Hope to list in India by early Aug; eye $105mn rev: Majesco

Below is the verbatim transcript of Farid Kazani’s interview with CNBC-TV18's Latha Venkatesh and Sonia Shenoy.

Latha: When is that big day, the listing of Majesco?

A: Having announced the record date for June 15 we are going to have the issue of shares in another four to five days and then I have the listing application with the exchanges and also getting the SEBI approval for doing that, my guess is it will take between 45 and 60 days before we list the Indian entity in India. So I would hope by first week of August we should be listed.

Sonia: Can you just explain to the viewers what exactly the business of Majesco will look like in the next one year and what are the investments you would be making into the company?

A: If you look at it on a pro forma basis and the reason why I would say pro forma is because we have acquired two entities. One is the insurance business of Agile Technologies that got integrated in January 2015 within the Majesco US entity and the second acquisition is the P&C which is the property and casualty business of Cover-All Technologies and Cover-All Technologies is a listed company in US on the NYSE and we are expecting shareholder approval of that by June 22. Once we get the shareholder approval we will be also integrating the Cover-All Technologies entities into Majesco in the US by end of June and we should be listing the US entity also around that time.

On a pro forma basis if I add Agile and Cover-All to the Majesco Insurance group we should be approximately USD 105 million on top line. There is a good amount of investment that we have planned in the next two years to take advantage of the market opportunities that we see which we believe is once in a kind of phase where insurance companies are looking at transforming the legacy platform and since we are very well positioned on the P&C side we expect growth on the P&C to be pretty robust. We are also present on the life and annuity and that also we expect to grow in another year or two. We are making investment also on the life side.

So, while we will have a starting pro forma revenue of USD 105 million we are spending roughly about 12 percent on our product development expenditure and after accounting that in the P&L we are right now at close to around two percent EBITDA levels on a pro forma basis. Hopefully looking at opportunities to grow in the next three years we should be looking at pretty good growth higher than industry and then looking at getting into double digit EBITDA in three years time.

Latha: Double digit EBITDA in three years time?

A: Yes.

Latha: From two percent to what 10 percent?

A: Yes, I am not putting out a numbers, there is no guidance, but our intention is to get to building the revenue and if we get the revenue that we expect we should be getting into a double digit.

Latha: So, what kind of revenue growth will be able to give you this kind of margins?

A: I am not guiding.

Latha: I am not asking you for a proper number but ballpark or a range or anything because it would have to be a substantial growth in revenues to yield this kind of margins? Or is it that you are going to sell a different kind of product altogether?

A: No, if you look at it Majesco on a standalone that was around USD 80 million odd with the two acquired entities we will be a 105 on a pro forma basis and then we expect with a customer base of around 150 in our fold we expect organic business cross selling opportunities and services business that we want to build on the insurance side should give us a good growth momentum. Certainly the investments that we are making in the business today on product development and on sales marketing should hopefully give us a better than industry growth rate.

Sonia: So the India business will be just a holding company or will there be a revenue in the India business as well for Majesco?

A: In the legal structuring we have the India business in the Majesco India Limited as part of the Indian legal entity. The rest of the global insurance business is housed under the US Majesco group.

Latha: Would you buy any more technology companies and how much cash do you have for it?

A: We do have decent cash but if you have to look at any acquisition that fits our strategic need we will have to look at access to capital both in terms of debt or equity at a future date. We don’t have any planned acquisitions at least in this year we need to integrate the current acquisitions that we are making.