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HOV Services has signed an agreement to combine its subsidiary HOV Services LLC with Sourcecorp. The combined entity is expected to clock revenues of over USD 481 million.

In an interview with CNBC-TV18, Sunil Rajadhyaksha, MD, HOV Services spoke on the joint venture and the road ahead.

Below is a verbatim transcript. Also watch the accompanying video.

Q: Could you tell us what this 50-50 JV that you have gotten into with Sourcecorp, what will it mean in terms of revenues and this combined entity, what will its financials look like?

A: We are combining our indirect subsidiary HOV services LLC with Sourcecorp in a new company called HCA Services Inc. SCH Services Inc will have USD 481 million in revenue. Previously HOV Services LLC had USD 159 million in revenue.

Q: Post this entire restructuring process what would the shareholding look like?

A: Shareholders of HOV services held 100% of its indirect subsidiary before and with the new structure the shareholders of HOV services will hold in SCH Services Inc 50% shares.

Q: You have also indicated that this entire merger should be completed in the next 45-60 days, which means that in FY12 the full financial impact will be visible on your books. So from Rs 850 crore that you did in FY10, could you give us some sort of projections for FY11 and FY12?

A: I think that is a forward looking statement. So after closing we will take a call again and I can update you then.

Q: Can you take us through the rationale behind this restructuring?

A: We were a diversified BPO player. Sourcecorp is also a diversified BPO player and with this merger we are creating a global BPO player with synergies and operating synergies which will create value for our shareholders.

Q: You have indicated that you have already secured debt financing of USD 625 million. What's the kind of debt this merger entity will have?

A: We have a commitment of USD 625 million and after closing we will give you the structure and the details about the debt.

Q: You have spoken explicitly about economies of scale which you could possibly see across verticals. Is there any sort of back-of-the-hand calculations you have seen possibly on an operating level and what could this do to your margins?

A: We have significant synergies by combining these two entities. In healthcare we are servicing the players and Sourcecorp is servicing the providers. By combining these two entities we will be able to service end-to-end providers and the players, which will create synergies.

Q: On March 9 as well, there was a BSE announcement that possibly HOV services LLC will be a surviving entity after HOVS Corp and Nevada corporation will be merged with it. Is there restructuring going on within that level?

A: That was an internal restructuring, the US restructuring which was announced.

Q: Could you tell us the new revenue opportunities which opens up on account of this merger and which new foreign markets are you looking to enter?

A: We have highly visible and large recurring revenues of the combined entity. We will be servicing marquee clients, more than 50% of the Fortune 100 clients.

Q: How exactly is the US business doing for you and if you could just highlight, for example healthcare, in terms of verticals how much does it comprise for you and in terms of US markets, how much does it comprise?

A: For us, healthcare is about 35% of our business and as far as the US market goes, the US market is pretty huge. The market in healthcare is a large space.