See FY13 volume growth at 15%, Re rev growth at 25%: Zensar

In an interview to CNBC-TV18, Ganesh Natrajan, vice chairman & Ceo of Zensar Technologies gives his expectations of the company's performance. He says, "We had given guidance earlier that we would be probably in the 15 percent range in terms of volume growth and 18-20 percent growth in terms of revenue. So I think we are very much in track to do over 25 percent in terms of rupee revenue."

Also read: Kotak Mahindra MF picks automotive, telecom; drops bank, IT Below is the edited transcript of Natrajan's interview to CNBC-TV18. Q: What is the impact of Hurricane Sandy for your own company?
A: We had very little impact of hurricane sandy, because most of our business is in the West Coast. What we are doing in the East Coast saw hardly a two day blip. So, no impact at all as far as Zensar is concerned. Q: How are you likely to close FY13 in terms of volume growth and in terms of revenue growth?
A: We are continuing to do very well. We have got all the business that we had planned to get, both from our existing clients and from new clients. Infact, we had given guidance earlier that we would be probably in the 15 percent range in terms of volume growth and 18-20 percent growth in terms of revenue. We are very much on track to do over 25 percent in terms of rupee revenue. In terms of volume growth, we will come in at the number we have projected, which is obviously at the higher end of Nasscom's projection for the industry. So, it has been a good year. I don’t see any reason why it won’t continue to be good till the end of FY13.

Q: Do you sense any pricing pressure at this point given that the larger peers are actually struggling at this point? Is the mid-tier having to sacrifice on its margins?
A: I don’t think so because we haven’t seen any pricing pressure throughout this year. People are not looking at very large deals, but for us, a good deal used to be USD two million. Today if you look at the average deal sizes we are getting, it is between USD four to six million. Actually, our pricing has improved because of the volumes of deal we are getting. I don’t see any negative signs in the market atleast in the foreseeable future. Q: Given the improvement in the deal size, do you think slight pricing improvement is also possible?
A: If I can stratify our business, in the core application management business, pricing is constant or maybe will go up about 0.5 percent. In the ERP business- where we do Oracle and SAP implementations, as the deals become larger in terms of more complex deals, there we are seeing about 1-1.5 percent pricing increase on deals.
Interestingly, in the infrastructure management deals, there are fairly large deals. We are currently chasing a pipeline of over USD 120 million in that area. There again, pricing has an upward bias. I won’t say much higher, but because of the value of the deals being larger, our profitability will be higher. In all the three areas that we are playing in, I see a positive bias in pricing and certainly no pressure on reduction of prices. Q: What about acquisitions? Have you identified any potential target? How soon might you be able to close it if you have identified one?
A: Since we are looking at either IM or SAP, we have spoken to investment bankers. We have already looked at three to four companies, but it is not factored into our current year budget. So, if we get the right company and there are quite a few out there, then we will do the acquisition. I don’t see any specific time target for that. It could be towards the middle of 2013 which could be June-July. We have the money and willingness to do an acquisition once we get the right company.