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Published on: Oct. 14, 2021, 9:56 p.m.
LVAL plays a perfect digital accelerator
  • LVAL provides services to blue chip companies in technology, BFSI, retail, industrials and other industries

By Lancelot Joseph. Executive Editor, Business India

Internet, online connected devices, world wide web, smartphones, broadband and 2G, 3G, 4G and now 5G connectivity together are creating an explosion of data. Due to the easy sharing of information between connected devices, companies worldwide have already amassed more data than they can manage. 

“There is an ongoing struggle to figure out what to do with it all, and the rate at which we produce and collect data is accelerating. In fact, according to research, on an average, companies only use a fraction of the data they collect and store,” explains Adugudi Viswanathan Venkatraman, founder and chairman, Latent View Analytics Limited (LVAL). He has a postgraduate diploma in management from IIM Calcutta, and a bachelor of technology in civil engineering from IIT Madras. He has several years of experience across IT services, credit analysis and business consulting. 

“We are a pure play data and analytics company. We started off in 2006. Venkat Viswanathan and Pramadwathi Jandhyala were the founders. There’s also Ramesh Hariharan, who’s a co-founder, he sits out of Atlanta, US and heads the technology and data engineering practice for us. We are a bootstrapped company, we have not taken funding from anywhere, anybody and we have been cash positive right from the beginning, with very strong cash balance,” says Rajan Sethuraman, CEO of the company. Sethuraman joined the company in 2016 and holds a bachelor’s degree in engineering from BITS, Pilani. He has more than 13 years of consulting experience, working with Accenture and KPMG.

Earlier on, LVAL focused on the Indian market, but quickly pivoted to the North American market around 2009. And that’s when it made its first appearance on the Deloitte Technology Fast 50 and maintains that for nine years in a row. “And 2010 was important because we had our first big account with Microsoft which turned out to be a big relationship. We landed in the west coast in the US,” adds Sethuraman, who is continuing to build relationships with all the technology companies out of the US West Coast, Silicon Valley Bay Area, 

“Today, about 63 per cent of our work is really for high tech technology companies. We developed expertise on how to use data from all kinds of sources, whether it is internal company data right from the ERPs and operating systems or whether it is external unstructured data, right from social media, from sensors or whatever it might be,” says Sethuraman, realising that the challenge then was to use all of that in some sense to understand the behaviour the data produced. It could be human behaviour, or machine behaviour or it could be process behaviour. 

“In some sense, at the heart of what we do is really to study and understand behaviour, and then help interpret what has happened, why did it happen and then predict what is going to happen and then what should companies do about it. We play a fairly broad spectrum in the type of the work that we do,” adds Sethuraman, who in India has delivery centres in Chennai and Bengaluru. It has subsidiaries in these geographies, US, UK, Germany, and Netherlands in Europe besides in Singapore. The largest market at this time is North America. Europe, and Southeast Asia are still emerging markets for them, but “we see a good amount of prospects right in those countries and in those markets. So we intend to focus on that as we move forward”. 

  • Viswanathan: new opportunities

    Viswanathan: new opportunities

Most trusted partner

In the last couple of years, LVAL has reoriented more to add more value to its clients. “So we have restructured by industry as our vertical. Additionally, we have also been building some horizontal capabilities in the area of data engineering, predictive, prescriptive analytics, supply chain analytics and more recently, we have put in a lot of effort in the direction of consulting capability,” adds Sethuraman.

“We provide services to blue chip companies in technology, BFSI, retail, industrials and other industries. We have emerged as one of the most trusted partners to several Fortune 500 companies in recent years (Source: Zinnov Report), and have worked with over 30 Fortune 500 companies in the last three fiscals,” says Viswanathan pointing to some of the key clients like Microsoft, Adobe, BMW, Uber Technology and 7-Eleven, to name a few. 

To make it simple and easy to understand, what LVAL does is take this raw data, analyse them to find trends and suggest the best way forward for a company. Descriptive analytics – that describes historical trends in data – focuses on summarising data in a meaningful and descriptive way. Then comes advanced analytics which uses advanced tools to extract data, make predictions and discover trends. “These tools include classical statistics as well as machine learning (ML). The ML technologies such as neural networks, natural language processing, sentiment analysis and enable advanced analytics,” describes Sethuraman.

“Classified into diagnostic analytics, predictive analytics and prescriptive analytics, data analytics provides the insight that businesses need to make effective and efficient decisions. Used in combination they provide a well-rounded understanding of a company’s needs and opportunities,” adds Sethuraman.

For instance, a leading European car manufacturer found it was spending a lot of money in replacing gaskets that would wear out before the warranty period. LVAL collected tonnes of data from the sensors already in these cars and analysed the driving patterns of thousands of drivers driving these vehicles. Using sophisticated statistical methodology with machine learning and IoT tools, LVAL made a series of recommendations to the car manufacturer which helped them save 35 per cent of the cost. 

Data analytics has an important role in the banking and finance industries. It is used to predict market trends and assess risk. Credit scores are an example of data analytics that affects everyone. “These scores use many data points to determine lending risk. Data analytics is also used to detect and prevent fraud to improve efficiency and reduce risk for financial institutions,” observes Rajan Venkatesan, CFO of the company demonstrating that data analytics can provide critical information for healthcare, crime prevention, and environmental protection. 

  • Jandhyala: margins have expanded

    Jandhyala: margins have expanded

“These applications of data analytics use these techniques to improve our world. The applications of data analytics are seemingly endless. More and more data is being collected every day – this presents new opportunities to apply data analytics to more parts of business, science and everyday life,” says Viswanathan.

Talking about the numbers, for the last three years while the revenue has logged a compounded annual growth rate (CAGR) of just 3.07 per cent from Rs287.93 crore (FY19) to Rs305.87 crore (FY21), the net profit has moved up at a CAGR of 23.80 per cent from Rs59.67 crore to Rs81.46 crore. “While the revenue may look flat, margins have expanded because the business has significant operating leverage, since they have a very asset light and scalable model. “Technology clients contribute over 60 per cent of its Rs300-odd crore, followed by industrials who make up for almost 18 per cent of its revenue. Consumer products, retail and BFSI contribute make up for the rest almost equally,” says Pramadwathi Jandhyala, ED at LVAL, who is also a co-founder with a BE in computer science from BITS Pilani and a postgraduate diploma in management from IIM Calcutta. 

The world today is witnessing a shift from providing core data to generating analytical insights to informed decision-making processes and optimising workflows across business activities. Real-time and precise insights on business operations and consumer spending patterns are critical for enterprises to maximise the company’s value at reduced costs.

Consequently, analytics and automation are leveraged across industries for a variety of uses such as forecasting demand, optimising supply chains, maximising return on investment (ROI) from promotional spending, predicting fraud and machine failures.

Today data analytics is one of the fastest growing segments of the digital spend across industries. “It is being leveraged by enterprises to guide business strategy and optimise spending decisions during growing financial uncertainties,” adds Sethuraman pointing out at the great amount of opportunity, as the market size for data analytics was about $174 billion in 2020 and is expected to grow at a CAGR of 18 per cent to $330 billion by 2024.

Organic growth initiatives

Meanwhile, the company has filed DRHP to raise an IPO of about Rs600 crore and there is a portion of it (about 20 per cent), which is offer for sale. So Rs474 crore is the primary money and the rest of it is offer for sale. The IPO is expected to hit the market around Diwali. 

  • Sethuraman: very strong cash balance

    Sethuraman: very strong cash balance

LVAL proposes to utilise Rs147 crore towards funding its inorganic growth initiatives. “There has been an increase in the consolidation of analytics service market to support the increase in demand. The pure play analytics service provider market is highly fragmented with a long tail of specialised service providers. The trend in the industry indicates that mid-sized and large-sized multi service providers are adding niche analytics capabilities through tuck-in acquisitions of small pure play analytics service providers. We propose to leverage these opportunities and to pursue our strategic expansion plans through inorganic opportunities. We are exploring strategic acquisition opportunities that will enable us to gain access to new geographies, industries, and client base. We continue to identify and evaluate prospects that will provide us access to new technologies/IP, clientele, and such prospects that we believe to be synergetic with our existing operations,” adds Sethuraman who has yet to zero in on an inorganic opportunity."

“In the past as well, we have received several expressions of interest and we have been looking at them, but there is nothing that I would call to be in an advanced stage right now. We do have a set of criteria, which we are using to add companies into the funnel. And we will be evaluating them as we go along,” concludes Sethuraman. “The key objective of acquisition is to expand our target market or improve their position in these target markets, in terms of fitment to our wheelhouse and the focus areas that we are interested in. So from a vertical perspective, we will be very much interested in companies that are playing in the BFSI and retail, CPG space,” Sethuraman shortlists his criteria.

“From a horizontal standpoint, we would be interested in companies that are doing work in either supply chain, or doing work in predictive prescriptive analytics so that we can add to the capability that we are building there. And we are also looking for stickiness as an important criteria, meaning do they have IP? Do they have long term client contracts? Or do they have a solution and a pricing model, right, that could create certain amount of stickiness. So broadly, those are the criteria in addition to financial criteria or synergy possibilities and so on,” concludes Sethuraman looking at the geographies around the world to stay ahead of the competition. The LVAL board has adopted a resolution on 12 August, 2021 setting out its intent to identify such targets and commence the acquisition process. 

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