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Having established themselves as the world leader in taxi market
Digital Dispatch Systems has now diversified into roadside assistance
Communications Equipment
Wireless Mobile Data
(DD-TSX)
Digital Dispatch Systems Inc.
11920 Forge Place
Richmond BC Canada V7A 4V9
Phone: 604-241-1441
Vari Ghai
Chairman, Pres. and CEO
Interview conducted by:
Lynn Fosse, Senior Editor
CEOCFOinterviews.com
April 7, 2005
BIO:
Vari Ghai, President and CEO
Mr. Ghai has been actively involved in the wireless mobile data industry for over 20 years
and is the founder of Digital Dispatch. Prior to founding Digital Dispatch, Mr. Ghai held
a number of positions at Mobile Data International Inc. (now Motorola Inc.) starting in
1985 as President, Taxi Division. From 1986 to 1988, Mr. Ghai held the positions of
Business Manager for Application Products and Director of Marketing at Motorola Inc. for
the transportation industry. Mr. Ghai was Vice-President of Engineering (Mobile Data
Division) for Glenayre Electronics Ltd.("Glenayre'') from 1989 to 1991. From 1978 to
1985, Mr. Ghai was employed by Datap Systems (a software engineering company) of Calgary, Canada,
where he held several positions, including Senior Project Manager.
Mr. Ghai has an Electrical Engineering degree from
the Indian Institute of Technology in New Delhi, India, and is a registered Professional
Engineer.
Company Profile:
Digital Dispatch Systems Inc. (TSX: DD) is a global provider of turnkey wireless mobile
data solutions focusing on real-time dispatching, vehicle location and tracking, and
computerized routing and scheduling.
Digital Dispatch is currently a worldwide leader in
providing wireless mobile data solutions for the taxi market and also provides solutions
for the transit/paratransit, courier, roadside assistance, airport shuttle, and vehicle
location and tracking markets. Digital Dispatch offers overall systems integration,
project management, technical consultation, system installation, training, and on-going
customer support. Digital Dispatch’s products include application software, mobile
and portable data terminals and computers with integrated peripherals and radio
infrastructure network products.
Digital Dispatch has installed over 58,000 wireless
mobile data devices and over 160 wireless data systems in 31 countries. Digital
Dispatch has operations in Canada, the United States, Sweden, the United Kingdom,
India and Singapore.
iPilot 8000
The iPilot 8000 is a feature-rich, highly
configurable mobile computer specifically designed to meet the requirements of today's and
tomorrow's fleet management applications. Built on an Intel XScaleŽ processor and
Microsoft Windows CE .NET operating system, the iPilot 8000 offers exceptional ease-of-use
and unmatched flexibility. With its numerous expansion options, the iPilot 8000 can
control a wide variety of in-vehicle peripherals, making it truly the heart of your
complete mobile computing system.
CEOCFOinterviews: Mr.
Ghai, will tell us about your vision when you started Digital Dispatch and where are you
today?
Mr. Ghai: “We started with being focused on the taxi
market, and I am pleased to say that we now have achieved world leadership. We have a
significant part of the American market, which we estimate to be 75 and 80%. We probably
have over 50% of the world taxi market. From that point-of-view, I think we achieved our
vision. Every company has been formed over a long period. Later on during our life cycle
in the company we changed the vision to the idea that we didn’t want all of our eggs
in one basket, which was the taxi market. We diversified into the roadside assistance and
today we have places like the United Kingdom. The Automobile Associations of the U.K., Belgium,
Ireland, the United States and Canada; they are all DDS customers. We have made a major
saturation in that market and also in the private transit and public transit market.”
CEOCFOinterviews: What
is it that you are actually selling?
Mr. Ghai: “We sell complete solutions, which include
application software, a wireless device with all of the peripherals that go inside a
vehicle. Sometimes we work on a private radio network; sometimes we work on public data
network. We provide installation services, training, handholding and everything. Once the
system is up and running, we provide a five to ten-year maintenance contract.”
CEOCFOinterviews: Who is
your typical customer?
Mr. Ghai: “There are two categories. Our typical
customer last year would have been a fleet that needs vehicle location to make decisions
about dispatching, routing, scheduling or anything to do with the location of a vehicle.
Typically, they would have a dispatcher that is talking to them over a radio. That is the
kind of customer we use to have. To justify the kinds of systems we had and the devices;
they typically needed to be inside about a hundred vehicles, so it would be fleet
management systems has dispatch systems for fleets of all kinds. These are people who
needed real-time access to databases if they wanted to know if a car was stolen or not;
that is a real-time system. What we have done since last year is we have introduced a
product called eFleet, which is a hosted application; nobody has to buy anything or any
infrastructure. It works on a public data network. In its most simplistic form, it can be
used with a cell phone but we normally prefer for them to have a device in their
peripheral like GPS (Global Positioning System). Regardless of hosted service, it is good
for fleets of 10 to 20 vehicles. We now have started to address the smaller fleet market
as well.”
CEOCFOinterviews: How is
that working for you?
Mr. Ghai: “In the large fleet everybody knows us and we
have a tremendous reputation, but in the smaller fleet it has been a struggle. We have now
several systems up and running; we call them on our data sites where we have been learning
what their needs are and fixing our products to meet their needs. I think what we have
seen at the end of last year and the beginning of this year is that there are a lot of
companies that are interested. Most of our competitors only provide is AVL (Automatic
Vehicle Location). How we differentiate ourselves is we also provide dispatching as well
as AVL and TUBEL messaging. We also provide wireless transactions like debit and credit.
Customers who want more than just AVL are coming to us and saying for $30.00 a month we
can get AVL, but for $50.00 or $60.00 we can also get dispatching and that is where there
is a very strong interest. From a field of competitors of fifty AVL suppliers, we get down
to three or four people that provide dispatch services.”
CEOCFOinterviews: You
are definitely doing something that is available on a limited basis elsewhere!
Mr. Ghai: “Yes! I think it is a niche market that hasn’t
been addressed. Because we came from the dispatch background since 1978, we have
been developing and installing dispatch systems, it made so much sense for us to
differentiate based on that core competency that we have.”
CEOCFOinterviews: How
does having worldwide service centers enhance Digital Dispatch customer service?
Mr. Ghai: “We have nine service centers; three in the
United States, one in Canada, one in Singapore, one in Sweden, one in Cambridge, India.
Whenever there are large populations, we open up a service center because we believe the
only way to provide good quality service is to do it ourselves. Other people will do it
purely based on economics, where as we can look beyond economics and provide a good
service. That is what we have done is we have provided a service everywhere. It also
allows us to be available 24 hours a day, so when the people in Canada are sleeping, the
guys in Cambridge or Sweden are up and running and they can provide the service to our
customers and when they are sleeping, the people in Singapore are available and they can
provide the service.”
CEOCFOinterviews: Are
most of your systems customized?
Mr. Ghai: “We are a very product oriented company so
even though our customers think that their systems are very customized they are actually
the same product that is running everywhere. How we have done that is, we have a highly
configurable system with lots of perimeters, which allow them to tweak how the system
works, just the way they want it. They think the system is designed specifically for them
but what they are doing is exercising the configuration tools, which allow them to make
changes. We are proud of the fact, say for example, in the taxi market of 135 systems,
everybody uses the same version of the software. I would say that they don’t feel as
though they are using a generic product, they feel that their products are their solutions
that have been customized for them. Every city has a different Geo-base, like all the
street addresses, so we customize it for them; it has their customer names and their brand
names, drivers and vehicles. It definitely is customized from a data point-of-view and it
is customized from how they implement the rules for dispatching.”
CEOCFOinterviews: Your
iPilot 8000 offers ‘exceptional ease of use.’ How is Digital Dispatch able to
make it so easy and comfortable for your customers?
Mr. Ghai: “I would like to take a lot of credit for what
we do but I think it all goes to our customers. This whole thing about the iPilot; in the
year 2000, somebody from Sweden came to us and said they would like a device that was
color and based on WINDOWS CE, so we designed a product for them. They said this is great
but not quite what we want. We completely redesigned it for them and they said can you
make it smaller and we made it smaller. I think we worked with our customers for a long
period-of-time and they actually told us what they wanted so I think I would like to give
them all the credit for the ‘ease-of-use’ and how it fits their needs. We
basically built what they asked us to build for them and we were able to leverage that
into other vertical markets because, generally speaking, whether the driver of a vehicle
wants a bright screen or another, what ever it is, it can be applied to others as well.”
CEOCFOinterviews: Will
you tell us about the financial condition of Dispatch?
Mr. Ghai: “Digital Dispatch has $23 million in cash and
that is approximate because it changes every month. We have a lot of money in cash. We
have been profitable for the seventeen years that we have been in business. We have grown
our business at an annual component growth rate of 28.5 percent until the end of 2003. The
profits have grown at approximately the same rate as well. DDS is financially very strong
because it is profitable, has a lot of money on its balance sheet, and has no debt. It is
leveraged to do whatever it needs to do to gain more market share.”
CEOCFOinterviews: Are
acquisitions or partnerships part of your strategy?
Mr. Ghai: “They are the main part of our strategy. That
is why we went to the market approximately one year ago and raised money so we could do
some acquisitions. Acquisitions will do two things for us; one of them is, and this also
applies to partnerships, they will allow us to enter a new vertical market. For example,
if we wanted to get into the ambulance market, we might partner with one of the
significant suppliers of ambulances, so we want to partner with them. Later on, if there
were an opportunity to acquire their partners, we would do that or if we wanted to invest
money in their company so that they could do more product development, we could do that.
Partnering takes the form of just a pure relationship to maybe a small equity position or
something like that. We do want to grow by getting into new vertical markets and
partnering will help us do that. The second thing is that in some cases we may do an
acquisition in a geographical location where we want to have a presence, so we might go to
Australia or Brazil or some place we want presence and have none. We will go there and
make a small acquisition that gives us a local presence and people speak the local
language. We have some customers, some credibility and that is what we want to do to build
up our business.”
CEOCFOinterviews: Is
there name value in the industry?
Mr. Ghai: “There is definitely name value because we are
working on a large public transit offering and the person that is making the decision says
that they are going to take a taxi that says DDS on it. I was glad to know that at least
he notices most of the taxis in North America have a DDS device. He realizes that we have
DDS systems all over the world. We are probably servicing our customers or otherwise we
would not have that. That really helps. Even in other markets where they have come to us
and said we see your terminals in all the taxis and we thought this might apply to us, and
that is how we get many of our leads.”
CEOCFOinterviews: Why
should potential investors be interested and what should they realize about Digital
Dispatch that perhaps they don’t see when they first look at the company?
Mr. Ghai: “First, let us look at value. We are
forecasting $34 to $37 million in revenue for this year of 2005. Most people when they do
their metrics will do it on 2005 or might even do it on 2006. When you look at that and we
have 30 million shares outstanding. Just based on two-time sales, or fifteen or twenty
times the price ratio, that translates to $4.00 or $5.00 a share. You then add to it the
$2.00 a share that we have in cash and you are suddenly looking at a stock that possibly
could be worth $7.00 or $8.00 a share. When it is currently trading at 3.75 or 4.00, I
think it is undervalued. It does not represent the true enterprise value, so from that
point-of-view, I think that investors who are patient, will be rewarded. The reason why I
say patient, is because DDS is not a very commonly traded stock that trades hundreds of
thousands of shares each day and that is because we went to the market recently and most
of the people that bought our stock were institutions. Whenever somebody wants to sell
some stock, it drops by 25 cents and whenever somebody wants to buy some stock, it goes up
considerably. Adding the goodness of time, there will be more trading going on and more
people following it and that is where I thing the value will come in as well.”
CEOCFOinterviews: In
closing, is reaching investors a focus for you?
Mr. Ghai: “We are really not focused on trying to reach
a lot of investors. We just think that if we execute our plan the way we have, that people
will be attracted to our stock. I think people will say that here is a stock that is
undervalued and will get it. We are a global company and 50% of our revenue comes from
outside America. We have market leadership and in at least one of the markets we are
definitely still the leader and in the roadside assistance, we are one of the top two. We
are a profitable company and we are projecting growth. It makes for an attractive story
and I think that as people get attracted, they realize it is an undiscovered thing. The
management of the company is not interested in selling their stock in the foreseeable
future, so we don’t mind if it takes time before everybody realizes the value. The
following will come and the shareholders will come.”
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