See 20-25% profit growth this year: KPIT Cummins

Excerpts from Markets Midday on CNBC-TV18 Watch the full show » RELATED NEWS KPIT Cummins revises guidance on good Q2 numbers KPIT Cummins Q2 net profit down at Rs 21.19 cr ALSO READ See latest News about KPIT Cummins See previous management interviews See what other Experts & Brokerages are saying about KPIT Cummins KPIT Cummins BSE | NSE 10/02/12 Are Mutual Funds betting on KPIT Cummins?

Q: You had mentioned some time ago that you have a lot of unutilized capacity, I assume that is being fully utilized but more importantly could you shed light on what is Cummins doing, are they going to increase their outsourcing, how much of your revenue is growing because the orders are increased and how much is it growing because you can charge more, could you just break it up for us into percentage terms, about 30% growth in orders about 2% growth in pricing, what is causing this uptrend?

A: The customers have started looking at new projects. We saw new customers acquisitions last quarter, even though small but those transactions had started happening. We are also seeing an end of the degrowth scenario where many customers were looking at slashing projects, so we are at the end of that. So, by Q3 I think no such pressure remains from earlier part. So, most of this growth is driven by new project discussion. I don't think still the rates have started revising and there is still time for. I think that better rate realization will come from change in the business model which we have demonstrated by moving fixed price projects from 12% to more than 35% during this period and IP-led services. So, the growth in the realization will come more from the change in the business model I guess and the growth which we are showing is more from the new relationships.