Aim to grow by 32-35%; growth to be evenly spread out: KPIT

Due to the uncertain economic environment, KPIT Cummins has targeted a safe 32-35% growth in dollar revenue for FY13. “Based on the pipeline and orderbook we have, we feel very comfortable with 32-35% which is by itself a strong growth by looking at other guidances,” said managing director and chief executive Kishor Patil in an interview to CNBC-TV18.

He further adds that this growth will be evenly spread over the full year. While KPIT posted a stellar 50% growth in FY12, profits did not see much of a boost. Patil attributes this to the difference in currency over the last year. “Our profits would have been higher by 15 crore if the currency was at the same level it was in the December quarter,” he said. On a positive note, Patil says they will be able to sync their new acquisition Systime’s margins with that of the company by the end of this financial year. Below is an edited transcript of his interview with Mitali Mukherjee. Also watch the accompanying video. Q: You finished up FY12 with a strong runrate, but for FY13 you are guiding between 32% and 35%. Given what you did last year, does it look like you will better that target? A: I think we have done pretty well the last two years. We grew by more than 50% last year, but I think from the next year perspective, the environment is still uncertain. So based on the pipeline and orderbook we have, we feel very comfortable with 32-35% which is by itself a strong growth by looking at other guidances. Q: What would 35% in dollar revenue imply in terms of what you are penciling in on core volume growth and do you think it will be evenly spread out over the four quarters? A: It will follow the natural path of growth quarter-on-quarter; it is neither front-ended neither back-ended, it is evenly spread out. The reason we are in a position to talk about strong numbers for the next year is because of a couple of large deals which we have closed in the last six months. That has helped us to ramp up a little ahead of schedule in the last quarter, which helped us post strong results in Q4. So from that perspective, I would say it would be reasonably well spread over next year. Q: What about the kind of implied volume growth there is over here? A: Certainly there is a little bit of a change which has happened in onsite and offshore revenue in the last year because of transformational deals. We believe that we will be in a position to do better on the offshore revenues in the next year. So with that in mind, I would think most of the growth will come through volumes. Q: Can you talk a little bit about Systime in terms of how much that has contributed to growth and when you expect that to work on comparable margins to your own business? A: Systime got consolidated from January 1. When we acquired Systime’s stake I think the EBITDA margins were around mid-single digit and we said that the EBITDA margins will go to double digit by the end of the year. We are very happy that our margins have moved in line with that. It will still take some time because we want to get to the growth momentum in that business. So in the next six months we will continue to invest a little bit so that we get a good market momentum, but by the end of the last quarter of this year, I think we will get EBITDA numbers even with Systime. Q: While dollar revenue growth has been very strong this quarter, the flow through right down till the profit after tax line is much lesser. You have only done about 6% growth on your net profit versus the kind of revenue growth you have had? A: The major difference has been currency because the average realization in this quarter has been significantly lesser as compared to last year. With that, if you look at the other income, we have made up for Rs 15 crore, so on comparable basis, our profits would have been higher by 15 crore if the currency was at the same level it was in the December quarter.