Satyam Revenue Up, But Q1 Net Dips 11% To Rs 108 Cr

Hyderabad: | Updated: Jul 26 2002, 05:30am hrs
Satyam Computer Services Limited (SCSL) has taken an 11 per cent hit in its net profit for the first quarter ended June 30, 2002, as compared to the same period previous year.

The net profit is also seen a sequential decline of six per cent as compared to fourth quarter last fiscal 2001-02, on account of the pricing pressure on both onsite and offshore fronts.

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Satyam Computer Services Limited (SCSL), sitting on a pile of cash, is open to both acquisitions and strategic partnerships with potential clients to make the business process outsourcing outfit a major player in the global arena. Satyam has a huge cash reserve of Rs 1,200 crore, apart from a floating funds of over Rs 700 crore.
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As per the audited Q1 results, the net profit for the first quarter was Rs 108.44 crore as compared to Rs 121.46 crore for the same period last year. On a quarter-to-quarter basis, the net income during the Q4 of fiscal 2002 was higher at Rs 115.15 crore.

The total revenue for the first quarter has exceeded the guidance level and ended at

Rs 471.48 crore (Rs 421.02 crore), an increase of 11.98 per cent. However, the total revenue declined by 2.8 per cent on a sequential basis from Rs 482.56 crore to Rs 471.48 crore due to fall in the margins.

The total income from software services was higher at Rs 463.81 crore, which is marginally higher than the guidance level of Rs 450-460 crore.

The first quarter EPS of Rs 3.45 has met the guidance level of Rs 3.40-3.50 and has declined as compared to the same period last year (Rs 3.91).

On a sequential basis, the income from software services has grown by 1.35 per cent over the quarter ended March 31, 2002.

Under the US GAAP, the revenue was higher at $106.27 million as compared to $99.73 million, an increase of 6.56 per cent and 0.59 per cent growth over the previous quarter. The net income was at $16.11 million as compared to $8.60 million in the corresponding quarter of last fiscal.

Speaking with the media on Thursday, Satyam chairman Ramalinga Raju said the decline in net profit was due to pricing pressure both onsite and offshore coupled with increased operating expenses.

There continued to be uncertainty on the improvement of economic environment in major markets.

While this was a source of concern, the silverlining was the discernible trend among large prospective customers to increasingly outsource their requirements to Indian IT services companies, Mr Raju said.

Travel advisories issued by major governments did result in postponement of visits and delays in decision making by some prospective customers. On the other hand, this provided us an opportunity to demonstrate our robust business contigency plans, thereby significantly enhancing the confidence and the relationship with major customers, Mr Raju pointed out.

He said that Satyam added 27 new customers, including 7 Fortune 500 companies during the period. Around 25 per cent of the new customer wins came from competing successfully against large global IT services companies.