KPIT, a global technology company specializing in providing IT Consulting and Product Engineering solutions and services to Automotive, Manufacturing, Energy and Utilities companies, reported its consolidated financial results for the second quarter and half year ended September 30, 2018.
Commenting on the performance of Q2 FY19, Kishor Patil, Co-founder, CEO & MD, KPIT said,” The quarter gone by witnessed solid improvement in operating margins despite wage hikes, driven by operating efficiencies and better quality of revenues. We are on track to achieve our annual revenue guidance and exceed the annual operating margins guidance. The Merger Demerger process is progressing well, as per planned timelines.”
Sachin Tikekar, President and Board Member, KPIT said,” Engineering and Digital revenues continue to grow at a much faster rate for us. We expect the trend to continue during the remainder of the year. We are progressing well on the business familiarization process with Birlasoft and are happy with the cultural and value similarities between the two organizations.”
The Profit for the quarter stood at ₹820.59 Million, registering a sequential growth of 6% and a year on year growth of 37.4%. The other income during the quarter was ₹70 Million as compared to ₹162 Million last quarter. There was also an increase in depreciation due to full capitalization of Phase III building in Pune.
We will continue with the profitability improvement measures to lead us to steady and sustainable improvement in the operating margins, during the remainder of the year.
UPDATE ON PROPOSED MERGER-DEMERGER:
On KPIT and Birlasoft merger/demerger front, the business familiarization process is progressing well with participation from focus teams from both the sides. The NCLT (National Company Law Tribunal) directed EGM for seeking shareholder approval for the Merger Demerger Scheme was scheduled on August 29, 2018.
The shareholders overwhelmingly approved the scheme for the merger of KPIT with Birlasoft and the simultaneous demerger of KPIT Engineering business into a new company, to create two new public companies. The final petition is now filed with the NCLT for seeking final approval from NCLT which, as mentioned earlier, is expected in the next few months. Thus, so far, we are on course with respect to the originally planned legal timelines.
BUSINESS SPLIT POST MERGER AND DEMERGER:
As we are progressing well on the legal timelines, it is important to understand the split of the businesses and the resultant businesses of the individual entities.
The Engineering Business (KPIT Technologies post demerger) will mainly focus on Automotive Vertical with embedded software, digital technologies, mobility solutions and application life cycle management as the primary practices. The Business IT Business (Birlasoft Ltd. post demerger) will mainly focus on the Manufacturing, BFSI and Media Verticals with ERP, digital technologies, product life cycle management, ADM and IMS as the primary practices.