IT firm iGate posts 9% net profit decline

Nasdaq-listed IT firm iGate posted a 9 per cent net profit decline to $31.6 million for the first quarter ended 31 March, 2014 as against a net profit of $34.8 million in the corresponding quarter last fiscal, the company said in a statement.

Ashok Vemuri, president and CEO of iGate, attributed the fall in profit mainly to a one-time cost of $7.5 million for US visas as the company continued to a steep rise in its North America business.

The net profit decline was also expected to drag in the second quarter results too due to investments in areas like capex, IT infrastructure, hiring of resources and building platforms and solutions.

However, Vemuri was content that the return on investment in these activities was faster than expected, as could be seen in the EBITDA of $75.2 million, as against $65.5 million in the corresponding quarter last year.

The company posted a 10 per cent rise in net income at $302.2 million in the reported period, against $274.9 million in the January-March 2013 quarter.

Favourable growth in North America and Europe, accounted for much of the increase even as depreciation in the Canadian dollar (a geography where it has significant presence) took away 0.9 per cent of the company's topline.

Meanwhile Vemuri told Business Standard in an interview that in the past quarter, the company had a cost of $7.5 million with regard to visas. He said as the company continued to see a rise in US business, it had to bear the costs as well.

Replying to a question as to how the verticalised structure, which had been adopted by the company in the last quarter, done, he said the journey towards verticalisation was about 90 days old and he was extremely pleased with the way his team had adopted the new structure.

He added, more importantly, his clients had reacted quite positively to that and the company was today where not only did it have business leaders to run the teams with profit and loss mandate, the critical thing was that that the company had the right people to run these businesses.