Accelya Kale Solutions-Niche & Sticky Business

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Accelya business model is a bit different but easy to understand. Unlike other Indian IT cos it’s successful n leading a product company n that too in its forte of revenue n business intelligence sector of airlines. The business is non linear not proportional to head count . Operating leverage comes into play once the top line increases due to its fixed cost which it seems is working beautifully since Accelya took it over.

It’s business is directly proportional to no of transactions taking place as its paid on per transaction basis . The key differential is the choice of Accelya as IT partner by fast growing Ethihad airlines . Ever since then the no of transactions are growing fast thus directly benefiting Accelya. Other airlines too find this opex based outcome based pricing model very attractive. Accelya besides getting steady business gets a client for 5-6 years .

Ethihad which has recently taken over Jet Airways in India has also tie up with other air lines like Air Seychelles, Air Berlin, Serbia Air, air lingers, Virgin Australia n is on lookout for others as well. This is turning very beneficial for Accelya as well

Indian IT cos want to go in for non linear business model and as such ET now had floated a news that Accelya might get sold for around 2100 cr mkt cap compared to 900 cr mkt cap.

Co doesn’t need much cash n is distributing heavy dividend n depreciating rupee is also acting as major tailwind.

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Can any Valuepicker from Pune or Mumbai attend the AGM of Accelya which has been surprisingly preponderance from November to 26 September 2013.?

We can then post a set of question to him.

Also book closure date for 40 Rs dividend has been declared from 19 Sep to 26 Sep 2013.

Seems something is cooking as per the grapevine post AGM .

A sellout can give a 20-30% upside still IMHO. Rupee depreciation has made the acquisition cheaper.

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http://www.youtube.com/watch?v=VhzV5XijXgk

Accelya video on Vivaldi card management

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I guess it is my time to get initiated, being from pune i think i can do the job, at the same time anybody else willing to join is more than welcome

rgds

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Thanks Hardtoget . Appreciate.

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Thanks and Congratulations on taking the lead Hardtoget.

Here are some questions for which we should know the answers. Due credit to seniors, whom I have tried to imitate while preparing these questions.

The company has had a great run over last few years. The sale has almost doubled from 165 cr. To 299 cr. And the net profits have grown more than 3.5 times in last three years.

    • Kindly take us through the journey and the key factors behind this growth.
  • *Kindly explain the business model of Accelya Kale. There has been a thrust in past to shift from licensing based revenue model to transaction based revenue model. What lead to this shift? What are the advantages of the transaction based model vs the licensing based model. Kindly take us through this transition and the rationale behind that.
  • *What are the challenges in the new transaction based models. Is it for Passenger revenues Accounting only or for passenger /cargo and other misc revenue accountings as well. And what are these misc revenue streams other than passenger/cargo revenue accounting.
    • The Operating Profit Margins have shot up from mid-twenties to mid-forties recently. Kindly explain the key factors behind that and How sustainable these levels are
    • Kindly share how Accelya taking over the Kale has benefitted (impacted) the business

Industry

    • Airlines is a very competitive industry. Profit margins are thin and hard to come by. What are the key challenges and issues and how accelya is helping airlines in addressing these challenges to stay on top of their numbers.
    • Who are the biggest players in the industry and competitors to accelya. What is the total market size and accelya market share…?
    • What is your strategy for increasing/retaining the market share.
  • *How does it look for next couple of years for Airline Revenue Accounting business in india and globally.s

Products & Customers.

    • Key Products- Passenger revenue Accounting(REVERA), Cargo revenue accounting(AMBER), Misc Revenue Accounting (FINESSE), Neutral fare proration (APEX), Decision Support System (EVEREST). Kindly share their contribution to revenue and other product segments. Kindly let us know where the most growth is coming from?
    • How the company has managed to create a renowned revenue accounting solution. And how difficult / easy it is for someone else to do it.
    • Apart from R&D skills to create, what does it take on the marketing PUSH side?
  • *How do go about retaining the existing customers and adding the new ones. Kindly share recent (last 6 months) customer wins and customer that left and the reasons for both.
    • Kindly give us some idea about your key customers/markets. Kindly share the revenue from top 5 customers and the average revenue /customer
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Dear Hardtoget,

I think most of the queries have been raised by Atul.You can get in touch with Omprakash & other members who too could be attending the AGM & distribute the questions so that max queries can be answered.Pl also touch base with other analysts who will be at AGM.

Otehr Pune /Mumbai Valuepickers can buy a few share of Accelya become shareholders & raise queries if possible

For my queries besides Atuls queries above

  1. Has Etihad tie up been a game changer for Accelya due to their associations with other airlines like Seychelles Air,Air berlin etc.?Has Etihad standardised on Accelya products in revenue/BI space?Will it be replicated for Jet Airways?

  2. Whats the opportunity size for the company & how scalable is the business model?

  3. What market share does Accelya has in the diff segments it operates in?

  4. Plan of chequers capital for short n long term for Accelya?

  5. Does other big ME carriers like Emirates n Qatar airways use Accelya products if Etihad is already using them?

  6. How has Accelya been helping the co post its takeover & what benefits have accrued to them?

  7. What are the risks & challenges that the company faces?

8)Is the co business directly proportional to worldwide passenger traffic & how much is the Accelya mkt share in fast growing Indian,Chinese & Middleast mkT?

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Hi Atul, Vivek

glad you have posted the questions,

Vivek

will try to follow your suggestions,thanks, could you pass the email ID of Omprakash, that way we can fix up in advance on the questions

one more thing , is there a pre-registration needed for the AGM, also i don’t own the company , so would that be needed to

Will be going thru this thread in detail & the AR as home work too

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Hardtoget I think you shud immly buy a few shares even single atleast of Accelya so that your name is there in the shareholder list & you become entitled to attend AGM.

I havent attended many AGMs as in Delhi most of the AGMs are farce.So other experienced boarders can guide on preregistration & sending queries or how to send him our proxies to attend the AGM on our behalf.

Please advise.

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i have bought 1 share to go to page agm. no pre-registration is required. you need to carry your dpid and folio number. you can print attendance form from AR or you can get them at the venue. take company secretary phone number, if you face any issue at the venue , call him. they will allow

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How to raise queries ? can we send queries by mail beforehand n expect the co to answer during AGM?

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Hi Vivek, Atul

Wondering if these questions could be put in a certain order , that would make asking them easier, also non-repetitive to the listener

I am trying to do the exercise myself, at the same time any help is appreciated

Darshit Shah has connected up & we will be meeting at the venue,

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Hardtoget,

The questionaire that I have posted, has its ordering and style borrowd from earlier questionaire from seniors. So I think that should be fine.

But I would think what comes to you naturally at that moment should be just as fine.

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Any feedback on Accelya AGM please?

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Hey Vivek,

will post my notes by 2moro

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please share update on agm

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AGM 2013 notes

Apologies, on the delay, here is my notes on the AGM

NOTE on my Notes)- it is not according to the Valuepickr questions, but in the order of whatever questions were being asked & what i could capture

The company sees no reason in keeping the cash, thus giving out as Bonus

There is a loss of one big client ( assumption-effect on business of 5-10 %)

The company is very cautious in it business decisions & they have very conservative long term plans

Transaction based business model, License model is a small part & will be lessen or remain same over time

The company is looking for recurring revenue, which is possible with the transaction based model

The company wants to have a single software for all future incremental revenue, that includes Airline Back-end financials,process & business intelligence, revenue accounting & cost management- like a one stop shop

The company is interested in leveraging the aviation industry only, by up-sell & cross-sell with customer base of Accelya & kale,That is also one of the major reason for the merger

The company did not want to disclose client & revenue per client details / revenue per solution,-as it was confidential & not to be disclosed publicly

The company mentioned many a time, that they were not an IT company & not to look on them as an average IT services company

They have an IP oriented business & the company believes that there are enough Scrabble options but limited to the industry size ie Aviation

Focus on Middle east & Asia-pacific for future growth

The sales force is still the same as it was before the merger , this was in reply to how has the merger effected the company

Acellya-Kale is 40% of the group turnover

On Competitors- they have different competitors for different solutions that they offer, no one from India only international competitors,for the outsourcing business they have Indian competitors

Theirs is a value & not cost based business model, the company emphasized that they are not into the services market, the dynamics of the outsourced services market doesn’t apply to them

60% of the Present group business comes from Europe , 60% of their clients use 1 or multiple products out of the 250/60 clients ( Aceelya-200, Kale-50-60)

On being asked about Ethihad, they said it WAS ( that is what i heard the guy say, so it differs to Omprakash note) not a game changer as some of the airlines were their clients from before

The are a stable company & this is well know for this by the markets & reflects on their relation with their clients

Dont look for 30% growth every year, but one can expect steady performance from the company

They have garnered 5-15 clients in the last 2 years

that concludes my notes,

Rgds

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Many thanks for the useful update Hardtoget. Keep up the good work.

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Has anyone received dividend of Rs40?

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Will be crefited on 10th october as per companys notice.