Fastest Growing SP (Gold): Allied Digital Services : Leader All The Way

During the economic slowdown in the last fiscal, when most companies were
finding it difficult to maintain the revenue they had posted in the fiscal
before (2007-08), Allied Digital Services managed to post a growth of 87 percent
to register an astonishing turnover of Rs 556 crore. In 2007-08, the company had
posted a turnover of Rs 297 crore. This is why the company has been awarded the
Gold in the category 'Fastest Growing SP' in the recently-held DQ Channel
Excellence Awards in Bangkok. Allied Digital Services' success also made it the
fastest growing company in the Silver Club list for the solution providers.

Prakash Shah accepting the award for Fastest Growning SP (Gold) from Shyam Mallhotra, Editor-in-Chief, DQ Channels

What contributed to an astounding success of the company last year? Part of
its growth came from its inorganic expansion, which came in the form of two
acquisitions. Last year, Allied acquired 80.5 percent stake in the
infrastructure management services firm, En Pointe Global Services (EGS),
subsidiary of the NASDAQ-listed $340 million, En Pointe Technologies. The
acquisition, funded through a combination of cash and equity swap, values EGS at
$30 million and entails upfront cash payment of $10 million; issuance of
7,45,000 equity shares of Allied Digital Services to EnPointe Technologies, with
an additional cash infusion of $4 million in EGS. En Pointe contributed close to
Rs 200 crore to Allied's revenues.

The company's revenue and profits have grown at a CAGR of 45 percent and 70
percent, respectively in the last three years. The company is expected to
deliver a phenomenal CAGR of 90 percent in revenue and 92 percent in profit in
the next fiscal, on the back of exponential growth expected in the RMS segment
and recent acquisitions. The company is believed to be close to signing an
agreement with one of the leading PC server manufacturers to offer its services
as a bundle to the OEM. Such deals can potentially bring in substantial
incremental revenues and act as the next growth driver for the company. The
bundled services would be initially offered in the USA and would be rolled out
in the other continents in the next few quarters.

Allied Digital Service's margins are sustainable in future inspite of the
highly competitive environment that it operates in. The success will be achieved
on the back of a higher proportion of revenues from the high-margin service
segment (driven by the NOC and SOC businesses); an improvement in EGS's margin
as more work gets shifted offshore; its conscious efforts to reduce its
dependence on the on-site employees; and cost efficiencies.

Madhura Mukherjee

madhurak@cybermedia.co.in