Hi Friends,
We have prepared a quick roughquestionnairefor today’s concall. Please add your queries and if one if participating in the con-call, plz try to cover the left queries.
Questionnaire forMPS
1.It has been an amazing turnaround forMPSLtd. Infact its one of the fastest turnaround we have seen. Kindly take us through the journey
Macmillan used to be a very profitable company but slowly its margins kept dropping. What were the problems in the existing business and how were they solved?
2.Please give us an idea about % contributions from the different business segments mentioned in the presentation. Also which segments are more profitable and focus areas going forward?
What is the breakup between Pre-press, Digital content management, Mobile app development? How is the contribution mix expected to change over time?
3.Company has talked about some of the part of its businesses becoming commoditised a like typesetting, proofreading etc. What part are these of the current turnover?
"Traditional pre-press services are fast becoming commoditized. The low barriers to entry have resulted in large number of competitors capable of providing pre-press services.
To remain competitive, company has developed comprehensive
osolution portfolios
oand packages for commoditized services with value adds**".
What exactly are these solution portfolios and value adds, andhow useful are these to the clients? What is the contribution from forward looking and more profitable segments?
4.We see that the sales are usually very volatile with quarterly sales fluctuating between a 35Cr to 45Cr mark. What are the major drivers for sales?
5.The major portion of the expenditure is on employees cost (56% i.e. 107Cr on 192 Cr), which we take as a fixed cost. Yet it has been volatile too. In Dec’11 quarter it was 23Cr, in Mar’12 quarter it was 17Cr. (26% down), in Jun’12 quarter it was 20Cr (18% increase). Is it based on the sales percentage or some other reason?
6.If we see the 10 years record of the company 2004 was the golden period for it. The top-line was 130Cr and the bottom line was 43Cr. How do you compare that phase of the company with current phase? Will it be possible forMPSto attain profitability like before?
Also, what is the long term vision of the company from here?
7.If we look at the long term track record of the company, it has been a slow grower. 10 Yr CAGR growth of 10%, 5 yr CAGR growth of 5%. Is this business tough to scale up? What kind of growth rates can we expect going forward and why?
8.There had been a dis-allowance of input credit of service tax of Rs.7Cr. Which is the current status of the litigation?
9.Since the company gets most of its revenue from exports, what are the implied income tax rates on the company?
In the recent quarters, the company has been paying heavy taxes: 31% in September 11 quarter, 55% in March 12 quarter, 30% in June 12 quarter, yet 0.5% in September 12 quarter.
10.What has been the recent quantum of transactions between the company and the MacMillan (promoter’s) group? Are there any effects of Transfer Pricing provisions?
11.Content is getting digitalized very quickly…slowly the preference for physical book is converting to ebooks. Is this negative for the company?
Does the company face any risk from giant company’s like Amazon or even Google and Apple? Recently, the all three have been very involved in the ebooks space and can any backward integration at their end pose a threat toMPS? In this sense, isn’t the biggest risk the competition risk?
Considering the fact that the above company’s might have a better edge in metadata and search library.(Metadata seems to have been a one of the reasons forMPS’s preference over others)
12.It has been repeatedly said in the annual report that “we are increasingly sought out by clients interested in high-end services like content management and application development.”
What type of applications are the most sought for?
Are the applications concentrated on web apps, desktops or mobiles?
What percentage of revenue is attributable to application development?
13.Company had 2143 employees as of March 12. What is the recent count?(Considering the new facility in Dehradun)
14.In theinterviewwith Publisher’s Weekly, Nishit Sir gives an excellent insight about the technicality and the specialization of the work. He also mentions about the importance of automation and that 80% of the work is automated. Can it lead to substantial retrenchments in future (and corresponding reduction in employee costs)?
15.How are the ADI BPO’s services integrated with the company? How is its expertise leveraged? What are the other businesses of the promoters?
16.We read about the new facility in Dehradun with 1600-2000 seating capacity. Can we expect corresponding increase in the number of employees?
17.The company has been paying out very liberal dividends. A way to look at things is that the company was acquired for Rs 36/share while already Rs 9/share has been paid out as dividend. So what is the dividend policy of the company? Business doesnat need much cash to grow?
18). Can the co double its turnover over next 4-5 yrs.
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