Tanla Solutions held a conference call to discuss the third quarter results and future prospects of the company. Mr Uday Reddy, Chairman and Managing Director addressed the call.
Highlights of the call
- None of the shares of the Company have been pledged.
- For the third quarter ended December 2008, Tanla reported 21% sequential dip in consolidated sales revenue at Rs 166.68 crore on the back GBP depreciation against US dollar which impacted revenues by 7.6% and impact of change in regulation regarding billing to clients in the UK. Prior approval from authorities is required to bill a customer in excess of GBP 4.50 per week Openbit contributed Rs 31.8 crore against Rs 23 crore in the sequential quarter. Product business revenues dipped 47% at Rs 11.87 crore Aggregator business revenues dipped 30% at Rs 107.8 crore and professional services revenues dipped 25% at Rs 15.21 crore.
- The number of SMS dipped to 8.9 million from 13.6 million in the sequential quarter. Actually, the new regulation is w.e.f. January 1, 2009, but it has been undertaken before so that the necessary problems can be solved. The management believes that the change in regulation would normalize going forward. 75% of the content providers have already taken approval.
- The capex for 9MFY09 was Rs 97.25 crore of which capex in India is Rs 12.9 crore, Singapore Rs 5.86 crore, UAE Rs 31.65 crore, Sri Lanka Rs 11.35 crore, UK Rs 11.23 crore and Ireland Rs 12.14 crore and others.
- S&M expenses were up 5% in absolute terms. The management expects the expenses to come down in Q4FY09 due to lay-offs done and platform being centralized.
- The depreciation charge increased 10% on q-o-q and 201% on y-o-y basis as the Company has moved into the new owned facility. The original facility in vacant.
- The management plans to move the platform processing to a centralized location in Dubai whereby reducing cost. This resulted in lower tax for Q3FY09, as Dubai is tax free zone. Effective tax rate was down at 9.8% from 16% in the sequential quarter.
- The Company has cash & cash equivalents of Rs 151.3 crore down from Rs 285 crore at the end of sequential quarter. Cash in India is Rs 49.27 crore, UK Rs 37.64 crore, Ireland Rs 31.10 crore, Singapore Rs 4.29 crore, UAE Rs 20 crore, Sri Lanka Rs 4 lakh, Finland Rs 22.51 crore, US Rs 12 lakh, Malaysia Rs 12 lakh, Spain Rs 7 lakh and South Africa Rs 10 lakh.
- Debtors in the books stood at Rs 278 crore with top 10 clients contributing 39.25% of the receivables. DSO days stood at 119 days. The spike in debtors was due to Poppy drive in UK.
- The company reduced manpower by 60 people in offshore. Employees at the end of the quarter stood at 490.
- Tanla Mobile, the UK subsidiary had revenues of Rs 28.72 crore and profits of Rs 5.87 crore up from Rs 5.09 crore in the sequential quarter.
- For Openbit, the number of smart phone licenses sold increased to 7.19 million from 5.97 million at the end of sequential quarter. Openbit added 6 new customers during the quarter.
- Revenues from South Africa started in last quarter and the Company has tied up with 2 majors. Spain is taking longer than hoped. The operations would start in January. USA is a difficult market. The Company would be focusing on professional services, as the aggregator business is costly.
- In the India business, the Company has tied up with Zee TV and I-Next. The bulk SMS area is strong. For Openbit, the Company has rolled out for Airtel and it has tied up with Vodafone. The Company has started musical alerts for Aircel.
- Of the funds utilized of Rs 368 crore of the IPO proceeds: Old building acquired Rs 12 crore, Issue expenses Rs 19.3 crore, R&D expenses Rs 22 crore, Openbit acquisition Rs 73 crore, computers & equipment purchased Rs 12 crore, New premises Rs 37 crore and capex at various geographies Rs 150 crore.
- Geographical contribution of revenues: India Rs 6.13, UK Rs 59.7 crore, Ireland Rs 24.5 crore, Sri Lanka Rs 9.4 crore, Singapore Rs 14.5 crore, UAE Rs 381 crore, Finland Rs 22.3 crore, Malaysia, Spain and South Africa Rs 0.5 crore each.
- Tanla’s market share was intact in UK market as all players were impacted by the change in regulations.