INTERVIEW-Mastek likely to cut 2008/09 revenue forecast

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By Bharghavi Nagaraju

MUMBAI Nov 14 (Reuters) - Software firm Mastek Ltd (MAST.BO) is likely to revise its 2008/09 revenue forecast downward due to the current global financial crisis, an official said on Friday.

Mumbai-based Mastek, which derives two-thirds of its revenue from Europe, had earlier said revenue for the year to June 2009 would rise by a third over last year's 9.16 billion rupees.

"When we made the forecast, 30 percent looked solid at that point of time," Group Chief Financial Officer R S Desikan told Reuters in an interview. "We have a lot of variables now."

The company would assess the situation and decide on a revision in January, he said. To a query on whether the 30-percent growth forecast would be cut, he said "It looks like that."

"The pound sterling was at 82-83 rupees at the beginning of the year and it is at about 75 now," he added. "We will have to consider that now."

The current financial crisis, which saw the collapse of several large banks in the U.S., has hit India's top software firms including Tata Consultancy (TCS.BO), Infosys (INFY.BO) and Wipro (WIPR.BO), which get a huge chunk of revenue from the U.S.

Infosys and Wipro have cut their forecast for the full year.

However, Mastek's exposure to the banking sector was below 10 percent, Desikan said.

"Our exposure to pure banking is minimal, compared to some of the larger players," Desikan said. "And not that any of our customers in the U.S. have folded up like some of the banks."

The company's focus on government projects is also expected to keep it in good stead, he added.

"We are talking to governments in India and UK. We are pitching for projects outside UK."

In April, Mastek bagged a 10-year, 27-million pound contract from the UK defence ministry, in partnership with Thales (TCFP.PA), Fujitsu Services and Flyware.

Governmental contracts contribute about 40 percent of Mastek's total revenue.

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ACQUISITION PLANS

However, Mastek continues to scout for buys worth $10-$40 million , he added. The company is eyeing companies offering software services in the insurance and healthcare sector.

"Cash is not an issue for acquisition," he said. "We are looking at additional opportunities right now."

The company had about 2 billion rupees in cash and cash equivalents and was generating 500 million rupees per quarter, enough to fund the acquisition, he added.

Earlier this year, Mastek said it would pay $29 million to buy U.S.-based STG International, an enterprise solutions provider for the North American property and casualty insurance industry.

Last year, Mastek acquired Vector Insurance Services, a technology solutions provider that focuses on the North American insurance industry, for $10 million. Mastek derives about a third of its revenue from North America. (Editing by Prem Udayabhanu)