IBM India FY18 revenue little changed on tax agreement’s impact

IBM India FY18 revenue little changed on tax agreement’s impact
Photo Credit: Photo Credit: Reuters
4 Jan, 2019

International Business Machines Corp’s India unit reported little change in revenue for the financial year ended March 2018, its filings with the Registrar of Companies (RoC) showed.

IBM India Pvt. Ltd posted consolidated revenue from operations of Rs 27,332.6 crore for 2017-18 compared with Rs 32,336.7 crore the year before. However, the numbers for 2016-17 included about Rs 5,010 crore additional revenue as per a pricing agreement with the Central Board of Direct Taxes covering transactions pertaining to export of IT services and recovery of reimbursable expenses pertaining to such export of services for the previous five years.

Excluding this additional revenue, the company’s revenue would have been around Rs 27,327 crore.

IBM India, led by Karan Bajwa, had shown an 18% increase in revenue for 2016-17 to Rs 23,359 crore. 

The software services provider's India unit reported a consolidated net profit of Rs 2,783 crore for 2017-18. It had reported a profit of Rs 6,163.8 crore and Rs 1,826.8 crore for the previous two years.

The RoC filings show also that the company’s other income, which includes interest income from bank deposits, nearly tripled to Rs 591.5 crore. Total expenses were also little changed, at Rs 23,900 crore, helping arrest the decline in profits.

IBM India competes with the likes of homegrown software services providers such as Tata Consultancy Services Ltd, Infosys Ltd and Wipro Ltd. Globally, IBM has been diversifying into higher-margin product and services businesses. As part of this strategy, IBM in October acquired open-source based software services provider Red Hat for $34 billion in its biggest takeover deal ever.