Onward Technologies Limited (517536) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Onward Technologies Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions]. There will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Asha Gupta from E&Y Investor Relations. Thank you, and over to you ma'am.

Thank you, Neha. Good evening to all of you. Welcome to Q1 FY '25 Earnings Call of Onward Technologies Limited. The results and presentation have already been mailed to you, and you can also view them on our website at www.onwardgroup.com. To take us through the results today and to answer your questions, we have with us Mr. Jigar Mehta, Managing Director of Onward Technologies Limited. He will start the call with the business update and financial performance for the quarter, which will be then followed by Q&A session. As usual, I would like to remind you that anything that is said on this call that reflects any of this for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report that you can view on our website. Having said that, I will now hand over the call to Mr. Jigar Mehta. Over to you, Jigar.

Thank you, Asha. Good evening, everybody, and thank you for joining the Q1 FY '25 analyst call on a Friday evening. I'm glad to connect with you all again. I hope, you can see the slides and the presentation that we released a couple of hours ago to [indiscernible]. Before dwelling into the quarterly performance, I would like to quickly discuss some of the key highlights we have laid down in our presentation. If you could refer to Slide #13. I can just quickly give you a perspective about the -- the last three years we were in the [indiscernible] will be, right? Just want to spend a couple of minutes on that today. The last three years post the pandemic, we saw opening and evolution or a change in the marketplace where some of the largest OEMs in the world because of disruption that the whole digital, artificial intelligence, data analytics, created, opened up an opportunity for one supplier, one company [indiscernible]. In addition, more large OEMs in the manufacturing industry and the more it depends on [indiscernible] in the three main ones, realize that a lot of the work, which traditionally couldn't be offshore to India, can now be offshore to India. And that's where companies like all the technologies thrive. Obviously, we would only do it locally in the respective country and/or locally in-house in their own centers. We started outsourcing that. And we have been blessed with being in the right place, right time, and right capabilities that we could ramp up [indiscernible]. In addition to that, we took the last three years to reposition all the technologies in a very structured way with key verticals and some horizontals. And today, that entire transition or transformation has been completed. And last, in terms of numbers wise, we achieved INR 472 crores of revenue. We delivered for the first time last year double-digit EBITDA from being [indiscernible] company and debt in 2019 to a company today with the highest cash on hand. Has changed the way we start looking at business. And of course, from a shareholder perspective, we have been a dividend paying company nine years in a row. And then earlier today in the AGM, we increased the dividend from INR 3 to INR 5 and then [indiscernible] by the shareholders. Now a couple of minutes about talking about there today and the next three years we go. We started Q1, [indiscernible]. We started off the financial year post May -- post the last [indiscernible], now we start accelerating towards both growth expansion in U.S. and Europe and building more domain capabilities in verticals and horizontals that we are presented. And we must have seen a lot of action about us as we talk about that. So what do we have today going into the future? We have a very strong team. We have an amazing board. We have an amazing board very, very -- which is very involved working with me in terms of management team in terms of policies, in terms of culture, in terms of budgets and then and that's -- and of course, [indiscernible], and that's really helping us, and lot of decisions we make today as well in the Board meeting, but actually has made review [indiscernible]. We have a very strong management team. My leadership team, my top two [indiscernible] been stating since 2016, and we only added to the [indiscernible]. Some people have retired and then other people [indiscernible] hired externally. Our entire second and third line is the strongest, I believe. We have come from very good execution backgrounds or good capabilities, of course, very highly educated from very strong [indiscernible] capabilities. Number two, our whole company today is from the internal focus in 2020 when we are sitting at home. Today is a customer-centric approach. Now it's all about getting back to growth and being ahead of the curve and you'll see that a lot more from us, especially in the U.S. and Europe markets. In terms of customer engagements, we were all over the place in the last two years with 250 customers. Now we are down to 85-plus customers. We always maintain 75, the sweet spot, 60, 75 customers and how do we grow and build deeper engagement and add value to them across all the [indiscernible] mechanical engineering, [indiscernible] electronics and digital. And of course, revenue growth. The revenue growth is very, very significant. And we looked at some of the best successfuls in our industry. Five companies is much bigger than [indiscernible] nominal job in the last 20 years. And we believe that's the right strategy that they have. And I think it's really obvious for a company that has to follow that to, the good years done by them, and see how you can create [ other ] which we play in the market, which is instead of being a broad-based service provider, R&D service provider working with a lot of customers, working with a few customers and scaling with them. And we believe the personal [ stone ] for us is ensure having a definite number like we did it in before is having 10 customers with $10 million and 20 customers at $5 million, and we are working towards that and all our investments are in that journey. And my last point is investments. I continue to keep getting questions is on-board investment completed and done with investment. I personally believe we have just started. We have such a major opportunity. We have such an amazing pipeline, and now it's all about converting and executing which is what [indiscernible] not done before because we hired people to do that, to invest in, in terms of expertise, building deep domain capabilities and going deep into lot of these areas in industry and [indiscernible] in mining equipment in construction, in automotive, in the [ military ] and a whole bunch of other stuff continues to be the name of the game. We believe we only started on the investment journey. And I would like so much amazing talent ability for a young company like Onward, and I'm very excited towards that. We're getting the best people from the best companies and hiring has become so much more easier for us. And I'll talk a bit more about that in [indiscernible] through the year as we talk about that. Now coming back to Q1 numbers. We declared INR 117.6 crores revenue, which is a marginal drop from the previous quarter and a little bit slower than we expected. I expected, I was hoping to be a bit higher than where we are today. And that's something we are correcting, and I am sure you will see that uptake right from Q2. In terms of -- I won't talk about lot about the exits of the old business, then the stuff that we have done [ because ] we've spoken enough about that in the last three years. I talked about the positives and where we want to go because there's nothing to exit anymore. So it's really progressive and positive or at least [indiscernible] and it's the best be for me professionally as well because [indiscernible] in the future. So coming back, revenue of INR 117.6 crore a bit shorter than what I thought will be. 120 would have been a good sweet spot for us after the transition completed. On the EBITDA level, on a quarter-on-quarter basis, we grew 20-odd percent. And we ended up at 9.9%, again, a bit shorter in the revenue growth. I think that would have had a pretty positive impact on us. But still a growth of 176 bps points. And PAT was at INR 7 crores, which is a growth of 6% sequentially. Our goal continues to be to have double-digit EBITDA. I do believe we will be much higher than last year as an organization at a consolidated level. Last year number was [ 9% ]. So yes, our aim is and our projection in pipeline do show and our cost structures. After all the investments that we will be higher than that. And we continue to maintain that for this year, next year and the year going forward, then we will have a balanced profitable growth [indiscernible] as we look ahead. On the revenue side, we believe revenues was something that you will see start growing starting from Q2 upwards, and I think the next couple of quarters and years are going to be very exciting for us. As we keep mining the existing relationships we have as we keep building on the amazing people the new hire and you're giving them enough 6, 9, 12 months to settle down and make an impact. And obviously, third is continuously [indiscernible] them as well to continuously [ tendering ] both our relationships, long-term contracts and higher revenue deals. Deal momentum continues to be very positive across all the three verticals. We are still not legally authorized by customers to share client names, but we continue to grow with our customers. A lot of our customers that we have signed in U.S., are pretty much to Europe, [indiscernible]. We are working with the U.S. [indiscernible] with other locations, which we are shying away from right now. A very interesting development that's been happening in the last several quarters. I'm assuming it applies to broader industry as well. The capital centers that we work with GCC that we work within India are now taking up global as well, right? And that's because of the major work our team has been doing on the delivery side, the capabilities, the quality of work and slowly, slowly we seeing positive momentum towards that and I do hope that's the new way of trust and relationships that what we're dealing with the customers. In terms of demand environment, external continues to be very positive. As I said, I've just come back -- actually, I didn't say that. I've just come back from [indiscernible] to U.S., Canada in the last few weeks. We are opening our first [ 2025 ] office in Toronto on Monday. So both the U.S. [indiscernible] my management team are there right now. They'll be doing the inauguration. They're are interviewing people. They're hiring. They're meeting a lot of customers and prospects, which are on [indiscernible]. And we do believe that can be an important part of our business. Just to clarify, Toronto office is not a sales office. It's an office where we will let interview to be the same time zone as U.S. or North America, and we are looking at servicing North America from there. [indiscernible] Chicago and our mid-office initiative. In terms of opportunities, we continue to see a lot of opportunities on the digital side, whether it's Gen AI, whether it's data science and data analytics. And we are trying to -- that's the opportunity. We challenge [indiscernible] the demand is so high, that attracting the right people is something that we have struggled with last year, but this year, the team is getting better and with a much better brand and extended values. In our favor, I think we really got to sharpen a lot of people now and a lot of momentum you see there. Just an example that I'm talking to in terms of financial numbers, we applied for 200-plus H1-Bs last year. And for the first time, we've got about, I think 25 or 30 approvals from [indiscernible], right? And again, this after a gap of six, seven years. So it's a very positive, I hope we can keep building on this momentum on a year or two [indiscernible] 200 or 300 HI-B is readily available for the projects that we [indiscernible] to be deployed, which we see a huge uptake of revenue growth as well. Our balance sheet continues to remain robust. We have, for the first time, again, very exciting and I'm very proud of it [indiscernible] as of end of June. And I do believe that number will keep improving in the next few quarters and years as we keep building a very strong robust business model without compromising on investments in the labs and central excellence and the [indiscernible] across the three verticals and horizontals. And to summarize, I would like to again thank you all for being a [indiscernible] in the last three years since the transition and transformation of Onwards started. It's been highly rewarding. And at the same time, last few quarters, thank you for your patience and changing the trajectory from the top line and bottom line. And we do hope that we will get back to, you're quite positive when we went back to both especially to our revenue growth starting Q2 and over the next few years. I would like to take an opportunity also to thank my team. We are working exceedingly hard. We're working extremely smart and I'm proud of the work that they do. We're now at 2,493 people. The reduction is not -- attrition is actually the client that we exited. Just to reclassify this at the end, we exhibited a large client in India, which was about 80, 90 engineers. We exhibited a very big business of ours, which is energy business in U.S. and Mexico and [indiscernible] Germany which used to generate about INR 20-odd crores a year of revenue a year or two years back. We completely moved out of that. You might have seen some drop in revenue in U.S. and Europe, but that's [indiscernible] is just a business that we exited and the transactions that we are part of. Third is some transactional clients that we exited in the health care vertical, both in U.S. and Europe, which is always part of our plan, which was not growing fast enough, and there are no potential to go beyond a $1 million. Some small clients, very good clients for small clients, and I think it's like [indiscernible], different ways. So that was overall drop of 150 people. But just to give you a perspective, that number will go up. You will see us hiring a lot of people. Even if you see as of today, we have [indiscernible] large number of them are already on the job portals, including social media, like LinkedIn. And we have built a very strong robust team of 90-plus recruiters now full time on our payroll, which are meeting the demand like shopping, right. So [indiscernible] when the focus and runs the whole team in-house, and we will start coming back. Now I would like to hand over the call -- the floor to the operator for Q&A questions and any clarifications that I can add. Over to you, Asha.

[Operator Instructions]. The first question is from the line of Kaushik from AK Investment Group.

Regarding the growth, being a small player, why are we growing 10% to minimum 10% to 15% of growth? And the second question is on the employee. You said that you are having 700-plus open positions. Currently, our employee cost is a derivative percentage. So you would be focusing on adding more employees or rather than letting operating leverage play out in our company because the margins are low. And then you go higher, again, the number is just higher, right? So that is my second. And third part is, what is our target? I see you are opening office in Toronto. So what is our target of percentage of revenue coming from America do you have in mind in next two years?

Repeat the first question. I got the third one on Canada.

I was talking about the growth rate. Currently we're not able to grow, 1% or 2%. I know that you have exited some of the businesses, but why the scale has not been happening at a [indiscernible] scale, right? Why being a small player, I'm asking about why being a small player, we are not able to scale. Like 10% to 15% growth is credit normalize. Why we are not able to do that? And then you are envisaging that you know that your pipeline is strong and there is a tailwind in the sector also. So when you're -- so which quarter or when you think that we will go on to the group because right now, the [ teaming ] has been done. So whatever you want to exit, you have exited. But when do you -- where do you see the scale at 10% to 15% growth since it is in the industry -- growing industry we are in?

Yes. Sure. So as I clarified before in the opening remarks, we do believe we were expecting to grow from Q1, and we had some delays, but that's behind us now. In Q2, we do believe from Q2, you will see us back on the growth side, and we will build on that as we accelerate towards where we want to go with our clients. The second question was in terms of headcount. You have that number in open positions. I just want to give you all of your perspective of the kind of demand that we are seeing as a young company. You've never had this kind of demand from our customers, especially in U.S. and Europe. And I think that number is only going to increase is what I see. As we keep hiring more accounting managers and account sales managers for the clients that we already serve, right. But please keep in mind, demand is one thing, execution is second thing. For execution, I do need a lot of levers, whether it's U.K., Canada, Germany, U.S., and that's something [indiscernible] did not have. That's a new business for us in the last three years. So we are building on that and we're seeing on moving momentum towards that, right? Just to clarify. Number three, this doesn't include offshore demand, and that continues to be a good -- that continues to be at a good momentum, which is the high margin business. And I do believe that business will also keep growing with [indiscernible]. We are upgrading all our offices as we are upgrading our infrastructure, right? Just to give you a perspective, a couple of days back, we signed a INR 6.5 crores with Microsoft for the next three years or something along those lines, right? We see that we are confident of the demand that we see for the next three years. We have bought all the Microsoft licenses, including Copilot for our [indiscernible], right, which is a Gen AI tool. And the third question in terms of America, so I clarified before, I believe in, very soon today, we at 50% outside India, 50% in India. I believe the right sweet spot for us is 70% of the revenue should come from outside India. That's [indiscernible], and that's where all our investment has been. And that gives us a good balance from a risk perspective as well, right? Over the next few -- and that's where we are continues to invest in.

So in the near term actually then there will be a lot of costs which will be coming in -- but in the medium term to long term, those will add benefit, that is, if I'm thinking, right? And at which growth has been a year-end a small place, at which growth, you will be happy for the execution? At what kind of growth you would like to see? I mean from Q2 assigned growth?

I'm the happiest CEO in the history of Onward in my industry. As I said, I am comparing three years back, company should have not existed. In three years we have built from 0 to INR [ 473 ] crores. [indiscernible] INR 100 crores cash on hand. Three years back, we had none of these Fortune 500 companies. Today, we have the best companies trusting us, engaging with us, training us, growing with us. So as I said, three years back, if you saw infrastructure, we're sitting at home. Today, Onward technologies, employees are working from the best infrastructure globally. And wherever we are not, we are upgrading that. All our policies are getting upgraded. Salaries are at an all-time high. So again, the only possibility [indiscernible] Onward. I understand from an external analyst perspective, people want to see much better growth. And I'm sure that we can. I think it's only a matter of time. As I said, we are last one quarter was a blip, which I was hoping was not there. Last one year, I was very clear that I was focusing on double-digit EBITDA. That changes the trajectory of the company whether you want to [indiscernible] somewhere else. So that's what I've said. Now going back to the cost side, I continue, I mentioned earlier, I do believe our EBITDA numbers for the year will be better than last year in spite of all this cost. In short [indiscernible] supported by revenue growth. So we have to grow. We see a pipeline and we have to execute towards that.

The next question is from the line of Raj from [indiscernible] Partners.

Sir, was there any lost sales in quarter 1 FY '25?

No, we've never had a loss in last seven years.

Sir, for FY 2025 it was an execution issue from our end rather than a demand issue, right?

Correct. We actually delivered 9.9% EBITDA percentage.

So that has been higher ideally?

Yes. It's been higher, it's been good. It's been very positive. It's exactly what we thought we will be a plus/minus percentage. Yes, Onward, the company, I don't see any big losses [indiscernible] in pandemic.

So are we expecting [ uptick ] in change in EBITDA both from Q2 FY '25?

We are expecting uptick in revenue growth from Q2. Everything else is balanced. We don't give quarterly projections, but yes it will be, how it plays down in the whole year, yes.

So sir, the issue was [indiscernible] since last two to three calls, you have been putting [indiscernible] on the ticket capability part of the company. So when do we exactly see this ticket capability converting it into the figures?

That's what we are working on, right? That's exactly what we are working on. A lot of things we get excited with a very young company. We get excited as the team that we are winning and then the project has started a bit later. There are lot of times we have -- we've signed -- just to give you a perspective, we have signed an amazing, one of the best -- best automotive brands, race car brand last quarter, so the billing started today. So we start on Monday, sorry. We were expecting that a quarter ago because it's a very small, small things like that. I mean you have to learn to live with that and we have to learn to play better, and that's what we are doing, right? And I think there's not much to it. I think it's all about we have to get back to growth. We have the customers. We have the people. We have the capability, and it's all about doing it properly and knowing where to invest your time and energy.

Understood. And sir, for us, how much is the ideal pipeline to order book conversion ratio?

So I'll answer [indiscernible] product company question, even our IT services question. I'll give you [indiscernible]. My way of looking at stuff. Each customer outsourcing budget continues to be worth a $100 million plus, some are $500 million or $1 billion, [indiscernible] right? And everything else in the pipeline because no customer today is married to [indiscernible]. or vendor. It's about capability, right? There's application support. And then there is new product development. Onward is not in the application support business, Onward is in the new product development business, right? Engineering, re-engineering, robotics, Gen AI and all the projects that we do for customers, we set of our R&D team or build competencies. So in that perspective, each customer's budget 20% to 30% is available to us to claim it. That's my pipeline, right? Today, on the most sales person or sales rep and Onward, going in the market to sign new clients. We don't have a pipeline and we already have won the customers. I hope I clarified, right? The customer is outsourcing budget. That's why my confidence is always very positive. Now it's all about we need to execute and we need to get a bit lucky as well to be very honest.

Sir, are we changing any big, big ticket clients?

We stopped chasing clients for two years. We have not made a single change [indiscernible]. The only clients that we have signed in the last two years or two-half years, has come to reference, right? Then we do a great job for [indiscernible] industrial companies, we get reference to one of the three. So all our wins have been through that. There is no sales pipeline. If you look at our [ PRM ] which is salesforce.com, there is nobody chasing a new client. And if there's an opportunity, a prospect is through a reference. And reference, usually, we are seeing a very high percentage conversion because there's a clear demand from the OEM to add a new supplier, tier demand and what they're looking at. They know [indiscernible] good work in that service. Now it's all about [indiscernible] select us to be [indiscernible] suppliers from somewhere around the world.

And sir, who would be our immediate peers in segments?

I request you to come back for a follow-up question. The next question is from the line of Sapna [ Jhawar ] from Kotak Life.

So just wanted to understand that what has been the execution challenges for us in this particular quarter, which led to a flattish or a decline in sales? Has it been that we did not have [indiscernible] people to fulfill the projects that we've already signed? Or was it something else? If you could just help us understand that.

Sure. Yes, so two things. From a U.S. perspective, we did not have the people, the technical people. That's something where we lost some traction in the month of, let's say, in the month of June. And from a Europe perspective, projects that were to start in the month of -- the projects that we won, which is supposed to start billing in Q4 did not start and some are starting [indiscernible] next Monday, coming Monday, right? Because [indiscernible] longer and something or the other. That's the first part of it, that 80% of the revenue. On the India side, we saw client budget accelerate and which we were not ready for. I think because we're also seeing a lot of new [indiscernible] every company is going through that. The GCCs are starting hiring at a very, very fast pace, right? And we were not ready for that. So we had invested all our [indiscernible] in the U.S. where the demand came very big in India from the same customers. And that's where we had to balance things out. So we did catch up a lot in last couple of days or weeks of the quarter, but we could have done it better, we could have seen things a bit better a quarter back. Because it's very hard to make an impact in the middle of the quarter for the quarter. I think you understand that on the services.

Yes. So is it wise to say that we have others in hand, it just got deferred to Q2 because of the lack of requisite talent in the appropriate place and they would come soon. So 2Q should see that deferment filling up the gap. And India as it is not a focus area for us. So even if the demand is high, we would be happy to let go of that same reason, right?

No, that business has gone Sapna. Yes, the first point is absolutely right and I agree. Second point is the Indian customer that we have today is a very important part of our business now. What we wanted, what was not a priority, what we want to execute is all done, and I hope I never have to talk about that in my career again. So it's very painful. Let go [indiscernible] client. But coming back to the clients that we have today, we've got dream clients. We love working with them. We are growing with them. We are getting awarded with them. But what is important is we didn't see the demand come up so quickly. There will be a marginal thing. And what happens is, if you don't ramp up with them the you get left behind if you don't deliver for them. So we want to ramp up with them as well, and that's what we are getting better. So we had a new leader who joined us in Bangalore, for example, to head that business. He came onboard from HCL [indiscernible] he came from other company. So we are now building that as well. So now we are in a good shape where we can make it deliver to what we see is potential for Q2, Q3 and Q4.

Understood. [indiscernible] talent wise we would not have an issue. In terms of demand we do not have an issue. In terms of -- in execution, are you seeing any delay for, say, that's happening? I understand, I mean we're a small company, demands really good, but are we seeing any deferment happening from any of your customers, be it in the automotive sector on the mechanical side, on the IT side, anywhere it's at all? Have you seen any deferment happening, which would have left us high [indiscernible] Q1 and should followup in Q2? Or any other execution challenge that you would like to highlight?

No. So one other point that you mentioned, execution challenge continues to be there for us in Europe and U.S. There after bidding a project, we're not actually be [indiscernible] as well. Customer wants to start tomorrow. Because every company that we are working with and you guys all know some of the names are very cash rich, very powerful, very larger companies in the world. So when they -- and they are huge budgets. So when they award a project or the selective as a supplier, they want to start to borrow. I don't -- all the technologies does not have the necessary bench. You never did -- we had small bench. We didn't have a huge bench with H1-B people with German work permits. And if we had [indiscernible]. We had a number of [indiscernible]. So it's just about playing it right.

So how many people have we added on a net basis from Q4 to Q1?

Great question. I think must be 150 plus, 200 plus. I don't have the exact number Sapna, but we can email back to you right away. But I don't know if I'm allowed to share today's headcount, we must be at about -- back to about 2,550 or 2,600 something.

What would be our entire plan for a net hiring for the year?

It's not the net hiring. It's a net hiring in U.S., U.K. and Germany would be important. Net hiring, I think we have shared in our projections, I think between [ 2,700 ] and 2,900 people net at a consolidated basis. But what is important, can we add that 1,500 people in Europe and U.S.

And how soon can we do that?

I mean if demand is there tomorrow, and that's what we are working on. We already filed for the visas and I said U.S. we got some success so we're really happy about that. We just have to get the momentum going for U.K., Germany and Canada. And we're almost there. I think we have figured out what we need to do, how we need to execute on that side. Now it's all about making sure that we deliver on that.

Great. So just last two questions from my end. One, on the cost front, you did mention about your aggressive hiring plan and probably some more investments coming in all appreciated. But in terms of cost, is there any more scope for us to improve efficiency within our own channel in terms of costing cutting because we've seen the sequential growth in the margins. So that must have been and despite net hiring, if you're seeing that, but much have been that from the OpEx part of it, we continue to squeeze something, be it travel or something of that sort. So is there -- if you could just explain that, what's led to this 200 bps improvement despite the revenue being [indiscernible] and how will this continue going ahead? Second, on the pricing front, since our ambition is to move towards more U.S., Europe, U.K.-based plant. On the pricing front, is there a negotiation happening for us to get a better rate in terms of employees because demand is not a concern. We just have to provide the requisite bench to them. So is there a negotiation happening on the uptick on the prices as well, these two points?

So to answer your first point, is there opportunity for cost optimization. There's always an opportunity. We are not [indiscernible], and this is the biggest size of the company we've ever run. We're always looking at that across the board, across the management team, across [indiscernible] that we have and it's a very European delegated task, so it doesn't come up to my end. Everybody is working on it every day, and that's very positive. Number two, please keep in mind also in the Q4 quarter and we had a bit of a dip in bottom line. Because of a onetime hit on furloughs and the Visas [indiscernible] costs that we had. And that's all behind us now. So that's not going to come up hopefully.

[indiscernible] that has led to the 200 bps or 150 bps improvement in the margins or the [indiscernible]?

No, no, no. I don't think there's any -- we don't do cost cutting. As I said, we are spending more. I'm actually encouraging my managers and my team to travel more. I want them to build more relationships, learn more because, again, we are at a stage where we cannot behave like a much larger company, right? The relationships have been there the last 20 years. We have just started the relationships. And you know very unfortunate or fortunate when we started the relationship three years ago, we were all remote [indiscernible]. Not they're building, people are meeting each other. Trust is getting built. They're seeing my team work. And I think it's very positive. I'll give you an example, we have won a new project right now in the U.S. it's more for Q2, but I can share [indiscernible], we signed an amazing new customer. We actually signed them in Q3 of last year. We're supposed to start in Q4 and will not start because of some contract in either business. Now it's all behind us. We complete the paperwork. And now we have fitted out. We start delivering the project from U.S. is actually will deliver the project from Canada. Just an example, because for the customer, what really matters, and we build face-to-face relationships was can you deliver the same time zone you don't want it from India or Europe. And they're happy with Toronto. They're happy with East Coast of the U.S. This is an example, right. Execution. Now I didn't know that a year ago, but we are discussing on teams. Now when you start sitting across a conference room and brainstorming on how to execute the project with customer, a lot of interesting things pop up. And this is one very beautiful example of how our teams got creative, customer got creative because everybody was working together to make it happen.

Got it. So on the cost side, also on the pricing also good share.

And on the pricing side, there's always a conversation because our majority of our business model, 80% or 90% of our revenue comes from time and material. Every year, Sapna, my team and me have a conversation with all our clients. Not just the top five clients, all every client that we have in the PNM side, which is on pricing. And we see a lot of positives. We always see positives. When we do a good job quality wise, the customers out of the work our teams are doing, when they [indiscernible] supplier, it seemed there much longer because we have a new supplier. We always see very good clients that it's rate increase, whether it's [indiscernible] increase. And that's a very natural progression, I believe, across the industry. On the fixed side, that's not how [indiscernible] and you are not quoting for that big projects.

The next question is from the line of Tanmay Aggrawal from [ Family Office ].

Jigar, I principally wanted to understand, do we have any concrete deal in hand for which you are so confident about the growth coming in from quarter 2 because at this particular moment, we've been stuck at [ 123 ] revenue [indiscernible] eight quarters out. So if you could probably say a little [indiscernible] now would be the quarter where we are definitive of breaking this particular [indiscernible]?

We have -- sorry, just to answer your question, I think I addressed it before. We have the pipeline, we have the visibility from our customers. We have to execute. Why I'm a bit more positive? One is I'm a positive person. Second is this team has built a beautiful company in the last few years and they've hired even this smarter people in the last one year. Customers are progressing and always getting great feedback. And now it's all about can we execute, right? That's what it's coming down to. And we share an example in the earlier answer. And these are things that we are doing to get [indiscernible] we're are able to execute our client.

So on the execution part, do we foresee any capability issues because from what I am able to see, if you look at the top 10 people that we have in the company, or if you try to look at the Board of Directors that we have barely and believe from the IT background, even though the partner that we have is not from IT background or here in the background. So just on that particular segment, when we talk about execution, can you share anything how this [indiscernible] could be different from the last date in terms of execution?

I don't know where you are seeing the people. So one, we're not an IT company. We're an engineering services company. My top 100 people are all engineering services guys. My management team are managers, their leaders. They're not need to be mechanical engineers, data science engineers. We are just great leaders, and we know how to work with each other. Over the years of experience together and have done a beautiful job right and they will only excel more and more in the next three to five years. You can see the next level below them. The management team is run -- the Board, which runs the organization. They are exceptional of creating large companies. That's what their contribution in corporate governance, of course, management team, which is drive leadership that's called the leadership team. They are job leaders. We need to be a leader. Hire great people to do great things. From the right culture, processes, tools, infrastructure, and that's what they do very well. And because the entire next line of people that we have, which is 2,500 of them, 2,400 of them, which is just phenomenal.

So anything specific that which would entail better conversion or better execution?

We just have to learn. We are learning. As I said, we said before, you never run a company on the side, we are learning. We are humble. We are [indiscernible] on the ground. Everybody is working very hard. Best part of all our industry, which all of you guys know, we're one of -- none of the Indians companies come to each other in our space. They're not IT business. Everybody has enough room to grow. Everybody has enough momentum. Everybody see visibility for the last five years. And I think the next five are going to be even better. It's not one company even at all, right? Every customer has three to five suppliers. There are five or seven engineering companies. And I'm just proud that Onward is now suddenly the mix in a large number of them. And I think we will only improve as the time goes by.

And we're very hopeful that happens too. Just one last question that typically in a R&D company, we usually do have visibility for the next 9 to 12 months. So anything that you can share in terms of what you envisage where we should exit on the inside this year?

We don't share projections. As I said, we are too young. We have to stick to what we are good at and get back. We had a great run last year and we can make next year better than the last three years. And that's what we all are working hard to do.

The next question is from the line of Manjeet Buaria from Solidarity Investment Managers.

I have two questions. First, I wanted to understand when the [indiscernible] some issues are. How does the customer look at that from our credibility perspective, and in terms of the global second. Is like the [indiscernible] long-term relationship benefit impact [indiscernible]?

Great questions. Again, let's classify the customers. There are customers where we have an engagement for more than five years. Now with those customers, they will get creative with you as a supplier because they take you part of their ecosystem. And they were kind of companies we love working with. They're with clear understanding. Because the customer, you have a supplier and they grow, they want you to grow with them, right? So they were trying to hold you and they get [indiscernible]. So that's the first part. There are some customers who are a reference client, you just signed them last one year, for one project, the two project and now the third requirement, come out and let's say Onward being done on capability because we want to do to execute. Those customers are definitely not good for us, right? Let's say, the project has to start on -- I'm just giving you the number a date, August 1. Onward is not already, we might wait till August 5th, if not then will go to the L2 vendors. The second vendor who was in the race. And that's how it works. And we also benefit sometimes buy back when some large engineering companies are not able to [indiscernible] our customer goes to us, not us or [indiscernible] and a lot of places on the 2. So that's the second part of it. How does it impact the relationship on the first? It's never good on a relationship then what you promise you don't believe, right? But I think what my team does a good job, and we are getting better every day. We at least we are very honest with the customer. We know our customer. If you remember, I don't know if you are tracking onward about 18 months back, we hired 5,000, and we actually walked away from the RFP. And every other Indian engineering company has [indiscernible] for it. So we walked away for them. We didn't have 5,000 people on bench, and we did not think Onward can ever ramp up to I think 5,000 engineers in one month. There's too much -- too high thing for us. So I think we are honest as honest as we can be. We like to stretch ourselves a bit. That's why we're trying to get better. We are [indiscernible] the customer, we want to ramp up -- [indiscernible] projects only in the best coast. And we did not want to do that because all our engineering centers are in India and we have some capability in the Midwest and the U.S. And we shied away from that. I think that could have been a huge opportunity. So just coming back to your answer, when you did your project or you we still have a project, it's never good for any relationship. But at least we -- it's very important that we communicate in writing. We communicate transparently and directly to the customer. And I have seen in the long run, most of them appreciate that.

But -- and when you look at the second bucket you mentioned that the relationship is so [indiscernible] relationship. When they come out with newer SKUs, if you participate in the [indiscernible] the black listers [indiscernible] you start on the [indiscernible]?

Yes. So interesting question. So we are again talking about OEMs, all large companies, the biggest companies in the three verticals that we are part of. There is -- you have to understand from your perspective, and I think you might know that as well, Manjeet, it's very expensive for them to add a new supplier, right? They're not new companies. They are more so than have 10, 20, 100. So for them to add a new supplier, they have really compelling even to add a supplier. The demand could be sold by the big technology structure or whatever [indiscernible]. So there's no concept of black list. But you have to -- that's where you need account manager, and that's why we keep saying for the last seven years that we are not done with investment. We won't be going to hire a lot of OEMs, which is accounting manager. We had a lot of [indiscernible] accounts managers. And what I have encouraged my team all the times instead of hiring a [indiscernible] experience, I had a VP for the same position in the 20 of experience, paying 3x more because that will help you build or accelerate your transition into the client trust -- in client in using, and that's what we're doing. But actually, in our careers at least in Onward, [indiscernible] projects, but those are project-based companies, and we are not into that business anymore.

One last question, Jigar that was, India was trying to cut the FY '23 and FY '24 deliver in two buckets. One was a legacy business, which you are not interested in your winding down and you've already shut them down. And the other is all the business you've to focus on because [indiscernible] in India the onshore business and all of that, right? So if you could just straighten the back out of INR 441 crores of FY '23 [indiscernible] what is the business which you really [indiscernible] the policy and to be shut down on this already shut down. And what is the same number in 2024. Because I'm just trying to appreciate the part of the people that company is growing the core business, which is your focus.

Okay. Good question. We have all the data, I believe, on our investor deck or the earnings but just from a timing perspective, is it -- if it's okay, we can have our teams send you all the data for this call. It's [indiscernible] available. As a substantial right.

Jigar, actually, I've been trying to be -- I've been trying to triangulate that from a debt, but it's not very clear, but by getting consumers to [indiscernible].

Yes, please do. And if not, we will make sure you have a [indiscernible] Monday.

[Operator Instructions] Thank you. The next question is from the line of [ Ambrish ] an individual investor.

My first question is related to attrition. Now that the IT services business has more or less been separated or exited, is there any color you can give us on how is the attrition within the core business now, especially between India and non-India because we're running quite hard to recruit. So just to understand if we have anything to worry about on the attrition side.

So not much to worry about attrition side. The reason we have not captured or we don't want attrition for the last three years, in particular, especially during the pandemic, which is through the roof is predominantly driven by, we decided to exit so many more away from the legacy business. It's very hard to calculate what goes attrition and what doesn't go attrition. But I would like to believe as for the feedback given by my HR head or discussions at the management level. The attrition is normal like the other companies in the industry, the R&D companies. But there's always room for the improvement, right? One of the best things about a young company like us is we are [indiscernible]. You know invest INR [ 250 ] crores, INR 100 crores [indiscernible]. A lot of data out there [indiscernible] is very good. I believe the [indiscernible] international career opportunity is very high. And I'm just talking about from where we were three years ago, not [indiscernible]. And so that's a very proud thing of where we are. We have to keep getting better. And I always tell my HR, we should become the best paying company in our industry. That should be a dream to a new HR organization. [indiscernible] all our attrition, all that doesn't come. We should not be the lowest thing, we should not -- we should actually be the best thing. Try go to level.

Yes, yes, that's helpful. I mean other question is just a consideration whether going forward, a couple of metrics could be included. So one is on attrition to a -- the others, I don't know whether it's sensible -- whether something like a total contracted value is a sensible metric for you to talk about or does it not apply, I mean from other companies do. That's more on the revenue side, right? The total contracted [indiscernible].

Sure. So we don't share the [indiscernible] at pricing, we are a bit -- we're not ready for that, but I'm sure we will start sharing as we make progress in the next few years.

The next question is from the line of Parth Desai [indiscernible] Investor. .

So you -- if I look at the India business, that's still growing quarter-on-quarter and rest of world is actually be grown and you've explained some of the drivers behind that already. What I'm trying to get to is how is this demand from the India GCC shared with Onward as a good via RFCs [indiscernible] or is it more head count based benign? And if it RFPs, the time cycle for RFP is particularly one month plus. So why aren't we being able to and the plan in advance and grab that opportunity.

Just -- so I'll answer this question, the last question, I think it would be great for everybody as well. So all every demand to Onward or any R&D commonly comes to RFP, right? There is no other mean. Whether it is for head count or it's for a project or it's for managed services, right? There are only three buckets which are there. Pricing can change how we want to do it, right? So there's only RFP process. There is no other combination. So there's a customer looking to add 500 people, head count only, it's RFP base, right? Because you still have to go through technical capabilities, domain capability, pilot projects, infrastructure. Even the customers plan to do the entire work in his or her premise, right? So it comes to RFP. I have never seen any other in my career. So that was the main question. And second is, why is it tough for Onward? And I genuinely believe what I shared at the starting of the communication and I've been saying it last three years in discussing and learning in the whole process is [indiscernible] to what happened and customers have demand and I have only 20 managers in place today, 20 teams in place, they are all over the place, right? And if I look at the success story for the larger industry peers, who I shouldn't call them a larger industry R&D companies, which have done exceedingly well, they have three or four or five. That's it. 90% of their profit or revenue comes from three, four, five companies, customers. So they're able to align their best people on the best customers. So my team today, I feel already is very stretched. So while demand is extremely high what is happening to us is all of [indiscernible] have demand tomorrow. And all 65 demand is different, different territories, different locations, some places there's commonality, but that's what it comes down to. So more and more we get focused more and more, we show the customer the now, we show the customer the commitment, the attention, we think the same customer will give [indiscernible] and that's what we are seeing, right? Just to summarize your point as more factual thing I thought would be important is like we had large million dollar [indiscernible] client right? About two years ago or one year ago. In the last several quarters, we actually moved away from significant number of them because we realize they can never go from 1 to 5 million. But it needed -- the relationship was either at my level or my management team level. So we'll need all our attention and we've actually moved away from that. And you will see not more getting added in the next few months or next few quarters. From the revenue percentage of our top 5 clients or 10 clients [indiscernible]. In spite of some clients going away, you chose to move out from. I hope I'm addressing your question to factory data.

Yes, that's an interesting thing.

So for us is to qualify, I have a few customers go deep with them, show them the commitment keep investing behind them and then hope they will reciprocate as well, and we have seen everywhere. Thank you.

Ladies and Gentleman we'll take this as the last question. I now hand the conference over to the management for closing comments.

So thank you again, everybody, for joining. I know it's Friday evening, and it's a lucky it's not [indiscernible]. We have started off the year early in the first quarter, and we do believe we have an exciting future. So thank you for your support for the last three years. Thank you for this quarter. We are positive. Our next three years will be much better than the last three years, and we only have strengths to take forward. And in some of the cases, when we need to share data, we will make sure we share the data to you guys by Monday [indiscernible]. Thank you, again. Have a lovely evening and a good weekend.

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