Hyderabad: Mahindra Satyam chairman Vineet Nayyar is optimistic about the company’s prospects after it posted revenue growth for five quarters in a row, but is cautious about the evolving economic situation in the euro zone. Edited excerpts from an interview:
Till now you posted profits mainly through cost optimization and spreading out your expenditure. How do you plan to continue this growth momentum?
Yes, we did cost control but I think growth has helped a lot also. We were able to secure an upward revision in prices...there were a whole host of things which we did to bring it back to health. Remember that during (founder B. Ramalinga) Raju’s time, in six years, if you take out all the fictional income, profit growth at the Ebitda (earnings before interest, tax, depreciation and amortization) level was never more than 3%. In two-and-a-half years’ time, we have brought it to up to 15.5%, which shows that the company was basically good but it was financial mismanagement which resulted in this issue.
Expansion track: Nayyar says the firm is looking at setting up local centres in other countries. Photo: Kumar/Mint.
How is business in the European market? How are clients responding?
The European market is tough because of the euro zone crisis. That’s the bad news. The good news is that because of this crisis we will have to rationalize the costs, we will have to secure more competent, more efficient service providers and that is one positive for us.
Which are the new segments and geographies you are looking at?
We are present globally. So it’s not about geographies. What we are looking at is setting up local centres there so that we can also provide employment to the nationals of that country. We set up two or three centres in Germany, we are looking at the US. We already have a centre in the UK. So we are putting up centres where we exist.
You have not yet been able to bag a $100 million client yet. Isn’t this bit of a concern?
Look, as I said, we started from almost nowhere. People were surprized when we took over the company. So, to retain clients, to get back their confidence, it is a big thing. And I think now we have started getting it. You have seen the results. That is because of new clients coming in, old clients giving us more business. And, everything takes time. Getting large deals will also take time.
When are you planning to merge Tech Mahindra and Mahindra Satyam?
We have indicated that as early as April 13 two years ago, when we won the bid for the company, that it is our intention to merge. That intention still remains. It is a process. We are looking at when to commence it and we are hoping that by next year, sometime to the latter half of the year, integration will in fact take place.