‘WE WILL CONTINUE TO GROW FASTER THAN THE INDUSTRY’
While the business outlook for domestic IT companies does not look bullish, Ben ga lu ru based mid-size IT firm Mind tree is sanguine about its growth prospects this financial year. Though its deal pipeline looks robust, its recent acquisitions are also slowly sta bi li sing. Mind tree Chief Executive Officer and Managing Director ROSTOW RAVANAN talks about the broader strategy of the company with
Debasis Mohapatra. Edited excerpts:
While the business outlook for domestic IT companies does not look bullish, Bengaluru-based mid-sized IT firm Mindtree is sanguine about its growth prospects in this financial year. Though its deal pipeline looks robust, recent acquisitions are also slowly stabilising. Mindtree chief executive officer and managing director
ROSTOW RAVANAN talks about the broader strategy of the company with Debasis Mohapatra. Edited excerpts:
Mindtree is upbeat about business prospects in FY19. What makes you so positive about growth when all domestic IT firms are struggling?
I have no clue what rest of the companies are facing, currently. My confidence comes from the efforts we have put in for the past 2-3 years such as understanding changes in the market, understanding the requirements of our clients, training our people and the disruption that is happening in the industry, among others. If you see our growth for the past few quarters, it is among the best in
the industry. We are growing faster than the industry. We have also seen continuous growth in our pipeline. Our win ratios have also been increasing. That is what is giving us confidence.
How do you see your revenue growth in this financial year?
Our feeling is that we will grow significantly higher than the last fiscal. We have grown approximately by 9 per cent in the last fiscal year and we hope it will be much higher.
Your margins have improved in Q4 of FY18 but you have given a guidance that margins would be hit by 300 basis points due to compensation cost. Where do you see your margins?
On the operating profit level, we have shown 5 percentage points improvement in margins last fiscal. This is despite the rupee appreciation seen during most parts of last fiscal. The confidence of margin improvement is coming from the measures we are taking up. For example, our utilisation levels are increasing. More work is coming back to offshore in digital space. Operationally, the two businesses we acquired — Bluefin and Magnet — are also becoming stable and positive. We should be able to get back to higher margins in FY19 than FY18. But this is assuming that the average exchange rate should remain at last year’s level. In the last two months, the rupee has been weaker. And if this continues, then our margins will be higher.
Have operations from your acquired entities, Bluefin and Magnet, stabilised?
Operations have stabilised. I think revenue will go through one or two quarters, where we can say it is in the comfort zone. Nonetheless, we recognise that revenue from a high consulting business will be lumpy.
Digital revenue contributes around 40 per cent of the overall revenue. Do you see this space keeping up with momentum?
In the digital space, we have done a lot of groundwork such as acquisition, skilling, hiring people or building domain knowledge. Today, we are reaping the benefits. That is why our digital segment is growing faster than Mindtree. While Mindtree grew around 9 per cent, the digital business grew almost 18 per cent.