In spite of a tax payment made to the Australian government, lower spending by the Indian government on account of elections, and other one-time charges, NIIT Technologies said its annual results were among the best in the history of the mid-tier information technology (IT) firm.
NIIT Technologies reported Rs 972.2 crore in revenue in Q4 ended March 31, an annual growth of 23.2 per cent, while net profit was Rs 105.5 crore, a rise of 22.5 per cent over last year.
Operating margin, however, fell 42 basis points (bps) annually on account of a voluntary tax disclosure made by NIIT Technologies in Australia, amounting to Rs 5.6 crore. Barring this one-off cost, operating margin rose 16 bps to 18.1 per cent.
Margins were also affected because of additional charges pertaining to legal and professional costs on account of acquiring WHISHWORKS IT Consulting, an IT services and consulting company specialising in MuleSoft and Big Data technologies.
It further said that because of the model code of conduct kicking in during the quarter, government procurement came to a ‘near halt’.
“The geographic information system business tends to rely very significantly on government spend and hence, Q4 spend, instead of being a bumper quarter for the segment, ended up being a 13 per cent decline over the third quarter,” NIIT Technologies Chief Executive Officer Sudhir Singh told Business Standard.
The banking and financial services business grew 5.3 per cent sequentially, accounting for 16.2 per cent of revenue during the quarter, while the travel and transportation business rose 2.5 per cent sequentially and contributed 27.1 per cent of revenue.
The insurance business declined 6.5 per cent sequentially, as the contracting of a licence sale got delayed. Insurance contributed 27.7 per cent of revenue.
Baring yet to come on board
Baring Private Equity Asia, the Asia-focused private equity firm and funds affiliated with it, said in early April that it would buy a 30 per cent stake in NIIT Technologies.
It also made an open offer to the public shareholders of NIIT Technologies to purchase up to 26 per cent additional shareholding as part of the same deal.
"At this time, the definitive agreement has been signed, but Baring doesn't have its representatives on the board. So, I think we'll have clarity by next quarter. Baring has indicated it likes the story and path charted out and it would like to work with the leadership to sustain and accelerate the growth of the business," Singh said about Baring's involvement with NIIT Technologies.
NIIT Technologies has also been very vocal about its strategy to hire senior-level talent from top-tier technology services firms under Singh.
The Noida-based firm hired Vamsi Rupakula, a managing director at Accenture as the global head of the infrastructure and cloud services business. It also hired Sreekanth Lapalla, earlier global delivery head at Virtusa, to head its Incessant business.
"We are going to adopt a hybrid model (of hiring). Fresher intake has always been a channel for us. We are also consciously looking for other avenues like a programme that we run with NIIT University where we have 120 people who are doing a Masters programme in artificial intelligence and data science. Structured specifically for us, they were hired after being interviewed by us. If they complete the programme successfully, we will hire them as employees, obviously at a higher salary point than normal lateral entrance or freshers," added Singh.