Geometric maintains dollar rev guidance of 22-25% for FY13

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Geometric maintains dollar rev guidance of 22-25% for FY13

Geometric Limited announced its third quarter results for the financial year 2011-12. The company’s consolidated revenues rose to Rs 2,190.37 million; up 14.5% from the previous quarter revenues. The company added nine new clients.

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Geometric Limited announced its third quarter results for the financial year 2011-12. The company's consolidated revenues rose to Rs 2,190.37 million; up 14.5% from the previous quarter revenues. The company added nine new clients.

The movement of the dollar-rupee also proved favourable as it helped declare higher revenues in rupee terms.

Manu Parpia, managing director and CEO of Geometric, in an interview to CNBC-TV18, reiterates its guidance that it had stated last quarter that they will push ahead and maintain the 22 to 25% dollar revenue growth for FY13.

Utilization levels will continue to remain high between 85 to 90%. I cannot see it going higher than that and I would not like to see it going below 85%. "You cannot put utilization above a certain level otherwise you will miss out on a lot of opportunities."

Despite the gloom surrounding the economy, he says the deal pipeline looks robust. "Despite the crisis in Europe and macro-economic conditions, or rather because of it, I see customers increasingly turning towards their offshoring partners for bringing in efficiencies," Parpia was quoted as saying in the company's media release.

Below is an edited transcript. Watch the accompanying video for more.

Q: What has the volume growth been in this particular quarter?

A: The growth is about 3% in dollar terms sequentially QoQ. We reaffirmed our guidance for the year which is about 22% to 25% YoY revenue growth in dollar terms.

Q: In terms of margin performance, you have done about 15.5% this quarter. Is that a sustainable margin according to you?

A: There have been some special effects on this quarter which we have highlighted which amounts to about 0.80 paise per share. The assets get re-valued as per the accounting rules due to the change in the value of the rupee vis-à-vis the dollar. The second is a one time benefit due to some deferred tax treatment of our US subsidiary. So these are the two one-time effects that are in place.

Q: We also understand that you added quite a few new clients this time around. Could you take us through what that would look like as you close the year?

A: The important thing is that some of these clients are clients which we believe will lead to substantial ongoing business in the industrial engineering sector of highway vehicle or in mining areas. These are customers who we added who we believe they are a long-term growth potential because they do a lot of engineering work and are global and they match the profile and our strengths.

Q: From hereon what would the strong growth drivers be for you in terms of specific segments? Last quarter, software services were the strong parameter for you. From hereon what are you banking on for growth?

A: We are looking at both software and engineering. Engineering we see it as in a secular trend. We believe that engineering is on a growth path because of several factors which go through demographics, technology and the shifts in market which are leading to growth in engineering demand.

We have very good strength in manufacturing engineering which is another area which we have under exploited so we see that manufacturing, engineering is something which will grow and we have an opportunity. Companies are setting up new centers in different areas and different parts of the world and that is an area where clearly we have strength and we have a market opportunity.

Q: Last quarter your utilization rate was quite high at about 89%. Where does it stand this quarter? Do you think you can hold on to those 15% margins from hereon?

A: I would not like to speculate on margins because on the margin. We have been very clear where there have been one time impacts on margins so that people should not read too much into it. In terms of utilization, we have improved our utilization this quarter but between 85% and 90% that is the figure it will range between. I cannot see it going higher than that and I would not like to see it going below 85%. You cannot put utilization above a certain level otherwise you will miss out on a lot of opportunities.

Q: What does the deal pipeline looks like from hereon until the end of the fiscal?

A: I feel it will be pretty decent. I feel that there is a continuing demand in the market for our services. It is a matter of making sure that we are there when decisions are being taken and delivered on what we commit to. I see that the market continuing to be positive despite all the uncertainty in the economic situation. Things could change. I keep worrying about that but as of now things seem pretty decent.