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Neha Kapoor

MUMBAI, Aug 29

THE recently listed financial software provider, i-Flex Solutions Ltd, seems to be on track, fulfilling objectives it had announced at the time of its initial public offer (IPO).

In an interview with Business Line, Mr Deepak Ghaisas, CEO and CFO, i-Flex Solutions, discusses how the company is going about augmenting infrastructure, adding marketing muscle and looking for inorganic growth prospects. Excerpts:

How has i-Flex been affected by the slowdown in the IT industry?

i-Flex, with its unique business model, is not really affected by the slowdown in its products business. As you can see, in the first quarter numbers under the Indian GAAP we have shown growth of 53 per cent basis and Profit After Tax (PAT) has grown 51 per cent on a year-on-year basis. All along we were saying that to be able to counter such economic turbulence you need a robust business model that allows a growth pattern.

Do you see a recovery in business for the IT industry by the end of second quarter as has been projected by various experts?

In the services business we do not see a full recovery in the IT sector by the end of the second quarter. Though we see a positive growth in volumes, the rate pressure continues to stay and so the overall recovery still seems to be distant.

How do you intend to use the funds raised through the IPO?

The IPO funds of Rs 178 million will be deployed in three areas. The first is to expand facilities - we are developing 160,000 sq feet of land in Bangalore where the objective is to shift the entire Bangalore operations under one roof. We are also strengthening our marketing spread in the neo-markets. Three subsidiaries — in the US, Amsterdam and Singapore — have become operational this year and funds will be used to beef up marketing efforts through these initiatives. Also, we are looking at some level of inorganic growth.

As far as inorganic growth is concerned, what kind of companies are you planning to target for acquisitions?

In terms of acquisitions, we would look out for companies, which have offerings/products in the same vertical across the globe that complement our flagship product `Flexcube'. Another criteria would also be the `right customer' acquisition. The size is really not a bar as far as we zero in on the right company to acquire.

A number of Indian companies have announced plans to either set up development bases in China or target the local market. Do you have any such plans?

We are currently present in 85 countries across the world and Flexcube is already present in China through foreign banks.

As a major market, we obviously cannot ignore China.

Do you have any plans of entering the business process outsourcing (BPO) fray?

With respect to the BPO foray, we are already there in terms of being an Application Service Provider (ASP) through our joint venture with HDFC — Flexcel. And ASP, we think is the highest on the value of BPO spectrum.

What are the company's hiring plans for the current year?

The company's hiring plans are in place and are not really affected by the ups and downs of the IT market at large. Last year, we added net of 500+ people to take the total head count to 2,200 and will continue to hire further to enhance our services and implementation capabilities.

i-Flex has recently tied up with Aptech Ltd to offer BPO courses for the banking industry. How does this move fit in to the larger business plans of the company?

The idea behind tying up with Aptech is to train as many people as possible in banking on Flexcube. This is one way to create brand equity at user level at large and fits in exactly with our larger plans for the Indian sub-continent and also other countries where Aptech would offer Flexcube training.

There is a stream of thought that advocates that Indian companies, apart from offering quality products, should charge a higher price in order to win respect of customers. Your comments. Also, could you elaborate price-competitiveness of your products compared to other domestic as well as global players.

Product pricing is strategic to our business. It has to be competitive in each market. However, what is important is the value perception you deliver to the customer and in such cases price becomes secondary consideration for mission critical products like Flexcube.

In the global market, we have rarely come across Indian players but in each region, including India, we do compete with respective players that operate and who are normally cheaper in price.

However, banks with a progressive mindset tend to look at a globally acclaimed product such as Flexcube in a different way compared to the domestic offerings available in the respective countries/regions.

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