Aditya Birla Minacs eyes buys in US, Canada

Aditya Birla Minacs, a subsidiary of Aditya Birla Nuvo, looks to grow inorganically to become a $1-billion turnover company in the next three years.

The business process outsourcing (BPO) firm is scouting for acquisitions in banking, financial services and insurance, public and healthcare sectors in the US and Canada, according to CEO Deepak Patel.

“Our target (of achieving $1 billion in turnover) is not just based on industry average growth rate. It is based on making some strategic acquisitions as well. We cannot do that organically,” he asserted.

To achieve its target of $1 billion in turnover, Minacs acquired Compass BPO, the UK-based pure-play finance and accounting services provider, in March and US-based Bureau of Collections Recovery, an accounts receivables management company that serves the credit industry, in June. It spent about $35 million (Rs 165 crore) for these acquisitions.

To finance its inorganic pursuits, Minacs plans to raise money through debt or equity. It has a cash reserve of about $40 million (around Rs 185 crore), but Patel said, “The cash we have now is primarily to support our current business rather than supporting all our growth aspirations.”

“We will raise what is required with a right balance of debt and equity, with the help of our parents.” Minacs’ debt-equity ratio stands at 2.2:1.

Minacs, which had a revenue of Rs 1,520 crore (approximately $350 million) in 2009-10, also sees a strong pipeline of deals, worth about $1 billion, to be executed over the next two-three years, according to Patel.

In 2009-10, Minacs closed deals worth $640 million of total contract value. In this financial year, Patel said, the company was seeing a healthy pipeline of deals across sectors. “The deal flow is pretty good. We have over a billion dollar in pipeline. I think the BPO industry is doing quite well. The difference between the BPO and other industries is that BPOs don’t rely on discretionary projects, but do the core parts,” said Patel.

Minacs derives about 95 per cent of its revenues from North America, including the US and Canada. While manufacturing sector contributes 48 per cent to its revenue, technology and telecom accounts for 30 per cent. Seventeen per cent of its top line comes from the BFSI sector.

Going forward, Patel said, the healthcare sector would be a major focus area for the company and it intends to establish a solid base in this space through an acquisition. Among other sectors, while BFSI was picking up quite fast, telecom was looking weak globally, he added.

Minacs gets about $25 million from its parent company, Aditya Birla Group, the $29-billion business conglomerate with operations in 25 countries. “The business we get from the parent company is not very large today, but we would continue to grow that aggressively. We have about 4,000 people working on various parent related projects,” said Patel.

Minacs is also setting up BPO centres in semi-urban and rural areas as the company expects to get a lot of domestic back office works. As a part of its ‘Connect India’ model, the company is connecting its hubs (existing centres), based in Aurangabad, Baroda, Mumbai, Chennai and Kolkata, with surrounding villages.

“We already have business which requires us to go into smaller towns like Bhilwara, Anand, Ranchi. Each of them will be 100-150 seater centres in the beginning as smaller towns may not be able to support a large business overnight,” he said. Minacs, with a headcount of 16,000, plans to add 2,500 people this financial year.