HCL Tech profit surges to Rs 352 cr

Written by Corporate Bureau | New Delhi, Oct 15 | Updated: Oct 16 2008, 06:13am hrs
Indias fifth-largest software services company, HCL Technologies registered a net profit of Rs 356.2 crore, up 15.5% over the same period in the last fiscal. The companys total revenues stood at Rs 2,369.3 crore, a rise of 38.6% compared to the corresponding period last year. On a sequential basis, HCLs net profit was up by 152.5%. The July-September period is the first quarter for HCL.

The company also announced purchase of an additional 10.7% worth of share in the UK-based SAP consulting firm Axon Plc at 630.9 pence a share through the open market. HCL earlier bought 0.47% shares in the company through the same route. The company is in race for the acquisition of Axon and has made an offer of 650 pence a share valuing the company at around 441 million pounds. Vineet Nayar, CEO, HCL Technologies said that it is playing on multiple variables to bring down the cost of the acquisition. Refusing to divulge more details on the motive behind the share purchase, he termed it a smart move.

In the first quarter of the financial year 2008-09 ending September 2008, the company recorded forex losses of Rs 97.4 crore, which is almost a third of the forex losses registered in the quarter ending June 2008. This led to an increase of 152.5% in its net profit on a sequential basis showing the benefit of the depreciating rupee on the companys balance sheet. Nayar said that the company had been witnessing a robust growth in terms of volume for the last three quarters, which was up 2.2% this quarter.

In US GAAP, the companys revenue growth has been almost flat at 0.1% q-o-q while y-o-y it grew at 17.6%. HCL also recorded $10 million of losses due to currency fluctuations this quarter. The increments given out in the quarter also had an impact on the companys EBIT, said Anil Chanana, executive vice president, finance, HCL Technologies.

In US GAAP, HCLs EBIT was down 4.7% q-o-q. He added that the two acquisitions of the US-based Control Point Solutions and UK-based Liberata Financial Services also led to lower EBIT margins and the 131.5% q-o-q increase in net profit (in US GAAP) was largely due to the better fortunes with forex loses this quarter.

The company signed eight large deals in this period worth $270 million and added a gross 5,597 employees in the quarter. The company has also signed a large domestic deal in the telecom space, which will be announced next quarter, said Nayar. However, the companys BPO operations recorded a 40.9% drop in EBIT q-o-q and 29.1% drop y-o-y. This was on back of the two acquisitions, which were done at a lower margin than the companys range of 18-20%.

Nayar added that the two acquisitions have been integrated with the company. The process of releasing profit from them over the next 12 months would now begin, he said.