NIIT Technologies’ net profit up by 61%

30 July, 2007:

IT solutions firm NIIT Technologies has reported a 61% rise in profit after tax over the same period in 2006, to touch Rs 351 million for the quarter ended June 30, 2007.

The consolidated revenues for the first quarter were to the tune of Rs 2,294 million – representing a year-on-year growth of 20%. While IT solutions contributed Rs 2,136 million, BPM business fetched Rs 158 million.

On a sequential basis, the company’s net profit dropped by 23.5% from Rs 459 million for the January-March 2007 quarter. Consolidated revenues for the April-June 2007 quarter were down by 5.7% from Rs 2,435 million in the previous quarter.

Operating margins declined by 0.46% on a year-on-year basis during the quarter. On a sequential basis, margins were down to 18.5% from 22% in the January-March quarter, which the company attributed to the rising rupee and increased wage bills.

Arvind Thakur, chief executive officer and joint managing director of NIIT Technologies, said the company added six significant customers, leading to a fresh order intake of $40 million. The pending order book executable over the next 12 months stands at $105 million.

Europe continued to provide the maximum share of business, Thakur added, representing 52% of total revenues, while the Americas contributed 31% during the quarter. The rest of the world contributed 17% of the revenues.

In all, 106 people were added during the quarter, taking the total number of people engaged by the company to 4,554 by the end of the quarter.

NIIT Technologies, which has customers in North America, Europe, Asia and Australia, offers services in application development and maintenance, enterprise solutions and business process management to organizations.

While the company does not expect a sharp appreciation in the rupee in the second quarter, it is looking at new business models to counter any future currency fluctuations, according to Arvind Thakur. He went on: “We would negotiate at least a 1% price increase with our clients. We would also look at more fixed price contracts in future."

The company got its clients to agree to a 1% price revision in the first quarter. Currently, 40% of NIIT’s contracts are fixed price.