The deal pipeline is 50% better in 2013: C P Gurnani

Tech Mahindra reported a 25% increase in net profit at Rs 377.24 crore in the January-March quarter on a 34% growth in revenues to Rs 1,907.17 crore.

C P Gurnani, managing director of Tech Mahindra, spoke with Beryl Menezes on the road ahead. Excerpts...

The BT business has seen some recovery. Has it made any impact on your P&L?
BT still contributes to almost 25% of the Tech Mahindra revenues, and so it is quite foregone that BT’s recovery has a positive impact on our business, too.

How much have the recent acquisitions added to your bottomline?
The induction of the management team of Comviva and HGS has been relatively seamless. We added 150 active customers in the last fiscal compared with 130 in fiscal 2012. 11 out of the 20 new customers were on account of the Comviva acquisition... We are slowly reducing our non-profitable BPO projects.

There has been a setback to the Satyam-TechMa merger. What’s next?
We are waiting for the final approval from the Andhra Pradesh high court, which is expected in the first or second week of June. We are making slow but sure progress on the integration front in multiple areas like system consolidation, process and policy alignment, while our accounts remain separate.

Which has performed better – Satyam or TechMa?
The overall growth have been almost on a par at around 9%. If compared back-to back, the revenue growth and PAT for TechMa is slightly higher for the year, inclusive of acquisitions.

Analysts expected a hit to margins due to cross-currency headwinds...
Mahindra Satyam has actually seen a margin expansion of 5% this fiscal, whereas TechMa’s was 19.9%. The 100 basis points decline was on account of depreciation in the sterling and de-growth of BT. However, overall Ebidta on-year was up 400 bps, and BT is expected to stabilise in the coming quarters. In fact, after three years, we reported positive EDIT margins, up 59 % on-year to Rs 380 crore.

Geographies seeing maximum traction for TechMa?
America is our largest market and is on the path to recovery with expansion in discretionary spends, although competition remains stiff. The growth in Europe, regardless of the internal geographies has been almost stagnant. Asia and Africa are also picking up and we see the deal pipeline 50% better this year, than last year.

Which verticals will contribute maximum to your topline going forward?
Spends in telecom remain sluggish while ‘Do More With Less’ is the mantra. But telecom services continues to be the major contributor in our revenues, followed by equipment, managed services and BPO services.