Sanjiv Goenka in Calcutta on Friday. A Telegraph picture
Calcutta, July 25: The RP-Sanjiv Goenka group may acquire more assets in the technology business after scripting a turnaround for Firstsource Solutions, its first foray into the IT sector.
Chairman Sanjiv Goenka hinted that the group would look beyond business process outsourcing (BPO) that Firstsource was involved in when it looked for acquisitions.
“We do not want to take on debt. But at the same time a call has to be taken whether to acquire a stressed asset cheap or a robust business and pay a premium. It may not be only within the BPO space,” Goenka said at his first media interaction on Firstsource, bought in late 2012.
The group will start scouting for opportunities “after a quarter or two” when Firstsource’s debt is further reduced.
The group turned around Firstsource by paring debt, cutting costs and increasing product offering. Consequently, the margin improved 300 basis points to 11 per cent from 8.5 per cent.
“We took a simple baniya approach that focused at cost reduction and improved bottomline and this strategy paid off. As a group we are focusing on profit and not topline,” Goenka said.
During the last 18 months, Firstsource has nearly trebled in size, while profit almost doubled on a like-to-like basis.
“Many had written us off. CESC’s stock price was hit when we announced the acquisition. However, I was confident even then. But I feel vindicated today,” Goenka said.
He said the company had reduced its debt burden significantly to save on interest cost. The debt-equity ratio had been brought down to 0.3:1 from almost 1:1.
The company, which has a small operation in Calcutta, servicing CESC, streamlined its operations with the closure of loss making delivery centres and accounts, launch of four products and new business.