Well this space has been dormant for a while, but this week I had attended a session –

28th September,2023 – Arihant Capital meeting with Management

Rahul Sir from Management:

Lines of Business

Digital Operations

– Digital Experiences (DE)

• Focuses on front office – interacting with customers of customers (not exactly customer support) – mostly on the cloud, use of Al for survey programming
• Implemented Generative Al – for creation of the survey forms. Eg : A company selling awards, Al to deploy read articles – where the award is getting provided ( categorize accordingly – and then categorize the award – turnaround time has decreased from 1 month to 3-4 days. And the use of employees have reduced from 300 to 100

– Digital Technologies (DT)

• Couple of Pockets – HyperScalers ( Cloud, ServiceNow, SalesForce, etc)
  Product improvement for customers
  What takes 2 months, now 2 weeks
• Investing heavily on robotics – used in operations and experiences. Selling as 3rd party licenses. Margins in the range of 16-18%. Due to investing margins look suppressed. And are not capitalizing on these.
• Automatic fair collection(AFC) – 30 products globally for metro fair collection ( implemented in HK, now in India they are doing as prime contractor in India – Mumbai, Lucknow. Memphis in US. Will bid more for US and India ( would be largest player in India)
• 50k$ → 150-200k$, now half million to million from orders
  Cracked a few good logos – they will all scale to multi-million dollars.
• All new customer signs small, and then start scaling substantiatilly ( like sony )
• Fringe Benefit – like some customers don’t want to buy but want to outsoursce it
• No slowdown has been observed as such, no customer has said so. There pipeline has increased

Q/A

1. What is driving the growth and what factors would take place for datamatics and data-analytics. Where is DMG leading in 4 years view:

• 14/15% growth for this year, going forward 15-20% – some uncertainity in the field due to Al causing disruption (depends which side you are on). Mgmt is confident about there outlook for next 3-4y. Margins should improve because of the investment being made for which margins are squeezed but they will start getting improved (18-20% on DT, on Experience and Operations – it would be north of 20-22% )
• Cognizant and TCS are very large and to grow 14-15% is big. So matter of the size of scale. Large spends not taking by them due to recessionary fears.
• Talking to companies for M&A

2. Journey of datamatics, 3-4 years back we had all the offerings ( were working on robotics and fair collection)

3. All AFC are greenfield capex for India and they are price sensitive – strategy to go aggressive ( lower pricing to capture market share, which has lead to market share – now doing price correction to capitalize on there brand – so margins should improve) – 200-300 Cr for single project

4. On the robotic side – tool for a product improvement on digital experience – When it was successful then took to market (before was a tool, now they have made it as a product to sell – more user friendly – implemented Gen AI – lowcode/noCode – seeing very good traction) – Fringe benefit: As per the hockey curve they are on the lower curve and can see high growth

5. Usecase from Digital Technologies(DT) – Growth would come from HyperScalers – American and European markets – 25% from India – pivoting towards abroad due to pricing better – work on salesforce & implementing lowcode/nocode – providing global support

6. Will Al be disruptinve in all verticals

• Moving very fast and disruptive on industry – early mover benefit would be for DataMatics (feedback of top 1% on the working of Al – so they will disrupt)
• Have to make Al more accurate for use of corporates compared
• Implement salesforce – say it in english and then it simply creates chatbot and creates the task – showcases prompts to the salesperson as to what to say to the customers.
• Read legal documents, a lot of effort and within 5 seconds give the answer and the reference dates, also gives questions to ask
• Email feedback, Al reads that then understands, and performs the action needed and then addresses back to the customer over email (what takes 2 weeks now does hardly 5 mins – leads to customer satisfaction)
• Al to generate images and videos, translate the audio from english to spanish on the fly which helps customers understand and provide an ease to do business
• These are hyperscalers, under the umbrella of DT. As in salesforce – they have implemented Al which has enhanced much more on the Al experience
• Digitised the Blr Airport – implement Microsoft platform
• Project with Zians Bank – acquired more 5-6 banks – they all have more mortgage – 40 millions to go through, Al helped and recategorized them to 219 categories and what are the supporting documents is needed

5. Focusing on RPA – as to add products and Intellectual Property ( IP has a residual value which is a huge value – enterprise value increases – gives you an edge)- Customer feedback has been exceptional.

6. Growth would come from there subsidiaries which were more than 51%, but now they have divested couple of those as they were dragging there performance.

   1. Focusing on high growth areas and removed the underperform

7. How are you hiring employees who know they are in high demand

   1. Core team is from a lot of years – which has been stable – and also large scale training are taking place. b.
      Senior people have ESOP’s, not all.

8. Risk as big corporates on small project –

   1. Big guys are chasing, but then as Datamatic shows Proof of concept there win rate increases. Sometimes customers don’t want to go with the large clients probably because of hand holding which they value.

Feel free to correct me where I have missed any pointers.
Datamatics Global Management Call notes.pdf (5.7 MB)

I have also uploaded the pdf notes – If someone want’s to refer that

The Secret Letters of the monk who sold his Ferrari by Robin Sharma

Basically it talks about all the important points we need to live our life with, and make these are core values. Sometimes these are so simple yet we take it for granted – that’s why he has made the person i.e. Jonathon the main character realise these core values by travelling around the world in search of ‘talisman’ which would have these secret letters to. These would be kept with one person all in different places. Each person having their own culture and value.

The 7 important letter’s collected throughout the journey ( I would highly recommend to read and then try to process it, before going on to the next point so that it does make a positive impact )

1. The Power of Authenticity
   The most important gift we can give ourselves is the commitment to living our authentic life. To be true to ourselves, however, is not an easy task. We must break free of the seductions of society and live life on our own terms, under our own values and aligned with our original dreams.
   We must tap our hidden selves; explore the deep-seated, unseen hopes, desires, strengths and weaknesses that make us who we are. We have to understand where we have been and know where we are going. Every decision we make, every step we take, must be informed by our commitment to living a life that is true and honest and authentic to ourselves and ourselves alone. And as we proceed, we are certain to experience fortune well beyond our highest imagination.

2. Embrace Your Fears was the title. I chuckled. Of course this talisman would be about fear. I continued to read:
   What holds us back in life is the invisible architecture of fear. It keeps us in our comfort zones, which are, in truth, the least safe places in which to live. Indeed, the greatest risk in life is taking no risks. But every time we do that which we fear, we take back the power that fear has stolen from us for on the other side of our fears lives our strength. Every time we step into the discomfort of growth and progress, we become more free. The more fears we walk through, the more power we reclaim. In this way, we grow both fearless and powerful, and thus are able to live the lives of our dreams.

3. Live with Kindness
   It is important to remember that just as our words are our thoughts verbalised,
   so our deeds are our beliefs actualized. No action, no matter how small, is insignificant how we treat someone defines how we treat everyone, including ourselves. If we disrespect another, we disrespect ourselves. If we are mistrustful of others, we are distrustful of ourselves. f we are cruel to another, we will be cruel to ourselves. If we can’t appreciate those around us, we won’t appreciate ourselves. With every person we engage, in everything we do, we must be kinder than expected, more generous than anticipated, more positive than we thought possible.
   Every moment in front of another human being is an opportunity to express our highest values and to influence someone with our humanity.
   We can make the world better, one person at a time.

4. Make Small Daily Progress
   The way we do small things determines the way that we do everything.
   If we execute our minor tasks well, we will also excel at our larger efforts.
   Mastery then becomes our way of being. But more than this—each tiny effort builds on the next, so that brick by brick, magnificent things can be created, great confidence grows and uncommon dreams are realised. The truly wise recognise that small daily improvements always lead to exceptional results over time.

5. To Lead Your Best Life, Do Your Best Work
   There is no insignificant work in the world. All labor is a chance to express personal talents, to create our art and to realize the genius we are built to be. We must work like Picasso painted: with devotion, passion, energy and excellence. In this way, our productivity will not only become a source of inspiration to others, but it will have an impact-making a difference in the lives around us. One of the greatest secrets to a life beautifully lived is to do work that matters. And to ascend to such a state of mastery in it that people can’t take their eyes off of you.
   a. Chase happiness- Not money

   

6. The Purpose of Life Is to Love
   How well you live comes down to how much you love. The heart is wiser than the head. Honor it. Trust it. Follow

7. Stand for Something Bigger than Yourself
   There are no extra people alive today. Every single one of us is here for a reason, a special purpose —a mission. Yes, build a beautiful life for yourself and those you love. Yes, be happy and have a lot of fun. And yes, become successful, on your own terms rather than on those suggested to you by society. But—above all else—be significant. Make your life matter. Be of use. And be of service to as many people as possible. This is how each of us can shift from the realm of the ordinary into the heights of the extraordinary. And walk among the best who have ever lived.

This book is a very short and nice read – it’s like when sometime’s you don’t expect anything out of it, you get the most ( be it learning, fun or anything that means a lot to you). It made me take

So over all I would give it a ( 8.5/10 ). Happy Weekend !

Force Motors AGM was quiet detailed. Some KTAs:

→ Indian economy continues to be resilient in the face of a global slowdown. Company expects demand for it’s products to continue and current volume run rate is sustainable.

→ Management is looking at 10-15% volume growth CAGR. When questioned whether company is being conservative,they responded by saying that it’s better to be pessimistic than be very optimistic.

→ Seriously looking at Defense as a key growth driver.

→ Export markets like Middle East,Africa were adversely affected due to Covid. However,everything is on track now thus the accelerated pace of exports. Africa is a high potential market for the company from both existing and new platforms.

→ Company’s efforts to rationalize on cost side & improve profitability have started bearing fruit. Focus will be to leverage market position and improve on profitability further.

→ While EV is the future,management doesn’t foresee any adverse impact for many years to come. Yet company is readying for new products in this basket. Overall,1000 cr will be invested over the next 3 years on new product development.

→ Breakeven of JV was delayed by 3 years,mainly due to Covid. Fy24 should end at breakeven & contribution to bottomline should accrue from Fy25. 500 cr revenue here is a low hanging fruit.

Almost all participants asked good questions. Some questions on tax rate & concall weren’t taken up. Overall,the management seemed very happy with the company’s progress in the last year or so & was confident of sustaining current numbers.

Disc.: Invested. Views are biased.

With offshore wind energy opened up, a new growth opportunity has been created. As per the news article, bids for 4140 MW of capacity are to be issued by February 1, 2024 while bids for the remaining capacity to be opened up by FY24-25

Need to check what are the capabilities of listed indian players like Suzlon, Inox and Adani in this area to know if they can benefit from this.

@manhar – you have any insights on this?