Business of the Company
Sasken is a software company that focuses on the broadband and wireless software space. The company is into both IT services and products and the mix is such that the company derived 86% revenues from services and 14% from products (9 months ending FY 04).
Within the services space Sasken provides embedded R & D outsourcing services to large network equipment manufacturers, semiconductor manufacturers supplying to the telecom market, wireless terminal product vendors and test and measurement equipment providers.
The products are software components which their customers use in turn to provide solutions to their customers.
To summarise the company is in a very niche business within the IT space. While this is good in terms of the company having developed critical capabilities it also exposes the company to the risk of being concentrated in only one sector the downturn of which would lead to heavy pressures over the company.
Few Customers
A natural outcome of being a concentrated player is that there are only a few customers within that space and the company depends on a few large customers for its revenue. This is a risky scenario with even if the company loses one of the customers the top line takes a major dent.
This is highlighted by the fact that the top customer accounted for 29.85% of the revenues and the top two customers accounted for 52.54% of revenues for the 9 months ended 31 December 2004.
Object of the Issue
The money is being raised to set up a new software development campus at their premises in Bangalore. A sum of Rs. 1260.80 million has been earmarked for this purpose with Rs.88 million being the issue expenses.
Financials of the Company
While the revenues have steadily increased from 759 million rupees in 2000 to 1661 million in 2004 there have been a decline in profits from 250 mn in 2000 to 162 mn in 2004. However a look in the statements shows that a large part of the decline is attributable to non cash expenses or expenses which are not really incurred by the company but are only on books. Example is depreciation where there is no cash outflow but the amount is reduced from the profit figure to make a provision for replacement of the assets. To that extent the company has done decently and a look at the cash expenses suggests that they have been in line with the increase in revenues.
The table below lists other stocks in this section
which also belong to the I.T. Sector.
I.T.
