EbixCASH has always had a goal of 30% margin: Robin Raina, Chairman, EbixCASH

Robin Raina, Chairman, EbixCASH, talks about the company, IPO plans, different business verticals like payment solution, financial technologies and travel solutions, international business and acquisition plans among others during an exclusive interview with Anil Singhvi, Managing Editor, Zee Business. Edited Excerpts:

Q: What is the connection between Ebix, the company that is listed at NASDAQ in the UN, and EbixIndia? 

A: Ebix Inc is the promoter and parent, while EbixCASH is its subsidiary.

Q: This means you are bringing an IPO of the company in India whose listed company is present in America?

A: Yes.

Q: How is the shareholding pattern of the company whose IPO will be launched in India?

A: Its shareholding pattern has been declared in the Draft Red Herring Prospectus (DRHP), which says that we are trying to raise Rs 6,000 crore, so, whatever is left after this Rs 6,000 crore will remain with the parent.

Q: Generally, people go to abroad for good jobs and turn entrepreneurs like you but after that they do not feel like coming to India. Ebix is a good listed company and has a good performance with businesses across the world. So, why have you returned?

A: I am an Indian by heart, just have an American passport in my hand but still I am an Indian at heart. So, I always used to come to India for charity purposes. I created a foundation named Robin Raina Foundation in 2003. Robin Raina Foundation has schools all over the country and we take care of thousands of children, we provide breakfast, lunch and meal to them. I am building 6,000 houses in Delhi in Bawana, the second largest slum of India after Dharavi. Around 1.50 lakh people are residing in that slum and I am trying that the word slum should not be present with it. So, 30% of the area is not a slum anymore. So, I thought about a project for Bawana under which I would like to provide 6,000 permanent houses on a legal land than everyone will have a house, which will lead to an end of the word slum. After that around it would build schools and medical infrastructure among others in the area. That's why I used to come to India, so, there was a lot of attachment with India, mainly on charity grounds. We had to set the backend units in India. Meanwhile, Mr Modi came to the US and started talking about 'Make in India' and when he started talking about 'Make in India', -as I used to come to India and also had backend units - I thought there is an opportunity to associate more with India. I thought, if we can make a company in India which will emerge and spread outside as an MNC, which hasn't happened in the financial or the insurance filed yet. What has happened in India till date is that very good companies have been formed but they are machinery companies and consulting companies but no one has created an intellectual property like Oracle and Microsoft. So, I thought that if we will create an intellectual property in the software field, which can be used in distribution as well as at the backend and B2C side and then take it to the world. So, I got such a dream in my mind and I think a lot of work on finance has not happened in India, everything was running on silo. I think, it is a time, when Mr Modi was talking about UPI and digitisation - certain things has happened in India that hasn't been done even in America till date - I thought about associating in this opportunity, then we can participate as a pioneer and create something new that can expand across the world and from there the EbixCASH's journey began in India.

Q: You have four business verticals and the first is financial technologies. So, what work EbixCASH does in terms of financial technology and where does it work?

A: We work in 75 countries today. So, some of our areas in financial technologies includes lending technology, wealth and asset management technology, insurance technology and bus exchange technology.

If you will have a look on these businesses, then we have taken a position of the backend technology in all of them. The bus exchange technology can be a simple example for the purpose as the company was in a distress in the bus exchange technology in Bombay by the name of Trimax and was in NCLT. We bought the company and today the company is doing a business of more than 30% and creates a good EBITDA margin. It has also grown well. Now, we are providing the complete technology to the States Roadways Corporation in which if you have to buy a ticket then the end-to-end process of smart e-ticketing is automated by us. So, whosoever is selling the ticket maybe it is our competitor or player, A or B or C then the ticket has to go through bus. Thus, we get some money on every ticket but the entire technology belongs to us. So, we are taking a position in the technology backend in Fintech and are taking these technologies to the foreign countries. You can see that we have our clients across the six continents in 75 countries.

Q: The second vertical is related to payment solutions and is an upcoming digital thing that is spreading in India at a great pace. So, what does EbixCASH do in this space?

A: There are many areas in payment solutions of which three are big areas and they are

Remittance: It includes remittance of money in which either money comes to India from abroad or goes out from India. Also, domestic remittance which is related to the movement of money within India.
Foreign Exchange: It is related to the foreign exchange currency field.
Cards business: In it we operate in cards.

In addition, there are many more segments are present like biometrics, AePs, PoS devices among others. But these are the three big main areas for us where we have done good works and have been in our focus. We had many opportunities like e-wallet opportunity but we didn't think that we can make money in this segment. So, we focused on these three big areas and we have done good work in these areas, acquired a good market share and we are strongly positioned in these three areas.

Q: What would be your market share in remittance?

A: We have a huge market share. Mainly, three big companies send money to India and they are Western Union, MoneyGram and Ria. Among these, we have an exclusive partnership with MoneyGram in which all the franchises of the MoneyGram in India fall under our ambit. I would like to give a number, we work digitally as well as phygitally, as of today, we have 6.50 lakh agents in five countries. As we are into the remittance work and in this field, we have a large portion of Western Union, I would not like to say the percentage as I want to adhere with the regulatory rules. MoneyGram is a publicly exclusive deal and only we are present in it. Similarly, we have a large portion of Ria as well. So, our agent count is huge due to which we have a reach in almost every corner of India. The reach is such that if you are sending $1000 to someone in Boston then the person can go to any EbixCASH counter after five minutes to collect his/her money. If they are travelling then also it is not an issue as they have to have their password and KYC, they can collect their money in just five minutes. This is our reach.

Q: You are having a business in travel. So, what is your business in travel and did the COVID had any impact on it and is it recovering now? 

A: We are doing a very good business in the pre-COVID era in travel. If you will look at our business in travel then we were doing transactions of around 2.50 billion. But everything decimated for a period during the COVID. There was a time at the start of the COVID that revenue turned almost zero. But the revenue has increased constantly in the previous two to three quarters and we are getting big numbers in every quarter. Its reason is quite simple that as the government is reopening the airlines. All the airlines will be opened from March 27, 2022, so, as it will open, our positioning is quite strong. We have 5,17,900 agents in travel and with these agents, we are very strong in Indonesia, the business is quite profitable in the country; we are also very strong and profitable in the Philippines. We are the leaders in these markets. In India, we are a leader in corporate travel.

Q: The Philippines and Indonesian business belong to the Indian company or the company that is listed in NASDAQ? 

A: They are in Indian company. Everything is under EbixCASH and whatever I am talking here is related to EbixCASH. So, our agents in Indonesia, Philippines, Singapore, Australia, Saudi Arbia, the UAE and India are using a single technology and it is a VIA Technology. VIA is our technology and we get an advantage of the technology. There is a big difference at our place that when other players were losing a lot of money in the pre-COVID and post-COVID period, we were not losing it. The reason for it was simple and that was that everyone was supposed to subsidise everything to bring the business back. Thus, they had a big focus on consumer marketing. At the same time, they were also selling a Rs 100 hotel room at Rs 60-70, expecting that they have to gain the market share. But it is not a good business practice in my eyes. So, we are just into a business of profitability. This is why, we always had a focus on being profitable at all the places and grow well. So, we didn't subsidise anything Reach of our agents is Phygital. For instance, if some of our agent is sitting in Nagpur or Indonesia, a land of thousands of islands, we have our agents in each of those islands. If anyone has to book than one way is to go online and the second is that he can get out in his lane of Nagpur or Indonesia and walks and find an agent of EbixCASH, who is travelling the travel, they book from him. If I have 5,18,000 registered agents then they are my marketing mount pieces and when they earn money only if EbixCASH is earning. We share a percentage of our profit with them, part of the percentage. So, I do not need a lot of money for marketing purposes compared to other companies. All these agents are digital, we have turned then phygital.

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Q: In this IPO you have kept aside around Rs 2,200-2,300 crore for acquisition purposes. So, what kind of acquisitions you are looking at?

A: I think, capital allocation is the main role of the CEO and I take the role seriously. What is your ultimate motive as a CEO? You have a goal to bring shareholders value and for that you have to look at the revenue growth, EPS growth and profitability growth. It has been a record of my career that in 22-years, there has not been a single month or quarter, where we haven’t earned a profit. It is my 22-years sequential growth record as a public company running a public company. This is my record and I can't do business without it. I always say that there is no shame in making profit, I do it happily and earn profit by telling the customers that I want to make a margin or 30% and this is my goal, I cannot make it happen many times but it is our effort. Having said that when we go for an acquisition then I make country-by-country strategy based on the business. For instance, if I go to France and want to make EbixCASH a successful one then it cannot make it happen being an outsider. If we have to make a deal with a French insurance company or a French bank then a French local relation is required. If I have to make the company enter into their culture then I will acquire a local company with financial relationships and have complementary products. I will cross sale the products of EbixCASH through those products. So, first we will acquire it, then integrate it and then put the products of EbixCASH in it. So, initially, it turns up to be an inorganic story, then changes into an integration story, which develops into an organic story because we take it on the path of growth. So, this is my basic plan and, in that area, financial technology is an area for acquisition for me, insurance technology is an area, payment solutions also have some opportunities in many areas across the world. So, it depends on every geography but each of those will run from India. Whatever we will do in any country or India will run from India, through the EbixCASH. We will have a company EbixCASH and everything, finance, HR, admin, technology, will run from India and it headquarter will be located here itself.

Q: Generally, the common investors have less understood about the IPOs of this type of companies as it is a business of different era. You are saying that this company is EbixCASH and is profitable for the last 22 years?

A: EbixCASH is comparatively a new company. I was talking about its parent Ebix, the company that I am running as a public company has been since the last 22 years, it has been 88 quarters has been running in profit. This company EbixCASH has been running as a profitable company since its start. In 2001, we launched Ebix Software India Limited, which has been named as EbixCASH and if you will track it. Currently, I have MAT credit in EbixCASH and I think it stands around Rs 300-350 crore. It is a big number of MAT credit and we have already paid this much tax in EbixCASH. So, every month, every quarter, we have earned a profit in EbixCASH.

Q: Tentatively, your IPO size is Rs 6000 crore. By when your IPO will be listed? 

A: Securities and Exchange Board of India can only inform about it and when they will approve it then we will try to bring an IPO within a month or 45 days. It is completely primary, there is no secondary in it.

Q: This means, the promoters are not selling any stake through this IPO? 

A: No one is selling their stake and no one is trying to move out. Everyone’s interest is aligned in it. So, it is 100% primary.

Q: Why you don’t want to sell your stakes?

A: If you are asking from me than I would like to take as much portion of this company as I can. I strongly believe in this company and my record has remained the same.