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Jan 25, 2013, 08.02 PM IST | Source: CNBC-TV18

On track for Q4 margins at over 30%: eClerx Services

"Our operating margin, which is what we focus on have been about 35 percent for the quarter and that is within our target range of low to mid-30s," says PD Mundhra, executive director, eClerx Services, in an interview to CNBC-TV18.

Last quarter our operating margins were about 33 percent so they are up roughly 200 bps quarter on quarter

PD Mundhra

ED

eClerx Services

eClerx Services posted its numbers today, with a topline operating revenue of USD 31.3 million this quarter, up 5 percent quarter on quarter qoq and in terms of bottomline their net profit was about Rs 49 crore for this quarter. "Our operating margin, which is what we focus on have been about 35 percent for the quarter and that is within our target range of low to mid-30s," says PD Mundhra, executive director, eClerx Services, in an interview to CNBC-TV18.

Further Mundhra believes that during the course of this calendar year pricing should remain stable and maybe the company has an opportunity to move prices up modestly over the year. "On margin front also, we remain fairly comfortable that our goal of low to over 30 percent should be something that we can manage," adds Mundhra.

Below is an edited transcript of PD Mundhra’s interview on CNBC-TV18

Q: Can you take us through how your sales and bottomline did?

A: In terms of topline, we had operating revenue of USD 31.3 million this quarter, which was up about 5 percent qoq in dollars and in terms of bottomline our net profit was about Rs 49 crore for this quarter, which was double of last quarter’s net profit of Rs 26-27 crore.

Q: Margins have been going down. In the first half we saw sharp erosion, pricing led concerns. Your stock has corrected after the numbers. What are the EBIT margins this time?

A: Our operating margin, which is what we focus on have been about 35 percent for the quarter and that is within our target range of low to over 30 percent.

Also Read: Maruti Q3 profit rises 2.4 times to Rs 501 cr, shares up 4%

Q: What is the quarter on quarter comparison?

A: Last quarter our operating margins were about 33 percent so they are up roughly 200 bps quarter on quarter.

Q: In the first half some clients were asking for price discounts and that explained pressure on margins. What is the sense now? This quarter’s discounts were required to be given and how do you expect margins to pan out in the Q4 now?

A: We had made some pricing adjustments in the first quarter of this financial year and at that point we thought that there would be no further price adjustments and that has been largely held true. So, in both Q2 and Q3 there have been no further adjustments to pricing. As we look forward, I would say that during the course of this calendar year pricing should remain stable maybe we have an opportunity to move prices up modestly over the year and therefore on margin front also we remain fairly comfortable that our goal of low to over 30 percent should be something that we can manage.

Q: Yours is a bank, financial services & insurance (BFSI) heavy company and the scenario for them looks better now. Do you also feel the same?

A: The environment hasn’t changed much for us. We will see some quarter on quarter volatility. Q2 was a soft quarter, Q3 was little better in terms of quarter on quarter growth but nothing much has changed. There is still slow decision making and organic growth for us will continue to remain soft.

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