Transcript of Ganesh Natarajan’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18
News | 21 Jan 2015
Eyeing double-digit PAT for next year: Zensar Technologies The company aims to get back to double-digit profit after tax (PAT) next year backed by profitable infrastructure management business and strong growth trajectory for enterprise business, said Natarajan. For the next four to six quarters we will see good results and e-commerce will be as profitable if not more profitable than rest. GANESH NATRAJAN Vice CMD Zensar Tech Zensar Technologies is all set to report many more strong quarters since all the businesses and geographies are firing on all cylinders is the word coming in from its vice chairman and managing director,
Ganesh Natarajan. Mid-sized software services firm Zensar Technologies today reported 37 percent jump in consolidated net profit to Rs 69.52 crore for the quarter ended December 31, 2014, helped by growth in infrastructure management services business . The company aims to get back to double-digit profit after tax (PAT) next year backed by profitable infrastructure management business and strong growth trajectory for enterprise business, said Natarajan in an interview to CNBC-TV18. "I am sanguine about the prospects of both industry beating revenue growth in FY16 and substantial improvement in margins for Zensar" he added.
The company is looking at 20 percent growth in e-Commerce over the next 3 years, of which Professional Access (PA) would be an integral part. 70 percents of the e-commerce business would come from PA, said Natarajan. Below is the transcript of Ganesh Natarajan’s interview with Latha Venkatesh and Sonia Shenoy on CNBC-TV18.
Latha: Do you think this is a pro-rata performance which should expect it in fourth quarter and in FY16 this 8.36 revenue growth as well as 9.6 percent constant currency growth? A: They are on a very strong track because as most of you know we were having difficulties in the infrastructure management business that is come good with a very strong quarter both in products and services. The good new is that our investments in digital transmission and e-commerce have really paid off. In fact if you look at the trends going forward that would be a key driver of our business. So, to answer your question yes, numbers apart we will see many strong quarters for Zensar because all the businesses, all the geographies are firing extremely well. Sonia: What was the contribution of the Professional Access (PA) acquisition in this quarter?
A: Let me separate that for you ; if you look at the constant currency growth you mentioned 9.6 percent, if you take out Professional Access the constant currency growth would still be 4 percent which is best in class. So, they have performed well and going forward given their positioning in the retail e-commerce space that will be excellent. However across all segments we are doing well PA is probably the icing on the cake. Sonia: You did mention the last time that PA could grow about 20 percent. Would you still hold on to that assumption? A: In fact in the next three years we are looking at 20 percent growth in the e-commerce business. It is mainly PA, obviously PA is the leader in the retail e-commerce. However, right now we are also doing a lot of work in e-commerce in other areas including what we call business to business e-commerce. Just to simply it a lot of manufacturers who are focusing on retail segments are now building out their own commerce websites including tools like IBM, SAP not just Oracle. So, we will do probably 70 percent of our growth will be because of PA, 30 percent of our growth in e-commerce will be because of our own efforts. Both together absolutely it will be 20-25 percent that is the driver for all the companies going forward. Sonia: In the last two quarters I understand that your margins have gone up about 180 basis points, now at 14.50 percent. In the next one to one and a half year what kind of a margin do you think Zensar could be sitting at? A: It is difficult to exactly predict that but as I mentioned many times in the past we have to now get back to double digit profit after tax (PAT) and that is clearly on the cards for next year.
The reason why we are confident that will happen is the infrastructure management business is now profitable. There is a strong trend going forward that they will continue to improve their margins. The enterprise business given the fact that 76 percent of our business comes from the US that will continue to grow. So for the next four to six quarters we will see good results and e-commerce will be as profitable if not more profitable than rest. So I am very sanguine about the prospects both for industry beating revenue growth in FY16 and definitely substantial improvement in margins.