Mastek posts loss in Oct-Dec on goodwill impairment
Second tier software services firm Mastek Ltd on Tuesday posted a loss in Oct-Dec, hurt by a goodwill impairment charge and higher depreciation at one of its facilities, sending its shares down 9% to a 20-month low.
January 19, 2011 / 18:35 IST
Second tier software services firm Mastek on Tuesday posted a loss in Oct-Dec, hurt by a goodwill impairment charge and higher depreciation at one of its facilities, sending its shares down 9% to a 20-month low.
Mastek, which follows an April-June financial year, took a goodwill impairment charge of Rs 20.7 crore due to its acquisition of Vector Insurance Services in July 2007."If you knock that off, it will actually reduce the loss by almost 50%," Chairman and Managing Director Sudhakar Ram told Reuters.The earnings were also impacted by higher depreciation of Rs 2.4 crore, with effect from July 1, 2010, pertaining to its facility at a special economic zone near Chennai.Mastek posted a consolidated net loss of Rs 27.66 crore compared with a year-ago profit of Rs 23.54.A Reuters poll of brokerges had estimated that mid-tier IT companies are likely to present a mixed bag of earnings in Oct.-Dec. as competition and the rupee's appreciation against the dollar weigh on margins.Total income of Mastek, which has a 12-month order backlog of Rs 296 crore, declined 21.2% on year to Rs 1.52 crore, as revenue from North America and Europe declined."The UK revenues have been marginally lower, but that's the way we see it right now and we hope it will pull back from next quarter onwards," Ram said.Revenue from North America fell 17%, while revenue from Europe declined 26%.Mastek, which caters to the insurance, government and financial services verticals, said is scouting for acquisitions of intellectual property."We have not shortlisted a target or any specific acquisition, but our focus will remain on the insurance vertical," Ram said.The company will look at an acquisition of USD 20 million to USD 30 million, he added.At 2.52 pm, shares of the company, which the market values at Rs 4.68 crore, were trading down 4.58% at Rs 165.70 in a firm Mumbai market. Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
