In an interview to CNBC-TV18's Reema Tendulkar and Nigel D'Souza, Sanjiv Goenka, Chairman, Firstsource Solutions spoke about his plans and outlook for the company.
Below is a verbatim transcript of the interview
Reema: Every quarter we look at it the earnings do look much better than they were in the previous quarter, so tell us how the outlook is looking for FY15. You had always indicated that after turning it around you would now like to consolidate before chasing growth. So in FY15 give us a ball park idea about how the revenues as well as the margins will be like?
A: Over the last few quarters margins for us have gone up by 3 percent, which is significant, and on a like-to-like basis, profits have actually gone up by 96 percent over last year. So that is a very significant jump forward. This year the board is yet to meet for a quarter result but we are very satisfied with the way the year is going. We are optimistic that this will be another year of robust growth and our focus has been on the bottom line and we do expect to see the bottom line growing forward very smartly.
Nigel: It has been growing very smartly in fact in the last year itself but could you take us through what is the guidance for this year in terms of constant currency revenue growth, are you expecting that five-six percent, are we on track?
A: We will have some revenue growth but as I said earlier my focus has been bottom line growth rather than revenue growth. We have had a few good wins on orders and that has been very encouraging. We have acquired a new logo in the US healthcare payer segment. We have acquired a couple of additional clients in UK but having said that we are also pruning down accounts which are loss making.
So, on a net basis, we will grow definitely. Last year revenues grew by 10 percent. We will grow this year as well but bottom line is what we are focusing on and we expect bottom lines to be very smartly up.
Nigel: Just looking at your bottom line growth in the last year was up 30 percent but in fact your revenues were up only around 10 percent but with regard to your debt are you comfortable with your debt levels. I believe it is a USD 120 million are you comfortable at that level, will that be part of boosting your profitability higher. Take us through those numbers?
A: As we speak debt stands at USD 114 million. It is already lower from March and we have paid off another USD 11 million in June and this year we expect to reduce debt totally by close to USD 45 million and debt-equity stands at 0.3:1 and we expect that to go down further.
Reema: You spoke about pruning down your loss making accounts, how many have been left, because you have been doing this exercise for the last few quarters, by when will all the loss making accounts that you have highlighted will be weeded out?
A: Very soon.
Reema: So in another quarter?
A: Maybe two.
Reema: So in two quarter all the loss making accounts will be out of the system?
A: We hope.
Reema: You spoke about that USD 45 million debt repayment this year and you have that quarterly payment of USD 11.25 million, can you tell us is there a chance or a scope to accelerate this debt repayment?
A: We would certainly be looking at accelerated repayments if we can. From our cash flow we certainly can. We are actually examining contracts with our contributors with the FCCB to see whether that is possible.
Firstsource Sol stock price
On July 25, 2014, Firstsource Solutions closed at Rs 37.25, down Rs 1.65, or 4.24 percent. The 52-week high of the share was Rs 41.90 and the 52-week low was Rs 11.02.
The company's trailing 12-month (TTM) EPS was at Rs 2.03 per share as per the quarter ended March 2014. The stock's price-to-earnings (P/E) ratio was 18.35. The latest book value of the company is Rs 20.89 per share. At current value, the price-to-book value of the company is 1.78.
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