UNITED STATES
SECURITIES AND EXCHANGE COMMISSION

Washington, D.C. 20549

 

FORM 6-K

 

REPORT OF FOREIGN ISSUER

 

Pursuant to Rule 13a-16 or 15d-16 of
the Securities Exchange Act of 1934

 

For April 25, 2007

 

PATNI COMPUTER SYSTEMS LIMITED

 

Akruti Softech Park , MIDC Cross Road No 21,
Andheri (E) , Mumbai - 400 093, India

 (Exact name of registrant and address of principal executive offices)

 

Indicate by check mark whether the registrant files or will file annual reports under cover Form 20-F or Form 40-F.

 

Form 20-F ý        Form 40-F o

 

Indicate by check mark whether the registrant by furnishing the information contained in this Form is also thereby furnishing the information to the Commission pursuant to Rule 12g3-2(b) under the Securities Exchange Act of 1934.

 

Yes o        No ý

 

If “Yes” is marked, indicate below the file under assigned to the registrant in connection with Rule 12g3-2(b):

Patni Computer Systems Limited

FAX TO SE

 

Registered Office : S-1A Irani Market Compound, Yerawada , Pune — 411 006, India.
Corporate Office : Akruti , MIDC Cross Road No 21, Andheri (E) , Mumbai — 400 093, India.

Summary of Consolidated financial results of Patni Computer Systems Limited and its subsidiaries for the quarter ended 31 March 2007, prepared as per US GAAP

		Quarter ended 31 March				Year ended 31 December
		2007 (Unaudited)		2006 (Unaudited)		2006 (Unaudited)
		USD in thousands except share data
Revenues		156,011		129,846		578,851
Cost of revenues		100,135		83,756		370,173
Gross profit		55,876		46,090		208,678
Selling, general and administrative expenses		27,562		27,179		110,265
Provision for doubtful debts & advances		643		134		1,191
Foreign exchange (gain) / loss , net		(2,630	)	994		2,748
Operating income		30,301		17,783		94,474
Interest and dividend income		2,929		2,765		10,088
Interest expense		(698	)	(776	)	(2,840	)
Gain on sale of investments, net		152		68		1,679
Other income/(expense), net		1,198		(960	)	3,541
Income before income taxes		33,882		18,880		106,942
Income taxes		6,034		4,437		47,692
Net Income		27,848		14,443		59,250
Earning per share
— Basic		0.20		0.10		0.43
— Diluted		0.20		0.10		0.43
Weighted average number of common and redeemable common shares used in computing earnings per share
— Basic		138,342,512		137,818,174		137,957,477
— Diluted		139,413,330		139,511,561		138,904,860
Total assets		684,724		567,572		640,341
Cash and cash equivalents		37,607		60,652		46,510
Investments		260,569		223,545		246,016

Notes:

(1)                                  The above summary of consolidated financial results were taken on record by the Board of Directors at its adjourned meeting held on 25 April, 2007.

(2)                                  The consolidated financial statements of Patni Computer Systems Limited and its subsidiaries have been prepared on a consolidated basis in accordance with accounting principles generally accepted in the United States (‘US GAAP’).  All significant inter-company transactions have been eliminated on consolidation.

(3)                                  The subsidiaries considered in the consolidated financial statements as at 31 March 2007 are wholly owned subsidiaries, namely Patni Computer Systems Inc. USA, Patni Computer Systems (UK) Ltd., Patni Computer Systems GmbH, Patni Telecom Solutions Inc., Patni Telecom Solutions Private Limited and Patni Telecom Solutions (UK) Limited.

(4)                                  Previous period figures have been appropriately reclassified to conform to the current period’s presentations.

 

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Summary of financial statements prepared as per US GAAP — Convenience translation

		Quarter ended 31 March				Year Ended 31 December
		2007 (Unaudited)		2006 (Unaudited)		2006 Unaudited)
		Rs. in thousands except share data
Exchange Rate (Rs.)		43.10		44.48		44.11
Revenues		6,724,053		5,775,534		25,533,112
Cost of revenues		4,315,805		3,725,454		16,328,328
Gross profit		2,408,248		2,050,080		9,204,784
Selling, general and administrative expenses		1,187,909		1,208,907		4,863,788
Provision for doubtful debts & advances		27,719		5,953		52,536
Foreign exchange (gain) / loss , net		(113,352	)	44,203		121,211
Operating income		1,305,972		791,017		4,167,249
Interest and dividend income		126,240		123,003		444,978
Interest expense		(30,072	)	(34,518	)	(125,269	)
Gain on sale of investments, net		6,571		3,044		74,065
Other income/(expense), net		51,637		(42,724	)	156,212
Income before income taxes		1,460,348		839,822		4,717,235
Income taxes		260,068		197,339		2,103,684
Net Income		1,200,280		642,483		2,613,551
Earning per share
— Basic		8.68		4.66		18.94
— Diluted		8.61		4.61		18.82
Total assets		29,511,625		25,245,597		28,245,426
Cash and cash equivalents		1,620,853		2,697,797		2,051,557
Investments		11,230,516		9,943,271		10,851,772

 

Disclaimer:

We have translated the financial data derived from our consolidated financial statements prepared in accordance with US GAAP for each period at the noon buying rate in the City of New York on the last business day of such period for cable transfers in Rupees as certified for customs purposes by the Federal Reserve Bank of New York.  The translations should not be considered as a representation that such US Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated above, or at all.  Investors are cautioned to not rely on such translated amounts.

		By Order of the Board
		for Patni Computer Systems Limited
Mumbai		Narendra K. Patni
25 April 2007		Chairman and Chief Executive Officer

 

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Audited consolidated financial results of Patni Computer Systems Limited and its subsidiaries for the quarter ended 31 March 2007, as per Indian GAAP.

 

		Rs. in thousands except share data
		Quarter ended 31 March				Year ended 31 December
		2007		2006		2006
		(Audited)		(Audited)		(Audited)
Income
Sales and service income		6,796,257		5,749,578		26,080,258
Other income		365,019		148,272		595,711
		7,161,276		5,897,850		26,675,969
Expenditure
Personnel costs		3,706,781		3,223,502		14,447,266
Selling, general and administration costs		1,587,755		1,519,405		5,959,700
Depreciation (net of transfer from revaluation reserves)		232,435		192,621		842,693
Interest costs		30,553		34,486		189,635
		5,557,524		4,970,014		21,439,294
Profit for the period / year before prior period items and taxation		1,603,752		927,836		5,236,675
Prior period items		—		—		221,172
Profit for the period / year before taxation		1,603,752		927,836		5,015,503
Provision for taxation		272,242		209,949		2,114,356
MAT credit entitlement		(17,792	)	—		(5,735	)
Provision for taxation - Fringe benefits		9,949		11,818		40,085
Provision for taxation (prior periods)		—		—		418,976
Profit for the period / year after taxation		1,339,353		706,069		2,447,821
Paid up equity share capital (Face value per equity share of Rs. 2 each)		277,255		275,739		276,564
Reserves excluding revaluation reserves						23,035,534
Earnings per equity share of Rs. 2 each
—Basic		9.68		5.12		17.74
—Diluted		9.59		5.05		17.60

Notes:

(1)                                  The consolidated financial statements of Patni Computer Systems Limited and its subsidiaries are prepared in accordance with the principles and procedures prescribed by AS 21 -  “Consolidated Financial Statements “ issued by the Institute of Chartered Accountants of India for the purpose of preparation and presentation of consolidated financial statements. The financial statements of Patni Computer Systems Limited and its subsidiaries have been combined on a line-by-line basis by adding together the book values of like items of assets, liabilities, income and expenses after eliminating intra-group balances/transactions and resulting unrealized profits in full.  Unrealized losses resulting from intra-group transactions have also been eliminated unless cost cannot be recovered in full.  The amounts shown in respect of accumulated reserves comprises the amount of the relevant reserves as per the balance sheet of the Parent Company and its share in the post acquisition increase/decrease in the relevant reserves/accumulated deficit of its subsidiaries. Consolidated financials statements are prepared using uniform accounting policies across the Group.

(2)                                  The subsidiaries considered in the consolidated financial statements as at 31 March 2007 are wholly owned subsidiaries, namely Patni Computer Systems Inc. USA, Patni Computer Systems (UK) Ltd., Patni Computer Systems GmbH, Patni Telecom Solutions Inc.,Patni Telecom Solutions Private Limited and Patni Telecom Solutions (UK) Limited.

(3)                                  Paid up equity share capital does not include Rs 8,781 (2006 : Rs 2,688 ) which represents share application money received from employees, on exercise of stock options, pending allotment of shares.

(4)                                  During 2006, the Company received a demand from the Income tax department for Rs. 630,166 (Including interest demand of Rs. 186,850) for the Assessment Year 2004-05.The tax demand is mainly on account of disallowance of deduction claimed by the Company under Section 10A of the Income Tax Act 1961, in respect of profits earned by its various eligible undertakings.The Company has filed an appeal challenging the disallowance within the time available under the Income Tax Act. Considering the facts and nature of disallowance and based on the advice obtained from the Company’s legal counsel, management believes that the disallowance is not tenable, is confident of a favourable outcome in appeal proceedings and hence no provision for such income tax demand is considered necessary.

(5)                                  The Company adopted Accounting standard 15 (revised 2005) — Employee benefits (“AS 15”) from 1 January 2007. The excess transition liability as per revised AS 15 for compensated absences was Rs 18,661 (net of tax) and excess liability provided in the books of account as compared to liability as determined under revised AS 15 with respect of defined benefit plans was Rs 26,646 (net of tax) as on 1 January 2007.  The net excess liability provided of Rs 7,985 (net of tax) has been adjusted through the balance in the Profit and Loss account as on 1 January 2007.

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(6)                                  Segment Information:

 

As on 31 March 2007 and for the quarter ended

 

Particulars		Financial services		Insurance services		Manufacturing		Telecom		Product Engineering Services		Others		Total
Sales and service income		957,062		1,667,386		1,492,161		1,005,491		1,134,114		540,043		6,796,257
Sundry debtors		778,058		1,055,588		1,214,174		875,094		898,984		509,696		5,331,594
Cost and estimated earnings in excess of billings		166,079		198,033		257,705		524,908		185,819		107,727		1,440,271
Billings in excess of cost and estimated earnings		(5,576	)	(800	)	(14,809	)	(10,220	)	(26,537	)	(13,815	)	(71,757	)
Advance from customers		(6,668	)	(790	)	(1,723	)	—		(805	)	(246	)	(10,232	)

 

As on 31 March 2006 and for the quarter ended

 

Particulars		Financial services		Insurance services		Manufacturing		Telecom		Product Engineering Services		Others		Total
Sales and service income		910,398		1,387,756		1,169,447		1,079,167		807,177		395,633		5,749,578
Balances at 31 December 2006
Sundry debtors		729,738		943,801		1,174,494		1,005,557		750,026		519,149		5,122,765
Cost and estimated earnings in excess of billings		107,409		45,076		210,680		461,246		108,332		78,591		1,011,334
Billings in excess of cost and estimated earnings		(9,197	)	(9,375	)	(32,229	)	(21,696	)	(36,242	)	(38,507	)	(147,246	)
Advance from customers		(214	)	(805	)	(5,391	)	—		(1,715	)	(112	)	(8,237	)

 

The Group evaluates segment performance and allocates resources based on revenue growth. Revenue in relation to segments is categorized based on items that are individually identifiable to that segment. Costs are not specifically allocable to individual segments as the underlying resources and services are used interchangeably.  Fixed assets used in Group’s business or liabilities contracted have not been identified to any of the reportable segments, as the fixed assets and services are used interchangeably between segments.

 

Until 31 December 2006, the Company reported Product Engineering Services (PES) and Independent Software Vendors (ISV)  as separate business segments. The PES business is primarily related to embedded technology services for products and the ISV unit provided the user interface for these products. Both these segments form part of technology services. The integration of these business segments would faciliate improved client service. Accordingly, effective 1 January 2007, the Company has integrated these two business segments with the primary focus on the following synergies (i) demand for providing end-to-end solutions from product engineering clients, and  (ii) leveraging the domain skills & platform skills to provide end -to- end solutions. Segment data for previous period has been reclassified to conform to current period presentation

 

(7)                                  Previous period figures have been appropriately reclassified /regrouped to conform to the current period’s presentations.

 

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Reconciliation of significant differences between Consolidated Net Income determined in accordance with Indian Generally Accepted Accounting Principles (‘Indian GAAP’) and Consolidated Net Income determined in accordance with US Generally Accepted Accounting Principles (‘US GAAP’) (Unaudited)

 

		Rs. in thousands
		Quarter ended 31 March				Year ended 31 December
		2007		2006		2006
Consolidated net income as per Indian GAAP		1,339,353		706,069		2,447,821
Income taxes		(9,569	)	12,366		(133,791	)
Foreign currency differences		(62,991	)	(33,988	)	(153,501	)
Employee retirement benefits		3,980		5,906		3,895
ESOP related compensation cost		(45,683	)	(39,712	)	(182,732	)
Business acquisition		(10,477	)	(9,667	)	(41,176	)
Prior period adjustment		—		—		765,595
Others		14,085		193		(21,878	)
Total		(110,655	)	(64,902	)	236,412
Consolidated net income as per US GAAP		1,228,698		641,167		2,684,233

 

Note:

 

The consolidated net income as per USGAAP shown in the table above differs from the consolidated net income shown under “Summary of financials statements prepared as per USGAAP - Convenience Translation” for reasons explained below the same table.

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Patni Computer Systems Limited
Registered Office : S-1A Irani Market Compound, Yerawada , Pune - 411 006, India.
Corporate Office  : Akruti , MIDC Cross Road No 21, Andheri (E) , Mumbai - 400 093, India.

Financial results of Patni Computer Systems Limited for the quarter ended 31 March 2007, as per Indian GAAP (Standalone)

		Rs. in thousands except share data
		Quarter ended 31 March				Year ended 31 December
		2007		2006		2006
		(Audited)		(Audited)		(Audited)
Income
Sales and service income		2,665,882		2,312,230		9,978,301
Other income		341,926		108,666		497,640
		3,007,808		2,420,896		10,475,941
Expenditure
Personnel costs		1,164,448		1,016,343		4,461,532
Selling, general and administration costs		592,123		564,702		2,141,127
Depreciation		196,875		167,172		725,602
Interest costs		11,007		18,932		88,792
		1,964,453		1,767,149		7,417,053
Profit for the period / year before taxation		1,043,355		653,747		3,058,888
Provision for taxation		93,034		141,644		971,681
MAT credit entitlement		(17,792	)	—		(5,735
Provision for taxation — Fringe benefits		8,180		11,500		35,313
Profit for the period / year after taxation		959,933		500,603		2,057,629
Paid up equity share capital (Face value per equity share of Rs.2 each)		277,255		275,739		276,564
Reserves excluding revaluation reserves						21,801,849
Earnings per equity share of Rs 2 each
— Basic		6.94		3.63		14.91
— Diluted		6.87		3.58		14.80

 

	Notes
(1)	The above statement of financial results were reviewed by the audit committee and approved by the Board of Directors at its adjourned meeting held on 25 April 2007.
(2)	The Board of directors at the adjourned meeting held on 8 February 2007, recommended a final dividend of 150% for the year 2006, subject to approval of the members.

 

		Quarter ended 31 March				Year ended 31 December
		2007		2006		2006
Dividend per share (Par value of Rs.2 /- each)		N.A.		N.A.		3.00
Percentage		N.A.		N.A.		150	%

 

(3)	Investor complaints for the quarter ended 31 March 2007:

 

Pending as on 1  January 2007		Received during the quarter		Disposed of during the quarter		Unresolved at the end of the quarter
—		10		10		—

 

(4)	Statement of Utilisation of ADS Funds as of 31 March 2007

 

		No of shares		Price		Amount
Amount raised through ADS (6,156,250 ADSs @ $20.34 per ADS)		12,312,500		466		5,739,262
Share issue expenses						369,406
Net proceeds						5,369,856
Deployment :
1   Held as short term investments						3,580,694
2   Utilised for Capital expenditure for office facilities						1,668,339
3   Exchange loss						120,823
Net proceeds						5,369,856

 

(5)	During 2006, the Company received a demand from the Income tax department for Rs. 630,166 (Including interest demand of Rs. 186,850) for the Assessment Year 2004-05.The tax demand is mainly on account of disallowance of deduction claimed by the Company under Section 10A of the Income Tax Act 1961, in respect of profits earned by its various eligible undertakings.The Company has filed an appeal challenging the disallowance within the time available under the Income Tax Act. Considering the facts and nature of disallowance and based on the advice obtained from the Company’s legal counsel, management believes that the disallowance is not tenable, is confident of a favourable outcome in appeal proceedings and hence no provision for such income tax demand is considered necessary.
(6)	The Company adopted Accounting standard 15 (revised 2005) — Employee benefits (“AS 15”) from 1 January 2007. The excess liability provided in the books of account as compared to liability as determined under revised AS 15 in respect of compensated absences and defined benefit plans was Rs.33,684 (net of tax) as on 1 January 2007. Such excess liability provided has been adjusted through the balance in the Profit and Loss account as on 1 January 2007.
(7)	Aggregate of Non-Promoter Shareholding

 

		As of 31 March				As of 31 December
		2007		2006		2006
— Number of Shares		77,654,938		76,276,581		77,309,051
— Percentage of Shareholding		56.02	%	55.33	%	55.91	%

 

(8)	Paid up equity share capital does not include Rs 8,781 (2006 : Rs 2,688) which represents share application money received from employees, on exercise of stock options, pending allotment of shares.
(9)	Previous period figures have been appropriately reclassified to conform to the current period’s presentations.
(10)	Text of this advertisement was approved by the Board of Directors at the adjourned meeting held on 25 April 2007.

 

 

	By Order of the Board
	for Patni Computer Systems Limited
Mumbai	Narendra K. Patni
25 April 2007	Chairman and Chief Executive Officer

 

6

For Press Release

Patni’s Q1 2007 Revenues up 20.2% at $156.0 million (Rs. 6,724.1 million),
Net Income up 92.8% at $ 27.8 million ( Rs 1,200.3 million), YoY

Mumbai, India, April 25th 2007: Patni Computer Systems Limited (Patni) today announced its financial results for the first quarter ended 31st March 2007.

 

Performance Highlights

 

Performance Highlights for the quarter ended March  31st 2007

 

·                  Revenues for the quarter at US$ 156.0 million (Rs. 6,724.1 million)

 

·                  Up 1.1% sequentially from  US$ 154.3 million (Rs. 6,804.9 million)  

 

·                  Up 20.2%  YoY from US$ 129.8 million (Rs 5,775.5 million)

 

·                  Operating Income for the quarter at US$ 30.3 million (Rs. 1,306.0 million)

 

·                  Up  11.2% sequentially from US$ 27.3 million (Rs 1202.3 million)

 

·                  Rupee Appreciation impact of ~40 basis points.

 

·                  Up 70.4% YoY from US$ 17.8 million (Rs 791.0 million) 

 

·                  Net Income  for the quarter at US$ 27.8  million (Rs 1,200.3 million)

 

·                  Up 8.2% sequentially from US$ 25.7  million (Rs 1,134.9 million)

 

·                  Up 92.8% YoY from US$ 14.4 million (Rs 642.5 million)

 

·                  EPS for the quarter at US$ 0.20 per share( US$ 0.40 per ADS ) up 8.1% sequentially and 92.1% YoY

 

·                  Stock based expense for the quarter was US$ 1.0 million as compared to US$ 1.1 million during previous quarter.

 

·                  Top Customer contribution towards revenue decreased to 11.1% during the quarter from 13.5% in Q4 2006. Revenue concentration of Top 10 clients also reduced to 48.8% from 52.2% in the previous quarter.

 

·                  We acquired 26 new clients during the quarter. Number of active clients was 252 at quarter end as compared to 239 in Q4 2006.

 

Future Outlook:

 

·                  Q2 2007 revenues are expected to be at US$ 163 million and net income (excluding the foreign exchange gain/loss) is expected to be in the range of US$ 22.5 to $23.0  million.

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Management comments

Commenting on the Q1 2007 performance, Mr. Narendra K Patni, Chairman and CEO, Patni Computer Systems Ltd., said, “The quarter under review was one of stable growth and profitability enhancement. With Phase one of our state of the art knowledge park now operational our thrust is to drive aggressive profitable growth and escalate our business across newer verticals and service lines.

We remain committed to create ongoing growth across the organization and are confident about our business momentum in a healthy demand environment.”

Commenting on the performance, Mr. Mrinal Sattawala, Chief Operating Officer, Patni, said, “Our client and service offering profiles continue to strengthen. During the quarter we have added 26 new clients and reduced dependence on Top 5 and Top 10 clients. Higher Value service offerings like Embedded Technology Services and Enterprise Systems Management now form a larger proportion of our revenues. We continue to invest in global sales and marketing and expand geographically in Europe in line with our strategic objectives.

Speaking on the occasion, Mr. Surjeet Singh, Chief Financial Officer, Patni, added, “Continued improvement and sustained thrust on optimizing operating costs have enabled profit improvements over the last few quarters. Investments for growth have continued. Efficient hedging of our foreign currency positions covered the forex risk and improved performance. We are looking to expand our revenue base effectively in existing and new clients with our mix of service offerings. Geographical Expansion coupled with inorganic growth are part of key strategic elements of our plan to drive profitable growth.

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Management Discussion & Analysis of Performance

(Figures in Million US$ except EPS and Share Data)

CONSOLIDATED STATEMENT OF INCOME
For the quarter  / period ended

Particulars		Mar 31 2007			Dec 31 2006			QoQ Change  %		Mar 31 2006			2006			Additional Provision in 2006		2006 (Excluding additional provisions)
Revenue		156.0			154.3			1.1	%	129.8			578.9			—		578.9
Cost of revenues		96.3			95.6			0.8	%	80.8			357.0			-7.0	(1)	364.1
Depreciation		3.8			3.9			-2.6	%	3.0			13.2			—		13.2
Gross Profit		55.9			54.8			1.9	%	46.1			208.7			7.0	(1)	201.6
Sales and marketing expenses		11.2			11.0			2.3	%	10.0			43.1			—		43.1
General and administrative expenses		16.3			15.6			4.7	%	17.1			67.2			—		67.2
Provision for doubtful debts and advances		0.6			0.4			70.8	%	0.1			1.2			—		1.2
Foreign exchange (gain) / loss, net		(2.6		)	0.6			-545.6	%	1.0			2.7			2.7
Operating income		30.3			27.3			11.2	%	17.8			94.5			7.0	(1)	87.4
Other income / (expense), net		3.6			4.5			-20.1	%	1.1			12.5			0.2		12.4
Income before income taxes		33.9			31.7			6.7	%	18.9			106.9			7.2	(2)	99.8
Income taxes		6.0			6.0			0.4	%	4.4			47.7			27.1		20.6
Net income/(loss)		27.8			25.7			8.2	%	14.4			59.3			- 19.9	(3)	79.2
Earning per share
— Basic		$	0.20		$	0.19				$	0.10		$	0.43				$	0.57
— Diluted		$	0.20		$	0.18				$	0.10		$	0.43				$	0.57
Weighted average number of common shares used in computing earnings per share
— Basic		138,342,512			138,178,492					137,818,174			137,957,477					137,957,477
— Diluted		139,413,330			139,357,451					139,511,561			138,904,860					138,904,860

**             Prior years’ tax review by IRS and the Department of Labor Review by Patni’s US Operations has resulted in the net reversals of additional provisions leading to an increase in Q2 2006 Gross Profit and Operating Income and a decrease in Q2 2006 Net Income.

(1) -      due to reversal of payroll taxes for earlier years, net of accrual from DOL review

(2) -      impact of 1, net of write-back of interest/penalty for earlier years

(3) -      impact of re-assessed corporate taxes for earlier years, net of 2

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Revenues

Revenues during the quarter were in line with expectations at US$ 156.0 million (Rs 6,724.1 million) representing sequential increase of 1.1% and 20.2% on YoY basis. 26 new clients were added during the quarter.

Gross profit

Gross margins improved above expectations to 35.8% from 35.5% in Q4 2006 net of negative Rupee appreciation impact of 40 basis points. 60 basis points effect of planned utilization change during the quarter at 72.8% (73.7% in Q4) was absorbed by contract price improvements. Absolute Gross Margins in Q1 07 at US$ 55.9 million (Rs 2,408.2 million was higher by 1.9% sequentially and by 21.2% on YOY basis)

Selling and Marketing Expenses

Sales and marketing expenses during the quarter were marginally higher at US$ 11.2 million (Rs. 484.6 million), as compared to $11.0 million (Rs. 485.0 million) in the previous quarter and as percentage of revenues, these expenses were almost stable at 7.2% compared to 7.1%.

G&A expenses

G&A expenses at 10.5% during the quarter were marginally higher per plan at US $16.3 million (Rs. 703.3 million) compared to US $ 15.6 million (Rs. 687.7 million) in the previous quarter due to period costs .

Provision for doubtful debts

During the quarter, provision for doubtful debts was at US$ 0.6 million (Rs. 27.7 million) as against US$ 0.4 million (Rs. 16.6 million) in Q4 2006.

 Foreign exchange gain/loss

The Foreign exchange gain for the quarter was US$ 2.6 million (Rs.113.4 million) as compared to loss of US$ 0.6 million (Rs 26.0 million) in Q4 2006.

While mark to market impact of forex contracts taken earlier and revaluation of debtors at the quarter end, resulted in foreign exchange gain of US$ 1.5 million for the quarter. Additionally, revaluation of advance foreign taxes and international tax liabilities resulted in a one time foreign exchange gain of US$1.1 million.

The quarter end rate for debtors revaluation was Rs 43.47. At the end of Q1 2007, we have hedging  contracts worth US$ 192.5 million in the range of Rs. 43.86 to Rs. 46.85.

Operating income

Operating income was higher at 19.4% at $30.3 million (Rs 1,306.0 million) against 17.7% or $27.3 million (Rs 1,202.3 million) in Q4 2006. Operating Income grew 70.4% on YoY basis as compared to $17.8 million (Rs 791.0 million) in corresponding quarter of previous year.

Other income

Other income (including interest and dividend income net of interest expenses, profit/loss on sale of investments and other miscellaneous income) stood at US$ 3.6 million (Rs 154.4 million) were in line with estimates of US $ 4.5 million (Rs 197.8 million) in previous quarter, net of one time credit of US$ 1.7 million on account of reversal of interest on tax provisions.

Profit before tax 

Profit before tax for the quarter was higher by 6.7% at US$ 33.9 million (Rs. 1,460.3 million) as compared to US$ 31.7 million (Rs. 1,400.1 million) during previous quarter.

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Income taxes

Income tax for the quarter was at US$ 6.0 million (Rs 260.1 million) at 17.8% effective tax rate on profit before tax lower than the previous quarter rate of 18.9%.

Net income

Consequently, net income for the quarter was at US$ 27.8 million (Rs 1,200.3 million), an increase  of 8.2% as compared to Q4 2006 net income of US$ 25.7 million (Rs 1,134.9 million).  Increased focus on margin improvement during previous few quarters resulted in YoY increase of Net Income at 92.8% as compared to corresponding quarter of previous year.

EPS

EPS for the quarter was at US$ 0.20 (Rs 8.68) and US$ 0.40 per ADS marginally higher than US$ 0.19 per share and US $ 0.37 per ADS.  EPS increased by 92.1 % on YoY basis from $0.10/ share or $0.21 per ADS.

Balance Sheet and Cash Flow changes

During the quarter, against net income of US$ 27.8 million (Rs 1,200.3 million), cash from operating activities was at US$ 14.1 million (Rs 609.5) net of changes in current assets and liabilities of US$ (-)20.6 million and non cash charges of US$ 6.9 million. These non cash charges comprise of depreciation and amortization of US$ 6.6 million and other charges of US$ 0.3 million.  

Net Cash used in investing activities was at US$ 26.1 million (Rs 1,125.9 million) which include net capital expenditure of US$ 18.4 million (Rs 792.8 million) and net investment in securities at US$ 7.7 million (Rs. 333.1 million).

Net cash inflow provided for in financing activities was at US$ 1.1 million (Rs 49.0 million) consisting of proceeds from common shares issued of US$ 1.3 million (Rs. 54.2 million).

Overall cash and cash equivalents (including short term investments) at the close of 31st March 2007 were at US$ 295.1 million (Rs 12,717.5 million), compared to US$ 289.5 million (Rs 12,768.9 million) at the close of Q4 2006.

At the end of Q1 2007, receivables were at US$ 122.6 million (Rs 5,281.9 million) US$ 115.6 million (Rs. 5,099.9 million) in the previous sequential quarter. Days outstanding for the current quarter were at 72 days as compared and 71 days in Q4 2006.

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Figures in Million INR except EPS and Share Data

CONSOLIDATED STATEMENT OF INCOME (RS. ‘000): BASED ON CONVENIENCE TRANSLATION
For the  quarter / period ended

 

Particulars		Mar 31 2007		Dec 31 2006		Mar 31 2006		2006		Additional Provision in 2006		2006 (Excluding additional provisions)
Exchange rate $1 = INR		43.10		44.11		44.48		44.11		44.11		44.11
Revenues		6,724.1		6,804.9		5,775.5		25,533.1		—		25,533.1
Cost of revenues		4,151.7		4,214.7		3,592.8		15,747.3		(312.3	)	16,059.5
Depreciation		164.2		172.5		132.7		581.1		—		581.1
Gross Profit		2,408.2		2,417.7		2,050.1		9,204.8		312.3	(1)	8,892.5
Sales and marketing expenses		484.6		485.0		446.2		1,900.7		—		1,900.7
General and administrative expenses		703.3		687.7		762.7		2,963.1		—		2,963.1
Provision for doubtful debts and advances		27.7		16.6		6.0		52.5		—		52.5
Foreign exchange (gain) / loss, net		(113.4	)	26.0		44.2		121.2				121.2
Operating income		1,306.0		1,202.3		791.0		4,167.2		312.3		3,855.0
Other income / (expense), net		154.4		197.8		48.8		550.0		4.6		545.4
Income before income taxes		1,460.3		1,400.1		839.8		4,717.2		316.9	(2)	4,400.4
Income taxes		260.1		265.2		197.3		2,103.7		1,194.8		908.9
Net income/(loss)		1,200.3		1,134.9		642.5		2,613.6		(877.9	)(3)	3,491.4
Earning per share
— Basic		8.68		8.21		4.66		18.94		—		25.31
— Diluted		8.61		8.14		4.61		18.82		—		25.14
Weighted average number of common shares used in computing earnings per share
— Basic		138,342,512		138,178,492		137,818,174		137,957,477		—		137,957,477
— Diluted		139,413,330		139,357,451		139,511,561		138,904,860		—		138,904,860

**             Prior years’ tax review by IRS and the Department of Labor Review by Patni’s US Operations has resulted in the net reversals of additional provisions leading to an increase in Q2 2006 Gross Profit and Operating Income and a decrease in Q2 2006 Net Income.

(1) -      due to reversal of payroll taxes for earlier years, net of accrual from DOL review

(2) -      impact of 1, net of write-back of interest/penalty for earlier years

(3) -      impact of re-assessed corporate taxes for earlier years, net of 2

 

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Important Notes to this release:

—                                   Fiscal Year

Patni follows a January — December fiscal year. The current review covers the financial and operating performance of the Company for the first quarter ended 31st March 2007

—                                   U.S. GAAP

A Consolidated Statement of Income in US GAAP is available on page 3 of the Fact Sheet attached to this release

—                                   Percentage analysis

Any percentage amounts, as set forth in this release, unless otherwise indicated, have been calculated on the basis of the U.S. Dollar amounts derived from our consolidated financial statements prepared in accordance with U.S. GAAP, and not on the basis of any translated Rupee amount. Calculation of percentage amounts on the basis of Rupee amounts may lead to results that are different, in a material way, from those calculated as per U.S. Dollar amounts.

—                                   Convenience translation

A Consolidated Statement of Income as per Convenience Translation prepared in accordance with US GAAP is available on page 8 of the Fact Sheet attached to this release. We have translated the financial data derived from our consolidated financial statements prepared in accordance with U.S. GAAP for each period at the noon buying rate in the City of New York on the last business day of such period for cable transfers in Rupees as certified for customs purposes by the Federal Reserve Bank of New York. The translations should not be considered as a representation that such US Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated elsewhere in this document, or at all. Investors are cautioned to not rely on such translated amounts.

—                                   Attached Fact Sheet  (results & analysis tables)

About Patni Computer Systems Ltd:

About Patni

Patni Computer Systems Limited (BSE: PATNI COMPUT, NSE: PATNI, NYSE: PTI) is a global provider of IT Services and business solutions, servicing Global 2000 clients. Patni caters to its clients through its industry-focused practices, including insurance, financial services, manufacturing, telecommunications and media, and its technology-focused practices.

With an employee strength of over 12,000; multiple global development centres spread across 12 cities worldwide; 21 international offices across the Americas, Europe and Asia-Pacific; Patni has registered revenues of US$ 579 million for the year 2006.

Patni’s service offerings include application development and maintenance, enterprise application solutions, product engineering services, infrastructure management services, business process outsourcing, quality assurance and engineering services.

Committed to quality, Patni adds value to its client’s businesses through well-established and structured methodologies, tools and techniques. Patni is an ISO 9001: 2000 certified and SEI-CMMi Level 5 organization, assessed enterprise wide at P-CMM Level 3. In keeping with its focus on continuous process improvements, Patni adopts Six Sigma practices as an integral part of its quality and process frameworks.

For more information on Patni, visit www.patni.com.

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FOR MORE INFORMATION PLEASE CONTACT:

Investor Relations.

Gaurav Agarwal, Patni US; +1-617-914-8360; investors@patni.com

Gavin Desa, Citigate Dewe Rogerson India; +91-22-4007 5037; gavin@cdr-india.com

Media Relations. :

Heena Kanal, Patni India; +91-22-6693 0500; heena.kanal@patni.com

Tony Viola, Patni US; +1-617-354-7424; tony.viola@patni.com

IMPORTANT NOTE:

Certain statements in this release concerning our future growth prospects are forward-looking statements, which involve a number of risks, and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in IT services including those factors which may affect our cost advantage, wage increases in India, our ability to attract and retain highly skilled professionals, time and cost overruns on fixed-price, fixed-time frame contracts, client concentration, restrictions on immigration, our ability to manage our international operations, reduced demand for technology in our key focus areas, disruptions in telecommunication networks, liability for damages on our service contracts, the success of the companies in which Patni has made strategic investments, withdrawal of governmental fiscal incentives, political instability, legal restrictions on raising capital or acquiring companies outside India, and unauthorized use of our intellectual property and general economic conditions affecting our industry. The company does not undertake to update any forward-looking statement that may be made from time to time by or on behalf of the Company.

-Ends-

 

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PATNI COMPUTER SYSTEMS LIMITED

FINANCIAL AND OPERATIONS INFORMATION FOR THE
FIRST QUARTER ENDED MAR 31, 2007

April 25, 2007

NOTES:

—   Fiscal Year

Patni follows a January — December fiscal year. The current review covers the financial and operating performance of the Company for the quarter ended Mar 31, 2007.

—   U.S. GAAP

All figures in this release pertain to accounts presented as per U.S. GAAP unless stated otherwise.

—   Percentage analysis

Any percentage amounts, as set forth in this release, unless otherwise indicated, have been calculated on the basis of the U.S. Dollar amounts derived from our consolidated financial statements prepared in accordance with U.S. GAAP, and not on the basis of any translated Rupee amount. Calculation of percentage amounts on the basis of Rupee amounts may lead to results that are different, in a material way, from those calculated as per U.S. Dollar amounts.

—   Convenience translation

We have translated the financial data derived from our consolidated financial statements prepared in accordance with U.S. GAAP for each period at the noon buying rate in the City of New York on the last business day of such period for cable transfers in Rupees as certified for customs purposes by the Federal Reserve Bank of New York. The translations should not be considered as a representation that such US Dollar amounts have been, could have been or could be converted into Rupees at any particular rate, the rate stated elsewhere, or at all. Investors are cautioned to not rely on such translated amounts.

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Fact Sheet Summary Index

Ref Number		Description		Page No.
A		US GaaP Financials
A1		Conslidated Statement of Income		17
A2		Consolidated Balance Sheet USGAAP		18
A3		Consolidated Cash Flow Statement USGAAP		18
B		Indian GaaP Financials
B1		Conslidated Statement of Income		19
B2		Consolidated Balance Sheet Indian GaaP		20
B3		Consolidated Cash Flow Statement Indian GaaP		20
C		Reconcilation between US GaaP and Indian GaaP Income Statement		21
D		US GaaP Financials Based on Convinience Translation
D1		Conslidated Statement of Income		22
D2		Consolidated Balance Sheet USGAAP		23
D3		Consolidated Cash Flow Statement USGAAP		23
E		Operational and Analytical Information
E1		Revenue Anlaysis		24
E2		Revenue-Client Metrics		25
E3		Efforts and Utlisation		25
E4		Employee Metrics		25

 

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