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Mahindra Satyam has posted a net profit of Rs 225 crore in the first quarter ended June 30, 2011, as against a loss of Rs 327 crore in the preceding quarter. The company's accumulated losses stood at Rs 2,200 crore.
The Hyderabad-based company registered a turnover of Rs 1,434 crore as against Rs 1,375 crore in the previous quarter, showing a growth of 4.3 per cent.
Cost of wages went up 2.9 per cent to Rs 930 crore from Rs 904 crore in the preceding quarter. The company, however, had deferred salary hikes to the third quarter.
Hiring plan
With global economic situation turning bleak, the company said it might reconsider its earlier hiring plan (to hire 18,000 for the fiscal). With a net addition of 2,200 in the quarter, it now has 31,500 employees.
He, however, cautioned that the company would have to ‘adjust' its hiring plan if global economic situation turned hostile in the future. “In the short-term, we do not see any impact,” he said.
“Hundreds of former employees have come back in the last few months,” Mr C P Gurnani, Chief Executive Officer, said.
Impact of US situation
Asked about the likely impact of S&P's downgrading of the US Government on the company's business, Mr Gurnani said the company's customers in the US had not raised any issues yet after the development (S&P downgrading of the US). “Our exposure to the US government is very small. Our exposure to troubled economies in Europe is too small,” he said.
ADS Issues
Finding it impossible to meet stringent SEC (Securities and Exchange Commission, US) norms to become current with its accounts, Mahindra Satyam will ‘wind down' its ADS (American Depository Shares) in a phased manner in the next seven months.
Its realisation that it could not become current with US accounting norms would also mean that the company will not able to seek a relisting on New York Stock Exchange.
As it is, the company's ADS are traded OTC (over-the-counter), following delisting of its shares from New York Stock Exchange after the fraud hit it.
Mr Vineet Nayyar, Chairman of Mahindra Satyam, said the ‘wind down' would not have any impact on the float of shares in India or on the business prospects of the company in the US.
ADS represent 10.74 crore or 9.13 per cent of outstanding equity shares of Mahindra Satyam.
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