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VISHWANATH |
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Epicenter is not only the biggest among the specialized
companies in India, but also its specialization—accounts receivable
management—is also an opportunity that few Indian companies have woken up
to. What is also significant about the company is that it has managed to get
this highly specialized business without a partnership with a US collection
company and is probably the only collections BPO company in India to follow
this direct-to-client model.
Though set up in 2000, the company commenced operations in a
significant scale only in 2001-02 and registered a whopping growth of 400
percent in 2002-03 to reach a revenue figure of $13.5 million. The company
serves some of the biggest names in credit card business like Providian and
Amex.
Collections—traditionally a small-scale industry in the US—has
shown a tendency to consolidate in last few years. This trend, coupled with
the India offshoring trend, is likely to trigger a few cross-border M&As
among Indian BPO companies and US-based collections agencies and debt
purchasers. Epicenter may be one of the first ones to do a US acquisition.
It has announced that it plans to raise around $15–20 million for
acquisition and has already zeroed in on a financial advisory firm to help
with the acquisition. It is understood that in case of an overseas
acquisition, the focus will be on beefing up the number of clients.
Though the company did register extremely high growth, it is
still dependent too much on a single client that contributes 60 percent of
its revenue. By the end of 2003–04, it is expecting that it would come
down marginally to 55 percent, still a very high figure. It needs to bring
it down further.
Epicenter’s independent business model, though a sound
strategy in the long term, has meant that the company is still doing early
stage collections. The company needs to, and most likely will, change that
soon and add some mid-stage collections work to its portfolio. An
acquisition may accelerate both processes.
Though there have been speculations in the last few months
that the Kalyani Group, the principal promoter of the company, would divest
wholly or partly its stake to a strategic investor, the indications of late
are that it may continue while bringing in a large US co-investment company
that would help it ramp up its operations. The company has already appointed
a senior collections industry person in the US as CEO, based out of the US
office. Epicenter also intends to invest about $5 million to set up a fourth
center with about 300–500 seats outside Mumbai.
With more than 90 percent of its revenues coming from
collections it has started targeting tech help-desk and retail as well,
without diluting the collections expertise too much.
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