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Satyam Q2 net down 11 per cent — Other income drop, expenditure blamed

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HYDERABAD, Oct. 23

SATYAM Computer Services Ltd today reported a net profit of Rs 118.16 crore for the second quarter ended September 30, 2002, which is down 11 per cent from Rs 134.08 crore during the corresponding quarter of the previous year. This decline has been attributed to a drop in other income and increase in expenditure.

The total income rose to Rs 505.05 crore (Rs 453.50 crore) while, for sequential quarters, the company's revenues grew 7.62 per cent and the growth in software services revenue in dollar terms was 8.39 per cent. The company has maintained revenue guidance at 18 to 20 per cent growth for the whole year in dollar terms, and projected an income of Rs 525 crore - Rs 540 crore in the third quarter.

While declaring an interim dividend of 40 per cent, the company has lowered the earnings forecast (EPS) to Rs 16.06-16.26 from Rs 17.10-17.50. This is inclusive of Rs 0.46 on account of gain on sale of Satyam's stake in the Satyam GE joint venture. The EPS last year was Rs 15.78.

Commenting on the results, the Chairman of Satyam Computer, Mr B. Ramalinga Raju, said that the company benefited from the higher offshore business, even as global IT services companies were affected by the challenging market scenario. This trend was likely to continue and gain momentum.

Mr Raju said, "The proposed $20 million investments by Softbank Asia Infrastructure Fund and Venture Tech will pave the way for reduction of Satyam's stake in Satyam Infoway (Sify) to about 35 per cent. Following this development, Sify will cease to be a subsidiary of Satyam. With fresh fund infusion, Sify will be able to consolidate its leadership and turn profitable. Once the Sify stake process is concluded this year, I will step down as the chairman of its board."

During the quarter, the company recorded a net income of Rs 14.55 crore from the sale of its 50 per cent stake in Satyam GE Software Services, a joint venture with GE. Excluding this income, the company recorded a net profit of Rs 103.61 crore, thereby resulting in an EPS of Rs 3.70 on par value of Rs 2 per share.

US GAAP: Under the US GAAP, Satyam recorded total revenues of $116.30 million for the quarter ended September 30 reflecting an increase of 13.26 per cent over $102.68 million during the corresponding period last year.

While the revenue was sequentially up 9.44 per cent, net income was pegged at $13.21 million compared to net loss of $ 37.63 million.

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