Ladies and gentlemen, good day, and welcome to the Tech Mahindra Limited Q4 FY 'twenty one Earnings Conference Call. As a reminder, all participant lines will be in listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. C.
P. Gurnani, MD and CEO, Tech Mahindra Limited, thank you and over to you, sir.
Good evening, good morning, and welcome to Tech Mahindra quarter 4 2021 and financial year 2021 results. Thank you all for joining us today. I know for some of us who are in India and in many different parts of the world, This is a very tough period moving to the wave 2 Of the COVID-nineteen, I sincerely pray for you and your families to remain safe and healthy. You're meeting again after 3 months, while Things have changed, but It is also more important to remember is that the priority of Tech Mahindra has become more about safety and wellness of our employees, their families, our clients, our partners, And that has become our topmost priority as we speak. Your company has taken ownership of vaccination drive For our employees across multiple locations, we have rallied together with Mahindra Group To make sure that there is availability of caregivers, thanks to Some of the work Tech Mahindra Foundation has done on the healthcare academy, we are Working not only with Mahindra Group, but also with the state governments and the local governments regarding medicine availability, Plasma donors, doctors, quarantine centers and essential supplies like oxygen cylinders.
We are also working with some of the leading hospital chains to convert Our facility into COVID Care Businesses or COVID Care Unit, Over a period of time, you start realizing what a small contribution can make a difference. Yes, the voluntary program, which is really very small contribution we started 5 years ago, called Associate Welfare Trust. In the last 1 year, the trust has now provided majority of funds to families All dependents, all associates who have got impacted. Tech Mahindra Foundation, I'm particularly very proud because they've been helping over 2,000,000 people And they run more than 350 COVID relief program. So all I want Also remember that we are committed to individuals in the company.
We are committed to our customers. We are committed to the society and to the nation, And we are doing everything possible to help fight this pandemic together. Though from an operations perspective, I mean the impact is very minimal because Statistically, our number of absenteeism of people who were either impacted by COVID Forward family members who were impacted, Puna and Mumbai, which are going through the worst way, the maximum Absentism or planned leave was only up to 1.5% of that Centers are that area's total number of employees. As you know, like Mahindra has global delivery centers In Philippines, in Asia, in India, we are in Coohedron, we are in Chandigarh, basically in all Kyoto cities also. Europe, U.
S, Canada, Latin America, we have development centers. As a matter of fact, when Vivek Agarwal talks about some of the acquisitions. You would realize that we also have Now expanded our reach in Mexico. So In general, that Mahindra is able to give seamless continuity And is able to serve all their customers, but always it's wellness of the employees, wellness of the customers first. Quarterly performance, I know we have already with you that the revenue of almost 1330,000,000, Quarter on quarter growth of 1.6 percent for quarter 4, EBITDA at 266,100,000 quarter on quarter 3.5% growth and overall Satisfying quarter, satisfying year because last year, if you remember, we had spoken to you And said, we will have a 3 year plan.
1st year was what I had called the repair phase, 2nd year was what I had called Raji, 3rd year is what I had called rise, which is acceleration. Your company has focused on Balancing the growth between communication and enterprises, we have Worked very hard at Giselle Ravi, who is our Chief Operating Officer and Sidney Rameeda, who is our Chief Transformation Officer. Both of them are on the call, but they have done an incredible work at looking at our margins, Looking at an EBITDA improvement program, I think our operations team has also worked very hard to focus on the free cash flows. So overall, focus on operating metrics, focus on balancing the growth, the company is now poised For a much better year as we go into FY 2022, What makes me feel a little more confident is really toxic in The amount of deals that we have signed, we did about $1,000,000,000 plus compared to the previous three quarters where we were more like $400,000,000 to $50,000,000 So TCV of 1,000,000,000 as we go into FY 2022 to deliver Potential deal signing in the next quarter also of the same magnitude, Only it says that there is a pipeline, there is a deal momentum, there is execution momentum, And hence, we feel confident that our growth will be double digit.
And Clearly, the company is also focusing on improving our customer success rate. We are also looking at further levers for profitability. We are also overall Happy that your company continues to be focused On being a company with a purpose, we had talked about our focus on CSR, ISR, the individual social responsibility, your company will continues to be one of the most recognized Companies in sustainable corporations around the world, we are particularly proud of the Internal moment on sustainability and also getting recognition as Global 100 Most Sustainable Corporations. So it is definitely a pride that Your company on ESG meets some of the world's best standards. I know there is a lot to be done, all of us together, growth on growth, operating metrics, Improving some of our areas, Particularly on what I call revised and regenerated focus on Hyper personalization, human experience management, customer experience management and that is one of the reasons You have seen some of our recent acquisitions and either let Vivek Agarwal carry the rationale And how it fits into our focus to increase our reach and momentum In customer experience management, human experience management, cloud and cybersecurity.
So Overall, I will summarize by saying we had a steady quarter. We remain optimistic Of growth acceleration or rally as we get into FY 2022, I want to request Milan, our CFO, to take us through the financials. I'm sure he will share with you Record dividend that we the Board authorized us to declare today. Willem, over to you, sir.
Thank you, CP. Good evening to everyone. Let me now cover the financials for the quarter and for the year ended March 2021. So as CP alluded to, we closed the 4th quarter with a revenue of $13,000,000 versus 1309 in the Q3 and reported Currency growth of 1.6% and a constant currency growth of 0.7%. What is satisfying is the growth was equally distributed across Enterprise and Communication.
And in Enterprise, our stress vertical, especially manufacturing, has started growing again, And that's this is the 2nd quarter of consistent growth. As you know, the first half, it had really taken a hit because of the COVID. The SCP alluded that new deal wins that we had in this quarter are about 1,040,000,000 1043,000,000 to be precise. And again, they are also divided equally between Enterprise and Communication. And it's also spread, I mean, both across Europe as well as Americas.
So now RMB1 1,000,000,000 the deal wins are like Which were like $250,000,000 in quarter 1, dollars 400,000,000 in quarter 2 and 3 have jumped to about 1043,000,000. The EBIT for the quarter is $219,000,000 At against €209,000,000 in quarter 3. So the EBIT margin is 16.5%, which is an expansion of about 60 basis points. And the increase has come on the back of Operational efficiency, delivery transformation, comprising of offshoring, increased utilization And automation and lower depreciation because of the You know, conservative capital expenditure that we have had over last 1 year, partially offset by SG and A. And Increase in SG and A is also contributed by increase in the recruitment costs, and we have Boost up our recruitment engine in the last quarter, okay.
Now the 16.5% EBIT margin is the highest that we have reported in the last 6 years. Our net profit after tax was 147,700,000 as against 177,700,000 in quarter 3. And that's primarily for two reasons. Our tax provision in this quarter is higher because of One time charges, tax charge in 2 of our subsidiaries. Our effective tax rate normally is in the range of Around 25%.
But the tax rate for the quarter because of this one off is at about 32.4%. But going forward, we expect the rate to be in the range of 25%, 26%. The other reason for that is also our lower other income, which we have seen in this quarter. And that's because of the low on ForEx gain or actually a ForEx loss. But as I will come to in the next these Actually, it's not a realized loss.
It's an unrealized translation loss. So it's not a cause of worry for us. Our cash flow for the year cash flow for the quarter is 1,000,000, which is about 127 percent of that, okay? And this is Aided by our continuous focus on bringing down the data days and we have brought down the data days from 95 to 92 at the end of March. Moving on to the full year performance, Our revenue stood at about GBP 5,100,000,000 which is a constant currency decline of 2.5%.
But that is an impact of COVID impact in the first half that we have seen. In the second half, we are back on a growth track, and that's quite satisfying. In rupee terms, our revenue It's INR378 1,000,000,000, which show the growth of 2.6% over the previous year. During the year, Enterprise Business grew by 1.2% constant currency term, While Communications business declined by 7.6% in constant currency term. And this was, as I said, was in the what we have actually experienced, the decline in the first half.
2nd half, Both the engines are on the growth track. In Enterprise, we have seen a growth in BFSI, Technology as well as retail vertical and Manufacturing and Communication, which declined in the first half, Are also back on growth track as I had alluded earlier. EBIT margin for the full year Stands at 14.2%. In absolute terms, the EBIT for the full year is RMB729 1,000,000. The positive for margin was operational efficiency, largely operational efficiency, Higher utilization, higher offshoring and reduce our focus on reducing the subcons.
Of course, there are some tailwinds which came from the currency our way and lower SG and A for the full year. Okay. And as you know, because of the COVID impact, we have seen some savings in travel and Some of the utilities cost because of the work from home. This was of course, this was partially offset by the revenue reduction that we have seen, as I said, in the first half. Now we ended the full year with an EBITDA margin of 18.1%.
Now going forward in the next year, So we have already rolled out salary hikes effective April. And as we start the Increment salary hike letters are being rolled out. And this will have some impact on the Margin, but we have plans in place to recover the salary increase impact through operational efficiencies. There may be some increase in the travel costs, especially in the second half with increased vaccination in the world over. But given our exit margins as well as our initiative around delivery transformation And cost optimization and tailwinds which will come from revenue growth because deliveries that will come We will get because of revenue growth.
We are quite confident of achieving our EBIT margin of About 15% for the next year as well. Going below the EBIT line, The other income for the year also was low. Other income is low because of there were some one times in FY 2020, some of the profit that we have made from our couple of investment that we have made In ITOSTAR as well as one of the investment in our subsidy from Comviva. Those were not there. And ForEx gain for the year is lower at about RMB13 1,000,000 as against RMB42.7 million.
Our free cash flow for the full year is €965,000,000 which is 162 percent of PAT, Okay. And this is primarily result of reduction in DSO days by 20 days over the year. Our data days are down from 112 to about 92 at the end of March. So We think we have reached the optimum level of DSO. And there may be marginal increase In terms of data, especially in absolute number as we get into a growth phase.
The Board has Recommended a dividend of INR 30 per share comprising of INR 15 as normal dividend and special dividend of INR 15. This will take our total dividend to INR 45 per share. Now this dividend is Our highest in the history of the company. And it's a kind of Indication about how we approach the future. So this is in line with our dividend policy that we have where we have said that we will return the excess cash generation after taking after retaining The money for acquisition and for the internal improvements, okay.
Our hedge book is at about $2,000,000,000 With an MTM gain of about $38,000,000 of which we have taken $8,700,000 have We've taken to P and L and balance 31,000,000 to the results or what is now called other comprehensive income OCI. We continue to follow our hedge policy, which has served us well in the past. So to sum up, it's been a FY 2021 has been a challenging year. However, we have come back quite strongly during the course of the year. And we look forward to continue our journey of operational efficiency And delivery transformation and deliver a good set of numbers.
I think we can Open the floor for the questions, sir.
Thank you very much. We will now begin the question and answer session. Participants are requested to use handsets while asking a question. The First question is from the line of Pankaj Kapoor from CLSA. Please go ahead.
Yes. Hi. Thank you for the opportunity. Seeti, you had a fairly good deal even in the quarter. So I was just wondering with this kind of a conversion, has your pipeline got depleted?
Or have you been able to replenish If you can give some color on the size and maybe distribution of the beef pipe, that will be helpful. Pankaj, I will probably start off and Citi can add to it over.
Pankaj, So when you look at the deal wins, about $517,000,000 from Comms, 525,000,000 from enterprise. We expect a similar deal momentum or other Deal wins over the next quarter also. So evenly balanced and In the right direction. But maybe just be sure and Manish, you want to add more color to the deal pipeline And Anshul, overall, what you see as a mood in FY 2022?
Sure, sure, Citi. So Pankaj, hi, this is Jagnesh. I think as Citi said, from a deal pipeline perspective, We have a pretty strong deal pipeline going into FY 2022. And we think that the It will primarily be driven by a lot of transformation deals from a cloud transformation perspective. So we are working very closely with All the 4 hyperscalers and the revival of some of our verticals and hopefully With the Q3 seasonal downturn of retail going off, we should see a much better pipeline getting conversion getting developed.
So pretty strong pipeline and hopefully that this will start to get to do a better result. Danish? Yes. Well, thank you, Dipesh. Pankaj, like C.
P. Said, the deal flow will continue to remain As you know, in the comm sector, we always focus on deals which are spanning across What we now call as legacy modernization, the deal that we announced last quarter is probably the largest across the world That any company has signed to take this customer onto a journey where they will transform their Both business process as well as their underlying IP infrastructure and systems to be ready for 5 gs. We are similarly working on these continue to work on these around customer care and transformation Using AI machine learning and these are all becoming part of the large deal construct. Jagdish said about cloud That continues to remain a very strong team. We signed a very large deal last quarter with an OEM to Continue the 3 year journey on cloud.
We are also looking at some interesting views around the network space as we speak. So across all our portfolio, the portfolios that are capable to do large deals, we continue to remain very engaged. Thanks for the complimenting, Asar. I had just one small follow-up question on your capital allocation. So the total payout this year, of course, was close to 40% of the free cash flow as you had alluded in the past also.
Is it fair to assume that this is going to be the deal going forward? Okay. So, Bhaskar, it's 60% or 61% of free cash flow that we've done this year.
Yes. So sorry to interrupt, but we are losing your audio in between, sir.
Okay. Sorry, Milind, are you picking up the question?
Yes, yes. I will take the question. So, Pankaj, the question was in terms of capital allocation, right?
Yes. So let me just repeat that. What I was asking is that the payout this year is close to 70% of free cash flow, which is similar to what the earnings we had indicated in the past. My only question is that is it fair to assume that this is going to the base going forward?
So I mean, Pankaj, our policy is that We would like to return the cash generated during the year to the shareholders after considering the Needs for acquisition and for the internal usage. So yes, I mean, unless we see A major acquisition during the course of the year, we should we hope to maintain that ratio.
Understood. Thank you and wish you all the best for the next year.
Thank you, Pankaj.
Thank you. The next question is from the line of Sandeep Shah from Equiros Securities. Please go ahead.
Yes. Thanks for the opportunity and congrats on a good deal flow. Just wanted to understand if you look at the Q2 billings, Q3 billings.
Mr. Sai, sorry to interrupt, sir. Maybe request you to move to a better reception area, please?
Yes. Is it better now?
Yes, sir. Thank you.
Yes. So congrats on a deal show. Just a question in terms of Q2 and Q3. If you look at the new business TCV wins $420,000,000 to $455,000,000 but the same is not translating into the revenue growth in line with the industry. So the question is, it looks like from our quarterly average of $450,000,000 $500,000,000 worth of TCV events each quarter may not be enough with an increasing base.
So how are we making sure that our deal flows each quarter continues to remain above 500 $1,000,000 in terms of a threshold. So we are pleased to see that happening in Q4, may happen in 1Q, but will it become a recurring feature going forward? Because Then only it looks like your growth rates may be better or inch up to what the industry growth rates are? Yes, indeed. Thanks for the question.
Can you hear me now, operator? Yes.
Yes, sir. We can hear you.
Okay. So, Puneet, from a deal flow and pipeline perspective, I think already Manish And then BH and CP added that we're looking at a strong pipeline and even with this quarter's $1,000,000,000 of deal When the wind pipeline still get placed and looking strong in the numbers. So from that perspective for the business, some availability is there and As we go forward, even for 1Q, as we have the visibility right now, And what we're seeing, we're seeing significant closures coming through for us across the regions and the verticals. So be it healthcare or BFSI, we're seeing that across the board. So as we go forward, we will continue to see Better conversions and we position the organization in a way that we see the benefit as that CP mentioned, when we focused Last year a lot on the repair phase.
So we put the structure in the process in place where we're now seeing the inflows even better, the conversion being there And also the quantum of value that you see coming through not just in this quarter, but we see that continuing as we move forward. Okay. Okay. And just on terms of margins, if you look at Q4 deal is better, 1Q, we expect a similar deal flow. So our margin threshold, which we indicated earlier of 15% will change with some largely ramp up related costs or it may be even better with the better The rate of Q4, which is 16.5%.
And a related question, does it the supply side issue worry you? Because in FY 'twenty one, we are the only company which not have announced the rate hike and the attrition across industry has been going on. Yes. So let me first take the first one on margin. So, Cindy, you're right that we exit Q4 at a 16.5% EBIT rate, right?
That's when we look at next year, we have Couple of things that are playing as headwinds and then their tails on for us. So from a headwind perspective, you're right. There will be salary increases. There will be some ramp up cost for the large deals that we'll keep. At the same time, we fasted all that in a model.
We're also looking at, as Sipid mentioned, in all the operational can see that we've been driving this year. We still have headroom as we move into next year for that as well as some optimization at the Portfolio company level that we're working on. So between all of those levers, the interplay has given us confidence that we will be Able to get to the commission that we have there. And then earlier in terms of high single 15%.
Okay.
Yes. Just the last question in terms of looking at utilization, which is at very high levels of 87% and at the other end, the attrition Also going up for the industry, it's like a catch-twenty two situation. How will I manage this going forward? Yes. So I think utilization is currently at its peak and with the deal flow coming in, we see the deal is being announced.
Hiring is going to be picking up. So there will be some normalization in the course of the year, but still there are other operational levels that we have on margin. So That we kind of optimize it. In terms of measures for attrition, you've taken multiple from our side and I'll invite Harsh, who is our Chief People Officer, to articulate some of the things that he's been driving from an organization perspective that gives us confidence On how the year is now? Yes, thanks.
Rohit, no great question. And I think Most of our peers have also seen an uptick in attrition, but we've actually taken a few steps really to stem it. Of course, first thing was That we reinstated variable pay in quarter 4 itself, which was a very positive move. But as CP had and Milind had elucidated, we have already sort of announced salary hikes with effect from 1st April For all bands in the company and the letters as we speak are getting rolled out. But what we also did is a few other things.
One is A special additional variable payout, we had actually, as you know, Not given the variable pay in the 1st 3 quarters. So additional special variable pay of 1 quarter As bonus to band P and E because we did see an uptick of attrition there, as well as taken some Cash and stock based retention plans for key talent and especially in niche skills. That will really help Our attrition to come down. So we have actually gone ahead and also added some skill based allowance for knee skills And project based bonuses for key performers. So we do believe and we are very confident that with all these steps in place, We should be able to stand the attrition.
Okay. Thanks and all the best.
Thank you. Thank you. The next question is from the line of Rishi from Nomura. Please go ahead.
Just one question from my side. Hi, thanks you for taking my question. CP value alluded the intention to reach double digit. Could you just help us understand the Split between both telecom and enterprise. And because we've mentioned that telecom is likely to grow only 6 to 8 with Sendai earlier Well, are we seeing a pickup of 5 gs that's driving us giving us that confidence to hit double digit?
Go ahead, sir.
Again, yes, why don't you go ahead? Vivek, you wanted to take it?
I think it's Manish.
Yes, Manish, go ahead. Yes, Manish, I
was answering that question on 5 gs that if you really look at this deal that we've announced This quarter, last quarter. This is what are we trying to do here, right? This is an indication of what kind of discussions we are currently busy with Grogs to the industry. This is about modernizing their entire customer engagement platforms, So, similarly on their consumer side of the house, including the underlying The cloud native architecture so that it starts giving them the flexibility and the hyperscalability like What is it for 5 gs? So we have always said that 5 gs is not just about a network modernization, it is also about the System and the back end process modernization.
So most of our dialogue across the board This is largely driven by the 5 gs narrative, right? There is no barring maybe 1 or 2 regions. Everywhere, the primary driver for the conversation is 5 gs and how they need to modernize their network and hence rest of the infrastructure. To answer your question, that indeed is correct. You will see maybe as we prepare for this quarter deal announcements, The next one that we are doing will at the outset look like more like an operation deal, But the underlying scheme is about getting ready for serving the customers in the new modern 5 gs type of a world.
Again, a very large, Very interesting operator that we are working with. So I think that trend will continue to be there for the next year or 2. At the same time, we have also continued to start adding deals or increase on both funnel, deal closure and revenue On the network side of the business, as far as 5 gs is concerned. It is still a smaller deal, but however, these engagements do start small. It's a top $10,000,000 deal at this point that one of the greenfield operators in the U.
S. Had filed us For helping them integrate and test their 5 gs overhang type of a network, Again, it's an indication that the kind of conversation that we have been saying that we have delivered will continue. So that's really the type of So, stuff going on in 5G. I hope I answered your question on that. Dipesh can empty with the enterprise side.
Sure, sure, So on the growth prospects, I think very confident with the coming back as you know one of the things that actually It did not work for us in last year, and our vertical was manufacturing and banking was doing very well. So for us, I think this year, we see definitely 2, probably 2 quarters of steady growth in manufacturing, but also in terms of our focus Well, on aero defense, history as well as process and we're having a scale in offshore, which we don't think will are our 2 top 4 verticals on the enterprise. We expect all 4 of them to start showing us double digit growth. So that should pull the enterprise numbers more towards the double digit number and pull it out. Okay, understood.
So just Manish, just to confirm, you mentioned that incrementally versus the last quarter, there's an acceleration terms of the timeline for 5 gs, is there a fair assumption? Sorry, can you repeat that question?
What I'm saying is that from a
5 gs incrementally versus last quarter, there's an acceleration in terms of the timeline. Is that a fair assessment of it? Okay, perfect. And just one small question, right. Could you just talk about the hiring trend for the next year?
So we don't really give specifics around it, but Harsh mentioned that And you look at the demand pipeline and the deal, right, you can correlate it. So I think from our perspective that trend will have to go Along with the business and the double digit growth that Siti mentioned, which is correlated to that, but we won't give a specific guidance there. Okay. Thank you.
Thank you. The next question is from the line of Manik Taneja from J. M. Financial. Please go ahead.
Yeah. Hi. Am I audible?
Yes, sir. You are.
Yeah. So my question was with regards to the fact that you've spoken about double digit growth aspirations for the full year. How should we be thinking about it from a quarterly standpoint, given the fact that typically 1Q has 1Q is generally good for us because of the conviva seasonality. Given the kind of deal flow that we've seen this time around, should we expect that This growth will get new front wheels going forward? Manik, you know that.
So you're right. If we look at our last 2 or 3 years data, we will see 1Q Seasonality and typically, except probably last year when it was COVID, it went down quite a bit. Before that, it will be around 1.5% to 2% seasonality impact, right, going down. As we move into next year, I think With the deal wins that we've announced and the view we have, they will obviously be a quarterly ramp up that you will see. But 1Q at least Currently, the way we're looking at is a little bit more favorable than what we've seen in the past.
Sure. And if I can applaud you on the margin front. You said you said that you're looking at 15% plus EBIT margins in FY 2022. So If you could give us some sense of the wage increment that we have announced and the potential impact of these increments that we should be thinking about from the market standpoint in the Q?
So Rohit, you're taking that question?
Can you hear me? Hello?
Okay. So this, of course, is considering the wage increase that we announced, We factor that in. So we're quite confident that with our operational Yes, improvements that we have planned, we will be able to absorb that and report a margin Upwards of 15% EBIT margin, upwards of 15%.
Okay, sure. Thank you.
Thank you. The next question is from the line of Divya Nagarajan from UBS Securities. Please go ahead.
Thanks for taking my question. I think to the earlier question, you talked about the Q1 seasonality Avoiding some of the negative trends that we've seen in the past. How do I reconcile it with your headcount that you ended the quarter with in the last quarter? So should we expect that the headcount will ramp up as the quarter goes in? And the other related question to that is that In addition to wage hikes, you also therefore, as you ramp up your headcount, do you expect to see your supply costs Increasing and how have you factored that into numbers?
Yes. Can you hear me? Sorry, my line is patchy. That's why I'm asking you. Can you hear me?
We can hear you. I can hear you. Yes, we can. Okay. Okay.
So if you think about headcount, the quarter ending position you're comparing with, but as we look at the trend, We see a monthly trend to get better in terms of numbers and similar trend will continue as we move forward. So I think that gets correlated as we move forward in 1Q in terms of the offset of the seasonality that I mentioned. In terms of sorry, what was the second question?
So I was talking about Given that you had a negative headcount in the addition at the end of 4Q, would you then have to ramp up Headcount addition as the quarter picks up? And what kind of an impact it would have on your hiring costs as the quarter and the year progresses?
Yes. So that's all factored in when we do the modeling and we're talking about as we connect here. So It would have some correlation and even in this quarter we see some recruitment cost go up. So that factoring And the incremental headcount, hiring and offers and all that is going in. So there will be and we've all factored Then the model when we're talking about the comfortable view that we have on 50.
If I can add, Rohit, this is Harsh, That we are actually, for example, have already hired about 5,000 interns at the bottom of the pyramid. So we actually see that Making up the pyramid even better and that's obviously been factored in like you very rightly said.
Got that. Thanks for that. And just as a follow-up, Did you quantify your telecoms growth for the year? I believe you did talk about a double digit growth on the enterprise side.
So right now, the view is the double digit on enterprise and the business in the Congress Then as CP mentioned, Twin, double digit overall. That's the current view we have. And if 5 gs accelerates to what Manish mentioned, if that Then we'll kind of see how that plays out.
Got it. Thank you. And I'll go back in the queue. Have a good rest of the year.
Sure.
Thank you. The next question is from the line of Prisheshi Junjunwala from IIFL. Please go ahead.
Yes. Thanks for the opportunity. Just one question on FX losses this quarter. As I look at Yes. It's Nuumu.
Q o Q end of period rates are flat, so it can't be translational. And On a year on year basis also, Rupi has been appreciating. So just wondering why hedging would also have a ForEx loss. So just Wanted to understand why such a large polyglot lift product? Yes.
So basically what we have is we have certain currencies that have moved versus the U. S. Dollar And some other currencies as well as we look at our subsidiaries. So that's caused the impact for the current quarter and it had the opposite impact of the last quarter. So it's Translation for those currencies vis a vis their movement.
Milan, do you want to add anything there?
Yes. Rishi, this is Milan. And as I clarified, this is last year or last quarter also, we have had a Foreign currency translation gain, okay. And it's in terms of the subsidies that we have. We have about 160 odd subsidiaries, most of them overseas.
And this quarter, some of the currencies have moved against us. So It's a translation currency loss in this quarter. It's not a realized loss. It's just a quarter to quarter volatility, which It's for some time. And as far as hedging is concerned, as I mentioned, we have a Mark to market gain of €38,000,000 I wouldn't really give much of importance to the translation currency gains or losses.
Okay. And just very quickly, can you elaborate a bit on the impairment that we've taken in this quarter? And we had a pretty large number last quarter, even last year, this quarter as well. So just wanted to understand what are the nature of these such victories have we What acquisition have you taken?
Rohit, do you want to take this or you want me to answer this?
Yes, yes, sure. Sure. I can take it. So this time, what you see as an impairment, we've as we've already said in the past also that we Continue to look at the opportunities in the market where we want to normalize and rationalize a business where it doesn't make And that where we continue to look at 1 of the JI roles and Specifically, that impairment where we'd rationalize, restructure and take into custody and future move in terms of loan. These We will assume it's been normalized to make profitable growth in this quarter.
Because of that restructuring, We've spoken in Ben on a specific country where we had a whole Which acquisition did you name? This was in Brazil that I'm talking about and this is almost 7 acres back and it's part of our strategy. We did I'm sure that we continue to look at geos where we want to be more prudent to what business we take and as a part of that I will get into
Thank you. The next question is from the line of Ashwin Mehta from Ambit Capital. Please go ahead.
Yes, hi. Thanks for the opportunity. I had one question on the performance in this quarter. So if I adjust for the acquisition contribution, it possibly did not Show any organic growth this quarter. So what were the negative surprises and which segments Did we see them in this particular quarter?
So I wouldn't say there's negative surprises, but yes, I mean from a timing perspective, the way the deals are closing and Pained out that we saw and adding traction to revenues are going to trickle down as we move forward. So probably that's timing
Okay. And the second question was in terms of like what Milan mentioned That you have operating levers at hand to manage the margin impact of wage hikes or the hiring pickup that we see. So if you can elaborate in terms of what are these operating levers at hand because we've not necessarily done hiring for some time, our utilization seems to be at peak. So So in addition to these, what are the other deals that we are looking at?
Yes, sure. So let me assume a couple of them, I'll add again. So if you think about From a delivery and operation standpoint, from an offshoring perspective, we still have room and we'll continue to drive that Labor, as we move forward, we compare our numbers. That's something that we will continue to drive. From second area that we should look at is the portfolio G and A centralization.
We're driving that effectively through a central team working with each and every portfolio company. So that should also give us some headroom there. And similarly on the operations that we said, we will continue to drive other operating levers on managing each of the accounts And driving operational leverage as you may call it.
Rohit, can I just add something?
Yes. Yes, we will do.
Another thing is the growth leverage, And we talked, CP alluded to that we are looking at a higher growth rate. And that growth rate itself will ensure that our SG and A gets spread over a larger base and That could be a good lever, a lever which we didn't have last year.
Okay. Okay. And just one last small So in terms of wage hikes, we are looking at only one wage hike this year or there is a plan that given that almost Every peer of yours is giving out wage hacks over a 3 quarter duration. We might also possibly have some interventions towards
the second half of the year.
I mean, it's difficult to answer because a lot of it, If we come up with a second rate hike, it will be mainly because The company's growth or company's performance would be better than what we have envisaged. And so I'm not ruling out a second wage hike, but at this stage, we have not budgeted or planned for it.
Okay, Sigrid. Thanks a lot and all the best.
Thank you. The next question is from the line of Vibhor Singhal from Philip Capital. Please go ahead.
Yes. Hi, Lalisa. Thanks for taking my question. So just two questions from my side. What is your hiring target for this year in terms of either net sales or thresholds or the combined number that we are looking at?
We specifically don't give numbers around that, but I mean looking from what Harsh are You can leave. Indeed, we're looking at lateral hires. We're looking at adding fresh shares at bottom level and Lamping up the workforce. So I think it's in the right trend moving upward, but we specifically don't call out numbers there. Okay.
Sure. Not a problem. Just wanted to just one more question from my side. Given that this year, we've generally in the last 4 quarters, there has been a net reduction in our employee force and we are looking at a double digit kind of growth this year. So do you see that I mean, maybe if the hiring is not ramped up in time, the levels of contracting costs might go higher, which have been scheduled for good part of this year.
But do you see that number rising from the selling barrels at around 13% of revenues to maybe something high? So, I think Subcon, we continue to monitor closely and It's something that we will look very closely, but it's also a function of what the customer asks and what the customer needs and the need of the market. We'll continue to monitor subcon costs and we'll continue to drive that like we've done the last year. And there might be some quarterly variation Right. As we move forward, but on a long term basis, that's a trend that we want to continue when we look at Q1 as a percentage of
net And
just to add, Rohit, this is Harsh. As I've said earlier also that we are increasing in terms At the bottom end of the pyramid and upscaling them and keeping them ready for any position that would come as we to fuel growth. So it's not that we have not taken steps, it's already there. And hopefully, those people at the bottom of the pyramid Would actually spur the group numbers. Thanks, guys.
Sure. Thank you so much for taking my questions.
Thank you. Ladies and gentlemen, due to time constraint, that was the last question. I would now like to hand the conference over to Mr. Rohit Anand for closing comments. Over to you, sir.
Yeah. Thanks a lot. Thanks for all the participants for joining us today. Just we all of us hope that everybody Safe. It's a safe where you have to be home.
So be safe and take care of the family. Wish you all the best and thank you for joining us.
Thank you. Ladies and gentlemen, on behalf of Tech Mahindra Limited, that concludes this conference. Thank you all for joining us and you may now disconnect your lines.