Hyderabad-based IT services and consulting company Satyam Computer Services reported a 6.8 per cent increase in net profit at Rs 378.32 crore for the first quarter of the current financial year compared with Rs 354 crore in the corresponding quarter of the previous year. | |
| Sequentially, the company's net profit for the quarter under review decreased 3.9 per cent from Rs 393.58 crore in the fourth quarter ended March 2007, which according to Satyam Chairman B Ramalinga Raju, was exceptional. |
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| However, revenues grew 26.8 per cent, while the sequential increase was just 2.9 per cent during the first quarter, which stood at Rs 1,830.19 crore compared with Rs 1,442.93 crore in the corresponding previous quarter, and Rs 1,779.15 crore in the last quarter, respectively. |
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| Earnings per share during the quarter stood at Rs 5.67 per share compared with Rs 5.44, an increase of 4.3 per cent. This was sequentially down 5.2 per cent from Rs 5.98 per share. |
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| In dollar terms, the revenues for the first quarter was up 40.3 per cent ($452.3 million) compared with the corresponding previous quarter ($322.5 million) and 10 per cent increase sequentially ($411.3 million). |
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| Stressing on volume growth as the key strategy in offsetting the short and medium-term impacts, Raju announced that the company would exceed the $2-billion revenue (over Rs 8,000 crore) mark this year compared with Rs 6,668 crore last year. |
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| Among the verticals, engineering and infrastructure witnessed a growth of 14 per cent and 36 per cent, respectively, well above the average growth in revenues, indicating the company's strong focus on the core sector, according to Raju. |
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| While a 7 per cent appreciation in the rupee during the quarter contributed most to the overall impact on operational margins apart from increase in wage bill and higher visa spend, the company could absorb most of it while staying on course, though with subdued bottom line. |
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| Significantly, the pricing also helped a bit to offset these adverse impacts. |
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| "Billing rates increased by 1.1 per cent over the last quarter and more than 2 per cent over the average pricing in the last financial year," he said, while giving a guidance of 2.3 per cent for the current year. Better billing rates added 135 basis points to the company's operational margins during the first quarter compared with 85 basis points in the last quarter. |
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| The company has brought down the net adverse impact on operational margins to 64 basis points, according to Srinivas Vadlamani, chief financial officer, Satyam. |
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| On how the company coped with negative impacts, Vadlamani said, "We had an impact of 230 basis points from the rupee appreciation, which reduced revenues by Rs 138 crore, 150 basis points on account of higher visa expenditure and 100 basis points due to wage bill among others. But with improvement in operational and financial efficiencies, we could bring down the net impact to 64 basis points." |
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| The company's overall growth plans, especially on the recruitment side, will not be hit by the rupee-dollar losses. Ram Mynampati, board member and president, commercial and healthcare business, Satyam, said the parent company alone would be recruiting 15,000-16,000 employees during the current year, which is on the higher side compared with last year. The company had 38,386 employees at the end of the first quarter, and 42,500 employees including Satyam's subsidiaries. |
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| According to Mynampati, the ongoing IT SEZ projects coming up in Hyderabad, Chennai, Nagpur and Visakhapatnam on 280 acres would start generating revenues from the beginning of the next financial year. |
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| Nipuna Services, Satyam's BPO arm, reported a loss of $2.02 million during the first quarter, mostly on account of rupee appreciation while posting a revenue of $11.93 million. |
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