NIIT reports a loss of Rs. 17.5 crore, owing to client dispute

Reported a 3.9% year-on-year growth in revenues at 611.2 crore

Mid-tier information technology (IT) services firm NIIT Technologies reported a net loss of Rs 17.5 crore during the quarter ended March 2015, due to a client dispute that led to a hit of Rs 80 crore. NIIT Tech reported a four per cent year-on-year growth in revenues at Rs 611 crore. Quarter-on-quarter, the growth in revenues was 2.7 per cent, lower than larger peers’.

“A dispute had arisen between one of the company's subsidiaries and its client in the Asia-Pacific, as communicated during the quarter. The dispute was resolved by concluding a settlement which released the company of its obligations to the execution of the programme,” NIIT Tech said. Meanwhile, the company acquired a majority stake of 51 per cent in Incessant Technologies for $17 million (Rs 108 crore). The latter provides business process management solutions.

The company reported revenue of $13.9 million in the last financial year and is estimated to report revenues of $17 million for the current financial year.                                                  

Arvind Thakur, CEO of NIIT Technologies said that the acquisition is in line with the company's focus on digital services. “There is a big opportunity for digital integration which involves integrating all the new platform into the legacy system; Incessant adds the BPM platform which we lacked earlier,” said Thakur. Currently, BPO services accounts for contribute around five per cent of NIIT Technologies' overall revenue.

“Incessant provides us with the capability to be a significant player in the digital integration space with digitization and automation of business processes for seamless customer experience”, added Sudhir Chaturvedi, COO, NIIT Technologies. The entity is expected to be margin and EPS accretive in financial year 2016.

The company’s consolidated revenues for fiscal 2015 grew by 2.9 per cent to Rs. 2372.5 crore. Reduced focus on domestic government business led to a decline by 38 per cent over previous year in the government sector and the company encountered client specific issues in the US in the first quarter, NIIT said.

“After an initial setback in Q1, the company reported steady improvement in both revenues and operating margins throughout FY’15”, said Thakur.