To see ramp ups in telecom busines, says Firstsource

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To see ramp ups in telecom busines, says Firstsource

Speaking to CNBC TV 18, managing director and CEO, Matthew Vallance, Firstsource Solutions said, there is a strong rebound in our telecom business sector.

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Excerpts from Markets Midday on CNBC-TV18 Watch the full show » ALSO READ See latest News about Firstsource Sol See previous management interviews See what other Experts & Brokerages are saying about Firstsource Sol Firstsource Sol BSE | NSE 01/06/12 Are Mutual Funds betting on Firstsource Sol?

Speaking to CNBC TV 18, managing director and chief executive officer, Matthew Vallance, Firstsource Solutions said, there is a strong rebound in our telecom business sector due to an increase in the pipeline and also see a good deal conversion happening.

He further says, it is very important for us to continue to build up cash in the business and it is good that we have gone ahead, raised the syndicated loan, it should put us in a good position to refinance when the bond becomes due in December next year.

Below is the edited verbatim of the interview. Also watch the attached video.

Q: First of all let us get to the segments - what has been the performance of the telecom vertical? That is the vertical that has been under pressure for you?

A: It is interesting. Actually over the last year, we have been talking about some softness in our telecom business. What we have seen more recently is that our pipeline has been building up in telecom. We have started to see a strong rebound in our telecom business so we are seeing not just an increase in the pipeline but we are starting to see a good deal conversion happening.

We are now starting to see some ramp ups, some of the projects that we signed up over the last couple of quarters going into light mode. So we're very encouraged by the way the telecom business is turned around its performance over the last 2-3 quarters.

Q: Then in percentage terms can you tell us the growth of telecom sector - healthcare and particularly BFSI vertical is also been indicating softness isn't it?

A: BFSI continues to grow. But we have seen some parts of our BFSI business where we have had some weakness. For example, we talked previously about our BFSI collections area which is currently on a cyclical downturn. In US, where we do most of our work, consumers have been going through deleveraging; card issuers have been reluctant to underwrite the issuance of new cards.

So the amount of consumer debt in the market really has been decreasing in terms of unsecured debt. So collections business has been somewhat soft and we expect to see that continuing into the next quarter. The rest of our BFSI business, we've seen growth come through from previous contracts signed. The pipeline is looking like it has a bit moderated in the BFSI business and perhaps that going to pan out over the subsequent quarters. We've seen some volume reduction in parts of our BFSI business compensated by increase in other areas.

Q: Just focusing a bit on the guidance then could you just leave us with what the revenue and the EBITDA margin guidance for the company would be first half or rather the second half of FY12 as well as FY13?

A: The second half of the year from a profitability perspective will be stronger than the first half of the year. So if you look at H1 and H2, just finished the first half, second half of the year we expect to expand our margins over the first half. Although Q3 will be somewhat constrained by the continued changes we have been having within our collections business and the top-line we certainly expect to beat up our own internal expectations in terms of our top-line growth and we do expect to end the year with a strong Q4 from a revenue perspective that will lead us into FY13 with a decent amount of tailwind from a revenue perspective and we will continue to work very hard in terms of driving up our margins as we come out of the financial year.

Q4: The other thing I just wanted to focus on is the liquidity issues would that be behind the company and what would be the updates with regards to the FCCB refinancing?

A: As you know, we raised a loan through a syndicate of USD 180 million. We concluded that at the end of Q1. We have drawn all the money at the start of Q2. So that USD 180 million which is on a long term re-payment cycle. We of course have an FCCB which comes due at the end of December 2012. So the important thing is to continue to build up cash reserves. We hold cash of about USD 184 million.

The important for us to continue to build up cash reserves and the book value, nominal value of our FCCB, the bond that is due is about USD 191 million with some interest to pay on that as well. So it is very important for us to continue to build up cash in the business and it is good that we have gone ahead and raised the syndicated loan and it should put us in a good position to refinance when the bond becomes due in December next year.