NIIT sees year-end turnaround

Wong Choon Mei

KUALA LUMPUR: India's largest computer education and software services firm
NIIT Ltd., said on Monday that it expected demand for software to pick up at the
end of the year and was preparing for it.

"There is high tide, and there is low tide. The slowdown is temporary,
and when the revival comes, it is going to be even stronger than the current
fall," said Rajendra Pawar, chairman of the company, at a news conference
after the opening of NIIT's regional multimedia development center in Malaysia's
capital.

Indian software firms dominate the technology sector of the country's stock
exchange, with annual revenue growing at rates of more than 50 per cent before
this year. But the sector has been hit by a downturn in the US economy, its main
market that accounts for more than half of total sales.

"When the revival comes, we see a very good demand for Indian software
companies, as they have proven they can do better than any other software firms
in the world," Pawar said. New Delhi-based NIIT, with 2,228 software
education centres in India and abroad, last month reported a 31.43 per cent jump
in second-quarter net profit to $10.32 million, but warned performance going
forward may not be as good.

It blamed slowing global economic growth and a general downturn in sentiment,
saying operating profit could fall by 30 to 40 percent this year. It had posted
a net profit of 2.94 billion Indian Rupees ($62.7 million) in the year to
September 2000. "We are sticking to our forecasts," Pawar said.

Four quarters

Last week, Indian technology firms told the government, that the slowdown
affecting the industry would not last more than three or four quarters. Pawar
said NIIT intends to reduce high-revenue, low-margin systems integration and
software product distribution as a share of its overall business.

"We are restructuring our portfolio of businesses and shifting from
areas where we glue together other people's solutions, which are less
value-added," he said. NIIT hopes to take advantage of Malaysia's
infrastructure facilities in its high-tech Multimedia Super Corridor, one of the
most ambitious projects launched by Malaysian premier Mahathir Mohamad to help
the country achieve developed nation status by 2020.

It is a 15-by-50 km (9-by-31 mile) zone stretching southwards from Kuala
Lumpur's Twin Towers to the city's shiny but under-used international airport.
"We like Malaysia's mindset and focus on multimedia, which we see as the
future of the industry," Pawar said.

(C) Reuters Limited 2001.