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Investment losses hits Infosys's Q2 net

Fakir Chand in Bangalore

Infosys Technologies Ltd, the Bangalore-based global IT company, has disclosed that its net profit for the second quarter of the fiscal year 2002-03 took a beating due to substantial losses it incurred from strategic investments made in the recent past.

As a result, the company made an aggregate provision of Rs 23.76 crore (Rs 237.6 million) to write off the investments it made in overseas IT companies at the height of Internet (read dot.com) boom time.

The provisioning has reduced its net income to the extent that it posted a net profit of Rs 226 crore (Rs 2.26 billion), a growth of only 12 per cent over the corresponding period (July-September) of the previous year (2001-02).

Admitting that the investments were made with a view to gain substantial business benefits, Infosys deputy managing director and chief operating officer S Gopalakrishnan declared in Bangalore on Thursday that the company had decided to make the required provision for the loss incurred from its strategic investments, mostly in dot.com and Internet companies.

"Due to challenging market conditions, some of these companies have not been able to perform satisfactorily. Hence, we have made adequate provisions on our investments in these companies," Gopalakrishnan stated.

According to the statement of accounts for the second quarter, the company made a provision of Rs 8.95 crore (Rs 89.5 million) for the same total of investment it made in the US-based OnMobile Systems Inc.

Similarly, a provision of Rs 6.85 crore (Rs 68.5 million) was made for the same amount of investment it made in Asia Net Media (BVI) of Singapore.

A total investment of Rs 750,000 made in JASDIC Park Company, Japan, was also similarly written off.

In the case of Workadia Inc, USA, the company made a provision of Rs 7.21 crore (Rs 72.1 million) for a total investment of Rs 10.32 crore (Rs 103.2 million), leaving a net investment of Rs 3.11 crore (Rs 31.1 million).

Infosys' board director and chief financial officer T V Mohandas Pai told rediff.com that the company still had an additional investment of Rs 33 crore (Rs 330 million) in some US and Singapore based IT companies, such as Stratify, Cidra, and M-commerce.

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