TAISTech Q4 margin lower due to H1-B pressures: Mastek

In an interview to CNBC-TV18, Sudhakar Ram, MD & Group CEO of Mastek spoke about the results and his outlook for the company.

Below is the verbatim transcript of the interview.

Sonia: Can you tell us what the organic constant currency growth was and what is a sustainable growth that you can maintain?

A: In this quarter on a constant currency basis we grew almost 5 percent on an organic basis, obviously the depreciation of pound had a different result in terms of rupee and the rest was contributed; out of the 40 percent odd, rest was contributed was inorganic which was the TAISTech acquisition.

Latha: What was the impact of TAISTech acquisition on your margins?

A: This quarter TAISTech's margins were not as good as the organic margins because of H1 pressure that we had to get a lot of visas done this quarter, but overall we expect TAISTech's performance in terms of margins to be similar or better than Mastek organic margin.

Sonia: What is the outlook looking like for FY18?

A: Overall as a company we are pretty positive, the momentum is there, TAISTech is growing and our own organic business is growing. So we should see good results, we want to sustain whatever momentum we have and do better next year.

Latha: While TAISTech has helped you diversify, UK government contracts are still contributing a goodish bit of your revenues. Apart from currency, will there be any Brexit linked impact?

A: Not really. Government is a significant portion of our business in the UK and we have seen government spending continue, in fact it is going to strengthen. However, with the latest elections being called, there will be a period of 'Purdah' where no decisions will happen but overall we are very positive about the business and the economic climate in the UK.

Sonia: This 'Purdah' as you calls it or the freeze period, when will this take place?

A: There won't be any decision making freeze for Brexit but just before an election, what they call is a 'Purdah' period, so no new decision - obviously the old government doesn't want to take any decision till the elections happen. So that will kick in in the next six-eight weeks and for a period of three-four months we will have a period where no new decisions are happening. However, existing programmes, existing initiatives will continue.

Latha: Does the 'Purdah' make for a soft Q1 and Q2 than usual?

A: Not really because we have a pipeline which has build-up over the last two quarter, so we should be able to see decent growth.