CMC Q1 net dips, worries TCS

MUMBAI: CMC Limited, a subsidiary of Tata

Consultancy Services, has shown a marginal dip in its net profit by posting

Rs 14.96 crore compared to Rs 15.33 crore in the corresponding period last year.






CMC's total revenue (including other income) increased by 14 per cent to Rs.
232.35 crore for the quarter ended June 30, 2006 compared to Rs. 204.50 crore

(including Rs 13.96 crore earned from sale of properties) in the corresponding

period last year. Its operating revenues increased by 22 per cent to Rs. 231.53

crore compared to Rs 189.87 crore in the corresponding period last year.






Operating profit (EBITDA before other income) increased by 73 per cent to Rs
20.46 crore compared to Rs. 11.84 crore earned in the corresponding period last

year.






The consolidated operating revenues of the company along with its wholly owned
subsidiary, CMC Americas Inc. for the quarter ended June 30, 2006 was Rs. 251.23

crore an increase of 25 per cent compared to Rs. 200.55 crore earned in the

corresponding period in the previous year. The consolidated profit after tax for

the quarter ended June, 2006 was Rs. 16.16 crore.






CMC Americas continued to drive international growth with revenues of $8.65
million at the end of the quarter, an increase of 42 per cent over the

corresponding period last year. International business increased by 61 per cent

compared with the corresponding period last year and share of international

business in total operating revenue increased to 29 per cent compared to 22 per

cent in the year-ago period.






"Sustained growth in the American and UK markets helped CMC to achieve
impressive growth in international business, where we won new engagements in IT

enabled services, insurance and embedded systems as well as a significant

digitization assignment from a large utility company in UK in synergy with TCS",

said R Ramanan, CEO and MD of CMC Ltd. "The initiatives taken to

restructure CMC's business mix, improved productivity of its professionals and

world-class process deployment are becoming visible in terms of growth in the

company's profitability, he added.






"By improving its revenue mix, offering more value added services as well
as by growing its international business, CMC has been able to expand its

margins by 300 basis points across all measures of profitability," said J K

Gupta, chief financial officer. "The share of service revenues as part of

total operating revenue increased to 60 percent compared with 52 per cent in the

corresponding period last year, he added.






CMC's proposal to set up a sector specific Special Economic Zone for IT/IteS
sector at its Gachibowli campus spread across an area of 20.59 hectares has been

approved by the Ministry of Commerce and Industry.






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