Legal settlements affect Satyam results

HYDERABAD, INDIA: Though Software services exporter Mahindra Satyam improved its revenues, it was hurt by a one-time expense due to a U.S. shareholder lawsuit settlement which resulted in the company posting a net loss for its fiscal fourth quarter.

In connection with the Upaid lawsuit settlement in the US, the company had to pay nearly Rs. 327 crore (US$ 70 million).

Satyam stunned investors in 2009 when its former chairman and founder Ramalinga Raju said profits had been overstated and assets falsified in a fraud allegedly worth more than $1.5 billion.

The revelation caused the company's shares to plummet. Satyam agreed in February to pay $125 million to settle the U.S. shareholder litigation over that decline.

"If you exclude the one-time expense, the growth at the operational level is decent. This can be improved further as the company is still concentrating on stabilising revenue," said Rohit Anand, sector analyst with PINC Research.

Hyderabad-based Satyam doubled its operating margin to 13 per cent in the quarter from the December quarter, its chairman Vineet Nayyar told a media briefing.

Revenue rose 7.5 per cent to Rs. 1375 crore

The company's revenue rose 7.5 per cent to Rs. 1375 crore quarter-on-quarter.

The company added 12 new clients in the quarter, chief executive C.P. Gurnani added.

"We are acutely aware of the challenges that lie ahead in this transformation journey. Accelerating profitable growth and building capability to deal with the scale are our key focus areas," Gurnani said.

Net loss for the quarter that ended March was at Rs. 327 crore ($72 million) compared with a net profit of Rs 589 million reported in the December quarter for Satyam Computer, which was bought by Tech Mahindra and renamed Mahindra Satyam.

Analysts had forecast a net profit of 997.5 million rupees, according to Thomson Reuters I/B/E/S.

The company, which restated its results for 2008 and 2009, gave only full-year figures for 2010 without a quarterly break up.

The company's shares were trading 3.84 per cent lower at Rs. 73.80 in a weak Mumbai market at 1.50 PM IST. They have risen over 12 per cent this year compared with a near-12 per cent fall in the sector index. They touched a low of Rs. 72.30 earlier in the session.