InvestorQ : Why did HCL Technologies report such a sharp fall in profit numbers in the Mar-21 quarter?
Mary Joseph made post

Why did HCL Technologies report such a sharp fall in profit numbers in the Mar-21 quarter?

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Arusha Ray answered.
8 months ago
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For the Mar-21 quarter, IT major HCL Technologies reported a very sharp 72% fall in profit at Rs.1,102 crore. This is in comparison to the sequential profits in the December quarter. However, this fall in profits was along expected lines due to the sharp spike in employee expenses as well as tax expenses in the Mar-21 quarter.

For the Mar-21 quarter, the revenue from operations was up 1.8% on a sequential basis at Rs.19,641 crore. The first item that led to the fall in profits was a sharp spike in employee costs. For the quarter, HCL Tech had announced a one-time bonus for its employees on reaching the magic sales figure of $10 billion revenues. This made a dent on profits.

The other issue was higher tax burden in the quarter. For the Mar-21 quarter, the tax outgo stood at Rs.2,256 crore as compared to just Rs.502 crore in the preceding sequential quarter. The higher tax liability was due to an accounting change with respect to goodwill which led to a higher tax liability on regular taxes and on deferred taxes.

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