3i Infotech Limited ($3IINFOLTD)

Ladies and gentlemen, good day and welcome to the 3i Infotech Q4 FY '26 Earnings Call. Before we begin, a few quick announcements for the attendees. Anything said on this call, which reflects outlook for the future or which could be construed as a forward-looking statement may involve risks and uncertainties. Such statements or comments are not guarantees of future performance, and actual results may differ from those statements. [Operator Instructions] Please note that this conference is being recorded. To take us through the results today and to answer your questions, we have the top management of 3i Infotech Limited represented by Mr. Raj Ahuja, Group CEO; and Mr. Kalpesh Shah, CFO. Mr. Ahuja will start the call with business update. After that, we will open the floor for Q&A session. With that said, I will now hand over the call to Mr. Ahuja. Over to you, sir.

Thanks, Supanshi. Good afternoon, everyone, and thank you for joining us on the Q4 FY '26 earnings call. After a brief pause in our investor engagements, I'm pleased to reconnect with you all today. Over this period of last 1 year, our focus was on restructuring the organization, strengthening our structure and building foundation for the next phase of growth. We deliberately chose to return to this forum once we have meaningful progress to share, and I believe today reflects that progress. The structure of my communication is simple. I will begin with the financial highlights of quarter 4 and full-year FY '26, followed by business updates across all 3 lines of businesses, a progress report on the key strategic initiatives and finally, our outlook on priorities for FY '27, followed by Q&A sessions at the end. Financial performance to start with, for quarter 4 FY '26, we reported a revenue of INR 175.7 crores, reflecting sequential growth of 2.1% increase from INR 172.1 crores in quarter 3 FY '26. EBITDA increased to INR 12 crores in FY '26 from INR 11.4 crores in quarter 3 FY '26, reflecting a 5.9% quarter-on-quarter growth. Gross margins percentage increased to 12.6% in quarter 4 FY '26 compared to 10.8% in quarter 3 FY '26, marking our sixth consecutive quarter of PAT profitability. This trajectory reflects disciplined execution and sustained effort of the entire team at 3i Infotech. For the full-year FY '26, revenue stood at INR 693.3 crores. As I address our investor today, I want to acknowledge that revenue remained largely range bound through most of the year, particularly quarter 1 to quarter 3, reflecting a period of major business momentum across key segments. Despite this, AAA business vertical continued to anchor the business through strong client renewals, new logo additions and a CoE-led approach across application modernization, analytics, ERP and AI-driven solutions. Infrastructure Services delivered stable margins, strong account retention and growth across cloud, cybersecurity, hybrid infrastructure and AI-driven operations, while also expanding dedicated CoE capabilities. BPS is undergoing a strategic repositioning from an India-focused BFSI model to a digital-first AI-led transformation business targeting new geographies and sectors. Across the organization, AI is now being embedded horizontally to drive scalability, productivity and long-term growth. Meanwhile, in terms of geographical footprint, the U.S. emerged as 3i Infotech's largest market, accounting for 49% of the total revenue in FY '26, with revenue in the region growing by 19% year-on-year. India accounted for 40% of the total revenue. For the full financial year, the company reported EBITDA of INR 72 crores in FY '26. This is against INR 47 crores in FY '25, registering a robust 53.3% year-on-year growth. Reflecting enhanced operational efficiency, the company's EBITDA margin improved to 10.4% in FY '26 compared to 6.5% in FY '25. We continue to maintain a debt-free balance sheet. Our DSO performance also has shown consistent improvement from 65 days in FY '25 to 55 days in FY '26, reflecting strong working capital discipline across the organization. Not only that, but our voluntary attrition rate also has been dropping consistently from 11.8% in quarter 4 of FY '25 to 7.3% in quarter 4 FY '26, which is a reflection of the stability, culture and commitment that we have built within the organization and something we take immense pride in as a team. The successful completion of the rights issue in FY '26 marked a key milestone in strengthening the company's financial position and future growth readiness. The proceeds are being utilized to strengthen working capital and support strategic business growth and operational initiatives. The 2 legacy items, which are the e-Mudhra and the RailTel matters, they are progressing well. In the e-Mudhra matters, statements were recording (sic) [ recorded ] during quarter 4 of FY '26, while in the RailTel matter, the arbitration panel has been constituted and the statement of claim has been filed. The company will continue to pursue both these matters towards a positive outcome. Coming to our first line of business. AAA, which stands for application, automation and analytics, continues to remain the anchor of our business, contributing approximately 71% of total revenues. We achieved a 90% renewal rate, added 60 new logos, reflecting the strength of our client relationships and the sustained relevance of our capabilities in the market. Our CoE-led approach with AI embedded across practices is strengthening our positioning and creating stronger differentiation in client engagements and strategic conversations. Coming to Infrastructure Services. The business delivered a contribution of 20% of total revenues for the year, supported by a healthy 98% renewal rate across key accounts. In FY '26, we added 9 new logos and expanded large accounts across infrastructure management, data center modernization, hybrid cloud and AI-driven operations. We have implemented continuous improvement programs across key engagements, helping streamline operations, enhance technology and deliver measurable value to our clients. We have also started building dedicated CoE capabilities across cloud, cybersecurity, AIOps and digital workspace solutions by structured go-to-market initiative across India, U.S. and Middle East. Our focus still remains formally on the cloud opportunities, growing data center growth ecosystem, cybersecurity and managed services in India and global markets, and we are moving ahead with confidence and positive momentum. Turning to BPS. This is a segment where we believe the maximum transformation opportunity exists. The business closed the year at 9% of the total revenue for the year with 10 new logos. This revenue was below our internal expectations due to structural headwinds. We have been servicing mainly BFSI customers in India in this segment. This business model has been under stress due to regular changes and tightening of outsourcing guidelines across BFSI regulators and also due to more automation and AI initiatives across processes, especially customer onboarding and servicing. However, the strategy for this business has now fundamentally evolved. We are no longer positioning ourselves only as an India-focused BFSI BPS player. Our focus is actively expanding towards opportunity in the U.S. and Middle East, while also diversifying into sectors such as finance, HR, manufacturing, health care, retail, telco and government. The larger objective is to reposition 3i as a global digital-first AI-led transformation BPS partner. Execution is already underway through the rollout of the CoEs, supported by a dedicated delivery and sales team. While the revenue of these initiatives may take a few quarters to reflect, I believe the foundation work is being built in the right direction. Most importantly, AI enablement is now becoming horizontal across the organization rather than practice specific. We are embedding AI into delivery frameworks, operational processes and client solutions, which we believe will progressively drive higher scalability, improved productivity and stronger margin performance over time. Several strategic initiatives undertaken in FY '26 that may not yet be fully reflected in the revenue line, but are expected to play a significant role in FY '27. A key milestone was the formal internal launch of our CoE framework across all 3 business lines in December 2025, creating scalable revenue generating and margin-accretive delivery models to be fully operational by the end of quarter 2 FY '27. On the business front, we have further strengthened our leadership team across India, Middle East and U.S. with key additions spanning business leadership, business development, pre-sale partnerships and AI/ML capabilities, enhancing our sales and pre-sales capabilities and a shopper KRA-driven accountability framework. These appointments significantly enhance our execution strength and deepen our domain expertise across markets while reinforcing our focus on driving growth, strengthening client engagement and scaling emerging technology capabilities, including AI-led transformation. Our U.S. subsidiary has been onboarded into the SAP partnership ecosystem, with a focus on SAP cloud ERP solution, which will help us to enhance value to our customers. We will leverage SAP's technology framework to strengthen our service delivery capabilities and accelerate outcome for clients across industries, particularly in areas of enterprise resource planning, data-driven decision-making and cloud adoption. While we are still in the process of filling up some critical senior positions under my direct leadership, this strengthened new leadership bench will be instrumental in accelerating our next phase of growth as we move into FY '27. We are also building strategic OEM and technology partnerships across AI, IoT and cybersecurity for joint go-to-market. Importantly, these are already operational, and we have begun publishing order wins to the exchanges to improve visibility and business momentum. Geographically, India and the U.S. continue to remain our core markets, while the Middle East has emerged as a key growth focus under dedicated new regional leadership. We are also evaluating expansion opportunities in Canada and East Africa to start with. In parallel, entity restructuring initiative, including U.S. restructuring, KSA and Netherlands closure and the India merger are progressing steadily, supported by strong governance frameworks and structure reporting mechanism across the organization. On leadership and governance, both the Board and management structure has evolved structurally over the last year, creating a stronger and more stable leadership framework in place with succession planning underway with deeper operating expertise, clear accountability and better alignment across strategic priorities, creating a stronger foundation for execution as we scale into the next phase of growth. This was all about the past 1 year. Now as we head into FY '27, profitability is no longer the question for us as we have already established a more consistent profitability trajectory. Our focus now is formally on accelerating revenue growth while maintaining margin discipline. Our FY '27 strategy is structured around 6 pillars -- 6 key pillars: people, process, productivity, platform, partnering and profitability, each driven through defined ownership time lines and review mechanisms. This is the most structured operating plan we have created till date, and I'm personally driving execution against it. While our strong presence in the BFSI sector continues to remain a key growth driver, we're also witnessing increasing traction across sectors like health care, retail, manufacturing, education, energy and government as further strengthening our growth outlook as well. On the revenue front, we expect a meaningful step-up in FY '27, driven by stronger sales execution, CoE-led deal momentum, expansion across U.S. and Middle East and gradual impact of our BPS repositioning from quarter 2 onwards. While we are not providing a specific number at this stage, we remain confident that FY '27 will be a growth year for 3i backed by a significantly stronger foundation that we have built over the last 2 years now. In summary, FY '26 was a year of building strong foundation and was not about any one business or function. As we move forward, our CoE-led approach, combined with AI-driven capabilities and new-age technologies will play a critical role in how we differentiate ourselves in this market. It is about how we operate collectively as an organization. I also believe the leadership team structure is stronger and better aligned for execution. As we step into FY '27, we do so with greater confidence, stronger execution capability and a clear vision for the road ahead. I would personally like to thank our shareholders, clients, partners and all the employees of 3i for their continued trust and commitment. I also want to acknowledge our long-standing investors who have remained supportive throughout the journey. Your faith in the company is deeply valued. Thank you once again. I will now hand it back to the moderator for the Q&A session.

[Operator Instructions] Our first question comes from the line of [ Santha Kumaran ].

Congratulations for turning 6 consecutive quarters of profitability. I have about 4 questions. Shall I ask them all together or one by one?

You can ask all the questions at one shot, and then I'll reply to them.

Okay. Mr. Raj, your vision is the company should be a $1 billion entity by 2030. But the current pace of the company and the declared order wins does not point towards that direction. Our order wins are just INR 2 crores to INR 3 crores and like that. So, when can we see an actual order wins of minimum at least INR 15 crores, INR 20 crores and whenever -- when we can hear that? And when are we going to be going towards in the direction of your declared mission? That is my first question. Secondly, we are hearing the company has lost, especially in the BPS division, a number of marquee customers, those who are with the company for a very long time and very large accounts you lost. That is what's the whisper in the outside. So, what is the fact? And how are you going to offset that? Thirdly, our contingent liabilities stand at more than INR 230 crores. That is nearly 60% of our total market cap. What percentage of this realistically going to be expected to crystallize in the actual debt in financial year '27? And when can be -- these legacy issues of RailTel, e-Mudhra and recently, you also just published something about some tax demand from one of your subsidiaries. All these kinds of suspense or just surprises keep coming up. When can we just leave them all behind and go on a normal path towards your vision? My fourth question. We are a totally shareholder -- retail shareholder-driven company. There is no promoter. 85% of shareholders are normal investors like me and others. Not a single director or even the management has got the so-called skin in the game. Shouldn't the Board have a director's qualification that you must have these many of shares, then only you can be considered to be the post of director? Shouldn't the Board should come up with that kind of a mandate? And for you, since you are saying that financial year '27 is going to be so profitable and we are on the path towards the direction, so shouldn't the senior management also demonstrate to the market by buying from the market a considerable amount of shares and showing your confidence? Can we expect something like that going to happen in this financial '27? My final question is about the EPS. We are a company -- we keep giving the EPS very -- this thing and it is the -- shareholders holding value keeps decreasing. I can understand the long-standing employees must be remunerated. But even I just saw one resolution that is even people who have got a grading of one, which is actually a nincompoop. If he is also should be authorized to be getting 50% of vesting rights, so just why the shareholders' value is reducing like that? Is there any plan to go for a repurchase of the shares so that the value can be maintained? These are my questions.

Thank you, Mr. Santha. First of all, thanks for acknowledging the profitability 6 quarters. So, we need wishes of all our well-wishers to continue this journey over a longer period of time. Coming to your first question on the $1 billion target, the vision which we have set and how we are going to achieve it knowing that in FY '26, we actually have a degrowth and we stand a little lower than where we stood around a year back when we have fixed up the vision of 2030. The Vision 2030 framework we shared of roughly tripling our revenues by FY '25 base by FY '30, this remains our directional ambition. So, we are not changing that at all at this stage. It's a medium-term aspiration and not a fixed year-on-year guidance given to the market. What has changed is not the direction, but the sequencing. FY '25 and '26, we have been focusing much on cleaning up the portfolio, exiting a lot of low-margin work and stabilizing profitability. That has been a strategy, which I had communicated even in the last call as a long-term strategy for us. We wanted a very healthy revenue pipeline and a healthy revenue base, and that's what we have been doing by replacing the low-margin deals with the equivalent high margins or a better margin deals over a period of time. This has created a very stronger and a more focused base to grow from now. As we move towards FY '27, the focus has shifted more meaningfully now to execution and scaling our core growth engines, while the base has already been set. We'll not recalibrate the aspiration at this stage at all. We will continue to let performance and visibility from the new bookings and pipeline guide, how the trajectory evolves over a period of time. I'm with you that all the new winnings what you have seen, they are of the smaller values in the range of around INR 2 crores to INR 5 crores, with a couple of them exceeding INR 5 crores. But that's only a beginning. We have seen this growth -- this is not the growth you have seen in the first few quarters where we were struggling for building up a healthy sales funnel and then growing on top of it. Now, we have started converting the funnel into the orders, and this is just a beginning. I don't want to make anything public as yet, but there are some new deals, which is almost closed, and you will also hear about those deals in the next few days and weeks to come. Your second question on the BPS weakness. You're right, and we have also made it public in our couple of messages earlier that India BPS has been facing headwinds over the last few quarters, which is driven largely by regulatory-led in-sourcing BFSI clients, and that has contributed to year-on-year decline seen in FY '26. We consistently did not chase low-quality volumes in line with our strategy to exit low-margin work. We have lost some good accounts there -- sorry, we had lost some good accounts there. And the reason for that is the outsourcing policies of our regulators, which is forcing the clients to look for a vendor replacement every 3 to 5 years period. And on top of it, the whole AI journey, which the customers have started, especially in the customer servicing and customer operations, that has also led to the decrease in the BPS business. One of the major reasons why BPS business, we are not able to scale is that we have always been focused on Indian market and BFSI market. We have not grown beyond these 2 markets. From here, the focus is on the stabilization and selective rebuilding through a clear approach, strategically pivoting to automation-led, domain-rich BPS where we can improve realizations, planning to expand into Tier 3 or Tier 4 locations to improve cost and retention strategies. And secondly, in growing in the higher-value markets such as U.S. and Middle East. I've also mentioned that we are also looking for processes outside BFSI, which includes finance, HR, operations, manufacturing. We're also planning to expand into those markets. So, that will take care of 2 problems. One, from India, we are now planning to expand into the U.S. and Middle East market and the initial interactions are good. We already closed a couple of deals over there, though they are very small beginnings, but we have already closed 3 deals in the last 1 quarter, smaller deals in U.S. and one in Middle East. And we'll continue to focus on those markets. Second is that we have also started building up the CoE around the non-BFSI processes, which includes finance, HR, administration, operations and other things. While some residual churn in legacy contracts cannot be ruled out, we believe the bulk of the reset has been done in the BPS. And BPS is now expected to be more stable and higher-quality contributor to the growth, and it will be in a more measurable way. On the contingent liability side, yes, we have roughly around INR 200 crores of contingent liabilities and most of them are from the legacy tax issues what we have over a period of time. We have been closing one by one whatever we can. In the last 1 year, we have participated in the VSV scheme. We closed a lot of those contingent liabilities. We also closed some of those old legacy tax litigations. We have made it public also as a part of our press release that we had closed one old service tax issue, which could have resulted into almost INR 60-plus crores, INR 70-plus crores kind of exposure, which we have closed it at around INR 5.5 crores of final closure after the Supreme Court, like the intervention. And that has already been provided in FY '26 financials. And we'll continue to negotiate and discuss on the penalty or interest wavers around that. This is an ongoing journey. I think the contingent liability, yes, for our scale and size, the number is high. But I think there have been like the legacy of almost last 20 years where a lot of issues have been opened up, and we are trying to close one by one whatever we can close. I'm not expecting any major hit as of now. At least based on our current visibility, I'm not expecting any huge hit to come in FY '27 out of this contingent liability to occur. Coming to the legacy items, the question is more on that you keep hearing about the RailTel, e-Mudhra, tax demand of U.S. While we understand that RailTel and e-Mudhra are very 2 specific litigations or disputes what we are going through, and we have been making it very much like aware to the public as and when there is any development happening because both are critical in terms of value and the goodwill of the company. The tax demand from U.S. is one of the routine tax demand, which normally post any assessment, you have to go through. There will be an order, like in India also it happens. There will be an order. You go through litigation and you go through the procedures. There might be some final demand coming up, which will get provided in the respective quarter as and when it gets finalized. That's a routine process in like, say, any tax assessment, though the value is huge, but we are not expecting as of now, and we are obviously having -- we are going to fight about that with the authorities. Coming to RailTel and e-Mudhra, like we have been declaring that those are the 2 things, which has been open for a long time and they will continue to be open for a reasonably long time. I can tell you that because both are in the matters of sub judice. And I will not go to comment more than that, whatever we made public. But since it is -- both are litigation matters, one with the government authority and other one of a strong magnitude, they will go through their own long-term litigation, in my opinion, unless we can negotiate some kind of an arbitration or settlement from the parties, which obviously, as and when it is done, we'll make it public. So other than these 2, 3 things, I'm not -- there's nothing open from the past legacy matters, except for the new things will keep coming, which is more on the routine business tax and other matters. On the ESOPs what you have mentioned about the promoters not having a skin in the game, I recognize that the capital structure what we have after the 2021 restructuring, which was done and after the INR 64 crores rights issue, which we did in FY '26, the share capital base has been very high, almost INR 200 crores plus and number of shareholders are also huge. On top of it, our profits are not sufficient for doing any kind of a dividend at this stage. As the business stabilizes and it will generate consistent free cash flows, the Board will obviously evaluate capital return options, including dividends and if required, the repurchase of shares to bring back the share capital to reasonable levels. But in the near term, I don't think we are planning to distribute any like -- or return any capital at this stage. In the near term, value creation will primarily come from reinvestment of the profits into the high-return growth areas and rather than the distribution. I also understand your concern on the ESOPs being given to the employees. One, I would like to tell you very clearly that ESOPs are -- our approach is very, very tightly governed. They are only used as a retention strategy and alignment tool for the critical talent. We have not done a very broad-based ESOP compensation mechanism. It is only given to the leadership above a particular level. And the approved pool is managed conservatively, and we are not expecting any huge dilution to happen to the overall capital, knowing the base of the capital what we have. With respect to the change what we have proposed, I don't know. I think you have not read that circular properly. For the person's rating 1 and 2, we are not planning to give any ESOP. So, that continues to be 0%. So the moment the person is rated 1 or 2, his allocation becomes 0. It is only the rated 3, which is in our parlance is known as met the plan criteria, met the objectives or KRAs of the individual. Only in that case, we are upgrading it from 75% to 100%. Earlier it was -- if you're meeting your plan, you were given 75%. We are making it more rational. If you've achieved your plan, you should get 100% of the allocation. That's what the thought process has been. But on top of it, we have also ensured to amend the scheme for making it to 4-year scheme instead of a 3-year scheme, which is obviously against the employees, but in favor of taking the ESOP as a broad -- as a targeted retention strategy and not just an award or compensation strategy. I hope I was able to give answers to most of your questions. Let me know if I missed out anything in this.

Thank you, Mr. Raj Ahuja. Yes, you addressed almost everything and all the best for your future endeavors. You left one issue, which if you can address, that is the Board Members and the senior management to have -- to buy shares from the market to show the direction and the confidence -- to increase the confidence.

Sure. As of now, most of our Board Members are Independent Directors. And so they are not obligated or they are not forced to buy any shares from the market because they should remain independent and they should not have a skin in the game. For the management, I agree. As of now, the management is getting shares only through ESOP schemes. I don't think there are many management members who is buying from the market and holding shares. But your point taken, I think I'll put it to our NRC Committee of the Board and see like if we can have some kind of a -- not forced, we cannot force anybody, but can we have some kind of a guidance or a suggestion to increase skin in the game from the directors or management side.

[Operator Instructions] Next question comes from the line of [ Sanjyot Khare ].

Raj, congratulations on another quarter of positive PAT. My question is about definitely revenue is growing in a little slower speed, and you already mentioned that, yes, you guys are working on it. The profit for the Q4 is mainly -- I mean, is including operating income as well as the other income. And because of the other income, I think it has really helped in getting a positive PAT. So, my question is, now as the things are under control or already the plan is there, are we going to see -- when are we going to see operating income is going to be more than the expenses? I mean, that will help in getting a PAT as well as the goal what you have set, like about INR 3,000 crores by 2030 is almost 4x of the revenue, 3.5x to 4x. So as we have to go step by step, are we seeing that at least for the FY '27, can we grow at least by 20%?

Okay. Thanks, Sanjyot. First of all, coming to the operating income versus other income. I know that in the financial -- audited financial, we have this line called other income. But when you see the details of that other income, we personally, internally, we don't treat that as other income coming from somewhere outside the operations. Most part of our other income consists of something, which is related to business and I'll explain you. Though it is -- because of the accounting principles, it is shown as part of the other income and not part of the operating income. The biggest item in this is the foreign exchange gain or loss. I personally feel and the management also and Board also personally feel that ForEx is a part of the business. So it is not something, which is outside the business. This is not about -- we are having foreign investments or some legacy assets and liabilities, which we are revaluing and the profit of that is coming into the P&L. ForEx is an extended arm of our revenue, which is 49% is coming from U.S. and the revaluation of all that operating assets comes into the other income, which technically is operating income for us. And then we also have -- we can always say that, okay, interest is out. Interest, we are not counting it as operating income. That's coming mostly from the FTEs and also most part of the operating income comes from either -- other income comes from either the accounting treatments like AS -- accounting standards accounting or it comes from the ForEx gain. The maximum amount actually, if I see roughly around 60% of -- 70% of the business, other income is coming from operating operations and not coming from just the accounting of other incomes like your income tax or income tax refunds or interest income or grants. Those are excluded out of this. So, I still personally feel that once you see when we release the retail financial, you should see the breakup of the other income and try to see -- we are already profitable from an operating income point of view also and not just because of other income. Sorry, what was your second question? Second question was I think a repeat of the earlier things. One is that it's not INR 3,000 crores by 2030. So the target is 2030 by 2030, which is roughly 3x. FY '27, yes, our internal plans are very aggressive. We have done a couple of investments in building capabilities and bringing the leadership team and our execution team below them in the last 6 months post the rights issue funds were received. We started doing the basic investments into capability building, the whole CoE formation and so many other things. And we should start seeing some results in the quarter 1 and quarter 2 of this year. I'm not putting a number. You asked me a number. I'm not putting a number as of now because we don't give any forward guidance. But yes, the internal growth aspirations are much higher, which should take us to our goal of 2030 by 2030. We are not changing that goal. We are continuing with that goal, and all our internal calculations are moving in that direction only.

Raj, just last question is about -- in the shareholding pattern, it has observed that Envecon Systems has acquired more than 1.5% of this equity of 3i Infotech. And I'm sure in this quarter, they might have acquired more as the price has gone up. So, I just want to understand, is there any working relationship or any strategic partnership or things going on with this Envecon Systems?

So, we also realized because we keep getting those weekly reports and we keep observing if there is any major movement happening in the shareholding pattern. And yes, you are right. Envecon has acquired roughly around now -- sorry? 1.5% shareholding, which was done, I think, over a period of 2 or 3 months in quarter 4. And after that, they have not been adding. I think they have been stable at that level for the last, I think, 4 weeks or so. Actually, they have sold off a little bit, very small portion of their equity, they have sold also in the last 2 quarters -- 2 weeks, I think once the rates are up. To tell you, frankly, I've been in touch with the promoter of Envecon. I have spoken to him after we realized that to see whether like there is any kind of a relationship possible to leverage on the synergies of the 2 businesses because they are into the similar kind of business. But I realized that I think they are looking this investment more from a financial investment and not a strategic investment. And we continue to wait and watch on their next thing because since they are doing a financial investment, so we are also not aggressively partnering with them as of now. And their operations in India are also very limited. They are mostly Europe-based delivery operations.

And may I ask the last question?

Sure. Go ahead.

Yes. Just last question is about the e-Mudhra. As you already mentioned, things are going on. And in eMudhra conference call, like this Q4 conference call, it has mentioned by their Chairman that they are in touch with 3i Infotech and they are not receiving any information -- received any information in last quarter as well as they have sent a legal notice to 3i Infotech. So, that is just some comment has being made into their conference call. So, I just wanted to give that information. I'm sure that you may be aware of it, but I just want to give you an idea and anything like progressing, which will be benefiting 3i Infotech?

So, we are also aware, we keep noticing what information they are taking to public. As of now, we are not in direct touch with them at all. They have sent us a legal notice and internally, the Board is discussing how the legal notice to be responded to because the matter is already sub judice. We have already filed the complaint, and the statements and all are being recorded. So at this point of time, the legal notice doesn't carry any sense. Frankly, knowing the legal process since the matter is already with the authorities, I'd not like to comment beyond it. And the legal notice once the matter is already with the authorities doesn't make any sense to us. But we are still talking to our lawyers and trying to see what is the best way to handle it. From our side, we are not in direct touch with the management as of now.

You are guys are really doing a great work -- really brought by the company on the good operational performance. Wishing you all the best for FY '27.

[Operator Instructions] Our next question comes from the line of [ Rishi A ].

Just quickly shoot my questions across. See, revenue has declined considerably. Cash loss is INR 50 crores. Operating loss is also INR 50 crores after excluding ForEx gain and COVID subsidy from U.S. Auditor has qualified report. They have not covered 85%, which seems to be a severe violation. As per market rumors, we also hear ICICI Securities and IDFC has been lost, yearly revenue of nearly INR 80 crores. This is not informed to the stock exchange, which again seems to be a SEBI violation. The management has kind of wiped out INR 200 crores cash in 3 years. Gross margin is only 12%. It looks like a flipping business. When all the parameters are bad, the admin expenses have gone up by 30%. With these, you're projecting 2030 by 2030. Is it just a big imagination and only wishful thinking? Please provide answers to these questions.

Thanks, Rishi. I think if you see from an independent point of view, a lot of these points are factual statements, and there is no disagreement to some of those things. But each of those points, you have to see in isolation and then see why they are there in the current form. Let's talk about cash flows. We have raised, let's say, rights issue, the equity capital because we were into the working capital cycle issues. And once the funds were raised for the working capital, obviously, it will result into usage of those funds for the working capital, which includes paying to our vendors and employees in time, which was not happening until around whatever 9 months back. There was a delay of almost 5 to 6 months to the payment of vendor and paying salary delays and all. So, all this has been corrected in the current year, which has resulted into our usage of cash to bring vendors and employees in line with the payment terms, which we have agreed to. And so the cash loss is not only this year cash loss, but it is the accumulation of the few years of non-payments to the vendors and employees in time, and that's what it resulted into cash loss. And that is linked to the other point on the INR 200 crores like in the last year, and I'm assuming you're talking about the period between '22 to '21 to '24 when the previous management was in place. And I'm assuming -- I'm sure like, say, if you were an investor or any investor before that would have asked that kind of question to that time management that why there is a loss and Board was still okay. But having said that -- so I'm not going to get in the past that why there was a INR 200 crore loss. That was all done by '24 when we booked a huge loss and write-offs in '24. And '25, '26 is when we -- the new management, the new Board has taken over and then we have corrected most of the things. I've already explained operating loss. I think you are reading it without other income. And internally, when we review our own performances, we include certain things like ForEx gain and loss and both sides, loss and gain. We take it as a part of our operations only, though accounting-wise, it comes under other income. I have also mentioned about revenue degrowth. Revenue degrowth was part of our strategy. For the last, I think, 3 calls whenever I've been there, we have been making it clear that the previous management has got into a lot of this low-margin loss-making deals, 0 margin deals, which we are trying to correct. And then we had told the market in the beginning of the year itself that there will be a degrowth this year. And this is not a surprise or an unknown fact to anybody. We have said that in very clear terms that there will be a degrowth because we want to exit loss-making and 0 margin deals or loss-making deals. Internally, I've already mentioned about 2030 by 2030. It's not a dream. It's a -- yes, it is a stretch. It is a wish. It's a far off like target. But we are working -- like we have worked a lot in the last 24 months on creating execution plan, putting everything in place, cleaning up all the legacy issues, getting the funding done through rights issue and so many other things we have done to set the base right, so that we can do a quick start from here onwards. And I think we are ready now. Yes, we have lost some of the couple of accounts. I don't want to mention clients' name because they are under confidentiality agreements. But I can tell you very clearly that they are -- it is not that we have lost those contracts. We had the contracts valid only till a particular date, and they are still there. As on 31st March, both the contracts are still valid. They will go over the period of the next few months. And they are part of the routine vendor -- what do you say, vendor churning, the vendor churning guidelines of RBI and SEBI and so many other regulatory authorities. And we are very clear, and we have been in touch with the highest authorities over there. They are not the loss of clients. They are loss of contracts, which means that we are still talking to them and we will still come back to them with the other contracts and other revenue opportunities within those companies. They have churned because there is a regulatory guidelines to keep churning the vendors every 3 to 5 years based on the evaluation and the risk assessment of other risk appetite of those companies. But it is not that the relationship has been finished. The relationship continues to be on. It is not a delivery issue. It is not a service quality issue. It is purely driven by the regulatory guidelines, which has led to these contract closures. And they are not contract loss. And you mentioned about SEBI, this thing. They are not the contract loss. Their period had ended. The contract was for a particular period. The period has ended its own natural period. So as per guidelines, there is no need to report if the contract is ending as per the contract terms. Only the cancellations or any -- like say, if there's a dispute with the customer, those only get announced. These are part of the ordinary businesses like when we say that 90% of the business or 98% of the business gets renewed, this is the part of the balance 10%, which doesn't get renewed. And this is normal for us. We keep losing some business. We keep winning some of the business. Good part, as far as I'm concerned, we have not lost a client. Relationship is still on, and we are still talking about some other projects with them with the same client. And the fact is that like, say, we also got almost 80-plus logos in this year. So for us, winning logos and losing some businesses is part of our routine business. So, I'm not concerned. Yes, they were big accounts. I'm not trying to underplay here. Those are big accounts. The number you mentioned are like on a higher side, but a little lower than that. Yes, that's a loss. But I'm not concerned as of now.

Another quick question. Sir, on the 80-plus logos which you're talking about, what would be the amount that we will be winning?

Okay. The total order value against these 80 accounts is roughly around INR 80 crores, INR 77 crores to be precise. It's around INR 77 crores of the new business. But some of these accounts, at least I say 10 of these accounts has a huge potential. And like this is only initial -- like I was giving example of the BPO business. We got 3 clients over there in U.S. They all started to experiment with us. They started with 5 seats and 10 seats. But there is the potential is to go up to 100-plus seats over there. We started with one client, which we made it public also, make it public because we have not mentioned the name. We started with the initial understanding of around 70 FTE equivalent IT services, and we are already now ramping up to around 130. So, initial order booking was INR 77 crores for these 80 clients, but all of them has a huge potential to grow as long as we continue to deliver well.

Yes. Also quickly on the qualified report, we don't see a coverage of 85%.

Yes, no, no. So requirement is 80%, and we are fully compliant. So, there is no qualification on this topic. I don't know from where you were reading that. The SEBI requirement, 80%, we are covering 80%. That check has been there from the beginning. We have never defaulted on any of the compliances or SEBI guidelines in this regard. Yes, there are qualifications, which we have explained. There are a couple of qualifications, which are all pertaining to legacy opening balances and all. There is no new qualification, which has come in this year. The old legacy -- because there are losses -- there are some losses booked in some of those subsidiaries, which is making it like, say, is it a long-term business sustainability issue for those branches, which is the legacy issue and then we are evaluating and we continue to take actions to bring them back to the track. But there is nothing new, which has got added this year on the qualification side also.

Please take a note that the questions in the chat will not be addressed. It's a request to get in the queue. Our next question will be coming from the line of [ Sanjeev Badra ].

I would like to congratulate the whole team of 3i Infotech. Thank you so much, Mr. Ahuja for addressing the investors. I would like to say [Foreign Language]. It was a big hope for all of us and still we are hoping it will be a turnaround story. Now, I have 2 questions. [Foreign Language]. A question, it comes from annual operating plan. I mean, targets or execution, sir. What was the exact AOP target for FY '25, '26 across revenue, EBITDA, net profit, new client acquisition, EPS growth, AAA growth, large deal wins? And which of these targets were achieved and which were missed? If targets were missed, what were the primary reasons? And were these external market issues or because of the internal execution failures? What are the corrective actions for these all? Can you please guide on this, sir?

Okay. Thanks, Sanjeev. On the annual operating plan, since we don't -- since the annual operating plan is not in the public domain, I can only tell you the categories rather than sharing the exact numbers. We have missed revenue targets for sure. Our target was to show a net -- almost stable numbers or a little higher than the stable numbers of the FY '25 numbers, but we have obviously not grown to that extent. And so that's a missed target. Profitability, we have actually overachieved. And we have overachieved because of our control on a lot of costs, what we have done. Despite the revenue being down, we have improved on our operating margins as well as reduced costs. Just to tell the team here that U.S. tax refund and all were also planned as a part of this one. So, that's not a windfall gain for us. That was already part of -- that was part of the annual operating plan. So on profitability, EBITDA, as well as PAT, we have done better than our internal plan. We don't have a separate target for large deal wins, but the one thing which we have failed is the growth part, which anyway I have just said as the top line heading, but the new order booking has been weak. And that is mainly because of the weak sales team, which we corrected in the last 4, 5 months now, which since I have taken over directly that role. We have reworked on the whole team. We have got new leaders, the second-line leaders in the team. We are reestablishing the whole sales framework. We have got some consultants to help us in setting up the sales processes, the sales funnel creation, the reviews and selling techniques and everything. So, we have got some work done over there in the last 4, 5 months. We have got the new leadership team in the Middle East. You would have seen the press releases Jagadish has joined us with the old hand, Middle East strong person and then the initial signs are very, very positive as of now. We have started looking at expansion into East Africa and Canada. We have got 1 person each looking at the sales of those -- at this location. We built up a sales team in U.S., while we continue to build sales team in India. And then we continue to fill up those gaps of the leadership as we go forward. In Asia Pacific, Thailand has been one of the things where we said we'll grow. We have not grown. Again, the same revenue issue, but there also, the things are in better shape now in the last quarter where we have got the new sales person over -- 2 new sales people here and the initial things are good. So it's a mix of bag. I will not say that we have achieved all our objectives. There are still -- I think we couldn't achieve many of them. Some of them were more execution issues like sales. We took a little longer time than we were expecting to set up the team and then build up the funnel. I think it took more than what we were expecting. And part of that was also because of not been able to attract the talent in the first 6 months of the year because of our cash flow issues and delay in salaries. So, that was the issue of attracting good talent, which got corrected, but I think there's still some little bit of hangover over there of the old cash flow issues still. So, mix of things. I will put -- I don't think that we have got impacted largely because of any external things. U.S., small impact, but that's business as usual. I'm not seeing that -- some of the government contracts, which we were doing was big contracts for us. That got into a little bit hibernation because of the government policies and funding issues in U.S. for the government departments and projects. In Middle East, in the last 2 months, there have been a little bit of a headwind because of whatever is happening in Middle East. But we have not seen much of the ground level impact. Again, I would call it as more of ordinary business issues as of now. Business is still going on. It is not growing the way because of the people being a little bit cautious of whatever is happening in U.S. and Middle East. We don't have any presence in Russia side. So, we're not concerned with Russia, Ukraine, whatever has happened. But overall, I think economic conditions, people have been in a little backseat to delay decisions and not take aggressive calls and that has impacted. But I think that's the business cycle, which we have to live with anyway.

Okay. Okay. I have one more small question, if you allow me to ask. May I, ma'am?

Sure.

Sir, what would normalized profitability look like, excluding ForEx gains, ERTC grant income and one-time adjustments? Can you please throw some light on this as well?

To tell you frankly, we have given a guidance. We have given a guidance at that -- when we given a vision, we said that we want -- we will be at a single -- high single-digit profitability numbers by 2030. We are much lesser than that for sure as of now. Roughly around -- if you exclude that U.S. grant, I think we are at roughly around 4% number, EBITDA. And we want to take that 4% EBITDA levels to -- our internal target is to take it to around early teens, which is 13%, 14% and PAT levels of high single digit, which is around, say, 8%, 9%, 10% levels. That has been the guidance as per the vision, and we still stand by with that number.

Due to time constraints, this would be our last question. I would like to hand over the call to Mr. Ahuja now for the closing remarks.

Okay. Once again, I think I'd like to repeat that very, very thankful to the investors who has given me this opportunity to -- like I think one of you said, the turnaround story. So, I'll be happy that this actually turns out to be a turnaround story, and we'll be happy to lead this story for the market. Thank you once again, everybody. And thanks for your wishes for a good FY '27. And we'll keep connecting. I think this time, we'll do it a little more often. Last year, we took a little break. But this year, we are planning to do quarterly calls as we were doing it earlier, and we'll catch up once again in the next quarter. Thank you, everybody.

Thank you very much. You can reach out to the Investor Relations team, NNM NextGen Advisory at [email protected] for questions. On behalf of 3i Infotech Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.