The smart ones amongst them like Infosys were quick enough in diversifying into other growth areas such as Europe and Japan. Whether the US recession will have an impact on the revenues of software companies is debatable, but it will definitely squeeze their margins as the US companies would be forced to cut their costs and go for cheaper alternatives. The next few trading sessions would witness some more hammering of VisualSoft stock and any recovery rally is ruled out. In a bid to further cash in on better industry scenario, it has announced acquisition of Sinar Mas plant for around Rs 500 crore. As a result, the company will be able to increase its capacity by nearly 60 per cent to 3.65 lakh tonnes.
Acquisition looks very cheap and the company seems to have hit pay dirt.
According to the strategic plan, Bilt has been concentrating on core areas of producing pulp, writing and printing paper etc. It has already embarked upon Rs 400 crore expansion for achieving the objective. However, interest cost has been ballooning as the major plans are being funded by debt. Cash flow will have to improve for a better debt-equity ratio. There is a silver lining as the net cash from operations for the year ended June 2000 was Rs 198.22 crore as compared to Profit before tax of only Rs 69.28 crore.