Tech Mahindra?s acquisition of Satyam Computer Services, that pushed the company to make net borrowings of Rs 2,380 crore, has impacted the company?s net profit in the first quarter itself. Tech Mahindra paid Rs 57.1 crore as interest for just over two months on its borrowings that have a tenure of one to five years.
Tech Mahindra reported a net profit of Rs 131.6 crore in the first quarter ending June 30, 2009 as against Rs 230.4 crore, down by 42.8% in the last quarter and down by 49.3% from Rs 258.5 crore in the same quarter last year.
Revenues increased to Rs 1,113 crore by 5.8% from Rs 1,051 crore in the last quarter and declined marginally by 0.26% from Rs 1,116 crore in the same quarter last year. Sonjoy Anand, chief financial officer said, ?The drop in net profit was largely due to interest paid and forex loss of Rs 26.1 crore due to currency fluctuations. However, our ebidta was at 25.5%. We continue to witness delay in the decisions from our clients but the pipeline outlook remains good at the moment.?
Anand refused to share numbers on how much the company would require to pay as an interest amount on the net debt. However, he added that the company has an option to pre-pay the loan amount, which it intends to do as and when the surplus amount is available. He further added that it would be viable to look at revenues flowing in from Mahindra Satyam almost after a year, as the books of Satyam Computer Services are expected to be reinstated by December 2009.
The market reacted negatively before the results and Tech Mahindra closed at Rs 770.15, down 5.07% on the Bombay Stock Exchange (BSE) and at Rs 770.35, down 5.15% on the National Stock Exchange (NSE) on Wednesday. Tech Mahindra’s revenues from its major UK client, British Telecom, were flat at $70 million (around Rs 33.6 crore). Its revenue contribution from North America was 29%, Europe 61% and India 10%. The company added 510 employees during the quarter, taking the total headcount to 25,482.