Kale’s Airline and Travel Revenue up 38% in Q3

Kale Consultants Limited, the leading provider of software solutions and outsourced services to the Travel & Transportation industry, has recorded an operational revenue of Rs. 124.02 million in the quarter ended December 31, 2004 a s compared to Rs. 104.18 million from the Airline segment for the corresponding quarter of the previous year.

Kale eTravel Technologies Ltd (formerly known as Cognosys Software Pvt. Ltd), a subsidiary which Kale acquired in March 2004, posted revenue of Rs. 20.11 million in the quarter ended December 31, 2004.

Thus taken together, the Travel and Transportation business which is the complete focus of Kale, recorded a revenue of Rs. 144.13 million for the quarter ended December 31, 2004. This constitutes an increase of 38.35% in revenue on a comparable basis.

For the nine months ended December 31, 2004 , the company has recorded revenue of Rs. 337.93 million a s compared to Rs. 278.32 million was from the Airline segment last year. Kale eTravel Technologies Ltd revenue for the nine month period is Rs. 60.24 million. Thus taken together, Kale's Travel and Transportation business recorded revenue of Rs. 398.17 million, a growth of 43.06% over the corresponding period last year.

The businesses that Kale has discontinued in the course of its restructuring last year contributed Rs. 68.85 million for the nine months and are included in last year's numbers.

Kale's net profit for the quarter is Rs. 2.48 million and Rs. 7.65 million for the nine month period ending December 31 st 2004 . This compares with Rs. 17.41 and Rs. 20.46 million in the respective periods last year.

Commenting on the performance, Mr. Vipul Jain, CEO & Managing Director said, "This quarter has been significant because we have successfully transitioned 4 new customers for our Managed Process Services. We have also completed product development of our proration engine APEX™ and are ready to commission the Neutral Fare Prorate industry service. Our growth is running at 40% and will gain momentum going forward. We have invested in expanding our MPS facilities and resources, with a short term hit on the bottom line. Our profitability will grow as our revenues scale up.“

Business Outlook
The calendar year 2004 finished with the strongest airline traffic rebound since 1991 with 11% growth in passenger numbers and 10.1% in cargo traffic. The industry is poised to grow at 6% CAGR for both passenger and cargo with China and India being among the fastest growing markets. At the same time, the industry has run up losses of more than $35 billion over the last four years and passenger fares and cargo yields continue to decline, increasing pressure on profitability.

The travel industry is facing similar dual challenges – the opportunity to grow on one hand and reducing commissions and margins on the other. On-line travel is one of the big success stories of Internet usage and is expected to continue to cannibalize traditional business models.

Change creates opportunity – and Kale's solutions are focused on delivering one or more of the following benefits to customers –
	Improved operational efficiency
	Better business intelligence
	Freeing up management bandwidth
	Revenue recovery and protection
	Embracing e-business strategies

Revenue recovery and protection
Kale delivers its solutions in a variety of innovative delivery models that span software products, customised software services and managed process services to deliver sustained business value to its customers.

With it's clear industry focus and domain knowledge, Kale is emerging as the supplier of choice in strategic areas of:

	Revenue and mid-office accounting
	Enterprise cargo solutions
	e-travel technology

Each of these areas is on the CXO agenda for change and thus represents huge opportunity to Kale. The company's competitive edge is in-depth understanding of the industry processes and ability to deliver demonstrable value through a fine blend of domain consulting, technical and processing skills.

The company has over the past four years made major investments in product development, marketing and setting up Managed Process Operations. The results of these efforts are clearly becoming visible with many milestones that demonstrate industry acceptance and credibility. Strong user base, healthy order book and robust pipeline would translate into significant growth in the coming years.

 

Investor Relations
Kale Consultants Ltd is committed to create long-term sustainable shareholder value through successful implementation of its growth plans. The company's investor relations mission is to maintain an ongoing awareness of its performance among shareholders and financial community.

 

For additional information, please contact:

Mr. Sumeet Nadkar
Chief Financial Officer
Kale Consultants Ltd.
Tel: 91-22-28259580
Email: Sumeet_Nadkar@kaleconsultants.com

 

Safe Harbor

Certain statements in this release concerning our future growth prospects are forward-looking statements which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the company.