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G.R.N. Somashekar

Mr Syamal Gupta (right), Chairman, Tata Elxsi Ltd, and Mr Patrick McGodrick, Director, at the company’s AGM in Bangalore on Tuesday. —

Our Bureau

Bangalore, July 22 Tata Elxsi reported a 41.2 per cent drop in the first quarter net profit, largely hurt by project delays from two top customers, sending its shares down 7.46 per cent.

The provider of product design and systems integrator services said net profit for the quarter was Rs 7.12 crore, compared with Rs 12.10 crore in the year-ago period. Net sales increased to Rs 97.37 crore (Rs 92.37 crore).

Describing the latest quarter as “disappointing”, Mr Madhukar Dev, Managing Director, said two of the company’s largest customers put on hold projects that led to a revenue drop of Rs 10 crore.

The two customers account for about 25 per cent of the company’s total business, Mr Dev said at the sidelines of the company’s 19th annual general meeting. The projects have not been cancelled, but put on hold for a short term, he added.

Mr Dev also said Tata Elxsi is working on a film project, which is (in) the over-run stage and that there would be no further revenue from it. The company’s Visual Computing Labs, which is a part of its product design services business unit, provides computer graphics, animation and special effects services.

Shares of the company fell by Rs 14.15 to Rs 175.55 on Tuesday at the Bombay Stock Exchange.

However, the company remained confident of meeting its outlook. Mr Dev said the company should be able to make up for the revenue loss. The outlook for the year does not change, he added.

He said the company has added 28 new customers, of which eight are in Japan. But new customers bring little revenue in the first few quarters, he added.

Tata Elxsi said 600 people were appointed in the last fiscal. They would be deployed on to projects in the current year, said Mr Syamal Gupta, Chairman.

Mr Gupta said a substantial number of employees working on the delayed projects have been relocated from onsite locations.

Mr Gupta said 2007-2008 was a difficult year as well, with fluctuations in the currency and uncertainty in the financial market.

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