Weighed down by a harsh economic climate worldwide, software service leader Infosys Technologies Ltd on Wednesday forecast its first decline in annual revenues in dollar terms, rattling stock markets and raising doubts on India’s IT industry prospects.
It projected a single-digit growth for fiscal year 2009-10, but its performance for 2008/09 has been strong. For 2009-10, the global software major projected revenues of Rs. 22, 066 crore to Rs. 22, 928 crore, a year-on-year growth of 1.7 per cent to 5.7 per cent. In dollar terms, the consolidated revenue is anticipated to dip by 6.7 per cent to 3.1 per cent year on year to $ 4.35 billion to 4.52 billion from $ 4.7 billion in fiscal 2009 in view of weakening of the Indian rupee in the currency market and pricing pressures.
The company despite the difficulties, plans to add a gross of 18,000 employees in 2009-10, compared with 28,231 a year ago, but will freeze wages to rein in costs. But it is planning no job cuts.
“Let me tell you that the amount of uncertainty today is unprecedented and is one of the worst (economic environments) we have seen in our lifetime. We hope that we don’t see it again,” S. “Kris” Gopalakrishnan, Infosys managing director, told a news conference in Bangalore.
“It is for the first time that we have given a single digit guidance for the full year and a negative guidance (dollar terms) for the full year. There is scope for revision. It is possible that things could change during the year,” he added.
However, Gopalakrishnan saw no reason for panic saying the company was financially strong with cash reserves equivalent to $ 2 billion.
Infosys met its own consolidated revenue guidance by notching Rs. 21, 693 crore during 2008-09, up 30 per cent year-on-year. The net profit for fiscal 2009 was Rs 5, 988 crore, up 28.5 per cent.
“In spite of tough economic environment, we have met the lower end of guidance. The three factors that influenced the performance are decreasing volumes, challenges in pricing and significant movement in currency,” Gopalakrishnan said.
For the fourth quarter (January-March) of fiscal 2009, the company recorded a consolidated net profit of Rs. 1, 613 crore, registering a year on year growth of 29 per cent.
The company recommended a final dividend of Rs.13.50 per share, that is 270 per cent on par value of Rs. 5 per share, for fiscal 2009.
Infosys shares fell as much as 7.7 per cent in early trade but recovered later.