Mahindra Satyam on Thursday said its consolidated net profit surged 56.3 per cent to Rs 352 crore in the quarter ended June 30, compared with Rs 225.2 crore in the corresponding quarter last year, largely driven by forex gains and employee pyramid correction.
Consolidated revenue increased 31.1 per cent to Rs 1,880 crore, against Rs 1,434 crore in the year-ago period. “The company reported a 400 basis points (bps) improvement in margins, including 300 bps on forex gains and 100 bps through cost optimisation and reduction in administration costs,” said Vasant Krishnan, chief financial officer.
According to Chief Executive Officer C P Gurnani, the company is cautious on its future sales and profit growth, as it was witnessing a slowdown in spending by clients across the markets. “We are not immune to the global scenario. We are a lag industry and the impact of the economic gyrations will be felt by us also. Decision cycles (of clients) are becoming longer and spending by government and defence sectors is coming down. We, however, are cautious and are readying ourselves for such a crisis,” he said.
Gurnani said despite the US market registering robust growth, there had been a bit of a “de-growth” in Europe and rest of the world, particularly in Asia-Pacific.
While the US contributed 55 per cent to the total revenue of the company during the quarter, European Union accounted for 22 per cent and the remaining from other regions. Vertical-wise, banking, financial services and insurance added 20 per cent, manufacturing 34 per cent, and retail and healthcare together 18 per cent to the first-quarter top line.
“Though I am cautious, I am optimistic as there is a potential for slower growth in those regions. The mood is that we will fight. We are a leaner, fitter machine to ride up and down in those markets,” Gurnani added.
He said the company was actively under discussion on increase of wages and they would come to a conclusion on the exact percentage increase next week.
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The company had seen an attrition of 13.5 per cent in the quarter, against 17.3 per cent a year ago. It added 2,643 associates, taking the total headcount to 35,996. The average employee utilisation, both onsite and offshore, was at 76 per cent.
During the quarter under review, Mahindra Satyam added 33 new clients, specially in the enterprise business space. “We are currently chasing 20 new deals and have almost closed three of them despite a weak global economic scenario,” Gurnani said.
Chairman Vineet Nayyar said the proposed merger of the company with its parent Tech Mahindra was progressing well and was in final stages.
Nayyar said the company, in July 2012, had received legal notices from two companies, belonging to the previous management, for debt recovery. “We are handling it. It will be dealt with,” he said, while declining to comment further.