May 14, 2013, 02.42 PM IST
3i Infotech is bullish about its performance going ahead. It may also sell some non-core divisions to repay debt.
Speaking about the growth plans of global provider of IT solutions he said, boost in the revenues would come by providing end-to-end service to their existing clients. 3i's Q4 revenues slipped 7 percent on a quarter on quarter (Q-o-Q) basis.
He further added that the company may hive off some of its non-core divisions to repay part of the debt and the balance repayment would be done via income from regular operations.
Below is the verbatim transcript of his interview on CNBC-TV18
Q: First your topline. The revenues are down seven percent quarter on quarter. Can you tell us why sales have been so sluggish?
A: It is not that the sales have been sluggish. In the previous quarter we had a big deal for our system integration companies and that actually pulled up Q3. Otherwise, quarter on quarter revenues has been on an increase.
If you remove that one time impact, the revenue between Q3 and Q4 would be more comparable and would throw a growth of about couple of percentage points.
Q: What are you doing about your exceptionally high finance cost, which seemed to be a denting your bottomline and preventing you from pulling back into the black?
A: Last year we went through a corporate debt restructuring (CDR) package which gave us some leeway in the current year. The CDR package actually gave us leeway of paying off our financial liabilities over a period of the next 10 years.
We are also right now looking at raising some foreign currency debt, which could be used to repay these liabilities thereby reducing the interest cost. The work on that is still in progress and we are reasonably confident that it would be able to reduce the cost going forward.
Q: You had also talked about options like hiving off some of your smaller divisions raising some money over there to alleviate this interest cost burden. What about that?
A: Post our MD and CEO Madhivanan Balakrishnan and me, joined the company on July 1 - we have identified certain divisions which are non core division. There are couple of businesses that we are planning to hive off and the proceeds from them would be used to repay certain of our debts. However, that would be a part of the debt and the balance would come out of the regular operations of the company over the next four-five years.
Q: You had also indicated that you hope to get the company to profitability over the course of the next 6-12 months. At this point, what can you confidently and comfortably point to in terms of where your revenue growth headed and when you would hope to break into the black through the course of FY14?
A: In Q4 we had an EBITDA of 18 percent before exceptional items. If we even held on to that 18 percent EBITDA and with about 10-15 percent increase in revenues, we will be fairly at a breakeven point in the third or fourth quarter.
For improving sales and revenues, we are looking at penetrating into our existing clients and providing end-to-end service to the customers through our products and the services division. We believe 15-20 percent sort of a rise in revenues can reasonably aspired for in the organisation.
Tags: 3i Infotech , Charanjit Attra, revenue growth, non-core divisions, corporate debt restructuring (CDR), foreign currency debt, EBITDA
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