Infosys, on Friday, reported revenues of $6.99 billion for 2011-12, but missed its full-year guidance for the first time in almost two decades. In rupee terms, revenues increased by 22.7 per cent to Rs.33,734 crore during the year from Rs.27,501 crore in the previous year.

Revenues in the last quarter ending March 31, 2012 amounted to Rs.8,852 crore, an increase of 22.1 per cent over the corresponding quarter of the previous year. Revenues slipped by almost 5 per cent on a sequential basis.

Extreme volatility

Infosys CEO and Managing Director S. D. Shibulal blamed the below-par performance on ‘an unusual convergence of multiple events'. Delayed contract closures with clients, especially towards the end of the year, the ‘slow ramp-ups' of operations that had been planned on the basis of deals that had been closed earlier, and ‘a ramp-down' of orders, especially by clients offering financial services in North America, were responsible for the company's relatively poor showing during the fourth quarter as well as the full financial year, he said. Striking an ominous note, he warned that the global environment for outsourcing continued to be characterised by “extreme volatility and delayed decision-making.” The company reported a net profit of Rs.8,316 crore in the full year, an increase of 21.9 per cent over the previous year. The net profit in the fourth quarter amounted to Rs.2,316 crore, an increase of 27.4 per cent on an annualised basis.

However, on a sequential basis, the net profit in the fourth quarter fell by 2.4 per cent, an indication of the ‘challenging environment' faced by the company.

Mr. Shibulal attributed the challenges to the ‘zero-based budgets' adopted by clients, which resulted in a ‘month-to-month spending philosophy'. There was a disconnect between companies' profitability and their IT spend, he remarked.

During 2012-13, the company expects revenues to grow by between 13.9 per and 16 per cent in rupee terms and by between 8 per cent and 10 per cent in dollar terms.

Admitting that this range was below the industry average of between 11 and 14 per cent projected by the National Association of Software and Service Companies, Infosys Chief Financial Officer V. Balakrishnan, said: “We will review the guidance towards the middle of the year, but time will tell whether our projections have been more realistic.”

During the first quarter ending June 30, 2012, rupee-denominated revenues are projected to increase by between 20.4 per cent and 21.6 per cent, implying a revenue range of between Rs.9,011 crore and Rs.9,100 crore.

To add 35,000 jobs

The company plans to add 35,000 people to its 150,000 workforce during the current year, including 1,200 local recruits to work onsite in North America.

Referring to the large stockpile of cash with the company, Mr. Balakrishnan said the company might use it for making ‘strategic acquisitions'. “This is a volatile period, not a time for considering wage increases,” he remarked.

Special dividend

The board of directors recommended a final dividend of Rs.22 a share for 2011-12 and a special dividend of Rs.10 a share on account of completion of ten years of BPO operations.

It had already paid an interim of Rs. 15 per share in October last year.

The shares of Infosys tumbled by Rs. 346.75 (12.61 per cent) to close at Rs. 2,403,.30 on Friday against the previous close of Rs. 2,750 on the Bombay Stock Exchange.

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