Our focus completely remains on organic growth: WNS

Back-office firm WNS Holdings posted first-quarter results above market estimates, helped by higher volumes, and narrowed its full-year revenue forecast range.

The business outsourcing firm now sees full-year adjusted revenue of USD 387-USD 407 million, compared with its previous outlook of USD 383-USD 407 million.
Analysts on average were expecting USD 375.7 million, according to Thomson Reuters I/B/E/S.
WNS whose rivals include Genpact, Firstsource Solutions and ExlService sees 2012 adjusted net income of USD 43-USD 47 million.
For the first quarter, the company reported adjusted earnings of 23 cents per American Depositary Share on revenue of USD 97.8 million, after adjusting for repair payments.
Analysts on an average expected earnings of 20 cents per ADS on revenue of USD 94.4 million.
WNS whose top clients include Aviva, Biomet Inc, British Airways, Centrica and FedEx Corp said it witnessed higher volumes across insurance, retail, shipping & logistics and healthcare verticals.
Shares of the company closed at USD 9.28 on Wednesday on the New York Stock Exchange.
Keshav Murugesh, CEO of WNS, in an interview with CNBC-TV18's Kritika Saxena, gave his perspective of the first quarter performance and divulged future plans. Below is the verbatim transcript of the interview. Also watch the accompanying video. Q: On a QoQ basis, revenue in US GAAP terms have fallen by around 21.2% and in non-GAAP terms, they have jumped by around 3.7%. Why has the dip in US GAAP numbers happened? Is it largely owing to the repair payments made in the AutoClaims business?
A: We have a unique business AutoClaims where we have both revenues as well as repair payments paid back to our vendors. Effective this quarter, there is a change in the accounting bear. From a BPO business point of view, you need to look at us is around our net revenue. From our perspective, net revenue for the quarter increased year-on-year (YoY) close to 10% and sequentially close to 3.7% from USD 94.3 million to USD 97.8 million this quarter. Q: On the margin front, you had given out wage hikes, but there has been a certain amount of pressure due to that. A certain amount of pressure due to currency volatility, margins are at around 31.7% versus around 30% last year in the corresponding quarter and 34% last quarter. What is the reason for the QoQ margin dip? Is this purely wage inflation or is it due to certain amount of currency volatility as well? Can you factor both the segments for us?
A: On a QoQ basis i.e. same quarter last year, we have improved margins by 80 bps because of higher revenue. On a sequential basis, gross margins have declined by 480 bps because of the wage increments which are partially offset by higher revenue. In our case, we have already completed the wage hikes over the rest of the quarter or year. We expect to see better margins going forward. We are shooting for something like 32-33% overall margins. Q: By when could that be achievable? Is this a FY12 target that you would be looking at to reach the 32-33% margin point?
A: WNS is transforming itself dramatically and is investing significantly in sales and marketing as well as our new offerings and vertical programmes. In spite of all these investments, we expect margins to start picking up built into our new guidance numbers released today. We had upped our guidance. At this point at the revenue range, we have upped the guidance close to USD 397 million from USD 369 million declared last fiscal. From an overall adjusted net income basis, we have provided a guidance of USD 43-47 million for the year after taking in all these expenses and expectations around margin improvement. Q: You spoke about transformation in your business. You have restructured your business into specific verticals. Can you give us an idea about how that has reflected into numbers this quarter? By when will the restructuring be completed?
A: As of now, WNS has restructured. We are delighted to see the progress that we are making as a result of that transformation. We are probably among the first companies to go to the market from a BPO point of view, which is completely vertically aligned around six key verticals with our horizontal offerings. Our sales programme has kicked in very well. We have upped our sales staff numbers from 41 people same time last year to almost 67 people now. We have been investing significantly in talent, technology and transformation solution. All of that is now reflecting in the exciting topline as well as the profitability numbers that we are beginning to see across each one of our businesses. Q: How is pricing looking like currently?
A: It has been quite stable. We have been able to extend our contracts with top 10 clients with improvements or at least stable pricing. Q: Could you give a quick word on the debt of around USD 70 million on your books? You have a cash currently of around USD 30 million. Do you have any acquisitions planned out because there have been some of your peers that have been extending their limits? They have started including IT services as well. Is acquisition something on the agenda to beat competition right now?
A: Last quarter, we were at USD 74 million in terms of debt. We paid off USD 20 million last week. We are now down to USD 54 million in terms of our debt. In terms of acquisitions, we are always opportunistic and looking at anything that is interesting. Now, our focus is completely on organic growth. We will be opportunistic if something interesting comes up. (With inputs from Reuters)