IT consulting and services provider Mahindra Satyam has witnessed a steep decline of 74% in its net profit to Rs 80 crore for the third quarter ended December 2012, as compared to Rs 308 crore in the corresponding quarter last year.
“The decline in net profit was on account of an exceptional charge pertaining to the Aberdeen UK claim settlement, which was reflected on our financial statement as such. But the good news is that, after resolving the Aberdeen issue, we have put to rest all litigations external to India,” Vineet Nayyar, chairman of Mahindra Satyam, told mediapersons here on Thursday.
The Hyderabad-headquartered company’s consolidated revenues for the quarter under review stood at Rs 1,940 crore, as against Rs 1,718 crore during the same period a year ago, reflecting an increase of 12.9%.
While the company’s EBITDA margins for the quarter stood at 21.6%, as against 21.5% in the corresponding previous quarter, it has seen a volume growth of 1.5% during Q3 of FY13.
Stating that there were some positive signs in the global economy, Nayyar said policy actions had lowered the risks of any major disruptions.
“These measures have supported a modest pick-up in growth. However, full recovery will be a long and low process, especially in the Euro Zone,” he said, adding that decision-making cycles would continue to be prolonged as in 2012, as customers closely monitored the markets before committing spends.
According to Mahindra Satyam chief executive CP Gurnani, while the company’s North American and rest of the world (RoW) revenues had come down, leap in revenues had come in from Europe. “It is not that Europe had rebounded completely. It’s because most of the large customers in the US tend to take a forced shut down during this period,” he said.
Currently, Americas account for 53% of Mahindra Satyam’s revenues, while Europe and RoW contribute 24% each. Vertical-wise, manufacturing contributes 34%, and BFSI (banking, financial services and insurance) 20%.
The company has made a net addition of 169 associates during Q3, taking the total headcount to 36,956. Its attrition stood at 13%, while the utilisation was at 77%.
“Overall, the company continues to do the dynamic balancing for its resource intake,” Gurnani said, adding that the company was almost ready for the integration, and was in the process of taking very active feedback on the new brand identity and positioning.
Satyam-Tech Mahindra soon
Nayyar said that the merger process of Mahindra Satyam and Tech Mahindra was at the penultimate stage and was expected to close soon.
“We will operate as a combined company in the near future. In fact, de facto, we are already doing that. We have made good progress in terms of integration on multiple fronts like system consolidation, process and policy alignment. Our joint go-to-market models are evolving with our customers’ needs,” he added.
Scouts for acquisitions
Mergers and acquisitions (M&A) is part of the company’s strategy and it will look at acquisitions in Europe and Australia, with focus on areas like engineering services, BFSI and healthcare.
“We are not shy to looking at acquisitions. We are hopeful that our acquisition strategy will consume some part our cash (Rs 3,311 crore as of December 2012). If it (buyout) is strategic and if it makes sense, the size will not come in our way,” Nayyar said.