US-based iGate on Friday said its net income declined 65 per cent to $3.9 million for the second quarter ended June 30, 2011 due to interest outgo for its acquisition of stake in Indian technology company Patni.
iGate's net income stood at $11.15 million in the same quarter of 2010, the company said in a statement. "We have successfully completed the first phase of integration, integrating the go-to market functions of both the organisations and are well underway into the delivery and shared services integration," iGate Patni CEO Phaneesh Murthy said.
Earlier this year, the US-based iGate had acquired nearly 83 per cent stake in Patni Computers for about $1.22 billion. The transaction was completed in May. It was announced that Patni would continue to be listed on the Indian stock exchanges as a subsidiary of iGate, while iGate will be listed on the Nasdaq. Both the companies jointly go to market under the brand name iGate Patni.
iGate's results for the second quarter include Patni's results of operations since May 16, 2011, the statement said.
“We believe that the integration programme is progressing more smoothly than planned. We are seeing customers respond positively to our joint value proposition and are starting to sense some larger opportunities," Murthy said.
Consolidated revenues for iGate in the reported quarter was up two-fold at $170.41 million as against $66.84 million in Q2, 2010. Organic revenues grew 14.7 per cent, with acquisition adding 140.4 per cent to the total revenues, it said.
"The blending of iGATE and Patni results and increase in salaries have created a dip in the margins, which we expect to improve over the next few quarters and to get to iGate's benchmark margins over the next two years," iGate Chief Financial Officer Sujit Sircar said. iGate continues to generate good operating cash-flow with a cash balance of over $430 million as on June 30, 2011, he added.
The company added 21 new customers during the quarter and had 26,395 employees at the end of the quarter. Patni has also reported nearly 93 per cent decline in net income to Rs 10.8 crore for the second quarter ended June 30, 2011 (from Rs 147.3 crore in April-June 2010) on account of $17.45 million severance pay to the top management.