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Economic Times
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Capillary Technologies’ DRHP highlights rising competition, AI impact on business
- Capillary Technologies' draft red herring prospectus (DRHP) emphasizes growing competition in acquiring and retaining enterprise customers, AI's impact on business, and changing market dynamics.
- The Bengaluru-based company plans to raise Rs 430 crore through its upcoming initial public offering.
- Revenue for 2024-25 totaled Rs 598 crore, a 13.9% increase from the previous fiscal year.
- Capillary Technologies faced customer attrition, especially among large enterprise clients, due to competition offering similar services.
- AI is a significant focus, mentioned 81 times in the DRHP compared to 18 times in the 2021 prospectus, with the company incorporating AI into its solutions and operations.
- The company acknowledges the evolving nature of AI and the potential impact on customer reliance on external services.
- Capillary Technologies invested 21.50% of its revenue in R&D in 2024-25, lower than the previous year's 28.04%, with plans to invest Rs 151 crore in research and development.
- To enhance competitiveness, the company aims for inorganic growth through acquisitions to expand into new business areas.
- Challenges include facing competition from firms developing in-house solutions, challenging macroeconomic conditions, and uncertain market dynamics.
- Risk factors highlighted include the potential impact of customers adopting in-house AI capabilities on the need for Capillary Technologies' services.
- The company aims to mitigate risks, challenges, and unintended consequences associated with AI implementation and adoption.
- Capillary Technologies attributes the decline in R&D investment as a percentage of revenue to ongoing efforts to maintain a competitive advantage.
- Inorganic growth through acquisitions is a strategic initiative to enter new business domains, although specific expenditure details were not disclosed.
- The DRHP filing outlines the company's continued focus on leveraging AI, managing competition, and navigating dynamic market conditions to sustain growth.
- Despite customer attrition challenges, Capillary Technologies aims to bolster its offerings and stay abreast of AI advancements to drive performance and market presence.
- Capillary Technologies' strategic investments in research, development, and potential acquisitions underscore its commitment to innovation and adapting to market demands.
- The company's emphasis on AI integration, customer engagement strategies, and revenue growth reflects its proactive approach towards business sustainability and expansion.
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