The Hindu : Infosys results on track with earlier guidance

Online edition of India's National Newspaper
Friday, Apr 11, 2003

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Business

Infosys results on track with earlier guidance

By Our Staff Reporter

BANGALORE APRIL 10. In line with its previous estimates for the year ended March 31, 2003, Infosys recorded a 39 per cent growth in income at Rs. 3,622.69 crores (Rs. 2,603.59 crores). For the fourth quarter ended March 31, 2003, the IT juggernaut posted an income of Rs.1,019.85 crores, a 49.95 per cent increase over the previous year's corresponding quarter. "We have met (earlier estimates) and in revenue terms exceeded our guidance.... in a challenging environment which is uncertain we have met the goals that we set,'' Nandan M. Nilekani, CEO, Managing Director and President, Infosys Technologies Ltd., said.

While the net profit for the fiscal stood at Rs. 957.93 crores (Rs. 807.96 crores), for Q4 this was Rs. 259 crores (Rs. 210.33 crores), reflecting a growth of 18.5 per cent and 23.1 per cent. A final dividend of Rs. 14.50 on each share of Rs. 5 (290 per cent on a par value of Rs. 5 per share) was recommended by the company. However, pricing pressures continued with a 5 per cent impact during Q4 coupled with fall in net margin. "We are managing costs to meet margin challenges,'' explained Mr. Nilekani. An interim dividend of Rs. 12.50 per share (250 per cent) was paid.

Onsite business and fixed price projects have increased this fiscal with the onsite-offshore revenue split at 54.7 per cent to 45.3 per cent. Last year, the ratio was 50.8 per cent to 49.2 per cent respectively. "The global delivery model has become mainstream as offshore outsourcing gains momentum,'' he added. In this regard, Infy has bagged 28 new clients including TeliaSonera, Nextel Partners Inc and Bank of Bahrain. As usual, the financial services segment was the growth driver for the IT firm contributing revenues of Rs. 1,355.94 crores (Rs. 953.98 crores) followed by the manufacturing segment with revenues of Rs. 597.84 crores (Rs. 445.94 crores). The banking business unit's performance at Rs.175 crores in revenues saw the division increase its head count to 572. Overall, the company recruited 1,298 people (net additions) during Q4 vis-a-vis 948 the last quarter with gross additions at 1,539 of which 363 were lateral employees.

"Infosys has increased its total employee strength to 15,356 as on March 31, 2002, up from 14,058 people during the third quarter. This is the highest addition in the history of Infosys,'' Hema Ravichander, Head-HR, Infosys, said. Utilisation rates including trainees were 77.8 per cent for the quarter and 77.6 per cent for the fiscal 2003. The company plans to hire 800-1000 employees during the first quarter of 2003-04.

Meanwhile, Progeon, the BPO outfit of Infosys also plans to hire 100-200 people to enable this division provide services to BT, its new client. "We have bagged a substantial five-year contract from BT,'' Akshaya Bhargava, MD and CEO, Progeon, said. The BPO unit broke-even this year with revenues of Rs. 90 lakhs for the fourth quarter. The unit added one client during the quarter with net addition of 113 employees.

Infy's outlook for the fiscal ending March 31, 2004 projected income (non-consolidated) from software development services and products between Rs. 4,408 crores and Rs. 4,479 crores while earnings per share is expected to hover between Rs.161 and Rs.163. Consolidated estimates for 2003-04 were Rs. 4,484 crores and Rs. 4,565 crores in income and Rs.162 and Rs. 164 in earnings per share. "We have looked and analysed the macroeconomic scenario including the short term impacts like Iraq war and SARS virus, business expected from existing and prospective clients besides our competition to arrive at the outlook,'' remarked Infy CEO Mr. Nilekani.

According to Infosys, several client visits were cancelled due to the SARS virus prevailing in Southeast Asia and the war on Iraq affecting its business. "Since March 15, there have been no client visits to our campus. The war on Iraq and the SARS virus in Southeast Asia have led to cancellation of client visits,'' Mr. Nilekani said. Moreover four Infy employees working in Hong Kong have returned back to India due to health concerns, S. Gopalakrishnan, COO, Infosys, said. According to him, travel by employees to Singapore and Hong Kong have been hit. "It does have an affect on our business,'' he observed.

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