Expleo Solutions Ltd — Q4 FY26

Expleo Solutions Ltd Q4 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=Rcs0UJSyBC4 Published: 3 hours ago

0:01 1 second Ladies and gentlemen, good day and welcome to Clear Solutions Limited Q4 FI26 earnings conference call. As a 0:10 10 seconds reminder, all participant lines will be in the listen only mode and there'll be an opportunity for you to ask questions after the presentation concludes. Should 0:19 19 seconds you need assistance during this conference call, please signal an operator by pressing star then zero on your touchstone phone. 0:26 26 seconds Please note that this conference is being recorded. 0:30 30 seconds We now hand the conference over to Miss Asha Gupta from ENY LLP investor relations. Thank you and over to you. 0:39 39 seconds Thank you Nita. Good morning to all the participants in the call. Welcome to the Q4 FI26 earnings call of XPO Solutions 0:48 48 seconds Limited. The results and press release have already been mailed to you and you can also see the same on the company's website. In case anyone does not have 0:57 57 seconds the copy of press release and presentation, please do write to us and we will be happy to share with you. 1:03 1 minute, 3 seconds Representing the management today, we have Mr. Dal Kellison, chairperson and non-executive director. Mr. Funni Tangala, managing director and CEO, Mr. 1:15 1 minute, 15 seconds P. Palani Aan, PO whom we will be referring to as money. Pani will start the call with a brief overview of the 1:22 1 minute, 22 seconds quarter and year gone by which will be followed by money who will be giving you the brief update on the financials. 1:29 1 minute, 29 seconds After that we will open the floor for Q&A session. As usual I would like to remind you that anything mentioned in the call which gives any outlook for the 1:38 1 minute, 38 seconds future or which can be construed as forward-looking statement must be viewed in conjunction with the risk and uncertaintities that we face. This risk 1:48 1 minute, 48 seconds and uncertainties are included but not limited to what we have mentioned in the prospectors file with sebi and subsequent annual reports which you can 1:56 1 minute, 56 seconds find on our website. Having said that I will now hand over the floor to Mr. Pani. Over to you funny. 2:03 2 minutes, 3 seconds Hey thanks a lot Asha and a very good morning to all uh and thank you for joining this call and continuing your trust on exlo. 2:12 2 minutes, 12 seconds So let me start by informing that we have done a good quarter and delivered a 2:19 2 minutes, 19 seconds good result in Q4 FI26 with income up by 14.8% yearonear 2.5% quarter on quarter 2:27 2 minutes, 27 seconds and five 15.5 on the AITA I would say this growth is primarily uh 2:35 2 minutes, 35 seconds from various factors I would categorize them into four major categories. The good news is the Europe started to lead 2:43 2 minutes, 43 seconds us from the front. There has been a significant uh movement uh with their own uh European cost pressures. There is 2:51 2 minutes, 51 seconds significant work flowing in and that resulted in Europe leading it from the front which is the fastest growing region uh for XPO. So that is one. From 3:00 3 minutes a sector viewpoint, we have uh uh banking, financial services and insurance uh on the technology side and 3:08 3 minutes, 8 seconds aerospace, defense on the engineering side have uh performed extremely well. 3:13 3 minutes, 13 seconds Primarily this is uh uh an outcome of a BFSI being one of the pioneers in adopting technology faster than anyone 3:22 3 minutes, 22 seconds else and we being one of the very few who have em embraced the AI way in 2023 3:29 3 minutes, 29 seconds and started doing PC's in 2024 we started seeing that and I would say today that there is not even a single 3:38 3 minutes, 38 seconds financial services proposal that goes out uh goes out without AI element into rate. So they are very fast uh in terms 3:45 3 minutes, 45 seconds of uh adopting technology and aerospace defense. This is something which I have been saying quarteron quarter and in our 3:52 3 minutes, 52 seconds earnings call even before that uh probably uh attributing to the global uh scenario there has been a high spend on 4:01 4 minutes, 1 second defense and AROW has been doing uh very well and we have a very positive outlook even for the upcoming year as well. 4:11 4 minutes, 11 seconds And the third uh area where uh I see things attributing to the growth is uh our internal revenue is ticking up which 4:20 4 minutes, 20 seconds is uh which is extremely good news and we foresee this trend to continue given the European uh situation what we see 4:30 4 minutes, 30 seconds and the last driving factor obviously is our uh the forex gains I mean that has a decent impact on the growth. So these 4:38 4 minutes, 38 seconds are the four major uh areas which have propelled our growth and uh we will uh we will see to that this uh is at least maintained in uh the quarters to come. 4:51 4 minutes, 51 seconds Having said that let me also talk about uh the pressures the pressures on margin pressures on revenue will continue to be 5:00 5 minutes there. I mean um this is not something only to exclude. This is a global trend that we are uh uh observing. The total 5:08 5 minutes, 8 seconds ticket size is shrinking with advent of uh artificial intelligence and its services. The ticket size is coming and 5:18 5 minutes, 18 seconds the engagements are become shorter. So the only way we want to overcome this is by increasing the volume rather than uh 5:26 5 minutes, 26 seconds going after big ticket uh items which may not be the way to go in future. This continues but the other part of it is uh 5:35 5 minutes, 35 seconds we are in a juncture at this point of time where we have to start cannibalizing our own revenue by infusion of artificial intelligence. 5:46 5 minutes, 46 seconds There is not a favor anymore. There is a demand. Most of the customers are expecting any new proposal, any new uh 5:56 5 minutes, 56 seconds work to have a significant element of uh AI may not be so much in the financial uh in the uh engineering services where 6:05 6 minutes, 5 seconds the AI adoption is very less but on the technology side the significant where our bulk of business is and more so as I told in financial services the adoption 6:14 6 minutes, 14 seconds is much more higher. So literally no financial services proposal today goes out without having an AI element. So 6:21 6 minutes, 21 seconds that results in uh the new business ticket size to be smaller and also for the existing business the renewals will 6:29 6 minutes, 29 seconds have a significant element of uh AI thereby cannibalizing a bit of our revenue to stay relevant. If we don't do 6:37 6 minutes, 37 seconds somebody else will offer them to do. So we are proactively doing that. This may have some pressure initially but the success of it will only see a 6:46 6 minutes, 46 seconds multiplication factor applied thereafter. So from uh that point of view we stand a clear advantage. This is 6:53 6 minutes, 53 seconds what something which I've been saying uh uh every earning calls as well that we have an advantage of a early bird. We 7:01 7 minutes, 1 second have put the XPO.ai AI platform uh much ready last year and this year we can 7:08 7 minutes, 8 seconds proudly say that 15% of our revenues are influenced by AI. So that puts us in a place where we are leading it. But I 7:17 7 minutes, 17 seconds mean this is where the sustenance matters. We have to continue to be invested. We are improvising exploit.ai uh on a constant basis with the R&D 7:26 7 minutes, 26 seconds going into there because the others will catch up very very soon. 7:31 7 minutes, 31 seconds So having said that let me also spend some time on the 20 the upcoming year. I would say that this strategy we have 7:39 7 minutes, 39 seconds divided into four major areas or four major focus areas or levers. So this year our heavy focus will be to new logo 7:48 7 minutes, 48 seconds acquisition compared to the last year where we have taken a strategic call of spending more time on existing accounts. But uh that 7:58 7 minutes, 58 seconds helped us definitely that helped us increasing the stickiness and others. 8:02 8 minutes, 2 seconds But as I talked about adoption of AI will reduce the uh the revenues. So there's only a way is to go and get new 8:11 8 minutes, 11 seconds new logos. So from that point of view we have uh uh this year started a partnerled growth initiative. An aggressive uh partner network has been 8:20 8 minutes, 20 seconds created. A partner management team has been uh reinforced and identified more than 15 partners whom we will go and do 8:28 8 minutes, 28 seconds a joint go to market uh strategy across the regions. This covers all the regions and already we started seeing the 8:35 8 minutes, 35 seconds benefits of it in the initial years but these are primarily going towards the upcoming quarters and months where we 8:42 8 minutes, 42 seconds leverage heavily on uh the partnerled growth. As I also spoke to you earlier, the new geography the Middle East uh the 8:51 8 minutes, 51 seconds last three years has shown a significant gain. probably this year it has started uh showing some resistance in the 8:59 8 minutes, 59 seconds initial part of the year but I I don't think so that will continue once the war situation is over that will settle but 9:07 9 minutes, 7 seconds in that context we have uh done uh significant analysis on the market of Egypt and we have uh made that as our 9:15 9 minutes, 15 seconds strategic go-to country for the upcoming year we have done some investments in making the market know about explos presence in Cairo. We have done events. 9:25 9 minutes, 25 seconds We have done uh CXO conferences and we are very bullish about Egyptian market. 9:31 9 minutes, 31 seconds That is our first uh strategy where to increase the new business. And the second one is we have looked at our top 9:39 9 minutes, 39 seconds 20 accounts, our key accounts and we are completely putting the focus on moving all the 20 accounts onto explo.ai 9:47 9 minutes, 47 seconds platform. Today I'm uh out of these 20 accounts at least five accounts are in one way or other adopted explo.ai our AI 9:55 9 minutes, 55 seconds capability and the uh idea is to expand this to all the 20. So that leaves 60% 10:02 10 minutes, 2 seconds of our revenue will be in one way or another influenced by AI. 10:08 10 minutes, 8 seconds The third is we don't want to spread uh too thin on the sectors uh in our investments. So we have uh identified 10:17 10 minutes, 17 seconds the two sectors as our primary focus area within BFSI. We have taken payments as one thing which is totally getting 10:25 10 minutes, 25 seconds revolutionized across the globe. The payment industry is uh meeting uh regulatory and compliance deadlines in 10:33 10 minutes, 33 seconds 2028 in US and many countries in Europe and the adoption of a UPI kind in uh uh 10:42 10 minutes, 42 seconds Middle East and North African market is extremely becoming popular. So with that we have decided that payments will be 10:49 10 minutes, 49 seconds our area of focus for this year and we have done some significant uh investments in generating simulators 10:56 10 minutes, 56 seconds that can work across uh the Mastercards, Visa, Rupe or any American Express and the UPIs of the world. So those are the 11:05 11 minutes, 5 seconds investments we have done and we are gearing ourself up for the demand and the change over for 2028 where a signific significant spend will be made 11:13 11 minutes, 13 seconds in 2627. So that's the third the focus area on the payments that is on the technology side on the uh engineering 11:22 11 minutes, 22 seconds side as I said the focus area will be on the aerospace defense we have uh uh a good traction coming in from the India 11:31 11 minutes, 31 seconds with the main make India uh initiative and also we are seeing a significant uh demand coming from Israel as well which 11:40 11 minutes, 40 seconds that is a country which we have been supporting for more than uh two decades now and it is highly warming up for new 11:47 11 minutes, 47 seconds activities where we are actively involved in at least three uh Israeli companies. 11:54 11 minutes, 54 seconds The last uh of the strategy the fourth one is of course the people. 12:00 12 minutes So I have talked to you about uh in the past our investments are on people and 12:05 12 minutes, 5 seconds with uh explo.ai AI is sorry uh AI 360 as our flagship learning and development 12:14 12 minutes, 14 seconds program. The last earning call I have uh informed you that we have started this. 12:19 12 minutes, 19 seconds We're very happy to announce that 70% of our uh organization is now AI qualified. 12:26 12 minutes, 26 seconds We have a three layer uh three level uh training program and certification program where the first level is 12:35 12 minutes, 35 seconds everyone to understand the basics of AI and use of uh basic AI tools. Second one is a uh one one level above with more 12:44 12 minutes, 44 seconds hands-on experience and third level is a leader thought leadership uh level. So in that we managed to get 70%, this is 12:52 12 minutes, 52 seconds uh helping us twice because we are now by and large seen in the market as a AI company looking for AI resource. And 12:59 12 minutes, 59 seconds second our continuous demand that is coming with the increased uh AI footprint. We are able to use our own 13:06 13 minutes, 6 seconds resources. That is what we uh intend to do. and by end of this year not even till December I think by September or October we want to hit anything between 13:15 13 minutes, 15 seconds 95 to 100% uh uh achievement on this so as I said that our investments are significantly growing on the people and 13:24 13 minutes, 24 seconds we'll continue to go on uh uh that uh and let me also in that context talk about attrition 13:31 13 minutes, 31 seconds while we keep hearing the big biggies slaying off 10,000 20,000 people there 13:38 13 minutes, 38 seconds there is some uh fear factor but that is very frankly not resulting in the lower iterations. Attrition levels continue to 13:47 13 minutes, 47 seconds be at uh uh challenging levels. We are moderating it at around 15%. But uh 13:54 13 minutes, 54 seconds there is a stark difference. People with 5 to 10 years experience are the people in demand. People above 15 years are the 14:03 14 minutes, 3 seconds ones who get laid off. So the demand and uh attrition or these layoffs are not really helping and the demand continues to be there on the emerging technologies 14:12 14 minutes, 12 seconds at a scale of 5 to 10 uh as a range of 5 to 10 years experienced people they continue to be demand and the attrition is also high in that particular range. 14:21 14 minutes, 21 seconds So so we'll continue to stay invested on this. will increase our uh employee engagement with all these uh training and other programs and employee wellness 14:30 14 minutes, 30 seconds is taken at the center of our uh employee uh engagement. So that uh is on 14:38 14 minutes, 38 seconds the these are the four. So I'll just repeat one is on the new business. Second is growing existing accounts. 14:44 14 minutes, 44 seconds Third is sector focus on payments on aerospace def uh defense and the fourth one is on people. So this will be the strategy for 20 uh 207. 14:57 14 minutes, 57 seconds So now let me also give you few updates and uh I'm very proud today we are inaugurating a new facility in our 15:05 15 minutes, 5 seconds Bangalore which is much bigger than our existing facility where primarily this is because of our increasing demand in 15:13 15 minutes, 13 seconds aerospace defense where we have now acquired a space and uh we'll be integrating it today with uh uh a lab 15:21 15 minutes, 21 seconds size because we have a significant increase in test bench production. 15:26 15 minutes, 26 seconds And that is our key specialty in this particular area. And our current lab may not meet that kind of requirement. So we 15:34 15 minutes, 34 seconds have acquired this space which is having at least four times bigger lab on the test bench uh manufacturing and assembly 15:42 15 minutes, 42 seconds part of it. And uh also for the technology teams the is a much bigger and more employee friendly space and a 15:49 15 minutes, 49 seconds state-of-art uh facility. So that is something which also indicates that uh our demand and our growth uh is validated by this. 16:00 16 minutes So with uh all these as thing we are looking uh uh at a strong pipeline but 16:07 16 minutes, 7 seconds uncertaintities as we all speak continue to remain. we have uh achieved what we have done despite uh despite all these 16:16 16 minutes, 16 seconds uncertaintities but hopefully we will continue on this and uh come out successfully in the coming quarters as well. Thank you so much. 16:29 16 minutes, 29 seconds So shall we open the floor for questions? The money will cover on the financials. Sure sir. 16:37 16 minutes, 37 seconds Thanks honey. 16:40 16 minutes, 40 seconds Good morning all. Um thanks for joining the call. I'll now talk about the financial highlights for this particular quarter compared to the previous quarter. 16:50 16 minutes, 50 seconds Our operating revenue for the quarter ended March 26 is at uh 2863 million compared to 2007 94 million in the 16:58 16 minutes, 58 seconds previous quarter which is a growth of 2 and a half%. primarily due to benefit from forex as rupee depreciated against euro as well as US dollar. 17:07 17 minutes, 7 seconds Total income grew by 3.1% to rupees 2989 million in this quarter primarily due to higher operating revenue and higher 17:16 17 minutes, 16 seconds other income from forex gain at constant currency. Our operating revenue decreased by.9% to rupes 2768 17:25 17 minutes, 25 seconds million in this quarter compared to 2794 million in the previous quarter. 17:31 17 minutes, 31 seconds Adjusted EITA for the quarter is at 15.5% versus 16.6% in the previous quarter 17:38 17 minutes, 38 seconds mainly due to wage increments partially offset with operational efficiency improvements. 17:45 17 minutes, 45 seconds Profit after tax including other comprehensive income is at 16.5% compared to 8.1% in the previous quarter 17:53 17 minutes, 53 seconds as the previous quarters had an exceptional cost on account of labor labor code changes and also due to higher marktomarket forex gains in this quarter. 18:04 18 minutes, 4 seconds I'll now talk about the uh highlights um of this quarter compared to the same quarter of last year. Our operating 18:11 18 minutes, 11 seconds revenue for quarter ended March 26 is at 2863 million compared to this 2558 18:18 18 minutes, 18 seconds million in the same quarter last year which is a growth of 11.9% primarily due to higher onset revenue 18:25 18 minutes, 25 seconds growth from euro in the BFSI vertical and benefit from forex due to repeat depreciation primarily against euro and the US dollar. 18:34 18 minutes, 34 seconds Total income grew by 14.8% 8% to rupes 2989 million in this quarter primarily due to higher operating revenue and higher other income from forex gain. 18:45 18 minutes, 45 seconds At constant currency, our operating revenue grew by 7% to rupees 2576 18:52 18 minutes, 52 seconds million versus 2558 million in the same quarter last year. 18:57 18 minutes, 57 seconds Adjusted EITA for the quarter is at 15.5% versus 15.6% in the same quarter last year. primarily due to wage 19:05 19 minutes, 5 seconds increments fully offset with operational efficiency improvements. 19:10 19 minutes, 10 seconds Profit after tax including other comprehensive income is at 16.5% versus 9.1% in the same quarter last 19:18 19 minutes, 18 seconds year primarily due to operational efficiency improvements and lower depreciation and amotization cost in the current quarter. 19:26 19 minutes, 26 seconds I'll now talk about the financial highlights for the full year FI26 compared to the FI25. 19:33 19 minutes, 33 seconds Our operating revenue for FI26 is at 11,80 million compared to 10,248 million in FI25 which is a growth of 8.1%. 19:44 19 minutes, 44 seconds And this is primarily due to forex gain on account of repeatation against euro on the US dollar. Total income grew by 19:51 19 minutes, 51 seconds 10.1% to rupes 11,459 million primarily due to higher operating revenue and higher interest income from higher cash balances. 20:01 20 minutes, 1 second At constant currency, our operating revenue decreased by4% to rupees 10,212 million compared to 10,248 million in FI25. 20:13 20 minutes, 13 seconds Adjusted EITA for FI26 is at 15.6% versus 16.2% in FI25 primarily due to 20:21 20 minutes, 21 seconds impact of wage increments partially offset by operational efficiency improvements in our core delivery cost and optimized spends on non-essential and discretionary costs. 20:31 20 minutes, 31 seconds Profit after tax including other comprehensive income in FI26 is at 12.3% versus 9.8% in the previous year due to 20:41 20 minutes, 41 seconds higher other income from cash balance and higher other comprehensive income on marktomarket forex schemes partially offset by wage increments and onetime impact from labor code changes. 20:52 20 minutes, 52 seconds Earnings per share is at 79.89 89 rupees in FI26 versus 66.52 rupees in FI25 which is an increase of 20.1%. 21:05 21 minutes, 5 seconds Cash position stood at 376 crores as of March 26 versus 229 crores as of March 2025. 21:15 21 minutes, 15 seconds That brings my update to an end. Thank you. 21:22 21 minutes, 22 seconds Over to you Asha. 21:28 21 minutes, 28 seconds Thank you very much. We'll now begin with the question and answer session. 21:32 21 minutes, 32 seconds Anyone who wishes to ask a question may press RN1 on their custom telephone. If you wish to remove yourself from the 21:39 21 minutes, 39 seconds question, you may press R and two. The participants are requested to use handsets while asking a question. 21:47 21 minutes, 47 seconds Ladies and gentlemen, we will wait for a moment while the question Q assembles. 21:53 21 minutes, 53 seconds Participants, team press are in one to ask a question. 22:04 22 minutes, 4 seconds First question is from the line of Disha from Sapphire Capital Partners. Please go ahead. Hello. 22:13 22 minutes, 13 seconds No other sir. Yes ma'am. Go ahead. 22:16 22 minutes, 16 seconds Yes, thank you so much for this opportunity. So firstly my question was on our growth. So you mentioned this four drivers that we're targeting for 22:23 22 minutes, 23 seconds F27. What sort of overall revenue growth are we expecting and what sort of margin guidance for F27? 22:33 22 minutes, 33 seconds See I mean with so many uncertainties uh around the is a very hard predictions but our direction is to have a 22:42 22 minutes, 42 seconds sustainable double-digit growth in terms of revenue and remain at uh the current AITA levels. uh ma'am 22:53 22 minutes, 53 seconds so around uh so I'm saying bit around without including other income so around 15.5 15% sort of range right 23:02 23 minutes, 2 seconds this is something which I've been consistently saying that that is uh a range which we are confident around so 23:09 23 minutes, 9 seconds and we'll stick to that okay and sir you you highlighted about uh Egypt being our target market for 23:16 23 minutes, 16 seconds this year could you elaborate a bit more on uh what sort of uh revenues you see from there what sort of initiatives have 23:23 23 minutes, 23 seconds we taken how will you scale this uh intern how will you scale this how are you scaling this market if you could just elaborate a bit more on that. 23:31 23 minutes, 31 seconds So our entry into Egypt is primarily driven by our success in Middle East uh be it in uh uh United Arab Emirates 23:38 23 minutes, 38 seconds followed by our subsidiary creation in Saudi Arabia. So all these have been uh bearing fruitful results and then we had 23:48 23 minutes, 48 seconds always an eye on Egypt which is from a proximity point of view very close to our uh Dubai offices. So that's where we 23:55 23 minutes, 55 seconds started investigating the market and then we realized that financial services is probably one of the uh areas which 24:02 24 minutes, 2 seconds are highly adopting change and with the sovereign AI uh being also initiated in Egypt. So that is where we thought we 24:10 24 minutes, 10 seconds will uh focus and the entire last year we have spent time analyzing the market and our target segment areas. And this 24:17 24 minutes, 17 seconds year we started our market campaign aiming at one to make the industry or the region know that explore has arrived 24:25 24 minutes, 25 seconds in uh Cairo. Second is we are doing marketing and social media campaigns on uh that front. the most recently two 24:34 24 minutes, 34 seconds weeks back we have done a CXO roundtable conference with uh the banking CXOs and 24:41 24 minutes, 41 seconds uh got into touch with them to understand their needs their challenges and how we can position ourselves. So these are the areas where we are at this 24:50 24 minutes, 50 seconds point of time we are highly focused in covering each and every bank and understanding their pain points and uh 24:57 24 minutes, 57 seconds address what we can do. Quantifying the business uh is something which we'll do it subsequently but more important now 25:04 25 minutes, 4 seconds is the actions all the are we doing all the right actions to make ourselves felt in that particular market. Yes, we are 25:12 25 minutes, 12 seconds doing everything and then it's only a matter of time when the pipelines start uh growing up ma'am we will be able to quantify how much revenue but given our 25:22 25 minutes, 22 seconds uh uh track record in Saudi and uh UAE and even in Kuwait I I see that that is 25:29 25 minutes, 29 seconds a promising market can't put a number against it at this point of time yeah I understand sir and so you last time I think we spoke you also mentioned 25:37 25 minutes, 37 seconds about something about inorganic growth and assumptions that we're targeting so any update on there anything that is uh closure close to being finalized if you could just share any updates on that. 25:48 25 minutes, 48 seconds Thanks for asking that and definitely yes and as a part of our uh optimal cash utilization strategy we definitely are 25:57 25 minutes, 57 seconds inclined towards doing uh M&A and that is where we have identified close to nine assets last uh 3 months and we have 26:05 26 minutes, 5 seconds moved into a due diligence phase in three and very very likely to close something in the upcoming quarter. 26:15 26 minutes, 15 seconds any sort of color on what what exactly when so whenever we whenever we acquiring what sort of acquisition rationale do we have what sort of assets 26:23 26 minutes, 23 seconds are we looking at how will that synergize with our existing business yeah turning skull ma'am so our we want to 26:31 26 minutes, 31 seconds look at something which is uh putting us into a stronger position in terms of client acquisition in part one 26:38 26 minutes, 38 seconds particular geography that will be US so it is a two-prong approach one is where the acquisition should help deeper into a US market and second from 26:47 26 minutes, 47 seconds a service point of view it should be a complimentary service to what we do. So it could be anything on the AI space or 26:55 26 minutes, 55 seconds anything on the data space or any of the key implementations on the Salesforce or those are the things where we see which 27:02 27 minutes, 2 seconds is not very limited to one particular sector which can be cut across. So from a service point of view it is uh uh industry agnostic uh service and from a region point of view high US focus. 27:14 27 minutes, 14 seconds These are the two criteria we have imposed on ourselves to see while evaluating the assets and uh that would continue. 27:23 27 minutes, 23 seconds Thank you. They shall request to come back for a follow-up question. A kind request to all the participants. Kindly limit yourself to two questions per participant. 27:36 27 minutes, 36 seconds Next question is from the line of web from PCG asset management. Please go ahead. 27:42 27 minutes, 42 seconds Hello. Uh thank you for uh taking me and congratulations on a great set of numbers sir. So uh uh so my first 27:51 27 minutes, 51 seconds question is on what sort of services or I would say AI service AI improve services uh are we currently increasing 27:57 27 minutes, 57 seconds in BFSI proposal and what is the sort of win rate is there around the renewals that we are seeing over the last one year. 28:07 28 minutes, 7 seconds Okay. In terms of uh the kind of services uh I can broadly classify into two areas. one is on the digital 28:16 28 minutes, 16 seconds assurance and digital engineering. So digital assurance is primarily because of the DNA that we carry on the quality 28:23 28 minutes, 23 seconds assurance in the past which has moved into quality engineering and now uh has a very high adoption of uh the uh 28:32 28 minutes, 32 seconds artificial intelligence. Let me spend a little bit more time uh telling what on that front. If you see uh the 28:39 28 minutes, 39 seconds traditional software development life cycle always had 80% of the effort spent in code generation and 20% uh on uh 28:48 28 minutes, 48 seconds ensuring that the code is of quality right that equation has totally changed that 80% has shrunk much much smaller 28:56 28 minutes, 56 seconds with advent of AI that is coming on the part of the digital engineering but once something comes from a black box like AI 29:04 29 minutes, 4 seconds the need for maintaining the quality ity is much more than before. So the spend 29:10 29 minutes, 10 seconds is going through a a shift where the generation of code is becoming uh a lot 29:17 29 minutes, 17 seconds uh easier but to ensure the quality with all those uh uh guardrails of AI and uh to ensure that you are not uh into 29:26 29 minutes, 26 seconds biases or any other parts of the negative things that come out of AI you need to have a very robust uh uh quality 29:36 29 minutes, 36 seconds assurance part of it. So that is what we provide is anything that comes out of a code generation we use AI infused 29:44 29 minutes, 44 seconds services to ensure that not just the functional fitness is there the performance fitness is there but it is also protected against the malign side 29:53 29 minutes, 53 seconds effects of uh uh artificial intelligence that is on the QA side when it comes to the digital engineering side where when 30:01 30 minutes, 1 second ever since we started developing the last uh 10 years the software development devops dev sec pops kind of 30:07 30 minutes, 7 seconds a thing there is an infusion of AI we have our own platform explorer.ai AI under which we have uh a sub tool called 30:16 30 minutes, 16 seconds code play which is uh not only catering to the uh requirements of the sovereign AI or the local uh thing but also helps 30:25 30 minutes, 25 seconds in faster generation of code faster generation of processes re-engineering digital modernization of legacy 30:33 30 minutes, 33 seconds platforms into this in all these aspects this uh uh AI is infused. So to answer your question primarily if I see where 30:42 30 minutes, 42 seconds the revenue on the pipeline is showing interest these are the two on the quality assurance AI infused and on the 30:49 30 minutes, 49 seconds uh digital engineering side also AI infused primarily on legacy modernization. 30:57 30 minutes, 57 seconds Understood. And my uh second part to this question was uh since you mentioned that uh uh renewals would be under pressure because all of uh the FSSR 31:06 31 minutes, 6 seconds proposal uh will be coming with the AI services being a part of it. So uh with our two focus services like you said 31:14 31 minutes, 14 seconds digital assurance and uh visual engineering what sort of win rate are we having around renewals for FI26 certificate quantity? 31:23 31 minutes, 23 seconds Oh very frankly uh win rate has not been a challenge. One is we have been uh with 31:30 31 minutes, 30 seconds these clients. Most of our clients are with us for more than decade. I mean most of our critical clients are there. 31:37 31 minutes, 37 seconds Some of them as high as 20 to 25 years also. So there is uh the win rate is not 31:44 31 minutes, 44 seconds major issue but what is the issue is the what I said before the ticket size. the same piece of work is now expected to be 31:52 31 minutes, 52 seconds delivered in 40% uh or 50% of the efforts. So that brings us the whole thing downwards. So then 32:01 32 minutes, 1 second you are under pressure to sell more and that is how we are engaging with our clients to increase the scope of the 32:08 32 minutes, 8 seconds work for the same amount what they used to pay earlier by rendering more services by increased scope coverage for 32:15 32 minutes, 15 seconds them and that is how it is. So there is a bit of cannibalization that is happening and there is a bit of pressure on that particular front but win rate is 32:24 32 minutes, 24 seconds uh not because we certainly are one of the pioneers in providing these services and our strength to the game has always 32:31 32 minutes, 31 seconds been we understand the business because we are a business focused sector focused domain focused company and that helps 32:39 32 minutes, 39 seconds and then we understand the customer's requirements also that particular customer's requirements because we have been in the system for 20 years. So the win rate has not been challenged but the 32:48 32 minutes, 48 seconds ticket size and the ability to draw the same revenue of last year is what uh will be under pressure and that is not 32:56 32 minutes, 56 seconds XP is not uh the only I think this is a market trend where everyone is uh if they are not AI ready then you have no choice but to show the growth on that. 33:08 33 minutes, 8 seconds Thank you very much Weber. I'll request to come back for a follow-up question please. 33:13 33 minutes, 13 seconds Participants kindly limit yourself to two questions per participant. 33:18 33 minutes, 18 seconds Next question is from the Sankar Naran from I thought PMS. Please go ahead. 33:24 33 minutes, 24 seconds Good morning sir. Thanks for the opportunity. Am I audible? 33:28 33 minutes, 28 seconds Yeah. Yes sir. So uh we are seeing the productivity gains through aled uh 33:35 33 minutes, 35 seconds services which is deflating our existing revenue. So can you quantify the productivity of uh AI due to the 33:43 33 minutes, 43 seconds implementation in our core legacy services and if if at all let's say if it's in the range of let's say 20 to 33:51 33 minutes, 51 seconds 30%age how much of it's being reinvested to same uh back to explo. 33:58 33 minutes, 58 seconds Okay, good thing one is we have range of services and the productivity gains uh vary from service to service. As I said 34:05 34 minutes, 5 seconds before, if it is a code generation, the productivity gains are as much as 60%. 34:10 34 minutes, 10 seconds If it is an automated execution of test cases, it could be anything between 30 to 40%. So it ranges anything between 34:17 34 minutes, 17 seconds 20% to 60% depending on what service uh you render. Then your second part of the question is how much of that is 34:24 34 minutes, 24 seconds reinvested? And but the most that is the most unfortunate part is today the entire market doesn't allow you to do 34:32 34 minutes, 32 seconds that uh that benefit of those productivities to be translated because they know that the uh suppliers use 34:40 34 minutes, 40 seconds artificial intelligence and upfront they want that benefit completely be passed out to them. So at this point of time 34:47 34 minutes, 47 seconds though we have a premium attached to each of the AI service it is not in comparison with the savings that we pass 34:55 34 minutes, 55 seconds uh get out of it because bulk of that saving still goes back to the customer. 35:01 35 minutes, 1 second Okay. Because uh some of your peers in the tire two segment so they were all saying that uh the 50%age or roughly 35:08 35 minutes, 8 seconds 60%age of whatever productivity that they are giving is being reinvested back to themselves. So their net productivity will not be the high number but uh in in 35:18 35 minutes, 18 seconds our case you are saying that we are not getting any reinvestment from our client to slightly disagree on that because it cannot be generalized because we apply 35:25 35 minutes, 25 seconds in the same market if someone is doing a piece of work for 100k and uh I'm going to challenge that saying that why are 35:32 35 minutes, 32 seconds you paying 100k and I can do it for 60k so then it becomes again everyone will be in the same plane right so very 35:40 35 minutes, 40 seconds difficult unless you are running uh a large multi year contracts on fixed bit projects which cannot be renegotiated 35:47 35 minutes, 47 seconds halfway through. There is a possibility of uh uh plowing back your uh gains but the customers are smarter than us very 35:55 35 minutes, 55 seconds frankly they know what is happening and nobody is letting go a vendor away with huge gains just because the AI is uh put in. 36:04 36 minutes, 4 seconds Got it sir. And second question is on our uh growth. So this year in this quarter we have done 12%age of revenue 36:11 36 minutes, 11 seconds growth. So in the overall FI26 so how much of our growth 8% growth is come from explos group and how much of our growth is coming from our own efforts. 36:25 36 minutes, 25 seconds Okay the growth see our revenue proposition uh between the business coming from group is around 36:33 36 minutes, 33 seconds 30%. Right? So that ratio is not significantly changing but I would say that by two or three basis points the 36:41 36 minutes, 41 seconds revenue coming from group has increased which is what I made in my opening statements that the revenue coming from group has increased which is definitely 36:49 36 minutes, 49 seconds a good news because from our total revenues I would consider explo group as of my largest customer. So and if that 36:57 36 minutes, 57 seconds is growing then definitely that is uh a positive news but having said that we are the direct business is not lagging 37:04 37 minutes, 4 seconds too much behind I mean we are just one or two basis points lesser but uh on in terms of growth but both are growing 37:11 37 minutes, 11 seconds that's why the percentage is still hovering at around 32 to 33% uh of the total revenue coming from group. 37:20 37 minutes, 20 seconds Thank you. 37:23 37 minutes, 23 seconds I'll request to come back for a follow-up question. 37:26 37 minutes, 26 seconds A request to all the participants kindly limit yourself to two question per participant. Next question is from line of Singh from counter cycling and PMS. 37:34 37 minutes, 34 seconds Please go ahead. Hi sir, thank you for this opportunity. 37:39 37 minutes, 39 seconds So these are the following list of my questions. So for this year our beta has uh mostly remained flat year on year 37:47 37 minutes, 47 seconds even for Q4 despite uh the dollar appreciation and the currency uh euro appreciation. So I would like to 37:56 37 minutes, 56 seconds understand why have why has this remained flat? Uh is it because of lower margins in our current orders? And when 38:03 38 minutes, 3 seconds we say we looking at a double healthy double digit growth for FY27 uh and uh considering that the rupee 38:13 38 minutes, 13 seconds would not depreciate as much as it did in FY26. 38:17 38 minutes, 17 seconds So do we realistically think that our EDITA margins will be maintained or they will fall? That's my first question and 38:26 38 minutes, 26 seconds uh my second question would be uh you mentioned about uh AI cannibalizing some 38:32 38 minutes, 32 seconds of our current revenues. So do we see any AI redundancy risk maybe in the 38:39 38 minutes, 39 seconds coming 2 to 3 years wherein uh our clients would uh I mean wherein AI 38:46 38 minutes, 46 seconds capabilities would reach such a stage where the clients would themselves uh be able to uh I mean you use AI to uh 38:56 38 minutes, 56 seconds fulfill their uh requirements. That's my second question. And my third question would be regarding the loans of 100 cr 39:05 39 minutes, 5 seconds that we have given. So I want to understand to whom have we given these loan uh loans and at what rate and finally why are we not paying out dividends this year. 39:16 39 minutes, 16 seconds So these are my list of questions. So out of these four questions uh first two I'll answer third on uh the loans I'll 39:25 39 minutes, 25 seconds get uh my CFO to answer and probably ask my chairman on the dividend uh part of it. So the EATA is uh still u at a 39:35 39 minutes, 35 seconds decent given that we have uh a good wage revision and then you have uh uh the 39:43 39 minutes, 43 seconds labor code coming in. We have not allowed it to reduce because the wage revisions in the market trend today is 39:51 39 minutes, 51 seconds anything between 8 to 10 and that has being in a services business where people are at 90% of our cost bulk of 40:00 40 minutes our cost is that is uh not possible without we having a very robust operating expense control being put in 40:09 40 minutes, 9 seconds place. So like what money has repeatedly said in his uh uh opening remarks, the 40:16 40 minutes, 16 seconds utmost effort has been put in to protect the AITA levels despite having these 40:22 40 minutes, 22 seconds one-time uh costs like the labor code or the wage revisions which we can't go too low from the market uh because that will 40:31 40 minutes, 31 seconds have an attrition and then you'll have a rehire cost adding to it. So from that point of view I think uh this is in line 40:38 40 minutes, 38 seconds with my uh statements even in the past that we will always hover around it. We see this coming and we'll continue to 40:45 40 minutes, 45 seconds see this and also the uh advantage you are giving on the coorex uh uh while it is true but we also have a significant 40:53 40 minutes, 53 seconds population in on site I mean in Belgium in Dubai in United States where 41:01 41 minutes, 1 second the the costs also will have the same impact so that is being negated. 41:06 41 minutes, 6 seconds So on the AI redundancy part of it uh while on paper what you say is right but 41:13 41 minutes, 13 seconds we at this point of time don't see any of our customers maturity level beyond even 50% of what it should be when it 41:22 41 minutes, 22 seconds comes to adoption of AI and doing it themselves. In fact, bulk of the customers, that's where I see it as a huge opportunity rather than being 41:30 41 minutes, 30 seconds worried about AI is bulk of the customers have not even made one attempt 41:37 41 minutes, 37 seconds to get into the AI. We are talking about a good number of customers where they are talking and implementing AI. While that number is good but as a proportion 41:45 41 minutes, 45 seconds of total number there are many who have not even got into for the fear or for the lack of understanding they are in 41:52 41 minutes, 52 seconds exploratory stage. So the entire market itself is in multiple phases. There are some who have not even attempted to understand, some who are exploring, some 42:00 42 minutes who have done P and some who have implemented for for us to go to a stage where 100% of this market adopts it and 42:10 42 minutes, 10 seconds runs it on their own and we don't require any implement or service provider is far too fetched imagination at least my judgment on this sir. So 42:18 42 minutes, 18 seconds that I don't think so. I'm only seeing that this is a huge opportunity that we are want to ride on and that will sustain for several years to come. So 42:26 42 minutes, 26 seconds that's on your uh uh the continuity and air redundancy part of it. The third is 42:33 42 minutes, 33 seconds on the loans uh whom are we giving loans and how much rate maybe money. Yeah. So the loans that's given to our own group 42:42 42 minutes, 42 seconds it's a related party transaction. So uh the average return that we are getting on this it's given at an armsen. So the 42:49 42 minutes, 49 seconds average return that we are getting is at around 9 and a half% to 10%. Uh that's the interest rate that's uh that India is uh getting 42:58 42 minutes, 58 seconds and the last one is on dividend rank you like I think the last one on dividend I think it's I think already it has been 43:04 43 minutes, 4 seconds explained by by funny on the priority that we are even giving on the um execution of our M&A strategy. Um I 43:12 43 minutes, 12 seconds think you have heard that we had screened the market identified the targets are now even in the in the process and um money has already even um 43:22 43 minutes, 22 seconds indicated even a timeline there and uh giving this priority we will we will focus to execute on this um with the highest um priority today. 43:38 43 minutes, 38 seconds Thank you. Good evening and request to come back for a followup question. 43:43 43 minutes, 43 seconds Next question is from the line of Fzelhava from Miji Havan Company. Please go ahead. 43:51 43 minutes, 51 seconds Sorry. The next question is from the line of Salman Sha from Paris Investments. Please go ahead. 43:59 43 minutes, 59 seconds Yeah. Hi Dean. Good morning. Uh so I wanted to know more on our aerospace and defense uh sector. So we are into 44:07 44 minutes, 7 seconds engineering services basically making some parts in this area or are we into software services in this area? 44:15 44 minutes, 15 seconds We are in I mean you have covered everything. So we are into multiple services on engineering. One is manufacturing engineering, mechanical 44:22 44 minutes, 22 seconds product engineering, electronic and embedded uh systems and uh PCPR. So these are the primary services but 44:30 44 minutes, 30 seconds however we also on the electronic and embedded systems have uh a good track record thanks to our French parent where 44:37 44 minutes, 37 seconds we started manufacturing test benches in France uh decades back to major customers like Talis or Airbus and uh 44:46 44 minutes, 46 seconds that has now significantly moved to India because of the make India initiatives and that has gained up and also on top of it the the more and more 44:55 44 minutes, 55 seconds defense spends and on the defense aircrafts and milit trailopters that being manufactured out of India is uh 45:02 45 minutes, 2 seconds happening. So the demand for the test benches that are required for all these manufacturing uh uh aerospace uh 45:11 45 minutes, 11 seconds vehicles I would say is much more higher now and even the test benches have to be manufactured otherwise it makes a uh 45:18 45 minutes, 18 seconds significant high cost manufacturing them in uh Paris and then eventually shipping over to them. So to answer your question, we while bulk of our services 45:27 45 minutes, 27 seconds are into the engineering services, we are also through our partners do a manufacturing and take a complete uh uh 45:36 45 minutes, 36 seconds design to print uh uh responsibility for the product where we are responsible for the f final product and we ship it out 45:43 45 minutes, 43 seconds of our premises but the actual manufacturing part we uh outsource it and uh we take the accountability for the precision of its working. Okay. 45:53 45 minutes, 53 seconds Okay. Because even in previous call you mentioned that we are very positive on this piece but still uh it is around 46:00 46 minutes contributing around 11% of the total revenue. So uh can we expect it to reach to what some good numbers 20 25% in next 46:09 46 minutes, 9 seconds one or two years and what the margins are we enjoying there? 46:14 46 minutes, 14 seconds Yeah. So the margins are in line with the overall margins but uh uh from these are defense contracts. I mean if you see 46:23 46 minutes, 23 seconds bulk of it is dependent on uh the government to government agreements there are so much of uh back and forth 46:30 46 minutes, 30 seconds on that. So the while the outlook is extremely positive on that with uh a significant uh amount of aircrafts now 46:39 46 minutes, 39 seconds both Boeing Airbus and the so aviation all wanting to manufacture out of India. 46:45 46 minutes, 45 seconds I mean this is a absolutely unpredictable market. In fact, I mean something of a complete manufacturer of Rafal has to have should have started uh 46:54 46 minutes, 54 seconds in the first quarter of last year. But for various geopolitical issues that has not even started while on paper it is 47:02 47 minutes, 2 seconds all done and dusted. So dealing with governments and dealing with supply chain sometimes that becomes very 47:09 47 minutes, 9 seconds unpredictable but only thing which I can say is the is one segment where we have grown and I foresee a growth and that's 47:16 47 minutes, 16 seconds why in my opening statement also I said that aerospace defense is continuing to be our uh focus area and we'll continue 47:23 47 minutes, 23 seconds to focus on that but very difficult to give a forward-looking uh percentage at this point of time. 47:30 47 minutes, 30 seconds Okay. Okay. And uh so my final question can we know more on our parent company? 47:35 47 minutes, 35 seconds So what is the size of our parent and uh what revenues and aitas they are enjoying versus what we are doing. 47:49 47 minutes, 49 seconds So I think the um the parent company in terms of revenue is it's approximately at 1.4 billion euros in revenue. 48:01 48 minutes, 1 second And I think the margin the business is generating is close to 10%. 48:12 48 minutes, 12 seconds Okay. 48:15 48 minutes, 15 seconds Thank you. S I'll request to come back for a follow-up question. 48:20 48 minutes, 20 seconds Next question is from the line of An Sharma from Stford Investments. Please go ahead. Yeah, thank you for this opportunity. 48:28 48 minutes, 28 seconds Couple of questions. One is there has been a management change at the group level. So what are the key priorities of 48:35 48 minutes, 35 seconds Walter now especially relating to India business? 48:40 48 minutes, 40 seconds Yeah. So Walter has taken at helm but I think Ralph is in a better position to cover this. I think you are you're absolutely right. 48:49 48 minutes, 49 seconds There was in the parent company a change in the CEO position and um we have now for a little bit more than four months a 48:56 48 minutes, 56 seconds new CEO while the capiladi on board and he has uh certainly been assessing the situation. What we can clearly see is um 49:06 49 minutes, 6 seconds that the that the portfolio of the company both in engineering and tech services is where we have our key strengths and we will continue to build 49:14 49 minutes, 14 seconds on this and this is even what we're having here with respect to this entity. 49:18 49 minutes, 18 seconds In addition to this um we have the industry sector aerody defense automotive transportation and thei 49:26 49 minutes, 26 seconds representing more than 75% of the group revenues and not only the revenues for for for years. So even there we see that 49:34 49 minutes, 34 seconds the um priorities from an capability and industry perspective will will remain. 49:41 49 minutes, 41 seconds Yeah, it will certainly make an impact based on the strategy is currently preparing with the executive leadership team at a at a group level. But as we 49:49 49 minutes, 49 seconds are talking here about the entity here, I think it can only play in favor as we can clearly see a continued acceleration 49:56 49 minutes, 56 seconds on on best shoring and offshoring a strong focus on the industry. I've mentioned and the um entity here that is 50:05 50 minutes, 5 seconds even um ESL is I think is very good equipped even to to cover additional demand that will most likely even come from the group. 50:15 50 minutes, 15 seconds Okay. Okay. My my my second question is really on the engineering piece. I think some some some people touched on it. So 50:23 50 minutes, 23 seconds you know despite the merger with group at at the time of merger with our group entity we were quite optimistic on the engineering piece. 50:32 50 minutes, 32 seconds uh but over a period of time we continue to see BFSI actually uh continue to dominate uh and within the engineering 50:40 50 minutes, 40 seconds the auto piece really hasn't done well it it's shrunk quite a bit so is it is 50:47 50 minutes, 47 seconds it is it looking like a structural trend that we might lose out on auto and really where do we want to see the 50:55 50 minutes, 55 seconds engineering piece that's not really done well as to what anticipated or aspoused to 51:02 51 minutes, 2 seconds So I think you um and I even give it the perspective of the group. The group is generating roughly twothird of its revenues in engineering and there you 51:10 51 minutes, 10 seconds can even clearly see that there's an upside potential on ENS even to cover and to to capture additional demand in engineering going forward and as funny 51:19 51 minutes, 19 seconds said it will predominantly even then in the arrow and defense segment as uh you have probably even seen and heard that especially the 51:26 51 minutes, 26 seconds um automotive industry is facing significant headwinds um not only the French car makers even the the German automotive segment is 51:36 51 minutes, 36 seconds under is under huge pressure and not only cost pressure you know we see significant divestments even there cash constraints in the industry a lower 51:44 51 minutes, 44 seconds ability to invest yeah what even has an impact even on the on the the GDP of some of the European countries at the moment so when it comes to engineering I 51:54 51 minutes, 54 seconds think there's certainly an upside here for ESL in the industries I've mentioned but uh we are continue to expecting headwinds in the German and in the 52:01 52 minutes, 1 second European automotive segment Thank you. I know I'll request to come back for a follow-up question. 52:10 52 minutes, 10 seconds Next question is from the man of Navi Pul from Callless Ventures. Please go ahead. 52:18 52 minutes, 18 seconds Hello. Go ahead. Your order. 52:21 52 minutes, 21 seconds Yeah. Yeah. Uh good morning team. Uh congratulations on great set of numbers and thank you for the opportunity. Sir, I want to uh uh ask you to elaborate on 52:29 52 minutes, 29 seconds our Middle East and um West uh Asia business because uh you mentioned that we have now moved into Egypt and we also 52:37 52 minutes, 37 seconds have dealings with the uh a few companies in Israel. So what I want to understand is because we have also significant presence in aerospace and 52:45 52 minutes, 45 seconds defense. How is the current geopolitical situation uh being looked at by the company? What is the feedback from our 52:53 52 minutes, 53 seconds uh partners from there? Is it is it going to be uh helpful for us to gain more contracts going forward? Uh if you can please elaborate. 53:03 53 minutes, 3 seconds Okay. So from a Middle East point of view, we had a fantastic run of three years until this war. And very frankly 53:11 53 minutes, 11 seconds at this point of time also I could say the impact of the current war can be divided into two segments. the segments 53:19 53 minutes, 19 seconds on the financial services where we are extremely strong is uh so far not impacted uh that's the good news and 53:26 53 minutes, 26 seconds rather growing the other part is on the retail side where we have the retail because of the supply chain with with 53:34 53 minutes, 34 seconds all the ships not moving the sales have come to almost in the Middle East especially in the Dubai to a standstill so where we are seeing that any industry 53:42 53 minutes, 42 seconds other than financial services is having some headwinds because of this but we expect that to be a short-lived and the 53:50 53 minutes, 50 seconds client side also when we engage with them it make a resume back from June June is the hope so that is at a overall level and uh now you also talked about 53:59 53 minutes, 59 seconds how the geopolitical situation and the aerospace uh and especially on the defense side it is uh impacted as I clearly said there are two regions that 54:08 54 minutes, 8 seconds we should uh look at one is Israel and where the the investments have always been high and that is continuing to grow 54:16 54 minutes, 16 seconds up with with the current thing. So I that while war is not something what we want but that also propels the need for 54:24 54 minutes, 24 seconds newer innovations and when newer innovations happen in the defense sector then we are one of the front runners. So Israel will continue to grow. On the 54:32 54 minutes, 32 seconds other side we are seeing a significant demand coming in uh the defense of Saudi Arabia. The Saudi Arabia has been 54:41 54 minutes, 41 seconds procuring uh uh helicopters and uh defense equipment which have to be locally customized and then for that 54:48 54 minutes, 48 seconds there is uh a kind of a testing that needs to be done on the verification validation side where we see an opportunity. We haven't cracked the 54:56 54 minutes, 56 seconds deals yet but we have been in pursuant with pursuing these opportunities with uh the government sector on the defense 55:03 55 minutes, 3 seconds side in Saudi Arabia and hopefully something will turn it around. So to answer your question, yes, Middle East 55:09 55 minutes, 9 seconds has a slow setback in uh the last 2 three months, but hopefully that will not last long and on the defense side, it is only being promising. 55:21 55 minutes, 21 seconds I think it's not a I think it's not a regional conflict. 55:24 55 minutes, 24 seconds Yeah, I think it even we should not underestimate there is not only the conflict and the war there. There is still another war in Europe. 55:32 55 minutes, 32 seconds uh and both of them are even resulting even then in a significant impact on the um situation and the economic situation 55:39 55 minutes, 39 seconds especially in Europe and even now I think even with energy prices going up even on the US uh limited even capabilities due to to higher energy 55:48 55 minutes, 48 seconds prices to to to invest across certain industries yes there is definitely an upside in um in in defense but even when 55:57 55 minutes, 57 seconds we see where the defense spend is going today going more into production and increase in production sites than really 56:03 56 minutes, 3 seconds into investments into into into R&D spent. We should not underestimate this. 56:09 56 minutes, 9 seconds So I think significant part even of the um cost or even the money that is going into it is is more production related than really R&D related. 56:21 56 minutes, 21 seconds Uh sir a small follow up on the same uh we have seen that we have expertise in the aerospace team. Are we alo also into 56:28 56 minutes, 28 seconds uh drones or or something because we have seen how uh there is a debate going on in the world regarding the efficacy 56:36 56 minutes, 36 seconds of drones versus uh defense uh aircrafts and secondly if you can just elaborate on the same lines regarding India given 56:43 56 minutes, 43 seconds the favorable European parentage we have. Thank you sir. 56:47 56 minutes, 47 seconds So on the drone specifically uh we are we have done a massive campaign last 56:53 56 minutes, 53 seconds year on the evol industry the electronic vertical takeoff and landing and there are far too many startups who have 57:02 57 minutes, 2 seconds emerged hundreds of them within India on the evol space. So we 57:09 57 minutes, 9 seconds went in a very cautious note on that and waited for things to settle and rightfully so by end of the year one/ird 57:16 57 minutes, 16 seconds of UTL companies have uh started showing decline. So but to answer your question this is an area where we have 57:25 57 minutes, 25 seconds significant expertise and we are focusing but we don't want to put all our investments in that until that industry totally matures. Today it is 57:34 57 minutes, 34 seconds primarily controlled by the defense organizations and but evol as uh a private industry is flourishing and we 57:42 57 minutes, 42 seconds are equipped for that at this point of time. We haven't signed a deal on evol yet but our pipeline has uh uh those uh 57:49 57 minutes, 49 seconds elements already but that is something which is the future. So we we are just geared up on that. on the similar 57:57 57 minutes, 57 seconds outlook on India. Uh though India defense spend uh uh may not directly impact us but the offset requirements of 58:06 58 minutes, 6 seconds uh Indo uh French uh deals could be uh a high value uh thing that we can look 58:14 58 minutes, 14 seconds because there is an offset amount each of these have to be spent in India and we are very well poised to consume that. 58:20 58 minutes, 20 seconds So from that point of view there is a opportunity but as I said this is again the same offset is what I believed will 58:28 58 minutes, 28 seconds materialize a lot in 20 later 2526 but it has now been pushed to the end of uh 58:35 58 minutes, 35 seconds this year. So it all depends on when they will actually start uh monetizing and materializing the manufacturer of 58:43 58 minutes, 43 seconds these uh uh aircrafts in India. So that it it is so much dependent on that but that that's what will fuel the growth of 58:51 58 minutes, 51 seconds ASD aerospace defense in India rather than uh the geopolitical situation which is impacting directly India. 59:02 59 minutes, 2 seconds Thank you very much ladies and gentlemen. We'll take the last question from the line of Hardik Jane from Whiteststone Financial. Please go ahead. 59:12 59 minutes, 12 seconds Yeah. Uh thank you for the opportunity. 59:15 59 minutes, 15 seconds Uh sir as you mentioned in your speech and in your answer to one of the questions that uh most of these 59:21 59 minutes, 21 seconds productivity gains due to AI uh we have to pass on the benefits to to our customers. So so I just want to understand so large part of our uh 59:30 59 minutes, 30 seconds revenue model or billing would be based on the uh manage that we spend 59:37 59 minutes, 37 seconds on the on the on the client or is it milestone basis just wanted to understand that. 59:44 59 minutes, 44 seconds So we have a combination of both. While uh the the client demands 59:52 59 minutes, 52 seconds a bulk of the transfer of the benefit of the productivity has to be going to them which results in our topline coming down. 1:00:01 1 hour, 1 second AI is a kind of a addictive. If organization takes success or 1:00:08 1 hour, 8 seconds productivity gains in one area very very highly likely that they will expand it to other areas within their 1:00:17 1 hour, 17 seconds organization. So that is where we are still able to protect our top lines on our key customers because we are engaged 1:00:26 1 hour, 26 seconds in one we show them a 40% productivity gain then immediately there are two such opportunities within the same organization that comes. Of course you 1:00:35 1 hour, 35 seconds may say that this will have a saturation but then you have to go to another customer then you have to exhaust each customer. So there is a time factor to 1:00:41 1 hour, 41 seconds that. So at this point of time while passing the complete benefit to them may sound that are we not retaining anything 1:00:48 1 hour, 48 seconds for ourselves this is demand driven by market. If I don't pass 100% of the benefit to the customer and if someone 1:00:55 1 hour, 55 seconds else does then uh we lose the total thing. So we are not risking that and then we have been lavish and passing it back to the customer. But the results 1:01:04 1 hour, 1 minute, 4 seconds are very very encouraging. The two sides one is they are expanding the scope and where they have been engaging us only on the quality assurance in the past are 1:01:13 1 hour, 1 minute, 13 seconds now allowing us to infuse AI into their software development into their uh L1 L2 support into their many other robotic 1:01:21 1 hour, 1 minute, 21 seconds process automation. So that is how I am seeing it and uh not at all worried on passing on the benefit totally to the customer. 1:01:30 1 hour, 1 minute, 30 seconds Okay. Thank you. Thank you. 1:01:35 1 hour, 1 minute, 35 seconds Thank you very much. I now hand the conference over to the management for closing comments. 1:01:42 1 hour, 1 minute, 42 seconds No, thank you everyone. I think uh we are well poised both in terms of our strategy and uh uh our actions. We have 1:01:49 1 hour, 1 minute, 49 seconds a great support from the group and uh Ralph has been there with this for ever since last 12 years. So that link is 1:01:57 1 hour, 1 minute, 57 seconds helping us big time and uh we brace all these headwinds and hopefully we'll sail out uh with good success. Ralph, you want 1:02:05 1 hour, 2 minutes, 5 seconds I would like to say thank you even to all the um shareholders for the continued support and I would like to thank the CEO and the CFO for all the 1:02:13 1 hour, 2 minutes, 13 seconds great achievements over the past quarter and years and we are looking forward to do the same. uh in the the near mid and long-term future. Thank you. 1:02:24 1 hour, 2 minutes, 24 seconds Thank you very much. On behalf of XPlay Solutions, that concludes this conference. Thank you for joining us and you may now disconnect your Thank you. 1:02:34 1 hour, 2 minutes, 34 seconds Thank you.