L&T Technology Services Ltd. reported a decline in profit for the January-March quarter as higher employee costs weighed on margins of the information technology engineering service provider.
Net profit fell 11.5 percent to Rs 96.5 crore as compared to a year ago, according to its stock exchange filing. Revenue rose 1.4 percent to Rs 812.30 crore in the same period. In dollar terms too, revenue grew 3.4 percent.
Operational profit stood at Rs 137.9 crore, down 11.8 percent from last year. Operational profit margins contracted by more than 250 basis points to 16.9 percent.
The company incurred 4.5 percent higher employee expenses than in the same quarter last year.
"We have a healthy pipeline of deals for the next two quarters and are seeing increased industry demand for our solutions", Keshab Panda, chief executive officer and managing director of the company said in a media release.
L&T Technology Services saw a 12.5 percent decline in revenue from Europe, its second largest market. Income from the U.S., which contributes more than half of its revenue, grew 5.9 percent. In India, revenue rose 1.8 percent from the same quarter last year.
The company's attrition rate stood at 14 percent, which is the same as was in the previous quarter. The board has recommended rewarding shareholders with a final dividend of Rs 4 per share.
New Acquisition
L&T Technology Services announced the acquisition of U.S. based design services provider Esencia Technologies. The company will pay $27 million (nearly Rs 180 crore) to acquire the California-headquartered firm and $15 million (Rs 100 crore) will be paid upfront. The rest will be paid over four years, Keshab Panda, the company's chief executive officer and managing director told BloombergQuint in an interview.
“We believe this acquisition will add to our portfolio of offerings, which will not only help scale up among existing customers but give access to new customers in Technology area,” Panda said.
Esencia has a team of more than 100 employees in the Silicon Valley.
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