MUMBAI, India–(EMWNews)–Patni Computer Systems Limited (Patni) today announced its

financial results for the second quarter ended 30th June 2008.

Performance Highlights for the quarter ended June 30, 2008
—		Revenues for the quarter at US$ 182.6 million (Rs. 7,837.1 million)
		—		Up 11.8% YoY from US$ 163.3 million (Rs. 6,628.1 million)
		—		Up 3.5% sequentially from US$ 176.4 million (Rs. 7,061.2 million)
		—		Contribution from top customer at 10.4% for the quarter from 11.1% during the previous quarter
—		Operating Income for the quarter at US$ 16.8 million (Rs. 720.7 million)
		—		Down 48.1% YoY from US$ 32.4 million (Rs. 1,313.5 million)
		—		Down 3.1% sequentially from US$ 17.3 million (Rs. 693.4 million)
—		Net Income for the quarter at US$ 24.2 million (Rs. 1,037.2 million)
		—		Down 27.2% YoY from US$ 33.2 million (Rs. 1,347.6 million)
		—		Up 33.4% sequentially from US$ 18.1 million (Rs. 724.6 million)
—		EPS for the quarter at US$ 0.17 per share (US$ 0.35 per ADS)
—		Stock Buy Back execution started as of July 10th 2008.
—		Stock based expenses in Q2 CY2008 were at US$ 1.0 million compared to US$ 1.1 million in the previous sequential quarter
Future Outlook:
—		Q3 CY2008 revenues are expected to be at US$ 182 to US$ 183 million and net income (excluding the foreign exchange gain/loss) is expected to be in the range of US$ 18.0 to US$ 18.5 million taking the operations at a constant dollar value of Rs 42 per US$ for the quarter.

Management Comments

Commenting on the quarter, Mr. Narendra K Patni, Chairman and

CEO, Patni Computer Systems Ltd., said, “While

our revenues and margins were in line with guidance the overall market

environment remains challenging with prevailing global uncertainties. We

are cautious in our short term outlook but remain positive on long term

prospects of our business and are continuing our investments in

identified areas.”

The newly appointed Executive Director Mr. Loek van den Boog said,

“The global information

technology services industry is going through a significant change. We

have proactively identified key strategic areas for differentiated

investment and focus which we believe will act as growth drivers and

enable long-term, sustainable and profitable growth. We have also made

corporate and operating management changes to strengthen the execution

of all spheres of our business and I am very confident that these will

yield the desired results.”

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial

and Operations Officer, said, “The

overall growth visibility is low in light of continued market

uncertainties in various segments of our business specially in North

America. The currency movement was volatile during the quarter but we

managed our risks well through our hedging operations. We continue to

make investments in geographical expansion in Europe and emerging

markets to diversify our revenue portfolio besides continuing to invest

to strengthen our services and portfolio.”

Corporate Developments
—		Corporate Management Changes
		—		Mr. Surjeet Singh, previously CFO, has been promoted as Chief Financial and Operations Officer He will also now manage global operations and infrastructure in addition to finance and internal systems.
		—		Mr. Neeraj Gupta, previously EVP-Communications and Media business, has been appointed as Chief Commercial Officer and Head of Global Client Relations responsible for global sales and marketing across geographies and vertical markets.
—		Awards
		—		Patni has won the ‘Economic times – Smart Workplace Awards’ under the “Professional Services” category. The award is designed to recognize and celebrate organization that are ‘Smart’ i.e. who adopt the best technological and HR practices.

(Figures in Million US$ except EPS and Share Data)
UNAUDITED CONSOLIDATED STATEMENT OF INCOME
For the quarter / period ended
Particulars		Jun 30 2008		Jun 30 2007		YoY Change %		Mar 31 2008		QoQ Change %		2007
Revenue		182.6		163.3		11.8%		176.4		3.5%		662.9
Cost of revenues		122.7		105.7		16.0%		121.0		1.4%		432.3
Depreciation		4.5		4.7		-3.7%		4.8		-7.4%		17.8
Gross Profit		55.4		52.9		4.6%		50.6		9.5%		212.8
Sales and marketing expenses		13.8		11.9		16.5%		12.3		11.9%		45.8
General and administrative expenses		19.8		16.7		18.5%		18.7		6.1%		70.4
Provision for doubtful debts and advances		0.2		0.5		-57.1%		(0.0)		-1711.1%		1.2
Foreign exchange (gain)/loss, net		4.7		(8.6)		-154.8%		2.2		111.1%		(23.4)
Operating income		16.8		32.4		-48.1%		17.3		-3.1%		118.7
Other income/(expense), net		11.3		7.1		60.3%		3.7		205.4%		17.0
Income before income taxes		28.1		39.4		-28.7%		21.0		33.7%		135.8
Income taxes		4.0		6.2		-36.5%		2.9		35.0%		21.8
Net income/(loss)		24.2		33.2		-27.2%		18.1		33.4%		114.0
Earning per share
– Basic		$ 0.17		$ 0.24		-27.5%		$ 0.13		33.4%		$ 0.82
– Diluted		$ 0.17		$ 0.24		-26.9%		$ 0.13		33.4%		$ 0.82
Weighted average number of common shares used in computing earnings per share
– Basic		139,061,109		138,646,132				139,030,296				138,660,785
– Diluted		139,295,007		139,978,442				139,279,675				139,569,933

Financial Statements Analysis:

Revenues

Revenues during the quarter were marginally ahead of guidance at US$

182.6 million (Rs.7,837.1 million), representing a sequential increase

of 3.5% and 11.8% increase on YoY basis in US dollar terms. We are

focusing on EMEA region and our share of Europe and Middle East business

has increased to 18.7% from 16.2% in Q2’07.

Gross Margin

Gross Margins were at 30.3% or US$ 55.4 million (Rs.2,377.5 million)

against 28.7% or US$ 50.6 million (Rs.2,024.7 million) in the previous

quarter with positive operating impact of 1.7% due to Rupee

depreciation, positive impact of 1% due to improvements in utilization

and negative impact of ~2% due to

compensation increase

• Depreciation and amortization expenses in CGS were US$ 5.0 million

  against US$ 5.4 million in Q1 2008 and US$ 4.7 million in Q2 2007.

Selling General and Administrative

Expenses (SGA Expenses)

• Sales and marketing expenses during the quarter were at US$ 13.8

  million (Rs. 593.2 million) at 7.6% as compared to US$ 12.3 million

  (Rs. 494.1 million) at 7.0% in the previous quarter(period cost change)

• G&A expenses during the quarter were at US$ 19.8 million (Rs.852.0

  million) at 10.9% as compared to US$ 18.7 million (Rs.748.7 million)

  at 10.6% in the previous quarter.

• Overall Depreciation and Amortization expenses in SGA were US$ 2.1

  million for the quarter as against US$ 2.0 million in Q1 2008.

Foreign exchange gain/loss

The revaluation and mark to market foreign exchange loss for the quarter

US$ 4.7 million (Rs. 201.6 million) as compared to foreign exchange loss

of US$ 2.2 million (Rs.89.0 million) in the previous quarter.

The quarter end rate for debtor’s revaluation

was Rs.43.02. Outstanding contracts at the end of Q208 were about US$

395.5 million contracted in the range of Rs.39.77 to Rs.44.10.

Other Income

For Q2 CY2008, other income (including interest and dividend income net

of interest expenses, profit/loss on sale of investments and other

miscellaneous income) stood at 6.2% or US$ 11.3 million (Rs.486.2

million) as compared to 2.1% or US$ 3.7 million (Rs. 148.4 million) in

the previous quarter.

Profit before Tax

PBT was up 33.7% sequentially at US$ 28.1 million (Rs. 1,206.9 million)

against US$ 21.0 million (Rs. 841.8 million) in the previous quarter

mainly due to rupee depreciation and other income.

Income Taxes

Income tax for the quarter was at US$ 4.0 million (Rs. 169.7 million) at

an effective tax rate of 14.1%.

Net Income

Consequently, net income for the quarter at 13.2% was US$ 24.2 million

(Rs.1,037.2 million) against US$ 18.1 million (Rs.724.6 million) at

10.3% in the previous quarter.

Balance Sheet and Cash Flow changes

During the quarter, against net income of US$ 24.2 million (Rs.1,037.2

million), cash from operating activities was at US$ 55.0 million (Rs.

2,359.3 million) net of changes in current assets and liabilities of US$

35.8 million and non cash income of US$ 5.0 million. These non cash

charges comprise of depreciation and amortization of US$ 7.0 million,

and other charges including stock option cost and gain on sale of

securities of US$(-) 12.0 million.

Net cash from investing activities was US$ 31.8 million (Rs.1,365.2

million) including capital expenditure of US$ 13.0 million (Rs.560.2

million), net proceeds from sale of investments of US$ 18.8 million (Rs.

805.0 million).

Net Cash outflow on financing activities was US$ 0.1 million (Rs.3.0

million) comprising of other financing activities. Over all cash and

cash equivalents (including short term investments) were at US$ 343.9

million (Rs.14,762.8 million),compared to US$ 326.1 million (Rs.13,050.7

million) at close of Q1 2008.

Receivables at the end of Q2 2008 were at US$ 116.5 million as compared

to US$ 136.8 million at the end of Q1 2008. Number of days outstanding

(Including Unbilled) for the current quarter were 89 days as compared to

95 days in Q1 2008.

Figures in Million INR except EPS and Share Data
CONSOLIDATED STATEMENT OF INCOME : BASED ON CONVENIENCE TRANSLATION
For the quarter / period ended
Particulars		Jun 30 2008		Jun 30 2007			Mar 31 2008			2007
Exchange rate$1 = INR		42.93		40.58			40.02			39.41
Revenues		7,837.1		6,628.1			7,061.2			26,125.3
Cost of revenues		5,267.0		4,290.7			4,842.7			17,035.3
Depreciation		192.5		189.0			193.9			702.5
Gross Profit		2,377.5		2,148.4			2,024.7			8,387.5

Patni US Gaurav Agarwal, +1-617-914-8360 (Investor Relations) [email protected] Tony Viola, +1-617-354-7424 (Media Relations) [email protected] or Patni India Heena Kanal, +91-22-6693-0500 (Media Relations) [email protected] or Citigate Dewe Rogerson India Gavin Desa, +91-22-4007-5037 (Investor Relations) [email protected]