Rajiv Kaul, former Microsoft India chief executive and now heading CMS Info Systems, majority owned by Blackstone (the private equity investor), feels the company’s revenue will grow by 20 per cent for 2010-11, after a tough year. The company expects to close FY11 with revenue of Rs 800-850 crore.
“Last year was a difficult year. We had to do business with a pricing pressure of 15 per cent. In some cases, clients had stopped payments. Add to this, since the talks of stake sale at CMS were going on for some time, the management bandwidth at the company was low. But from here, I think we are ready to ride the domestic growth story,” said Kaul, executive vice chairman and CEO of CMS. He was a partner with Actis, a PE fund, before he took this position.
With a target to be a Rs 2,000-2,500 crore revenue firm in the next four to five years, Kaul says he has managed to get the right foundation in place after Blackstone took over the company close to two years before.
Team
“If you ask me what is the one important achievement we have managed over the past year, then it’s getting the right team. I think we now have a good senior management team in place,” he added. CMS has managed to pull in Sudev Muthiya from Microsoft to head the information technology (IT) business here. Raja Roy, who was with HCL Infosystems, heading its institute business, is now spearheading CMS Institute Systems. Anand Sunderesan quit HCL Technologies and took over the role of vice-president, Sales. Some others will be joining soon.
For Kaul, a seasoned professional, joining CMS was an entrepreneurial bet. “I think there is a huge domestic opportunity. If you look at the domestic market, there are three large players — IBM, TCS and Wipro. After Wipro, there is a huge gap and enough room for another player to emerge in the domestic market and that’s what we are aiming at,” he added.
CMS Info Systems, the entity carved out from the CMS Group, is 60 per cent owned by Blackstone and 40 per cent by the promoters, the Grover family. Blackstone had acquired the stake for $40 million in December 2008. This is the second investment of Blackstone in the IT sector.
After getting a team in place, Kaul is focusing on the operational side. “Since the promoters were in a sell-mode for over a year, critical investments that are required in a services firm were not made. Of the six verticals that we are in, three are doing very well —- card services, cash management and print services — but three need to gear up. We will leverage Blackstone to get customers,” he added.
CMS Info Systems’ six vertical offerings are managed IT services, systems integration, IT Training, print services, cash management services and card services.
Aims
An objective for Kaul is to also restructure the business into two verticals — IT business and outsourcing services. “Almost 80 per cent of the work is done,” he said. The IT business will have the verticals of infrastructure services, systems integrator, IT training and print services, whereas outsourcing will have cash management and card services.
“Today 40-44 per cent of revenue comes from IT and cash management; print and card services contribute 10 and 5-7 per cent. In future, we want to double our print business,” said Kaul.
Another initiative Kaul is venturing into is the international market, with its remote infrastructure management services. The company has set-up a network operation centre in Mumbai.
“I think the contracts that we have with the Indian government are significant, both in terms of size and work. For instance, we are working with the Registrar General of India on providing IDs (identity cards) for people residing in coastal regions. We have won significant deals in the SI (systems integration) and infrastructure space. We have closed four deals in the public sector and are in talks with another four,” said he. It had also bagged the contract to supply personalised magnetic strip cards for the Rs 1,200-crore Employees State Insurance Corporation project from Wipro.
When asked what would be Blackstone’s exit option and if it is in the near future, Kaul said: “We are in for a long haul. From my conversation with the partners at Blackstone, I can say they are not in a hurry. Besides, right now I want to focus on how I can make 8x of their investments in the company.”
