Robust deal pipeline in US, APAC to drive growth: KPIT Cummins

The company's focus areas have seen significant growth in recent times helping it to meet market expectations even in a difficult economic environment, says KPIT Cummins MD & CEO Kishor Patil

Mid-size IT services provider KPIT Cummins expects its robust deal pipeline in the US and Asia Pacific regions and increased spending by clients to drive growth in the coming quarters.

 

The Pune-based company, which reported 17.5% growth in profit for the April-June quarter yesterday, sees healthy growth from the US, North America, Middle-East and Europe regions and is confident of meeting its 2013-14 forecast of $465-475 million revenue in FY 2014.

 

Speaking on growth drivers, KPIT Cummins Managing Director & CEO Kishor Patil said: "Our traditional automotive, manufacturing and energy & utility verticals will continue to drive growth in coming quarters."

"We have built a robust deal pipeline in the US and APAC, making us confident of stronger growth and profit performance in FY14," he said.

 

He said the company's focus areas have seen significant growth in recent times helping it to meet market expectations even in a difficult economic environment.

 

The first half of 2013 has been strong for the US automotive industry led by improvement in US housing, employment rates and revival in consumer confidence. New vehicle sales are picking up pace close to pre-recession levels, the company said.

 

Its sales grew by 14% to Rs 613.21 crore in April-June quarter, meeting the market expectations.

 

The US contributed about 74% of the revenue while Europe and rest of the world accounted for 13.12% and 11.9% of the revenue during the quarter.

 

Speaking on clients' spending, Patil said: "Our top 10 customers registered strong Q-o-Q growth of 15.7% and we expect their spending on software to increase this year."

 

On pricing, he said that the company is not facing any pressure from competitors.

 

The company provided for some milestone based discounts to couple of our customers which had an overall impact of around 100 basis points (1 percentage point) on the margins, KPIT Cummins said.

 

The firm gave wage hikes to its employees effective April 1, 2013. The average salary hike for offshore employees was 8% and 3% for onsite employees. The wage hikes along with visa costs, resulted in a negative impact of around 270 bps on the margins.

 

However, rupee depreciation during the quarter helped offset increased wage costs and maintain higher profits, Patil said.