According to Vineet Nayyar, vice-chairman, Tech Mahindra, the biggest destablising factor that impacted Tech Mahindra and other Indian IT companies was the exit of the United Kingdom from the European Union.
Tech Mahindra, which on Monday reported 28% year-on-year growth in its June quarter net profit at Rs 796 crore, said Brexit is a really big destabilising factor but hopes that the world economy comes out of it.
Its consolidated revenues grew to Rs 6,920.9 crore from Rs 6,293.8 crore in the year-ago period.
According to Vineet Nayyar, vice-chairman, Tech Mahindra, the biggest destablising factor that impacted Tech Mahindra and other Indian IT companies was the exit of the United Kingdom from the European Union. "Its immediate impact is going to be quite significant. The trade between UK and Europe will be disrupted without a shadow of doubt, therefore the next one year is going to see a fair amount of uncertainty. My personal perspective, however, is that in the long term, things will settle down," he said.
Nayyar said there is yet another uncertainty on the horizon -- that is the US elections. "They could be disruptive. But as we stand today, this company is prepared and ready to face the current disruption and other disruptions it may come. Because we believe we provide critical services and these services will be needed irrespective of trade agreements," Nayyar said.
According to Nayyar, the company posted revenues for the first quarter at Rs 6,900 crore, up about half a percent, quarter on quarter and 10% year-on-year. "The margin was around 14.9% as against 17% in the March quarter on an increase in visa costs and seasonal downturn in some clients," he said.
The company had posted a profit of Rs 880.6 crore in January-March.
He said the company also closed the BIO agency acquisition in the first week of July and it will be getting consolidated in the second quarter of the current financial year. "Our net cash balance improved by around Rs 557 crore in the first quarter after payouts of BIO and Pininfarina acquisitions. Our total reserves are around 5,800 crore," said Nayyar.
The company's chief financial officer, Milind Kulkarni said the company incurred a cost of $11 million on H1B visas while there was a hit of 1.80% because of the seasonal downturn with select clients of Comviva.
MD and CEO C P Gurnani said Britain accounts for 10% of the company's revenues and the spillovers in an inter-connected world are something the company needs to keep in mind.
Gurnani said the delivery on one deal lifted the share of digital revenues to above 20%, from 11% in the year-ago period, and is optimistic that this will be maintained.
Interestingly, he said Indian customers are featuring among some of the digital deal wins.
He saw banking and finance and healthcare verticals as the engines of growth at present and added that the enterprise vertical as a whole will grow at 12% this fiscal.
Its utilisation rate moved up to 78% from the year-ago's 74% and the 77% in the preceding March quarter.
It added 1,784 employees during the quarter to take its total strength to 1.07 lakh, but the attrition too remained sticky at 21%.
The stock closed with gains of 0.62% at Rs 489.70 on the BSE as against a correction of 0.17% in the benchmark.
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