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NIIT quarterly profit up 57% on high-margin deals, tax breaks

NIIT quarterly profit up 57% on high-margin deals, tax breaks
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First Published: Wed, May 05 2010. 05 49 PM IST
Updated: Wed, May 05 2010. 05 49 PM IST
New Delhi: NIIT Technologies Ltd on Wednesday said its quarterly profit rose 57% on increase in high margin contracts, lower depreciation and tax reliefs, and expects business to improve in 2010-11 as the economy recovers and on greater focus on emerging markets.
“A better economic environment, focus on Asia-Pacific and India and growth in the US” will be key growth drivers in 2010-11 for the software company, chief executive Arvind Thakur told reporters on Wednesday.
The company secured fresh orders worth $124 million during the Jan-March quarter and added five new international clients. At present, it has $147 million worth of orders executable over the next 12 months.
NIIT Technologies will focus on government contracts in India and other countries and expects its contribution in overall revenue to increase this year from the current 5%. “There will be pressure on margin because of government contracts,” Thakur said, “as government contracts require to provide complete solution for which one will have to purchase hardware.”
Banking and financial services, travel and transportation together contribute 74% to the company’s total revenue. The contribution of retail and manufacturing, 11% at present, may fall this year, finance chief KTS Anand said.
The company lost a retail client in Europe and sees the continent as a ‘concern’, Anand said. Europe’s contribution declined to 43% in FY10 from 50% in the previous year, compared to a rise to 24% from 20% for India and Asia-Pacific.
NIIT Technologies, which has a cash reserve of Rs190 crore, plans to acquire a software company in the financial services or travel segment, Thakur said without giving detail.
High margin
The software firm reported a consolidated profit of Rs41.3 crore for Jan-March period, against Rs26.3 crore in the previous year. Revenue rose 5% to Rs240 crore.
The operating margin expanded by 432 basis points to 22%. Increase in high-margin contracts and cost management helped expand margin, Anand said.
The company did not pay any tax this year compared to Rs4 crore in the year-ago quarter, benefitting from the government sops for software makers.
The firm logged losses of Rs12.5 crore for the March quarter due to currency fluctuations. It has currently hedged $99 million worth of orders at Rs43.04 a dollar for the next four quarters.
The rupee rose 3.6% against the dollar in the March quarter after a 4.7% gain in 2009.
Shares in NIIT Technologies, which the market values at about Rs1,100 crore, rose 0.48% to Rs188.50, while the Mumbai stock market was down 0.29%.
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First Published: Wed, May 05 2010. 05 49 PM IST