it should not face any problem in getting a strategic partner who will invest funds in return for buy-back of the production.''

The company is looking at three options to raise funds - rights issue, preferential issue and unsecured loans from promoters - to bring in fresh investments.

However, the company is currently in the red thanks to a monthly payout of Rs 18 lakh as interest on account of unsecured loans of Rs 20 crore from the promoters. The last option is unlikely to be adopted. Since the company so far has not given good returns, the shareholders may not welcome one more share without a software tag. With a software tag, the company is likely to go in for the option of a private placement or rights issue at a premium.

In the software market, the company would cater to two segments -- the original equipment manufacturers (OEMs) market and the software services market. X O Tronic plans to focus on business-to-business, business-to-commerce, e-commerce and web-based products in the software services market. It will primarily focus on the overseas markets with in-house software solutions for schools, hospitals and colleges.

Set up with an investment of Rs 40 crore, the company is currently operating at a full capacity of 15,000 motherboards a month. The company holds more than 20 per cent market share in the motherboards market. It sells its produce to HCL Infosys, Wipro, Sony, Ascom, ABB and Casio.