Tech Mahindra won deals worth Rs 421 million in Q2FY21: Manoj Bhatt, CFO

Tech Mahindra’s CP Gurnani, MD & CEO; Manoj Bhatt, CFO and Vivek Agarwal, Healthcare and financial services – Global Head, talks about the quarterly numbers that the company has posted, deal wins and pipeline and price negotiations due to COVID among others during an exclusive interview with Swati Khandelwal, Zee Business. Edited Excerpts: 

Q: The numbers for the September quarter has been very good. Numbers in terms of operating margin grew by 14.2% and profit growth of 9.6% has comfortably beaten the street estimates. What gave you this kind of numbers and what were the growth drivers for the quarter?

CP Gurnani: We got more success particularly in the Americas and emerging markets in this quarter. In a way, the company has been strengthened through some strategic acquisitions. Apart from this, we have also announced a special alliance related to the blockchain – a very secured technology breakthrough – with Amazon. We have also announced a business unit with Microsoft and a new provision for Go to market with Google. In a way, our investments in Cloud First has been given a huge boost. Platforms related to artificial intelligence (AI) has been created. Apart from this in 5G also, we through a press conference with a Japanese company’s CEO Rakuten Mobile have informed that a Japanese and Indian company – Rakuten and Tech Mahindra – have reached an agreement for go-to-market and how it will help the two companies in competency development, creating labs, new products and providing solutions related to open RAM to the market. 

Q: In term of verticals, where do you see the maximum growth and do you think that its growth will be sustainable in the coming quarters of the year?

Vivek Agrawal: As you have people have earlier said that the company’s strategy has been divided into two parts. (i) Focus on high growth technologies, like cloud, AI, digital transmission and (ii) high growth verticals and three verticals have been identified for the purpose, namely financial services, healthcare and hi-tech. During the pandemic, it has been seen that hi-tech and technology is growing at a tremendous pace across sectors and its demand scenario has benefited us. We had announced a large deal last year and the growth is a complete ramp-up of that deal, which is fully live. When we look ahead, there is robust demand in areas like digital health, digital banking and automation. 

Q: Tell us about the new deal wins for this quarter. How do you see the deal pipeline going forward for the rest of FY21 and if there were any kind of pricing negotiations with clients due to COVID and has it stopped now?

Manoj Bhatt: As you asked about the funnel, then our funnel is at all-time high levels. As far as deal wins are concerned, then there has been deal wins worth $421 million in this quarter and if I have a look at the spread in it than it they are equally (half and a half) divided between communication and enterprise. If looked from that perspective then across sectors, we have seen that the dip in an activity that was seen during the COVID quarter or the first quarter has returned and as Vivek has said that digital transformation and investment in some of the new technologies has become a necessity across segments. Secondly, we are seeing that the momentum of activity around deals and the kind of conversation that is happening gives a sense that it, the momentum, will increase when we move from this quarter to next and further. We will see how it will happen but current activity is giving a sense that the cycle of digital transformation will remain in place for several quarters. 

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Q: There are talks related to 5G. So, let us know the kind of benefit it will have and what is your view on 5G? And when it will arrive in India – the way it is panning-out globally – then what are you expecting from it, in terms of impact?

CP Gurnani: The biggest thing in 5G is that market-readiness has matured a lot. When it comes to partner readiness then have a look at the announcements from Reliance’s Jio, Microsoft and Rakuten, then the three are ready to roll out 5G on different technologies. And when they are ready to roll out then I believe that we will succeed more with our partnership with them. So, the market is now getting ready and I would like to say that there is a velocity.