Patni net profit dips 7.7% to Rs 64.24 cr

BS 200 SCORECARD

Global IT services provider Patni Computer Systems has posted 7.7 per cent drop in net profit to Rs 64.24 crore ($14.44 million) in the first quarter ended March 2006, compared with Rs 68.22 crore ($15.64 million) recorded during the comparable period of the previous year.

The company's profitability was impacted due to changes in onsite compensation structure, lower utilisation rates and an extraordinary cost of about $2 million.

The company's revenues rose to Rs 577.55 crore, up 30.6 per cent, from Rs 433.74 crore last. Operating income rose to Rs 78.49 crore, compared with Rs 84.27 crore recorded during the same period a year ago.

Patni's gross profit rose 17.4 per cent to Rs 205 crore during the quarter under review, as against Rs 171.20 crore posted during the same quarter a year ago.

Deepak Sogani, chief financial officer, said, "In the first quarter, Patni showed strong revenue growth on the back of volume expansion and an increase in the average realised rates. We negotiated rate revision within several ongoing relationships and were also successful in engaging new business at higher rates."

"However, profitability has been impacted due to changes in the onsite compensation structure. Our utilisation rates were also slightly lower than the budget, and we incurred extraordinary costs of about $2 million during the quarter, including professional fees, ADR related forex loss and prior period tax charges," he added.

Patni follows a January-December fiscal year, and all the figures were reported under US GAAP. The company's diluted EPS for the quarter stood at Rs 4.61 or 10 cents.

"During the quarter, several of our client relationships showed encouraging expansion. We forged several new alliances and initiated many new business relationships," said Narendra K Patni, chairman and CEO.

The company had transitioned to a gross compensation structure in the US during the current quarter. The costs relating to this transition was in excess of the company's initial estimates, he added.

For the second quarter of 2006, Patni expects net profit of $11 million, at an exchange rate of Rs 44.60 to the dollar.

"Traditionally, the second quarter of every year is lower for the company in terms for earnings, given the increase in salaries and visa costs. Overall, we remain very confident about our business momentum," he said.