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Focus Business Solution

• Focus Business Solution has come out with an initial public offering (IPO) of 6,42,000 Equity Shares of face value of Rs 10 each for cash at a fixed price of Rs 19 per equity share.

• The issue will open on June 30, 2021 and will close on July 5, 2021.

• The shares will be listed on SME Platform of BSE.

• The share is priced 1.90 times higher to its face value of Rs 10.

• Book running lead manager to the issue is Navigant Corporate Advisors.

• Compliance Officer for the issue is Radha Rameshbhai Gohil.

Profile of the company

The company has been evolved as a financial services company and is engaged in the business of debt collection services for Banks, NBFC and financial institutions. It enters the agreement with India’s leading banks, financial institutions and non-banking financial companies to act as authorized recovery/collection agents on behalf of them. It focuses strategically timed action based on aging of delinquent account with emphasis of traditional methods such as tele-calling and field visits. It deploy its manpower to visit and collect overdue payments of loans / credit cards / credit facilities advanced to borrowers by its clients, who engage with it in service agreements. In occasional cases, it need to trace the new address and contact details of borrowers as delinquent borrowers may relocate their address. The company through its call centre also do follow up over tele-calls, to the defaulters for overdue payments. It has fully equipped call centre with 64 (sixty four) work station along with call recording, dialler and CRM facility. It also do repossessions of vehicles or other hypothecated assets on the request of its clients, in case defaulting borrowers unable to repay of its loan overdue.

The company is strictly bound by code of conduct issued by banks and financial institutions in accordance with RBI guidelines of Fair Practices code. Such code of conduct is strictly followed during visit to borrowers as well as during follow up calls. Internal records are maintained to monitor the performance of each field executive and back-office staff. Daily checking of receipt books to avoid any discrepancies. Prompt feedback and daily reporting to Collection Manager regarding collection and repossessions are part of its business process. It has robust electronic retail collection administrative programme (RCAP) i.e. myrcap.in, which is an intelligent debt recovery solution and can deliver high Promise-to-Pay (PTP) rates effectively. Automating daily operational task of collection agents minimizes the time spent on unproductive task so that they can dedicate working time to critical issues.

Proceed is being used for:

• Part finance of working capital requirements of the company.

• Meeting general corporate purposes.

• Meeting the expenses of the issue.

Industry overview

As per the Reserve Bank of India (RBI), India’s banking sector is sufficiently capitalised and well-regulated. The financial and economic conditions in the country are far superior to any other country in the world. Credit, market and liquidity risk studies suggest that Indian banks are generally resilient and have withstood the global downturn well. Indian banking industry has recently witnessed the roll out of innovative banking models like payments and small finance banks. RBI’s new measures may go a long way in helping the restructuring of the domestic banking industry. The digital payments system in India has evolved the most among 25 countries with India’s Immediate Payment Service (IMPS) being the only system at level five in the Faster Payments Innovation Index (FPII).

The Indian banking system consists of 12 public sector banks, 22 private sector banks, 46 foreign banks, 56 regional rural banks, 1485 urban cooperative banks and 96,000 rural cooperative banks in addition to cooperative credit institutions. As of September 2020, the total number of ATMs in India increased to 210,049 and is further expected to increase to 407,000 by 2021. Asset of public sector banks stood at Rs. 107.83 lakh crore ($1.52 trillion) in FY20. During FY16-FY20, bank credit grew at a CAGR of 3.57%. As of FY20, total credit extended surged to $1,698.97 billion. During FY16-FY20, deposits grew at a CAGR of 13.93% and reached $1.93 trillion by FY20. Credit to non-food industries stood at Rs 103.46 trillion ($1.40 trillion) as of November 20, 2020.

Pros and strengths

Robust technological infrastructure: The company has robust electronic retail collection administrative programme (RCAP) i.e. myrcap.in, which is an intelligent debt recovery solution and can deliver high Promise-to-Pay (PTP) rates effectively. Automating daily operational task of collection agents minimizes the time spent on unproductive task so that they can dedicate working time to critical issues. It has a scalable, modern and sophisticated technology infrastructure capable of servicing its clients from pickup to recovery and every offices are well equipped with modern amenities and facilities like computer, fax, IP Cameras, internet, dialler, smart CRM andmobile application.

Diversified and quality services: The company’s services ranges from address tracking, follow up with borrowers, collection of payments, parking of repossessed vehicle at yard, update visit / calling feedbacks, update collected payments details, provide right and correct information to customers, helping them to understand overdue statement etc. It is committed to maintain quality at all steps of its operations. Its dedicated team ensures the compliance with good practices and code of conduct. It gives prime focus to providing quality services to its clients and follows high quality standards.

Established operations and proven track record: The company has established operations and, in the past, it has been successfully served varied range of clienteles. Its clientele includes major Indian banks and financial institutions, where it acts as an authorized debt collection agency for them. Its competitive edge through its consistent quality-oriented service has enabled the company to retain its clients.

Risks and concerns

Revenues depends upon meeting specific customer requirements: The company’s services ranges from address tracking, follow up with borrowers, collection of payments, parking of repossessed vehicle at yard, update visit / calling feedbacks, update collected payments details, provide right and correct information to customers, helping them to understand overdue statement etc. The aforesaid services are to be provided to each client based on its specific requirements. Its inability to provide customized solutions could lead to erosion of its market image and brand value, which could lead to clients discontinuing their work with it and stagnation of its customer sets which in turn could harm its business and profitability. Its future growth will depend on its continued evolution of specific sets of customized services to deal with the rapidly evolving and diverse needs of its customers in a cost competitive and effective manner.

Business depends on operations in Gujarat region: While the company’s operations are spread out in Gujarat region of the country, all of its office Outlets is located in the Gujarat. In the event that demand for its services in general reduces or stops by any reason including political discord or instability or change in policies of State, then its financial condition and operating results may be materially and adversely affected. Geographical and functional expansion of its business domain requires establishment of adequate network. As the company seeks to diversify its regional focus, it may face the risk that its competitors may be better known in other markets, enjoy better relationships with customers. Its lack of exposure in geographical boundaries outside its operating region could impact its future revenues.

Face intense competition: Debt collection industry in India is highly fragmented with presence of many regional, local and unorganized sector players. It operate in the business which faces intense competition from established as well as unorganized players. There may be many other players of comparable size, who offer debt collection services. Further there are many small and fragmented players (both individuals and corporate entities) that compete with it in various market segments. It anticipate this competition to grow as the demand for these services increases. It seek to compete with these entities through value added services, faster service response, quality of service, capabilities based on enhanced technology.

Outlook

Incorporated in 2006, Focus Business Solutions is engaged in the business of debt collection and recovery services for banks, financial institutions, and NBFCs. It takes strategic actions on delinquent accounts to recover overdue payments of loans, credit cards, and other credit facilities from customers. The company follows a smart retail collection administrative programme (RCAP) to recover overdue payment on personal loans, business loans, vehicle loans, loan against properties, 2-wheeler loan, SME loans, gold loans, and others. It further has a well-equipped call center with 64 workstations to take regular follow-ups from defaulters on the due payments. The company’s promoters are experienced in its line of business. Its management and employee team combines and experience to outline plans for the future development of the company. Its competitive edge through its consistent quality-oriented service has enabled itself to retain its clients. On the concern side, the company’s customers include some of prestigious banks and financial companies. For the nine months ended December 31, 2020, its top ten clients accounted for approximately 92.69% of its total revenue. The loss of any significant client would have a material effect on its financial results. Disruptions in global credit and financial markets and the resulting governmental actions around the world could have a material adverse impact on the company’s ability to meet its funding needs. The company, in order to carry out its operations requires continuous access to large quantities of capital.

The company is coming out with an IPO of 6,42,000 equity shares of Rs 10 each at a fixed price of Rs 19 per equity share to mobilize Rs 1.22 crore. On the performance front, the operating income of the company for the year ending March 31, 2020 is Rs 1083.78 lakh as compared to Rs 1067.19 lakh for the year ending March 31, 2019, showing an increase of 1.55%, due to increase in volume of its operations. Its profit after tax increased by 29.57% from Rs 11.77 lakh in financial year 2018-19 to Rs 15.25 lakh in financial year 2019-20. The company intends to enhance the brand recognition of its services through its qualitative services and success ratio in debt collections. It also intends to focus on use of targeted marketing initiatives such as digital advertisements, as well as marketing through meetings and conferences. The company intends to improve operating efficiencies to achieve cost reductions to have a competitive edge over the peers if any.  The company aims to enhance the growth by leveraging its relationships and further enhancing satisfaction of its clients.