The Hindu Business Line : Genpact net income rises 42% on higher growth

New Delhi, March 21BPO (Business Process Outsourcing) firm Genpact has posted 42 per cent rise in net income for the full year 2007 at $56.4 million, as growth from existing global clients and from GE boosted earnings.

The revenue of the company stood at $822.7 million in 2007, up 34.2 per cent from 2006, with organic growth (or revenue excluding acquisitions) of 27.7 per cent. The adjusted income from operations margin increased 50 basis points to 16 per cent.

For the fourth quarter, Genpact’s revenue was $231.6 million, up 30.3 per cent over same period previous year, and up 8 per cent from the third quarter of 2007.

In a statement here, the company said that revenues from clients other than GE (global clients), grew 114.9 per cent over 2006 (organic growth of 91.1 per cent), driven by the company’s ability to expand with existing clients across the spectrum of diverse services and solutions. The GE revenues for 2007 grew 11 per cent over 2006, prior to adjustments for dispositions by GE of businesses that it continues to serve.

Improved pricing

Revenue per employee in 2007 increased to $28,200 from $26,400 in 2006 reflecting a combination of higher value and higher revenue work as well as the company’s ability to improve pricing.

About 44 per cent of Genpact’s 2007 revenue came from banking, financial services and insurance clients. “About one-quarter of those revenues came from insurance clients, with the remainder distributed among consumer, commercial and investment banks and asset management clients. About 42 per cent of revenues came from manufacturing clients, which include aircraft, infrastructure, automotive, healthcare and pharmaceuticals businesses, while remaining revenues came from clients providing transportation and logistics, media and entertainment and hospitality services,” Mr Pramod Bhasin, Genpact’s President and CEO, said.

For the full year 2008, the company expects organic revenue growth in the range of 25-27 per cent. “We also expect adjusted operating income margin to improve slightly by 10-30 basis points to 16.1-16.3 per cent,” Mr Bhasin added.

Non-cash gains

During third quarter of 2007, Genpact had indicated that due to internal restructuring and change in tax status of one of the entities it was required to recalculate some of the existing deferred tax assets and liabilities at US Federal and state tax rates which it estimated would produce a one-time, non-cash charge for deferred tax liability of $22-$29 million.

“The recalculation process involved a detailed and complex analysis of the tax implications of the restructuring and change in entity tax status, and the unrealised taxable gains and consequent deferred tax liability are much less than estimated earlier. In addition, calculation of certain other deferred tax assets arising out of the restructuring and change in entity tax status resulted in a credit to the income statement for the fourth quarter of 2007. The net effect of these calculations resulted in a one-time, non-cash benefit to the 2007 income statement of $1.3 million,” Genpact said.

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