Arun Jain, Chairman and Managing Director (CMD), Intellect Design Arena, talks about Q2FY21 numbers, the performance of the company, deal wins, segmental performance and work from home among others, during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts: 

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Q: The Company has posted decent numbers for the September quarter and reported a profit of around 40%. What led to this kind of performance?

A: The major thing is that we have a product business that has a license. The second is annual maintenance contract (AMC) for the license that is sold by us, in which if we sell a license for Rs 10 crore, then we get an AMC of Rs 2 crore year-after-year. So, it had grown by about 20% and we have sold licenses worth Rs 98 crore this time and received AMC of about Rs 74 crore in this quarter. So, this is a back-loaded business, which requires huge investment in the beginning and the last five years, we have spent around Rs 1,200 crore on R&D and Rs 1,600 crore in marketing. The company has reached a stage 2020 where its EBITDA is growing continuously. Earlier, our EBITDA was at 20% and increased to 24% in this quarter (September quarter). We expect that in the next four quarters our EBITDA will be close to 30% because our business model is similar to a pharmaceutical company in which once a molecule is created then it is sold 10 times. Interestingly, the profit increases every time the molecule is sold. 

Q: How has been the deal wins in this quarter and what's your outlook going ahead for the next 2 quarters?

A: As far as deal wins of the last two quarters are concerned then there were deal wins even in the first quarter at the time of COVID. There was four deal wins in the first quarter and six deal wins were made in the second quarter. The important factor of the deal wins of this time is that there was 1 deal win in America in every quarter, i.e. there was deal wins in January to March quarter, April to June quarter and July to September quarter. So, we get an entry to America in all these three quarters and this is an importance of the product business. The second importance of our product business is that our product or retail banking and wholesale business have been ranked as number 1 by IBS Intelligence. So, if any product is number 1, especially the software product that is ranked as number 1, then a very large pipeline is expected as it gives support to other customers that they are buying the number one product. The leader in the product business is always benefitted. So, if you have a look on Intellect then our 57% revenue is linked to license or linked revenue, i.e. License, AMC and cloud revenue together. So, it is very positive news that an Indian product company is successful in the global market place. And 57% of our revenue comes from the advanced markets like America, Europe, Australia and Singapore, where maximum competition is available and giant players are present. And, we sell one license in the range of 20-25 crores. So, this is the value of this company. 

Q: How has been your relative segmental performance and do you think it will be maintained or it can get better in future?

A: Going forward, there will be an improvement in growth. There are two things in the product business and that is the number of customer wins is made, a similar number of customers are made live. In the last quarter, 19 customers were made live. Interestingly, the nearby banks also want to win the same product, which increases the growth potential. So, the growth will remain positive in the next two quarters and will be better than the previous two quarters. This is our expectations. 

Q: There is a work from home (WFH) culture and it has been adopted in the best manner by the IT companies. What impact did it have on your company and how are you handling this work from home? Do you think that it will be an important part of the future strategies related to employee hiring and placements? And, what is your outlook on hiring in future?

A: As far as work from home is concerned, the best part is that we moved into in from the very first day and it is continuing till date. It will be 8 months of work from home. So, a new model of work from home has emerged due to which our company’s productivity has increased by 10% because people are not supposed to travel and they can focus on the work better. And, this is a way in which we are connecting globally. When it comes to the impact it will have in the future, then I feel that we will have to meet with the team, so work from the office should be available. It is not so that that we can be the work from home throughout life. Possibly, there can be a situation in which such capacity of real estate infrastructure will not be required. A model will emerge in the next years, where it will be decided that we should work for two days or four days. We will require the bonding of the team so that we can design solutions by sitting physically, which will need our presence in the office. So, a middle balance between office and work from home will come out in the next six months and we are designing it. 

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