Though Krishna Bodanapu, President and COO of Infotech Enterprises feels that the company may face some short-term challenges in Q4, he is confident of things being positive in FY14.
"The additional tax burden on royalty as well as on technical sales will have only a negligible impact on them because of the nature of services and solutions they provide," he said in an interview to CNBC-TV18.
Infotech Enterprises held its sell side analyst meet a couple of days ago. With reference to the meet, Bodanapu said the message they communicated to the analyst and investors was that they are confident of business going forward.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: What’s the feedback that you gave the analysts and how is the business looking like? Do you see an improvement in business because the IT index seems to be showing that on the stock charts?
A: The message that we communicated to the analysts and investors is that overall we are very confident in the business going forward. We do have short-term challenges, which we articulated at the end of last quarter’s earnings call. We had some challenges in Q3 and we will have some in Q4 as well.
However, looking forward to FY14, we communicated a very positive message. We communicated a message by dissecting our business by industry, and by the type of services we provide. We are very confident on how things look going forward.
Q: With regards to the solutions segment, which contributes 20 percent to your revenues, now that there is an additional tax burden on royalty as well as technical sales, would buying software become expensive and therefore that crunch your margins?
A: We don’t believe so. We are still looking at the implications. What it actually means for us is a little bit different than sort of the royalty on technical data and so on, so forth.
The assessment of the impact for us will be negligible because of the nature of the services and solutions that we provide. So, we don’t see an impact.
Q: Can you give us an idea of what you did guide or can guide in terms of your revenue growth next year?
A: This year our revenue growth year-to-date (YTD) has been 7.9 percent for the first nine months. So, all I can say is that it will be better based on the budgets that we have and the pipeline that we have at this point.
Q: Is National Association of Software and Services Companies (NASSCOMs) estimate of 12-14 percent; is that what you have in mind? Will you reach the lower end, higher end, average of the band?
A: Average is a safe place to be but I can’t really guide that because at this point we are still hashing out our budgets and getting to what it actually means.
The general IT services sector has a very different set of dynamics than we do. Therefore, the numbers might come out to be what they are but from a qualitative perspective it is not right to compare us to them atleast from this perspective.
Q: You also told the analysts that you have about Rs 500 crore to buy up companies. Can you give us any details on when it will happen and what kind of acquisitions you are looking at?
A: Basically while doing our strategy, we identified certain gaps in the kind of services that we provide for example electronics, medical or utilities. In hese areas, we are basically working with various sets of bankers, on identifying companies and really going through the process.
Since these things till they are done, they are not done and therefore it is very hard to give a timeframe. All I can say is that we have companies in various stages of pipelines. We basically have a four-stage pipeline; right from identification to actual acquisition. We have companies in various stages.
Q: Any company in the fourth stage?
A: We have one or two in the fourth stage, but it is not done till it is done because there are instances where we got upto signing and in the very last minute it didn’t happen.