Hey Kunal, agree with you, no clarity offered by the management, had recently sent mail to the company with similar questions and all I received was gas (from the same guy, Vijendra).
On 27th April I wrote:
Dear Mr. Surana,
I am Sampat Bhansali an investor. While looking for companies with high ROE & ROCE I came across your company. Was surprised to see low PE for such a high performing company, on further research I found the company is completely depended on 1 client - VISA, also found that despite high cash balance the company is neither shown intent to give direction on how it would like the cash to be deployed, nor it has given it back to investors via dividend, any specific reason for the same.
Also I understand that the revenue are falling and whatever growth we see in last few quarters is because of the rupee appreciation.
The Management is not vocal about the future of the company, request you to throw light on revenue growth, margins, employee cost (which recently went down in a big way) utilization of cash balance for the next 5 years
I received the following response:
Thank you for your mail Mr Bhansali.
Company is looking at appropriate opportunity to acquire a company which blends with the domain focus.The company intends to utilise available cash for such an initiative which will enahance the top line/ bottom line of the company.
Regards
Vijen
Next I wrote:
Thanks Mr. Surana for your response. Can you also throw some light on your dependence on 1 client - VISA, who have set their shop in Bangalore. How much will it impact your topline and what is the companies plan to mitigate the risk.
and he replied:
We cannot talk any customer specific as we have certain confidentiality requirements. Hope you would appreciate that.
But at a generic level , this is part of any business and a large number of MNCs have opened their captives in India to reduce their in house cost. This necessarily do not impact their outsourcing business substantially.
Regards
Vijen
I donât understand when are they gone use the idle cash and why are they not using it. If they are not getting the right match why donât they payback to investors.