Birlasoft Ltd. has reported loss in a quarter that witnessed a churn in the senior management and the bankruptcy of a key client.
Revenue of the CK Birla Group company rose 2.5% over the previous quarter to Rs 1,222 crore in the three months ended December, according to an exchange filing on Thursday. That compares with the Rs 1,227-crore consensus estimate of analysts tracked by Bloomberg.
The loss stood at Rs 16.36 crore as compared to a profit of Rs 115 crore in the July-September period. Analysts tracked by Bloomberg had estimated a profit of Rs 124.91 crore.
The Pune-based IT services firm created a provision of Rs 151 crore to protect itself from the bankruptcy of client Invacare Corp., a maker of medical devices in the United States.
“Birlasoft Solutions Inc., a subsidiary of the company, has received intimation that Invacare Corp., a customer in the U.S., has filed a petition for relief under Chapter 11 of the Bankruptcy Code in the United States Bankruptcy Court on Feb. 1, 2023,” the exchange filing read. “While the implications and options are being analysed further, the company has, as a prudent accounting practice, created a provision amounting to Rs 1,510.14 million (Rs 151.01 crore) against the outstanding receivables and contract assets as of Dec. 31, 2022.”
Birlasoft had in October 2019 signed a $240-million deal with Invacare to provide IT services over 10 years. At that rate, Birlasoft would have earned $25 million annually from the client.
WATCH | Birlasoft CEO Angan Guha On Q3 Loss
Birlasoft Q3 Results: Key Highlights (QoQ)
Revenue up 2.5% at Rs 1,222 crore, compared to an estimate of Rs 1,227 crore.
EBIT loss of Rs 136 crore vs EBIT profit of Rs 155.7 crore. Analysts had pegged it at Rs 158.3 crore.
Loss of Rs 16.36 crore vs profit of Rs 115 crore, and against an estimate of Rs 124.91 crore profit.
Churn In The Corner Office
Birlasoft's troubles in the third quarter weren't limited to the client side, but extended into the corner office as well.
On Nov. 30, Dharmander Kapoor resigned as the chief executive officer of the company; he was replaced by Angan Guha, a non-resident Indian, with immediate effect. The company has sought the central government's approval for his appointment.
On Thursday, Chief Financial Officer Chandrasekar Thyagarajan tendered his resignation, citing personal reasons, the filing said. The company is in the process of finding his replacement.
Separately, the company has appointed Ananth Narayanan, founder of Mensa Brands and former Myntra CEO, as an additional independent director for a period of five years. He is also an independent director on the board of directors of Marico Ltd.
Birlasoft, part of the $2.4 billion CK Birla Group, provides enterprise and digital services, such as data analytics, cloud, domain, blockchain, CRM, and supply chain management.
On Thursday, shares of Birlasoft Ltd. fell 8.14% to Rs 271.95 apiece on the BSE, even as the benchmark Sensex ended the day 0.38% higher at 59,932.24 points. The quarterly results were declared after market hours.
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