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Fall in BT revenue has Tech Mahindra net rising just 7.4%

The company's income from operations rose to Rs 1,444.87 crore during the quarter under review as against Rs 1,211.14 crore in the same period last year.

Mumbai: Tech Mahindra Wednesday reported 7.4 percent rise in net profit to Rs 276 crore for the third quarter ended December 31 and said gains from rupee depreciation were off-set by fall in revenues from British Telecom (BT), which holds stake in the Indian IT firm.

"The rupee depreciation and currency tailwinds helped us. But the impact was not felt because revenues from British Telecom went down. We also had a few projects in transition," Tech Mahindra Vice-chairman, Managing Director and Chief Executive Vineet Nayyar said here.

In the third quarter of the last fiscal, the company had reported net profit Rs 257 crore. The Mahindra Group firm said its profit in both the quarters are not comparable as the figures in respect of 2010 did not include its share in the profit of its fully-owned subsidiary Satyam Computer.

"We have bagged a large outsourcing deal related to telecom from Australia. We can see similar opportunities coming up in Qatar and Indonesia. Growth from Europe has come down, but this is merely a periodic cycle," he said.

The company's income from operations rose to Rs 1,444.87 crore during the quarter under review as against Rs 1,211.14 crore in the same period last year.

Nayyar said he expects the European crisis to result in more business opportunities for the company, which makes software and billing systems mostly for the telecom industry.

"The company's business deal with Etisalat is protected by a bank guarantee. It is also a global cash-rich company which operates in several countries. We have to wait and watch what Etisalat's options are here and if cancellation of the (2G) licences will affect them in any way. But at the moment, we continue to do business with them," he said.

He said the drop in Ebitda margin is largely due to challenges with large customers and also because the company's capacity utilisation was lesser than last year. Meanwhile, M&M chief executive for automotive division Pravin Shah said at the launch function in Mumbai,
“The new Xylo marks the sixth new launch from the Mahindra stable this fiscal."

When asked if the new model that comes with a slew of added features, including the industry's first voice command system, will eat into sales of the XUV500, which has logged in a demand of nearly 34,000 units since the launch late September, he said he is not worried about "cannibalisation".

“If at all some sort of cannibalisation happens, that's fine with us as long our products are sold," he said.

The new Xylo claims mileage of up to 14 km a litre and is packed with over 50 styling changes. It also offers better torque and higher power at 120 Bhp while the Innova offers only 105 Bhp.

On export plan, Shah said, the first focus will be the right-hand drive markets, beginning with South Africa shortly, where it has made the global launch of the XUV500, followed by Latin America markets. However, he did not specify the timeframe.

Already, the Xylo which enjoys nearly 60 percent market pie in the under-Rs 8 lakh SUV segment, has share of 27 percent in the overall SUV segment, after the Innova.

Since the launch in January 2009, the Xylo has gone on to become one of most successful marketing success stories, selling as many 90,000 units.

"The company will stop production of the old Xylo and the new model is available in the market from Wednesday almost across the country, barring the high-end E9 variant," senior marketing vice-president for Xylo and Bolero Vivek Nayyar said.

The most salient feature is the voice command technology (to control headlamps, doors, wipers, etc) and 15 security warnings in the top-end E9 model apart from the advanced mHawk engine.

"This technology is adopted for the first time ever in the auto industry in the country, probably in the world, and has been developed in-house and is patented," Shah said.


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