The company’s executive chairman Ashok Soota and CEO and MD N Krishnakumar have said that MindTree is an 11-year young company, which has achieved a run rate of $340m in revenues . “You would appreciate that among the many IT services companies which started around the same time, very few of them exist today as independent companies or have completed an IPO. MindTree is one of the few exceptions.”
They add that at a revenue level, MindTree has a CAGR of 22%, 28% and 39% in the last three, five and ten years, respectively. “We have a strong organic growth engine and acquisitions have contributed only about 20% of our growth. All acquisitions have been well integrated and have strengthened our service offerings.
The article talks about “Bad Decisions and some wrong strategies” . MindTree does not wish to be a “me too” company. And this has built a differentiated , sustainable, next generation services company , which appeals to the younger workforce.
The letter added that the acquisition cost of Kyocera Wireless India was only $6m, and the acquisition in itself has yielded favorable results. The revenues from services to Kyocera Corporation since the time of acquisition till date have been $22m, with healthy margins.
“A conclusion that MindTree faces an uncertain future is incorrect and is unfair as it is not based on any research or data. In a market like Global IT services , which is dynamic and ever changing, being nimble, innovative and flexible will help Mind-Tree win customers. MindTree’s Vision and strategies are in the right direction.
Our correspondent replies:
The article highlights concerns surrounding the company given its recent patchy performance and the fact that some of its bets have gone wrong. It does not in any way seek to undermine MindTree’s corporate governance, people practices or knowledge management . In fact, it gives credit to the company for its technnology and client relationships. The article also highlights the point that MindTree has 269 customers of which 48 are Fortune 500 clients.
The concerns that the article tries to highlight are more recent, in the context of expectations investors had from a company of MindTree's calibre. Companies, especially in this sector, are measured on their performance quarter-on-quarter . As regards the Kyocera unit, it has been mentioned with reference to the drop in revenues in the third quarter from this segment, and future prospects with a top customer ramping down. We have not questioned the acquisition strategy nor commented upon the rationale.
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