BIRLASOFT LIMITED — Q1 FY26

Birlasoft Ltd Q1 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=AEIWj8k1DHY Published: 9 months ago

0:00 Ladies and gentlemen, good day and welcome to the Vidlasofts Limited Q1 FI26 earnings conference call. As a 0:08 8 seconds reminder, all participant lines will be in the lesson only mode and there will be an opportunity for you to ask questions after the presentation 0:15 15 seconds concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touch phone. Please note that this conference is being recorded. 0:26 26 seconds I now hand the conference over to Mr. 0:28 28 seconds Abhin Nandan Singh, head investor relations Berlasoft. Thank you and over to you, sir. 0:37 37 seconds Thanks and welcome everyone to our Q1 FY26 earnings call. Uh you'd already have received our results or seen it on 0:45 45 seconds our website. Um the before we get started, let me quickly introduce you to you the members of our team who are 0:52 52 seconds present on this call with along with me here. Uh we have our CEO Mr. Angan Goha 0:59 59 seconds with us. Along with him we also have our CFO Miss Kamin Sha and as well as uh and 1:07 1 minute, 7 seconds along with the her we also have our CFO designate Mr. Chandra Shaker Thiagar Rajan or Chandu as we call him. 1:15 1 minute, 15 seconds We will begin the call today with opening remarks from both Angan and Carmin as usual and uh after that we'll open the floor up for your questions uh 1:23 1 minute, 23 seconds and responses to those. Before I hand over the floor to Wangan, a quick reminder that anything that we say on this call on the company's outlook for 1:31 1 minute, 31 seconds the future could be a forward-looking statement um involving significant uncertainty and therefore that must be heard or read in conjunction with the 1:38 1 minute, 38 seconds disclaimer that appears in our investor update which you would have received and is also uploaded on our website as well as filed with the stock exchanges. With 1:46 1 minute, 46 seconds that, let me hand over the floor now to Mr. Angan Buha, our CEO and MD. Over to you then. 1:52 1 minute, 52 seconds Uh thank you Abi. So good evening and good morning to everyone wherever you are and thank you for joining us today 1:59 1 minute, 59 seconds as we share some perspectives of our performance during the first quarter of the financial year FY26. 2:08 2 minutes, 8 seconds As you already know from our announcement a couple of weeks ago, Kami who has been serving as our company's 2:16 2 minutes, 16 seconds CFO since April 2023 has decided to move on for personal reasons. uh I would like to take this 2:24 2 minutes, 24 seconds opportunity to thank her for her contribution over the past uh two odd years in driving the efficiencies and 2:32 2 minutes, 32 seconds ensuring strong cash flow generation. So thank you company. 2:38 2 minutes, 38 seconds I'm also pleased to welcome Chandru who will take over as our CFO effective tomorrow which is the 8th of August back to builderoft. 2:48 2 minutes, 48 seconds As many of you may recall, he served as the company CFO earlier during the period of 2020 to 2023. 2:57 2 minutes, 57 seconds Chandra is a highly accomplished and seasoned finance leader and is also very familiar with our business. We are 3:06 3 minutes, 6 seconds therefore pleased that we were able to find in him the best possible person to step in and take on the role of the company's next CFO. 3:18 3 minutes, 18 seconds So now with that backdrop let me dwell into our Q1 performance. You may recall 3:25 3 minutes, 25 seconds in our last earnings call I had mentioned that we were witnessing some rampdowns as well as some insourcing 3:32 3 minutes, 32 seconds amongst few of our customers which was likely to affect our growth performance in Q1. 3:40 3 minutes, 40 seconds That was mainly on account of the prevailing macroeconomic environment where customers are still focused on 3:47 3 minutes, 47 seconds cost optimization, cutting back on discretionary spending and are maintaining a hold and wait approach 3:55 3 minutes, 55 seconds with regard to large transformational programs. 4:00 4 minutes Consequently, the revenue for Q1 has been sequentially lowered by 1% in 4:06 4 minutes, 6 seconds dollar terms and has come in at 150.7 million. 4:12 4 minutes, 12 seconds However, three out of our four verticals have actually shown growth. BFSI, life sciences and services and energy 4:21 4 minutes, 21 seconds utilities have delivered sequential growth in dollar terms during the quarter. 4:27 4 minutes, 27 seconds However, our manufacturing vertical which is our largest vertical has registered a very soft performance due 4:36 4 minutes, 36 seconds to project completion ramdowns as well as insourcing which has more than offseted our growth 4:45 4 minutes, 45 seconds that has been contributed by the other verticals. 4:50 4 minutes, 50 seconds On the margin front, we entered Q1 with a base effect headwind because in Q4 we had significant amount of margin 4:58 4 minutes, 58 seconds tailwind due to some one-offs that were absent in Q1. In that backdrop, I believed we have managed to 5:07 5 minutes, 7 seconds minimize the margin contraction sequentially and delivered an IITA margin of 12.4% for the quarter. Kami 5:16 5 minutes, 16 seconds will share more on margins and net earnings in her remarks. Coming to deal wins, more than half of the TCV secured 5:25 5 minutes, 25 seconds in Q1 compromises uh comprises of new deals that we have won during the quarter. The quantum of TCV deal wins in Q1 is at about roughly 141 million. 5:40 5 minutes, 40 seconds However, this is lower than what we had delivered in Q4 because as you know the second half of the financial year which 5:47 5 minutes, 47 seconds is the third and the fourth quarter are very renewals heavy. So traditionally the Q3 and Q4 deal wins are higher. 5:57 5 minutes, 57 seconds In addition to that, there was one deal that got right shifted to Q2, which is why you saw a little bit of softness in 6:06 6 minutes, 6 seconds signing deals in Q1, but we are hoping that we will cover it up in uh this quarter, which is the uh quarter end 6:14 6 minutes, 14 seconds concern in Q2. But I would also like to point out that we have secured some marquee deal wins that demonstrate our 6:21 6 minutes, 21 seconds enhanced tech capabilities particularly in emerging areas such as Gen AI. For instance, we have partnered 6:29 6 minutes, 29 seconds with a leading player in the US energy sector to deliver cuttingedge agentic AI 6:36 6 minutes, 36 seconds use cases within the supply chain accelerating intelligent automation and operational resilience. 6:45 6 minutes, 45 seconds Similarly, we won another engagement with a global technology leader for a landmark enterprisewide 6:53 6 minutes, 53 seconds quality engineering transformation program wherein we will be integrating agentic AIdriven automation. 7:01 7 minutes, 1 second These engagements will add to our growing base of existing customers where we are already deploying advanced AI 7:09 7 minutes, 9 seconds powered capabilities including Agentic AI. 7:14 7 minutes, 14 seconds Now looking ahead, as I've observed earlier in my comments, a demand environment continues to be difficult. 7:21 7 minutes, 21 seconds This has resulted not only in prolonged period of time during which customers have been reluctant to take up long-term 7:29 7 minutes, 29 seconds transformational projects but also in delayed decision making and cut in their discretionary spending. As a result, 7:39 7 minutes, 39 seconds while our pipeline remains strong, conversion to deals have been relatively tippid. 7:46 7 minutes, 46 seconds While we expect sequential growth in Q2, we do anticipate that the challenging 7:53 7 minutes, 53 seconds marketing the market conditions will reflect in our performance through the course of the current year. 8:00 8 minutes At this point I will ask Carmini our chief financial officer to share her perspectives on the quarter under 8:07 8 minutes, 7 seconds review. Carmon over to you. Thank you Anen. Good day everyone. Thank you for joining us. It's a pleasure to talk to 8:15 8 minutes, 15 seconds you again. Let me take you through some of the financial highlights for the first quarter of FI26. Our revenue 8:23 8 minutes, 23 seconds performance for Q1 reflects the challenging demand conditions that we are operating under. On our last call, 8:30 8 minutes, 30 seconds we had indicated that we are seeing some project closures and ramp downs and on account of that our revenue for the 8:37 8 minutes, 37 seconds quarter declined 1% quarteron quarter in dollar terms to 150.7 million. As Anan 8:45 8 minutes, 45 seconds has observed in his remarks, three out of our four verticals have resisted sequential growth during Q1 in dollar 8:53 8 minutes, 53 seconds terms. Energy and utilities sustained its growth trajectory during the quarter under review, growing 1.9% quarteron 9:02 9 minutes, 2 seconds quarter. BFSI has also grown a bit marginally and life sciences and services verticles have returned to 9:10 9 minutes, 10 seconds growth during Q1, recording a 1.4% 4% growth quarter on quarter. The manufacturing vertical however witnessed 9:18 9 minutes, 18 seconds a 4% quarteronquarter deg growth which is for the reasons that Angan had mentioned. If you really look at our 9:24 9 minutes, 24 seconds service line our ERP business saw a sequential decline reflecting its correlation with the manufacturing 9:32 9 minutes, 32 seconds vertical. The infra business which is a much large smaller piece of our overall business also witnessed a degrade due to 9:39 9 minutes, 39 seconds completion of a project. The digital and data business however has registered a growth of 2.6% quarteron quarter. This is on the back 9:48 9 minutes, 48 seconds of new engagements and incremental revenue from existing accounts. You would recolct that in the last call we 9:56 9 minutes, 56 seconds had mentioned that our Q425 margin performance has some one-time benefits pertaining to currency benefits, leave 10:03 10 minutes, 3 seconds and cash and variable pay for our senior executive amounting to about 200 bits. 10:09 10 minutes, 9 seconds We had also indicated that we were confident of offsetting half of the margin headwing coming into Q1 through 10:17 10 minutes, 17 seconds operational efficiency. We have been able to minimize sequential margin contraction in Q1 despite a subdued 10:24 10 minutes, 24 seconds topline and delivered an EITA margin of 12.4% in Q1. 10:30 10 minutes, 30 seconds The effective tax rate, which for us has historically been in the 25 to 26% 10:36 10 minutes, 36 seconds range, saw a rise during Q1 to 35.9% on account of a provision made for 10:43 10 minutes, 43 seconds higher tax. We have been engaging with tax experts and are transitioning our terms of engagement with key customers 10:51 10 minutes, 51 seconds to more accurately align with our operating model. With this we expect to limit the impact of the incremental tax to the current financial year. 11:02 11 minutes, 2 seconds Thereafter we expect the ETR to come back to our historical levels. Adjusted for the incremental provision for tax 11:11 11 minutes, 11 seconds for the quarter would have been at 14.4 million and basic EPS at 4.39 per share. 11:19 11 minutes, 19 seconds We have began the new financial year with a robust balance sheet. Our cash and cash equivalence at the end of Q1 11:27 11 minutes, 27 seconds stood at 266.6 million. This is up by about 16% yearonear and 2.8% quarter on 11:35 11 minutes, 35 seconds quarter. Our DSO was at 58 days while it is higher than what we normally reported in the earlier quarter. This has been 11:43 11 minutes, 43 seconds primary due to delayed collections that have come in earlier July. Had these collections come within the time frame of June, our Q1 DSO would have been at 11:52 11 minutes, 52 seconds 53 days. We remain committed to staying focused on sustained robust cash flow generation. While we are still 11:59 11 minutes, 59 seconds navigating through the challenging demand environment, I believe our ongoing efforts to drive operational 12:07 12 minutes, 7 seconds efficiencies, generate healthy cash flows and invest prudently in the business positions us well to benefit 12:15 12 minutes, 15 seconds from a recovery in demand as and when that happens. Thank you very much. Back to you Abi. 12:21 12 minutes, 21 seconds Thank you K. Thank you. Uh moderator, can we please open the four floor for questions? Sure sir. 12:28 12 minutes, 28 seconds Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question, you may press star and one on your touchstone 12:37 12 minutes, 37 seconds telephone. If you wish to remove yourself from the question, you may press star and two. Participants are requested to use handsets while asking a 12:45 12 minutes, 45 seconds question. Ladies and gentlemen, we'll wait for a moment while the question cube assembles. 12:59 12 minutes, 59 seconds We have our first question from the line of Girish Pai from BB Capital Markets. Please go ahead. 13:06 13 minutes, 6 seconds Uh yeah, thanks for the opportunity. Uh you and you mentioned that 2Q is going to be a growth quarter on a QQ basis. Uh will that continue into 3Q and 4Q? 13:19 13 minutes, 19 seconds Uh so Girish uh thank you for uh your interest and thank you for asking me that question. Uh so look we are working 13:26 13 minutes, 26 seconds uh towards uh a sequential growth in Q2 uh and our focus currently is Q2 and we are working with our teams and with our 13:35 13 minutes, 35 seconds clients to see how we can deliver uh you know sequential growth in Q2. Now it'll all depend upon how my order book stacks 13:43 13 minutes, 43 seconds up for Q2. As uh I'm sure you've seen uh and I mentioned in the call, our Q1 we delivered about $141 million worth of 13:51 13 minutes, 51 seconds orders. One order slipped into Q2 which is now getting signed. So hopefully Q2 we'll have a larger order book right. Uh 13:59 13 minutes, 59 seconds now if we really deliver uh a larger order book then barring the furls I 14:07 14 minutes, 7 seconds think operationally we can uh we can show some growth but that'll all depend upon how the Q2 order book looks like. 14:14 14 minutes, 14 seconds Uh it's hard for me to say whether uh Q3 will really be a growth today because of the uncertaintity that we are facing. Uh 14:22 14 minutes, 22 seconds but our job is going to be to focus on order book and deliver higher order book which uh will make sure that you know the revenue growth comes in subsequent quarters. 14:33 14 minutes, 33 seconds Okay. And uh in the previous calls you've been saying that you would want to uh uh lower the exposure discretionary business from what I think 14:41 14 minutes, 41 seconds was 70% to about a 50/50 mix. Uh where are they on that journey and is the new business coming at lower margins 14:49 14 minutes, 49 seconds compared to the discretionary business that you've been getting? 14:53 14 minutes, 53 seconds Yeah. So Gish uh you know our Okay. So here is uh here is how I'm seeing it play out right and as you know our 15:01 15 minutes, 1 second quarter 1 and quarter 2 are quarters which generally is a little lower in terms of order book because that's how 15:09 15 minutes, 9 seconds our uh seasonality works right Q3 and Q4 the renewals are very heavy we are not 15:16 15 minutes, 16 seconds anticipating at this point in time and again I stress at this point in time that our renewals will be at a lower margin our renewals will be at our 15:24 15 minutes, 24 seconds current margin uh at the minimum and in certain cases we may get a little bit of a extra margin even in our renewals 15:32 15 minutes, 32 seconds business. However, what will happen though is in our new deals and I also talked about two or three big deals that 15:40 15 minutes, 40 seconds we are working on in the range of about 30 to 50 million. Those deals will definitely come at a lower margin. So uh 15:48 15 minutes, 48 seconds for us as a management team it'll be important to first of all win those deals, secure those deals and deliver and also work on our overall cost so 15:57 15 minutes, 57 seconds that uh you know we can sustain the margins at the current levels. 16:03 16 minutes, 3 seconds Just two more questions on salary hikes uh when will they happen and the quantum and the impact from a basis points 16:11 16 minutes, 11 seconds perspective which particular quarter will it hit you? Uh so we have not taken a decision on salary hikes just yet. I 16:18 16 minutes, 18 seconds mean we've just started the first year and as you would recollect even last year we gave the salary hike only in Q3 16:25 16 minutes, 25 seconds 3Q of our financial year. Uh so it's just been about a quarter. So we've not taken a decision on that yet. Girish. 16:32 16 minutes, 32 seconds Yeah and just to add to that Girish our senior leadership salary hikes were done at the beginning of this year around January that is quarter four of last 16:40 16 minutes, 40 seconds year. So at this point of time we will review the situation and take a decision on whether we would uh do it. 16:47 16 minutes, 47 seconds And lastly uh I had a question on the industry and there's a lot of talk about uh H1B visa process change that may happen from a lottery to something else. 16:57 16 minutes, 57 seconds Uh should it change from a lottery process uh uh you know from an industry standpoint? Would that be an additional margin pressure that the industry is going to see? 17:08 17 minutes, 8 seconds Yeah. So Gish we'll have to wait and watch in terms of how it shapes up right. Uh currently we don't have a comment on that because we'll have to 17:16 17 minutes, 16 seconds see the new regulation the way it comes out and only then we can assess the situation. But currently for us uh the 17:23 17 minutes, 23 seconds way our business is shaping up uh we have enough uh uh you know H1B resources ready to travel if needed and we are 17:31 17 minutes, 31 seconds also localizing our workforce by hiring locally. So I think we are covered at this stage unless uh the visa situation 17:39 17 minutes, 39 seconds changes dramatically which we can't comment on at this stage. Gish. Okay. Thank you. 17:48 17 minutes, 48 seconds Thank you. We have our next question from the line. 17:52 17 minutes, 52 seconds Priyanka from Valum Capital. Please go ahead. 17:56 17 minutes, 56 seconds Yeah. Hi team. Uh hi uncle. Thank you for the opportunity. 18:00 18 minutes uh I'm sure uh in this challenging times uh there are a lot of things that you know outside the macro some things that 18:09 18 minutes, 9 seconds uh Velasoft as a team and the management team would implement so that we we we 18:16 18 minutes, 16 seconds emerge out much more stronger. So I would want you to highlight few the key learnings that you have had in this last 18:24 18 minutes, 24 seconds uh one uh 12 months or four quarters which have been more challenging and any corrective action plans that you have undertaken uh for from those learnings. 18:35 18 minutes, 35 seconds Uh so Priyank again thank you for the question and thank you for your interest in our company. So look, one of the biggest learnings for me and my 18:43 18 minutes, 43 seconds management team in the last one year has been the fact that uh our order book has not been very strong as you all know 18:52 18 minutes, 52 seconds right so there is an enormous focus on our building the pipeline and driving uh more order book I think if you remember 19:01 19 minutes, 1 second in FI24 we delivered about $850 million worth of orders which came down to almost 750 last year right so One of the 19:11 19 minutes, 11 seconds big learnings is unless we have an order book obviously the revenue growth becomes a challenge. So one the entire team is focused on driving order book. 19:19 19 minutes, 19 seconds So that is one. Second is we also realize that we need to be more domain orientated and as a result our new 19:26 19 minutes, 26 seconds hiring that we are doing is building on more domain oriented hiring rather than generalist hiring. So that's number two. 19:35 19 minutes, 35 seconds Number three, and we talked in our commentary, how do we drive a lot of uh delivery through our agentic AI 19:44 19 minutes, 44 seconds platforms and we have some marquee platforms which are uh which are really uh truly uh amazing platforms if you 19:51 19 minutes, 51 seconds will. How do we use those platforms to deliver to our customers and win new deals? And we are focusing on that as well. We've also undertaken a 20:01 20 minutes, 1 second companywide transformation on all parameters whether it is uh whether it is customers how do we serve customers 20:08 20 minutes, 8 seconds better what are the capabilities we build and finally on the cost side uh and in a situation where uh there is uh 20:17 20 minutes, 17 seconds there is so much uncertainty we will obviously work a lot more on the cost and again I want to make it very clear it's not that we will fire our employees 20:25 20 minutes, 25 seconds or anything that's not the idea but the right roles need to be done in the right geographies which is what we will focus on number one and number two we will 20:34 20 minutes, 34 seconds continue to invest in the areas that we see growth right so as you have seen our digital and data business has shown a lot of growth we want to continue to 20:43 20 minutes, 43 seconds invest in that kind of business but we need to kind of uh move uh move the 20:49 20 minutes, 49 seconds workforce in the right geographies where they actually need to be uh so while we're looking at the cost side significantly but Keeping the long-term 20:59 20 minutes, 59 seconds in mind, we also want to invest in the right places. So I guess broadly Priyank these are the big learnings but if you 21:06 21 minutes, 6 seconds ask me our biggest job right now is to get the order book fixed and if we can get the order book fixed then the revenues will follow. 21:15 21 minutes, 15 seconds very clear and uh should we see this implementations getting populated into order book like you mentioned uh from 21:24 21 minutes, 24 seconds the first large bin deal that we are already working on it which got slipped so from Q2 onwards the mandate would be 21:31 21 minutes, 31 seconds to first check the order book and its accuration and then would be then would so the delivery we follow 21:39 21 minutes, 39 seconds that is exactly right Priyank I mean I'm hoping that we deliver more order book in Q2 than what we did in Q1 one for sure and then Q3 Q4 obviously the 21:48 21 minutes, 48 seconds renewals come in and then if we can swing at least one out of the two large deals uh then clearly you know the year 21:55 21 minutes, 55 seconds will be good in order book and I'm hoping if we can deliver strong audible book for the year then next year you know we can commit to a larger growth 22:04 22 minutes, 4 seconds perfect so for so just to summarize this this year uh uh the more focus would be on order book then to then the revenue 22:11 22 minutes, 11 seconds uh recreation so for this full Should we consider that we would be ending somewhere around with single digit 22:18 22 minutes, 18 seconds growth and then follow on for FY27 we should uh start accelerating to double digit growth. 22:27 22 minutes, 27 seconds Yeah. You know I I don't know whether the growth will be singledigit or whatever. It's hard for me to now say because we uh you know we faced enormous 22:36 22 minutes, 36 seconds headwind in Q4 as you know Priyank right. Uh our our degrowth was in a much steeper than what we had anticipated. 22:44 22 minutes, 44 seconds uh so I can't really comment for the year now my entire focus is a quarteron quarter so what we can say is we are working at least for a sequential growth 22:52 22 minutes, 52 seconds in Q2 that will be our focus and apart from that our only focus is to drive better order book now mathematically 23:00 23 minutes it'll tell you that if we can deliver upwards of $850 million worth of order then definitely next year we can show much more growth now I don't know 23:08 23 minutes, 8 seconds whether it will be double digit or whatever that time will tell but this is all keeping in mind priyank that you know the uncertaintities at some point 23:15 23 minutes, 15 seconds in time settles down because uh we don't know what we don't know very clear and now just last question 23:23 23 minutes, 23 seconds and I'll come back in the queue after the delivery of whatever strategic actions that you have undertaken you also mentioned in your opening 23:32 23 minutes, 32 seconds commentary that we start this year with a very robust balance sheet uh at the same time when you are implementing internals do we need to 23:40 23 minutes, 40 seconds look into the external to you know acquire a better capabilities, diversify 23:46 23 minutes, 46 seconds and uh build a much more sustainable organization for the coming years. 23:54 23 minutes, 54 seconds Yeah. So Priyank so Priyank we have done a lot in building a solid organization per se as you know we have zero debt we 24:02 24 minutes, 2 seconds are generating positive cash flows uh and from that perspective I think we are world class we need growth in the company right uh now you know an 24:11 24 minutes, 11 seconds acquisition currently at least to my mind is going to be a distraction we will not look at an acquisition today we need at least three or four quarters of 24:20 24 minutes, 20 seconds sustained quarterly uh growth performance uh and then look at something. But you know we always are in the market looking at assets at any 24:28 24 minutes, 28 seconds point in time and if something really shows up which adds good value to us then we are open to looking at it. But 24:35 24 minutes, 35 seconds right now the management uh the actions are very clear. We need to focus on building pipeline delivering audible and 24:43 24 minutes, 43 seconds at least start delivering sequential revenue growth uh even before we think about uh an inorganic uh acquisition. 24:51 24 minutes, 51 seconds No problem. So just on that uh it's a request from the minority shareholder to you know focus better on the cap capital 24:58 24 minutes, 58 seconds allocation for this year maybe I'm not talking for a permanent change but in this year we can think for a better dividend payout or a buybacks uh so that 25:07 25 minutes, 7 seconds you know our uh return on equities and the return ratios become much more uh attractive uh and as we start FI27 again 25:15 25 minutes, 15 seconds the capital allocations as per whatever the decided policy can go on. Thank you. Thank you Priyank. 25:24 25 minutes, 24 seconds Thank you. We have our next question from the line of Deep Ma from MK Global. Please go ahead. 25:31 25 minutes, 31 seconds Yeah, thanks for the opportunity. Uh couple of question. Uh first about the outlook. I think last time you indicated 25:38 25 minutes, 38 seconds about uh quarter two to be growth quarter and then I think for the full year also you made two uh observation. 25:45 25 minutes, 45 seconds first about our aspiration to deliver uh at least positive growth in FY26 and second is evita margin roughly around 25:54 25 minutes, 54 seconds 13%age for the year. So if you can provide your uh broad observation on some of these two 26:01 26 minutes, 1 second things whether we continue to aspire to reach uh positive growth and 13% a beta for the year. Second question is about 26:09 26 minutes, 9 seconds you indicated about right shifting of some deal. Uh can you help us understand whether those deals have uh are already 26:17 26 minutes, 17 seconds closed or we are yet uh to see that closer happening and whether it would be uh large size in terms of the relatively 26:25 26 minutes, 25 seconds chunky deal compared to our usual uh size of the deal. If you can answer this question then I have a couple of followup. Thanks. 26:33 26 minutes, 33 seconds Yeah thank you DH. So dishe first of all you know on the Q2 I'll concentrate on Q2 first. Q2 our endeavor will be to 26:40 26 minutes, 40 seconds deliver some positive growth. I can't comment on the quantum because uh the situation is very fluid. But all I can 26:48 26 minutes, 48 seconds tell you the management team is working on delivering some amount of uh sequential revenue growth in Q2. Now Q3 26:55 26 minutes, 55 seconds we will like I said earlier to Girish also that if I deliver a strong order book in Q2 then maybe Q3 we can uh 27:04 27 minutes, 4 seconds continue our growth momentum for the year it is hard for me to say whether we'll be positive quite frankly uh dep 27:11 27 minutes, 11 seconds because we are starting from a much lower base if you remember last year our base was at about 160 odd million now 27:19 27 minutes, 19 seconds you know where our base is so mathematically it'll tell you that uh delivering positive growth may or may 27:26 27 minutes, 26 seconds not be possible ch it is quite difficult at this stage but I will not comment for the year and you know we don't give a guidance we would like to take one 27:34 27 minutes, 34 seconds quarter at a time that's point number one point number two on your deals uh construct uh look we have won two 27:41 27 minutes, 41 seconds reasonably large deals uh one deal is getting signed in the month of uh August so we have reasonable momentum on the 27:49 27 minutes, 49 seconds deal flow the two big deals that uh that you are referring to Like I had said even in the last call those are Q3 Q4 decisions. We are working on it. 27:59 27 minutes, 59 seconds Hopefully we will be able to close one out of the two and if that happens then at least we will be able to uh deliver robust audible for the year if not 28:08 28 minutes, 8 seconds revenue. Uh Deep our entire focus this year because of the fact that we are starting uh from a huge headwind 28:16 28 minutes, 16 seconds position is to really focus on quarteronquarter growth and delivering the order book rather than looking at 28:24 28 minutes, 24 seconds year onear because yearon year obviously will look very very muted. 28:29 28 minutes, 29 seconds No fair point and on the margin side if also you can comment. 28:33 28 minutes, 33 seconds Yes. So dep look I mean h our first quarter as you have seen that our margins were at 12.4%. Right? Last year 28:41 28 minutes, 41 seconds for the entire year we delivered a 13% margin. Our endeavor is at least to keep the margins at that level. Now I don't 28:48 28 minutes, 48 seconds know whether we'll be exactly 13 or 12.8 or 12.6 or 13.1 I don't know but it will 28:55 28 minutes, 55 seconds will be in that range. Our end will be to keep the margins at in that range. 29:01 29 minutes, 1 second Understand? Now I have a couple of followup. Uh first about the manufacturing if you can provide some sense how one should understand uh manufacturing uh growth playing out. 29:12 29 minutes, 12 seconds There are some headwinds. So if you can give growth sense, if you can slice and dice into some sub segment, how you are 29:18 29 minutes, 18 seconds uh seeing demand trend there and whether this pain is uh likely to be prolong or you expected to see rebound uh entering 29:27 29 minutes, 27 seconds into second half and second similar question for ERP segment. Uh so ERP if you can give some sense. Uh couple of 29:35 29 minutes, 35 seconds quarters back I think you were hopeful about recovery in ERP. Now again ERP is seeing uh challenges for last three quarters. See if you can give some sense 29:43 29 minutes, 43 seconds there. And one question for Kamini uh ETR increase I think you provided some uh statement but I missed it. If you can 29:51 29 minutes, 51 seconds help us understand uh what led to this increase in effective tax rate. Thank you. 29:57 29 minutes, 57 seconds Yeah. So Desh I will talk about the uh the manufacturing and the ERP situation and then I will hand it over to uh Kani 30:05 30 minutes, 5 seconds for her comments on the ETR. Uh so look manufacturing is uh is a manifestation of what we are seeing in the market. Now 30:14 30 minutes, 14 seconds you know while we work with some really marquee names in manufacturing the reality is we also work with lot of 30:21 30 minutes, 21 seconds midsize manufacturing companies in the US as well as in Europe. Now with everything that is happening on the 30:28 30 minutes, 28 seconds tariff side uh you know there is also a little bit of uncertaintity uncertainty in terms of decision-m and prolonged 30:36 30 minutes, 36 seconds decision- making and as you also know of our manufacturing business actually sits in two areas one is the pure 30:43 30 minutes, 43 seconds manufacturing and second is in the healthcare space also we work a lot with med devices uh customers which is also 30:51 30 minutes, 51 seconds manufacturing now if you look at it I I'm of the opinion that our Met devices business is now turning around that will 30:59 30 minutes, 59 seconds continue to show positive momentum. Our discrete manufacturing is going to be continue to be under pressure which is 31:07 31 minutes, 7 seconds why uh that has an effect on our ERP business because the ERP and manufacturing business go hand in hand. 31:14 31 minutes, 14 seconds It is hard for me to comment with uh with the way the world is moving and way the tariff situation is playing out in 31:22 31 minutes, 22 seconds terms of when this business will move around only because uh you know it is a wait and watch policy in terms of our 31:29 31 minutes, 29 seconds customers decision-m process. So we'll watch this space and as the quarters go by I will give you an update when the clarity comes in. But our endeavor on 31:38 31 minutes, 38 seconds the ground is also to kind of turn the manufacturing business around and see if we can deliver growth in the coming quarters. Uh on on the ETR, I'll I'll hand it over to K. 31:48 31 minutes, 48 seconds So so deep like I had mentioned if you look at our uh typical effective uh ETR, we've always been in the range of 25 to 31:57 31 minutes, 57 seconds 26%. Uh but you know, this quarter we've had to take it to about 36% because of a provision that we have made. What I had 32:04 32 minutes, 4 seconds called out was that we are engaging today with our tax experts and we have started transitioning our terms of engagement with key customers. So our 32:12 32 minutes, 12 seconds current assessment is that uh you know this impact is going to be for this financial year and then going forward we expect the ETR to come back to our 32:21 32 minutes, 21 seconds historical levels. So that's really our current outlook at this point of time and we are working through this engaging with the experts. 32:29 32 minutes, 29 seconds Understand? So broadly uh I'm not very clear let's say what led to this increase uh because you said certain client you are in uh conversation and 32:38 32 minutes, 38 seconds all those thing and this 35%age plus kind of number is likely to be there for next three quarter at least. So if you can provide some sense what led to increase. 32:48 32 minutes, 48 seconds So I think it's also the factor of you know some of our engagements uh deep pish that we looking at which is why I said we are engaging with our tax 32:55 32 minutes, 55 seconds experts at this point of time and you know what we really need is to just work with our customers to realign the contract terms. So which is the reason 33:03 33 minutes, 3 seconds why I'm saying that you know I mean I know this is much higher than what we've had historically but we do expect to get this back and I think our focus right 33:11 33 minutes, 11 seconds now is to make sure that we take all the necessary step to get back to this uh levels. Okay. Thanks. 33:20 33 minutes, 20 seconds [Applause] 33:24 33 minutes, 24 seconds Thank you. We have our next question from the line of Sepa from EQS Securities. Please go ahead. 33:32 33 minutes, 32 seconds Yeah, thanks. Thanks for the opportunity. Uh, in terms of whatever you explained till now, it looks like even after two and a half years of 33:41 33 minutes, 41 seconds effort in terms of turning around the ship and the bulas of growth profile, it still looks like our restructuring and 33:48 33 minutes, 48 seconds turnaround efforts are undergoing. So, what is not executing as per your plans? 33:55 33 minutes, 55 seconds Uh, is it more to do with the capability gap? Is it more to do with the execution aggression or you believe it's more to 34:03 34 minutes, 3 seconds do with the macro headwinds which is impacting us? 34:08 34 minutes, 8 seconds Yeah. So Sep look I mean if if I were to make an honest assessment in terms of what is going wrong with us there are two big things that is going wrong with 34:16 34 minutes, 16 seconds us and look macro is where it is. I mean that is not in our control so I will not talk about it. It is our top 24 34:24 34 minutes, 24 seconds customers or top 40 customers which essentially gives us 93% of our business. If you look at their performance over the last four quarters, 34:32 34 minutes, 32 seconds they have not matched up to the kind of growth that we had seen probably uh four uh six quarters back right. So they have 34:39 34 minutes, 39 seconds slowed down. Now one can argue whether uh this is because their spending has been going down which clearly it is. It 34:46 34 minutes, 46 seconds is also because some of these work is go becoming insourced as far as they are concerned. Some projects uh have got 34:53 34 minutes, 53 seconds over and which has impacted us in the last six quarters tremendously. So clearly our focus needs to go back into mining these accounts winning more in 35:02 35 minutes, 2 seconds those accounts to get back uh the business on track. That's number one. 35:06 35 minutes, 6 seconds Number two from a capability perspective again you know if you look at our digital and data business they have done reasonably well. Our infrastructure 35:14 35 minutes, 14 seconds business has grown significantly if you were to compare it over three four quarters. Our one uh big issue that we 35:21 35 minutes, 21 seconds are facing is ERP and ERP is very coupled with our manufacturing business. 35:26 35 minutes, 26 seconds So if I were to now look forward four quarters what will be our plan like I was telling Deb earlier separ 35:35 35 minutes, 35 seconds go back to the basics on mining the 24 and 16 accounts that's important. So the 40 accounts we have to mine. We have to 35:43 35 minutes, 43 seconds start adding more and more newer logos in that in in the bucket of 40. Uh that is number second. And number three, how 35:52 35 minutes, 52 seconds can we work with our partners like SAP, Oracle, etc. uh and uh invest in more leadership to turn around our ERP 36:00 36 minutes business. If we can do these three things at least in the medium term, we can get back uh the company into into a 36:08 36 minutes, 8 seconds growth mode. Now economic uh external economic factors like I said is not in our control. So hard for me to comment 36:15 36 minutes, 15 seconds how that will move but at least internally these are the three things that we have thought of in terms of 36:22 36 minutes, 22 seconds investments in terms of push focus uh to get the overall company back on growth because remember ERP still contributes 36:29 36 minutes, 29 seconds with all the uh headwind that we have faced over the last 3 four years it still contributes to 200 million out of 36:36 36 minutes, 36 seconds the 6 620 630 million that we have so that's a big business Okay. Okay. But uh again sorry to stress 36:45 36 minutes, 45 seconds on this uh in the review process we should be having some amount of lead indicators about these things happening 36:53 36 minutes, 53 seconds in the next one quarter two quarter or three quarters. So why the execution is more on the reactive approach rather 37:02 37 minutes, 2 seconds than a proactive approach because this could because the way you are explaining it looks like second half could also be 37:08 37 minutes, 8 seconds a difficult uh period for us in terms of the growth. 37:13 37 minutes, 13 seconds Yeah. So Sep look it's it's not it's not reactive. We know exactly what is happening right and uh again there are a 37:20 37 minutes, 20 seconds lot of specificators I can't discuss specific customer issues but we know exactly which vertical which account uh 37:29 37 minutes, 29 seconds which markets are really not doing well and we have a plan to fix them right the only reason I'm not giving a 37:37 37 minutes, 37 seconds forward-looking guidance one is because we don't give a guidance and second is because the uncertaintity is so much you know I I am not being able to pinpoint 37:46 37 minutes, 46 seconds point something but what I can tell you Sep is this the entire management team is focused on those two things that I spoke about one is creating pipeline 37:54 37 minutes, 54 seconds delivering the order book and I would tell you if you deliver the order book the revenue will follow and we have a plan in multiple levels we have a plan 38:03 38 minutes, 3 seconds for our top 24 clients the next 16 clients uh what we call as the attack accounts which are 16 clients that we 38:11 38 minutes, 11 seconds want to have in our portfolio and there is a proper plan account by account, people by people, service line by 38:18 38 minutes, 18 seconds service line which aligns to our you know long-term growth strategy. Now it'll be all about execution and you know execution from your perspective 38:28 38 minutes, 28 seconds will be higher order book and if it's and if we can deliver higher order book then the revenue will follow. 38:34 38 minutes, 34 seconds Okay, fair enough. Thanks for the detailed answer and sir uh I think uh in the last earnings call we called out we 38:41 38 minutes, 41 seconds had a two large deal and each about 25 million in Q3 Q4 plus we are expecting 38:49 38 minutes, 49 seconds another two close which got delayed from 1 Q to 2 Q and beside that you also spoke about couple of other large deals 38:58 38 minutes, 58 seconds which are in the pipeline needed to be closed in the second half. So am I understanding this correctly? 39:05 39 minutes, 5 seconds Yes, absolutely correct Sep. One deal as you know we closed in Q4 already. Uh one another deal uh you know we closed in 39:13 39 minutes, 13 seconds Q1. The deal that got shifted into Q2 will also close. Had it not closed then our order book would have come in at 39:20 39 minutes, 20 seconds about 1601 165 million but that will close in Q2. uh and the two large deals that you're talking about uh are in the 39:27 39 minutes, 27 seconds offering but you know those like I had said in the earlier earnings call are a little bit of a long shot and the closure date is also more like Q3 Q4 we 39:37 39 minutes, 37 seconds will absolutely work on them and we will see uh how we can convert but more importantly we also have to build our pipeline we have to get more deals on 39:45 39 minutes, 45 seconds the table which the team is also working on. 39:49 39 minutes, 49 seconds Okay. Okay. And just last few things uh in terms of EIT margin target which we have said last time uh we are not 39:56 39 minutes, 56 seconds changing that this year we could be flattish plus or minus in a small range and then from 527 there could be uptick 40:05 40 minutes, 5 seconds in the margin. Is it the right way of understanding? 40:08 40 minutes, 8 seconds Yes sir. Because look I mean at the end of the day if the revenue is so muted see from the cost side of course we have done a lot on the cost side and we will 40:16 40 minutes, 16 seconds continue to do a lot right on our overhead side and the cost side but at the same time we will invest in the right areas. So our uh going in position 40:26 40 minutes, 26 seconds right now is that the IBITA margins will be in the current range uh give or take a few uh uh which uh we spoke about but 40:35 40 minutes, 35 seconds as the revenue growth comes back uh the margins will automatically improve because you know the operating leverage will come into play. 40:43 40 minutes, 43 seconds Yeah and last thing uh madam just wanted to understand this higher tax rate which we expect in FI27 will have a cash flow 40:51 40 minutes, 51 seconds impact or we are doing just a prudent provisioning of the same in anticipation of a higher tax outflow in the later 41:00 41 minutes years it's a combination of both at this point of time which is why I said that there would be some cash outflow that would happen on account of but you know 41:08 41 minutes, 8 seconds like we are engaging with our tax experts to see as to how we can work around website. So it could be a combination of both. 41:15 41 minutes, 15 seconds Okay. Okay. All the best harmony ma'am and welcome sir. Thank you. 41:23 41 minutes, 23 seconds Thank you. We have our next question from the lineup. Ravi man from McQuire. Please go ahead. 41:30 41 minutes, 30 seconds Hi thank you for the opportunity. Uh I mean just uh you know wanted to uh ask about which side uh is a spec uh you 41:38 41 minutes, 38 seconds know high-tech customers which vertical is that classified and saw that at least three of your key deal wins are from that segment. Uh is that in 41:46 41 minutes, 46 seconds manufacturing or is that in the services side? It is on the services side uh Rabi. 41:52 41 minutes, 52 seconds Okay. And life sciences I noticed that you know we haven't really seen any events. uh could uh could you talk a bit about uh that uh you know what's the 42:00 42 minutes outlook there uh is that uh you know even apart from medical devices uh is that still solved? 42:08 42 minutes, 8 seconds Yes. So Ravi look I mean predominantly almost 80% of our business is medical devices. While we have not seen any win 42:15 42 minutes, 15 seconds in Q2 there are couple of deals that we are working on even on the uh on the life sciences space that we hope to 42:23 42 minutes, 23 seconds close between Q2 and Q3 we are working on them. Uh I personally feel that the med devices industry per se though it 42:31 42 minutes, 31 seconds went through a little bit of challenge it will turn around but again we don't know how the tariff situation will play out for them. We'll have to wait and 42:38 42 minutes, 38 seconds watch. Uh but at least the momentum is picking up in in that area. Uh we while we did not win a deal, we have been uh 42:48 42 minutes, 48 seconds selected by a very large med devices uh conglomerate as one of their preferred vendors and we hope that some of the 42:55 42 minutes, 55 seconds deals should be coming out of that over the next two to three to four quarters. 43:00 43 minutes So I if you ask me Ravi I'm feeling a little bit more positive on the med devices space uh on the larger life 43:08 43 minutes, 8 seconds sciences area you know we obviously don't work with any providers and we uh don't have the capability to work with any providers but we have started 43:16 43 minutes, 16 seconds working with some of the pairs and as we sign up some new clients on that area I will come back uh to you with an update 43:24 43 minutes, 24 seconds really thanks and we saw you a couple of wins in insurance uh uh so Look like that's also picking up. Uh how about the banking segment? 43:34 43 minutes, 34 seconds So uh Ronnie again as you know uh while we call our business BFSI but we don't really work with any banks right I mean 43:42 43 minutes, 42 seconds we work with asset managers uh we work with payment providers and we work with a little bit of insurance. Insurance is a very very small business for us. We 43:51 43 minutes, 51 seconds are winning some small little deals there and we feel uh that will continue to show growth. Uh on the payment side we will see some softness going forward. 44:02 44 minutes, 2 seconds Uh but it'll be seasonal. I feel Q2 will be a little bit of growth again in payments. Uh Q3 because of furloss could 44:12 44 minutes, 12 seconds be flattish. Uh but in the long term I think the payments as well as the asset manager space will grow for us. 44:18 44 minutes, 18 seconds Thank you. And notice that this quarter you know we've seen a bit of shift offshore. So should we expect that to continue and will that help margins uh 44:27 44 minutes, 27 seconds uh you know or you think that new deals when they you know are they coming through uh we will have to uh keep the off onsite offshore mix more or less at the current levels. 44:37 44 minutes, 37 seconds Uh Ravi our expectation it would be more around the uh current levels. I think the shift that you saw was largely because some of the regrowth had 44:45 44 minutes, 45 seconds happened more on site at this point of time and that's the reason that we expect it to remain at the same levels. 44:51 44 minutes, 51 seconds All right. Thank you. Best luck. 44:56 44 minutes, 56 seconds Thank you. We have our next question from Lo Shadhagar from Asian Market Securities. Please go ahead. 45:05 45 minutes, 5 seconds Yeah. Hi sir. uh we've seen um you know our sales and support headcount coming off for the last many quarters and if 45:12 45 minutes, 12 seconds you look at on a Y basis it's about almost 17 18%. So what is happening there? Um is it more of overhead staff 45:20 45 minutes, 20 seconds that is that is going out or are we also looking at rationalization of a sales team? 45:26 45 minutes, 26 seconds Yeah. So Sha our going in position is to invest in sales. So you should not take this as u as a cutting of sales force to 45:36 45 minutes, 36 seconds enhance margins. That's not the idea. We will continue to invest in sales heavily going forward as well and you will see 45:43 45 minutes, 43 seconds an uptick. Uh but we will invest in specialized sales instead of generalistic salespeople. Uh also sha we 45:51 45 minutes, 51 seconds will measure sales productivity very very strongly. Uh and you know I can't comment today whether we are right sized in terms of sales or not. uh that will 46:00 46 minutes be driven by productivity and there is a big exercise that is going on but the larger point that I made earlier I think to Priyanka or Deep is uh we will have 46:08 46 minutes, 8 seconds the right roles in the right geographies right so from that perspective you know we are rejigging our workforce a little bit but investments in sales in the 46:18 46 minutes, 18 seconds right kind of accounts that give us growth will continue yeah and shut just to add to what Angen said right while we continue investments in the sales area the the reason why you 46:27 46 minutes, 27 seconds see a reduction is we are also looking at a lot more internal optimization and automation in our internal processes which is why our support headcount has 46:36 46 minutes, 36 seconds also been showing a declining trend. So while it's clubed together for you from your standpoint sales and support reduction is not in the sales area it's 46:43 46 minutes, 43 seconds largely in the support area then we sure related question is any progress on hiring of CEO America's after the exit 46:53 46 minutes, 53 seconds of new group since we think more than two quarters that uh you know we've been looking for replacement so any update on that 47:01 47 minutes, 1 second so sh we will come back to you on that I mean u uh there is uh there is some thought process that we are going through at this stage and at an 47:10 47 minutes, 10 seconds appropriate time Asha we will come back and update you on this right and so just last one question from 47:17 47 minutes, 17 seconds many companies have been talking of they get gaining incremental market share in the consolidation deals so what is our 47:24 47 minutes, 24 seconds status on such consolidation deals that come up uh in the pipeline yeah so some of the deals that I talked 47:32 47 minutes, 32 seconds about that we have won part of it of course is vendor consolidation and some of the other deals are also So uh a new 47:39 47 minutes, 39 seconds deals which is more agentic AI I mean one of the deals that where we are delivering uh to our clients with 47:46 47 minutes, 46 seconds agentic AI solution is a part of the consolidation deal. So we're winning our fair share of consolidation deals as 47:52 47 minutes, 52 seconds well, Shhata. But like I said, our focus rather than just driving vendor consolidation is to kind of win new 48:01 48 minutes, 1 second transformation deals for our clients uh which is more AIcentric and where I will be able to use my AI platforms to deliver. 48:10 48 minutes, 10 seconds Right. And sir just one last question. 48:12 48 minutes, 12 seconds Um RO saw a steep decline. So the manufacturing decline and RO decline are related or 48:20 48 minutes, 20 seconds yeah it is related uh because there are some manufacturing uh uh clients uh spend and we and these clients are 48:27 48 minutes, 27 seconds really global clients. So we cannot classify whether RO or in the US but you're absolutely correct Shhata that aligns with the manufacturing uh 48:35 48 minutes, 35 seconds decline. uh but overall ro outside of uh manufacturing has done reasonably well. 48:41 48 minutes, 41 seconds In fact, the two or three deals that we are signing or about to sign are actually in the ro area. 48:47 48 minutes, 47 seconds Great. Thank you. Thank you. 48:54 48 minutes, 54 seconds We have our next question from the line of Sudep Gupali from Kak Mahindra ANC. Please go ahead. 49:02 49 minutes, 2 seconds Uh hi. Hi. Thanks for the opportunity. 49:04 49 minutes, 4 seconds So my question is uh I think a follow up on what one of the earlier participant asked uh on Q3 growth. Uh so you're 49:12 49 minutes, 12 seconds saying the deal that got right shifted uh is almost signed in the opening for progress and uh if if things uh 49:21 49 minutes, 21 seconds especially on the macro side I I I understand that there is a the situation is very fluid but uh if things let's 49:27 49 minutes, 27 seconds assume things uh can fit a score uh and you know given that you have the comfort of that uh uh deal timing and and the 49:36 49 minutes, 36 seconds deal timings happen to be higher than what they were in this quarter uh then is it is it fair to assume assume that December quarter will also be a growth 49:43 49 minutes, 43 seconds quarter beside like 160 basis points of hinges per season. Is that the right mark to assume? 49:51 49 minutes, 51 seconds Yeah. So, Sudep I will break this up for you right so that uh you know I communicate it clearly and I'll also ask 49:57 49 minutes, 57 seconds Khan to step in on this one. So look if I can sign more deals in Q2 than Q1 uh roughly about anywhere in the range of 50:05 50 minutes, 5 seconds 162 165 million in that range if I sign then clearly Q3 will also be a growth uh 50:12 50 minutes, 12 seconds growth quarter. The only reason I am not being able to say that with something on the table is because I don't know how much furloss will my customers come back 50:21 50 minutes, 21 seconds with. See the growth operationally I can tell you I will grow in Q3 but the problem is how much hit will I take 50:29 50 minutes, 29 seconds because of furloss is too early to comment because as you know 30 or 40 not 30 50% of my business is manufacturing 50:38 50 minutes, 38 seconds and depending upon how the tariff situation goes for them we don't know how much amount of discretionary cut they will have as a result how much 50:46 50 minutes, 46 seconds furloss they will ask us to take which is the only reason I'm saying this But operationally if you ask me we'll 50:53 50 minutes, 53 seconds absolutely grow in Q3 as well. Barring uh the only caveat here is if the furlows are more than anticipated 51:02 51 minutes, 2 seconds historically then obviously we'll have an impact otherwise we'll be growing minister uh that's why my uh question 51:09 51 minutes, 9 seconds had a predication that uh uh uh broadly in the historical range uh given that it is too early to uh predict fur laws uh 51:18 51 minutes, 18 seconds uh but otherwise uh you don't see uh I think this is with regarding asking for some more clarity on one of earlier 51:26 51 minutes, 26 seconds comment uh uh that uh uh uh that that says that uh Bishu is sounding we are sounding a bit weak. I I I'm just trying 51:35 51 minutes, 35 seconds to get some clarity on his comment uh because uh I I was not there for the full extent of the call just that part. 51:42 51 minutes, 42 seconds Okay. So yes so let me let me clarify and I think uh I k clarified this to sep 51:50 51 minutes, 50 seconds uh sorry to yeah to sep as well. So look, we are entering Q1 as you know we entered Q1 with a lot of headwind, 51:57 51 minutes, 57 seconds right? Earlier our revenue base was roughly about $160 million. We entered uh or rather we ended uh Q uh Q4 at 52:07 52 minutes, 7 seconds about $152 million base. So we had a huge headwind because of uh you know uh 52:14 52 minutes, 14 seconds closure of projects, ramdowns and going a lot of the work going to uh the captives. Now if I were to take that 52:21 52 minutes, 21 seconds base right and growing from here uh and you will be able to do the math we'll need substantial amount of sequential 52:29 52 minutes, 29 seconds growth to show growth from there on right so which is why my request is and I I know this maybe uh not the right way 52:37 52 minutes, 37 seconds to say it but uh you know let's let me focus on quarteronquarter performance rather than year-on-year performance because with that kind of headwind 52:46 52 minutes, 46 seconds yearon-year performance may not make too much sense. So my entire focus and my management team's focus is first deliver 52:52 52 minutes, 52 seconds growth in Q2 and then like we discussed if there are not too much furlows deliver growth in Q3 and then Q4 uh but 53:01 53 minutes, 1 second uh at a larger scope if I can deliver this what I just said focus on quarteron quarter and deliver above 850 million of 53:09 53 minutes, 9 seconds order book then at least next year I can commit to a solid growth year. 53:16 53 minutes, 16 seconds Fair enough. I was just trying to get that uh confidence on uh sequential basis only quarter on quarter go registry for the second half uh uh not 53:23 53 minutes, 23 seconds on a year on year basis since one of the earlier comments by one of the participants uh seem to imply otherwise that's the only thanks for the clarification. 53:34 53 minutes, 34 seconds Thank you sir. 53:38 53 minutes, 38 seconds Thank you. We have our next question from the line of Aishik Shindar from Incred. Steve go ahead. 53:50 53 minutes, 50 seconds Yeah. Hi, thanks for the opportunity. Uh just one question. Um sir historically 53:58 53 minutes, 58 seconds when we have had a hunting and a mining team restructuring typically 54:05 54 minutes, 5 seconds uh you know what is the time frame within which they actively start contributing to the new pipeline 54:14 54 minutes, 14 seconds especially the hunting team any color in terms of that timeline could be useful. Thank you for taking my question. Yeah. 54:21 54 minutes, 21 seconds So, Abishek uh the hunting team actually does two things, right? One is either they work on a deal in a new account or 54:28 54 minutes, 28 seconds they open a new account, right? So, let me uh take both the questions separately. When you're working on a new 54:35 54 minutes, 35 seconds deal in a new account, uh that depends upon the deal closure. If the deal closes quickly, we can start getting revenues quickly. But the other uh you 54:44 54 minutes, 44 seconds know rhythm or a cycle in in the hunting motion is to open an account, sign an MSA, get the account in our fold and 54:53 54 minutes, 53 seconds then you start walking the floors. My personal take is when you open a new account, sign an MSA and start walking the floors. By the time you close the 55:01 55 minutes, 1 second first deal and see the first dollar of revenue, it could take anywhere between 6 to 12 months. That is the motion of a new account opening MSA. Which is why we 55:10 55 minutes, 10 seconds put an account manager who starts walking the floors and over a 2 three period the account can become 5 million, 10 million, 20 million which is the 55:18 55 minutes, 18 seconds account mining exercise. Uh but the algorithm where you are working on a deal in a new account that could close whenever it closes could be 3 months could be 6 months. 55:31 55 minutes, 31 seconds Understood. So my question was more about uh business in existing accounts versus the end business. So generally 3 55:39 55 minutes, 39 seconds to 6 months is the time frame when the new team uh you know would take to get uh know the em business. Is that the right way? 55:49 55 minutes, 49 seconds Absolutely. Yes. Yes. Yes. 55:54 55 minutes, 54 seconds Perfect. Uh very helpful and thank you for taking my question. 56:00 56 minutes Thank you. We have our next question from the line. A followup from Girish Pai from BB Capital Markets. Please go ahead. 56:08 56 minutes, 8 seconds Yeah, thanks for the follow-up opportunity. I just had one question. 56:12 56 minutes, 12 seconds You mentioned insourcing and captive a couple of times or maybe more than twice during this call. Uh are these multiple 56:20 56 minutes, 20 seconds clients and uh why is the insourcing happening? Is it that the clients can do the same work at cheaper rates uh within 56:27 56 minutes, 27 seconds the capitals or any specific reason why the insourcing is happening? 56:31 56 minutes, 31 seconds So no no no so so Kirish you must not look at insourcing from a rate perspective it's not about rate it is 56:38 56 minutes, 38 seconds more about you know standing up their uh their GCC's and getting that off the guard it could also be some amount of 56:46 56 minutes, 46 seconds work which are more regulatory in nature which needs to be within their four walls so I would not read too much into 56:52 56 minutes, 52 seconds that it was more to explain in terms of the fact that we have we have not lost those deals to competition we've lost 57:00 57 minutes those uh actually lost is the wrong word. We've uh given up those people or that piece of work uh to an insourcing 57:09 57 minutes, 9 seconds rhythm is what I was referring to. It's nothing got to do with price gish and is I mean are these more than two three clients? 57:18 57 minutes, 18 seconds So it again we will not we will not talk client specific but yeah it is more I mean it will be a couple of clients. 57:25 57 minutes, 25 seconds It's not more than two or three clients but it is in that range. 57:29 57 minutes, 29 seconds Okay, one last question on pricing. Uh how is the pricing in the market today compared to say 3 months back or 6 months back on discretionary work the so-called discretionary work. 57:40 57 minutes, 40 seconds Yeah. So look the pricing is going to come under a lot of pressure right which is why Gish if you remember my first comment was at least to get my renewals 57:49 57 minutes, 49 seconds done at the current price levels and not give discounts on the renewals and that itself is a lot of effort considering 57:55 57 minutes, 55 seconds the macroeconomic situation. Now as far as new deals are concerned on discretionary or even non-discretionary 58:03 58 minutes, 3 seconds there is enormous amount of pricing uh pressure at this stage uh which is uh which is why you know we are taking two 58:10 58 minutes, 10 seconds strategies actually three one is trying to get the renewals done at the current pricing number one number two uh getting 58:18 58 minutes, 18 seconds our organization cost structure corrected to reflect the new reality of the pricing pressure that we will go 58:25 58 minutes, 25 seconds through and third of course we will also be aggressive in the market to gain some market share but strategically win some deals at a at a little bit more competitive pricing. 58:36 58 minutes, 36 seconds Thank you. Thank you. 58:44 58 minutes, 44 seconds We have another follow-up question from the line of SEPHA from EQA Securities. Please go ahead. Yeah, thanks. Thanks for the followup. 58:52 58 minutes, 52 seconds Just a bookkeeping question. If I just look at the intangible asset both which is mentioned as other intangible and 59:00 59 minutes intangible asset under development it has gone up on a Y from $1.4 million to 59:07 59 minutes, 7 seconds $3.1 million and largely because of the intangible assets under development. So I agree as a percentage to revenue it's 59:15 59 minutes, 15 seconds not very big but what is leading to this increase? 59:20 59 minutes, 20 seconds So, so Sep it's is actually if you could recollect we had mentioned uh you know about our own in-house uh uh 59:28 59 minutes, 28 seconds transformation program that we had been doing a couple of quarters back Optimus uh as we are building it up it's really the cost associated to it. 59:38 59 minutes, 38 seconds So Optimus is one of the solution or a tool which we are developing. Yes, absolutely. 59:45 59 minutes, 45 seconds Around automation or it is it is actually uh you know an entire platform that we are creating in 59:52 59 minutes, 52 seconds house uh for our own internal purposes in terms of transforming our organization. 59:59 59 minutes, 59 seconds Okay. Okay. Thank you. All the best. Thank you. 1:00:05 1 hour, 5 seconds Thank you. We have our next question from the line of Dashi Mazumar from Swan Investment. Please go ahead. 1:00:15 1 hour, 15 seconds Good evening. Hi Anan, thank you so much for taking my question and kami all the best for your future endeavor. So Anan, I have a little bit of strategic 1:00:24 1 hour, 24 seconds question in my mind. uh if I see your journey in Bellaoft uh once you joined after we faced a uh huge headwind from 1:00:33 1 hour, 33 seconds Inbakare uh which was kind of managed well then we came back into the growth mode uh for two to three quarters uh 1:00:41 1 hour, 41 seconds because some of the changes has been done some strategic uh changes has been made time consolidation has happened 1:00:48 1 hour, 48 seconds hired new people then if I see over the last two to three quarters we suddenly kind of uh collapse from that uh growth 1:00:56 1 hour, 56 seconds journey. So and obviously because of that our margin also got impacted. So according to your analysis what was the 1:01:03 1 hour, 1 minute, 3 seconds reason of this uh impact? It was like job half half done when we were kind of changing strategically three four 1:01:12 1 hour, 1 minute, 12 seconds quarters back it was more or it was more of a macro impact that we have faced or it was more of a client specific or 1:01:20 1 hour, 1 minute, 20 seconds vertical specific issues that uh we have faced. So according to your analysis what are the among all these three what is the main reason according to you in 1:01:29 1 hour, 1 minute, 29 seconds your mind that has impacted us the most and the second is at what level of transition that we are in and uh 1:01:37 1 hour, 1 minute, 37 seconds according to you how much time it will take approximately to get back into the growth phase. 1:01:43 1 hour, 1 minute, 43 seconds Yeah. So uh Dish first of all thank you for this question. So there are a lot of questions in one question but I'll try and summarize and answer them right. Uh 1:01:52 1 hour, 1 minute, 52 seconds so look uh there are fundamentally there is nothing wrong with the company right the company is strong and that shows up in our balance sheet that shows up in 1:01:59 1 hour, 1 minute, 59 seconds our cash flow generation uh the very fact that we have no debt we've been able to uh generate positive cash flows every year shows that we are a 1:02:08 1 hour, 2 minutes, 8 seconds fundamentally strong company what we need is growth now where did growth go wrong it went wrong in two two or three areas one is like I was mentioning in 1:02:16 1 hour, 2 minutes, 16 seconds earlier things some of our customers have insourced a lot of work some of the projects have finished and they have not got renewed. Uh and this has happened at 1:02:25 1 hour, 2 minutes, 25 seconds about two or three clients, not too many, maybe at best four clients out of the 250 clients that we have served. But 1:02:32 1 hour, 2 minutes, 32 seconds over the last four quarters, we've lost a lot of revenue because of them. 1:02:37 1 hour, 2 minutes, 37 seconds Correct. uh but that but equally we won a lot of business which is why uh though we've lost a lot of business uh we have 1:02:45 1 hour, 2 minutes, 45 seconds still been able to stay at the current levels which is the commentary that you made that in the last four quarters we 1:02:52 1 hour, 2 minutes, 52 seconds have uh uh worked to only be in the same place I feel personally that you know this is an ongoing journey we have made 1:02:59 1 hour, 2 minutes, 59 seconds lot and lot of changes in the organization and when I make ch mean changes I don't mean people changes alone in the way we work, the way we 1:03:08 1 hour, 3 minutes, 8 seconds serve our customers, the kind of capabilities that we build, the kind of capabilities we want to build for the future. Uh even in the year that we did 1:03:16 1 hour, 3 minutes, 16 seconds not do well, we've given our people salary hikes, promotions, and everything, right? So, we investing in our people. We're investing in our 1:03:24 1 hour, 3 minutes, 24 seconds capabilities and we have a long-term view about all this. It's hard for me to say that how many more quarters will it take for consistent growth to come back. 1:03:32 1 hour, 3 minutes, 32 seconds See, look, we we are attempting to deliver growth even in Q2. So technically in Q2 we will deliver growth. Hopefully if the furls are not 1:03:40 1 hour, 3 minutes, 40 seconds too much we should deliver growth in Q3 as well. Uh but the furloss are way too much then then I can't obviously 1:03:48 1 hour, 3 minutes, 48 seconds comment. Now it's an uncertain world I will have to focus quarter on quarter take one quarter at a time uh and then 1:03:56 1 hour, 3 minutes, 56 seconds build on it. But of course our endeavor is to get to consistent quarteronquarter growth for 4 5 6 7 8 quarters uh sooner 1:04:04 1 hour, 4 minutes, 4 seconds rather than later. Uh so it it is not a half a job half done. We continue to do the job and we are fiercely committed to 1:04:12 1 hour, 4 minutes, 12 seconds our customers to our people and we will build a strong robust company in the long term. 1:04:19 1 hour, 4 minutes, 19 seconds Sure. And uh uh when you said that building a robust company in the long term from your recent experience at 1:04:26 1 hour, 4 minutes, 26 seconds least uh where do you think that the maximum gap is? It is like depending on a one single vertical uh which is very 1:04:33 1 hour, 4 minutes, 33 seconds volatile in nature uh or kind of depending on few single customers uh where again you can have higher pressure 1:04:41 1 hour, 4 minutes, 41 seconds going forward. So according to you what are the areas which need to be addressed very very urgently. 1:04:48 1 hour, 4 minutes, 48 seconds Both what you said both traditionally we have been an ERP company which has not shown growth. We are big in manufacturing which has not shown growth 1:04:56 1 hour, 4 minutes, 56 seconds right. Uh so we have to do both. We have to acquire new customers. We have to also mine our existing customers and 1:05:03 1 hour, 5 minutes, 3 seconds over time we have to build up uh manufacturing back to growth path while uh life sciences and energy utilities 1:05:11 1 hour, 5 minutes, 11 seconds and all of the other businesses continue to grow. 1:05:16 1 hour, 5 minutes, 16 seconds Sure. Sure. Understood. Thanks and thank you so much for answering my questions. Thank you. 1:05:25 1 hour, 5 minutes, 25 seconds Thank you. 1:05:27 1 hour, 5 minutes, 27 seconds We have our next question from the line of Zubor Singer from Noama institutional equities. Please go ahead. 1:05:34 1 hour, 5 minutes, 34 seconds Yeah. Hi. Uh thanks for taking my question. Uh I'm sorry I know we have passed a review time. I'm sorry to hop on this question again. I'm just trying 1:05:42 1 hour, 5 minutes, 42 seconds to wrap my head around the tax uh thing that K you mentioned. So first of all just want to clarify you are saying that 1:05:50 1 hour, 5 minutes, 50 seconds for the next three quarters in this year also we will have 35% tax rate. Did I get that correct? 1:05:56 1 hour, 5 minutes, 56 seconds Yes, that's absolutely right. Uh for this year, we're looking at a tax range in this range. Yes. An ETR. 1:06:04 1 hour, 6 minutes, 4 seconds Got it. So now just want to understand the nature of this thing. So is this some sort of a tax demand that has been raised by the department that we are 1:06:12 1 hour, 6 minutes, 12 seconds trying to fulfill? Is this some kind of re-evaluation that we are doing? you mentioned like some of the projects and you're trying to work around what has 1:06:19 1 hour, 6 minutes, 19 seconds what has a project got to do with the tax because I think that is a different kind of a thing and so just trying to understand the nature of this uh expense 1:06:26 1 hour, 6 minutes, 26 seconds that we are looking at for the full year. 1:06:29 1 hour, 6 minutes, 29 seconds So, so at this point of time like I said know since we're engaging with our tax experts we're actually relooking at our uh models that we work with our 1:06:37 1 hour, 6 minutes, 37 seconds customers to be able to align to our operating models which is the reason why I think we are kind of giving you a very limited information at this point of 1:06:45 1 hour, 6 minutes, 45 seconds time we're working through this but I think what we can say with a lot of certaintity is that uh given the work 1:06:52 1 hour, 6 minutes, 52 seconds that we've done so far uh you know we see this as an impact for the current year and not beyond that h so allow us some time to work through this and 1:07:00 1 hour, 7 minutes probably we would come back to you later on. 1:07:05 1 hour, 7 minutes, 5 seconds Sure. Thank you so much for taking my question and I wish you all the best. Thank you. 1:07:12 1 hour, 7 minutes, 12 seconds Thank you ladies and gentlemen. That would be the last question for today and I now hand the conference over to Mr. Angul Gua CEO 1:07:20 1 hour, 7 minutes, 20 seconds and MD Villa Soft Limited for closing comments. Over to you sir. 1:07:25 1 hour, 7 minutes, 25 seconds Yeah thank you. Thank you so much. Uh so to begin with I would like to thank each one of you for your interest in biddlesoft and for your insights with 1:07:33 1 hour, 7 minutes, 33 seconds questions. Uh at Bridlesoft we have taken undertaken and initiated several actions over the past couple of quarters 1:07:41 1 hour, 7 minutes, 41 seconds to secure our long-term profitable growth objectives. Why and we've discussed this in the last 1 hour that while the macros are unfavorable for a 1:07:50 1 hour, 7 minutes, 50 seconds few quarters. Uh we believe that we are well positioned to benefit uh from the emerging market condition. Uh I feel our 1:07:59 1 hour, 7 minutes, 59 seconds first goal would be to deliver for Q2 and we are working on delivering some growth in Q2. Uh and then take it 1:08:06 1 hour, 8 minutes, 6 seconds forward uh from there on. uh like I've mentioned multiple times, we will take one quarter at a time and our focus 1:08:13 1 hour, 8 minutes, 13 seconds clearly this year is going to be to deliver more and more funnel and more and more order book. So thank you once 1:08:20 1 hour, 8 minutes, 20 seconds again. Uh I look forward to speaking to all of you again next quarter. In the meanwhile, please feel free to reach out to Abhinand for any clarifications or 1:08:29 1 hour, 8 minutes, 29 seconds feedback. Thank you and I and thank you and have a great evening. 1:08:34 1 hour, 8 minutes, 34 seconds Thank you. Thanks on behalf of Villaasoft Limited. That concludes this conference. 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