Ramco's chants `CPR' mantra for survival

Bharat Kumar

Raja Simhan T E

CHENNAI, Aug. 9

NONE of the brash Americanisms from him. No vehement pumping of hands or those plastic smiles. Just a hello, firm handshakes and exchange of cards.

The only difference evident since he came into Ramco Systems as President during the last calendar year, is Mr Lakshmi Narasimhan's French beard.

As you go over the year mentally, you can't help getting back to Ramco Systems' roots. It started off as a predominantly ERP product company.

The Chairman, Mr P.R. Ramasubrahmaneya Rajha, invested heavily in product development. The company made inroads with implementations to its credit across the world.

However, during the last fiscal, Ramco Systems transformed itself into a software solutions company ``with a suite of products'' -- a change that brought with it prospects for further revenues.

Keeping these in mind, and watching Mr Lakshmi Narasimhan begin to speak about building relationships with the media, one wonders what the road ahead holds.

What is your take on the slowdown? When do you think things will start looking up?

It is difficult to hazard a guess. But, we are told that it could take at least two quarters before things become better.

What is Ramco's outlook for the year, given the scenario?

If things go on as they are, we should grow between 30 and 40 per cent. If the US economy picks up early enough, we should do better.

In fact, this quarter, we are looking at a good break-even situation, as per US GAAP. The next quarter, we should see a turnaround, with some small profits.

Ramco Systems showed an increase in excess of 100 per cent in losses last quarter, compared to the same quarter of the previous year. Given this, how do you see a turnaround as per US GAAP?

We have made investments into infrastructure and manpower. Hence, the losses for the last quarter.

Any plans for acquisitions? Some in the industry feel that if you spot any good companies now, with valuations being what they are, you should swoop immediately.

I would agree. Eventually, the October-December quarter is when the industry's M&A scenario would become better.

How would you expect to counter the slowdown?

CPR is the mantra now for us. It stands for cash flows, profitability and revenues. We are going about doing everything that would help us increase numbers on these three counts.

For instance...?

We are coming down heavily on infrastructure costs, and consciously trying to control our variable costs such as travel and communications.

We are deferring bonus and salary increments by a quarter, and are effectively utilising our bench to expedite product development. Depending on how well we do this quarter, we will take further measures.

We have even changed the way we decide on bonus amounts. Earlier, the bonus amounts used to be decided based on revenues. Now, the CPR is an added factor.

What is your bench situation like?

Surprisingly, in July, our bench is at 20 per cent of our total manpower. In August, it might even come down to 10 per cent. If it is required, we will do just-in-time hiring.

We still intend to go to campuses. However, the numbers we take may not be as many as we took last year. And being a product-centric company, bench in the conventional sense does not apply to us. We have the ability and flexibility to redeploy resources.

Have your billing rates been hit badly?

There is pressure on billing rates. On average, we quote at $22-30 per person per hour, but do not mind going lower in a case where the customer is of strategic importance.

However, our rates for ERP implementation continue to command the same figures as before.

What is the status of your deal with Boeing?

Boeing is a promising customer. We hope to make a sale in the last quarter of our fiscal. Before that we have to go through rigorous evaluations from the end customers, who are typically the airlines.

Pic.: Mr Lakshmi Narasimhan, President, Ramco Systems Ltd.

Picture by Shaju John