India's Tata Technologies posts sharp loss after labour charge
Tata Technologies, an Indian engineering research and development firm, recorded a 96% drop in third-quarter profit on Thursday, primarily due to a one-time charge related to India’s new labour codes.
This marks the company’s largest quarterly profit decline since its market debut in 2023, News.Az reports, citing Reuters.
Looking ahead, CEO Warren Harris said the company is “poised for a sharp acceleration in Q4,” anticipating more than 10% sequential revenue growth.
The Tata Group company, which counts Jaguar Land Rover and Tata Motors among its largest clients, reported consolidated net profit of 66.4 million rupees ($731,036) for the October–December period, down from 1.69 billion rupees a year earlier.
Tata Technologies recorded a one-time exceptional charge of 1.4 billion rupees in the quarter following the implementation of India’s new labour codes, which increased its gratuity and leave-related liabilities.
The codes, which came into effect in November, require employee wages to be at least 50% of cost to company, and benefits like provident fund and gratuity to be determined based on wages.
Previously, companies like TCS and HCLTech have reported similar one-time charges to factor in the new labour codes, while peer ER&D firm Tata Elxsi's profit was hit by it.
Tata Technologies had said in October it expected short-term tactical challenges and margin pressure in the third quarter, due to "near-term temporary headwinds" and salary hikes.
"Margin headwinds from Q3 are behind us, and we expect to return to—and exceed—the Q2 adjusted margin run-rate," CFO Uttam Gujrati said.
Revenue from its services segment, making up 77% of overall revenue, rose 4.7%, while technology solutions revenue remained flat.
The company's overall revenue rose 3.7% to 13.66 billion rupees.
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