Mahindra Satyam confident of better deal pipeline in FY12

Technology major Mahindra Satyam posted a net loss of Rs 327 crore in the forth quarter (January to March) against a net profit of Rs 58.9 crore quarter-on-quarter, despite higher net sales and operating margins. (Click here to know how the company faired in Q4)

However, in an exclusive conversation with CNBC-TV18, the company's top honchos including chief executive officer CP Gurnani, chairman Vineet Nayyar and chief financial officer Vasant Krishnan, appeared unperturbed. In fact, they are confident of a much healthier deal pipeline for fiscal year 2012.

"Our class action cost us USD 125 million, US Securities and Exchange Commission (SEC) cost us USD 10 million and UPAID USD 70 million. So we paid a total of USD 205 million. Now there is a sense of relief. Almost all risk factors and litigations are over and we would factor in some legal costs next quarter. We also hope to resolve discussions with SEC by October 2011," said Gurnani.

Happy with the steady progress of the company, the management said it would want growth to be higher than industry peers. In fact, "we have witnessed volume growth of 3.5% this quarter. This has been lead by growth in the US and Asia Pacific. We are seeing continuous traction in the manufacturing and the telecom, media and entertainment sectors," Krishnan said. The software services exporter's fourth quarter net sales rose 7% to Rs 1,375 crore.

Did you read:Mah Satyam Q4 woes, a hard pill to swallow for mkt

Below is a verbatim transcript of exclusive management interview on CNBC-TV18. Also watch the accompanying video.

Q: Margins are at a good level at around 6.6% for this quarter. Going forward are margins sustainable at 13% as Nayyar said. Is there clarity on the whole tax front going forward? If there is any kind of damages will it hit margins or the overall PAT figure?

Krishnan: As far as tax is concerned, the provisions that are sitting in our books we believe that is adequate, hence it closes that chapter. The Rs 616 crore that the income tax department demanded, pursuant of the order is with honourable Supreme Court, we furnished a bank guarantee. Hence, we believe that as far as provisions are concerned they are adequate and we will deal with it as soon as the order comes.

Q: On the margins, is the level at a higher figure?

Krishnan: It will be inappropriate to get into a discussion on forward looking margins. However with respect to the margin growth that we have seen this quarter as compared to the optimization that has been carrying out throughout the year, the results are beginning to show.

Q: Also, the volumes have jumped up, earlier it was 2.5% now its 3.5%. What do you have to say?

Krishnan: We have seen 3.5% volume growth largely led by America and Asia-Pacific We are seeing continuous traction in the manufacturing and the telecom, media and entertainment (TME) sectors.

Q: Vertical wise, media and entertainment has performed well, manufacturing has performed well. What about banking and financial services?

Krishnan: Overall, I would say is that it's been a fine balance. America and emerging markets did extremely well. When we are talking about growth, most of the industries have done well, including BFSI. The way I look at it is that the firm is now investing into new technologies. We are hedging our bets on smart grid and we are leading this through one of our group internal acquisition called Bridge Strategy. Now, Bridge Strategy has a lot of energy and utility clients. They have set up a large smart grid practice.

So right now, in terms of volumes, it will not show so much because it is going in through a strategy consulting. There is, however, a lot of follow through business in smart grid around system integration. We are being innovative and we are challenging in the current paradigm. We continue to go back into our verticals around manufacturing, BFSI, healthcare, and overall, there is a significant bounce that you can sense from our front ending growth engine.

Q: Is Europe stable right now because we have seen a couple of the IT firms say that there is little amount of uncertainty in Europe?

Krishnan: Europe, from a business point of view, there is an impact. The fact is that all of us live in a connected world that a protest in Spain does not get unnoticed in different parts of the world. So, in need to improve their own operational efficiency, I think Europe is recognizing it. What we are seeing is public sector spending has reduced dramatically. In various other sectors, which are particularly export-led economies, there is a fair amount of additional momentum and velocity.