Satyam profit more than doubles in Q3

HYDERABAD, INDIA: Mahindra Satyam, formerly Satyam Computer Services, has posted three percent growth in its revenues for the third quarter ended December 2010.

The revenues during the quarter were Rs.1,279 crore against Rs.1,242 crore during the previous quarter.

The firm recorded over two-fold jump in net profit at Rs.59 crore in Q3 against Rs.23 crore a quarter ago.

Earning before interest, depreciation, tax and amortisation (EBIDTA) too increased by 11 percent at Rs.82 crore from Rs.73 crore in Q2. EBITDA margin improved at 6.4 percent against 5.9 in the previous quarter.

Vineer Nayyar, chairman, Mahindra Satyam, told a news conference that the quarter-on-quarter growth was "fairly decent" and that they were looking to the coming year with cautious optimism.

"I think we have done well. Hopefully in next 12 months, we may do better," he said.

Nayyar said if Rs.53 crore which was provided for exceptional items towards the impairment charges of a subsidiary of the company was excluded, the profit would have gone up by 254 percent Q-o-Q basis to Rs.112 crore.

"Three percent is a modest growth considering that many people, including ourselves, had higher expectations. Considering the background from where we came in it is reasonably good performance," said C.P.Gurnani, CEO, Mahindra Satyam.

Tech Mahindra took over Satyam Computer Services in April 2009, four months after Satyam's founder B. Ramalinga Raju confessed to India's biggest corporate fraud.

Nayyar said after taking over Satyam, it had embarked on a three-year journey and set a certain trajectory. "After a year and half, we are still on that trajectory," he said.

He evaded a direct reply when asked whether the company would again become fourth largest IT services company in the country by June 2012. He, however, was confident it would achieve the profitability rate in line with peer group or better than them. He declined to give any numbers.

Nayyar claimed the company's transformation plan is in the right direction with Europe taking the lead.

"We have started contesting for large deals. Many senior employees who had left Satyam had shown interest in joining back. We are also reaching out to former clients of Satyam and have got confirmations from two clients - one insurance firm and another in the manufacturing segment," he said.

Gurnani voiced concern over 25 percent attrition rate but claimed that it was in line with the industry and was coming down month by month basis.

The headcount of the company at the end of the third quarter was 28,832, an increase of 764 personnel from the previous quarter. He said the company planned to add 6000 to 7000 people in the next 12 months.

The company added four customers during Q3, taking the number to 217. However, the actual number of clients had come down from 350 in the last quarter and he attributed this to new norms laid with respect to minimum billing and periodicity.

The three major deals the company won during the quarter were of $15-30 million with a servicing tenure of about 3-5 years.

Geographically, the US contributed about 50 percent of the company's revenues while Europe accounted for about 30 percent.