Performed on fundamentals; hit by dip in IT hiring: NIIT

we are going to use this quarter to launch new products which are valid for placement requirements.

Vijay Thadani

CEO

NIIT 

Vijay Thadani, CEO, NIIT  explains to CNBC-TV18 that the though the company performed well on a fundamental basis, it has been adversely affected by the slowdown in the hiring process in the IT sector.

Below is the edited transcript of the interview on CNBC-TV18.

Q: Can you explain the results that you have announced?

A; Our overall revenue was Rs 279.1 crore which is flat on y-o-y (year-on-year) basis and for us an y-o-y comparison is more appropriate even though on a q-o-q basis, the results look much better. The important thing is given the seasonality of our business. I think our corporate learning-solutions arm has done the best with 31 percent y-o-y growth.

Q: Why has your bottom-line remained flat while the top-line posted growth?

A: I think the bottom-line was flat because in the last quarter we got a tax benefit on an Element K transaction which resulted in a write-back of taxation which has caused the bottom-line to look much better.

However in fundamental terms, we could have done better in Q2 than Q1. In Q2, in comparison with last year, our revenue remains flat and there is a reduction in profit. While the corporate and schools business did exceedingly well, we were affected by the slow hiring process in the IT sector.

This does affect enrolments of graduates who are seeking to join employability-based IT programs and that did contribute to a negative or a decline in enrolments and resulted in a de-growth in the revenues. So on a year-on-year basis, our overall revenue performance remained flat.

Q: How do you expect to fare in Q3?

A: In Q3, our corporate business opens the quarter with a very strong order-book. In fact in the first two weeks of this quarter, we have already inked two new deals whose benefits will be seen during this quarter. We expect robust growth in this quarter as far as the corporate sector is concerned.

Our school-learning solutions arm is also on a good wicket, but we have a government business which we are exiting out of and to that extent there will be some impact. However, the private-school business is what we are banking on. In the individual-learning business, we believe that the slow sentiment will continue during this quarter and in any case Q3, is normally the lowest quarter for individual-learning business. But we are going to use this quarter to launch new products which are valid for placement requirements.

Q: Can you give us an indication of the size of those deals? How big is the government business that you will be exiting from?

A: We are exiting the government business since we are not accepting any new orders and will complete the existing orders. So our quarter-on-quarter performance will see a bit of a decline.

The new deals are typically in the USD 2-3 million range. Just to put it in perspective, last quarter our order intake was about USD 14 million. Getting about USD 3-3.5 million in the first 15 days of this quarter is a very good sign.

Q: Can you give us an update on how the strategic alliance with Microsoft is panning out?

A: Our strategic alliance with Microsoft is on a very strong wicket. We have strengthened our partnership and are looking forward to be an important part of Windows 8 as well as the new suite of Microsoft products launched especially on the cloud platform. We launched some internal applications on the Microsoft cloud platform and we are very proud of the achievement.