The Hindu : Business : Infosys posts 21 % rise in net profit

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Infosys posts 21 % rise in net profit

Special Correspondent

The guidance for the next quarter and the current fiscal reflects “cautious optimism”

Adds 7,182 employees during April-June
Consolidated income rises to Rs. 4,854 crore

— PHOTO: G R N SOMASHEKAR

STRONG GROWTH: S. Gopalakrishnan, CEO and Managing Director, Infosys, at a press conference in Bangalore on Friday.

BANGALORE: Infosys Technologies reported a 28.7 per cent year-on-year growth in income for the quarter ended June 30, 2008, earning Rs. 4,854 crore. The profit after tax has increased by 20.7 per cent to Rs. 1,302 crore. Earnings per share went up by 20.4 per cent to Rs. 22.75.

The company explained that the net profit included a reversal of tax provisions amounting to Rs. 31 crore. Excluding this reversal, earnings per share would have been Rs. 22.20.

Explaining the company’s strategy, CEO and Managing Director, S. Gopalakrishnan, told reporters here on Friday that, “The uncertain global economic environment could affect IT spending in the near term but we also see opportunities as customers focus more on improving efficiency and look for global delivery models as we offer”. More business with manufacturing, BFSI (banking, financial services, insurance) and retail sectors has sustained the growth, he added.

Infosys added 7,182 employees for the quarter ended June 30, taking the total headcount to 94,379 employees. When other IT firms have been reducing their bench strength to increase efficiency, Infosys said its hiring has been as planned.

The consolidated income rose to Rs. 4,854 crore in the June quarter from Rs. 4,026 crore in the year-ago period. Despite global uncertainties, the IT bellwether expects its income to grow by 27.4-28.4 per cent in September quarter to Rs. 5,229-5,272 crore.

The growth of the Indian software services sector slowed last year with the sudden change in the rupee-dollar equation and the subprime crisis. Infosys believes that the currency market would remain volatile in the short-term, company’s Chief Financial Officer, V. Balakrishnanan, said. However, margins for the quarter were impacted due to increase in salary and visa costs which to some extent were offset by rupee depreciation, he said.

Q2 guidance

The guidance for the next quarter and the current fiscal reflected “cautious optimism” and some price negotiations were on, mainly with banking and financial sector clients, he said. The Finacle universal banking solution, had won a strategic worldwide partnership with BBVA, among the top 15 banks and large orders from a major bank in the Asia-Pacific region.

Chief Operating Officer, S. D. Shibulal, said, “Our operating margins came down by two per cent, due to factors such as currency exchange volatility. We incurred additional expenditure to expand office space, salary hikes and visa costs. But, outsourcing revenues grew and our geographical spread now is 52 per cent sales in the U.S. and 28 per cent in Europe. We are trying to improve the utilisation rate, now 70 per cent, this should reflect in the second quarter”.

Mr. Balakrishnan, said, “At a time when most corporates are scaling down their IT budgets, we added 49 new clients. Infosys has cash and equivalents of Rs. 7,564 crore, cash flows actually increased to Rs. 1,249 crore.”

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