Wage costs, forex losses eat into HCL Tech profit

Written by fe Bureaus | New Delhi | Updated: Jan 27 2010, 04:17am hrs
On the back of higher wage costs, forex losses and a decline in other income, the countrys fourth largest software services firm HCL Technologies consolidated net profit for the October-December quarter declined by 20.5% at Rs 296.7 crore. On a sequential basis, the net profit was down 7.3%. Due to a recovery in the market situation, the company recorded a 4% growth in volume in IT services during the quarter and added 12 new deals with two large deals in the financial services verticals. The company, which follows the July to June financial year, said that during the October-December quarter it revenues rose 22.8% on a year-on-year basis to Rs 2,469.1 crore and marginally up sequentially. We are seeing confidence return to the market and even discretionary spending should be back by the middle of next year, Vineet Nayar, CEO, HCL Technologies said.

The company, which has been suffering forex loses for several quarters, logged a loss of Rs 125.7 crore against Rs 120.3 crore is the corresponding quarter last year but down from Rs 150.4 crore in the last quarter.

However, Anil Chanana, CFO, HCL Technologies, said that the companys net profit was dragged mainly due to the Rs 13.3 crore loss booked in other income compared to Rs 120.6 crore of profit booked in the same quarter last year mainly because of lower deposit rates from banks. At the end of December 2009, the company had $397.9 million of cash and cash equivalents.

Chanana said the company has also cut its net debt to $130 million from the end-June level of $221 million. HCL Techs stock was down 5.68% to close at Rs 361.15 on the Bombay Stock Exchange. During the quarter, the company made gross addition of 5,508 employees. The net addition was 1,691 people. Nayar said that while the company is bullish on hiring, it will continue to do just-in-time hiring. He did not also divulge any hiring targets for the coming quarters.