Mahindra Satyam’s net profit up by six percent

November 10th, 2011 - 6:30 pm ICT by IANS  

Hyderabad, Nov 10 (IANS) Software exporter Mahindra Satyam registered nearly six percent increase in its net profit during the second quarter ended Sep 30 with the company claiming that its convalescing period has almost come to an end.

The Q2 profit after tax was Rs.2.38 billion ($47 million), as against Rs.2.25 billion during the previous quarter.

“The company had near-death experience two-and-half years ago,” chairman Vineet Nayar said, referring to India’s biggest corporate scam that hit Satyam Computer Services Ltd.

Tech Mahindra bought the company in 2009 and re-named it as Mahindra Satyam.

While stating that the firm was back to health, Nayar also voiced his concern over the impact the euro zone debt crisis could have on its near term demand cycle.

The consolidated revenues in dollar terms during Q2 were $330 million, indicating a year-on-year growth of 21 percent and sequential growth of 3.2 percent.

The growth appears higher in rupee terms due to rupee depreciation. The revenues were Rs.15.78 billion registering 10 percent growth over the previous year and over 27 percent year-on-year.

The earnings before interest, taxes, depreciation, and amortization (EBITDA) was 15.3 percent during Q2 against 14.7 percent during Q1. In absolute terms Q2 EBITDA was Rs.2.42 billion versus Rs.2.13 billion in Q1, a growth of 13.7 percent.

“We have maintained our path in terms of our stated goal. This quarter has been of steady growth in terms of revenues and we have been able to improve the margins,” he said.

“With these quarterly results, it would be safe to assume that the period of convalescence is almost over. We are back to health. We are ready. We will be running and will give competition a run for money,” he added.

Mahindra Satyam CEO C.P. Gurnani said it would be too early to say what would be the impact. “We do notice people are more cautious but there has been no abrupt or knee-jerk reaction from any of our customer base,” he said.

Despite the uncertainties, Europe accounted for three percent growth for the company over the pervious year. The maximum growth of 7.2 percent came from Americas.

Gurnani said the best results came from technology and media sector, which registered 7.4 percent sequential growth.

The maximum growth of 16.1 percent was contributed by banking, financial services and insurance (BFSI) segment. Manufacturing, which accounted for three percent growth, remained the strongest pillar, he added.

Mahindra Satyam added 36 new clients during the quarter. However, the number of active clients had gone up from 220 during Q1 to 228 during Q2.

“We have set up a bar for revenues for an account to be considered active. We will consider the clients active when they start clocking that revenue,” he said.

The company added 654 employees during the quarter to take the total headcount to 32,092.

With effect from October, the firm increased the salaries of its employees. The hike was 12 percent offshore and 2.5 percent for on-site employees.

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