Nucleus Software has expansion plans in Canada, Australia, the Middle East and Europe: Vishnu R Dusad, MD

Vishnu R Dusad, Managing Director, Nucleus Software Exports Limited, talks about Q1FY22 numbers, his outlook in terms of top line and bottom line in FY22, business opportunities, employee benefit expenses and order book among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: The numbers have been on the weaker side on a quarter-on-quarter basis with profit falling by almost 78% and margins are also under pressure. What led to this decline and what is your outlook ahead?

A: The reason is that COVID has had a lot of impact on us in the first two months – April and May – of the quarter due to which our two months got spoiled in a way. After this, our company faced a ransom attack in June due to which we were not able to work properly even in June. These are the two reasons along with attrition led to decline in our top line. We have taken very bold decisions related to compensation. These four things have impacted our bottom line as well. 

Q: Going forward, what is the outlook in terms of performance and how will it improve? Also, what is the guidance for the top line and bottom line for the entire year?

A: As far as guidance is concerned, our company as per the policy does not provide the guidance. But we are trying to build a long-term business and under it, we see a very good future ahead because we have made a heavy investment on our projects in the last 10 years, but we do not capitalize it knowingly. But a heavy investment has been made and around 50 lakh hours have been invested in creating our products due to which the product has turned quite powerful and useful for our customers, and they are also using it. Looking at those things, we are absolutely confident about the future. Similarly, our teams by using the latest technologies also produce a lot of power for our customers so that they can run their business at ease and least expenses. Due to this, we are very confident that these products of ours will go further. Similarly, our services business is also doing very well, and we are receiving good orders.

Q: You are saying that you are optimistic as good business is visible in the future. What is the thing on the basis on which you are saying this apart from the adoption of technology and what will be the growth drivers?

A: It is a very good question. The optimism is coming because whenever we talk about our products with our prospective customers and the existing customers then they are quite impressed with its features and they feel that the sooner they can get it, the more profitably their business can run. At the same time, the continuous upgradation of the technology at our end also gives a sense to our customers about the way by which they will be benefitted. These are the factors due to which our optimism is quite justified. 

Q: On a QoQ basis, the employee benefit expenses have shot up by 15% to Rs 92 crore. Will this continue to increase for some more quarters or what would be the average for the next few quarters?

A: It is an important question. Currently, the situation of the IT industry is like neither the past nor the future (न भूतो न भविष्यति) because our country has received a lot of work-related to digitization in the last one year due to COVID-19. Because of this companies need a lot of people, IT professionals due to which overall the manpower expenses of the entire industry have increased substantially. Even this increase at our end is in the same direction. So, right now, I will not be able to say that how it will be in the next few quarters or the next year because it will again depend on how the industry will respond to it and how much work reaches in our country and how they work is executed. 

Q: Your order book looks strong. Can you please provide some details about the same in terms of the kind of contracts you are getting? Also, there is an interesting trend in lending and transaction banking solutions, so, what is your business outlook on this front? Going ahead, do you have plans to enter some new geographies and are you planning to venture into any new verticals going forward or do product bundling as an offering for digital transformation solutions?

A: Our lending product is being welcome well and people are also liking our transaction banking. Due to the same, we are continuously investing in the same and will continue to do so. We have invested in the domain for the last 10 years and will continue doing. We have a release every six months and now we are trying to make releases at a faster rate, and we will try to make it happen. Due to these being released every six months, our customers are getting new and more powerful features every six months. Many of our customers in every six months are upgrading themselves. When it comes to upgradation, then we have developed such a technology that they are not supposed to work hard without spending much time. Things are upgraded at an ease every six months. So, they can use the new features that come along with every release every six months. This is why they are liking our products and they are also ready to provide references to us. 

Q: Can you please quantify the kind of order book that you have at present and what is the expected order book?

A: As far as investment is concerned, then in the IT sector investment is seen in the terms of home many hours the work has been done. So, 50 lakh hours of work has been down in the last 10 years, and it is a huge figure. Due to this, our products are quite sophisticated to the level that there is no competition around us. When it comes to new geographies, we are moving into then we are trying to enter into countries like Canada and we are getting queries from there. In addition, we are also trying to enter some old countries like Australia, Japan Southeast Asia, the Middle East and Europe. And, due to the sophistication of our products, we are hopeful that we will be able to show them the kind of products they want. 

Q: What trajectory is visible in the context of the margins and how it will improve and what is your focus on increasing the margins and profitability? Also, what could be the range for the margins by the end of FY22?

A: It is a very difficult task to answer this question because we do not know at all that how this environment will emerge, especially the environment related to the talent in the next 2-3 quarters. So, the margin has a direct linkage to those things due to which I will not be able to answer this question but obviously, we will try to return to the margins that we used to have in the past.