Aim for high sales growth, prudence with capital: TeamLease exec

Maintaining a high revenue growth rate and being frugal with capital are two factors that TeamLease will target to achieve, said the company’s Co-founder & Chairman, Manish Sabharwal ahead of its proposed initial public offering (IPO), to hit the capital market on February 2.

While highlighting that TeamLease is a zero-debt company, Sabharwal said the company has maintained an over 30 percent growth rate for the last 5 years and expects to maintain the same rate in the coming years.

“Our bottom line (profit before tax) has gone up by 5.7 times in last 4 years, while the number of our people has gone up only 1.4 times. So, we have digested our fixed cost now,” Sabharwal said.

He believes that while business services and staffing solutions is a very large listed sector globally, India is just warming up to the concept and this means great opportunity for the company which is about to be listed.Below is the transcript of Manish Sabharwal’s interview with CNBC-TV18's Navin Shetty.Q: Tell us something about your financials and the growth outlook ahead.A: We have zero debt. Yes, it is a zero debt company, so, we have zero interest, we have zero depreciation. So, there is not much difference between Profit before Tax (PBT) and EBITDA in a company like ours. So, I would submit a company like ours you have to focus on return on equity (ROE). Margins, other metrics are important, how much capital we have used and how much capital we propose to use to generate the growth that we propose to use.Team Lease will be successful if we sustain our growth rate and we are frugal with capital. That is important to us. As a company we have sustained plus 30 percent growth rate for the last five years. Our RoE is quite high. So, Team Lease kind of companies have not traditionally been listed in the stock markets in India but globally the business services and staffing is a very large listed sector and as India is formalising its enterprises this is a great opportunity.Q: I also wanted to know what is the bottom-line in maybe the past three years. What has been the bottom-line and the topline growth and where are you standing currently?A: Our bottom-line EBITDA has gone up by 5.7 times in the last sort of four years and our people have gone up only by 1.4 times. So, we have now digested our fixed cost and we see that as we continue to grow and if we sustain a large and high enough growth rate the margin expansion will happen because we have digested the fixed cost.