Patni Q1 consolidated net falls 7.7%

By agencies   |   Wednesday, 26 April 2006, 07:00 Hrs
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MUMBAI: One of IndiaÂ’s largest IT firm, Patni Computer Systems Ltd. today reported a 7.7 percent drop in quarterly net profit on higher costs and a one-time charge, and predicted rising wages would keep its profits under pressure.

The net profit for 2006 would be lower than the original estimate of $85.5-88.5 million as salary increases and higher U.S. visa costs for onsite workers push down margins, Chief Financial Officer Deepak Sogani said.

Consolidated net income for the first quarter to March stood at $14.44 million, compared with $15.64 million a year ago. Revenue grew 30.6 percent to $129.85 million.

"We have to work on improving our productivity during the year," said Sogani.

The New York stock exchange listed company took a one-time charge of $2 million on account of professional fees, foreign exchange loss from an overseas issue and previous tax charges.

In December 2005, Patni raised $139.84 million through the issue of American Depositary Shares.
During the quarter, Patni added 20 new clients, Sogani said adding the company's revenue maintained its momentum and the customer base has widened.

The latter half of 2006 would be better for the company when it expected costs to soften, he added.
"In the third and fourth quarters there will be a pick-up in margins, with labor costs going down."

Patni plans to spend nearly $90 million in the current year to expand offshore infrastructure in India, Sogani said. The company spent a similar amount on expansion last year.

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