Our concern for quite sometime has been whether there is inventory accretion in the system. We looked at the top 80 companies and the inventory accretion was a mere Rs1.17bn. Wrong, I would say. Without taking these two companies into account, the inventory accretion has been about Rs7.8bn. This would be a cause for concern as we go forward.
Lets start with the good news.
However, within the IT companies the bigger boys have performed better than the smaller companies. Our recent discussions with many industry professionals have indicated that smaller IT companies are facing pressure on both topline as well as bottomline. In fact, some VCs who have funded IT services companies have indicated that the companies in their portfolio have missed the 3Q targets and the next one to two quarters is likely to be the same. The sector's interest costs have also remained under control. As a result, the sector in aggregate has posted net profits of Rs69.7m in 3QFY01 as against a net loss of Rs677.7m in 3QFY00.