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HCL Tech net weighed down by forex losses

HCL Tech net weighed down by forex losses
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First Published: Fri, Aug 01 2008. 10 58 PM IST
Updated: Fri, Aug 01 2008. 10 58 PM IST
New Delhi: The country’s fifth biggest software services company by revenue, HCL Technologies Ltd, reported a 17% drop in net profit for the year ended 30 June to Rs1,124.80 crore, as the company was weighed down by foreign exchange losses.
Large, multi-year business contracts signed in the previous years helped boost revenue by 26.6% to Rs7,639.40 crore, from the previous year’s Rs6,033.60 crore. The company had a foreign exchange loss of Rs306.70 crore in the year.
Some Indian computer services companies have been hit by foreign exchange volatility, after having hedged against the risk of the rupee extending last year’s 12.2% rally against the dollar.
A rising rupee lowers the local currency equivalent of dollar-billed earnings
But the rupee declined 7.2% in the quarter ended June, denting the profits of software makers, who had bet that it would rise.
HCL, based in Noida, near New Delhi, said it made a net profit of Rs141 crore in the April-June quarter, with foreign exchange losses at Rs299.90 crore. The quarter’s profit was 71.1% less than the year-ago quarter. On a sequential basis, net profit fell 58.9% in the April-June quarter from January-March.
HCL’s revenue for the June quarter rose to Rs2,168.80 crore, a year-on-year increase of 34.5% and a sequential growth of 11.5%
Earnings before interest, taxes, depreciation and amortization (Ebitda), a measure of the operational profitability of a business, for the fiscal year was at Rs1,639.90 crore, a year-on-year growth of 26.7%. Ebitda for the April-June quarter was Rs508.40 crore.
“Our Ebitda margins are moving upwards because of three factors,” said Anil Chanana, executive vice-president (finance). “We’ve been driving our utilization across the last three years to 73.9%; we’re seeing growth from higher business orders and realizations from new sectors; and our productivity from large contracts signed two-three years ago is starting to kick in, with significant realizations.”
HCL remained optimistic about the coming year, in spite of an economic slowdown. “From the opening score this year, our deal flow is looking promising—the size of the pipeline is very healthy, and a lot of deals, subject to realization, can be expected,” said Vineet Nayar, chief executive officer at HCL Technologies, declining to give a forecast.
Shares of HCL Tech ended at Rs207.25 before the announcement of the results on Friday, up 3.44% on the Bombay Stock Exchange, whose benchmark index expanded 2.1%.
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First Published: Fri, Aug 01 2008. 10 58 PM IST