Mastek group Q1 net up 23.5%, buys US co for $2 m

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Our Bureau

Mumbai, Oct. 13

THE Mastek group reported a 23.5 per cent increase in net profit for the first quarter ended September 30, 2005, and also announced that it had acquired the Connecticut-based, $1.5-million company Entegram LLC for $2 million to augment its US business.

Of this, $750,000 is to be paid up-front and the balance as earn-outs over a two-year period, said a statement from the company.

Net profit for the first quarter amounted to Rs 15.02 crore as against Rs 12.16 crore reported for the corresponding quarter of the previous fiscal.

The company's total income for the quarter rose by almost 17 per cent, recording Rs 153 crore (Rs 130.5 crore).

"The quarter has been distinctive for the all-round growth recorded by the company. There was also a 20 per cent rise in our US business, which has seen a good turnaround and is profitable now. We also saw a rise in EBITDA margins," said Mr Ashank Desai, Chairman, Mastek Ltd.

Profitability also improved due to better cost management. Total expenditure rose over 15 per cent, to Rs 124 crore, up from Rs 107 crore.

The company also finds itself with good cash on its balance sheet, of Rs 171 crore, pointed out Mr Desai. "Our liquidity position is very strong."

The quarter under consideration was also marked by the hiring of 200 employees, a record growth in the number of people for the company, said Mr. Desai. The employee strength of the company is currently 3,000.

For the next quarter, Mastek's business outlook suggests income in the range of Rs 159 crore and Rs 164 crore, and net profit to be between Rs 15.3 crore and Rs 16.3 crore. "We expect a growth of around 4 to 7 per cent in the next quarter. However, given our current pipeline, the growth rate should see a significant increase in the quarters ahead," he said.

During the quarter, revenues from European operations grew by 25 per cent over the corresponding period last year while revenues from US operations increased by 19 per cent in the same period. Presently, Europe contributes 60 per cent while the US contributes 18 per cent to the group revenue.

(This article was published in the Business Line print edition dated October 14, 2005)
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