Subex Limited (532348) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q4 FY '25 Earnings Conference Call of Subex Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the conference over to Mr. Ramu. Thank you, and over to you, sir.

Thank you very much. Good morning, everyone, who have joined the earnings call for the quarter and year ended March 31, 2025. Now I would like to introduce the members of the management who are attending for this call. Ms. Nisha Dutt, Managing Director and CEO; Mr. Sumit Kumar, Chief Financial Officer; and myself, Ramu Akkili, Company Secretary of the company. I would like to start the conference by going through the safe harbor clause. Certain statements in this presentation concerning our future growth prospects are forward-looking statements, which involve several risks and uncertainties that could cause actual results to differ materially from those in such forward-looking statements. The risks and uncertainties relating to these statements include, but are not limited to, fluctuations in earnings, our ability to successfully integrate acquisitions, competition in our areas of business, client concentration, liability for damages in our contracts, withdrawal of tax incentives, political instability, unauthorized use of our intellectual property and general economic conditions affecting our industry. Thank you. Felicia, you can take the investors on to the call.

Sure sir. Ladies and gentlemen, we will now begin the question and answer session.

Felicia, Nisha may needs to do something.

I'm sorry, I need to kind of...

Please go ahead, ma'am.

Okay. Good morning, everyone, and welcome to our investor call. Thanks for joining us today as we share updates for Q4. As you have seen from the results, our overall results for Q4 are below expectations, but we have managed to maintain the bottom line in our core telco business. I've been saying that I'm focused on getting core telco back to profitability, so we can reinvest for growth. So let me start by taking a moment to reflect on our performance for the past financial year. As I look back, I think FY '25 was a mixed year for us. The good news is that our core telco business remained steady. However, we did face challenges on the growth front. One of the key factors here was delayed closure of order intakes in earlier quarters. Sales cycles have become little longer in telco. We have also seen slower decision-making because of ongoing macro conditions. And this impacted our conversion time lines. So things that we were expecting, for instance, to happen in Q1 ended up happening in Q3 and so on and so forth. And consequently, this also affected our revenue realization. Our year-on-year revenue declined by 8%, but this decline was primarily driven by our noncore business. So our core business, we were still okay. So despite these headwinds, we were able to deliver profitability, which underscores the strength and focus in the organization. On the upside, we made significant progress on cost optimization, which led to an EBITDA improvement of INR 22 crores. This has translated to an 8% year-on-year margin expansion on our core telco business. So we were minus 4%, we are plus 4%. So we have had 8% gain. Importantly, EBITDA has been positive in the 5 of the last 6 quarters. So this has helped us close the year profitably. We have also seen our normalized PAT turn positive in Q4, which I know a lot of you have been asking for a while then when will your bottom line turn positive. So we did that in Q4. Our normalized PAT was positive, reflecting the momentum that we have had from our operational improvements. Our cash reserves remain healthy, thanks to stronger collections and continued focus on financial management. This will give us the flexibility to make thoughtful decisions in an uncertain environment that a lot of us are staring at right now. We have also seen strong outcomes from our ongoing cost and productivity improvement program. So since I took over 2 years ago, we have driven a 31% improvement in employee productivity. This reflects our continued focus on talent effectiveness, operational discipline and digital enablement. What this also means is that our fixed cost breakeven point is significantly lower, which makes us more competitive and financially resilient in the market. As I've discussed on the earlier calls, we have made a conscious decision to deprioritize noncore initiatives to reduce cash burn and refocus on core growth. In the year, you guys are aware, but we divested IDcentral via slump sale in Q1 of FY '25, aligning with this strategy. Our Sectrio division has continued to be a drag on our profitability this year, and we are actively working to reduce the [ burn ] while we minimize customer impact. So during this quarter, based on internal assessment, the company has recognized an impairment allowance on disputed trade receivables. While company is evaluating all the possible options for recovery, on a prudent basis, we have created an impairment allowance of INR 16.89 crores, and we'll recognize any inflows as they come in, and this impairment is specific to the Sectrio business. Despite the challenges, I would say that there are many positives that give me great confidence in the turnaround that we are driving. In Q4, we secured some very strong wins. We added a new logo in Europe for our latest HyperSense fraud management product. We extended our managed services contract with 2 Tier 1 customers across Europe and Middle East. These wins strengthen our recurring revenue base, but also reflects that market still has confidence in our offerings. I'm also happy to share that we achieved 100% contract renewal rate, underscoring the trust that customers place in us. As you are aware, in early March, we had MWC in Barcelona. This is industry's leading telecom event where we showcased our latest AI and GenAI-enabled solutions in business assurance and fraud management, including AI agents for fraud investigation. The response was very encouraging. And with the rise of LLMs, agentic AI is emerging as a real productivity lever for telcos, and our offerings are well aligned with that shift. So this event also allowed us to deepen our engagement with our customers and explore new opportunities. This validates that our product road map where we are going is in sync with where industry is heading, especially in GenAI as it becomes central to transformation agendas in telcos. As I look ahead for this year, our priority remains to strengthen our core telco business while scaling new growth levers. And new growth levers for us are especially in fraud management. As fraud continues to grow in volume and sophistication and more players enter space, we believe differentiation through innovation will become critical. We are doubling down on embedding advanced AI and GenAI across our solutions to stay ahead of evolving threats and deliver more value. Our installed base gives us a solid platform to build this from. The telecom industry -- I'd like to just remind you that telecom industry is $1.7 trillion market with double-digit TAM expansion year-on-year. And we have a strong brand recall here and a solid installed base. And given that we are very focused on profitable growth, I think we will have the money to reinvest in our core portfolio, and I'm very excited about what opportunities are ahead of us. So next, I shall cover the consolidated financial results for quarter 4. All numbers are in INR. Revenue for the quarter stood at INR 706 million as against INR 727 million for the previous quarter. Normalized EBITDA for the quarter is at INR 53 million as against INR 40 million for the previous quarter. Normalized PAT for the quarter is at plus INR 66 million (sic) [ lakhs ] against negative INR 17.8 million for the previous quarter. PAT for the quarter is at INR 176 million as against negative INR 33 million, including exceptional items in the quarter. Now I will cover the consolidated financials for FY '25. The revenue for the year stood at INR 2865 -- INR 2,856 million as against INR 3,097 million for the previous fiscal year. Normalized EBITDA for the year is at plus INR 65 million as against negative INR 95 million for the previous financial year. Normalized PAT for the year is at minus INR 146 million as against minus INR 375 million for the previous financial year. And PAT for the year is at -- overall PAT for the year is at minus INR 314 million as against minus INR 1,917 million, including exceptional items in the previous fiscal year. As always, thank you for your constant support, and I'm happy to take your questions and comments.

[Operator Instructions] The first question comes from Jitendra Bhutoria an individual investor.

I remember in the last con call, you had said about Subex Digital LLP wherein Sectrio rests. Now Sectrio, you said they are -- Sectrio had 2 big contracts, which needs to be served and you're not taking any other new contracts. Now out of those 2 contracts, 1 contract was being negotiated with the clients to close down pre-closure, and this was expected to be done within the March quarter itself. And the second contract you said you were negotiating and you hope to negotiate and pre-close that contract. Now my question is, what is the status of those pre-closure of those contracts because they are burning a lot of cash? Now this is my first question.

Please go ahead.

Yes. My second question is, I just wanted to know, you have spoken about the impairment allowance for trade receivables. Now this impairment allowance wherein you have mentioned about INR 16.89 crores is disputed trade receivables. Now which year to it pertains and whether -- I understand there was some outstanding with regard -- to Burma receivables, there was some repatriation problem. Is that this receivable relates to that?

Okay. Okay. So are those your two questions, Jitendra?

Yes.

Okay. So in Sectrio, there were 2 big contracts, as I have mentioned. So one of the contracts actually we have been able to pre-close. And I'd like to kind of again remind everyone that the INR 16.9 crores (sic) [ INR 16.89 crores ] impairment that we have taken is purely on account of Sectrio. So which -- what that means is that the Myanmar contract that you're referring to is not a part of this impairment. So this impairment pertains specifically to Sectrio and this impairment has one of the contracts that we have been able to pre-close. The receivables are from that contract, the 16 -- I mean, some part of it. A large part of it is from that contract. There is another very small contract on the other side, but I think large part of contract is the one that we have pre-closed. So we have receivable pending there that we have to collect over the year. Because we had a discussion with our auditors, and we said that in spirit of transparency and also because I've been saying this all along that we are trying to negotiate out of contract, we should provide for it. On a -- it's more, I would say, a prudent basis and abundant caution basis that we should provide for it now. And we will recover the money. As we recover the money, we'll recognize income for it as through the year, we recognize the money. But to your question, on the 2 contracts, the INR 16 crores is from one of the contracts actually, a large part of INR 16 crores rather is from one of the contracts that we have pre-closed. So we have been able to [ pre-close ] but receivables are something that we have taken impairment for on a cautionary basis, which we will continue to recover through the year. So that's one part. The second one is second contract. I don't think that -- again, we are trying our best, but we may not be able to entirely exit that contract. In which case, we will continue to service this, but with a very lean team because it's only 1 contract. It's not -- we are not spread out too much. So we may not need a lot of, I would say, a spend, not to the tune that we were actually having cash burn in Sectrio. I think that has significantly reduced, and you will see a lot of impact of that in Q1, for instance, right, because we were still dealing with the, I would say, the aftermath of winding down and all that. So we will still have probably a very lean team that will service our second contract. We are trying to negotiate, but it's entirely possible that we may not be able to exit that contract. So that's the status of our Sectrio. Again, to remind everyone on the call, this impairment is not on the core business, what I call as core telco business. This impairment is purely on Sectrio actually right now, which has been taken on a cautionary basis. Does that answer your question?

This answers my question. There's one follow-up. Now I just wanted to know that regarding -- you said that the second contract you may not be able to close down or pre-close it. What is the estimated cash burn you expect during the whole of this year? Because although we are trying, and is there any impairment in the receivable of that contract also?

So again, see. Okay. So in spirit of transparency, let me just put it as much as I can share with you. See, the cash burn for us will vary depending on what we are able to do with that contract. So in the sense that if I'm able to, let's say, do it on a very lean manner and sort of take support from external support and fulfill that contract, then my burn might be to the tune of -- again, please remember that these are numbers that are more estimates only. Please don't take this as strong guidance because I'm still working these numbers out. But it might be in the range of -- we are thinking like a [ $300,000 ] or something through the year. And if we manage not -- but we have to -- there is another option that we intensely work on the contract and try and close it sooner. In which case, it's possible that we may incur a higher burn but try and exit the contract a little sooner than we would have otherwise exited. So in which case, our burn might increase, but we might be able to exit it, let's say, 2 years sooner than we would have otherwise exited the contract. So that's the negotiation or decision that we are trying to make right now, honestly. So that's why I don't have a very clear answer for you. But I think at the very bare minimum, we might have a [ $300,000 ] for sure. And it may only go up depending on the decision we make on the contract. So that's broadly where we are.

[ $300,000 ], I would understand as crores or...

USD. It's USD. Sorry.

Because I see in -- sorry, I see that Sectrio, you have a loss for the whole year of INR 25 crores. Now -- and that is out of these 2 contracts only. So leaving apart the first one, which is closed, what was the quantum of loss in the second -- out of this INR 25 crores, if I may?

Actually the second contract, we have not had a loss. So there are 2 things that happen here, and I will ask Sumit to weigh in here. So there are 2 things. So the overall loss is -- has 2 components. There is a Sectrio loss of 1 contract, which is 1 -- largely 1 and a very small other 1, which is contributing to around INR 17 crores. The other part of impairment that you are seeing is basically, we internally have a financial -- I would say, again, this is a policy that we agreed, internal policy with our auditors. We didn't have to, but we have agreed as management that any receivable that crosses a certain threshold will be provided for. So this is a regular provision that we are doing. And some of these contracts are not bad contracts or bad money. What happens is that some of the contracting that we do in our core telco business is backloaded. So what means is that the money will come a little later for us. So that gets recovered, but it gets provided for. So it's that money. Again, Sumit, do you want to come in and maybe clarify a little bit for Jitendra?

Yes, yes, sure. Thanks, Nisha. So basically, there are 2 pieces. One, as Nisha told. For the quarter, if you see we have provided the bulk impairment is towards the Sectrio contract, which is INR 16.89 crores. Then barring that, there are as a part of ECL provisioning for the receivables. So anything which is -- which comes into the ECL provisioning, it keeps coming. And internal policies is anything greater than 365 days, which is crossing as a receivable, then we provide. And then obviously, it's like a moving bucket, it comes and goes. So which is a routine kind of a thing, which is there, but bulk is the Sectrio piece, which we have just clarified.

The next question comes from Mahesh Kumar, an individual investor.

You have been saying in all the calls that telecom total addressable market is a few billion dollars -- few trillion dollars, what are the products which Subex is having for that, what is the total addressable market? That is my first question. In second investor call, you told see you will try to address adjacencies of telco for growth. What is happening on that front?

Sure. So basically, if you look at our products that we have for this market, as you know, we are in business assurance, we are in fraud management. We do partner settlement. And then we have a suite of AI products, but AI products are primarily for us geared in fraud management space. So if I were to look at fraud management in telcos, it's actually a $39 billion market, that's the TAM, which is growing at 39% CAGR year-on-year. So we have been tracking actually. And if you look at the AI agent market, which is where we are trying to position a lot of our fraud agents, AI agent market is $5 billion market as we speak today, and that is growing at 45% CAGR. So these are very high-growth markets actually. So that will give you a sense of the TAM. And in terms of adjacencies, what we have done is -- so we are addressing telcos, of course. Telco adjacency we have picked up is primarily on, I would say, telco fintechs. So every telco in the market today has a wallet, right? Airtel has a wallet, Jio has a wallet. And all the large telcos actually have wallets or they have their own financing arms. So we are actually doing a lot of fraud management and business assurance for their fintech products. So what we have done is we have done horizontal scaling of our products, and we are addressing a lot of things. So for instance, if I do churn management, right, at what rate do customers churn from a telco. So I can do it for telco, but I can also do it for their telco finance arm, the telco fintech that we call. So mobile money itself is growing at 22% CAGR. And the market there is $120 billion. So that's an adjacency that we are strongly latched on to. Also because I already have relationships with telco, so it's easier for me to kind of cross-sell into mobile money. So that's the 1 adjacency that we have taken. The other adjacency, which I wish we could have gone stronger, which we haven't been able to go very strong at, but this year, we definitely want to go there is OTT business, your Netflix and Amazon Prime and all these places. So that's where we did not make a lot of inroads, but we made inroads in mobile money. This year, we are hoping that we are able to go much stronger on OTT side as well. So these are the adjacencies and our product suite is very, very focused on fraud. So one of the largest growing frauds in the world today is account takeover. And account takeover happens in money -- mobile money, it happens in your telco business, but it primarily happens on OTT side. So for instance, that's one of the problems that we are trying to solve. Our handset fraud solution, actually, the biggest fraud in telco is handset fraud. And we have a solution for that, and we are servicing a lot of customers with handset fraud specifically. So we have anchored a lot of our -- I would say that the fraud management portfolio, which was very traditional CDR-based portfolio, we have taken it and we are trying to embed a lot of AI into it, and we are trying to tackle new fraud through AI actually. So a lot of robo calling, flash callings, account takeover, everything that we all suffer from actually day-to-day basis. So we have created solutions for it, and we are trying to go strongly in that. And these are the solutions that can horizontally scale. It's not just a telco problem. It's a data problem. It's also a money problem. It's also an OTT problem actually, some of these things. So that's the way that we are looking at it. We are also looking strongly at some partnerships because we understand that time to market is very important, right? I don't have the time to sit and develop a solution for another 2 years and the market may move away from me. So places where we already have a lot of domain knowledge, we have gone faster at it. But there are places where we are going to partner with people, going strongly with partnerships and see if we can white label their products or should cash become available, then we can look at some inorganic path as well. But that's the direction in which we are thinking that what we can do ourselves, we go fast at it. What we cannot do ourselves and will take us time, we go into that market with partnerships. So that's the kind of scenario that we are kind of looking at. But I would say it's primarily fraud. We have done mobile money to answer your question, and OTT is something that we definitely plan to tackle.

I have a follow-up question on this. What are the customers you have for AI agent? Do you get any success till now? Then you have also launched a team of LLM solution for fraud management thing. So do you get -- do you have any customer for that? And how many customers are there for phone fraud management?

Okay. So POCs for agents, the POCs, we have done actually, I would say, 3 POCs for agents. And actually, they have highly successful POCs. And one of the places where we will probably contract -- we are actually in advanced stages of converting it into a contract. So we should have our first full win on the agent side. LLMs, what we are doing is we are not selling LLMs like separately. So what we are doing is LLMs, we have integrated into our HyperSense solution, for instance. So our HyperSense will now be powered by LLMs, right? So anybody who buys a new version of HyperSense...

You had announcement of team of LLM solution.

Correct. Yes. Yes. So that's the fraud...

So do you have any customer for that now?

We do actually. So for instance, the way I solve for handset fraud, right, is a team of LLMs that's solving for handset fraud. So one...

Which continent these customers are there?

This is actually in North America. We have 1 in North America, 1 in APAC. And another 1, if I'm not wrong, it's in Middle East -- North Africa, sorry, North Africa, we are doing.

These are paid customers or only POC?

No. One is a fully paid customer. One is -- actually the POCs are also paid. So it's not that we are doing free POCs.

No, actually the POC should result into a contract.

Which we are actually negotiating right now in North America to get into a new full-blown contract. So there, we have -- we are working as a consortium of 3 large telcos where we have demonstrated and they have liked our solution. It was -- and now we are talking about a commercial contract there. So some of this is not theoretical for us. What we have done is our embedded -- first of all, our -- we used to call it an AI first, right? I would say HyperSense is also LLM first in that sense. So we are embedding LLM strongly into our portfolio. And we also have stand-alone solutions that can go. So I can sell handset fraud as a stand-alone solution. I can sell robo calling as a stand-alone solution. And these are all powered by agents actually. So this is like an agentic squad, we call it, that solves fraud management. It can do investigations in fraud. So that's the kind of agent. And underneath, you will see that there are 10 agents that are doing different tasks. One is a KYC agent. One is checking your subscription. So there are different agents that come together and solve for fraud, investigate a fraud. So that's how we have sort of architected it.

So this team of LLMs basically are collaborating for a solution. Am I right?

That's correct. That's correct. That's correct.

Okay. See, all these new developments are happening. Yes. Just a suggestion. I have one suggestion for Nisha. See, all these new developments like AI agent and team of LLMs and phone fraud management, these all you should communicate regularly with the investors. See, we are not getting this information anywhere. Last time also, I sent you mail on this team of LLM.

Correct. So I thought that in MWC communication goes out often, but I think one of the maybe misses that we have had is we do a lot of LinkedIn communication. I think we are not sending like releases on this, but on LinkedIn we do a lot of...

Many investors are not there on LinkedIn.

Yes, you're right about that. So but we do actually communicate.

It's actually stock exchanges. See, these are very good development happening. This will change the perception about Subex. Right. See AI agent will take you to the next orbit in the perception. Perception also matters.

Matters a lot, I would say. Completely agree with you.

See, today, Subex's perception is very bad among the investor fraternity. And you are doing all these developments. So we need to communicate more with the exchanges. If you have done POC, all these companies listed on Indian exchanges they communicate if they do POC. Okay. Maybe Ramu, can we make a note of this?

Yes, ma'am. I made a note of it.

Let's do some more proactive. See, we do -- actually, we do a lot of marketing collateral. I think we have not kind of specifically targeted stock exchanges, but we do quite a bit of collateral actually. I would say that on the average, maybe 1 post goes out every day. There's a strong -- but you are right, yes.

See LinkedIn -- on LinkedIn, you will get accolade from the professional peers, right? But you also have a responsibility to investors.

Agree. Agree. Sure. Point well taken. What I will do is maybe Ramu, we really need to get a cadence set for this.

Sure.

We should communicate. See how many companies in India are working on AI agents?

Actually, I would say very few. There is a lot of noise around this.

So that's why you have to communicate. See in U.S., many companies are trying AI agent, Google is trying, Meta is trying. But in India, very few are there. So you should communicate. People should come to know that you are doing such cutting-edge technology development.

Right. Noted.

[Operator Instructions] The next question comes from Abhishek Kale, an individual investor.

I think what Mahesh said, the previous caller said, I've been saying the same thing over and over for the last 2 conference calls that we have had. I mean high time. So last time, Ramu was just -- he just got into the company. But now -- I mean, we cannot continue going on the same path. It's high time. We just put our act together. Okay.

But Abhishek, we did make a lot of announcements on the wins and all that, right? And I think we are starting to give...

I know we did on LinkedIn...

Not LinkedIn, we did stock exchanges, the wins that we have had on the...

Yes, yes. So you did with deals. I'm saying overall, whatever we are doing, if you think that people should know about it, right, then it should go out to the exchanges. I mean, when you're putting it on LinkedIn, your marketing team is very regularly putting things on LinkedIn. I have -- I follow your company, on LinkedIn. So I know what is happening. But if I were to just not sign up on to LinkedIn, I have 0 visibility as to what is going on apart from the deal wins that we have had. The European deal that we have had, which was communicated timely by the organization, I appreciate that, but we need to communicate more. So I mean, high time. Then another question. I mean, what was this need for impairment, the provision that we made, right? You said that as a matter of caution, okay. And bear with me, the moment you use the term caution, right, it -- to me, I hear it as we have doubts whether we will receive the money or we have at least the slightest of the doubts, wherein we have talked out of that contract. And we think that the customer might not pay, and that's what may be the reason for exercising the caution. Is that right assumption? Or am I off base here?

So that is not correct. So I will tell you why we have taken the cautionary impairment. So one is that, see when you are -- one is our own accounting policy, right, that we have decided on internally, like even Sumit was explaining. When a receivable crosses a 365-day threshold, we do provide for it. So I didn't have to take this provision, honestly, for another quarter. I could have sat on this. And my Q4 results would have looked great. In fact, I was disappointed that I would -- we had to take this and I said we will take it. But if you look at the normalized EBITDA and PAT, we are actually PAT positive this quarter, right? I mean what is not to like here? And I'm -- I would say, I'm slapped with this kind of an impairment, which nobody likes. You don't like, I dislike it even more than you. So the thing is that so that -- but we have created a policy, right? And we have said that, look, we will do the right thing. We will -- so that we don't end up having reversals like we have had, if you remember, we have taken huge revenue reversals in the past. To avoid any of that, we said that we will cautionary basis, we will just provide for things, and we will collect them as we collect, we will recognize. The reason why we have also taken -- I use the word caution is because once you discontinue a contract, your ability to recover money, right, becomes a little bit tricky. I would not say it will not come, but it becomes a little tricky, nevertheless. Because when you are engaged with the customer and you are working with them on a day-to-day basis, you can press upon them the urgency to pay. But when you are sort of telling also negotiating with a customer that, look, I need to kind of discontinue this, I'm winding this down, I'm not going to service this, in that scenario, what happens is that the things are not as clean as servicing a contract, right? So that's why we thought that we should provide for it. And as we collect, we will kind of keep recognizing income for it through the year. And I will try all means possible. And whatever it takes, we will go and collect this money. So we have decided that we will go to the end of the earth if we have to, to collect this money. So if it means that at some point of time, we have to do disputes, whatever it is, we will do it. But this money, we will go and collect one way or another. So that is the reason why we said that let's provide for it, but let's also be transparent that you will see in disclosure, we have said all means possible. We will use every possible tool with us, right? It will be negotiation, arbitration, legal, whatever I have to do. But I will try and go get this receivables.

So probably then this question is more a Ramu question than Nisha question. Do we have our contract written in a way which protects our interest or have we managed to write this contract, which we have walked out in a way which benefits the customer more and puts us in a big hole. Because I think one of the contracts, the one where we are seeing a $300,000 cash burn is of that nature, where we have no control of walking away from that contract. There is nothing in it for us in terms of what we can do. We are only obliged to service. We cannot walk away. We don't have any [indiscernible]. Is that something that is baked into this particular contract? See, Nisha, I mean, nothing against what you said. I understand that you will follow up and -- we will see what happens in the future. But right now, to me, I mean, the more you spoke about it, that since your engagement is not to that level, right? I mean that is raising a bit of a red flag for me. Right now, I won't put an amber, not a red right now. But I mean, that is doubtful that how much of it of the INR 16 crores will get realized. I will be the happiest person. I'm a shareholder. I'll be the happiest person if we get all [ INR 16 ] and some interest on it. But right now, it's an amber flag for me, probably for you as well, I don't know. So...

See we are sitting on some information that gives us a -- this is a disputed trade receivable right now, right? That's why we're providing for it. But we do have some -- we are sitting internally on some information, which might make it a good case for actually going and getting our receivables here. So we do have some information that we are sitting on internally. But the provision is perfectly -- but provision is more a matter of, I would say, principal policy and I would say, caution and prudence, right? I mean, I always feel that if the policy demands it, do it. When in doubt, be conservative. There is no point in us coming back and telling you guys the same thing. I could have actually done it next quarter. I didn't have to do it this quarter. But we just -- in fact, we were the one who approached the auditors and we said that let's just do it because we think that, yes, it will make results look bad, but I do think that we have otherwise delivered actually on everything. So...

This is point taken. Point taken. I mean, again, see, Nisha, what has happened, if you see last year, the same time, we decided with that goodwill impairment.

Impairment...

That was the first bouncer. I mean, which broke my head. Then this second bouncer, I mean, you don't give a chance for us to duck under the bouncer because IPL is going on and I'm a cricket fan so [indiscernible]. So -- but I mean, you can see it from an investor's perspective. And again, for the moderator, I'm going to probably continue with my questions. Please don't kick me out because most of the questions I'm going to ask others will have the same ones. So point is these bouncers or these shocks continue to hit us. And we don't know what next land mine we are going to hit or step on to as an investor, maybe the company is privy to and you will disclose as things come or as we step on to that land mine and our legs get blown apart, then we will know about it because you disclose it. I mean, these things are actually driving the investors away from the company. The credibility is really, really, really low at this point in time. I mean, I don't know as an investor tomorrow, what is going to happen, right? And for me as an investor, being in this predicament is like what? Do I stay with this company invested or not? I think you probably would see through what I'm trying to say, right?

No, no, I do. And see, the irony of it is not lost on me. In fact, when we decided to take this impairment in Q4, the irony was very clear to me that we did that last Q4 an impairment and that was goodwill, but this time we are doing a trade receivable impairment. So the irony is not lost on me at all. Believe me that I felt the pinch a lot. But I think also, I would say now to be fair to the management, Abhishek, we have been flagging Sectrio issues. At least I've been flagging for the last 2 or 3 investor calls that this is a little bit messy. We are trying to exit few things. So some of it, I wouldn't say that -- okay, we didn't say that something like this might hit us. But I think I've been giving fair warning that this is something that we are trying to sort of untangle right now. And some of the mess comes with it, which we will -- I think we will get through it. It's -- I'm very confident we'll get through it. But I've been flagging it for a while, right?

No, no, no. I don't deny that you have been flagging the Sectrio issues. It was only the quantum of it, which I don't think we were privy to. Maybe you were because -- I mean, you obviously know the numbers, but we were not privy to the numbers. I hope you see that point, right?

No, I see your point.

Right. Now a couple of more questions and quick ones. The 3 deals which we have closed, right? One is a renewable -- we have renewed a contract and 1 is the new -- the deal in Europe. What it is going to contribute on a quarterly basis to our numbers? And when would it start?

So on the MS renewal deals, wherever the renewal of MS has happened on 2 deals, that contributes to the quarter immediately because there is not -- on the net new, like when I say that I sold a HyperSense fraud management solution, this is also to kind of explain to everyone how you should interpret the numbers. So whenever it's a managed services deal or a renewal, the revenue continues. So there is no lag. But when it comes to a new implementation, when I sell a new fraud management or revenue assurance solution there, there is an implementation period. So the moment my implementation of that project ends, that's when my subscription starts. So I will recognize some money in the beginning, which is more a setup, some license and all that. But bulk of it comes a little later once the implementation is done. And for us, our fraud management solutions typically take, I would say, around 9 months implementation cycle. So depending on the complexity of it, so it takes between 6 to 9 months of implementation. So once the implementation is done, the subscription revenue comes in. So you should expect it, let's say, a win that has happened in Q4 probably starts accruing for us in Q3 of this year. So that's broadly the time line. On renewals, that's why renewals, we are very bullish on because one is it gives us recurring revenue base. Also, it's -- the quality of, I think, revenue is very high, right? Always the MS revenue is very high-quality revenue. So that's why we are bullish on that. But yes, that's the way to interpret those numbers broadly.

Okay. One last question. The cost optimization you said, which saved us about INR 22 crores. Could you please elaborate on that?

That was primarily done on a few aspects. One is obviously, we do manpower optimization. So that has -- the way that we have done a cost framework is just to explain to everyone is what we do is we kind of took a look at our gross margin. We looked at below the line items. We looked at what our S&M cost is, sales and marketing cost is, what our, let's say, G&A is. So we took our cost base and we benchmarked against some of the best in the industry, where I would say which are similar size, some really big ones, some small ones, some similar size. So we did some sort of benchmarking actually when I came in. That was one of the big exercises we did. So when we benchmark, we realized that is our gross margin broadly aligned with what it should be industry-wise? Is my R&D spend aligned? So we did a lot of alignment internally, and there were buckets where we found that our spend was way off when I compare it to my competitors. And that's where we sort of took a, I would say, a stronger cut saying that if others are able to do it, let's say, in a certain percentage, why am I so off actually? What is causing this for me? So that is the, I would say, the cost-wise, that's the structural correction that we have been doing, which has actually led to this. So it's not just manpower. It's also facilities, for instance, right? So we also decided that we went and looked at the unused facility or is it underutilized? Can I kind of collapse it and bring it on 1 floor. So in Bangalore office, for instance, we have done some trade-offs where we are giving up a floor and bringing everyone down to sort of 1 floor. So we are doing some of those facilities adjustments. So there is -- so when we did this, we did this on G&A, we did it on S&L, we did the gross margin level. We did on R&D spend. We did it on our delivery utilization. So we have benchmarked everything. So this is broadly a part of that framework. So it's very systematic. So EBITDA has not come because it suddenly just happened because growth has been a challenge. Yet we have delivered the bottom line. So there has been a very systematic approach to this. We keep kind of doing this every 6 months, we go and measure. How are we doing? It's the cross drifting. And if it does, then we take another sort of swipe at it. So it's not just people. It's also facilities. It's also things like travel expenses and there are other things. There are a host of costs in a company, hidden costs. So we take a cut at everything actually across. So that's what contributed to this, obviously.

Okay. And one last question.

[Operator Instructions] The next question comes from Sagar Desai from [ Crown ] Capital. And the next question comes from Sanjay Kumar, an individual investor. And the next question comes from Sanjyot Khare, an individual investor.

Congratulations on good operational performance. And finally, we could see positive PAT. So well done on that. I mean I can understand in this difficult business scenario, doing these [ things ] are difficult. You guys have done it. Definitely, would have been happy to see more improvement on top line. So hoping things get better on the top line side. So my question is about, one is like how the business scenario looks like region-wise now from Americas, Europe and Asia -- APAC. Since January this year or since March and the things -- the tariff talks have started and things have started. So how are we seeing now the business scenario? Are we seeing there is -- there are opportunities there, opportunities are growing and are we getting a chance to participate in more RFPs or proposals moving to L2 and L1s? And what differentiators we are building to get the contracts? Because just at the start of the call, you mentioned that there was a delay in closures. I mean, so it means that you have reached to L1s and now the closures are pending. So are we seeing that some closures should be happening in Q1 quickly? That's the first question. And the second is about -- definitely, the things are getting better slowly on that. So do you have any plans to work with analysts and investor community and then see this more presenting about how the company is doing and then getting more visibility into this investment community and analysts, so any plans for that?

Okay. So on the first question, I think what we are seeing is you're right. Actually, a lot of our deals moved. I think the only good news there was we didn't lose any deal. It was just moving quarter-on-quarter. In fact, there is 1 deal that almost moved by 4 quarters honestly. So it's just -- this is -- because people -- what happens is that when some global leaders, political leaders, macroeconomics. When people start exercising caution, then they start looking at spends a little bit more carefully, right? They start delaying it. Not that they are not spending, but they are delaying their decisions. So you are right, actually, a lot of contracts that got moved for us. We are expecting a lot of closures in H1 this year. So we are expecting that some of that has -- and so there were 2, 3 things. One was this happened. There was a micro environment line up. There was something growing there. The other issue was that right in March, when there is expected to be some closure activity, Middle East and good parts of APAC where we work, right, major markets, they went for 8 holidays for 4 weeks. So then what happens is that work just stalls actually. For instance, Europe will now go for -- we all know, July and August, Europe will stop working. So there is a lot of cyclical things that we have to catch up on and we have to tie. So you are right that we are seeing some of the contracts that were moved should happen in H1, manifest for us in H1. So that's one thing. The second is in terms of geographies, we are seeing a lot of interest from APAC. APAC has always been a very good market for us. Africa for -- Africa was sort of, I would say, up and down market for us. But this year, we do have some good ones that we are chasing actually, some very good contracts that we are trying to close in Africa. So if Africa, we are able to really be bullish on this year, I think we should do well. Europe, again, I think it does what it does. Americas, we are trying to -- Americas, we are positioning more with our new products because America is a market that can actually absorb a lot of, I would say, agents and everything else that we were talking about, right? That we are really positioning in Americas market for us. So that's why we are looking at this. But overall, telcos have generally been hit with -- if tariffs come, then what will happen is their investment -- their network investments are very big, right? It's a big part of telco business. And CapEx is very high. So with tariffs, what will happen is that this bucket will really balloon for them if actually it becomes real. In which case, a lot of other spends that they do, they will start putting it on hold even more. So that's the -- I would say if I had to ring the warning bill a little bit, that's the one that we are seeing might have an impact on our business. But that's -- we'll see how it plays out. For now, it's on pause. The tariffs are on pause, but we will see. But you are seeing, right, some effect of that will happen actually for telcos. It's an indirect impact, but we might get hit by it. For now, we are okay, but we should see how it plans. I would say, pans out, we will see it in this quarter. But as we stand, we are expecting the deals have moved to happen close in H1 of this year. So that's -- as we stand, that's what will happen. The other decision that we are seeing telcos make a lot, which is kind of interesting development for us is that while we are selling HyperSense, we have a large installed base of rock implementations, our older product. So there are telcos where we have gone and the customers are telling us that our mandate is very clear. We can't spend, let's say, on new, but we want to sweat this asset a lot more. So can you then do a lot more work, do a lot more enhancements and AI and agent servicing, everything that you wanted to take to HyperSense, can you put it on ROC and make me sweat my assets a lot more? That's become like an interesting development for us because -- and if you are able to deliver to that, I think that will unlock a very big market for us because ROC actually has a huge installed base compared to even HyperSense, right? I would say it's like 4x, 5x of HyperSense right now. So if you're able to kind of grab on to that opportunity and more and more telcos start thinking that I want to sweat my asset, then I think it might become an opportunity that we were not actively tracking, but we are seeing market pull for it. So that will be an interesting one for us. That's again the other one that we are tracking. On your second question on analysts and investors, honestly, I thought that sometime last year, I would start that outreach and start the conversations. But I have been a little bit conservative in my thinking also. I think -- I always thought that I have to deliver some numbers before you can actually stand up in front of someone and have a good conversation, right? But now I think that maybe the time is there where I feel that yes, we have some drag that's getting caused by a noncore portfolio, but I think core is sort of -- we have -- I would say that we have fortified our core quite a bit. And this might be a good time for us to go back and test waters with analysts and investors. So maybe Q2 of this year, we will start that activity as well. But to be honest, I've been a little bit away from thinking that the work has to speak first before we go and start speaking. So I think somewhere we have some fortification now. And now I feel that maybe the time has come for us to test waters. So we'll up our engagement in Q2 -- starting Q2 of this year.

Sure. And my last question is about are we seeing that the top line -- now this revenue is bottom now and it's going forward, are we saying it should be incremental from Q1 onwards, that it will keep going up, it's not going to go down?

That's my ambition, for sure. I can say that that's my ambition that it should start because growth has been a challenge last year. And while I've been able to fix the bottom line, I always tell that there is a cost of growing business, right? So how much can you play with bottom line beyond the point, right? I still think that we have room, but beyond the point, your top line has to grow. So definitely, a lot of effort has gone in last year to see how we could sort of go back and grow our top line. I'm hoping some of it yields results this year also because the deals that got shifted. If they manifest in H1 of this year, then it should start having an impact on our top line almost right away. So definitely this year, I think as we continue to improve EBITDA, the fight is going to be on the top line. And the other is we are also going to reinvest in new areas, right, because EBITDA was important only because if you are able to release some cash, I can go back and reinvest in new areas. So we have been able to release some cash, right? So I think also with tax refund and all that. So what we will do is we'll go back and reinvest in the new areas and see if we can build a net new pipeline, which did not exist earlier for Subex. So one of my big goals this year is to build a pipeline that would otherwise not exist for Subex, which means net new offerings, net new pipeline. So there is a lot of effort that we are going to make in that direction. And hopefully, this will all yield results. But yes, ambition is definitely growth, yes.

The next question comes from [indiscernible] from Crown Capital.

I'm a bit new to the company, so pardon my question if it's a little bit naive. Just wanted to firstly ask like in the Q4, we finally received a normalized [ PAT ], but then we had to take an impairment. Now again the reasoning for impairment because we want to do more [indiscernible], but the following quarters right now in Q1, some months have already gone by, so can we expect the similar run rate in terms of our EBITDA or PAT? And just one more bookkeeping question element to it. We had suffered losses in the past. So how does a tax rate work out because can we get a setoff of growth? Because that will also just kind of help us [indiscernible] better tact. I just wanted to ask about that.

Okay. Maybe I'll ask Sumit to sort of take your -- yes, Sumit can you answer the question on the tax?

On the PAT [ debt ], the answer is yes. So any carryforward losses that we have -- because again, [indiscernible] is not considered as a tax state, it is just a provisioning in the accounting side. But having said that, we do have some lot of carryforward losses and that future taxes can be -- future profit can be offset with the gains which we have. Apart from that, to be very honest, given it's a global company, we do have some sort of a foreign withholding happen, okay? And that is that is only allowed to the extent of the gain. So there will be always a bit of a tax leakage keeps happening because of the various jurisdictions around. But broadly, in a plain vanilla answer, yes, the carryforward losses, which we have, can be sufficient to [indiscernible].

So how much losses do we really have like -- because even this year, we provided for some taxes, right? Like I just wanted to ask a bit about that.

So again, as I mentioned, we have a foreign withholding taxes out there because it's -- in our -- what the thing is if you have -- if I have a foreign withholding the taxes to the extent of gain, it is allowed and balance, it is basically is the tax. So that is what we keep provisioning for, in case the company turn positive to the extent of that. Otherwise, it's a tax leakage. So that is a [indiscernible].

Okay. Okay. And my question regarding -- in a normalized quarter, like you have [ territory ] finally done positive on that. So how do we see now going forward, like are there going to be some impair -- because it's like this impairment? And if not, like how do we see FY '26 panning on? Because I think in terms of revenue, also timing of, I think, come near the bottom, and now I think we can recover the deal. And we work a lot on bottom line in the [ initiative ]. So it's on a broad base, what is [indiscernible] can be arrange also. Just wonder now like what is our target, like can we like maybe just giving [an ultimate ] INR 350 crores, INR 400 crores of revenue and any kind of EBITDA that you would want to achieve?

So basically, as I mentioned, see, the cost restructuring has been done, right? So some amount of cost restructuring we have already done, and we will continue to do it. But -- so those gains should carry forward for us, right? I mean it's not onetime. When you do this restructuring, some of it stays with you. So -- like productivity enhancement, I was talking about 31%, right? So that can only go -- it can only get better. It doesn't get worse. It can't get much worse than that. So those gains we will continue to make. So when you restructure costs in a more systematic manner, then those gains will continue. Now on some additional or unexpected costs, will it hit us in terms of -- today, as I said, I can't foresee anything, but we'll see. If it happens, then we will let you know. But again, I don't foresee it. So I think some of the cost restructuring initiatives should continue and continue to give us gains. But in terms of top line, you are right. We have had a decline in the top line from, I would say, INR 300 crores-plus top line to a decline this year. But a lot of that decline, like I said, has happened from the noncore business, right? So from core, we should start building up from here. I think -- because you were seeing consol numbers, you are -- most of you haven't seen the split. We have seen the split internally. I think where we are, our core is still -- I wouldn't say it has grown tremendously, but I would say it's broadly flat. So -- but it's not degrowth -- there is no degrowth in core at all actually. So I think where we are, we are in a solid position. We should be able to grow from here. So there has been no degrowth in core actually on the top line also. My disappointment is that we didn't grow very fast. Or not even fast, but I would say that at least we didn't grow as much as we wanted to. But rest assured, there has been no degrowth actually in core business. So noncore burn reduction will continue through the year. Also, we will try to control that because we are still carrying some of that -- I would say a lot of it is behind us, but there is still some to be cleaned up this year, which will continue to clean, but that burn should continue to reduce. So I would say, the bottom line benefit should keep accruing unless there is an untoward event, but that should continue to accrue. Growth will be something that we'll get focused on. While we didn't degrow, we didn't grow also very well. I would say we were broadly flat. So that's one challenge that we had to tackle this year, in my opinion. So yes, I mean, if I were to give you at least -- I wouldn't call it guidance, but at least that's my, definitely, aspiration for the year, that we do much better on top line, like I was saying. Bottom line restructuring has happened, we will continue to restructure it even more. But like I also mentioned earlier, there is a cost of doing business, right? So sometimes, there is a certain cost that you will end up carrying because no matter what you do, you cannot go down to a zero base, right? So there is certain cost that we will end up carrying, which means the only way for us to generate more and more healthy bottom line is to grow our top line. Beyond a point, top line has to kick in. So -- and that's the effort that we are on this year. We should go back to our previous glory.

Just two questions on my end. Like just number one, like when you're mentioning the core and noncore, it would be really helpful in your PPT, you could mention as well for me as a layman, which part of Managed Services is core or and noncore. That would really be helpful from the next quarter that you can give or mention, "Okay, this is our core business, and this is the business here trying discontinue." We also know because a certain bottom line -- top line hit will be that [ this part discontinue ]. But consecutively because the burn of this will also get discontinue, bottom lines will keep on getting better. And just like on the core and noncore, so the core businesses, what is the margin that we -- in spite of when we are making the process for, what is the minimum margin that price keeping on your [indiscernible] they were going with cover core business? So at least from a core business, we're going to try going forward increasing. So what's the margin as our business beyond -- it will saying it'll happen next year or maybe next to next year, but if that's what you're building into a contract, like so what kind of margins are we -- just as building into the contracts that we have?

So first of all, going forward, you will see that when I report top line numbers, that will only be core. So that I wanted to kind of tell the broader investor community, you will have some burn. So in cost side, you might have some noncore elements sitting there, like I was saying, to that 300,000 or even more, depending on how we land. But on the top line, rest assured, you will see only core in all investor presentations and everything. Going forward, it's only core that you will see because there is no topline that we expect to accrue from any of the noncore. So that's one. The second point is that I would say that if you look at all the telco vendors, right, and we keep benchmarking, like I was saying, it's not just cost, we also benchmark margins. So in benchmarking, I have seen that all telco vendors are currently benchmarked in the range, and it's a wide range. But we have seen telco vendors at around 10% to 17%, is the benchmark actually and -- of margin. So our -- my aspiration is to get to the benchmark first. So -- because if there are other telco vendors who are able to get to that op margin, right, I think then we should have a part to that op margin. So that's how we have thought about it. And I mean, if you think about it even this year, there has been an 8% gain on the op margin. We were at minus 4%, we're at plus 4% now. So there has been an 8% gain on the op margin. So if we continue to do things right. And if we're able to grow our top line and continue on the restructuring that we are doing, I think we should be -- at least my first aspiration is to get to the benchmark, which is in the range of 10% to 17%. So that's where we are. Currently at 4%, but trying to see if we can get closer and closer to the benchmark. Our framework is created with the benchmarks in mind, like I was saying. All the costs have been benchmarked to that on op margins. Everything is benchmarked to what telco vendors are, and we have kind of tracked many actually. So we tracked quite a few telco vendors, and we have been benchmarking to them. So that's definitely the framework.

The 300,000, like $300,000 per month or per quarter?

For the year.

The next question comes from Sanjay Kumar Shetty, an individual investor.

I actually invested in the [indiscernible] companies. And this company is basically like [indiscernible] this for me because my children are in the same during their [working in the same field ]. I just wanted to ask you one thing. I don't want to go into any technical things, what are you doing, what you have actually [ done ] and what the company will do. I just want to ask you one thing. When the company has been very good, all your ESOP provided to the -- [ recommendation ] around 30-40. Will there be a provision very medium [indiscernible] why is the top management -- is the top management buying [indiscernible]? Because it is 11.36, all these is top levels. I think there should be something where you put the SIP or some [indiscernible] and tell your company employees to buy on the buyback basis. Only then there will be a shareholder confidence because we wouldn't say promoter is holding. Whenever the things are not good, promoter come back and buy back the shares. So this is the only way [ left wing ] can do something for [indiscernible]. You keep on working, that's not what we want. Something out of the box we have to do, where the turnaround will be felt? No, the public [ number ] is also increasing the stake. I want to...

So Sanjay, there are two, three things, right? So one is All the selling that you see, a lot of people who have sold, right, they have left actually the company, they are currently not with us. So I would actually tell you that the current management -- and you can probably go to the website and see what the current leadership is. Current leadership is not selling, actually. I can very confidently say that because all the shares come to us for approvals before selling. So current management is not selling actually. So this is all people who have left us subsequently and who were given shares at a low price. So this is all, I would say -- again, I forget to remember the -- pardon me if I'm not remembering this correctly, but maybe it was the share allocation, ESOP allocation, which sort of continues to sort of raise a lot of flags with investors. This happened, I think, in 2017 or 2019. I'm kind of missing the -- it happened sometime during then, okay. So that's why a lot of people sold from that time. So most of them are not with the company anymore. They are not our [ KNPs ], they are not people who are working with us anymore, and there is no way that I can stop them from selling, actually. The shares are given to them as part of compensation. Buyback, I need money to buy back. I don't think I have enough to buyback right now.

No, it is only [indiscernible]. Suppose your earnings, whatever you are selling, you start proposing 10% of your earnings in the company. It's a positive gesture. [Foreign Language] Try to understand, where -- how we like the confidence, I'm holding...

[Foreign Language]

[Foreign Language] So I want to tell all the investors, have confidence and start putting more money. Why are you worrying about the development of the [ inventory ]?

Actually, that is with the thing now, Sanjay. We have been trying to build the confidence back, but we thought [Foreign Language].

[Foreign Language] You take my word, and you'll see that the company will go to 50, 60, 70 [Foreign Language].

[Foreign Language]

[Foreign Language] But something out of the [Foreign Language] other companies are not doing so bad, madam. [Foreign Language] Try to understand [Foreign Language]. Do something, madam. [Foreign Language]

The next question comes from Sanjyot Khare, an individual investor.

I just -- one question about the income tax refund, which is I think you mentioned INR 34 crores, is something is expected to be coming. And even till last quarter, it was some INR 8 crores was pending. So has the INR 8 crores already come and this INR 34 crores in addition to INR 8 crores?

No, no. So INR 34 crores includes INR 8 crores because the new INR 34 crores is -- so income has adjusted that and this INR 34 crores [ rate ]. And we are actively talking to the department. Our case is currently in [ 245 (2) ], which is as a new provision, it goes and there's a process. And it will come roughly in like 60, 70 days. There's a process around on that. So we are hoping that money should come at any time and -- yes.

Yes, because that's a big amount. And that's why I was just...

We are totally tracking that. Yes.

No, I guess listening to previous [ words ] and definitely, that amount, even if you try to use an amount for the buyback, you can just buy back 3 crore plus shares. So that's one of the opportunity I -- just [ a suggestion ] for that. But yes, definitely, it should be used for the right purpose. And looking forward to how things will be changing after getting more cash in hand.

We have a follow-up question from Sagar Desai from Crown Capital.

Yes. Just wanted to check on this investor need kind of thing. Can you organize every quarter or every 6 months in Bombay for a few hours or even we can come down to Bangalore and have a look at the facilities and all?

Sure. I think we can. I mean, honestly, we haven't thought about it, but I don't see any reason why we can't. So I think on a 6-month basis or something we can think about It. Thanks for the suggestion. I'll kind of work on it. We can do an Investor Day or something, where we can invite all the investors to walk through the facilities. I mean it will be good if you also come and see your company, right? So you can walk through the facilities, you can see what we do. So we can do like an Investor Day or something. That's a good suggestion.

If we can do it in May, that's one. Secondly, on the current receivables, which are getting reflected in books and the goodwill amount which is substantial, do you foresee any further possibilities of impairment or [ write-offs ]?

Sumit, do you want to take?

Yes. So again, as we speak, again, this is -- we don't foresee any kind of impairment around on the receivables or goodwill. And as you know that goodwill -- goodwill impairment is a yearly exercise. So based on the current assessment around, we have a sufficient headroom on that. So we don't expect that. On the receivable, again, our DSO right now stands at 87 days. So -- and we -- all receivables are the good receivables and actively collected. So we don't feel any sort of impairment on both the subjects.

And this -- with this non-telco business coming negligible or becoming zero, so the balance of the top line, what we have done -- like in the current year, we could see INR 5 crore is the only -- this is for the first quarter, I could see you had given that breakup between telco and non-telco. So [ Curatio ] hopefully falls in the non-telco, correct?

Yes. The degrowth has come from nontelco.

No, not degrowth. My question is whether [ Curatio ] is included in telco or non-telco?

[indiscernible] you mean? [indiscernible] is a nontelco, non-core.

Then that -- the revenue what you had given for the fourth quarter is just INR 5 crores. So can we say that the top line is only INR 5 crore of this business?

No, no. So it was more than that. But what has happened is through the year...

Yes, yes, sorry, Nisha, so if you see the investor deck, actually, quarter 4 of 2024, the non-telco component was INR 14 crores, okay? And then this year, obviously, it is only like roughly INR 5 crores. So this is entire impairment into our tax because nontelco was in negligible, I will say, till the last year. And only last year, quarter 4, as something has commenced and then has obviously gone into this entire impairment exercise. So -- yes.

No, my second question is like you said there is a [ hit ] of 300,000, which is roughly INR 2.5 crores. So on a running rate of INR 5 crores and for the exit -- quarter exit of quarter 3 and 4, it is negligible, not even INR 50 lakhs; so where is this INR 2.5 crores is going to come regularly? So if my exit for the last 2 quarters is INR 5 lakhs and 34 lakhs, where is the question of INR 2.5 crore running hit?

That is for servicing the contracts actually. So see, what happens is that you meet a milestone, you take the money in, right? But there are -- there is still work that has to be -- so when you install a box somewhere, you still have to service that box, right? You cannot leave -- that's our challenge on exiting the contract, where if I have made an installation, I need to still run that installation, right? Otherwise, the customer does not get any benefit from it. He has paid me, but what's his benefit. So I still have to run it and sort of make sure that he's getting his value for money. So the burn comes from actually servicing the revenue that we have recognized, we have to service that also. So the burn that we are talking about through the year will be the servicing component that we still have to do. And that is something that we are not able to back out of right now.

So on the telco side of it, you don't have anything, which is any contracts or any such big chunk of business, which is running at a loss, correct?

No, not at all. Telco is all good, right? Like I said, we have turned PAT positive, EBITDA has been -- 5 out of 6 quarters have been positive actually. So telco business, we are -- I think we have fixed the fundamentals. That's been the big effort, somehow to fix the fundamentals. But the degrowth in the top line that you're talking about, only INR 5 crores is, because early in the year, we made a decision to wind down the business, right? We sold one, and we decided to wind down the other one. So we decided to stop taking any new money in contracts and all that because that keeps increasing your liability if you do that. So when we decided to sort of wind down, we stopped taking new money in. And that's the reason why you don't see any top line that happened on the non-telco side, right? The top line, we were trying to restrict actually. And see -- and there is some burn that we are carrying, which we will have to service some of the revenue that we have taken in the past. So that servicing of contracts will happen. So that's the word that we are anticipating right now.

Within telco or outside telco?

Outside. Within telco, we have -- yes.

So on a quarterly basis, INR 50 lakh is that burn. Nothing else, correct?

That's correct, yes. As things stand, that's the case. Like I was saying that if we decide to sort of accelerate some of the events, that can I do more and sort of exit a little sooner, then that burn might increase a little bit. But that's a call that we will make as and when they get to it. But currently, the way we have at least budgeted for it, that's what we have budgeted. We have budgeted 300,000 or something.

Yes. So the first contract where the burn was high, you are anyway out. So...

We are anyways out as for receivables. There, we have receivables that we have provided...

That is done, yes. So now, what is left out is the second small contract with whatever burn we talked about, correct?

Correct. Yes.

So now on a steady state of [ FS ] from quarter 1 onwards, assuming INR 75 crores of ratio top line with the kind of EBITDA what you had projected like for 5% or 7%, 8% kind of an EBITDA, that is the kind of steady state of business we are looking out for?

In the near term, I would say that's our -- like I always say, no guidance. But at least ambition is, in near term, to stabilize to something around that. But obviously, we want to kind of grow the topline a lot more aggressively. In fact, one of my personal ambitions, which I keep telling in company also, is that I want to see INR 100 crores quarter, which was my ambition last year as well. So that continues to be something that I totally aspire to do. I want to see INR 100 crores quarter. I'm hoping that we are able to deliver to that. But yes, on a steady-state basis -- it will take us some time to get there. But on a steady-state basis, yes. On core, that's where we are.

So I think we are to go and talk to institutional investors and participate in many conferences, so that this visibility comes in and probably the HNIs and the retail investors, who are in this, who are invested; gets a proper price valuation [ probably ]. So I think some time if you can spend on meeting investors, trying to educate them about the things going forward.

Sure. Yes, like you mentioned, right, we will try and do an Investor Day. We'll try and do a lot more outreach starting Q2. So yes, I think it's fair ask.

We have a follow-up question from Mahesh Kumar, an individual investor.

Nisha, see, for last 12 years or plus, Subex performance is stagnated. And during that period, you were Independent Director on the Board. So you have a macro view of the company, which is called [Foreign Language]. Now last 2 years, you are MD of the company. So you have micro view of the company, which is called [Foreign Language]. So from your view, you can give a very genuine answer, what is the root cause of these poor performance for 12 years? See, 12 years is a very long time. Is it products are not relevant? Is it poor talent in the company? Is it faulty processor system? Or is it that the mindset of the organization is not conditioned for growth? Please give a genuine answer.

No, no, I will honestly answer this. So like all problems in life, right, I mean, you can usually not root cause it to one thing. It's usually a combination of factors. And so is the case here. So I think -- I tell you, from my perspective, one of the things that I didn't realize when I was on the Board and -- which sort of hit me when I joined, is the amount of tech lag that we had accumulated actually. I would purely call it tech lag because the time, I would say the 5, 6 years, which was very turbulent, right, from, I think, 2012 to 2018 or so, where we were like majorly embroiled in the balance sheet issues with bondholders; what that did was that's when a lot of our competitors were making gains, right, technically. See, in a products business, in a technology business, tech investment is something that you must keep doing, right? Like there is an R&D spend that even we carry even now, right, it's nonnegotiable in our tech business. And tech is moving very fast. You can't sit on a tech stack which is 5 years old, right? And when I came in, that's one of the things that I realized quickly, that the tech lag was -- I would say, it's a significant lag actually that we had to catch up on. So how do you catch up on tech lag, right? You have to invest. Where is the money to invest? And that's where the challenge starts, right? Then you are on a treadmill. So that's when we said that we will have to fix the fundamentals, which means that I need to generate the bottom line, I need to get some money, right, into free cash to go back and invest. I don't have enough money to properly invest, I didn't have enough money to acquire anything or add on to my portfolio, right? So it's one of the situations where -- I think you don't appreciate it fully until you are in this seat. From a Board perspective, you cannot appreciate it actually. That's how bad it can be when you are in front of a customer because all our business is RFP business, right? The bulk of it is competitive RFPs. In competitive RFPs, what matters? First, your tech matters, even before the money. First tech matters. And then you need to be able to show gains. So that's one challenge that I found which was kind of -- it took us some time, honestly. And I wouldn't say that we are completely out of the woods now. But I think we have made a huge progress there. Then we had made some commitments, right, like I would say, Sectrio or IDC and all that. So there were commitments that we were carrying in the company, which I think was slowly bleeding us actually. It's a -- I call it the death by 1000 cuts nobody is killing you in one shot. It's a death by 1000. [Foreign Language]

When they brought to the Board, did they mentioned that this market is OEM-dominated market to the Board?

You have to remember that when it came to the Board, it was an IoT business. It was not an OT business. [Foreign Language] But then they pivoted actually. After 2 years trying to make it in IoT, the management decided to pivot into OT. So that is not something explicit. Yes. I mean that's -- that's called a business pivot. They will not come to us for approval for those things. [Foreign Language] You also know, you're very well aware because you are right to me, I know that you know this market. This is an OEM-dominated market, and you need deep pockets to fight in this market. This market is not fought with $10 million or $8 million. This market requires significant money or you need to be able to show significant growth to do huge fundraising, which was our attempt. When I came in, I said that let's see if we can get money into this actually. Before winding down the attempt, it was to see if we could raise money into this, which we failed to do, right? We were able to do for one IDC. We weren't successful in another one. In which case, we said that, okay, then we will have to reduce the burn. So there are things or decisions that were made which were causing a drag on the core, right? [Foreign Language] So these are things I think you appreciate only when you sit in the seat. And this is hot seat only not for that reason because you come in and you realize the amount of, I would say, cleanup or [ assembling ] that you have to do. And that's exactly the journey I got on, right, even 2 years ago. So I would say that from a Board perspective, you are thinking that -- see, if I go to the Board today technically and stand in front of the Board and say that I have a great business idea, I think I should get into, for example, utilities market because my products have great utilities market. Now from a Board perspective, how do they know? They are expecting that the management has done the diligence, right? When you are proposing something, you have done the time analysis, you have done all the analysis, market analysis, you know what your product [ can do]. [Foreign Language] So Board also goes with some bit of management confidence, faith. And see, Board -- till the time I was there, we always thought that you want to back management, you want to hold them accountable, you want to be also champions of management, right? So that's the spirit in which you do it. But then some bets take -- some bets pay off, some bets don't. And I think in Subex's case, what has happened is more bets didn't pay off than it did.

Board should be independent. They should not have any emotional backing request.

No, there is no emotional backing.

They have an official responsibility.

Exactly. And see, we always saw business cases and all that, right? But if somebody shows you a business case, that will work technically. And see, Subex, I also know that because I've been on the Board, I remember if you -- you will also remember the history that there was always an ask on the Subex's management, right, that you should diversify out of telco. Don't just take in telco. Can you diversify out of it? There was a strong ask, I remember. And that's why that management decided that let's take some bets outside of it. See, intentions were right, the ideas were right or at least I would say the spirit of it was correct. It didn't just pan out actually, right, because I think one of the issues is your idea may be best in the world, but your execution is strong -- has to be very strong, right? All startups also fail on that. The best ideas don't take off because the execution is not very strong behind it. And I think Subex had an execution issue. If I look back, honestly, you ask for an answer, I would give you an honest answer. Execution was a very, very big challenge actually. And that is something I still think is a little bit challenging for us. Execution is something that I keep telling internally also. You can -- it does not matter what your idea. If your execution -- like you can take a B idea and make it work if you have an A team executing it. But you can have an A idea. But if you have a B executing it, you are definitely going to fail. So it's one of those conundrums that Subex has always been in. And today also, I would say that I have -- yes?

Are you saying that quality of talent is not good enough? Or...

Wasn't good enough. No, actually, it wasn't the best. But see, today, you will see that there has been a big change in management also, leadership also, right? So you continuously find -- see, there are people who are very good at what they did at some point of time, right? But what you -- what wwas first doesn't always work again, right? So you have to sort of start cleaning -- you're right. So that's the cleaning, which is...

Are you referring to current [ brain ] lag?

You're right. [Foreign Language]. You are right. So that's the cleanup that we do.

What is your view about mindset of the organization?

Mindset, I think -- see, there are two types of mindset that prevail in the organization, again, from -- because I have the privilege of having a little bit -- correct, mindset of the organization is two, I think. One is I see a lot of people who are very driven because they feel that there is a lot of cutting-edge work that we do here, which they want to be part of, right? So there is a lot of excitement. But there is also...

So that is on development front. What about sales front?

No. And there is also a group that sees that the organization is a little bit aging, old, right? So there is that sentiment as well actually. So in sales, I think we are generally [ gango ] also because sales is always one step removed from the core organization in the sense that our sales is global, right? So people are sitting in Middle East, they are sitting in Morocco, they are sitting in the U.S. So I think we are one step removed in the sense. So they are excited about -- their pressure on us is always the same [Foreign Language], which I think is great pressure, right? I mean I think it's a positive pressure. So sales that way has been, I would say, good for us. Again, we have had churn in sales also, where we have gotten new blood and fresh blood, fresh thinking. But there's always that pressure that they create on us, which I think is very good for organization [Foreign Language]. So i think Those conversations are constantly happening, which I think is the culture and spirit of it is good, I think. Now I think we are at a point, I think since last 1 year, I have seen in Subex, internally -- which I think -- I always feel some tension, there should a tension [Foreign Language]. And I think that [Foreign Language], which is actually very good, which -- people should push each other a little bit. Not -- all of us should not sit back and say that [Foreign Language]. So I think that culture change I've seen, Mahesh, where people starting to engage with each other, challenge each other, leadership also gets into hot debate, which I actually, personally, I enjoy. So I think...

Is the organization mindset positive for growth?

It's positive. It's positive. See, this change would not have happened if it was not positive. I think that mindset is positive. Again, that's the sense I have, that it's positive. There are always pockets of skepticism in every organization, [Foreign Language]. But I would say that broadly, it's positive also because there is a lot of fresh blood and new energy in the organization. So people...

Selling AI agent and team of LLMs, you are using a different kind of talent. The talent we should [ be using for ] old existing products will not be good enough for saving AI agent and team of LLMs. So how you are going to address that issue?

You have bang on. And we are hiring differently, actually. So what we have decided is that people who can sell a certain kind of enterprise sales product are not the people who can sell something which is new age. So we are actually hiring differently. So this is correct. So we have segregated actually our sales into bread and butter sales, which is I need to get the HyperSense, and I need to get Fraud Management. Then there is -- there are people who need to get focused on to be able to generate quick POCs to be able to take customers because this is unknown territory, right? Customer also doesn't know, you are also sort of discovering a lot. So there is a different team that has been formed that will do this part. So you are bang on. You're absolutely right.

Are you getting talent from Google, Meta or companies like these? See, these will be costly talent, but it will set up a system and processes for selling such products and solutions.

I am trying very hard. I can tell you. It's hard to hire, as you can imagine, the salaries are completely off [ par ]. But we are trying, Mahesh. We are trying -- sales team -- there is quite a bit of churn in sales team. So we are formulating a new sales team. So you are right. [Foreign Language] only because...

People from FMCG to sell this technology product is not going to work.

No, it would work. No, we always hire from the domain only. We don't hire from -- right, because...

[indiscernible] FMCG because I have personally interacted with them.

No, no, we're not making those mistakes. We are [ making ] global talent. Actually, you're right. See, a lot of our sales team, actually, I would say, maybe 2 or 3 people are in India. [Foreign Language]. They are in the regions also. We don't run deals from sitting in India. So like Middle East team runs its own deals. North Africa, Middle East is covered from Dubai actually. Europe is covered from U.K.

So proximity to [ location ] is okay. But that neither should come from companies like this.

No [indiscernible].

So that you have to work. See, it may cost slightly higher amount. But it will create a platform for the company to jump from that position.

You are right, actually. Yes, yes. See, not for the lack of trying, we have been trying very hard to hire from global companies. But as you can imagine, [Foreign Language] because the costs are completely out of that, right? So -- but you are right, maybe 1 or 2 people will still make from that pool.

Yes, your sales side should be from companies like these, then only you can create a pipeline for new products and technology because he will have the network connection in U.S. and Europe. So getting POC is easy with his help. Otherwise, you will face same problem like Sectrio and this IDCentral.

Right, right. [Foreign Language]

And the late entry people or organization, AI agent and team of LLM, they will capture the market. And all this is companies are trying for this AI agent.

Yes, yes. And why shouldn't they? I mean this is a hot topic. Everyone will. So that's why the speed matters here. Speed matters, our ability to go fast really matters here. No, I am completely aware of that.

We focus on that and go and get it. I'm expecting that announcement that you will get people from Google, Meta and some other companies.

I am going to get my HR right of the audit.

We have a follow-up question from Abhishek Kale an individual investor.

Just one follow-up. Regarding the cash burn we were talking about for that one contract, so it's going to be INR 5 crores at max for 2 years, I mean total -- in total, INR 5 crores, right? 300,000 for 1 year, 2 years at max is what we are looking at that the contract duration is, right?

Correct. No, correct. If we end up taking the parts that we are taking now. But it's entirely possible that -- see, that contract is actually not just 2-year contract, it's a much longer contract. So what we might start to do is to do some development early, upfront and to see if we can exit the contract a little sooner than the 5-year tenure that we have there. In which case, we might end up burning a little bit more this year to sort of survey some of the pending items. So that's the evaluation stage that we are in. So that's why I was saying that at the minimum basis 300,000. It might become a little high, depending on the call we make. But net-net, it won't make a difference. I mean if I were to take a 2-year, 3-year view, it won't make a difference because we may bring some of our costs forward and spend a little less later. So it may -- that's the trade-off we will have to see what we wanted to do or how much we want to buy this year. But net-net, it won't change. But this year, it's possible that we might make a decision to pull some development effort upfront. So that's the decision that we are still trying to sort of negotiate and find out from the client. But yes, that's the one.

Nisha, the Barcelona event where we showcased some of our products, right, did we receive any orders or RFIs/RFPs after that event?

We did not receive RFIs,RFPs, we got POCs. So...

Because you said they are paid POCs at this moment, right?

Yes. We generally refrain from doing free POC unless it's a very like 3-week effort or something. We refrain from doing free POCs because obviously, you can imagine, if the customer has no skin in the game, then they will sit on the decision and take their own sweet time. If there is skin in the game, there is also seriousness from us and them. So that's why we usually insist on paid POCs.

So I mean I'm just trying to put some numbers together in my head. Assuming we don't get the INR 16 crores, the ones which we have talked about, I'm just being very pessimistic at this very moment. I don't get the INR 16 crore provision plus say, I take what, INR 10 crores hit on this contract, I'm just talking about worst case. So INR 26 crores gone, but I have about a INR 32 crores income tax refund. So net-net, my impact is about INR 6 crores, which will show positive in my account. Am I right in reading between the -- I'm just trying to see the positive from -- I don't know...

Broadly, yes. What do you think, Sumit?

So from a cash flow, yes, because income tax refund is not a P&L item. It's a cash. So yes.

I mean, for me, the way I'm looking at [Foreign Language].

That's why I told that its cash flow. Yes.

Cash flow and -- P&L is [ no ] different. Cash flow...

[Foreign Language]

There are no further questions. Now I hand over the floor to management for closing comments.

No, thank you all for joining. I know it was supposed to be an hour call, but it's almost ended up being 2 hours, but thank you for being patient staying with us. But -- again, my emphasize -- I know the numbers sometimes don't give the right picture. So again, just to tell you that I feel that we are on the journey to fix fundamentals. We wanted to fix core business. And I think that's broadly and essentially what we have done in the last 2 years. And numbers will bear that story. So I would again urge that you always see a little bit -- and if you -- if the numbers don't give you the right context, please reach out to us. I'm happy to talk to you and tell you what we are doing exactly. But there is some drag that has been caused, which -- we may continue to have some drag. But rest assured, the business fundamentals are solid. We are going to free up some cash and start reinvesting in the core business. I think we have the right ideas. And this year, my big challenge, I think, will be growth because I think bottom line somewhere we have started fixing. So that's a journey that we have to be on. But growth is one big lever that's missing right now for the last 1 year. So this year, definitely, I hope to get back on that, somehow make sure that growth comes back so that we are all looking at a company that's much more healthier, right, that has some growth that you can see on the top line. You are consistently seeing the bottom line. So that's really where we are. Again, noncore, please always -- when you see the numbers, just make sure that you see it in the right context of what is the noncore versus core. Core is where we are focused right now, and that's going to be my focus going forward. So that's what I wanted to say. Thank you again, and I really appreciate you taking the time to come to the call. And I look forward to speaking to you next quarter. And I think one of the investors made the suggestion of an Investor Day. I think I like the idea. So we'll try and get that organized, so we get to meet all of you one of the days in our Bangalore office. So thanks again, and I look forward to seeing you in Q1 earnings call. Thank you.

Thank you, everyone. Ladies and gentlemen, this concludes the conference call for today. Thank you for your participation and for using Door Sabha's conference call service. You may now disconnect your lines. Thank you, and have a good day.