Advanced Synergic
On to higher stakes

Advanced Synergic Microsystems Ltd (ASML) took over the assets and liabilities of Synergic System, a partnership firm, in 1992.The later, which commenced operation 1988, was engaged in developing software particularly in engineering-based software. The management of both above mentioned companies is the same, consisting of us returned technocrats.

The list of its clientele is indeed impressive: BARC,ISRO,Indian Space Application Centre, LRDE,HAL, HMT, BHEL, BEL, Phillips and others . Turnover rose from Rs.60 lakh(net profit of Rs.3 lakh) in1990-91 to Rs.36 Crore (net profit of Rs.5 lakh) in 1992-93.

ASML is now planning to widen its horizon by venturing into systems engineering, value added reselling through distribution ships of leading hardware and software system. In fact, the company has entered into an agreement with Silicon Graphics, a US-based computer major for value added reselling of the latter's RISC based 3D workstations. However, ASML is a non-exclusive reseller of this product and moreover, the deal will be terminated on December 31, 1996.

But then, the project under implementation has already incurred a time overrun. Though it was originally scheduled to commence operation in August 1993, there has been a delay of at least six month And the project date for commencement and commercial production has been shifted to the first quarter of 1994.Hence, the projection for the year 1993-1994 will not be achieved In fact, the company officials now state that only half the projected total income of Rs.8.40Crore for the year 1993-94 may be achieved. However, the company maintains that estimate for later years will be achieved. Project cost & details:IDBI, which had appraised the project in February in1993,has put the project cost at Rs.4.60crores.As much as Rs.2.95 Crore has been earmarked for acquiring plant and machinery(basically engineering workstations ,LAN with cabling, PC's mini computers with software, CAD/CAM/CAE software tools ,software aids etc), which forms 56% of the total cost.Moerover,Rs.83.40 lakh has been set aside for preliminary and preoperative expenses and for meeting contingencies on plant and machinery(18% of the total cost).

The project in financed by an equity infusion of Rs.3.00 crore (promoters contribution of Rs.1.15 crore) and a IDBI term loan of Rs.1.60 crore.

Projections: As per the appraisal of IDBI, the total income in expected to raise from Rs.6.84 crore(net profit of Rs.20 lakh) for the year ended March31 1994 to RS.12.68 crore(net profit of Rs.67 lakh) by 1996-97.for the latter year mentioned above, the EPS and book value slated to reach Rs.2.23 and Rs13.90,respectively.

Risks: (i) The business of the company is prone to completion from the existing and new units (ii) The project is an industry where the man power turnover ratio is high

(iii) Since the company is dependent on the imports of workstations, etc the operations and the profitability are exposed to adverse import restriction and fluctuations in foreign exchange rates.