Mid-size IT provider Mastek has come up with a unique method to reduce margin impact from staff salary increments. Rather than postponing increments for all staff -- as Infosys did -- it has staggered increments over two quarters. The company's junior staff have got their increments in July but the senior staff will get their increments only in October. Because of the staggered wage hike the company was able to cushion its operating profit margins at 8%. Offshore salary increments will be 8% and onshore increments 3.5%.
"This quarter has seen an improved operational performance on a like to like basis with the EBIDTA at 8.0%. This is after the wage hike for employees upto a particular level. The balance wage hike will take effect from Oct 2012," said Farid Kazani, CFO, Mastek.
During the current quarter, the increments had a 1% impact on the margin and the next set of increments will impact margins in the December 2012 quarter to the extent of 1.8%. "This impact is likely to be made good with various profitability initiatives undertaken by the company," Kazani added.
Mastek said its net profit for the first quarter ended September 2012 was Rs 6.5 crore on revenues of Rs 223 crore. In the comparable quarter of the previous year the company posted a loss on revenues of Rs 155.5 crore.
Sequentially revenue was up 6% but net profit was down. Kazani said this was because of lower staff costs in the previous quarter because of an incentive adjustment. The Mastek stock closed 4.4% lower at Rs 132 on the BSE on Friday.
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