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GK Muralikrishna, CEO and Managing Director, helios and matheson is a gold medalist in science and an alumnus of Indian Institute of Management, Ahmedabad, Mr. Muralikrishna (CEO & Managing Director) co-founded helios and matheson a little over a decade after leaving B-school. His ability to create an entrepreneurial culture and client centric approach in the organization has resulted in helios and matheson building long-lasting relationships with Fortune 500 clients. Muralikrishna has played a key role in bringing the organization on an aggressive growth path through a judicious mix of strategic acquisitions and organic initiatives, owing to which helios and matheson has its presence in the USA, Europe, Singapore and India. His strengths include team building and forging lasting relationship with institutional clients. Muralikrishna has been ranked among the top 101 entrepreneurs in Tamil Nadu by CII in the year 2010.
helios and matheson provides technology solutions to clients globally, with special focus on Banking & Financial Services, Insurance, Healthcare and Information Technology verticals. It offers a full complement of IT services with a slew of delivery options ranging from on-site to near shore and off-shore following a world class global delivery model. helios and matheson has subsidiaries and offices in USA, Singapore and India. While helios and matheson parent is listed on the NSE, BSE and MSE in India, its New York based subsidiary is listed on the NASDAQ in USA. helios and matheson is probably the only information technology company from India having two independent listed entities in India and the USA. Its infrastructure includes future proof development centers located in Chennai and Bangalore in India. The company’s presence in California, New York and Singapore adds to its global foot-print catering to clients from USA, Europe and Asia Pacific.
Replying to Yash Ved of IIFL, GK Muralikrishna says “The company is geared to tap this huge market potential and post healthy growth in revenue by building on its inherent strengths.”
How was your quarter as a whole?
The company posted a sequential double-digit growth during this quarter. The operating income for the quarter is Rs.288 mn and also touched a record Rs.1000 mn mark for the year, an increase of 27% over the previous year. Operating margin improved by 218 basis points over the corresponding quarter. There was a smart rise in net income too. The company added 5 new clients and had a gross addition of 261 to its head-count. It was therefore a very satisfying quarter on all fronts.
What are your plans going forward?
We have built a strong organic growth engine. We expect our existing clients to propel growth in the immediate future. We have 22 clients, each giving us revenues in excess of a million dollars every year. Each one of these clients is a Fortune 500 company, a leader in their industry besides being a large spender on IT services. We have a time tested, trusted relationship with these clients. Therefore, we expect that as we grow bigger we would get a larger wallet share from each of these existing clients.
Organic momentum would therefore be the main driver of growth. The company has a proud record of servicing its top 10 clients for more than 10 years on a trot without a break. We have proved over a period of time its utility to these clients in the face of changing market dynamics driven by technological challenges and ever-changing business landscape. Having attained a critical mass the company is positioned well to seize this opportunity for extra-ordinary growth coming in its wake during the current decade.
The company has accordingly strengthened its business development platform to not only acquire new accounts but also mine the existing accounts.
We have successfully demonstrated the ability to manage large client relationships. This is reflected in the long duration of our relationships with some of our large clients and in the joint development of engagement models that have resulted in the sharing of productivity gains between our clients and us. We hope to leverage these relationships and take it to the next level of volume growth.
Our extensive experience in the insurance, manufacturing, technology, healthcare and financial services industries allows us to accurately define and deliver customized services that effectively address the business challenges faced by our clients in these industries.
To sum up, the company is geared to tap this huge market potential and post healthy growth in revenue by building on its inherent strengths as detailed below:
Increase business from existing and new clients
Invest in infrastructure and employees
Enhance our solution set
Develop deep industry knowledge
Enhance brand visibility
Nasscom/McKinsey estimate that IT Services exports would touch $ 175 bn by 2020. In addition, there is domestic market of $ 75 bn available by then. Thus the total addressable opportunity would be a whopping $ 225 bn by 2020. We at Helios and Matheson are positioned very well to carve a niche for ourselves in this humungous opportunity.
Your outlook on BFSI sector? What percentage of revenues comes from BFSI sector?
A few years back the company took a strategic decision to focus on the BFSI sector. It was a bold move, considering the fact that this vertical is dominated by tier 1 players. Then in 2008-09 global melt down happened that majorly affected the BFSI sector. Undaunted, the company persisted with its strategy and it has paid rich dividends. Today we work with as many as 7 out of the top 10 global banks. The relationships are strong and growing. In most cases we share the league table with top players. As we grow bigger in size, we are bound to see a bigger wallet share coming our way. Revenue contribution from BFSI has increased from 30.9% to 36.4% during the last quarter. We registered a 49.9% growth in BFSI sector over the previous year.
What is your take on margins?
The margins are improving year on year. We recorded a 2.18% increase in gross margin over the previous year. The tier 1 players with whom we compete have net margins in the vicinity of 20%, compared to 7.3% that we earned this year. As volumes increase we expect our net margins too would increase as we see there is sufficient headroom to increase net margins in the space we operate.
Comment on your Capex plans?
We do not expect to incur additional capex for the next couple of years beyond the routine replacements/renewals. We have already put up necessary state of the art infrastructure facilities at various locations in India and USA.
What are your global plans?
USA continues to be our main geography. We have a strong presence in USA through our Nasdaq listed subsidiary, which gives us the advantage of a homegrown entity in the USA. Our client profile and the long-standing relationships with these clients too add to our strength in this geography. We will leverage on these unique strengths and grow our business in USA without diluting our energy in other new territories. We have a diversified client base that would protect us from any risk of concentration in one geo. Finally our revenue base in India, which is another fast growing geography would provide requisite momentum and stability.
What is your revenue mix?
The revenue mix is onsite 55%, offshore 23% and domestic 22%.
What is your current debt and debt to equity ratio?
The current debt net of cash balance is Rs. 2193 mn on consolidated basis and debt equity ratio is 0.74 .
India Infoline Research Team / 14:59, May 20, 2015
GPIL reported 13.5% yoy decline in operating profit as the impact of higher volumes was offset by lower product prices