In conversation with Amit Sudhakar, CFO of BLS International Services Limited

Our key focus is mainly on growing sustainably while maintaining and growing our profit margins and working capital cycle, to generate value for all stakeholders, states Amit Sudhakar, CFO of BLS International.

In Q1FY24, the company’s top line surged by 40.56 per cent from Q1FY23, while the net profit zoomed by 131.23 per cent from last year’s same quarter. What were the contributing factors to the company’s performance?

The growth in top line and profits was driven mostly by a significant increase in the new prices and number of visa applications, coupled with a rise in value-added services. The ongoing revival of the travel and tourism industry worldwide and the winning of new contracts are driving the growth in visa volumes. This, along with higher realisation, is leading to continuous month-by-month growth in our visa business. Realisations per application are on the rise since there is an increase in pricing and value-added services being opted by applicants, such as SMS, mobile biometrics, courier service, etc.

During the year, the Ministry of Foreign Affairs, Spain, once again chose BLS International as the global visa contractor for its visa application outsourcing. This is the second time in a row that we have been trusted with this significant responsibility. BLS International has been serving the Spanish government since 2016 and operates 122 visa application centres. We process almost 2 million applications from the Spanish government every year. In addition, this number is expected to increase further due to the addition of long-term Visa applications. The growth in the Digital Services segment is being complemented by the acquisition of Zero Mass Pvt Ltd (ZMPL) which helped boost the top line.

One of the key factors contributing to our success is the strong partnership we have forged with governments around the world. We currently work with more than 46 client governments. These partnerships have allowed us to leverage our expertise and provide unparalleled services to citizens and governments alike. We've also won some new contracts with the Governments of Italy, Poland, Thailand and others.

Could you provide insight into the IPO of BLS E-Services, including its main objective? Will it continue to be a subsidiary of the company after the IPO?

The Board has approved a fundraising initiative through an IPO of BLS E-Services. We recently filed the DRHP for the company with SEBI. The move, subject to necessary approval and market conditions, will enable us to explore new avenues of growth and fund expansion initiatives for Digital Services businesses. BLS E-Services will continue to be a subsidiary of BLS International Services after the IPO. The proceeds raised through this will help fund our growth plan for this business where we see significant growth potential. 

Expansion will require the deployment of cash for opening up offices in different geographies. Overall, we aim to grow the Digital Service business organically as well as explore inorganic opportunities. With a wider network of touchpoints, several transactions and Assisted E-Services are expected to grow.

What factors might serve as the primary drivers of growth for the company in the upcoming quarters? Additionally, are there any potential acquisition strategies being considered by the company in the near future?

Key growth drivers can broadly be listed as:

1. Recovery and growth in travel and tourism, boosting visa volumes globally.

2. New tenders coming up for renewal, for which BLS is among the few prime candidates.

3. Increasing revenue inflow from higher pricing and value-added services, which boost revenue realizations.

4. Expansion in several touchpoints in the Digital Services segment and providing Assisted E-Services, leading to higher transactions and consequently revenue.

5. Tie-ups with more local governments in India for e-Governance, with banks for BC business, and with governments globally, for visa contracts

6. Inorganic growth opportunities to complement organic growth strategies. E.g. ZMPL in the previous fiscal year.

As our number of touch points across India increases, we expect robust growth of Digital Services revenues. We have also won new contracts in visa services for the first time, which will lead to further growth in volume and opening up offices in newer geographies. We hope to enhance the overall experience for visa applicants and further strengthen our position as a trusted service provider. In the next few months and years, multiple opportunities are coming out for contracts, which we would be bidding for. The opportunity is huge – more than a $1 billion opportunity available.

Regarding inorganic growth, we are scouting actively for acquisition opportunities in both the Visa as well as Digital Services segments.

At the moment, what are your top 3 strategic priorities?

We are equally focused on both, our Visa and Digital businesses. To expand our Visa business, we are actively bidding for various contracts which are coming up for renewal. We are also looking at countries which have not yet outsourced their visa processing services.

On the Digital front, we are strategising to expand our network of touchpoints across India and tie up with banks to grow the BC business. We are also open to collaborating with State governments to offer e-Governance services. A wider network of touchpoints will facilitate providing Assisted E-Services, which will bring in more transaction volumes and also grow the scope of value-added services which we can offer.

Overall, these initiatives will be complemented by inorganic moves – we are actively looking for acquisition opportunities in both our Visa and Digital businesses, for which we can use our cash reserves. We shall look at businesses which would ideally be EBITDA accretive from day one.

To summarize, the company is in a position where it can leverage its strengths to capitalize on the market opportunities. Our key focus is mainly on growing sustainably while maintaining and growing our profit margins and working capital cycle, to generate value for all stakeholders.

What is your outlook for the Digital Services business vertical over the next few quarters, especially considering the impressive 140.5 per cent YoY revenue growth supported by sales from ZMPL?

On the digital services front, we are making significant headway. Based on the growth of our banking correspondence (BC) and e-governance business, we decided to merge these two into the Digital Services segment and focus on growing these lines of business. To expand Digital business we have increased our spending on hiring new people on board and investing in them.

The ZMPL acquisition helped boost this segment and expand our network. While the base is relatively smaller at present on the Digital side, the growth which we are anticipating will continue the way we have been doing till now. We are looking at acquisitions as well as bidding for new contracts, which will keep this momentum going. So, we are very bullish about this business per se. Moreover, an increase in Assisted E-Services and value-added services is also expected to boost growth in revenue as well as profitability.

Disclaimer: The opinions expressed above are personal and may not reflect the views of DSIJ.