BANGALORE: It has been a roller coaster year for software blue chip company, Infosys. Pricing pressure, economic uncertainties, dipping margins and stock prices, charges of sexual harassment and wrongful termination of an employee, failing to satisfy the investors and a whole lot more. But the upswing of all this is that the company has ended the year with a growth of 40 percent, exceeding their own expectations.
"We have overshot our guidance by $100 million," said a seemingly pleased Nandan M Nilekani, CEO, President and Managing Director, Infosys Technologies. However he was quick to point out that margins have dropped. "They have dropped 30 percent in the first quarter to almost 25 percent in the fourth quarter, which is not a very good sign," he added.
The company has given a revenue guidance of about $950 million for the financial year 2003-04. In rupee terms, the consolidated income outlook for the fiscal has been project in the range of Rs 4,484 crore and Rs 4,565 crore.
Another high for the company was the mark that it had registered revenue of over Rs 1,000 crore for a quarter for the first time. This was achieved when the company reported revenue of Rs 1,019.85 crore for the fourth quarter of 2002-03. This represents a growth of 50 percent against the corresponding period last year.
Infosys also ended the year adding the highest number of employees in its history. They added a net addition of 4,618, while gross addition stood at 5,509. Last year the company added 907 employees. The head count as of March 31, 2003 stood at 15,356 employees out of which 14,001 are software professionals. It also significantly increased it banking business unit count as it went up from 176 in 2002 to 572 in 2003.
The company refused to give any projections for the number of additions for this year. The utilization rate, including the trainees was up 7 percent at 77 percent this year as against 70 percent for the year ended March 31, 2002. Excluding trainees it was 82 percent as against 72 percent. On the hike and salary increase front, "We have moved to a role-base organisation and have increased the salaries of our employees for the next year. In addition, we have taken further steps to align compensation to their job roles and their performances," commented S Gopalakrishnan, member of the board and COO.
The Board of directors of Infosys have recommended a final dividend of Rs 14.50 per share for fiscal 2003, amounting to Rs 96.05 crore. Including the interim dividend of Rs 12.50 per share amounting to Rs 82.76 crore, the total dividend recommended for the year is Rs 27.00 per share, amounting to Rs 178.81 crore.
Despite the good run, Infosys is also humbled by the double whammy of War -SARS virus scare. Cancellation of clients visit and prospective business opportunities, return of a few employees from SARS affected countries, stalling of China development center plans are some of consequences.
"Uncertainties relating to the US economy continues to have an impact on the industry growth with longer sale cycle," added Nilekani. On the billing front, the company’s software revenues in dollar terms grew by 7.7 percent for the quarter as compared to the quarter ended December 31, 2002.
Revenue growth comprised volume growth of 12.8 percent offset by a price decline of 5.1 percent as compared to the quarter ended December 31, 2002. The company added 92 new clients this year with two $ 40 million clients bagged in the last quarter.
Although refusing that they are conservative, Nilekani stressed that the year ahead looks challenging, "the global delivery model has become mainstream as offshore outsourcing gains momentum." Going by the past performance of over shooting its guidance, the company is positioned to touch the $ one billion mark this fiscal.
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