Digital consulting company KaarTech received a significant $30 million funding boost in July 2023, leading to a remarkable 56% increase in its revenue for FY23. However, despite this growth, the company’s profit remained unchanged due to a sharp rise in employee benefit costs.
Although the external funding contributed to the firm’s 56% revenue growth in FY23, its profit stayed the same during the same period. Kaar Technologies reported a surge in revenue from operations to Rs 359 crore in FY23 from Rs 230 crore in FY22, as indicated in its consolidated financial statements filed with the Registrar of Companies.
Established in 2006 by Maran Nagarajan, Ratnakumar N, Selvakumaran M, and George Guardian, the company specializes in SAP and S/4 HANA implementation, providing consultation, implementation, and support for SAP-based enterprise software solutions.
The majority of KaarTech’s revenue, approximately 97%, came from exports, primarily from markets like Saudi Arabia, Qatar, Oman, UAE, and other overseas regions, with income from IT services, including software development, support, and maintenance, serving as the primary revenue sources.
Similar to other tech companies focused on products and services, KaarTech’s employee benefits accounted for 71% of its overall expenditure, rising by 81.3% to Rs 243 crore in FY23 from Rs 134 crore in FY22.
Additionally, expenses related to legal professionals, rent, website maintenance and development, marketing, and other overheads contributed to a 65% increase in overall expenditure to Rs 340 crore in FY23 from Rs 206 crore in FY22.
Despite the revenue growth, the significant increase in employee benefits had a notable impact on the company’s profit, which remained constant at Rs 22 crore in FY23. KaarTech’s return on capital employed (ROCE) stood at 28%, with an EBITDA margin of 11.5%. On average, the company spent Rs 0.95 to earn a rupee of operating income in FY23.
Overall, KaarTechnology has raised $35 million across various rounds, including the $30 million funding led by A91 Partners in July of the previous year.
