Aurum PropTech Limited (AURUM) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 FY '22 Earnings Conference Call of Aurum PropTech Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta from EY Investor Relations. Thank you, and over to you, ma'am.

Thank you, Stephen. Hello, everyone, and welcome to the Aurum PropTech Limited Q4 FY '22 Earnings Call. It gives me great pleasure to welcome the management of the company represented by Mr. Srirang Athalye, President Aurum Ventures and Director, Aurum PropTech Limited; Mr. Onkar Shetye, Executive Director of Aurum PropTech Limited; Mr. Kunal Karan, CFO of Aurum PropTech Limited; Mr. Hiren Kumar Ladva, EVP, Investments, Aurum PropTech Limited. Before starting the call, I would like to remind you that anything that has been said in the call which reflects any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction that the risk we face -- this risk and uncertainties are included but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report. You can find it on our website. With that said, I now hand over the call to Mr. Srirang. Over to you, sir.

Thank you, Asha. Good evening, all. I thank each one of you for joining our Q4 FY 2022 call. This is the fourth quarterly call under Aurum management, and I'm glad to have all of you once again on this call. Today, we would like to walk you through Aurum PropTech's journey post taking over the control of the company from the old promoter in May 2021. In span of just 10 months, we have been able to build operations and generate revenue in the company with a hybrid strategy. We now have 2 self and 4 RaaS products in the market. Our talent pool has increased from just 5 to 400 as of March 2022. We would also like to take you through a synopsis of recently concluded rights issue and our progress on organic as well as inorganic growth strategy. But before that, let me take you through the strong tailwinds witnessed for the proptech sector in India, which strengthens our conviction for this sector. To start with, the real estate industry in India is set to grow to USD 1 trillion economy by 2030. It is estimated to contribute 13% of the national GDP. This is further fueled by rapid urbanization in India, with estimating 75% of the national income to come from cities by 2021. To add to it, the digitization has seen a rapid pace and rapid growth in India with Internet penetration standing at 47% as of 2022. The rising tide of the millennial generation are leading to meaningful changes to the consumption pattern and acceleration in technology adoption. In the financial year 2021, we witnessed [ 40 ] billion digital transactions worth more than INR 4 billion across the country. Further, a recent report by CII has estimated that proptech investment will double to 1 billion in 2025, as technology is infiltrating every aspect of real estate. This always will lead to a long-term sustainable value creation in proptech sector. Given Aurum Group's understanding of the real estate sector and experience of technology-led disruptions, we are best positioned to bringing digital transformation to the real estate sector. Our businesses are built with an eye for revenue and profitability and are based on strong governance, risk and compliance practices. I'm sure all of you would have noticed the operating revenue of INR 8.2 crores in the last quarter. This is goldmine in creating value for all the stakeholders of Aurum PropTech. Aurum PropTech is also implementing a governance risk and compliance,a GRC framework within the group and invited companies. The Board will monitor the GRC framework closely, ensuring the best GRC practices. Now I'll hand over the call to Mr. Onkar Shetye, Executive Director of Aurum PropTech to elaborate more on Aurum PropTech's journey until now.

Thank you. Thank you, Srirang. Welcome, everyone, and thank you for your continued interest and commitment to Aurum PropTech. The real estate industry has traditionally been conventional, off-line, open and largely fragmented, with a multitude of stakeholders. Our mission is to bring transparency, trust, increased efficiency and improved consumer experience with technology in real estate sector. This will unlock a wave of opportunities for all stakeholders. We are developing an integrated profit ecosystem for consumers and creators of real estate. The real estate value chain as previous stated such as invest, develop on the reach and creation part, research, purchase on moving on the consumption part, use rent on resale on the utilization part. We believe that the size of the price is large in tech-led integration of this fragmented value chain and a meaningful and massive business opportunity in building efficiency for creators and bettering experience of consumers of real estate. Marking these stages, our vision of proper ecosystem has 4 segments: investment finance, enterprise efficiency, customer experience and connected living. Each segment has products and services under it that address a specific problem statement in the real estate value chain. We have further categorized each of our tech driven by business opportunities in 2 segments: software as a service, SaaS; and real estate as a service, RaaS. In March 2021, we acquired 14% promoter stake and stepped into the shoes of controlling management of company, post which we increased our shareholding to [ 35.04% ] in June 2021 with an open offer. On March 22, we successfully concluded our rights issue and thereby our shareholding increased to [ 50.34% ], substantiating our conviction in this sector. We thank you all for showing interest in the rights issue, which was oversubscribed with interest from the REIT investor base. The right entitlements were actively traded, reflecting the interest of investors in the rights issue. The allotment of equity shares was completed on 19th May 2022. The trading and listing approval was received on [ 23rd ] May 2022. The trading of partly paid shares commence today -- or commence on 25 May 2022. With this, Aurum now has committed [ INR 343.55 ] crores to our profit, an increase from our commitment of INR 80 crores which substantiates our commitment to proptech. With this aggregate amount of approximately INR 300 crores plus of cash and cash equivalent, which can be deployed towards the integrated profit ecosystem. Since May 2021, we have aggressively embarked on an inorganic strategy of acquiring robust products, experienced teams and mature businesses and projects. In a very short time, the Board of Directors has approved acquisition of 6 companies, and we are integrating them into the company. Our acquisition started with sell.do, our real estate CRM with SaaS annual revenue run rate of INR 13 crores at the time of acquisition. With our understanding of the sector, we added a broker aggregation platform, Beyond Walls, which added [indiscernible] revenue to the business and increasing it to an ARR of INR 27 crores from SaaS and RaaS revenue. Beyond Walls is a discovery and transaction platform that matches channel partners subscribed to the platform to real estate buyers, enabling an informed purchase experience and augmenting the sales velocity for the seller. After addressing the buy/sell part of the value chain, we acquired the House Monk, a rental management SaaS software, providing an end-to-end technology suite for the rental management industry. [indiscernible] has set annual revenue run rate of INR 1 crore and services clients in India and overseas. We have further gone on to add RaaS businesses in the co-living and TG markets by approving acquisitions of HelloWorld and Grexter. With these, we will cater to the consumer at the beginning of its lifetime in real estate consumption journey. We have also approved acquisitions of CareerSocially, a data analytics company and in the past, invested in Integrow Asset Management, PLC. My colleague, Hiren Ladva, will throw more light on this in a few minutes. The acquisitions have been good addition in our quest to build the integrated profit ecosystem, and along with the technology products have given us good debt and operations teams across the spectrum. In a very short time, we have been able to ramp up our presence to 15 cities, 500-plus people team, led by mature operating leaders from the proptech industry. We have observed that many good tech businesses, including proptech, have been starting during [indiscernible] and recently due to the tech meltdown. We feel we can continue to selectively acquire them through a conservative valuation as we have been able to do so far. I would now like to hand over to my colleague, Hiren Ladva, EVP, Investments, to elaborate on our recent acquisitions.

Thank you, Onkar. Welcome. Good evening all, and thank you for joining the call. As we have just announced, Aurum PropTech has acquired 100% stake in 2 exciting project companies, CareerSocially and HelloWorld. Let me first talk about CareerSocially, which is a company under the name of Blink Advisory Services Private Limited and is being applied for a consideration of [ USD 3 million ]. CareerSocially is a data analytics company headquartered at Noida and started by 3 experienced data scientists who have extensively worked with data science-based companies prior to starting careers. The trio has built a robust data analytics practice with SaaS-based products and services for the real estate sector. The SaaS product is called the CS Agent Connect. Through its subscription service, it provides various value-added services to leading real estate developers, apart from connecting them with the channel partner community aligned with the project profile. This helps the developers amplify and activate their distribution network, especially when entering into new micro markets. With another product under its portfolio called AutomateLeads.ai. CS uses the power of data to run a recommendation engine platform. With this service, they provide actionable insights to developers for monetizing their inventory. Another data science platform called automated valuation model is being developed using the power of merchant learning and artificial intelligence to enable transparency in price discoveries or property purchase. We already have a strong suite of offerings for the developers and channel partners community under Aurum PropTech in the form of just launched Beyond Walls and sell.do CRM from the K2V2 stable as well as great suite of products under the Aurum PropTech umbrella. The existing products from the CS stable and potential to build more along with the Aurum team and K2V2 capabilities will significantly enhance Aurum's offerings to the developer and channel partner community across the country. Going ahead, the founder team and Aurum PropTech teams are jointly committed on a business plan for the next 3 years, under which we aim to expand the reach of their existing products, take them to new markets, leveraging Aurum's ecosystem and relationships with the property ecosystem. And we also plan to bring more exciting data science products through collaboration between the incoming team at Aurum PropTech and our data science team. I will now review on the approval of the next acquisition, which is HelloWorld Technologies India Limited. HelloWorld features among the largest co-leading companies in India and is being acquired for a consideration of [ INR 38 ] crores for 100% stake, as already mentioned. HelloWorld is a subsidiary of Nestaway Technologies, which was backed by marked investors, including Goldman Sachs, Tiger Global and Chiratae Ventures. HelloWorld is present in 16 cities and across the country, within India. They focus on the student housing and co-living needs, which typically serves the urban demographic between the age of 16 to 30 years, representing millennials and generation Z. HelloWorld differentiates itself through an agile tech stack to reach out to the target audience and manage the onboarded tenants. It's got a right product market fit, aligned with its property sourcing strategy and the streamlined and lean operations to deliver its services. The founders have spent extensive years in catering to the rental market and have tremendous insight into the social behavior and consumption pattern of the target segment. HelloWorld B2C plays [ tenders ] are our top tech ecosystem play. And as already remarked by Onkar, it plays a crucial role in serving a demographic that is just beginning their real estate consumption journey in the [indiscernible] or as a tenant in a metro. With that, I would like to hand over to Kunal Karan, the CFO of Aurum PropTech to give us an update on financial performance of the company and the rights issue.

Thank you, Hiren. Good evening all. The Board of Directors has approved the audited results for the quarter and year ended 31st March 2022 last year. Post the change in control of the company, after a gap of 3 quarters, has started netting revenue from the third quarter of the financial year ended March 31, 2022. During the year ended March 31, 2022, the company has approved and announced investments in 5 entities, out of which we have made investments in 3 entities before the end of the financial year. In terms of quarterly performance, the revenue from operations stood at INR 8.2 crores and total income INR 9.5 crores. In terms of the full year, we reported revenues of INR 15.8 crores in FY '22. The revenue was driven by the start of operations in the credit business under Aurum PropTech and also from the operations of the newly acquired subsidiary, K2V2, which has contributed for 2 quarters. Loss during the year was INR 13.3 crores. The cash and cash equivalents, including current investments, as of March 31, 2022 were [ INR 102.5 ] crores. I would like to take the opportunity to thank the investors for participating in the rights issue of Aurum PropTech. Amidst the challenging market times, the company's rights issue was subscribed 1.05x. The size of the issue was [ INR 343.5 ] crores. The promoter shareholding post the rights issue was increased from [ 35.04% to 50.34% ]. Post the rights issue [indiscernible]real estate assets, our available funds will be in the range of INR 520 crores. We seek to further strengthen and provide financial flexibility to the company to capture future growth in line with its strategic plans. With this, I will now hand over the floor to the operator for questions and answers. Thank you very much and appreciate your continued interest in Aurum PropTech Limited.

[Operator Instructions] The first question is from the line of Faisal Hawa from HG Hawa & Company.

Sir, with the current acquisition with your entire position or the entire ecosystem, a range of companies that you wanted looks to be complete. So is it possible for you to give some kind of revenue guidance for the coming year? And how do you plan to monetize it? Will you be uprooting the limited real estate developers for us and get business from there? Already, we hear around that you will create awareness over the social media and even trying to get customers and change them and you're finding how you're probably finding, cornering or helping them get a home loan? How will it actually work? And do you have any kind of live customers at this point of time? And what is the month-on-month growth in the number of customers, paying or nonpaying?

Mr. Hawa, thank you so much for your questions. I would like to take the response, one with respect to acquisitions and how they fit in our ecosystem. We started the acquisition with the [indiscernible] journey when we acquired sell.co, which was the CRM piece. So I think it's SaaS products to developers. We introduced Beyond Walls, which is a transaction platform, run in correlation with the CRM, which helps the buyers, which is B2C, taking [indiscernible] for real state purchase and at the same time, providing a service to developers in terms of monetizing their inventory with the higher velocity because of the subscribed distribution network of channel partners onto the platform. But we have concluded the journey, we then went on to acquire the rental management piece, starting with TheHouseMonk and HelloWorld. Our acquisitions coming to the same path with respect to revenue, our acquisitions have -- and the products available now have a mix of SaaS and RaaS products. The SaaS products are typically B2B-oriented, so providing enterprise solutions to real estate developers. And our RaaS products, however, are B2C-oriented providing customer experience to purchasers and renters of the property. So I'll not be able to make any forward-looking statements for the next year. With the acquisitions and at the time of acquisition, we have a visibility of up to INR 95 crores of annual revenue run rate from the 5 acquired companies as of April 2022.

Sir, what is the figure? I missed the figure.

Like it's -- I remember revenue of INR 95 crores as on numbers -- monthly numbers as of April 2022.

INR 95 crores, is it, sir?

INR 95 crores.

Okay. So I see that a totally new team is actually attending the con call today and I joined the call around 3 to 4 minutes late. Can you possibly introduce the team and probably also tell who got what assignment and the kind of achievement that the team did with the previous assignments?

Sure. So the team is not completely new. From the time we started attending these calls, we have been getting along with Mr. Srirang Athalye, Group President at Aurum Ventures and Aurum PropTech. I have been also present on the calls myself, Onkar Shetye, Executive Director at Aurum PropTech. And I also have my colleagues, Mr. Hiren Ladva, VP Investment -- EVP Investments, who has joined the team new and is looking at investments into products and companies and also integrating these companies into the ecosystem; and Mr. Kunal Karan, who's the Chief Financial Officer, who has also been a part of the calls earlier. In addition to the team, with respect to the overall team that we have now, there is a good operational target at every product level, including the -- including the industry companies who are running these products like independent P&Ls. I hope I was able to answer your questions.

The only thing which is in my mind is that you have acquired -- it's like acquiring a set of like 10, 11 players, VIP. So how will you recommend all these players get together and score the runs or how will the revenue come to Aurum. What is the trigger for the revenue to come to Aurum is the question I'm not able to really have a clear answer on. And secondly, why are we not hiring more people from the system that has created the larger companies like [indiscernible] or the larger operation that is similar to [indiscernible].

Okay. This is Srirang here. I'll try to answer a couple of questions. One is your initial question was on the trigger for the revenue. So as a process, we are still in the process of acquiring and consolidating the companies that we have invested in, plus there is a pipeline of investments that we are continuously engaged on. And at the right juncture when those discussions mature, we will definitely announce. And as a thumb rule, it takes 3 to 5 months for any acquisition to hit the revenues until the transaction certifies completely in the form of our Board presence into these companies. So I hope that answers the first question in terms of what is the trigger for revenue. So all these companies would have their individual time lines in terms of -- and at least the announcements that we have made, we will have their revenues hitting our -- at the consolidated basis hitting our revenues in the course of this year itself. Secondly, your question about the team -- hiring team. Let me rephrase your question just to understand it correctly. You're referring to the operating team into these ventures that we have. And then you are seeking clarity on the recruitment of those operating teams. Is that correct?

I would like somebody who is likely to capture all the quotes of all these companies that we have acquired who can bring these people to work together, have revenues together and which would finally lead to revenues and profits for Aurum because finally, the shareholder is concerned about the workings of these satellite companies.

So in fact, me and -- I'll be developing a team within myself within the Aurum PropTech itself, I would be responsible for that, which is to one: Track the business plans and AOPs of each of these companies. That's what Onkar has already mentioned. Onkar also mentioned the second piece of the key focus area for myself would be to integrate this into the ecosystem play, as per our investment philosophy itself, right? So we have identified the 4 specific areas for the segments, as Onkar has called out. And we will be focusing on this segment as our potential targets of acquisition as well as potential product development that we would be undertaking in-house. When we do this, we have an overall ecosystem play in our mind which is catering to both B2C players, which could be 4 different types of personnel that we have identified in the form of an owner, a seller or a tenant or there could be somebody who is just playing up -- there is a channel partner play there, which is the second part. And third is the developer community. Broadly there is 4, and then there are allied service players also there, right? So catering to these different types of personas or customer segments, we have different products and propositions that we are working on, either internally or scoping for potential targets. The second role, the focus area that is for me is to ensure that both the in-house products as well as the acquired companies gel together into this ecosystem play that we have in mind, which starts with first, ensuring that we make the right investments. Second, once the investments are made, the business plans are aligned, the AOPs are aligned. And third, continuously, we have a forum called Entrepreneurs Forum wherein we have all these invested companies coming together on a quarterly basis, where we thrash out ideas, new areas of collaboration and growth opportunities, and we take them up as projects to implement them more on the collaboration front amongst the ecosystem, right? So these are the few levers that we have in the very early days identified as the way to establish the ecosystem play that we have. But going forward, yes, we will continue to improvise and build further. We also have a governance risk and compliance forum, which would also have some of the metrics, and we will start sharing those metrics in the future calls as well, which would -- and one of the metrics within that is to actually foster collaboration, not just internally, but across the ecosystem play, right? So, yes, we have those plans, we have those ideas in mind, which would help address some of the questions that you asked.

And your question was as to why are we not recruiting from the ecosystem to run the company or to sharpen the focus of the company. The thing is the companies which we are acquiring are already led by the subject matter experts who have already kind of schooled themselves. And as we go on acquiring these companies, they become part of our team. So for example, we have the example where Mr. Prakash from CareerSocially is part of our team, then [ Jitendra Jagadev ] from HelloWorld is part of our team. So these are actually in this smart proptech industry, these are veterans who have already made their mark on the industry. And now they are part of our team. And to coordinate under Onkar, [indiscernible] has joined our team now. And he also has a substantial experience in building organizations, creating network, logistic network and coordinating multiple activities. So will be the key person who will coordinate it at Aurum PropTech level. And with each acquisition, we are adding subject matter experts and what we are referring to as entrepreneur's forum. So all the founders of these companies, we meet quite regularly, to exchange ideas, to bring improvement into each other's operations and to build synergies. So everybody is very much hands-on and collaborating with each other. So we have our abundant talent pool now with ourselves. And as I think was pointed out, that when we started these operations, we were only 5 people in Aurum PropTech. Now as of March 31, there are already 400 people totally working. And if we possibly take next month, we'll have a team of 600 people who are dedicatedly working towards all the objects and the products. So we have undertaken a recruitment in an innovative way because then the promoters of the industry company join our management and they are the best suited people to run this further. I hope that answers your question.

[Operator Instructions] The next question is from the line of Amit Kumar, an investor.

Yes. I joined late. One question I have is the property of Majesco, can you throw some light on that?

Can we face this as the properties with Majesco Limited, was that the question?

No. The assets that we acquired from Majesco, can you throw some light on its valuation?

Sure. So we'll give you a view on what we inherited when we acquired Majesco Limited. There were 2 buildings there. One building was in a completed state, which was utilized by the existing Majesco team, which had been vacated and was vacated when we acquired it. And the other building was under construction. Both buildings put together had a combined square feet of around 1 lakh 16,000 square feet. What we have done is on the first building, we have gone on to leave these buildings to 2 marquee tenants in the financial sector, one being [indiscernible] Financial Services and the other being [indiscernible] Financial. And the tenant space is also to be leased out. Post leasing in its entirety, we will work out a path to monetization on the -- which is basically liquidating that asset. The other building is under construction, which was close to [ 40,000 ] square feet. We have completed construction of that building, gotten the required approvals in terms of completion certificates and will be following a similar path as we exit Q4 in terms of path to monetization.

Okay. Can you -- is it possible to give some numbers about the value ratio of that currently?

It will be difficult to ascertain value or give a forward-looking statement, but we expect the market to be in the range of 100 crores to 120 crores for the 2 buildings.

[Operator Instructions] The next question is from the line of [ Anup Nambit ] from Equity Intelligence.

So in the opening remarks, the CFO told that there is INR [ 520 ] crore of capital for growth investment. So this is basically including the INR 233 crores that we have already invested, right?

Mr. [ Nambit ], yes, the combined cash and cash equivalent that we have is INR 500 crore plus, which includes the rights issue of INR 343 crores and the cash equivalent, which is the links that we have -- real estate assets that we have and also the cash results.

Okay. So -- and one more thing, like when we speak of the 4 segments, can you just name them once again? The segments that I got was the RaaS, SaaS and capital as [indiscernible]. So what's the fourth one?

So there are 4 segments, investment finance, which typically take care of the wholesale and retail investments for developing and purchasing the estate assets. The second segment deals with enterprise efficiency, which deals with bringing in efficiency in the business of developing and selling and monetizing real estate. The third segment is consumer experience, which deals with purchase and renting of real estate -- consumption of real estate essentially. And the fourth segment is connected living, which deals with the utilization and increasing the experience of utilization of real estate assets, including renting and resale and monetizing.

Okay. The [indiscernible] of these segments comes under the reported segments of RaaS and SaaS.

Yes. So these are the 4 segments where we have identified product opportunities. And further, the business is driven into 2 metrics, which is Software as a Service revenue and Real Estate as a Service revenue and business.

Okay. So final question was on -- you gave a INR 95 crore run rate on the current monthly [indiscernible] revenue. So of which, how much will be acquired companies and how much would be the in-house? I know that we are developing something in-house also. Do we expect any revenues to come from? What would be the revenue coming from the in-house?

Sure. Our in-house products have just been rolled out, and we have witnessed at least the INR [ 10 ] crore of mandate, a product called [ Grexter ], which is customer expert -- experts. It is a form of revenue. And the balance of the ARR that we have at the time of the acquisition is from the invested companies.

Okay. So if I understand right, there's only one company that has started revenue contribution, right?

I will explain this a little bit further. Once acquired, we take close to 3 to 4 months to complete the acquisition and take control of the company, post which the revenues are consolidated in the total project. So if we have completed acquisition and control of 2 companies, K2V2 Technologies, which have sell.do and Beyond Walls as a product and TheHouseMonk, which has got -- sorry, Monk Tech Pte, which has got TheHouseMonk as a product. And further balance approved -- identified and approved acquisitions are in the process of consolidation as we speak.

Okay. So from Grexter, HelloWorld and CareerSocially, we have not booked any revenue so far?

Not as of now. They are in the process of completion of control and conservation.

So I'm just exploring further. So on the current INR 95 crore run rate, we have not included any revenue from the Grexter, HelloWorld or CareerSocially. Am I right?

You are correct. This is not consolidated at Aurum PropTech as of now.

So as of now, what is the revenue these 3 entities are doing right now? Any like before consolidation and as we acquire?

I would just -- this is Kunal. I will just try to answer it in a different way. Look, the INR 95 crores that Omkar gave is based on the FY '22 numbers. And this include all the acquisitions that we have made and the acquisitions that are in the pipeline. So they are not absolute revenue numbers, but they are revenue numbers that we know that we can draw after these acquisitions are complete. And this is a revenue based on FY '22 run rate of these individual entities. So it includes HelloWorld and Grexter.

So it seems like we lost the connection for the current participant. [Operator Instructions] As there are no further questions, I now hand the conference over to the management for closing comments. Over to you.

We thank all the existing participants on the call for showing your continued interest in the company. We intend to build this further aggressively and sustainably over the next few quarters. And we will be in touch and we will keep communicating our progress hereon. Thank you.

We also thank all the investors who subscribe to the rights issue because of which the right issue is oversubscribed. So thank you all.

Thank you. Ladies and gentlemen, With that, we conclude today's conference. We thank you all for joining us, and you may now disconnect your lines.