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Mr Nandan Nilekani, Managing Director and CEO, Infosys, addressing a press conference at the Infosys premises in Bangalore on Friday. — G.R.N. Somashekar

Bangalore , Oct. 10

INFOSYS Technologies beat market estimates and its own guidance to post a 33 per cent increase in net profit to Rs 300.16 crore during the second quarter of the current fiscal compared with the same period last year while revenues rose 29 per cent to Rs 1,134.75 crore during the same period.

"Growth continues to be strong. Pricing is showing signs of stability," the Infosys Technologies' Managing Director and Chief Executive Officer, Mr Nandan Nilekani, said, announcing the results.

The IT bellwether also revised its revenue guidance upwards to Rs 1,171 crore - Rs 1,181 crore (consolidated) for the third quarter and EPS between Rs 45.50 - Rs 45.60. For the year ending March 31, 2004, Infosys has projected revenues of Rs 4,623 crore - Rs 4,658 crore and EPS at Rs 178.8 - Rs 179.3.

The company has also declared an interim dividend of Rs 14.50 per share. EPS rose 33 per cent to Rs 45.30 during the quarter.

Mr Nilekani said Infosys expects to become a $1-billion company in 2003-04, as per US GAAP.

In 1999, its revenues were $121 million and a couple of years ago, it was a $0.5 billion company.

Sequentially, the company's total income grew 4.9 per cent over the Rs 1,082-crore in the first quarter while net profit grew 7.9 per cent over Rs 278.12 crore.

Other income was Rs 76.73 crore, an 81 per cent rise over the corresponding previous period - mainly from treasury operations.

Mr Mohandas Pai, the CFO, said the appreciating rupee may impact margins and every 1 per cent appreciation of the rupee will lead to 0.5 per cent impact on the operating margins, though Infosys continues to hedge its exposure. Infosys has taken a forward cover for $139 million.

"Cash flows continue to be strong. Margins have stabilised due to several proactive measures taken earlier," Mr Pai said.

Infosys said it added 29 new clients in the quarter taking the number of new clients for the first six months of the current fiscal to 51.

There was a net addition of 2,025 employees in the second quarter. Employees now total 19,120. Infosys said it plans to add at least 3,000 more employees during the rest of the fiscal. The quarter saw 570 employees leave the company with the attrition rate being 9.1 per cent, the highest so far for the company. During the first quarter, the attrition rate was 7.9 per cent. "We will continue to hire strongly," Mr Nilekani said.

Infosys' subsidiary Progeon contributed Rs 17.08 crore to the quarter's revenues and turned profitable at Rs 82 lakh. It added three new clients and 156 employees during the quarter, taking the total headcount to 1,038.

Mr Nilekani said revenues from offshore services rose 2.1 per cent to 45.9 per cent; fixed price projects contributed 35.4 per cent to the total revenues during the quarter.

Utilisation rates were 74.3 per cent in the quarter, he said. North America contributed 73.9 per cent to revenues, down from 74.7 from the first quarter.

"The revenues from the US has not declined but revenues from other regions have increased," Mr Nilekani said.

"Offshoring business has become mainstream," said Mr Nilekani adding that increased business for Infosys was a demonstration of the robustness of its global delivery model. "We can deliver at competitive price points compared with global competitors," Mr Nilekani said.

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