Tech Mahindra on Friday reported a massive 91.6 per cent spike in consolidated net income for the first quarter at Rs 276.5 crore on the back of a massive revival of its subsidiary Mahindra Satyam, but warned of more downside risks to growth going forward.
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Explaining the downside risks to growth and margins, Tech Mahindra Vice-chairman, MD & CEO Vineet Nayyar told reporters in Mumbai that the biggest threat to revenue may come from its largest client BT Group (also known as British Telecom), which is seeking bids from rivals.
"The BT Group, which accounted for 40 per cent of our revenue in the April-June period, is seeking bids from other technology companies for projects currently being done by Tech Mahindra. This could lead to the company losing business from BT," Nayyar said.
Tech Mahindra and BT are still partners and the British company still owns 24.4 per cent in the Mahindra group company.
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Company chairman Anand Mahindra said, "We will continue to build our business portfolio at a measured pace, despite low discretionary spends in the telecom vertical. This has been enabled by our diversification into new geographies and customers".
Explaining the reason behind the profitability, Nayyar said, "We have aligned ourselves with changing customer priorities and needs, which has helped us navigate in these volatile times. Our continued focus on core competencies has enabled us to show sustained growth across our key clients and geographies. The changing macroeconomic conditions could pose new challenges which we are closely monitoring".
The massive rise in profit has been largely driven by the turnaround of its fully-owned subsidiary Satyam, the company said, warning that the volatile economic environment as well as the ongoing probe into the telecom sector may pose some challenges to growth.