Patni's Q1 consolidated net falls 7.7 pct

MUMBAI - Indian software services firm Patni

Computer Systems Ltd. reported a 7.7 percent drop in quarterly net profit on

higher costs and a one-time charge, and predicted rising wages would keep its

profits under pressure.

The net profit for 2006 would be lower than the original estimate of

$85.5-88.5 million as salary increases and higher U.S. visa costs for onsite

workers push down margins, Chief Financial Officer Deepak Sogani told Reuters on

Wednesday.

He, however, declined to say how much lower the profits would be.

Consolidated net income for the first quarter to March stood at $14.44

million, compared with $15.64 million a year ago. Revenue grew 30.6 percent to

$129.85 million.

"We have to work on improving our productivity during the year,"

said Sogani.

The New York-listed company took a one-time charge of $2 million on account

of professional fees, foreign exchange loss from an overseas issue and previous

tax charges.

Patni had raised $139.84 million through the issue of American Depositary

Shares in December 2005.

Sogani said the company's revenue maintained its momentum and the customer

base was widening. During the quarter, Patni added 20 new clients.

The latter half of 2006 would be better for the company when it expected

costs to soften, he added.

"In the third and fourth quarters there will be a pick-up in margins,

with labour costs going down."

Patni plans to spend nearly $90 million in the current year to expand

offshore infrastructure in India, Sogani said. The company spent a similar

amount on expansion last year.

Patni will set up new campuses in Mumbai and Chennai cities, he added.

Shares of Patni were down 2.3 percent at 406.75 rupees in a firm Mumbai

market.