Kellton Tech Solutions Limited (519602) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Kellton Tech Solutions Limited's Q4 FY '20 Earnings Conference Call. [Operator Instructions] I would like to thank you all for participating in the company's earnings call for the fourth quarter of the financial year 2020. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's con call may be forward-looking in nature, and such forward-looking statements are subject to risks and uncertainties, which could cause actual result to differ from those anticipated. Such statements are based on the management's belief as well as assumptions made from the information currently available to the management. Audiences are cautioned not to place any undue reliance on those forward-looking statements in making any investment decision. The purpose for today's earnings call is purely to educate and bring awareness about the company's fundamental business and the financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call. We have with us today Mr. Niranjan Chintam, Chairman and Whole-time Director; and Mr. Karanjit Singh, Chief Executive Officer, India. I request Mr. Niranjan Chintam to give his opening remarks. Thank you, and over to you, sir.

Thank you, Stephen. Thank you, everyone, for joining our Q4 financial year '20 financial highlights call. I know all of you are going to ask question about COVID. I will answer that in a bit before -- once I finish with the numbers. So let me start with the numbers for FY '20. We have achieved a revenue of about INR 775 crores with an EBITDA of INR 116 crores and the net profit of INR 70 crores. I want to caution one thing, the numbers for 2020 versus 2019 are not comparable because we sold a subsidiary constitutes of Global last year that was contributing about $12 million in revenue. That is the reason why you would probably see a dip in revenue and dip in all the numbers because of the sale of subsidiary. If you have removed that $12 million, then we are actually increasing revenue by about INR 40 crores compared to last year. So that is something that I want to highlight because that is first thing that everybody would -- once they look at the numbers, everybody would observe that. Now coming to the quarter. For the quarter, we were about INR 208 crores in revenue, which is a slight increase over last quarter, with an EBITDA of INR 25 crores and the net profit of about INR 14 crores. Now last year was an interesting year where we actually won quite a few awards, including Software AG's related one, Integration Partner Awards. We partnered with Dell Boomi. So there are quite a few of awards that we achieved last year. And we also won a Food Corporation of India award of about 39 crores last year. Now this quarter, we have added 12 new customers in this quarter, which is not a small achievement. And these belong to various different kind of industries and it's not concentrated in one industry. Now coming to COVID. I want to first talk about our employees, then I'll talk about customers and related ones that are behind that. So the employees right now, all of our employees are working from home, 100% working from home. All of our offices are closed except for skills and staff going there to maintain the systems for connectivity. But otherwise, all of our employees are working from home. We also realized very early of the COVID impact and what is going to be for the global. So we're able to bring back our employees that were dispersed all over the world who had to be shipped out of India. Except for 3 employees, we got everybody back in time before the shutdown took place in India. It was a very short notice, but we're fortunate enough that we realized that this is going to be a global pandemic and we're able to bring them back home. So that is a quick highlight of COVID. The impact of COVID is going to be there for this quarter and potentially -- I'm sorry, for last quarter and potentially of this quarter, too. Just like everybody else in this industry, we are also facing an impact primarily -- probably the first 2 months of last quarter, where people were trying to figure out what was going on within the industry or they're trying to figure out what exactly they need to do. We faced a lot of challenges those 2 quarter. But people have started to -- I guess I noticed that this is the new normal and started working. The pipeline also, while it was built up before March and then there was took a pause for about 2.5 months now, the pipeline has opened up, and now we are able to close new wins last quarter. Again, we have not compiled all the numbers yet for this -- for the last quarter, but we're probably be compiling that very soon. Now that we have closed out the Q4 of last year, we are working on Q1 of this year. So any questions related to that, I will have to defer. But I can talk in generic terms as we go on with the Q&A part of the thing. So with that, I want to open up for questions. So Stephen?

[Operator Instructions] The first question is from the line of Agastya Dave from CAO Capital.

Hello?

Yes. Go ahead, Agastya.

Sir, I have just one question this time. The disruption which has happened, so logically, it should help all the companies who are in the business of digital transformation. Yet as you briefly touched upon the sales part that the pipeline, which was -- I mean you must be working on a sales pipeline. And that must have got severely disrupted, plus traveling is pretty much gone out of the part. There's no way anyone can be expected to travel and close the deals. So for Kellton and for the industry, how will we tackle that? I mean how will you close deals? Just the sales part, the implementation can be done from home, but can you actually do the -- closing the sales deals? So that's my first question. Second is just a request, sir, if you can, again, this is -- I've asked this for a number of times. If we can do the results towards the starting of the quarter rather than towards the end because we are always the last company to come out with the results -- that's -- it is not that great. We then lack the visibility. Earlier, we were amongst the first always to report. And again, we are lagging behind. So that's a request. I know the times are tough. But if you could take that into consideration going forward and then the question about sales. That's it.

Sure. Let me first answer the question about the results. Unfortunately, this time, yes, we were late. We, I guess, underestimated the -- I guess the adaptability of some of our auditors that were auditing the numbers. Given that, we have multi-country audits, and this is a financial year closing part of it. Every numbers had to be audited, so it took quite a bit. There was a held up and I know, we announced one date, and then we had to push it. Because one particular geo was unable to finish the audit, and hence, that consolidation also took time so we had to request for additional time and we were able to compile it. That's given the nature of this pandemic what it is. But I understand and we will try to do that. This quarter also, there might be slight -- we may be the laggards. But going forward from next quarter, if everything is back to normal and our auditors are able to adapt to these new conditions, we would be happy to announce it sooner than later. Okay? Now coming to close...

Q1 is understandable, sir. If there are any delays, Q1 will be understandable because the situation is pretty bad in Hyderabad and Delhi, both the places, so I can understand -- and globally. So that's understandable. But probably Q2 onwards, if we can be slightly -- I mean definitely, not on the last day because we are consistently on the last day. That's not that great. We get lost in there on an average 600, 700 results on the last day. And we are in one of those 600 companies, so our results are never visible. Yes, that's it, sir. We can proceed to the question.

Okay. So now coming to the sales part, I'll let Karanjit answer this because he faces this day in and day out more so than I do. So Karanjit, can you take that question on how are we closing sales remotely?

Yes. So yes, so yes, you're right. So I think the way it happened and the way it has stand out, and I think this is pretty much the experience with most is that obviously, it was too sudden. And of course, everybody got busy with the whole logistics exercise of moving people to work from home and all that. And then there was a period of uncertainty luckily for us. As I said, there's a popular joke that says that "Who accelerated digital transformation and it is COVID," and I think that broadly, kind of, is true. After about 45 days to 60 days, when people figure out that this is the new normal and we'll have to learn with it, we have seen a change where customers previously even anywhere in the U.S. or even U.K., pretty much things were shutdown. But I would say from the last about 3, 4 weeks now, conversations have started. And in fact, in some cases, especially like U.K. where we tend to -- like Europe, where we tend to -- people prefer -- they are slow and prefer more in-person meetings, they have actually been very responsive on LinkedIn and all that now. Because remember, it is not about me trying to sell now. It is also now they're trying to look for a vendor, and they also have to do it only virtually, right? So those kind of things have happened. Now I try to just tell you factually and give you a little bit of color what happened with the pipeline was about 30%, 40% of the pipeline just went into a deep freeze, right? Given the industry, whatever, whatever, right? But there was a 50%, 60% of the pipeline. And again, it was -- there are variations by region. India remained quite active also that time. People were having conversations. We had webinars, which were not directed at sales, but just about COVID and all that, right? And people attended because otherwise, people who wouldn't catch or wouldn't come webinar, sitting at room, are actually attending because they have time or whatever. So those kind of conversations have started happening. Our pipeline, about 40% -- 30%, 40% went into kind of a freeze. The other 50%, 60%, we were able to have conversation. Even it's not about closure, but at least about -- the conversations are continuing. And some, in fact, got accelerated, and I will give you some examples of some of the customers that you talk about. But of course, new pipeline generation was also took a hit for that 60 days. That has also opened up over the last 3 to 4 weeks or so, right? So that is kind of how it is happening. So it is not only -- yes, it is a challenge. And we think in person is always build their trust and helps you to build that comfort. But then again, remember, the customer is also [Technical Difficulty], and they also have to accelerate some of these things. So they are coming -- ready to come on to the virtual channels to engage. And wherever possible, like in India, we are not traveling because both Bombay and Delhi where we operate pretty much have got impacted, right? So it's not safe. But in the U.S. and nearby, our people have started going and actually meeting people and people have started granting those meetings as well. They have green shoots. I'm not saying everywhere that's happening. So that's kind of a general lay of the land, and we all have to learn to sort of do it in a new way now.

Sir, would it be reasonable to conclude that we should be back to completely normal status in the next 6 months in terms of the sales pipeline?

So let me answer that, and then Karanjit can add if I just left any gaps there, Agastya. So right now, right, it's very uncertain. There are -- as you can see in India itself, right? There are lockdowns now going on in some of the places because of the flare up. And we're seeing similar kind of stuff in the U.S., too, right? Unlike India, there are no lockdowns happening, but people are tending to be a little bit more conservative. I think I don't want to comment about what industry analysts are talking about the Gartner's of the world. They are saying that the spend, there is a freeze on spend also. People are waiting and watching till December to see what is going to happen. So come the new elections in the U.S. would the purse -- company start opening up purses, it's a little bit of right now a speculation. I don't want to be in that game. But if, let's say, if everything goes the way we expect it to go, yes, we should be back. But the whole year, some people are saying, this is the last year, right? That's a comment that people keep saying that. Are we going to be in the same boat? Probably not because like Karanjit said earlier, digital transformation, who's leading whom? Are we pushing it or are they pulling? So we are getting pulled. Earlier there used to be push, now we are getting pull, too. So there is going to be a loss in revenue for sure this year. How much of it? I don't want to predict today. But I think some of it, like Karanjit was saying, we should be able to recover whatever we lost out in the first quarter if everything goes the way that we -- as of today, right? It goes the same, we should be able to recover some of that lost revenues. I know it's a little bit vague answer, but that's all I can do for now.

I understand. I just wanted to -- I mean because we are the last IT company to actually report, I was just wondering if you have a slightly different answer because so much additional time has passed. So maybe there is some like a much clearer recovery, which maybe you are seeing. So -- but it's -- I perfectly understand the vague answer, sir. It's understandable. I have a couple of more questions, sir. I'll go back in the queue.

The next question is from the line of Shubham Gupta, an individual investor. Mr. Gupta, we are unable to hear you. Can you speak closer to the handset, please?

Hello, hello. Yes.

Yes. Go ahead, Shubham.

Are you able to hear?

Yes, we can.

So sir, I would like to answer -- I would like to ask question, partly it was answer, like in the previous question, the part is left, which I wanted to know, are there any new industry verticals or are the new technologies which we are getting deals of, like any demand for them? Are we anticipating any increase in the new demands for the new technology and new verticals?

Sure. So let me answer that, Shubham. Okay, let me answer that and then you can ask the follow-on questions, if you have any. So yes, specifically, pharma and health care, there was a huge demand that we have started receiving. That's the reason why, to earlier question that Agastya was asking where I was saying, we will be able to recover some of the lost revenue. We see lot of demand coming from pharma and health care. And we were able to close some of the deals last quarter despite whatever has happened with the lockdown, so we see that. Now -- but with that said, right? There is a big impact in travel and hospitality. We do have some customers in that area. So we lost out there, right? So that is something that is always going to be there. There's a counterweight. Would we be able to recover all of the revenue that we lost out in travel and hospitality, in pharma? Again, that is -- the jury is still out. We can't say anything. But as of today, we -- I can assure you that some of the lost revenue can be recovered if things go the way they are today. Now coming to the new technologies, right? There are certain specific software, right? All of these SaaS-related software security is another one, right? You would see that security implementation. Even for our own needs, we are going and finding security products because 100% work from home is happening. How do you secure the BYOD, right? Bring your own device kind of a thing. So those are areas that we are seeing, some of the technology improvements that are happening. Technology companies are doing very well in this space because of the work from home. So there are certain technologies that are doing very well. Sorry. Shubham, any other question you have there?

Yes. Thanks for the answer. It was like -- I needed a brief of it. And there is one more question. It's regarding the costing that company is facing. So is the company looking for cutting costs, like cost optimization looking at the current scenario more from a perspective of talent management in the current situation? And how is the talent management team geared up to meet the challenges of hiring new talent for the new wins as you described in the previous one?

Let me answer that a little bit, and I'll ask Karanjit to add to that. So to answer to your question, absolutely, yes, there are going to be some cost-benefit analysis we are doing. We are trying to reduce our footprint when it comes to the office space all over the world. We have -- me being me and my brother, Krishna, have taken a complete takeout basically. We have not taken any pay for the last quarter. The Board has taken a 50% cut in salary. The senior leadership has gone -- volunteered to go up to 25% pay cut -- up to 25%. Given everybody's individual thing, they volunteer themselves. Whereas the regular employees, we have not implemented any pay cuts. So everybody is drawing the 100%, and we recognize -- including all the way down to the lower staff, even though we are not using the lower staff people and we're still paying them 100%. Given this nature of the situation, right? It's not their fault, so we'll have to take care of them, too. Now coming to talent acquisition, I'll let Karanjit answer because we are hiring people today, and we are successfully able to hire people, too. So I'll let currently Karanjit answer. Karanjit, can you answer that?

Yes. So yes, so I mean we have actually had some closures. And -- so as I said, it was a little bit of an uncertain situation initially for the first 2 months or maybe about at least 4 to 6 weeks. Then really, there were some impact. We weren't sure that projects -- some projects start-ups got deferred or whatever those kind of things. So we have some corrections that were done. But after that, basically, it's been pretty much business as usual. And we have been actually hiring and onboarding people. In fact, we have been hiring and onboarding people all through this time. And in fact, right now, we're hiring a lot of people because we closed out certain large projects at this point. And of course, hiring has been a lot easier right now except for the challenges of virtual hiring, right? That aspect. But otherwise, from a talent availability and all that, obviously, we have been able to onboard people much at shorter durations. Challenge is available previously. Before the lockdown, hiring people, a number of people who wouldn't join was very high. All that is now actually got a little sorted. And in fact, we continue to hire at this point.

The next question is from the line of Vibhor Sharma, an individual investor.

So congratulations on achieving fantastic numbers for Q4. So I have couple of questions for you guys. First one on bundling. First one is like seeing on the company's revenue, it has -- it is concentrated on the U.S. side specifically. So how about the growth in other deals, like India, APAC and Europe? Also, like U.S. growth have been impacted by the recent event of unemployment and COVID-19 pandemic. So what are your views on that? And how about the growth of revenue and other deals?

Okay. Thank you. So APAC and Europe are area of focus for us. It has -- Europe has always been a focus for us. APAC, I think we have some decent wins in this quarter from APAC, which will -- probably reveal a lot more detail once we get the Q1 results out. Coming to the U.S., U.S. has taken a big hit when it comes to last quarter. There were a number of customers that have either frozen their existing contracts or have demanded for some discounts. And we, just like everybody else, we have to do the same. So what would be the future for U.S. when it comes to unemployment related ones? See what has happened is unemployment is mostly in the blue-collar space than really the white-collar space. Yes, there was an impact of IT employees, too, but not to the extent that rest of the other industries have taken a hit. Retail, travel, hospitality, those kinds of spaces have taken a lot of hit. So there is now -- yes, talent pool is much more open or available like Karanjit was saying. So we anticipate that if we get additional new wins in the U.S., we do have a new wins in the U.S., too, for the last quarter just so that -- mind you, we are not saying we have not won anything. So there is -- I guess right now, we are ramping up the staffing there for that particular win. It's a huge win. We'll make that announcement shortly. So there are a lot of opportunities in this space when it comes to acquiring talent, acquiring new customers, and our people are focused on those particular things. Just like we talked earlier, it's now become a pull versus a push. So we would be able to close out quite a few additional customers this year. I'm talking about calendar year as well as to probably the first quarter of next calendar year, too, which is our financial year. So I believe that, yes, the pipeline is building up, and I think we'll be in a better shape than where we were probably about 4 to 6 weeks back.

Okay. So my next question is, it was something related to your commentary. You said in your commentary that your 100% workforce is operating from home. So having said that, are we facing any sort of challenges in terms of productivity, operations or you can say supply side or delivery side? So any certain set of challenges? And what are our plans in the coming future in terms of having a remote workforce? How the company prepared for that?

Okay. So Karanjit, can you take that, Karanjit? It's right in your territory.

Yes. Sure. Yes. So see, if I were to comment, right? You are right. As a company, we have never done work from home at this extensive level. And while in the U.S., of course, work from home, or even in Europe, people do work. It's a lot more flexible. It's part of the culture. But in India, pretty much, it has always been worked from a physical location. And obviously, there is a whole cultural nuances and managers looking over the kids and all that, right? It's a little different. Luckily, we started somewhere around 2 weeks before the lockdown, right? We kind of anticipated that given that it is spreading, we should start doing some POCs. So we put together a task force and that task force actually did a good job of actually, we were already testing out. So we actually took the top whatever 10 projects where we knew that the managers manage these things well and whatever the productive teams. We moved them as the first 50, the next day, another 50. And we did it in phases. It turned out well to the point that by the time lockdown was announced, for that one Sunday, on that Friday, we were literally 95% of the people working from home, including we have to run people with their desktops and all that. We have very few people on desktop, but we have given out all that as well. So for us, luckily, we did not take a hit because luckily, for us, we were doing all these preparations for the last -- about 2 weeks prior to the actual lockdown that happened in anticipation. Having said that, within -- and yes, you're right, our biggest concern, not only personally as it from a management perspective or me, but also the biggest concern from the account team, the customer-facing teams was that, "Hey, our customers are used to sort of a certain level of productivity. And if things don't go well, what will happen? How will I get impacted as an account manager, my customer will get impacted." So we actually came up with that proper -- it was not only about just giving a hardware and saying go back and work from home. There were elaborate processes that were put in place where people have told, there has to be virtual desktops. The VPNs were triggered. Everybody should do a good morning, 10:00 standup and this and that. So that's -- those all protocols were laid out. The time trapping and the time sheets had to be very -- were done in a lot more detail. There were open documents that were accessible to customers where we were logging what is happening during the week so that -- to allay the concern that the customer doesn't come back after 2 months saying, I'm not sure what happened in the week, minus 8 or something, right? So all those protocols were put in place and credit to our team that all that went very well to the extent that we had almost like, I would say, about 60 go-lives during this -- the first 2, 2.5 months of lockdown, right? Still we're unlocked. We did 55 releases, some of the major ones. And customers have acknowledged it. And even our manager has come back and said that people are working much longer hours because obviously, there was no choice. If people go out of the house and the police will beat you up in India, right? So that helped the cause a little bit. We -- in terms of challenges that we face, some of the challenges that we faced were around hardware, right? So where if people -- power supply went off or somebody's laptops suddenly turned off. Initially, it was really challenge around the first lockdown, right? The first 2 months were a challenge because you couldn't really -- you couldn't really ship out. Amazon was not supplying anything. We couldn't send out anything. By far, people who are within NCR, except Noida, which was very badly locked down, and there also we were able to make something. NCR, we were able to supply. But otherwise, it was a challenge for people who are in some odd area or crazy place or Noida. So people had to really make do, so we have to come up with innovations like, we told them please use your home -- neighbor's computer or home computer, and we gave them virtual servers on Amazon and all that. We have to do that. So those are the challenges that we faced. Of course, there was an odd case -- 2 or 3 odd cases where people had gone over that weekend to their house thinking -- leaving their laptop in the office, thinking they'll be back on Monday, and then there were stuck in Kanpur or wherever, wherever. And poor guys, couldn't work. But then same thing, we have to innovate. Those exceptions were there. We couldn't ship the computer, so they had to work from personal machines virtually logging into our virtual server and all that. So those were the challenges that were really there for the first 2 months. In terms of productivity and all, I was hoping -- I was prepared -- not hoping, I was prepared for the worst, but things have really panned out well. And in fact people have been complaining more about overwork than the other way around. In fact, so much so that for engagement, we are doing virtual engagement attributing and people are just not coming. That's when we came to know that what's going on because people are like we're so busy, we can't even come for this virtual engagement activities. But I think that now people have started adjusting to the new normal. So there are 2 categories of people. There are people who are with their families or who have gone back to their families, they're happy. They want to continue to work from home because they're in Kanpur or lives with their family in Delhi or wherever, right? And there are those bachelor groups where they stay in these PGs and all, and there were a lot of issues around PGs and all during that time, right? With the owners and all. Those guys, of course, were troubled. But now I think after the unlock, they have also moved on and everybody's gone to comfortable surroundings. And most people -- while we hear the sentiment, sir, we should come back to office. But that is more like I should come at my option, but the work from home should continue. That is general sentiment that is going on with people.

The next question is from the line of Keshav Garg from Counter Cyclical Investment.

Sir, our market capitalization is around INR 150 crores, and we are INR 70 crores profit. Sir, so basically, our company is trading at a valuation of 2x our profit. Sir, so that is primarily because, sir, that company is not paying any dividend. There has been no buyback. Sir, so the market thinks that -- I mean if a company is making money and cannot distribute even 10% of profit. And so you know very well that IT companies are major distributors of dividend and buyback. So that is the primary concern of the shareholders.

So Keshav, I appreciate your question there, but I think we announced this multiple times. Until 2021, I will not be able to give a dividend. The reason being, we are in our growth phase of our company. We have not raised a single rupee from the market. All of the money that has gone in either is through internal accrual or through promote the funding. So we do not have any external money that we have raised. We are growing as an organization. We need the cash to help in the growth of the company. And also, we do have some obligations of paying off earn-outs, paying off our debt so which has taken more priority over giving dividends. By 2021, we would be in a better shape, so we would then consider looking at dividends. Until then, our plan is to conserve cash within the company for the growth as well as to pay off our obligations. Now that COVID has thrown a curveball, we have to see what that means to those 2021 plans. And we have not done that analysis because the last quarter has been nothing but trying to make sure that we have enough cash to sustain the business and make sure that we are running and meeting all of our obligations, and we have successfully done that. We should get some breathing room probably within the next 1 month after we make the announcement of this -- last quarter's results. We will take a relook at, are we still on target for 2021? Or do we need to push that for dividend for some more time? But at this time, we are not in a position to give out dividends because we have the cash needs outweigh for other priorities than to pay dividend. And mind you, probably 60-plus% of the dividend is going to come to me. So it doesn't makes sense to pay myself.

Sir, and also, sir, the other financial assets is INR 115 crores and other current assets is INR 70 crores, sir, so around INR 185 crores of, sir, other current assets? Sir, what exactly is the nature of these other current assets?

We'll answer that question, Keshav. I'll get the numbers, and I pull up and give you that answer. Because right now, we are all working remote. And my team is also remote. So we'll get that answers for that shortly. If you have any other questions, then go ahead, and I'll answer that once I get the numbers in front of me.

Sure, sir. And sir, even adding around INR 40 crores to our revenue due to the subsidiary that you sold off. Sir, so even adjusting for that, if we see for the past 3 years our top line and EBITDA is flat. Sir, whereas before that, we had blistering growth phase. Sir, so basically, when will we break out of this range that we have been stuck in the past 3 years?

So Keshav, even for 2018, we sold out another subsidiary also. That's the reason why the last 3 years probably are looking flat to you and which -- if you look at purely without the qualitative analysis part of it, yes, you're right on that. We, at one time, were on a target to do blistering growth. After that, we said, okay, let's take a pause. Let's consolidate what we have and improve our balance sheet. Our balance sheet at that time was completely different from what it is today. Our ratios were different then, our ratios are much better today compared to then. We had lot more debt we were carrying. I'm talking as a percentage of debt-to-equity ratios. All of that have improved dramatically. Because one of the things that analysts were pointing out was, yes, your numbers are good, but your ratios suck, your balance sheet is bad, right? So we are trying to improve that -- those numbers, our balance sheet numbers, hence, we went with improving the balance sheet versus the growth. Now that corona has come in place, how does this work? Would that give us opportunities to grow? We are really looking at that as a strategy. And like I said, last quarter was nothing but to make sure that we are able to meet our cash needs, and we have successfully done that. So we will have some room to think about this and analyze over the next 1 quarter, then we'll come back, probably come up with a new strategy if required.

Sir, and also, sir, are your customers are asking for discounts?

They did ask for discounts last quarter. There were discounts given. And that was a limited time frame when we gave discounts. We limited to last quarter. Now we are back to 100% of what the ills that we were giving. And I think everybody has faced this, and we also faced it similarly. So that's the reason of this, okay? So the question that you asked, the assets, right? These were -- the 2 subsidiaries that we sold, there is money owed to us. Just like when we buy companies, we pay out over a period of 3 years. The same thing is the case when we sold out the companies, the Bokanyi and Supremesoft. So there was the earn-out payments that are due that slightly got delayed because of COVID, but they are back on track now. And that is the reason why you see that big asset sitting in other financial. That is nothing but the sale price that we are proposed to get the partial payment, and we're going to get that shortly.

Sir, but if we are -- in future, if we are expecting around INR 185 crores. Sir, we have around INR 100 crores of debt. So basically, company is already net cash positive by a huge margin. So considering that, sir, I mean, sir, what I'm saying that if we are trading at 2x our profit and the companies that we are acquiring, clearly, we won't be acquiring them at 2x of their profit. We will be having to pay a good premium at maybe 10x profit or even more. Sir, so then does it not make sense for the company to buy back its own shares and extinguish those shares so that whatever future growth comes, will get divided on a smaller share base and the earnings per share will increase?

Keshav, you're right. If I was sitting on cash, right? I'm not sitting on cash. If I was sitting on cash, absolutely, that is the first thing I would be doing is buy back my shares. And potentially, at that time, look at some other option, right? Because public option is not looking that great for us, right? So you're right. But at this time, right? I'm not sitting on cash because the cash is spoken for. And I have commitments that I need to meet. That's the reason why I said probably 2021, right, earlier, like I was saying earlier. So we have to relook at this strategy and potentially look at long term differently, and that is something that we'll look at this quarter, maybe potentially next quarter and see how things are going.

And sir, lastly, wanted to understand, sir, that our receivables, sir, we are giving around 3 months of credit to our customers. Sir, so by industry standard, sir, that looks a little bit higher because it's normally between 45 and 60 days.

Okay. So you're right. The industry, when you say industry, you're comparing us with the big boys, right? They have a better negotiation power than we do, Keshav. Just to give you a few names that I will tell you without going into the details of it. So we -- for instance, we have UPS as a customer. They pay us 90-plus days. Okay. We have IBM which pays us 80-plus days. We have Novartis that pays us probably 87 days. So all of these do cause in the grand scheme of our numbers receivables to go up. And then before you add the Indian numbers of government paying us late where if we get paid in probably 120 days, we are very lucky. So those are the things that we continue to have challenges with. As our balance sheet goes up, we'll be in a better negotiation power. I beat up all the sales guys, including our CEO in the U.S. saying that how come others are able to get it. And their answer which I feel, which I agree with them, is that, "Hey, we don't have negotiation power. We have to go with whatever standard, template they give us, if you want to get our foot in the door, and those kinds of things. As we go on, as we improve upon our balance sheet, absolutely, we'll be in a better negotiation power.

The next question is from the line of [ Nikhil Shankar Dhalani ], an individual investor.

Sir, my question was in line with the other participant's question. As you clarified that current DSO is 90 days, which we compare to industry standards is 30 days above. Yes. So the question was the sale has come down relative to your last year year-on-year, but receivables have gone up. So is there any particular reason behind that? Or just wanted a clarification on that.

Just -- if you're looking at purely last quarter there, Nikhil, okay. March was a wash. Let's look at year-on-year, too, right? That's what -- last quarter is what is affecting the whole year-on-year, right? I'm not talking about the sales-wise. I'm just talking about receivables-wise. March was a wash. Okay. When I say wash, this is completely -- nobody was working and majority of the large companies that I was talking about earlier. I'm just picking an example, right, please don't think that UPS did this. I'm going to pick UPS as an example. So UPS was supposed to pay us around March '20, let's just say, okay, and they have 90 days. And it's usually because that's one of our largest customers, so we get paid on the March '20. And March '20, they were going to lockdown, and the person who's supposed to pay us did not come to work, so it got pushed by a month or 1.5 months now. So what has caused that is immediately, right, my receivables will go up. And then if you look at -- compared to the last quarter to this quarter, it's INR 20 crores difference when it comes to the receivables going up. And since March being the first month that COVID has impacted, absolutely, the receivables that we are supposed to get in March, we did not get in March. It got pushed to April. In some of the cases, it got pushed even to May. So that has happened the whole quarter for us. That is what I was saying last quarter has been a challenge to sustain cash flow-wise because every customer that we had, there was probably 30- to 60-days delay in payment. And these are large customers, mind you, not because that they don't have cash. It's just that they're trying to figure out how to now work in this work-from-home setup. Even governments, too, right? Despite whatever that the governments were talking about, all work that we're supposed to do, all contracts that we need to suppose to sign, all payments that they're supposed to give, all got delayed by 30 to 60 days. So that has put severe strain both on our receivables as well as if you want to call that number of receivable days has gone up. And yes, that will be the same for this -- the last quarter, too. That was the -- that's not the new normal, right? We are going to hopefully get out of that new normal and have a better receivable days going forward. But I have to caution that last quarter is almost -- last quarter is also going to be like this.

Okay. So what I understand is not just the DSO numbers have gone up, but also the value of the amount has gone up because -- because relatively the sales figure have gone down. But the value has gone up for one, not just one, but n number of customers that you have in terms of receivables?

Correct.

Okay. Okay. The next question is, I just wanted to understand, as you clarified earlier, right, we sold one of our subsidiaries. I believe that was in last quarter -- I mean, last year, last quarter, right? That was in March?

That was obviously -- yes. Correct. Yes, yes.

Yes. So I just wanted to understand how did you -- I mean I couldn't see any reflection of proceeds, probably I must have missed it somewhere, but have we received...

Yes. That is in the other assets that earlier that Keshav was asking about. So that is where the proceeds where we did receive some. Like I was saying earlier, typically what happens is when we purchase, we only pay partial upfront and then we pay -- we get -- we pay the balance in 3 years. Similar to the case when we sold 2, we only get a partial upfront and the balance comes in 3 years. So we did receive some money, not all of it.

Okay. Is it kind of earn-out?

It is an earn-out.

But are the earn-outs dependent on any sales targets or irrespective of your sales targets with company...

So yes, typically, what happens there is a guaranteed amount, and then it becomes a sliding scale. If the numbers what were projected out are achieved, then they get the amount that -- when we have in the share purchase agreement. If for instance, we achieve more or less, it becomes a sliding scale. We get less or more. Same thing when we buy -- it's a similar model that is followed across the United States.

Okay. Okay. Okay. So currently, that outstanding that there is in other financial assets, by -- is there a time line that we'll be able to, I mean, we'll receive it or?