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

Good afternoon, good evening to all of you. Welcome to the Q1 FY '22 earnings call of Xelpmoc Design and Tech Limited. We have sent you the press release and presentation. And they've also been uploaded on the website as well as stock exchanges. In case, anyone doesn't have a copy of the same, please do write to us. To discuss the results and the outlook for the future going forward, we have the top management of Xelpmoc with [indiscernible] as usual. Before we start the call, I just would like to remind you of the safe harbor clause. And with that said, I'm going to throw open the floor to Srini to kind of start with the proceedings. Srini, all yours.

Thank you, Devakar. Good evening, everyone. Welcome to Xelpmoc's earnings call for Q1 FY '22. I hope you and your family are doing well and staying safe at home. The key highlights I would like to bring to your attention is the Newport Asia's investment in Xelpmoc. I would like to thank Newport Asia for having faith in Xelpmoc's mission to become an international tech evangelist. With Newport's global network and research, we will invest in augmentation of our senior management team and overseas business expansion. We remain focused on our stated outcome to deliver market outcomes. The other good news is we share is the Board of Directors has appointed Mr. Srinivas Kollipara as the Group President Startup Ventures. Mr. Srinivas Kollipara with 30 years of international experience was the founder for Hyderabad-based T-Hub, India's best-known start-up engine. T-Hub also used to run a corporate innovation division, serving leading MMC clients, we welcome him as a part of our senior management team. Moving on to financial highlights. I'm pleased to inform that we have maintained our business momentum while focusing on sustainable operations. We continue to move higher with our execution plan, which is centered on identifying targets in sectors that correspond with our HEAL approach. Our operating revenues for the quarter was INR 32.5 million as compared to INR 35.4 million in Q4 FY '21 and INR 35.1 million in Q1 FY '21. Operating EBITDA adjusted for ESOP for the quarter was INR 5.3 million as compared to INR 5.5 million in Q4 FY '21, and INR 14.1 million in Q1 FY '21. Adjusted EBITDA margin was 16.3% as compared to 40.1% in Q1 FY '21. As we had mentioned in our previous calls, due to the lockdown, we had substantial fixed cost nonoccurrence, which had resulted in abnormal high EBITDA margins in the past few quarters. And is now gradually coming back to the expected revenue. The net profit for the quarter was negative INR 15.3 million due to INR 22.9 million ESOP expenditure as compared to a loss of INR 1.5 million in Q4 FY '21 and a profit of INR 16.7 million in Q1 FY '21. We expect to build on this performance in the current fiscal. Our team size is 86, including employees, intents, consultants as compared to 99 in Q1 FY '21, and mainly the reduction is in the number of interns. Till date, we have served 48 clients and our sustained interaction of clients is foundation for good performance. The fair value of our investment in portfolio companies stood at approximately INR 480.4 million as on 30 June 2021, as compared to INR 347.3 million as on 30th June 2020. Our portfolio companies did well by embracing new opportunities. 4TiGO experienced a mild slowdown in April and May 2021 on account of the second wave. However, in June, witnessed a near complete recovery to March '21 levels, with the exception of Kerala and Northwest, which continue to be impacted. July and August have seen some good consumer demand, manufacturing business and the normalization of the metal and mineral industry across India. This strong rebound and [Indiscernible] focus on the growth trajectory is expected to move it closer to a breakeven by mid-FY 2022. The other portfolio company Mihup. Mihup has released the next generation of its contraction analytic products VIA. This is the initiative, more user-friendly dashboard, sleek design and more robust technology at the back end. This will enable automation of quality control and auditing of 100% customer service interaction. Currently, it is rolled out in around 6,000 vehicles per month for the Tata Nexon and Altroz models. The VIA has also started servicing clients in several other sectors, including payments and online marketplaces. Woovly is on track to become India's most trusted social commerce platform. Every month, its 5 million-plus users generate more than 150 million views on content development by 18,000 homegrown influencers. Woovly currently has more than 110 brands and 7,000 SKUs active on its platform, leading to an ARR of $1.5 million. Its revenue is increasing at the rate of 34% on a month-on-month basis. 70% of its users hailed from Tier 1 and Tier 2 cities come to Woovly to explore like brands with goods or associated user tech base. It's bias is siding over 4,250 postal courts across India and spend on an average of $10 per order. Woovly had a pre series at closure recently and is currently focusing on launching an online video commerce option. Among the other portfolio companies, the star in me, a global career advancement platform for women professionals has garnered 7,000-plus members from 69 countries till date. These users are availing coaches from 90-plus leading experts in across 10 countries. It has also tied up with 20 MMC clients in IT, pharma, BFSI and consumer sectors as a facilitator for their employee learning. It has 1 startup awards from HYSEA, SCSC and [Indiscernible] in association with the U.S. Department of State and Kerala Startup Mission. It has booked a revenue of INR 60 lakhs till date and is focused on onboarding 40 B2B clients and 20,000 B2C members. TSM has recently raised fund from ISV and the Department of Science Technologies and from one of the U.S.-based investors. The Board has also approved acquisition of 64% in Singapore-based GOFX Platform Technologies. GOFX is in the development of e-commerce application in the HEAL sector and will enable global market approach, reach and growth for the -- for Xelpmoc. I would like to share that we had our first exit in August 2021 in Ideal Insurance Brokers. The cost of acquisition was INR 2.35 lakhs and we have sold our stake for INR 50 lakh, resulting in a profit of INR 47.65 lakhs. Now let me come to the outlook for the remaining fiscal year of 2022. We see a promising growth in our portfolio companies, given that they're concentrating on hitherto unaddressed areas of the economy. We expect our key investments, including Fortigo Network Logistics, Mihup, Woovly to expand and enter the next generation of growth. We continue to maintain our cautiously optimistic outlook given the current challenging times, limiting the opportunity to onboard clients. With this, now I request Devakar to open the floor for question and answers.

[Operator Instructions] So the first question comes from the line of Kishan Toshiniwal. I'm going to move to the next person, comes from the line of Rudresh Kalyani.

I've got three questions. So I will start with a couple of them. For how many quarters are we going to capitalize this ESOP expense and in what trends? That is my first question. And the second question will be our revenue has been stuck around for INR 3 crores since somewhere around 6-odd quarters. So when can we expect an uptick in that? And the third question is, what was the reason when selling the stake in the Ideal Insurance?

Siri, do you want to take the ESOP and other things?

Yes, yes, yes. So basically, in case, if you look at ESOP. ESOP, we had 2 pulls. One is ESOP scheme 2019. Other one is ESOP scheme 2020. Now under ESOP scheme skill 2019, we had close to about 8,31,369 options, which have been approved by the shareholders, out of which we have given about 5,15,743 shares -- options to be employees. So majority of these options or brands are going to be exercised over the period of next few years. Please understand that these are the employees who are associated with the company and at a very senior level. And the compensation package at Xelpmoc is like higher on the ESOP side and lesser on the cash so that they have a longer term with the company. Now yes, I hope that answers as far as the ESOP is concerned.

Yes, coming back to your 2 other questions as to I think the 2 questions were basically that why did we exit the Ideal Insurance? And the second one was that when will our revenues be unstuck? So the first part of it, Idea Insurance, we have not been playing an active role for quite some time. And the pathway they are taking, while it has a lot of promise and all, we do feel that there is something more that we can do in the insurance sector in a different dimension. They have their own business model, which is there. And when we had interacted with them and built the first level [indiscernible], it was relevant. But in today's time and place, probably something new could be done. As you know, that we interact with 1 entrepreneur in 1 problem area. So to give us some space for some furtherance in insurance space in a future date, we thought it was the right time for us to exit this part. Anyway, it was a insignificant stake we were holding. We were holding about 1% to it. About the revenue getting unstuck, I think we have clearly said that we are looking at our revenue growth only from next financial year first quarter. and we are sticking to it. At this point of time, we are consolidating, making sure that our overseas market exposure, the business setup is there, the kind of focus that we want to give on startups, you find our next level of winners. Those are the key components where our time is going. And by the time we consolidate and get ready for the overseas market, only then we will start looking at -- serious looking at revenue increase. So I don't think you can expect any revenue increase. Our revenue will be in this range until next year, first quarter. I think that's something we have always consistently said, it is not changing.

We'll try Kishan, again. We'll take the next question to the line of [ Jagdish ].

Yes. We have invested our technology support or -- I don't know about the financial support in the Tata CLiQ, where I think I have seen the use case where we improved Tata CLiQ performance based on the design or something. How the collaboration? And how are we planning to get new customers in that area?

Tata CLiQ was a pure services project, and there was no other participation from us other than technological inputs, and it was a one-off project, wherein we built it for them and we hand it over and came out. These are projects that we have done so that the experience factor for us to know that we can work for large logos kind of building up a portfolio, all these things are important. And from time to time, it's not just Tata CLiQ, we have worked for several corporates to find out what is our niche and where do we expect the maximum kind of windfall or the maximum kind of margins to come in from when we are doing a pure services project. And as you know that I have said in the last few con calls that we do feel strongly that it is better to put our services focus for marketing and sales in the overseas market than in the Indian market because margins arguably are much, much more lucrative. And if we are doing it for margins and might as well do it for the highest margin. That said, as and when challenging assignments come up from good logos, which sort of helped us establish ourselves as a serious player or a player with serious reputation or skill, we would participate in it. And it's not just Tata CLiQ. We have worked -- I think it's disclosed, we have worked for Britannia also. We have worked for some [indiscernible] names. And we are in the process of working with some more, which we cannot disclose immediately. But that's where the services part will rest. But you will see a sea change once we go overseas, then we will be purely focusing on getting our funnel of pure services revenue will be different.

[Operator Instructions] We have the question on the line of [ Abishek Agarwal ].

I just wanted a brief overview on the startup ecosystem that you're seeing currently in India as well as abroad.

Startup ecosystem are -- see, the thing is, it's quite simple. If you look at it from a very top level, we are close to a $3 trillion economy. And somewhere or the other technology will enable at least, let's say, 10% of the GDP. And if you assume that 40% of that business of, let's say, $300 million -- $300 billion, would get done from start-ups because of the innovation cycle. It's a large market, which will lead to large capitalization. So overall start-ups do have a key thing because somewhere, we had a kind of a [ log gen ] innovation and suddenly, it is coming to fore. Now that said, our perspective and our knowledge, we are limiting to what we call as the HEAL sector and allied sectors. And we do think that, that sector possibly will have a kind of a higher rate of return from a worldwide perspective. So if you look at it from a startup focus, we probably would be more interested in startups out of Southeast Asia, Africa and India then, let's say, start-ups out of Europe or U.S. or any of the non third-world countries from an overall perspective. Unless those start-ups are pure tech startups, where our chance of participation in all, unless it's in data science, looks remote to us. Because a high-tech start-up does not really need to engage with us in any form. Now from the overseas aspect of it, which we are trying to get into, and that's the reason you see our interest in the U.K. office as well as, let's say, GOFX acquisition that we are doing in Singapore. This is mainly to make sure that we are attached to those sort of ecosystems where our kind of start-ups in the HEAL sector is deployable. Now you must realize that in India, when we started as promoters, we had a reputation, we had knowledge of the entrepreneurial ecosystem about who we are and hence some fit. Unlike India, in U.K. or in any other country, our reputation is not that well understood or found to be relevant. So till we build a portfolio through services in U.K. and all, I don't think we will get hand or the handle of good entrepreneurs there. So we will wait our term. But overall, anything which is focused as mass markets, anything which is focused at soft sciences, anything which is focused as human man-machine interface. I think these are the 3 areas where we feel start-ups would be very good in the next 10, 15 years.

Okay, sir. Sir, one more question, if I can? In the start-up -- I mean, since we have opened up subsidiaries now in U.K. as well as Singapore. So any new capabilities or any new opportunities that we are very excited of what we see on the horizon?

See, the thing is the Singapore ecosystem is much, much more focused on, let's say, the African markets or Latin American markets. So we will, in some parts of, things like health or education where there's a focus on the whole ecosystem, a lot of government support. So we do think that it will open up doors for us. And the key -- again, the key aspect is always people. We think that the -- our partner in there are set of people who actually are pretty reputed and that will again helpfully -- hopefully help us to open up doors in those ecosystems. I think there are some questions in the chat window.

I'll just go with it, Sandipan. It's easier for you. So since Kishan has been trying a bit and he couldn't go through. So I'm just going to ask his question first. As last year, we were making profits. But again, we have started losses. Is it because only ESOP booking or anything else? That's the first question. Srini, you want to go with that?

Yes. So basically, yes, as you rightly pointed out, it is purely on account of ESOP booking. In case, if you look at it, the top line was about INR 3.25 crores and overall total income was about INR 3.5 crores. Adjusted EBITDA was about INR 53 lakhs of profit, okay? Compared to Q4 previous year, it's about INR 55 lakhs. And in fact, the EBITDA margins -- adjusted EBITDA margins have improved when you compare Q4 versus Q1. In Q4, it was 15.4%. In Q1, it is 16.3% in case if I can exclude the sum. I hope that answers this question.

Fantastic. The next one is on, we have done a...

I would like to add a little bit more. Apart from this, we also invested a huge amount of time and effort in undefined start-ups, which hopefully, you will get to know in the next quarter or 2. So there's a lot of work that happens before it comes to the fore. And even prospecting and finding winners, interacting with things, is a very heavy process on our end. And we have been heavily interacting with a lot of startups. Hopefully, you will see some of those tractions visible in the next 2 quarters. So that's also a huge part of effort. We have not taken that manpower and try to get more services project to buffer up or lift up the revenue level. So that's also a strategic path we are taking.

Yes. The second one from Kishan reads. We have done a private placement to Newport. Is there any specific reason or we wanted to raise funds at a good price? What is the rationale behind the private placement with Newport? I think that...

Yes. So we wanted to make sure that we are able to do our strategic execution of management augmentation plus the overseas expansion in a sensible way with no other impedence coming in the way and for that, the funds were important. I think they have grown at a rate slightly faster than what we have calculated. And we think that right now, the entrepreneurs, as you call in the stock market term, the promoters could be the biggest bottleneck that was going to happen if we could not expand on our philosophy at the right time. We thought that the timing was becoming hot, and it was a time for us to harvest some opportunities coming our way because I think our model has clicked and the faster we expand on to it is there. So getting intelligent people, smarter people than us onto the management, getting better people than us to augment us for the next level was [indiscernible]. And for that, we wanted to make sure that we have the right kind of reserves and the kind of funding that we need, irrespective of whatever else happens on to that. We didn't want to put pressure on to liquidating our assets just to make sure that we are able to fund it to keep our strategic vision in line. That's the first thing. But that's the main reason for raising the funding.

[Operator Instructions] The next question comes from the line of [ Gaurav Joshi ].

So just in terms of the capital equation, in terms of the new money which you have raised and also in terms of this sector allocation, how much we think will be going for the service line? And how much do you foresee for the startups in investing the start-ups? And also in terms of the startups, which sector -- is there any sectoral allocation which you are making on how much is for tech? How much is biotech -- which all sectors we are more inclined to? And what is your average maturity holding period with the startups?

So I will try to answer this thing. First of all, we have not raised this fund to fund any startups. That part of the model has not changed, and I don't think they're going to change it in the short term, at least for a year or so more. The fund has been raised to augment management to increase and get a better team and to make sure that we are able to bootstrap and start our overseas operations. The overseas operations, as you rightly said, are geared towards getting more services business, but they need a registration period and kind of a sedimentation time. If you connect the things we are saying, we have said that we hope to get some traction in the services and the service revenues will grow on next financial year first quarter. This is the buildup to that for which we need to make sure that we're augmenting it properly. And generally, to make sure our business grows and probably grows at a more sensible level to answer some of those questions. When we exit, what's the right time to exit, what's the best new start-up. I think we need to augment the management bandwidth, which we will be doing aggressively and some part of the fund is for that part. The funds are not going to be applied for -- I mean, unless -- there are always exceptions. But the purpose of raising the fund is not to deploy it into a particular sector or for any startup so to say.

The next question is from the line of [ Sandeep Daas ].

Am I audible?

Yes. Yes. Go ahead.

Yes. So one of the question was already asked regarding the Newport Asia. Another question would be like, in the current revenue, what will be the -- what is the breakup of the revenues coming from the product and revenues coming from the services?

Srini?

So as of now, most of the revenues are to that matter -- I mean 100% revenues are coming from the services only. Products, what we do is we build into it. Like these are the components which are being developed before shaping up the final product. So those are being used to render these services.

Okay. So also, can you just give a brief elaboration on what is the strategy for the next 3 to 5 years in the product lines, in the service lines and as far as the startups are concerned?

3 to 5 years is quite a long time. Honestly, it's not in our full capability to project for that long, to be very frank -- to be very accurately. But broadly, we will stick to our core competencies. The products that will come out will essentially be around leveraging our expertise in data science, statistics, mathematics and our understanding of design and parts. In a 3- to 5-year timeframe, we do -- as you can see, 1 pattern, I don't know if few people have noticed is, our equity or stakes in the startups are growing significantly from our first few parts, right? And mostly, we are getting into a higher level of equity participation in the startups because we are paying a longer and bigger role. In probably 3 to 5 years, you will see -- I mean some startups where we may hold above 75% of. Notionally, that means that we are kind of like the majority and -- I mean, there are no other big participants. And those are going to be a bit. That's the kind of product venture mix that we think will be where Xelp will be 3 to 5 years from now. I hope that answers your question.

I'll take the next question from the line of [Indiscernible].

So my question is that currently, like we have like Fortigo, Mihup, Woovly. So those are doing fairly well. So are there any plan to increase stake in those? Or you keep holding how much you're holding it? And I'll just monitor I have this going. That's the first question. And the second question is, we got the notification that we have acquired close to 64% on GOFX. I just want to know like what it does? And is it like completely new startup? Or it has some background of some years? So these 2 questions will be hand to you.

Okay. I'll answer the first question, which is basically as to are we going to at least preserve our stake in the startups. I think the answer is very simple. It's -- we start our quote according to a clock. And right now, I don't think clock wants us and the valuations we have gone to that we can hold on to even if you want to. At the moment of time, we don't want to make sure that we are confusing our priorities as to where our investment needs to go into. Hopefully, we'll find a solution for it in a 1 to 2 year timeframe. But as of now, there are no plans. That's it, if opportunities come up, if we find a mechanism which is favorable and works to our benefit, we may from some [Indiscernible] strategic point of view. About GOFX, It's actually time end of an acquisition. If you look at the value we are paying, it's almost at the face value level. The reason is we think that to reach out to the overseas market, it is better to go with a focused set of experts who are doing that only. And we want to make sure that it is not somewhere we are burning a lot of money in trying to investigate. They have equal skin in the game. And that, obviously, will make a more cost-efficient structure for us to acquire new businesses in overseas territories for the sectors that we are predominantly in. So it's more of an efficiency structure that way. It's a new start-up. It doesn't have much history. The people have a lot of history, and that's what got us interested to set up something of this nature with them.

And the last question, if I may? So I suppose currently what is happening, we are primarily providing services to the state and we are getting the request take out of it. But is that the plan going forward as well? Or it might be a scenario where we need to infuse gas as well, if needed, to some startup? Just trying to myself clear.

All these options are open. Maybe we's will come up with a new model. Maybe we will go on with a new change of how the venture world should be. All things are on table. But coming to your pertinent question as to where we see the focus. The focus is that we will play to our strengths and what is our capability, not spread ourselves too thin and try to build on whatever is market acceptable or believable in terms of what we can deliver and try to maximize that. But our core focus is to make sure we are catalyzing innovation across all the spectrum. And for that, whatever we think is the right tool, it may be fundraising for our start-ups. It may be coming with a new model of doing some sort of a stock swap. We are open to those things as long as it makes sense for us and our shareholders.

I think that also answers the question of [Indiscernible] Gandhi and Anand Shah, who wanted to know more on GOFX acquisition and the rationale behind it. I think Sandipan did answer that. I'll take the next question from the line of [Indiscernible].

Am I audible?

Yes, [Indiscernible]. Please go ahead.

So I have a kind of a philosophical question. So like -- so let's say, if I own certain shares of Xelpmoc, what am I actually owning? That is my question.

I think you had interacted with me on LinkedIn, correct?

Yes, sir. Yes, sir. I did.

Correct. I do have a sort of memory or recall kind of a thing. Yes, I think that does take care of a little bit of a philosophical answer. What you firstly own is a focus onto a sector which is underserved as of now. And what you own is a kind of ownership into solutions, which are focused for the next 500 million Indians, hopefully translating into next 5 billion world citizens. That is one thing that you are surely owning. What you essentially own is something akin to, I would not say a standard mutual fund, but more of a leverage mutual fund where the instrument that you're investing in, which is Xelpmoc, is trying to get a delivery assurance and success ratio higher by making sure access to technology for these sectors. It has usually starved up technology is given at par with world standards. I think that is the concept and you're owning. And if we do it properly, then the spoils of the war from those sector, the wealth from the bottom of the pyramid is what we stand to capitalize. Does that answer your question?

Yes, yes, absolutely.

I'll take the next question from the line of [Indiscernible].

Am I audible.

Yes [Indiscernible], please go ahead.

It's an honor to be talking to you sir Sandipan. Okay, so here's another question. In the last con call, there were 4 different SKUs which got put around how Xelpmoc plans to play the tech sector. One being through the formal education, then one being through competitive exams. So I just wanted to understand what are the updates there? Are we still sticking to the view? And what's happening in the ever few companies which Xelpmoc had acquired [Indiscernible].

So I'll just refresh the segments again. And I think broadly, we had talked of 3 segments. One is what we call the need to learn, which is the formal education sector. Then there is a need to succeed sector, which is a competitive exams and such like. And then there is a need to know sector for which we had also told about the acquisition and kind of a process we are doing through a subsidiary called Signal. We are working very hard on all these aspects. And incidentally, for need to subsidy you have seen, our strategic stake we have taken in a company called GPL, which works on something called Sarkari Pariksha, helping people prepare for government exams on all. And this was, I think, done 2 quarters back, if I'm not mistaken or maybe a quarter back. And -- so we are on track on those spots. But again, these are slightly, I think, we have started last year, probably 4 to 7 months there. So you will hear some news on our starting, hopefully, in the next 2, 3 months on the need to know front and some maturity levels and some performance factors coming in, probably in another 5, 6 months for the education sector and need to succeed sector.

I'll take the next question from the line of [Indiscernible] Desai.

Can you hear me?

Yes, please.

So I'm new to the business model accounting. So pardon my ignorance if I ask some stupid questions. So first question, on the unimpact -- in the tech for equity segment, typical ticket size that we have been deploying is less than 1 PR, is this a norm? Or do you think that was more of a limitation from where we started and it has the potential to go up?

I couldn't hear your question fully properly, there were some sort of a static coming in, but I think I got the gist of it. So first of all, we are not tech for equity exactly. We are tech for cost plus equity. That's the first thing that I wanted to correct, which means that we are not making money unless the company does well. So we have skin in the game. And the value we are bringing in terms of delivery assurance, execution, architecture kind of building for the last -- that is what we are booking in the equity that we take from the company. So as such, there are limitations which come because of ethical and, of course, practical issues like if we are working with a particular entrepreneur in a sector, it is immoral as well as strategically wrong to work with other entrepreneur in the same sector. So the standard services model of I am experiencing making banking interfaces for hundreds of banks and every other bank I do my cost comes down, that doesn't apply to us. But what we gain instead is the fact that we own equity in all these companies, and hence, the chance of success of any one of them. And if -- even 1 in 5 strikes is big, we are more or less compensated for from that perspective. And no matter how well you do the other model, you will probably get 50%, 60% margins. Whereas here, we are talking of 5x, 6x return in terms of margins coming in. So that does sound lucrative even with the kind of a thing that -- of some failure inevitable.

Okay. Got it. Can I ask one more question?

I think you had entirely 2 questions. So yes.

Okay. So second question is, in all the investment that we have done because of the limitation of the COVID, we kind of keep on getting diluted even though the ventures scale up. So do you guys have kind of an understanding that when the inflection point will come where we have to, at least not mandatorily, dilute and then hang on to our stake. EBIT like after a few days, it was picked from the first pain of our investment, any such milestone or inflection point that you can think off?

I I think that is not possible to keep ours intact and be fair to the entrepreneurs, okay? We're coming at the cofounder level. And remember that we are getting diluted at par with the cofounders. It will be unfair of us to sort of flex our muscles and have a favorable clause in our favor while making the entrepreneurs suffer double. That is something I don't think we will do. Coming to whether we should want to sort of play a role in choosing the startups and deploying more money than we won't get diluted at infinite. Surely, we want to do that, but for our top shots. And I think we are 6-year vintage, about to be 6 years, not even 6 yet. Our best start-ups are a modal vintage of 3 to 4 years. I don't think we would rather deploy our resources to some other parts of it and do our full stat strategy of 30-odd problems or the 40-odd problems we identified, make sure that we have covered them all before we start deploying our resources for other aspects and out of breed. We don't even know if that money we deployed, the opportunity cost of that is higher or not. So at least as long as we have our thesis, we want to follow it. And then as we have completed at least part of the thesis, maybe then we'll look for it. And another thing is we have to find out if this is the right way to deploy such funds or does it make sense for us to do some other financial instrumentation like an AIF, which is working in tandem with us and do it. We don't know. We have not thought of that question. We have parked it for now. Once we think about it, we'll find out the best method to do it.

We will take a follow-on from the line of Rudresh Kalyani.

So I was asking about the -- we raised stake in 3 entities recently in the pencil and slate as well as in another one. So what was the strategy behind increasing stake in them?

Yes. So to answer your question, Rudresh, for example, in case if you look at pencil, we have entered into a contract over 3 years back. So 3 years back, we have subscribed for optionally preferential shares and as well as partly convertible equity shares. So over the period of time as and when the time matures, we need to convert those partly paid equity shares into fully paid. So that keeps on happening every quarter based on the technology that we deploy in pencil. So that's the reason why where you see pencil equity going up. And as far as the slate is concerned, slate, again, we have -- there is an -- what happened was, they went ahead and raised additional capital from existing investors. And just as a part of our share -- as a part of anti-dilution protection, we have increased additional about close to INR 50 lakhs.

I think we did it in the right spirit because the entrepreneur is also putting money. So we'll be putting money with -- at par with them. We wanted to make sure that we are backing them to the full extent.

We'll take another follow-on from the line of [ Gaurav Joshi ].

So this is just a follow-up from what Sandipan covered in the questions preceding this and he also talked about AIF. [indiscernible].

I said that probably we'll find the right instrument.

Probably, yes. Correct. So are we looking at positioning us as an investment only company in the long term? We don't envisage to startup in something like a product business to just from a divestiture perspective, what we are looking partial -- purely as a investment only company.

Okay. [ Gaurav ], I'll give you a very honest answer. We are not modeling or trying to go into anything. We are innovating, improvising as we see opportunities and what we think is the right solution. I have no fixed plans into that. Only, as I said, we'll do whatever postures our and maximizes our catalysing of innovation, and make sure that we are trying to do it with the right balance of investor interest and our shareholder value increase.