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A windfall due to rupee depreciation shored up the performance of Mahindra Satyam in the third quarter ended December 31, 2011.
The company's revenues rose by 34 per cent to end at Rs 1,718 crore (Rs 1,279 crore) with the rupee depreciating by 10 per cent during the quarter.
Its net profit soared to Rs 308 crore (Rs 59 crore) in the quarter.
Fall in the value of the rupee had saved the day for Mahindra Satyam. Without it, volumes would have stayed flat with a decline of 0.3 per cent.
Dollar revenues saw a dip at $325 million as against $330 million.
After completing a three-year journey from near collapse in 2009, the company improved its operating metrics despite the Euro zone crisis and uncertainty in the US market.
“We could have most qualifications (noted by auditors) dropped in the last three years. Our EBIDTA (Earnings before Interest, Depreciation, Taxes and Amortisation) has gone up by 10 per cent in one year,” Mr Vineet Nayyar, Chairman of Mahindra Satyam, said.
EBIDTA margin, a key indicator of a company's performance, was lying very low at 6.1 per cent when the company began to revive its fortunes.
Addressing a press conference here on Wednesday to announce the third quarter numbers, he said the company was practically close to industry norms.
Pay hike
Unlike last year, the company gave a wage hike in the third quarter, increasing employee costs to Rs 1,046 crore from Rs 910 crore. It gave an average hike of 12 per cent for offshore and two per cent for onsite staff.
As of December 31, total number of employees stood at 32,280, with a net addition of 188 over previous quarter. Attrition rate was put at 16 per cent (25 per cent) in the quarter.
Mr C.P. Gurnani, Chief Executive Officer, was cautious. There were some challenges as delayed decisions stalled top projects.
New verticals
“Despite headwinds, Europe business grew by 4.2 per cent and BFSI by 7 per cent quarter-on-quarter. We are investing on new verticals such as M2M as we foresee huge opportunities in machine-to-machine communication,” Mr Gurnani said.
The business mix geographically has not changed much, with the Americas continuing to contribute about 50 per cent, followed by Europe.
Merger process begins
Mahindra Satyam and Tech Mahindra have appointed accountants and bankers to assess and ascertain valuations of the respective companies, paving the way for the merger of the two Mahindra group companies.
“They will submit their assessments to their boards in due course. We expect that the merger process to be completed in eight months. Most probably, it should be done by October,” Mr Vineet Nayyar, Chairman of Mahindra Satyam and Vice-Chairman of Tech Mahindra, said.
He had not indicated any timeline for bankers to submit their reports and for other stages in the merger process.
Referring to the damages suit filed against the former board of Satyam Computer Services in City Civil Court, he said the company waited for judicial process to start. “We have claimed Rs 270 crore in damages. But this is only indicative. Actual damages are substantially more,” he said.
Meanwhile, the company has co-opted Mr Ashok Kacker, former IRS officer, as a director on the board of directors.
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