Healthcare Sector is expected to perform well in FY22: Partha DeSarkar, Hinduja Global

Partha DeSarkar, ED & Global CEO, Hinduja Global Solutions Limited, speaks about the growth drivers of the fourth quarter/FY21, margin expectations in the new fiscal, debt situation and merger and acquisition during an exclusive interview with Swati Khandelwal, Zee Business. Excerpts:

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Q: March quarter numbers have been good. What are the important growth drivers? Going forward, what is the outlook and is this performance sustainable?

A: Everything clicked this year, i.e. we had great employee satisfaction, client satisfaction and hopefully by the result we have been able to provide shareholder satisfaction as well. This year, we operated in a bubble. When the first quarter opened, I didn’t think that this year would close like this. Quarter one was the peak of COVID; there was complete uncertainty of how the year will go. The fact is that we were able to deploy work from home quickly because we already had an experience of the same from Canada, where around 1,000 people were working from home there. So that experience was very useful and we were able to deploy work from home, globally. Travel, tourism and hospitality, these three sectors were impacted the most. Thankfully, our revenue from these sectors are minuscule and our revenue has not been impacted. As oppose to that, the sectors that are termed as recession-free, like healthcare, technology, have more business in this domain and we have gained a lot in this sphere. So, I think, we will be able to sustain this momentum that we have built next year as well. In the UK, the public sector has been a big growth area for us. This year, we have done Brexit support from the UK government and we have done vaccination support for the UK government. So, if you look at our UK business that has really done a fantastic job this year and we will continue with that momentum.

Q: When we look at the profit, it has gone up significantly. As a big contributor, we see others going up from Rs 9 crore to Rs 28 crore. What is this other income and also tell us about the expected PAT for FY22?

A: We don’t give guidance, so, I can’t tell you what the expectation for PAT is going to be. Other income is driven primarily by the foreign exchange movement. So, as you see Rupee has depreciated quite a bit as compared to USD and because we are an export-oriented company and that has given other income. But the biggest gain in profitability has come because of reduced operating expenses due to work from home due to which there is no utility expenses, maintenance expenses, travel expenses. So if you look at the whole year, our savings on account of work from home is about 18.8 million as opposed to the expenses to deploy work from home has been about 12 million. So balance it out because we moved our workforce to work from home, we have saved about 6 million-plus in one year itself because we deployed the work from home model. So, I believe the future of work is the work from home and if you are able to sustain it this year as well then I think we are ready to maintain the margin profile that we have today.

Q: Which are the segments on which you are bullish in terms of growth and what are the growth projections in those? How much client addition did you see in this quarter?

A: Client addition will be about 40. I think, UK public sector as I said has been a big growth area last year and will continue to be a big area this year as well. In healthcare, traditionally, we have experience of 21 years and that is where our largest clients are and that vertical will grow very well. Digital business, which is coming out of our acquisition in 2018 of Element Solution, has been going very well. This brings a new area of cloud, AI, ML and all of that. It is also growing. These are the niche areas where I would say that we will get good growth.

Q: How is the debt situation of the company and how much of it has reduced and going forward, what is an outlook about debt reduction?

A: We have paid down whatever debt as possible, if you look at it, I think we have paid down about rs 100 crore plus of debt this year. Today, we are a net cash company, if you look at cash compared to the debt on our book; our cash is more than the debt on our book. Our debt-equity ratio is very very healthy, so whenever debt becomes zero that will be paid off because we are generating so much cash and debt is not a concern for us.

Q: When it comes to your strategy and growth inorganic growth comes into your business. How are you looking in that direction and is there something on the radar or any specific business you are eyeing, if yes, what is the ticket size you are looking upon? Also, unlocking the value of your healthcare business, you are embarking upon a journey where you are talking about creating value for shareholders. So, what is the status in the healthcare vertical?

A: Let me talk about acquisition first. Last year, we have been very conservative with cash because of the uncertainties of COVID. So, now we have learnt to operate in this bubble and we see those risks culmination, we look at M&A. A couple of areas as I said digital and technology are the areas, we are looking at. We are looking at South America, which we have been exploring in 2019, we could stop in 2020 and we are looking at that. So, as far as the healthcare-specific question you have asked, unfortunately, I will not be able to comment on that because those are in the nature of rumours, so I will not be able to give you any additional information on that.

Q: But is there any timeline because you have embarked on the journey and working on it, so by when it can be completed maybe in this financial year?

A: We are looking at our portfolio on an ongoing business. Last year in January 2020, we divested our India business, which was not doing very well. The Healthcare business is doing very very well, so, I think these rumours are best now kept alone. I can’t give you any timeline of what we are doing as part of our portfolio rejig. It is very generic, it is business as usual. On an ongoing basis, we look at what businesses are doing well and what businesses are not doing well. That is all I can comment on.