Tata Technologies, an engineering research and development firm, announced on Thursday that its third-quarter profit plummeted by 96%. This marks the steepest decline since the company went public in 2023.
Consolidated net profit for the October-December period dropped to 66.4 million rupees ($731,036), down from 1.69 billion rupees a year earlier. The company attributed the fall primarily to a one-time exceptional charge of 1.4 billion rupees.
This charge resulted from India's new labor codes, which took effect in November. The regulations increased the firm's liabilities related to gratuity and leave provisions.
CEO Warren Harris stated in a release that the company is "poised for a sharp acceleration in Q4." He projected sequential revenue growth exceeding 10% for the upcoming quarter.
CFO Uttam Gujrati added, "Margin headwinds from Q3 are behind us, and we expect to return to—and exceed—the Q2 adjusted margin run-rate." The company had previously warned in October of short-term challenges and margin pressure for the quarter.
Overall revenue for the period increased by 3.7% to 13.66 billion rupees. Revenue from the services segment, which constitutes 77% of total revenue, grew by 4.7%, while technology solutions revenue showed no change.
Tata Technologies, part of the Tata group, lists Jaguar Land Rover and Tata Motors among its major clients. Other Indian technology firms, including TCS, HCLTech, and peer company Tata Elxsi, have reported similar one-time charges related to the new labor rules.