I went to Delhi to attend the AGM of BLS International on 21st Sep. The AGM was more of a formality and was completed in a hurried manner. When we asked our questions, we were told to come to their office in Barakhamba road. I along with two other investors went to their office where Mr. Karan Agarwal, ED met us and spent time to answer all queries. I might have missed few points or heard incorrectly. Please do your own research
Summary of our discussion with Karan Agarwal – Executive Director
Visa services Business:
• Only 3-4 companies are engaged in this type of business. The names which we could make out was VFS Global, CKGS (Cox and Kings Global Services) and one more whose name I missed.
• Most of their offices are leased, hence it’s an asset light model.
• They partner with locals as in many countries it is mandatory. Local partner also helps them negotiates the rentals etc. better.
• As per them the Quality of Service and Security systems are their main USP for any new offering. However, it’s sounded too generic to me. To me it seems once technical bids are cleared it’s the price which matters. But only few players in this business at this point of time is an advantage.
• Their vision is to reach 20m application/Year. They are expecting to process 2 million applications in current financial year.
• They lost their US business to CKGS(Cox & Kings Global services)
• Visa on arrival: It has it’s own risk, hence most people prefer to have it approved before they start their vacation. Policies keep changing across the globe, so they have to work through it. Like with Brexit, even British people will need visa to travel to Europe some time from now.
• They got Spain visa business replacing VFS Global. VFS Global’s tender was only slightly higher. However, they said that around 50% of it is new business.
• They confirmed that value added services could take the total realization to about 500 million Euros while the visa contract is only 175 million Euros. However, Value added services will pick up gradually.
Punjab e-Seva project:
• Debt were taken for Punjab project as the cash sitting in the books were outside India in $. Hence borrowed money in India for rupee needs
• Wipro and ILFS were competitor for Punjab e-seva projects
• They pay taxes in respective countries, hence it seems low in India. With India business going up the tax rate will increase overall as in India tax rate will be full.
• Most of their software systems are custom made. They have 50+ team who are working on development/maintenance of the system.
• Low Management Salary: The profit in standalone business is low and hence the management team can take only limited salary.
• They do not retain customer data. Once a client’s application is processed, his/her data is purged from BLS database. The Data purge happens every evening and the data is purged for clients whose application has been processed
• Property bought in Dubai: Property worth 29Cr was bought in Dubai to accommodate future growth as rentals are quite high there. It was bought in 2014. The strength of team there is more than 500 (not sure I heard it correctly).
• Have appointed E&Y for the process overhaul and restructure the organization for the current and future growth
Disc: Invested since much lower levels. No transactions in last 3 months.