Financial Daily from THE HINDU group of publications
Tuesday, Oct 21, 2003
Financial Daily from THE HINDU group of publications Tuesday, Oct 21, 2003 |
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Info-Tech
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Software iGATE Global posts net loss in Q2 — To buy IdeaSpace; picks stake in Concours Our Bureau
Mr Phaneesh Murthy, CEO, iGATE Global Solutions (right), and Mr N. Ramachandran, CFO, at a press conference, at Koramangala in Bangalore on Monday. — G.R.N. Somashekar
Bangalore , Oct. 20 IGATE Global Solutions Ltd, the Indian subsidiary of Nasdaq-listed iGATE Corp, on Monday reported a loss of Rs 1.24 crore for the quarter ended September 2003, compared to a net profit of Rs 6.49 crore in the corresponding previous quarter. The company reported a 61.3 per cent rise in operating revenues at Rs 145.50 crore for the quarter compared to Rs 90.2 crore in the year-ago period. . iGATE Global posted losses on consolidated basis for both its IT services and ITeS business during the second quarter after it took a one-time charge of Rs 2.69 crore towards acquisition-related charges. "Net income will be under pressure for the next two quarters as a result of acquisition, restructuring and higher expenses without corresponding revenue. Once the additional revenue kicks in, which is expected in the next fiscal, we should stabilise," said Mr Phaneesh Murthy, CEO, iGATE Global, addressing a press conference announcing the company's results. iGate is buying companies to expand its range of software and IT-enabled services and is hiring people to boost sales. "The restructuring and integration efforts are progressing smoothly and we are putting in place measures to increase operational efficiencies, which should show results in the next fiscal," Mr Murthy said. The operational improvements effected are likely to result in a saving of over Rs 4.5 crore starting next fiscal. Lower utilisation rates, higher onsite contracts, low billing rates are among the factors contributing to the lower margins, Mr Phaneesh Muthy said, adding that the company was taking several measures to set right these issues. iGATE added 11 new clients during the quarter of which six are Fortune 500 companies. A Fortune 20 consumer products company, two European insurance firms and GATX, a specialised finance and leasing company, are among the new clients. Meanwhile, iGATE announced that it is acquiring software services firm IdeaSpace Solutions Ltd for Rs 7.67 crore. The acquisition will add 170 employees, who are specialists in banking technology and operations. The acquisition will also bring in ING Vysya Bank as a customer into the iGATE fold. iGATE also announced that it had entered into an alliance with US-based business research firm Concours Group. iGATE Global will pick up 6 per cent stake by investing $1.8 million in Concours to gain access to its client list. The company has already invested $1 lakh in Concours Group. iGATE also planned to move about 45 jobs from US to India by relocating its IT and IS operations, finance and accounting operations, he said. Mr Murthy also mentioned that the company was exploring the possibility of having a combined capital structure for both iGATE Global Solutions and iGATE Corp. Various options were being thought about and the initiative was in the preliminary stages, he said.
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