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Last Updated : Aug 18, 2016 03:05 PM IST | Source: CNBC-TV18

Expect single-digit revenue growth in FY17: NIIT Tech

The first quarter of FY17 was impacted due to seasonality and softness in insurance business in the UK post Brexit, although there have been no deal cancellations, says Arvind Thakur, CEO of NIIT Technologies.

NIIT Technologies reported a 63.8 percent drop in first quarter (Q1) net profit to Rs 28.6 crore compares to Rs 79 crore in preceding period. Operating profit slipped 19.5 percent to Rs 101.5 crore while the margins contracted 330 basis points.

However, the company expects a bounce-back in the second quarter of FY17, says CEO Arvind Thakur. Q1 was impacted due to seasonality and softness in insurance business in the UK post Brexit, although there have been no deal cancellations, he adds.

Due to the slowdown in Q1. the company expects single-digit revenue growth for the full year. 

Below is the verbatim transcript of Arvind Thakur's interview to Sumaira Abidi on CNBC-TV18.

Q: I want to start off by asking you about your start to year. It was not very good. You saw one big deal which got pushed to the second quarter. How are things shaping up?

A: You are right. In fact, the first quarter this year was expected to be soft primarily on account of seasonality that we see in our geographic information system (GIS) business which has the smallest business activity in the first quarter of the year and maximum in the fourth quarter. That is what was one prime contributor to the softness in the first quarter.

In addition, we also saw some softness in our insurance business in the UK primarily on account of the uncertainty that we saw as a result of the Brexit activity. These are two main reasons why we saw softness in the first quarter and of course we expect to bounce back in the second quarter and recovery from this little blip that we have seen in our business.

Q: You mentioned the impact of Brexit. We have already seen one of he big deal cancellations by Royal Bank of Scotland (RBS) or Infosys. Have you in particular had any deal cancellations?

A: We have not had any deal cancellations, but our insurance business is predominantly led by products business. It is an intellectual property (IP) solutions business that we have and that business grows on the back of new licence sales and revenues thereof. So, we have seen the uncertainty resulting in no new engagements or expansions of that business.

Q: What about the FY17? Will revenue growth be in line with the NASSCOM guidance?

A: We have had a dip in our first quarter which gives us a little set back. So, revenue growth for the full year would be in single digits only.

Q: Also, if I look at your order book for the third and the fourth quarter of FY16, it was pretty much at about USD 120 million odd. Now, the first quarter of FY17 has seen this dip to about USD 110 million. How is it going to be this quarter? What is the kind of trajectory you are looking at?

A: You are absolutely right. In the last two quarters of the last year, we have actually stepped up our intake which used to be typically between USD 80 million and USD 100 million per quarter to about USD 120 million. As you mentioned earlier, one of our deals has also slipped from Q1 to Q2, so we expect Q2 also to come back to the same levels as you have seen in Q3 and Q4.

Q: You had an exceptional loss of about Rs 36 crore, which was a provision for amounts outstanding in respect of a government contract which was put on hold. So, are there any other such contracts which have also put on hold?

A: No, this was a specific situation where we entered into a mutual consultation because the programme was getting significantly delayed and our accounting policy required us to take a provision for the outstanding amounts in case there was a hold of this nature. So, that is specific to that instance only.

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First Published on Aug 18, 2016 02:49 pm
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