Higher average taxation has led Tata Group company CMC Ltd to post a nine per cent drop in its consolidated profits at Rs 41.37 crore for the quarter ending December 31, 2011.
Consolidated revenues in the quarter though were up 45 per cent to Rs 396.17 crore.
“Though sequentially our profits grew (27 per cent), the drop year-on-year has been because of STP tax benefit going off this year. Our SEZ business at Hyderabad is taking time to stabilise and transition will take two years,” said Mr J K Gupta, CFO, CMC.
“The average tax rate for the quarter was at 29 per cent, largely because of high taxes in America (above 30 per cent). For India, it was 25 per cent,” he added.
CMC expects the average tax rates to further decline by 100-150 basis points, as it ramps up operations at the SEZ. By 2012-13, it is expected to be below 25 per cent.
CMC shares at the BSE were down 0.04 per cent to Rs 918.80 on Friday.
Making it almost a 10,000-people company, CMC hired 1,474 employees in the quarter for large domestic projects and expects large hiring to continue in the January-March period as well. The Hyderabad SEZ, which is shared with Group company TCS, will also have a 13,000 shared seat capacity by June-September, 2013. Of this, 6,000 employees are being hired this year.