Mahindra Satyam Q3 profit drops 74% on Aberdeen settlement

Jan 31 2013, 22:03 IST
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SummaryDuring the quarter, Mahindra Satyam paid Rs 294 cr towards settlement of legal claims.

Software services provider Mahindra Satyam's net profit declined by 74 per cent to Rs 79.98 crore in October-December 2012 due to one-time charge for settling Aberdeen claim.

Its net profit stood at Rs 308.48 crore in the same period of previous fiscal.

During the quarter, Mahindra Satyam paid Rs 294 crore towards settlement of legal claims of Aberdeen. The provisioning for tax stood at Rs 112 crore in the quarter against Rs 79 crore in the year-ago period.

The company had agreed to pay USD 68 million to Aberdeen Global and 22 other funds to settle claims for alleged fraudulent misrepresentations.

"With the settlement of the Aberdeen suit, the external litigation issues now stand concluded, freeing us to focus even more on the business-ready solutions for our customers," Mahindra Satyam Chairman Vineet Nayyar told reporters.

Revenues increased 12.88 per cent from Rs 1,939.53 crore in the reported quarter from Rs 1,718.08 crore in the year-ago period.

Profit of Mahindra Satyam (erstwhile Satyam Computer Services) before exceptional items stood at Rs 374 crore.

The company had 368 active clients, while cash and cash equivalent stood at Rs 3,311 crore as of December 31, 2012.

Shares of the company closed down 2.3 per cent at Rs 119.90 on the BSE.

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On merger with Tech Mahindra, Nayyar said the issue is at penultimate stage and expected the merger to take place soon.

"On the merger front, we are hopefully at the penultimate stage and confident that this matter will be closed soon and we will operate as a combined entity in the near future. In fact defacto we have already doing that," he said.

Tech Mahindra took over reins of Satyam Computers in April 2009 and rebranded it as Mahindra Satyam.

Currently both the companies are awaiting respective High Court approvals for merger.

On market conditions Nayyar said though there are some positive indications, overall turnaround will take some more time especially in Eurozone.

Decision making cycles would continue to prolong as in 2012 as customers closely monitor the markets before making spends, he added.

Mahindra Satyam CEO CP Gurnani said most of the large customers in the US have declared a forced shutdown during the quarter as holiday.

"Currently America accounts for 53 per cent, Europe 24 per cent and Rest of the World is 24 per cent. I personally see that this trend would continue for some time,"

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