Shikhar Aggarwal, Joint Managing Director, BLS International Services Ltd., talks about Q3FY22 numbers, segment-wise business performance, corporate business correspondent (BC) license, insurance license, settlement of outstanding payment with Punjab Government, budgetary announcement related to e-passports and cost-saving measures among others during a candid chat with Swati Khandelwal, Zee Business. Edited Excerpts:

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Q: Congratulations on the good numbers. Can you tell us to what extent is business back to normal and has it reached the pre-COVID levels?

A: BLS, currently, is working in more than 62 countries and is also working with more than 46 government clienteles. When it comes to the results, we have posted a revenue of Rs 227 crore and posted a PAT (profit after tax) of more than Rs 28 crore, which is more than 70% compared to the last year. Interestingly, 50% of the result is based only on the number of Visa because our revenue from our existing contracts has increased everywhere. I think, there should be a change in the scenario and there should be an increase in the numbers, which means there will be a betterment in the company's result.

Q: There were several restrictions in economies that were put due to omicron but are being removed now. How will you see the situation at the global level and will its impact will be seen in the coming quarter?

A: At the global level, the governments' have declared this pandemic as endemic, so, everything is open globally. If we will talk about Europe, they want that more and more tourists to come there, so that their economy, which was closed for two years, should start again. So, if you want to go to Spain from India, then there is no restriction, you just have to get yourself tested for COVID and you can go there. As we are talking about the quarter, we have received all outstanding from the Punjab government, all the settlements have been done. We had an outstanding of more than Rs 300 crore around three years back has been cleared. So, if you will have a look at our balance sheet then it is quite strong at this moment and cash of more than Rs 380 crore is lying in our book. For the next quarter, I think, there is going to be a lot of demand as soon as the flights will start.

Q: Can you give us a bifurcation of business performance ~ Visa & consular business as well as Starfin business?

A: Conventionally, we have always been a Visa Outsourcing Company. Four years ago, we had acquired a company Starfin and the company's 10-15% revenue comes from Starfin and the e-governance business that we are doing in Punjab and UP and the rest of the 85% of business comes from Visa outsourcing. As far as Visa is concerned, then in the next two years - I have also said earlier - we have already received the tenders worth $1.50 to 2 billion, in which 5C countries - it includes countries the US, the UK, Canada and Australia, are issuing their tenders and we are eligible in all of those and we have also started bidding in those and are qualifying in those.

So, we believe that if we are able to win tenders from these markets then the company will grow a lot. In the last quarter, we have won a new job for the Indian Embassy in Kuwait; Italy Embassy's work in Russia; Thailand Embassy's work in Delhi and the Philippines Embassy work globally. So, we are growing well in the Visa counsellor services and we are bidding aggressively. As far as, Stafin and e-governance business, in it as well, when we started, we were working just for State Bank of India but today, we are working for Bank of Baroda, Punjab National Bank and many other banks. Similarly, the e-Governance business, which we were doing in Punjab, Uttar Pradesh and Rajasthan is also going well in terms of working capital and we are earning good profits from it.

Q: During this quarter you have got corporate business correspondent (BC) license from PNB and Central bank as well, with this, how many banks do you have the business correspondent license now and what are the potentials of this business in terms of revenue?

A: It is a good annuity business in which RBI has released a policy where it is encouraging the banks to make more and more BC partners and open BC branches because it is a cost-effective mechanism for the banks. So, we are talking with the other 10 banks. There were not many organised players in the segment in India, to date, so, we are trying to fill and win the tenders of as many as banks we can. We will also try to emerge as one of the major players in India. Currently, we have more than 5,000 branches in India and we will try to increase it. We do not have any CapEx investment in it, it does not require any cost, it requires operating expenses (OPEX) and revenue comes monthly on a per transaction basis. Going forward, the BC business is looking quite encouraging to us, which will not require any big CapEx investment.

Q: Update us on the insurance license that the company has been talking about since the last few quarters and how the business is likely to pan out and when it will start?

A: We are running 5000 BC points within India, where we are doing more than 1.50 lakh transactions daily. So, these people have requirements for all services of insurance and many insurance companies approach to us for this asking us to sell their products. For that, we have to take a license, under which we can start it and it will bring a huge revenue. Right now, we are talking to IRDA in this regard to know how this service can be started and we can start earning its revenue, as it is a new type of service, which has not been given to date. So, very soon this revenue will start coming in our books.

Q: Can you provide a timeline for the same?

A: We have plans to start booking its revenue within the next six months.

Q: What can be the revenue size (roughly)?

A: Currently, it is a new thing and we haven't tried it to date but the demand is quite encouraging. So, we will be able to comment on the numbers only after the process will start.

Q: You have talked about the settlement with the Punjab Government as your press release says that you have carried out a full and final settlement for the old contract and also taken a net write-off of around Rs 7 crore. How much was the net receivable and how much has been received? Also, do you have any other unsettled claims with some other governments' and you are expecting that they will come?

A: If we will talk about the old contract of the Punjab government that we were running then there was an outstanding of more than Rs 300 crore at a point in time. All the money has been recovered and in this Rs 300 crore, we have taken a write-off of Rs 6-7 crore in the final settlement. So, the rest of the money has been received and it was related to the interest payment. So, we have got all the money and currently have zero outstanding. Besides, we do not have such a model of outstanding with any government, we work on a cash basis with others. Even with the new contract that we are signing with the Punjab government, we are working on a cash basis, where we collect the upfront money from people. So, the company has no outstanding as of now and it is a zero-debt company. We have cash and we are looking forward to how it can be used for growth, acquisition, and new contracts that are coming to us such as the US government or anyone else, how the money will be deployed in making those centres.

Q: You have cash of around Rs 370 crore and you have said that you may look forward to acquisition. What kind of acquisition you are eyeing and what can be the ticket size for it and what can be the area that can enhance your business?

A: Basically, we are a technology-based company and all of our offices are running on tech software and we have the control and applications are accepted based on the same. So we're looking at acquisitions in both the visa and consular space. If you will have a look then there are three big companies in the segment across the world and a few regional players. So, we are discussing the same with one or two, if we can acquire them because the small companies haven't booked good profits during the COVID. As far as business correspondent business is concerned, we are into discussions with one or two companies in the domain, due to which our revenue and profitability and growth parameters can increase well.

Q: In the budget, the Union Finance Minister has said that the government will roll out e-passports in FY22-23. How do you see this and does this impact your business in any way?

A: This introduction of e-passports in the budget is an encouraging announcement by the government. We are already working on e-passports with many countries, especially with the Philippines government and we are assisting them to introduce e-passports in three countries, namely Italy, Qatar and Malaysia. We are about to start it within the Philippines. It will benefit Indian travellers by easing their travel globally. If you will have a look then everyone has started adopting e-passports, we can use e-gates so that people will not have to stand in long queues. There will be a huge increase in travel as well as the number of applications. So, what we have experienced with the foreign governments in these many years - we are working with more than 40 governments - and we can assist the Indian Government in this. We have also made a plan to start a park.

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Q: So, can it emerge as a new business avenue for you?

A: It can become a huge business avenue for us because more than one to one-and-a-half crore passports are issued every year to the Indian population. So, if all the passports of the Indian citizens are transformed into the e-passport then a new passport will be issued to everyone. If there are 10 crore passport holders then everyone will have to take an e-passport and the number will go up every year. So, it can emerge as a very big business avenue and we have experience of working on this with governments, so, we can assist the Indian Government. Interestingly, we hold more than 50% market share of the Indian government globally. So, we can assist it.

Q: The company has an asset-light business model and the majority of the offices are on rent. Can you tell us to what extent has the rent been re-negotiated amid the pandemic and the work from home and how much is the company saving? Also, tell us about the business strategy that the company has adopted now to keep the cost under control?

A: We are an asset-light company and have lean management at our company. So, we have worked a lot on cost negotiation with the landlords and have reduced all of our expenses. Now, we are aware that we can operate at what cost. So, as the things will open, we cannot work only from those offices and will have to increase the number of offices but the cost will not increase after a level. So, our profit margin will increase and the industry has also understood the process of using the technology to reduce its cost. So, we have learnt all these things. As you know, as more people will come to the office, we will have to take bigger offices and the rental cost can be negotiated to a minimum level but we can reduce the rest of the cost with the help of technology.