‘Brexit will have little impact on volumes’

Tech Mahindra posted in-line results for the June quarter though margins disappointed a bit. C P GURNANI, managing director and & chief executive officer remains positive on these. However, he believes Brexit will have some impact on the company in the sh

Tech Mahindra’s margins came below Street expectations. Will you be able to recover some lost ground going forward?

We could have done better on the margins side. However, we believe we should see an upward trajectory for the next three quarters from here on and our endeavor, would be to try and keep the same margins in FY17, despite external headwinds.

You have indicated that there will be near term impact from Brexit on the company. Are you witnessing heightened demand pressures in certain sectors?

There is no exact analysis. There are two impacts of Brexit. The first is when there is a currency depreciation of 9-10 per cent, clearly there will be an impact. And, for a company like ours, which derives 10-11 per cent in pounds, it makes a difference. The second part is, we serve our customers’ customers. So, there will be a minor impact because of relatively lower volumes in certain businesseses. The third impact is more of a delay in the decision making cycle. There will be a bit of uncertainty. But, the UK prime minster has done an amazing job of stabilising the party and communications around Brexit. She has tried to reduce the uncertainty surrounding it to some extent.

What are IT companies such as yours doing to reduce the short-term impact of Brexit?

Different companies will have different strategies. At Tech Mahindra, we have taken a policy of wait and watch because luckily, on the foreign currency side, we are more or less covered.

On the business side, we want our clients to firm up their strategies, before we react. Full interview on business-standard.com