Friday, July 9, 1999 Published at 17:02 GMT 18:02 UK
World: South Asia
Profit boost for software leader
Shares in Infosys have rocketed on the Bombay exchange
By Sanjeev Srivastava in Bombay
India's premier software company, Infosys, has nearly trebled its profits in first quarter results for the financial year 1999-2000 - confounding those sceptical about the boom in the Indian software market.
The sector has recorded growth rates of nearly 100% per year for the last five years, but was regarded by observers as a bubble waiting to burst after Y2K-related work orders were exhausted.
With sales figures of nearly $39m, net profits for Infosys have reached $14.1m for the first quarter of this year against a profit of $4.7m in the corresponding period last year.
The company posted a net profit of $42m last year.
New clients help business
Infosys specialises in software services and products, employing nearly 4,000 people not just in India, but also in Canada, the US, Europe and Japan.
Announcing the first quarter results on Friday in Bangalore in southern India, the chairman of Infosys, Narayan Murthy, said the company had been helped by new clients such as Amazon.com, EC Cubed and Value America - several of whom are in the e-commerce and Internet business - as well as new business opportunities.
The first Indian software company to be listed on Nasdaq in March this year, Infosys started the concept of employees' stock options in India when it went went public in 1993.
Shares were offered to the public as well as company employees at about $2.5 (100 Indian Rupees).
Bonanza for share holders
With the company having issued a bonus share in the ratio of one share to every share held and the share price now quoted at 3,800 Rupees, all of the employees at Infosys as well as those amongst the public who kept their holdings in the company are now millionaires.
Those who invested in the Infosys share offer on the Nasdaq, priced at $34 in March this year, have also been handsomely rewarded as it is now trading at $66.
Within four months of its listing, the Nasdaq share price of Infosys has nearly doubled.
According to market analysts in Bombay, Infosys should be able to sustain a healthy growth rate in the immediate future as the company management is now concentrating more in e-commerce and the Internet as against the service sector.