All E Technologies Limited ($ALLETEC)

Ladies and gentlemen, on behalf of Captive Consulting, Investor Relations team, I welcome you on to the Q4 H2 and FY '26 post earnings conference call of All E Technologies Limited. Today on the call from the management team, we have with us Dr. Ajay Mian, Managing Director; Mr. Rajiv Tyagi, Executive Director; Ms. Ritu Sood, Executive Director; Mr. Sandeep Jain, Chief Financial Officer; and Mr. Sandeep Salman, Head, Cloud and Managed Services. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to run us through the investor presentation for the period ended March 2026, the business performance highlights and the growth plan and vision for the coming year, post which we will open the floor for Q&A. Over to the management team.

Thank you very much, Vinay, and thanks, everyone, who has joined the call. I will try to run through the slide deck quickly so that we have time for whatever conversation we have. The deck was uploaded on the NSE side yesterday and I guess, at least some of you might have taken a look at it already. So this has been a transitional year for us, and we have used this period basically to build scale, prepare ourselves for things which are needed as we see the technology and the overall IT ecosystem changing the worldwide. So we go through some of the detail of what has changed and what have we been doing about it. So this has been a soft operating year, but the foundation is strong. All E Tech is a profitable, debt-free, cash-rich business, and we have chosen to invest during this period when the demand cycle from the customers have been cautious. The fundamentals that protect the shareholders' capital will remain intact. We generated INR 26.1 crores of cash from auctions, which was a PAT margin of 17.2%. The balance sheet, as you would know, is fairly strong. We have cash of almost INR 163 crores cash and investment, and we are practically debt-free. The network shareholder fund, they moved up by 17% to now INR 169 crores, and we invested in business spend activities and building AI capabilities. So the dip that we see is not because of a lost competitiveness or because of demand, but a lot of other things have played a role in whatever the year has been. We have experienced -- so [indiscernible] anyway, was not a business as usual leader. And we experienced shifting global trade dynamics, which started from the beginning of geopolitical conflicts and the fastest technology shift that we have experienced over the last more than a year now. And they all caused customers to hesitate we are a leading indicator. Whatever happens in the market, we get to see it very quickly because we work directly with the end customers. So we experience and absorb the macro stress that the markets show. And this basically was a period we saw buyers to cover the mid-market customers across several regions became cautious and they deferred new commitments. With all the changes that were happening in the technology, people are less sure of whether they were buying the right product, they were buying the right solutions. So the unprecedented pace of this technology shift basically meant that the decision cycles were longer, the hesitation lengthen the valuation approvals. And the costlier presales basically also impacted. It always has dual impact. It basically means that you're spending more time selling and you are investing more, you have more -- than you have more POCs to do. And all of these things came together to the year that we just ended in March '26. So our response to that has been that we have been working to align ourselves with the marketing shift with the market shift. We have been making deliberate efforts to move up the market, so more focus going and more time and energy going and engaging with larger customers. They have been enhanced focus on larger accounts who bring higher revenue and would last several years over time. We have strengthened our data and AI solutions. This is both in terms of building proprietary IP and overall capability of our teams in this area. So this is how we have responded to whatever changes were happening in the market. If you look at All E Tech, positioning, we are diversified by geography and capability India, incidentally, during this period, we had growth in this area, although the overall numbers show a slight decline, but India had a growth in the enterprise modernization and the mid-market Dynamics 365 adoption. The Middle East and Africa, [indiscernible] is very, very new for us, but it has started locking customers in and we saw the traction in this market, strengthening after several quarters of effort prudently. Africa is turning again this quarter, and we expect some significant closures happening this month. The Americas, we have been consolidating. The one good in Americas is that we now have a critical mass of customers there. So we are instead of focusing just -- when I say America, I'm talking of the U.S. and Canada together. We are trying to shift focus from very small customers to larger-sized accounts. Europe and APAC, we go a little bit more in an opportunistic manner. So our efforts in that are -- have been a little bit majored. And when we go these customers, we go with the entire capability stack, which node the ERP, CRM, Power Platform from Microsoft. It includes data engineering, data governance and business intelligence the entire AI stack, which includes the Agentic automation, the other AI capabilities that these product lines have and building the enterprise intelligence layers. Azure Infra and security solutions have become very important this quarter, and we are seeing a good traction on that front as well. So put all of this together, we clearly see this year being significantly better than the year that went by assuming that there are no other global level macro shocks that come along. So what is our level of readiness? And why do we think that All E Tech can scale? Our existing foundation, we now have more than 300 active customers. These include the customer we have had in the past the customers that we added in the last year, and there is some churn that anyway would happen, but we still have more than 300-plus active customers. Our multi-country presence -- we are very focused on Microsoft. So we really specialize in their offerings, and Microsoft is doing well, which is a good news. We have a strong balance sheet, and we have a high customer retention. The scaling driver for us would be more energy is being put on the larger deal size. Our revenues would be increasingly driven by -- and just to clarify, when I say that, it does not mean that we are an focused solution provider, but IP form a critical element of many of our projects because our industry solutions would be built around those IPs, which are then adapted by the customers. In several geographies, we now have a critical mass be it the U.S., Canada and India, of course. And Africa is building up, we are very excited about what's happening in that market today. and data and AI cross-sell is pitched to most customers, which are above a certain size, and we are seeing good traction there. And of course, M&A remains on our agenda. And all of these things together will be the driving factors, and this is why we have the conviction that All E Tech will scale. The other thing that happened since we spoke last, we now have all the 6 Microsoft solution partner designations. So this is where our scaling, our training, our certifications, they came in. And they also -- these solution partner designations also mean that we did the revenues that are needed for earning these badges. These are the 6 designation that Microsoft offered and we now have all of the 6. Not many partners globally would have all the six. One very important question that everybody -- every investor, shareholder obviously has in mind is that we have significant amount of cash sitting out there over INR 160 crores. So what are we going to do? Our current priorities, of course, are -- so first of all, as I mentioned there, the balance sheet is not idle. It's an optionality for us which basically means that we maintain strategic flexibility. We are going to ensure that we bring returns to the shareholders. We are going to pursue value-accretive acquisitions at the same time, preserve balance sheet strength and continue with capability investments. The capability expansion basically would continue. The focus is on data engineering and AI talent and, of course, the IP that we are building around it and our geographic reach and in disciplined structuring, be it the earnout led or retention log deals that protect the downside. What we will not do is that we will not pursue acquisitions at realistic valuations, and we are not going to deploy cash merely to demonstrate activity. Our midterm goal is looking at INR 500 crores, and the building blocks are going to be the core ERP and CRM growth, and I think this is a very important point for all of us to understand well. There is big momentum on AI. The products are changing all the products, including the Microsoft ERP, CRM products are getting powered with more but then all these products also require data, which AI will work on. And this data comes from the systems that we have been deploying for over 2 decades. That's the core and so the momentum there is increasing. The products are getting modernized and customers are looking at getting modernized with those new products increasingly. Our international expansion, our data and AI practice growth, customer expansion and selective acquisitions are going to be the building blocks. So by the way, this INR 500 crores is a midterm goal. It's not a guidance, and we believe that this is achievable over midterm and requires both organic and inorganic growth. We are looking at mainboard migration. It's on -- we haven't yet taken that division in the Board meeting, but this is something which will come up for conversation shortly. And based on the physicians and recommendation of the entire Board, including the independent directors and the key management here, we will take that call in the coming few months, perhaps. The numbers, maybe some of you have already seen these. But if I was to look at our annual numbers, we did a revenue of INR 13.87 crores, which was probably like 1-point-some percentage less than last year. The total income from operations, however, stood at INR 149.59, which was just a little bit more than last year. The EBITDA and margins were at INR 36.3 crores and it was 24.3%. The reported net profit and margins INR 25.7 crores which is 17.2%. The adjusted net profit and margin INR 27.1 crores, which is 18.1%, repeat and reckening revenue was 90.6%. We added 35 new customers and the team size remains at about 350. A dividend of INR 1.5 per equity share has been recommended by the Board and we expect this will go through. The geographic spread has been in this fashion, the Americas, and this is by the -- only from the services point of view. The Americas constitutes the highest percentage of services followed by India. And then APAC, Middle East, Europe, Africa, we expect will grow significantly from the next quarter onwards because of the -- some of the deals that we are on the words of signing in this region. If we look at the total revenue including the license and services, then our -- the India gave us 46% of the total revenue and sorry, 43.5% total revenue. And we had approximately -- the rest of it came from the international business. From a customer engagement point of view, you will see that from the top 5 and top 10 customers, we have had 21.8% and 29.8% revenue and the new customers that were added were a total of 35. By the way, one interesting data that I would like to share with you here, which is not mentioned on the slide, is that while the total revenue from the top customers have been shown as 21.8%. This is for the entire year. And because of the headwinds that we spoke of, we were facing -- this percentage for the last quarter was higher. The conflict that was happening in our neighborhood had a significant impact on many decisions whole thing. And we expect that in the coming quarter and some of it in this quarter will get cleared up. These are the industries served the same set of industry that we had last year, professional services is at the top with 35%, followed by manufacturing, EPC, retail and the rest of them. While this is in the category of what has not changed -- what has not changed is that we have been doing Microsoft business applications for all these years. We have had 7 at least inner circle badges over this period of time, more than 1,100 projects done a team of 350. But even in this slide, all these new solution partner designation that we now have had strength to whatever we have been doing in the past. Now this is important. The reason this is important is because increasingly, more and more customers like to partner with companies who have the ability to leverage the entire technology stack to deliver a solution. and not just somebody who's an ERP and not just somebody who does just Azure. So the ability to look at, understand all the entire technology stack, understand all these solutions and stitch a solution, which brings the best of what is needed is very important. And customers do, therefore, look for partners who have the capability across the entire solution areas. These are the broad areas that we have been working on, and there's an existing slide from the last quarter also which includes digital core modernization, enterprise applications, process optimization, system integration, data and AI and change management. The entire stack and, of course, all the component of this stack keep changing very quickly with AI and agents getting embedded in them at such a rapid pace. The Board of Directors, the lead management and then the statements which you probably would already have access to. So I wouldn't read that. This is our CSR. So I will stop here.

[Operator Instructions] We'll take the first question from Sandesh Kumar.

Like, sir, we have been talking about AI since 2 years, and we are transitioning from solution partner to first modernization center. We have been deploying AI agents for our internal process, resulting in reducing banners, and we are embedding agents to our IPs, resulting operational savings for clients like we are already scaling Microsoft fabric as a unified data foundation for SME and mid-market solutions. Given that these are the exact technical pillars, like agent architization, data modernization for to get the [indiscernible] partner back from Microsoft, like recently, many global peers got the award and even some small company like [indiscernible]

Yes, yes. So you see Microsoft also has in some of the badges, they also have a certain amount -- a certain volume of transactions that you do, certain volume of licenses that you sell. I'm not so sure, but I think for being a frontier partner, and eventually, we will become in a couple of quarters. I think they had a need of selling 1,000 seats of certain products. Copilots or [indiscernible] they needed 1,000 feet, maybe Sandeep Salman has more...

[indiscernible]

So they basically needed 1,000 seats of M365 Copilot to be sold. We have everything else, but we do not have 1,000 seals of seats of M365 Copilots sold. And that's the reason that we don't have that yet. But I'm sure we'll have -- we'll get there sometime during the year.

Like can we do E7 migration without this frontier suit?

Can we do have a migration without the frontier? Sandeep?

Yes. Migration is one part, but you can always sell the new licenses of E7. However, if you have to migrate your existing customers from [indiscernible], then you need to be a [indiscernible] partner. But you can only sell new licenses of any 72 customers.

Okay, sir. So when we can expect this [indiscernible] partner?

My guess is it will happen sometime during the year. I think we'll be happy to update you as in the coming months as things progress. We have a couple of hundred there, but I think we have some distance to cover to get to a number of [indiscernible].

Sir, my next question is on our IPs. Like our IPs like Travel 365 and others who are built like pre-Gen AI era, now the Microsoft is naturally [indiscernible] Copilot studio and now this [indiscernible] CI is becoming highly capable, especially is our proprietary IPs upgraded to handle this Microsoft agents natively. Consider this scenario [indiscernible] Bangalore, using Dynamic 365 along with our Travel 365. Can I use simply Microsoft Copilot to perform actions such are like booking a hotel in Mumbai. So this core pillar should use work IQ to check my OEM, my travel policy, my designation eligibility. So it should talk with multiple agents with multiple locations and should check with the Travel 365 back in and can do this type of work.

So I will ask Rajiv to respond to that. But before I do that, I would also like to clarify that to really get an answer to that question, you will have to understand what Travel 365 solution is for. So Travel 365 solution is not a portal for end users. Travel 365 solution is a solution for travel agencies and for businesses who are providing travel services. This is a solution which will be used by their mid-office and back office. There is not -- they are portal, which is used by the end users. Over to you, Rajiv.

Yes. So regarding Dynamics 365, whatever Co-pilotshave been embedded in the product, they natively get used by our solution also because our solution is an extension built on the same platform. So we don't have to -- the only thing that we have to realign is certain workflows. What now it's possible to do through the agent. In addition to that, for all of our vertical solutions, we are also drinking our own additional agents and intelligence layer to make these solutions become more modern and empowered. So in addition to what Microsoft is releasing, we are also pertain AI capabilities in our solution.

Sir, [indiscernible] so our IPs are deeply integrated to current environment. So it's like nothing become absolute in AI era.

No, not at all. It will only become more powerful.

So like what type of investment we are doing in AI? Like earlier in last PPT, they showed like 10% of revenues coming from EA and data. So like what type of work and what type of investment we are doing, especially with EI?

So we are 2 kind of things. One is that besides modernizing these solutions with the specific point agents, which will do certain functionality. We are also investing in building our generic intelligence layer which sits on Microsoft Fabric. And with all of our -- so this will open up an opportunity there not only for all the new customers, we position this. All our existing that 300-plus customer base becomes of farming ground for this. And we have already started reaching out to other customers. We have also converted customers. We see now that customer, there is an inflection point where the customers are seriously talking about AI and are taking it to the production level. So that is -- so the investment is going in building this intelligence layer and [indiscernible] enabling all these AI capabilities in a customer, there is a level of change management. So every customer will start small, they'll try to pick up a few use cases, develop that complete I awareness within the organization. So which is what happens and what is happening with a lot of customers now.

Okay. Sir, my last question is on like our aspiration in African content were very big. Like we almost had 20 years of association with [indiscernible]. Like in fact, we had our first client from Africa. Earlier, we developed it on product like [indiscernible], it's like by Microsoft itself. Now when we established an subsidiary, All E Tech ERC during Jan 2023, it's like almost 3 years. Earlier, we had revenue like 8% to 10% from African continent. Now it's reduced to less than 4%. Like what is the reason for this, sir? Is any local competition from there?

No, no, it is not local comp. Ritu, you want to do that? Do you want to take that?

Yes, please. In the African region, what we have seen is the sales cycle, it says is different in Africa vis-a-vis the other geographies, right? What we have experienced in the last at least 2, 2.5 years is that if we have to sign a deal, say, in India or in U.S., it will take, say, about double, at least double in Africa, right? And the other element that has compounded is our migration from the small and very small businesses to the larger customer bases where the decision making takes longer. But having said that, we are right now at a point where in this month and in the coming years, Africa is going to grow [indiscernible] .

Can you reach like earlier revenue percentage like 8% to 10%?

We guess so because we have a good pipeline there, and we are at almost contracting stage on a couple of customers. The other one thing that you need to understand about Africa is that some regions of Africa also had very deep currency crisis. For example, Nigeria has been a very important market for us. We had some large customer there. But then it fell into a deep currency crisis with the naira versus dollar rate changing so dramatically that we had to kind of pull back a little bit from there. So this has been a situation, again, for at least 2 years there. But I think things are now stabilizing significantly, and we are pretty excited about what we are currently involved with in Africa.

Sir, we'll take the next question from [indiscernible].

So my first question is around the growth. So can you, for the quarter and for the year, give us the constant currency growth numbers or degrowth, whatever it was on a constant currency term.

I do not have that number handy with me, but you can possibly compute that from the financials that have been published. But if you have any additional questions, please feel free to write back. And Sandeep or our Investor Relations team will respond.

Sorry, sir. And can you give a split of product versus services revenue also within the product? How much was IP-led products for in the weighted?

Yes, absolutely. Our license business was approximately 44%, and our services business was about 56%. And our IP the thing is that you have to understand, sometimes looking at the number or the value of our IP is very misleading. It becomes receding because these are not off-the-shelf products. Many or times, our IP becomes the catalyst, which enables us to sell an entire project. It could be -- by its very inherent value, it could be maybe only 5%. But then if that 5% wasn't there, we wouldn't probably win the project itself. But the -- but then -- so for example, in the travel segment, our IP on the travel segment, if we didn't have it, we don't sell anything on trouble. Similarly, in education, if we don't have it, we wouldn't sell anything in education. So the same thing is true about be it EPC or be it [indiscernible] or be it a couple of other solutions that we have. So the number of the value of IP itself and even if I mentioned this to you, it will probably be about somewhere between 5% to 7% of the total product. But this number would be misleading. If you try to gauge from it, the impact it is having on the business.

Got it. So it's more like foot in the door kind of a product for us.

It's not a foot in the door. It's a primary driver -- it gives us the seat on the table. Because this IP demonstrates -- our understanding of the domain of the industry, it demonstrates our ability to solve the problems of the industry, and it demonstrates our hold on the product and the technology stack.

Just to add one thing that this year, deliberately, we are restructuring the pricing and positioning of the IPs, we have created different bundles. And we expect that this whole IP things should reach to a 10% level of the license. So we are trying to get a very focused approach, trying to increase the share of the IP [indiscernible] of the deal.

Okay. Sir, next, I'm trying to reconcile some data points. So basically, we had decent customer additions this year. We have 100-plus active clients Microsoft reported for the dynamic product portfolio for every quarter more than 20% year-on-year growth. So these -- so my understanding is just to be the anchor point for our growth as well. But why is there a dichotomy? Like is it because in spite of all the macro headwinds that you mentioned, Microsoft is able to grow this product by 20% every year, like quarter-on-quarter every year. So why is it that we are not getting the talent on it. So why are we not benefiting from it? Is there like -- is it -- the customer segment that we target versus where Microsoft is booking the revenue from? Or is it something else?

Well, one aspect of this definitely is that a lot of the revenue that Microsoft is talking about is from very, very large businesses. And sometimes in those cases, Microsoft does the licensing directly, sometimes as a pass-through with some very large account resellers. So that is where you see the growth from. But overall, the momentum has been increasing. We may not appear to have gained from it this year, but this momentum is definitely going to be a tailwind for us to give us more momentum in the market. So that is the reason why we said that some of these numbers may not -- if you look at some regions globally, they were not as impacted by whatever was happening during the year. The mid-market segment was impacted more, particularly after the recent conflict, certainly, the Middle East got kind of paralyzed and a lot of things kind of stalled. So the impact of this has been very varied across regions and across customer segments. But that Microsoft has been having good growth is only good news for us because we play in exactly the same market. And yes, we have added a decent number of customers, but this number of customers have been lower than last year. And we also had, as I said, our percentage of revenue from existing customers the top 5, top 10 in quarter 4 was significantly higher than what it has typically been and what it was for the entire year. and this kind of is just a data point that shows the impact of whatever was going on. But we are so excited that the overall market is reacting very well to what Microsoft is doing, and we will end up gaining because of that momentum.

Okay. Just to understand this year's performance again. So is it like the average revenue that we are booking for client has gone down? Like mathematically, it has gone down. But in general, power client revenue has decreased or is the impact because of us losing some large plans? And was there a [indiscernible]

No. I think the biggest reason was that something which normally we would have closed in, let's say, in a matter of months, 3, 4 months, 5 months, 6 months, just continue to drag on. So for example, some of the deals that I mentioned are in a contracting stage and we expect them to happen this month have been going on like for close to a year, close to 9 months. Normally, this would have happened in 4 to 6 months' time and we would have booked some revenue from that, which did not happen.

Okay. Got it. And lastly, sir, your aspiration for INR 500 crores. So what is medium term like then how many years would be medium term?

Well, I would guess anywhere 4 to 5 years is medium term. And well, ask me, do I have a reason to say that? No, I don't. But that's what we would like to see happening.

[Operator Instructions] We'll take the next question from [indiscernible]

I had one question in H1, like you had indicated towards a normalization business condition towards the end of this year, like, which is in the performance of peers to we have weakened further. So like what has -- like there were some delaying the decision-making and all the macro condition which has impacted the overall sales performance. So like can you give more colors on that? And like what is your current outlook further?

Well, there isn't more that I need to add because whatever has been happening, I gave the 3 reasons that have seen us not grow on the sales side. And whatever has been happening, particularly in other part of the world is known. Some things have aggravated in the last quarter, in the last 3, 4 months that has paralyzed businesses in some countries. And when people have to make investments that look discretionary at some point in time. They took longer to take that decision because there has to be enough conviction that businesses are going to return to business as usual. When that does not happen, people look at saving cash.

Yes. So like if you have to comment on the current scenario, like so what can say that?

Well, if you tell me what will -- what's going to happen around Hormuz with certainty, I will be able to respond to this question on uncertainty.

Got it. Okay. Like one more question on the margin decline. So like what were the -- like the main reason like in the steep fall in the margin in this quarter?

So really, operationally speaking, there wasn't any steep fall. Obviously, when sales goes longer, your cost of sales goes up. If you're engaged somewhere instead of 3, 4 months, you are engaged for 9 to 12 months, you end up investing more, not just money but also mind share and time of some of the senior management team, and that brings an impact on the overall cost. But then there were other elements, we had this onetime cost of, I think, INR 1.3 crores or INR 1.4 crores, which went towards all the -- the changes that government brought in for PF and so on, those adjustments. Then we had some additional new business development costs that were booked in this quarter, which has included some travel and it included some participation in some exhibitions and so on. So some of those bills kind of came in at this point in time, and they were all booked, there was nothing really extraordinary about it.

We'll take the next question from [indiscernible]

[indiscernible]

No, your voice is breaking. I can't hear you clearly.

[indiscernible]

Well, I can try.

It was really, really highlight both the content and the [indiscernible] I have 3 topics on which I would like to know your views. First and foremost is other deal side, we are targeted. So what are the reps we have built in the last 2 or 3 years, which makes us [indiscernible]

Can somebody repeat this question for me? Is he talking about large deal sizes and what is it again? Do you want to put your question in chat, I will respond.

Yes, I'll do that.

We'll move on to [indiscernible]

No,no, I guess we give him a minute. It's not base.

So let's take the next question. [indiscernible].

Some qualitative assessments from your end. So you know that '26 was a consolidating year. Can you throw some light on how deal flow is kind of shaping up in Q1 and FY '27? Are the sales cycles continuing to be long? Can we expect some of the extended conversions from last year to convert? Like you said, you have some in contracting phase already. So some kind of qualitative texture on how FY '27 would shape up relative to FY '26 or even FY '25.

Absolutely. So as I said, some of the deals that are in the contractual stage in which we hope to conclude this month have been deals that we have been working on for anywhere between 9 to 12 months. Under normal situations, they should have closed any time around October, if not before of last year. But with everything that was going on, it did not happen. But now it's happening. We -- unless there is a big surprise, we see no reason that we should not end this month with a good order book for new business. So I would say that if we look at the momentum, the momentum is there -- it's very encouraging because customers are now asking not just for an enterprise application. They are not asking just for ERP, not just for CRM. And everybody knows that these are the systems, which are the foundation for generating the data that ultimately goes and feed their AI applications, and they need to make their organizations AI-enabled. So the overall ask from customers -- the spectrum of that is becoming broader. We, as an organization, are gearing up to address those needs. We are finding customers engaging with us on a broader scope. So these are really, really exciting times. And I'm sure that we will leverage this. And we will have a very exciting business traction for the rest of the year.

Sir, that's promising to hear. So does that mean that will translate into numerical growth for FY '27?

Yes, of course. I mean we still don't have, let's say, the Middle East deal signed between the 2 nations. We still don't have some other things addressed. We don't know what happens to Hormuz. We do not know what will happen to other things that are going on in the world. But assuming that we don't have any of those things impacting, as I said, I wouldn't be surprised if in itself, we signed a new order book worth maybe $1 million across all solution ADRs put together. BTRP or CRM and AI and Azure. So that's likely to happen. No, that does not mean that we will have that happening every month or every other month. But if we are doing that this month, this is all something that we have been working on for the last close to 9 to 12 months. So some of these things, they also bring momentum. They help you to build the muscle to do more. So as I said, these are exciting times. That's exciting to hear.

Second question was on the capital allocation part, which you briefly touched upon on the debt as well. So we are, of course, incrementally adding to our cash balances on a year-on-year basis. And now it's been close to 3 years that we have not really been able to find the type of acquisition that we would ideally like to make based on your parameter and the prudence in which you are carrying along. So sir, the question is, going forward, this is going to continue to accumulate or do we have a defined plan or are we clear of what we are trying to acquire, whether it is a sales capability, tech capability or what it is exactly and some defined time lines? And if not, is there a way maybe we can give some amount of that surplus annual capital that is being generated back in the form of a buyback or some form of a higher dividend?

All of this will be put on table with the Board in the coming weeks. And once we have some decision on this, we will be happy to intimate. But we -- there are some conversations on the acquisition front, some look at advanced stage, but it's like one of those things. They -- it's 0 or 1. So unless it happens, it has not happened. But we are squarely aware of the situation and fairly sensitive about it.

Got it, sir. So we don't think we can actually build instead of -- if you're not able to find acquisitions that whether we can actually spend on building that capability [indiscernible]

That we are already doing.

Do we now have an expectation of how much we are intending to spend on this in the next -- in this coming year?

Well, it's going to be some serious money because some of the buildup that we are doing is expensive. So that way, I have probably pre-answered a question that you might ask me in one of the future calls, that why has the expense gone up. So some of that expense is going up in this area.

But sir, to be honest, I mean, as a long-term investor, it's very heartening to hear that because the biggest [indiscernible] has actually been the idle cash. So if it's not being deployed even externally, if you are able to use it.

I will see that happen this year.

Build out capabilities. That is also very heartening to hear.

You will see that happen this year.

Sir, [indiscernible] has put a question in the Q&A box if you can answer them. This first question is what are the gaps we have bridged in the last 2 to 3 years to make us a compelling vendor for large deal sizes.

I don't see -- is it in chat?

No, there's a Q&A box separate. What are the gaps we have bridged -- this first question. His first question has by understanding [indiscernible]

[indiscernible]

The first question has moved to answer by mistake. What are the gaps we have bridged in the last 2 to 3 years to make us a compelling vendor for large deal sizes?

Okay. Got it. So I think one of the most important things is that we are now seeing -- we are no longer seen as purely an ERP provider. And for quite some time, we are now a provider of solutions that comprise of the entire stack. If you look at some of our, let's say, as an example, we have some sizable customers, let's say, in Canada, for those customers, we are doing kind of everything. It includes the ERP and the CRM and data engineering and some AI work. And so there is so much that we do. So for example, this customer that I'm referring to, he is going to spend with us at least $3 million over 3 years. And he wouldn't have done that -- at the moment, we are his primary solution provider. He wouldn't have done that. He wouldn't have engaged with us if we didn't have the ability to do that. So one, we have created a separate -- we have assigned a couple of people internally just to work on large accounts. And these are obviously people who have the consulting and solutioning ability and they engage with a small number of identified customers on from a consulting side. So it's not a sales engine. So when you engage in these accounts, we don't see this as a revenue event. We are looking at a revenue annuity. So I think there's a very different approach to these sizable accounts, and we are trying to change our approach of handling the SMB in one way and our large accounts in a very different way. So the answer to your question is from the point of view of our status as a solution provider, our capabilities in terms of the products and in terms of the solution areas, and then also a little bit in terms of our -- how we are structuring ourselves -- and by the way, I must also say that we are not done we have started doing it. It does require a significant amount of push and energy and bandwidth investment, but we are going to do it. So second question is how our thinking has evolved on acquisition approach after spending 3 years actively with a strong balance sheet compared to earlier times. So I think I answered this question. So unless there is something that you think. Additionally, I need to say, but you are saying target size, valuation aspects. So valuations have obviously changed over the last 6 months. Some of the multiples that we were looking at earlier have only come down. Over this period of time, our target size remains businesses, which are ballpark in the range of $5 million to $10 million higher, the better. Question 3 is midterm goal, how much percentage expected from inorganic growth. I think this is related to question 2, in some sense, but my guess would be that the inorganic will probably comprise of somewhere between 30% to 40% of this number.

Sir, we'll take the next question from [indiscernible]

So I have 2 questions. As you can see, the margins has decreased for the quarter. So what is the margin guidance for the next few quarters? And the second question is the recurring revenue rate on the quarter was 85%, but the average for the year was 90% plus, right? So is the recurring revenue decreasing? These are 2 questions.

None of these are indication of any trend. We had, as I already mentioned, our Q4 revenue from existing customers, was actually and some of these numbers that you see, you have to bring what is services and what is license. But there isn't any clear trend if you look at an annual basis to say that whether the recurring is growing or there's no -- there are -- there may be small, I would say, I would say, turns that you may see a graph taking on a quarter-by-quarter basis. But broadly speaking, nothing has fundamentally changed. And I was just answering that question on profitability. And as I said, our profitability has not had any significant impact other than that there has been this onetime cost of about INR 1.4 crores towards the government recommended PF provisions that we had to make. And at the same time, we had some business development costs, which went -- which were towards trouble and towards participation in some exhibitions and so on. There is, of course, some increase in the overall cost of people, the overall employee cost and technical people cost has gone up slightly by about 5%. But because we did not see and which is natural, that will happen. But this probably wouldn't have been there if some of the deals that we have been talking about because we invested in the presales of that deal. So if those deals would have closed in the October, December quarter or January, March quarter, then you would have seen the same percentages as we have seen before.

Okay. So sir, can you expect the margin to increase from this point?

Well, I don't want to answer that question because at the moment, our focus is to say -- see that how does the business scale. And just to show that we are increasing our margin. We don't want to compromise on the scalability of the organization. Now this may happen, but I don't have anything specific that I would say I'm doing to increase the margin, right? We have the same levers that we work on. the outcome of what we do varies from quarter-to-quarter, we are working on increasing our international business. We are working on increasing our revenue from our IP. So -- and we will continue to do that. Now depending on how much of it shows up in a quarter, it does impact the margins that you will see because it's not like in a manufacturing business, we will say that, okay, now we are getting our raw material from a lower cost source and therefore, our margin will become more. We still keep doing the same things, and we just want to increase the intensity with which we are doing those things. We don't have a mechanism that we don't have a lever that we will turn to say that now this cost has come down. And in fact, some of that cost may go up on one hand when we are trying to attract and keep high skilled people, they will have a cost. We don't want to not keep it simply because we want to show a higher margin. So we think that the scalability of the organization is very important. Scalability of business is important. We will bring these people in. It may impact the cost in the short term. But ultimately, it will bring us to a point where we will have a healthier, bigger balance sheet and P&L.

Sir, we'll take the next question from [indiscernible]

First question was we have a large shareholder called [indiscernible] and your name appears in the prospectus also. So I see someone from the company?

No, she is not. So she, however, has a history. She invested in the company way back in 2006 and those are early days for us, and they have just chosen to stay with the company.

Got it. Got it. That is one question. Second is because we run a work from home kind of an environment for all of our employees. Just wanted to understand how are we going about training for the AI-driven training for all of the employees. Are we training them only on co-pilot or on cloud and other land models also?

Rajiv, do you want to add take that?

[indiscernible] And in fact, just to let you know that Microsoft get up Copilot, they allow you to use [indiscernible] want to use whatever LLM ChatGpt or Claude. So that's a choice that we can make when we are using these Copilots. So it is just not restricted to Microsoft.

Got it. Got it. And last question was because of the use of AI, are we seeing any efficiencies in our employee productivity? And if yes, can you quantify it? And related to this, what is the hiring plan for next 1 year?

So we obviously are seeing efficiency gains. But at the same time, it has not become to the level where it is becoming so easy to measure the on a quantitative basis. I think there is still time for us to get to that level. Right now, what is happening is that the quality of the core, certain processes that were not happening previously in terms of regress reviews and whatnot. They are now getting addressed to the -- so you don't have to have those people and that competence is being utilized through the Copilot because we also work more on the packaged success. So it is not that we are just into the full-blown software development activity only. So we get into a lot of consulting kind of area as well where the debt is training, configuration and whatnot. So in the coding side, so we are gaining efficiency in every aspect. But as I said, I think it will take more time, maybe another 6 months where we will be able to quantify exact gains. We have also kind of remodeled our implementation approach methodology that has also now got redefined with agents, what will the agent do, what the human in the group will do. So all that is what is currently getting transitioned. So I'll say it's a bit early to have the quantitative numbers. One more thing which I would like to add here is it's important to understand, many of our people have stopped writing code manually. But that does not mean that people don't have -- don't need to do anything. You still need to work to bring the agents and Copilots to a point where they generate good for you. So while this gives them the productivity gains, but you also to understand that there's also a time where all these people have also to learn and train themselves. So they are getting also spending that whatever time is saved in exploring and learning and training, but for sure, these people are writing significantly less code today than was being done, let's say, even 6 months back.

Got it. Got it. And last question, if I could squeeze in. larger IT companies are saying that AI is going to be very deflationary for maintenance part of the business because as more and more automation increases, the actual number of people required are very less. While I understand that the same would not be true for us because we are not a software services company. We do have a lot of maintenance is what we understand. So do we also -- as a thought leader, what would you say about the deflationary trend of AI coming in and affecting our business.

No, no. What you're saying is absolutely right. And for example, I have a friend he, along with his team had a mandate from a company where this large company has a team of about 7,000 people working for another very, very large company, global company. And he has been given a mandate to build AI automation, which will bring this number down from 7,000 to possibly 4,000, 5,000, something like this, okay? So these things are happening. But the people who are relieved of doing this may end up picking up something else and doing something else. In our case, however, you see we are not and doing this maintenance type of routine maintenance type of a thing is not a primary business model for us. We do it in some cases but what we do is deeply driven by our domain knowledge, our experience on the product. The products keep building up themselves. We are not in the business of saying that here's a system, which is relatively static and we just need to maintain it.

Got it. Excellent, sir. That were all my questions. I just wanted to compliment on the discipline with which you have not used of the cash, and you're looking for the right opportunity. I wish you all the best and have a great time.

We'll take the next question from [indiscernible]

We are actually a main board company who is sitting in the SME segment actually. So I had a few questions regarding -- firstly, on the revenue side. The revenue kind of dropped from the same quarter last year, which was like INR 35 crores around that figure to INR 28 crores this time, which is around like 20% drop as per the quarterly this thing, right? Am I right or am I wrong in reading that? 27.75?

I don't think so. Sandeep you're on mute.

Last year, the revenue was INR 34.93. Same quarter. And this year, it is INR 34.74. I think you are looking at the stand-alone revenue.

Yes, standalone, I'm looking at. Standalone has gone down significantly. [indiscernible]

[indiscernible] gone down that much.

Actually, that's steady. Okay. Okay. So even if the rupee has depreciated a lot, and we have significant Americas present, like why have we not gained from that?

[indiscernible] is coming in the other income aspect. If you see the other income has increased from last quarter.

But that's not significant, right? I mean why I'm saying is even the very large organizations like in [indiscernible] which are not growing at all in the dollar terms are gaining the benefit of the rupee, right? So like 6, 7 percentage gain there, but it's seeing the same in our case.

Yes, that's what I'm saying, our difference of exchanges coming into other income aspect if you see there. Last year, it was INR 950 [indiscernible]

Okay. Okay. So that means it's not a significant number for us. That's fine. My second question is, sir, when you say that macro impact was there. Why do we see other like even the midsized IT companies like [indiscernible] growing sustainably with the sustainable profitability in their growth. Like is it...

A very important question and also important to understand, we have different businesses. If you look at, let's say, a persistent or you look at companies of that size and maybe some smaller companies. Some of them have large project engagements, which means putting a very large number of people on assignment or project with other large companies. These businesses they have more wear with all to take pressure of when things change. And if they have budgeted for something for a year and if something changes, these budgets would probably stand or hold, they wouldn't change very quickly. But our -- one of our important drivers have been the work that we have been doing in the midsized companies. And these midsized companies are faster to react. The large companies take significantly longer to conclude a deal and you can do it faster with a midsized company. But the midsize companies also react to external factors much more quickly than would these large companies. So this has been one of the primary reasons where, for example, if there's a manufacturer who sees that the cost of inputs is dramatically changing because of tariffs, he gets paralyzed and then he doesn't know what to do. Should he spend time, effort, money in finding alternate sources of his raw material purchase or he should invest in technology. If somebody sees that, he's not really sure how his logistics is going to get impacted or how customers are going to behave in a certain region, certainly, their priorities would change. So when everything is going well, the small business -- the midsized businesses are more agile, they are faster and they have a high level of loyalty. But when things become a little tough, I think they also are the first to react and that is where the larger businesses would take longer to react to the same situations. They also take some to revert back when things change but they react faster when things become hard.

And so one last question. Two years ago, we had said our low-term target was like INR 1,000 crore revenue. Now we are saying midterm target is INR 500 crores. 2 years back, 2.5 years back, we said INR 1,000 crores, which is like now midterm is long term for the 2 years back target. Why are we tracing? Like are we...

2 years back, we did not know what's going to happen in the last 14, 15 [indiscernible].

There are no further questions, sir. Would you like to give any closing comments?

Well, I guess, I kind of said everything that had to be said. I just want to thank everyone who has been with us. I just want to say that as a company, we are extremely careful and cautious for the shareholders' wealth that we have. It's a great responsibility that we have on us, and we are going to continue working towards giving them return for the investments that they have made. And all of us as a team and other people who support us are going to continue to work in growing the organization.

Thank you, sir. Thank you to the management team for your valuable time, and thank you to all the participants for joining the call. This brings us to the end of today's conference call. You all may disconnect now. Thank you.

Thank you very much.