MD Ranganath is the Chief Financial Officer (CFO) of the company. He has over 27 years of experience in information technology and financial services industries. He has held several leadership positions during a tenure of over 17 years with Infosys. Ranganath who is stepping down from the company this November said the robust financial performance in the last quarter has been very satisfying and the depreciation in the rupee also benefiited Infosys by 80 basis points (bps). One basis point is a hundredth of a percentage point.

India's second largest IT services firm, on Tuesday, reported 10.3 percent growth in consolidated net profit at Rs 4,110 crore against for the quarter ended on September 30, 2018, compared to a net profit of Rs 3,610 crore in the year-ago period.

Edited Excerpts:

The street was expecting you to cross that 24 percent mark this time around but did you take a conscious call to reinvest whatever benefits you have made and where was the pressure coming in from in terms of expenses in some areas have increased?

If you look at this particular quarter's performance, if you look at multiple dimensions, not just revenue growth, the topline growth, the deal wins, the operating cash flow for the first half of the year, earnings per share (EPS) growth year on year and even the operational efficiency, which I am very proud of taking laser-sharp focus over the last three years, have been really multi-year highs. As I step down, this robust financial performance in the last quarter has been very satisfying for me.

Rupee benefited us by about 80 basis points and we also had good pricing as well. Another 70 basis points came to us but that entire 150, we invested about 100 basis points for new additional compensation and also to address certain pockets of attrition which we had.

As we had announced at the beginning of the year, for the US localisation model as well as for the highest sub-contractor expenses that we had to incur to address the talent supply chain, these are the two principal factors. So, 100 basis points towards contractor, 50 towards sub-contractor as well as the onsite US talent. So, that took away the entire 150. Also, in the second half of the year, our trajectory of investment is going to be sharper than the first half, that is the second reason.

The strategy of reinvesting benefits back into the business, does that continue and if it is going to be sharper now, then that you are very close to crossing that 24 percent mark?

I do not want to guess for the margin but what we can say is that the currency movement is also another factor, how is it going to play out, it has been extremely volatile if you look at the last one week. At this point in time, we are comfortable with the guidance. If you look at the first half of the year we are pretty much at the top end of the guidance.

We had specific investment plans which we have outlined. In fact, at the beginning of the year we had brought down our margin guidance by 1 percent and that was primarily towards addressing these investments and we are in the trajectory of making those investments.

Are you confident then that in the next two quarters, Q3 and Q4 despite the seasonality, Infosys will remain at the higher end of the margin guidance? That is something that you had alluded to last quarter?

What I will talk about is the first half which is 23.7 percent and the reason we have kept 22-24 percent is that we have certain investments to make in the second half which we had outlined at the beginning of the quarter and the pace of those investments will be there in the second half.

You have devised a very specific capital allocation of $400 million is already done, $1.6 billion is that going to be completed in the next two quarters? What will be the strategy to give back those returns to investors?

The capital allocation strategy, when we announced last year, we returned $2 billion by way of a buyback. We had clearly said that upto $2 billion will be returned for fiscal 19 of which $400 is already given by way of special dividend, remaining $1.6 billion board clearly said we will distribute in a method that will be announced at an appropriate time. I am confident that the board will evaluate it at the appropriate time and make it happen.

That 12 months is coming to a close, so is January going to be the period when the buyback will be announced?

I do not want to guess on the buyback etc... but at least there is a commitment to return upto $1.6 billion back to the shareholders which were announced in April.

As you move on from Infosys, what do you make of the macro environment, how well positioned is Infosys to be able to handle the changing macro headwinds and it is across the board, be it Brexit, be it trade wars? Do you believe that Infosys has weathered the storm and is confident that they will be able to handle even attrition that may increase on a quarter on quarter basis without you and where are you headed?

If you look at the broader demand environment the US has been positive for us and the growth in the momentum of the financial service has been there and our exposure to China and South East Asia is very minimal. So, at this juncture, we do not really see much of trade related pieces affecting at least our sector.

In the US, the issues regarding visa, we addressed proactively through localisation and things like that. The attrition is demand environment related, I am sure that with the measures that we took this quarter we will continue to watch very closely, it is still 19.9 percent on a standalone basis.

Last 18 years I have worked with each one of the founders, each one of the CEOs of the company, especially as CFO in the last three years, I have worked with three CEOs and I have been an integral part of this growth journey. When I joined, the company was less than $200 million in revenue, the entire management and thousands of Infosians have worked towards it and scaling is one clear expertise.

As a CFO the transition management had put a very resolute focus on financial outcomes for a large balance sheet management, capital allocation, these are all some of the skillsets I want to put to use in certain places, especially the experience of managing a large listed global corporation and that coupled with my CFO expertise, I will be the first person to tell you when I make that announcement.

First Published:Oct 16, 2018 9:05 PM IST