Firstsource to turn debt-free soon

From close to defaulting on its repayments six years back, Firstsource Solutions is set to turn debt-free soon.

The outsourcing major, since its takeover by Sanjiv Goenka, has brought down its debt level by over 87% in the last quarter of the previous financial year and would pay off all its debt by the end of the second quarter of this fiscal.

"We have fully repaid our $135 million term loan and $20 million external commercial borrowing, and the debt of $27.4 million would become practically zero by October and would reflect when we report our thrid quarter result," managing director and chief executive officer Rajesh Subramaniam has told analysts.

Sanjiv Goenka had acquired the loss-making FirstSource for Rs 640 crore in 2012 when the BPO firm had a debt burden of $215 million and was about to default on its loans.

Under Goenka's management, the debt level was progressively brought down through regular repayments.

Firstsource Group USA Inc, a wholly owned subsidiary of the company, had availed $135 million term loan in May 2015 with the final maturity on March 2018 repayable in 12 installments.

With the repayment of debt totalling $61.7 million in FY2018, Firstsource has brought down its aggregate debt level to $27.4 million as of March-end from $50.4 million as of December-end, Firstsource told analysts post earnings.

And with interest burden coming down to Rs 8.4 crore from about Rs 10 crore during the year, FirstSource announced its maiden dividend of 15% on Monday.

Firstsource would try for a dividend payout of about 15% every year from now, he said.

“During the year we have practically deleveraged the company on the back of improved cash flow generation and financial strength. Declaring a maiden dividend is a major milestone for the company,” chairman Sanjiv Goenka said in a release post earnings.

However, the headcount of the firm has dropped to 18,703 employees as on March 31, 2018, from a level of 19,226 employees as on December 31, 2017, a net reduction of 523 employees in the fourth quarter of last fiscal, contributed primarily because of the drop in on-shore employees to 9,894 from 10,376 employees based outside India in the third quarter, the company told analysts in a presentation.

Firstsource's headcount in the UK, a key market, is set to grow by 1,000 in 2018, the management said recently.

These hires will take place across the country as Firstsource plans to scale up for customers like media major Sky and mobile service player Giffgaff, besides on-boarding new clients.

Firstsource currently employs 5,300 people in the UK.

"Some of the reduction in headcount was in relation to our largest client where there was some portfolio rebalancing," the managing director told analysts.

A BIG COMEBACK

• Firstsource’s headcount in the UK, a key market, is set to grow by 1,000 in 2018 from 5,300 people at present
   
• It plans to acquire new clients and scale up for customers like media major Sky, mobile service player Giffgaff