The Hindu Business Line : Blue Star Infotech net dips as other income takes a hit

BLUE Star Infotech Ltd recorded a 30 per cent dip in consolidated net profit at Rs 3.6 crore for the quarter-ended June 30 compared to Rs 5.3 crore recorded during the corresponding period last year due to a drop in other income and increased expenditure on event-related marketing activities.

The company posted consolidated revenues of Rs 28.5 crore (Rs 23.6 crore) for the first quarter of 2004-05 reflecting a 21 per cent growth.

``One major reason for the decline in net profit was the drop in other income, that is our mutual fund investments did not pay off compared to last June (first quarter 2003-04) when we had recorded other income of Rs 2 crore. Moreover, we took a conscious decision to forego margins when we invested on global marketing initiatives like event-related trade expositions,'' Mr Parmod Bhalla, Managing Director, BSIL, told Business Line.

According to Mr Bhalla, the planned investment on marketing activities will erode ``the bottom line for sometime to come but we expect this to be compensated by volumes.''

The company plans to allocate $100,000-$200,000 per quarter on marketing activities including the participation at a JETRO-sponsored trade event at Japan in the near future.

With a zero-debt financial position and Rs 30 crore in cash/cash equivalents as on June 30, the company is actively looking at acquisitions as part of its growth strategy.

It has identified the US-based companies specialising in consulting for the acquisition and is "willing to pay as much as $20 million if the fit is right," the BSIL MD said.

For the quarter-ended June 30, the company opened a new sales office at Detroit, Michigan and expects to grow its business in the US.

During this quarter, the US geography contributed 57 per cent to BSIL's revenues, while Europe accounted for 22 per cent.

Nine new customers were added during the quarter taking total number of active customers to 48.

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