Mastek sees revenues from insurance segment rising

MUMBAI (Reuters) - Mid-sized software firm Mastek Ltd. sees increased revenues from its insurance segment in the next few years, a senior company official said on Thursday.

"There are a lot of opportunities for work on insurance as in the UK most of the processes are run on legacy platforms. Revenue from insurance could go up to 32 percent in two years," Chief Financial Officer Jamshed Jussawalla told Reuters.

About 60 percent of the company's revenue comes from contracts in the UK.

The insurance business contributed to 25 percent of Mastek's revenues in the year to June 2006.

Jussawalla said in the last three years Mastek's insurance business had grown 300 percent, while in the last quarter it showed a rise of 43 percent on year.

"The only problem with the insurance segment is that in this space the players take a lot of time to come to a decision, so deals take a lot of time to fructify," he said.

The other major segment for the company is the government sector, which contributes to 44 percent of revenues.
"We are on track to meet our targets," Jussawalla said. For the current quarter, the company had forecast net profit in the range of 207-217 million rupees and revenue of 1.95-2 billion rupees.

Mastek also expects to see the share of revenues from fixed price projects going up to 40 percent this quarter, from 37 percent in the previous quarter, Jussawalla said.

Fixed price projects run the risk of an adverse impact on margins if the company is not able to stick to its delivery schedules.

"We thrive on fixed price contracts," said Jussawalla.

Most insurance contracts, which have a long duration, are fixed price projects, he said.

The company's shares closed 1.35 percent lower at 347.20 rupees in the Mumbai market.