CMC Apr-Jun net profit at Rs 58.42 cr, up 10% yoy

Company's Education and Training segment to show increased income from Q2

CMC Ltd, a subsidiary of Tata Consultancy Services (TCS), reported a consolidated net profit of Rs 58.42 crore in the June quarter, up 10% from same period last year even as the company had to take a hit of Rs 18.83 crore on account of increased depreciation to comply with New Company's Act.

The company reported consolidated revenues of Rs 592.63 crore in the period under review, up 22% from corresponding period last year. The revenue stream was led by the systems integration segment which garnered more than half of the total income at Rs 383.13 crore and was followed by customer services stream at Rs 104.75 crore.

Though revenue from the company's education and training segment stayed the lowest contributor, going ahead it is likely to increase given that CMC plans to lay more focus on the same.

"In Education and Training, we have made a conscious reorientation of the segment and restructured it making some investments in additional centres, classrooms, branding. We see a positive impact of this from next quarter. Also we plan to make proportionate investment in this segment going ahead," Managing Director and Chief Executive Officer R Ramanan told Business Standard. In the quarter ended June, education and training revenue stood at Rs 11.06 crore.

Sequentially, the company's performance witnessed a drop at the revenue as well as bottomline level. The topline declined by 5% on quarter-on-quarter basis while the net profit was down 34%.

"CMC is a project driven company and so some of the projects and completion of the projects is towards the end of the year which is which is what kicks in a lot of revenue. So a fair comparison would be year on year," said Ramanan.

Regarding the various announcements that the government has made at its budget last week, Ramanan said, "We see a number of opportunities from the government in terms of projects going ahead but it is too early to say how big the opportunities would be."

CMC has had a long association with Indian Railways and has developed end-to-end solutions for them in the past.

In the quarter ended June, the company has added 12 new clients of which nine are in the domestic market. "Of the nine clients, four are from the government so you see, we can see the government orders coming in though overall it remains balanced between the government and the private sector," said Ramanan.

Ramanan sees significant number of orders flowing from the government only by the end of the current financial year. "Identifying the appropriate company and awarding will take the next two quarters and so we see the revenues flowing in by the end of the year and then it will roll on."

Internationally, the company sees increased traction in Europe, West Asia and Africa and to that extent CMC plans to strengthen its sales presence in these geographies. "We have already invested in product development and now we will be focusing on aggressive sales in order to increase presence in these geographies," said Ramanan.

Of the total revenue, the share of international business stand at 67.8% in the quarter ended June, up marginally from 67.4% in the same period last year.