It was Hindustan Levers and Infosys that lifted the sentiments of the Indian stock markets during the week ending October 13, 2001 as the Sensex reached 2959 even as the Afghan war continued to blaze and Bio terrorism showed its ugly face to the civilized world. Hindustan Levers’ novel scheme to issue Bonus debentures which can be redeemed and which carries interest was received as a welcome innovation in the market place.

Simultaneously, Infosys announced a better than expected quarterly results and also confirmed that it had concluded new deals after  September 11dispelling the extremely pessimistic views taken by some of the analysts on the prospects for IT companies in the Post September 11 scenario. NIIT and Satyam also moved positively . There was also a renewed interest in Banking shares with HDFC Bank and ICICI Bank making substantial gains.
Even though profit taking cannot be ruled out in the coming week, the general sentiments has improved substantially during the week to bring back some optimism that once the index breaks out into the 3000+ zone, it should gradually consolidate at a higher level.

During the week, a new scrip from the IT industry attracted attention posting a net profit increase of 56% during the quarter ending September 30 as compared to the previous year. The Company was the Bangalore based Aztec Software which is a relatively new Company in the industry. 

Aztec, was promoted  in1995 by S Parthasarathy, and  is a software technology company providing high-end e-engineering solutions to the B2B e-commerce market. It provides software solutions mostly to net-centric companies using technologies like core database, data warehousing, infrastructure, XML and Java  Mr K.B.Chandrashekar of Exodus Communication has invested in the Company through his Maritius based investment company. 
The Company made its IPO in last October at Rs 80 per share for shares with a face value of Rs 3  . Presently however the shares are quoted in the region of Rs 35.

The Company  registered  sales of Rs 79.92  crores for 2000-2001 with a net profit of Rs 20.15 crores  For the first quarter ending June 2001, the Company posted sales of Rs 26.31 crores and a net profit of Rs 6.06 crore. This was inclusive of a substantial other income portion of over Rs 1.3 crores and hence the operating profit margin declined  substantially raising some worries about the impact of the slow down of the Internet economy on which the Company is focussed.

The Company has however responded to the emerging situation boldly with cost reduction  initiatives including a substantial cut in the manpower costs.. It has cut its global manpower by 10 % to meet the uncertain future, more on the lines of the US Corporate practices.. It has also deferred some of the planned expansion related capital expenses and showed a sense of  maturity and managerial skill often absent in the traditional Indian Corporates .
As a result of some of these initiatives, the Company has been able to consolidate during the second quarter ending June 2001 when it registered sales of Rs 22.96 crores and a net profit of Rs 6.38 crores. Additionally, unrealised gains on investment by the company in debt schemes of mutual funds amounted to Rs 2.52 crore. has not been included in this figure 
The company, presently has a set of over 40 clients and has added six new customers in the current year despite the sluggishness in the market. The company, has also diversified its market from the west coast of US to the East Coast as well. The company has also signed a client in France marking an entry into the European market.

The success of any enterprise lies in its ability to respond to dynamic market changes  in such a way as to reduce the impact of adverse developments and also to exploit emerging market opportunities. These are often learnt and forgotten at the management schools and the judgment of entrepreneurs gets clouded in a practical situation.  Since we are now in an era where changes happen faster than any entrepreneur can imagine, what is certain in a venture is that it would not be the same venture after some time. One of he reasons why investors in India have lost their money in many of the companies is the inability of the management to adopt to the changing needs. 
Aztec which is a baby in the Indian industry appears to have a different set of managerial personnel who are quick on their feat to react positively to changing circumstances. It is this character which makes this low prices share worth considering for investment for a possible long term benefit.

Na.Vijayashankar
October 13, 2001