NIIT Technologies on Tuesday posted a marginal 0.8 per cent rise in consolidated net profit for June quarter at Rs 41.2 crore, as higher taxes dented profitability. The net profits stood at Rs 40.8 crore for the same period previous year.

With tax benefits under the Software Technology Parks (STP) scheme having come to an end in FY11, NIIT Technologies saw its tax rate spiral to 26.5 per cent for the first quarter ended June 2011 against 14.5 per cent a year ago.

The expiry of the tax holiday resulted in higher taxation for Indian IT companies, which are now increasingly moving new business and projects to Special Economic Zones. For TCS, the tax rate stood at 22 per cent in the June quarter against 20.8 per cent in the March quarter. The effective tax rates that software companies now pay depends on what portion of their units are operating under the SEZ scheme.

“The tax increased dramatically…. As we do more business in the SEZs, the tax will reduce over a period of time. The incremental new business will reduce the tax burden and it will come down by 0.5 per cent during the fiscal,” Mr Arvind Thakur, CEO of NIIT Technologies, said.

The consolidated revenue rose almost 13 per cent to about Rs 329 crore (Rs 291.4 crore in same period previous year). “It is a good growth considering that last year's revenue had Rs 44 crore of ‘bought outs' (hardware supplied by the company as part of a project for Border Security Force) so the growth is over and above that,” he said.

Operating margins remained flat year-on-year at 18.5 per cent. There was a 200 basis point sequential decline on account of wage hikes (an average 8 per cent hike), the company said. One basis point is one hundredth of a percentage.

Mr Thakur said that while economic environment continued to be turbulent, the company did not see demand for technology services diminishing. moumita@thehindu.co.in

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