Sify Q4 net profit jumps over 6-fold to Rs 90 crore

Performance highlights

• Revenue for the year was INR 24,320 Million, an increase of 6% over last year.
• EBITDA for the year was INR 5085 Million, an increase of 25% over last year.
• Profit before Tax for the year was INR 1599 Million, an increase of 57% over last year.
• Net Profit for the year was INR 1585 Million.

Deferred Tax Asset of INR 600 Million has been recognized at the end of the year based on an assessment of reasonable certainty of future taxable income in the individual entities of the group. In the future, Tax expenses comprising Current tax and Deferred tax would be in line with the effective tax rate.

• CAPEX spent for the year was INR 3483 Million.
• Cash balance at the end of the year was INR 5438 Million.

 Raju Vegesna, Chairman, said, “India is in the grip of the second wave of the COVID pandemic and governments have reintroduced lockdowns to deal with the calamity. The first wave was a wake-up call for large companies to increase their investment in automation, and that has helped insulate them to a large measure this time around. Now that the merits of automation have been firmly established, we should see more mid-sized businesses adopt automation aggressively.

The new normal has blurred the lines between work and home environments, calling for businesses to invest in the security of their data over public networks. The challenge is in ensuring public networks are as secure and resilient as corporate networks.

That said, we wish for the scourge of the pandemic to be eradicated so that people and livelihoods can return to the old normal”.

Kamal Nath, CEO, said, “A year into the pandemic, all the industries – small, medium, or large have accelerated their digital transformation and cloud adoption drive to be able to sustain and grow their businesses in a changing environment. Work from anywhere, movement to the hybrid cloud platform, strengthening of disaster recovery plans to enable business continuity, application modernization – all these market trends find a natural solution in Sify’s “Cloud@core” model and offerings.

The other important highlight is the growth of Hyperscale CSPs and OTT players in India which on one hand is accelerating our Data Centre colocation business and on the other hand strengthening our hybrid cloud offerings.  Overall, we are absolutely on the right side of the trend curve”.

M P Vijay Kumar, CFO, said, “We continue to show steady growth through 2020-21 despite the challenges that the pandemic has posed. The healthy EBITDA growth has increased our confidence to spend on ramping up both people and tools to increase our digital transformation service capabilities.

We expect contracts to take slightly longer to conclude as clients take time to regain momentum. Our focus is on insulating the organization as we carefully manage our costs while ensuring that there is no lag in service delivery and customer experience.

We are firm on our commitment to our data center, cloud, and network-centric expansion plans, and will exercise due caution in terms of both the timing and cost structure of these projects.

Considering the resurgent pandemic and the uncertainty on the pace of economic recovery, the Board did not recommend the payment of dividends this year and instead advised that capital be conserved.

Following shareholders’ approval, we have given effect to Business Transfer Agreements entered into, during the quarter, for the transfer of Data Center business and Digital Services business to wholly-owned subsidiary companies.

Cash balance at end of the year was INR 5438 Million”.

Business highlights

• Revenue from Data Center centric IT Services grew by 22% over last year.
• Segment-wise, revenue from Data Center Services grew by 45%, Cloud and Managed Services grew by 21% and Technology Integration Services grew by 19% while Applications Integration Services fell by 19% over last year.
• Revenue from Network-centric services fell by 7% over last year.
• Segment-wise, revenue from Data and Managed Services grew by 4% and Voice business fell by 35% over last year.

Growth drivers
The pandemic has accelerated the primary growth drivers in the market for cloud adoption, led by digital initiatives and transformation. This trend is triggering the movement of workloads from on-premise Data Centers to Hyperscale Public Cloud and hosted Private Cloud in varying degrees, based on the digital objectives of the Enterprises. This results in the transformation of the traditional network architecture and transformation at the edge which connects the end-user. The need for digital services like analytics, data lakes, IoT, etc is shifting the focus toward the adoption of Hybrid and Public Cloud vs Private Cloud. Collectively, these trends are generating opportunities for full-scale Cloud, DC, and Network service providers with digital services skills.

Key wins
Let me summarize the categories of customers who are signing up with Sify

• Customers choosing Sify for migration of their on-premise data center to multi-cloud platforms like Cloudinfinit, AWS, Azure, and Oracle. They also entrusted Sify with management and security.
• Customers choosing Sify as their DC Hosting partner as they embrace a hybrid cloud strategy.
• Customers choosing Sify as their multi-service Digital Transformation partner.
• Customers choosing Sify as their Network Transformation and Management partner as they migrate to Cloud-ready networks.

 For data center centric IT services

• 4 customers signed up to have their workload migrated from their on-premise DC to multiple Cloud platforms, including Cloudinfinit and AWS. These cover key verticals such as Automotive Finance, Personal care, Automobile, and Heavy engineering.
• 7 major clients signed up for greenfield Cloud implementation from verticals such as Steel, Media, Chemicals, Application development, Online Financial Services, Online Gaming, and Hosiery Manufacturing.
• 4 major customers, from verticals such as Asset Management, NBFC, Digital entertainment, and IT, moved from competitor DC to Sify DC, while 4 customers moved from their on-premise DC to Sify DC across the Banking, Beverages and Heavy Engineering verticals.
• A major Public Sector Insurance client contracted for a complete refresh and augmentation of their DC and DR.
• Multiple clients contracted for Managed Services, among them a State Government, an Insurance major, and an MNC logistics company.
• 4 customers signed up for Digital Services, among them India’s largest B2B eCommerce marketplace, a dairy cooperative, and the country’s largest banker.
• The online test platform saw more than 300,000 tests being conducted for clients from Education, Heavy Engineering, State government, and the Health sector.

For network centric services

• Network Centric Services added 236 new customers in the year across various verticals and segments.
• In what is the biggest win of the year, the country’s largest bank signed a multi-year contract for setting up next-generation NOC and management of network across 4 Data Centers in India, 24,000 branches in India, and 120 branches outside India.
• With Cloud interconnects gaining momentum, significant contracts were concluded with a global content delivery network, private and public sector banks, automobile manufacturers, a retail chain, and a couple of insurance players.
• Customers from several verticals including IT, Retail, Banking, and Digital Wallets signed up for MPLS Network builds while a retail major signed up for pan-India SD-WAN service.
• During the year, there was significant investment and expansion of the next generation fiber access networks across 6 key markets covering Data Centers, SEZs, and Commercial Business Districts. Revenue growth has largely been driven by customer and network acquisition on fiber.

CT Bureau