The problem companies like Intellect face especially with products like the one created for GEM is that this is doesn’t have any use case outside GEM.
The matters that the company will need to address in the short term will include
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The GEM platform R&D cost that is capitalized will need to be impaired/ written off now since they don’t have any other customers using this platform.(no revenue visibility).
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Staff who are currently working on both management and operations of this platform will need to be redeployed to other revenue generating projects or be asked to find a new job.
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The product has largely lost its referenceability considering it is not live at any customer.
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If the company has procured any assets etc to deliver these services, then those assets has lost its ability to generate any revenue and may need to be redeployed or written off.
As far as TCS is concerned, it’s a drop in the ocean and they may have internal mandates to penetrate into more key government projects.
I certainly believe that the GEM department should have considered the ingenuity that Intellect has brought to table 5 years back and how they have ran this project glitch free over the term – now we know what a free market economy can do to a company with lesser financial muscle power – the amount of thought, effort and sheer brilliance that Intellect has delivered to this project is forgotten in no time – its cruel and unfair to lose out after scoring better on technical parameters but that’s the world we live in.
Hope Mr. Arun Jain and his leadership teams learns a good lesson from this episode and come out stronger. I’m certainly going to keep my investment intact with this management team.
AJ
Disclosure: Remain invested and this will remain one of my biggest bets.
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