The Hindu Business Line : Firstsource cuts dollar revenue guidance to 21%

Mumbai, Nov. 24 The global financial crisis and the volatile foreign exchange environment have led back-office firm Firstsource Solutions to cut its forecast for full-year dollar revenues to 21 per cent, against its original guidance of 33-38 per cent.

“There is a slowdown everywhere and hence volumes are not as robust as we would have liked it to be. Though seven of our top 10 customers have increased their business with us, the increase is not to the degree we had anticipated,” Mr Ananda Mukerji, Managing Director & CEO, said in a teleconference.

An adverse impact of three per cent has been factored in on account of cross currency movements in the revised guidance, the country’s third largest pure play BPO said in a communication on Monday.

Credit card collection

Due to the economic environment, Firstsource’s credit card collection business has been negatively impacted; however, its telecom and healthcare practices continue to remain “more or less stable”. On the pricing front, there have been sporadic cases of clients asking for reduction in billing rates, said Mr Mukerji.

For the full year, the Mumbai-based company expects operating EBIT margins to be in the range of 10-10.5 per cent, the press release said.

Separately, Firstsource said it has recorded a 38 per cent dip in consolidated net profit for the second quarter ended September 30, 2008 at Rs 28.2 crore from Rs 45.59 crore in the corresponding quarter last year. For the September quarter, the firm’s numbers were impacted due to a foreign exchange loss of Rs 108 crore. In December 2007, the company had raised $275 million through overseas convertible bonds.

Earlier this year, Firstsource decided to adopt Accounting Standard 30 which mainly affects the accounting treatment given to the outstanding FCCBs of $275 million. As a result, unrealised translation loss is recognised in the translation reserve account, the press release said. Had the standard not been adopted, Firstsource’s net profit for the quarter would have been lower by Rs 108.3 crore. The company added 1,223 employees during the three months ended September to finish the quarter with an employee base of 19,576.

attrition

Firstsource reported an annualised September quarter attrition (post 180 days) of 45.4 per cent compared with 38.7 per cent in the previous quarter. This increase was largely due to ramp-down of one programme and movement of another to a new delivery location, the company said. Excluding this, attrition for the quarter was at 39.8 per cent.

Firstsource scrip was up by 4.88 per cent to close at Rs 12.9 on the BSE.