Attrition to peak out, normalise around 18-20%: Cyient

IT solutions provider Cyient's second quarter consolidated net profit shot up 31.7 percent sequentially to Rs 98.5 crore, aided by strong operational performance.Talking about the numbers Ajay Aggarwal, Senior VP & CFO, Cyient in an interview to CNBC-TV18 said most of the verticals like aerospace, railways etc showed good growth in the quarter gone by.The big challenge for the company was the GIS segment due to reduction in volumes by a large customer. There are also other small challenges in the utility space where there were some project close downs but overall the growth for the quarter was in line at 4.2 percent in terms of constant currency.Out of the 240 basis point improvement in margins quarter-on-quarter, about 70 basis points was because of the exchange rate, the rupee deprecation and rest from operational efficiencies and high margin jobs, said Aggarwal.Going forward, he is also confident of attrition peaking out and normalising around 18-10%.Below is the transcript of Ajay Aggarwal’s interview with Ekta Batra & Anuj Singhal on CNBC-TV18.Ekta: It seems as though your margins as well as your profits were largely in line with what the street was working with. However, maybe there is a tad miss on the dollar revenue which is at around 3.6 percent for this quarter as opposed to say expectations of around 4 percent odd. What led to a 3.6 percent dollar revenue growth, were there any problems that you faced from clients and what was your vertical break up as well if you can share that with us?A: Our growth quarter on quarter in constant currency was 4.2 percent so when we talk of 3.6 percent dollar growth some of it got lost in the currencies. As such if you see there was a good growth from acquisitions, there was a good growth which came from aerospace; it came from rail vertical, communications and consumer. So, most of the verticals we have the growth. We have some challenges in geospatial information systems (GIS) where one of our large customers did not have so much growth there was a reduction in volume. We had some small challenges in utilities where some of the projects had closed down but we are getting the pipeline in utilities. We had some little de-growth in semi conductor. Overall if you ask me it was on anticipated lines and a good 4.2 percent constant currency growth quarter-on-quarter.Anuj: In the concall you had said that Rangsons will contribute towards the lower end of the guidance of USD 60-65 millions but in H1 it was only USD 16 million. How will you achieve it?A: As far as Rangsons is concerned we are having two things there – one is in terms of the business integration. We had acquired this company in February 2015 so we have taken lot of initiatives to integrate it. We have a very robust management in place now. We have got a good order pipeline. We had significant wins that happened in H1 based on which we expect H2 to be exponentially higher.Anuj: The stock is down 10 percent today is Carlyle looking to exit your company?A: It is not fair for me to comment about both these aspects. We perform and it is for the markets to decide which way the stock price should go. As far as Carlyle is concerned we cannot comment about any existing investors having a portfolio churn. What I can say is overall we keep meeting lot of investors, private equity players FIIs. I think there is a all time high interest in all the investors in this company. So even if there is some churn I think there are lot of people who are interested in the company. Specifically to comment on one particular investor will not be appropriate for me. Probably you have to go back to them and ask them. Ekta: What constituted the margin improvement that we saw?A: We did get very small part of it about, we had improvement of 240 basis point. 2.4 percent improvement in margin quarter-on-quarter. About 70 basis points because of the exchange rate the rupee deprecation helped us. The balance 140 basis points all came from the operational improvements, uitlisation has been all time high in the recent past. We got good mix, there is lot of focus on getting higher margin job so all those operational improvements have been showing up. Anuj: Your attrition is inching up and that is also a cause of concern for the market?A: In some ways it has peaked. We have been doing some kind of a recalibration also in terms of right sizing, improving utilisation and some pyramid initiatives. I would say now it has peaked; you will see a downtrend and we should be back over the quarters to our normal attrition rates of 18-20 percent.