The Hindu Business Line : Mastek Group net jumps 37 pc in Q3

MASTEK Group has reported 37-per cent jump in net profit for the quarter ended March 31 to Rs 13.76 crore compared to Rs 10.02 crore in the corresponding period last year.

The company's total income increased 28 per cent during the quarter to Rs 150.11 crore (Rs 117.46 crore) with a 103-per cent increase in income from Government and financial services' clients.

Income from telecom and IT services, on the other hand, fell 87 per cent and 52 per cent, respectively. Mastek expects close to 30 per cent rise in its income for the next quarter April-June 2005, in the range of Rs 152 crore to Rs 157 crore, the company said in a release.

The group has reported a total income of Rs 453 crore in the financial year 2003-04.

For the quarter ended March 2005, the company saw maximum growth in income from its UK operations (Rs 93.78 crore), where it has started executing on-site projects that were earlier executed by its subsidiary. While revenues from the UK increased 68 per cent, the US and Asia Pacific operations declined 19 per cent and 17 per cent, respectively.

Total expenses went up to Rs 126.29 crore (Rs 97.26 crore). Other expenses of Rs 19.72 crore (Rs 17.52 crore) include Rs 50 lakh towards taxes on income from its joint venture with Deloitte Consulting — Mastek DC Offshore Development Company Pvt Ltd (DCOTG).

The tie-up now has a new CEO in Mr Parag Saigaonkar. He replaces Mr Manish Soman who the company says is pursuing an "entrepreneurial opportunity."

Interest payments fell to Rs 12 lakh (Rs 41 lakh) and depreciation cost Rs 6.08 crore (Rs 5.96 crore). During the quarter Mastek spent Rs 91.60 crore on staff costs, 38 per cent higher than Rs 66.23 crore last year; most of this, at its UK operations where it has hired 400 more. Tax provisions stood at Rs 1.86 crore (Rs 7 lakh).

During the quarter, Mastek was awarded multi-country roll out deals for its channel management solutions by a US-based insurance major, a release said.

Beefs up UK presence

Mastek has converted its UK presence into a branch office from a subsidiary. A statement said that the company has started directly executing on-site projects in the UK. Earlier, these were executed by its subsidiary.

Asked if this move was intended to avoid double taxation, Mr Ashank Desai, Chairman, Mastek Group, told Business Line, "This is to bring in our legal structure in line with our operational structure."

Earlier, the company was structured into strategic business units, whose heads were as responsible for deliveries as they were for onsite execution for each of those units. "Now, all deliveries are made out of India. So, onsite responsibility also comes back here." He added that having a branch office, instead of a subsidiary, also did away with the complexities of transfer pricing.

The company's CEO, Mr Sudhakar Ram, is to relocate to the US.

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