L&T Infotech says COVID-19 to impact biz in first half of FY21, to use different tools to protect margins

MUMBAI, May 24: L&T Infotech (LTI) feels the COVID-19 pandemic will impact business in the first half of the fiscal, but it will not resort to employee retrenchment even as it seeks to protect profit margin, a top company official said.
Different tools, including reducing subcontracted staff and deferring capital expenditure plans, will be deployed to protect margins, LTI Managing Director and Chief Executive Officer Sanjay Jalona told PTI.
A lot of information technology (IT) companies have voiced concern about the business impact of COVID-19 pandemic as economic activity slows down across the world, leading companies to spend less or defer spending on IT front.
LTI posted a 12.9 per cent jump in its March quarter net profit at Rs 427.5 crore, on the back of a 21 per cent rise in revenue to Rs 3,110 crore.
“In the March quarter, the impact of COVID was only in the last two weeks. The full impact will be seen in Q1, and we feel Q1 and Q2 business will surely be impacted,” Jalona said, pointing out specifically to difficulties which may come out of oil and gas and manufacturing sectors.
The company will try to minimise the impact on profit margin through various moves, he said, without giving any guidance on numbers for 2020-21.
LTI is postponing its capital expenditure plans to save cash and has also started renegotiating contracts, wherever possible, including on supply of manpower, he said.
Currently, over 98 per cent of staff is operating from home and almost all the key delivery milestones are being met, Jalona said, adding that the wellbeing of the employees is the top priority.
The company is deferring wage hikes by six months, he said, specifying that the revised salaries will set in from January 2021 as against the usual practice of having reviews from July.
When asked if the company plans to go for employee retrenchment, Jalona said it will not resort to any actions which will be viewed as being adverse by the employees.
He said LTI wants to protect its margins amid the turbulence, and will resort to other moves, apart from capex reductions and renegotiating contracts, to achieve the objective.
Jalona said utilisation will be impacted because of the difficulties on the business front, which will put pressure on margins.
He said that the company may look at reducing the number of subcontracted staff which works for the company in other locations. (PTI)