Ranganath Mavinakere, the new CFO at Infosys, comes in at a time when the IT major has declared an awesome set of numbers for the September quarter while providing a tepid business outlook for the remainder of the fiscal. Given his prior experience of handling key functions within Infosys, Mavinakere says that his current focus will be on the smooth execution of strategy for profit and growth, in an interview with FE’s P P Thimmaya. Excerpts:
As the new CFO of Infosys, what will be your key priorities?
First of all it is a privilege to lead a world class finance team at Infosys. My illustrious predecessors Mohandas Pai, Balakrishnan and Rajiv Bansal have always ensured that the finance function plays a key part in the success and growth of the company. The finance function has always set new benchmarks whether it was about becoming the first ever Indian company to be listed on Nasdaq or the first to adopt IFRS. There are a lot of benchmarks. I think the finance strategy and function are already world class. I would like to build up on the strengths that we already have. More importantly, all of us draw our strength from the core values at Infosys which are transparency and integrity. The current focus will be a smooth execution of strategy for profit and growth.
Do you see managing the forex market and pricing as two big challenges for Infosys?
I think currency volatility is here to stay. We have to manage that and it is not going to go away especially on the cross currency front, though rupee-dollar rate helps us. In cross-currency movement this quarter, the Australian dollar was a significant factor. At the same time we have to take a view that we will not speculate on currency but at the same time take measures to ensure that our cash flow is protected. We have to watch on pricing for some more time. The whole objective of automation is to really ensure that we bring down our costs with the ability to price and win more deals.
What were the reasons for the 150 basis improvement in margins in the quarter?
Rupee gave us about 0.7% gain and the rest 0.8% is primarily combination of operational efficiencies with other factors. So we have seen a good 1.5% improvement in our margins. On the margins we have already said that we would like to maintain this in the range of 25% plus or minus on either side and we would like to retain that.
What factors drove the 6% sequential revenue growth in this quarter?
We have already disclosed that our 6% growth includes the 1% one time gain. If we take that away then it is 5%. If one looks at it on a quarter to quarter basis there are always seasonalities in terms of some of the project milestones that take longer than expected. If you look at the last three quarters, the pricing has been extremely competitive. One should not draw too much conclusion out of one quarter, and we need to watch a couple of quarters more to draw any meaningful conclusion.
Will Infosys look at further cost optimisation measures?
We will continuously look at operational efficiency improvements. For example, in this quarter the utilisation level went up above 81% and there is still scope for improving on this level. Likewise there are many other levers possible and we will continue to focus on that.