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Vishwanath Kulkarni

Bangalore, Sept. 30 As part of its efforts to broadbase its cost structure in the wake of a rising rupee, MindTree Consulting Ltd is looking at setting up an overseas development centre.

“We are looking at countries where currencies don’t swing much,” said Mr Rostow Ravanan, Chief Financial Officer, MindTree. “At present, we are evaluating Mexico in Latin America and Budapest in Eastern Europe and may finalise the location by this year-end,” he added.

“To begin with, we will start small and scale up the centre to around 500 by next year-end,” Mr Ravanan said.

The company expects to invest around $3 million in the overseas development centre, which would be staffed with about 90-95 per cent locals.

About 90 per cent of MindTree’s 5,000 employees are currently located in India and offshore efforts account for 86 per cent. In revenue terms, offshore accounts for 71 per cent.

The appreciating rupee had a major impact on MindTree’s June quarter earnings.

A one per cent appreciation in rupee impacts MindTree’s operating margins by 50 basis points.

The company has taken long-term forex hedges covering the next five years.

At the end of June quarter, MindTree had about $69 million worth of forex hedge of which $22 million is for the next 12 months and the remaining for the subsequent 48 months.

MindTree expects its revenues to be in the range of $178-180 million for financial year 2008.

After being impacted by the strong rupee in Q1, MindTree lowered its profit guidance by about 10 per cent to $22.5-22.6 million from the earlier projected $25.1-25.2 million.

The company reported a net profit of Rs 22.98 crore on revenues of Rs 167.7 crore for the quarter-ended June 30, 2007 as compared to a net of Rs 25.3 crore on revenues of Rs 135.6 crore in the corresponding quarter last year.

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