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Wins in Europe, better growth rates it is a matter of time

Software service firm Mindtree Ltd is confident of beating the industry's growth target of 13-15% in the year to next March, chief financial officer Rostow Ravanan said. Speaking after announcing its September quarter earnings, chief executive officer and managing director Krishnakumar Natarajan said the company is positive on its deal pipeline, which is strong across business segments. The company also aims to maintain current margins in the next three months. The midcap company is hopeful of aggressively growing in Europe in the next two quarters. The hi-tech segment has now delivered three quarters of consistent quarter-on-quarter growth for the company. Mindtree added eight clients in the fiscal second quarter and signed deals worth $165 million. Edited excerpts from an interview:

Are you satisfied with your second quarter performance?

Natarajan: This quarter has been extremely satisfying be­cause the performance has been very strong on growth as well as margins and after a growth of 6.4% quarter-on-­quarter in Q1 to follow it up with 4.1% has been certainly satisfying.

The utilisation has increased over the last two quarters. What is the headroom available?

Ravanan: We are at the outer limit of our comfort zone. Now we definitely need to balance both the employee additions and revenue growth. The only thing is the last two quarters typically the employment ad­dition was slow because of the campus intakes are more that will happen in Q3 and Q4. It's at a level where we definitely need to add more people to in­crease capacity for future growth.

Your attrition rate is high compared with the last quarter. How are you planning to address this?

Ravanan: The attrition rate to some extent was seasonal because the largest groups of people received their incre­ments effective 1 July. Typical­ly, we see attritions spiking up the moment people receive their increments. It will trend down over the next couple of quarters. We have also put in place many people engage­ment initiatives over the last quarter and it will continue over the next one or two quar­ters to bring attrition down.

How is the deal pipeline? How many deals is the company chasing at the moment?

Natarajan: The deal pipeline continues to be fairly strong across verticals. If you look at our hi-tech, which was a lag­gard last year, has now deliv­ered three quarters of consist­ent quarter-on-quarter growth and deal pipeline there continues to be healthy. For retail and consumer products, there could be some short-term soft­ness because we are getting into the last quarter of the cal­endar year but beyond that we anticipate the pipeline to be healthy. Therefore, the pipe­line is healthy and as we see ahead, we have just started ini­tial conversations with our customers on what is their out­look for calendar year 2015 and the initial sign though it is very early, are quite positive. We are not seeing any signs of discomfort or even the minor sense of concern from custom­ers. Overall, we continue to be very positive on how the deal pipeline and overall the out­look our customers are telling us is reflecting.