Higher tax outgo flattens Zensar Q4 net profit at Rs39 crore

Zensar vice-chairman and managing director Ganesh Natarajan attributed the lower profit numbers to a large tax outgo during the quarter by way of deferred tax payment

Mumbai: The RPG Group’s software arm Zensar Technologies reported a muted 4% rise in net profit at Rs39.30 crore for the fourth quarter ended on 31 March 2012 on higher tax outgo, reports PTI.

The poor net income numbers come despite the Pune-based company reporting a 32% spike in revenue and 62% jump in pre-tax profit to Rs494 crore and Rs56.99 crore respectively.

Zensar vice-chairman and managing director Ganesh Natarajan attributed the lower profit numbers to a large tax outgo during the quarter by way of deferred tax payment.

“There was a 32.5% spike in deferred tax at Rs57 crore for the fiscal and Rs17.6 crore in the reporting quarter,” Mr Natarajan told PTI over phone.

Against this, the company had an exceptional deferred tax gain of Rs10 crore in Q4 of FY11, he added.

However, he sounded bullish about the current fiscal, saying Zensar, which nets almost 75% of profit from its US business, will grow much above the Nasscom projection.

“We see both our profit as well as revenue growing by at least 15%-18%.”

The Nasscom projection is a bit downcast this year at 11%-14 %.

For the full fiscal, the IT firm’s revenue rose to Rs1,782.48 crore from Rs1,138.30 crore, a growth of 56.6%, while net profit grew from Rs131.73 crore to Rs158.71 crore, a 20.5% rise.

During the fiscal, Zensar and its subsidiaries added 112 new clients, taking the overall headcount to 7,121.

Mr Natarajan said of the 17 new additions during the quarter, 10 came from the US, two each from India, South Africa and Britain and one from Australia.

In morning trade, Zensar Technologies was trading at around Rs195.65 per share on the Bombay Stock Exchange, 0.26% up from the previous close.

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Indiabulls MIP Gold Plus: One more

Hybrid funds are in fashion now. Performances of such funds have faltered despite a humongous gold rally in the past year

Indiabulls Mutual Fund plans to launch an open-end hybrid scheme—Indiabulls MIP Gold Plus, according to an offer document filed with the Securities and Exchange Bard of India (SEBI). This scheme would join the 18 odd hybrid schemes which have gold as an asset class. The asset allocation of the scheme is similar to that of Religare MIP Plus and Taurus MIP Advantage Fund, both of which were launched in 2010. The scheme would invest up to 25% in equity and equity related instruments and 5%-25% in gold ETFs (Exchange Traded Funds). A major portion (65%-95%) of its assets would be invested in money market and debt instruments.

When it comes to performance, similar funds like Religare MIP Plus and Taurus MIP Advantage have not done too well. In the one-year period ended 10 April 2012, when gold prises rose by 32%, both the funds underperformed their composite benchmark index and returned around 8% and 10% respectively before tax, which makes these funds hardly any better than debt funds where the returns were around 8% in the past year.

Hybrid funds investing in gold seem to be coming back in flavour as since the start of the year there have been three fund houses which have filed offer documents for their multi-asset schemes —Axis Life Plan, SBI EDGE Fund and Taurus Twin Advantage Fund. Moneylife in the past had written extensively on hybrid funds. And most recently we wrote that adding gold to a mutual fund portfolio displays herd instinct (Read: Hybrid Funds: Adding gold did not help).

Where would one place a scheme that divides an investment into different assets? How would an investor decide how much to invest, when he already has money invested in gold ETFs and/or equity schemes. And why should one add unnecessary risk to one’s portfolio by investing in gold. Fund houses concentrate on devising products to gather assets. These schemes are not tax efficient and as a major portion is debt these schemes attract high long-term and short-term capital gains tax.

Additional Scheme Details
Minimum Investment amount: Rs5,000 and in multiple of Rs1,000 thereof
Additional Investment amount: Rs1,000 and in multiple of Rs1,000 thereof
Minimum Instalment for SIP: Rs1,000
Annual scheme recurring expenses:  2.25% p.a. of average daily net assets
Exit load if switched before one year: 1%, and nil after one year
Taxation: Investors would be subject to long-term and short-term tax on capital gains.

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IPO: Funds through IPOs slump 82%

Indian companies raised a total of Rs5,800 crore during FY11-12 through initial public offers...

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