RAMCOSYSNSEQ4 FY2022May 25, 2022

Ramco Systems Limited

7,262words
54turns
3analyst exchanges
6executives
Management on call
Anmol Garg
DAM CAPITAL ADVISORS LIMITED
P.R. Venketrama Raja
CHAIRMAN
Sandesh Bilagi
CHIEF OPERATING OFFICER
R. Ravi Kula Chandran
CHIEF FINANCIAL OFFICER
Gayathri R
VP FINANCE
Vijaya Raghavan Ne
COMPANY SECRETARY
Key numbers — 40 extracted
rs,
see, we have had a challenging year in Ramco Systems. As we have explained in the previous quarters, it was because of fall in the Asian market, but we used this time to really consolidate all our op
11.82 million
ning everyone. You would have seen the results. Our order booking for the quarter declined to USD 11.82 million, which was USD 13.55 million in the previous quarter, which is one of the low ebb and consequentl
13.55 million
seen the results. Our order booking for the quarter declined to USD 11.82 million, which was USD 13.55 million in the previous quarter, which is one of the low ebb and consequently for the year also, similar
38 million
arket because of the COVID and lock down and the way the market operates. Traditionally around $38 million to $45 million we used to book orders per year from Asia, which had come down last year to USD 22
45 million
f the COVID and lock down and the way the market operates. Traditionally around $38 million to $45 million we used to book orders per year from Asia, which had come down last year to USD 22 million and in
22 million
on to $45 million we used to book orders per year from Asia, which had come down last year to USD 22 million and in current year we ended with around $12 million in order booking. We are now seeing the Asia
12 million
m Asia, which had come down last year to USD 22 million and in current year we ended with around $12 million in order booking. We are now seeing the Asian market opening up, with a good amount of traction b
100 million
important to actually first stem this downward trend, stabilize and then start moving back to USD100 million plus order booking per year. That is what our team is working hard and we are feeli
Rs.10 Crore
pite of these things, we were able to manage our operations without borrowing - in fact we repaid Rs.10 Crores of borrowings in Q4, which we had at the end of Q3. That was possible because of the significant
Rs.96 Crore
ld be able to bounce to the level what we were booking. At the peak of 2019-20, our borrowing was Rs.96 Crores, which dropped to zero next year and maintained that year after also. We would like to remain at
50 million
e have resulted in the improvement. Unbilled revenue which was at peak in Q3 FY2020-21 around USD 50 million, dropped to USD 45 million in Q2, then to USD 41 million in Q3 and currently in Q4 to USD 36 mi
41 million
h was at peak in Q3 FY2020-21 around USD 50 million, dropped to USD 45 million in Q2, then to USD 41 million in Q3 and currently in Q4 to USD 36 million, which is a direct result of the operational efficien
Guidance — 20 items
Chairman
opening
“In the coming quarters, we expect getting back to normalcy in the one or two quarters and that is the good news.”
COO
opening
“At the peak of 2019-20, our borrowing was Rs.96 Crores, which dropped to zero next year and maintained that year after also.”
COO
opening
“I would draw upon some project governance what we have put in place.”
COO
opening
“The recurring revenue is flat at USD 8.04 Mln.; however, the recurring revenue is witnessing a good 25% CAGR in HCM recurring revenue, which in 2016-2017 used to be around USD 5.15 million, growing to USD 15.09 million for year 2021-2022.”
COO
opening
“So with all these areas - the investment, the focus on the execution, the markets opening up in the Asia and elsewhere, the investment made in the other geographies - all put together we should be in a decent shape with the immediate coming quarters and next year should start bringing us back to the number where we had left pre-COVID.”
Question
qa
“So any colour on that or any update on that will be helpful?”
Answer
qa
“We have seen the pipeline increasing in the Workday area and typically what happens is - first the HCM areas go live and then the tail end of that will be payroll and that is why we are getting ready and that is why we had built up the connectors for integration and utilization of payroll which will be easier in Workday.”
Question
qa
“So, essentially what you are trying to say is that in the last couple of months maybe starting March when most of the Asian countries were relatively relaxing, you have seen some traction already building up, which gives you confidence that growth will be better in FY2022-23?”
Question
qa
“Do we see the pent up demand will be enough to cover up for the revenue loss opportunity that we had in 2022 and which may also result in that we can turn profitable in FY2023, do you see that as a possibility?”
Answer
qa
“Out attempt is to do that, because of the quarters and years we had, I think cautiously we would say the first step would be to come back to where we were and then this year we would like to utilize that to turn the tide and start on the growth journey and consolidate our position and project excellence and stability and other things which we spoke about and prepare the entire organization for big growth.”
Risks & concerns — 10 flagged
We are confident about that and looking by the order position for the Q1 and Q2 we are optimistically cautious that we are moving in right direction and it should start showing better booking results from coming quarter.
— COO
So, in spite of this decline, we were able to close the year with zero borrowing.
— COO
Secondly, from booking perspective, the booking that we are seeing is kind of a multi quarter, multi year low kind of a thing and we been repeatedly talking about Asia being the key concern factor for you.
— Question
Is this more about immigration kind of a challenge / travel restriction being a major challenge or have we seen a significant attrition on the key member side which is causing this kind of an impact?
— Question
People meet in person and that is when the decision starts moving and it is common in most of the Asian countries and that is what added to our slowdown.
— Answer
Now what is happening is, since such products were not available in the market and people thought it is extremely difficult to do, people actually waiting for some of these projects to go live, before we start getting the enquiries and many more closure of this product.
— Answer
I also hear in the market that there is slowdown in the start up recruitment and that is also helping.
— Answer
The only major headwind will be any stagflation happening in the western market because of Ukraine, if that happens and things starts slowing down, ie.
— Answer
Whatever assessment we have made, that is what is the market size and this market is actually growing at 5% CAGR currently and witnessing growth and why we are bullish also is because the workforce in this geography is actually increasing significantly for most of the global companies, but for COVID there were some decline as reported in some of the countries, but it should pick up and again come back on growth for the numbers as well.
— Answer
It is difficult to give gross profit margin, because most of our expenses are fixed.
— Answer
Q&A — 3 exchanges
Q
I had a couple of questions, firstly, I missed your comment what you said on the update on the Workday connector side. Any update you want to share what is happening? We were expecting for the last three quarters that once this connector is done, then there would be a significant pipeline that could come from this business. But we have not seen that shaping up, while the revenue in this part of the world has been really well in this area. So any colour on that or any update on that will be helpful?
Answer
On the Workday front my update was that in January it was one country we had the certification completed. We have progressed to additional seven countries in this quarter. Most of those countries are in the Asia and we continue to get more and more connectors moving forward. That was the first response to your first question. Second, how Workday revenue in the region is showing the uptick? We are not seeing that in Ramco. If I understand correctly, there are two things to it. We have seen the pipeline increasing in the Workday area and typically what happens is - first the HCM areas go live an
Q
We thank all the participants and for all the questions were helpful. Hope we have clarified. We hope to meet you soon in the next call. Thank you.
Management
Q
This fact sheet has been prepared by Ramco Systems Limited (the “Company”) for information purposes only and does not constitute, or should be regarded as, or form part of any offer, invitation, inducement or advertisement to sell or issue, or any solicitation or initiation of any offer to purchase or subscribe for, any securities of the Company in any jurisdiction, including the United States and India, nor shall it, or the fact of its distribution form the basis of, or be relied on in connection with, any investment decision or any contract or commitment to purchase or subscribe for any secu
Management
Speaking time
Answer
23
Question
22
Moderator
4
Chairman
2
Anmol Garg
1
COO
1
Disclaimer
1
Opening remarks
Anmol Garg
Thank you. Good afternoon everyone. On behalf of DAM Capital, we welcome you all to Q4 FY2022 conference call of Ramco Systems. Today, we have with us, Mr. P.R. Venketrama Raja, Chairman of the company. Mr. Sandesh Bilagi, COO, Mr. R. Ravi Kula Chandran, CFO, Mrs. Gayathri R., VP Finance and Mr. Vijaya Raghavan NE, Company Secretary. So, without any further ado, I will hand over the call to Mr. Venketrama Raja for his opening remarks. Thank you and over to you, Sir!
Chairman
Good evening everybody and thank you for joining the call. As you can see, we have had a challenging year in Ramco Systems. As we have explained in the previous quarters, it was because of fall in the Asian market, but we used this time to really consolidate all our operations and improve our customer interactions and stabilize the workforce, which was also facing a lot of attrition due to the market condition. All that is now coming under control and we can see the green shoots happening. In the coming quarters, we expect getting back to normalcy in the one or two quarters and that is the good news. We thank you all for showing the patience in rebuilding and revamping the whole system. We look forward to the questions you are going to ask later. Now, COO will takeover and give you the update on what is happening and viewpoints.
COO
Good evening everyone. You would have seen the results. Our order booking for the quarter declined to USD 11.82 million, which was USD 13.55 million in the previous quarter, which is one of the low ebb and consequently for the year also, similar low numbers you will see in both order booking and in revenue. Booking for the year had come down to around USD 64.78 Mln., in comparison to year 2020-21, which was around USD 109 Mln., the main reason, which as explained was weakness in the Asian market because of the COVID and lock down and the way the market operates. Traditionally around $38 million to $45 million we used to book orders per year from Asia, which had come down last year to USD 22 million and in current year we ended with around $12 million in order booking. We are now seeing the Asian market opening up, with a good amount of traction building up. Though we indicated in the last quarter call that it is going to take three to four quarters for us to completely get back, it loo
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