Tech & Telecom Players SeeProfits Under Pressure

Updated: Jul 31 2002, 05:30am hrs
MTNL Net Crashes
Our eFE Bureau
New Delhi: The government-owned Mahanagar Telephone Nigam Ltd (MTNL) Tuesday reported a sharp 34 per cent drop in net profit for the first three months of the current financial year to Rs 249.87 crore from Rs 377.31 crore in the same period a year ago. Income for the period was down a marginal 0.1 per cent to Rs 1,493.65 crore from Rs 1,495.31 crore.

The company blamed the steep decline in domestic long distance tariffs, higher tax outgo and pension payments for the declining profits. This is the quarter in which the impact of the 62 per cent reduction in domestic long distance tariffs sunk in. Also, we had to make a Rs 60 crore provision for pension. In addition, the tax outgo was higher since we have exhausted the five year tax-holiday period, chairman and managing director of the company, Narinder Sharma, said.

Staff cost (which includes the pension payment) during the quarter soaked up over a fourth of the total income during the quarter at Rs 388.98 crore against Rs 319.19 crore in the corresponding period a year ago. Provision for taxation was up, to Rs 110.45 crore against Rs 62 crore in the same quarter a year ago.

Nevertheless, Mr Sharma said that he was not unduly concerned about the numbers and they would improve during the course of the year. New revenue streams will gain strength. We also expect to get a higher share of revenue from Bharat Sanchar Nigam Ltd and Videsh Sanchar Nigam Ltd, Mr Sharma said.

For the current quarter, a provisional revenue-share has been worked out which is likely to be revised upwards once MTNL starts levying fair charges for terminating calls in the Delhi and Mumbai network.

During the year, the firm also expects an uptake in revenues from cellular services, call centre operations and its recently launched Internet telephony services.

On the back of these revenue streams, and with call volumes going up, MTNL should post a healthy growth in the bottomline and topline during the year 2002-03, Mr Sharma said, declining to quantify the growth projections. In the last financial year, MTNL posted a net profit of Rs 1,300.68 crore on income of Rs 6,143.72 crore.

In the current quarter, cellular services contributed Rs 35.41 crore to the revenue while basic telephony services contributed Rs 1,467.32 crore.

Advisories Hit NIIT
Our eFE Bureau

New Delhi:

Blaming it on adverse travel advisories and slow growth in the software education sector, the NIIT management has declared that the company (excluding subsidiaries) has posted a 56 per cent drop in its net profit for the third quarter ended June 2002 at Rs 2.31 crore from Rs 5.29 crore during the corresponding period last fiscal.

Income from operations for the third quarter also fell by 19 per cent to Rs 85.75 crore against Rs 105.82 crore in the correspondng quarter last year.

Commenting on the results, NIIT chairman R S Pawar said that the companys revenue and profits were affected by the travel advisories issued by several countries asking their citizen to avoid travel to India. The advisories have resulted in delays in billing customers on completion of milestones. NIIT, being largely dependent on fixed price projects had been affected more as compared to other software companies that work on time and material basis, he said, adding that the training business of the company had also not picked up as expected despite increased market share.

Global revenues (including subsidiaries) in the third quarter added up to Rs 193 crore against Rs 236 crore during the same period in June 2001, registering a fall of 18 per cent. However, the revenues had grown marginally by two per cent over Rs 189 crore of its previous quarter.

Commenting on the outlook, Mr Pawar said operating profit for the next quarter was expected to improve over third quarter. But given the uncertainties in the environment, this improvement would be moderate, he said.

The company claimed that its software division added 25 new clients in Q3 making a total of 150 active customers.