Financial Daily from THE HINDU group of publications
Saturday, Apr 15, 2006
Corporate Results - Software
`Margins to remain stable'
The company has taken a forward cover of $6 million each in pound sterling and euro to cushion currency volality impact.
Bangalore , April 14
Infosys expects its operating and net margins to be largely stable in FY07, where it sees a stable pricing environment.
"We expect the margins to be largely stable," said Mr V. Balakrishnan, Company Secretary and senior Vice-President Finance, Infosys Technologies. The company saw a small uptick in the billing rates with onsite rates going up by 0.6 per cent, offshore by 0.3 per cent during the fourth quarter ended March 31, 2006 when volumes grew by 6.1 per cent, he said.
Infosys expects to spend between Rs 1,600-1,800 crore as capital expenditure during FY07, he said. The company totally spent Rs 1,090 crore as capex during FY06. As on March 31, Infosys had nine million sq ft of space seating 41,666 professionals and 5.3 million sq ft under completion for 20,200 professionals.
The company expects to effect a wage hike of 14-15 per cent for its offshore employees and a 3 per cent hike for its onsite employees, said Mr Balakrishnan.
The currency volatility had a 1.3 per cent impact on Infy's margins and 2.4 per cent on revenues during the fourth quarter, he said.
Infosys has taken a forward cover for $100 million and options for $210 million and has marked them to market, he said. The company has also taken a forward cover of $6 million each in pound sterling and euro denominated currencies, he said adding the company expects the rupee-dollar movement to be stable next year.
Further, Infosys expects to double its headcount in China to 1,000 by the year-end, said Mr S.D. Shibulal, head of sales and global delivery. The company currently has some 500 people as against the targeted 800-1,000.
Infy's Chinese operations are still making losses, he said, adding, "we hope to break even next year.''
The revenues from Chinese operations were around $5 million last year. "Our focus was on the local business. We have now started focusing on global business. We have aggressive growth plans for this year, and we are also recruiting locally," he added.
Mr Balakrishnan said Infy's consulting subsidiary, which is in an investment mode expects to break-even at the end of next year.
Infosys Consulting clocked a revenue of Rs 143 crore, while its losses were Rs 36.4 crore. The Australian subsidiary clocked a revenue of Rs 321 crore and made a profit of Rs 18.42 crore during the year.
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