MPS Ltd

Thanks Mahesh as always for taking the discourse further. And providing answers to the gaps !

Yes, its a good idea to present Competition data points again to MPS Management, at Conference Calls and other interactions with Management consistently. We did raise this in the Mgmt Q&A at a first level – MPS wanted to see if FY15 stellar margins reported by SPS sustains in FY16 – before responding further on this point.

We do not find inconsistency in the Management commentary, atleast not yet. From our perspective these are the counter-arguments to your thesis.

1. We should be careful of comparing Apples to Apples. SPS fits the bill well as it serves the same Customer segment. Newgen doesn’t serve the STM market from what I could see, so that shouldn’t figure in any rational/objective peer comparison chart (http://www.newgensoft.com/customers/)
2. That almost all other players in STM Market report inferior margins than MPS gives credence to MPS observations on margin pressures faced
3. It is also consistent with the Publishing Industry dynamics – where most of the large Publishers are struggling with profitability/cost pressures
4. We suspect SPS higher margins have to do with a mix of two factors a) captive of Springer (there may be long term contracts) which accounts for 50% of the business b) better productivity/efficiency from automation tool-kits and processes

Any others competitors in STM Market with higher margins that you can point to?

Did you cultivate any contacts in the STM Technology Vendor space? We are now primed to extract the most out of any direct interaction with domain specialist folks