MphasiS has announced its consolidated
results for the quarter ended June 2008 (Q1). The company's consolidated
net profit was at Rs 79 crore versus Rs 71.4 crore on QoQ basis.
The company's Q1 consolidated net revenues were at Rs 742 crore
versus Rs 657.6 crore on QoQ basis.
The company’s Management including Jeya Kumar, CEO
and Susanto Banerjee, Interim CFO of MphasiS spoke in an
exclusive interview with CNBC-TV18. The order book is visibility
strong, the Management said. The revenue flow from EDS is likely
to be more back-ended. MphasiS sees the EDS revenue share going
back to 43-46% range by year-end. There are cost pressures the company’s
utilisation is good. The Management said that their billing rates
are steady. They should be able to hold margins at current levels.
The company’s BFSI revenues are up by 15%, which it is confident
Excerpts from CNBC-TV18s exclusive interview with Jeya Kumar and
Q: Could you start off by talking about the order book visibility
MphasiS has right now and how much incremental business has come
in through this quarter from EDS?
Kumar: The order book visibility is very strong for us. If one
looks at our results YoY, the revenue grew 40%, net profit up by
54% and EPS up 54%. We are continuing to see good order book growth.
EDS for the quarter was about 41% of our total revenue and we see
that more as being back ended and so we continue to see our growth
Q: You said the EDS growth is back ended, by the end of the year
what kind of growth do you see from EDS clients and EDS accounts
and what proportion would be accounted by EDS?
Kumar: The portion of EDS revenue has always been around 43-46%
range and we see getting us back to that range again end of the
Q: Do you think you will be able to hold margins in double
digits through the next few quarters of the year?
Banerjee: The cost pressures are there but if one looks at the
matrix, all the matrix have improved in this particular quarter;
Utilization has improved dramatically, the billing rates are steady
though we have pressures on vendor rationalization etc , so all
the matrix are looking up and we are growing and if the growth continues
we should be able to hold the margins
Q: What is it that you are penciling in by way of billing
rates especially on the Banks, Financial Services & Insurance
(BFSI) side? You have got a bit of forex loss this time, so how
are you working with the currency for the next few quarters?
Banerjee: If one looks at the foreign losses, they are lower than
the peer companies because traditionally we have not been doing
the cash flow hedging, so the forex losses are lower in our case.
The way we are going to manage our currency is that we will get
into a programmed future cash flow hedging but we will look at that
particular line as well.
The BFSI segment in this particular quarter has grown, it has grown
in revenues. It has grown by about 16% over the last quarter, the
percentage share is also up, so we think we will be able to hold
BFSI segment through the year.
Q: What is the final status on the Electronic Data Systems Corporation
(EDS) - Hewlett-Packard (HP) merger- will there be an open offer
Kumar: The EDS-HP is a merger, so they are not compelled to do
an open offer right now. I think the EDS-HP merger is still not
finalized as yet and as it gets finalized things will roll, become
clearer for us.
Q: HP has a significant presence in India as well; do you
see any changes in business dynamics post this merger going through
for your India operations and business flow?
Kumar: I think it will be more positive. From what we understand
of the HP structure in the country, even from a client perspective
or from a delivery perspective we don’t see any overlap. I
think it should be positive for both the organization.
Q: Are you seeing any billing rate pressure at all which is flowing
through on your margins particularly from the BFSI space?
Banerjee: Yes there are little bit of pressures because some of
the clients are going through vendor rationalization process. But
we are trying to overcome those pressures. During this particular
quarter, the billing rates have been steady