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

Ladies and gentlemen, good day and welcome to the Xelpmoc Design and Tech Limited Q4 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ravi Udeshi from EY. Thank you and over to you, sir.

Thank you, Pezan. Good evening to all of you. Welcome to the Q4 FY '22 Earnings Conference 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 on the stock exchanges. In case anyone does not 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 today the top management of Xelpmoc represented by Mr. Sandipan Chattopadhyay, Managing Director and CEO; Mr. Srinivas Koora, CFO; Mr. Madhu Poomalil, Group President, Strategic Initiatives; and Mr. Srinivas Kollipara, Group President, Startup Ventures. Before we start the call, I would just like to remind you that the safe harbor clause applies. And with that said, I would now like to hand over the call to Mr. Srinivas Koora. Over to you, sir.

Thank you, Ravi. Good evening, everyone. Welcome to Xelpmoc's Earning Call for Q4 and FY '22. I hope you and your family are doing well. I'm pleased to inform that we have maintained our business intact while focusing on sustainability of operations. We continue to move ahead with our execution plan, which is centered on identifying the projects that correspond with our approach. Operating revenue for the quarter was [ INR 18.6 ] million as compared to [ INR 35.4 ] million in Q4 FY '21 and [ INR 80.3 ] million in Q3 FY '22. We saw a remote interest from our clients, which lead to a sequential revenue increase of 1.4%. Operating EBITDA adjusted for ESOP for the quarter was negative [ INR 42.2 ] million as compared to a positive INR 5.5 million in Q2 FY '21 and negative INR 12.2 million in Q3 FY '22. I would like to give you a context to these [indiscernible]. We are seeing a demand for ongoing manpower talented, especially in new technology system have increased drastically across the IT sector, resulting in increase in the manpower cost. In some cases, we are seeing by 2 to 3 [ SAP cost ]. Further, there was also a provision for [indiscernible]. This outstanding is now fully provided. Excluding that, as I mentioned, we are in line with our Q2 FY '22 EBITDA. The net loss for the quarter was INR 49.5 million, partially due to [ INR 39.9 ] million of [indiscernible]. This is in comparison to a net loss of [ INR 39.9 ] million in Q3 FY '22 and net loss of INR 1.5 million in Q4 FY '21. For the full year FY '22, our operating revenue was INR 80.5 million as compared to INR 140.5 million in FY '21. Regarding the change in revenue, as stated in our previous call, Xelpmoc is largely a data focus rather than the service contractors. We have certain service contracts, which got considered during the first half of the year, leading to the [indiscernible]. However, our revenue momentum as we do in the second half, and we expect this momentum to continue. Operating EBITDA adjusted for ESOP was negative [ INR 63.9 ] million compared to a positive INR 46.0 million for the reasons discussed. The net loss for the year was [ INR 128.3 ] million compared to a profit of [ INR 30.8 ] million in FY '21, partially on account of increase ESOP expenses of INR 82.4 million. Our team size is 91, including employees, interns, consultants as compared to 77 in Q3 FY '22. Till date, we have served 52 clients, and our sustained interaction of clients is foundation for good performance. The fair value of our investment in portfolio company stood at approximately [ INR 22.6 ] million as on 31st March 2022 as compared to [ INR 31.6 ] million on 31st March 2021. Our portfolio companies began by investing new opportunities to start with Fortigo. Fortigo's ARR increased rapidly in the sequential quarter basis and crossed INR 100 crores in Q2 despite the third COVID wave. Further SaaS solution for enterprise glass transport management system commenced in Q4 and will be implemented in the near future. Based on the above, it expects that the first half of FY '23 will experience an uptick of our H1 FY '22 volumes. We hope Auto-SBT platform have been upgraded with new interactive features and have added multiple digital languages pattern. This has led to a 20x growth in revenue from the first SBT. It's next-generation year-on-year platform as doing launch, which are the greatest functionalities in terms of user insight, performance and investments. We hope we recorded a 3x growth in revenue in FY '22 and this FY '22 revenue is expected to increase our FY '22 levels. Woovly enables INR 7.2 million users to shop socially with the help of about 28,000 content creators. Around 13,000 influences create short video contents, resulting into 298 million videos per month. It has clocked a GMV ARR of about INR 9 million, which has doubled in Q4 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. PSM, the other portfolio company, PSM, the star in me, is a global carrier advanced platform for women and a diversity partner for organization. It has increased traction by signing a large global company [ corporate ] clients. PSM saw a steady [ revenue ] momentum in FY '22, which is continuing in FY '23 as well. Pencil a brand of 1.6 technology private limited. Pencil helps writers become author and sell their books, books as an [indiscernible] paperback globally via it's technology platform. Its technology enables writers to write better using AI-enabled. [indiscernible] core and self-OTT platforms and studios. [indiscernible] on its platform, its monthly user-based, exceeds 20% user growth on a month-on-month basis over the past year. And now it has a community of about 22,000 writer containers. This platform has enabled publishing of 1000 books within a year of its launch. Further the entire piece of content has already been published in 65-plus languages across 80-plus countries, and this traction is expected to continue in the future. Coming to our subsidiaries, Signal Analytics Private Limited a majority on subsidiary of the company, has invested in Soltrack, which is engaged in content creation. Signal now holds 54.75 sold tracks. Both the businesses are expected to work closer and develop synergies. This is a significant even post the balance sheet date. Our Board has approved investment into Accelerated Learning EduTech Private Limited, also known as SOAL, School of Accelerated Learning, to an extent of 14% on a fully valuated basis. [indiscernible] the cash contribution and the balances for that valuable services. Sol is an upscaling start-up that designs and runs cohort-based courses, which have students kickstart their carrier in engineering and design irrespective of the background. My colleagues [indiscernible] above the start-up during [indiscernible]. Now let me come to outlook for the fiscal 2022. We see a promising growth in our portfolio companies given that they're focusing on unaddressed areas of the economy. We expect our investment including in Fortigo, Mihup, Woovly, Signal, operating to expand their access and reach and enter the next generation of growth. Our dual focus on our start-up as well as our tremendous achievements makes us fairly confident of EBITDA profitability in FY '23. With this, now I request Ravi to open the floor for questions.

[Operator Instructions] The first question is from the line of Abhishek Anand, individual investor.

Can you hear me? Hello?

Yes, we can hear you.

So my first question is on the U.K. subsidiary. So when we receive in the manner which we had expected, what to be received in legal care? What were the first impression by the ecosystem on our incorporation in the U.K. So could you please throw some light on this one? These are pieces basically the U.K. subsidiary is planning, is planning according to our plans.

Madhu, why don't you take this question and explain the U.K. plans to him.

Sure, Sandip. Abhishek, the plans for U.K. are progressing as planned. We started the ATP there. We got done with incorporation. And it took some time to get the bank accounts and all that in place, both accounts of COVID and the increased KYC processes. But suffice it to say that all of that is behind us, and now the entity is fully operational. We are in the process of hiring a senior personnel for the business development. And I think our plans for the next couple of several months very much in place.

So does it mean that we haven't yet started to take in some orders, right?

Yes. We are poised to take in more orders and adjust the orders, but we will be also trying to rather we'll be replicating what we've been doing in India on the venture side. So we initiate the dialogue with start-up entities, also groups of accelerators to start of the ecosystem in our case. And once we have our business development team in place, I think there'll be points for the -- taking on clients, both on the services side and also looking at ventures, which essentially the portfolio for us.

And from then, are we expecting to see some traction of this one from when are we starting to execute any work based from the U.K. subsidiary?

Sorry, [indiscernible] you already on this. Go on Madhu, I just wanted to mention that.

Yes, go ahead, Sandip.

No, I said that [ 2 reps ] are already underway. We have started it by remotely doing it. But from the U.K. direct approach-wise, we have not started. We're waiting for the right structure to come in, which Madhu as you said. Once that business development man we will identify, he comes and owns up, then we want to hand it over to him. So there's no [ fundings ] in between.

Wonderful. Okay. Thanks for that explanation. And my second question is on Signal analytics. So you did mention now, you did commented on this one in the past. But in terms of the elements of the value chain of [ EPEC ], so which elements of this value chain have you present Signal Analytics? I'm not -- I'm sure that we're not trying to do that in the [indiscernible], right? But...

No. No, no, no. We had clearly said that this is for peripheral education. We can go through the older concalls and through the concept papers we have to take. But briefly to summarize again for you: broadly, we are looking at interesting content by modernizing the content itself to use current technology elements instead of trying to insert a good-looking video and so this is technology in terms of that using the [ STM ] video, we are using game engine-based video. Those are the kind of things we are trying to explore. That's from the content exploration part of it. Then there we are trying to do something called the subscription business, which is a fiducial element where our textile and technology work at a pace. That is a company we are looking for. We have some ideas. We have shortly received some start-ups. But the progression was first will be the content company, then we will look at the subscription company and further on to 2 other elements of gaming and smart price.

Okay. And one last thing on the products. So are we envisaging to also build up everything in a stream using our products, right? If yes...

So as I said before, we are looking at focusing on the product from third quarter of this year. So that would be on track. We had, that from first quarter of this year, we will be focusing on making sure that our services part is set and running like a well-oiled machine. We have done that. We are on track for making it more stable. Focusing on that, we have distributed work. And we will have that focus on to the products from third quarter.

And one last question on the products. So are we trying to bank on the same products that we have, for instance, it start, it might expand? Or are we going to come from Q3 onwards is the difference of our products?

It may be a mix of both. Please remember that these are component stack. We are not trying to make sure that it's like an off-the-shelf product for everyone. There could be a product like that. But right now, these are more component stack, which are more developer-friendly or actually pretty appropriate for this new code era that is coming. So I think we are going to hit it at the right time.

Right. Okay. So I was just wondering from an outsider point of view. For instance, this stack, largely predominantly -- you did mention in the website that it's -- the deployment in elections et cetera. So I was just wondering why didn't you able to deploy this stack so far? There has been a number of elections, which have already been...

We have taken projects analysis of election towers that we have used this. That's how these products are coming to being.

Okay. But those, could we...

See, we are not trying to sell it as a product itself because that's a different journey. Right now, we are saying that this is the future. If there are developers who are eager and keen, and that's one of cases, mostly, it's our own internal use as of now.

Next question is from the line of Ishit Desai, individual investor.

Mr. Sandip, I think you mentioned in the last call that -- so the portfolio companies and start-up portfolio companies have reached to that level of 6, 7 years of holding where you probably look to start exploring [ habits ] in one of them. So any progress on any of the portfolio companies? Any negotiations we have done on that part?

Do you think it's the right time to do it now? I mean everything has gone very well. So I guess -- again, as I have said, we have to play it by the year. Things change. And that's exactly why we always refused to put a line in the sand on time because that's exactly the kind of dynamic nature that happens. But that's the reason we might have core progress and what really matters for the setup and for us, which is revenue and how much we have stuck to plan. We got some money. We change plans dynamically. We are back on track. That's what matters, how we are able to leverage resources and environmental opportunities the best way we can.

Understood. And sir, on extension on that question, right, I mean, I think you mentioned not the best time to look at it bit and all. What's the impact on our portfolio companies? I mean investor activity, of course, is like, it's very much probably, you hear a buzz around that. If you could really bifurcate into...

Fortunately, for us, none of our start-ups are the bond types, right? So I don't think we are that badly affected. When a whole forest is on fire, not only the big cheese, but even the bush gets a bit of the flame or the neighborhood also gets a bit of the burn from just the heat, so that will happen a bit. The general environment and sentiment will be down. And maybe there will be a resurgence of interest in these areas of funding. That could be the silver lining for the spot. We don't know yet. Right now people are in shock.

So if you were to kind of bifurcate into 3 categories, right? So one is like companies are looking Series B and about probably, right? And second part...

It is not that simple. It's not that simple. It's also the category they're in. Correct? One example, I think, for example, logistics and all will suddenly get renewed interest. Certainly, we will go off from SaaS and start saying "okay logistics looks interesting". Deep tech will certainly be interesting, right? So -- but at the same time, social intake may itself become taboo. Things can happen. So we have to get by that. It's not about Series A or Series B. It's -- sorry?

Largely, if you look at on a -- I mean there's no substantial impact on our portfolio companies specifically in terms of activity trackers or interest shown by investors.

We have talked to each of the entrepreneurs post this debacle's happening. I think they are well stashed for the moment, firstly. And secondly, the businesses are doing good. As long as that's happening, I think in any time when you are doing good business, money is never a problem. Valuations maybe not up to your expectations and how the market thinks widely and all, and I'm never a person for that. It's about value and it's always about fairness.

Correct. Correct. And sir, a couple of new start-ups coming for portfolio, which are kind of about to hit the product side, okay? One is Catailyst and other is Firstsense. So if you could throw some light on how that interactions took shaping up on that?

Pretty good. Catailyst actually have signed up a few of its first customers already. So pretty good progress. We didn't expect customer onboarding so fast, but it's happening. So the product had a latent need, and we are discovering that. So we're just trying to see, instead of going right away, we are probably saying that we're seeing something and maybe there's a bigger market. So we are replanning and re-strategizing as to how to approach the market best. And I think what we had planned was from July, which somehow is good for the pharma industry, for some odd reason, she wants to go post middle of July with a [ full house ]. So that's on the other one front. Firstsense, we are doing a lot of pilots, which I think if you follow a lot of LinkedIn requirements of [indiscernible], I also sort of like it or something there own posts, you would be aware. So we have put it into 2, 3 colleges. We have tried it in some hospital in 2, 3 different use cases. And there are some things in the pipeline which I can't discuss right now, which essentially will give us some interesting kind of performance-oriented POCs. Where if the POC is successful, it means it's a contract. So we are working on some of those frameworks.

And last one on the Signal Analytics side. So you mentioned about the 4 pillars around which you are planning to work. So any time lines in terms of how we are going to roll out, what phase are we looking at right now..

I think everything together -- yes, we have an overall time line. But see, again, we will wait for the right [ time ]. That's the first requirement, right? But overall, we are looking at it dynamically. I think in a 0- to 21-month time frame, we have to make sure all these 4 are working in some way or the other. It may be that one of them is just in an [indiscernible] stage and some on is the mature stage. But content was a good -- we are always very clear that content has to be the first piece because that sets your strategy, that sets your -- creative part of it very clearly. And that is how having everything will be, right? And the second part was content is, hopefully, a very early cash cow. So we should be able to monetize content very fast from since we have started.

Understood, sir. And in your acquisition of [ Slate ], sir, the company -- you had mentioned that the company has a turnover -- doesn't have any turnover. When I was looking at -- referring to your website, they already have a production house, which is catering to certain clients. So is that, that the promoters are going to work under ties...

That was studios. That was studios. So that they're closing down. They're a very good production house, but they didn't have the creative juice, right? So we are bringing that in because we needed execution people. We didn't have experience in that part. We didn't know how to operate an AV machine or do editing properly and all. These guys have that skill and they have immense creative talent. Once you give them the story, they're superb. But they never tried the other part. So we are giving some time for that part. But as I said, I do believe we'll hit revenue very fast in this one.

Okay. So the money we are putting for the production studios as well as these entrepreneurs, right? That's what...

Srini?

Just to address. Soltrack Studio Private Limited is a entity where we are investing. Basically, this company was incorporated by using founders like Soltrack Production. And post incorporation of this entity, all the creative work which has been developed in Soltrack's production has bought back by this new entity, all the new creatives and the founders are going to be in this Soltrack Studios Private Limited in this Signal I have invested.

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

Yes. So you have mentioned that due to resignation of one of the directors, we have decided to call off one of the [ universal ] proposals. So my question is that what was the rationale for investment in the first place? And as I can see about our latest acquisition, like Sol, so even Mr. Srinivas Kollipara is one of the [indiscernible] as well. So do we have the similar risk here as well?

So just to answer that, the -- one of the entity, which is Singapore entity where we are planning to take substantial strict and where Suman goes also one of the majority shareholders, we were planning to build the innovation center for Singapore, et cetera. But now since Suman has taken up a job and is also working in the IT sector, there's a conflict of interest. That's the reason why we have called off that investment, yes. And as far as the sale is concerned, Srinivas Kollipara is one of a individual investors holding a very minority share. We don't have risk in this.

All right. Noted, sir. And as I can see, the expected completion date is mentioned as March 2025. So like, I would like to know why -- like why would it take so long.

So basically, if you look at the safest [indiscernible] picks up, the majority 11% is coming from the advisors. So advisories are close to about [ 18 to 24 ] months. So over the period of time, this [indiscernible]. So on top 14%, we are investing 3% in form of cash, and 3% would be issued upfront and the balance would be issued in 9 -- over the 9 installments.

Just to be clear, the product will be not finished, but it will keep on getting finished because it's already a live product. There are already customers. We'll keep on improving it. This is the engagement period for what we are calling the first phase, and that's what we have the market is. It's not like we are taking the product off the market and will come back again on 2025.

The next question is from the line of Kunal Dinesh Bihani, individual investor. The line for the current participant has got disconnected. We'll move on to the next question from the line of Milan Govind, individual investor.

I have a question on the [indiscernible]. On November, we declared that we [indiscernible]. But still in the later...

Can you repeat that -- can you just repeat what you said? I missed what the topic you were saying.

Yes. It was not -- we were not in.

In the [ SAPI ], you said we have diluted the space. But in the latest report, it is coming out as a wholly owned subsidiary.

So sorry, we have that -- when we say wholly owned subsidiary, like we have diluted about 8%, 9%, but still we own majority, 91%. So it was mentioned in that context.

That is fine. But even if that is the case, the proceeds of that dilution is not reflecting in the finance. Can you please kindly update? It's supposed to be...

Whatever dilution -- whatever amount that we have received is capital nature. So it's appearing in the share capital and on the reserves and surplus of the Signal balance sheet.

Okay. Just to explain to you, if you're expecting that valuation to reflect on to Xelpmoc in the portfolio, that's not going to happen. Subsidiaries of a different nature, where whatever money or whatever investment we are putting, our valuation stays locked at that. Still, it has some other part. And all we say that we are not in a subsidiary, and we are having it as an equity on to that part.

So fair value of assets, we are reporting only to the entity, which is not an associativity or which is not a subsidiary of Xelpmoc.

So to get the right thing, we have to actually...

A subsidiary assisted entity and subsidiary is always reported a cost and it comes in consolidation.

So if you have to calculate the overall wealth of wealth, then you have to actually go there and do the maths for each of the subsidiaries and then add it back.

If that is the case, it should have been reflected in the investor presentation that the current value of the [ SAPI ] should have been like close to 50 crore, right? That we don't see.

No. That's the reason why -- what we are saying is as per the accounting standard, we are reporting our associate and subsidiary investment cost. That is the reason why...

What he is saying is that we can have one line saying the current valuation of this subsidiary is going to. Maybe that's the point he was trying to make.

Mr. Sandipan, the point is that there is the current valuation, but it was still showing it as a worldwide numbers. It's not reflecting the new numbers. So...

So basically, in the value of portfolio slide, which is a Slide #22 in the investor deck Signal Analytics Private Limited, I'm showing the cost of investment has been met, and fair value as on 31st March '22 has been met. The reason for this reflection is we are reporting subsidiaries at cost only. We are not showing there fair market value.

Brother, we cannot. That's the accounting law.

Yes.

Okay. One appreciation goes to the brand name and the company name that has got incorporated, but there is one more thing which many of the investors have been asking for the last close to 9 months or more than a year. That is in terms of from thousands to per lakh or crore. Why do we have some kind of a resistance changing with the numbering format? Or is it that you don't want to...

No. It's not the question of resistance. When we spoke to auditors, et cetera. They were more comfortable in reporting numbers in this particular format.

But the investors are not okay. Right?

The early numbers and the costs are on the lower side, I mean -- I'm sorry, you're not audible. Can you repeat your question once again please?

I have a basic question. Are we trying to satisfy the investors' requests? Or are we here to satisfy the auditors' request?

So whatever the practice as suggested by the financial consultants, we are going ahead with that.

I don't think so. If that is the case, why are we...

We will take it up with them, and we will relocate it once again.

No. This topic was that from last one year -- close to about a year, but we are sticking on to that. And of course, I was holding a question for a last couple of months. I was holding it just because maybe in between now in the year, you don't want to change it. So that's the reason I was holding on to it. But while I see this is repeating even after the year-end closure, I suppose to ask this question on a little more harsher way. Is it -- if that is the case, doesn't want to change at all, then it has to be told to the investor. They don't want to change it. That's how we operate. If you are interested you stay or else you get out.

We heard you. We got your point. We will do look at it once again. Thank you.

We'll take the next question from the line of Kunal Dinesh Bihani, individual investor.

Am I audible?

Yes.

Yes, you are. Go ahead.

Sure. So I have questions around the business and the financial side. So I'll go with the business part first. I'm joining the combo last 2, 3 quarters. So pardon if I missed something over there. Just wanted to check on the LMS platform. Is there a progress in terms of the number schools, number of schools we are approaching? Or have you changed the strategy around that? That's question one.

No. I think that direct has not really borne fruit. We had to abandon it.

Okay. Fair enough. So except that one change...

The platform is there. But at this point of time, schools are completely in a [ easy way ]. They have no strategy. Till they settle down, it's not worth because too much changes are coming in too frequently. It was not worth it. The product was going haywire. So we decided to took a break to let the school settle down. Once they are done, then we'll go back again and stabilize situation, then we'll make a steady product.

Okay. Fair enough. My second question is around what is the share of the revenue which we get from our start-up ecosystem companies where we take equity or we support on our hybrid model versus the direct client, which pay us for the work we do without any equity on. If you can elaborate on that?

Srini? Srini?

Right now, whatever revenues that we are receiving, these are largely -- there is no revenue share. It's more on upfront for whatever technology that we are building.

How was the percentage between our portfolio companies and the outside world?

Portfolio companies in outside would be the ratio of about 40-60.

40 in the outside world, right?

Saving the 60, outside world. Well, please remember, the portfolio world is done at a very subsidized cost. So maybe 80% effort is going there, but your revenue will still be 40%.

Okay. Got it. Fair enough. One thing, yes, -- there is a lot of chatter around start-up valuations, funding being dried up and all and I think a couple of questions has been asked around it. Just one theme which I'm trying to understand whatever start-up which we are looking at as part of the larger ecosystem to work with or to invest in. Do we have a view that we should wait out for some time to see if we can get a better valuation to invest that? Or are we just going on with the plan depending on our progress?

We are going -- whenever we get a good entrepreneur, whenever we get a business we believe in, we will invest at what we consider fair value. We have never believed in its hyper valuation and all. Ours are not the rocket science, the spitfires. We have been stable slow-growing start-ups. We look at the 780 horizon. So I don't think anything in our strategy changes, except for, of course, we have to be careful because the environment is to be volatile and whatever -- collateral damage can happen. We have to put a [ toss ] from somewhere. But fundamentally, our ideologies, our businesses, I don't think fundamentally anything has changed as because of this overhype in breaking up on it.

Correct. But the reason I'm asking is a lot of the fair value, whatever you put in our presentations or on our books, I don't know how the accounting works. Somewhere down the line, a lot of those companies are part of the ecosystem, right? We might have invested at a certain... Let me just complete, sir, please. All I'm trying to understand is we also have a portfolio of companies where the fair value around accounting standard has been bumped up. Whether we agree or not, we are still part of the same ecosystem. Because as someone said, 80% of our effort goes towards those companies even if we realize half the revenue. So that is my rationale of asking, right, because end of the day, we effect...

Please go ahead.

Yes. So that is the reason my question for asking is valuations will matter because the valuation this have put right now. I'm sure another quarter is -- I don't know. Nobody can predict if the carnage goes on, depending on whatever our fair value will also come down. So when we look at new start-ups to deal with, is there a sense in terms of -- I'm not seeing to hold out for a quarter and all, but just trying to see whether it will make sense financially. Technologically, I am not questioning on the financial side to get a better deal. That's all.

So let me point out fundamental beliefs, right? You saw a burnout in the stock market of certain types of start-ups, which got listed, it's showing value and then they completely went up, right? Stock market, everyone were affected. Fair enough. But even within that, delivery IPO still went and on the first day, we have a positive within the company. So certain sectors, certain businesses, certain things which are making profit are probably going to get honored. And we believe that we have chosen those sort of nonglamorous pretty sensible businesses, and hence, we have of confidence. Now coming to your point of valuations and fair market valuations, yes, there are bump-ups. But that's actually because some -- we never bump up, we, in fact, bumped down when we believe that despite the valuation they have got, business is not doing well. We have gone ahead and bumped down, so we used to bumped down also. The bump-downs are completely due to us. Trust me, the bump-ups are always due to an external financial event, not due to us. So it has always been happening over the last 7 years. Now it is coming into the limelight, but it has always been all as an average section. And that will continue to happen. Some of the start-ups may suffer, though I think very few of our start-ups have susceptibility to this carnage. But then, yes, as you said, it can drag the other sectors also just for any of it. No one can predict. I also can't. But again, the probability seems to go. That's all.

Got it. Fair enough to point again. Just last couple of questions. I would see a steady sale by promoters quarter-on-quarter basis. So are we expecting this trend to continue? But I'm just having a look...

What do you say? You sell by promoters?

And the promoter growth, only one is -- no. So let me just...

So probably back. That also one promoter because you have personally.

No. No, fair enough, sir. I am not questioning the nature. I'm just asking in -- I think probably if I look at over low of September from a high of 58.17, we are at 54.25 at a promoter entity. For whatever reason, I'm just saying that...

No. We diluted the whole company to get in about 27 crores, a 5% valuation.

There were 2 things which have happened. One is we have raised differential -- we have issued differential allotment. And also, there were resorts which were exercised every quarter-on-quarter basis. So as and when there is a brand which has been given and the employee exercises, additional shares are issued. So automatically promoter holding will come down.

One last question. We have a revenue which is down 40% to 45% on a Y-o-Y basis. So if I just look at the year-end, we have a revenue of [ 9.3 cr ]. Correct me if I'm reading it right, the figure are in...

You're right.

Correct? On this base of 9.3, we have a bad debt plus doubtful debt of around 3.5 cr -- 3.6 cr. That looks relatively harder to me, given the base, I mean, on a 9 to 10 cr base, we have a bad debt plus doubtful debt, which I'm assuming is all part of the same revenue of around 3.6 cr. That's around 30% of the revenues. Am I looking at this right, basically?

No. No -- yes. Basically just to highlight on the doubtful debt like majority is coming from one entity, where we have done us with this contract. And it is not that just coming from this financial year. Certain services which are being rendered in 2021 and in case if anybody who does not play within about 9 months, even though we believe that still we can lever as a good practice, we go and provide for doubtful debt. So on account of that, you are seeing that the bump up in doubtful debt.

Okay. That you're saying is for the 2.1 cr, right, the doubtful debt?

Yes. And they were also on intangibles, which were created and those intangibles were developed before COVID, especially for a couple of restaurants. But we are seeing this pandemic were up and the complete resistance as a business has taken a different model. So even those intangibles which you're work in progress, even we have written off those intangibles.

Okay. Fair enough. So just one last thing on the [indiscernible]. Do you think there is a chance of recovery or settling it midway during this current financial year? Or will this be spilling over?

No. No. Absolutely, there are fair chances of recovery. But what I said as a good practice, we started providing even if it is not resumed. Even though we had meetings lasting last one week or so, but still we go ahead and [indiscernible] for doubtful debt. As and when it recovers we will [indiscernible].

The next question is from the line of Rudresh Kalyani, individual investor.

Am I audible?

Yes, sir.

Yes, we can hear you.

For one of the previous question, we said that we will be investing in branches in 9 installments until 2025. So do we have milestone check for that? How is that? When will you invest...

So basically. No. It is not a milestone check. So as I said that we are picking up 14% CCPS in the sole entity. Out of that, 6% would be allotted upfront on Mihup or within about 15 to 20 days of signing of the asset. The last balance, 8%, would be issued over the period of 9 installments, okay? And those are on a quarterly basis. Those are more on a time line basis, not on a milestone basis.

Okay. And my next question is that you said that in the previous concalls, you said that we will be maintaining revenues from the service sector. But obviously we start generating revenue from the third quarter. What is the reason for that delay? I just wanted to...

No. No, no. I said we will focus on the products from third quarter. The revenue from services is on from first quarter. I think you misunderstood.

So you mean that from the first quarter, we will see revenue generating from the service sector as well?

Yes.

Okay. Okay. My next question is, since we talked about exit as well. So what is the management plan once we get the exit amount? Are we going to buy that phase or do dividends or bonus...

We are not going to do any buyback or anything. We are going to reinvest that back into more creative stuff.

We will take it up with the Board, we will debate, discussing the Board. And whatever the Board approves, we will follow accordingly. But yes, as a management, we will put forward our statistic. So whatever Board approves, we will go acting that.

[Operator Instructions] The next question is from the line of Ashish Malani, individual investor.

Am I audible?

Yes, sir.

Yes. Yes, you are audible.

So my question is more on the lines of how we are looking to become at least self-sufficient in terms of financial basis, where at least even if they're not profitable, like the services part is more like oxygen that we need to live, but like we don't live for the oxygen. We are more looking to be partnering with other companies. So what is the time line do you see where you think that we will be at a place where at least the company will be in a state where it is not going in losses?

Not only losses. We plan to turn around that and be substation between this financial year itself. I know it may sound like a tall [ thing ], but I think we will do it. And post that, we -- [ one tranche ] of the company, moving like a normal software services company with its natural growth trajectory.

Okay. My second question is more around what you had mentioned earlier, that none of our companies are doing a lot of cash burn. But from what I understand, a couple of companies, particularly Google India, I think, had plans to raise money around mid-time this year, which right now is a bad time for investments. But how confident are you about your investment in the company? And do you see -- are you confident that they have enough burn for the runway for at least next 6 months and can survive this next 6 to 12 months? Even if in case...

Yes. I think they can. I think they can. And secondly, by investors and all, we don't think some of the investors will back down if there is a bridge round [indiscernible] or something.

The next question is from the line of Ishit Desai, individual investor.

So sir, my follow-up question is on School of Accelerated Learning, the investments which we have made. Just back of the annual calculation, the premium valuation of both cash component as well as services put together works out to be roughly INR 36 crore. So is that understanding correct?

Srini is something that you should take up now.

Yes. Your understanding is right on the valuation.

Perfect. Great. And what specific value add is going to come on Xelpmoc side even though it's already a running product? So I mean it's a substantial chunk of advisory equity, right, which has been put in the company, which has already raised money from some of the investors. So what value add it is going to brings to this company, especially any discussions around that?

Sure. This is Srinivas. Maybe I can take this one. One of the things that we've realized that -- as you've probably seen, I was a very early investor into this company when they literally have just started out. Very, very small. It was more the encouraging them. But essentially, it's this: yes, they've raised money and yes, they've got a product that's working well. But the strength of Sol, especially with the team that we have there, it's not only technology, also the broad understanding of what's happening in the world and how can we expand their business model. And so they're looking to us not only to build out much deeper technologies using the strength that we have today. It's also about how do we get the new customers, how do we define new revenue streams that are potentially out there. There's many things that we believe we will add value to them, and they're very clear that we add that value also.

Okay. Okay, okay. And sir, any specific update on Slate and Pencil because I see both Slate stake is diluted a bit and Pencil we've added some money? So are these part of fresh downs or have the invested independently to those companies?

So basically, to answer your question, if you look at Pencil also like as and when we enter into end contract with the start-ups, the equity is allotted towards over the period of the contract. Now in case of Pencil the contract was for a period of 3 years. So every quarter, they do allot some equity. That's the reason why you will see an increase in stake in as far as venture is concerned. And as far as Slate is concerned, Slate, we have participated in one round of investment last year, somewhere in the month of June, July.

Okay. But that was carried by us solely or it was a larger round we are part of?

No. It was a part of a round and everybody invested on a proportional basis. It was sort of a breakdown.

Understood. Understood, sir. Okay. Then my question, just last suggestion. In our presentation on portfolio companies, I mean we see the same set of content in terms of what companies are doing. If there is a possibility of having any metrics around it, right, which Mr. Srini mentioned during the opening of the call, like Fortigo doing a growth ARR or Mihup, [indiscernible]. So is there any possibility of having either a separate presentation on portfolio companies or maybe a...

So basically, what we can do is we can check with the portfolio companies. Which in a portfolio company is comfortable, maybe we can keep on updating their decks on our website itself so that.

Because most of these companies actually share, would be sharing quarterly on key upgrades with most of their investors, and I'm sure you would also be a part of it. So whatever on that and...

We are a part of it, but we also want to respect their stealth. Sometimes they're too close to something. They don't want that to be known in the full market. So we essentially do a little bit of a communication filtering onto that part.

I understand, sir. I understand. But whatever on best take, whatever is possible it can be communicated with them...

Whatever they agree to, we'll put it up.

The next question is from the line of Ankur from RIL.

Actually, my question is that our focus on HEAL scheme. But do you have any exposure currently to agricultural sector?

We have one of our start-ups, which is doing steady job in Bengal. And post that, we have been more or less waiting because we learn certain things because of our exposure to government sector for the first time. And the next batch will probably be doing maybe in a year or so, not now at the moment.

The next question is from the line of Milan Govind, individual investor.

Mr. Sandipan, you released a press release on the U.K. [indiscernible], is it right, the investment of about INR 3.5 crore? So could you please throw some light on what is the time line which we are planning on? And I also understand there is about [150 ] employment opportunity. So would like to know about -- a little more about that on the time lines.

Madhu. Your question Madhu.

Yes. So the investment amount that we had declared the U.K. government is spent over 3-year period that initial amount for the investments of starting the operation. The headcount, unfortunately, have been misrepresented. We had mentioned very clearly that we would be hiring the presales and sales by end of this calendar year, which would be about -- close to about 10 employees. And then eventually, we will build our. So that's just to clarify on the numbers.

Are we talking about still the $3.5 million? If so, what is the time line...

Over -- yes, that's spread over a period of 3 years.

Oh, okay. That information was not very clear on the news release. So I thought I'd just clarify here. But I do have a question. While we talk about the $3.5 million, that is approximately INR 27 crore, INR 28 crore. But whatever the money left with us or the new funds which we got. That amount itself is only about the same amount, right? So are we confident that we want to invest all the [ tons got ] rates really investing in the U.K. market then?

So why are you assuming that in 3 years, we'll not have other sources of funds?

I don't have a doubt, but just to clarify.

See, it's a 3 year part. That's the kind of requirement it is there to make a substantial business. Now whether the business funds itself or not, we don't know. If the business in U.K. does very well, the profit itself may be putting those money. This is the kind of expansion cost that we have to put in to make the business substantial. So how we resource the funds and all those things, that will do it. For the moment, we have allocated a significant chunk of the money we addressed for overseas allocation. That has been allocated. And that roughly is about, I guess, 40% of the same amount. So remaining 60% should come in due time. Madhu, please add.

I think that about answers what we have.

And wherever required, we have either we can raise funds to [indiscernible] all is whatever we are narrating this subject to our Board approval or we may raise funds from a third party to directly into the result U.K.

Okay. Okay. I do have a question on -- sorry.

Take your time. It's fine.

I forgot the question now in between the discussion.

No problem. You can reach out to us any time. I think nearing the closing hours, but do reach out to us whenever you remember. Okay. So we like to talk in this way. Please don't take it other way. Sometimes I know I interject finance because I get excited because the questions we like because it's a strategic in nature. These are also things that you cannot disclose, but if someone ask you can answer. So it makes them feel happy.

We'll move on to the next question from the line of Ishit Desai, individual investor.

Last question for my side. On this map, [indiscernible] one of our portfolio companies. If you could throw some light on how it is planning to raise it's [indiscernible] and then if there is any progress there.

Srini?

So right, we said [indiscernible] to provide the manpower we do the boards, et cetera. So right now, we are in process of raising funds, but they are -- still, we are able to self-sustain on whatever cash that they have raised in the last 1.5 years.

Understood. And in terms of business, but in terms of business, it's shaping up decent, not just fund raise.

Yes. Yes. I think that is a key part as the business is doing pretty good, and they have moved on to the [ big 5 ] or something pretty fast. So they are trying for more penetration and trying to go. So right now, it's used for the top-level recruitments, only they are trying to go a bit down. Of course, that has pricing elements in all -- in it. So they are trying to find that product market fit for the lower class also.

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

Thank you, everyone, for joining us. In case if you have any further queries, please do reach out to us. We will do our best to address them. And that's it from our side. Thank you once again for joining us.

Thanks, everyone. Take care and stay safe.

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