‘Our next billion dollars will come in three years’

Quess Corp, the Bengaluru-based provider of business services, reported a revenue of $1 billion in 2017-18. The company, which operates in five sectors such as Industrials, Integrated Facility Management, People Services, Global Technology Solutions and Internet Business, expects to double its revenues much faster. In an interaction with Mahesh Kulkarni of DH, Ajit Isaac, Chairman and Managing Director, Quess Corp explains how the company plans to achieve its target. Excerpts:

What has been the growth of the company post-IPO in July 2016?

We issued shares at Rs 317 per share and close to about Rs 2,000 crore worth of shares have transacted in the last two years.

Our shares today are trading above Rs 1,000, and at peak it was Rs 1,300. So, investors who came in at Rs 317 have seen about 3.5 times growth. It is also the reflection of how the company has performed.

Our EBITDA has also grown 3 times from Rs 120 crore pre-IPO period to Rs 354 crore in FY18. Since IPO, we have completed 10 acquisitions and 23 overall. We have utilised the money and for the shareholders there is no idle money sitting with us. We have had some great acquisitions like we acquired the BPO unit of Tata Business Support Solutions. Tatas own 49% and we have 51% stake. We bought Manipal’s entire back end for their hospitals and universities.

We have added about 10,000 beds. Together with Manipal, we now have about 220 million sq feet in India which makes us India’s largest facilities management player hospitals, universities, malls, airports and corporate offices. We have also ventured into buying telecom tower services company named Vedang Cellular Services. We are engaged with the maintenance of about 1,00,000 towers out of about 4,50,000 towers in India. We bought Monster, which is a marquee internet brand and presently gaining market share in India in the job search space.

What is the purpose behind buying stake in East Bengal Football Club?

About 20% of our sales come from outside India. We do not think that this number is not going to move dramatically for us. The 20% may become 30% but not the majority for our business. We wanted a branding initiative that will help us connect with customers on a more global basis and we wanted something that is not entirely Indian. We identified sport as an area because sport creates a constituency of people that cuts across age, sex, education, salary profiles, etc. It coincided with the football season with the FIFA World Cup 2018. We came across the East Bengal Football Club as we noticed a change in ownership as previous owners- Kingfisher wanting to move out.

East Bengal Club is one of the largest football clubs in India, so we could not get a better platform than this. The club has 40 million registered fans. As the game gathers popularity in India, Quess Corp will begin to associate with marquee football brand that will have its own spin off for India.

What are your branding initiatives?

At the Bangalore international airport, we are doing a lot of internal branding. We just started the process. This initiative combined with the football club, we think, gives us more visibility. We are introducing the Quess brand to the world, so to say. we are doing a campaign introducing the brand saying, ‘’I am Quess’’.

After the IPO and acquisitions, how has been the business integration?

We run a very decentralised company. Our corporate office has only about 10 people. We do only three things. We do the capital allocation, performance goal setting and leadership matters. Everything else is left to the business. We don’t integrate them into the company. We often retain the brand; the entire management team and we work with the team to achieve our investment goals. Integration is not a big issue for us because we allow it to continue the way it is. One of the reasons we are able to progressively increase our EBITDA margins is also because our shared service centre helps us reduce cost of service.

What is your current EBITDA margin?

Our EBITDA margin is under 6% and our target is to achieve around 8%. Two things are happening: while our topline growth stays, our margins are also expanding. By 2020, we will be able to achieve 8% margins.

Where will next acquisition happen?

CRM is definitely one way we want to look at, but I think the more interesting thing is to see the group as a whole. We took 10 years to become a billion dollars company; the next billion dollars will come in three years. 

How much you need to grow annually to achieve $2 billion revenues?

The last 5 to 6 years we had a compound annual growth of 45% and last quarter we grew our revenues by 52%. Adding these numbers we should be there in 2-3 years time. Two things are happening: while our topline growth stays, our margins are also expanding from 5-6%. Our goal is to get 8%.

What is the growth expected during the current year?

We don’t give forward-looking statements, but I think it will be fair to say that we have grown 52% in the first quarter. So, if you compound that growth into the year, we should be closer to about Rs 9,000 crore sales. Our first quarter is Rs 1,964 crore. Going by the growth achieved during the first quarter, we are in between Rs 8,500 crore sales. Going by the first quarter’s numbers and if we extrapolate that number into three quarters, we should be up by 40% at least.

How many did you hire last year?

Till recent past, we were largely a B2B company but as business services grows, you deal with platforms which includes huge volumes of people. We have 2,72,000 people who work for us and we hired 1,00,000 last year. That must have been the single largest number of people hired by any company in India. We also trained 40,000 people and ran skill development initiatives in India across 100 training centres.