MindTree net profit 48 percent down on huge forex loss

January 20th, 2009 - 12:01 am ICT by IANS  

Bangalore, Jan 19 (IANS) Hit by a massive forex loss due to a weakening rupee, global IT services firm MindTree Ltd. Monday reported a lower consolidated net profit of Rs.103 million (Rs.10.3 crore) for the third quarter (October-December) of this fiscal (2008-09), posting a negative growth of 48 percent year-on-year.The net profit in the same quarter of last fiscal (2007-08) was Rs.198.3 million (Rs.19.83 crore) and Rs.351.3 million (Rs.35.13 crore) in the second quarter (July-September) of this fiscal.

MindTree net profit slumped by a whopping 96 percent to Rs.9.4 million (Rs.94 lakh) for the quarter under review (Q3) of FY 2009 from a high of Rs.208.1 million (Rs.20.81 crore) in the same quarter year ago (FY 2007) and Rs.367.2 million (Rs.36.72 crore) in the second quarter (Q2) of this fiscal.

On a consolidated basis, the company suffered a foreign exchange (forex) loss of Rs.789.4 million (Rs.78.94 crore) in the third quarter as against Rs.20.37 million (Rs.2.37 crore) in the same quarter of last fiscal and Rs.305.6 million (Rs.30.56 crore) in the previous/second quarter of this fiscal.

The forex loss is Rs.665.8 million (Rs.66.58 crore) as against Rs.20.39 million (Rs.2.39 crore) same period last year and Rs.157.9 million (Rs.15.79 crore).

For the nine-month (April-Dec) period of this fiscal, the forex loss is a whopping Rs.1.32 billion (Rs.132 crore) as against Rs.4.9 million (Rs.49 lakh) in the same period of last fiscal.

According to the Bangalore-based IT firm, promoted by four former Wipro executives, including Ashok Soota and Subroto Bagchi, the consolidated revenue, however, shot up to Rs.3.64 billion (Rs.364 crore) in Q3 from Rs.1.88 billion (Rs.188 crore), registering a whopping 93.4 percent year on year growth. Sequentially, the growth is 16.6 percent from Rs.3.12 billion (Rs.312 crore).

Revenue increased to Rs.2.76 billion (Rs.276 crore) from Rs.1.87 billion (Rs.187 crore), posting 47.6 percent YoY growth and Rs.2.55 billion (Rs.255 crore), a sequential growth of eight percent (quarter-on-quarter).

MindTree consolidated financials include that of Aztecsoft, which it acquired in May 2008 and other three firms it bought over the last four-five years, including the chip design team of PurpleVision in 2007. The company went public in March 2007 to raise Rs. 2.38 billion (Rs. 238 crore).

Similarly, consolidated operating profit shot up to Rs.897.2 million (Rs.89.72 crore) from Rs.208.7 million (Rs.20.87 crore) in the same quarter year ago. Standalone, operating profit jumped to Rs.673.3 million (Rs.67.33 crore) from Rs.215.5 million (Rs.21.55 crore).

MindTree chief financial officer (CFO) Rostow Ravanan told IANS late Monday that the company had hedged $120 million at Rs. 41.11 in the beginning of this fiscal (April, 2008) for the entire year.

“We hedged $120 million which was about 50 percent of the revenue forecast for the entire fiscal (FY 2009). Though we hedged when the rupee was strong, a rapid depreciation against the US dollar in the third quarter led to a forex loss of $11 million (Rs.460 million/Rs.46 crore). Weakening of other currencies such as euro, British pound and Australian dollar against the greenback had also led to translation loss,” Ravanan said.

Due to global economic recession and slump in IT spending, the company has revised its standalone revenue guidance for the entire fiscal to $223-225 million, projecting YoY growth of 22-23 percent. The net profit guidance is projected to be $12.8-14.5 million.

On a consolidated basis, revenue guidance is $269-273 million and net profit is expected to be $14.8-17.5 million. The guidance is based on the exchange rate of rupee at 48.5 for one US dollar.

The company added 22 clients during the quarter taking the total number of active clients to 260.

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