Hinduja Global's Q2 net down 10.5% at Rs 38.5 crore

The company's net profit stood at Rs 42.9 crore in the year-ago period

BPO services provider Hinduja Global Solutions (HGS) today said its consolidated net profit declined by 10.5% to Rs 38.5 crore for the second quarter ended September 30, 2014 even as its consolidated net sales registered a growth.

Its net profit stood at Rs 42.9 crore in the year-ago period, it said in a statement.

HGC, part of the diversified Hinduja Group, posted a 8.5% growth in consolidated net sales at Rs 702.1 crore in July-September quarter this fiscal from Rs 647.3 crore in the same quarter of 2013-14 fiscal.

Quarter-on-quarter, the firm's net profit rose by 18.3% in July-September from Rs 32.5 crore in the first quarter of 2014-15 fiscal. Net sales were up 5.4% from Rs 666.2 crore during the same period.

Commenting on the performance, HGS CEO Partha DeSarkar said, "Our EBITDA margin of 11.5% remained stable at the first quarter levels after absorbing substantial ramp-up costs related to the expansion of facilities in the Philippines."

Net sales was helped by broad based growth across all geographies and verticals, with healthcare being the major contributor. The growth in the quarter was offset to a certain extent by unfavourable foreign exchange variations of around 3.5%.

As of September 30, 2014, HGS had a net debt of Rs 67.8 crore and a net worth of Rs 1,522.1 crore.

The firm had 143 active clients (excluding payroll processing clients) at the end of the second quarter.

The total headcount stood at 28,120, of which 60% were based in India, 19% in Philippines, 9% in the US, 9% in Canada and the remaining 3% in Europe.

DeSarkar said, "Looking ahead, we see significant growth opportunities across our business. Healthcare vertical, in particular, is anticipated to be a major growth driver in the near term. Keeping in view the sales pipeline, we are confident that growth trajectory will be maintained."

On its performance outlook, HGS said in the US, the firm continues to invest in sales and account management to strengthen client relationships, while in Canada it plans to expand existing facility to service increased volumes. Ramp-up cost may impact margins in the near term.

In Europe it will continue to expand profitability as well as investing in sales and marketing to support growth, while the Philippines market continues to experience strong demand for delivery centres, the company said.

The company's operations in India is expected to benefit from expansion of the line of services from existing clients, the statement said.