The Hindu Business Line : MphasiS BFL beats guidance — Net up 47 pc; plans 1:1 bonus, 30 pc dividend

IN the first of the earnings announcements from the IT sector, the MphasiS BFL group has declared a 47 per cent rise in net profit and a 35 per cent rise in revenues, exceeding its own guidance.

Consolidated net profit for the year stood at Rs 98.58 crore while revenues were Rs 580.58 crore. The board has recommended a dividend of 30 per cent and proposed a bonus issue of shares in the ratio of 1:1which, if approved by shareholders, will take the paid-up capital of the company to Rs 70.88 crore.

MphasiS BFL group expects to see a 35-per cent revenue growth in the year to March 2005; profits are expected to grow at 40-45 per cent while BPO services - MsourcE - is expected to grow at 65 per cent on improving profit margin levels, the company stated.

Sequential profit for the software services of MphasiS BFL fell to Rs 18 crore from Rs 22 crore while revenues stayed nearly flat in the quarter at Rs 66.4 crore compared to Rs 66.2 crore in the previous quarter. Sequentially, MsourcE recorded a revenue growth of 16.4 per cent over the previous quarter with net profit of Rs 7.92 crore. MsourcE recorded revenues of Rs 56.24 crore, a growth of 84 per cent over the corresponding previous period.

The total staff strength of MsourcE stood at 4,283 on 31 March 2004, and the BPO has added one new client to take the total client base to 19, said the company in a statement. The business is poised for another year of rapid revenue growth and increasing profitability, according to the company.

"Software net margins have been maintained at over 20 per cent for the second consecutive year, the BPO services revenue and profit growth continue to be robust," said Mr Jerry Rao, Chairman and Managing Director. "Results have exceeded the revenue and profit guidance that we gave at the beginning of the year despite an appreciation of the rupee."

The group added twelve new clients during the quarter including one in the BPO services business. This includes an international financial services organisation, a multinational retail company and a large technology corporation. The software business added 184 people while the BPO services took on 865 people during the quarter. Onsite billing rates increased marginally and offshore rates were kept at last quarter levels.

The group derived 12 per cent of its total revenues from a single client (FedEx) during the quarters ended 31 March 2004 and 31 December 2003. The BPO business derived 20 per cent of its revenues from the same client. "However, the overall trend is a declining client concentration and the trend is likely to continue," the company stated.

MphasiS BFL is also working to reduce its dependence on the US for revenues (77 per cent of total revenues) and is exploring business opportunities in Europe, Japan, Asia Pacific and West Asian regions, according to the company.

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