TechM Q2 net down 10 pc YoY at Rs 150.7 cr

BANGALORE, INDIA: Tech Mahindra Ltd on Tuesday said second-quarter net profit fell more than 10 percent as the Indian IT services firm booked a charge related to its shareholding in Mahindra Satyam.

The company, a unit of tractor and utility vehicle maker Mahindra & Mahindra in which British telecom operator BT Group Plc owns about a 30-percent stake, said wage hikes also pressured margins in the quarter.

Tech Mahindra, which provides information technology services to the telecoms industry, counts as clients BT and AT&T, Alcatel-Lucent, Motorola and Vodafone, added seven new clients in the second quarter. Its total client base now stands at 124.

"For the first time we are seeing the signs of demand recovery and we are getting a fairly decent traction with our customers across geographies," Vineet Nayyar, chief executive and managing director of Tech Mahindra told a news briefing.

Mahindra Satyam last month reported a net loss for fiscal 2009 and 2010, giving investors the first view of its financials nearly two years after it was hit by India's biggest corporate fraud.

Tech Mahindra, which acquired Satyam Computer Services in April 2009 and rebranded it as Mahindra Satyam, in a statement said it took a charge of 367 million rupees in the September quarter due to its shareholding in Satyam.

Net profit for Tech Mahindra fell to Rs 150.7 crore ($34 million) from Rs 169 crore a year ago.

Compared to the corresponding quarter of the previous year, revenue rose 34.3 percent to Rs 1533.9 crore, aided by a one-time fee from a client. In the first quarter, the revenue was Rs 1133.7 crore. The company saw significant growth in emerging markets in the second quarter compared Nayyar said.

On Monday, Tech Mahindra said it was one of three companies selected by Bharti Airtel to handle customer service operations for the telecom firm's newly acquired mobile networks on 16 African nations.

Industry leaders Tata Consultancy and Infosys earlier this month reported market-beating quarterly but flagged currency volatility and the macroeconomic environment as a concern for the $60 billion IT outsourcing sector.