Mindtree restructures business units for better predictability

Company reports 51.8% jump in net profit in Q1 of FY14

Mid-size IT services company, Mindtree has simplified its business structure by eliminating the distinction between its two main operating business units.

The Bangalore-based company said that the product engineering services (PES) business which used to account over 30% of its revenues will now be part of its Hitech services vertical.

The company earlier used to have two main operating business units – IT services and PES.

Mindtree also said that with no distinction between the two businesses, the company will no more have separate CEOs for these business units. The Heads of the company’s four major verticals -- BFSI; Manufacturing, Consumer Processing Goods (CPG) & Retail; Travel and Transportation and Hitech services – would report directly to Krishnakumar Natarajan, CEO of MD of Mindtree.

“We have made some key changes to our strategy and structure to enhance our expertise led positioning and to build an agile organisation. We are confident that these steps are in the right direction, and will help us to achieve more predictability in the revenue from the business,” said Natarajan.

In May this year, Anjan Lahiri, the CEO of Mindtree’s IT services business had decided to quit the company. Following this, the company had said that S Janakiraman, who was earlier heading its PES business as the CEO would become the chief technology officer.

The company said the changes were made effective from July 1, 2013.

Meanwhile, Mindtree registered 51.8% growth in its net profit at Rs 135.4 crore for the first quarter ended June 30, 2013 when compared to the corresponding period last year, largely buoyed by foreign exchange gain of Rs 61.7 crore. The total revenues of the company for this period stood at Rs 647.7 crore, a growth of 15% on year-on-year basis.

On a sequential quarter basis, the net profit went up by 71.6% and the revenues grew 5.8%. During the quarter the company had a volume growth of 4.1%. The attrition level stood at 12.4%.

“We have delivered 15 consecutive quarters of revenue growth. This quarter’s performance continues that trend and has been encouraging both from a revenue and profitability perspective,” said Natarajan. “We hope to continue this momentum,” he added.

The company also announced a salary increase of 6-8% for its employees which will be given in three tranches. Eighty% of the people will receive the raise with effect from July 1 while 18% of them would get it from October 1. For the remaining two%, it would be effective from November 1.