TravelMole Interview: Dinesh Dhamija, ebookers

ebookers chief executive Dinesh Dhamija (pictured) has told TravelMole that, despite warning of “subdued” trading during August, the outlook is positive for the company.

Yesterday the company’s shares dipped after it issued a statement saying that sales in August had been hit by the “unusually hot weather, causing customers to stay at home” along with problems with its migration to new mid-office technology.

However Mr Dhamija told TravelMole: “The first six months of the year were pretty good even though there was the war and Sars. July and August have been bad, but September was good and October and November look good.”

He added: “We survived 9/11 we’ve been through the worst, I don’t think there’s any problem. We’ve got £50 million in cash in the bank.”

Mr Dhamija told TravelMole that the company would not have survived 9/11 had it not been for its India Business Process Outsourcing subsidiary Tecnovate.

He said: “I don’t think people realise the value of BPOs. They do in America – where there are four BPOs listed on the NASDAQ – but it’s not the same here. They are very valuable – they not only save but produce a lot of money. After 9/11 we would have gone bust if we hadn’t had the BPO.”

The company yesterday announced that it had sold a 6.25% share in the previously wholly-owned Tecnovate to Kipotechniki BVBA, a Belgian-registered subsidiary of holding company Mikal Ltd for $10million. On paper at least, this values the entire subsidiary at $160million. Asked why he had not sold a greater share he said: “I would have done if they had offered more.”

The money will be used to expand Teconovate to service third party clients with the facility expanded from 22,000 sq ft to 84,000 sq ft and staff capacity increased from 600 to 2,000. Mr Dhamija said that the company was in negotiation with a number of organisations, including travel suppliers, as potential clients. But he said he would not be prepared to use Tecnovate to service another online agent, telling TravelMole: “I wouldn’t work for a competitor, why should we help them?” He also claimed that it would be hard for a competitor to set up a similar facility, saying: “It’s pretty difficult to do, you’ve got to go through a middleman.”

According to ebookers in the second quarter of the year Tecnovate delivered savings of £1.4 million. It claims cost savings could rise to £2 million per quarter by the end of the year as it handles greater volumes of ebookers’ back office processes.

Mr Dhamija did not rule out an eventual flotation of Tecnovate but said it was unlikely that the BPO could eventually prove more valuable than the core online agency business. He told TravelMole: “The whole industry has had a very bad year but we [ebookers] won’t be minus we will be very much plus. We are in the right space and that is the internet space.”

Read our previous stories:
05-Aug-2003 ebookers adds new affiliate
04-Aug-2003 ebookers finds new £8m profit centre