Polaris Software Q2 net drops 33%

Polaris Software reported a 33% drop in its net profit at Rs 18.22 crore for the quarter ended September 30, 2007 (Q2) when compared with the Rs 27.10 crore figure it recorded in the corresponding quarter a year ago.

"Although we had our hedging strategy in place, the rupee appreciation severely impacted our bottom-line," said R Srikanth, CFO, Polaris Software. The company's EBITDA fell 22% to Rs 34.26 crore for the second quarter from Rs 44.12 crore in the previous fiscal's second quarter. However, revenues were up 7% to Rs 273.55 crore from Rs 255.56 crore in the same period previous fiscal.

On a sequential basis though, its net profit was up 26% compared with Rs 14.41 crore in the previous quarter of the current fiscal ended June 30, while revenues increased 6.25% from Rs 257.45 crore. Revenues from Intellect, the company's proprietary banking platform, increased 57.36% in dollar terms and 37.33% in rupee terms over the same quarter of the previous year. The company won four deals for its Intellect platform in the second quarter, taking total deals won over the half year to 10.

Polaris has been focussing on utilisation, cost structures and a prudent hedging strategy to counter the rupee appreciation. Utilisation has improved by 200 basis points this quarter. We are continuing to follow a short-term hedging strategy and will pursue a long term hedging strategy as and when opportunities arise, said Srikanth.

Arup Gupta, president & COO, Polaris Software Lab said: "In the last six quarters, we have steadily built up the quarterly run rate from $44 million per quarter to above $65 million levels. All our four growth engines namely, outsourcing, products (Intellect), consulting and BPO (Optimus) are performing well. Our focus is on accelerating talent development to meet the growing expectations of our customers in domain-led outsourcing as well as IP-led outsourcing".

For the half-year ended September 30, net profit fell 31% to Rs 32.64 crore from Rs 47.37 crore in the same period a year ago. Revenues stood at Rs 531 crore, up 9% over Rs 487.61 crore reported in the first half of previous fiscal.