KPIT Cummins continues the growth momentum

KPIT Cummins Infosystems Ltd has announced its results for the quarter ended June 30th, 2007, showing robust growth in all major markets and practice areas-especially Automotive Electronics & Semiconductor Solutions.

Robust Topline Growth
Total revenues for Q1FY08 were Rs. 1352.917 Million, reflecting a 32.30% growth over the revenues in same quarter last fiscal and 3.83% growth over the revenues of previous quarter. In USD terms, revenues over the last quarter grew by 5.4%.

Profits grow 22.59% yoy; Rupee appreciation + Wage rise bring margins under pressure
For Q1 FY08, the Company earned a Net Profit of Rs. 126.8 Million, a growth of 22.59% over the corresponding quarter in the previous fiscal but profits were lower by 9.77% over the preceding quarter-owing to rupee appreciation against the US Dollar & annual wage increments during this quarter.

Highlights of the Quarter
F&A BPO to be one more growth driver for KPIT Cummins

KPIT Cummins also announced today, that it has reached an understanding to partner with Cummins Business Services (CBS) for delivering F&A (Finance & Accounting) Services to Cummins. KPIT Cummins will benefit from the domain knowledge of global F&A systems and processes at CBS which it plans to take to other customers. This deal significantly strengthens KPIT Cummins's positioning in the F&A BPO services market for the Manufacturing vertical.

KPIT Revenues from this partnership are expected to be USD 1+ Million in the first full year with a potential to grow into a USD 15 Million BPO business annually in 60 months. This deal will generate about 55+M USD revenues over next 5 years. KPIT Cummins believes that a 5 year opportunity size of 90+M USD is available in this F&A space including business from non-Cummins customers. A separate joint press release giving details of this partnership is being issued along with this note.

Ravi Pandit says: Robust growth to continue; long-term outlook very positive

Commenting on the results, Mr. Ravi Pandit, Chairman and Group CEO, KPIT Cummins said, "This quarter witnessed a robust growth in revenues. However quarterly margins have taken a hit due to rupee appreciation and salary increments. Our fundamentals continue to be very strong and Cummins Business Services partnership in the area of F&A BPO adds one more strong scalable offering to our portfolio for the Manufacturing vertical. We look forward to consistent growth in quarters to come"

Kishor Patil: Bullish on key practice areas: Automotive, Semiconductor & F&A BPO

Expressing his views on the quarterly performance, Mr. Kishor Patil, CEO & MD, KPIT Cummins said, "All markets demonstrated predictable growth this quarter. We see good traction for Automotive & Semiconductor solutions as we continue our march to become the leader in this space. In last quarter, we added 3 marquee customers in Automotive & 2 in Semiconductor. We have 3 sizeable deals in Automotive expected to close in next 4-6 months. Pricing is stable with upward bias. Our 55+M USD F&A BPO partnership with Cummins is one more step in our endeavor to become partner of first choice for our global customer base"

Girish Wardadkar: Excellent Operational readiness for coming quarters

Mr. Girish Wardadkar, President & Executive Director said, "Last quarter we ramped our middle management by 250+ lateral hires globally. This coupled with our annual pay hike of 17% contributed to lower than expected margins. However our attrition has reduced to 18% from 20+% in previous quarter and utilization has marginally decreased from 71.4% to 71%. We are operationally in very good shape to fulfill the rising demand over next few quarters. "

In light of the prevalent Rupee-USD exchange rate situation, KPIT Cummins has decided to revise its full year guidance as follows.

Topline guidance in USD terms has been increased from 143.02-143.72 M USD to 145-148 M USD.

PAT guidance in Rupee terms has been decreased from Rs. 700M-730 Mn to Rs. 630 M-680 Mn.

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