Xelpmoc Design and Tech Limited (XELPMOC) Earnings Call Transcript & Summary

Ladies and gentlemen, good day. And welcome to Xelpmoc Design and Tech Limited Q4 FY '20 Earnings Conference Call. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta from Christensen IR. Thank you and over to you, ma'am.

Thank you, Sid. Good evening, everyone, and thanks for joining the Q4 FY '20 Earnings Call for Xelpmoc Design and Tech Limited. It's a great pleasure to have all of you on this call today. Results of an investor presentation have been already mailed to you and is also available on stock exchange. In case anyone has not received the release, please do write to us, and we'll be happy to send the press release and presentation to you. To take us through the results and to answer your questions today, we have the management of Xelpmoc represented by Sandipan Chattopadhyay, MD and CEO; and Srinivas Koora, CFO of Xelpmoc. Srinivas will start the call with his overview of the quarter and full year gone past, and we'll then start the Q&A session. We would like to remind you that everything that is said on this call that reflects in the outlook for the future or which can be construed as forward-looking statements should be reviewed in conjunction with risk and uncertainties that we face. These risks and uncertainties are not -- are included, but not limited to what we have mentioned in the prospectus with SEBI that you can find on our website. With that said, now I -- I’ll now -- I hand over the call to Mr. Srinivas. Over to you, sir.

Thanks, Asha. Good evening, everyone. Welcome to Xelpmoc earnings call for the fourth quarter of fiscal 2020. Total operating revenue for the quarter was INR 32.6 million as compared to INR 21.3 million in Q3 FY '20, reflecting an increase of 52.9% quarter-on-quarter basis. On a year-on-year basis, we have grown by 123%. Q4 FY '19, our total operating revenue was INR 14.6 million, whereas for Q4 FY '20, it was INR 32.6 million. EBITDA was INR 5.4 million as compared to negative INR 4 million in Q3 FY '20. Net profit for the quarter was INR 4.7 million as compared to a net loss of INR 1.6 million in Q3 FY '20. Now coming to full year performance. Total operating revenue was INR 81.1 million as compared to INR 60.9 million in FY '19, reflecting an increase of 33.2% year-on-year. EBITDA was negative INR 27.3 million as compared to INR 49.8 million in FY '19. Net loss was INR 21.7 million as compared to a net loss of INR 49.8 million in FY '19. The fair value of our investment in portfolio companies as on March 31, 2020, stands approximately at INR 350 million. And as on March 31, 2019, NAV of this investment was approximately INR 274 million. As on March 31, 2020, our total team size was 104, which includes employees, interns and couple of consultants. If you look at revenue mix for Q4 FY '20, 15% of our revenue was generated from international clients and 85% from domestic clients. We have added one new client in the last quarter. Till date, overall, we have served 36 clients. New client, whom we have added in the last quarter of FY '20, is one of the leading chains of schools in India, which has over 40 schools in 14 major cities, known for their quality of education and academic excellence. Now coming to outlook. We would like to give an outlook for 2021, where Xelpmoc would like to focus on education sector with a multitude of opportunities that have arisen due to COVID pandemic. We see good growth opportunities in this space. We are seeing an increasing traction from the overseas market for our services and this is a new pipeline given most of our current work was only from India. And we would like to continue on strengthening the financials on the back of breakeven what we have achieved in the last quarter. The project implementation pipeline looks strong, and this should aid the fundamentals of the company. And for 2021, we would like to focus our energy on promising sectors and portfolios like EduTech Ventures, Health Care, Fortigo, Mihup, Slate and would like to invest our best efforts in this sector and in this portfolio companies. With this, I would like to open it for Q&A.

Thank you very much, sir. Wait, 1 second, Sandipan, maybe you could just spend a couple of minutes because we have a lot of new callers into this particular call. I thought it would be nice for you to kind of just spend maybe a couple of minutes explaining the business model and how we operate so that the new callers will have a fair understanding rather than them asking the questions. Would that be okay?

Sure, sure. I'll do that. So thank you all for joining in today's call. It's a great pleasure that we have been -- had your support and interest all this while. We're grateful from that perspective. Just to give a quick refresher. I mean it may -- at the cost or risk of being boring and repetitive, I just have to reinstate some of the core values of our company. We look at ourselves as an innovation catalyst for all sectors, predominantly looking at corporate sectors who are looking for new changes and of course, the start-up industry. And we adhere to solutions for the next 700 million Indians, which has the potential for the next 3.5 billion world citizens in Africa, Southeast Asia and other such social representatives' economic pockets like India. And that has been our core forte, and we have stuck to that particular theme all the while. Predominantly, we call this as HEEAL, which is health, education, environment, agriculture and livelihood. These are the sectors we work in. And we started off with this part as a pressing need of the country that will come at some point of time. Well I'm not happy with how it has become more in focus now. But as of today, given the current scenario, I think our theme has been proven to be one of huge significance in the country, and we have seen a huge amount of renewed interest in the areas and sectors that we had always focused on because we knew that, ultimately, the base of India has to improve with the overall India and Indian economy and all these things have to improve. So that is more or less the kind of areas that we are in. As a structure, the way we're working, we have very high-powered systems and processes. And obviously, very brilliant guys who are idealistic in nature. And we work with start-ups as a profounder of source to them, and even for corporates, we work for new initiative areas, almost like an equal partner for making sure that we are getting the best-of-class technology and processes for them to take on global competition. So that is, in a nutshell, what Xelpmoc stands for and what we like to do. I'm keeping it short here. I would love to take more questions and specifics and answer as and when it's needed.

Thanks, Sandipan. Right now, you can open the lines to Q&A, please.

[Operator Instructions] The first question is from the line of [ Sumit Agarwal ], an individual investor.

Congrats for achieving the breakeven this quarter. So my question is, as you're now seeing breakeven in this quarter, so can you sustain this kind of margin going forward? And do we foresee reaching to the range of 20% to 25% in the coming quarters? So when do end results that we might reach over there?

Srini, you want to take that?

Yes. Yes. Yes, you can take it, Sandi.

So yes, we would very much like to stay in that, and that was the plan. We had always said that quarter 4 of last -- this year, I mean, last financial year, was the time when we're trying to breakeven. Because as I said, the skills are always regulatable by us. And we wanted to make a right balance and kind of a prudent balance between profitability from our projects vis-à-vis our entire engagement with the start-up space for value creation for the future. And we have been able to stick to the plan. We have an execution aspect of it, and we are on track of it. But at the same time, we have to be cognizant of the overall environment on that part. All said and done, given the current project situation and the booking pipeline we have, we look good for 1 quarter or 2 quarters going ahead to stick to the plan. But obviously, the current economic situation and simply inaccessibility to the marketing calls or to reach out to people or even reluctance on the part of several corporates to take an addition at this point of time, will have a bearing, but of course, we'll be at par and obviously below -- above par of what the market would be. But we are not insulated from the market completely, so maybe our growth plans and all would not be exactly how we do. The margins and all that you are talking of would be a factor of all these factors. We would see and bear and balance all the opportunities coming to us and take calls. At the sake of increasing margin percentage, we don't want to make sure that we deliberately lose out an opportunity which maybe a short-term lessening of the margin, but of our long-term gain. So that -- those are decisions, that with a strong Board and the management team committed to it, we would keep on doing it. At this point of time, I would not want to give any number as a guidance. But in principle, we would think that the profitability phase, or the focus towards profit of Xelpmoc, has started, and we would adhere to it.

Also, it would be very helpful if you could talk about your project pipeline outlook for FY '21 and thereafter. So if you could highlight and how we are basically panning out to see the impact of COVID and how we are overcoming that and stuff like that. Because you have mentioned that you are not seeing any problems in overseas. Instead, you are seeing traction. So I just wanted to get your views in that.

See, the thing is, overall, I think there will be a wealth of opportunity coming from the overseas market, especially given COVID because margins and cost pressures would be there all around the world. And there where the things are cost-effective, high quality; and the nature of the work we do, which is more of efficiency-increasing software. I think that demand will be consistent. How well we execute and all, will always be a factor. There will be more players on it, who will be looking at these new sectors to come onto it. So there will be some more heat on to that part, and we have to balance those out. From a project outlook point of view, there has been a slight handicap, and we have not been able to be as aggressive as we would like to be. We are doing pretty because of the effort we put in, in the last -- 2 last quarters, and those are the results you are seeing. So we are -- we have a change, which, as I said, we see a runway for 3 to 6 months, but post that, how the situation worldwide unfolds. And for the simple sake, like, if I have to get overseas projects of significance, I need to be there for some time, I need to have meetings there, I need to go out and do some phone calls. Just not possible at this point of time for the last 2 months. So some of the plans that we had where we had thought we would go beyond what we have said is not really worked out the way we want. But at the same time, we are well booked, so covered for some time, and we hope that we will be able to leverage on this part and create a portfolio of the current work by which the other work, by reference itself, has good growth. So we have to wait and watch. Unfortunately, that's the status for any company in the world today. We are not insulated from that part. But at the same time, we are not at a risk because we were not that current. We had lead time for that, but we are sufficiently stocked for now, but future outlook is something that we have to worry about in terms of execution part.

The next question is from the line of [ Naman Jain ], an investor.

Actually, I'm a new investor in the company. This being the first call that I'm attending, just wanted to understand that in terms of next 3- to 5-year kind of a horizon, what should shareholders expect from the management? As at the moment, Xelpmoc looks more like a holding company with many investments which are maybe illiquid or notional in nature. But in terms of the shareholder value creation, how will that pan out over the next 3 to 5 years, sir?

Srini, do you want to take that question?

Yes. So basically, in case, if you look at our product mix right now, it's a combination of both corporates versus start-ups. So as far as start-up is concerned, since we are partnering with these guys at a very initial stages, and we want to enter into a long-term contract, where it would be a win-win situation both for the start-ups as well as Xelpmoc, so what we do is we initially enter at a very, very steep level of investment. That's why we pick up [ SECT ]. But at the same time, we do also develop the complete technology solutions. Generally, these contracts are for 3 years and which are extendable further for another 2 years. So in fact -- you, in fact, instead of looking at us as a holding company, it gives an opportunity to have a long-term relationship with the startups or the clients and which would be a win-win situation for both the start-ups as well as the company.

Yes. But in terms of shareholder value in Xelpmoc, what plans do you have over next 3 to 5 years to create that, sir?

So in order to create a shareholder's value, what we would be focusing was corporates, and we are going to come out with our own products and the other one is the start-ups. So holding layer would be coming as a part of start-up.

Okay. Okay. Yes. And just one more thing. So what would be the impact of this pandemic on the investments that you've made in all the start-ups? I'm sure that you would not have had a chance to go deep into it. But in terms of surviving or stuff like that, any handle on that, sir?

See basically -- let me take that question. I personally see that given the nature of the sectors that we were in, there were so core and fundamental and efficiency increasing, we are seeing added traction to most of our start-ups. They are growing in stature and usage because now everyone is trying to get on to those rustic, very down-to-earth kind of solutions that we make for the mass classes at a very efficient and cost-effective way. So we have actually seen more traction and more interest in our start-ups in the last quarter than ever before. So maybe a silver lining in the overall pandemonium that's happening all across, but we have been sort of insulated and we find maybe they are safe, we have seen actually added opportunity opening up because of the nature of that 700 million Indian target that we had from the beginning.

Okay. And sir, just one last question. After this, I'll just go back into the queue. So we've recently done this Catalyst acquisition. So can you throw some more light on this, sir?

It's not an acquisition. We are working with them. We don't acquire companies in that scale, not yet. So Catalyst is the advanced AI-oriented way by which we are looking at pharmaceutical companies and pharma research in a way by which we are looking at global data to come in. And trying to ascertain a kind of value that we can attribute to the parent company. So this is more or less kind of a focus for the overseas market to look for what are the kind of impacts and discoveries you can make in that part to aid analysts and other people who are bringing drug discovery-oriented company investments, research and stuff like that.

Next question is from the line of [ Pramod Motilal ], an investor. [ Pramod ] your line is unmuted. You may go ahead with your question.

Can you hear me?

Yes, you're audible. Please go ahead.

First of all, I'd like to say -- I'd like to thank Mr. Sandipan and Mr. Srini, for letting me be a part of Xelpmoc even before the IPO had come out. My question is, just specific to the new companies which you guys have added, which is Traydstream and AgeBold. My question is, have you guys bought equity in these start-ups? Or this will be against the services which you will be providing?

These 2 specifics are purely services contract.

Okay. Purely services contract and Xelpmoc has not invested any money in these companies?

Not at all. Not yet. Some things may brew up with Traydstream. With AgeBold, we are happy to just be on the services. But it's not part of exactly our core sector. It was part of our core competencies and services. Whereas in Traydstream, we are now seeing opportunities where some of the products may actually stick to our theme. There we explore some opportunity, but, of course, it is not yet talked out. It's something that is a wish-list at the moment. As of now, there are no investments or any kind of a joint collaboration or any of the standard structures that we do for any of the products. So they're pure customers who are paying us for the services rendered.

Okay, okay. And if I may -- can I ask one more question?

Sure, go ahead.

Yes. So I want to ask about the Fortigo Xelpmoc Network company, which is a separate entity. I've noticed that the profits in the turnover has gradually decreased from the previous years. So can I know the reason why?

You are talking about which entity? Fortigo Logistics or Fortigo Xelpmoc?

Fortigo Xelpmoc.

See, Fortigo Xelpmoc was -- it's a joint venture company between Fortigo and Xelpmoc, where the initial thought process was for all the truck-related technology, we were planning to build from that entity, that particular entity. I'm sure you're aware that the Fortigo, we are also -- it's a part of a portfolio company, and we've also done -- their complete tech stack is developed by Xelpmoc. So later on, the Board has decided that instead of having it in a separate company, they wanted to do everything from the main entity. So that is the reason why we have sold whatever holding that we had to the promoters at the cost front.

The next question is from the line of [ Rajendar Kumar Sethi ], an individual investor.

Thank you, Srinivas sir, and Sandipan sir for this opportunity of investing in start-ups at a very early stage because even I am age 25 right now. And giving me opportunity of investing in start-ups, thank you very much. And my question is, sir, there is a start-up known as Phi Robotics. And I want to know about how it's shaping up with you? And other content, sir, I've gone through a lot of apps of your start-ups. And there are a lot of fake reviews of that application on Google Play Store, like [ InstaPress ], Woovly. There are, I think, a lot of fake reviews like same review is given around about 30 or 40 times. Is there anything that you can speak about it?

Google Play Store is not in our control. So of course, those are things we cannot really control on that part. But overall, we look at the traction and the usage of the software. And Woovly has seen a huge traction. It has also attracted recent investments and all. This is on the right track. [ InstaPress ] is an area where they're growing organically, and looking at certain other stuff. So I think we adhere to our part of the play, and we look at the overall growth. But of course, managing comments and all on Google is something, of course, beyond our control at this point of time.

Okay. And sir, Phi Robotics?

Even if you look at [InstaPress] on the user side, in the last 1 year, they have grown 3x.

Yes, sir. And sir, finally, on Phi Robotics?

Phi Robotics is more into a little bit of a deep-level R&D and some sort of an explorative work that they are doing in terms of -- in the different segment in warehouse management and security systems for corporates. It's a long run process. We are tracking the progress and trying to help them onto that part. But as of now, we have to wait and watch as to how the markets unfold given the COVID thing. A lot of the POCs were down in COVID internationally and in India. We will see how they mature and act further. But we do believe that it will have a little bit of added interest and added spice now given the current situation.

Sir, there is also investment in education recently in Vibgyor, sir. Sir, how things are shaping up with that? [Foreign Language]

No investment at all. We are developing a product of which Vibgyor is one of the first customers.

Okay. Okay.

Yes, just to make it very clear on the back part. That's not at all the charter of Xelpmoc and nor are they in a position to accept any investments at this point as to the best of my knowledge. It's not -- it's one of the lead customers at the moment, but there are other prospects that we are pursuing. And it has opened up a box of opportunities for us during the current fiscal year in which every school is trying to adjust everyone on.

Okay. Sir, one more question. Sir, could you please make a disclosure on the Investor Relations website about the start-ups we are invested in? And how much percent of total equity we are currently invested? I mean what amount of stake that we have in that company.

So right now, what we are doing is what is the fair value and what was the cost price that we are reflecting, okay? From going forward, we will ensure that even holding percentage is also shown.

The next question is from the line of [ Kapil Mukkar ], an individual investor.

Could you please let us know the name of the client which -- the school chain which you just acquired, the client which have you acquired on the school chain? Is it Vibgyor?

Srini, do you want to take that? I don't know what the...

Yes. Basically, we have not acquired any company. We have not acquired any schools. Basically, we are partner for developing the technology development for one of the leading schools. And because of the confidentiality clause, we have not disclosed the name of the brand. We have not acquired any stake in that company.

All right. I was talking about the client acquisition only, not about the company.

Yes, yes. Client, yes.

The next question is from the line of [ Ayush Agarwal ], an investor.

Congratulations team for the good set of numbers. I would start off with a bookkeeping question. First, can we assume this as a sustainable base for our revenue run rate going ahead?

Yes. We are trying to build a momentum on this. But given the economic condition, what Sandipan has previously stated, where we are able to find it difficultly in acquiring new funds. But nevertheless, we would like to continue with the current momentum.

Correct. And second would be, since I can see that our entire costs have gone down. So has been there any layoff or have we taken papers or like why did the employee number change quarter on quarter?

So basically, there is no layoff from our side, okay? What we did was we did some smart works where by hiring interns, trainings, et cetera, and trying to train them and getting the higher productivity. So apart from that, even just in COVID situation, we have not done any salary cuts and any layoffs.

We have booking years to build up core components and I think if you look at the trend from last -- 2 last quarters onwards, we were able to leverage those core competence more and more and get more productivity out of people. So we didn't -- we did sort of a strategy wherein we had -- didn't fill our positions of natural attrition in senior positions, and we built up good basis. And those junior guys have come up to a very high productive level using the core components we have developed in the first few years of our development. And I think that is overall paying dividends right now. Going forward, we think this trend of productivity increase per employee should be an increase in function.

Okay. Okay. And sir, my next question will be like following up on the previous participant's query. He asked about a shareholder value of 3 to 5 years. But I will be more pointed in that and ask you that in a company like for Fortigo, since you have a stake in that company, and we have built their extract right from the start. So when do we plan to take an exit, I mean, like at what stage would we take an exit so that we can generate that much cash flow and probably invest in other start-ups and perhaps in a much more bigger start-up other than these seed funding?

Well these are strategic questions, and we can basically go by couple. I have actually talked about it in the previous calls and also in the initial IPO meets and all. I think the typical cycle of exits of investors at the level of seed at a very involved level is usually in a 5- to 7-year cycle. So we are about 4 years in page now with some of the projects. In some projects, we are 3 years. So it's a rolling canvas in that sense for different start-ups. But of course, given the opportunity and all, we will certainly look at having partial exits and certain clauses that we have wherein some part of the fundraising comes to us. We've always figured some of those, some revenues and some cash flows have been generated because of that from some of our start-ups. We think going forward that will only be an increasing function because these are more like lock-in funds which will have liquidity. But given -- but saying -- having said that, you must also understand each of these are statutorily assets which don't have an assured return of any nature. But we believe because we have a very spread out all-weather kind of a portfolio, overall we'll average out and have good returns on the overall portfolio. Individually, we should not talk about each company, because no one knows what happens with individual companies, right?

Yes. I mean I wanted to ask this question because as you can see, during this pandemic, too, that BP funding and other fundings have dried up. So this might have taken a hit on our plans of maybe if we were looking at an exit in a certain portfolio companies. So because -- what I'm trying to understand basically is, how are we going to generate enough cash to further our investments in the future?

I think one thing that must get clear is that as a policy, we have never really invested in a company by putting in cash, except for in very abnormal cases and exceptional cases, which are 1 in 21 and 25. We mainly look at doing it at more or less at cost with some initial POC and all being at our cost, which is a minimal risk we take. Post that, we do get paid for the services we render to them, but at cost, we don't make profit on those. And the profit and the value we add is what we get as a CT. So we're coming in a very early stage almost at a founded level and for a very minimal amount of money, we essentially get this equity for that part. So it's not like we are a holding company of any sort. We get not exactly set equity, but more of an early investor, ringside view investor kind of an equity at a privileged spend. So that's the first thing. So our investments and all, the risk of investing going ahead given with these grants, is not something that really comes up. It's only when the investments are in and the project is in full swing, do we have any exposure to this. And again, I had answered this to the previous query. Given the nature of our theme, the fact that we have had to very, very mass market products and services. So we are actually seeing no traction in most of our products right now. And we think that will be a continuation. So all I can say is that we had sort of hit on our need, which we thought was our need and it was something that of a midterm market. COVID is maybe slightly more warm than anything else. That's our take on the situation right now.

Yes. And apart from that, the total cost of investment in all these companies approximately about INR 3.73 crores, where right now, the NAV is about INR 35 crores. At the current -- as of now, the strategy, we will not be looking at investing in any other company by putting a very hefty amount, et cetera. In case if you want to get in, if you like the sector, if we are going to partner with them for developing technology for a longer tenure, then we would look at entering at a very, very early stage.

So basically, you're not even looking at a Series A or like or something like that? We are only looking at seed funding and building test for them?

Absolutely not obvious investment. Hopefully, one day when we have proved the theme and all, we will have that sort of preserving our percentage in interesting start-ups where participants [indiscernible]. As of now, that's surely not in our core model.

Right. And my last bookkeeping question would be...

Sorry to interrupt Mr. Agarwal.

Just one simple question. In the INR 13 crore on our balance sheet, is it completely liquid funds or is there something else in that also?

No, no, completely it's in the liquid fund.

The next question is from the line of Raghav Singh from Ace Capital.

This is my first con call, and I have a very simple question. Probably you guys -- I've been asked this question again and again, maybe in the future also. So as I understand our business model is into 2 parts. One is pretty lumpy in nature, where we do some investments, the maturity period of 5 to 7 years, and then probably we'll take advantage of that and will be getting a lot of revenue. So that becomes lumpy. Second is where we have products, we can sell licenses, we can sell services, which will be pretty much linear in fashion. But as an investor, most of the time expectation is that companies ideally grow at a linear pace. So how are you planning to balance that out in future? If you can give some color or guidance to that.

Srini, all yours.

Yes. So basically, as you said, we would be contemplating both on the start-ups as well as on the corporate. We continue to do what we are doing right now. As far as the revenue generation from services and the product will continue. We will be focusing more on the corporate, but nevertheless, even there would be certain marginal portion which is coming from these start-ups as well for developing the technology. See, basically, when we talk about start-ups, start-ups is not just an investment into the company. Unless and until we have a long-term relationship with those entities where technology is completely our baby, we don't partner with them. But whereas in case, if you compare other companies, it's a purely -- purely a service contract. Today, he might be working with you; tomorrow, he might not be. And most of the cases, whatever the technology agreement that we have entered, since we being a shareholder of those companies, we have the first right of refusal before in case if they want to go to some other party even after completing time. So that way, I think we are in a position in a better way, both on the linear side and -- as well as on the bumpy side where in case whatever we could make out from this portfolio holding.

Okay. And what is our bond rate? Like this quarter, we are profitable. So I believe if we are able to achieve revenues in excess of this probably will be profitable most of the time in the future, right? Or it will be again lumpy in nature?

So, see, basically, in case, if you look at the cost, cost is more or less consistent. We are very, very cost conscious. In case, if you look at from September to March onwards, like the cost is more or less, it's averaging about INR 2.8 crores per quarter.

The next question is a follow-up from the line of [ Kapil Mukkar ], an individual investor.

Do you think at the size of your company and looking at the size of your investment in start-ups, we look more like a VC? Do you agree with me?

Not at all. Not at all. I don't think we are anything like a VC at all.

I'm sure you would not.

Sorry?

I said I'm sure that you would not agree. But looking at the financials of your own company and looking at the investment side in the start-ups, don't you think that it will make more sense that if you take a revenue instead of...

But how -- I don't think the investment has been significant. How much have we invested, Srini?

INR 3.73 crores.

I think for a company of our size that's not large enough to be considered as a VC class investment.

I certainly understand that your market cap as of today is INR 100 crores and out of that, you had already done an investment of INR 3.73 crores in other start-ups. So don't you think it would make more sense if you take revenue instead of taking equity stake in those companies?

I -- can you repeat yourself, taking what instead of equity stake?

Yes. I think the question he is asking is, why didn't you become a services company rather than doing an equity model? I mean...

Yes, correct. So it's not all suggestive of equity model, first to clarify that. But first, I think equity gives us a way to grow faster and have more growth than just a services company. Services companies are margin driven. You can never get a 7, 8 stake return on what you are actually putting. I would rather say that if I can go out, we are more of an intellectual capitalist than a venture capitalist. The money we are putting is notional. The main thing we are putting in where we are hoping to get exponential returns in some of the cases is by the dint of our skill and by the understanding of the market and the technology stack we are building for these start-ups.

All right, I believe there's one company who are early -- you guys had a lot in the previous quarter, right? And yet you're buying stakes. I don't think it's a prudent business decision, but it's up to the Board the way they want to take it forward.

I guess -- as you said, it's a strategy call that somewhere we have to put in the investment into making sure that there is future growth possibilities. From a projects perspective, we are always unity [indiscernible] positive. But that profit to make sure that the profit is at a more sustainable and higher growth, the start-ups do -- we do think that, that's a better model, and that's kind of a hybrid model which will be the future of all servicing industries as well.

And just to add what Sandipan has said, see, basically, we don't want to work as a vendor, where a client is coming and giving, okay, scope of work what needs to be done. Basically, we also involve in the product ideation. We are like a technology founder, where we also help them in product ideation, developing tech stack, et cetera. And more importantly, since you are their shareholder, you have a long-term relationship with them in building a technology platform. And it also gives confidence to the promoter that, okay, I can -- I don't need to have a CTO or a technology team -- in-house technology team, at least for the next couple of years. Today, in case, if you look at it for start-ups, they go ahead and recruit a CTO and they also build a tech team, they give very huge SOPs to CTO. And at times, CTO leaves and the complete team leaves the organization and the entrepreneur is back to square 1.

Totally agree with you.

Yes.

And do you -- could you give us a time line, say 3 years or 5 years or 7 years down the line that it will -- your investment will liquidate? Can you give us the time line of your liquidation of your investments?

See, basically, right now, we haven't decided anything, but the best option for the company to be -- to start looking at from a Series B level onwards. And there are no restrictions as far as the shareholders agreement are concerned. We are at our liberty whenever we want to do it but from the company's point of view, it would be better if we can start looking from a Series B level onwards.

Can we move on to the next caller, please?

Next question is a follow-up from the line of [ Naman Jain ], an investor.

Yes. Just one more curious question, sir. So while we are very happy and thankful that we have had a chance to invest in a company which is very different from what is present on the table in terms of all the other listed companies. But just wanted to understand your thought process as to why we did an IPO at such valuation where instead, considering your past and how you guys have proven history, you guys could have easily taken up e-funding and could have grown the company and then getting listed.

Okay. That was an idealistic stance we took. Yes, we would have done that. And it will not have been difficult. And it's probably something I'm not talking out of vanity, but of reality. The fact is that when you do that, the normal stock market investor doesn't get the growth possibilities that if new gets. By the time it goes public, the gain possibilities from the public markets are limited to only the growth rates. It's at the initial stages where the main growth and the returns possibly just come. We wanted to make sure that, that return is -- so 2 things we wanted to achieve by forming Xelpmoc. One is surrogately giving exposure and a kind of a role to play in the start-up ecosystem of India; and secondly, to make sure that the normal middle class investors have a chance of getting the gains only the PEs and the HNS gains. I think that's been our idealism, and that's something we believe in strongly. In future, we hope that this model will be replicated and also used by many other people. I think the time for that has come. And then we will really have an ecosystem of start-ups that we, as Indians, own instead of being completely -- I mean people of India own than being led by some few parts of India, both of them are needed. We were completely disbalanced towards the VC funding alone. I think there has to be a balance in these formats and many other formats. We are just trying that one at this moment.

Next question is a follow-up from the line of [ Rajendar Kumar Sethi ].

Sandipan sir, as you are a developer of MoneyControl.com. Sir, is there anything in which you are looking for equity market, you are developing something technological for equity market?

Not really as of now. We may get into some sort of -- at a later date, not now. Finance -- mass market or access to the financial markets at a [Foreign Language] level and the tier 2, tier 3 CCP level is something we will look at in the future for sure. We are looking for suitable partners because, see here technology would be a part but the execution, the actual mass market, at least, is also in the field strength and the way you approach it. So having the right partner is very important. We are looking out. There are some prospects. But as of now, I would not want to comment on it. But yes, personal finance is a love. And my dream is to make sure that even the middle class Indian starts respecting finance and the stock markets, equity markets, mutual funds. That way we will have a self-sufficient country. So maybe in the near future.

Sir, another one question is sir, the fair value of IDL insurance investment is currently declining quarter on quarter. Is there anything problem with that company or we are decreasing our stake in that?

No, no, we have not even decreased. There is no problem. We have taken a COVID discount on it. That is the reason why you will see that.

Okay. Since it is continuing from quarter on quarter from around April, May last month -- last year of April or May.

Yes. So there is no -- actually, the business is concerned, they are doing well. There is no issue in the business. We have taken a discount.

Sir, one more question for Sandipan sir. Sir, as we have invested in doing start-up, and it is growing like manifold. Sir, is there any plan for Xelpmoc that's not being a technology partner, but also invested in some start-ups, which will grew like anything? Means, I mean at that time create a great value, sir.

We established ourselves and improve our credentials to the public market. Then with your co-operation and all, we can raise something. Who knows about the future? We would love to do it. But at this point of time, our hands are full and getting the foundation there right, getting success stories out, establishing the credentials and the model capability is our first priority. We are not looking at that -- on that. But in fact, personally, we don't -- we have stopped investing since we stopped -- started Xelpmoc. [indiscernible] Xelpmoc days when I was still figuring out what to do.

Okay, sir. Okay. And thank you, sir, from the real investor side. You don't know what you have made.

Thank you. Thank you so much for having the faith and believing in the ecosystem. And being participant to it. We know it's not a standard IPO that we had. We had our own -- everyone had a lot of different things. But we have upscale amount of faith in the intelligence and maturity which is often undermined mostly. And it was good to see that our confidence in that investor was proven right. Thank you for being there for us.

I now hand the conference over to the management for closing remarks. Over to you, team.

Thank you, everyone, for joining us. While these are the uncertain times, our focus continues to ensure that the business is run efficiently -- as efficiently as possible. We'll try to build on the existing current momentum. In case if you have any further queries, please do reach out to us, we will do our best to address. Wish you all have a great evening ahead and requesting you to be safe. Thank you once again.

I would just like to add a thing, which may not be exactly normative. But please do understand it's a very committed management team and our prudence, our ambition and our ideologies are equally woven. It is something of a passion for us. And all I can say is we would work tirelessly to make sure all our combined dreams are fulfilled because we are even more invested than anything else that we have ever been in before.

Thank you very much, sir.

Thank you.

Ladies and gentlemen, on behalf of Xelpmoc Design and Tech Limited, that concludes this conference call. Thank you all for joining us. And you may now disconnect your lines.