The Hindu Business Line : Satyam pursuing 20 large deals

Hyderabad, July 18 Satyam Computer is in pursuit of at least 20 major deals in the range of $50 to $100 million and expects some of them to materialise during the quarter, according to Mr Ram Mynampati, President, Commercial and Healthcare, Satyam Computer.

Mr Mynampati told reporters said the business environment was positive in most markets with the exception of financial services sector in some markets, particularly North America.

While the broader economic environment was on expected lines with pressure on financial services, other markets continued to witness growth be it Europe or Asia-Pacific, Mr Mynampati said.

Firm billing rates

The Chief Financial Officer of Satyam, Mr Vadlamani Srinivas, said “during the quarter, billing rates are similar to the fourth quarter last fiscal and we have not witnessed any delays in deal making. In new client engagements, we may have much higher rates.”

Referring to hedging strategy, Mr Srinivas said “the company hedged $675 million, that is about 50 per cent of dollar inflows and continue to stick to this strategy.”

Hiring

“The company expects to hire about 14,000 to 15,000 people during the financial year. Significantly, we have managed to bring down attrition levels further. This is backed by good compensation packages. As against the industry average of about 13-14 per cent, we offered about 16 to 18 per cent,” Mr Srinivas said.

The company added 34 clients and has 631 active customers. It has 237 clients with $1 million and above business, which includes 93 with $5 million and above and 52 with $10 million and above. Top 10 customers contribute 30.60 per cent of business.

“The company made several acquisitions last fiscal and continues to scout for them. We are actively pursuing acquisitions, which will continue to be small but adding new areas,” Mr Srinivas said.

The company is considering acquisitions in the BPO, infrastructure management services and engineering services space. Though no deadline has been set for these, they could take place any time, Mr Srinivas said.

BPO impact

The BPO business saw its revenues slump about 33 per cent from Rs 72.96 crore in the March quarter to Rs 48.97 crore in the June 2008 quarter. It also recorded a loss of Rs 21.9 crore in June versus a profit of Rs 1.55 crore in the March quarter. A sizeable animation contract had ended in the quarter. This is not a permanent loss and revenues from that segment would resume again shortly, company officials said in the earnings call with analysts. The animation business typically contributes 25 per cent to 30 per cent of total BPO revenues. The management consulting subsidiary of the company, Citisoft, recorded a loss of Rs 3.71 crore compared to a profit of Rs 1.82 crore in the March quarter. Mr Mynampati attributed this to increase expenses that vary from quarter to quarter.

Domestic leads

The Satyam Chairman, Mr. B. Ramalinga Raju, said “we are getting important leads into the domestic market. The company is exploring opportunities for large, long term technology management deals to happen.”

Application development and maintenance business contributes 44.63 per cent and consulting and enterprise business (44.70 per cent). Banking, financial services and insurance contributed 21.38 per cent followed by manufacturing 23.07 per cent, Times 21.90 per cent followed by healthcare, retail and transportation among other areas.

Asked about the Upaid case, Mr Srinivas said that the matter would come up for hearing next year and that the company was confident of its case.