Bullish about Wipro's growth this year: TK Kurien

Wipro shares fell as much as 7 per cent on Monday after the IT giant forecast weak revenue growth in the June quarter. The company's management, however, sounded confident that the weakness will be prove to be a temporary phenomenon and fiscal year 2014-15 will prove to be much better than last year. Wipro's CEO TK Kurien and CFO Suresh Senapaty spoke to NDTV's Prashant Nair about the company's outlook in the coming quarters. (Watch video)

This is an edited transcript:

Fourth quarter has been good but why guidance for first quarter is muted?

TK Kurien: The last quarter has been a fairly satisfying quarter for us for 2 reasons. Growth came in at 2.5 per cent, which was decent for us and importantly, we focused more on execution. Our margins have shot up last quarter primarily driven by three broad trends - 50 basis points from forex gain, 50 basis points came from utilization and 50 basis points came from productivity. And we see this trend continuing in the medium term. We have announced a salary increase and we are confident that we will be able to hold the margins. We have closed more orders last quarter than we have ever done in our history. Interestingly, we see the same trend to continue in the June quarter. To this extent, we are bullish about the future but unfortunately Q1 is seasonally weak and that weakness will continue this year too.

Can you just talk about Q1 guidance that you have put out?

TK Kurien: We are clearly saying that Q2 is going to be better than Q1. I have already said about the order book strength in Q4 and we see the same strength to continue in Q1. At bottom end, our guidance for growth will be 8 per cent compared to previous year's 4.7 per cent. This gives a sense about what we have done in the past year in order to get our growth back.

Suresh Senapaty: If you look at Q1 of FY 2013-14, we delivered 4.7 per cent year-on-year growth and thereafter Q2, Q3 and Q4 have been increasing. In Q4, we delivered 2.5 per cent sequential growth, which is about 8 per cent year-on-year. If you look at Q1 guidance, even at the lowest it appears flattish. As we go quarter-on-quarter, our endeavour is to get our quarterly revenue run rate on a year-on-year basis expand, so that as we go forward it will be decently looking at par with industry leading growth rates. We have been making steady progress to achieve it. Our Q1 guidance should be looked at in comparison to what we have guided for the first quarter in the previous year.

What would your margins look like in FY15?

Suresh Senapaty: As we see in quarter one, we have headwinds in terms of compensation increase, there would be some amount of pressure so far as Q1 is concerned. Our expectations and endeavour would be to at least sustain and improve in terms of operating margins what we delivered in FY 2013-14.

Attrition has gone up, do you think the 6-8 per cent salary hike which you have given will be sufficient?

TK Kurien: The quarterly annualised attrition rate has actually fallen in Q4. The bigger point is that we are pretty confident that we will be able to keep our skill base intact for growth. When we say that a salary hike of 6-8 per cent, the person at the top end will get much more. We differentiate clearly with folks we need in front of the customer and also we differentiate in terms of the skills that we need at back. I don't see attrition jumping significantly as we go through the year.

How discretionary revenue will look like for Wipro for FY 15?

TK Kurien: If you look at discretionary spends, we see discretionary spending coming back in retail banking, healthcare and life sciences. We also see discretionary spending coming back in utilities. We have stressed a little bit on retail which has been a hard one for last quarter. We see some softness in oil and gas. So broadly it has been a mixed bag. We are positive on some areas and little negative on others. On consulting, I don't bother too much because primarily it is a quarter issue for us. We would see growth coming back in consulting. We don't see much of a concern there.

Geography wise what is the outlook?

TK Kurien: I think US continues to remain strong for us and that for us is a big area of opportunity. If you don't win in the US then you don't win in the world so for us it is important that we remain strong in US. We have spent lot of time to make sure that we get growth in US. The other area that we are excited about is continental Europe. We are bullish about UK. If you look at India we are hoping that after the new government budget, we see vigour in buying. I think the concern for us is rest of the world, especially East Asia. Overall bullish about the big markets.

Suresh Senapaty: Middle East and South Africa continues to look bullish for us. All in all decent outlook as we enter the year.