Firstsource on Monday appointed Rajesh Subramaniam as its managing director and chief executive officer. This was after Mathew Vallance chose to step down to pursue other opportunities. His resignation would be effective from this May 15, the company said on Monday.
The announcement saw the city-based entity’s stock price go up by about 10 per cent in intra-day trading. Its share price closed at Rs 10.52, up 9.93 per cent.
Subramaniam, who has been Firstsource’s deputy managing director, was with its founding management team in 2002. He became the company’s CFO when it went public in 2007. A year later, he left the company to head venture capital firm Walden International as its India MD.
Subrahmaniam on Monday said Mathew was looking at transitioning out of the company. “My coming into the company was the first step towards that,” added Subramaniam, who rejoined Firstsource in July last year.
For Subramaniam, two issues will be crucial. First, to deal with the company’s $237-million foreign currency convertible bonds (FCCBs) that mature in December this year. Second, improve the firm’s profitability.
“With regards to FCCB, I would like to focus on building a cash reserve. By the time we reach the time of the maturity of these FCCBs, we would have a cash reserve of $165-170 million. We will have a gap of $50-60 million,” he said.
Adding: “But I also intend to improve the performance of the company so that the lenders in my syndicate will support us.”
The FCCB burden has impacted the firm’s stock price. Firstsource was listed at a Rs 54-64 price range. Since 2009, its stock price has been sliding.
The company said it would “from time to time” buy back some of the bonds. As of December 31, 2011, it had cash reserves of Rs 653.6 crore.
On the operational front, the boss-designate said the company had brought in some changes. It was verticalised in four major sectors: healthcare, Banking, Financial Services and Insurance, telecom and media. It means each vertical will have a business unit head, besides separate delivery systems. But since October last year, Firstsource has, other than healthcare, integrated all segments in a horizontal manner. This means that banking and financial services, besides telecom and media, will have their sales team, even as the delivery will be integrated.
“Since these segments were verticalised, there was duplication,” Subramaniam said. “There was no cost redundancy. More importantly, there was no single point of accountancy. All these also impacted margins.” The vertical focus will be applicable only to geography.
