The disclosure that its profits dropped by a quarter from a year earlier would be quite the blow to its new investors
On the eve of its debut on the bourse, eGeneration, the first software technology company to get listed, dealt some bad news for its investors: its net profits tumbled 24.9 per cent between July and December of last year.
The company, which is the only Bangladeshi licencing solutions partner (LSP) of Microsoft and premier partner of SAP (ERP solutions provider),logged in a profit of Tk 4.9 crore for the first half of its 2020-21 financial year, which runs from July to June.
And in the second quarter, its profit dropped 16 per cent year-on-year to Tk 2.7 crore.
The company’s revenue increased 15 per cent in the second quarter, according to Shameem Ahsan, its managing director.
“To increase market share and continue our business growth even during the pandemic, we onboarded some projects in the first half of 2020-21 with a competitive margin. However, as the situation is improving gradually, so is our business,” he told Dhaka Tribune yesterday.
Regardless, the disclosure that its profits dropped by a quarter from a year earlier would be quite the blow to its new investors: general investors placed orders for shares 40.76 times their allotted amount.
Investors booked shares worth more than Tk 611.4 crore against the Tk 15 crore allocated for them.
The 17-year-old companyplans to use about 65.6 per cent of the Tk 15 crore IPO proceeds for business expansion.
And the crown jewel of eGeneration’s business expansion plans is a digital healthcare platform.
The healthcare sector is significantly behind other sectors in terms of using data and emerging technologies, Ahsan earlier told Dhaka Tribune.
“If the hospitals transformed themselves digitally in the pre-pandemic period, we probably would not have lost so many experienced doctors, healthcare staff and patients during this pandemic.”
Moreover, the hospitals could have offered better and safer healthcare services to more people even with their limited resources, said Ahsan, also a former president of the Bangladesh Association of Software and Information Services (BASIS).
The digital healthcare platform in the works would digitalise the medical records, linked to the national identity card database and accessible between hospitals.
The platform is already being piloted with members of the Border Guard of Bangladesh.
According to the World Health Organisation, 1 in 10 patients experience medical errors while receiving hospital care, and one of the main reasons behind this is paper-based manual medical record-keeping, Ahsan said.
Due to the lack of instant access to information, a doctor may have to make a critical decision without assessing the prior medical conditions of a patient, which can very well lead to some adverse event.
“That is why we are putting a lot of emphasis on the adoption of electronic medical records.”
It will also enable health system interoperability so that a patient’s health records from one hospital are made readily available to other hospitals and physicians.
“We are working relentlessly to help bring a cultural transformation initiated by advanced technologies that will lead to an equal-level partnership between patients and their caregivers,” said Ahsan, also the chairman of the Venture Capital and Private Equity Association of Bangladesh.
Other than the ground-breaking platform, eGeneration is also planning to ramp up its export of IT products and services, particularly to India, Nepal, Bhutan, Malaysia and several other African countries.
At present, it is already working on the internet of things (IoT) in Japan and on a cloud-based application in the Middle East.
eGeneration, which started as a management consulting, technology services and outsourcing company, now offers data science, system integration, cybersecurity, natural language processing and capacity development services to its clients.
The company is also doing extensive research on advanced technologies such as machine learning and artificial intelligence.
Some of its upcoming products are blockchain, cloud computing, data centre, agriculture prediction system, money laundering detector, agriculture automation system, etc, according to a report of Brac-EPL.
At present, eGeneration offers low-cost IT services to banks and financial institutions, garment and textile factories, consumer goods industries, e-commerce, business-to-business platform and different departments of the government.
Some of its notable clients include the ICT division, Sonali Bank, Robi, bKash, S Alam Group, Brac University.
About 52 per cent of eGeneration’s revenue of Tk 39.6 crore in its 2019-20 financial year came from three clients: Bangladesh Computer Council (21.3 per cent), Robi (19.4 per cent) and Sonali Bank (11.7 per cent), according to Brac-EPL’s research.
“Although the industry can be run remotely, the regular activities of the industry were hampered due to cancellation or postponement of products from the client-side resulting from the COVID-19 pandemic,” the report said.
Demand for IT products from overseas clients also plunged at the same time, the report said.
According to industry experts, annual revenue declined by 20-25 per cent in the 2019-20 financial year.
“Despite facing all these obstacles, eGeneration registered 8.9 per cent top-line growth,” the Brac-EPL report added.
The top line refers to a company’s revenues or gross sales.
Ahsan is expecting eGeneration’s revenue to hit Tk 57 crore by next year.
“We will use the proceeds to repay a major portion of our long-term debt to reduce our cost of capital and purchase commercial office space that will minimise our operating expenses and ease bank financing in the future,” he added.