LCC acquisition, forex hurt Tech Mahindra; net slips 23 pc

Country's fifth largest software exporter Tech Mahindra today reported a steep 23.15 per cent fall in net profit for the March quarter at Rs 472 crore due to currency headwinds, poor performance of recent acquisitions and a slowdown in large telecom clients.
The Mahindra Group company's pre-tax margins also saw a massive 5 percentage points decline over the December quarter to 15.2 per cent.
Chief financial officer Milind Kulkarni said the poor show by LCC, which it acquired earlier last fiscal has hurt the margins by 1.40 per cent, rupee appreciation shaved 0.90 per cent off the bottom-line, while drop in utilisation levels hurt by 0.60 per cent.

An overall slowdown in revenue coupled with higher outgoes on sales and general administration also resulted in a hit of 0.70 per cent, he added.
The company's overall revenues rose over 19 per cent, but a bulk of the growth came from the acquired entities, which contributed USD 100 million to the top-line, Kulkarni said.
On an organic level, the revenues were down 1.2 per cent, which was on a slowdown in spends by the telecom clients who are looking at newer avenues of investments beyond IT, and also on currency headwinds.

The pre-tax profit came in at Rs 673.5 crore as against Rs 832.5 crore in the year-ago period.

Asserting that the company will continue to invest despite these numbers, managing director and chief executive director CP Gurnani said the company will focus on faster integration of its acquired companies and also growing its pretax margins.
Gurunani said a multitude of factors like slowdown among the communications clients, which account for half of its revenues and the volatility in the non-dollar currencies like euro, Australian and Canadian dollars, and the Brazilian real, which account for half of its billings, resulted in this impact.