Q3 growth led by BFSI; rupee depreciation helped: Mah Sat

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Q3 growth led by BFSI; rupee depreciation helped: Mah Sat

Mahindra Satyam posted consolidated net profit at Rs 308 crore versus Rs 238 crore last year. Speaking to CNBC-TV18, Vineet Nayyar, chairman; CP Gurnani, the CEO and Vasant Krishnan, the CFO of Mahindra say that the company is now crossing over from the restructuring phase on to a growth phase.

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Mahindra Satyam posted consolidated net profit at Rs 308 crore versus Rs 238 crore last year. Speaking to CNBC-TV18, Vineet Nayyar, chairman; CP Gurnani, the CEO and Vasant Krishnan, the CFO of Mahindra say that the company is now crossing over from the restructuring phase on to a growth phase. "We are coming closer to industry standards of operating margins," they say. Ebitda margin for Mahindra Satyam came in at 16.2% this time, up 10% from a year ago.

Revenue stands at Rs 1,718 crore for the company and they recorded forex gain of Rs 66.3 crore in the third quarter. The management says that the rupee revenue growth has largely been due to rupee depreciation.

Though market conditions are still unstable due to global economic concerns, the company says that they will invest in new practices and in non-linear platforms. "We are seeing longer decision-making cycles for big projects now," the company says.

According to Mahindra Satyam, growth in Q3 was led by the BFSI segment.

Below is the edited transcript of the interview. Also watch the accompanying video.

Q: The sense we get from around the globe is that spend on technology is looking downhill. Where is the opportunity in such an environment?

Gurnani: My management team's analysis of the situation is that our technological needs have only increased. If in the previous quarter, an Apple could sell 15 million tablets, it is clearly showing that the spend on technology is not reduced, and so, the spend on software will continue to, if not be on the rise, market forces will make sure that the enterprises around the world will have to upgrade their technology. If they are going to upgrade their technology and if they need to be more efficient, they need to be more effective, they need to be more cost-neutral, then they would have to look at partners like us, and that's where the opportunity is.

We will continue to focus on new technology directions, we will continue to focus on our investment and competencies, we will continue to focus on having a meaningful dialogue not only with our customers, but prospects too.

Q: Looking at the current scenario how do you look at Europe and US happening for Mahindra Satyam? What is the forecast and company's approach towards these geographies?

Nayyar: In US, it maybe premature to say so, but things are going to look up and there is going to be growth in business. In Europe, as Gurnani said things happen with a lag. We have seen impressive growth this quarter in Europe, but the lag impact may come two or three quarters later. You may see some issues, but greater the economic pressure on them, greater the desire to move work to areas, where they can get more cost effective results. So, I am pretty optimistic at this point of time.

Q: Can you give more details about the much talked about merger? There is news that there will be some more delay and you are thinking of changing the name of the company, will you be retaining Satyam part of it or how is it going?

Gurnani: It is a process. The management can only make a recommendation and that recommendation would be based on our consultants - whether they are from banking or accounting firms or legal firms and how they help us draft the recommendation. So, currently that work has started. We don't know when we will be able to finalise the recommendations and after that it is a decision with the board of directors of Mahindra Satyam has to take.

Both the boards need to consider it, which means the entity that is Tech Mahindra that we intend merging with. I strongly believe that one problem is very easy to solve because Mahindra Satyam and Tech Mahindra have a prominent name called Mahindra. The new name will definitely have Mahindra as a prominent name. I personally believe that is not going to be the big issue.