Patni Q3, 2006 Net Income up 37% at $22.3 Million , and Revenues up 28% at $151.7 Million , YoY

Business Wire, Oct 27, 2006

MUMBAI, India & CAMBRIDGE, Mass. -- Patni Computer Systems Limited (Patni) today announced its financial results for the third quarter ended 30 September 2006.

Performance Highlights

Important note:

As stated in our Q2 2006 release, prior years' tax review by the IRS and a review by the Department of Labor of Patni's US operations had resulted in additional provisions which led to an increase in gross profit and operating income by approximately US$ 7.0 million and decrease in net income by US$ 19.9 million for Q2 2006. Variations in Patni's Q2 2006 financial performance as a result of these reviews had been referred to as 'additional provisions' in the said press release. Financial Performance for Q2 2006 excluding these additional provisions has been considered for comparative performance review with Q3 2006 in this release.

Performance Highlights for the quarter ended Sept 30(th) 2006

* Revenues for the quarter at US$ 151.7 million (Rs 6,971 million)

* up 6.1% sequentially from US$ 143.0 million (Rs 6,561 million) in quarter ended June 30, 2006

* 28.3% higher compared to US$ 118.3 million (Rs 5,197 million) in quarter ended Sep 30, 2005

* Operating Income at US$ 25.1 Million (Rs 1,153 million) on the back of improved operating efficiencies

* up 46.4% sequentially from US$ 17.1 million (Rs 786 million) in quarter ended June 30, 2006

* 40.8% higher compared to US$ 17.8 million (Rs 783 million) in quarter ended Sep 30, 2005

* Net Income at US$ 22.3 million (Rs 1,024 million)

* up 33.4% sequentially US$ 16.7 million (Rs 766 million) in quarter ended June 30, 2006

* 37.2% higher compared to US$ 16.2 million (Rs 714 million) in quarter ended Sep 30, 2005

* EPS for the quarter at US$ 0.16 per share, (Rs 7.42 per share); US$ 0.32 per ADS

* Top Customer contribution towards revenue decreased to 14.1% during the quarter from 14.5% in Q2 2006. Revenue concentration of Top 10 clients also reduced to 51.6% from 54.1% in the previous quarter.

* Number of active clients was 235 at quarter end as compared to 220 in Q2 2006. Patni acquired 27 new clients during the quarter.

Key Corporate Developments in Q3 2006:

* Patni ranked highest in Forrester survey - Customer Satisfaction Survey among Indian Offshore Supply Chain Solution providers.

* Patni and Savvion entered strategic alliance - Offering industry-leading Business Process Management solutions.

* Patni received CIO 100 award at CIO Symposium - Acknowledged as one of 'The Giant 100' companies at the first CIO 100 awards in India.

* PatniConnect - Annual customer event concluded successfully.

Future Outlook:

* Q4 2006 revenues are expected to be US$ 152 million and net income is expected to be in the range of US$ 20.4 - $20.6 million excluding foreign exchange gain/loss and taking the operations at a constant dollar value of Rs 45.50 per US$.

Management comments

Commenting on the Q3 2006 performance, Mr. Narendra K Patni, Chairman and CEO, Patni Computer Systems Ltd., said, "I am delighted to report a strong increase in revenue and net income in the quarter under review which is a result of new client acquisitions and efficient management of our cost structure. We are witnessing healthy demand escalation across all our verticals and service lines. To ensure adequate preparedness to meet this demand, we are expanding our facilities. Further, in continuation of our drive towards profitable growth we have reorganized our management team, as a result of which I expect greater focus and accountability thrust across the organisation.

Over the medium to long term, I remain confident of our ability to capture the growth opportunities and translate them into ongoing value enhancement for all our stakeholders."

Commenting on the performance, Mr. Mrinal Sattawala, Chief Operating Officer, Patni, said, "This quarter saw us delivering good operating efficiencies. We improved our resource utilization for both offshore and onsite projects in addition to improvements in other operating parameters. During the period under review we have added 27 new clients, bringing our tally of active clients to 235. Additionally, in line with our overall business strategy, we maintained our thrust on diversifying our revenue stream which is reflected in reduced reliance on our Top 5 and Top 10 clients. These developments strengthens our confidence in our ability to maintain our strong & profitable growth momentum."

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer, Patni, added, "In Q3 2006, we executed well on our operating efficiency improvement plan. A reduction in G&A, improvement in operating parameters including utilization coupled with revenue growth has led to sustainable margin expansion in the quarter. We continue to focus on managing our cost base more efficiently and driving profitable growth through our investments in service capabilities."

Corporate developments in Q3 2006

Patni Ranked Highest among Indian Offshore Supply Chain Solution Providers in Customer Satisfaction

Patni received the highest customer satisfaction rating among Indian offshore supply chain solution providers in a Forrester survey. The survey, "Ranking Supply Chain Management Tools and Services," conducted by Forrester Research, Inc., in June 2006, queried 167 supply chain decision makers in North America. It examined their satisfaction with supply chain software and service providers, as well as their plans for additional investments.