Scouting for small buys: Infosys CFO
Infosys CFO V Balakrishnan has a tough job at hand. Rising attrition, wage hikes, rising rupee and more taxes, all are trying to hit the Infosys balance sheet. But despite the rising rupee, Infosys managed its reputation of beating analyst forecast and delivering higher bottomline and topline growth. He talks on the problems the company is facing due to the rising rupee and related issues. By how much has the rupee hurt Infosys balance sheet this quarter? Our net margin in the past quarter (Q4 FY07) was about 27%. In Q1 FY08, our margins were hit by 7%. Wage hikes (of 12-15% offshore and 5-6% onshore) eroded margins by about 2.5%. A hit of about 1% was suffered due to the visa costs. But an appreciation of 6.8% in the rupee gave us the maximum hit, of 3.5%. However, better employee utilisation and flexible financial model enabled us to overcome it. All our subsidiaries are doing well except Infosys Consulting and Infosys China which are in losses. In IT services, we have a natural hedge with about 26.2% revenues coming from Europe vis-a-vis 64% from North America.