Growth on track despite hedging losses: NIIT Tech

Here is a verbatim transcript of the exclusive interview with Arvind Thakur on CNBC-TV18. Also watch the accompanying video. 

Q: Can you run us through this quarter, it has been slightly muted to start off with, what was the other income component going into this quarter?

A: The other income component has a component of hedging currency gains as well as losses that we have included as part of that. So in this quarter we have seen an improvement in our other income over the last quarter.

Q: Can you take us through the revenues and the margins picture? There has been some pressure on the margins, can you take us through the highlights of this quarter's performance and what may you guide for the next quarter?

A: Our revenues for the quarter is little over Rs 258 crore which is a 13% YoY (year-on-year) growth. We had very robust growth in this quarter, which has been 5% QoQ (quarter-on-quarter) growth. Our operating margins are at 18%.

One of the things to notice in our results is that we have taken hedging loss of Rs 85 million in this quarter. But despite of the losses we have shown 5% QoQ growth.

So it is robust as far as the topline is concerned. Also robust in terms of order intake - we had an intake of USD 75 million in this. Margins have been under pressure because the hedging losses have actually reduced our revenues and that flows all the way down to the operating margin. So operating margins have reduced from 19% to 18% in this quarter.

If the effect of the hedging loss is removed, our operating margins would have been 20%.

Q: Quick status checks on your Adecco JV, and also on ROOM Solutions what is the revenue outlook on that front?

A:  ROOM Solutions is something that grew well in this quarter and we just launched our new solution which is the next generation of insurance frameworks called IPF 3, which is Insurance Processing Framework third generation and we have got good response to that. I think ROOM Solutions is on a good wicket. Particularly in these trying and difficult times it's a niche position that it has in the market place and we see our business growing well in that area.

Q: What is the guidance for full year, for next quarter?

A: We don't provide guidance. We talk about all the data points associated with our performance.

Q: Will you be able to maintain margins?

A: That will be our attempt, as we just discussed the environment is difficult, the currency is very volatile and I think our margins are under pressure essentially on account of the hedge positions that we have taken and the rupee continues to depreciate and put pressure on the margins.

Q: By how much might your order book fall or rise in the next quarter? What is an estimate that you have from any dipstick survey you may have done with your clients?

A: We have been increasing our intake over the same quarter as compared to previous quarters. Our Q1 intake was higher than same period last year. Q2 was also dramatically higher than the same period last year. So we are on a good wicket as far as intake is concerned with respect to our clients.