NIIT to reduce debt in FY11-12, focus on free cash flows

Vijay Thadani, CEO of NIIT, in an interview with CNBC-TV18's Latha Venkatesh and Gautam Broker, said that the company has decided to look after the complete training requirements globally instead of having an in-house training function.

Thadani further said, "As far as the businesses like corporate learning solutions is concerned, the transitioning costs are over there and we see an improvement in margins for this quarter." Below is the verbatim transcript of the interview. Also watch the accompanying video. Q: What are the investors looking for? Interest in the a lot of midcap companies have gone up. Your guidance especially in the individual learning solutions (ILS) segment is about 18% year-on-year growth. Would you be able to better that? Do you maintain the growth trajectory that you have set for FY12?
A: As the economy has recovered from recession, the jobs are back and the interest in IT sector as well as in-professional training is returning. Last year, the sector grew by 13% on YoY basis in the ILS business. This year, we are looking at an acceleration above that. With the interest returning in, we do see an upside over what we did last year. Q: The soar point in last quarter numbers were that margins and exchange rates were trimming. There were higher rentals, people cost and transition cost of large deals. What did that mean? Can you arrest the fall in margins at the level in Q4 or will you better them?
A: In last quarter's transition cost that we referred, we have got into an interesting line of activity. We got five large contracts last year called as managed training services.
In managed training services, the training of a particular corporation is looked after as a whole. When you do that, you have to take over their training function over a period of time. Instead of having an in-house training function, NIIT has decided that it would look after their complete training requirements globally.
We have to gear up to take up that requirement and resources, setup the teams, make sure that the data gets transitioned and hardware/software becomes compatible to what they have been doing. All this requires an effort in which no one is earning any revenue which means transitioning cost. Q: Will this continue to bedevil your margins? What should we expect on the margin front in FY12?
A: This quarter, as far as some of these businesses like corporate learning solutions are concerned, there the transitioning costs are over and we see an improvement in margins.
Despite other cost incurred, the margin did improve. The improvement did happen, but wasn