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Last Updated : May 31, 2018 05:05 PM IST | Source:

HGS Q4 net profit down 1.4% sequentially due to wage hikes in Indian states

The company had registered a net profit of Rs 42.7 crore in the January-March 2017 quarter.

Neha Alawadhi @alnehaa
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Business process management company Hinduja Global Solutions’ net profit for the fourth quarter fell sequentially 1.4 percent due to the impact of the Karnataka wage hike, but the company said it expects the coming year to be better.

“The minimum wage in India has impacted our fourth quarter results by Rs 20 crore or so,” said Partha DeSarkar, CEO of HGS. “We have taken that in our stride, but it will have an impact on our numbers going forward,” he added.

Several states in India introduced wage hikes during the quarter, a move that is likely to have an adverse impact on the BPM industry that is labour intensive and works on low margins.

 DeSarkar said, however, that HGS is beginning the fiscal year with an “oversold pipeline”, and that it would mean “bumper growth” next year.

He added that the company had some large wins from new logos especially in the second half of the fiscal that will provide a strong base for revenue growth in FY2019.

Net profit at HGS was Rs 48.2 crore for the quarter ended March 31, 2018. This included the impact of an exceptional item of Rs 12 crore on account of the company's UK business.

HGS’s revenue from operations in the fourth quarter grew 2.9 percent sequentially to Rs 10,003.8 crore.

"Although there has been softening of EBITDA margins in FY2018 due to performance of the UK and India Domestic business, profit after tax for FY2018 grew by 7.2 per cent due to lower depreciation, interest and tax costs," DeSarkar said.

The healthcare/insurance business accounted for 51 percent of the company’s fourth-quarter revenue.

DeSarkar said the HGS will continue to focus on the vertical, and that it has trained doctors, nurses, PhDs and MDs in offshore locations and will hire more in the US going forward.

EBITDA margin stood at 10.2 percent, impacted by a one-time cost of acquisitions made by the company during the quarter.

The total headcount was 44,265 at the end of the fourth quarter, and HGS hired about 1,000 people during the year.

DeSarkar said the hiring numbers would be similar going forward.

(With inputs from PTI)


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First Published on May 31, 2018 11:20 am
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