India Business
Infosys net jumps 70 percent but forecast slightly muffled
Apr 13, 2007 - 5:56:16 PM

Bangalore, April 13 - Beating market expectations yet again, India's number two IT exporter Infosys Technologies Friday reported a whopping 70 percent jump in net profits for the last quarter of 2006-07 at $267.4 billion even as it set a target of $4 billion in revenues for the current fiscal.

The company that ranks just behind Tata Consultancy Services in software exports said its net profits for 2006-07 were up 57 percent at $900 million thanks to an outsourcing boom, but warned that the growth could slowdown to 30 percent in the current fiscal due to firming rupee and higher wage bill and operational costs.

'The global IT services industry continues to show strong growth with exciting opportunities,' Nandan M. Nilekani, chief executive and managing director, in a statement, adding: 'Infosys is well positioned to take advantage of this.'

In a notification to the stock exchanges here, the company said along with an interim dividend of Rs.5 per share, or 100 percent on Rs.5 share, the final dividend for the whole fiscal would be Rs.11.50 per share, or 130 percent.

The decision to reward shareholders handsomely was taken by the company's board that met here to approve the financial results for 2006-07. The year before, the company had declared a silver jubilee dividend of 600 percent and a 1:1 bonus.

The impressive results and dividend announcement immediately resulted in Infosys shares rising as much as 3.8 percent on the Bombay Stock Exchange - and helped the 30-share sensitive index - of the bourse rise 2.1 percent.

The company also used the occasion to effect a shuffle of its management team and said Nilekani will be its co-chairman with effect from June 2.

The present chief operating officer -, president and joint managing director S. - Gopalakrishnan will be the new chief executive and managing director, while founder director S.D. Shibulal will be the new COO, the company said.

N.R. Narayana Murthy will continue to be the company's chief mentor and non-executive chairman.

'Kris is gentle but firm, consultative yet decisive and thoughtful yet action-oriented. Shibulal is smart, focused, detailed and target-oriented. I am sure Nandan, Kris and Shibu will together perform extremely well with the high performance team they have,' Murthy said.

'The board has felt having both an executive chairman and a CEO would best serve the global organisation, with Nilekani as co-chairman and Kris Gopalakrishnan as the CEO and managing director,' the notification said.

The company also said that its staff strength in the just-concluded fiscal year had risen to 72,241 employees, against 52,715 in the previous fiscal and that 30,946 new employees had been recruited during the year after attrition.

According to Gopalakrishnan, the outlook for the company remained positive since the fees for new contracts had risen four-six percent, while renewal of existing contracts had seen the fee go up two-three percent.

'The pricing environment is positive. It is a stable environment with an upward bias and we are seeing that on a quarter-on-quarter basis,' he told reporters after presenting the results.

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