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| Edited By: Beryl Menezes |Source: DNA |Updated: Mar 19, 2018, 03:14 AM IST
HCL Technologies on Wednesday announced a stellar set of numbers for the three months ended June – its fiscal fourth quarter – and said its board has decided to increase the foreign institutional investor (FII) limit in the company to 49% from the existing 30% subject to regulatory approvals. It also announced the appointment of Roshni Nadar, daughter of HCL’s co-founder and chairman Shiv Nadar, as a non-executive director on the board in addition to her role as the CEO of HCL Corp. Anil Chanana, CFO, HCL Technologies, spoke to Beryl Menezes on the company’s winning strategies after the announcements. Excerpts:
On net profit growth, which was similar to TCS’s...
Our net profit in the June quarter was up 16.3% sequentially and 41.6% on-year at Rs 1,210 crore, while revenues grew 8.1% sequentially and 16% yoy to Rs 6,944 crore. Our dollar revenues were up 3.1% in the quarter at $1,228 million. Over the last year, our margins have expanded by 400 basis points and touched a five-year high of 16%, largely on an operations-income level. Our return on equity for the year has been 34%, which is among the best in the industry. This is due to focus on multi-year engagements, higher utilisation, IMS focus, risk and reward model and transformational development markets.
On higher growth from Europe than the US...
While we see a healthy growth pipeline from both the US and Europe, the Europe market is still underpenetrated, so they are slowly opening up for outsourcing. In the quarter, Europe revenues grew 9.6%, while the US revenues grew 2.8%. Going forward, we expect higher growth from developed markets than APAC, although we are still seeing good traction from domestic business. Financial services, global services, manufacturing and healthcare continue to be key growth verticals.
On infrastructure management services, where HCL is the leader...
Our IMS growth in the quarter was 9.4%, due to good rebid deals from this division. We are also seeing more large deals, with stable pricing and pick-up in discretionary spends as well. We have a different approach to discrectionary spends however - in that it is mixed with run-the-business.
On currency hedging position...
We are comfortable with our hedging position. In the quarter, we saw a 3.9% volume growth, while our EBIT (earnings before interest and tax) margins grew by 130 basis points at 23.3%. This was aided by a 100 bps positive impact of rupee depreciation of $5.4 million. For FY14, we have set a target of 18.5-19% at a rupee rate of 55 (to the dollar).
On employee utilisation, attrition, hiring and wage hikes...
Our utilisation is at a comfortable 84%. There are no changes to our hiring numbers. We hired 6,600 people this quarter. However, going forward, we’ll train employees to offer end-to-end total IT outsourcing and customer lifecycle management. Attrition at 14.9% in the quarter, as compared to 14.2% last quarter was seasonal. We will be giving out wage hikes of 8% to offshore employees and 3% to onsite employees across July-October. This will have a 60 bps hit to margins next quarter.
On the US Immigration Bill...
While we do not have a high dependence on H1 visas, we have our action plan in place in terms of transferring more jobs onsite, and setting up more delivery centres abroad with more local hiring.
