Hi Bagdu, Thanks for the links. Can you elaborate about the possibilities for MPS from TD’s website. Thanks
http://blogs.intoday.in/businesstoday/Indian-publishing-industry-63017.htmlA good link giving a dark yet positive picture…
The opportunities that MPS has not yet exploited that are mentioned on TD’s websites and otherwise are:
1.E-Learning
2.School Education
3.Higher Education
4.Financial Services
Of these, Element acquisition will address School Education. Its strong capabilities in STEM and journals will give it a head-start in addressing Higher education and an acquisition in this area might be expected. Element acquisition might help in addressing this segment as well, to an extent.Similar to journals, Education is also a relationship based business and once you crack that, you can be sure of revenues for a long time. Education at all levels is facing cost pressure in the west because of the demographics. A lot of seats are going vacant because of the population pyramid resulting in cost pressure. In our own country, the number of children in 0-6 years age bracket has declined in recent years.
Nishith Arora has earlier mentioned that they are developing multimedia capabilities, this is needed to address e-learning segment an acquisition can be expected there as well.
MPS being in the content business can also address advertising outsourcing to an extent, but then that is not its strength.Similarly, once it has exhausted these key segments, it might look at the content creation for financial services companies. An acquisition will not help it there though. An alliance might.Content creation is the low end of value chain and a risky part to outsource for a Client given what data breach can do to the business.It does not make much sense for a Programming company to directly work with typists as well. Not all big IT companies have their own in-house BPOs. Why not use the services of a specialist content creation company whose only reason to exist is its expertise in creating complex content creation workflow.
Another area which no one seems to be addressing is Information Services industry. If you know Piramal, you would be knowing DRG. (DRG has other competitors as well btw) DRG has got a lot of highly qualified analysts, many of them Phds. Now, does it make sense for these guys to do all the clumsy formatting themselves or hire an assistant instead? Why waste a $100 talent for a $5 job? Again, this is STEM, MPSs core capability.
As i have repeatedly mentioned, all this depends on Management capability of which we only know a little till now. I am the part owner, I would expect much more clarity on Management capability for the 3 crore+ rupees i am paying to the father son duo.
4 Likes
Hi,
Just started looking in to MPS. And the very first line in Management Discussion and Analysis for '12 AR is
“At the same time, lowertechnological and other barriers of entry have resulted in a mushrooming of competitors offeringtraditional prepress services in India. However, new opportunities have also been created by thechange in consumer tastes, like demand for more interactivity in ebooks.”
I am assuming these new opportunities are low barriers to entry as well.
would appreciate if seniors tracking this company can share how companys create competitive advantage in this industry and how MPS fares on that ??
We all understand the industry in which the company is working growing really slow. Also there are couple of other things to note,
The technologies where there is some growth like search indexing, Mobile Apps, are fast changing. I don’t believe they have any edge here and if at all they have, it will be short lived at best.
Human beings are lazzy by nature. Not many people read and I don’t see that changing. So there is big risk of stagnant demand OR preference change.
I am not convinced about MPS story and am open to be corrected.
Atul,
Think you are rushing to quick conclusions, without spending enough time studying this business.
From your comments, it appears you are unsure of what are the main business segments for MPS, how much comes from where, and where they dominate!!
Btw, there is enough material in this thread itself put up by bagdu, Vinod MS and others to convince anyone that this is a pedigreed business - what we need to establish is, can it scale up fast from here, and how, or why not:). There is good presentation material at MPS website itself.
Urge guys like you to delve deeper!
Donald,
Thanks for the correction. I realized this after going through some of my mails. I Must admit I am finding MPS (and PI as well) a difficult business to understand. I 'll take a relook.
Atul,
PI - do not read thru the thread. Mahesh’s one-sided deluge will overwhelm anyone, and might impede independent thinking. Rather you should read the Stock Story and then the Management Q&A, and then read all the ARs by yourself - trying to stay away from the noise created in that thread.
Compute some numbers yourself, especially segment-wise. if they have done this in FY13, with an exceptional monsoon year, what are they likely to do, etc. Time is running out on PI by the way:).
I am trying to put up the latest Management Q&A today.
2 Likes
Donald,Thanks for the direction.
Yet again; the genereous dividend policy continues by MPS. Rs 5 interim div declared.
Good results too; they have been increasing numbers as discussed in the con call last time.
There is something to worry a about though. The tax payment has been very high this time. Any idea why this sudden rise? And is it going to continue going forward?
Hi Mokhtar,
Personally, I view higher provision for tax a positive…its scary if a co is paying no or low tax as in that case they may be manipulating the nos.
The tax provision in this qtr is at full tax rate as they earlies benefits have expired (due to losses by Macmillan earlier). Going forward they will be paying full tax
2 Likes
|
CONFERENCE CALL from Capital Market MPS The company is investing in new cloud-based platform MPS held its conference call after it declared September 2013 quarter results. Nishith Arora, Chairman & Managing Director addressed the call Highlights of the call Sales grew 14% to Rs 47.22 crore during the second quarter ended September 2013. The company witnessed strong growth in Journals (22%), Books (30%) and MPST (18%) divisions. OPM improved from 26.5% to 31.0%. Tax grew from just Rs 7 lakh to Rs 5.08 crore as the company had availed MAT credit last year. The company has more MAT credit of Rs 3 crore still available which it can avail of. So P&L will take a hit of full 33% but outflow will be less. The company's integration with the acquired company Element LLC is going well. This has helped the company to enter new markets. Element LLC is into education space. Element LLC sales for previous quarter was $ 3.5 million. The company was loss making when it acquired it. The company will continue to pursue inorganic growth in new areas. The company is strong in academic areas. 2/3rdsales comes from that space. The company is investing in new cloud based platform called Digicore. The company will start trials soon. The company will initially use this platform to increase its own productivity. Once this platform sets up, the company will be stronger. The company has two clients working on this platform doing trial and testing. The company expects outsourcing to improve especially as the economy is not doing well. Rise in OP is largely due to higher volumes. Journal and books volumes have grown. The company has stepped up its sales and marketing efforts as it feels that it is poised for good growth in all the segments it operates in. Sales for the six months grew 9% to Rs 87.51 crore. OPM stood at Rs 26% against 23.7%. Sales growth was driven by growth in Journals (23%), Books (18%) and MPST (12%) divisions. Other income grew 64% in September 2013 quarter mainly due to write-back of debtors provision and other liabilities no longer payable. Top 5 clients account for 56% of sales. Top 10 clients account for 75% of sales. MPS derives majority of its revenue from North America (49% half year) and Europe (48%). The Europe market witnessed growth of 14% in first six months. RoW grew 9% and Northe America grew 4.2%. Forex loss was Rs 3.5 crore in quarter. The company hedging policy is 6 months forward. The company hopes to get higher business from its new and existing clients. Journal production accounts for 5% of business, Books accounted for 22% and Digital services accounted for 12%. Dehradun facility can go up to 1000 employees in all shifts. The company has 6 production facilities, 2 on-shore offices for sales and client management and around 2600 people. The company has one building in Bangalore which it has been planning to give on rent from a long time but have not been able to do so. Total debtors are Rs 31.7 crore. The company has its policy that it provides 50% of debtors more than 6 months and 100% of debtors more than 1 year. |
||
1 Like
Mps has been a great turnaround story. And this has been reflecting well in the stock price.
Rewarding dividend regularly can’t be taken entirely positively as they themselves are 75% shareholders.
It’s a decision to make if is it the right time to sell or hold.
Until now they could curb the expense and reduce the unwanted operation costs and thus increased their margins. Whats next; as the company’s growth rate is going to be average in the future.
In constant currency terms, revenue growth has been negative. And that is expected, given the state of publishing sector. Notice the stress Nishith has been putting on volumes in the conference calls. Besides management acumen, a lot of the profit growth has been because of rupee depreciation. There might still be some value left in the share price because of their real estate assets. That makes it more of an asset play now rather than Earnings growth gains. Henceforth, any significant gains would be one-offs, resulting from assets sale. There are much more attractive options other than MPS with better valuations now.
2 Likes
new levels
supports rs. 175/—
resistence rs 189/----
on closing basis…
Add me to the list of people who found this story tough to understand 
also the enthusiasm was less as the sector growth rate wasn’t that high.
Would like some help to understand what is the profile of people/employee for this business.
If we look at employee cost of 77cr. For 2013 for 2600 employees, the average cost is less than 3 lac per annum , doesn’t that sound too less for a kpo kind of work ? Specially when mgmt. itself gets about 6 cr. out of that 77cr.
1 Like
Raj,
Correction: It is 77cr for 2331 employees as per the annual report. This figure in most probabilities includes contract staff who are employeed for lower level jobs.
If we see the years before the takeover by ADI the ratio of employees to cost was even worse. The new management has only made it better from there on. Yet it looks lower compared to some other companies. But a comparison to the same industry might be helpful.
They have turned the profitability around in no time. I believe in the pedigree of the management to give and respect shareholder value in a country where most minority shareholders are overlooked.
Mokhtar
Hi Guys,
We are trying also for MPS Management Q&A during 3rd week Jan.
Those interested/tracking please post updated queries and help us extract the most from the interaction.
Cheers
what is the average cost of employee/per head/per month at different location
have they explored newer markets in south africa
what is their business relationship in australia with publishing houses
what is the quaterly performance of element
why remunearation to top key persons so high
what are the business prospects in india
have they developed any business relationship with national geographics
Donald,
This is great news. Thanks for the heads up on the Q&A with MPS management. Have you prepared your questionnaire? Ayush who has initiated MPS on this forum will have more understanding on the questions to the management. Please take us through it and let us know if your team would need anything.
Mokhtar