iGate posts higher revenues, profits next year

By siliconindia staff writer   |   Thursday, 22 January 2004, 08:00 Hrs
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BANGALORE: iGate Global Solutions has reported a 46% spurt in revenues during the third quarter (Q3) ended December 31 at Rs 142.8 crore as against the corresponding period last year (Rs 97.7 crore). However, the company posted net losses to the tune of Rs 2.56 crore on a consolidated basis as against Rs 3.56 crore net profits made last year, mainly due to the Rs 87 crore Quintant buy-out.

Phaneesh Murthy, chief executive officer at iGate stated that the company will be able to wipe out losses in the next fiscal year. “By April we will be able to give an earnings guidance for the first quarter next fiscal which will give a clear idea on when the company will report net profits. I hope to achieve this within the next fiscal year.’’ Murthy said.

However, market analysts were less optimistic about the company’s performance as the operating margins declined substantially due to pricing pressures since IGS IT services business has reported a measly 3.17% operating margins as against 8.1% last year. “The company may not come back to profits even next year since the gestation period for BPO outfits is quite long and Quintant impact would continue till 2005 end, “ said an analyst. The company has also finalised a corporate and capital realignment plan whereby it plans to fully acquire Quintant Services through an all-stock deal.

The company has also dropped a capital restructuring proposal with iGATE Global Corporation, its US parent, with the domestic firm Igate Global Services citing huge tax implications. iGATE will also acquire Symphony Interactive from iGATE Corporation for which an independent valuer will be appointed soon. Symphony has a strong client base of 140 clients in global securities business which would open up opportunities for iGATE’s plans for focusing on financial domain space. “This acquisition will be complete in another three months,” Murthy said.

Murthy vehemently denied all market rumours regarding a domestic buy-out. “We are currently consolidating our acquisitions and certainly there are no plans at the moment,” said Mr Murthy. The company added 16 new clients in this quarter including Gedas group, the IT subsidiary of German auto major Volkswagen and renewed GE contract, which contributes over 40% of IGS revenues.

(Source: Economic Times)

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