Polaris net profit dips 33 per cent

Polaris Software reported a 33 per cent drop in its net profit to Rs 18.22 crore for the quarter ended September 30, 2007, compared with a net profit of Rs 27.10 crore it recorded in the corresponding quarter a year ago.

"Though we had our hedging strategy in place, the rupee appreciation severely impacted our bottom line," reasoned R Srikanth, chief financial officer, Polaris Software.

Earnings before interest, taxes, depreciation and amortisation (EBITDA) fell 22 per cent to Rs 34.26 crore for the second quarter from Rs 44.12 crore in the comparable quarter last year. However, revenues were up seven per cent to Rs 273.55 crore from Rs 255.56 crore in the previous corresponding period.

On a sequential basis though, its net profit was up 26 per cent compared with Rs 14.41 crore in the previous quarter ended June 30, while revenues increased 6.25 per cent from Rs 257.45 crore.

Revenues from Intellect, the company's proprietary banking platform, increased 57.36 per cent in dollar terms and 37.33 per cent in rupee terms over the same quarter of the previous year. The company won four deals for its Intellect platform in the second quarter, taking total deals won over the half year to 10.

Polaris has been focussing on utilisation, cost structures and a prudent hedging strategy to counter the rupee appreciation. Utilisation has improved by 200 basis points this quarter.

We are continuing to follow a short-term hedging strategy and will pursue a long term hedging strategy as and when opportunities arise, according to Srikanth.

Arup Gupta, president and chief operating officer, Polaris Software, said, "In the last six quarters, we have steadily built up the quarterly run rate from $44 million per quarter to above $65 million levels. All our four growth engines namely, outsourcing, products (Intellect), consulting and BPO (Optimus) are performing well. Our focus is on accelerating talent development to meet the growing expectations of our customers in domain-led outsourcing as well as IP-led outsourcing."

For the half year ended September 30, net profit fell 31 per cent to Rs 32.64 crore from Rs 47.37 crore in the same period a year ago. Revenues stood at Rs 531 crore, up nine per cent over Rs 487.61 crore reported in the first half of the previous financial year.