Mahindra Satyam posts loss despite high sales and operating margins

Tuesday, May 24, 2011

Gulf News

Dubai Indian software services exporter Mahindra Satyam yesterday posted a net loss for its fiscal fourth quarter despite higher net sales and operating margins. The company attributed the net loss to a one-time exceptional charge to settle back-dated litigation.

The Hyderabad-based company agreed in February to pay $125 million (Dh459 million) to settle the US shareholder litigation and that it has made provision to cover any probable loss due to any further litigation even as action commenced by British firm, Upaid System, remains currently adjourned.

The company doubled its operating margin to 13 per cent in the quarter from the December quarter, its Chairman Vineet Nayyar said in a statement.

The company’s revenue rose 7.5 per cent to Rs13.75 billion quarter-on-quarter and Rs51.45 billion for the fiscal year (April-March).

The group’s net loss for the quarter ending in March stood at Rs3.27 billion compared with a net profit of Rs589 million reported in the December quarter for Satyam Computer, which was bought by Tech Mahindra and renamed Mahindra Satyam.

“The fourth quarter results in the Middle East and North Africa region were very good. We recorded around $12 million from the region, registering a year-on-year growth of around 50 per cent compared to $8 million last year,” Bobby Gupta, vice-president and head of Middle East and North Africa, Mahindra Satyam, told Gulf News.

He said, “We expect revenues from the Mena region to grow by 100 per cent this fiscal year compared to $45 million last year. The group recorded $30 million revenues from the region last fiscal year.

He said out of $12 million, around 40 per cent each comes from the UAE and Saudi Arabia and around 20 per cent from the other Gulf countries.

Mahindra Satyam, part of the $11.1 billion Mahindra Group, announced its first audited financial results for 2009-10 after its founder B. Ramalinga Raju admitted to massive accounting fraud in January 2009.

In November 2010 it announced its first quarterly result for the April-June quarter, the first time after disclosure of its July-September 2008 quarter earnings.

“We have around 80 customers in the region, of which 72 come from the Gulf countries. The company added six new clients from the region and 12 clients globally in the fourth quarter,” Gupta said.

We are currently working on a few contracts in the region and are optimistic about the region despite the political unrest.”

The UAE, Saudi Arabia and Qatar are the regions expected to grow this year, Gupta said and added that government spending is on the rise in the Gulf followed by the manufacturing sector due to high oil prices and stability in the region.

Regarding mergers and acquisitions, he said the group is in talks with two parties in Saudi Arabia and one firm in the UAE for joint ventures.

The US contributes around 60 per cent to the group’s growth followed by Europe with 25 per cent and the rest of the world with 15 per cent.

Mena contributes around 5 per cent to the group’s growth.

By Naushad K. Cherrayil?Staff Reporter