Aegis, the business process outsourcing (BPO) unit of the Essar Group, on Tuesday announced the appointment of Sandip Sen as the interim CEO. This follows the resignation of Aparup Sengupta as global CEO.
With the change in management at Aegis, the Essar Group may be going slow on the stake sale of its BPO arm.
According to sources in the know, Sengupta plans to start his own venture. But his exit has also meant several others leaving the company. This includes Anil Modi, chief marketing officer and president — MENA (CLM Business), Chandra Venkataramani, COO, Americas and R Vaidyanathan, president, India & SAARC.
However, the company denied more exits. “What matters is that the core team that formed this company is still very much together. Of course, Aparup did leave, but all others are still here,” said Sen.
According to the latest announcement, Sen will work along with an executive committee comprising core leaders of Aegis. In addition, Sandeep Gulati, who has been part of Aegis for the last three years, will head the Indian operation and Christopher Luxford will head ANZ (Australia and New Zealand) operations.
Sen reiterated the company's plans for listing and getting financial investors on board, although he did not disclose the timeline. “We would like to have financial investors around the time when we are ready with our IPO offering. Currently, the focus is on growing the business - top line and bottom line growth,” said Sen.
The company denied that it is currently in talks with any of the private equity (PE) players. “We never, even in the past, gave a timeline for an IPO or the dilution of promoters stake. We are not in a hurry for listing. As and when that happens, the promoters will also dilute their stake. How much would the dilution be will depend where the company gets listed,” said Sudhir Agarwal, Strategic Initiatives, Aegis.
The management of the $1-billion Aegis had in the past stated that it was in talks with PE and financial investors as it looks at diluting its stake. According to industry sources, talks have failed due to valuation mismatch. Industry sources pointed out that this was also due to the company’s margin being lower than peers.
There were news reports suggesting that PE players like KKR, Barring PE Asia were among the few who were interested in acquiring stake in the company. Sen denied any such development and said that the focus of the company is to consolidate its business units, expand its presence in new geographies and improve margins. This also means that some of the initiatives that were started during the tenure of Sengupta have been consolidated into the BPO business.
“We started our consolidation process over the last two to three months. Now the company is divided into BPO business and technology. Some of the units were too small and scaling them up would be difficult. Our focus was to grow and make profitable business. Rather, in this short span of time, we have seen improvement in the operating margins,” said Sen. According to a note by Standard & Poor’s, Aegis has an Ebidta margin of 10-11 per cent.
As part of the consolidation, shared business such as F&A (finance and accounting), spend management and human resources have been consolidated into the BPO business. Social media engagement platform and the global command centre business have also been consolidated into the BPO business, rather than independent units. “The immediate impact has been improvement in margins. Customer experience in or key markets have improved and our focus into new geographies is also looking good,” added Sen. He believes that the company should be able to have margins in the 15-16 per cent.
In terms of expansion into new geographies and verticals, after Manchester, Aegis has identified Brazil as the next big market. It plans to enter one more region in Asia after the Philippines. While banking and financial services will see a revived thrust, utility has been identified as a new segment.
