Zensar Q3 net down 7% y-o-y

Revenue was up 9% at Rs Rs 524.78 crore on a year-on-year basis

Planned shutdown in two large clients and one time payment to a leading consulting firm for implementation of best practices across operations, impacted Zensar Technologies third quarter numbers.

The RPG Group company reported net profit of Rs 48.7 crore for the quarter ended December 31, 2012, down 7% from Rs 52.3 crore in the corresponding quarter last fiscal. On a sequential basis net profits were up 51% from Rs 32.17 crore.

Revenue was up 9% at Rs 524.78 crore on a year-on-year basis. But planned shutdown by two large clients pulled the company's topline growth by 2% on a sequential basis.

“The Insurance business is upbeat and Manufacturing and Retail continue to be on target, showing a healthy pipeline of business and a good order book to help us attain our growth goals. However, data center and infrastructure product business has been sluggish this quarter. We are seeing increasing traction with a number of significant deals being converted in Integrated Dual Shore IM business and the business is expected to be on the growth path from quarter four,” said Ganesh Natarajan CEO and Vice Chairman, Zensar Technologies.

Infrastructure management IM revenues dropped 4.3% QoQ in dollar terms because of unanticipated shutdown of some on site revenue streams from a major OEM partner – these are however being replaced by significant offshore business. The total number of $1 million client was also down from 43 in the quarter ended September 30, 2012 to 41 at the end of Q3. Zensar’s non-IM revenues grew by 1% quarter-on-quarter in dollar terms.

The company, however said that it has been able to secure number of large deals totaling to $20 million. During the quarter Zensar reported 18 wins across its four vertical. Insurance business recently won a $24 million deal with leading US health insurance provider. As part of the five year deal, Zensar will assist the client in meeting the challenges posed by continuing implementation requirements because of regulations.

The company also stated that there is a strong pipeline of $105 million with large opportunities across data center and remote infrastructure management.

“Continued focus on utilization and productivity have seen profits move up sharply by 51%, despite one time payments of Rs 5.5 crore to a leading consulting house to implement best practices across all operations. Moreover, the order book looks healthy and gives us assurance of meeting our growth goals,” said S Balasubramaniam, Chief Financial Officer, Zensar Technologies.