Europe will drive KPIT's growth in the next 2-3 quarters: Kishore Patil

Interview with co-founder, CEO and MD, KPIT Technologies

Kishore Patil, co-founder, CEO & MD of mid-cap IT firm KPIT Technologies was surprised that the company manage to close deals even during the last week of December. The third quarter, October-December, is generally a soft quarter for the IT services industry due to furloughs and holidays. KPIT reported revenue growth of 15 per cent yoy for the third quarter and net profit of 7.5 per cent. In an interview with Shivani Shinde Nadhe he talks about how Europe will be next growth frontier for the company, plans around Revolo and growth strategy. Edited excerpts…

Take us through the quarter, and how has it panned out for you?

I think we have done well this quarter. In term of profitability our EBITDA margins improved by 60 basis points. Currency volatility impacts us a bit more as we have exposure to Euro and GBP along with the US dollar. But dollar has been favorable this quarter and we have seen good realization this quarter in dollars too. From deal perspective we have done particularly well this quarter. We were closing deals even towards the end of December. We are maintaining our FY15 guidance of annual revenue in the range of $498 million - $500 million.

Europe has grown very well and registered 16.3 per cent growth for the company, do you think the current uncertainty in the region will impact your growth prospects?

For us Europe will be growth driver in the next two to three quarters. Over the last two-three years we have been investing in the US market, as Europe had its own challenges, though we did have investments in Germany.  We are now refocusing on Europe and you will see the impact in few quarters. It is an important market for us due as it’s the auto manufacturing hub. Last quarter we did win a large contract also in Europe.

But rest of the world was down almost 10 per cent for the company?

The RoW is down primarily due to our intelligent transportation solutions segment. This primarily caters to government sector and the uptick has been slow. We have 100 per cent market share in this and we are confident that growth will be back in a few quarters time. ITS revenues for the quarter stood at $4 million as against $6.5 million in Q2FY15. We expect these revenues to again pick-up in Q4FY15.

Minister for Heavy Industries and Public Enterprises Anant Geete yesterday announced that the NEMMP has received Rs 1000 crore sanction, which will aid hybrid technology for vechicles. How will this impact KPIT (KPIT has developed a hybrid technology solution called Revolo)?

It is certainly a positive move. We, like several other players, have been waiting for this. You will see roll out of Revolo products in the next few quarters. It will not be a big-bang launch from us, we will focus on limited production. We expect Revolo to take atleast 12-18 months for us to see an uptick in demand among users. Once we get the desired numbers we will increase the production capacity. We also plan to roll this out internationally. We may see some revenue coming in from Revolo in FY16.