labels: hcl technologies
HCL net up, NIIT in red news
Pradeep Rane
23 October 2001

Mumbai: Leading information technology company HCL Technologies has posted a 21.18-per cent increase in net profit to Rs 108.69 crore for the quarter ended 30 September 2001, as compared to the Rs 89.69 crore in the first quarter of this financial year. The total income for the quarter surged by 23.15 per cent to Rs 216.79 crore from Rs 176.04 crore in the same period last year.

The board has approved a proposal to provide interest-free loans not exceeding Rs 50 crore to HCL Technologies Employees Trust for the purchase of equity shares of the company from time to time.

HCL Technologies chairman, president and CEO Shiv Nadar said: Our offshore business continues to be robust and its competitive positioning remains unchanged despite the downturn witnessed in early 2001 and the post-September 11 scenario. I am also happy that our entry into business process outsourcing has started yielding good results.

The recent acquisitions in the banking and EAI practices, in line with our non-linear growth strategy, will start contributing to revenues from the second quarter. I am confident of achieving the revenue target of Rs 1,750 crore and a net profit of Rs 575 crore after provisionings in the financial year 2002, he said.

The profit fell short of analysts forecasts, but the company said it is confident that it would achieve its full-year net profit target of Rs 575 crore after provisions.

In the meantime, IT education firm NIIT has reported a 86.2 per cent drop in net profit at Rs 12.51 crore for the quarter ended September 2001, against Rs 90.8 crore registered in the corresponding quarter in the previous financial year.

Net sales of the company stood at Rs 164 crore for the same quarter, against Rs 215 crore in the same period, representing a 23.7-per cent fall. Global revenue stood at Rs 247.7 crore in the period, against the Rs 366 crore in the corresponding quarter last year. The board also declared a dividend of Rs 4.50 on each share of Rs 10 face value.

NIIT, the number one IT education and training institute in the country, has reported an operating loss from this very business for the first time in the quarter ending September, NIITs last quarter. This quarter is considered to be the best time for education companies with maximum new admissions taking place in the July to September period. Analysts pointed out that this did not bode well for NIIT. The operating margin in the quarter stood at 10.82 per cent as against 48.52 per cent in the fourth quarter ended September 2000.

NIIT believes that the economic slowdown will lead to a consolidation in IT education. The process of clearing out non-serious players, which started early in the season, continued during the fourth quarter, as a few more players folded up. It is expected that in an uncertain period of the market-churn, students will choose brands like NIIT because of the trust and security that this brand offers.

Commenting on NIIT`s Q4 performance, NIIT CEO Vijay Thadani said: Our strategy for the learning business has given us a 2-per cent increase in marketshare, while our focus on verticals in software gave us significant wins in two Fortune 500 customers last quarter. Q4 saw the addition of 26 new customers, including Fortune 500 companies - Office Depot, the world`s leading provider of office products; and Marks and Spencer, a global retail chain.

Fresh order intake of US $17 million in Q4 marks a 55-per cent improvement over US $11 million in Q3 FY 2001. The financial segment saw the addition of Pension Trust of the UK, Leigh Mardon in Australia, and Skindia in Japan as new customers Solutions provided in finance also included implementation of NIITs own IPR offering, Electronic bill presentment and payment, for two large clients.

Revenues from finance, insurance and banking verticals increased from 19 per cent in Q3 to 21 per cent in Q4 in line with the strategy to focus on this segment. NIITs people strength at the end of Q4 was 3,774. It has been following the just-in-time hiring practice since March 2001. In software solutions, NIIT is creating two major strategic business units (SBUs) to enter into new vertical segments of transport and retail. NIIT will also enhance its focus on the existing vertical segment of financial services by dividing it into wholesale, insurance and retail.

NIIT is planning to double the education network in Andhra Pradesh to 200 over the next two years and increase the number of NIIT domestic centres to 3,000 (2,467) by September 2002. While the delivery of computer education to students in over 1,100 government schools in Karnataka, Punjab and Tamil Nadu continued, in Q4 NIIT added West Bengal by bagging a pilot project for introducing computer education in 100 government schools.

Over the next three years, online education is expected to account for 10 to 15 per cent of NIITs total turnover. The e-learning component of the global IT training market, at US $1.7 billion, is growing at a CAGR of 56 per cent and is projected to be a US $5.3-billion industry with a 37-per cent share of the overall IT training market by 2003.

Revenues in NIITs international education business are currently growing by around 50 per cent per annum and it is expected to sustain a similar topline growth over the next three to four years. This should give a sustained revenue growth in learning solutions of 12 to 15 per cent per annum over the next three to four years.


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HCL net up, NIIT in red