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Satyam beats own guidance on revenue; Q2 net up 28%

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The Chairman of Satyam Computer Services Ltd, Mr B. Ramalinga Raju, announcing the company's Q2 results through video conferencing from the US to the media in Hyderabad on Wednesday. - A. Roy Chowdhury

Hyderabad , Oct. 20

BEATING its own guidance of Rs 810 crore of software revenues for the second quarter of current fiscal ended September 30, Satyam Computer Services Ltd has announced revenues of Rs 848.1 crore, which is 9.93 per cent up sequentially.

It is up 41.71 per cent compared with the revenues in the corresponding quarter of the previous fiscal.

The company posted a net profit of Rs 188.79 crore for the quarter under review, recording a growth of 8.83 per cent sequentially and 27.92 per cent year-on-year, on a total turnover of Rs 872.03 crore (Rs 636.07 crore). The EPS for the period under review was also higher at Rs 5.95 than the guidance of Rs 5.48.

Addressing the media here on Wednesday from the US office through a videoconference, the Satyam Chairman, Mr B. Ramalinga Raju, said the revenue guidance for the current year has been revised upwards.

Accordingly, the revenue is projected to be in the range of Rs 3,415 crore to Rs 3,428 crore, indicating an annual growth of 34.37 per cent to 34.88 per cent. The earlier forecast was 28.59 per cent to 30.32 per cent.

According to Mr Raju, the EPS for the current fiscal is expected to be between Rs 22.61 and Rs 22.76, indicating a growth rate of 31.45 per cent to 32.33 per cent over the previous fiscal. The earlier forecast for annual EPS growth was 26.22 per cent to 28.26 per cent.

The board has also announced an interim dividend of 100 per cent for 2004-05.

Mr Raju attributed the strong growth in revenue to continued rationalisation in selling, general and administrative expenses. The broad-based growth across verticals was a noteworthy feature of the company's performance. The company has added 27 new customers, of which five are Fortune 500 companies, increasing the company's Fortune 500 list to 109.

Stating that the company has aggressively added new global delivery capabilities (GDCs) to take its total GDC count to 20 including those in the US, Canada and Australia, Mr Raju said with the launch of operations in Hungary and Brazil in the next few weeks, Satyam is preparing to actively engage in Europe and Latin America.

Recruitment: Apart from the aggressive recruitment drive of the new associates in Malaysia, the company has also strengthened its operations in Bhubaneshwar, Chennai and Hyderabad and added around 1,500 associates. As against the earlier guidance of adding 4,000 associates, the company has revised the guidance to 4,500 to 5,000 associates.

To control the attrition rate, the company has decided to go in for a significant hike in remuneration to its associates for the third time in the last 12 months, both offshore and on-site.

Viewing that it would be too early to predict the impact of such pay hike on the attrition rate, which is currently at around 18 per cent compared to the industry average of 24 per cent, Mr Raju said the increased personnel expenses would have up to 100 basis points negative impact on the operating profit margin.

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