Hinduja Global Solutions Limited (HGS) Earnings Call Transcript & Summary

Good evening, ladies and gentlemen. A very warm welcome to the Hinduja Global Solutions Limited Q4 FY 2021 Earnings Conference Call. From the senior management, we have with us today Mr. Partha DeSarkar, Executive Director and Chief Executive Officer; Mr. Srinivas Palakodeti, Chief Financial Officer; and Mr. R. Ravi, Vice President. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ravi Ramalingam, Vice President, Hinduja Global Solutions Limited. Thank you, and over to you, sir.

Thank you, Rucha. Thank you. Ladies and gentlemen, I R. Ravi, Head of Investor Relations at HGS, wishing all a very good evening and a warm welcome to the Fourth Quarter FY '21 Results Conference Call. To discuss the fourth quarter results and full year FY '21 financials, I'm joined by Mr. Partha DeSarkar, Executive Director and Chief Executive Officer; and Mr. Srinivas Palakodeti, the Global CFO. Before we begin the conference call, I would like to mention that some of the statements made and during the course of today's conference call may be forward-looking in nature, including those related to the future financial and operating performances, benefits and synergies of the company's strategies, future opportunities and the growth of market of the company's service and solutions. Further, I would like to mention that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties. I would like to add a couple of more points. During the Q&A session, questions should be asked only related to the Q4 FY '21 financials and FY '21 financials. The management would not be commenting on any of the speculative news going around. There is an investor presentation made by Adfactors been already e-mailed to all the investors. I'm sure all of you had the chance to go through. Before I hand over the call to Partha DeSarkar, I would like to mention that if there is a call drop during the course of the conference call, please bear with the management. Because of the COVID-19 pandemic, all of us are still taking calls in mobile from various locations and hence call drops are likely to be a recurring problem. Now I would like to invite Mr. Partha DeSarkar to provide his perspective on the performance of the fourth quarter and as on the full year FY '21. Thank you, and over to Mr. Partha.

Thank you, Ravi, and a very good afternoon to all of you. This time, we have made a change in format of our earnings call. We have actually got a deck that has been uploaded on our website and has been mailed to many of you by Adfactors PR, whom we've appointed to be in charge of our Investor Relations deck. So the earnings call will refer to the presentation deck as we go through it. So the first slide on the deck essentially talks about, at a very high level, what this company is all about. About $464 million in revenue with 56 delivery centers in 7 countries, employing approximately 40,000 people and having about 254 BPM clients. We operate in 3 spaces, by and large, healthcare being our largest space, followed by customer experience transformation and digital. We handle voice calls, 4.5 billion voice minutes, chat [325,000] chat, 150 million healthcare experiences and globally, we support about 34 languages. What are our key strengths? This company is today a strong net cash company with very strong free cash flow. 60% of our revenues come from tenured clients who have been with us for more than 10 years. We have a good geographical footprint. We call it the right-shore footprint. We have good presence onshore in U.S., Canada and U.K., Nearshore in Jamaica and offshore locations like India and Philippines. Today, I'm very proud to say that our client satisfaction score is at an all-time high. It's the highest score that we have received since we started the third-party CSAT service. And also our employee satisfaction surveys also this year have come out to be the highest in all the years that we have been doing employee satisfaction. Our 5-year revenue CAGR is about 10.9%, our 5-year PAT CAGR is 27.2%. Our EPS for the last year is INR 161 and we paid out a dividend of INR 40 per share in FY 2021. I would also like to say that we are a company with 0 promoter pledge. A view of the industry that we operate in, the global BPO spending, as you have in this slide out here has a CAGR of about 5.1%. This is the Gartner prediction, and you see that this is a steadily increasing line. For the year 2022, it's predicted to be about $206 billion, and that obviously is a massive market. And it's fairly fragmented that allows us players like us to play in equal footing with some of the big guys. If you look at what's new since the last 5 years, you will see the graph on the right telling you that though the whole pie has been growing, traditional BPO as a percentage of the total revenues is now a lower percentage as compared to others. So if you look at it, business process as a service, and that service includes many custom-made platform as well, has also been growing pretty handsomely in the last 5 years. What are the highlights of last year? I think we had a fantastic year where many things came together. But the key thing that helped us survive the pandemic has been the speed at which we deployed the Work@Home solution. So we've been able to report a very strong top line and profitability growth. The fact that we did not have travel, tourism and hospitality -- it is a very miniscule percent of our revenue -- that actually helped us a lot because these 3 sectors have been seriously impacted by the pandemic. I talked about the fact that this year has also seen our highest ever ESAT goals and CSAT goals. So in a way, it can also be said that these 3 are actually connecting 3 dots together, happy employees, happy clients and happy with shareholders as well because we have seen the numbers for this quarter. They have been really, really strong. We've had very big wins in healthcare and the public sector, specifically the U.K. public sector. The U.K. public sector has played a stellar role in the growth of quarter 4. These are 2 specific projects that we did pertaining to Brexit support for the U.K. government and for vaccination support for the U.K. government. The Work@Home technology that we talked about was the key success factor of our ability to produce strong results. When pandemic hit us in quarter 1, we had no idea that the full year would be so strong. And the one factor, the single largest factor that helped us, was that we had about 1,000 people operating in Canada from Work@Home anyway. And all we had to do was to rapidly deploy that technology and acknowledge globally. And I have to say that we are one of the first 2 companies who were off the block with a really fast deployment of Work@Home. The technology that was required to deliver, the fact that we have to ship dongles and UPSs and headphones to every associates office, all of that was done in record time. That made sure that after quarter 1, we recovered the revenues in quarter 2, quarter 3 and quarter 4, and the results are there for all to see. A comparison with previous quarter, previous year quarter on a like-to-like basis. We've grown by 21.5% in rupee terms and 31.7% in EBITDA terms. And that, you have to bear in mind that we sold off the India domestic business in Jan 2020. And that is why the numbers look so spectacular, because February and March, we did not have revenues from India domestic. Next slide, Slide 8, talks about as-reported. Good performance again, both profit after tax growing by about 190.6%. Revenues grew about 18.6%. EBITDA grew about 24.5%. Profit before tax grew about 72% and profit after tax grew about 190.6%. Very pleased to say it has obviously been the strongest quarter in our 21-year history. If you compare with 2 years because I think that's more relevant, it takes out the effect of pandemic. And you will still see that in the year of pandemic in the year that we actually sold off the India domestic business, we've still grown our revenues by 14.6%, and our profitability by 15%. Slide 10 gives further detail. As reported, what you get to see despite the sale of India domestic, we are still able to see about 6.8% of revenue growth, we're able to see 7.9% of EBITDA growth, 27.1% of PBT growth and 63.4% on profit after tax growth. Clearly, we are very happy to produce these kind of numbers, specifically on the profit after tax numbers. How has this mix evolved? You will see that a channel mix today has actually dropped significantly from what used to be a traditional voice-based business. Voice-based business sometime back was almost more than 75% of our revenue. Today with the addition of digital and transaction processing, the voice-based revenues have dropped to about 68%. We have signed up our 37 new logos for digital services in FY 2021. The area that we are focusing on is what we call AAA, which is analytics, automation and artificial intelligence. This year also has been a spectacular growth year for U.K. This is because we have had massive wins with the U.K. public sector and the business has virtually grown by 60.7%. I talked about the fact that we've gone large contracts from the government in cooperation with Fujitsu on the Brexit support. We've also had a contract to support the NHS in the U.K. vaccination rollout in quarter 4. Our headcount increased to 2,357 from a number which was close to over 1,000. And all of that has been done in just 1 year. We've actually been able to deploy technology, which is cloud-based, that has allowed us to flex our capacity fantastically. And we've also been able to hire from all over the U.K. as opposed to being tied down to the 3 cities like London, Chiswick and Preston where we had our physical locations. We've been able to do this from all over the U.K., and that's one of the secrets behind the success of U.K. this year. I mentioned about Work@Home and why that is a game changer. It took us 2 months to completely move Work@Home. And this is a global deployment today, about 85% plus of our workforce is working from work from home. Are very few who have information security needs are working on -- or are working on some critical processes continue to come to office. But this is the single contributing factor for our ability to recover our revenues in quarter 3 -- quarter 2 to quarter 4. Everything not only production processes, even support processes like interviewing, recruiting, hiring, onboarding, training, everything has worked from -- has moved to work from home. I, myself as the CEO of the company, has been working from home for the last 1 year. I've gone to office in only 1 year. My CFO, Mr. Palakodeti has also been similarly working from home. So this has been a massive success story. And as I mentioned, the fact that we've deployed technology in the form of cloud has also helped us flex our capacity. And the good thing about cloud is you are not stuck with infrastructure. You are able to ramp up and ramp down depending upon the seasonality of demand and supply that gives you a lot of flexibility. It is also a very, very CapEx-light model. And that, we believe, is a working model for the future. We believe because we were able to deploy work from home last year, our annual savings on account of savings on utilities, maintenance, travel, all of that is to the tune of $5.6 million on a net basis for this rapid -- for this hybrid delivery model. I want to talk about our COVID response. The fact that we moved people back home, they are working in the safety of their homes, and that has been our primary concern, employee safety. Every employee is -- has been taken care of. We've made sure that there is enough availability of technical support, wellness and fitness are all issues, engagements are all turned virtual. We've done everything that is possible to make sure that our remote employees are productive and happy. Even in the second wave, when India particularly went through a big hit, we focused on employee health, safety and well-being. We've given 14 additional leaves for affected employees in subgeographies. We've added counseling and support groups. Extended plans for family members increased light cover in case of employee demise, focused on employee mental health. The stress has been the biggest productivity killer this year. We've tried to make sure that our employees are stress free. Today, as we speak, we are also organizing a vaccination camp for employees in Bangalore. 2 weeks back, we did it in Mumbai, and this week, we are doing it in Bangalore. All of this to make sure that our employees are safe so that they can be productive. So what is the new normal? We will be continuing to work -- we call it the work from anywhere model. We will continue to leverage cloud technology, which, as I mentioned, is a CapEx-light model. We will continue to invest in digital, which is the AAA strategy that I talked about, artificial intelligence, automation and analytics. And we are looking at how can we drive verticalization deeper so that we enjoy from the domain experience. Key takeaways, as I said, -- the 3 connected dots: happy employees means happy customers, and hopefully, as shareholders, you are happy as well because of the numbers that we have been able to produce. Never before have these 3 metrics being aligned so perfectly if this goes to demonstrate how at the core of everything that we do is a very happy and productive employee who is giving his best to keep his customers and ultimately see shareholders happy. We have also taken care of the community. Our CSR program, despite the constraints of the pandemic, we have had 51,000 hours -- plus hours volunteering, which is benefiting about 2,000 -- 220,000 beneficiaries. So we've really impacted all force model with that. With that, I'm going to hand it over to Pala for his financial update. Pala, over to you.

Thank you, Partha. I hope all of you are able to hear me.

Very clear.

Thank you. So we move to Q4 FY '21 performance. As we were -- Partha mentioned, we have actual growth of about 21.6% in terms of revenue. But from a reported basis, the growth is about 18.6%. We've had an FX impact of about 1.5% in terms of -- on the revenue. There's actually been a phenomenal growth in terms of volumes of about 19.5%. And then if you back off whatever was the drop due to the impact of sale of business it's about 2.5%. We are in a very strong position of 18.6% revenue growth on a year-on-year basis. Margins, you would see, have improved from 14.3% to 15%. And at the PAT level, the profit has shot up by about 190%. So we almost delivered in Q4 of FY '21 profits which are almost twice the profits delivered in Q4 of FY '20. On a full year basis, the revenue growth may look muted at 6.8%. As we explained earlier, we've had -- we have taken out the revenues from the India domestic business. And if you also -- there were some pass-through revenue, which we -- if you -- we have explained are no longer there. So out of the total growth, FX impact is 4.1%, volume growth is about 9.4%. And then there is 2.1% impact of businesses which we have exited, giving to revenue growth of 6.8%. Margins have also improved and there is a growth of about 8% at EBITDA level. A couple of callouts on the exceptional items, INR 211 million in FY '20 pertains to write-off of some goodwill on intangibles, whereas the exceptional items in FY '21, that is related to additional purchase consideration paid for acquiring the balance stake in HGS Digital LLC or Elements. So in January of FY '21, we completed purchase for the balance stake. So we now own 100% of HGS Digital LLC. We have declared 3 interim dividends of INR 6 each during the year. The final dividend declared approved by the Board, and this is, of course, subject to shareholder approval is INR 22 per share, which includes INR 15 of special dividend. That brings total dividend of INR 40 per share. And a pitch in the terms of payout comes to about 25% of the consolidated profits. And in absolute amounts, the dividends have increased from INR 20 per share in -- for FY '20 to INR 40 per share for FY '21. From a revenue split perspective, health care continues to perform very well and accounts for about 55.8% of total revenues. U.S.A. continues to be the largest market in terms of origination at about 73%. And as Partha mentioned earlier, with the strong growth in U.K. that has now become the third largest market and accounts for about 9% of total revenues. In terms of PAT, this is at INR 336 crores of PAT. This is highest ever in terms of the PAT in the history of the company. EBITDA is also at an all-time high at about INR 773 crores. And as you -- people who have been tracking, there's also been a significant increase in our market cap. And as of today, it's roughly around INR 36,000 million or INR 3,600 crores. We continue to be reduce our debt. During FY '21, we reduced debt by about INR 200 and -- INR 2,106 million and we have ended the year on a net cash basis of INR 1,365 million. Our CapEx for the year was INR 1,581 million, this is higher than what we had in FY '20 for 2 reasons. We had to incur extra CapEx to part of the dongle, hotspots and other equipments we acquired to enable our employees to work from home. The other thing is when we work from home, obviously, each employee needs to have a separate computer whereas if they work from office, it's based on shifts that can be shared. So there is some impact of that as well. Our DSO days while slightly higher compared to FY '20 needs to be borne in mind that revenues in actual terms grew by about 21% in Q4. At an overall level, our collections have been good. And we've had no impact of any financial health of our clients deteriorating because of COVID. Cash flows continue to remain strong and about 49% of our free cash -- of EBITDA got converted into free cash. And we've also seen an increase in return on capital employed from our 16.2% last year to 18%. Out of our total debt, about 64% of our debt is in the form of long-term loans. We have most of the loans linked to LIBOR, but we also have loans which are in the form of with interest rate swaps and fixed rate. As we speak on 31st March, there was no debt in India, except for an ECB of equivalent of little over INR 110 crores. While we do have surplus because of regulatory requirements, we are not in a position to repay the loan without RBI approval. Coming to FX, we continue to take forward covers on a rolling 12-month basis. So we have FX covers with an average of about INR 76.9 for the dollar for FY '22, which compares very favorably with the current spot rates of little over INR 74. We have rates touching going all the way up to INR 84, when you look at our forward covers for FY '23 and '24. And of course, this is not fully hedged. We typically hedge up to 75% of our expected revenues. On the Philippines side as well, we have rates in the range of PHP 48.6 to PHP 48.9, which is broadly in line with the current spot rate of PHP 48.67. Partha talked about the CSAT scores being at all-time high, ESAT scores at all-time high. If you recall, by end of December '20, our PAT for the current financial year for the first 3 quarters had already exceeded the full year profits of FY '20 and clearly, we have -- as we declared better results, the markets have recognized our performance, and our share price has seen a significant increase and it has gone up by -- it has gone up by about close to 285% over the last 12 months or so, definitely higher than the increase in CNX IT and NIFTY 50. That is all for my section. I would now like to hand it over to the moderator, and we'll be happy to take questions and answers. Thank you.

[Operator Instructions] The first question is from the line of Siddharth Oberoi from Prudent Equity.

Yes. Yes, I wanted to know, you have reported that healthcare contributes 55% of the revenue. What is the profitability of this division?

This is Pala here. We don't give individual breakup of any particular line of business. So we only report overall profitability.

But is it a low-margin business or a high one, if you can give that amongst your portfolio of businesses?

No, I don't want to give specifics. What we are willing to share is the overall margins rather than specific margins for a particular vertical.

All right. So of course, the performance has been very good, and the pace of revenue growth is almost about 8% Q-on-Q. So is this -- has this been possible because of the last 2, 3 quarters of the orders bagging or is there something else at work here?

So what do you mean by something else at work? I didn't understand the question.

I mean, is it that the existing customers are giving you more orders? Or is it the new orders, the recent orders that you have bagged are contributing more to it?

It's the combination of both, our existing clients have also grown very, very well. As I also mentioned that we've had 2 large wins in the U.K. public sector, that has contributed very handsomely in quarter 4. So the answer to your question is the combination of both factors.

All right. Okay. Also, any update on the intercorporate deposits between company and the promoter?

Pala, you want to take that?

Yes, I'm coming to that. So we do have ICDs. They were all repaid during the year. We were sitting in a position of cash surplus. And as I mentioned earlier, we do not have any working capital borrowings on the India balance sheet. The only loan which we had in -- on the India balance sheet was an ECB, which we cannot repay without RBI approval. So these funds have been redeployed. And the money is available on -- I mean, repayable before end March 2022, but payable back on demand if there is a need for the needs that comes -- to meet the needs of the company.

Okay. So right now, there are no deposits lend to the promoters. Is that correct?

No, no, no. As of 31st March, there is -- there are -- there is debt, short-term debt of INR 359.5 crores. These are all repayable before March 2022 or on demand. So we can call this money back as and when required.

All right. Also, I wanted to know about this special dividend. What is the significance of this? Is it not recurring this 25% of the profits that you are paying?

So in the -- as I said, last year, we paid a total of INR 20. And this year, we paid INR 40. We are in a dynamic situation. So looking at -- so we just called it special dividend. But even if you see the other part, there is an increase compared to the same dividend which we have declared in the previous 3 quarters.

Okay. But since you called it special, it's like a onetime one, something? Or is it -- can this be continued in the future?

Yes. So we will -- the Board will take a decision as we go through the year. So right now, I don't want to say anything more beyond the fact that our dividend for the full year are at INR 40, which is double of what we had in FY '20.

Okay. All right, sir. Also regarding this tax rate, why is the tax rate so low? In the previous con calls, you had stated that it will be about 30%, 32%. So is there a shifting to a different tax [ plan ] or something?

So I think we did mention and as part of the publication page, there was an option to take either full rate and with tax benefits or take 25% without tax benefits. So we did our evaluation. We were better off. So that's what we have opted for.

So but then from FY '22, you revert back to the original or?

No, no, it's a onetime election. So you can't change that. So for India, there will be 25% of our profits without any exemption even if we have receivables.

And what -- what are the tax rates there?

That's somewhere around 12%.

Sorry to interrupt. Mr. Oberoi, may I request you to please rejoin the queue. We have participants waiting for their turn. The next question is from the line of Subhankar from SKS SPL.

Congratulations for a great set of numbers. So 2 questions basically. One was on the dividend part. So FY '21, effectively it is 40% and excluding that INR 15 is about 25% -- sorry, 15%. And last year, actually, we had 20% payout. So are you going to -- I mean, maintain a 20% that of a payout numbers, because last year it was 20%. This year, excluding the onetime, it is 15%. Are you going to maintain somewhat 15%, 20% kind of a rate?

So Subhankar, thanks.

Or we're going to gradually improve that because, I mean, overall, I think on a quarter-on-quarter basis, there has been a higher payout.

Yes. So Subhankar, there are 2 ways to look at it. So if you look at the first 3 interim dividends, those are at INR 6. Now here, it is a total of INR 22. So there is -- I mean, if you split it up, we said INR 15 is special. So INR 7 is what would have been -- against, that's what you need to compare. I think the more relevant portion is that for us our profits have gone up, and we maintained the payout ratio at 25%, and we paid INR 40 per share compared to INR 20 per share last year.

Right. Sir, understood then. So second is related to the margin has been seen in terms of improvement in the internal margin. Now what would be the -- I mean I'm not asking for a guidance, but what are the factors that you watch out for in terms of a margin improvement of your own or an erosion because FY '21, we had a benefit number work from home that gets well stated. So other clients, while partnering with them are you getting the same pay or pretty okay with this kind of model of they are willing to come back at normalized?

I don't know, Subhankar, I was not able to hear you. Your line was very disturbed.

Okay. Is it better now? Can you hear me now?

Yes, yes.

Okay. So I was asking about the margin -- EBITDA margin. We had seen a significant improvement in our margin last year. So what are the factors that we'll have to watch out for FY '22 in terms of the margin improvement from partner or a erosion, I mean, are there clients willing to continue with this work-from-home model? Or are they kind of asking employees to come back to office once everything normalizes?

Yes. I mentioned the fact that U.K. performed very well. If you go back to our history of U.K. performance, it used to be slightly loss-making unit -- operating unit. This year, it has made a fantastic turnaround. It has made a very handsome profit. And even in the current year, we are seeing encouraging signs from U.K. So from a loss-making unit to significantly contributing unit that's been a swing that has contributed a large amount of quarter for profitability, and we expect that to be sustained. Your second question also is about what happens to our clients. It is a little premature. We haven't yet had any clients coming and saying that we have to come back to work. The dialogue has just about started. But we are not in a position to give you any concrete yes or no answer as to whether our clients are asking us to come back to office. That hasn't -- we haven't yet taken a position on that nor have our clients taken a position on that.

Got it. And in terms of this growth momentum, I mean, you had a great quarter 4 with a volume growth of 19.5%. Now FY '22, I mean, do you see a similar growth trend will continue? Or as you said, like quarter 4 you had a benefit of the vaccination program in U.K., is it a kind of one-off or you think that these are the volume growth numbers that can sustain, 19.5% is like pretty high teens, but do you think it will be somewhere between 10%, 15% or 10% to 20% range?

Subhankar, look, it is very difficult to say which way vaccination will go. You yourself must be reading in the press, what's happening to vaccination all over the world. There are so many theories floating around. So whether the vaccination support will be an ongoing activity, whether the vaccination will be a seasonally difficult for us to comment on that right now. We do have the vaccination support program that is going to continue for quite a few months going forward. And then as and when vaccination strategies came, it will be time for a second shot, third shot, fourth shot, we don't know. They're talking about people below the age of 18 now getting vaccinated, right? So if you look at the vaccination that has happened worldwide, it has mostly been targeted towards people 18-plus of age right? Now if you start vaccinating children, that creates a new way -- a new wave of vaccination support. So I will not be able to tell you for sure, no, this is seasonal. No, this is going to stay. We've signed up with the U.K. government to support that government. Whatever the government's policy is towards, how they want to vaccinate the population, we are going to be their partners.

Thank you, Subhankar.

[Operator Instructions] The next question is from the line of [ Anand Agarwal from Balaji Invest ].

First of all, I hope that the team of HGS are doing well during this pandemic. My question is related with the -- this -- the year has gone -- I mean, a fantastic, as you said that work from home, that was the major reason. But I just want to understand a broader picture, say, 2 years down the line, how you are seeing, what kind of growth the company is targeting in both the verticals or in all the verticals?

So sir, the best answer for this will be to look at our history and see what has been our track record of growth. So I think we will be able to sustain the track record of growth that we have delivered year-on-year, and that's what you should count on.

So this year, so can we expect that this year was exceptional as the kind of growth this year we have seen is better than earlier?

No. As I said you have to look at it over the long term.

Yes. Especially profitability. Especially profitability, not in terms of revenue, especially -- I mean, in margins and profitability.

Look, the attempt will be to improve our profitability going forward. As I said, the Work@Home itself has contributed about $6 million in operating profitability, right? If you're able to sustain this model, it is a CapEx-light model as well. So if you're able to sustain that and our clients agree to keep continuing to do Work@Home on an ongoing basis, I think this margin can be sustained. Also, if the U.K. performance continues in the way that it has performed last year, I also see the profitability being in a good, stable situation.

Okay. And one more question. I mean this -- as there was a rumor in the market for the hiving of this health care vertical. So is there any view on that?

Look, at the very outset of the call, I think Ravi, who is in charge of Investor Relations clarified that we will not be commenting on rumors or speculations.

The next question is from the line of Maan Vardhan Baid from Laurel Investment Advisors.

Congratulations on a great set of numbers. So maybe if you could guide us through what is happening in U.K.? I mean, obviously, one is aware of the changes that you've made over the last couple of years. But finally, one is seeing that in the numbers. So -- and it seems that business is probably going to grow at a different pace than the rest. So maybe if you could take us through how you see that business ahead?

So it's been a turnaround -- if you have been tracking our performance, our user performance has been rather dismal till about 2019. This year, as I said, because we are a part of the U.K. government procurement framework, we have been able to back quite a few orders pertaining to Brexit support and pertaining to NHS vaccination. So that's what's added to our revenues. And our pipeline in U.K. public sector pipeline is actually pretty strong. So we hope to be able to continue the growth here.

So since obviously, this business has transformed and one can't historically look at the pace at this business is done. So when one looks forward, what is the kind of pace that one can expect this business to grow at?

You're talking about the U.K. business or you're talking about the completion of the total business?

Yes, the U.K. business.

No. The U.K. business has been totally transformed. You're right. It's grown at about 64% this year over previous year. So look, we do want to sustain the revenue pipeline that we have built. So I think going forward also, you will find a strong performance from U.K.

Fair enough. Also on the U.S. side, obviously, there's been a change of guard on the government over there. So are there some policy changes or something that is -- that we see happening, which might work in our favor or not work in our favor?

Nothing specific that I can comment on. Pala, do you have anything specific to comment on?

No. The only thing I would say is that every 4 years or 8 years, there's a change in the U.K. -- sorry, U.S. presidency. But in this whole period, we have -- our health care portfolio has grown in terms of revenues.

Fair enough. So in terms of -- since on the health side, the earlier regime had a very specific kind of very so, is there some view on that? Are we going back to those days of ObamaCare or that coming back?

You're talking about the Affordable Care Act?

That's right.

Yes. Look, the Affordable Care Act may be back in some shape or form. We don't have any concrete comment on that today.

[Operator Instructions] The next question is from the line of [ Chirag ], an Individual Investor.

Hello. Hello?

Hello? Yes, please.

Yes. Am I audible?

Yes.

Very clearly. Go ahead, Chirag.

Sir, I have a few questions. Like we are into this IT business since quite long and other leading players of Indian IT industry have also started the same like when we started. So why there is a -- I mean delinquency in growing the pie and all? Because most of the -- whenever the IT boom and IT abbreviation happening, the Indian IT sector is able to capture a good tailwind of turnover and all. So this time in the cycle, do we see the strategy of getting orders and delivering the strategy and all in line with what the top players are doing in the industry? Some thing -- some changes did we initiated to get the benefit of maximum of this tailwind, which is scheduled post COVID world?

Chirag, one clarification. We are not in IT, we are in IT/BPM and majority BPM as opposed to majorly IT. So our competitors are not really the IT firms that you're talking about. If you compare us with companies like FirstSource, WNS, EXL, Genpact, you will find that we have done reasonably well in comparison. But comparing us with IT firms is not necessarily the right comparison. We are not in that business.

The next question is from the line of [ Satish ], an Individual Investor.

Can you hear me?

Yes.

Yes, sir.

Yes.

So congratulations on a very good performance. After a long time, I could see there was some pickup on your performance. And even the world also sounds to be very confident in particular to be at home to the people who are investing in the company. Congratulations on that. Coming to the question, if you just -- fellows asked, same question I want to repeat. You are not in IT. But in what thing, you can be compared with IT companies like eClerx. Can we compare your company with eClerx? And going forward, are you going to add any other verticals of cloud-based business models? That's all.

Yes, eClerx is similar in many ways. As I said, there are 4, 5 companies who operate in the zone that we operate. eClerx is one, Firstsource is another, WNS, EXL, Genpact. These are the 5, 6 companies, even Allsec, I would say, is a BPO company. Apart from that, the people that we compete with are captives of the firms in India. So yes your direct question, eClerx is a competitor, but we don't necessarily compete with them, but they're -- I would rather call them a peer as opposed to a competitor because we don't come across eClerx in competing RFPs. So that is answer to question number one. Question number two, yes, we do want to grow our cloud practice. It's a small practice today, but we do want to grow it in the future.

Okay. And the revenue we are going to substrate. That is for sure, because the confidence of our company shows over a period of time and this time, last time I participated in the con call, and we were sounding a little bit hesitant, in telling something to the people. At this time, I could see that there was a confidence that you had. And the same confidence can I expect in the years to come?

Sir I answered that question. It's not about 1 year or 1 quarter. You look at our performance over the last 10 years, look at our revenue CAGR and then you will be able to ascertain what kind of growth they can expect from us. About confidence, lack of confidence that's a subjective comment, sir. I don't know how many CEOs were confident when they were facing a pandemic about giving future projections for the company.

Okay. One final question. One final question ending here. Generally, you are an IT company who are much enabled in the, what you call, technology platform, why your results are so delayed? When a company like Infosys or TCS can produce for research, in the first week of every quarter or the second week or third quarter, while you are delaying it so much because that creates a little bit of what you call, a little misunderstanding in the market. So just I wanted to hear.

Yes. So let me take that.

Yes. I mean COVID -- yes, okay, Pala you take that. Yes.

Yes. So let me take that. So clearly, results have come out later. And we had this unfortunate situation where there are some people from both from our auditors side and are our own employees who are required to finalize the accounts. They unfortunately had challenged -- I mean they had health issues arising out of COVID. So we took longer, but well within the time limits permitted by SEBI. But as we go through, we expect things to come on track in FY '22. And clearly, we would like to close our results and come out of it sooner. Because you should understand that the confidence level. That is spent in the companies or in the book. That's what I want to tell to that organization. Thank you. Thanks a lot.

[Operator Instructions] The next question is from the line of Keshav from RakSan Investors.

Congrats for FY '21, especially for Q4. Sir, I wanted to ask that what is your -- what is the tenure of your contracts you have with your clients? What -- if I can have even an average time line.

Pala, do you want to take that?

Yes. So our contracts are typically 3 years. But we have the same set of plans [ that have been in the pack ] for about 20 years or even more. So one is the contractual term where you may sign an SOW for, say, 3 years and then get renewed. But we have clients who've been with us for many, many years. And as we mentioned earlier, about 60% of our revenues come from clients who have been with us for more than 10 years. So this is a business with long-tenured clients.

Okay, sir. And do you also have shorter tenure clients, maybe a smaller percentage, lesser than a week.

Some of them could sign a short-term projects and based on performance, there a lot of them evolve into long-term contracts.

Okay. So sir, this past 1 year, amongst the client onboarding that has happened could you give a fair or even a rough idea as to how much percentage of them would be long term and maybe 3 or more than 3 and otherwise?

Yes. Most of them are long term. When I say long term, those are 2 or 3 years' tenure. As I said earlier, in the beginning, there were some contracts the concept of COVID where people -- the clients wanted to turn short term. But as we went through the year, even they have turned long term. We do some work on the digital experience, et cetera. Or which is more like project based, but again, on SOW and another SOW typically starts.

All right, sir. Sir, one more thing. So do you also have payments milestone based as in amongst these contracts, so there's a clients laser contract for 3 years. So is it an annuity-based business? Or would it also have milestone components?

See, most of -- almost all our revenues come from what is called transaction-based or FTE billing. So we get paid per call answered per transaction process. And as I said, these are clients who have been for us for a long time. So we have recurring revenues from each client.

Okay. All right. All right, sir.

It's not project-based, let me clarify that.

Ladies and gentlemen, as this was the last question for today. I now hand the conference over to Mr. R. Ravi for closing comments.

Thank you, Rucha. Again, Ravi here. Thank you to all the participants for joining us in the fourth results conference call. If there are any further questions or clarifications about the Q4 or on FY '21 financials, please e-mail me or to Pala, and we will be more than happy to get back to you. This is Ravi, signing off on behalf of the HGS management. Again, thank you.

Thank you, everyone. Thank you for participating.

Thank you.

Thank you. On behalf of Hinduja Global Solutions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.