In an interview to CNBC-TV18, Vijay Thadani, CEO, NIIT shares his view on Q3 earnings and his business outlook for the company.The company reported a consolidated net profit of Rs 1.8 crore against Rs 1.2 Cr year-on-year. The consolidated revenue of NIIT was around Rs 248.2 crore versus Rs 233.6 cr from a year ago period. Below is the verbatim transcript of the interview: Q: The revenue run rate is still muted at Rs 248 crore, it works to 7 percent. What can you guide in terms of a revenue growth for the next quarter and for the next year?
A: Yes, so I have to paraphrase this with the two important statements. One, it’s a seasonally weak quarter for us historically and from last 33 years quarter 3 is our weakest quarter. So it is a weak quarter.
Second in this particular quarter we have been focusing on a major business transformation program so another way of looking at the same result is that it is after many quarters some parts of our business is a challenge. This quarter we have a 6 percent growth which is aided by a very strong growth in corporate learning solutions and has been escalating much ahead of projections and so, a 28 percent growth in corporate learning solutions and with the strong margin as well as a strong order intake that they got is the highlight of the quarter.
Also, private schools have got a very good order intake of 41 percent growth in their order intake. So those are some of the contributors.
Our focus has also been on improving our balance sheet and the net profit improvement which you see is also contributed to a large extent through the reducing interest cost as well as improved liquidity as well as capital efficiency which is been visible.
Going forward, our focus is on business transformation and that business transformation is to prepare the organisation for the next phase of growth. We also have a succession plan in implementation and the timing could not have been better because it is the new team which is working on this whole business transformation case.
Nigel: Could you take us through the individual learning solutions? The net revenue came in at around Rs 77 crore.The last quarter, if you look at on quarter quarter-quarter basis which we are not comparing on that basis it was at around Rs 100 crore where indicated there was some pressure that time as well. Will quarter four look better, how are things shaping up over there?A: See the sentiment t is still weak on the individual business though there are some parts of the system like banking which is showing signs of improvement. I-T hiring has just picked up so we are hoping that not this quarter but in the following quarters when large number of graduates come out from colleges we should see an uptick but it is still to be seen as the hiring progresses and net hiring as well as fresher hiring improves, there are some very significant opportunities that we are in discussion with various employers which should come into play and all this is part of the business transformation agenda. So we will have to wait for a while before Individual business can start showing the true colours that it used to be.Latha: What would your margins be this quarter?A: Our overall margins this quarter are just two percent and that is contributed by an adverse business mix, operating leverage issues as well as the business transformation cost because this and the next quarter we are incurring these costs but those are all one time expenses which will get behind us so we should start the next year on a very strong footing.Nigel: Maybe from next year onwards, given that this quarter we had only two percent margins, from the first quarter of FY16, can we see those margins back up and if we are going to see them back up, what is the expansion we can see on the margin front?A: The potential for NIIT to improve its margins is fairly substantial. At our steady state we used to operate at 15-16 percent margin and that is a state we would like to go back to however the environment has to improve. The hiring environment has to improve. Some of the strong initiatives that the government has announced like Skillindia, Digital India are important contributors to making that reality happen so we will have to see how those get rolled out and we playing a significant part. Important thing is we have improved our market share, we have improved our market position. Our brand has actually remained strong and in fact become stronger.Latha: Can’t you give us one number or at least a ballpark number for next year’s revenue growth?A: In these uncertain times it is a real crystal gazing and therefore it will be difficult for us so we should extrapolate from discussions that we are having and rest we have to hope for the best because the market opportunity is very large and we need to make sure that the environment turns positive for us to and that is difficult to predict for us to take advantage of that.
Discover the latest Business News, Sensex, and Nifty updates. Obtain Personal Finance insights, tax queries, and expert opinions on Moneycontrol or download the Moneycontrol App to stay updated!
