SmallCap Spotlight interviews Mr. M.Q. Syed, Chairman and Managing Director, and Mr. Nitin Minocha, Co-Promoter at Exhicon Events Media Solutions Limited, discussing the company’s journey, challenges, and future outlook.
Rumela Banerjee: Hi, this is Rumela Banerjee and joining me today is M.Q. Syed, Chairman and Managing Director and Nitin Minocha, Co-Promoter at Exhicon Events Media Solutions Limited, to talk about the company’s journey so far and the outlook. Thank you for joining. I will start with you Mr. Syed, let’s go back to 1997 when the foundations for the Exhicon Group had been laid. Tell us how that came to be and what was the idea behind it?
M.Q. Syed: So, you know, being a first-generation entrepreneur, I did not have any idea as such. I just wanted to grab whatever comes my way because those times were not the times of today’s startup world. Whatever you have in hand is something called business. So, we wanted to do something and I ended up being into the exhibition industry. So, that’s how I came into it. But then after getting into the industry, I realized that there’s a huge potential and it’s a very vast industry.
A lot of scope for the startup, a lot of scope for the newcomers like me during that period of time and I started exploring different services. And we, that is only during even that period of time that provide the full gamut of service for trade fairs and organizing sector. Hence, we envisaged that good scope for a company which can provide end-to-end services for trade fairs and exhibitions.
And we sort of, you know, imagined that after a decade or so the industry will be moving faster and then we’ll have much more, you know, better things to do. And that’s how the group started. So, that is the crux of it.
I may speak more about it when you speak about some specific question, but this was the whole idea of starting the EXHICON.
Rumela Banerjee: So, Mr. Nitin, tell us a bit about your personal journey. The events and exhibition industry has not been a very organized one. Definitely not back then, but you have managed to professionalize it. Was that challenging?
Nitin Minocha: Just like Mr. Syed, I also have a very long entrepreneurial journey and I’ve had the good fortune of working in a lot of industries. After I did my engineering in ’93, I worked in more than like 10 industries actively and, events and exhibitions was fortunately one of them.
I was with APEC exhibitions, if you’ve heard the name. They are one of the largest in terms of IP owners of exhibition. The best part about exhibitions and trade fairs is that, you know, it’s a reflection of that particular industry.
The entire industry comes together under one roof for knowledge sharing, for product sharing, for display of products, technologies, as a meeting point during those three or four days, maybe 10 days of trade fair and exhibition. And it’s actually a proxy to the economy. So, for example, if there’s a exhibition on building material, architecture, design, construction, you’ll have the who’s who of that industry coming under one roof during those three, four or 10 days, whatever the duration of the exhibition may be.
And it’s a reflection of that industry, whatever new is happening by testing. So, that is, this industry is said to be a proxy to the economy and a lot of investors are attracted to this industry, as in, this reflects the, it’s a mini reflection of the economy. Also, it’s a trade enabler.
And in fact, after Second World War, Germany and a lot of European countries have come up on the strength of this industry only. They have utilized exhibition and trade fair industry as a showcase to display or showcase their technology and products. And they’ve immensely benefited.
And globally, and of late, China, they’ve built huge, huge exhibition centers to do massive exhibitions. You think of any industry and the mother exhibition is either in Germany or China, or somewhere in Europe or US. Europe has been at the forefront.
And typically, exhibition industry, as a percentage of GDP of these countries has been up to 1% of the GDP, which is quite significant. And then it also has a multiplier effect because it enables trade tourism. So, for example, if there’s an exhibition in Europe, and if there are visitors from India or any other country to Europe, they will not only attend the exhibition, but it will also give a lot of revenue to the tourism industry, hotel industry, travel industry.
And, it is estimated that a multiplier effect of exhibition and trade fair industry is almost like a multiple of 10. So, every 1 rupee spent on poor exhibition has an enabler effect of another 10 rupees in terms of revenue for the entire downstream industries or support industries. So, exhibition and trade fairs are a very vibrant and enabler kind of, I would say, industry, although it’s very small in terms of size comparatively.
And in India, particularly, last 60 years, there has not been that much importance given to the industry. In fact, it didn’t have the status of industry also until recently. And in the last 10 years, it has got momentum, new exhibitions are built.
And so, that’s how, you know, we, and we at Exhicon have always been, you know, focused on complete end-to-end solutions. So, for our exhibition industry, if you look at the entire value chain, there are three major players, participants, enablers, whoever you call. One is the venue where your exhibition or trade fair will happen.
Second, is the organizer who conceives and conceptualizes and executes the entire exhibition. So, for example, auto industry, exhibition or auto expo. So, it is done by the auto association and the IP owner of that particular exhibition.
And then, there is the exhibition at the venue. So, these are three major components. And we at Exhicon have always been, we have always believed in integrated solutions.
So, we are a service provider. We also have our own IPs and we enable other IPs also to be done. So, being an integrator, it was very logical for us to propertize and raise capital and, you know, be investor-friendly, more compliant, so that we could scale up.
And as I said, this industry is rapidly growing. We were, I think, 10 years back, as a percentage of GDP, Indian exhibition industry would be hardly 0.1 or 0.2 percent of the total GDP. And we are growing it, like the GDP itself is growing at 7, 8 percent.
And this percentage share is also catching up. It should come up to 1 percent of GDP, as is the case in other countries. So, we have a very big leg room in terms of growth in this industry, especially after COVID.
COVID had a break for two years and now that there has been explicit growth. So, that’s how, like, you know, for us, it was a little journey to integrate and corporate and scale up in that process.
Rumela Banerjee: Okay, Mr. Syed, this is an industry that has no barriers to entry, I suppose. What are the core competencies that set Exhicon apart?
M.Q. Syed: No, no, no, that’s a wrong notion. If you say that the industry doesn’t have the barriers, that’s a wrong notion, you know, to begin with. This industry needs very, sort of a very specific services, unique type of experience, skill set, which is unmatchable from any other industry, risk, which is very much there for every new entrant.
And overall, the organizers who are the core of this industry does not actually entertain any new company to provide them any sort of services, because there’s a whole lot of risk involved. So, entry barriers, for sure, are much more higher than any other industry in the exhibition and trade sector. Further to add that, even though the entry barriers are much more higher than other type of industry, Exhicon is having, you know, even better sort of environment, where the kind of service Exhicon into no other country so far, providing those kind of full support system to exhibition and trade fair organizers.
So, even for one service, which is to be taken by an exhibition organizer from a vendor, a vendor has to have minimum of 5 to 10 years of experience providing the similar kind of services to other organizers. This means that anyone or any entity which wants to get into exhibitions and trade fairs at least should have a combined experience of 10 to 15 years of the manpower and a good backup of the material, the good backup of the, you know, clientele in hand and execution experiences. So, entry barriers, for sure, are there and we are fortunate enough to be involved in the sector from the nascent stage when this started way back in, I would say, 1990 was the time when the exhibition sector started mushrooming in the country.
Those times, there were only few organizers and a few venues in India and in 1997, Exhicon got into this domain. Since then, we have been not only providing the services which are core services of Exhicon, but providing end-to-end solution to trade fairs and exhibitions. So, as far as, you know, barrier is concerned, I don’t see much of a competition in this industry, especially for us because as I mentioned earlier that, you know, there are different services to be offered to exhibition organizers and corporates and fortunately with the kind of experience, the manpower, the resources that we have been working on since almost 26, 27 years now, we have been far ahead of the competition.
So, there are certainly entry barriers and there are certainly further entry barriers when it comes to competing with a company like Exhicon.
Rumela Bannerjee: Now, Mr. Nitin, if you could tell me where are you present?
Nitin Minocha: So, sure. So, we are based out of Mumbai, headquarters is in Mumbai and we have exhibition venue or events venue in Pune and we have an office in Delhi and we are also setting up exhibition centers or events or venues in Mumbai and Ayodhya.
So, these are immediate plans.
Rumela Banerjee: Okay, who are your key clients, Mr. Syed?
M.Q. Syed: The key clients of Exhicon includes exhibition organizers, primarily the exhibition organizers who are organizing B2B exhibitions. Now, when I say organizer, it could be a private sector organizer, it could be a government organizer, it could be a foreign organizer, it could be an, you know, institution, it could be an EPC, Export Promotion Council.
So, any organization who’s organizing an exhibition is primary client of Exhicon, because an exhibition organizer needs a company to provide services for an exhibition on ground and off the ground. And the organizers, as I said, such as associations, such as SPCHAM, CII, different ministries across the country, state level and central, both private sector organizers as well as foreign organizers. So, there are four or five sets of B2B trade fair organizers primarily clients of Exhicon.
Rumela Banerjee: Okay, Mr. Syed, is there a sense of what the market size is? What market share do you have?
M.Q. Syed: So, honestly, there has not been a very prominent study on this industry or the sector. But as far as the estimated numbers from, you know, ITPO or a couple of private sector associations and councils, if you look at the total number of exhibitions in the country today, there are around 3,500 to 4,000 exhibitions, B2B in a year. Each exhibition has a average participation of exhibitors or the corporate or the companies ranging from 100 to, let’s say, 1,000.
There are about 100 very large exhibitions in the range of, let’s say, 20,000 square meter plus in terms of the gross area. And then there are midsize and the mediocre and the smaller exhibitions. So, the overall number of exhibitions is about 3,500.
Look at the number of organizers could be 1,000 or a little more, B2B exhibition organizers. Exhicon is serving at least 10 percent of them on a regular basis, either with the overall services or with the selective services or with, you know, organizing and management part. So, I would say we currently hold around 10 percent of the market share, but not consistent.
There has been, you know, some exhibition which gets, you know, biannually, some annual, some twice in a year. So, it all depends. But approximately 10 percent market share is what I can, you know, I can gauge that we should have.
And as the number of exhibitions are increasing, we are also increasing our strength in terms of overall exhibition, the infrastructure, the venues, the manpower, of course, and different services which are not regularly in the kitty of other event management companies or exhibition services companies are being added by us on a month on one basis.
Rumela Banerjee: Mr. Nitin, we noticed a lot of acquisitions made by you in the last couple of years. So, what’s interesting is that these are in a slightly different space like hotels, F&B, etc. Could you share your rationale behind this massive inorganic growth? Is there a bigger vision of expanding the company into a more holistic hospitality company?
Nitin Minocha: Our entire theme revolves around events, exhibitions, trade fair, MICE, which is one sector. So, trade fairs and exhibitions, you are aware, like Auto Expo or Gems and Jewelry Exhibitions, Architecture Design Exhibition, Property Expo, Education Expo, those are typically trade fairs and exhibitions. So, a theme of events, exhibitions, MICE, and you can add religious tourism to it.
And when you talk about when it is a monthly venue, it is not just for trade fair, trades and exhibitions, there will be other corporate events also, experiential events, marriages, etc. So, if you look at this common theme, anything which supports us in this common chain or theme is a logical acquisition for us because it not only adds revenue and profitability to us, but it also supports our core business, which is venue, which is providing venue and support services to exhibitions, events, MICE, etc. So, for example, if we look at a F&B company for an acquisition, it will not only be an acquisition in itself in business sense, but it will also support us in our venues because in our venues we require F&B services, either we are outsourcing or either we are having some part in-house or we are allowing third party to cater to the event or exhibition which is going on.
So, that revenue comes to us and that not only gives us revenue and profitability, but it also adds to our strength as an integrated player. So, for example, last year they had done a very big event with us, this year it is like increasing by 50%. So, they or any other big customer would prefer an integrated solution, he does not want to go to 10 people for 10 different things within one event.
So, the more integrated we are, the better it is for us, we have the strength in terms of not only client servicing, but also negotiation in terms of margin expansion. So, all our acquisitions that we have done fit into this logical chain or team of providing venue and support services to exhibitions, trade fair, events, MICE, religious tourism and these are very related. So, they are not out of focus area or not like, they are all logical, they fit logically into the entire chain of things.
Rumela Banerjee: Okay, yes. Let us talk about the Dare Spark Communications acquisition, that was a big one, your rationale behind it and what you aim to achieve?
M.Q. Syed: It has been our subsidiary for almost 4 years now and it has grown considerably and we acquired the business of Dare Spark Communications and merged it with DigiGlobe. So, within our entire value chain, Exhicon, the listed entity, the parent company looks after the B2B business, which is a venue and providing services to the organizers.
Whereas, looks after servicing the end clients, who are the clients of the organizers. So, in the value chain, as I had explained, there is a venue, there is a, there is an organizer and there is a service provider and the end client of all of this is the, is either a corporate or a brand who is, who seeks to participate in the exhibition or trade fair to displace products or technology or who is doing a MICE event or a dealer meet or something and utilizing this entire value chain again. So, the end client does not interface with the venue owner because it is the organizer who interface with the venue.
It is his responsibility to get the venue. The end client doesn’t interface with the service provider because service providers, because the organizer again, again, liaison with the service provider as he does with the venue to provide the entire experience. The, the end, the end client only deals with the organizer, the, the IPO owner or the exhibition or trade fair organizer or, or he may be a corporate himself.
And whatever services he requires during the exhibition, like for example, stall design, marketing collateral, digital marketing, et cetera. These are provided by our subsidiary DigiGlobe. So, we have clear distinction between the clients of Exhicon and the clients of DigiGlobe, although it is a subsidiary, but there is a clear cut demarcation.
And to answer your question, Dare Spark was acquired by DigiGlobe and the business was merged into DigiGlobe and the business is providing stall design, stall stand construction services during exhibitions and events to the end clients.
Rumela Banerjee: Okay. Now, your IPO in 2023 was for the purpose of these acquisitions, right? Having fully utilized the IPO money?
Nitin Minocha: Yes, so, the purpose of acquisition was to acquire exhibition materials, which we use to provide the services during the exhibitions and events. And some part of it was for working capital and general corporate purposes. So, we have fully utilized that amount into buying exhibition material and part of it is utilized in working capital.
Rumela Banerjee: Okay. Can you also give us an idea of the ROI you see in these acquired companies?
Nitin Minocha: Yeah. So, whatever acquisitions we are making, we are ensuring that they come at a valuation and ROI, which is, ROI is generally lower than our own ROI and that is why they are on the block.
And so, we try to make sure that we have, that it fits into our valuation metrics and the valuation and the multiple is considerably lower than what we enjoy for Exhicon. So, that upon acquisition and upon integration and upon consolidation of these numbers, the overall ROI improves and overall EPS improves. ROI may fall slightly because if we are acquiring a company which has lower ROI than ROI or ROA or ROE, than our own, and then the acquired company and obviously there will be short-term blip in those numbers.
But in terms of EPS, it is accretive and because of the better PE we enjoy or the lower PE at which we acquire these companies, they eventually add value to our consolidated earnings.
Rumela Banerjee: Now, Mr. Syed, you have some venues you are investing in, like in Mumbai, Pune, Ayodhya. Could you tell us a bit more about that? Are these going to be assets that will be rented out by you?
M.Q. Syed: Yeah. So, as you can figure out from our last conference call, that is the permanent fairgrounds or the multi-purpose event venues across Tier 2 cities. Why Tier 2? Because we are investing not a very big amount of money, especially in the land acquisition, but we are getting into a JV model on a PPP sort of a model, private-private partnership or public-private partnership. Venues are a big revenue earner for any service company to the exhibitions or fairs.
And every business of exhibitions revolves around the venue. So, unless a venue is booked, the exhibition or event will not happen. So, we had, in fact, in past been trying to get into this space, which is fairly a heavy asset or asset-heavy model.
However, with our relationship and the previous experiences that we had in the last event venue in Pune, we have been able to acquire seven acres of land in Pune on a PPP model. This is on Exhicon Events Media Solutions Limited. The land is basically owned by the private party, wherein the entire investment towards building the venue and, of course, managing it and operating it, lies with Exhicon.
So, the first venue, which we are proud to announce, will be in Pune. We have already tied up, got into the agreement. Work at the site has also been started.
Our first phase of venue of around three and a half acres should be completed by the – this is a very important news. We are only revealing it to you so far that, you know, officially, because we have already announced on Stock Exchange about this acquisition, so I can always do that. We are already, you know, constructing this venue, and in November 2024, which is three months from now, the first phase of the venue shall be started in Pune.
Simultaneously, we have also acquired around five acres of land just around three days back, which is also announced on the Exchange in Ayodhya for the similar purpose. So, again, it will be a multi-purpose event venue. This five-acre land has been acquired by Exhicon, and since Ayodhya doesn’t have any purpose-built venue for any kind of event, however, there’s a huge demand for a venue at least in the range of, you know, 3,000 to 5,000 square meters covered area because of the various government events and private sector companies, you know, getting into Ayodhya as a potential market, religious tourism, the industry is eyeing Ayodhya as a potential market, and a lot of big corporates already looking at Ayodhya to be their future, you know, destination, especially for the incentive program for their, you know, employees as a religious tourism destination.
So, we have also got one in Ayodhya. So, currently, Exhicon is working on two venues simultaneously, one in Pune and the second one in Ayodhya. The Pune one, as I mentioned earlier, is seven acres.
Ayodhya currently has been acquired for five acres, which will be extended, of course, depending upon how fast we can get the land and how fast we can start working on the project. So, two venues are already almost finalized. The construction at Pune has already been started.
Ayodhya, we are in the phase of planning now, since the land is acquired. We expect that these two venues will generate a fair amount of revenues, also the bottom line for the company. Reason being, since Exhicon has 360 degree and end-to-end solution for trade fairs and exhibitions, and venue play a very important role for bringing in the client at a place to start the, you know, business of exhibition or event for that matter.
We are hopeful that by 2026, these two venues will be up and running fully and will complete, you know, with the kind of projections that we see will give us a good amount of not only the visibility, but the top line and bottom line both.
Rumela Banerjee: Okay, Mr. Nitin, your vision for the company for the next three to five years.
Nitin Minocha: So, we have already given a guidance of 50% growth in terms of sales and in terms of consolidated numbers and both sales as well as slight improvement in margins also.
So, and beyond that, I think we are not allowed to discuss numbers being a listed company and without prior information. But we have a very good story ahead since we are adding venues, since we are adding, we are making acquisitions and a lot of our acquisitions will give us very good revenue numbers and profitability in coming years. So, beyond that, I don’t think we can talk numbers beyond ’25.
Rumela Banerjee: All right, that’s all for now. Many thanks for your time.