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July 21, 2009

Tech Mahindra Q1 profit plunges 46%

Due to interest costs on borrowings

By CBR Staff Writer

Software exporter Tech Mahindra has reported a 46% drop in its net profit for the first quarter of 2010, due to interest costs on borrowings it took to buy Satyam Computer Services.

The company posted a net profit of INR1.4 billion, down from INR2.59 billion, compared to the same period last year.

For the first quarter of 2009, the company reported revenue of INR11.13 billion, down from INR11.16 billion for the same period of 2008. Revenue was up 5.9% compared to fourth quarter of 2009.

Anand Mahindra, chairman of Tech Mahindra said, “This has been a momentous quarter which has redefined Tech Mahindra’s positioning in the marketplace. Not only has our leadership position in telecom been reinforced, but our presence has expanded across other industry verticals as well.”

The company has raised debt to acquire Satyam Computer Services, now Mahindra Satyam. The company holds 42.70% shares in Mahindra Satyam. It has a debt of INR23.8 billion as of June 30, 2009.

Geographically, the US revenue accounted for 29% of the total revenue while Europe accounted for 61% and rest of the world contributed 10%.

Vineet Nayyar, vice chairman of Tech Mahindra said, “Communications and connectivity is the backbone of every enterprise. The combination of Tech Mahindra and Mahindra Satyam now enables us to address the wider enterprise market.”

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Tech Mahindra consolidated head count increased from 24,972 in March 2009 to 25,482 in June 2009.

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