IBM India reported a net profit of Rs 2,070 crore for the year ended March 2021, down 21 percent from last year due to renegotiation of contracts and lower billings.
The company had reported Rs 2,617 crore in net profit for the same period last year. Revenue fell 6 percent to Rs 25,365 crore for FY21, from Rs 27,103 crore for the same period last year, according to a filing by the business intelligence platform Tofler.
The company’s total expenses for the fiscal were reported at Rs 22,311 crore.
According to the filings, the decline in revenue was driven by lower reimbursement billings and renegotiation of some long-term contracts. While profit from operations remained mostly stable, interest and foreign exchange gains contributed to a marginally lower pre-tax-income, the filing said.
During the period, IBM created a separate public entity, Kyndryl, for its Managed Infrastructure Services (MIS) business to focus on cloud. “Kyndryl will remain IBM’s preferred partner for infrastructure. IBM USA will spin off the global MIS Business into Kyndryl and the shareholders of IBM USA will be distributed shares of Kyndryl in the same proportion as their shareholding in IBM USA,” the filing said.
“In India, the MIS Business presently carried out by the company is proposed to be transferred (by way of a court approved demerger) to its newly formed wholly owned subsidiary, Kyndryl Solutions Private Limited (formerly known as ‘Grand Ocean Managed Infrastructure Services Private Limited’),” the filing read.
The company received adequate sanctions from the Indian courts on August 6, 2021 for the demerger, the report said.
“The extent to which the coronavirus impacts our operations depends on future developments, which are highly uncertain and cannot be predicted with confidence, including the duration of the outbreak and the actions that may be required to contain or treat its impact. We will continue to closely monitor any material changes arising out of future economic conditions and impact on our business,” IBM India said in the filing.
However the company said that the demand outlook looks robust.
“The pandemic has significantly accelerated the digital transformation journey of companies of all sizes and industries world over - what we would see happening in five or six years is now happening in a year or less. The question for enterprises is not “if” or “when” – it is “how fast”. The IT landscape in India has also leapfrogged with exponential technologies such as Hybrid Cloud, Artificial Intelligence (AI), analytics etc, and helping clients take advantage of the data paradigm and reshape standard business models,” it added.