Suyog Telematics Limited (537259) Earnings Call Transcript & Summary

Ladies and gentlemen, I welcome you all to the Q3 and 9 Months FY '25 Post Earnings Conference Call of Suyog Telematics Ltd. Today, on the call from the management, we have with us, Mr. Shivshankar Lature, Managing Director; Tushar Shah, Business Head (India); Mr. Ajay Sharma, Chief Financial Officer; Mr. Suyash Lature, Business Development Manager and Ms. Aarti Shukla, Company Secretary. As a disclaimer, I would like to inform all of you that this call may contain forward-looking statements, which may involve risks and uncertainties. Also, a reminder that this call is being recorded. I would now request the management to quickly run us through the presentation for the quarter and 9 months ended December 24, sharing the performance highlights and then growth plan and vision for the coming year. Post, which we will open the floor for Q&A. Over to the management team.

Good afternoon, everyone. I am Tushar from Suyog. I'm heading business for Suyog. So for presentation, we are only displaying key slides for this one, because we believe there are lot of questions coming on. So to have more time for Q&A, we have displayed only the key slides which matters to investor for a presentation. Kamlesh, we can start the presentation. So again, we have -- even in Q3, our 50% of revenue came from Bharti Airtel, 22% from Jio, 27% from VI and 0.4% from others. As mentioned earlier, we have 26 states which are operational with us. The total tower count is 5,500 plus towers and we have 6,400 plus tenancy as of Q3 exit. So to be accurate in numbers, we have 5,517 unique towers with 6,461 tenancies as of Q3 exit. Out of 6,461, 3,989 were our small cell tenancies. We have crossed 1,000 tenancies for government sites this quarter. We have added around 350 kilometers odd fiber network and we have reached 5,561 as a fiber kilometer network. And we have another 455 sites ready which are yet to be built, which we'll be building in subsequent quarter. So if you see a Q3 performance, we have added 1,091 unique towers, which are built by the state in this quarter, which has added 1,215 tenancy and 341 per kilometer. So as committed, we have started a full-fledged rollout from Q3 based on the operator equipment's ability. And now this period will continue going forward and we are getting more and more business opportunity in coming quarters. The way we are discussing with operators, we may even cross our targets of the rollout. Shivshankar Lature is our Managing Director and Co-Founder. In terms of business, like we have mentioned in earlier quarter, we have Master Service Agreement with all the 4 operators. Recently, we signed an amendment with BSNL for 10 years lock-in period. And same payment comes continued with all the telco with 2.5% escalation every year. The best news of this quarter is, we have crossed 1,000 tenancies on government land. So we are continuing our strength and we are being market leader in government tenancies. Again, all the roll out, what we are doing maximum is coming in a slum side area which is our strength. So we are playing with our strength and we will continue playing the same across India for coming quarter also. My 70%-80% sites which we are rolling out in Q3 have come from slum sectors where we are very strong even compared to our biggest competitors. We also doing small cell rollout, because the volume bifurcation between macro and small cell has changed. My 70% to 80% sites which we're rolling out are coming from macro and another 20%-30% is from small cell. Major is happening -- my major rollout is happening for BSNL and Vodafone. So BSNL 100% sites are macro sites, since they are doing 4G rollout. And Vodafone is doing small cell majorly in cities like Mumbai or other are coming on the macro site. So the advantage of this is that my revenue per $0.01 increases since macro gives me a major -- higher revenue compared to small cell. We built strong and stable team in operations. We're continuing to invest in operations. We are doing many new things like we are installing DC energy meter that's planned for next quarter going onwards. So we'll keep upgrading our operations and we'll ensure that we have one of the best uptime in the industry. Like earlier mentioned, we have everything in our portfolio. We are like a one-stop player for all the mobile operators from ground-based tower to rooftop, macros, small cells, fiber, FTTH. Whatever operator demands, we can deliver to them across India on the fastest possible time. We work with all the 4 operators. So in terms of tower industry, tower industry is going very strong. You have seen many mergers and acquisitions. Now, Indus has gone ahead and taken over Bharti Hexacom sites and Airtel. And the way Vodafone and BSNL is going, we are expecting BSNL to be very more aggressive in coming quarters. And they have got additional INR 16,000 crore approach from cabinet. So Vodafone and BSNL are doing a great job in terms of new site rollout. They have been very aggressive. And this aggressiveness from Vodafone and Jio will -- Vodafone and BSNL surely benefit the entire industry. And in a, maybe, couple of years we will see the more than 50% of increase in tower count as a overall industry level. So our targets are same. Like I have committed, we were planning around 3,000 macro sites plus 500 for MTNL in Mumbai and 1,000 plus small cells in the FY '25. We have already crossed 1,800 plus tenancy up to Q3. We have same order book. We have actually much higher order book than what I'm showing here. But only thing this target may get spread over in coming quarters, based on our funds availability. Otherwise, what I have committed was around 8,000 towers in FY '25 plus FY '26 put together. We can easily cross that number. The way we are speaking with Vodafone and BSNL, they are increasing their rollout. Vodafone is planning around 10,000 towers every quarter. You must now also seen the ad of Vodafone where they are adding 600 towers, 500 towers on an hourly basis. Plus Vodafone and BSNL has already started readiness for small cell rollout in coming quarters or maybe next financial year. So we will see a huge upside in terms of our business opportunity and our rollout which we will do. So we have already crossed 1,800 tenancy and Q4 we'll try to best deliver them to go closer to our target. But surely all this will be achieved in coming quarters, along with the next year target. In terms of way forward, we are ready for macro sites, we are rolling out in huge numbers. We are going very aggressive on small cell. Fiber, we are very positive that very soon we will start fiber work even for government backed operator. And FTTH we are ready and we are deploying it. Slow and steadily on FTTH we'll grow. In terms of inorganic growth, we have already declared that we are eyeing one of the company whom we are planning to close in closure. But maybe we will close all the acquisition, there will be few delays in terms of closure of acquisition of a company because first priority would be to put funds -- available funds in an organic growth and based on that we may delay acquisitions by some quarters. Otherwise, we are sure on an inorganic growth target also and organic. We will achieve all of them 100% or we will also close our targets. BSNL is going very aggressively. They will be more aggressive in coming quarters. You must have heard about INR 6,000 crore approval which BSNL plus MTNL has got from very recent approval from cabinet. So they are going to increase their roll out and they are also going to open new circles like Odisha, West Bengal, as our discussion with BSNL. So it will be much more aggressive target from us in coming quarters. Our growth driver remains same. We are going to do pan-India rollout of macro and small cell along with fiber. I hope you guys have all seen our financials which were uploaded yesterday. So our Q3 revenue was INR 488 million and if you see 9 months revenue, it's INR 1,425 million. EBITDA again going very strong. We are continuing on strong percentage of EBITDA target here quarter-on-quarter. It's INR 341 million in Q3 and INR 1,019 million for 9 months consolidated. EBITDA percentage again remains same, 69.9% which we're going very strong. Net profit, again, we have clocked INR 172 million in Q3 with INR 543 million in a year YTD. Net profit percentage, again going very strong with 35% of net profit and EPS strong as ever. So in terms of delivery, we have been delivering revenue as per commitment, we have been delivering EBITDA and PAT as per commitment and same trend will continue in coming quarter and coming years. I think you guys have all seen this, so I don't need to repeat financial statements. We want to give more time for Q&A so we have kept the presentation limited to key slides only. So this is all it from my side. Vinay, now we can open floor for Q&A.

[Operator Instructions] We have our first question in the chat box from R. Dixit. The question is, the number of increase in tenancies and macro towers on Q-on-Q basis, but revenue did not increase proportionately Q-on-Q. Is there some lag in the billing?

So this question is from?

R. Dixit.

So, Dixitji, you are right, revenue did not increase proportionally because, see my entire quarter whenever I say site count it does not come from the first day of the quarter, so you can take an average of 1.5 months. And there is a delay of 30 to 45 days in billing as per the operator expectation. Because MTNL was struggling with the equipment, which they have got now, so there was delay of say 30 to 45 days in term of -- maximum delay was 60 days in BSNL case and Vodafone billing is happening as per the RFID tooling. There are minor delay of 60 days for BSNL mainly. But, yes, we'll see entire 100% revenue impact from the next quarter onwards. Hope I have cleared this or you have any more doubt on this?

No, I'm good. Thanks a lot for your clarification.

We'll take the first question from Varun [ Ghia ]. Varun, you can go ahead, please. Varun Ghia.

A couple of questions. So firstly, you mentioned that there will be a spillover of the overall tenancies which we were trying to achieve, 10,000. So this year-end what would be the actual number which we can achieve. And secondly, on margin side, you mentioned in last quarter that 73% EBITDA margin should be -- which should be maintained, but there was again, because of lower revenues, your margins also went down. So what would be the sustainable level going forward?

[Foreign Language]

Excluding that, the margin were around 73%, EBITDA. So right now it's around 69.9%.

Excluding INR 4 crore?

Yes.

[Foreign Language]

So turns, we are already crossed 1,800 tenancy. We are trying to reach as close to our target. So see when you started with 10,000 tenancy. 10,000 tenancy target remains same. We will be -- the only thing, next -- but 10,000 tenancy was FY '26 exit which we are not changing at all. Yes, the spillover of FY '25 will happen in '26. So suppose there is a spillover of, say, 1,500 odd tenancies, we will cover it along with the FY '26 target. We are working on the finances. We are speaking with few of them and it will soon be arranged. So my 10,000 tenancy target of FY '26 plus FY '26 is intact. We will do 10,000 tenancy addition, 10,000 tenancy by FY '26 March exit. There is no change in target or spillover in that case. Only the FY '25 target will get spillover to '26.

And what will be your fundraising plan since you have withdrawn the preference and warrant?

So see, basically, we are speaking with a few bankers. We are trying to get the maximum debt whatever possible, which we are trying to close ASAP. In terms of fundraising, we now will wait for appropriate time and whenever there is an appropriate time, we will again go for the same.

Last question, what was the receivable amount as of Q3 December?

Can you repeat your question? Receivable amount as of December end?

Receivable is around INR 45 crore.

We'll take the next question from the line of Saket Kapoor.

As you mentioned about the preference part [Foreign Language] So, sir, appropriate time is a very subjective matter. So if you could just give some more color, what according to the management is an appropriate time to raise fund. And the way we have envisaged it earlier in terms of the CapEx and the amount to be spent, how are we going to realign that funding requirement going ahead? And then I have a follow up for this preference part again.

Saketji, so we are still working on the finances. So as of now, we are very sure we'll go ahead with debt for time being, where we are speaking with few bankers. We are very positive that we will be closing our fund requirement immediately. Maybe next month or so we'll be closing with the bankers and we will get enough funds to complete our Q4, Q1 targets of next year. Appropriate -- and see very difficult right now to say when we will again go for fundraising. You all know the market conditions, right? We don't want to take risk on investors' money. Like, we come up with something and again investor gets impacted, that's the only reason we withdrawn this. It was keeping the market scenario in mind and investor benefit. So let's wait. This is not a right time. And we -- and it's not a right time to say by when we will do the exact date. But, yes, whenever it is appropriate then we will come back to market for the funds.

Sir, what kind of debt arrangement in absolute numbers can you allude to for -- which we will be raising or tying up for March ending '25 and we will be spending...

[Foreign Language]. INR 100 crore debt immediately [Foreign Language].

[Foreign Language] deployment breakup [Foreign Language].

[Foreign Language].

It will be all CapEx.

CapEx nothing else. CapEx [Foreign Language].

[Foreign Language] IP1 asset [Foreign Language].

[Foreign Language] INR 5 crore advance [Foreign Language]

[Foreign Language].

[Foreign Language]. Firstly it's an Delhi based company [Foreign Language] So it gives me an upside in Delhi where my organic growth was happening very slowly. Second, [Foreign Language] 100% tenant was Jio and Airtel who are not pulling out these sites and there are very high chance of increasing the tenancy immediately from Vodafone and BSNL. We are speaking to both of them. As soon as we complete the acquisition formerly, we will bring Vodafone and BSNL on the same sites and improve the tenancy. So this acquisition was done and actually as per this strategy which I declared on my earlier calls also, that we'll acquire a site where organically I am not very strong. Second, which gives me additional tenancy for Vodafone and BSNL. On the same base we have done this acquisition.

Sir, in terms of revenue contribution, can you…

Saketji, can I request you to come back in queue. We have lot of people to ask questions.

[Foreign Language].

So revenue generation will be INR 66 crores per annum more or less [Foreign Language] current revenue generation, so once we add tenancy it will increase much higher.

[Operator Instructions] We will take the next question from Mr. Mahek Talati.

So just wanted to understand more from the debt perspective. So we already have a debt of close to INR 100 crore on our books as of H1, FY '25 and now we are planning for another INR 100 crore of debt. That is -- so is our balance sheet supporting the same? And what is our debt to equity target, which we are planning going -- which we want to -- which is our target?

Debt ratio support [Foreign Language] Equity debt ratio is very good. Right now [Foreign Language] INR 100 crore raise [Foreign Language] max to max INR 0.75 crore. [Foreign Language]

In the INR 100 crore debt which we are planning for CapEx, how many new towers we can add with this?

Near about 1,200 new towers add [Foreign Language].

1,200 new towers. So this will be done in entirely in this quarter or there will be some spillovers for Q1 as well?

By March or June [Foreign Language] target achieve.

So we can add around 600 in this quarter on an average, right?

Yes.

And other than this, from internal process, are we also planning any new additions or that is done by...

Mahekji, one more thing. So, when you talking about this, when we are saying we are raising that, it's only a stopgap arrangement because we have withdrawn from the preferences. So at an appropriate time whenever we raise the preferential, again our equity will improve. In terms of repayment, I think whenever I install this, my revenue starts immediately from the day of installation. And a good cash flow. So, even repayment should not be an issue. It's just a stopgap arrangement which we are planning and soon we will -- at the appropriate time we'll again come with the preferential issue.

No, sir, my question was basically that this 1,200 towers which you are installing is on the debt now -- by using the debt, correct? I am asking that if...

You are saying that you have installing up to Q3 or you are talking about future towers?

Till date what we have installed is by...

It was all from internal accrual.

Yes, so going forward also, are we planning -- do we have the funds that along with the debt, we can add more towers or only 1,200 towers will be added?

No, new towers will not happen through that. So there will be internal accruals which -- because if I have done the 1,300 plus tenancy, I will get full-year benefiting next year. So again, we will get that internal accrual which we will be used for CapEx, plus we will use debt as a stopgap management.

Okay, so basically internal accrual -- debt will help us in adding new towers for the next 2 quarters, at least, right?

Right.

And then we might go for a fundraise for addition of new towers.

Yes.

And any specific number how much new tenancies we can -- what could be the March ending in terms of tenancies? Any rough ballpark number?

It should be 6,500 to 7,000 tenancies.

So currently you are at 6,400, so around 7,000-7,500, correct?

So currently we are at 6,400 as of Tuesday exit. In next quarter, let's see based on our financial working, we are trying to add the maximum. So we are trying to reach 7,000. Let's see where we reach.

And sir, last question was on the tax perspective. So our tax is quite low at around 12% and in some quarters it's around 11%, some quarters it's not 18%. So a reason for lower tax and when can we -- are we expecting that to go to 25% tax level?

[Foreign Language] as per company law. [Foreign Language].

We'll take the next question from the line of [ Hemant ].

So I just wanted to understand like we have a target of 10,000-odd towers, right, in FY '26. You said you are going to raise debt of INR 100 crores and that would kind of give us 1,200 towers. So we will still be short of around 2,500 towers going forward. So what are your plans with respect to that? How are we going to manage the funds for that?

So, sir, what we said is again, currently we are using -- see we are adding funds from alternative routes, so debt would be [ intermit ] or you can say timing arrangement, stopgap arrangement. Debt is only stopgap arrangement. Again at the right time we will come up with the preferential issue which we will use for new rollout.

The only concern is like, say you said the market conditions are not correct and you kind of withdrew the preferential. Say, assume the market condition remains like this for another 6-8 months or a year forward, so how are we going to raise the funds?

So we are working with the multiple alternative routes where we are planning to raise the funds even if market condition is not stable. We are speaking with multiple people. There are a few rules which we will explore and we will raise the funds. But as a management, we are very confident that we'll be able to raise the funds for an entire rollout of FY '25 spillover, plus FY '26. If market condition is very good -- if it does not improve, we will use alternative routes.

So just last question sir, is promoter planning on introducing the funds for the growth aspects of the company?

Yes, 100% promoter is planning. The only thing this time will be drawn because that was not solving our purpose and because it was a warrant and it was only giving me 25% in current year which would have not helped my deployment. So, promoter is planning and he will 100% infuse funds in the company.

So last question, so what percentage of revenue is coming from BSNL for now?

So as of now, it's only 0.4%, 0.5% because we have just started rollout from last quarter for BSNL and MTNL together. So it will slowly and steadily increase in coming quarters.

So any number or any percentage we are looking from BSNL, say, in coming 2, 3 years?

I think in next -- by FY '23, it should reach 15% of my revenue.

We'll take the next question from [ Chinmayi Upadhyaya ].

Sir, one question was that we have written in our PPT that there are 455 sites which are ready for integration. So what does that exactly mean? Because in the 5,500 towers that we currently have, there are also some towers for which you are saying that the billing has not happened. So can you differentiate between the 2?

So basically what happened, suppose we are talking about Q3. Q3 was October, November, December, so whatever site I must have bidding late November or December, the sign off gets delayed by 30 to 45 days, which basically happens from RFID, but it happens on a pro-rata basis in the coming quarter. So by Q3 -- and we may not have billed that 450 sites, which I will bill in this quarter, in Q4. So -- we have got the orders from operator. Only thing they need around 15 to 20 days, mainly BSNL needs around 15 to 20 days to install their equipment and then they will be sign off to start the billing. But it would be from a back dated.

So, sir, this 455 towers, this is not the MTNL towers which we spoke in the last con call which were awaiting integration?

[Foreign Language] is already part of billing now. These would be 3 towers. They're 3 tower, it would be between MTNL and Vodafone put together, so whatever tower I may have to [ graduate ] in the month of December, I cannot bill it in the same month, right? They will install equipment, it will take 15 to 20 days for sign-off.

So my next question was on the acquisition that we have done of Lotus Tele. So I understand that there is going to be some delay on the acquisition part, but how many -- so I understand there are 120 sites as per your press release. So how many tenancies do they currently have on them?

They have 140 tenancy on 120 sites, 140-145 some tenancy count is there and with 120 towers. And see Lotus we may not do the acquisition but other companies which we are eyeing may get delayed by few quarters.

And sir, how do we plan to source funds for the site acquisitions that we are planning going forward?

Obviously, we are planning multiple routes like bank debt is one of these, internal accruals are there, promoter will invest funds, and obviously, at right time will again come in preferential. But obviously, our priority for deploying would be organic route first and then we will manage funds and then we will go for inorganic route.

Sir, next question is how many towers have we currently installed for BSNL considering that they have given a rollout of 65,000 towers already on the 4G side?

So when you say BSNL has done 65,000 4G, it means that they have -- they have 50,000 plus or you can say 60,000 plus tower upgraded from the existing tower to 3G or 2G to 4G. In terms of new tower, they have deployed around 10,000 odd tower out of which we have done 500 plus towers.

And what is the kind of number we are expecting from BSNL going forward in terms of the number of towers, any visibility we have there?

So with the new approvals in place we are eyeing at least 2,000-2,500 tenancy of BSNL in Suyog portfolio by end of FY '26.

And my last question, sir. How much CapEx have we incurred till date on the number of towers we already have installed?

INR 100 crores.

INR 1,000-plus crores.

INR 100-plus, yes. And sir, what is the kind of CapEx we expect to incur in the last quarter of this year?

See based on finances we are [ speaking base ] once we get, so we are planning again -- we are planning around 500 plus sites, so it should be around INR 50 crore plus.

50 crores plus.

We'll take the next question from the line of [ Agastya Dave ].

Actually, the previous participant asked a lot of questions, but she was looking at different units. I'm looking at different units. Some very similar questions, but [Foreign Language] and vice versa. So the first question is, BSNL announced a lot of CapEx, right, in terms of the amount that was given to them by government. And that was done last year and allocations were made in the budget and funds were infused in BSNL. So, do you have an idea how much of those funds have been deployed by BSNL across various projects not, just related to your company but just talking macro-wise?

So, we know the number of towers. But in terms of fund allotment we don't have any information from BSNL on the fund usage. That's their internal issue which they don't even declare. So it's very difficult to share that information or get that information from BSNL.

But sir, you would have some idea, right? What was the targeted number of towers and how much have they completed?

See they have target of 100,000 tower in 18 months, out of which 60,000 towers were upgrade and 40,000 towers were new sites. So out of 60,000 upgrades, they have done 40,000-45,000 upgrade till now. Around 40,000 new towers, they have done around 10,000 towers till now.

So 3,000 new towers and sir what was the previous number can you repeat that?

So out of 60,000 upgrades, 40,000-45,000 upgraded till now.

Okay so 15,000 upgrades and 30,000 new sites are remaining.

Right.

Correct. And sir any problems on the payment side from BSNL?

No, no, no. We're getting...

It's coming in smoothly right?

It's coming properly. There are no issues.

So then the previous participant was asking you about CapEx. So if I take the base of FY '24, you had 5,118 tenancies. And on top of that, if I take your long term target of reaching like 15,000, so that's a 10,000 difference. Now, am I right in saying that you just mentioned to her that for 500 towers , you require INR 50 crores. So would it be a right idea to extrapolate that number over the entire 10,000 sites? So would you require like INR 1000 crore CapEx in total to reach 15,000? Is it too simplistic from my side if I do that.

For 15,000 tenancies, which is 10,000 additional tenancies, we have done 8,000 towers. So CapEx plan is around INR 800 crores.

INR 800 crores, so not INR 1,000 crores. So 800 crores starting from the base of '24. Is that right, sir?

Right.

And so when I -- so this is the CapEx which I'll see from the cash out on investments, right? And on the balance sheet, this is the sum total of the changes that we'll see in the gross block from PPE and also from right of way. Right?

Yes.

That is exactly how it will work. Right, sir? No additions will be there. So the INR 800 crores is what I need to concentrate on?

Yes.

Sir, then final question. Again, on the funding part, sir, sorry to, again, repeat it. So again, taking 2024 as the base, this INR 800 crores, how do you plan to fund the entire amount? So you've talked in pieces that INR 100 crores from here, INR 100 crores from here. But if I look at the big picture, INR 800 crores [Foreign Language] rough breakup [Foreign Language] There will be a time limit, right? You cannot wait indefinitely. And then what is your comfort level in terms of debt/equity for this incremental INR 800 crores?

Agastyaji, [Foreign Language] approximately INR 250 crores debt [Foreign Language]. INR 100 crore promoter [Foreign Language] rest in periods [Foreign Language].

And sir just to be clear, when you said that INR 250 crore is the maximum debt that you are comfortable with, that is the total amount even on the expanded equity raise.

Expanded?

On expanded, right? [Foreign Language].

[Foreign Language].

[Foreign Language] should be equity raise plus internal accruals, right?

[Foreign Language]. INR 250 crore plus INR 100 crore, INR 300 crore [Foreign Language]

So, INR 250 crore debt, INR 250 crore equity, INR 100 crore from the promoters, so that is INR 600 crores and [Foreign Language] INR 200 crores comes from internal accruals?

Yes.

I invite Mr. [ Dhruv Bajaj ] from the chat line to ask a question please.

I just had a couple of questions. So my first question was that how many towers have we executed in the current quarter and was the slowdown on the revenue front primarily due to delay in the billing cycles and therefore we should see an uptrend in Q4? Or did I miss something? Because we are guided for a much higher number in Q3 and Q4.

So Q3 I think it will be around the expected only we have done 30,000 plus tenancy in Q3 with 1,000 per towers. In terms of revenue upside, you will always get a revenue upside of Q3, Q4 onwards but even in Q4, you will get only 3 months or 2.5 months revenue upside. Next year, you will get the full year impact of towers rolled in Q3.

Got it, sir. And my other question was regarding fundraisers but I guess that has been answered.

We will take the next question from the line of [ Darshil Pandya ].

Sir, just wanted to understand, will any of our revenue be impacted as what we have guided for FY '25 and '26?

No, as of now we are on target. FY '25 is also on target, more or less and FY '26 would be inversely 100% on target. I can say vice-versa, we are getting many more orders. We have been speaking with operator. So, we are trying if we can further improve it. But yes, we are on target.

And sir, a few days ago, Indus Tower had one announcement. They bought some 16,000-odd towers from Bharti Airtel with around INR 330-odd crores. So I just want to understand that how difficult or easy it is to get these towers from slum sale and either building that own towers. Just want to understand that.

So it's a wrong comparison, to be frank. So when you buy a tower, obviously it's easy. But when you buy a tower you need, so from a Suyog perspective, what we -- I don't know what Indus think, but I can share about Suyog strategy. Whether I acquire a company, it's not only about buying the existing tower at what price, it's more about how many more tenancy I can add on that tower. So if we feel that the tower is very lucrative and we can add another 1, 1.5 tenancy on the existing tower, and it's in the area where we are not organically grown, I will 100% go for that. Organic growth is 100% very difficult. We are being working day and night on field. At night not field. And it's difficult. But then it also gives you much satisfaction as you are able to achieve target your brand improves and because of organic growth, I get more and more business from operator. Because there are many locations where they want to put anchor sites where existing towers are not there and I get more and more business of anchor site because my organic growth is very strong compared to competitor.

And so just want to understand, you know, in the previous calls, we discussed about installing wind turbines, solar energy, and something also about zinc batteries that, you know, might start in Q4. So where is all this?

Zinc batteries are on track. So we are expecting trials in Q4 of zinc batteries. Wind turbine, I think, was not workable because of energy it was generating. Yes, but Zinc battery is on track. We will be soon doing a trials of Zinc battery.

Any internally, have you thought, what kind of savings can we do on this? Just a ballpark thing of what today we might be giving and what we might save in future?

It's very difficult to do right now unless we do trial, successful trials, there is no point discussing, sir. Because we have to see what price will get this zinc battery because it takes volume to manufacture, right? And it's very early stage of trials. Right now we are not even aware of the exact costing of zinc battery. But principally if you feel it will be good saving because lithium is very scarce resource while zinc is available in abundance. So it should give a good saving compared to lithium.

One last question sir. Is there any update on the FTTH trials that were underway to -- that they were exploring last mile connectivity without laying fiber cables. Do you have any update on that?

No, it's still our team is working on it. They are finding various solutions. So nothing concrete has come out yet.

Can we expect in this quarter?

Let's hope.

We'll take the next question from [ Yash Nath ].

So, I just one question. I think we had raised some funds with regards to addition of towers from Vodafone and BSNL. So, are the tower addition in place or has the plan been sanctioned for addition of those towers?

I really did not got -- understand the question. But still we have been adding -- whatever rollout I am doing right now is 100% for Vodafone and BSNL are rolling out huge towers that's going on quarter-on-quarter basis. We had planned extension raise which we have withdrawn because of market condition. So as of now we have not raised any funds but whatever rollout has been happening has been done with the internal accruals till date.

So can you give just a time line as to how this -- when and where -- when are these towers going to be added?

So just explain again, we have already added 1,300 plus tenancy in Q3. Overall, ideally it's 1,800 plus tenancy we have added in Q3. Q4 we are eyeing to get tenancy. Next year we are again planning 5,000 tenancy addition. So FY '26 and we are having around 14,000 to 15,000 tenancies by FY '26 end.

We'll take the next question from [ Vinit Khatri ].

Sir, my question is with respect to the budget of this year. Like BSNL's allocation was reduced, right? So do you see any type of impact on the growth of BSNL?

[Foreign Language].

Additional INR 6,000 crore has been sanctioned by cabinet for BSNL rollout. So BSNL has become more aggressive in market rather than what you were saying. So we are expecting more orders from BSNL. We have been speaking with them on daily basis. They are being very aggressive. They have further improved their rollout numbers and 100% more orders will flow through from BSNL.

So like what I had heard about was that 53% type of budget allocation towards BSNL was reduced.

No, no, so what they are only doing -- when you say budget has reduced. Rather than putting their own sites, which is their CapEx, they are eyeing for more and more IP sites. So there's only change in strategy. What they are doing is, they will -- IP site sites from Suyog or Indus are much commercially viable for them and they come at much faster pace. So that's where they are changing the strategy and their site rollout numbers remain same. There is no reduction in site rollout numbers.

And the funding to them is intact, right?

Yes.

We'll take the next question from [ Deepak Pandey ].

Sir, I want to understand what is the revenue expected from Lotus Infra for FY '25 and what sort of growth can we expect for FY '26?

Yes, FY '25 will be -- only 3 months' revenue we should get from Lotus Infra because we are still not complete the acquisition. We are in process of completing, which might complete in Feb. So in FY '25 there will be no impact in terms of revenue. It is hardly a 1 month's revenue. In FY '26, their original revenue is INR 6 crore plus and we are eyeing to add at least 50% currency on Lotus Infra. So target should be around INR 8 crores -INR 9 crore revenue in FY '26 from Lotus Infra.

And on the margins front, they are doing 50%-60% only?

Yes, margins are almost same.

And once a tower addition order is provided by an operator, how much time do they give generally?

For normally a ground based tower it's around 30 days, for rooftop tower it's around 15 days.

And what happens if you are not able to deliver it in 30 days?

Finally -- probably we have meetings on a daily basis. If I say I am not able to deliver at all because of X, Y, Z issue, then they may open it for some other IP. So, then I will give them commitment that they will deliver it maybe with a lead of 10-15 days, they accept it. Only they will reserve when I say I am not able to deliverer.

And they'll take the whole order or specific location order?

No, that specific tower. That specific tower will get open for other IPs if I say no to them.

Specific location wise site will get open for other IPs.

Right.

We'll take the next question from the line of [ Rahul Anna ].

Sir, I just want to know a couple of things. How many tenancies are coming for renewal in over let's say next 6 months and what is our retention rate for these renewal of tenancies?

So 100% we have been retaining the tenancies because -- anyways but now agreement what we are signing is for 10 years -- 5 year to 10 years. We don't sign a small contract. In terms of next 6 months we have around 150 tenancies which are coming for renewal and as of now my success rate is 100%. And this there is a building which is in the redevelopment or something one or 2 sites may go. Otherwise we have been retaining 100% all these sites.

In your PPT you have mentioned that there are some 1,000 new small cell towers you're planning for FY '26 and 3,500 from MTNL, Vodafone. So these are confirmed orders or these are potential business opportunities?

These are -- as of now more than 3,500 [Foreign Language] confirm order in my hand, plus it's been adding on daily basis.

And your number of tenancies has gone up by almost 1,000 plus in -- on a quarter-on-quarter basis. But the impact on the revenue is not visible in the Q3 numbers, so can you explain how does it work?

See it will not come in Q3. Because when I say it has increased by 1,000 that does not mean that on first day of Q3 we have rolled out that side. That 1,000 number has come across 3 months. So we get hardly 1 month revenue or maybe less than that. So actual impact will come from next quarter and full year impact will be from next year.

And so 1,000 plus tenancy next quarter, how much potential additional revenue can we expect from Q4?

See, it's normally around INR 25,000 odd revenue on an average basis per site per month.

We'll take the next question from [ Manish V. ].

Firstly, thank you for explaining CapEx, you are demonstrating your effective debt management. At the same time, you talked about strong sales growth. I think what I really want to understand from you, to me, the area of concern is the increase in sales does not translate into proportionate profit growth. When I look at your last -- I think I put that in the chat as well. Despite of the strong sales growth that you've mentioned, I'm seeing an impact drop by 10% year-on-year. How are you addressing this? Is this due to high cost, poor operational efficiencies or any other non-operational expenses?

So, Manish, as we mentioned even in my earlier earning calls, we are bit unsure of maintaining EBITDA of 65% plus EBITDA and 32%-35% of PAT. Only thing you are seeing this difference, one is because of ECL provision which we have reversed, we did not have any ECL in Q3. When we had ECL reversal in Q2 and even in Q4 of last -- Q3 of last financial year. That's why you are seeing this drop. Otherwise, we are actually maintaining EBITDA and PAT margins. And also there was one -- because Diwali falls in Q3, there was a little bit increase in employee cost, which was at onetime in a year cost. Other operational cost remains same throughout the year. And our PAT -- since my I have Master Service Agreement only for operators by input, my sales figure don't change. It's a fix revenue which I get from operator year-on-year, so my PAT margins and EBITDA are very stable and will continue at the same rate.

That is what I am trying to understand. Is it the OPM which has gone down from 80% to 70%? Is it the increased expenses -- I am trying to also understand the investor sentiment here given the sharp decline in prices. Of course, if I take macroeconomic conditions into equation but at the same time I'm seeing a significant dip from highs of INR 1,900 to almost INR 1,000 which is a 50% dip.

So in terms of market drop in share price, see, we are a company who focuses on business. We are very sure of performance, we don't really -- what to say, we don't see a market that much. I will not comment on the drop of share price. But, yes, in terms of EBITDA, PAT, there was a drop because there was an Vodafone recovery. If you compare my Q3 EBITDA with Q3 last year and Q2 of this year, there is a difference or there is a you can say a drop only because in both that quarter there was an Vodafone recovery which happened. Like INR 3.5 crore recovery was -- we got INR 3.5 crore recovery Q3 last year. And we got around INR 4 crore recovery from Vodafone in Q2 this year. While in quarter 3 of this year, which is our current quarter, which we are discussing right now, we don't have any Vodafone recovery. And that's the only reason you are seeing major drop in EBITDA compared to the past 2 years. My last question, in terms of investor participation, are we seeing an increase? Are we seeing people reducing their positions? Is it the promoters? Is it the retail investors? What sort of trends are you seeing over the last quarter?

So when you say last quarter, the overall investor count, [ full efficiency ] has increased. We are seeing a lot of participation, and we are getting a lot of queries. We are meeting investors. So in terms of interest in company, we have found it increased. People are more and more interested in Suyog, and they are very confident about our performance.

We will take the next question from the line of [ Jai Arora ].

Last year, we had achieved revenue of INR 174 crores and our PAT was [Foreign Language] INR 63 crores. Guidance for FY '25 and FY '26 [Foreign Language] and what could be the PAT? [Foreign Language] and tenancies. [Foreign Language] So just for my simple basic understanding [Foreign Language] this financial year. FY '25 and FY '26 [Foreign Language] and similarly for the PAT? Last question [Foreign Language] if I am not [Foreign Language] is to reach 15,000 towers and financial year would we want to complete this entire CapEx cycle? [Foreign Language].

So I will answer the second part first, then first part Sharmaji will answer you. In terms of target, 15,000 is the tenancy count which we want to achieve by the FY '26 exit. [Foreign Language] CapEx we'd be utilizing it in [ FY '20 ] Already they have done INR 100-plus crore out of it INR 800 crore, so balance CapEx [Foreign Language] which will enable us to reach the 15,000 tenancy in FY '26 exit figures. We're 100% confident about this and will anyway achieve it. Because the way we are getting business from Vodafone, BSNL, 100% sure of achieving it.

[Foreign Language]

Yes.

[Foreign Language].

[Foreign Language].

[Foreign Language]. I am very excited. [Foreign Language].

[Foreign Language].

Basically we need to add 8,000 towers [Foreign Language] which we are 100% capable, we have aligned all our resources and will be doing it.

So this is going to be INR 800 crores [Foreign Language] So this will we additional assets of INR 800 crores assets [Foreign Language] this will -- we will from INR 484 crore to we'll reach INR 800 crores.

[Foreign Language].

[Foreign Language] to recognize all the tenancy to -- in the revenue.

[Foreign Language] INR 570-plus crores.

INR 570-plus crores. And we are going to have the same kind of 32% to 35% PAT [Foreign Language]

[Foreign Language] EBITDA around 65%.

[Foreign Language].

[Foreign Language].

[Foreign Language]. This is [Foreign Language] different investors. [Foreign Language]

Plan without promoter.

Without promoter [Foreign Language]. What is this? I mean, these are just [Foreign Language] and I will pay you rent around that network. Is it going to be of that kind of revenue?

Revenue would be recurring, same IP1 model, recurring revenue from Jio, Airtel, BSNL. Both fiber to home is nothing but doing vertical wiring of your building. Horizontal wiring from a spare box to your house, operator [Foreign Language] They will bill you. I will be sharing my vertical backbone -- vertical backbone of building with operators and you will be paying me recurring rent.

[Foreign Language] That infrastructure will be given on rent. [Foreign Language]. Give my regards to Latureji everybody.

Thank you, Jai.

We will take the next question from Mr. [ Yash Adhiyaru ]. Mr. Yash, we are not able to hear you. We will move to the next participant. We will take the next question from Mr. [ Rishi Kothari ].

I mean, we right now anyway cater to the targets for FY '27, right? But still I will be probably more interested in the next quarter per se FY '25 target and as well as FY '26, if at all ballpark numbers that you can give.

So, in terms of number of towers?

In terms of -- no, PAT level and revenue, purely financials.

Rishi, we would like to avoid any quarterly direct guidances.

It is very difficult, Rishi, to give our guidance on revenue and year.

And for the whole year also you won't be able to give?

No Rishi, it could be violation of policies. So, you won't be able to give proper numbers in terms of... Because it's sensitive information, market sensitive information.

Not the proper numbers first, but any growth targets or any expected...

First of all, what I can say is, basically whatever guidance we have shared earlier remains intact and will achieve that.

And also in terms of the provisions that we discussed that this quarter we did not have any recovery from the Vodafone Idea debt, right? So is it purely variable nature? How exactly does that whole thing now?

Whatever outstanding was there about 180 days has come down to less than -- we need to do project only for the recovery, which is more than 180 days, which is not -- which is not the case anymore.

Previously provided.

previously provided that was a recovery. Now we are not providing it because we are getting the payment from Vodafone within 180 days only.

So what are the provisions that we have created anyway, we have already been reversed it on our P&L.

Yes, we have recorded what -- all the provisions have been successful recovered.

So the expenses that we right now see on the other expense category is -- will be more or less in the same.

Yes, same levels.

Same levels, that is around INR 300 crores -INR 320.5 crores.

Yes, same levels.

[ Yash ], you can ask your question.

I have 2 questions. One is, why is there an execution delay in the new tower rollout? Like you previously guided for 4,500 towers in FY '25, but you have only achieved the almost 1,100 or 1,200 in the first 9 months. What is preventing you from meeting the target? That is my first question. And the second one is that, you mentioned that the rollout would spill over into FY '26. So what gives you the confidence that the targets will be achieved then in FY '26, given that they weren't met in FY '25?

Yash, what we have done was, we have given a guidance of 4,500 tower for FY '25. What we have achieved is right 1,100-plus tower, which is a build tower. There is one more 453 towers which are not part of building. So we have done a unique tower of 1,500 tower plus tower. 1,500 plus tower they have deployed in first 9 months, which has given me a around 1,800 plus tenancy. Now, why -- see, if you see my entire year predictions, it was same that Q1 and Q2 would be very slow. Q3 and Q4 would be very fast. So Q3, what we have targeted, we have almost achieved it. Q4 gets impacted because of the planned preferential which -- you know, which have been drawn now based on market condition. So if -- that's why there is a delay in the project, which will get spillover to a quarter or say a few quarters. Otherwise, the target remains the same. How we are ensuring that we'll achieve this target in the next financial? As mentioned earlier on this one, we are arranging funds from alternative routes and we are very confident of arranging funds from alternative routes to deploy this number of towers. The only thing there is a spillover is because of the funds management. Otherwise, we have enough orders, we have enough teams to deploy. There is no concern at all in terms of performance. Once we arrange funds from the alternative routes, we will be deploying 100% of the committed target in FY '26.

We'll take the follow-up question from Saket Kapoor.

[Foreign Language] in terms of coming to the enterprise value for the sale.

So probably I will not give you exact details but what we normally do is [Foreign Language] Secondly, [Foreign Language] we don't want to impact the EBITDA and PAT level at all. So [Foreign Language] then we go ahead with the acquisition.

[Foreign Language].

[Foreign Language]. Because, obviously, there is a confidential agreement which we sign with the acquiring company. [Foreign Language] nearly same or little bit premium you can pay because [Foreign Language] Then we are okay with the acquisition of that tower.

[Foreign Language]. one off acquisition [Foreign Language] You are also eying some more assets. [Foreign Language].

[Foreign Language]. INR 15 crores, INR 13 crores -- INR 15 crores -INR 20 crores.

[indiscernible].

[Foreign Language].

[Foreign Language].

[Foreign Language].

[Foreign Language].

No, no, Saket, we are not aware. And even we don't discuss the market rumors. [Foreign Language].

And last [Foreign Language]

[Foreign Language]. It will be same model which we will follow. Only thing [Foreign Language]. Maybe post FY '27 we will see a major jump in FTTH rollout by operators.

And this will be in line with the IP1 story only. This is the same...

Same line. Only the model would be little bit different but it will be on the same lines and terms.

[Foreign Language]. And we hope that we get an appropriate time going ahead to raise funds. We were unlucky this time, sir.

Thank you.

Since we are overshooting on time, we will take one last question from Mr. Darshil Pandya.

Sir, Tushar sir, just wanted to understand what will be the kind of tenancies by FY '25 that we will be having? FY '26 we will be having 14,000 to 15,000. What will be the FY '25 number?

What you say 14,000 to 15,000? That's the total exit number of FY '26. If you say addition tenancy, FY '25 should have around 2,500 odd tenancy addition and FY '26 will have around 7,000 odd tenancy addition.

That will totally give us 14,000 to 15,000 if I am correct.

Right, right.

So FY '25 will be 4,500 plus, plus.

That's right.

[Foreign Language]. And sir, what will be the FTTH revenue per kilometer?

So if you see FTTH revenue does not taken on per kilo -- it's a per home pass. So it depends on building to building. More the home pass, the better is the revenue.

Since that was the last question for the day, I would request the management to give us their closing comments.

Sir, we need your closing comment. I'm ready to speak.

Yes, Latureji, if you can give your closing comments, sir, that will be very helpful.

Sorry for the interference. Good afternoon to everyone. I am very happy that all the participants and my team, Tushar, Sharmaji and all the directors are present. I want to mention here 2 things after listening to all the people. We have strong market orders in hand and I have to deliver whatever commitment my team has given. And I am very much sure from past 2 years in the 4G rollout after 5G, there is a lot of requirement has come in the market. And the first -- the rollout of the other 2, nobody has asked, but I have to mention here that 2 people of Jio and Airtel is also coming after March. So looking to the all angle, whatever tower we are installing for BSNL is a rural area and Vodafone is a commercial area. So looking to these perspectives there both -- another operator maybe naturally come to our site. So revenue growth is whatever plan is achievable, first of all. Second, regarding the funds, lot of people ask about the fund arrangement. So my preferential and debt, whatever our CFO has told, whatever permitted is there. Another people are also in line with us for the preferentials and QIP. We'll definitely explore the things whatever possible and how the beneficial to my investors, because Suyog has always given the good return. Also, we have secured our ESOP and all this procedure for my staff also, because this is a big task, not a simple task. So we are very systematically planning. We have deployed already all over India sites and our -- we have to additional -- we have to do this thing properly only, because operator have also trust on us that they are delivering. And even in Mumbai, we are looking the 2 state, we -- 5 state, we are focusing: Maharashtra, Mumbai, Delhi, we have acquisition done, Gujarat and Rajasthan. So considering 5 state, we -- whatever numbers are there, they are actually orders are in double. But whatever Tushar and other people spoken is only about what deliverable is there. If the funds will get to us, we will definitely increase our capacity and deploy it. Because all our vendors, suppliers are in a well-position to deliver us, because the last 6,500 sites is also a difficult task. But after 6,500, once the national highway come by the rural and we will cross the 10,000 than more orders will be come and we are looking very positive to our growth of the Suyog Telematics with the interest protecting to these.

Sir, I think there is some disturbance or issue in his line. Would you like to close the conversation, Tusharji?

It's impossible due to rainy season and other [ objectives ]. All these things are being taken in the mind. And now the working season is going on, so we will deliver our best to the investor protection as well as company's growth. This is my last and final submission for all. And thanks to everyone for joining and asking questions. Special thanks to asking questions and giving answers, Suyog team is also thanks. I think that we will see the progress in the next quarter. After March, our results, once again, we will meet. Thank you very much.

Thank you. Thank you, Latureji, and thank you to the entire management team for joining on the call. And thank you to all the investors for participating on the call. This brings us to the end of today's conference call. Thank you.

Thank you.

Thank you Vinayji. Thank you, Tushar.