Genpact net dips 6% on forex loss

NEW DELHI: India’s largest back office support provider Genpact expects profit margins to improve in the second half of the year and reaffirmed its forecast of 14-17% revenue growth for the fiscal year ending December 2010 even as the growth in Europe looks uncertain.

The company posted 6.2% drop in net income to $27.8 million for the second quarter ended June even as revenues increased 12.7% to $307.6 million. Slower growth in profitability was mainly due to forex losses, that more than doubled to $4.8 million during the quarter, besides increased working capital requirements.

“Investments in business development, smart enterprise processes and India business besides foreign exchange volatility had impacted our profit margins during the quarter,” said Genpact chief executive Pramod Bhasin. The overall growth outlook is positive and deal pipeline is healthy, he said.

Genpact’s global client revenues or business from clients other than GE, grew 16.9% over the year ago period, representing 61.7% of the company’s total revenues. Revenues from GE, increased 7.3% over last year.

Genpact generated $10 million of cash from operations in the first half of 2010, down 85% over the previous year. The decline was primarily due to incremental working capital requirements related to the acquisition of Symphony Marketing Solutions, deposits for infrastructure investments, increase in accounts receivable and reduction in current liabilities. In a bid to expand global footprint, the company is looking to foray into new geographies including Brazil and the Middle-East.

The company will continue to focus on sectors such as pharmaceuticals, telecom and financial services, Mr Bhasin said.