Profits impacted due to falling rupee: Infotech CMD

Infotech Enterprises' net profit fell by 22% to Rs 50.3 crore in the second quarter of current financial year 2012-13 from Rs 64.7 crore in the previous quarter. BVR Mohan Reddy, CMD, Infotech Enterprises, tell us the reasons for the decline.

Below is the edited transcript of Reddy's interview with CNBC-TV18. Q: What did you do in terms of revenues and profits this quarter?
A: Our revenue for the last quarter was Rs 477 crore. That is about 4.5 percent growth compared to the previous quarter in rupee. It is about 28.1 percent growth compared to the previous year. But on constant currency terms we grew about 3.6 percent and our volume growth was 3.9 percent and there was a price decrease of 0.3 percent.
We have certainly grown by 3.6 percent compared to the previous quarter in terms of constant currency. In terms of our operating profit we are flat at 18.7 percent which is USD 89.2 million. Our net profit is Rs 50.3 crore and primarily the profit after tax being impacted because of the foreign exchange challenges we had in terms of writing down our receivables, because if you recall on the 30th of June the rupee-dollar exchange was at 56.31 whereas on 30th of September it was 52.70. We did mention that even though they are notional losses, but otherwise the profit was about Rs 50.3 crore. Q: There is a fear in the market that this time around for FY13 the dollar revenue growth could be at the lower end of the National Association of Software and Services Companies (NASSCOM) range which is about 11-14 percent odd which means you might come closer to 11 percent versus the earlier expectation of beating the NASSCOM guidance and coming in with growth of close to about 15 percent odd. What is the expectation? What will be the plan for the entire year?
A: We have already said that we will be under the NASSCOM guidance of 11 to 14 percent, but we were at the lower end of the NASSCOM guidance. Therefore, it need not be just 11 percent, but the lower end could mean even beyond 11 percent. So our expectation at this point of time is fairly high and we are confident. We have redone our numbers for next two quarters, that is Q3 and Q4 and we believe that we will be in a position to be at the lower end of the NASSCOM guidance. Q: What about your margins? What have you done in terms of operating profit margins this time around and what are you hopeful of delivering by the time FY13 closes up?
A: We delivered 18.7 percent for the current quarter which was the same as the previous quarter. The expectation could have been slightly higher than the last quarter, because last quarter the wages were increased. But our on-site revenues grew considerably during the current quarter and we also had a couple of one-time costs. So the result is that the operating margins remain flat, but we are hoping that we will be in a position to maintain at least 18.7 percent if not improve on these numbers for Q3 and Q4, which means by the end of the financial year FY13 we will be at least 18.7 percent if not more.