Infotech Q1 net dips 18%

Infotech Enterprises Limited, a Hyderabad-based technology solutions provider offering engineering and geographic information services, reported a net profit of Rs 26.85 crore for the first quarter ended June 2011, as compared with Rs 32.89 crore during the same period a year ago, reflecting a decline of 18.36 per cent. Revenues, however, grew 37 per cent to Rs 346.67 crore, as against Rs 252.89 crore.

“Being the first quarter of the year, we gave annual increments to our associates and this is the predominant reason for our operating margin to drop by 180 bps (basis points) to 12.5 per cent (16 per cent in corresponding quarter last year). Though the net impact of salary increases was 280 bps, we were able to contain the overall impact on the company at 180 bps, both due to volume growth and managing margin levels,” BVR Mohan Reddy, chairman and managing director, stated in a release on Wednesday.

The first quarter saw strong volume growth from both verticals – N&CE (network and content engineering) and engineering – at 4.4 per cent and 6.3 per cent respectively. The company's liquidity continued to be strong with a cash position of Rs 393 crore, Reddy said.

“Our profit after tax was lower this quarter due to higher tax rate on account of expiry of STPI benefits. We currently target to have 450 seats operational from October 2011 in our SEZ facilities at various locations,” he added.

Infotech’s scrip plummeted 86 per cent to end the trade at Rs 138.85 on the BSE on Wednesday, over the previous close of Rs 140.05.