Niit Pared 25% Staff To Survive Meltdown

The decline in information technology training and software development markets has cost a quarter of NIIT employees their jobs.

NIIT's annual report for the year ended September 30, 2001, shows that the company has reduced staff strength by 25 per cent (1,136 employees) between the quarter ended December 2000 and the quarter ended September 2001.

The maximum number of pink slips were given to the general workers compared with those in knowledge-based projects.

The company has cut the strength of knowledge-based employees by 309 in the last four quarters to 2,143, while that of unskilled and others fell by 827 to 1,631. The present employee strength of the company is 3,774.

The company's software solutions business, which grew by 7.62 per cent in the first half of 2001 (October-March), declined by 2.88 per cent in the second half of the year. From a growth rate of 29.6 per cent in the first half, the company's learning business declined by 45.7 per cent in the second half.

With a drop in total business by 8.3 per cent, the company's expenditure on salaries and wages increased to 17.3 per cent of the total revenues during the year ended September 2001 from 12.7 per cent of the total revenue in the corresponding period of the previous year.

The profit margin of the company fluctuated in the last four quarters. From a healthy operating profit margin of around 23 per cent in the first two quarters, the profit margin declined to 6 per cent in the third quarter and marginally improved to 11 per cent in the fourth quarter.

The depleted margins saw the company's net profit plunge 57.2 per cent to Rs 95.96 crore from Rs 224.13 crore in the previous year.

Meanwhile, NIIT has ceased to be a zero-debt company during the financial year ended September 2001. The company borrowed Rs 60 crore from financial institutions. This could have made to finance part of the investments which the company made in international subsidiaries.

During the year, NIIT made fresh investments of Rs 128.51 crore in its overseas subsidiaries. Its cash flows worth Rs 131.83 crore were not enough to fund the investments in the subsidiaries.

NIIT increased its holding in NIIT (USA) Inc by pumping in Rs 18.67 crore. NIIT (USA) had posted a Rs 9.98 crore loss during the year under review.

The company, during the period, invested Rs 37.74 crore in NIIT Antilles NV, Rs 16.68 crore in NIIT Mauritius, Rs 43.20 crore in NIIT Online Learning and Rs 9.62 crore in NIIT Europe.