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NIIT Tech Q4 net falls 15% on hedging losses

NIIT Tech Q4 net falls 15% on hedging losses
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First Published: Tue, May 26 2009. 04 35 PM IST
Updated: Tue, May 26 2009. 04 35 PM IST
New Delhi: NIIT Technologies Ltd’s net profit for the quarter ended March slipped 15% on hedging losses and a tough business environment, its chief executive officer said on Tuesday.
On a consolidated basis, its profit stood at Rs263 million, down from Rs310 million last year. Revenue fell 8.8% to Rs2.27 billion from Rs2.49 billion last year.
“Every organisation is cutting costs, so the expectation from every customer - our(s) as well as for the whole industry - is to provide more for less,” Arvind Thakur told a news conference after announcing the firm’s results.
There were ‘serious price negotiations´ with retail and manufacturing clients, Thakur told reporters, adding travel clients were extending their contracts.
India’s export-oriented software-service firms, long accustomed to a scorching pace of growth, face a gloomy year as clients slashed technology spending after the financial crisis chomped profitability or even bankrupted some of them.
Currency fluctuations saw the firm logging Rs221 million in hedging losses for the March-quarter, Thakur said.
The rupee declined 3.8% against the dollar in the March quarter. Against the pound, it fell 1.9%.
The software firm posted a 58% fall in March-quarter standalone net profit to Rs227 million.
Margins erode
The software firm’s operating margins fell by 102 basis points to 17.8% for the March-quarter, Thakur said.
“We are seeing an erosion of 1 percentage point in offshore contracts and 3 percentage points on onshore, in new contracts,” he said.
The software firm has $97 million in orders executable over the next 12 months, NIIT Technologies said in a statement.
For fiscal 2008/09, NIIT Technologies signed orders worth $312 million, up 36% from last year. For the March quarter, it signed deals worth $46 million, adding five new clients.
Close to half of the firm’s revenue comes from Europe, the Middle East and Africa, while the Americas contribute another 31%.
NIIT Tech has said it is tapping its existing clients for contract extensions and new orders to counter the slowing deals from potential and new clients.
Shares in NIIT Tech, currently valued at close to Rs6.1 billion, had lost nearly a quarter of their value in the March quarter, compared with a 2.6% rise in the sector index and a 0.6% uptick in the broader market.
The shares ended down 2.8% at Rs104 rupees, while the Sensex was down 2.3%.
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First Published: Tue, May 26 2009. 04 35 PM IST