Thursday, March 20, 2014

Ganesh Natrajan, Vice Chairman and MD of Zensar Technologies believes software exporters offering new solutions, which enable people to get closer to customers and supply chains, will be successful in coming days.

After Infosys, TCS too slashed its March quarter margins and is expecting negative revenue growth in domestic market. Investors are cautious on it as TCS lowered 40-50 basis points in Q4FY14 margins due to cross currency and higher investments.

However, Natrajan remains confident quoting TCS's statement that FY15 will be a better year than FY14. "The US economy is improving. Europe is much better this year than it was last year. Markets like Africa, even in the Middle East, are seeing growth. So I see no need whatsoever to be concerned about industry growth," he told CNBC-TV18.

Below is the transcript of Ganesh Natrajan’s interview with CNBC-TV18’s Anuj Singhal and Ekta Batra.

Ekta: Can you give us more details of these multi-deals that Zensar Technologies has signed which is cumulatively worth Rs 100 crore?

A: Let me start with little bit of industry perspective because it will set the deals also in context. We all worry too much about some sporadic information here and there. What is the future? The future is really about if you have a good story in application support—the whole ERP space.

I am sure many of the large companies have a fully developed story. In Zensar, we have been building the story over the last six quarters, which is why the order booking in the last four or five months has been really good. So, in this context, if you look at what we have signed, one is a very large deal. It is in the multishore infrastructure management space, which means across the US supporting deskside, providing helpdesk service and doing work in India for infrastructure management.

The second deal, which is a smaller deal, is what we call Oracle Fusion Middleware. It is stitching together applications through a complete service oriented architecture, which is the way people are doing it today. The third is in data warehousing because as all of you heard of big data and analytics and everything else. So this deal is actually setting up a data warehouse where people can analyse decisions, do actually analytics, create these business intelligence solutions.

The reason we are excited is not just that the deals cumulatively are Rs 100 crore. That is okay. But it kind of shows the trend in the marketplace that if you offer new solutions which enables people to get closer to customers and supply chain you will be successful. So, that is what I am very happy about.

Anuj: You have been associated with Nasscom as well in fact you still are, is there something going wrong because last week we had Infosys, today we have Tata Consultancy Services (TCS) both saying that they see problem points. This in an environment where the US economy is actually seeing quite a bit of recovery what do you think could be going wrong?

A: I saw it on your channel this morning and I think there is a statement which you guys are not talking about which is that TCS has said that FY15 will be better than FY14. That is a trend that all good companies will see. People who have invested in ERP and invested in digital enterprise will continue to grow. It is impossible for me to comment on whether they will grow 5 percent or 2 percent as you were saying this quarter. That could be very easily some kind of a sporadic problem with any customer or whatever.

I have no data on that but I am just saying that the way we see the markets, if you look at the US economy it is improving, Europe is certainly much better this year than it was last year. Markets like Africa, even the Middle East, are growing. So, I see no need whatsoever to be concerned about the growth of industry. Quarter-on-quarter (QoQ) there might always be some aberrations here or there company specific, client specific but I can assure you this industry is going to grow better in FY15 than it is growing in FY14 and the business demand is very much there.

Anuj: Why should the market not be concerned when the two large companies are not saying good things about the next quarter?

A: About the current quarter I agree. Obviously if two companies are going to say that they will have muted growth it is a matter of concern. All I was trying to do is allay the fears about the sector at large. There will be company specific issues, there will be quarter specific issues but if you look at it in a slightly longer term, for the entire sector over the next four to five quarters I am just saying that there is no need to be concerned about growth. Growth is very much there because customers are spending money and customers are spending money on both old technologies and new technologies. So, that is my simple point that let us not get too carried away in one direction or the other by a quarter here or there. I think it is the long-term trend that is very positive for this industry as we speak.

Zensar Tech stock price

On March 20, 2014, at 10:16 hrs Zensar Technologies was quoting at Rs 393.00, up Rs 2.00, or 0.51 percent. The 52-week high of the share was Rs 429.80 and the 52-week low was Rs 180.90.

The company's trailing 12-month (TTM) EPS was at Rs 35.87 per share as per the quarter ended December 2013. The stock's price-to-earnings (P/E) ratio was 10.96. The latest book value of the company is Rs 110.75 per share. At current value, the price-to-book value of the company is 3.55.

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