Nucleus Software eyes Europe, US; to cut costs

Nucleus Software eyes Europe, US; to cut costs

New Delhi: Nucleus Software Exports Ltd, which reported a marginal drop in consolidated quarterly profit, sees improved performance in FY11 on a recovery in economy, rise in bank lending and as it targets new markets.

“Now the world has come out of recession. Banks have started giving more loans. We have started receiving more request for proposals from banks," chief operating officer Niraj Vedwa told reporters on Monday.

Nucleus supplies retail banking software to banks mainly in Japan, South-East Asia and India. The economic meltdown that started in 2008 in the US had left banks across the globe with low confidence, impacting orders at software providers such as Nucleus.

Nucleus Soft reported a 4.3% decline in consolidated net profit at Rs91.8 million and 15.8% fall in net sales at Rs722 million for the quarter ended 31 March 2010. The operating margins improved to 19.15% for the quarter from 13.76 in the year-ago period on massive cost cuts.

The company was able to slash its costs by 14% during FY10, as against a target of 10%, finance chief Pramod Sanghi said.

Vedwa said the company was targeting to bring down the delivery cost to 50-60% of revenue in FY11 from 67-68% last fiscal, but the marketing cost, at 14% of revenue now, may go up as the company targets new markets.

The company plans to ramp up its revenues from Europe, US, and Latin America, that has been “negligible" in FY10, he added. The company’s board has approved plans to acquire new products to service existing clients and those in developed markets, Vishnu Dusad, CEO and managing director said. The company has free cash of Rs1.62 billion as on 31 March.

For FY11, the company has set a capital expenditure plan of Rs50 million, which would be used to set up a 250-seater development centre at Jaipur Special Economic Zone, Sanghi said.

The company’s order book stood at Rs1.64 billion at March-end, down from Rs1.79 billion as on December-end, Sanghi said.

The company also announced a final dividend of Rs2.50 per share for the year ended March 2010.

At 3.13pm, shares in Nucleus were trading 2.76% down at Rs156.10. The broader market was up 0.35%.