Ganesh Ayyar, CEO and ED, Mphasis says this deal is in line with the strategic roadmap adding "we have chosen to focus on government‘s digital compliance and infrastructure management.â€
Mphasis has sold its residual 33 percent stake in its domestic voice business process outsourcing (BPO) business to Karvy Data Management for Rs 2.75 crore. With this, Mphasis has completely exited its domestic voice BPO business, which generated Rs 60 crore of revenues annually,says Ganesh Ayyar, CEO and ED, Mphasis.
He tells CNBC-TV18 that the move is in line with the strategic roadmap adding "we have chosen to focus on government’s digital compliance and infrastructure management.”
Below is the transcript of Ganesh Ayyar's interview with Reema Tendulkar and Mangalam Maloo on CNBC-TV18.
Mangalam: Could you give us a sense of what the consideration was for this deal?
A: The consideration is 2.75 crore. This transaction is in line with our strategic roadmap. If you recall, about ten days ago we had sold 2/3rd of our domestic voice business process outsourcing (BPO) business. This is the remaining 1/3rd and we are delighted that Karvy is the partner in this case. We are transferring roughly about 2,000 people and this is 1/3rd of our domestic BPO voice business. Once this deal closes we would have exited the domestic BPO voice business completely.
Reema: Could you give us the size of your business that you have transferred in terms of revenues?
A: The first transaction was of about Rs 130 crore odd. This is half of it, roughly closer to about Rs 60 crore in revenue terms per annum basis.
Mangalam: After selling one part of the company to Hinduja Ventures and now this. Is there any other residual business left in the Indian domestic business which you are looking to transfer?
A: The domestic BPO voice business is completely done with this, of course we still have footprint in India business, which are in other areas but BPO voice business is completely done with this transaction.
It's important to choose a strategic roadmap and execute that roadmap because future ahead for IT services industry - one way of looking at it is it is full of opportunities and the other way to look at it is full of spreads and we have chosen to go and focus tremendously around digital, governance risk and compliance and infrastructure management.
This will release the leadership bandwidth, the focus on those areas and we are thrilled that Karvy became our partner in this 1/3rd of our domestic BPO business.
Reema: When you had sold your business to Hinduja Global, you told us that there are net current assets or receivables from the business which will accrue to you. Could you tell us what would be the quantum of receivables for this 1/3rd business, which you have now exited?
A: I am giving you an approximate figure; this would be in the vicinity of about Rs 13 crore-15 crore.
Mangalam: That is as far as divestment is concerned. Considering you are focusing on your businesses, any inorganic growth lined up?
A: Nothing that I could talk about right now. When we are closer to it and sure of it we will certainly share, but this does give us an ability to put our leadership in those areas which we want to focus on and we do have the cash ability. We will be selective in our acquisition. We are not going to rush towards them but we do have the ability to acquire.
Reema: Any other noncore assets that you would be willing to sell or that is currently on the block?
A: The moment we disclose it ahead of time it hurts the shareholder value and it punctures the entire execution model. So won't be at a liberty to disclose it. If you recall, you had asked the same question ten days ago and I had said that as soon as we conclude it I will talk to you first and that's exactly what I am doing and I will do the same thing again if there is something else.