Mastek, an IT solutions player having focus on insurance and government verticals worldwide, saw its consolidated net profit tumble 88% year-on-year to Rs 0.85 crore in the quarter ended June because of increased expenses, fall in revenues and rise in finance costs.
Though the company added eight new clients in the quarter gone by, the Mumbai-based firm garnered revenues worth Rs 220 crore, down one% from same period last year. On the other hand, the company’s total expenses rose 5% year-on-year to Rs 227 crore. Finance costs in the period under review were at 0.13 crore as against 0.11 crore a year ago.
The company quoted Farid Kazani, group CFO and Finance Director as saying, “the quarter has been quite challenging on the financial front. The right shifting of the project milestone on a project has led to an impact of Rs 10 crore on the revenue and profits for the quarter. However, once the project is executed successfully within the revised timelines, the company will be able to release profits out of the contingency held back on the said project in subsequent period.”
Even at the operational level, the company has moved into losses in the June quarter. The company has recorded a loss of Rs 6.31 crore in the second quarter as against a profit of Rs 5.97 crore in the corresponding period last year.
In the segmentwise revenue break up of the company, revenues from UK operations continued to remain in the forefront followed by North America.
Sequentially too, the performance was a dismal as revenues slipped 1.34% while bottomline was down by 92%.
Mastek said its billable utilisation in the second quarter stood at 85.4% as against 82.5% in the previous quarter. As on Jun 30, Mastek had a total 3,223 employees.
Though the company’s other income was the highest at Rs 6.69 crore in the period under review, up from 6.14 crore in the previous quarter and 5.06 crore from last year, it was unable to lend much cushion to the bottomline.
Despite this, the company continues to remain optimistic going ahead, “the UK geography has shown good improvement and we expect to announce few more deals in the coming quarter. The continued investment in the North America insurance market is expected to see conversions in the second half of the fiscal year,” Sudhakar Ram, group CEO and managing director was quoted as saying.
During the quarter, Mastek (UK), a 100% subsidiary of Mastek Ltd has entered into a ‘Shareholder Agreement’ with the The Law Society of England and Wales, United Kingdom to establish Legal Practice Technologies Limited (LPTL). Mastek (UK) owns 40% of the issued share capital of LPTL which amounts to Rs 4.10 crore.