Mid-size IT services company Mindtree has reported a decline in net profit in the third quarter mainly because of forex losses but remains bullish on growth for the 2014 fiscal.
The company’s net profit fell 31 per cent sequentially for the quarter ended December, 2013 to Rs 88.5 crore while revenues grew 2.7 per cent to Rs 790.6 crore for the same period. In dollar terms, the company posted a 31.5 per cent drop in net profit to $14.2 million, on a sequential basis. On a year-on-year basis, net profit grew 22.7 per cent.
Its revenues increased 2.5 per cent to $127 million quarter-on-quarter and 2.5 per cent on a year-on-year basis on the back of bagging multi-million dollar deals in the consumer packaged goods, transportation, retail and manufacturing sectors.
CEO and Managing Director K.K. Natarajan pointed out in a teleconference that Mindtree will end 2014 fiscal in a strong manner.
Natarajan also said that the company wants to focus on fewer segments and in line with that, it has decided to take up projects where it can make a significant impact rather than continue with plain vanilla outsourcing services that are highly commoditised. Mindtree has seen a major drop in the number of clients it services over a period of time.
While the company has managed to bring attrition down from 15.1 per cent a year ago to 11.6 per cent at the end of December quarter, forex issues remained a cause for concern.
According to CFO Rostov Ravanan, the company has brought down its hedging period to three months due to currency volatilities. “As we have outstanding hedges, this new hedging policy will take effect from September 2014,” he said. The company has total hedges of $98 million.