Ceinsys Tech Limited (538734) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q1 FY '25 Conference Call of Ceinsys Tech Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.

Thank you. Good afternoon, everybody, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Ceinsys Tech Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the first quarter of financial year 2025. 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 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 conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Kaushik Khona, Managing Director of India Operations. Without any further delay, I request Mr. Khona to start with his opening remarks. Thank you, and over to you, sir.

Thanks a lot, Anujji. Very good afternoon, everyone. It's a pleasure to welcome you to our first ever conference call for the first quarter of financial year 2025. Given that this is our first earnings call, in the interest of some of the people who may be new to the company, let me first start by giving you a brief overview of the company. Ceinsys Tech is a leading technology solution provider in the IT-enabled sector, renowned for its expertise in geospatial engineering as well as other engineering services and solutions. The company offers a broad range of geospatial intelligence services, including data creation, data analytics, decision support system, enterprise web solutions and positioning itself as a key player in these domains. In the FY '22, Ceinsys strategically expanded into mobility sector by acquiring Allegro Technologies, a specialized engineering service provider with a strong international presence. This acquisition allowed Ceinsys to enhance its capabilities into manufacturing technology solutions, covering the entire product development process and industrial automation for diverse sectors such as 2 and 3-wheelers, passenger cars, commercial vehicles and off-highway equipment. Ceinsys serves a prestigious global clientele that includes large corporates, OEMs, asset management companies and government bodies, highlighting its robust reputation in both the geospatial and manufacturing sectors. With offices in India, the United States, the United Kingdom and Germany, the company combines local expertise with a broad international reach. Additionally, Ceinsys is venturing into software product development and emerging technologies through a new vertical focused on artificial intelligence and machine learning and embedded electronics. This vertical emphasizes advancement in metaverse, ed-tech, gaming and mobility, reflecting the company's commitment to innovation and maintaining a competitive edge in a dynamic technological landscape. Now moving on to the performance of the first quarter of financial year 2025. For the first quarter, the operational revenue was INR 74 crores, representing an increase of around 37% year-on-year. The company was able to achieve strong topline growth on a year-on-year basis despite adverse impact owing to general elections, where there was a code of conduct for most of the period. EBITDA reported was around INR 13 crores, which grew by around 16% year-on-year, and the EBITDA margin stood at 17.9%. The net profit after tax was reported at around INR 12 crores, which was an increase of around 42% year-on-year, while the PAT margins reported at 16%. On our business segments, the r Geospatial & Engineering Solutions revenues for the quarter were INR 42 crores, a small decline of around 13% on a year-on-year basis due to some deferred revenues on some projects. The Technology Solutions revenues for the quarter was INR 31 crores, which grew by almost 4x year-on-year. On the operational front, the company successfully implemented major products -- projects like IoT project under the water domain, Digital Project Management Systems awarded by the State Water and Sanitation Mission, Maharashtra under the water domain and consulting services for third-party inspection projects of various rural water supply schemes at Uttar Pradesh. All these were under Technology Solutions segment. On the business development front, during the quarter, the company was able to generate fresh leads for fresh and renewal of business of almost INR 270 crores. Of these, contract closures of almost INR 50 crores were achieved. The current order book stands at around INR 750 crores and a bid book pipeline of around INR 200 crores is being pursued. With that said, we can now open the floor for question-and-answer session.

[Operator Instructions] Our first question is from the line of Suresh Pal from Avendus Spark.

Sir, my question is, I'm new to the company. So can you please explain what is the tailwind that we are seeing in our company?

Well, as I introduced, the company is primarily into IT-enabled sector. And there is a special focus on the geospatial vertical. As you may be also aware, the Government of India through the recent finance budget has given a huge emphasis on the various projects, which are geospatial related including the land and other records mapping for the rural and urban area. On top of it, the company is providing the technological solutions, and it's not in the pure play of providing any products. So we are into providing solutions, complete solutions, including development of software wherever required. As -- I mean, the company is in the area where there is a huge growth opportunities. The sector itself is growing substantially well, as you may be aware. And the growth potential of these sectors have also been multifold through this budget, which has been stipulated in the month of July '24. And, therefore, we see a huge opportunity for the growth, and we see good tailwinds as regards the growth opportunity, and we don't find any headwinds in this sector as of now.

So sir, can you please explain what is the rate of growth that we can expect for our company in the coming years?

So as I think we already mentioned, we would not be giving any forward-looking statements, but you would be aware that the sectors which we are into are growing in the range of around 20% to 25% to 30%. And we are also benchmarking our growth to the sectoral growth. We want to be better than the sector, and therefore, the growth expectations could be of a similar nature. You could also see that in the performance of the past years, we have grown on a 25% to 27% in the last 1 year, which is the history. And as we already have mentioned about the order book, we have almost INR 750 crores worth of order book, which we are to execute in the period of next 2 to 3 years. So we expect the growth to be in line with the targets as well as the overall segment growth, which we expect in the range of around 20% to 25% to 30%.

The next question is from the line of Gunit Singh from Counter Cyclical PMS.

So you made an acquisition recently. Can you just share some numbers regarding the revenues, top line, bottom line of that acquisition, and whether it has been consolidated in the Q1 numbers?

So thanks that you are keeping track of the company. We recently acquired VTS, which is in the geospatial area, and this company is based in U.S. It's a small company to begin with because we wanted to have a presence in geospatial for going further into the geospatial area at U.S. The company itself had a top line of around $3.5 million to $4 million year-on-year. And we expect that the growth of that year -- growth of that company, we will be able to push further once -- because we also have started deploying people over there for the growth of that business segment. The VTS has been recently acquired. It is on -- in the month of July. These companies have been taken over by one asset and the business is now being populated, and therefore, it's not included in the quarter results because the acquisition has happened after the end of the quarter.

So let us know, basically, $3 million to $4 million top line would be added Q2 onwards basically?

Year-on-year, that's the potential which the company had in the past. So we expect that to continue or maybe improve further. But for that, we are doing all further efforts by putting more people over there to grow the Geospatial segment focus in U.S.

And what kind of margins do we see there?

U.S. margins are not so heavy as in India. The company, which we have acquired, had these historical margins of around 14% to 15%. However, once we expand, and it remains to be seen how much economies of scale we are able to obtain, but in U.S., margins of around 10% to 15% to 18% are set to be good enough.

Okay, sir. Sir, we recently planned to raise money. I mean, so do we have any big acquisitions in the cards this year? Are we working in that direction? What kind of target acquisitions are we looking at? Can you please throw some light on that just to give us a sense?

I think it's a very relevant question. You must have seen that in the -- since March onwards, 2024, we have already authorized the company to raise fresh funds by way of preferential allotment of shares and warrants. The overall fundraise will be in the range of around $25 million to $27 million. All this is for the acquisition. And we have already appointed the agency, which is CARE Ratings, who is going to monitor the funds. The issue of -- the raise of the funds has still not happened. It will happen once we have timed it along with the acquisitions which are being lined up. We are in the process of -- we have identified a few acquisitions. But right now, it will be premature for me to identify and highlight which are the acquisition targets. The acquisitions, however, I can say that they will be in line with the existing line of business, which is the engineering solutions, the geospatial solutions as well as technology solutions. One area which we are also focusing, which you must have seen, is that we are also trying to add value by focusing into setting up of the data centers, which is a tech-enabled center, where we are not into the provide -- the setting up -- the physical infrastructure setting up. We are into the consulting part. And we have already set up a 100% subsidiary at Singapore, for which the Board has authorized for the investment of around INR 5 crores into the equity of that capital. The company has also appointed a very renowned and experienced professional who has been -- who has exposure of setting up data centers for over last 18 to 20 years in Singapore and in APAC region. And we expect that also to be given a good focus in this coming 2 to 3 quarters, where we can find out new avenues to add our top line.

Right, sir. Sir, is it reasonable to expect about INR 20 crores to INR 30 crores revenue for the potential target because of the kind of funds that we're raising? And also, sir, setting up of data centers, what is the rationale? And what kind of leads or order pipeline or -- I mean, what gives us the confidence that we will be able to establish ourselves in that domain given that we have not been present in that?

So one thing which gives us that confidence is, first of all, the investor who is -- the prospective investor who is going to fund these new preferential allotments. They themselves had a very good kind of history in setting of the data centers, and they are also giving us some leads and help on to these avenues. The data center, as I said, we are not physical data center setup. We are -- why we have identified because it's a huge tech-enabled area, which we see a good focus. In fact, as per the study reports, which we have had, there is a growth of the data center business alone of more than 25% to 30% in the APAC as well as in India. And we are talking of large data centers like those set up by Amazons or Google and all. And, therefore, we see a lot of potential to set up those as additional avenues for our consulting business.

Right. And sir, as per the target acquisition, can we -- is it fair to expect a $20 million, $25 million topline considering the kind of funds we raise?

I think -- as I said, we have still not signed off any further acquisition, except the VTS, which we already mentioned about. Once we are able to sign off, we will be able to publish that into the stock exchange, and we will be able to give you further guidance on that.

Perfect, sir. My last question would be regarding the EBITDA margin. So directionally, I mean, can we expect to maintain 20% plus margins? I mean, just in the directional sense, I don't want any specific numbers. And also considering that the industries we are in are growing at 20%, 25%, and we want to grow faster than that, so can we reasonably expect 30% to be a good number for growth for the coming 3 to 5 years?

Well, I think, as I said, yes, I don't want to, again, be mentioning about any guidance of future, but we have our own targets to be ahead of the industry. And we are working on all the projects, and the projects, which are in pipeline, have a net EBITDA margin in the range of around 20%, 25%, 30%. So I think over a period of this financial year, we will be able to see the sustainable improvement from the margins, which we have been reporting year-on-year. And if you see the last 3 years' margins also, they have been steadily enhancing and improving from '22 to '23 to '24. And we are on the track to see that the sustainability of the growth of margins also sustains.

The next question is from the line of Richa from Equitymaster.

Could you -- like I'm new to this business, could you help me understand what is the percentage of business or revenue from government? Like is it a tender-based business, the order book that we are talking about? Also, if you could talk about the breakup of this order book of INR 750 crores, where exactly -- what are the constituents of this order book?

Sure. So predominantly, before 3 years, before we acquired Allegro, we were more so 95% on the government businesses. After the acquisitions and after going further into corporatization of the business, the present government business is in the range of around 65% to 70%. The order book of INR 750 crores, which I mentioned, the breakup of that mainly provides into 2. First of all, segment-wise breakup, the -- out of that INR 750 crores, around INR 550 crores is towards the Geospatial & Engineering Services and around INR 200 crore plus is towards the Technology-related Solutions Services. As regards the government exposure, the government business is on the basis of the tenders, and many of them are in respect of the same water-based or the smart city solutions, which we provide through geospatial. So these are the focus areas where we are having our expertise, and we try to tap the opportunities wherever available from the government auctions or tenders where they are available.

Okay. And sir, could you name some of the peers or competitors who are operating in the similar area in India? And how does this order book look on a year-on-year basis? Like what kind of growth has been there?

Yes. So I would like -- I would not be able to identify a one-on-one competition because we are into 4 or 5 major business segments. As we said, we are into geospatial. One can relate that to -- perhaps to that element, we can relate to the CE Info Syst, which is into Map India -- MapmyIndia kind of -- but it is, again, a product. We are not into the product. If we look at the technology solutions, we have some companies which are based in Nagpur or who are based in Mumbai also, which are of the similar size, and which can be kind of compared. But if you look at the kind of the bouquet of services, which is offered by the company, I have not been able to come across any company which is an apple-to-apple company. So that's my take on the competition. What was your second question? I missed it.

It was about the progression in the year in the order book. How does it look on a year-on-year basis?

So I can give you the past, in the sense when we started, 2023-'24, our order book was in the range of around INR 250 crores. When we closed the year '24, we were at around INR 700 crores. After execution of around INR 65 crores of projects, we are again at INR 750 crores. And I said that there is a pipeline of the tenders, which we are already tracking as of now of around INR 200 crores, of which there are -- 70% of the tender pipeline, we are already L1. So we hope that, that could fructify, although I cannot give a guidance because that's all subject to the final government approvals wherever they are in relation to the tenders and the invites. And going forward, we are trying to focus more on similar exposure of geospatial and smart city solutions. Going into the different states, like we are having major presence in Maharashtra, and we are also having presence in Uttar Pradesh. We are trying to tap further into the states of Chhattisgarh, Madhya Pradesh, Jharkhand, Delhi and Rajasthan, where we already have people and infrastructure base. So these are some of the states, which we have identified to go into and tap further opportunities. I think the order book position, we will be able to update it on a quarter-on-quarter basis at the time of every periodic reports which we publish.

Okay. And sir, typically, historically, what has been our strike rate, like you mentioned, the pipeline is of INR 200 crores. So historically, what kind of success rate do we have when we bid for these tenders?

To be very frank, we apply where we feel that we have the ability to strike the deal. And historically, we have had a strike rate of almost 90% plus. So it's something where after having done our diligence, after having seen that we have good capability to execute the project, there only we apply. And that's where we try to see that we meet the criteria of technical qualification as well as ensure that we also are kind of competitive on the commercial part. So, so far, our strike rate has been in the range of around 90% plus.

[Operator Instructions] The next question is from the line of Ankit Minocha from Adezi Ventures.

Starting the investor conference calls, I think this is a great initiative. Overall, my question -- first question was regarding the order book as well. So if you're talking about an INR 750 crore order book in the next 2 years, that is substantial growth over our last year number. So firstly, do we have the execution capability currently to execute an INR 750 crore order book over the next 2 years? And secondly, what would be the average or a margin profile of this current order book?

I think a very valid question, and thanks for your compliment. You are right, the order book has an execution timeline of 2 years and 2 to 3 years in some case because that also includes the O&M part of some of the orders. Capability-wise, we have added a lot of capacities over the last 6 months, where not only the execution part, we have also ensured that our systems are further upgraded to see that the executions are being monitored centrally. So as of now, we have -- the order book which we are trying to tap, we have ability of execution and the capability even on the technological side as well as management side. So we don't see any challenge in execution of even a higher order book as of now, and we are trying to, therefore, tap further. As regards the margins of order book, which we have already kind of signed off, the gross margins are quite good. And I think we should be aiming -- as I said, again, I should not be mistaken to give any kind of guidance. But going forward, we should be able to aim -- achieve our targets of having a higher EBITDA growth on a sustainable basis between 20% to 25% to 30% in the next 1 or 2 years.

Right. And my second question is with regard to seasonality in the business. So I was just kind of looking at the quarter-on-quarter numbers. And for example, the June quarter was very strong last year. And it also comes strong this year, but then we saw some kind of a dip in quarter 2 and quarter 3. So is this -- is there a seasonal element to the business wherein these executions and tenders are executed more over a certain point of time? And should we be taking that into account?

Let me, first of all, clarify, these all projects which we do are little long-term projects, in the sense they either span from 9 months to 12 months to sometimes 2 years also. And typically, they are -- we, therefore, have a structured way of doing business, which we measure, although the measurement obviously happens quarter-on-quarter. But the kind of the cyclical fluctuations, which could happen, gets evened out on a yearly performance parameter basis. So I would rather look at the performance on a year-on-year basis. And there may be various reasons for a specific quarter performance. For example, we just said that this quarter, we had CoC, which is a code of conduct. But without going into such kind of reasons, we normally have a cycle where financial year-end is the measurement because even these clients, whether it is government or corporates, they also want the project to be kind of measured at the end of the year. And, therefore, we would also measure our performance through the financial year performance. So quarter-on-quarter fluctuations may remain. But because it's -- as I said, it's an ongoing projects, and sometimes, the timelines to invoice a particular element of the execution may not have been attained. But over a year, I think that can be measured on a seamless basis.

So if I'm understanding correctly, then Q4 is your strongest quarter usually?

One can -- if you look at last year quarter 4, normally, what happens is financial year-end is where people take to -- the clients ensure that let's measure ourselves. And that's where normally whatever pending issues are getting are normally getting addressed within the year itself. That's why I said we look at the financial year-end. Typically, quarter 4 happens to be that way of closure. So year-on-year, if you have seen, perhaps the quarter 4 would be a kind of a balancing quarter where whatever has not been built, not been achieved, those timelines also get fructified over there.

The next question is from the line of Pritesh Vora from Mission Street India.

My question is, sir, your margin has come off this quarter. And I just also want to understand the client profile. Who are our clients and whom do you serve? Is this a tender-led business or there is a fixed client? And if it is a client tender-led business, what is our order book position as of now?

Thanks for joining. I guess you must have joined a little later. Most of the questions which you have raised, I will just repeat them. Yes, it is 70% of the total business is government business, which are awarded through tenders. And, therefore, they are in relation to those projects. Second is there will be quarter-on-quarter fluctuations. So, therefore, we just requested all of you to kindly look at the performance on a yearly basis rather than looking into on a quarter-on-quarter basis. The third issue is the order book is -- which, as I said, in the beginning of the year, it was around INR 700 crores. We are at right now INR 750 crores of confirmed order book, and we have a further pipeline of around INR 200 crores for which we already have bid and the final decision for the allotment or award of the order is still pending. So we expect the order book to continue to be strong, which will help us to perform higher execution targets year-on-year.

And how do you -- my second question is about how do you rate your capability vis-a-vis other people in GIS space? There are a couple of people in India who serve to Google and other multinational for the GIS space. How do you rate yourself in that aspect?

So if you ask me, the -- we have various buckets of the business segments. And if I were to compare with any of the -- such competition, like those who are serving Google or we have just acquired one company, which was serving Ericsson, which is also a large multinational in U.S. So we are serving those large clients also through such verticals. And that doesn't make the -- it's only a part of the whole. So we have various business segments where our focus remains on providing the smart city solutions as a solution, which also, therefore, includes parts of that, which has, let's say, geospatial, more onto the technological-aided software development solutions. And, therefore, we don't only cater to the large clients like Google or Ericsson or for that matter any of these Amazons. But these are one of the buckets which caters to such businesses, which we had also in the initial introduction, we mentioned about the manufacturing and other industrial customers.

And sir, will you compete with Cyient? Like a Cyient, will you go to U.S. and other geography to compete with Cyient and other people in this space?

We -- I have little knowledge about that, so I won't be able to comment on it. Our focus right now on U.S. is to set up the geospatial arm, and we are trying to focus over there. And in that endeavor, we have acquired one, VTS company, which is into geospatial, which also I mentioned in the past. I'm not quite aware about the science, so kindly pardon me for that.

The next question is from the line of Ankur Kumar from Alpha Capital.

Sir, I wanted to ask in terms of our 2 segments, Geospatial and Technology, is there a big difference in margins? And how much of our order book can be divided into the 2 segments?

So as I mentioned, around INR 750 crore order book has around INR 550 crore book of Geospatial as of now and around INR 200 crores of order book on Technology Solutions. I can also mention, which I have not clarified earlier, the INR 200 crore pipeline, which we are right now banking on subject to the final award, 80% of that is into Technological Solutions. So if everything had to come through, then this percentage of Technology Solutions into order book will further improve. That's the mix of the business which we are catering into. As regards margins, I think we have already given the kind of the margins which we have been sustaining, and we aim at improving it further on a sustainable basis as we grow further.

But there is no significant difference in the margin between the 2 segments. Is that right?

It doesn't make difference. Between overall segments, there will be some contracts which may have a higher margin because of our special exposure to that particular geography or that business. But typically, on an average, the margins for both the segments should be in the similar range, as I said, between 20% to 25% to 30%.

Got it, sir. And, sir, on this INR 200 crore bid pipeline, when can we expect good numbers, good thing, information on that.

I think we will be able to communicate as soon as we get, because as per the stock exchange requirement also, as and when we get a further order book confirmed, we do publish. And within the month of September, I think almost INR 150 crores out of INR 200 crores should be decided. Now, whether we are awarded or not, that I think we'll be able to communicate.

Got it, sir. And, sir, any more bids in future coming as in how are the things looking on from the bid side? Because as you said, we get a lot of confirmed orders on the basis of bids only.

Yes, yes. So we continue to tap the options available. There are a lot of opportunities which are coming. I'm sure you must have gone through the recent honorable Finance Minister's budget, where they have -- in fact if you look at the outlay budget, they have identified a total expenditure outlay of around INR 1,13,000 crores on the 3 elements, which is Geospatial, Smart City Development and the Energy Solutions, in which all of these we are there as a presence. So -- not that I'm saying that we will be benefiting out of that INR 1,13,000 crores worth of outlay. But there are a lot of opportunities which we expect to happen because the government focus on these areas is significant and has come out very startingly in the budget, which has been announced by the honorable Finance Minister on the 23rd of July.

Got it, sir. Any comments on working capital side, sir, how soon can we receive?

So as we have been seeing that we are into projects which could span into a period of 1 year, 2 years, and because it's -- these projects are, I would say, spread across large geographies, which may cover sometimes multiple districts, the overall working capital cycle may be a little more, but quarter-on-quarter, we have seen that the working capital cycle is now further reducing. And we are able to see that the overall working capital cycle has improved substantially, which can also be seen from the fact that none of our banking limits on -- fund-based banking limits are being utilized. Right now, we are sitting on a positive cash flow, which I think even on the presentation, you would have seen that we have a negative debt equity, which means that we are right now sitting on a surplus of funds. So I think working capital is not a major cause of concern. And it's -- I think it's a hazard -- natural hazard to this business if I can submit that way.

The next question is from the line of Saurabh Sadhwani from Sahasrar Capital.

Sir, can you please tell us what are the margin levers with which -- which will help you to achieve your aim for your margins of 20% to 30% range?

To be very frank, the kind of the expertise which we already have built, I would not say that it's a major constraint to the new entry, but the technological knowledge which we possess, I think it's not easily replicable. And, therefore, the margins which we are looking at is something which is always possible. And, therefore, the levers of margin is the delivery. And we are -- as I already mentioned in the past, we have the ability to deliver. We have a good 1,000 technically qualified skilled employees with us, which help us to execute with a good perfection. We are -- I also mentioned earlier that we are also having a technological-enabled tool to ensure that all the projects are being monitored through a central database system. We also have implemented kind of certain software tools, whereby the integration between different systems is also feasible and which enables the execution faster. So I think the margin story of 20%, et cetera, is given with the kind of size of business which we are into.

Okay. Okay. And, sir, could you give us an example of a project in both of your segments, for Geospatial & Engineering and Technology Solutions, that you might have done, a use case that you might have implemented?

Well, one very interesting project which we are right now undergoing, and that's a very large project, which we have implemented within a short possible time of 6 months, it's called a Digital Project Management System. And this is a small project which is on the verge of completion where we were awarded a contract through the government of Maharashtra, where almost 900 schemes of water irrigation systems were to be integrated, which -- for which a technological platform was to be built by us. We got all the schemes onto different formats of the documents, which we converted all of them into GIS. We made them technological-enabled into a mobile platform as well as web-enabled platform. We set up a system whereby a person can on a handset go to the respective location and do the audit, verify the asset, et cetera. And there would be an asset mapping also being done for the purpose of O&M or asset tracking or, right now, the Bhu-Aadhaar system, which is going to be implemented, will also be integrated to that. So this one system, which is a very -- I would say, a very good system, which has been developed in a very short time is one of the examples which I can talk about on the Technological Solutions, which we have implemented. One system which we are already implementing is Engineering Services and Geospatial & Engineering Services, where we have been allotted a contract before a year or so, and we are right now on the extension or, I would say, the further extension of the project. It's called a third-party inspection, where we are consulting engineers to ensure a third-party inspection of all the projects which are being implemented in the State of Uttar Pradesh, where the contractors are doing the capital outlay, and we are monitoring through the physical as well as through the data tools to see that the project, which is being implemented, is as per the plan and is integrated through the different software systems of the state, and that's how we integrate and then report on a monthly basis. This is an ongoing project. This is a geospatial where, again, the geo-mapping of each asset is also being done over there. And this also enables for the rural water supply scheme under the state water and sanitation mission of the Uttar Pradesh. I would just -- these are the 2 just an examples of each one of the segment which we mentioned. I hope I was able to clear. The first one was Technological Solutions. The second one was the Geospatial & Engineering Service.

[Operator Instructions] The next question is from the line of Riddhesh Gandhi from Discovery Capital.

Congratulations on a great set. Sir, on the Geospatial, we sort of understand you are competing with Genesys and MapmyIndia. Just on the Engineering Services side, who do we typically compete with? Is it the [indiscernible] Technologies? Is it the Tata Elxsi? And just to understand in terms of what does our billing rates sort of stack up to, just to get hands-on how we are relative to the competition?

So it's very difficult to, as I said, identify whom we can relate to. I can also -- because at one project, I was competing with Tata projects. In one project, I was competing with even the KPMG consulting services. So I'm just giving you that kind of perspective as to who could be my competition, as regards the Engineering Services. So as I said, because we provide into the different kinds of services, but all of them, I would say, are -- I mean, I would not even brand it, but it's more to do with either infrastructure-related development services or smart city solutions or in that sense, any complete solutions, which an organization requires to maybe enable their execution of any particular project. So as I said, it's difficult for me to identify which can be a competition for, but it will be different for different types of projects. I forgot what is the second question?

No, the other question I had was if you could highlight a little bit about the kind of team you have on the Engineering Services side as well, that would be helpful as in, in terms of the leadership, how they're looking at it in terms of...

So I think we have a very good experienced and a good team, which has an average age of almost 10 years into our company. I'm talking about -- let's bracket them into 2, one is the senior management, which has managerial and technical skills. And second is the execution team, which has a technical and supervisory skills. In both the cases, I would say almost 70% of our people have an average age -- I'm talking about the managerial skills, of more than 7 to 10 years of existence into our company. And I think that's a big asset for our company because the continuity of people do give a lot of advantage as regards the aligning of the company's systems and execution skills. As regards names, I don't think you need names because they are all seniors and they are expert into that respective field. But each and every vertical, we have at least 1 plus 2 as a senior management skills. And, therefore, if I can divide my total number of deliverable segments, we have almost 12 deliverable segments. So we have a good management team of, I would say, even on the project execution and management skills of around 35 to 40 people who are on the top management skills. The rest of them are the execution and planning and various other skill-related team members.

The next question is from the line of Anik Mitra from Finnomics Solution Pvt Ltd.

Sir, last time, when I have spoken to you, maybe in last 1 month, you said -- like I asked this question related to satellite-based tolling system, what Nitin Gadkari has mentioned. So you said wherever there is longitudinal and latitudinal data, there is a scope of like taking up that kind of project. And obviously, you did -- like you also have hinted like you are discussing on this. So is there any progress related to the satellite-based tolling system? And if there is any clarity like what could be the size of this business and where you can work on, if you can give me some facts?

So we have capabilities to do that. Right now, the project RFP has not come on this part as regards satellite tolling project. I think it's a wonderful project to have. But as I said, we still need to have more details. Once we have the RFP published, I think it will be known a little more better. We have LiDAR capabilities. We have the capabilities of doing the geo-mapping on the basis of a satellite as well as drone facilities as well as LiDAR facilities. So we also were evaluating various other such projects. So once we get some kind of RFPs, then I think we will be able to give you further guidance on this.

Okay. Sir, my next question is related to the data center. Sir, is there any timeline like when we can see some revenue coming from the data center business?

Well, I would not be able to give you any timeline. The segment has just started on 1st of August. In fact, a very senior member, perhaps if you have gone -- were on the call, you would have Mr. Vijay, who is a very expert on this. He has joined our Singapore subsidiary. And he has an experience of around 18 to 20 years on setting up the data centers in the Singapore as well as APAC region. And we are actively kind of tracking the possibilities for getting those kind of new options available. So I would be able to get more specifics once I have something more to share. And as a normal transparent corporate behavior, once we have some kind of signed documents for new orders, the same will be published in the stock exchange.

Fair enough, sir. Sir, my final question is related to the government projects. Sir, payment history of government projects are not very pleasant in India. So as your 70%, 75% projects are from government only, so what kind of payment cycle do you see -- like do you get with the government? And like what kind of receivable days you are maintaining with government?

First of all, I think I have not had that experience, and I have not seen that as a history in our company. And I would guess the government is also guided by its own parameters of corporate governance. We have seen that in these projects, like the water-related or the IoT-based projects or the DPMS projects, the overall outstanding has been hardly 15 days or 20 days. So I don't think there is any major cause of concern when we look at the government projects. Yes, there are a few projects, small projects, which had -- perhaps the government allocation of funds was dried up, and we are waiting for the fresh allocation. That's where the outstanding remains due for 2, 3, 4 months. But that is, I think, unavoidable when it looks to the central. And these happen when there is a -- the project which is co-funded by state government and central government. So it could be possible that state government has the funds and central government funds are awaited and/or vice versa, in which case, there can be small delays. But I have not seen major issues on the government project, the receivables.

The next question is from the line of Kshitij Saraf from Tusk Investments.

Congratulations on the results. Just wanted to get a sense of how you see finances going in, let's say, 5 years from now with regards to the current business segments we have. How big do you envision each of the 3 segments to be? And do you plan to add any other lines of business? For example, you've just added data centers. Any color on how you're thinking about the business in the long run would be very helpful?

Well, thanks for the compliment, first of all. And both the questions which you have, have a little bit of challenge for me because we are all talking about future. But I can only tell you that the 2 lines of segments, which we have classified, which is Geospatial & Engineering Services and Technological Solutions, which are the 2 segment businesses, which we have classified ourselves, seem to have a good kind of visibility for the next few years. I can't give any kind of due date for when they will kind of mature. And it's difficult for me to give you any guidance as to from last year's of INR 250 crores, whether I will be INR 400 crores this year or what I will be this year. I think it's difficult for me to give you any guidance. And as I said, it will be a forward-looking statement, which I'm guided not to be giving such guidance. But we are on a growth mode, which I think on a quarter-on-quarter, you will see the results. So I'm sorry that I'm not able to answer your questions with a clear answer.

No, that's all right. If qualitatively you could help us understand how you deepen the capabilities in each of the segments, what can we expect in 3 to 5 years? And then we can think around, okay, how the organization is going to shape up eventually.

Yes. So qualitatively, as I said, I think we have huge capabilities of execution. The technical qualification, we are adding some more qualities of people. We have added, as you said, as you already observed, we are trying to add into a new segment, which is called the tech-enabled services in the form of setting up consulting for the data centers, which also we see large options. And right now, I would not say that we are even 1% of the market. So it's -- the market is huge. And if we really -- even if we work to get 2% to 3% to 5% of the market, I think we can grow substantially. So I would fail to give any clear guidance, but I mean, let's wait and watch for next maybe 2 quarters, 3 quarters. At the end of the year, you will come to know where we are heading to.

The next question is from the line of Ashish Soni from Family Office.

Sir, you mentioned the hit rate of 90%. So how does it work? Typically, what I have seen is generally hit rate in tenders are not more than 50% also. So what's the special thing you guys do? I just want to understand that.

So we don't apply for everything. It's not something that there may be -- in a month, there would be around 15 to 20 to 25 tenders even in our sectors may have come. But depending upon, a, the prospective competition, depending upon the timeline by which the same has to be executed and depending upon the advantage which we have, let's say, it may be in relation to a specific state or a district or a geography or a timeline, where we see that we have -- we are better off. That's where we evaluate ourselves. And technically, if we find ourselves ahead of the prospective competition, that's where we apply. So it's something where we are not -- because we have enough order book. So it's not something that we are craving for order book. So we go for quality order book where we see that there are better margins, and we are able to execute them within the kind of the technical skills, which we have. And, therefore, we only identify those segments where we feel that we can certainly be ahead of the competition, whether it is on a technical skills basis or on a commercial basis. So I think it's a planned way to apply for tenders rather than a generic way to apply.

And in terms of execution, what sort of risks are you seeing in the next 1 or 2 years? And how are you gearing up for it?

Well, I -- first of all, there are general risks, which any industry or any company would have. Those risks will apply to me, but they are very general in the sense inflation or government stability, et cetera. But, otherwise, I don't see any risk as regard to the skill set, as regards the capability issue on the funds as well as on the technical skills. And we are -- you would have already seen that we have presence in India at around 7 states as of now. We also have presence in U.S., which we are expanding further. We have presence in U.K. and Germany and also in Singapore now. So I think we are trying to leverage our strength and get strength complementing from each other. That is where I think we are able to kind of build up our strength. So I don't see any major risk factors other than the normal -- the way you mentioned when you'd look at a SWOT analysis, same way those peculiar bookish risk factors will be there. I hope I answered your question.

The next follow-up question is from the line of Ankit Minocha from Adezi Ventures.

Yes. This is in reference to Slide 11 that you've shared the segmental performance. So I was just looking at the margins for the Geospatial & Engineering Services. And I believe this quarter, the margin has significantly gone down from what the margin profile was, say, for Q1 FY '24 or for Q4 FY '24. So could you please help, sir, what would be the reasons for this margin going down significantly for this part of the business?

So I would, again, like to emphasize that there will be some quarterly fluctuations on the margins, mainly because there are cycles where we are -- because these are projects on an ongoing basis, which has a timelines of maybe 1 year, 2 year. And, therefore, there will be sometimes the timelines to the issue the invoices may not have fructified. And, therefore, we always believe that the margin measurement or the performance measurement should be done on a yearly basis, which is on a financial year basis. So the quarter fluctuations may be there, we -- if you would like to kind of submit that, let's look at the yearly review rather than the quarterly review. And if you see quarter-on-quarter -- sorry, year-on-year performance on the margins also, there have been a substantial improvement over the last 3 years on a cumulative basis. If you see -- you go on to Slide 13, you would have seen that the margins have improved from 11% to 14% to 17% over the last 3 years. And even now, if you look at the quarter 1, it still improved at around 17.9%. But as I said, I don't want to give this quarter as an indication for the margin. Let's look at the financial year. Once it completes, we will get a better picture of a sustainable, improved margins going forward.

Sir, that is clear. But what we are actually kind of getting to is specifically for the Geospatial & Engineering Services. So if I look at the margin for quarter 1, that's close to 17% versus -- I understand that we have to look at this on a yearly basis, but overall, I think last year, the margin profile for the Geospatial & Engineering Services was close to 25%. So considering if we expect a lot of the growth to come from Geospatial & Engineering, then in that case, is this growth margin dilutive that we are anticipating?

I -- as I said, again, I'm perhaps putting myself into -- going into minute detail. But I would just give one example, which I don't think I want to defend as an example. But in that, let's say, in this quarter, there is a project which is a TPI, which I'm doing at Lucknow. That TPI project for the entire quarter, which is April, May, June, could not progress well because the funds were not allotted at the Uttar Pradesh SWSM and the projects were not implemented by the contractor and because the funds were not allotted in view of the CoC. Now the funds have been allotted and the project has already started. And we have also got a substantial enhancement or, I would say, the extension for the project. So the first quarter, which we lost on the TPI, the total turnover, which would have lost would be in the range of around INR 12 crores to INR 13 crores, while the cost continued to be incurred. That would be kind of recouped over the next 3 to 4 quarters. So I just -- I'm just giving you an example. I think you are well-versed to understand the impact of it. There will be certain projects which performed well in 1 quarter or which lag behind in another quarter because of some of the other external reasons. But on an overall basis, in a year, these would be evened out.

Understood, sir. So then that's very clear. And just -- I mean, on the same question, is 17% -- it's just a continuation of the same question. Sir, would 17% be the sustainable margin for the GIS business on a yearly basis or 25% be a sustainable margin on a yearly basis?

I think I have already made -- first of all, this -- I don't want to be guiding -- giving you guidance for the margins, but we are aiming at sustainable margins on a growth, and we should see that over the year-end when we see that -- and the indication of the last 3 years should give you an indication that we are growing. We are not stable at last year, 14%, or this year, 17%. And our aim is that even the book, which we talked, has margins -- EBITDA margins on the range of around 20% to 25% to 30%. So I think let's look at the year-end, and we will see the final margins, how they have fared well.

The next follow-up question is from the line of Gunit Singh from Counter Cyclical PMS.

So I had a similar question as the previous participant on margins, but I believe -- I mean, you answered it very well, so that has been clarified. So I mean, in my understanding, GIS, better margins would flow in probably in the coming quarters to, I mean, maintain the annual margin trajectory that you have been guiding. So I want to understand the numbers of our joint ventures basically, which is consolidated, the other income. So what is the revenue from that and the margins?

So there is a -- the profit which you are talking about, the profit -- share of profit of joint venture?

Yes, the other income that we get. So what are...

Yes. So we have a joint venture company called Allygram, where Allygrow, which is our wholly-owned subsidiary, has a 70% profit share, I would say, the shareholding share with Grammer of Germany, 30%. It's a 70-30 venture. Because it's a 70-30 venture, the -- we are not able to consolidate the topline. We have to only factor into the share of profit as per the accounting standards applicable. This -- the Allygram is also into the same business as Allygrow and which is specifically into mobility business, where we are giving them that engineering services on the automotive part. And Allygram is a world -- I would say, a well-known name, Grammer. Grammer is well-known name on these Engineering Services, and they have a huge exposure on various automobile companies, including a major stake into General Motors and all. So our business is what we do for the business in the Engineering Services in Allygrow, we have Allygram, which is supported through Grammer. This year, in fact, we have already given a kind of stock exchange clarity where Grammer has renewed further for a period of 3 years where they have committed to give us a business of almost INR 100 crores, which is almost, I would say, EUR 10 million -- EUR 11 million, and which is, therefore, a growing business as compared to what we had in the past. So it is in the similar line of business of mobility and falls into the Engineering Services.

All right, sir. Can you share the top line and bottom line of Allygram?

The margins are in the range of around 26%. Our share -- what you are seeing is this quarter share of 70%. So if I have to gross it up, it will be in the range of around the turnover -- sorry, the margins will be in the range of around INR 4.2 crores and on a total topline of around INR 12 crores to INR 13 crores of this quarter. And yearly, this business will contribute around INR 45 crores as per the advice which Grammer has already provided. So a topline of around INR 45 crores in this year with a margin of around 26%, which is the past year's margin, which we have achieved in this business.

The next follow-up question is from the line of Richa from Equitymaster.

My question is, when it comes to these tender-based business, is there any criteria that like amount-wise that we have qualified and based on how we grow further we would be allowed to enter into higher brackets? Do we have any such limits while bidding?

Yes. So every bid has a prequalifying criteria. And if we qualify -- see qualifying criteria could be whether we had exposure to that kind of business, whether we had turnover for that kind of business, et cetera. So if we qualify for that, we can bid for that.

So it's based on experience with a certain kind of project, and it is not really limited by value of the project or order as such, right?

Every prequalification criteria is mentioned separately, but not many pre-bid qualification criteria are linked to the value. But I would give you one example where there was a tender, which was floated by the State of Uttar Pradesh under the Ministry of Jal Jeevan Mission under the Ministry of Water, where they had given a qualifying criteria that you should have a turnover of INR 250 crores on consulting, which nobody qualified. And unfortunately, the tender was scrapped. So there are certain times, the qualifications have been mentioned. And if we don't qualify, we can't bid for that. But they are very rare.

Okay. And, sir, second question is that you are mentioning O&M is a part of the order book. Is there a bifurcation within the tender business? If the duration is different, margins are different, what kind of percentage breakup would be there between O&M versus the order?

So you are right, not all projects have O&M. It's -- if I talk about INR 750 crore order book, there are only 4 to 5 projects which have O&M. O&M are, again, not a fixed for every contract. There is a project where there is 2-year O&M. There are 2 projects where they are 5-year O&M. And the O&M period starts after the project CapEx period is over. So out of INR 750 crores, the O&M part will be hardly around INR 55 crores to INR 60 crores.

Okay. And, sir, my last question is that I think you were referring to a negative working capital cycle that is also a result of the high payable days that you enjoy because being in the government business, the receivable days are on the higher side. But even the payable days have varied from 400-odd to 1,000-odd. So what is the reasonable number that one can go with?

I didn't get your question, sorry.

Sir, my question is that being in the government business, our receivable days tend to be a little on the higher side, but that is well balanced by the payable days. But the days payable also range between 400 to 1,200 to 1,600. So what is a reasonable number to go with? Because historically, that variation has been huge.

So normally, when we enter into a contract of supply based on the government contracts, it's -- we normally try to have a back-to-back contract. In the sense, we have a condition that once we receive the money from the government, you will be paid. I mean, so, therefore, we are not out of the money in most of the cases. I hope it answers your question.

Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments.

Good evening, everyone. I'm grateful for participation from all of you and your very positive related questions to the business. I'm very happy to know that you have shown good interest into our business. And I'm once again thankful to not only to all of you, but also to Anujji, who has made this happen. I'm sure that we would try to be in touch with you if you have any further questions. You can route it through Mr. Anuj if you have any further follow-up questions, which we can then try to attempt any answers. We will also try to have a similar quarter earnings call at the end of every quarter. Thanks, everyone, and have a nice evening ahead. Thank you. Thank you, Anujji.

On behalf of Ceinsys Tech Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.