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Satyam returns to profit

John Ribeiro | Nov. 16, 2010
The outsourcer now plans to merge with parent company Tech Mahindra

BANGALORE, 15 NOVEMBER 2010 - Indian outsourcer Satyam Computer Services reported that it had returned to profit in the quarters ending June 30 and Sept. 30. Profit for the quarter ending Sept. 30 was lower than in the quarter to June 30, largely because of salary increases.

Satyam, which entered a financial crisis last year, is now planning to merge with another Indian outsourcer, Tech Mahindra, which acquired a dominant 43 percent stake in Satyam last year as part of a revival package for the company.

Satyam said on Monday that its net profit for the quarter ending Sept. 30 was 233 million Indian rupees (US$5.2 million at the exchange rate on the last day of the quarter), down from 975 million rupees in the previous quarter.

The company reported revenue of 12.42 billion rupees for the quarter ending Sept. 30, down marginally from 12.48 billion rupees in the quarter ending June 30.

The company had 28,068 staff at the end of Sept. 30, up from 27,722 in the previous quarter.

The downward trend at Satyam has come to a stop and the company is adding customers, said Vineet Nayyar, chairman of the company, during a conference call with analysts. But the size of orders and their volumes do not make up for clients lost during the crisis, he added.

The company has made some progress winning back lost customers, but will take a few quarters to reach optimum levels, Nayyar said.

The company's results are in conformance with Indian GAAP (generally accepted accounting principles). A comparison with the company's revenue and profit figures last year is not available as the company was exempted by India's Company Law Board from publication of financial results for the quarters ending from Dec. 31, 2008 to March 31, 2010.

The Indian government constituted a new board for Satyam in January last year after its co-founder B. Ramalinga Raju said that the company's revenue and profits had been inflated for several years. The board ordered the company's accounts be restated.

Satyam reported in September revenue of 54.8 billion rupees for the fiscal year ended March 31, 2010, down by 38 percent from revenue in the previous fiscal year.

The company, however, reduced its losses to 1.25 billion rupees from 81.8 billion rupees a year earlier. A large part of the losses last year were related to the financial irregularities at the company.

 

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