Background
eClerx was founded in 2000. It has currently more than 3,000 employees. At the end of 2007, the company became the first Knowledge Process’s Outsourcing (KPO) firm listed on the Bombay Stock Exchange. It has five deployment centres in India and executive and sales offices located in London, New York, Austin, Dublin and Singapore.
eClerx provides KPO and Business Process Outsourcing (BPO) services to global companies from their deployment centres in India. Their teams provide the level of manpower, expertise and technology necessary to continually innovate and improve the processes that drive the world’s most successful companies. As a result, their clients have a heightened degree of confidence that their critical processes are operating accurately and cost efficiently.
eClerx teams are known to sales and marketing managers for their mastery of the processes and technologies related to pricing, all facets of online operations including content management, web analytics and social media; broader data heavy operations in the supply chain, CRM, channel and catalogue/SKU management spaces. The financial services teams of the company are highly appreciated for their domain expertise that enables them to improve and operate processes relating to risk management and reconciliation, trade validation, trade support, asset servicing, expense control and more. Unlike other BPO and KPO providers, eClerx excels at rapidly achieving value for its clients and smoothly scaling expert resources as needs fluctuate.
Promoters
P. D. Mundhra is the co-founder and executive director of eClerx Services Ltd. Mundhra has more than 16 years of experience in the manufacturing and financial services industries and 10 years in capital markets and the KPO/BPO sector. Mundhra, along with Anjan Malik, founded eClerx in 2000, bringing with him a wealth of experience from his tenure in Lehman Brothers’ investment banking division and the corporate treasury at Citibank. Before his finance experience, he ran a number of entrepreneurial ventures including setting up a joint venture with Amco Veba of Italy for manufacturing and marketing mobile cranes in India, and a consumer products packaging plant for Unilever. He holds a Master of Business Administration degree in Finance from The Wharton School, University of Pennsylvania (USA), and a Bachelors of Commerce from St. Xavier’s College, Calcutta (India).
Malik is the co-founder and director of eClerx Services Ltd and the executive director of its on-shore subsidiaries. He has more than 18 years of experience in investment banking, capital markets, consulting and technological solutions. Nine of those 18 years have been devoted to capital markets and the KPO/BPO sector. Before his involvement with eClerx, which he co-founded in 2000 along with Mundhra, Malik ran the credit trading department for Lehman Brothers in London. Before Lehman, he worked in Europe as a senior consultant with Accenture’s capital markets practice. Malik holds a Masters of Business Administration degree in Finance from The Wharton School, University of Pennsylvania (USA), and a first-class Bachelors of Science degree in Physics, with honours, from the Imperial College of Science and Technology, London (UK).
eClerx Services Ltd (eCx), India’s first publicly listed KPO and a Forbes ‘200 Best Under a Billion’ company, has been named as one of the two best mid-cap companies in India, in an annual survey conducted by Finance Asia Magazine , one of the leading financial publications in the AsiaPacific region in 2011.
Speaking on the ranking, Mundhra, executive director, eClerx Services Ltd, said, ‘We have always endeavoured to be the best at what we do, and have focused on building the maximum returns possible on all our efforts, so as to sustain the company’s steady profitability. This recognition from Finance Asia makes us even more confident of our efforts being on the right track, and should serve as a confidence builder for our investors as well. It is a mark of our expertise and strong business dynamics that we have been adjudged as one of the only two best mid-cap companies in India, in a survey of international stature. Going forward, we are confident that we will sustain this momentum and take the business even further, and retain our rank among the best Mid-Cap companies in the country.’ The Finance Asia survey is a part of an annual poll conducted by the publication to adjudge the region’s best-managed companies. The survey is based on votes from more than 300 investors and analysts across the region.
Earlier, the company was selected as a finalist for the Most Admired Knowledge Enterprise (MAKE) India award for the second consecutive year 2010. eClerx has been named for the first time as a finalist in the much broader MAKE Asia list in 2010 as well. A total of 78 companies were nominated for the MAKE Asia list and 35 for the MAKE India list. A panel of Fortune 500 senior executives and internationally recognized knowledge management and intellectual capital experts has selected the 2010 MAKE finalists. The panel recognizes organizations against a framework of eight key knowledge performance dimensions that are the visible drivers of competitive advantage
In 2008, Forbes Asia’s fourth annual Best under a Billion list focuses on Asia-Pacific companies with less than $1 billion in sales; eClerx was one of the only 22 Indian companies that made the cut, and the only one in the KPO/data analytics arena. The list includes companies many times their size, and many of them are much older than eClerx.
In an interview with ET Now on 8 April 2011, speaking about the growth prospects of the company, Mundhra shared: ‘…from our perspective, the value proposition of moving these types of activities from high cost countries in the West to lower cost developing countries like India is very strong for our clients and that the trend will continue to play out over the next few years and service providers like us should benefit from that. So that is the secular trend that we see and if we can execute properly, we should be able to capture our fair share of that business especially keeping in mind the fact that we already have relationships with about 20 Fortune 500 companies. So that is what underlines our outlook for the future. We do not really give any formal quantitative guidance. So I cannot give you specific numbers but qualitatively, we continue to see good traction.’
Competition Market:
The Indian IT-BPO industry was estimated to be around $88.1 billion in the fiscal year 2011, with the IT software and services (excluding hardware) accounting for $76.1 billion of revenues. Interestingly, the export revenues are estimated to be around $59 billion for the same period. Further, the IT services segment is growing by 22.7 per cent over the fiscal year 2010, aggregating export revenues of $33.5 billion accounting for 57 per cent of total exports according to a recent NASSCOM report.
However, the BPO segment grew by 14 per cent and reached $14.1 billion for the fiscal year 2011 and is expected to transform itself to the next level moving to offer high-end value services. Further, the engineering design and products development segments are growing by 13.6 per cent to reach $9 billion on the back of the increasing use of electronics and localized products. In addition, the domestic market is expected to grow 16 per cent to reach ` 787 billion on the back of rapid advancement of technology infrastructure, increase in government spending on IT and increased competition among Indian players.
The year was characterized by the consistent demand from the US market and increased contribution from the Asia-Pacific and the rest of the world. Incidentally, the growth has come from across the verticals, that is, traditional verticals such as Banking, Financial Services (BFSI) and new verticals such as retail, healthcare, media and utilities.
1. Discuss and explain whether it was the right time for eClerx to go for public issue in
2007. Justify your answer.
2. Discuss and explain in detail the shareholder value before and after the issuance of public issue.
3. Compare the financial ratios of the company with that of the industry and comment on the financial strength of the company.
4. Would one place this company in the successful category of IPOs? Justify your answer.