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Satyam slashes Tech Mahindra Q4 profit

Tech Mahindra said quarterly profit fell by more than a half,mainly due to Mahindra Satyam.

Written by Agencies | Mumbai | Published: May 27, 2011 12:25:12 pm

Tech Mahindra,India’s No. 5 software company,on Thursday said quarterly profit fell by more than a half,mainly due to losses related to Mahindra Satyam.

* Q4 net profit 922 mln rupees,vs 2.27 bln rupees

* Pricing outlook stable,will trend higher – executive

* See stable revenue from largest client BT – executive

* Shares closed down 0.3 percent ahead of results

Earlier this week,Mahindra Satyam,which Tech Mahindra bought in 2009,reported a quarterly net loss. It was hurt by a one-time expense due to settlement of a U.S. shareholder lawsuit.

Excluding Satyam numbers,these numbers are in-line with my expectations,said Srivathsan Ramachandran,analyst with Spark Capital in Chennai. Growth for the company is going to be muted as the telecom market is not going anywhere.

Tech Mahindra,in which BT Group owns about a 24 percent stake,provides IT services to the telecom sector and counts AT&T,Alcatel-Lucent,Motorola and Vodafone among its clients.

Outlook for revenue from BT — its largest client — was likely to remain stable,Chief Executive Officer and Managing Director Vineet Nayyar told a media briefing.

Yes,at the moment their demand is more or less stable. It is not going up for our services,Nayyar said. Going forward… we are expecting it will continue at this level. Therefore our increments are going to come…from other areas.

The company is looking at Africa as a growth driver where it was one of three firms chosen by Bharti Airtel last year to run customer service operations for the Indian telecom firm’s mobile networks in 16 African countries.

BT contributed 70 million pounds to revenue in the March quarter,Chief Financial Officer Sonjoy Anand said.

Tech Mahindra,a unit of tractor and utility vehicle maker Mahindra & Mahindra,expects pricing to be stable and to trend higher,Anand said.


The company added 4,125 staff during the quarter and 15 new clients for the year.

Bigger local rivals such as Infosys,Tata Consultancy Services and Wipro have all expressed caution about surging wages and currency volatility with forecasts from Infosys and Wipro disappointing investors.

Tech Mahindra reported net profit of 922 million rupees for the fiscal fourth quarter ended March,down 59 percent from 2.27 billion rupees a year ago. The just-ended quarter included 1.14 billion rupees in losses from its share in Satyam.

According to Thomson Reuters I/B/E/S,analysts,on average,expected net profit of 1.9 billion rupees for the company.

Mahindra Satyam,earlier called Satyam Computer,was bought by Tech Mahindra in 2009 after Satyam was hit by what became India’s biggest corporate fraud.

Ahead of the results,Tech Mahindra shares closed 0.3 percent lower in a firm Mumbai market. They have dropped 6.4 percent this year compared with a 12 percent loss in the wider market.

More on Tech Mahindra

More on Satyam

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