The Hindu Business Line : Firstsource net falls 31% on US crisis

Mumbai, Jan. 30 Rising loan defaults in the US coupled with certain payments to be made relating to the recent MedAssist acquisition caused the city based pure play BPO vendor Firstsource Solutions to register a 31.7 per cent fall in consolidated net profit for the quarter ended December 31.

Net profit was down at Rs 20.6 crore against Rs 30.2 crore recorded in the corresponding quarter a year ago. Total income for the quarter was up 71.6 per cent at Rs 382.5 crore (Rs 222.8 crore).

While revenues on a sequential basis were up 29 per cent, the net profit spiralled down by 54.8 per cent.

The extents of delinquencies on all asset classes are increasing in the US. Many are defaulting even on their credit card bills, leading to a fall in the collection profitability for Firstsource, according to Mr Ananda Mukerji, MD & CEO, Firstsource Solutions.

“This had a negative impact of 2-2.5 per cent on the overall profitability,” Mr Mukerji said.

In order to finance the $330 million, mega acquisition of MedAssist Holdings in September last year, Firstsource had taken a high cost bank loan. “We carried the bank loan and the interest relating to it on our books for about two months; we booked an interest of Rs 19 crore in this quarter,” said Mr Mukerji.

In December last year, Firstsource raised an FCCB issue of up to $275 million for retiring this debt, added Mr Mukerji.

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