NIIT Tech staves off Re threat

CORPORATE SCORECARD

The hedging policy, cost control measures and price negotiations with clients helped Delhi-based NIIT Technologies to partly stem the rising rupee and record a profit after tax (PAT) of Rs 35.1 crore for the first quarter ended June 30, 2007, a 61 per cent rise from Rs 21.8 crore recorded in the same quarter of the previous year.

The company's consolidated revenues also grew by 20 per cent to Rs 229.4 crore compared with Rs 191 crore in the same quarter last fiscal.

Sequentially, the company's PAT slipped by 7.4 per cent from Rs 45.9 crore for the quarter ended March 31, 2007. While the revenues were down by 5.8 per cent from Rs 243.5 crore. Revenues were affected due to low order sales from the government sector which contributes close to 8 per cent.

The rupee did effect its operating margins. They were down to 18.53 per cent from 22 per cent when compared to the March quarter, which the company stated was due to the rupee's rise and increased wage bills.

"The company was able to negate the impact by 1.6 per cent due to hedging that the company resorted to in the quarter recording a net decline of 0.8 per cent," said Arvind Thakur, chief executive officer, NIIT Technologies.

"To further reduce the impact of the rupee in the following quarters, the company intends to reduce its onsite business which is currently 62 per cent and increase its share of its off-shore business from 38 per cent, by one per cent every quarter, as the margins are better," added Thakur.

NIIT Tech, further intends to reduce their dependence on increasing head count to non-linear options. The company has an order book of $105 million (around Rs 420 crore) executable over the next 12 months. During the quarter, 106 people were added to the employee base, taking the total number 4,554.

Europe continued to provide a dominant share of the business, contributing 52 per cent of the total revenues, while the Americas and the rest of the world (primarily Asia and Australia), contributed 31 per cent and 17 per cent, respectively, to the total revenue.