Here is a verbatim transcript of the exclusive interview with R Desikan on CNBC-TV18. Also watch the accompanying video.
Q: Margins have slipped this quarter even though you have been able to meet your guidance what is the call going forward- Is this optimism likely to stay with the company?
A: Firstly, our year beginning is actually from July 1, and therefore all the wage increase reflect in July 1 as compared most other players who’s balance sheets reflect this on April 1. There other cause of this fall is due to some of the forex related charges there on mark to market basis. However, we have met the guidance for the quarter on the whole both on the topline as well as on the bottomline.
Q: Going forward what is the outlook given the kind of turmoil we see in the global financial markets? Do you think you can hold on to you year guidance and where do you see growth coming from?
A: We have always been giving a quarterly guidance and for the next quarter we have given a guidance of Rs 265 to 270 crore which is higher than the quarter which went by. We are looking at Rs 43-48 crore of PAT as compared to what we have reported Rs 41 crore for the previous quarter.
Q: Could you tell at what rate did you hedge the rupee?
A: We don’t have a major hedge as of now. As on September 30, we had an exposure of USD 17 million.
Q: At what rate was this hedging taken place?
A: That hedge had taken place at approximately Rs 42 to a dollar.
Q: Could you tell us about your National Health Service (NHS) ramp down, because you guided that it would take place over a one year period, but as we understand it will now take about two years?
A: At the beginning of the year we thought it would ramp down by the end of the year or a 12 month period. Based on whatever we have seen in Q1, there may be ramp down but it would take place over a period of 24 months instead of 12 months. So it is good for us because we get more business.
Q: Going forward in terms of order book position, what do you foresee for the company in the next few quarters because you have still three quarters to go before you close this year? What are the potential downside risks that you see right now for your business environment?
A: As a company, our exposure to the banking sector is much less as compared to most other players in the IT sector, where their dependence on the banking sector is about 40-45%. We are actually in single digit therefore the current turmoil is going to have much less of an impact on us as compared to most other players.
The second aspect is that we have very heavy dependence on government sector. Typically the government sector always balances out during the downturn period. They try to pump–prime the economy by having additional expenditure therefore there will be some amount of second order impact but all that has been considered when we gave the guidance.
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