Hope to close some more deals in next quarter: KPIT Cummins

KPIT Cummins yesterday reported a 17.5 percent rise in net profit at Rs 60.13 crore for the first quarter ended June 30, 2013, on the back of robust deal pipeline in the US and Asia Pacific. Kishore Patil, MD & CEO, KPIT Cummins expects growth to be spread evenly in coming quarters. He expects to close some more deals in the next quarter, which will again drive growth.

Patil told CNBC-TV18 top 5 and top 10 clients have grown strongly. He expects the company’s growth to be stronger in the second half of FY14.

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Patil says their margins were impacted by wage hikes and some one-time expenses.

Below is the verbatim transcript of Kishore Patil’s interview on CNBC-TV18

Q: Could you set out the track for us in terms of what you expect to do through the course of the year and how volume growth is looking?

A: As we had mentioned at the beginning of the year when we gave our guidance that this year our growth will pan out throughout the year, it will be a spread out growth; some part of our business will grow throughout but some part specifically in the area of SAP and Cummins, the significant growth will come at the backend of the year. Therefore, in line with that we had mentioned that we see the Q1 coming out.

We also see good pipeline which has been building. The pipeline is stronger. So, we hope if we can close some of those deals in the next quarter that will again drive growth in latter quarters. The most important part is the top five and top ten accounts have grown. Cummins has also come back to growth in this quarter as we have said real growth will come towards the end of this year.

Q: Cummins grew more than 8 percent quarter on quarter. Are you saying that this kind of growth is sustainable and can be bettered in the second half?

A: The quarterly growth is always up and down but overall H2 growth should be better than H1 in case of Cummins.

Q: Where do you see margins stabilising because in this quarter there has been some hit on margins because of wage hike etc. Do you see it stabilising closer to 16 percent or closer to 18 percent?

A: We do think that this quarter there has been a big impact of a couple of things and mainly on margins. Large part of our increments happened during this quarter so that has an impact and also there have been some onetime expenses which we have booked so that has also impacted margin to some extent but we see improvement in the margins going forward. So, we do have some parts of increment basically promotions or the fresher joining in the later part of the year. However, overall we see improvement in the margins going from now.

Q: Cummins contributed about 17 percent to overall revenue share. Was that penciled in when you set out your FY14 full year dollar revenue guidance? Were you working with this kind of revenue share or do you think there could be a surprise element in terms of how Cummins performs?

A: This quarter it was better than what we expected certainly but we are now looking more on broad base growth, so we are looking at what growth we will get from top ten or top five accounts and we believe that our top ten accounts will perform very well during this year.