Confident of beating 13-15% industry growth tgt: Mindtree

Q: Are you satisfied with your Q2 performance?Natarajan: This quarter has been extremely satisfying because the performance has been very strong on growth as well as margins and after a growth of 6.4 percent quarter-on-quarter in Q1 to follow it up with 4.1 percent, has been certainly satisfying.

Q: The utilisation has increased over the last two quarters. What is the headroom available?

Ravana: We are at the outer limit of our comfort zone. Now we definitely need to balance both the employee additions and revenue growth.

The only thing is the last two quarters typically the employment addition was slow because of the campus intakes are more that will happen in Q3 and Q4. It’s at a level where we definitely need to add more people to increase capacity for future growth.

Q: Your attrition rate is high compared to the last quarter. How are you planning to address this?

Ravana: The attrition rate to some extent was seasonal because the largest groups of people received their increments effective July 1. Typically, we see attritions spiking up the moment people receive their increments. It will trend down over the next couple of quarters.

We have also put in place many people engagement initiatives over the last quarter and it will continue over the next one or two quarters to bring attrition down.

Q: How is the deal pipeline? How many deals is the company chasing at the moment?

Natarajan: The deal pipeline continues to be fairly strong, across verticals if you look at our hi-tech which was a laggard last year, has now delivered three quarters of consistent quarter on quarter growth and deal pipeline there continues to be healthy.

For retail and consumer products there could be some short-term softness because we are getting into the last quarter of the calendar year but beyond that we anticipate the pipeline to be healthy.

Therefore, the pipeline is healthy and as we see ahead, we have just started initial conversations with our customers on what is their outlook for calendar year ’15 and the initial sign though it is very early, are quite positive.

We are not seeing any signs of discomfort or even the minor sense of concern from customers. Overall, we continue to be very positive on how the deal pipeline and overall the outlook our customers are telling us is reflecting.

Q: The US growth has been more than the Europe growth for the fourth consecutive quarter. How can the US growth sustain and also the Europe growth has been lagging company’s average, why is that?

Natarajan: It is very contextual to Mindtree. Last year we shared saying that we are significantly enhancing our investments in client facing people.

The investments in North America were done almost six quarters back, so today’s result or the continuing last three quarters’ results is a reflection of the investments which were done ahead of time in North America.

In Europe we have started doing the investments, starting from this financial year. We will get to more what we think is aggressive growth rates in Europe within the next two-three quarters. You will start seeing us talking about wins in Europe, better growth rates. It is a matter of time.

Q: How are Q3 and Q4 shaping up because Q3 is seasonally weaker, do you expect it can pick up in the last quarter?

Ravana: You are right. The December quarter tends to be seasonally weak, deal closures are slower, projects which we have won, tends to be slower, so Q3 will be muted for us with a marginal growth but Q4 will definitely bounce back to strong growth.

On a full year basis our growth for FY15 will not only be higher than the industry average, it will also be better than the growth we declared last year.