Infollion Research Services Limited ($INFOLLION)

We can start, Purvangi.

Good evening, everyone. My name is Purvangi Jain from Valorem Advisors. We represent the Investor Relations for Infollion Research Services Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the second half of the financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Certain statements are based on management's beliefs as well as assumptions made by and information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is probably to educate and bring awareness about the company's fundamental business and financials under review. Now let me introduce you to the management participating in today's earnings call. We have with us Mr. Gaurav Munjal, Managing Director; Mr. Varun Khandelwal, VP, Strategic Initiatives; Mr. Abhay Sangal, Business Head, NAMR; Mr. Abhishek Jha, CFO; and Ms. Megha Rastogi, CS and Compliance Officer. I now request Mr. Gaurav Munjal to start with his opening remarks. Thank you, and over to you, sir.

Thank you. Thank you, Purvangi, for the introduction. A very warm welcome to all the investors. So quickly, before we get into the Q&A session, I'll just quickly give you a brief of what happened in this financial year. So this year, we had a pretty decent execution. We -- on the volume front, we were almost at the long-term growth trends at an annual level. Our core India business continued to demonstrate resilience, growth. And so in the second half of this financial year, we saw some moderation. So usually, our second half of the year is almost equal to the first half of the year. But this year, we saw a decrease in volumes towards second half, especially in the last quarter, and which kind of peaked in March. In March, on a per day level, the number of projects we received was very low, almost 25% lower than what was the usual run rate, which kind -- which almost led to a flattish annual number. But at an annualized level, it was almost 30% increase. So besides that, last year, we promised that there are at least 2 or 3 initiatives that we have taken, which were out of the experiment stage. So this year, we set up the teams for Huksa. It was almost a [ 50 ] member team now. We crossed the first crores. It is at least in the initial stages of a business, no longer an experiment. U.S. operations, the India to U.S. corridor increased at a steady growth from a 1/4 to almost 1/3 now. The U.S. to India operations also recorded its first quarter and a bit of surprise and a bit of positive side was that while we started MENA much later, MENA is Middle East and North Africa, much later in the -- essentially this year, we started traveling and started maintaining a presence over there as well. And it also -- it actually grew faster than our other businesses, at least other initial businesses, primarily because it is very accessible in the time zone and a presence of a lot of Indians, and we also recorded the first crores on there. So 3 new growth areas. We also started expanding in EU and [indiscernible], but that's probably a year away from any meaningful number. So on the client side, especially in Huksa, we added a lot more logos for our core India business. We have seen that our clients haven't grown as much as they used to. So this was a relatively flat year for most of our client sets. But in Huksa, we added a lot of logos. Our target is to add a lot of clients from a perspective that once you become a registered vendor, we can expect a regular flow of trainings from them, to which I think is going ahead well. We have been conducting a lot of trainings. We have got a reasonable number of repeat clients as well. And hopefully, it will become a regular business in the years to come with a very reduced CSE. So we are not using social media or online channels too much as of now. It's quite expensive to -- from a [ CAT ] perspective. But vendor registrations are primarily [ CAT ] investment, investment, which might release -- which might turn into a regular business flow down the line. So especially in Huksa, we did almost 100-plus training this year. We are trying to move into a managed training services model where we have built up certain internal capabilities, which we can offer to our clients. More on it during the presentation. So in U.S., we made steady progress, although it is not meaningfully big right now. But I think over a period of time, once we build the export base, they should start paying off. We have been maintaining a presence of at least a month per quarter in U.S. At our overall operational level, we added almost 70 employees. We are 270 at the end of the year. Most of these employees have been added in relatively newer functions. So we now have a reasonable sales team. We now have some senior guys moving in from core businesses to newer initiatives. Abhay, Varun and one of our senior leaders, [ Monika, ] who was heading Healthcare has also moved on to a larger role in MENA. So we would be trying to -- in fact, we have expanded the tech team as well. So almost -- at almost 2025 people, including a few senior guys have moved on from our core business roles to newer expansions. This would -- this has led to a bit of backroom in the existing business. And we would try to expand that team from operational level as well this year. So on the tech front, we have been building our prop platform. I think we're pretty happy where we are. We are one of the first networks to have completely open APIs. This year, we would probably open up our [ LCV ] server as well and it should be a matter of time where we also did a lot of bot-moderated calls. And overall, most of the investments which we made in the tech front are going at a healthy click. We've expanded that team as well. AI, so we have done a lot of -- in fact, we have been saying for a while that we're using the 3 pillars in AI. We won some human-in-the-loop logic. We want prop data. And as of now, we are not going very aggressive on investments on that front. We are just making sure that whatever we invest is recoverable at this stage, the kind of amounts that are needed to do anything in AI are substantially larger than what we can afford at this stage. From a -- after having ROI. I mean, of course, a lot of -- having said that, within the export network world, we should probably be at the leading edge on that front as well. So that's a quick overview on my side. On the financial numbers, we've already declared there on your screen, but Abhishek will browse you through it with some more details. Abhishek, who is also our CFO, Abhishek, over to you.

Yes. Thanks, Gaurav. Good morning, everyone. I am Abhishek Jha, CFO at Infollion. Coming to the financial performance for the financial year 2025 and '26, Infollion has crossed the INR 100 crore revenue mark this year. The EBITDA stood at INR 14.73 crores and PAT reported at INR 12.72 crores. We were able to generate a cash flow of over INR 10 crores from operations and over INR 8 crores for our free cash flow for this FY. Precise numbers are given in the financial statements filed with the NSE. These are also available on the company website. Thank you. Now we can move to the Q&A session.

Thank you. We'll now begin the Q&A session. [Operator Instructions] Yes, [ Mr. Sikka, ] please go ahead.

Yes. So what was the volume of calls we did in H2 versus this year versus H2 last year?

I think that would have been disclosed. Abhishek, can you help me with that?

Yes, Gaurav. So H2 in 2025 was almost 9,000 calls and H2 is in 2026 is 9,800 calls.

Okay. And what was the reason for this March month not being so good on the volume of calls? And are we seeing a trend reversal in April?

So I'm not so sure. But overall, the second quarter -- sorry, fourth -- the second half of -- second half, the second quarter, second half, basically, Q4 of this financial year. We saw a bit of weakness. We were absorbing this weakness for a while. In March, I'm not so sure what happened, to be honest. We don't really have the retail numbers, but we saw a significant decline. We spoke to quite a few clients of ours and they have seen a flattish growth in their own numbers as well. I'm not so sure if it is the [ war ] thing which is kind of we've seen a decline in numbers. We have seen some improvement in April, but it is still back at same per person per day level, we haven't seen a meaningful increase at this stage.

Got it. And regarding our employee expenses. So as of now, can we say, is it safe to assume that the current employee expenses have peaked out? Or are we planning to add more employees for this FY '27?

Of course, we will add more people in FY '27. How can they peaked out, so I'm not sure what do we mean we peaked out. But what I can say is that at least INR 1.5 crores, INR 2 crores of employee expenses have been besides the core business. Newer initiatives, whether it is expansion, whether it is tech, whether it is sales, whether it is Huksa, almost a couple of crores has been spent. Had we been doing in the same line of business and continue, we could have probably saved that, but we are definitely investing in future growth.

Got it. Got it. So what I meant was is the rate of growth of these employee expenses, will we see a slowdown over here or a similar kind of growth in the employees we'll be seeing going ahead in the employee expenses?

So employee expenses is not a monolith for us, right? So there are 3 or 4 parts. And I mean, for the natural course of business, which is a core business, let's say if we are about 180 to 200 people doing the core India business, they would probably not -- would not see growth at the same pace as revenue. But for others, if this quarter opportunity, we'll do that. In U.S., we still really haven't started recruiting. We are still just traveling. U.S. is a very expensive market. So we haven't recruited. In Europe, MENA, [ SCA, ] we might try a consultant/commission level to begin with. But for newer initiatives, sales, we would definitely add more people. Huksa, I hope we add more people. It's a good thing, which is still a new building, new business which is coming up. For our core India business, definitely, the growth is going to be much slower in terms of how many number of people we add as opposed to the revenue growth. For U.S. business, the growth has already come down. We went from 0 to almost 35, 40 in the last year. And still we have fairly -- we haven't added so many.

[ Mr. Rohit, ] please go ahead.

So Gaurav, am I audible?

Yes, yes, go ahead.

So two questions. So one was in terms of the note that you had shared, you talked about a specific client where we had to give out some discounts and to sort of tender our position and the volumes also sort of went down. So I mean, in the past, you've also mentioned that we are probably the most competitive in terms of our positioning at a level that we can operate and the kind of margin that we have. So just wanted to understand like if we are already at a very strong [indiscernible], why would we need to give out more discounts, et cetera? So that was my first question.

Okay. So sorry, you want to ask all the questions together or do you want to continue one by one?

Maybe one by one will be better because...

I think the volume growth one, I just said that we have seen a bit of decline in March, specifically in the last quarter. Probably, it is related to the overall economy and the lines not growing at the speed at which we expected. Plus, our baseline of U.S. growth was much, much lower in the previous year and this year, it was much higher. So growth wasn't that high in the second half. Next, I think your question was around discounts, right? So there is no specific client per se whom we give discounts to. To be honest, we are leading the charge. We are actually offering -- we don't offer upfront discounts for sure. So what we typically do is whenever someone is pitching to their clients, we join them at the early stage. And then we say that we would help you out with the scoping initial cost, which is known as corporate development calls for them. And then if the project converts over a period of time, we try to recover. For new geographies, the CD calls are offered at a higher number, but we do not have the capability to service at this stage. It is more like a relationship-building exercise that whenever you are pitching into a new client, we would be happy to be a part of that investment, right? Any service business, pitching to a new client in itself with the investment. Sometimes it may translate into an immediate revenue. Sometimes it takes months or years to really build a relationship with the client. If the client project doesn't convert, then it kind of goes to waste. Regarding the second point, which you mentioned on why do we need to offer discounts. We don't really need to offer discounts. We have been very aggressive in the sense that if you do so and so, if you continue, so we operate in a multi-vendor environment. So what happens is in that environment, if you want some kind of client stickiness, we say that if you complete a certain amount of calls with us towards the end, we would reward you or we would waive the charges of the last few. So that kind of concentrates the calls with you as opposed to your peers in a multi-vendor set up. So that's the only point. We believe that structurally, we have the capability to offer those discounts even at these margins. But that's a leverage which we have. In our business, it's usually not very price sensitive. So it's not like that it is a commoditized product where you give discounts and the volume increases and you remove discounts and the volume goes down. So it's usually a long-term building exercise for us at this stage.

Understood, sir. And just related to this, then I think I mean personal gross margin impact was pretty sharp this year. We've been operating at about 45%, 46% very consistently. So I think you called out that around INR 3 crores was an impact of these 2 things which you mentioned. So if I were to like just remove the new initiatives and you look at the domestic -- I mean, the domestic calls business, whether these calls are arising from U.S. or India, just the U.S., your core business, if you will. What is the gross margin level that you think that we should look at? I'm saying that let's remove the expansion, whatever you are doing in terms of -- and the 3 calls, et cetera. So if you were to sort of just give a broad number, we were at 45%, 46%. Do you get back to that number? Or because the growth has come down and because of other things now, maybe that 45%, 46% is not possible. Just highlighting again, not talking about the new initiatives at this point of time.

So if you remove the new initiative, a couple of crores out of the INR 3 crores, so we are at a similar net margin, right? So at less than one crore kind of a number. So even if you're spending, let's say, INR 2 crores, INR 2.5 crores on something which is not giving us immediate business, a reduction of about INR 3 crores in net -- in overall gross is not meaningful enough, it's barely left with. In absolute terms, it's just about INR 1.5 crores, a few trips to U.S. just basic stuff. If we end up hiring a couple of people in U.S., it will probably be 3% of our net margins. So we have to also keep that in perspective that in absolute terms, it is not very substantial, even if we hire 1 person and let's say, 120,000, 130,000 in sales, and if we had 2 people on East and West Coast, that will amount to almost INR 3.5 crores. So coming back to your question that, is it the entirely the gross margin? So if you remove the initiative part, even after reducing the gross margin, it would not have been 3.5%, 3.4%. It would have probably been [ 1.2%. ] Having said that, in our business, [ 1.2% ] is not substantial. You can easily increase the price if we go into the consolidation one.

Got it.

This is not very price sensitive. At a very broad level, it is price -- I mean, a lot of you would have done calls, people do pay [indiscernible] the price range, but at 1% or 2%, it doesn't really matter. The other things matter far more in the business.

No, no fair. I think I understand.

[ Mr. Rohit, ] please come back in the queue. We have a long line of questions. [Operator Instructions] Mr. [indiscernible] [ Agarwal, ] So first is more of a clerical. Just I wanted to point out in the presentation. I think if you mentioned in the presentation, total number of experts is at 1 lakh 36,461. And I think in the subsequent slides, you also shared the breakup between domestic and international. But if you total the domestic and international, it will not add up. So probably, you can just check internally.

Lately, [indiscernible] plan is not updated.

Yes. Okay. Coming to the question. So since we are focusing towards U.S. market, my question is like what kind of customers are we targeting? And what is the strategy there? Basically, are we targeting customers who are new to the expert network industry? Or are we essentially trying to gain market share from our competitors in the U.S.?

Competitors in the U.S. So we have mostly our own -- we have converted most of our contracts to global contracts. Most of our clients are global. So we are targeting to expand within that. And of course, we're targeting new customers as well, but most of them are well aware of the network industry.

Got it. So then how does the value proposition works for the [ exit? ] So what value proportion...

So we are focusing on 2 or 3 specific domains where we want to go deep before we start expanding into other domains. So what we are trying to do is we are going to offer 2 hooks. One is extreme custom recruitment, even at a cost. So custom recruitment is usually a high cost of fair. So we will do custom recruitments. And even if we have to take the cost on the chain, we'll do that in order to establish the relationship. Second, once we have the network done, we believe we are structurally in a very good position if we are able to concentrate our capabilities into 1 or 2 domains.

But it's essentially, you're trying to break into a couple of domains [indiscernible].

We will not go very wide initially. We might go wide in the custom part, but we will try to focus all our resources into 1 or 2 domains to really gain market share.

But then how does the value provision work? Let's say, Life Science may have this expertise and have deep domain expertise.

Structurally, we think we have a fair amount of research capabilities. We would be able to gain market share.

Got it. And just one last question. So you mentioned about acquisition in your press release that you have released. So are you looking more like -- any opportunity in the U.S. market to expand to get to...

Yes, we've evaluated that. Yes, we've evaluated that as well. To be honest, either they are too expensive and if they are not expensive, we haven't really found value in them. But as of now, in U.S. we are inclined more towards build, but we are actively exploring if we are able to get something. We have filed our -- how do we perceive the entire M&A bit. And each and every segment, we have given that what is our interest level, given that we have added almost INR 10 crores of cash flow, we are in a far much stronger position than last year as well.

Got it. And just to confirm...

Sir, please come back in the queue. [ Mr. Saurav Kumar, ] please go ahead.

Gaurav, hope I'm audible.

Yes.

So one of my question is around all these 3 new businesses where currently we are at around INR 1 crore mark. At what revenue level we expect these businesses to break even? And do you have any time lines or aspirations in mind for each of these 3 businesses to breakeven?

So first thing first, MENA and U.S. are not really separate, separate businesses. They are just leveraging our existing core. If we include the India to U.S. corridor, probably U.S. business is already breakeven. The key point is, at what point of time do we have a network deep enough to justify investments in U.S. So I think roughly a $1 million mark should be there. If we get to about INR 8 crore, INR 10 crores, we should start hiring in U.S. That's the idea. MENA, I don't think we would be doing a separate hiring if we can easily service that from India, maybe a bit of sales hiring. Huksa, it is new to us. We don't know how to pan out. At this stage, I think we have enough number of people to take it to the next level, the [ MRRs ] or at least -- in fact, Huksa has been a completely different trend. What was there in the first month versus what is there in 12 months is much, much different from April 2025 to March 2026. If we continue with the numbers, which you have seen in the last 2, 3 months of March '26 of Q4, we should be in a good position in Huksa at this stage. If required, we would add more people. But at this stage, we may be not.

So the margin drag, which has come, like will it take 3 quarters, 4 quarters, 5 quarters, do you have any rough idea where we expect these margins to bottom out and how many quarters?

I have -- I just cannot -- even if I try to even with the best of my abilities, I cannot predict it in quarters. In the longer run I know what's going on. But in 3 quarters, 4 quarters, 5 quarters, I just don't know what will pan out, how and what is going to pan out, what impact AI will have, how many new clients we'll be able to get, how India -- there are just too many variables for me to try and predict even if I do my best. But in the longer run, we still believe that we would be a derivative of Indian economy, given that it is structurally a network business and if we can keep on harnessing the existing data capabilities, we should be able to concentrate and kick in the network effects. Margin, I have already given a sense that the margin contraction is -- there are 3 or 4 conditions at play. One is we became aggressive in gross. Two is we added almost a couple of crores of extra costs from the net margin. And even in the gross margin play, had we had a good Feb and March or specifically March, even this 500 calls more or 100 calls a week extra would have given almost INR 1.5 crores kind of extra number. So there are 3 different plays happening at the margin compression. When are they likely to come back to normal, I can't predict in quarters for sure. But in the longer run, we definitely have capabilities of higher gross margins.

Sure, Gaurav. And last question on the current H2 India's performance. I mean it could be war, with the war going on. But are there any chances that structurally in India, the growth has matured out? Or you don't see any such chances, you see more like a one-off event or some kind of cyclicity? Or have you seen in the past these kind of cyclicities where 1 or 2 quarters were flat, right?

Yes, yes, yes. Every now and then, it can happen that you could have a fixed ended period. Having said that, most of our clients witnessed exceptionally good growth in the early years in the last 6, 7, 8 years, I would say, at some point of time, they would also take a breather. Concerning industry, in fact, in the entire financial industry, which also fits into the consulting industry, it is nothing but a derivative in the broader economy. And if that's taking a breather, we can't really do much about it. We see -- our conversion rates are still similar, but our inflow of projects did come down a little towards the end of the year. So maybe since most of our clients are either LLPs or private, we would get to know by October, November what was their growth rates this year. My bet is they were probably lower in the previous years.

So should we benchmark like we can take big 4, like KPMG, EY and all, and we can see at what rate these big 4s are growing. And is your growth could be a proxy of that, I mean, just to correlate?

So not the big 4s, but the strategy consulting arms of big 4s, other consulting arms, private equity investments, public market investments. I explicitly said that we are nothing but a derivative of these 3 or 4 categories.

Mr. [indiscernible], go ahead, please.

So just wanted to ask about our growth perspective. So as you said, you don't want to predict something quarters down the line. But if we had a broad medium-term [indiscernible], like how would we see that? And what would be the biggest growth factors for us? Like what would be the growth drivers, like which part will kick in more growth, like what conditions will be there between [indiscernible]?

So we are hoping our international business growth is going to be better than our core India growth. India growth is going to be dependent on the 3 factors, which I just stated. How does the overall strategy concerning growth, how do the overall private equity investments move, and how do public markets can even grow. So these are the 3 growth drivers for our core India business. India to U.S. business, it will probably be dependent on how soon we are able to build out the network in U.S. Besides that, if we are able to crack the L&D market, that's a much bigger market. At this stage, it is still speculative. So I would not be able to point out that what can be the growth in the L&D market. We are still in a -- it is almost a [indiscernible] business, to be honest, at this stage. It is too early to say anything. It might take years to even pan out.

Well, fair enough. [indiscernible] With regards to like [indiscernible] volume, we just wanted to address that. Is it that research that maybe there would be levels to high level of medium-term level of resource required? Is it that some part of our clients are using AI for it and maybe this is coming to us for verification barriers? Previously, they would come to us with 4 to 5 calls, and now they are coming with -- coming to us or asking our service where last 1 or 2 calls, where we are validating their data or resource that we've gotten from AI. Like, how do you look at it? Have we had any customer interaction there whereas you can see the volume of calls? And is that a reason something that we can assume that is this a hint because of AI? Because personally, I feel there can be some hint because of that, sir. So any kind of idea that you got on feedback from the client or something that you know?

Yes, we collect this kind of feedback a lot with our client. At this stage, the ratio of projects to clients is -- and their revenue still remains the same, whatever numbers we had. But it's a very dynamic number. We don't know how it will pan out. But what I believe is that with the advent of AI, primary data rarely gets impacted. It is a secondary data, which is likely to get impacted. For the simple logic that unstructured data, available data, available reports, things which were usually done by research reports for a few thousand dollars. All this will get collated and get discoverable. So whenever someone is doing shallow and wide research, trying to understand the basics of the market, they'll do it. But our business has never been that. So while you may classify us as a research business, but no one pays for $100 an hour for basic research, the research, which is available. So your point is that they would be just validating, maybe not. But if everyone has access to all their data, then all the more reason that primary data becomes far more valuable. But the data which has never been written down is what we bring on the table. And it is not that we have been saying this after AI started and when these elements turned up. We have been saying this right from our 3-, 4-year IPO roadshow days that the reason we exist is because this information and human-in-the-loop and the intuitive ability of exports is what we bring on the table. So AI is definitely going to reshape the research setup, how will we -- how will it pan out? Your guess is as good as mine. But what I believe is that we would like to be at the forefront of it. We will definitely try to procure best ways of primary data. AI has helped us a lot. We see it both as a threat and opportunity. In fact, a lot of other things have opened up, as I mentioned, bot moderated interview. So instead of [ 45 ] interviews, some clients have started taking 30 minutes, lots of interviews with bots because the limiting factor, and in some cases was not just the price, sometimes it was also about analyst time and the ability to synthesize, which also means that they can probably collect more data. So how -- so there are both positive and negative drivers. Having said that, shallow and wide research is definitely going to be impacted, but primary research, not. And there are enough opportunities as well for it to cover.

Okay. Fair enough. And just the last question, sir. [indiscernible] So that what, we were seeing, sir. [indiscernible]. Hello?

Yes, yes. Go ahead, [indiscernible].

Yes, I was asking in terms of medium-term growth, like even if you don't want to comment on year-to-year basis, like any kind of like a broad growth guidance that we would like to reach, sir?

I can just think of it in a 3- to 5-year perspective. I've already explained everything I could. I can't really put a number at this stage, let it stabilize, and we will be able to do that. The new businesses, they are too small to really share a sample at this stage. And the whole business, there are too many -- it's a bit volatile to predict. So even year-on-year level, I don't know, but at a 5-year level, I probably know that this business is going to be larger. We do not have a capability to do that, to be honest.

[ Mr. Sankar, ] please go ahead.

So in the previous call, you had mentioned that you'll be disclosing the data for free calls and total paying times. Could you please quantify these for the current period? It will also help us to understand how these free calls.

So free calls?

Yes, yes. Free calls and paying times, conversion of these free calls to [indiscernible].

I'm not sure we would be -- we don't have it ourselves. I'm not sure we could disclose it. But overall, how it works is that we give CD calls [indiscernible] projects get converted and they become a part of it. And the volume discount happened at the end of the project. So it's never that this call is free or this call is not free. It's usually the project, which gets compressed in the last few calls. We have a 2% or a 3% volume discount or something like that. For CD calls, again, some of them, so you could assume that CD calls in India, we will probably be doing about 10 lakh a month of sorts, I mean, never more than that.

Ms. [indiscernible] Gupta, please go ahead.

Can you hear me?

Yes, ma'am.

Okay. Great. So sir, I just wanted to ask if you can just please repeat why the gross margins in this quarter have been hit. You said that you've said it before, if you can please explain your self again.

Okay. So we've actually done that in the commentary. Is there still a specific question? I would be happy to answer that.

No. No, it's okay. If you can just...

Okay. I'll just read out the same thing. So gross margin, so we have been trying to expand into new businesses, especially newer geos outside India. And we would like to build up relationships or long-term relationships with newer partners and newer companies. So plus, we would like to become quite aggressive from a pricing perspective within the industry. We believe that we -- structurally, we are very well capable of absorbing that, and we want to lead that thing rather than being driven by competitors. In fact, it makes it difficult for competitors to match those kind of gross. Structurally, we are at a very good position at a per person per call level, especially in the India business, we have a lot of data capabilities which we can harness. So we are very aggressive. We want to be dominated within the India market. We want to gain market share, maybe just 3 years ago or even 5 years ago. We were amongst the top 1, top 2 kind of a number. We are probably equal to the next 2 or 3 combined now. So we are gaining market share at a steady state. I mean, amongst the India growth players. We are gaining that at a steady state. And we believe that we can easily work with those kind of gross margins at this stage. And along with it, we can offer relationship-based discounts or build relationships with our newer clients or in a multi-vendor setup, try to get the relationship more sticky by offering volume-based discounts towards the end of the project.

So is my understanding correct that you're seeing that these gross margins are what are likely in the next maybe 1 year or 2 years, is that correct?

No, I never said that. I said it depends. I mean, it depends on a lot of factors. If we move into the consolidation phase, then probably we can increase the price. But if we keep on moving into the growth phase as well, within India market as well, we could probably keep that. It depends. I mean there are too many variables. But structurally, we have the capability to increase the margins. I mean there is a leverage. I'm not really predicting anything at this stage. But what I can say is that we're pretty happy with the overall numbers. And in the sense that we can easily work with these gross margins. And if you wish, structurally, we have -- in the entire market, I think we have the capability to work at the lowest margins and still be far more profitable at a net level while expanding. So even if we just stop expanding, we can add 2%, 3% of [indiscernible].

And sir, my second question is...

Ms. [indiscernible], I request you to come back in the queue.

I'm just asking my second question.

Ma'am, we have a lot of participants over here. Mr. [indiscernible], please go ahead.

So Gaurav, I just would like to know how do we see your business coming to employee expenses? For example, the employee expenses have gone up by 25% in last financial year, whereas the business has gone up by 30%. So how do you actually look into addition of employees? Is there any productive analysis -- productivity analysis that we have done like suppose the employees go up by this percentage, the business has to go up by that percentage or maybe? And I also would like to address you on the cost of sales. So what constitutes this cost of sales? Because I could see that it has gone up from 54 to 59 year-on-year and as a percentage of sale, of course. So how do we take this going ahead? I mean, in the next financial year or maybe a couple of years down the line, what could be the standard in this particular issues?

This is a very similar question that I just answered in the previous one. So cost of sales is just the reverse of gross margin, so I will skip that. The first question, the employee bit, I think as I said, just someone asked the same question. So it is not a [ monolith. ] It is not going in the percentage. There are 3 aspects to it. One is our core India business. Second is the somewhat predictable core, but other geo business. And the third is Huksa. So at a top level, we are trying to expand our sales capabilities. Huksa is almost from scratch, so we don't know how to pan out. In our core India business, the rate of addition of employees or the rate of increase in volumes is not proportional at all. In fact, if we go into the consolidation phase, it can actually -- we can actually be at far more productive. So at the overall percentage level, as I said, almost a couple of crores is less, could have almost led to a similar number of revenues.

But Gaurav, just wanted to know why do we need employees actually? I'm not -- I'm just trying to understand because you're just adding -- you have a digital network, right, and you get a lot of repeat business also. So where are you adding these employees into? Like I mean, if it's a digital platform, I think the serviceability of one employee to all, there would be like much -- many of the clients which can be serviced by a single employee, right? I mean I just want to understand how exactly you go ahead and do the recruitment.

Sure. So we're adding a fair number of employees in sales. We're adding people who work on U.S. time zones, we're adding experts in U.S. And besides that, we have just built up a new vertical called services L&D vertical. So as I said, in our core business, the ratio of increase in sales or revenue is not proportional to the added number of employees, which you also pointed out. But we're trying to do a lot of newer things. In our calls business, when we are in the expansion phase, we increased the customer panel calls, where our employees speak to a lot of experts. There are very few [ self-rated ] experts. We do not encourage self experts, self [indiscernible]. We have a very curated backdrop, both on a client as well as expert side. And that's where -- so almost 50% of our employees are on the research side where they're aggregating and getting good experts. About 20%, 25% would probably be the servicing side, and rest of it is sales [indiscernible] finance support. Now the ratio varies a little across that, that ratio has been mentioned in our [indiscernible] and is almost the same in our core India business. But outside India and newer businesses is where we are adding more employees.

Do you also incentivize your sales team when they get more experts enrolled? Is there any incentive?

The sales team is not the team which works with expert. Sales team is the one which works with newer clients.

Yes. Any incentivization that happens in the internal level to these guys?

Yes, of course. So sales never works without incentives. But in our scenarios, the incentives are geared more towards servicing than newer sales.

Okay. So not addition. So only the service?

No, both. What I'm saying is the servicing part and the export part is also incentivized a little. But in our scenario, we don't have a ready product, which you just go and sell. It's in a multi-vendor setup, you can easily add on to a project. But how do you service the project is where the real incentive is.

Do these sales also have [indiscernible]?

Mr. [indiscernible], I request you to come back in the queue. Mr. [indiscernible], go ahead, sir.

Gaurav, so I had some questions regarding Huksa. So these learning content that gets created. So is there -- so do you look for repeatability of that particular IP? And is there -- is it like targeted? Or is it generic? By generic, I mean, like something that gets created for one client can be used for another client? If you could just help me understand that part.

I'll just quickly say a line, and then I'll hand over to VK. So yes, we are working to -- we are building the entire thing at a modular level, at least the first the way we are envisioning Huksa at the first level is that we're definitely building modules. They would be repeatable. I'm not sure at what stage will the repeatability kick in. But at this stage, we are just picking up whatever possible to have a reasonable level of data on which to build on. But yes, there is a fair amount of repeat rate. To tell you more about Huksa, the repeatability, the kind of clients, everything, I'll hand it over to Varun. Feel free, Varun, please go ahead.

Sure. Thanks, Gaurav. So yes, I think you're right. What we are trying to do is we're trying to capture both of these segments while we are very conscious about repeatability of our L&D programs and specifically, the modules that we're creating. We're also concentrating on providing customer bespoke solutions to our clients, which are not generic or readily available in the market that acts as a very good entry point for us, right? So we do both. We've got a good level of programs on our website that are on IP. We work with our experts to create these programs, which can be a bit generic and repeatable. We've already done a lot of repeat programs. A lot of our clients have seen some of our programs and requested the same programs with their teams. What we are essentially going to look at is we do not want to discount the fact that our clients would still need some bespoke solutions. And how we can be more efficient with our sales is the repeatability angle of it. So we are cognitive about both of it.

So at some point in future, could you provide some more color around it, like how much is repeatable and how much is like one-off? And what are the economics of both these kinds of repeatable types of...

Probably, in the next time, I might have some answers for you. Like the sample is still very small.

Mr. [ Pramod ], please go ahead. Mr. [ Pramod? ] Mr. [indiscernible], please go ahead, sir.

Yes. I just have one question like that following the increase in the authorized capital in the last AGM of INR 250 crores. And given that the company is in SME segment only with the paid up capital constraint, could the management clarify whether you're preparing for a potential [ import ] migration, merger [indiscernible] opportunity or any fundraising?

So we do have -- I mean, whenever the main Board allows, whenever we cleared all the criteria, we would like to move to the main Board if required. And at this stage, I think we clear most of the criteria, except a few. I'm not sure what would be the right number. But whenever appropriate, we will definitely move to that, and we will take care of rest of the formalities as well.

Because we are 3 years to be in this SME segment and INR 100 crore turnover, which we achieved this year.

Yes, 3 years, INR 100 crores is that. There is, I think, 1,000 shareholders and there's a few other things as well which need to be taken care of. I think we clear most of it, some of it is, if not the next year, if everything -- I think there is some net worth -- the number of shares criteria as well, the overall. So probably Abhishek would be able to give you a better answer. But the short answer is that whenever required, at the appropriate time, we will definitely [indiscernible].

Mr. [indiscernible].

My first question was on the salary expenses that are getting capitalized, what would -- like would this be a recurring expense? And what would be the quantum for the same?

You mean the tech expenses, right?

Yes, yes.

Abhishek, would you be able to help me with that?

Yes. [indiscernible], these are probably -- we sell these [indiscernible] while developing the internal intangible that you have seen in the balance sheet. That is purely that only.

No. Like is this going to be recurring from now onwards? And what would be the quantifying...

I think you are asking when will we start amortization of this.

No. What I'm asking is, what would be the quantum for these expenses? The salary for tech teams that is getting used for the platform that you are building, right? Like would the quantum be increasing next year onwards for the capitalization or how would it be?

Yes. Once it goes into maintenance phase, the salaries spend on these tech teams will be on a recurring basis, and we'll hit the end of it.

Okay. And Gaurav, my second question was regarding the client development costs that we are doing, right? I understand that we have to give these out in higher numbers in newer geographies like U.S. and MENA to garner our foot in those markets. However, for our India business, have they increased per project compared to previous years? And in general, are we facing any competitive intensity due to which we have had to reduce pricing to maintain client stickiness?

Look, we haven't really reduced [indiscernible] to really change that. But we have gone aggressive voluntarily, see because being in a similar range for a long time, although we have kind of increased a bit, we became a little aggressive, especially in newer geographies and within the larger clients to increase stickiness. We obviously give volume discounts. We are in a multi-vendor setup. And I think -- what was the last point which you raised?

Yes. So basically, in our India business, right? I get your point that all geographies we have...

We do give a [indiscernible] India business as well. But that's usually controllable. I mean...

And have they increased in the previous years? For example, let's say, per project level may have you guys been doing more because -- not really. So basically to call it out, our India business remains as it is with regards to our previous years in terms of our competitiveness.

Our India business became a problem from a volume perspective a little in the last quarter. But otherwise, most of the dynamics are similar, given volume discounts, yes. But CD calls are probably in the same range.

So basically, our competitive stance in India business remains the same, right? Is it just because of the newer geographies [indiscernible] calls that we are doing, our gross margin is looking a bit lower compared to previous years? Would that understanding be correct?

Yes. To a very large extent, yes. But yes, we have become aggressive in India as well. I'm not sure it is entirely because of competitive intensity, but we are rather leading the charts there.

Got it. I think yes, that's it from my end. Also just one last question. What are the finance charges of INR 45 lakhs this year in the P&L?

These are purely bank charges.

What are the bank charges? I don't see any borrowings in our balance sheet?

Yes. The bank charges, the basic, the transaction fees that will be -- that we pay on international payments.

The INR 45 lakhs is of transaction charges?

Yes.

Thank you. That is the last question for today. Gaurav, sir, I now hand it over to you for your closing remarks.

So that should be -- I mean, I can see a few more hands. I'm not sure we should continue. But I hope I have addressed all the questions. If not, feel free to reach out. Happy to answer all the questions. I can see -- I just had -- I am just quickly going through all the questions, which was sent to me off-line in case I missed any. I think a quick question which I saw was, how soon do CD calls convert to projects? So it depends on which geography we operate. If in India geography, it is relatively few months. In geographies outside India, it depends on our strength of the network. CD costs are usually done to build long-term relationships as opposed to an only project-based thing. So once the long-term relationship is built, we typically get more projects from those teams. So -- but that doesn't necessarily mean that it will convert right then and there. If you have the capability to service, it will convert over a period of time, and it becomes deeper into -- and the relationships will become deeper with those respective teams. So any other, let me just check if I have anything. So just the closing remarks, no. So overall, we understand that this year has been a bit subdued toward the second half. Having said that, in the longer run, like from a 5-year perspective, almost nothing changes for us. We still remain as a derivative of overall India economy. In the shorter run, we are likely to remain aggressive at this stage. We might consolidate a little over the next year. But on the newer front, we definitely remain aggressive. We have added meaningfully large amount of cash, free cash flow to our [indiscernible]. And hopefully, we will be able to press the accelerator and we have all the wherewithal to do it whenever we find that [indiscernible], find the relevant opportunities. So that's it from my side. Thank you so much for believing in us. Thank you for attending the call. If there's still any more questions, feel free to reach out to the Valorem team or us directly. Thank you so much for attending the call.

Thank you, everyone. Thank you, Gaurav, sir.

Thank you.