May acquire 49% stake of Comviva from Bharti: Tech Mahindra

We had salary increases. That impacted our EBITDA margins by about 150 basis points. 

Sonjoy Anand

CFO

Tech Mahindra

Tech Mahindra  has met street expectations in the second quarter . Total income has risen by 6% at Rs 1,630 crore. Net profit was down 13% compared to the last quarter. But that was also in-line with expectations.

In an interview to CNBC-TV18's Kritika Saxena, the management, including chief financial officer Sonjoy Anand and executive vice chairman Vineet Nayyar, spoke about the results.

Nayyar said Comviva is pending with Reserve Bank. "We expect that to come in a few days time. So, possibly, as of next month, we would be factoring in their revenue. It is about USD 70-75 million a year," he added.

Nayyar also said that there is a possibility of the company acquiring remaining 49% stake in Comviva from Bharti.

Below is the edited transcript of the interview on CNBC-TV18.

Q: What is your view on the margins?

Anand: We had salary increases. That impacted our EBITDA margins by about 150 basis points. We have got one month of the Hutchison Global Services acquisition. We had mentioned, at the time of acquisition, we expect mid-teens margins initially from that business. So, that has had a 30 basis points negative impact on the average. So, 180 basis points negative has been mitigated by about 90 basis points through the continuing benefit from the initiative we spoke of two or three quarters back. One, the focus on cost optimisation in general.

Secondly, we said we are looking ruthlessly at all our low margin projects and businesses. We are either taking action to increase the profitability or where it does not make economic sense seize that business.

Q: Hutch has already been factored into the revenue. Has Comviva also been factored into the revenue? If not then by when will we see revenues coming in and by how much?

Nayyar: Hutch has been factored in only for one month. So, going forward, you will see an entire quarter. Comviva is pending with Reserve Bank. We expect that to come in a few days time. So, possibly, as of next month, we would be factoring in their revenue. It is about USD 70-75 million a year.

Q: You have acquired around 51 percent. Is there a provision wherein going forward you could take in the remaining stake from Bharti as well?

Nayyar: Yes, there is a possibility that we can and we will.

Q: You have been with the company, since quite some time and way too long now. I remember having a conversation with you a year ago where you said I am kind of tired now but you are still continuing for three years, is that correct?

Nayyar: In a manner of speaking, active work as always will be done by these guys. I will take the credit, whenever they do credit worthy work.