Even though higher expenses and lesser gains from foreign exchange impacted Tech Mahindra’s net profit, the company posted a healthy top line growth in the June quarter. The Pune-headquartered firm’s CEO and managing director C P Gurnani tells Aditi Divekar that his aim is to gradually improve margins in the next two quarters. Excerpts:
You said you would continue to focus on improving profit margins. How are you going to achieve this? For the next few quarters, we just need to focus on (employee) utilisation level, which currently stands at 72 per cent. Simply focusing on that will give those strong margins, which we had reported in the past. But it will take at least two more quarters to push up margins, gradually. All budgeting has been done for improving the utilisation to 75 per cent. We will be comfortable at that level. Of course, anything above that is welcome. Our growth is likely to come from the US, Europe and Australia.Appreciating rupee impacted your margins in the last quarter.
But going ahead, the rupee is not expected to depreciate either. How do you see your margins from the currency point of view?There are things beyond my control. I have my hedging policy in place whereby we insulate ourselves to one-third, and we do not intend changing that policy. If the rupee appreciates, it will hurt exports. This will be across the industry. Are you looking to grow inorganically? There is a buzz in the market that Tech Mahindra is planning to buy HP’s stake in Mphasis? I haven’t heard of a formal process in this regard. We are looking to grow inorganically, but we haven’t heard from HP at all. Our inorganic growth strategy is driven by sectors we want to focus on, not geographies. We look for and will continue to look for acquisition in banking, financial services and insurance, and healthcare spaces. If we come across the right candidate, we will consider this. We have enough cash and cash equivalents, and even we can borrow if required.