tourism sector growth: Going forward, expect good growth from Aadifidelis Solutions: Shikhar Aggarwal, BLS International

Shikhar Aggarwal, Joint MD, BLS International Services, says the overall tourism sector has expanded. Given this context, there is a significant interest from the investor community, which likely explains NSE’s decision to launch a sector-specific index that includes BLS as well. This move will benefit the industry as well as the investors. Additionally, Aggarwal anticipates various asset management companies to launch sector-specific funds, thereby benefiting both the industry as well as the investors.You have recently been included in the Nifty India Tourism Index as well. What is the relevance for this? The expected benefits from the inclusion?
Shikhar Aggarwal: See, post-Covid, there has been a significant surge in tourism-related activities, both international and domestically. The resurgence has led to an increase in demand, such as sectors in aviation, accommodation, dining and entertainment, often referred to as revenge travel or pent-up demand. The hotel sector has also seen a notable increase in occupancy rates as well as room tariff.

Similarly, the aviation sector has also expanded. Around 1.700 planes have been ordered, both from Airbus and Boeing, by various airlines and that is expected to increase to 2000 by March 2025. Post-COVID, there has been a shift in the psychology of travel with young adults now preferring to spend more on leisure than saving. At BLS, we also have witnessed a robust increase in visa and counseling services post-Covid. We have secured new contracts as well as repeated contracts from previous clients, reflecting the growing demand for visas as well as the quality of services we provide. So, if you look, the overall tourism sector has expanded. I feel, given this context, there is a significant interest from the investor community, which likely explains NSE’s decision to launch a sector-specific index that includes BLS as well. This move will benefit the industry as well as the investors. Additionally, we anticipate various asset management companies to launch sector-specific funds, thereby benefiting again both the industry and the investors.Channel check suggests that air travel is expected to become a bit leaner during monsoon. Has the visa enquiries come down? What is happening to that business?
Shikhar Aggarwal: This first quarter is definitely higher compared to the rest of the year. We have seen a 10-15% incremental increase in visa enquiries, visa demand. So, till now, I think we have seen numbers going steady.Recently, your arm, BLS E-Services, acquired a stake in Aadifidelis Solutions, one of the largest players in the distribution processing of loans. What kind of synergies can you expect?
Shikhar Aggarwal: This company started in the year 2018. The management is all ex-bankers from private sector banks. This company did a revenue of around Rs 560 crore and Rs 22 crore of EBITDA. Last year, they had a network of 8,000 plus net channel partners spread across India and they do a loan dispersal of around Rs 1,500 crore every month from various banks like HDFC, Axis, Bajaj Finance, Poonawalla Fincorp, etc.

We expect that using our presence of one lakh touchpoints, seven lakh people come to our centres every day, we have more than 21,000 banking correspondent networks. So, cross utilising that network, we can really increase the revenue and profitability of that company and we can increase the loan dispersal to a big amount. Definitely, there are big synergies and this revenue and profitability will also be added in our books this year. So, going forward, we expect good growth coming in from this company as well.The other thing was the major contract renewals which are expected for you in the next six to nine months.
Shikhar Aggarwal: If you talk about BLS E-Services, we have recently started working for HDFC, Axis, different banks. We have started loan dispersal with them. We have also extended the bank correspondent network with our existing banks like SBI, Karur Vysya Bank, etc. We recently acquired this company BLS E-Services. We have also started land record registration projects in Gujarat, etc. So, we are looking at various states coming up with more tenders. We are already in five-six states and expected to increase our footprint even further.

In terms of BLS International, in the last one, one-and-a-half years as you can see we have won contracts with the Portuguese government, the Polish government, with the Spanish government with the addition of new categories of visas like student visa, etc, and opening of offices in newer geographies. We renewed our contract with the Indian embassy in Canada, etc, and we also won global contracts with the Slovakia government and some other governments.

Going forward, in one, one-and-a-half years horizon there are multiple contracts that are expected from European and North American markets that we are bidding for, we are qualified and we expect certain market share to come in from that. And also, as you know we announced the acquisition of a regional player called iDATA in BLS International a couple of months back. We expect the transaction to be completed soon. So, that will also add in more revenue and profitability to the company.

Let us get some closing comments in terms of the company sitting on a cash balance of about 1100 crores. How are you planning to use it?

Shikhar Aggarwal: If you talk about the acquisitions, in the last one year we already acquired…, the last big acquisition was Zero Mass, which was a 200 odd crore acquisition that we did. Then, we acquired this company iDATA, that some money will be utilised in that acquisition. Money is yet to be paid. This company Aadifidelis Loans that we acquired, money will be paid in that also. So, I feel that money will be utilised in those acquisitions. Apart from that, there are multiple contracts that we are expected to deploy across the world. So, money will be utilised in that as well.