Aurum PropTech Limited (AURUM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day and welcome to the Majesco investor update conference call. [Operator Instructions] I would now like to hand the conference over to Ms. Asha Gupta from Christensen IR. Thank you and over to you, ma'am.

Thank you, Janis. Good morning, everyone, and welcome to Majesco Limited investor call today. Please note that we have mailed out the investor presentation, and you can also view the same on the website, www.majescoltd.in. To take us through the presentation today and to answer your questions today, we have with us top management of the company, represented by Mr. Ketan Mehta, Founder and Non-Executive Director; and Mr. Farid Kazani, Managing Director. The normal safe harbor clause applies. With that said, I now hand over the call to Mr. Farid. Over to you, sir.

Thank you, Asha. A warm good morning to all of you all, and welcome to this update call. Wishing you and your families a safe stay at your homes and workplace. 2020 has been an unprecedented year for all of us, and it would not have been different for Majesco too. As I look back in March 2020, we were staring at this year to be one of the most challenging years for the management team. But this has eventually turned out to be a milestone period for Majesco's history and, ultimately, a very satisfying and value-generating event for the shareholders. I am extremely proud to state that Majesco was incubated and nurtured as an insurance product business out of India that successfully generated tremendous business traction in the U.S., which is the largest insurance market globally. Majesco's products have ranked amongst the top 3 in both the P&C and L&A segments and continues to achieve higher stride. Majesco is the first listed product company from India that has been able to generate and unlock significant value for its shareholders, getting nearly 5x of revenue multiple and 39x of FY '20 EBITDA with a stake sale to a well-known private equity, Thoma Bravo. All of this would not have been possible without the dedicated efforts of the management team, led by Mr. Ketan Mehta and Adam Elster, and supported by the other founders. I would like to personally thank the founders for giving me the opportunity to be an important part in this value creation. The journey actually began exactly 6 years ago, in September 2014, when we received the approvals from the Board of Directors for the demerger of the product business from Mastek Limited. I must remind some of the shareholders that the total market capitalization of Mastek in September 2014 was approximately INR 550 crores. And the combined market cap today is close to 10x in a span of 6 years. Clearly, it reflects the intent and efforts of the founders to deliver value to the long-term shareholders. It is not often that you see Indian founders relinquishing control and distributing the wealth created amongst all its shareholders. Along this journey, I would also like to specifically thank all the shareholders for being extremely supportive and patient and believing in our strategy and trusting the management team. Thank you once again. As you would be aware, we declared our Q2 FY '21 results last evening, and it was no surprise. It reflected the divestment of Majesco Limited's entire stake in Majesco U.S. to Thoma Bravo at a price of $16 per share. The deal was consummated on September 21, 2020, and we received the entire proceeds of $513.8 million on 22nd September 2020. While none of you may be interested in the financial results of Q2 FY '21 at this juncture, I have shared a summary slide on the same in the presentation update, which we just uploaded to the stock exchange this morning. The founders and Board had clearly stated the intent to distribute the entire sale proceeds to the shareholders in an equitable manner expeditiously and in the most tax-efficient manner. In our last communication, we did mention that we would be closing the transaction by end December and distributing the money within the next few months after taking necessary advice from legal and tax experts on various alternatives to distribute the money. I am happy to state that not only have we closed the transaction in a record time of 45 days, but we have reviewed all possible options to distribute the money in the most expeditious manner and the most tax-efficient way. There were a few options and structures, which we could have -- which could have led to a much more tax-efficient basis, but would have taken a year or 2 to distribute to shareholders. The founders and Board members at the meeting held at the -- held this morning have proposed a plan to distribute the proceeds by considering the buyback of 25% of the share capital through a tender route, subject to shareholder and SEBI approval, at a price per share of INR 8.45. The buyback process is contemplated to be completed by end December. Thereafter, the balance monies would be distributed under a dividend route immediately on completion of the share buyback. This was a decision considering the payout to be given in an equitable manner towards the buyback of shares and the dividend route. Now I would like to take you through the investor presentation, a copy of which would have been mailed to you or can be accessed on the stock exchange website or on our website, having the new address, www.majescoltd.in. I will just give a few seconds before you can access the presentation, so we had a little time to kind of make this available on this particular call. The objective of taking you through the presentation is to give you complete clarity and disclosure of what the Board has decided in terms of distributing the money. Keep in mind that this buyback, which has been approved by the Board, is a little different from the normal buyback that other companies do. This is a buyback, which effectively is distributing the monies out of the business that has been divested, to the shareholders. And as you are aware, we could go down various alternatives, but keeping in mind the category of the shareholders, the length of period of time before we distribute the monies and to ensure that everybody has the right tax impact, we have decided on these particular methods, of doing the buyback and the dividend route. Let me start with the presentation because that will capture all the possible questions that U.S. shareholders would have. I will move on to Slide #4, which is the Q2 financial performance, capturing the stand-alone financials and the consolidated financials in brief. On the stand-alone financials, the total income for the quarter was INR 5.8 crores, an increase of 6% year-on-year. The profit before taxes and exceptional income was INR 2.29 crores as compared to INR 1.51 crores in the same quarter of the previous year. After accounting for the gain on sale of Majesco U.S. stake of INR 3,237 crores and adjusted for taxes, which is capital gains tax, of INR 725 crores, the reported net profit after taxes was INR 2,510.84 crores for the quarter. The second table on the same slide reflects the performance for the consolidated entity for the quarter. While the net profit before exceptional income is the same, the following has been reflected. The net profit, which is total income less expenses and taxes, of INR 34.55 crores for the Majesco U.S. subsidiary for a sub-period ended September 21, 2020, as the discontinued business up to the date when Majesco relinquished its control on Majesco -- of Majesco U.S. Secondly, the exceptional income reflected here is INR 3,067.8 crores, which is after netting off the derecognition of the assets and liabilities on account of loss of control accounting and deal-related expenses. Effectively, the net profit after taxes and exceptional income for the period, which is Q2, was INR 2,376.54 crores. I will move on to the next slide, which is Slide #5. This reflects the details of the various regulatory and statutory approvals, which are obtained in a record time period of 45 days. And these approvals were across both in U.S. and in India. Moving on to Slide #6. This slide reflects the total value realized from the stake sale. A total of $513.8 million translating to INR 3,778 crores. And after considering the capital gains tax and expenses, the net amount available for distribution is INR 3,072 crores, which translates to INR 1,028 per share. This is marginally lower than the expected INR 1,038 -- INR 1,037 primarily due to the impact of the USD-INR FX rate, which was realized at INR 73.53 versus INR 75 that was mentioned in the previous communication. This impacted the cash value per share by INR 25. This gap has been mitigated to some extent by a lower share count and better expense management. So effectively, shareholders have a cash value of INR 1,028 as of September 30, 2020. Moving on to Slide #7, and I think it is important to share with the shareholders the disclosure of where the monies have been invested. This slide reflects the detailed investment portfolio for an amount of INR 3,825 crores across various funds and banks. All of these have been invested in AAA and AAA+ rated banks and funds. The prime consideration for investing in this fund was 100% capital protection, 100% liquidity availability and 0 interest rate risk. I'm sure you will appreciate that if -- as we have invested in these particular investment avenues, it has an interest rate, which would not be more than 3% to 3.5% overall for the period that we have invested. Slide #8. The slide reflects the breakdown of the cash value in hand of INR 3,825 crores, which includes the sale proceeds of Majesco U.S., the opening cash balance and the exercise amount received from the employee stock options as of 30th September 2020. The capital gains tax on sale of investment is estimated at INR 731 crores, and the net expenses plus the ESOP tax is approximately INR 22 crores outstanding as of 30th September 2020, resulting in a net distributable amount of INR 3,072 crores, which I mentioned earlier. This amount does not include any monies from the potential monetization of real estate. The real estate monetization is likely to take time considering the market conditions, and we will keep you updated on the progress of the same. As I move on to Slide #9, this slide reflects the distribution of funds to shareholders through the buyback of 25% capital proposed to be bought back at a price of INR 845 per share. This 25% buyback of 74.7 lakh shares is envisaged to cost the company a total sum of INR 778 crores, including the tax on the buyback. Once the buyback is completed, the residual amount of approximately INR 2,300 crores is envisaged to be distributed as special dividend on the reduced capital. The dividend is subject to approval of the Board and the exact amount and count of shares will vary and would be contingent on the proposed response to the share buyback. The dividend is expected to be declared by end December or early Jan 2021. The basis of distribution of funds through the proposed options was considered to ensure equitable distribution of -- between the buyback and the payout of dividends, which will be declared by Board members immediately after the buyback closure. Shareholders may please note that since the company is required to pay tax on the share buyback as per the new rules, there will be 0 tax in the hands of shareholders, whereas in the case of dividend, the company is only required to deduct the TDS as per the law, but the incidence of tax payment will rest with ultimately with each shareholder. I'll now move on to Slide #10. The Slide 10 gives disclosure of the shareholding pattern as of 30th September 2020. Here, they are categorized as foreign participants, and within domestic participants further categorized between individuals and corporates, enterprises/associations. This shareholding analysis would give the reader a good idea while evaluating this decision to surrender shares in the buyback or hold for dividend. I hope you find this information useful. We will endeavor to distribute the money as soon as possible, including those out of real estate monetization once it is realized. I have come to the end of my presentation, and I hope this has preempted a lot of the questions, but I'm happy to answer more. I'd like to hand over the call to our Founder, Ketan Mehta, to say a few words. Ketan, over to you. And once again, thank you for your continued support, and have a good day and stay safe. Ketan, over to you.

Thank you, Farid, and good morning to all of you. I think Farid has probably covered everything about the transaction, about the journey. So really, all I want to do is reflect back on our journey. As you know, we created a unique model, taking a risk on being a product company, made a number of acquisitions and invested fair amount of both R&D as well as marketing money to create a product business in the U.S. market. And I'm so happy with the outcome. At the end, we have been able to get a very satisfactory outcome. As you all know that we closed the deal at $16 for the entire U.S. business at the time where the market price for the Majesco in the U.S. was in the range of around $7.52, which is a 113% premium over the market price. And we did this transaction at a time when there was a lockdown COVID impact. But all our legal team as well as Farid and his team, both in U.S. and India, did a fantastic job to get -- complete all the due diligence, get a very, very quick closure to the transactions. And our intention is to really follow this through with a very quick disbursement of the funds in the hands of -- hands back to the shareholders. But through this entire journey, I do want to take a moment and really thank all of you for supporting this unique business model, trusting us with all your efforts and the capital. And really, really want to thank all of you for your ongoing support for our business. I'm really pleased with the outcome. From the management side, we feel that -- we feel very pleased with the future of the company, the staff, the customers. So I feel it has been a very satisfactory outcome, not only for the shareholders, but for the entire base of the stakeholders. So I do want to thank everybody. Our intention now is to really have a very quick and equitable distribution of funds as quickly as possible in the hands of shareholders. Farid has outlined how we have structured the buyback, so that we want to follow this through with a dividend in such a manner that it is an equal and a very equitable distribution to our different classes of shareholders with the differential tax impact, which they have. So thanks again, and I'm now -- I know you may have many questions. So I don't want to take further time, but I would open it up for the Q&A.

[Operator Instructions] The first question is from the line of Rahul Jain from Dolat Capital.

Congratulations on executing to the team. And I think this can become a kind of a case study for many people to watch out the way things have evolved in the last 6 years. And of course, a lot of efforts on creating IP prior to that. So congratulation to the entire management team for this. My question is related to the other income potential. I think, Farid, you said somewhere there, there's a 3.5% yield on the portfolio that we have invested. Is it for the tenure we may possibly hold the cash? Or this is the annualized yield that we are talking about? And on the same thought process, the other income of -- that we have booked of close to INR 37 crore in this quarter, this is coming from the same portfolio investment? Or if you could give any view on that.

Thank you, Rahul, for your questions. Let me just break it up. The monies has been invested, keeping in mind that we will exhaust this money by end December. So it's a very short period that the monies would be invested. The return after tax is not significant. So whatever interest that we earned is going to get utilized towards our ongoing expenses that are there and some kind of upgrading of the real estate that we need to do, so that we get a good price for the real estate. So really speaking, we are ensuring that, that money gets parked and dedicated for that purpose. On the second question, the amount is not INR 37 crores. It's INR 3.7 crores, which was a normal kind of cash that was there with us, and the ESOP money that came in earlier that got invested and we got the return on that money, yes.

Right, right. So you are saying one should not expect significant thing coming from this INR 3,000 crore, which possibly we may be holding for a quarter. Even assuming a 1% yield, probably, this would be INR 30-odd crores, but this can possibly go towards meeting the expenses. That's what you're trying to say.

Yes. So Rahul, a good kind of guess on the calculation. But if you look at it, we've invested in very, very secured instruments, which do not give that kind of yield because we wanted 100% security, 100% liquidity. So we had to compromise on the interest rate. And I think keeping in mind, this money is for shareholders, we've not done any kind of -- we've not taken any risk to invest it in a high-yielding securities. These are very, very typical, where the yield is not more than 3%, 3.1%. So the amount is going to be much less. And as I did mention that this amount will get utilized towards expenses and upgrading the real estate.

Right. And lastly, from this real estate monetization part. So in a hypothetical situation, if we are not able to conclude this deal, let's say, by December or January, when we plan to make up dividend payout, does that mean we will still do the entire cash payout at that time, excluding this transaction? Or we have to probably wait till that also goes through?

No. So Rahul, we are very clear, we will distribute the monies as dividend immediately after the buyback closure. And we will estimate the cash requirement for future, which is for managing the real estate and some expenses, and keeping some money for contingencies because we are obviously paying the taxes. We don't want any contingency on that. So we will estimate the amount that is going to be with us in hand, okay? And that will be a very, very small amount. So you can be rest assured, we will not hold up the dividend process for this purpose, yes.

The next question is from the line of Shyamal Dhruve from Aditya Birla Sun Life Insurance.

Congrats to the management team on the sale of Majesco U.S. and completing the formalities in -- relatively quickly. Sir, my only question is on the buyback price of INR 845. Like, what was the rationale of making the buyback price at INR 845 and the fair value as per our assessment is INR 1,000-plus and the market price is also close to the buyback price? Like, wouldn't it be prudent to give some premium so that there would be a participation by all type of shareholders in a tax-efficient manner?

So it's a good question, and I think this is very relevant for shareholders to understand. We did mention the principle that whatever we do, we are keeping in mind that this is not a typical buyback, okay, which is definitely done, keeping in mind surplus cash for ongoing or companies, which would be only doing very typical small buyback. This is actually a distribution of money, okay, so it's a little different method. But the distribution of money is used through a route of giving the monies buyback -- through a buyback mechanism. Keep in mind, when we are giving the buyback price of INR 845, it is after paying tax. The tax on the buyback is 23.296%. So effectively, the company is paying the tax and giving it to you as post-tax in your hand at INR 845. So if you gross it up for tax, Shyamal, this amount will be INR 1,030, roughly, okay, and which is exactly equivalent to the cash value on hand of around INR 1,028, which I did mentioned in the presentation, okay? So if we had increased the price for the buyback at a much higher price, which effectively, assuming that the buyback gets completely subscribed by sections of the shareholding community, then we are estimating that the balance amount that will be available as dividend will be lesser than INR 1,028 when we give dividend. And dividend is what you will receive and pay tax in your hands based on your tax rate. So obviously, we have not gone down the path to deciding what tax rates are there for each constituent of shareholders. It was very important that we kept a pretax distribution of INR 1,028. So that is how we have gone about.

The next question is from the line of Arun from Unifi Capital.

Yes. Congrats on the deal execution. And this will -- I'm sure, this is a role model for product companies in terms of execution as well as the corporate governance. And my question is on the real estate part. On the Mahape property, can you just give us the contours of the property and what is the square feet and what's the current market value?

So the current building is roughly 120,000 square feet. Market value is very difficult to estimate at this point in time. You know the market conditions. So it will be very difficult to put a guess on that number. We are looking at upgrading the property, okay, where we have actually -- we had a piece of land, and we had started construction of a second building, okay? And that is almost at a stage where we will complete the second building by March of 2021, which effectively gives us another close to around 45,000, 50,000 square feet. So we are talking about a total land parcel, which would be closer to 160,000 to 170,000 square feet. And I think that will be the right time in March where we examine what is the likely value that we can get through potential buyers. And these could be buyers either in the -- in direct buyers. It could be real estate developers or it could be REIT funds. So we have a clear plan of how we're going to approach this. We will obviously again take help of experts. So while I cannot give you any idea about the value at this point in time, I can tell you that we are -- we will approach it in a manner that we will try and see how best we can maximize by creating a parcel that is marketable. And the other fact that you need to keep in mind that this can fetch a better value if the property is completely occupied by a tenant. At this point in time, our tenant, which is Majesco Software and Solutions India Private Limited, the subsidiary of the U.S. company, has an agreement till November '20, that is by end of November. We are in discussions to see how we can get them to extend that. If they extend the contract and they remain as tenants in the property, then it becomes a very much better marketable asset as compared to a property which is vacant. So these are some of these kind of nuances, which will determine how much value we get. Therefore, I, at this stage, cannot determine a value. I cannot even determine timing. All I'm saying is that we are working through -- with a process and hope to get a good price.

Yes. Thanks for this update. Just to clarify, the land area is 160,000 square feet?

The built up area is 160,000 square feet.

So what is the land area?

I don't have the exact land area calculations with me right now, yes.

Okay. Fine. No problem. Yes. So are promoters -- I mean I presume promoters would be participating in the buyback. Is that a correct assumption?

So when you get the notice of the buyback, you will have basically disclosures by each of the promoters of their participation. There are NRI shareholder -- promoters and there are domestic promoters. So each of them will have their choices, and they will make a disclosure accordingly.

And when you make the payouts of the dividend in January, is there any procedures that will take time? Or as soon as the buyback is concluded by your target date in December, you'll be free to make the payouts? Can we budget, say, 10th of January broadly?

I mean see, the buyback process is a shareholder process and a SEBI process. So SEBI timing is something not in our hands, okay? So if the SEBI approval comes in, we will work towards closing the buyback as soon as possible. Then it is just a matter of time that we will call an immediate Board meeting and announce a special dividend. And there's no other roadblock to it.

Okay. And for the buyback, we understand you need a limited review of the books to be conducted by your auditors, if that's completed?

Yes. We fortunately had all this planned out, and we have done an audit of the September number. So what we are seeing, we had the meeting for the Q2 results, which was an audited result, okay, for the YTD September, basis which we are able to kind of call a meeting for the buyback today in the morning.

The next question is from the line of Neerav Dalal from Maybank Kim Eng Securities.

Just one clarification. In terms of the buyback, it will be on the tender route, meaning everyone will be eligible to x number of shares. If the -- so it will be restricted to that number, right? If the entire buyback is not full, it wouldn't mean that the people who have applied for it will be getting more. Just a clarification.

No. So if all 100% shareholders participate, then the equitable or proportionate buyback will be 25%. Let's assume 75% only of the shareholders subscribe to the buyback, then the proportion will be 25% over 75%, which will be 33%, okay? But keep in mind, there is a 15% reservation for small shareholders.

Right. But -- yes, so that's what. So for -- so -- but every application will have eligible number of shares, which one -- which the shareholder will apply for, right? So if there are 100 shares, 25 shares would be eligible, he can add more if he wants, but that is how it will work, right?

Yes. That is how typically buyback works. So your form will show you 25%. But you will have a column saying that, do you want to subscribe to additional shares? So you decide what you want to do. If you want to give the entire thing, ultimately, there will be a proportionate buyback.

Not an issue. Not an issue. And whatever is the shortfall will be added to the dividend and will be paid as dividend? Yes.

Absolutely.

The next question is from the line of Utkarsh Katkoria from PGIM India.

I just had a question regarding what happens to the shares after we pay the dividend? Of course, they will go ex dividend. But do we still have to wait for the sale of the property? So what the final process in terms of taking the India entity public? And what happens to the current shares that we -- the shareholders are holding?

So till the time we don't get to finality, okay, you will remain shareholders and the company will remain listed, okay? The process is, after we complete this dividend announcement, which will be approved by the Board, the real estate monetization is a period which we really cannot determine. So till the time the real estate monies are there, okay, and needs to be monetized, we will wait till that time. We will get the money. We will distribute that money, obviously, again, in the most tax-efficient manner. Then, I cannot distribute monies to the extent of the capital, okay? And if I have to then wind up the company, okay, and distribute the capital also, then I have to go in for a voluntary delisting and dissolution of the company, which is another time-consuming process because that goes to the NCLT. Now whether that would be the route adopted by the company, none of that has been decided as of now. There are other methods where we can do some other structuring. At this point in time, we have not put our minds to it. So I think once we get to that stage, which is another 6 months down the line, we'll come back and tell you what's the approach. And we'll be happy to kind of take advice from the right guys to help us through, again, make it possible for all shareholders to gain in that entire closure, whenever it happens.

Okay. Okay. So the shares will continue to be listed and traded, even beyond the dividend?

Yes. Yes. It will continue...

Till there is a complete unwind -- wind down of the company?

I mean it will be ex dividend, whether we wind down, whether we do something else, it's not decided right now.

The next question is from the line of Mehul Bhatt from Oyster Rock Capital.

My question is for Mr. Mehta. If you could provide insight on the sale of the company from a promoter perspective. So what were the considerations as a promoter, both individually and collectively? And how did the consensus on this decision happens? What were the key thoughts and milestones along the way? If you can give us an insight on that, Mr. Mehta.

Yes. So essentially, we were not really looking out for putting up really company for a sell. And we were all focused on really building the business. At the same time, we were very open to the market opportunities in terms of valuation and the returns we can get it for the shareholders. But we really got an unsolicited offer, and I was initially not very upbeat about it. Given the COVID time, I thought the valuation will not be really very appropriate. But I was actually pleasantly surprised at the types of valuations we started seeing in the market. And when we really saw the -- it from a holistic perspective, we realized that it is actually a great return to the shareholders. The key consideration that time was not only the return, but also the risk. And we looked at our 3-year trajectory, the projections, the plans the company had, and obviously, we have -- we are very upbeat about the country -- company even now. But we recognized that considering the risk/reward mechanisms, this is a very attractive return to the shareholders at this point of time. So that was one primary consideration. Then we also looked at the impact on the employee base, stake -- customers and other stakeholders and looked at it. And we found that this is also a great return for -- great transaction for all the stakeholders. In fact, the employee base is quite happy, and that has been an important consideration for all of us as founders as well. But broadly speaking, as you know, we have the independent CEOs running the company. We were active only on the Board level, and we were focused on making sure that if we have a right level of shareholder return opportunities, we should be open to taking that. And fortunately, we got a fantastic offer, which we felt is in interest of everybody.

Ketan, I'll just like to add a couple of pointers to this, and I know that Mehul is a very astute investor. Mehul, just to kind of give you a background, okay? We have had a legal structure, which is a company listed in India as a holdco and a company listed in the U.S., okay, as an operating co. We obviously ran into a issue or a problem of how to kind of manage the stakeholder valuations considering both these listed entities. Now keep in mind, the listed entity in the U.S. had a big issue of liquidity of shares, which would not have allowed a right price discovery having continued to remain listed, okay? The only other option was to kind of then dilute significantly and create a higher base of shareholders, which effectively would have increased the liquidity, and then our price discovery would have taken place. But that would have meant a dilution at $7, $7.5, at that price. So we obviously were battling with that issue. The second issue that we were battling was a larger base of shareholders, including promoters and minority shareholders in India, which are at the holdco. And we knew that typically, Indian holdco companies are looked at very negatively and discounted by 50%, and we were discounted by 50%. Now if you look at those considerations, which we had to unshackle, it kind of made us feel that the only way we can discover and get the valuation is by doing sale of the operating entity at a good valuation, which takes care of this, ultimately, unlocking the structure and paying for even the leakage in terms of taxes. So I think the offer that we got was at a significant premium of 113% in the U.S. and almost 200% premium to the India price for giving value to shareholders. So in all, I think the promoters have -- could have continued to remain with the company and have it listed and continued. But in the interest of all the shareholders, considering that this was a good valuation, and there was no reason to reject it, I think they worked in a direction that they brought ultimate value to all the shareholders. So that's the real background also. Besides that, I'm sure that all the shareholders in the U.S. and India are very delighted with the price.

The next question is from the line of Gautam Gupta from Nine Rivers Capital.

I had a very quick question, and I -- forgive me if this was covered earlier. But we have a shareholding pattern, Slide #10. Wanted to know whether this includes now the full ESOP dilution? Or is there any more dilution that could come on this share base?

So most of the ESOPs have got exercised. There's a very small component, which will happen because some of the employees who are not able to get monies to kind of invest. So we have given them 60 days' time, okay, because that is a fair period to give to employees. So my guess is, another 100,000 shares could be potentially there, but not more than that. So we are at, I think, 29.9 million -- it will end up at 30 million shares, I would guess, yes.

Yes. So that's the number that you gave in your earlier presentation a few months back, that was the full detail you said. So we can work with that, I think, for now.

In fact, I had given 30.3 million. I'm sure it will be less than 30.3 million. It will be less than 30.3 million.

Understood, understood. That's it from my side. Thanks once again for all the transparency that you all have shown. I think as investors, it's a little bittersweet for us because it will be tough for us to find another company of this caliber now to put the money into.

Thank you for those words of appreciation.

The next question is from the line of Ankit Pande from Quant Mutual Fund.

Many congratulations once again. My question would be on the buyback process. When is the record date and the shareholders' approval would be required? So I suppose that is required, am I right?

Yes. There is a shareholder approval required. You will get all the details in the notice that comes to you. But just to kind of let you know, we will be calling the Extraordinary General Meeting on 2nd November 2020, and post which, we will get to SEBI for their approval. SEBI process would take close to 3 weeks. Once we get that, then we will announce the record date and will have the tender offer for 10 -- open for 10 days, yes.

Okay. Great, great. And also, I just wanted to check if you have any other property, apart from the Mahape one? I think the MIDC one we have vacated. Is that right?

No. No. So we don't have any other property at all. There was an MIDC property, which remained with Mastek. That is the Andheri one which remained with Mastek in the pre-demerger period.

Congratulations once again.

Thank you.

The next question is from the line of Niteen Dharmawat from Aurum Capital.

Yes. All my questions are already answered. Just wanted to congratulate the management. Fabulous work and amazing transparency that you have maintained. A very few companies with such a transparent mechanism are there in India. I appreciate that, and wish you all the best for future.

Thank you very much.

The next question is from the line of [ Venkat ] from 3sigma Financial.

Yes. Feeling very sad that a product company is sold out. While everybody is congratulating, I have very sad feeling that the company is sold out. And till I attended the call, I was thinking the company will exist and some kind of products will continue to be developed. It looks like that is not going to happen now. Is that true?

I'll leave this question for Ketan to answer, whether he wants to do something else. But yes.

No. I would say that -- and I've got many calls in the last quarter, but -- of how the different product companies' model are evolving. So I'm very upbeat about the IP based product business coming out of India. I feel for Majesco, this was the right decision, right valuation, right price, but I'm very confident that we'll have many other product companies. And I'm hoping that many others can take any lessons out of our experience and build and invest into the product business because I'm sure that will happen.

I echo that very clearly. Yes, same thing.

The next question is from the line of Gaurav Jhanwar from Systematix Shares.

I just want to know one question. Like in the post buyback, are we talking about the dividend of INR 1,020 per share?

So I think you have done a basic calculation of the amount that is available divided by, I think, the number of shares that will remain after a successful buyback. So you are not wrong in assuming that. But as I told you, it all depends upon the quantum of the shares that get delivered in the buyback. And therefore, we're not determining a rupee per share. That will get ultimately determined after buyback gets over and a Board decision to determine an exact value, as I'd mentioned earlier. We've clearly mentioned and transparently mentioned that the monies available post buyback for dividend will be close to INR 2,300 crores.

The next question is from the line of Jiten Parmar from Aurum Capital.

Yes. I just want to congratulate the management for amazing corporate governance and transparency. And as 1 participant said earlier, a good product company is no longer going to be there. So feel a bit of sadness. But overall, great outcome for all the stakeholders. And my questions have already been answered, and most of it has been already answered in the presentations you have given. So I don't have any questions, but congratulations.

Thank you very much.

The next question is from the line of [ GV Jalan ] from KLG Securities.

My question is a twofold. One is, what will happen to all other subsidiaries, which we are having in Majesco? And second is that, if we assume that total buyback of share is completed, say, that 25%, after that, how much dividend per share will be coming?

So all the subsidiaries that were there as part of the organization were 100% under the U.S. company. The sale that has happened is the sale of our Majesco Limited stake in Majesco U.S. Having divested that, all the subsidiaries have been divested together with Majesco U.S. So we do not have any further subsidiaries now in Majesco Limited. And to answer your second question, we had an earlier gentlemen who did some calculation on the dividend price based on INR 2,300 crores. So I think you could also probably do that same assessment.

The next question is from the line of [ Piyush Garera ], individual investor.

My question is a simple thing. That after completing this buyback process and after giving this dividend, how much money you are going to invest in further development of the real estate of 50,000, 60,000 square foot as informed? So how much money you were going to invest in that project?

So good question. The land was always there. And the development cost could be another INR 7 crore to INR 8 crore only, okay? So it's not much of a cost.

The next question is from the line of [ Vishwanath Shettigar ], individual investor.

I would like to congrats your whole team for the whole deal. My question is, what is the expected expenses, which we will be incurring to run the company till the time of liquidation before disbursing the dividend? And what is the income that you expect against that?

Yes. So we have a few costs, which is the cost of salaries, cost of maintaining the real estate. And then I just mentioned about the cost for the further kind of development that we are doing, okay? So we envisage the amount that we will get from the investment income and some rental will be more or less equal to the expenses that we will incur in the next 6 months. But keep in mind that we need to keep some contingency. Prima facie when we get to a stage where, ultimately, we may have to go to NCLT to wind up, at that point in time, we don't want a surprise from any constituent. Hopefully, that it would not be. There are no creditors that are there in the company. But we obviously have tax assessments that has been done only until 2017. There are tax assessments yet to take place, right? And therefore, there were operations that were carried out after 2017. So you just don't want to kind of leave a window open that if there is anything that comes around and you don't have monies. I can't get back to the shareholders or founders to ask for money. So I will keep a contingency reserve. Once everything is done, that contingency reserve also will be given back to the shareholders. This is a very prudent approach that we have to take.

The next question is from the line of V.P. Rajesh from Banyan Capital.

I just wanted to congratulate Mr. Mehta, the other founders and Farid for creating tremendous value. And I think I just want to note the fact that you guys got the deal value higher within a month of the first announcement. So congrats, and that's all I had to say on this call. Thank you.

Thanks, Rajesh.

The next question is from the line of Ritesh Poladia from Girik Capital.

Congratulations to the entire team for the amazing deal and exhibiting amazing strong governance. Just one question. On the dividend, whatever you will be declaring, is there any statutory provisions wherein you can declare that much dividend only? I think there is something like you cannot -- you can do only 85% of the pre-reserves?

No. There is nothing like that. We can distribute to the extent of the reserves that we have. So we will distribute that -- the amount which is available as pre-reserve.

The next question is from the line of [ Chaitanya Agarwal ], individual investor.

Yes. I just want to congratulate about -- for the good execution and the transparency in the deal. And all my questions are just answered before my turn. So I just want to congratulate you for the good execution and transparency in the deal. Thank you.

Thank you very much.

The next question is from the line of [ Sarfaraz ], individual investor.

Congrats to the management team. My question, I have two questions. First one is on the property value. I can understand you're not able to give a value of the property. Will you be able to shed some light on the kind of rental income?

Yes. So the rental income is market determined, okay? At this point in time, we get roughly around INR 70 lakh per month on our current property.

Okay. And the second and last question I had was when you did this transaction with Thoma Bravo, there must have been some kind of warranties you would have had to give as a seller. How are these being taken care of, so they don't come back as a liability for the company after the dividend is distributed?

Yes. Great question. So I think we've been efficient enough to ensure that there is no reps and warranties, and there is nothing that Majesco Limited needs to satisfy with regard to anything that happens after the business. So it was given as based on after all the detailed diligence that was done by them. And there is no reps and warranties or any liabilities that Majesco Limited in future will carry. More so, we have also talked with Thoma Bravo to cover the directors and officers for 6-year tail insurance against any liability that may arise with related to the past. So we also covered our directors to that extent, which has got paid by Thoma Bravo.

So if I understand you correctly, there's some kind of -- either you've not given these reps and warranties, or it's been covered under an insurance policy?

No. No, we've not given any reps and warranties. I'm saying that further, we've got them to cover our directors on our Board for any liability that may arise in future with regard to the past period. So even if there's a third-party claim that comes directly on our directors, okay, we will get covered under the insurance. So we have no kind of liability from the company side to be given to Thoma Bravo or any third party.

Okay. Congrats to all of you once again.

The next question is from the line of [ Pavan Chakotia ], individual investor.

First of all, congratulations. I am myself from IP product company, and I take a pride in, and I can understand the pride that one would have on getting such a recognition internationally in terms of the valuation. My question was related to -- in your slide, you were saying that 70% of the population or the shareholders, if you look at it, are the shareholders holding less than 200 shares. Okay. And I also believe in shareholders who have been long-term shareholders, right? Now given grandfathering price, which is INR 570, given that long-term capital gains are 10%. Somewhere, I felt a little disappointed with the buyback price because while it could be beneficial for a set of shareholders, for the 70% shareholder's population, if you look at it, it would have been more tax efficient had the buyback been greater than INR 1,000. Or am I wrong somewhere in my calculation? You could guide me.

No. That's really important to understand that this 70% -- I mean, we're talking about almost around 78% of our shareholder base, roughly 18,000-odd shareholders, who hold less than 200 shares, will be benefited if they continue to remain as shareholders and have a dividend. Because if they have a tax rate which is much lesser, and I'm assuming that their tax rate is lesser than some high net worth individuals and companies, they would be actually beneficiaries to remain as dividend, but I cannot speak for them at all. But to my mind, they have other options to sell in the market if they get a better price and then the tax is equivalent to capital gains tax where they can get grandfathering, or some other set up of losses. So I think it's important for each shareholder, based on all the information that we have given transparently, to decide their own tax, okay, impact on this transaction, whether to give in buyback, whether to sell in the market or whether to remain as dividend and remain a shareholder. So I think each individual for its own self has to kind of make its determination, which is why we have given so much of information that can help them to understand that.

Well, ladies and gentlemen, that was the last question for today. I would now like to hand the floor back to the management for their closing comments.

Ketan, over to you.

So I do want to, again, thank all of you for a continued support to Majesco over the last 5 years. It has been a great journey, and I thank you all, and wish you all the best. Thank you.

Thank you very much.

Thank you. On behalf of Majesco Limited, that concludes this conference. Thank you all for joining. You may now disconnect your lines.