Subex Limited (532348) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to Q1 FY '26 earnings conference call of Subex Limited. [Operator Instructions] Please note that this conference is being recorded. I would now like to hand over the floor to Mr. Ramu. Thank you, and over to you, sir.

Thank you very much. Good evening to everyone who have joined the earnings call for the quarter ended June 30, 2025. Now I would like to introduce the members of the management who are present for the call: Ms. Nisha Dutt, Managing Director and CEO; Mr. Sumit Kumar, CFO; and Mr. Harsha Angeri, Head Corporate Strategy and AI; and myself, Ramu Akkili, Company Secretary and Compliance Officer. I would like to start the conference call 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 acquisition, competition in our area of businesses, 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. So with this, I now hand out the call to Ms. Nisha Dutt to take it forward.

Good evening, everyone, and welcome to Subex's investor call. Thank you for joining us today as I share updates for quarter 1. You must have seen the results by now. I would say the results are mixed. Our Q1 results are subdued from a top line perspective. Our business has always been H2 heavy, but one of the key reasons for muted Q1 is that there was slow order intake in the last financial year. If you remember, I mentioned it a few times, our deals got shifted from quarter-to-quarter due to various budgetary and geopolitical reasons. And we did not close deals as per schedule. So what that does is it has an impact on the subsequent quarters and the way we take our revenue. But however, now I think things have started to move and our order intake is getting back on track. We also have a strong pipeline, which gives me confidence that we shall make up for the shortfall in subsequent quarters. Last year also got some OI challenges, but we stayed focused on profitability. We have been EBITDA positive and delivered profits in 6 of the 7 quarters. This quarter, as you all know, PAT is back in black, helped by tax refund and office optimization. And our cash position, you have seen this, it's significantly stronger, thanks to sharper working capital management and onetime income gains. Q1 was a strong start. We landed a major T1 win, a Tier 1 win in Middle East, a clear step forward in priority growth market. Our Managed Services business continues to deliver with consistency, driving recurring revenues quarter after quarter. We renewed our AI-based MS contract with a T1 operator in Africa. So wins like this build momentum, and it also validates our strategy and position us to capture strong tailwinds in high potential markets. So all these wins have been in our clear priority geographic areas. We also continue to invest in next-gen products. I'm sure that most of you must have got some of the announcements that we made. We recently launched FraudZap, a lightweight AI-powered fraud detection platform. This product is mainly targeted to Tier 3 telcos and MVNOs and customers with specific single use case requirements. For this segment, the ask is clear. They need solutions that are lightweight, cost effective and easy to deploy. So that's exactly what we are delivering, an AI-first approach with minimal total cost of ownership and near zero deployment effort. So it's a plug-and-play model designed to bring value quickly without the complexity or overhead of traditional systems. And we are beginning to add new pipeline in this area. And as to that, this is a little bit of a departure from the way we generally build and deliver products. We also announced recently that our HyperSense platform is now GenAI enabled. We have embedded GenAI into our platform. Customer experience is changing across applications. And thanks to GenAI, we are able to add applications which are conversational and enable that experience in HyperSense. So HyperSense can now continuously learn, adapt, and unlock new use cases as foundational AI models advance. So this is, I would say, not just an evolution. I think this is a major leap forward in how cloud management and revenue assurance will be delivered in future. As you are aware, we had unveiled agents also during MWC in Barcelona. So we continue to work on POCs with telcos on these investigative agents. In Q1, we also had the opportunity to attend DTW Ignite in Copenhagen, and I'm happy to share some exciting news. This is where we -- our catalyst project, so we had participated in a catalyst project, and it was called Quality of Trust, eliminating spam and enabling growth. So this was well received and we were recognized as one of the front runners in this. So this recognition is especially meaningful because it reflects the support and validation from our peers and broader industry. So this is not just any other award. This is where your peers actually evaluate you and score you. So this was especially meaningful to us. It reinforces our mission to help telcos build customer trust and enhance the user experience by taking a proactive approach to combating spam and scam. So you heard me say this before, we are focused on making sure that we expand our fraud and assurance portfolio on emerging next-gen use cases. So we are not just talking about AI when we take it to market for our customers, we are also internalizing it and operationalizing it. Internally, we have deployed GenAI within our engineering team through initiatives like post field workshops, using GitHub Copilot to improve test coverage, reduce defects in our products, accelerate release cycles. So we are building what I think of almost as AI-native workflows to future-proof our innovation engine. So if I were to kind of sum up Q1, I would say that it brought some headwinds, but we have responded with focus, resilience and clear plan forward. You will see that we had some struggles on the top line, but we are more than compensated on the bottom line. So fundamentals are [ set in ], order momentum is building, our profitability is consistent, and our innovation roadmap is aligned with where the market is going. And that gives me a lot of hope for the way the year will unfold. So next, I shall cover the consolidated financial results for Q1. All the numbers are in INR. Revenue for the quarter stood at INR 664 million as against INR 706 million for the previous quarter. Normalized EBITDA for the quarter is at INR 43 million as against INR 53 million for the previous quarter. Normalized PAT for the quarter is at INR 128 million as against negative INR 6.6 million for the previous quarter. PAT for the quarter is at INR 128 million as against negative INR 176 million, including exceptional items in the previous quarter. So thanks for listening. And now as always, I break for the real action, your questions and comment.

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

So now I could see this time, at least we have reduced the losses on the -- that Sectrio thing and it seems that we have turned a bit profitable. So my question was, the last con call, we discussed there were two contracts, long-term contracts in the Sectrio, wherein one was closed out and the receivables were provided for. And the second contract you were trying to close out pre-closure because since that was a 3-year long-term contract. So I would like to know what is the status of that pre-closure, one? Secondly, as of now, how many employees are still working with Sectrio? Because at that point of time, there were 57 employees and then you said it will be scaled down to about 25 and then further down. So what is the status on that, if you can tell me?

Okay. So in terms of contract, you're right, there were two contracts. The first one we provided for last quarter, and we continue to try and recover that amount. So that is ongoing. The second contract, again, we don't have any exposure there per se, but what we are trying to do is exit that contract. The negotiations have started with a potential customer and -- not potential, sorry, the customer. Negotiations have started, and we continue to negotiate our way out of that because as you can imagine, these are contracts that also have implications for the customer and they have to find an alternate vendor. So these are not very straightforward negotiations. So it's taking some time, but we are in active negotiations right now. So I guess short answer to the thing is that we are not closed that yet. We are still in the middle of negotiations. In terms of employee strength, you are right, we were at 57. Currently, as we stand, we are at 2 employees. We are down to 2 employees.

Down to?

Two.

Two people.

Yes.

Okay. So that's really great. Now my next question is, now you have proposed investment in this SME, Subex Middle East this thing, about some INR 35 crores.

Sorry, I didn't catch that.

Yes. You have made an investment -- you are proposing an investment in Subex Middle East, right?

Yes.

Some odd -- some INR 35 crores, I suppose.

Right.

Now -- right now, the net worth of this Subex Middle East is negative by about INR 34 crores, INR 35 crores, INR 34 crores, what I could understand. So is it the reason that in order to get further orders, you would like to have that company net worth positive first and then capital inflows so that you can grow accordingly? So what are your plans on that?

Yes. You are bang on on that, that this is to just make this capitalize that entity because there are certain orders coming to that entity and it has to be net worth positive. So that's the thing. That's the plan. And then the point...

What are your plans basically? How would you like to scale up that once you have put in this INR 35 crore infusion into that company?

So again, it's a strategic thing whereby a lot of customers are interested to that market. And as per our -- the business is more about it's hosted out of our subsidiaries and one of the key subsidiaries is our Middle East entity. And we are going into that market. And for that, we need to invest into that entity, and that's how is the -- that's the plan.

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

I have two questions. First question is, what is the target addressable market for FraudZap? And how many POCs you are doing at the moment? And how many POCs you have completed? That is the first question. Second question is, now you are saying you are building the pipeline for the products. So what is your road map for providing AI to the telco? Is there a thought process to venture into other enterprise AI? So these two questions.

So I think we are doing 1 POC right now on FraudZap, and we have one more lined up. So that's kind of -- as you can imagine, we have just launched. So I think given that we have 2 in the bag is a good start for us. In terms of total addressable market, I think it's similar to what fraud market is actually. It's not the overall fraud market, but the specific one that FraudZap will fall. So this is more of a single use case thing, right? It will go to every other...

Last year, in conference calls, you have mentioned that the handset fraud product has been launched using AI.

Correct.

Okay. So how many orders you have received till now after 1 year? You told you have done some POCs on that and said...

I mean I can't -- honestly, I don't have the number at the top of my head, but at least we have 3 that we have already done. In fact, we have received revenues. These are not POCs. This is like a full-blown commercial engagement that we have on handset fraud. Top of my mind, I already know 3, of course, that we have worked with and all the 3 are Tier 1 in fact.

So they are now currently paid customers?

Yes, they are.

Now this FraudZap is targeting what -- is trying to solve which problem?

You want to take on, Harsha, maybe?

Yes. This is Harsha here. So what we have seen in the market is that given the evolution of fraud, a lot of telcos, especially smaller telcos and MVNOs are focused on solving only certain use cases for which they don't want a full-fledged solution. So that is where FraudZap is targeted. Now FraudZap, the way it works is it will solve a single use case. And the first use case we are focused on is handset fraud or device fraud, how you call it. And like Nisha mentioned, we've already delivered in 3 telcos is device fraud. And now we have a pipeline where we will just deliver this single use case. It's not a full-fledged fraud management solution. But what we have also now seen as the interest is even in the larger telcos where they want to very quickly add a certain new use case without going through, again, procuring or upgrading a full-fledged fraud management solution. So that is where, again, there is interest in FraudZap, but for a single use.

What is the market size for that?

So market size, device fraud itself will be in the $2 billion to $3 billion range. But I think amongst overall fraud, this is growing at about almost 18% CAGR or so. So it's a high-growth fraud segment. It is part of the overall fraud landscape itself.

No, if it is a $2 billion market, why we are not able to get customers? What is the problem?

No, no. We are getting customers, like Nisha mentioned.

They are not generating the revenue. See, revenue stagnated for last 8 quarters.

No, no. I mean we are doing this work, and this is a part of the revenue that you see, right? So last year, we had significant order intake challenges. But despite that, if you look at the revenue, it's not sort of declined sharply, right? It's kind of holding. And it's holding because of...

That is your legacy business. The old customers are still sticking with that and that is how it's going.

No, no. It's not...

See that is constant INR 60 crores, INR 66 crores for last 10 years.

No. Actually, it's not that customer will continue to give you money for the next 10 years or 15 years, right? That's not how contracts work. What happens is that there is a spike when you implement a contract. So your revenue recognition from a specific customer goes across 2 or 3 years and then there is AMC which is obviously minimal, right? AMC is not where you make a lot of money. And I think also we have to remember that a lot of things that we were delivering legacy way, right? So it's not that handset fraud was not ever getting solved. It was getting solved in a very, I would say, clunky way in a rules-driven way, right? Now it has moved completely. The velocity of how you solve that fraud has completely changed with GenAI. So what we are trying to do is that we are shifting that. So what you are seeing is the quality of revenue is shifting now, right? It's become more AI. It's a lot more that we are moving away from clunky things. That does not mean that there is -- it's a net new thing that which was never solved, you are solving that. It's not that. But now that we can solve it with a great velocity, then now you can go to market faster today because you don't need a platform, for instance, to solve this anymore. You can actually be very lightweight and still solve it now. So there is a different approach to these.

What is the roadmap for the new product pipeline that you've been mentioning you are building the pipeline? So what are the problem areas, your pain points of the customers you are trying to address with these AI-first solutions?

I think it's a mix of a lot of assurance and revenue of fraud use cases. Primarily, I would say, things like mobile fraud, we are doing subscription fraud. We might do like API-based fraud. So there is a whole roadmap that we have on the frauds, different kind of frauds that we want to solve for customers. We also have a similar pipeline or I would say, roadmap on the assurance cases that we want to do using GenAI agents. So there is a roadmap that we are following right now, and we will be using GenAI to pretty much launch them, like billing anomaly, API based. So there is a lot of roadmap that we have that we have created. So we have it internally, and we are following that.

So when the growth is likely to come? See main is growth. That growth is not happening.

I agree with you. I mean that has been a little bit of disappointment even for us that we have been able to control the bottom line. I think growth is something, obviously, we are -- I would say all over Subex, we are really working very hard to make sure that the top line also starts moving because bottom line, I think we have a fairly good control right now on the cost and the bottom line aspect of it. The top line is something that we are really working very hard to make sure that we keep improving.

Why it is not improving? Is it that your customer-facing --

This quarter, like I said, see, the way our business works is it works on backlogs, isn't it. So obviously, you are --

But there is a decline compared to -- year-on-year also there is a decline.

Yes, that's why because year-on-year --

Year-on-year, it is actually flat on telco business.

If it's flat means it is decline only. If you take the inflation and all other currency variation, it is a decline.

Yes, that way.

So what I'm asking, what is the problem? Is the problem with the customer-facing employees that you are not able to grow the business?

I mean it's -- as you can imagine, Mahesh, it's rarely one thing, right? So it's usually a combination of things suddenly not working, but we are obviously, you know... And we are acutely cognizant of the fact that this is a problem, and we are doing everything within our power to solve this problem right now. So completely aware of it, and I also understand shareholders' disappointment on the growth aspect. We are equally disappointed as management. So we are working very hard to solve that, but it's rarely one thing, right? I mean to say that we are customer-facing person I think that --

If customer-facing employees are not delivering, we have to take a tough decision.

Which we have taken, actually. This is not something that you will see us hesitate at all. In fact, I don't hesitate on these decisions at all. These decisions have to be taken...

See, we have supported you taking out IoT, taking out your IDcentral, but on those businesses we are not growing.

No, no. I mean, Mahesh, a lot of hard decisions have been taken in the last 2 years. We have shut down businesses. We have exited contracts. So a lot of things have been done. We are hardly the people who will not take hard decisions, but my -- what I'm saying is that growth is not such a straightforward thing in the sense that if I just change the sales guy, it will just suddenly start growing. It's not -- that's an oversimplification of that problem. So there are some pockets of challenges in those.

No. Is there are a talent problem in the customer-facing employees? I'm trying to understand the problem, which is not able to deliver the growth.

Mahesh, just to add, as you know that it is a bit of an order book business. It is not like a retail, you just go and convert that into revenue. So you should appreciate the fact and what Nisha has told last year and in her speech also, we had seen a lower order book, okay, which eventually is impacting and translating into the revenue now. And that's how the entire exercise last year, last couple of years is to how to make us relevant and become as a profitable. So that we have demonstrated. And the revenue side as revenue in the market itself is a bit of a shifting with new GenAI and other things are coming, and we are now answering to the market with the launch of our new product suits. And probably -- and this piece is the revenue is quick because it's a lighter implementation. And once we prove our POC, which we have proved on our handset fraud and other aspects around, the revenue will be faster and we'll start looking the growth there. And as a management team, we acknowledge like we have not shown a growth, but yes, this is what as a team, we are working towards to make this happen.

The next question comes from Chirag [ Kataria ] from Ashika Group.

I have two broad questions. The first is a continuation of around the previous participant, like the growth is not coming, okay, and we are developing products and new initiatives also in the place, in the company. So just want to understand what is our ground strategy to entertain more and more clients and initiate the sales engine and use the sales engine. If you can throw some detailed qualitative insight as a strategy within organization what they are doing and how they convince to motivate the employees to push the sales? And also what sort of communication and discussion are going with the clients to move the needle of the sales engine? Second, in filing, we mentioned that we are investing around INR 34 crores to INR 35 crores in one of our subsidiary, which is 100% by the parent, and that is mainly for the working capital need to fund the growth. So what top line multiplier from that INR 34 crores to INR 35 crores kind of capital we are expecting and by what time? Yes, just these two questions, if you can elaborate in detail.

Okay. I can take the first one, then I'll request Sumit to talk to you about the details for investment in the Middle East strategy . So I think in terms of growth, right, like I was explaining to Mahesh also, so first of all, all of us need to kind of be -- just to give some context setting, right? When you launch a product, it's not -- you don't eat the fruit the moment you plant the seed, right? It takes -- you have to give it some time for it to grow for it to get traction and for it to start yielding fruit. So this is our attempt. So why are we then doing this, right? There is twofold attempt. One is we need to make sure that we are keeping our customers current. But more importantly, I want to get into a product line where the deployment, like I said, the deployment cycles are very short or almost, I would say, negligible, right? What that does is that it makes for quicker revenue. So I don't have a product that I have to go install, sit before I can take subscription. So we are also trying to get into because with GenAI, we have an ability today to build and deploy products much more faster than we did in the past. So we are trying to be a part of that wave and to see if we can launch a lot of a host of or a suite of point solutions that customers can use and deploy very quickly and revenues can start flowing. Again, these are not things that will give you $1 million revenues and all that. But then this is what I would say is the velocity is very high. These are high velocity products which have been missing in generally Subex's portfolio. Subex has always been about a little bit of implementation-heavy business. So we are trying to change that product mix a little bit. So that's one thing. The second is we need to kind of be -- when we say that we are an assurance and fraud business, we need to make sure that we are solving the next problem, right? And as you can imagine, the fraud has completely changed. It's more digital fraud now. All of us experience it day-to-day. So I cannot sit here and solve frauds of yesterday, right? So I need to solve it what's coming down the pipeline, and that has to be solved through GenAI. Now coming back to the growth challenge, it is a little bit complex is what I was trying to explain to Mahesh as well. So it's not that if I change the sales guys, the growth will come automatically. It does not work like that. These are long product cycles. These are long sales cycles. Our sales cycles are almost to the tune of 9 months to 1 year that you have to nurture accounts. Most of it is RFP driven. So an RFP that gets launched to the closure of the RFP actually takes good 8 to 9 months. So this is not something that is very quick action. So since last year, our order intake was a little bit anemic. What that has done is we are essentially in the business where when I sell something, then I eat from it for next 3 or 4 years. So if my orders got moved quarter-to-quarter, my revenue also subsequently or I would say, same proportion starts getting moved. So that is the relationship here. So -- and like I said, now our order booking seems to be coming back on track, which means that in subsequent quarters, we'll be able to make up for it. But the fact that does not take away from the fact that it does have an implication. So if our deals start getting moved, it does have an implication on our top line. I mean growth challenge, I know that we have been stuck in a certain range for a while. It's also true. But I would say that this is something we need new products to take to our telcos. We almost have -- we have a lot of new products to take through the pipe. So we have 100, 150 telcos with us. If we can offer them new things, then I think this is going to be a win-win for us. So yes, we seem to be running into some amount of growth challenge, but one that I think will be over this quite quickly. So I think -- stay with us. This is something that we know how to solve. It's taking us some time, but we'll get there. We know what the challenge is right now. And it's a mix of the frontline teams, it's a mix of products. It's a mix of our market. It's a mix of how do you -- your conversion cycle. So there are a few factors at play here. And we are trying to find that balance, which will put us on a healthier trajectory as far as growth is concerned. Do you want to answer the INR 35 crores question?

Yes. So again, as I explained, this is more about -- so how we do our business? We have a front company, which is like -- specifically for Middle East, we have a Middle East entity. They do end contracting with the customer. So it is kind of our marketing unit, whereby they take the contract, then there is a sales force attached and there's some of the field guys are attached and entire work has happened out of the India. So it's a bit of a global transfer pricing arrangement between 2 subsidiaries or companies around and the work happens. So now historically, this entity slightly had a net worth issue. And because of that, there's a contracting issue which was happening. So now we are just funding this company. The working capital cycle remains same in the sense group working capital is hovering around -- DSO as such is holding around 98 to 100 days around. So we are there as it's a controlled thing, and it will be more about the intercompany funding around this company. So this is what -- so as such, the working capital framework remains same. It is a bit of making this entity viable enough to pick the customer contract to hold this stuff.

[Operator Instructions] The next question comes from Sanjyot Khare, an individual investor.

So first of all, really great work. Congratulations on this kind of tough market, at least the operating performance is improving. That's a good part. We are seeing telco revenue is still flat. And you mentioned that there is some deal spillover happened from probably last quarter to probably this quarter. The spillover, is it -- does that mean that some closures were happened in the last quarter and it should be happening in this quarter? If that's the case, then if you can share more detail on this deal, whether size or when it will be effective to get revenue? I want to understand like how the business scenario looks now. I mean is it the tariff part is still impacting, the decisions are taking longer time or you are seeing the improvements in closures or at least customer discussions are getting better compared to last quarter?

So what we are seeing is -- so first of all, yes, I think our deal closure velocity has improved, definitely significantly improved compared to last year, the challenges that we were facing. Some we have announced. Some of them we haven't announced but put it in the investor deck because for me, it's business as usual. And we usually only announce the significant ones. So in that sense, we have not made announcements, but you will see in the investor deck that we have mentioned a few there. So that's there. I think in terms of decisions and all that, we are seeing two things -- challenges. One is decisions are still slow because telcos themselves, if you look at it, they have growth challenges, right? They are only growing from, I would say, about 2% globally. So it's not that telcos themselves have high growth right now. So telcos themselves have quite a bit of challenges at their end. And when they have challenges, a lot of it is obviously going to percolate down to us. So I would say that there are those challenges. There are two, three other kind of things that we are facing. One is in some geographies, I would not say it's a tariff, but it's a currency issue that we are seeing. What that means is that I have the base, but I may not be able to -- there might be currency challenge because that country may not have USD or that country may not have euros or USD or fixed currencies to give us. So I think in hard currency. So we are seeing that sometimes we do have deals, but we are having to sort of really take our time to decide whether we want to pick those deals up or not because of hard currency challenges. So I think that challenge continues. I've seen that becoming a little acute over last year and this year. So there are deals that we could have technically picked up, which we are sort of shying away from. So that's one challenge which we are trying to overcome. The second one that I'm seeing more and more is that there is a lot of margin pressure on deals. So what's happening is that customers are -- they are not postponing the decisions, but they are elongating the decisions. So for instance, in an RFP, typically, a deal would get closed with BAFO round, right? I mean they would ask all the vendors to do a BAFO, which is best final offer. Typically, 1 or 2 BAFOs as the deal would be closed. They will pick someone, award and move on. Now more and more, I'm seeing that in deals, people are going to 4 or 5 BAFOs. But what that does is that it keeps elongating the time, decision time, right? So it's not that they are not making a decision, but now every BAFO takes 2 weeks. So every BAFO takes 2 weeks. If they are doing 4 or 5 BAFOs, then that's 10 weeks short right there actually. So we are seeing some of those things which are -- again, I think it's the nature of the beast, we just have to deal with it. But -- so these are the challenges that I'm seeing, not directly tariff per se. I think tariff and indirectly what we are dealing with is the currency impact. There are some countries that may not have the hard currency. Now the currency reserves are running low. So that's sort of -- it's an indirect thing. It's not direct. So yes, I mean, if that answers your question, that's the kind of dynamic that we are seeing in the market play out right now.

Sure. And in this quarter, I think some INR 14 crores, I think, has been considered as a part of tax refund, I think, for -- in the Q1. And total tax refund was, I think, received is INR 34 crores. So is it remaining INR 24 crores or INR 20 crores will be recognized in the next quarter?

No, no. So see, the tax refund has two components. One is the interest which we got. Another is the principal associated to that. So we have received entire INR 34 crores. This quarter, we booked the interest income to the tune of around INR 12-odd crores and the balance is a principal component towards that. So overall, INR 34 crores comes to the bank this one and the interest was INR 11.39 crores. So other thing has been recorded, to answer straight, obviously, yes.

Mr. Sanjyot, please join back the queue, sir.

Okay. I just not finished the question. Can I just finish the question?

Yes, go ahead.

Yes. I'm saying that next quarter, you'll be having some recognition about the tax refund or there won't be any recognition in the next quarter?

There is no tax refund because whatever order we have received, we have already realized that, INR 34 crores was the thing. We do have some income tax refunds pending with the department, which is under the process. But still the order has not received. So as and when it's received, as a process, we keep informing to the stock exchanges, and you will get to know if we receive on that.

The next question comes from Malav Desai, an individual investor.

You are back to the black. Thank you very much. My question is that regarding two questions. One question is that your marketing person and 2 senior person left the company. Is there any problem with the management or what? That is -- one is that Suraj Bala Chandran and Shankar Roddam. And second question is connected to that further -- another person. That one recruitment from Poonam Wadhwa, marketing person, right?

Correct.

She is from Comviva, Tech Mahindra?

Correct.

You have a joint fair at Copenhagen, that is with Tech Mahindra. Is there any correlation with this company is going to take over Tech Mahindra like that, anything like that, something insight running in the company?

No, no. Malav, I would be -- I definitely do not have any insight or anything of that sort. But just to answer your question, first of all, yes, the marketing person had left us, but then Poonam is the replacement. You have got the new already. So Poonam has already joined us. So that position is filled. Again, in terms of -- Shankar, I think, left us -- I'm trying to think maybe I think it was Suraj, right? You said Shankar or Suraj? You said Suraj, okay. Suraj left us recently, but Suraj was with us for a very long time. There are no issues per se. I think Suraj has been -- he was a fantastic employee. He was working for us for a long time. And...

Yes, he was with the earlier batch, 2008 with the company.

Yes, yes. He was there for a long time, and he has moved on to do something different right now. So I think he has kind of left and this has also been one of the ask, I think, of shareholders repeatedly in many calls that we should be looking at revamping our sales team, we should be looking at getting different kind and new energy and fresh blood. So this is also our effort to see if we can bring people from outside and bring people who come from, I would say, related industries, but not exactly people who are already doing the same thing. So this is also our effort to listen to a lot of shareholder feedback, right? We have heard your feedback. And what we are doing is we are also trying to revamp our team to see if that will get us better results. Obviously, sales is more visible, but you will see that we are trying to make that revamp effort across the board in the company.

The next question comes from Ramesh Pillai, an individual investor.

This question is for Sumit. So I just wanted to check the nonoperating income kind of reflects INR 11.4 crores, which you mentioned is from the IT refund. I wanted to check what's happened to the principal amount, while you did mention something to someone who checked earlier, but it's not clear. The second question is, can you please expand on the other income? So there is around INR 15 crores, which is being showcased in the balance sheet. And one last check is for Nisha. Are we still invested in Privasapien? Yes. Those are my questions, please.

A quick thing on the interest. Let me rephrase myself. So we have received INR 34 crores as a cash from the -- towards the refund amount. INR 11.39 crores pertains to the interest component, which is shown as a part of the other income. And balance is towards the income tax refundable asset, which is the balance sheet item that has been knocked off. So basically, that portion. So obviously, you will see we have not reported the balance sheet because this quarter 1 normally is not a balance sheet quarter for us. So once we publish the H1 results or quarter 2 results, you will see that the income tax asset has reduced drastically in the balance sheet, and that is basically a realization of that asset. So that's on the -- just clarifying on this INR 34 crores, net. On the other item which you asked about what are the breakup of other income. So if you might have heard, Nisha has told is what we have done is in our Bangalore office, we have reached a bit of a consolidation. So we used to own two floors to that office. So one floor we have given up. So for that, we got some lease termination gain, okay? That is again routed to our P&L. So INR 2.6 crores is towards that. So net-net, that is the amount eventually goes as other income, apart from our treasury income, which is anyway as a routine, which -- so because we have now on balance sheet holding around INR 135 crores, and we have some investment towards the fixed deposits and safe assets. So that gives us the other income. So net-net, this is the two, I will say, is one-off income comes in this quarter. One is the income tax interest component and the other is the lease termination gain of INR 2.6 crores.

Yes, we continued -- our investment in Privasapien continues right now. So it's -- we think we are excited about the area that they are in, which is responsible and -- privacy and responsible AI. So we believe as a space that's going to become more and more important. So in that sense, we still think that it's a good investment. So we continue to stay invested. We are tracking how they are doing. So yes, as and when they kind of -- there is a movement in their end, we'll come back to shareholders and inform.

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

One question. Why don't we see the management owning a piece of the company? I don't see them as shareholders, and that gives me zero confidence as an investor. If you remember in the last quarterly conference call, right, one very senior investor, he kind of alluded to the same fact that the Subex employees themselves are not -- and the management. I have a very good feeling that the management doesn't have confidence in their own abilities, and that's why they are not getting into buying the company's stock, right? So that is first question. Second one is the Sectrio order, right? You mentioned that one of the orders -- one of the contracts which we walked away from, what is taking so long for us to take the fastest possible route, and start recovering the amount. I mean, I do understand that these are things which are like -- I mean, I had written that off. If you remember my comments, I said that, that money is gone for us. Technically, I'm accounting that as zero. But you guys sounded like you -- no, no, we have something at our disposal as the way the contract is framed, so that we can get this amount recovered. Where are -- what is taking so long?

Well, let me just take the Sectrio question first. The thing is that, okay, it is going to take some time, Abhishek. To be honest, it's going to take some time. And we are going to use every tool available in our arsenal. Again, I can't – I am unable to quantify because what we are planning to do is that we have a strategy around recovery. So what we are trying to do is we are going to -- we have sent multiple reminders. There is a legal firm also involved. So there are -- there is a process that we are following. And should it come down to that, there might be a lawsuit. There might be some claims and counter claims. So this will go into a process. And as you know, with legal things, we don't know how long it takes what it takes. So we are trying to see if we can settle it or if there is a way that we are able to recover it simpler way. But if not, then we will take whatever necessary steps we have to. In fact, we have already taken some steps in that direction. So that's why I'm not able to answer in terms of is it 1 quarter or is it 2 quarters? It will -- and again, this is not a recovery that's India-based recovery, right? It's a different geography. So it might take us some time to -- because we have to now fight a case in that geography. So the law will take its course. We are going to -- I mean, we have actually done our bit. We have done all the diligence. We have prepared all the documents. Everything is ready from our side. And it will take the time it takes. Honestly, I don't have a answer to that. Will we be able to wrap it up in 2 quarters? I don't know. But we think that we have a great case. And we think that this is something that we should pursue. So as Board, as management, we are very firm that we will pursue this with all means available to us. And that's why I was saying that we do believe some recovery will happen. So that's on the Sectrio side. On management owning shares, see first of all, I think ESOP, as you can imagine, are designed by the Board. It is a certain design is given, and people have to subscribe according to that. And it's more or less sort of allocated, right, to every employee that you can -- you are allocated x number of shares and all that. And employees exercising and all, it has multiple components, right? Employees exercising shares in basis their financial situation or what they want to do at that point of time. But again, I can't –- and I have always felt that there are many companies where people have never had any shares. In fact, they have never had an ESOP, but they have nonetheless done a fantastic work actually for that company. So I don't think it comes in the way of commitment, honestly, because -- I mean, even personally for me, I have never seen that -- I don't think that --

No, no, no, no. Nisha, you're misquoting me. I have not said anything about the commitment of the management. I'm saying this from the perspective of investor confidence. See when we know -- see, the commitment and all that is not visible to us on the outside. You look -- I mean, you be at my place and tell me how -- I mean, if you guys are burning midnight oil, fine, I'm not privy to that, right? But what I get to see from the exchange disclosure is what piece of company you guys are owning, right? And that instills confidence in me that you -- I mean, we are part of the same group as I would say. And we will mutually benefit. I mean your hard work, you will get to see more fruits of it. And we as shareholders will also enjoy the benefit. But I mean, I'm not able to understand -- and that ESOP things, and all policies and things, right? It's not like it's engraved in stone...