Opportunities worth $1.5 billion expected in visa processing in next few years: Shikhar Aggarwal, Joint MD, BLS International

As global tourism recovers in the aftermath of the pandemic, BLS International, the second-largest visa processing firm in India, is set to take advantage of the expected recovery in international travel. Major visa processing contracts worth $1.5 billion from countries in the European Union, Australia, New Zealand and Canada will be auctioned in the next few years, joint managing director Shikhar Aggarwal told Moneycontrol in an interview.

BLS is targeting at least 30 percent of these contracts. Edited excerpts:

The pandemic had quite an impact on travel and tourism over the past two years. To what extent is business back and has it reached pre-Covid levels?

Over the last two years, our company’s performance has been impacted due to the outbreak of the Covid-19 pandemic, despite which we managed to report an EBITDA (earnings before interest, taxes, depreciation, and amortisation) of Rs 50 crore in 2020-21 and we are on track to double that in 2021-22… despite processing only about 50 percent of the number of visas we processed in 2019 before Covid-19.

As more people look to travel and we get to process more visas, revenue and profitability will rise. We have taken significant steps to increase our profitability and margins like increasing revenue intake from our existing contracts and launching new services like our citizen service business.

A lot of governments are coming out with tenders for new visa processing contracts in the next few years and there are contracts worth around $1.5 billion that will be put to auction in the market. I think if we get a sizable portion of the contracts that will come out in the market in the next two or three years, even if we get around 30 percent, we can really take BLS International to another level.

Which major visa processing contracts are coming up for renewal and which of them are you targeting?

A couple of countries in the European Union are coming out with tenders. Australia, New Zealand and Canada are going to come out with tenders and we are looking to bid for all these tenders.

There are a few more countries which have previously never outsourced visa processing to private parties which we are also negotiating with and we are hopeful of winning contracts there as well.

Within India, we currently work with the Spanish government, Thai government, Lebanese and the Moroccan governments to process visas and we are looking to expand our services.

Many countries have announced free visas to passengers and others have waived visa renewal fees. How will these policies impact your revenue?

Firstly, even if countries announce they will waive visa renewal fees or offer visas for free, the charge for processing visas is still the same, as decided by the tendered value of the contract signed between us and the government of a country.

Although the visa fee can change, depending on the policy of the government from time to time, the visa-processing fee remains the same.

Did you renegotiate visa processing contracts with governments that you work with during the outbreak of the Covid-19 pandemic?

A lot of governments took notice of the fact that the international tourism sector and the visa processing industry took a massive hit due to the outbreak of the pandemic.

We presented a number of case studies to governments to increase the service charge for processing visas, so in a couple of contracts the duration of the contracts was increased and some governments also increased the service charge in existing contracts.

We work for the Portuguese government in Russia and the Italian government in Singapore – those are examples of contracts we have renegotiated in the last year. In most of the contracts, we have renegotiated an increase in the service charge per application by about 15 percent.

Many agencies including the International Air Transport Association do not expect global air traffic to return to pre-pandemic levels till 2024. Is that a cause for concern for your company?

If you see the finances of the company at the end of 2021-22, we will report our highest revenue and bottom line in our history despite the outbreak of the pandemic and processing only 50 percent of the number of visas when compared to 2019. So whatever market opens up, it will only lead to growth.

In the last two years, we have really realigned our contracts and our revenue inflow from existing contracts has increased per application. Plus, the new avenues of citizen services that we’ve expanded into, be it in Punjab, Uttar Pradesh or Rajasthan, or the bank correspondent business, have started to pay off. Whatever we have achieved is the baseline, the numbers cannot go down from here.

How will the situation in Russia affect your services, given that you work with some foreign governments in Russia?

In the last two years, since the outbreak of the pandemic, the percentage of our revenue from China and Russia has been very minimal.

We were obviously very hopeful that the numbers will increase in the coming few months. But I don’t know what will happen now and overall, I don’t think the situation in Russia will have a major impact on our operations.

In the last two years you expanded your banking correspondent operations and added Punjab National Bank and Central Bank of India to your portfolio in 2021. Are you in talks with more banks?

When we acquired Starfin India, it was working only for State Bank of India. Since 2018, we have added four more banks to our portfolio and moving forward, we are definitely looking to tie up with more banks and become one of the largest players in this field.

Banking correspondent operations in India work on a very safe model wherein you get income per transaction and it’s almost guaranteed income. We are aggressively looking at more banks. There are a lot of tenders coming out and we are eligible to bid for these tenders and will look to get these tenders.

Currently, if you see the revenue split, 85 percent of our revenue comes from the visa processing business and 15 percent comes from other businesses. We are looking at expanding both in a scale wherein the ratio could be maintained.

Are you looking at avenues like the foreign exchange business to expand your operations?

Definitely. We are actually working with banks currently like HDFC and a couple of other banks and they sell their forex cards as a value added service through our centres.

We are already working on all of these products. We haven’t really discussed how to start a standalone vertical, but as we speak, we’re already selling those products and services and we get commission and fees from third-party vendors.

You have also tied up with the likes of Amazon and Flipkart. Can you explain how you are looking to expand that avenue of your business?

We work with Amazon and Flipkart and offer customers the use of our hubs to order and collect products in Punjab, Uttar Pradesh and Rajasthan. We have a network of more than 10,000 centres in UP, more than 350 in Punjab, and a lot of them in Rajasthan and we provide last-mile delivery in tier-two and tier-three cities in these states.

We are working with these e-commerce players to encourage and facilitate customers to use our centres to buy products from these websites. We already have a significant footfall in our centres.

BLS International has close to Rs 400 crore in cash on its books. Are you looking to use the cash for an acquisition to expand your business?

There are a couple of opportunities we are looking at. Last year, as a way to reward shareholders, the dividend was the highest ever. So I think we are looking at interesting ways on how to reward shareholders, be it through dividend pay-outs or acquisition opportunities.

In the budget, the finance minister said the government will roll out e-passports in FY23. How do you see this and will it impact your business?

The introduction of e-passports in the budget is an encouraging announcement. We are already working on e-passports with many countries, especially with the Philippines government, and we are assisting them to introduce e-passports in three countries, namely Italy, Qatar and Malaysia.

It will benefit Indian travellers by easing their travel globally… Everyone has started adopting e-passports. We can use e-gates so that people will not have to stand in long queues. There will be a huge increase in travel as well as the number of applications.

So, we have experience with foreign governments over these many years – we are working with more than 40 governments – and we can assist the Indian government in this.