Rising rupee hits Infosys profit in last fiscal

April 15th, 2008 - 9:28 pm ICT by admin  

Bangalore, April 15 (IANS) Infosys Technologies Ltd suffered a loss of Rs.10 billion ($250 million) in net profit and Rs.20 billion in gross revenue for the last fiscal (2007-08) due to steep appreciation in rupee against US dollar, a top company official said here Tuesday. “We have taken a hit in net profit and top-line (revenue) growth during fiscal 2008 due to 11 percent appreciation in the rupee against the green back (US dollar). Rupee appreciated to Rs.40.02 by fiscal-end (March 31) from Rs.43.10 at the end of previous fiscal (2006-07). Year-on-year, rupee appreciated to Rs.40 in FY 2008 from a low of Rs.45.06 in FY 2007,” Infosys chief financial officer V. Balakrishnan told IANS.

“During the fourth quarter (January-March), a depreciation of 61 paise to Rs.40.02 from Rs.39.41 in the previous quarter (October-December) had a 0.5 percent positive impact, enabling the IT bellwether to maintain its operating margin at 31.5 percent for the entire fiscal,” Balakrishnan pointed out.

“We have maintained our margins during the fiscal despite 11 percent appreciation in the rupee. We have also posted a net profit of $1.16 billion (Rs.46.6 billion) for the entire fiscal, crossing the $1-billion mark for the first time,” Balakrishnan added.

The global software major declared a special dividend of Rs.20 per share (400 percent on par value of Rs.5 per share) for the fiscal under review to celebrate achieving $1 billion net income milestone and in line with its desire to balance the cash required in the business with that of enhancing returns to its shareholders.

The company hedged $1.14 billion in the forex market during the last fiscal to minimise the impact of volatility. For the first two quarters (April-September) of this fiscal, it has taken a forward cover to the tune of $760 million, with 20 percent of it in options,” said Balakrishnan.

“We expect the forex market to remain volatile, with the exchange rate moving both ways. Though the rupee may tend to depreciate, the government or the Reserve Bank may prop it up to contain inflation,” he noted.

For the first quarter (April-June) of this fiscal (FY 2009), operating margin is likely to be impacted by three percent due to 2.3 percent increase in wage and in visa costs by 80 basis points.

Cash and cash equivalents, including investments in liquid mutual funds shot up to Rs.83.1 billion by the end of fiscal from Rs.60.1 billion at the end of previous fiscal.

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