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Bharat Kumar

Chennai , Sept. 29

DEBTOR days for the quarter ended June 2003 give a mixed trend among the domestic software companies. Among the top companies, only Infosys seems to have been able to reduce debtor days between quarters ending June 2002 and June 2003.

Debtor days is a ratio between receivables at a certain date and the revenues for 12 months prior to that date. So, the lesser the ratio, the better a company has managed its receivables.

Significantly, Satyam Computer Services and Wipro Technologies, which is Wipro Ltd's software export arm, have both seen an increase in debtor days while smaller companies such as Mphasis-BFL, HCL Technologies, SSI Technologies and VisualSoft have all seen a slump. HCL and SSI have seen the greatest slump in debtor days between these two quarters.

It may be noted that debtor days is relative to sales point to cash flow trends.

Where sales have increased and debtor days have simultaneously decreased will have a positive impact on cash flow.

But growth in debtor days disproportionate to sales growth could have a negative impact on cash flow.

Mastek Ltd has said that debtor days have shown a jump since some customers paid up dues in July 2003, after the June quarter. Mr T.V. Mohandas Pai, Chief Financial Officer, Infosys Technologies, said that there has been an "improvement in the collection process" which is "reflected in the debtor days figure."

Commenting on an industry average for debtor days, he said, "The average credit days provided on customer receivables is 60 days and typically the invoices of the last two months ending with the period under report would be outstanding since these are not due for payment by the customer."

He feels that hence, 60 days would be the average with "anything less than 60 days indicating excellent receivables management."

Also, companies that disclose debts outstanding for more than six months show a marked increase between June 2002 and June 2003.

For the June 2003 quarter, Infosys has debts of Rs 16.22 crore outstanding for greater than six months that it considers doubtful compared to Rs 6.56 crore in June 2002.

For Wipro Ltd, it was Rs 150.40 crore and Rs 103.81 crore, respectively.

Satyam Computers had figures of Rs 14.15 crore as debts outstanding for greater than six months and which it considers good compared to Rs 20.98 crore in June 2002.

Further, it also had doubtful debts of Rs 45.99 crore in June 2003 compared to Rs 73.03 crore.

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