Mahindra Satyam posts profit of Rs 23 crore for Q2

The firm posts profit of Rs 23.30 crore for the July-Sept quarter this fiscal, down from Rs 97.5 crore in the previous quarter as wage hikes squeezed margins.

Mahindra Satyam (formerly Satyam Computer) on Monday posted consolidated profit of Rs 23.30 crore for the July-September quarter this fiscal, down from Rs 97.5 crore in the previous quarter as wage hikes squeezed margins.

In September this year, the company posted its first results since its Satyam founder chairman B Ramalinga Raju confessed in January 2009 that overstated profits for years, which blew the lid off a multi-crore rupees accounting scam.

The company has since been acquired by Tech Mahindra and rebranded it as Mahindra Satyam. The new promoters had sought time to declare the audited results.

Company Vineet Nayyar said the challenges for the company are not yet over.

"We are still at a cusp. You will see, in absolute terms, legal challenges, class action suits, which we will face. There is a challenge of competition and stigma hangover too," he said.

"The dip in net profit in the second quarter was on account of employee costs...The company gave pay hike of 15 per cent in the second quarter," Mahindra Satyam Chief Financial Officer S Durgashankar said.

Revenue for the first quarter stood at Rs 1,248 crore, while in the subsequent three-month period, the revenue was Rs 1,242.40 crore.

Mahindra Satyam's headcount has gone up from 27,722 at the end of June 2010 to 28,068 at the end of September quarter.

On attrition rate and hiring plans, Nayyar said the attrition level is at 25 per cent, while the utilisation rate was at around 71 per cent.

"We are looking at hiring about 5,000 young graduates from management and engineering schools, for next financial year. To meet our regular business requirements, our HR team will be hiring about 4,000 professional in the next six months," he added.

However, he added that the company is rightly poised and the next two years, the business will flourish.

"Our performance over the last two quarters clearly reflects the stability that has been brought in. The level of growth and recovery will be gradual in the next two quarters," Mahindra Satyam CEO C P Gurnani said.
He said the company had added nine new clients in the first half of the ongoing fiscal.

Tech Mahindra, which bought Satyam in April 2009 and is operating it as an independent company, said consultation (for merger of Mahindra Satyam) with Tech Mahindra with board members of both the companies has started along with the process of legal consultations.

"Our earlier indication that the process of merger will begin by November 15, is bit fast. We will not be in position to set date when Mahindra Satyam and Tech Mahnidra will go to their boards recommending a merger," Nayyar said.

Mahindra Satyam had reported a net loss of Rs 1,250 crore for the year ended March 2010, giving a first view of its financials almost two years after the scam broke out.

The company had registered a net loss of Rs 124.6 crore in FY2009-10 on a turnover of Rs 5,481 crore.