India’s Cyient posts quarterly profit fall on one-off labour code charges

Jan 22 (Reuters) – India’s Cyient reported a 24.9% fall in third-quarter profit on Thursday due to a one-time charge from the country’s new revised labour codes.

The engineering, research and development (ER&D) firm’s consolidated net profit fell to 918 million rupees ($10.02 million) from 1.22 billion rupees last year.

The company incurred charges of 420 million rupees to comply with new labour codes implemented in November, denting its bottomline.

India’s new codes – the country’s biggest overhaul of workers’ laws in decades – have dragged the profit of firms in India’s manpower-heavy IT sector, including that of Wipro (WIPR.NS), TCS, Infosys and HCLTech (HCLT.NS).

Revenue in its digital, engineering and technology (DET) segment, which accounts for around 75% of overall revenue, fell 0.7%, which the company attributed to “a fluid macroeconomic environment and a typically soft third quarter due to furloughs.”

Total revenue fell 1.6% to 18.79 billion.

Cyient also incurred a charge worth 80 million rupees due to mergers and acquisitions expenses related to the spin-off of its semiconductor unit.

Peer Tata Elxsi too reported a fall in profit for the December quarter last week, due to the charges from the new labour codes. 

($1 = 91.5980 Indian rupees)

(Reporting by Sai Ishwarbharath B in Bengaluru; Editing by Janane Venkatraman)