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

Good evening to all of you. Welcome to the Q3 FY '22 Earnings Call of Xelpmoc Design and Tech Limited. We have sent you the press release and the presentation, and they have also been uploaded on the website as well as the 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 with us the top management of Xelpmoc represented by Mr. Sandipan Chattopadhyay, Managing Director and CEO; and Mr. Srinivas Koora, CFO. Before we start the call, I would just like to remind you that the safe harbor clause applies. And with that said, I would like to hand it over to Mr. Srinivas Koora. Over to you, sir.

Yes. Thank you, Ravi. Good evening, everyone. Welcome to Xelpmoc's earnings call for Q3 FY '22. I hope you and your family are doing well. I'm pleased to inform that we have maintained our business momentum while focusing on sustainability of operations. We continue to move ahead with our execution plan, which is centered on identifying the target sector that correspond with our HEAL approach. Operating revenue for the quarter was INR 18.3 million as compared to INR 35.3 million in Q3 FY '21 and INR 11.2 million in Q2 FY '22. As stated in our previous quarter, we did see an increased level of face-to-face interaction with our clients, leading to a sequential revenue increase of 63.8%. Operating EBITDA adjusted for ESOP for the quarter was negative INR 12.2 million as compared to INR 11.5 million in Q3 FY '21 and negative INR 12.9 million in Q2 FY '22. The net loss for the quarter was INR 29.9 million, partially due to INR 21.4 million of the ESOP expenditure. This is in comparison to a net cost of about INR 33.7 million in Q2 FY '22 and a net profit of INR 10 million in Q3 FY '21. As stated, we expect to build on this performance in the current fiscal. Our team size is 77, including employees, intents, consultants as compared to 68 in Q2 FY '22. Till date, we have served 51 clients, and our sustained interaction with the clients is the foundation for our good performance. The fair value of our investment in portfolio companies stood at approximately INR 611.2 million as on 31st December 2021 as compared to INR 436.3 million as on 31st December 2020. Our portfolio companies did well by embracing the new opportunities. Mihup has onboarded one of the leading Edutech company in India as its customer for speech analysis. Mihup's API is now available on Azure Marketplace, one of the foremost technology store does making it accessible globally. While Woovly enables its 5.5 million users to shop socially with the help of about 19,000 content creators, around 13,000 influences, which could -- where they create short video contents, resulting into 220 million video views per month. It has gained increased followers on social media platforms like Instagram, where the followers base has increased to 80,000 in a short span of time. It has clocked a GMV ARR of about INR 4 million, which has grown by 70% in Q3 FY '22 on a sequential quarter-on-quarter basis. A substantial portion of this has translated into revenue, and is seeing a good traction in the coming quarters. Woovly is looking at expanding its reach by adding vernacular language and tap the international markets in the future. The other portfolio company, PSM, the star in me, is a global carrier advancement platform for women and a diversity partner of our organizers had increased traction with the leading corporate clients being onboarded recently. It serves 20-plus multinational corporate clients across IT, ITES, BFSI, pharma and consumer good sectors. It has onboarded 8,000-plus members from 69 countries, 90-plus leadership exports. They coach from 10 countries coaching these members to actively manage their carrier and help in charting their growth part. It has launched PSM premium services with the 2 corporate clients for coaching 100-plus employees. It has recently sold its first enterprise sandbox model to a blue-chip corporate for their employees. The company's revenue has been contributed from enterprise as well as our B2C business. Slate is creating India's most comprehensive SME data repository by offering them a real-time involving, payments and reporting platform that seamlessly integrates with the other accounting packages. Slate presently has 10,000 users, including 1,000 CES and tax advisers, that bundle Slate's platform as a co-branded services to their own customers in order to automate reporting inventory, management, invoicing and collections and other financial management functions and tools. Slate has partnered with over 500 resellers and the software distributor to reach out to the end users, thereby ensuring that Slate's client acquisition cost is the lowest in the industry. And coming to our subsidies Slate, Analytical Private Limited, a wholly owned subsidiary of the company, has raised INR 52.4 million by way of preferential allotment of pre-series A cumulative compulsively convertible preferences to new investors.

Mr. Srini, I think if you said Slate, it should be Signal, right?

Sorry, Signal, yes. Thereby, Xelpmoc shareholder in Signal has changed to 91.95% on a fully diluted basis, and it has now become a majority-owned subsidiary of Xelpmoc. During the quarter, the company has incorporated its wholly owned subsidiary, Xelpmoc Design and Tech Limited U.K., for facilitating its international expansion plans. Madhu is leading this international operations. He has extensive experience in working at the communities of finance, technology and in private equity firms. We expect that our presence in U.K. enable Xelp to deliver services to international start-up focusing on mass market, soft services, man machine interfaces and all promising areas over the long term. We have also started our office in Hyderabad, which will provide further impetus to the company's operations going forward. Now let me come to the outlook for the remaining fiscal of 2020. We see a promising growth in our portfolio companies. Given that they are concentrating on enter to unaddressed area of the economy, we expect our investments including in: Fortigo, Mihup, Woovly, Signal to expand their access and reach and enter the new generation of growth. We continue to maintain our cautiously optimistic outlook given the underlying economic volatility. With this, now I request Ravi to open the floor for question-and-answers.

Thank you, sir. [Operator Instructions] Yes, we have a question from the line of Mr. Rudresh Kalyani.

I've got a couple of questions. See, as we get -- am I audible?

Yes, yes, we can hear you clearly.

Yes. I was -- as we're getting nearer to the session of revenue from the service domain, how much are we expecting from it 1 year down the line? And what will be the margins with respect to it?

Srini, can answer that question better because numbers and all that something we can diverge that way. But after...

Yes. Frankly speaking, right now, we are not in a position to comment anything on the future numbers. But yes, as far as the services, as the business is concerned, as we have commented in our previous analyst call, we are looking to see some traction Q1 of next financial year.

Okay. And second question is about the customer churn rate as well as the reputation rate?

See, the services part that we will take. We are not looking at high churn there. But in the past, what we have done were one of projects and all and they were lot of solutions than anything else, so the nature of the business is slightly different from the new customers that we are trying to add and building the pipeline from there. Some of them at least be long-term contracts. Till now, what we have done has mostly been innovation projects, which has had its own life and then it sort of hand it over and we go along. I guess it will be a mix of both of this. But for sure, we are looking at some long-term contracts, which would have a tenure of more than a year, 2 years a normal software practices. So that mix is a way to come in from next financial year with the new customers coming in.

The next question is from the line of Mr. Venkat. I think there's no response from Mr. Venkat, so we will take the next question. The next question is from the line of Ishit Desai.

Sir, I wanted to understand more about our partnership with the domestic VC ecosystem, right, because our investments in these early-stage start-ups. As we move forward, we're going to work with more and more of this domestic and international VC's. So are we working on any partnerships or deeper relationships with them or where we can run some joint programs to get access to some early-stage opportunities on entrepreneurs? So I just wanted to understand on that.

As a formal relationship, MoU stuff kind of things, if you're talking of, absolutely, no. We don't have any such partnership with any VC because not doing we want to do it. In terms of meeting and taking our start-ups to the VC reverse in general, we have been doing it. And if you notice, most of our start-ups have been funded by pretty significant VC's in that part. That said, every VC have their theme. And in many VC's sector allocation or the kind of company profile, they want and all, we don't necessarily fit in for many of our start-ups. So there, it has been that we have not really had some purchase from certain kinds of VC's. But with the overall VC's family offices, which we are trying to explore. I think we have had nice relationships and the fruition is visible in terms of number of start-ups that order and funded.

Sure. Sir, also the recent funding on Signal Analytics, can you help us with the investor name, who has invested in Signal Analytics?

I am not sure how much we can diverge. But Srini, I'll leave it to you for that part. You're on mute, Srini.

So most of these investors are individual investors, okay? And who are been closely and working with us for the last 3 years and who was looking at Xelpmoc and its close wherever we have -- actually, whatever we have achieved. So those are the investors who have invested, and all are individual investors.

Okay. So there's not a VC investment or an institutional investment?

No, no, no. I don't think we are right now at this moment of time, very keen on VC investment in Signal. Probably in the next -- next to next round or so, then we will look at our invest capital.

Sure, sir. When I look at the numbers, it's not market share marked up at the book value, it's not marked up to the valuation at which you have raised money. Any specific reason for that?

I could not get you.

Yes, the Signal Analytics valuation, it's still at the book value in the presentation, right?

Yes.

When you're visiting active sticker or valuation, any specific reason of not marking it up?

So, basically, for associate entities and to your subsidiaries, it has to be at the cost price, not at the marketplace as per the accounting standard. And whatever investments in case if you have in any of the associates or subsidiaries, you will see at a cost not at the market value.

Even for SMB, right?

Yes.

Okay. So can you add space for some more questions, or should I come back in the queue?

Yes, you can ask 1 question.

Sure.

Yes. So one thing I want to understand, sir, in terms of our portfolio, if we were to break up between companies which are at before MVP pre-revenue and generating revenue. So what will the breakup, say, roughly? I'm not looking for an exact number, but what will the broader contribution amongst that?

I guess now that we have some maturity, I would say, 30% pre-revenue and 70% of post revenue, but not necessarily that now are running. Most of them are running still. I think we will see the -- as we have said that this year would be a transition year. Some of our start-ups would move into operating positivity.

The next question we have is from [ Mr. Venkat ].

Sir, the question is, we've made like INR 11 million or INR 12 million revenue for this particular quarter. So what would be the untangible revenue, say, for instance, when our resources actually, when our team members where they're work in other companies, so there is a value associated for their work, right, per hour or per day rates. So there should be some additional income that must have accrued? So what is that additional value that you actually associate?

We don't account in that way. So as you rightly said, there are certain parts of it, which there is a margin built into it, and we don't hold equity in those parts. And where we hold equity, we are doing it at a cost factor, where margins are nonexisting, right? So effectively, there we are sort of monetizing it over time on the way the company is growing and the way the valuation of the company is going. On a month-on-month basis, it's difficult to accumulate that and give a benchmark to it because the chance of success or failure depends on how the start-up would do. That's why we do it on a lump-sum. And the result of the intangible gain that you were saying is basically palpable in the portfolio value increase of our holdings. But all of the profit comes from the nonportfolio of services -- nonportfolio company services that we do basically. So in a way, the normal services are the ones which subsidize the portfolio of services.

And to -- Venkat, to add what Sandipan said, basically, we don't do that, okay, deploy 5 resources to 1 x company and charge them over 20% margin over and above their cost. We don't do that. Basically, whatever do, we build an end-to-end solution, even if it is on the services space, and that to -- unless and until there is some sort of an innovation, which we can use it for our start-ups.

Yes.

So how do we value the contribution of the team members actually because we are just charging whatever -- you mean to say that we are charging just cost to the employee. Is that what we are seeing?

To the startup ecosystem where we hold equity, yes, we are charging the cost of the employee, including the overheads, just as a zero-sum gain. Whereas, when we are doing services project, there, there is a markup our overall margin that we may come overall, not at a per employee basis. But on the overall effort that we have put in, there is a markup and there's a profit margin to that part.

So what is the service component out of this one? And what is the -- what you call...

If a customer type -- everything is a service. The customer type determines it. Broadly, there are projects where we don't have any equity. That's pure service. We are not doing it for any other reason, but for profit.

Okay. So if I take this number on an annualized basis, per employee revenue is coming to like $12,675, so which to me looks very low actually for company which is like such a heavy technology.

So you have to add to that the portfolio increases value also, right. Divide that also by employee in case.

Yes. But adding that as well, it will not add so much because we are just adding INR 61 more crores, right, which again, we're not monetizing now, we would monetize it whenever when it goes to public or something like that, whenever somebody buys the equity from us.

Yes. That is the whole point of this company. INR 61 crores, divided by 75 is quite a significant bump right on the $12,000 that you said.

So that might add another $10,000 or $20,000, not much actually. For annuity -- between companies which are in similar field, I don't want to name those companies, but they are anywhere between $65,000 to $75,000 per hour -- sorry, per year.

Yes, yes.

So Venkat, frankly...

So how do we fill this gap? Yes.

We don't. We are looking at the value creation completely. And wherever we are doing profit, I'm sure we are at par with them. Wherever we are taking the part of creating wealth, there we are paying the long way gain. That's the risk we are taking.

Okay. Okay. So when are we going to see substantial growth from a growth point of view?

That why's we have said that. The services part as a disciplined action, we are only fruitioning from first quarter of next financial year. So April onward, there is a special practice, which is only looking at services. And the revenue mix, which is probably, Srini can correct me, let's say, about 80 -- or 70-30 today, 70 points towards our portfolio company, we hope that goes to 50-50 or 40-60 kind of a breakup in the short term.

Okay. Sounds good.

So they are 60-40. 60 coming from the portfolio companies and 40 coming from the service company. And...

Yes. That's the revenue in terms of money. Effort-wise, probably in 80-20.

Okay. Thanks for the clarity.

No, no. It's a very important question. And by the way Venkat, that is the differentiation of Xelpmoc. We are not trying to only build margins. We are trying to build wealth. And our hope is that if you see, if you're looking at an averaged out holding. But if you look at the vintage-based holding and you accumulate a 5- to 6-year rotational part where the trail value a lots, then you will realize that the per capita income is significantly the amortized in over multiple years.

The next question is on the line of [ Mr. Ashok ].

So during one of the earlier con sessions, you mentioned that you're in discussion with some company which deals with metaverse, right? Is that still on the cards?

We said we call it virtual. If I remember myself, I said metaverse is a good word, but more of virtual part. Yes, that's on the cards.

Okay. Any new company which we are talking to in terms of portfolio investment, which you can give at this point in time?

We're always talking to new companies; we have sold the sectors that we are taking in. But as and when they mature and they are sort of disclosable, we disclose it immediately on the official channels on to that. But as of now, whatever was disclosable we have disclosed. But remember that for every company that makes it to the notice in BSE, there are 5, 6 companies which have come through a funnel of 30 or other companies which we have not really mature at fusion into it. That's a, patient process with high attrition, but that's what keeps our stock as healthy as we possibly could do logically.

Okay. And we had also set up the Hyderabad operations, right?

Yes.

Have we started to take in clients for that particular company?

Clients are [indiscernible]. So I'll tell you what happens, so, personally, I'm located to Hyderabad. Because when we had senior people joining in, they were Hyderabad-based, and it will make sense that we all work together for the first 2, 3 years when the culture sets in. So basically, this is becoming the corporate office, and we are running the business from here. The Bangalore office, which is more towards a tech production and all that continues to do it. But any project, actually, there are very few projects which is not happening somewhat of the other from all the 3 offices together. Each of us have a specific role to play, design, planning, resource allocation, budgeting, innovation, that happens from Hyderabad and stuff like that. The tech innovation and all, which is traditional tech, that happens sort of Bangalore. Data science, some part of the -- some fractions of thing that we do more transactional part of the technology, that happens out of Kolkata.That's broadly how we do it. It is not like, Hyderabad office is a separate SBU, Kolkata office has separate SBU. England, obviously, we'll have a separate billing head. That's a strategic business unit. But these are branch offices, which are functional, and of course, they are also built so that we can tap on to the local talent wherever we get good talent, they have 3 options to join. That's the main thing.

We have a follow-on question from [ Mr. Ishit ].

Yes, go ahead.

Sir, I wanted to understand in terms of our deal pipeline, right? So typically, how many number of companies do we evaluate? And so what's the ratio when it comes to finance, screening and success?

So I have made the concession before, but I'll recap it, but things are changing. Till now, we didn't really have a marketing department. It was all incoming. And as requests came in, we used to service them. Now we have somewhat of a marketing channel, we have a some sort of a target, and we are sort of reinvigorating ourselves to those new norms. Hopefully, that is settling in. And as planned from April onwards, we'll have a more professional approach towards us marketing where the deal funnel and would be more or less systematized. That said, please do remember that people know us as an innovative company. And there are going to be many income inquiries where people feel that, okay, let's try itself if this problem has a solution at all. And in many cases -- I'm not doing it. In many cases, we are often the last reports where people have tried for some time. It has not worked out they are taking a chance with us or they have innovative new idea, and I think we are the only man enough people to listen to it with patience and try to appreciate it. But we are changing that. Some standard projects are also coming in now. We have told our ambitions and surely my focus to try to get some government contracts or government-related contracts. I think now we will get into more of a systematic rhythm where more discipline will be seen on that part. So we hope that we will be able to at least look at 8 to 9 new clients per month, of which we hope that in the first few things we will be able to convert 1 or 2. Size of the project is different, that's a different volume altogether. And slowly, slowly will mature sort of our funneling and all processes. So given the manpower, we have planned, that's a minimal part that we want to front. Remember, these are not set projects. These are all conceptual projects, like Srini was saying. It's an end-to-end delivery part that we are only focused on. At no point of time, are we trying to do skill supply or supply of manpower purely with no intent or solution in place? We'll skirt those markets, and that gives us a slightly more need for more focus. That's the part that we are happy with. Coming back to your question, we have had -- this is something I can disclose, we have had some success already in the U.K. and U.S. markets. There are projects which are ongoing, and they have been onboarded in the recent past. And I think we more or less are sticking to our plans. We will see how it goes. But until now, nothing worrisome beyond what we have planned. But of course, we are always greedy. We hope we can strive and push it more and grow at a faster pace.

I think my question was more around start-ups and portfolio companies, like how many you typically evaluate you before investing in it?

Sorry. See, deal pipeline and all typically we only give a -- because start-ups we take with a very different respect level. Now in start-ups, I've explained before that we have set themes and set sectors that we're doing. At the commonalities, they are data science dependent, and they are targeted to the next INR 50 millions. And more or less, we stick to the fortes of health, education, agriculture and likelihood. If you look at our current portfolio, you will see that education has been the main focus in the last 7, 8 months, mostly. Whereas in many [indiscernible], almost are non-existed, so that should tell you the gaps we are going to overfocus in future. Now we don't have a number that we keep in mind. We keep our wears heart and are constantly meeting with entrepreneurs now, they're the kind of people we get to finally get excited to work with. That is like a 3% to 5% chances. We keep on meeting start-ups and all, but unlike the financial event, we actually have to see a lot of psychological parts that we can add value to them. We respect each other. We can work with each other. So that is there. That said, even there, we are trying to discipline. There are very, very senior people who have joined, who have sort of -- we have discussed the value of, and we are learning the value of discipline having a target. I think we would see some numbers per quarter basis coming probably from the next quarter, we'll have a better plan. And when -- as and when we will have a plan, as and when we will have an action plan, what we are going to do, we're going to tell it to you people and then do it. We do want to hide it and then try to do. So Srini, if you have something to add? I don't know how much more we can.

It's perfectly fine. Yes.

And sir, in terms of number of investments made, I only talk about startup portfolios now. How many started lower -- how many valuations have been lower down when you have a lower down time? How many, in terms of [indiscernible] or numbers, which are less?

Yes. Broadly, in percentage wise I can tell you, it's between 25% and 33%. That's my thing. The exact number Srini can probably give you. You're on mute, Srini. You're on mute.

Basically, what we do is we do look at every quarter on a quarter basis, the performance of the portfolio companies. In case if they are not going anywhere or if they are in the right direction, we do write-off. That's the reason why in case if you look at our balance sheet, every year, you will see 1 or 2 portfolio companies which are written off. Or in case if they are not going anywhere at times, since there is an opportunity, we also do an exit.

Understood. Understood. Sure. And sir, and as we look at trying to expanding bandwidth to sectors like, say, direct-to-consumer, which again has a very strong data science role to play, where in data and customer feedbacks are of great importance, which are of retail. And this is -- have we looked at going beyond some of these industries and looking at expanding?

All the time, as I said, that we don't look at sectors per se, as long as the basic tenants have mean that we are serving, the next 500 million primarily, and it's affecting one of those health, education, agriculture, livelihood sectors or in general purpose technology is something which is multilingual, already audio based. We are always looking around. So we look for the entrepreneur more than the sector for us to be very frank. And yes, they happen to be in these sectors and all. For example, D2C is marketing was what he explained about Woovly and all, it's an enabler of D2C. So we're expanding on that space. Would we look very eagerly at someone who's trying to do a D2C venture in, let's say, it would supply? Absolutely. We'll be excited to work with such a partner. But the entrepreneur has to make sense to us.

Sure. And last question from my side, sir. In your existing portfolios, right, someone who's had very recent stage, but getting very good traction or something you are very excited about given the initial response. Are there any portfolio companies currently, beyond the ones which you have mentioned, of course, which are already...?

Not a portfolio company, but the structure that we have form Signal and the response we have got the kind of entrepreneurs we're getting to interact some of the things that we are already more or less looking at closing. I think it has been a pretty good experience much better than we thought. Sure. Sure. Please remember, Signal is at least the cluster of 4 start-ups under it. So it's [indiscernible].

Got a broad sense from what you tried to explain last time, I think this is the best we can understand right now, right, as and when we you get to do more.

We also don't know everything. We are figuring out -- we know that we will tackle a sector instead of tackling 1 set at a time and having a problem even making an cross-pollinate. So we are trying to root out the problem at the base, and we're learning on the way, but till now, so far, so good, better than expected.

The next question we have is from [ Dhwanil Desai ].

You're able to hear me?

Yes, Dhwanil, go ahead.

Yes. So again, pretty basic question. But -- so basically, I wanted to understand how do we decide about exit from our existing investment? Is there certain scale, certain valuation? I mean, what are the kind of things that you look out for scaled up investments like money that we have put in has multiplied? What are the parameters on which you will decide that we will make an exit? And a follow-up on that or a related question on that is that let's say, there are investment which we are in fourth or fifth year, and they have scaled up, and we make an exit, and we come out with a significant amount of cash. What do we do with that? I mean, is there any thought process around what can we do? What should we do with the money that you get from exit?

Right. So first, I'll take your first question first. We have always said that we don't believe that less than 7 years of any start-up, we would look at it. That said, this is the year some of them will turn that magic number, and we will look at it. But we essentially would always do it on a case-to-case basis, we are not mature enough to have a set principle or a set numberic -- numeric approach to it. We have started thinking on those issues now because the maturity and the vintage of our start-ups are reaching that 7-year age. But there are always exceptions. We have taken rate exit; we have written off some of these things. That's on a case-to-case basis based on what we believe is, are we adding move? Is this something that we think that we would, do it? Should we block this sector because -- or should we give it a cooling period for some times where we can reenter it and we have probably achieved whatever we could be in this space that will be there. Coming to your second question, my first reaction is that we are in the path of growth right now. Any money coming in, I would rather want to deploy it for other growth opportunities than anything else, at least for the next 3, 4 years. That's said, that's my firsthand preference. We are a well governed body the Board coming in. And at any point of time, the Board's decision is final. I have no prior inkling to it, nor do I want to have it. And I do believe the Board is also not a very set board. They are not people who are wishing to do it by the rules, and they're also rule books. They look at the entire structure. They look at the environment and make judicious and very mature decisions, which I think will take the company forward. But my innate reflective intention is to go for growth at least for the next 3, 4 years more.

Yes. Just -- so I think probably I will rephrase my question on the second part. So I felt fairly well understand that we are on a growth path, and we would redeploy that capital for growth. So I think that it makes a lot of sense. The question is that whether we have enough opportunities available, let's say, you get an exit of INR 20 crore, INR 25 crore, INR 30 crore. And our typical ticket sizes are less than INR 1 crore, right? So one way to go is that you don't dilute your self in the start-ups, which are scaling up well or you make larger ticket size investments. So I was thinking that...

Okay. Or we don't take investments, right? That's also the third option. So if you look at -- let's, take the comparison of the latest instance that you have. Srini, how much is the Signal raised right now?

5.24.

Sorry? 5.24. So that means we could think of 5 Signal-like structures. We have the idea capacity for that. We may not go for the first round of funding for those 5 clusters if you get INR 25 crores.

Okay. Got it. Got it.

There's always that -- the idea is a more premium factor for us. I don't think money has been a constraint for us. Touch wood from -- when you've got a good idea where we believe in something, raising money has not been the yes. We have always liquidated ourselves more than that. I surely would focus on seed and pre-seed stage funding and deploy money as much as possible in that stage than try to do a secondary follow-up on existing investments intuitively. That said, there are some of these building blocks, which are our startups, which have strategic importance for us for our future plans, we may lend in our equity there if the situation arises and we have ample money to make significant debt. It's all situational. I really don't have a strategy. I'm telling if then else conditions, which all the possibilities exist.

Understood. Understood. The only reasonable assumption to make is that we will have enough ideas to redeploy that capital, right? We will...

That, we are sure of.

Yes. So that is the question.

To be very frank, we have cut our clout according to our clock, and we have always been frugal. But if you give us a lot of clout, we can make a lot more.

Okay. Got it. And second, just I don't know how much feasible it is, but some of the start-ups where the scale up is happening, is it possible to share some operational metrics so that we get sense...

I think we do share it. Srini did summarize some of the key government at the beginning.

Yes. We do share whatever is in the public domain and whatever our...

Even in the reports -- investor reports and all key metrics of key start-ups are given.

[Operator Instructions] Ashish, do you wish to ask a question? Sudip, do you wish to ask any questions? One second. Yes. We have a question from [ Amuthan Iyer ].

With respect to our own products, the ERP solution, the DocuX and certain services that we would be offering. How dependent are we on travel restrictions like opening up completely? So the extended question is, if we become a kind of a free world in terms of travel, would that kind of scale up very fast?

No, no, I don't think that's a dependency at this stage for our product suite. But it's a good question. Some of the interest and some of the pipelines and some of the existing customers move overseas, we are taking as a service project, but we are using some of those product components as of now. The real constraint is that when we go with the product market full fledge it, we want to deploy a sizable, dedicated resource. At this point of time, we decided that it's better spent to have the management bandwidth and those resources, focused on the servicing sector improvement and our portfolio companies for the moment. As I said, we -- next year, third quarter onwards, we'll relook at the product series in between if a good luck event happens and we get the chance, we'll exploit it. But as our focused intervention and our resource deployment, we don't see it happening before next year third quarter.

And the Hyderabad office, is it getting any extra like manpower? Are we recruiting for the design development business?

We are recruiting people, and we are saying that you need to work with us in person, but you're free to choose any of the 3 locations: Kolkata Hyderabad or Bangalore. Certain functions like product design, thinking and all where the key management people, including myself, Srinivas, we're involved, those positions are only for Hyderabad. So I think there is a related question of Satyam coming up in the chat. I'll read out the question first. I'm Satyam Gupta. I'm a shareholder of Xelp. We have 3 products. Do you plan to launch new products? We have not even launched those 3 products. We have just built it, and we plan to launch, yes, those 3 products. And there is -- there are space in our mind spot two things will hit us. One of them itself would be more of a venture by itself, which is 100% owned by Xelp. There is one more from [ Kirti Chandani ]. I'm not able to read the full name it's not coming. Do we have a long-term vision where the revenues from our services business is used to invest in startups? Absolutely, if we make enough revenues enough profits from that, then yes, we would do that part. Sir, attrition rate for Q3? Not very high, but we have had some attrition and some of that attrition is kind of discipline led. We have seen that some people are reluctant to come to work from office scenario back and we are extremely stringent for our culture, but that is an absolute non-compromisable thing for us.

In fact, the overall count has gone up from Q2 to Q3. Q2...

Yes, but attrition can happen, and we could augment with more, just we have had some attrition but more on the fact that we believe in work together than work from home, and that's something that we are not letting any other precedents or any bad precedence or any special favor being done. There are some basic questions there. So the products are not launched yet. We're only providing services as of now. Okay, yes and no. The products are more like component inventorized now. There are components. When we provide a services business, we often use that component readily and we try to intimate the customer and the showcase, hey, we have these components ready. We'll extend these things to do it, but you still have to pay for the overall bill of it. Manish Agarwal asked, do we have geography-wise service revenue breakup? Srini?

Yes. So we're still in case, if you are looking at India versus overseas, close to about 60% revenue comes from India and 40% comes from overseas for the previous quarter.

Yes. And sir, when will be profitable at a sustainable basis? Profitable and -- we are really to don't miss profitable. But if you meaning believe that when are we going to have green numbers only in our part, I think probably sometime next financial year third quarter onwards we can hope to have that part.

So [ Mr. Pawan ], in case, even if you look at it like we do have a lot of senior eyes, if you look at breakup between the salary versus, we believe people who can be with us for a longer duration who believes in action, [indiscernible] well, that's why we give an ESOP. So if you look at even Q2 or Q3 or Q4, as we mentioned in the Q1 of this fiscal year, you will see ESOP expenses on higher side for even next fiscal year as well. But yes, as Mr. Sandipan said that you can see a profitable even including ESOP in next fiscal year, maybe in Q3 or Q4.

Yes. So do we have recurring license fee on the product components? No. As a now, no. We keep it as is. We don't give them upgrades naturally unless it's a good customer and we've already be in the good books only. We don't have a strategy for lifetime monetization of it. As of now, we are almost doing it tech [indiscernible]. Any crown jewel in investment companies, if you can highlight that? Well, we are lucky we have a multipronged throw kind of a crown. So there are several. I think Srini has mentioned some of them. Personally, of VSP, we always have highlighted some of the parts from an impact point of view, I think the ones that we told, Woovly, Signal, Mihup, of course, Fortigo then Slate, they're all pretty good on that. TSIM has a very high impact part. So how we define jewels is compete there. Till now, we are pretty happy with our quarter and its literally accessible link, so honestly on that part. Any application managed service contract? Not as of now. Not as of now. Typically, for now what -- we are looking at those things in the services expansion. For now, we typically think that any organization has an innovation phase and then the business-as-usual pace. We have been skirting the business-as-usual pace. We do a handover post the innovation phase and we have been doing it. Some part of the business-as-usual case also when we may, do. And that's why I said the very nature of how our engagement is, we surely will have some contracts, which are more tenured-based with 2, 3 years, not project delivery event-based. So that natural it is something that we are going through ourselves. Write up is on the on cost? Yes. The other part we have already booked in the losses, right? So that's already factored in any way.

Yes. Thank you. The next question that we have is from the line of Nitin.

So my question would be, sir, as the Signal you clearly demonstrated that the company can definitely do hyperscaling. Out of nowhere, you've built a company that has a INR 60 crore valuation company. So basically, being a long-term investor, I know the management is definitely the best you and the new guys that you've recruited Mr. Koora and Madhu sir. So basically, in the long term, how big your company can be? I've got a huge expectations, but I just want to have some sort of idea because I know you're definitely a hyperscaler. You proved it time and again. So...

Okay. So first thing some facts need to be corrected. Mr. Koora and I are working for 16 years together, and he was there from day minus 180. Mr. Srinivas Kollipara is a new entrant. So Mr. Kollipara and Mr. Madhu Poomalil, they are the new parts. And as you said you are ideally bounce and -- that's the first part. Now coming to hyperscaling, I think I have covered it sometime better. The unified metric that we use is a [indiscernible] generally, is that how many people are we affecting every day, which means that something we have developed, how many people are using it every day. And I would dearly love to go to a stage where -- we will not stop rather until we have 5 million to 7 million daily users of something we have developed on a base of 50 million, 60 million who are using it or maybe more. But that is the metric we want to hear under that. Sorry, 50 million to 60 million. I get confused with crores and lakhs and million. Sorry, 50 million to 60 million daily users, yes. Nitin, does that answer your question? you're on mute.

Yes. So I was just asking, so do we have any long-term vision of how much would be in terms of valuation as a whole company, let's say 5 years...

Valuation is not what I bother about. That's a game [indiscernible] thing. But what I do bother about is profitability and revenue. Looking at 50, 60 million if you're using it every day and let's hypothetically say that per transaction, I make [ INR 60 ] because it's a mass market. Keep into the mind.

We have a couple of questions in the chat. Mr. Om Prakash Shah is asking, how many quarters ESOP is pending?

Hopefully, ESOPs will be pending the answer. The current scheme is pending for other 7, 8 -- 6, 7 quarters, I think. But ESOPs will have new schemes coming. That's the best way to get talent pool. We will be there with us for the long term. Do we have any...

That's the best thing like, people have really given the ESOP at different stages for a few people, even it's there for 4 years as well. So these ESOPs, we started this year or last year, you will see for the next another 4 years.

Yes. We have any projects pipeline in design services? Not yet, not yet. Not -- only in design, but we do see good scope there. We have not even -- we have started forming it, but once we form after the formation, a few months, we'll go until we build the capability and then we can expect. So a pure design project, which we hope we get -- it maybe that the design build part of it and then we also build fulfillment of it. I think we can expect the pure design project to come maybe 6, 7 months down the line at the earliest.

We have the next question from [ Ishit Desai ].

Sir, 1 more question. Have you come across any of the exit opportunities from some of these successful companies that any incoming investor looking to biogas, but we have not exercised and thinking that the company has maybe better potential to grow?

No. No one has made a hard force on us. They have suggested, and we have provided it right.

Yes. So but we have come up with opportunities that we can at our discretion we could have chose to exit, right?

Well, at our distribution, not at our will. And at the point of funding, we were given a choice, we need to exercise, yes. That doesn't mean that the offer still exists, right?

No, I understood. I understood, sir. But -- and how many of them, maybe 3, 4?

I really don't know.

Tentatively? I'm not to looking at the number, but tentatively.

Maybe 3 or 4. You're right, yes.

We have the next question from Rudresh Kalyani.

Srini told that we diluted 9% to individual investor. So can I get to know the demography of these investors? See, usually...

I can give sample profiles. I can give sample progress on the geographic.

Usually, in the interest rate, we don't dilute easily to the individual investors like us. It will be either to the elite investors like Kunal Shah or Vijay Shekhar Sharma or something like that. Are they -- those investors? Or is it retail investors?

I mean, with all due respect to everyone there, they're not retail investors, to come to your point. There are people who have been part of Xelp's journey since Xelp started. First believers in us, some of them. People we respect. And more importantly, people lose money we wanted because what we felt was, they bring lots more value than just the money in this year.

And 1 more question is on the pre-MPO rise. So do we -- all the time to be excise those rises are, do we defer it and access...

Sorry, since IPO, we have not had a single company went into IPO.

No, no, no. Pre-MPO rise. Yes, just to answer Rudresh, you ask, for example, we did a couple of investments wherever we want to increase. For example, if you look at Slate, Slate, when other investors were investing, we also thought that we should also ensure that we don't get diluted. So we have invested.

We have done a bridge around for Mihup also, but they are rare and far and compete. Usually, we don't -- usually like to deploy our cash for that. Maybe situations will change in 2, 3 years.

Usually, who will lead these rounds? Is it Xelp or...?

No, the existing investors.

[Foreign Language] investor.

The other investors do usually. Sometimes entrepreneur, they also lead it.

We have a 3 minutes left. [Operator Instructions]

No. I mean, I'm okay to a little bit more than 3 minutes if there are questions.

Yes. We have a question from Mr. [ Ravindra Yellappa ]. Did the funding round completed in Mihup and Woovly?

we can't comment on it at the moment. It is disclosable. It will come out as an official announcement anyway.

Mr. [ Puneet Motihar ], do you wish to ask a question?

That's unknown name.

[Operator Instructions] Yes, [ Amuthan ]. I have...

So we normally revalue the book value of the invested companies every 2 quarters, I think September and March. Broadly, what other than -- like if they have not raised any NIM, what parameters do we use at Xelpmoc to do that?

So sir, basically, one is we look at the last round of funding. And in the last 3 months or in the last 6 months, how is the performance? Are they are on right traction when they have spoke to them initially? Whether is their growth in their business model or not? Based on that, we relook at it.

So Amuthan, the basic criteria is we look at consistency and adherence to the plan. So anything is quite probably on to the plan, if it's on the negative side, then we discount. If it on the positive stand, we stay that as conservative.

[Operator Instructions]

I think we are done.

Yes, sir. Since there are no further questions, I would like to hand it over to the management for their closing comments.

Srini, yes, can you please give it?

Yes. Thank you very much for joining us. In case still if you have any further questions, please don't hesitate to write back to us. We will respond to you as early as possible.

Thank you.

Thank you, everyone. Nice chatting up. And as Srini said, any questions, you feel free to drop by. And next 2, 3 months, keep watching the announcements, that should keep on happening.

Thank you, Sandipan, sir. Thank, Srinivas, sir. With that, this call ends. Have a nice day. Goodbye.

Bye-bye.

Bye.