Satyam grows faster outside US market

Q2 bottom line up 27.9 per cent at Rs 409 cr.

Riding on the back of improved prices and accelerated growth in markets other than the US, Satyam Computer Services today reported a 27.9 per cent increase in consolidated net profit at Rs 409.1 crore (Indian GAAP) for the quarter ended September 30, 2007, as against Rs 319.81 crore in the corresponding quarter Last year.

Total income from services for the quarter grew 26.8 per cent at Rs 2,031.72 crore from Rs 1,601.88 crore in the previous corresponding quarter, while net profit witnessed a sequential increase of 8.1 per cent over the previous corresponding quarter.

Satyam Chairman and founder B Ramalinga Raju described the performance as phenomenal in comparison to that in the past five to six years.

"It is gratifying to see that in less than two years we are growing into a $2-billion company from $1-billion this year," Raju said.

With the better-than-expected results boosting confidence, the country's fourth largest software services company revised its guidance for the full financial year, raising year-on-year growth expectations to 42 per cent from 32 per cent. It said it also expected prices to improve by 4 per cent from 2-3 per cent announced early this year.

The company's shares closed up 2.97 per cent (or Rs 13.30) at Rs 461.75 on the Bombay Stock Exchange on Tuesday.

The company said it was reducing its dependance on North American markets to contain risks.

"The share of North American business operations in total ncome has come down to 58 per cent from 85 per cent six or seven years ago, while that the Asia-Pacific has gone up to 20 per cent. Europe's contribution increased to 21 per cent," Raju said.

Revenues from the rest of the world and Europe grew 27 per cent and 17 per cent respectively.

During the quarter, billing rates increased by 1.4 per cent on offshore operations and 2.2 per cent on onsite operations, said Srinivas Vadlamani, chief financial officer. Yet, profit margin for the quarter came down to 19.82 per cent from 22.63 per cent in the previous corresponding quarter.

Price improvement was one of the main factors that helped the Hyderabad-based company contain the impact of rupee appreciation on margins to half.

Raju said that the willingness of global companies to give much larger contracts would sustain future growth.

The company has projected recruitment during the current year at 17,000 professionals from the earlier 15,000-16,000 levels, which will take it over the 50,000-mark. The parent company ended the quarter with 41,423 associates.

The company has announced a 50 per cent dividend (Re 1 on a share with a face value of Rs 2). Earnings per share for the quarter ended September 2007 stood at Rs 6.12, a year-on-year increase of 25.1 per cent, and a sequential increase of 8 per cent.

Buys Nitor

Satyam Computer Services has acquired UK-based Nitor Global Solutions, which provides infrastructure management services, for GBP 2.76 million ($5.5 million) in cash. This is its second acquisition in Europe.

Nitor, which was founded in 2002, posted revenues of $3 million for the year ending September 30, 2007. It has expertise in end-to-end solution implementation and brings new relationships with some of the dominant players in the banking, pharma, telecom and media industry in Europe.

Satyam Computer Services has signed an agreement with Fujitsu Services to provide IT services to Reuters as part of a 10-year, $1 billion internal information systems transformation programme.

Fujitsu deal

Satyam will extend its support and development of a large number of core applications, as well as provide managed infrastructure services for desk side support, a global Network Operations Centre and Remote Infrastructure Management.

Satyam has provided services to Reuters worldwide for over six years, but now this will be done through Fujitsu from the Reuters Offshore Delivery Centre in Hyderabad and a new centre in Chennai.