Microsoft India sees profits surge by over a third

Microsoft Corporation (India) Private Limited, the Indian subsidiary of the Satya Nadella-led tech giant, saw its profit grow by over a third, driven by increased income from product and service sales.

The company reported a net profit of Rs 898 crore for the fiscal year 2023-24—up 38.4% from Rs 648.6 crore earned in the previous year, as stated in its financial filing with the Registrar of Companies (RoC).

The tech firm recorded operating revenue of around Rs 22,562 crore in FY24, an increase of 17.3% year-on-year (YoY). Its total income, including interest income on bank deposits of Rs 329.7 crore, rose 18.3% to Rs 22,891.6 crore in the fiscal year ended March 2024.

In India, the company is in the business of manufacturing, replicating, marketing and selling Microsoft retail software products and services.

Microsoft India generated Rs 3,854.7 crore from its products, Rs 16,530.9 crore from its services, and Rs 2,176.3 crore from support services, including marketing support and data centre infrastructure support.

However, the company is required to pay royalties for receiving non-exclusive rights to manufacture, replicate, license, distribute, and sell Microsoft retail software products, as well as for search and online advertising in India.

The firm paid royalties of Rs 15,700.5 crore in FY24, up from Rs 13,052.8 crore the previous year for Microsoft retail software products and services. Additionally, it paid Rs 37.6 crore in FY24 for search and online advertising.

Globally, big tech companies, including Microsoft, Google, and Meta, have carried out multiple rounds of layoffs over the past year as part of their restructuring efforts to manage costs.

However, for Microsoft’s India subsidiary, the employee benefit expense for FY24 was Rs 1,368.6 crore, a slight decrease of 3% YoY, primarily due to a reduction in deputation charges.

Microsoft India’s net worth increased 168.6% to Rs 20,019.9 crore in FY24, up from Rs 7,454 crore in the previous fiscal year.

The company disclosed that it raised additional capital in December 2023, issuing 23,32,960 equity shares on a rights issue basis to existing shareholders Microsoft Corporation and MSHC LLC, with the latter receiving a negligible number of shares comparatively, according to the directors’ report.

Although there was no change in the authorised share capital, the company’s paid-up capital increased to Rs 5,97,44,360, the report added.

In October, Microsoft posted double-digit growth in both revenue and earnings for the first quarter of FY25, driven by advancements in AI integrated into its cloud services, but it forecasted for slower growth in the cloud business.