We are in turnaround process with focus on profitability: Ramco Systems CEO

We had a reasonably good quarter in Q1 [In the June 2024 quarter, the company reported a reduced net loss of ₹20 crore on revenue of ₹137 crore, compared to a net loss of ₹47 crore on revenue of ₹140 crore for the same period last year]. We grew by about 4 per cent q-o-q, which is pretty good given the environment. We are focusing more on profits and are in the process of a turnaround. Cash flow has become positive now due to large wins. Overall, it has been a very positive quarter across all segments.

We have become debt-free in the last two quarters. Our collections were not very strong, as many customers were not paying us. This was a significant problem, but we have addressed it. Our bank balance is now in a good position. We are now EBITDA-positive and are on the path to profitability. It’s a time for transformation for the 25-year-old company. We are turning the Titanic in a different direction, so it will take time.

One of the measures we took for cost optimisation was resource optimisation. We had too many people, so we optimised resources some time ago. We reduced the workforce by around 400 people over 4-5 months. Some of these reductions were voluntary, and there was also attrition. We did not replace these positions. Across the board, we increased prices, as we had been underpriced for a very long time. These measures helped improve profitability, but it is a journey. It will take time, but it is trending positively.

We closed at about $19 million last quarter, which is fairly good. This follows around $23 million in the previous quarter, during which we won a very large order from Korean Airlines. Generally in terms of the order book, we are in a very good shape at this point in time.

One aspect was on the financial front, focusing on deal review and improving profitability. There were several non-paying customers. We cut the service to them, and many returned and started paying. That’s what the telephone operators do to you, right? We did the same thing. We are a product company, and there were areas where we were not profitable. We eliminated all those aspects.

The container management in logistics. We will not touch it. We excluded some geographies and products and decided to focus only on a few things and do them well. Technology is being modernised, and we are implementing a low-code platform to make it very user-friendly.

The transformation story spans 18 to 30 months. It is a challenging process. Last year was about recovery, and we wrote off $15.1 million. We completely cleaned the book. We are moving towards a state where we believe things will become more predictable. This year, we are focusing on stability in terms of processes, customers, products, financials, including decent cash flow. From year three onwards, we will start pushing for growth. That’s what we are really aiming for.