In an interview to CNBC-TV18 Farid Kazani, group chief financial officer & director of finance at Mastek spoke about two new orders that the company has recently bagged from the UK government and the road ahead. “The margins in these two projects are pretty much in line with our business margins, which are close to around 40 percent odd at a gross margin levels,” he said.
IT solutions provider reported a 21.9 percent sequential growth in its third quarter profit on better operational performance. Its net profit increased to Rs 18.3 crore in the quarter ended December 2013 from Rs 15.1 crore in previous quarter.
Below is verbatim transcript of Farid Kazani’s interview with CNBC-TV18’s Sonia Shenoy and Sumaira Abidi .
Sonia: Can run us through your order book and the details of these two new UK Government projects that Mastek has won?
A: This is efforts of Mastek in the UK with registering on the G-Cloud which is direct selling to the government on small government projects. Three months back we had the first win, which was in the health department side. Recently, we have won two new orders from Home Office on immigration platform. The G-Cloud allows to kind of bid directly and based on our capability and competency the government gives us direct orders. This is the first time in the Home Office Department; we do believe that this is the start of our foray into working into various departments in the government.
Sumaira: What will be the margins that you will be enjoying on these projects?
A: The margins are pretty much in line with our business margins which are close to around 40 percent odd at a gross margin levels. These two businesses will see improvement as we keep working with these departments and doing more business with them. The first one is to develop and test shared service bus for immigration platform and second program is developing a common data platform, so that gives a much better data consistency for the department.
Sonia: I did not get the exact quantum of the orders that you have bagged. How much is it? How much will it actually add to your revenue stream in the next couple of quarters?
A: We have not disclosed that. Just to give an idea it starts with a small program. Hopefully, we should see a built-up of the business in both these programs and in the department.
Sonia: In the quarter gone by you did close to Rs 250 crore of revenues. Do you think you could sustain that or because of the orders that you are winning perhaps that run rate could go up?
A: Last quarter was pretty good. In our results we did mention about a particular impact in our North America business which will see the revenue dropping because of a USD 2.4 million impact on the top-line for every quarter. We are hoping that these kind of wins both in the UK and some of the other wins in insurance that we are expecting in US should help us to mitigate this impact in the next few quarters. We are hoping that next year we should stabilise and do better in top-line.
Sumaira: So this hit of USD 2.4 million that you are getting from one of your North American clients, how many quarters do you think it will take for this project implementation to come on track?
A: The drop in the business is USD 2.4 million from a North American client. We do expect that at some stage we should get back to business, not putting too much of hope from that, it is the year estimate. North America is looking good on the insurance side and we would expect that gap to be mitigated in the next few quarters from the North America insurance business itself.
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