5% okay thank you. I guess my next question is looking at the wage hikes that you gave, that during Q2, I think you typically give the wage hikes at the beginning of the quarter but this year, I think it got pushed out a little further. So looking at the operating margins for Q3, should we expect that the operating margin that we would actually see the bulk of the impact of the wage hike in Q3 rather than in Q2?
Ramalinga Raju
Kanchana, I think there is no change in the policy. We give increment with effect from 1st July. That is in the vogue this practice in vogue for the last two to three years. So that continued during this year. So the full impact of the increment is felt in Q2 itself.
Kanchana Vaidyanathan – Pacific Crest Securities
Okay. I think next question is just looking at your BPO business, what was the revenue in the US dollars and also could you comment on the BPO business? If you recall last quarter, you actually had an issue with one of the clients, how you got cancelled. Can you give us an update on what is happening in the BPO business?
Ramalinga Raju
On BPO business, relative to Q1 has done well. The revenues have increased compared to Q1. In rupee terms we have seen a growth of almost 15% on quarter-on-quarter and similarly, on operating margin front the operating losses have come off. Those were around 13% of the operating loss, 13% of revenues last quarter. Now it has come down to now roughly around 6%. Similarly, the net profit level, the net losses has also come down. So I mean quarter-on-quarter basis, we have seen improvement on the Satyam BPO front. So that is one important feature of this quarter and coming to the business, the animation project that has got delayed. I think that it is still, as we were mentioning, it is still intact and we expect that it happen in Q3 and Q4.
Kanchana Vaidyanathan – Pacific Crest Securities
Okay and finally, I was wondering if you could talk about your manufacturing and your retail verticals. I guess the expectation in Q3 and Q4, where are you seeing as strength, I mean the areas of strength and the areas of weaknesses in these two verticals?
Ram Mynampati
Well, if you look at the numbers that this quarter you will notice that the manufacturing has grown, whereas retail has not grown as much as we would like this quarter, that is including retail and consumer oriented markets. The impact of the current economy on these markets is in front of us and not behind as in a sense that we don’t know exactly where the impact of credit squeeze impacting the capital flow that would impact spending and manufacturing. That is difficult to gauge at this point because we don really know, how long it would take for this situation to get better. And that would potentially impact the spend in the manufacturing in there, by the business in manufacturing sector. But there are segments in manufacturing that continue to do well Aerospace and defense are doing well. The heavy manufacturing sector is doing well as well. In retail and transportation sector, we see some of the markets like the apparel market, the food and beverages market, these seems to be doing well. But the markets that are predominantly consumer-centric is where, potentially there might be some slow down if the consumer spending were to slow even further than what is reported to date. So it’s very difficult to predict where these markets would be and where the spending would be and we would obviously be closely following the markets and the parameters that would impact spending in this space.
Kanchana Vaidyanathan – Pacific Crest Securities
Okay, thank you that was very helpful.
Ramalinga Raju
Thank you.
Operator
Thank you Ms. Vaidyanathan. The next question is from the line of Arvind Ramnani from Bank of America Securities. Please go ahead.
Arvind Ramnani – Bank of America Securities
Sure, are you looking to make any alternations to your hedging strategy based on recent currency volatility?
V. Srinivas |
