C2C Advanced System . A contribution from my side for understanding the business and its history. Got interested with the big marquee names in the RHP.
History :
C2C Advanced Systems started its root as dB Systems in 2006-2008
2008-2018:
dB Systems Inc. was set up in 2008 to take up retro fitting services for the Indian Navy ( Source : :: dB Systems Inc :: ) .
The company forged strategic partnerships with M/s Offshore Systems Limited (OSI) , Canada and MDA Corporation, Canada. which provided dB Systems Inc. with navigation and domain awareness and coastal surveillance products to meet requirements of these products for Indian Navy .
Company Verticals ( Source : :: dB Systems Inc ::)
- Outsourced Repairs & Reverse Engineering : Outsourced Repairs and Reverse Engineering vertical aims to deploy the collective expertise of the group companies to resolve repair bottlenecks faced by customer and support obsolescence management through reverse engineering .
It means the company was basically sourcing repair products from its strategic Canadian partner OSI and then leveraging it for repair of Indian Navy and in some cases due to parts being obsolescent figuring out workarounds to repair the warships
- Embedded Software Development vertical focuses on design and development of embedded software. . Activities like developing embedded software to replace legacy code, assist in understanding / refining / modifying deployed code, developing new software based systems to enhance the operational effectiveness of deployed forces etc. is taken up by the company.
This is the business which still remains with C2C and which is what the investors are excited about. The Combat Management Systems ( CMS ) can be considered as the heart and brain of the warship. This technology is only available with a handful ( less than 10 companies ) across the globe and it is critical as this piece of software which integrates with all the systems and sensors on a warship and acts as a control and command center which can decide the tactical moves the warship to monitor and defend itself from threats. These embedded systems can be considered the most coveted technology of a warship and its IP would be guarded secrets and could be the deemed as national assets which the handful of companies would own and would go at lengths to protect it
Brochure of db Systems products based on listing on Indiamart (https://www.indiamart.com/dbsystemsinc/db-systems-inc.pdf )
Now the question arises how did dbSystems a small company based out of Bangalore get skills to develop this critical piece of software ?
The answer could be found in the following article from 2015 ( Arming the Navy with hi-tech solutions - The Hindu BusinessLine )
Weapons and Electronics Systems Engineering Establishment (WESEE) , Indian Navy and DRDO engineers entered into joint development with a European CMS vendor and after working on the project for a decade, the first CMS was built in the early 1980s to 1990s.
db Systems co founder Commander Kuriyedath Ramesh was one of the founding members of the Indian Navy indigenous CMS system .
Another cofounder Commander LSS Narendra also left Indian Navy at around the same time to join dbSystems .
These 2 key person basically had the entire knowledge of the hardware sub systems , the integration and the software piece required to build an end 2 end CMS system . Whether Indian Navy software IP’s were compromised can be anyone guess but then by 2015 db Systems merely a 3 to 4 year old company claimed that they have the capability to design a complete CMS and already had a fully-built CMS in its repository and now are a part of one of the few companies across the globe to have their own CMS system.
Interesting thing to note , is that while the Company had a developed CMS system it has not been able to make in roads directly to supply to Indian Navy for an End2End system since the last 9 years and at best had to resort to supplying the subsystems to Tier-1 companies . Probable reasons could be either Indian Navy and WESEE did not trust dbSystems ( IP infringement ??) or could be their CMS was not upto date with Indian Navys requirement
2018-19 :
Feb 2018 : The 2 co-founders setup a the company C2C – DB Systems Private Limited which is now known as C2C Advanced Systems Limited.
2018 -19 : This was pivotal as this incorporation was just before the company received its first export order to supply end to end CMS to Marine Crest Technologies & T7 Marine SDN BHD for the Royal Malaysian Navy (RMN) for its 2 older warships KD Leiku and KD Jebat ( These 2 warships were commissioned in 1999 and were having CMS from Bae Systems and were due for retrofitting ) . RMN wanted to create it indigenous CMS just like Indian Navy , so this order to C2C was probably to create a customized version of CMS for Malaysian Navy and transfer part of the tech to RMN via Marine Crest Technologies .
The point to note that the C2C CMS was fitted on a 2 decade old warship with older technology and sensors and not on their latest warships so this was probably to test C2C CMS systems as well as get the technology transferred .
The CMS system was called as “Vibrant 01” system which replaced the “Nautis F” system (of BAE Systems origins) which had become obsolete after almost 25 years of operational service. Bae Systems had offered the Nautis 4 CMS to replace the current Nautis F CMS but it was deemed as too costly by RMN.
However , it seems that the company has struggled to get the orders from Malaysian Navy even after 6 years . This could be due to their first two warships are being refitted so probably things are progressing at a very slow pace . Refer this 2024 article which mentions some refits are still ongoing for KD Jebat .
This could mean for reasons unknown to us, even the CMS software adoption for Malaysian Navy is going on a snails pace.
2022-2023 : Getting Krishna (Sandy K Chandra) Chandra on Board as Managing Director and CEO . As per DRHP it wrongly mentions she instead of “He” ‘She holds a Bachelors degree in Social Sciences from the Madras University and a Masters degree in Business Administration from the Rutgers University, New Jersey, USA. She has 18 years of experience as a technology licensing specialist and has about 10 years’ experience as a digital design specialist’
Probably C2C founders Kuriyedath Ramesh & LSS Narendra realized that even though they have had mastered the tech capabilities of creating a CMS , probably selling and marketing their company was not their forte . Inspite of spending over a decade , their CMS was struggling acceptance against the Global competitors and Lakshmi Chandra was the boost they needed . As per Laksmi Chandra linkedin Bio , he is a Founder and Chairman “Secure Universe capital partners” a Private equity and investment bank focused on next generation technologies.
Surely he knows to sell stuff being a PE investor. So as the next step , born was the latest version of the company C2C Advanced Systems . Recipe for success add all the trending buzz words in the market and give C2C a New Brand Image
Step 1 : Change the logo and website
Old Logo
New Logo
Step 2 : Change Website
Old Website : C2C DB Systems | Home
New Website : https://c2c-as.com/
See the huge difference
Step 3 : Lets add all the buzz words to the Company
- Artificial Intelligence :
- Data Science and Analysis
- Industry 4.0 practises
- Lastly Command and Control Systems ( Ironically the company was built over a decade in C2C and sadly thats the last tile for the company because its not a buzz word known to investors) .
Some more buzz words
“Predictive Insights to Avoid Mishaps Before They Happen
Enhancing Business Productivity with Digital Automation
Digital Tools for Business Empowerment
Advanced Robotics and Automation
Smart ERP Solutions”
How many of these words fit the narrative that the company had built over the last 10 years as a defense organization.
Step 4 : Lets add more industries and buzzwords . We are not just serving Navy we have across industries
Step 5 : Lets add Products ( still figuring out )
Maybe I can help here with some of their upcoming and latest products courtesy India Mart again
C2C iCRM Software - i CRM Service Provider from Bengaluru - A competitor to Salesforce
C2C C2CProMGenius - A competitor to Service Now / Jira
C2C HRMSSoftware - i CRM Service Provider from Bengaluru - A competitor to Workday / SAP SuccessFactors
So , a company which was struggling for a decade in defense, now has a suite of products basically competing the best of the best SAAS based companies .
And what has C2C achieved during 2023 for its core CMS Project. The GUI for INS Vikrant was developed by C2C . So basically TASL got the contract for the CMS and the GUI possibly was built by C2C based on the LinkedIn comment
They have not been able to scale up on their Domestic Revenues as per the RHP .
2024 : Lets get the investors in before the IPO . The base is set , narrative is set , now lets promise some exponential returns to our pre ipo investors.
- Preferential Issue of 5,12,839 Shares on December 18, 2023 of face value of ₹10 at a price of ₹136
- Preferential Issue of 7,82,523 Shares on January 29, 2024 of face value of ₹10 at a price of ₹136
- Preferential Issue of 8,35,850 Shares on February 13, 2024 of face value of ₹10 at a price of ₹ 160
- Preferential Issue of 16,09,062 Shares on March 18, 2024 of face value of ₹10 at a price of ₹ 160
Transfer using Off Market Route from Promoter Group Shareholding
Conclusions
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C2C does have the end to end CMS capabilites for Warships . However , this business has failed to contribute in the past . Each End to End CMS would be atleast 30 cr revenues per warship. If the company can get even 30 warship orders in the next 3 years that vertical itself can generate over 900 cr in revenues. Defense is lumpy and some of the projects information could be classified , so this needs to be converted into revenues before jumping into conclusions and believing management commentary
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Change of Statutory Auditors for 4 times in the last 1 year is something which needs closure scrutiny especially after getting our new PE Investor and CEO Lakshmi Chandra on board
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Utilization of IPO proceeds . Yash Technologies is known for ERP implementations like SAP / Oracle and Analytics which are not software’s core to C2C’s defense business ? https://www.yash.com/ does not even mention Defense as an Industry so utilization of funds must be closely tracked
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Exponential Increase in Employee Cost and number of employees and data of employee and employee expenses does not align
- All buzz words are to fool the markets and the investors .
One more example when Commander LSS Narendra has skipped all the buzz words slides as if he is not confident going into the details . Start Video from Time Stamp 15:33 seconds
Again at TimeStamp 22:09 Commander LSS Narendra sees that Lakshmi Chandra has dropped the call and asks the moderator to get him added. The slide “Investment Rationale” was explained by Lakshmi Chandra. Ironically , the founder who has been since 2011 feels uncomfortable walking through the slides while a PE Investor cum CEO joined in the 2022 is responsible for explaning why we should invest in C2C Advanced systems .
- Revenue breakdown between India and Exports / Working Capital Cycle and Operating Cash Flows needs to be closely monitored . Considering they are more of a software and tech play, the Cash Flow from Operations must be closely tracked . Defense is lumpy but Domestic Revenues need to improve over coming quaters
Also while the narrative is Indian Defense opening up and huge opportunities in Shipbuilding industry , the Domestic Revenues need to be monitored closely
Existing Numbers from IPO Meet
- Hard questions needs to be asked to management about all the buzz words and why are they into unrelated businesses like CRM / Ticket Management / HRMS which do not make any sense. Also , giving an industry wise breakup as they are working not only in Defense but also in other industries will let us know what is the sales contribution of the different industries mentioned