TechM Q1 net dips on currency fluctuation

Tech Mahindra on Friday posted a 36.4% decline in its net profit at Rs 144 crore in the first quarter ended June 30…

Tech Mahindra on Friday posted a 36.4% decline in its net profit at Rs 144 crore in the first quarter ended June 30, 2010, as against Rs 227 crore in the fourth quarter ended March 31, 2010. The operating margins for the quarter stood at 18.75% down from 23.5% in the last quarter, which was backed by currency fluctuations that brought an impact of 2.3% on margins, lower utilisation rates of 69% that impacted 1.3% and high sales, general and administrative (SGnA) expenses that were up 5%, brought an impact of 1.5% on the margins. Revenues for the quarter declined by 4.2% at Rs 1,133 crore from Rs 1,183 crore in the last quarter.

Tech Mahindra vice-chairman Vineet Nayyar said, ?Our numbers were adversely impacted by currency movements. The telecom market has been under pressure for some time now. However, we expect it to revive in the coming quarters?

During the quarter, the firm saw 45% of its revenues coming from the British Telecom. ?We have been following the large system integration or transformational projects and decision cycles are slow in Europe,? said Sanjay Kalra, CEO at Tech Mahindra. The firm bagged 4 new clients during the quarter. ?We are in active discussions with our clients in the North America,? Kalra said.

The firm said it was planning pay hike to its employees effective July 2010, and was expecting an impact on the margins in the coming quarter. It saw an attrition rate of 27% during the quarter, annualised for the full year, as compared to 22% in the last quarter. It added 1,743 employees during the quarter taking the total headcount to 35,267. Sonjoy Anand, CFO at Tech Mahindra, said, ?We see the capex for the year to be at $40-50 million. The tax rate at the moment is at 18%, however we might see it going up in the coming quarters.?

The results came after the market hours. However, shares of the company took a slight beating and closed at Rs 737.5, marginally down by 1.07% on the Bombay Stock Exchange.

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First published on: 27-07-2010 at 23:30 IST