Will exceed sales of Rs 100cr in FY11: Tricom

Tricom India

The company expects revenues from these contracts in the range of USD 8-10 million over next three-five years.

Chetan S Kothari, Managing Director of Tricom India said the company will exceed sales of Rs 100 crore in FY11.

Here is a verbatim transcript of an exclusive interview with on CNBC-TV18. Also watch the accompanying video.

Q: I believe that you are about to back some multiyear contracts in the title insurance and health insurance verticals. What kind of nature of orders could these be?

A: We have been selected by one of the larger healthcare insurance company from United States of America (USA). We will be processing around 10-12 million claims in the next one year. The contract is for the three years plus auto renewals for another two years. Hence, we expect around USD 8-10 million of revenue coming from that contract.

For one of the states of US, we have been selected to process 6 million documents for the title insurance related business which we have to complete in next one year.

For the healthcare insurance business, we are creating separate exclusive facilities in Bombay because that is one of the requirements for the security aspects of that company. We will be starting a pilot by middle of March and by first week of April. We will be going online for productions on that project.

Q: This USD 8-10 million order that you have won, by which quarter will you be able to start booking revenues? Will it be an equal spread over the next three years or will it be backended or frontended?

A: The first two months of the first quarter of 2010-2011, it will be ramped up. Second quarter onwards, it will be at the peak and then it will be equally spread across the three years time. We will be getting 10 million claims every year which we need to process. 48 hours is the turnaround time for that project. So the revenue will start coming in from the first week of April but it will be picked up in June of 2010 onwards.

Q: What is the total size of both the title insurance and the health insurance orders? Are they both put together USD 8-10 million or the overall number is larger?

A: No, overall number will be slightly larger because USD 2 million is what we are estimating from title insurance business. We are estimating around USD 9-10 million as of today based on what volume commitment has been given by the client over a period of next three-four years. We are confident that once we achieve their quality and the turnaround time which they are looking for 10-12 million claims, we may get more volume and the figures will change. However, it will take at least two-three quarters before they take a decision to increase the volumes on the same thing.

Q: You mention that you will need to set up a separate facility though, what kind of cost will that involve for you?

A: We have already taken on lease the property in MIDC and Andheri for which interiors are going on. We are expecting that by middle of March. The facility should be up and running. We are spending around Rs 6 crore or on the interior and all the security related aspects which is the requirement of the clients.

Q: With these orders, next year fiscal year 2011, do you think you will be able to exceed Rs 100 crore of revenues in a year?

A: Yes definitely because in our past trend, we have already achieved Rs 65 crore in the first nine months. If we continue the same growth and if you add these projects into account, with these two projects only we will be crossing more than Rs 100 crore. We are not taking into account any normal growth from the clients and any new contract which we may begin in next one year or so.

Q: This year has been pretty sluggish on topline and bottomline even though your margin performance has improved. On the bottomline for next year, what is it that you can do if you do more than Rs 100 crore in sales?

A: If you analyse our figures in last year or a year and a half, we made three acquisitions and the interest burden has gone up because of the acquisitions. We are already talking to some of the investment bankers for raising the equity things. If we can reduce the interest burden which we have as of today, the bottomline will be much more improved than sort of a thing.

As far as the title project, which we have claimed, is concerned, it is going to be executed from our existing facilities. So we will not have to spend any of the administration and the infrastructure cost. Straightaway it will add it in our bottomline, which will benefit the company.