Indian IT outsourcer Satyam beats profits forecast

Indian software outsourcing firm Mahindra Satyam on Tuesday said its quarterly net profit soared by 130 percent year-on-year, beating forecasts, as demand for outsourcing grew. The company, recovering from the country's biggest corporate fraud, said net profit rose to 2.25 billion rupees ($50 million) for the three months to June 30 from 975.3 million rupees in the same period last year. Analysts had forecast a profit of 1.5 billion rupees for the financial first quarter. Mahindra Satyam, formerly known as Satyam Computer Services, stunned India in 2009 when its founder B. Ramalinga Raju admitted he had for years overstated profits and inflated the balance sheet by over $1 billion. The fraud nearly pushed the group into bankruptcy and Raju, who was once a star of India's software boom, is facing charges including conspiracy, cheating and forgery. Shares in Satyam, now part of the tractors-to-holidays Mahindra and Mahindra Group, slid 4.31 percent to 71.1 rupees on the Bombay Stock Exchange ahead of the results in an overall weaker market. The company, based in the southern city of Hyderabad, said it was confident of recovering from the fraud, although it added that turbulent macroeconomic conditions could pose challenges for India's outsourcing industry. "Our relentless focus on market growth and margin expansion has yielded satisfactory results this quarter," chairman Vineet Nayyar said in a statement. Satyam earlier this year said it had paid a one-time charge of 5.72 billion rupees ($127 million) to settle a class action lawsuit in the United States. Several shareholders had sued the US- and India-listed Satyam in a class action suit in 2009 after Raju's admissions. The legal action was seen as major stumbling block to the company's future and the announcement of the settlement in February brought to an end all legal proceedings against Satyam in the United States.