Basilic Fly Studio Limited ($BASILIC)

Ladies and gentlemen, good day, and welcome to the Basilic Fly Studio Limited Q4 FY 2026 Earnings Conference Call hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Purvangi Jain from Valorem Advisors. Thank you, and over to you.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations of Basilic Fly Studio Limited. On behalf of the company and Valorem Advisors, I'd like to thank you all for participating in the company's earnings conference call for the fourth quarter and full year of the financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Let me now introduce you to the management participating with us in today's earnings call and hand it over to them for their opening remarks. We have with us Mr. Balakrishnan, Managing Director and CEO of the company; Mrs. Yogalakshmi, President, Business Strategy and Whole-Time Director; Mr. Zameer Hussain, Chief Operating Officer and Global EVP; and Mr. Gaurav Mehra, Chief Financial Officer of the company. Without any further delay, I request Mr. Balakrishnan to start with his opening remarks. Thank you, and over to you, sir.

Thank you, Purvangi, and good afternoon, everyone. Welcome to our earnings conference call for discussing our performance for the fourth quarter and full year of the financial year 2026. Before I give you the operational highlights of the period under review, let me first start by giving a brief overview of the company evolution for those participants that may be new to our company. BFS was started in the year 2013, became private limited in the year 2016, and we opened our first foreign subsidiary in July 2021 in Canada and our second foreign subsidiary in April '22 in U.K. Simultaneously, we got listed as public limited in September '23, with a record over subscription of 287 times. And we acquired a 20-year-old legacy, Emmy and BAFTA award-winning company based out of the UK named One Of Us in July 2024. Today, we provide end-to-end visual effects services across films, television series, web content and commercials. In FY '26, 3 of our movies named Mission Impossible, The Electric State and Shutter Bird got nominated for academy awards. Apart from that, we also collaborated with major top-tier film production and TV networks during the time. Today, our 725-plus employees operate from Chennai, Pune, London, Paris and Canada and planning to expand beyond Bengaluru, Mumbai and North America very soon. Our premium client list includes Netflix, Amazon, Disney, Sony, Warner Bros, HBO and many more. Netflix and Amazon contributes greater than 50% of revenue while Europe and North America contributes greater than 80% of revenue. And now let me walk through business updates for the period under review. During the period, consolidated total income amounted to INR 418 crores versus INR 306 crores the last year, a growth of 36.6% year-on-year. Our PAT amounts to INR 50.6 crores versus INR 44.7 crores last year, growth of 13.2% year-on-year, maintaining EBITDA percentage 20.89%. CFO, Mr. Gaurav Mehra, will be covering financial updates in detail in his briefing. We continue to execute strongly across our global delivery platform, reinforcing our position as a trusted tier 1 visual effects partner. We successfully delivered 410 projects for 108 global clients during FY '26 and executed 624 movies and series, demonstrating our ability to operate at scale while maintaining delivery quality across diverse production requirements. FY '27 looks more promising, wherein our order book stands at around INR 232 crores and bidding volumes go all-time high, reaching an active pipeline of approximately INR 456 crores. On the domestic market, also, we have achieved a significant breakthrough by onboarding both Netflix and Amazon for full domestic OTT mandates. We are investing in people and technologies as well. Happy to share that we have onboarded 14 senior leadership hires in FY '26, which includes the names such as Adrian De Wet, ex-Netflix and Abishek Nair, ex-ILM. Their credentials include blockbusters such as The Matrix and Harry Potter series, the Sandman and Tron, respectively. We are investing in technologies such as USD, proprietary AI-powered company production workflows to drive more efficient operating models and lead technology by example. Our leadership hires include names such as Sebastien Gourdal, who is among few leaders driving AI in the creative VFX domain. BFS India becomes the sixth facility worldwide to achieve TPN Gold certification, Stella Award, which speaks about our global standard benchmarking. With that, I will now hand over to Mr. Zameer Hussain, our COO, who will walk us through the operational and technical updates of the company.

Thank you, Bala. As we scale our business globally, our operational strategy remains centered around the simple principle. Every investment we make must improve scalability, strengthen margins or deepen our competitive advantage. FY '26 was an important year in that journey. We continue to strengthen the structural advantages that differentiate Basilic Fly and One Of Us within the global visual effects market. Our India-led delivery model remains to be one of the strongest competitive advantages. Through the selective migration of roles from the U.K. and Europe into India, alongside the continued expansion of our Bengaluru operations, we have established a structural cost advantage of approximately 30 to 40 percentage compared to the traditional delivery locations. Simply put, we are not just growing in capacity, we are improving in the economics of growth itself. Secondly, the technology has been a major area of investment during this year. Historically, VFX production has been constrained by labor-intensive workflows where the cost rise almost linearly with the output. We believe the future belongs to the studios that can break this equation. To address this, we have actively deployed proprietary AI-enabled workflows, especially on the [Compu and UI] side across the production environment. These are production-grade systems, and they are already operating within the live delivery pipelines and span advanced 4K de-aging and age conditioning, AI-assisted 3D generation and high fidelity texture creation as our important proprietary modules. The business impact is clear. These technologies reduce execution timelines, lower first shot cost, improve artist productivity and thereby enhance project level profitability. Most importantly, the benefits compound as volume grows. Alongside AI, we are investing on creating the USD pipeline, which is the universal scene description pipeline, along with also hardening our infrastructure in terms of our storage with NetApp to gear up for the next level, which opens seamless integration across the global sites and which becomes more efficient operating model. To give you a brief, USD enables multiple departments to work simultaneously on the same asset or the shot rather than the traditional sequential workflows. This reduces the hand-off delays, minimizes rework, improves version control and accelerates production timelines. It also strengthens interoperability across different software applications and also geographical locations, which is particularly important as we continue to operate an increasingly integrated global delivery model across India, London and Paris currently and also for our future sites. Equally important is that it strengthens our ability to qualify for higher-value Tier 1 global mandates. USD is not merely a pipeline investment. It's an investment in accessing the next tier of revenue opportunities. Security has always remained nonnegotiable in Basilic Fly. As Bala touched upon, our Chennai and Pune facility successfully renewed the TPN Gold certification through 2028 and also our winning of the Stella Award where we have become globally the sixth facility to receive this award. These achievements reinforce the trust our clients place in us and further strengthen our position within the premium segment of the global VFX market. As we look ahead, our strategy remains clear. We are building globally integrated VFX platform powered by technology, strengthened by talent and scale through operational excellence. The investments we are making today in AI infrastructure, pipeline architecture, security and the leadership are long-term assets designed to expand our margins, increase scalability and strengthen client confidence and most importantly, to position Basilic Fly and One Of Us for the next phase of global growth. Thank you. And with that, I hand over to our CFO, Mr. Gaurav Mehra, who will be taking us through the financial performance for the year.

Thank you, Bala, Zameer, and good afternoon, everyone. Happy to share FY '26 strong business and financial performance, another year of consistent growth and sustainable margin even after absorbing the long-term initiatives cost and impacts of project rescheduling. Before I jump into the numbers, at the outset, I would like to share that we have delivered strong growth in our India stand-alone business, both in terms of revenue as well as margins. While maintaining the healthy consolidated revenue growth during the year, consol margins are impacted primarily by the project shifting to the FY '27 and initial period cost of strategic hires. We have also undertaken several strategic initiatives across technology, infrastructure, leadership, offshore expansion to build a stronger foundation for sustainable growth and improved profitability over the long term. I will talk about these initiatives in detail as we discuss the results. I will now share the financial performance for the quarter and the full year FY '26. I will start with stand-alone financial performance. Revenue updates. Supported by strong business momentum, India business continued to deliver robust results. Your company has delivered Q4 operational revenue of INR 27 crores and FY '26 revenue of INR 120 crores. At full year level, growth stood at 64% on a year-over-year basis. Last year, we were at INR 74 crores. India growth reflects client confidence on BFS being the vendor of first choice, our increased offshoring opportunities and strong execution capabilities. Stand-alone margin updates. There is not only significant growth in terms of the value due to 64% revenue growth, but the margin percentage has also improved in Y-o-Y by benefits of scalability and sharp focus on the cost control measures. Full year EBITDA margin improved by 0.05% on Y-o-Y. FY '26 EBITDA margin stands at 43.1% versus 42.6% of last year. Full year PAT margin improved by 1.5%. FY '26 PAT stand at 24.2% versus 22.7% last year. I will move to the stand-alone operating cash flow. Operating cash flow has significantly improved by INR 15 crores from negative INR 5.9 crores last year to positive INR 9.1 crores in current year, driven by strong earnings conversion and also supported by recovery of aged debtors. Margin improvement led by the better volumes due to increased offshoring and higher projects wins as a preferred vendor for our client. Now I will move to the consolidated financial performance for the group, revenue update. Operational revenue for the quarter stands at INR 113 crores and for the full year at INR 408 crores, delivering robust growth of 34% on Y-o-Y basis. Last year revenue was INR 304 crores. Growth is driven by full year growth driven by the full year consolidation, industry revival, higher winnings. As Bala touched upon in his speech, FY '27 sales pipeline looks even more promising with an order book of INR 232 crores and a bid pipeline of INR 456 crores. I will move to the consol margins update. EBITDA margin shrank by 3.3% and 2.6% for the quarter and full year, respectively. FY '26 EBITDA margin stand at 20.9% versus 23.5% last year. PAT margin shrank by 2.3% and 2.5% for the quarter and full year, respectively. FY '26 PAT margin stands at 12.1% versus 14.6% last year. Consol full year margins are impacted primarily due to the project shifting to the FY '27 and also impact of the 14 senior hires, which is the initial period expense investment. Consol operating cash flow improved by INR 2.9 crores from INR 20 crores last year to INR 22.9 crores in the current year. For the full year and this OCF improvement is due to the better conversions and the partial recovery of the aged debtors. In overall, India delivered significant growth in revenue and PAT with consistent improvement in margin percentage. Consol margins were impacted due to the project rescheduling senior higher initial period expenses. With that, I hand over back to Mr. Bala for his closing remarks before we open the floor for Q&A. Over to you, Bala. Thank you.

Thank you, Gaurav. To summarize, India continued to deliver strong growth during FY '26, while our offshoring strategy gained further momentum across the group. While the quarter reflects planned investments and transitional costs, we have also taken decisive steps towards structural lowering our cost base and likewise increasing offshore operational leverage and also optimizing infrastructure spend, which has significantly showed the reflection in our overall the last year performance and like strengthening long-term margin resilience. With a strong offshore foundation and growing technology capabilities and an active bid pipeline of approximately 35 million GBP and continued focus on execution excellence, we believe we are well positioned for sustainable growth and improved profitability going forward. With that, I would now like to open the floor for the Q&A session. Thank you so much. Over to you, Purvangi.

[Operator Instructions] First question comes from the line of Nitin Babulal Gandhi with Inoquest Advisors.

The 14 senior employees, which you had hired, what is the cost which is yet to start reflecting revenues going forward? And what will be the key milestones like for them to undertake? That's the question first. Second question is with reference to what is like historic conversion for bid pipeline? Is it 50%, 60% of what is this? So if you can share that, it will be great helpful. And what is the third question, what is the max potential revenue based on our available facility at this point of time?

Shall I take that question, Bala?

Yes, please.

Sure. Thank you, Mr. Nitin, for your questions. I will go question by question. So your first question relates to the senior hire cost and the benefit out of that. So see, as you know that the industry is reviving after the strike period and management has taken the strategic initiative to hire. Bala named a few people. Like the Adrian De Wet, like the Abishek Nair, who comes from the premium studios like the Netflix and the ILM. This is strengthening our team and these roles goes to the different areas like in a common language, I can say that the Adrian performed the role of the business development. He's the senior VFX supervisor. And very happy to share we have also got the winning done via our senior hires in the month of April to the tune of close to 3 million to 3.5 million GBP. This -- all the 14 strategic hires goes to the different, different roles. A few are about 5 to 6 people are into the business development role across the geographies of the North America, Europe, U.K. The other people are on the operational levels as well as into the creativity. Bala mentioned one person, Mr. Sebastien, who comes from the background of the AI to lead the AI initiative, the investment company is making. So in a nutshell, this belongs to the different, different areas. These are overseas as well as in the India also to drive the domestic expansion for the company. So we are doing the -- exploring the new geography overseas as well as exploring the domestic expansion. And happy to share within the first quarter of the FY '27, we secured 2 full series from the Netflix and Amazon in the domestic. Coming to the cost aspects of this, this cost at the full scale, they have the component of both fixed cost as well as the variable cost variable cost belongs to the business brought by them depending upon the achievement of the margins improvement. All put together, variable fixed, the total cost will vary in the range of 1.2 million to 1.5 million annually, all put together. Not every role is the new role. It's a combination of the few, upgrading few roles as well where the backfill was required, and we have gone to the next level of the leadership position for those. Coming to the bid pipeline, as Mr. Bala mentioned that today, we stand at INR 232 crores of the order book and INR 456 crores of the pipeline. As a traditional, our winning ratios ranges from the 60% to 70%, but it's hard to say from the ratio perspective. What's changing for us in the previous period, we used to do the bidding for an average ticket size of 1 million to 2 million. We have changed our bidding scalability with the connect through the leadership hires. As I mentioned that in the first quarter, we got the first bidding done to the size of 3 million to 3.5 million and the other in the bid pipeline is as high amounting to the 7 million, 5 million. So I think if we win any of them in terms of the value, the percentage can change to any extent. Moving to the third question, the max potential revenue possible from this. So with the current workforce, ranges into the range of the 75% to 80% of our utilization. considering all the leaves, we do have a potential to increase with the current workforce close to 10% to 15%. We are also investing into the AI and the technology, which will enable us to deliver the more and the lower operating model with the existing workforce. We are also evolving the module where the expansion is possible immediately, rapidly at a lower cost by the outsourcing. We are expanding our channel partners, both for the India as well as overseas, where any scalability can be done in the immediate period with minimal commitment of the cost. I hope I addressed your all the questions.

Yes. Most of them have been addressed, but on the pipeline, if you can share what is the overall execution time frame for orders separately?

The order -- go ahead, Bala.

Yes. For the existing orders that we have in hand, I think 90% of that would be executed closely by end of Q4 next year. And that some would be spilled over to the Q1 of the following year. And apart from that, we've been bidding on a few projects, which will also be filling up in the coming current -- current year as well, so which we've been bidding aggressively. And yes, so that is the current status with the orders that we have on hand and also the projects that we are bidding.

What is the order intake in the month? That's the last question. Order intake in full year, sorry, FY '26?

For the last...

Yes, last year or FY '27, what do you expect, either which if you can share what is the best.

So INR 232 crores order that we have on hand at the moment for the next current year. And also, as we mentioned earlier, the bidding pipeline is approximately at 35 million GBP. So out of which we are very confident of winning maybe 40% to 50% of that. And maybe that will roll out between first -- the next half of the year and to the next year, next financial year as well. So that is the current situation. And I hope that answers your question.

The next question comes from the line of Viraj Mahadevia with Moneygrow.

Congratulations on stable results and seen through the transition here. Based on your order book, do you think you could deliver a top line of INR 500-odd crores -- INR 500 crores to INR 550 crores in FY '27? INR 232 crores from wins of the active pipeline plus your incremental steady flow business.

Yes, I think we would be able to add on 30 percentage to what we did in the current year and -- I mean the last year, last financial year. And INR 232 crores to start with is looking very good for us as in the momentum really looks good. The current order book that we have in hand, and we have plenty of scope to bid and get things realized as we move forward in this current year. So we do see maybe organically 30 percentage more, we would be able to do 30 percentage more than what we have covered in this current year.

Okay. Fantastic. And now given that you've done the hiring of the senior hires of the offshoring hires ahead of winning business, assuming incremental INR 100 crores to INR 150 crores of top line on an annual basis, if your cost structure were not to change materially, could you deliver a PBT of -- incremental PBT of about INR 70 crores from higher revenues?

Yes, absolutely. Yes. In terms of delivery, yes, we would because we have the senior hires in place. And at the moment with Adrian De Wet, we already have a project under his name. And likewise, Adrian De Wet joined in September and likewise a few other hires joined only after September to March. So it will take a bit of time where they would get in the projects in place as well. And in terms of delivery capability, the network that we have in place, for example, the platform that we have platform in the infrastructure that we have developed in place would really be supportive of adding more resources globally and also to be not only within the physical locations that we have, but also with the remote, we would be able to connect within India and also outside other locations as well and also make sure that we would be seamlessly be connected between locations. So that is where we spent most of our last 18 months into building this network infrastructure and framework for us to be able to deliver any bigger projects simultaneously. I think we hired the senior team key creatives as well as...

Appreciated on the global delivery model construct with AI, et cetera, and offshoring. My question is slightly different. If we were to add INR 150 crores of incremental revenue in FY '27.

So sorry to interrupt, Mr. Viraj, could you please use your handset because your voice is breaking in between.

Sure. Can you hear me now?

Yes. Please go ahead.

Yes. So if you were to have this level of revenue, your incremental employee headcount cost should not change materially. So a large part of the INR 150 crores, assuming you have INR 20 crores, INR 30 crores of incremental cost. INR 100-plus crores should flow down to the PBT level. Is that -- does that understanding resonate with you, Mr. Mehra?

Yes, Mr. Viraj. So as you said, so you see that currently, we stand, and I will take it up at the PAT level. So as you know that our current PAT level stand at INR 50 crores. So even if I take the current PAT percentage on the another INR 150 crores, we can very comfortably add as is close to INR 16 crores, which takes the number of the PAT to the INR 65 crores to INR 66 crores. Now as we mentioned that the idea of this all technology investment, AI-driven workflow, hiring senior is to build an operating model at a much lower cost. Mr. Zameer mentioned about the USD, which enable more offshoring. I would like to call out that we are expanding the Bengaluru. We started this way back in the October, November. And as we speak, the team has grown to a size of around 40 people. Now this all expansion, now this all shifting to the offshoring is adding to the PAT percentages. So to answer you that around INR 70 crores or so doesn't look to be quite -- doesn't look to be quite difficult, keeping the finger crossed. I think we should be able to achieve more than that with the current pipeline. major benefit what we expect to be unlocked is we are now bidding the pipelines. We are now bidding the projects of much more scalable than earlier. I mentioned in the bidding pipeline that the projects are to the tune of the 7 million, 5 million. Now the benefit of the bigger projects comes with the scalability. When you deliver a lot of smaller, smaller projects, the scalability benefit can be unlocked to a limited extent. So we think that with the as is position, it should take us comfortably to the -- within the range of the INR 65 crores to INR 70 crores of the PAT with the current visibility. With the initiative being driven, that should add another 2% to 3% in the range at the -- if not the fully, I think it should comfortably add within the range of the 1.5% to 2% on an annual basis. So it should surpass the INR 70 crore number, what you mentioned.

Yes, yes. My mathematic says INR 70 crores incremental PBT, which means you should target a PAT of INR 100 crores on INR 550 crores top line. But anyway, maybe you can pick that up offline. My next question, Mr. Mehra, is regarding the aging receivables. I think it was about INR 40 crores, INR 50 crores. How much have we collected and how much is still outstanding?

So we have got a good collections done in the March. Just to name you, we got the outstanding collection of about INR 20 crores within the month of the March. And post balance sheet, we have received another INR 17 crores. So within the last 2 months, April and May. So in last 3 months, we have received close to INR 37 crores. Now to talk about the number. So now to talk about the number, debtors as on the 31st March after knocking off March collection stand at the INR 100 crores. Important to note within the INR 100 crores of the total receivables for the India, about INR 35 crores belongs to the intracompany. So net only INR 65 crores belongs to the external customer. We still do have some aging more than the 6 months, which is in the kind of range all put together close to INR 44 crores, INR 45 crores. I'm not counting the April and May knockoff. Our receivable of the INR 100 crores of the March came down to INR 86 crores after taking the knockoff of the collection of April and May. So there is a significant amount of the reduction into the aged receivables. We are expecting the April and May high collection trend to continue in the rest of the H1 as well. So we think the aged receivable should be behind us gradually latest maybe by the H1.

Understood. So what is the net aged receivables outstanding as of today after April and May collections in your estimate?

I said it's ranging around the INR 86 crores from the current reported number of the INR 100 crores, close to INR 15 crores down, INR 14 crores down.

So those are not aged. Aged Was 40, which you collected. I'm talking about the aged receivables, ones that have already extended beyond the receivable period. Out of that, you collected some and there's some you collected in April, May. So what is the balance? You're talking about overall receivables. I'm talking about only the aged receivables.

All right. So more than the 6 months, as I said, that because as the time passes, that the others will also pile up. So as I said, that more than the 6 months age receivables as on March, it stands close to INR 47, 48 versus the INR 53 crores last year. And if I do the knockoff of the April and May, it should come down INR 7 crores to INR 8 crores. In the June also, we expect some collection. So in my mind, this should come down under INR 40 crores by the end of the Q1 of FY '27.

Understood. And our clients still showing receptivity to repay the old aged receivables from the old...

Absolutely. So as we mentioned earlier, we continue to do the more work and now we are stressing more on that clearance of the aged receivable as soon as possible, and we get a very good collection into the March and last 2 months and expect that momentum to continue.

Great. Any update on the incremental acquisition that you're looking to make after your fundraise last year? I think the cash balance is about INR 45 crores.

We are working very actively on that. To give you some perspective, by now, we have evaluated close to 7 to 8 companies across the geographies. We are in the advanced stage with the 2 to 3 players. When I say the advanced stage almost finalized from our end and waiting for the counter side and meeting to take it to the next level. We will be sharing the updates with the investors as soon as we are able to move to the next step, but it seems to be at a quite advanced stage as of now.

Understood. And assuming some of -- at least some, if not all of these would go through, how much incremental revenues could you generate from inorganic in FY '27 and '28?

The typical ticket size, what we are evaluating ranges in between the INR 200 crores to the INR 300 crore ticket size of the M&A acquisitions and...

The value of the acquisition or the revenues?

I'm talking about the top line, I guess you were asking that.

Yes, yes, please.

It's the top line for the consolidation.

The next question comes from the line of Shikhar Mundra with Vivog Commercial Limited.

So this INR 73 crores of investment which we have done this year, is this entirely for the AI software, which we are building?

I will take up that question, and I will request Mr. Zameer and Bala to add on that. So Mr. Shikhar Mundra, thanks for the question. So this INR 73 crores is not only the AI, it's multiple aspects, and it's within the India as well as outside the India. So as we briefly mentioned, we are investing into something called USD, Universal Scene Description, which enables the India team to operate on the same pipeline where the London people are operating. We are investing into the storage. Mr. Zameer mentioned that we have expanded our storage multiple times with our NetApp storage. We are also investing into the AI. We are investing into the workflows. We are upgrading our tools. So I wouldn't say it's limited to the AI, but AI is a significant part of that, including the art lab and the others what we are exploring overseas. So it's across. I will request Zameer also to answer if I missed any other comments.

Yes. Thank you. Thank you, Gaurav. Yes, it's not just on the AI, it's on the technology by itself. One being the infrastructure where we have procured the NetApp enterprise storage solution, which is a very high bandwidth storage that really caters to the FX and CG caching and CG heavy rendering as well and which becomes a foundational piece into our Bengaluru expansion as well. The second one being the seamless integration of -- pipeline integration of London, Paris and India as well. So earlier, we were doing it with the model of AWS where any cloud service is always cost intensive. And now I think we have restructured the codes, and we have made it in such a way that it is hybrid mode, where out of the 3 components of the technology that we are using for real time, which is main storage, computing and also in terms of the rendering, only storage would remain on the AWS for the shared work and the computing and the rendering will happen on-prem. So that brings the cost significantly down to around 62%. And that even goes exponentially in terms of the volume growth. The more you use it, the more benefit you get. That's the second part. The third aspect is the pipeline. This USD pipeline is very crucial. Number one, it puts us into a league of the Tier 1 mandates that we can secure. Because earlier, we were very location-centric and even we were not able to take in work which could be shared between the other studios because from the bigger studios like a few studios where the assets have to be shared for us to really work on, which we were not efficiently doing it. But now currently, with this USD solution, we will be able to work and our interoperability between the studios will become very effective, and it puts us on the Tier 1 league in terms of execution as well. Not only that, this USD pipeline also brings in or reduces the redundancies significantly in terms of multiple revisions and all. It is more like, if I may say, on [indiscernible] the same assets.

Yes, Thank you, Zameer. And to summarize, it is more about investing in bringing the efficiency, flexibility and seamless ability. So it is the main aspect of investing into USD and also our AI workflows. So that is where we've been investing in. And these investments would really play a major benefit in deploying, getting in bigger projects as is what we've been planning for the next upcoming years.

Got it. And how much of this type of investment is pending for FY '27? How much do we plan to invest more?

I think it's -- I would say it may be another close to 15 to 20 across the year, not immediate. So that may be the -- yes, because as I said, it carry a significant portion into the overseas as well. And just to add, apart from this operational technologies, we have also some capitalization happened into the R&D spend, what we are doing as an ongoing process in the company. So as we move to the next level, now the projects what we are taking are high-end projects, which involves a lot of R&D-related works and we are -- those can also be capitalized. So that also contributes to some part of that, which is kind of a -- depending upon what the projects we land, if we land with more projects of that complexity, it may increase.

But given the fact that only INR 15 crores, INR 20 crores, so major part of the investments are done because we invested, I think, something more than INR 70 crores this year. So...

Yes. Yes.

Okay. And so this intangible assets under development of INR 59 crores, so this is roughly what all we discussed, right?

Yes.

Got it. Got it. So these investments we are making, they are not on hardcore assets. They are more on the technology side or the software side.

I wouldn't say because hardcore. Zameer mentioned that kind of what we did it into the storage and few that as well. But largely, yes, largely remains into the AI tools and building the pipeline, which comes more into the intangible rather than the PPE classification from the accounting perspective.

Okay. And from the accounting perspective, then how do you quantify this as like, let's say, INR 59 crores right now, that's the time spent by our internal team, employees, which has been capitalized as INR 59 crores for building these profits?

It's not entirely internal, and that's not possible. It's a mix of the internal as well as external. So it's a mix of both. So yes, but the people who are dedicated working on building those, yes, we consider their cost also as part of the capitalization as per the accounting standards.

Got it. Got it. And one last question to the employee cost, which we are reporting right now. So is this 14 new hires also included in the employee cost? So are these peak...

Absolutely.

So going ahead and continuation to the last participant's question, so shouldn't we see a much big jump in operating leverage, given the fact that the incremental revenues which you're adding, I mean, a great chunk of it should ideally flow to the bottom line. So I mean, why -- just a couple of increases in PAT percentage. Why shouldn't the jump be much higher.

Right. So once you do that, that the capitalization we were talking that will bring back some depreciation on there. So whatever the investment you are bringing, that will also be part of the P&L in the coming period, not that. So EBITDA may improve more, but I guess, on the PAT, with the current visibility, we think it will be offsetting. So even in the current year. So the cost initiatives are there, which will deliver the leverage, but we are in parallel investing. So in the current year that all 14 hires, which we have done, it do not absorb their full year cost. This -- their onboarding has been gradual since October. So it may carry for the few people 6 months, few people 1 month, few people 2 months. Next year, it may carry the full year cost. So it's on -- there may be some offsetting. And definitely, we wanted to keep the number conservative and try to always deliver more than the recommended or as per the guidance.

Got it. And sir, last question on the receivables. Like in spite of the collection of receivables, our debtor days are still at 120, 125 days. Is this something normal which we should, I mean, estimate going ahead? Or is there further improvement -- scope of improvement over here?

Scope of improvement is always there, but I would like to take your attention that this INR 100 crores, we should consider in context of the increased revenue and the large part of the revenue comes into the last 2 quarters. So we should not look at. So last year, we were at around INR 70 crores, INR 75 crores. Last year, we were at the level of the INR 70 crores, INR 75 crores. And this year, we have moved from there to the INR 120 crores. And in fact, likewise into the consolidated. So definitely, that the debtors is an outcome of as your revenue scales up. The good part is that the old receivables are gradually coming down. So that's really helpful.

No, I mean INR 78 crores has moved to INR 138 crores, but our revenues have grown from INR 300 crores to INR 400 crores. So the percentage jump in receivables has been higher than the revenue. So I was just pointing out to that fact, just comparing last March to this March.

Yes. So I think -- yes, so I guess last March, we also called out that last March, we were able to get some undue receivable received within March, the few which were falling into the April month, we were received in that. So that was a gap of about INR 15 crores to INR 20 crores from the Netflix, we received an advance payment. So this time, it's on the regular schedule, so that also impact when you compare year-over-year. But largely, to answer you that if you see the overall DSO, that ranges into the range of the 96. So 96 is the typical 90 days period of the turnover.

Got it. And one last question. So given the fact that most of the investments have been done and our margins are maybe on an inflection point, they can improve from here, we are growing and the company. So can we expect some dividend payouts going future? Our cash flows have also turned positive and dividend payouts going ahead in the future, some payback to the shareholders.

That's always into the consideration of the management, but I would like you to appreciate that currently, the company focus is more on investment and the expansion. So this cost, what we have invested are not the smaller one, both in the people and the technology, and this can replicate the return in much more time than dividend. But definitely, that's always in the top consideration of the management. And as management decide, we'll definitely communicate and we'll try, if not the bigger one, if we can do some smaller one, yes.

The next question comes from the line of Saurabh Panchal, an individual investor.

I have 2 questions. One is, I see that we have hired senior people here. So what is the driving for this sudden move on the hiring -- aggressive hiring on this front? Is there any trigger for that? That's first question. And second question is what is the plan for going main board IPO from SME?

The main trigger for adding the senior [indiscernible] and new business hires mainly as in -- because we are not a stand-alone entity anymore with One Of Us and being we have a stronger presence here in India as well. So as a group, we have to grow beyond what we have done individually over a period of time. So that is where we really we have this potential not only to build on work up on projects within the ticket size of GBP 1 million or GBP 2 million, but more than that, we target more at beyond 3.5, 5 million or 10 million plus. So that is where we thought we need to have senior hires who would be able to build those confidence like how Basilic Fly -- One Of Us used to be client for Basilic Fly and Adrian De Wet used to be client for One Of Us. And so that going up over the ecosystem really helps. And so that is the reason we want to really go one level up and also evolve as a company. That is the reason we brought in key hires. Where we see opportunity in the industry as in a few companies are all struggling as in the industry as well. So that is the right thing for us to invest and bring in these key hires to elevate our position and also attract new markets and take up big size projects. So that is the main reason.

One more follow-up on this one is, so is it going to be a new normal, we are being like upgrading ourselves from a Class 1 grade company? Is it going to be a new normal for hiring such execution and it's going to be like continuous process going forward? Or it's just onetime activity?

I think at this point, we are pretty much covered with the key hires that we already have. And also since we have also worked upon our infrastructure as well as our operating ability, more flexible operating ability across the globe, I think we are rightly positioned with what key hires and also the process that we've been building and also be ready at the moment for taking upon bigger projects. And we need to focus more towards execution and bringing new projects at this moment based upon what we have at the moment.

Just to add on what Mr. Bala said. So I think you will recollect that one of our primary objective in the QIP was both the organic and inorganic expansion and the investment into the technology. So there are 2, 3 factors which is leading to this aggressive hiring, as Bala mentioned. So one part is that we were holding those plan earlier because it requires the capital infusion, which we are able to make it out now. Second part is that industry is changing from the traditional ways to more of the AI-driven ways wherein we are hiring the people who has that background and also investing into the technology, which can deliver the client expectation. The third part is that we are doing more offshoring. We mentioned about the Bengaluru expansion and the team ramp-up is not possible until -- unless we have the framework of required technology. So I think the combination of all these 2, 3 factors as well as the management strategy to do the domestic expansion, that is what is driving that. To answer whether it will continue, I think, as Bala mentioned, we are largely done what's required for the near future. But as we expand, there can be a requirement, and we have also upgraded a few roles to the next level compared to the earlier position. So it's a mix of both.

The next question comes from the line of Sahil Shah, an individual investor.

Can you hear me?

Yes, Mr. Sahil. Please go ahead.

Congratulations on a good set of results. I just wanted to know the goodwill, which is mentioned in the balance sheet since the last financial year, is that the amount which you had acquired One Of Us for?

Sure. I will take up that question, Mr. Sahil. So goodwill, as you know, as per the accounting standard, it's the difference into the purchase consideration paid to the company versus the net worth. Yes, this entire goodwill belongs to One Of Us acquisition.

All right. And you all had mentioned in your earlier transcripts that you would also be looking at gaming as an option to expand the business. Is that still in your plans or...

Very much on the plan. So the M&A partner, what we are exploring to give you that perspective, the primary strategy around that is, first, the diversification of the geography; second, the diversification of the services. From a geography perspective, we are -- we are more dominant into the Europe and U.K., what we are exploring to expand into the North America, Spain, those markets from a geographical perspective. From a capability perspective, services perspective is beyond the gaming, we are also exploring the companies who are more towards the commercial as well as the immersive experience beyond VFX. So we will get the opportunity of doing the cross-selling as well.

The next question comes from the line Bhavya Kumaria, an individual investor.

Hello, sir. Am I audible?

Yes. Please go ahead.

Any updates on the main board migration as of now?

Sure. I will take up that question. So we have already kickstarted the process. As you know, as per the norm, our eligibility lies by the September 2026 to take the advantage and to move fast. The process has already been kick started internally, whatever the preparation can be done before the time lines. And we are exploring, taking it up with the right consultant to move as fast as we can.

All right. I had another question about the acquisition. In the previous call, you mentioned about being in advanced stages of M&A and you have filed LOIs as well. So any updates on that?

To be transparent and honest with you that the earlier LOI, what we were talking about in the earlier calls that is on hold currently from the seller side. As I mentioned that we are in advance -- we do the 2 or 3 prospects at the max at a single point of the time. So we are exploring with the other prospects. And hopefully, we should have the signed LOI very soon.

The next question comes from the line of Viraj Mahadevia with Moneygrow.

Hi Mr. Mehra. Can you give a split of your revenues between currencies, so roughly dollar-denominated, euro, GBP and INR and presumably with the benefit of rupee with what's happening against those currencies?

Sure. So to give you the perspective from the -- and that goes with the geographies. So like the larger part is being contributed by the Europe. So GBP and euro is the major currencies, followed by the North America. So our Europe contribute close to 60% of the total. Our North America contribute close to 21% of the total. So that's the dollar money. As of now, we are 100% -- almost not 100%, but we are almost export company from the India business as well apart from the overseas business, we hardly do the domestic business. So almost everything is in the foreign currency. Coming to the answer of the benefit with the rupee depreciation and all currencies is skyrocketing, definitely, that has benefited us. And you can see the other income is in the -- to the tune of the INR 10 crores for the overall year. So that benefit close to 20% to 25% on an average from the mix of all. That's how it is here.

Understood. And sir, you have the receivables coming back again, the trade receivables of INR 138 crores as of March '26. Of that, how much receivables are directly from the producers and how much are from other studios as subcontracted work? Can you give that split? Because clearly, we want to see the latter reducing over time and going away ideally as we move from third-party outsourcer to directly solution provider to the end client.

So we can see that from the 2 perspective, if you see the debtors standing into the India stand-alone, that primarily is from the subcontracting business, which means from the large studios. Other than that in the stand-alone, whatever. So to give you the number, so in the India as on 31st March, we stand close to INR 100 crores out of the INR 138 crores, which is largely from the studios and the balance INR 38 crores or INR 40 crores will be directly from the production houses, such as the Netflix, Amazon kind of the production houses.

Understood. And do we expect this INR 100 crore number to start reducing over time as we deemphasize third-party outsourced studio work and do more direct clients and mix changes?

I mentioned that this INR 100 crores if I take that the old INR 100 crores means we have received close to another INR 15 crores in the April and May post balance sheet date. So that itself reduces to the INR 85 crores, and we are expecting sizable collection into the month of the June as well. So we expect, as I said, probably we should expect this to be substantially down by the time we talk about the Q2 or the September. So there will be good recovery in the Q1 and more in the Q2.

Ladies and gentlemen, that was the last question. I would now like to hand the conference over to the management for closing comments.

Bala, over to you.

Thank you, everyone, for joining for the call, and it's a great pleasure to interact with everyone and share our thoughts and likewise the update of the company. And to summarize, it is really a pleasure meeting you all, and thank you so much.

Thank you, sir. On behalf of Valorem Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.