People working on computers in an office (Photographer: Victor J. Blue/Bloomberg)

Q3 Results: Deals, Transition Costs Hurt Zensar Tech’s Margin

Zensar Technologies Ltd. said transition costs involved in more than $700 million worth of deals announced by December 2018 had offset the company’s gross margin growth in the reported quarter on a sequential basis.

Several of these deals are in the advance stages of execution, Zensar’s Managing Director and Chief Executive Officer Sandeep Kishore told BloombergQuint. “The transition cost which comes with the execution of these deals do impact the short-term margin profile.”

The Pune-based information technology company’s profits plummeted 41 percent and EBIT margin contracted to 8.3 percent from 10.4 percent sequentially, it said in an exchange filing on Monday.

Kishore expressed confidence in Zensar’s core business and said the segment is currently operating at a 15 percent Ebitda range, excluding the reported quarter. The company, he said, is committed to bring back the business to the ongoing Ebitda range in the mid-term.

The company, according to Kishore, is working on maintaining itself as a “digital first player”, for which it has invested heavily on onsite operations and increased the head count of its onsite business by about 45 percent.

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