IT services firm MindTree has inked two deals worth $70 million from a European customer and a mid-sized US bank. As part of the five-year deal, MindTree will offer infrastructure management solutions. "It is an annual contract where we are picking up the maintenance of a certain portfolio of applications and infrastructure," says Rostow Ravanan the CFO of MindTree in an exclusive interview on CNBC-TV18.
He adds that bagging large orders like these will help boost investor confidence in small companies like his. "The order that we won from the European geography is the largest win for MindTree till date. This is a great story for us to be able to take to our customers and win more deals in the future," he says.
Below is a verbatim transcript of his exclusive interview with CNBC-TV18’s Udayan Mukherjee and Mitali Mukherjee.
CNBC-TV18: What can you tell us about these two deals?
Rostow Ravanan: the two deals that we announced, one is a large European customer and the other is a mid-sized bank in the US. The exciting thing about this deal is that small players like us are now able to win big deals. One of the concerns that many people in the investment community have raised with us in the past, is, is the growth missing the small companies and is the growth only going to large companies.
This is an example of us trying to prove that as long as you have a specific positioning, the required capabilities and expertise, even small companies like us are able to win large deals. The order that we won from the European geography is the largest win for MindTree till date. All put together, for our new infrastructure management offering, it is a great story for us to be able to take to customers and win more deals in the future.
CNBC-TV18: Can you confirm the size of the deals to us and what is the duration here? By which quarter do they start and how long do these contracts last for MindTree?
Rostow Ravanan: The two contracts are approximately 5 years in duration. The value of the deal is USD 70 million over the 5-years period. So, it is about $14-15 million per annum sort of contract which is what we have won.
CNBC-TV18: Sometimes large orders have to be compromised with margins. Are these on comparable margins that MindTree enjoys right now or lower?
Rostow Ravanan: Absolutely. These are possibly at or even slightly higher margins than the average that we are on because the intrinsic pricing is quite attractive for us. Secondly, the way we are delivering these services are also from an integrated platform that we developed called MWatch which will also allow us to deliver decent margins, because the productivity gains that we make would actually accrue to us in these contracts.
CNBC-TV18: Are these evenly spread out over 5 years or back ended and if you could tell us which verticals they come from?
Rostow Ravanan: The US customer is a banking customer. The European customer is from our services, retail vertical.
CNBC-TV18: Are they evenly spread out?
Rostow Ravanan: Yes, they are evenly spread out over the period. It is an annual contract where we are picking up the maintenance of a certain portfolio of applications and infrastructure.
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