With almost no export earnings, KLG Systel's fortunes are tied to the domestic economy and the on-going recession has impacted the company's bottomlines. Says managing director Kumud Goel, ``It's been a bad year for us and I am not very optimistic about our prospects for the full year.''

KLG Systel, which provides software solutions to the infrastructure sector, is certainly feeling the pinch. With corporate India reeling under sluggish demand and excess capacities, most are not setting up new plants. That has meant fewer work orders for KLG Systel; the past two months have been particularly bad and the current order-book position is only around Rs 1 crore.

Worse, the rupee depreciation which is normallyviewed as a blessing in disguise for infotech firms has had an adverse effect on KLG Systel. Some of its key software inputs have become dearer and that has added to costs.

Unlike most other infotech companies which are raking in millions, thanks to the Y2K bug and the Euro conversion, KLG Systel has been steadfast in its decision to stay away from it. Neither has it been involved in body-shopping to earn some quick bucks. For the full-year, Goel expects to earn a net profit of Rs 1.9 crore on a turnover of Rs 14 crore. Compared with last year, the net profit margin is likely to fall from 15 per cent to 13 per cent.

In the first-half ended June 1998, KLG Systel's turnover has grown from Rs 3.98 crore to Rs 6.01 crore while net profit has risen from Rs 46 lakh to Rs 89 lakh. Says Goel, ``Our performance has been below expectations and that's primarily because of the recession in the domestic economy.''

KLG Systel has only now realised the importance of reaching out to clients abroad and has set up awholly-owned subsidiary in the US. However, so far, KLG Systems, the US arm, has not bagged any orders.