 "Jatin Dalal")
Wipro’s Chief Financial Officer Jatin Dalal tells Apurva Venkat and Bibhu Ranjan Mishra why the company is optimistic about future prospects getting brighter because of investments the company is making now. Edited excerpts:
It’s always work in progress at Wipro. Are you happy with the numbers?It is always work in progress at Wipro. But it need not always be work in progress. So from our standpoint, we had a decent quarter.
We completed some of the investments that we wanted to make in terms of people (salary increase) and acquisitions, including that of HealthPlan Services. We talked about the six themes that we are going behind with a lot of focus. I think there is business in the market to be picked up and we creating the right fishing net for that and therefore to that extent, we should see a better trajectory as we move forward. It will not become much better overnight. We always had a choice of doing something halfheartedly and give lower salary hikes, not doing acquisitions.
But these are the future. This year, we our compensation hike was 30 per cent higher than previous year and it has covered more people. So we are in that transit time, where we can see the sign on the other side, but we are not yet there.
Your profit has really taken a hit this quarter. What really impacted it?
It is because of the investments we have done. Salary increase for employees do bring down the operating margins in the quarter, and then you have to win those margins back. Profit has also taken a hit because of inorganic element which is acquisition. Initially, there is dilution in terms of intangibles write-off that one has to be done on account of acquisition which eats into your profitability.
But you had just one month of impact of wage hike as it was affected in June. So the real impact would be felt in September quarter?
Margins will remain lumpy. We will do everything we can to make better. One wouldn’t bet on making everything good but the endeavor will be there.
Your account mining strategy seems to be not working as revenue from top clients is actually declining. Why is it so?
Our biggest challenge has been mining. We are still seeing top account decline. But I am happy with the work we have done on mining in the Q1. Because mining is not for just top 1 or top 5 account but for top 100 accounts. We have done decent work there and we will be able to see traction and scaling up.
You decided to call off the deal to acquire Viteos Group. Is it that your eagerness to grow inorganically had made the company to announce the deal in a hurry?
The fundamental reason for deciding to acquire (Viteos Group) was we liked the business and the asset. But both parties could not complete the closing conditions, despite the best interest of both managements of the companies. We did not want to drag as it takes away the organisations efforts, bandwidth and attention, and brings in uncertainties. But there was no financial obligation (that was required to be fulfilled while cancelling the agreement).
Based on the visibility you have at the moment, will Wipro be able to post double digit growth?
I would rather be comfortable improving my quarterly run rate, first. If we could move from 0 to 1 per cent (revenue growth rate) to the band of 1 to 2 per cent and then to 2 to 3 per cent band, it will automatically be double digit for the year. It is matter of getting quarterly rhythm first before worrying about where I will be by the end of the year.
What is the restructuring Wipro is doing for its India and West Asia businesses?
The businesses that we were going after in India were a little difficult ones. Sometimes, the terms and conditions are prohibited; sometimes there are significant over runs and collection challenges. So we want to be more selective in India than what we have been in the past. We are just being selective on the type of deals and size of the deals we are going after.
