Order delays hurt company's dollar revenues: Geometric

The dollar revenue of Geometric declined by 2 percent on a quarter-on-quarter basis to Rs 312.70 crore due to delays in orders in January, said Manu Parpia, Managing Director & CEO, Geometric. The delays for the month accounted for USD 1 million, which the company would not be able to recover, added Parpia.However, he expects a rebound in the first quarter and sees a modest growth projection. FY16 margins were at 12 percent and he expects FY17 margins to see improvement.Below is the verbatim transcript of Manu Parpia's interview with Reema Tendulkar and Mangalam Maloo on CNBC-TV18.Reema: Your dollar revenues have declined by 2.4 percent on a quarter-on-quarter (Q-o-Q) basis. You haven’t given us two key reasons for that, one was delay in getting orders in January from major customer and secondly on account of unexpected delays in a few other customers, will you be able to recoup the lost revenues in the coming quarter?A: Regarding the January delays we will not be able to recoup but other delays will we able to recoup, so I do see there will be a rebound in Q1.Mangalam: What was your revenue loss in Q2 due to these two factors?A: I would say that it amounted to at least a million dollar so we would have probably been flat had this not occurred or been slightly up.Reema: Because at least you will be able to recoup part of the revenues in the coming quarter, how will Q1 revenue growth look like, will it be a modest pick up or do you see a substantial improvement?A: It is modest growth. I don't see anything more than modest growth at this stage.Mangalam: Q1 margins will be weak due to the wage hike, what will be the impact, any other pressure points?A: No, I would say that the wage hike will have two-three points impact on the margin. That is what I anticipate going into the quarter and over the next couple of quarters that will be clawed back in the usual manner that the industry does. So, it is nothing unusual.Mangalam: FY16 margins stood at 18.3 percent and what is your outlook for FY17 margins then?A: I would say that the important things are to look at the margins of Geometric standalone because Geometric -- the subsidiary 3DPLM works on a cost plus basis. So margins are fairly static there. So, margins in Geometric were around 12 percent in EBITDA terms. I see that moving up a bit for the year as a whole.Reema: You will also be changing your accounting standard in FY17? What will be the impact on your profits on account of this?A: I believe the impact will be at least one percentage point and when I talked of margin improvement, I clearly meant like-to-like. When due to the change in accounting standard, I believe the impact is around one percent due to the adoption -- a couple of things are there. One is the accounting of options, second is amortization of goodwill, these are two major factors and the third factor is reimbursable travel, the way it is handled. So these are three major factors in adoption of new standards.Mangalam: So since you are splitting the business, revenue growth visibility?A: I have not given any guidance on that. So I would not like to put something there and talk about it because I have not given any guidance. I would say that we will aim to grow the company because we believe that is the most important factor now. Last year was about stabilisation of margins, this year is about getting our growth back and building a proper growth engine.