Helped by key wins, Mahindra Satyam performance

Software services provider Tech Mahindra reported a 22.4 per cent increase in its consolidated net profit at Rs 338.5 crore for the first quarter ended June 2012 compared with the same period last year.

This can be attributed to key wins in the managed services space, performance in the Mahindra Satyam unit and currency boost.

Revenues were up 19.4 per cent at Rs 1,543.4 crore (Rs 1,292.5 crore). Tech Mahindra has also benefited in this quarter from internal cost-optimisation initiatives.

However, the global economy continues to be a cause of concern for the company, as is for other IT competitors.

‘Customers delaying decisions’

“We are focused on margin improvement. Due to the global ecosystem, customers are scrutinising all aspects of expenditure, including IT spending, and are looking to minimise financial commitments,” said Vineet Nayyar, Vice-Chairman, Managing Director and CEO, Tech Mahindra. Customers are also delaying decisions on IT spends, he added.

Tech Mahindra’s proposed merger with Mahindra Satyam is expected to ease growth concerns as business at the latter is good. A number of projects in the business intelligence space, analytics, upgrade to 4G and LTE have added to the company’s growth, said Tech Mahindra. Business from British Telecom (BT), the company’s largest client, has marginally fallen. Internal pressures have led to BT reducing its IT spend.

Non-BT business grows

However, Tech Mahindra’s non-BT business has grown two per cent in the quarter, with business in Australia, West Asia and the US ‘doing well.’

Revenue from North America has increased by 3 per cent, while revenue from Europe fell by 6 per cent in the quarter against the corresponding period last year. Debt decreased to Rs 886 crore.

Tech Mahindra added six new clients in the quarter gone by and has a total headcount of 40,630.

The company has still not decided upon wage hikes. Last year, wage hikes were given in July.

(This article was published on August 9, 2012)
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