Margins up on superior ops; will sort out Sebi ban: Polaris

Polaris chairman Arun Jain explains that the quarter's margins were boosted by operational excellence and is confident that his legal team will be able to lift the Sebi ban on the company’s access to the capital markets.

Below is an edited transcript of the interview on CNBC-TV18 Q: Could explain what led to the margin improvement on a q-o-q basis and what the outlook is for the remaining two quarters of this fiscal year?
A: This quarter was effectively a quarter of operational excellence which was achieved after establishing the right business model where global banking business has a gross margin upwards of 60 percent. Our products business is ramping up well which is complementing the service business from US, UK and product business more from Asia Pacific and EMEA (Europe, the Middle East and Africa). Overall, the quarter was balanced.
Some of the profit came from the operational excellence drive which we iniated last quarter which enabled us to muster good results and improve EBITDA margins by over 15 percent over the last few years to the current level of EBITDA Rs 126 crore .On an annualised basis, the quarter closed at Rs 500 crore which is a sign of success from the perspective of the management team.
Looking forward, I think the EBITDA-level is sustainable. This improvement in EBITDA has taken care of initiating an increase in salary of almost Rs 28 crore.
Apart from being a very healthy quarter from an operational perspective, our acquisition of high quality consulting company Pyxis during the quarter had contributed 30 percent to our capital market portfolio which will now grow thanks to the acquisition. So, overall we are satisfied.
Next quarter, we are to sign three deals. We have two preferred partners and one strategic partner for one of the large banks- two European banks and one US bank. So, these three banks will give us some more traction in the coming quarters. So, we are looking positive. Q: Any change in the FY13 guidance as indicated earlier?
A: Our plans to achieve the guidance are being thwarted with the rupee playing spoilsport. Till September 20, the rupee was Rs 56 and on September 30, it came down to Rs 53. The weak rupee has made it tough for us to estimate the guidance. But on a sustained basis, our target is Rs 2,400 crore, if the rupee does not play too much of a spoilsport. Q: Sebi has banned your company from accessing the capital markets for two years. Any update on that or any development?
A: Our legal teams are working on it. After the High Court and Sebi consent order, the band order should not have been issued. Our legal team is very confident of solving that problem. Q: How soon would it be sorted out?
A: We do not know. It is a High Court decision. So we cannot give a timeline. I think the arguments and the consultation is proper. So we will be filing a suit next week.