Patni Computer Systems Limited (Patni) announced its financial results for the third quarter ended 30th Sep 2007. Revenues for the quarter at US$ 169.5 million (Rs. 6,735.7 million); Operating Income for the quarter at US$ 29.0 million (Rs. 1,151.4 million); Net Income for the quarter at US$ 27.6 million (Rs 1,097.8 million); Previous quarter saw higher fixed maturity treasury investments maturing during the quarter, resulting in a higher income and Acquired 31 new clients during the quarter. Number of active clients was 293 at quarter end as compared to 267 in Q2 2007. +Q4 2007 revenues are expected to be in the range of US$ 170 - 171 million and net income (excluding the foreign exchange gain/loss) is expected to be in the range of US$ 17.0- US$ 17.5 million at a constant $ value of Re. 39.8 per US $ for the quarter.

Corporate developments in Q3 2007 are Completed the acquisition of Logan-Orviss International; Acquired New Jersey based Life Sciences Services Company, Taratec for $27 million; Acquired an Intellectual Property(IP) from UK-based The Carphone Warehouse, with over 2000 stores in ten countries. Signed a US$ 200 million multi year outsourcing deal with The Carphone Warehouse and Appointed Mr. Rajesh Padmanabhan as Executive Vice-President to head the Company's Global Human Resources function. 

Revenues during the quarter were at US$ 169.5 million (Rs 6,735.7 million) representing sequential increase of 3.7% and 11.7% on YoY basis. 31 new clients were added during the quarter. Gross margins were at 30.9% as compared to 32.2% in Q2 CY2007. Gross profit on absolute basis in Q3 CY2007 at US$ 52.4 million (Rs 2,082.0 million) was lower by 0.5% sequentially and 1.4% YoY. Overall sales and marketing costs were lower at 6.5% of sales, US$ 11.0 million (Rs. 436.8 million), as compared to $11.9 million (Rs. 481.4 million) or 7.3% in the previous quarter. The decrease is due to period cost change.Normalized G&A cost for the quarter in line with previous quarter.  The Foreign exchange gain for the quarter was US$ 7.5 million (Rs.296.4 million) on account of mark to market of forward contracts , revaluation of debtors and tax liabilities, as compared to a similar gain of US$ 8.6 million (Rs 347.8 million) in Q2 CY2007. The quarter end rate for debtors revaluation was Rs 39.85.  Outstanding contracts at the end of Q3 of about US$ 175 million contracted  in the range of Rs. 41.87 to Rs. 46.44.

Operating margin was at 17.1%, US$29.0 million (Rs 1,151.4 million) against  19.8%, US$ 32.4 million (Rs 1,313.5 million) for the previous quarter. This includes forex exchange gain on hedging. Operating margins Ex-forex was at 12.7%  ( 14% excluding one time charge ) compared to 14.6% in the previous sequential quarter. Operating Income grew 15.5% on YoY basis as compared to $25.1 million (Rs 1,152.7 million) in the corresponding quarter last year. On Ex-forex basis Operating income declined by 18.4% driven largely by forex change duing the year

Profit before tax for the quarter was at US$ 32.6 million (Rs. 1,295.8 million) as compared to US$ 39.4 million (Rs. 1,600.2 million) during previous quarter. Income tax for the quarter was at US$ 5.0 million (Rs 198.0 million) at 15.3%  effective tax rate on profit before tax lower than the previous quarter effective tax rate of 15.8%. Consequently, net income for the quarter was at US$ 27.6 million (Rs 1,097.8 million) ( US$ 29.8 excluding onetime charge) , as compared to Q2 CY2007 net income of US$ 33.2 million (Rs 1,347.5 million).  Increased focus on margin improvement during previous few quarters resulted in a YoY increase in net income by 23.9% ( 33.8% excluding one time charge)  as compared to corresponding quarter of last year.

During the quarter, against net income of US$ 27.6 million (Rs 1,097.8 million), cash from operating activities was at US$ 39.8 million (Rs 1,583.6) net of changes in current assets and liabilities of US$ 7.0 million and non cash charges of US$ 5.2 million. These non-cash charges comprise of depreciation and amortization of US$ 7.7 million and other charges of US$ (-) 2.5 million.  Net Cash used in investing activities was at US$ 57.9 million (Rs 2,301.8 million) which include net capital expenditure of US$ 35.0 million (Rs 1,390.6 million), net investment in securities at US$ 1.7 million (Rs. 66.3 million) and investment in affiliates of US$21.3 million (Rs 844.8 million).

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