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Investments Led to Margin Shrinkage: Nucleus Software

July 24, 2006
Managing Director of Nucleus Software, Vishnu R Dusad says that the company is confident that operating profit margins will return to previous levels.

He further states that its current order book position stands at Rs 130 crore. The company has added more than 350 associates in Q1, he adds. Dusad feels that investments led to shrinkage in margins.

Excerpts of CNBC-TV18's exclusive interview with Vishnu R Dusad:

Q: Could you tell us what led to a decline in your margins?

A: The reason for the decline in margins is essentially our bullishness towards our products business. We have hired 350 plus associates in this particular quarter, which is the highest ever number that we have recruited. We are investing very aggressively in our product development and hence the margins have declined by 4%.

Q: Are you confident of bringing back your long-term operating profit margins in the coming quarters?

A: Absolutely. We have always maintained that we would be operating around 30% and we are very confident that we would be able to take it there.

Q: What are your revenues from your top five clients in this quarter?

A: In this particular quarter, we are looking at 78% revenues from our top clients.

Q: How many client additions did you make in this particular quarter?

A: We have added four clients in this particular quarter.

Q: What has your attrition rate been like? Are you facing any problems attracting talent because that seems to be the cause of concern throughout the industry?

A: Some of the best industry talent are joining us and we are looking forward to even more high quality talent joining us in the coming quarters. We have orders for implementing our solutions in more than 80 countries all over the world.

Stock Open: 24/07/06  Close: 23/06/06  % Change
Nucleus Software  Rs 321.25  Rs 291.75 10.11% UP

Q: What is your current order book?

A: We are looking at about Rs 130 crore. Q: What kind of product and services ratio is the company targeting? A: In this particular quarter, we have already reached a ratio of 49% of product and related services revenue and the balance 51% is our conventional business of software development and support.