Tejas Networks Limited (TEJASNET) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Q4 FY 2020 Earnings Conference Call of Tejas Networks Limited hosted by Haitong Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Mukul Garg from Haitong Securities. Thank you, and over to you, sir.

Thank you, Shivan. Good evening, everyone. On behalf of Haitong Securities, I would like to welcome the senior management of Tejas Networks for the fourth quarter of fiscal 2020 earnings call. As part of the senior management, we have Mr. Sanjay Nayak, CEO and Managing Director; Mr. Kumar Sivarajan, Chief Technology Officer; Mr. Arnob Roy, Chief Operating Officer; and Mr. Venkatesh Gadiyar, Chief Financial Officer. I will now hand over the call to Mr. Sanjay Nayak to start the proceeding. Over to you, Sanjay.

Thank you, Mukul. Thank you, everybody, for joining the call late evening today. And at the outset, I hope you and your families are all safe, and we are in a very unprecedented and tricky situation. So I hope everybody is taking care and doing well. I wanted to just make sure that we had uploaded the presentation on our website and also made the press release. So I hope you had a chance to download that or at least look at it online. So I will be walking you through the presentation. So let me start off with the first slide, which is the Q4 FY '20 key updates. So Q4, we did net revenues of INR 52.7 crores. And for the whole year, the net revenues were INR 379.8 crores. The profit before tax for Q4 was INR 126.5 crores of loss, and for the whole year, it was INR 138.6 crores of loss. Basically, we had a very steep fall in revenues, primarily in Q4, which is traditionally the strong quarter for us. And as a result, because most of our costs, other than cost of goods, are manpower-related and almost fixed in nature, the shortfall in revenues resulted in a relatively large loss for us. Within this INR 138.6 crores of number for the whole year, PBT, we have a onetime impairment charge of INR 69.9 crores on intangible R&D assets, which we have revalued. And Venkatesh, when he talks a little bit later, will talk about it. It's a onetime charge. So if you take that away, the profit would come down -- sorry, loss would come down to some extent. As on March 31, our order book, which is confirmed orders in hand, is INR 483 crores, out of which we think 35% to 40% will be revenued in FY '21. In terms of what's really happening in the sales of the company. So Q4, as I said, was adversely affected by the COVID situation for us in 2 different ways. One is the confirmed orders that we had in hand, usually, in the last 2 or 3 weeks, a lot of the customers come for factory acceptance and testing, and we have to -- some of them are FOB orders, some of them are DDP paid orders. But because of all the logistics and everything else, all of those orders just could not be shipped out and actually haven't been shipped out in any significant way because even though the lockdowns have partly relaxed in Bangalore, we still have a little bit of a challenge doing that. And second impact was that a lot of orders come late into the quarter from our existing customers, so who give us a forecast, for whom the inventory is kept ready, and usually, for their financial year-end and now they usually take these orders. But those orders, again, because of logistics issues and closedowns could not be released to us, both India and internationally. So the net impact of that really made a pretty short Q4. All of these pushouts orders from Q4 should happen in Q1/Q2, depending on when things open up, both in India and internationally. So it's not business loss, but orders that got shifted out. For the whole year, if I look at it from a complete basis, we had a 57% drop in year-on-year revenue, which is a very steep fall. The reason for that is pretty simple. India was 79% of our total revenues in FY '19, which declined by 63% and international really did not grow as expected. And I'll go into the specifics of those a little bit later. Within India, the India government business was very, very weak. We had a year-on-year decline of 88%. So even at the end of Q3 call, we had mentioned that the India government is very weak. There was really no business done by BSNL or BharatNet, which got a year-over-year decline of 98%. It's not that we lost anything, there was really no project that got done. And the critical infrastructure, such as railways, utilities, power and all those, there, we actually had orders. We were to ship it out. Those really got impacted by the lockdowns, and we could not. So the execution of those projects, which we have in hand, could not happen. So really, the India government was the biggest drop. India private, I'm sure you're all tracking this sector. After the AGR issue came out in -- the first decision came out in October of last year, subsequent to that, really, there has been a significant cutback in the CapEx by all the operators in the second half of the year. And as a result, that also partly impacted our business. So till Q3, our India private was showing a year-on-year growth. But when Q4 happened because of some orders could not be shipped and some orders did not come, we had a 6% decline year-on-year. The international, when we had again talked in Q3 end, we were quite confident that international at least on bookings will grow healthily during the year. But during the -- by the time we finished Q4, international declined 31%. This, again, that -- lot of large orders from our existing customers in South East Asia, Africa as well as Mexico, got delayed because they could not get the orders to us, although the orders are approved, and they could not get the orders to us. Second issue also is that in the last -- in the first set of lockdowns around the world, most telecom operators pretty much had what they call a lockdown on the network in the sense that they were neither upgrading nor they were allowed to upgrade and they were not even touching the network to make any changes because the networks for critical services, and they did not want to disturb that. So as a result, even though orders that they had, they basically told us, please don't ship because our warehouses are not open and we'll not be able to install it. So that really kind of caused the decline in international. And again, from a business win perspective, momentum perspective, we felt that we are making good progress internationally. So the net result was that the run-rate business, the India private plus international, declined 18% year-on-year, which till Q3 was actually on the positive territory. We, of course, continue to believe that IPR and R&D is very crucial for us. We have filed 349 patents till date. And during the quarter, 3 were approved and -- taking the total grants to 116. I'm now going to the next slide, which is a little bit more segmental view of each of the business. If you see on the left-hand side, the chart is how our business was in different buckets in FY '19. And the chart on the right-hand side shows how it is for FY '20. So at a high level, 79% of the total business of FY '19 was from India and 21% was international. And in FY '20, that ratio changed to 67% India and 33% international. Of course, the total base shrunk, but just from a split perspective, it did move to 67-33. Within those segments, the India private declined -- actually dominated more than half of our business for the year and was 52% of the year, declining on an absolute basis 6%. International OEM was almost flat, which was around 2% last year. It declined by 9%, and this is not going to be a big part of our business going forward anyway. International direct is where we were expecting a healthy growth, but because of the reasons that I mentioned earlier, the actual revenue basis, it was a decline of 33%. And within India government, BSNL and BBNL, the BharatNet stuff, really nothing happened in the year. And the critical infrastructure projects also declined 17% -- 71% for the year, primarily because of execution delays. We really won almost a large majority of the projects that were out there for bidding. We have a healthy backlog and a whole bunch of tenders that we have bid, which are expected to get executed this year. So if you see the overall focus again, we will continue to make sure that the run-rate business, which is the nontender business, continues to be something that we make our baseline. So the India private as well as international is what we'll continue to focus. The critical infrastructure business, again, a large part of that is executed through system integrators. And again, there's a lot of -- which are private companies, although the end customer may be a government entity. But we do believe that that's a reasonably solid piece of our business, which is continuing. At this stage, I will hand over to Venkatesh Gadiyar, CFO, who will walk us through the next couple of slides on the financial side and give his views there. Gadiyar, please.

Yes. Thank you, Sanjay. Good evening, everyone. Hope all of you are doing well and stay safe. Now on the financial update, the revenue, we saw a steep decline of -- on a quarter-on-quarter basis, around 80 percentage. The revenues were INR 53 crores for the Q4 and for the year ended INR 380 crores. And on a year-on-year basis, for a full year, we saw a decline of 56 percentage on the net revenues. EBIT before impairment for FY '20, we saw a loss of 94.6% -- INR 94.6 crores on a year-on-year decline of 172.6%. And there was a provisioning of around INR 18 crores of overall expected credit loss in Q4. This is primarily on account of the delays in the payment of -- or a collection from the BSNL and others. However, we do not see any collections risk on account of the [Audio Gap] as this is coming from the BharatNet project. And EBIT after impairment of a onetime impairment had a loss of INR 164.5 crores for the year FY '20, which saw a year-on-year decrease of 226.2%. There was a onetime impairment loss of INR 69.87 crores on an intangible assets of the R&D assets, including CWIP and capitalized R&D. Basically, we carry the R&D assets in 2 forms: one is on CWIP, and second one is on capitalized product development. During the year, we had made an assessment on the impairment and tested for impairment of those assets. Certain assets in CWIP was impaired, for which we felt that in the current situation, we are not seeing any -- or we are seeing a reduced future economic benefit. Hence, we took the impairment charge of INR 37 crores. And on the capitalized product development, since we have developed newer versions of the products, we felt that it was prudent for us to impair the value of the intangible assets that we are carrying. As a result, we took the impairment charge of INR 33 crores during the quarter Q4 on the capitalized product development. And on a PBT basis, we had incurred a loss of INR 138.6 crores. Again, on a year-on-year basis, we saw a decline of 192.4%. And on a PAT basis, we saw a decline -- our PAT was a loss of INR 237.1 crores, saw a decline of year-on-year basis 261%. Overall, with the net revenue of INR 380 crores, the loss from the operations was about INR 69 crores and onetime impairment of CWIP and capitalized product development of INR 70 crores comes to around -- totally, it comes to the loss of INR 139 crores. And with the deferred tax of INR 99 crores, the total PAT was coming to a loss of INR 237 crores. However, we had recognized the deferred tax reversal of INR 99 crores till 9 months. Current quarter, we have not -- there was no charge-off for deferred tax or MAT in this quarter as we are having a loss in this quarter, Q4. Next slide, on the key financial indicator. Our net worth declined by INR 126 crores during the quarter. We took an impairment on the intangible assets of INR 70 crores, which is a onetime in nature and loss of about INR 56 crores. Inventory has increased to INR 252 crores. COVID has resulted in the pushout of certain shipments from Q4, and we expect to consume a large part of the inventory in FY '21. On the trade receivables, we saw -- trade receivables reduced to INR 456 crores. We received only INR 2.4 crores from BSNL during Q4, which was lower than the expected or planned for, and INR 300 crores to INR 350 crores was expected to be collected -- is to be expected to be collected during FY '21. And DSO has increased from 268 days to 382 days as of December '19. Excluding BSNL, our DSOs have increased from 170 to 224 days. And subsequent to the year-end, we have collected about INR 12.5 crores from BSNL. That's just an update. Then working capital in absolute term has decreased. On the cash position, as of March 31, 2020, we are a debt-free company, with the cash and equivalents, including the investment in the mutual fund and the deposit with the financial institution and the deposit with the banks stood up to INR 280 crores. And in these tough times, we need to conserve the cash and keep enough cash in the balance sheet to support the future growth. During FY '21, we expect to improve our cash position from the current level. Based on our expected collections and inventory usage and tight expense control, we expect to see some year-on-year reduction in the operating expenses during the next year, that means the FY '21. And we have done a detailed cash flow planning for the next 12 months, and we believe that we are currently -- that we are well positioned to meet our business growth requirement. Then finally, for the year ended March 31, 2020, since company has incurred the loss, as per our policy, Board has decided to -- not to recommend any dividend for this year. Maybe, Sanjay...

Okay. Thank you, Venkatesh, for walking us through the key financial indicators. And as he emphasized at the end, the cash conservation is a very important thing from our business perspective. And being a debt-free company, we would like to make sure that as the year progresses, we continue to improve our cash position based on the receivables, which are very large amount and all visible to be collected as well as the use of the inventory, which is basically the pushout of last year, which we should be able to use during the current year. I'm on the next slide, which is the COVID-19 impact on our business. So this is an important thing because we have actually done a lot of work in terms of looking at different market research reports. So we looked at the Ovum report from a global perspective. And of course, we have our own view of the business. We've been talking to our customers. So just to give you a quick summary of what is the impact of the COVID on our business. So number one is that, as a company, I'm very proud and happy to say that we have been able to successfully support all our customers globally. So we were -- very quickly, within a few days, we were able to put a business continuity plan into action. So all field support, all technical support was on. And given that telecom was declared as a critical infrastructure service, we were able to get a limited number of passes from the Ministry of Home Affairs even in the early days itself, and we continue to have those passes. So the good part of that is we have been able to consistently support all our customers. We are absolutely monitoring the progress. And we're happy to say that all our customers where our equipment is there, we have been able to give 99.999% uptime over the last 6 weeks of lockdowns. Secondly, for our own internal purposes, safety is very, very crucial. We are following every rule to the hilt and making sure that as a corporate citizen, we do the right and the best processes. So we have implemented work from home for all employees who can do that. Very few employees who will need to come to our manufacturing facilities, which is, by the way, on in a very limited way or the people who need to come and access the hardware labs in terms of testing of the software, et cetera, they have been able to do, but everybody else has been productively working from home. We've been able to provide them all the VPN and all the other services, increase the bandwidth requirement in our own network. And as a business, we have been able to continue our business without any glitches whatsoever. And I've not heard a single escalation from any customer worldwide to mention that. By the way, just on a lighter note, about 2 weeks back when the -- on -- I think on 15th of April at 9:00 p.m. when the Prime Minister had talked about shutting off the lights and lighting of the lamps, the entire power grid infrastructure basically had a much lesser load. And I'm very happy to say that all the 4 GMs of power grid actually sent a congratulatory note to Tejas because the communication infrastructure, which is balancing the load, was running on Tejas, and we made sure that nothing amiss happened during that time as well. Coming back to the next point. So there's clearly a very high degree of near-term uncertainty. To be honest, I have no idea how long the lockdown will be in Bangalore or in Bombay or in Delhi. The situation is evolving every day. In Karnataka, they announced certain concessions, but then they took it back. So it's very, very obvious and clear that at least for the next 2 quarters, we really don't know how things are going to pan out. Not only in India, different parts of the world that we do business by waves and by different sequences, the same impact is being seen. So I would definitely expect that next 2 quarters will be very volatile. Number one, because of lockdowns, various governmental restrictions, supply chain things, so for many days, customs was not open. No transporter is picking any goods. International flights are not coming in and out. Components, even if you need 1 component out of 100, and if that is not available with you, it can disrupt your supply chain. Lot of -- customers are not taking things because their warehouses are not open. So I think all of those disruptions at least for the next 2 quarters will be on. The third thing which has come out very strong and clear, and I'm sure each one of you have directly experienced it and, as a country, we have experienced it, that telecom network, the reliable working of telecom network has been a bright spot in the economy that we are able to do work from home or from wherever else. The mission criticality of the networks is obvious. However, the data traffic on the network has dramatically gone up. I have been talking to our large customers in India, and one of them said that between 20% to 30% traffic increase they have seen just in the last 4 weeks. And just to give you a sense, people usually expect 20% to 30% data increase in a year. But here, people have been able to see it in a few weeks. So net-net, if you see the right-hand chart, which is from the Ovum report, homes are morphing into small offices due to work from home and a lot of home broadband and data consumption for e-learning, entertainment, shopping, social networking, pretty much all of that is happening. So the entire investment around home broadband is going to be significantly high. And mobile services can only do so much, but going for any high-speed broadband, one would need a fiber kind of a service from home. So that's one trend we are seeing. So if I were to look at it from a medium and long term, I think we expect that there should be a net positive impact on our business. Clearly, optical infrastructure and xPON, which is Fiber-to-the-Home infrastructure spending by operators around the world should increase. And that is the sweet spot for our business. Bandwidth will be upgraded. So backbone networks' capacity have to go up. So again, there again where our DWDM equipment will be used. Fiberization will continue both for home broadband and, of course, existing 4G networks have to be strengthened, and you're seeing some of that in India, how the networks are choking. Of course, 5G networks are going to be delayed clearly. I don't think that's going to be a priority for many countries for the next couple of years. And the last part, I think, again, I'm sure you've been tracking all the news reports, but we get direct feedback from a lot of our customers, that customers are very specifically looking to diversify their supplier base away from China. So there's been a significant amount of discomfort where they've put a lot of their suppliers out of China, and they are very, very clear that for a variety of reasons, they would like to get an alternate from China, and we seem to be very well positioned for those kind of services, especially in the markets that we service, which is Southeast Asia, Africa, U.S. and Mexico and, of course, India. So I think that's the last part which, I think, is going to play out. How well, how much is really something which we do not know. So just to summarize this slide, I would say, clearly, a lot of choppiness near term. It's very hard to predict anything, to be honest. But if I look at the medium-term and long-term outlook, there's an opportunity, and that's why we being solid on cash is a very high priority for us because that will give us an opportunity to leverage the opportunity -- to benefit from these opportunities as they open up. Going to the next slide in terms of the business update, I have one slide for the India and one more for international. So in the FY '20 update, as I mentioned for government account, it's not that we lost any business, it's just that hardly any business happened. Although they have publicly announced that they want to do a lot more coverage of BharatNet from 125,000 villages to 250,000 villages by August '21. But realistically speaking, I mean, given what is happening, we really have to see the things on the ground before we get a good comfort around it. During the last year, we did collect INR 88 crores of pending payments from BSNL and BharatNet. We still have some amount pending. We don't see that a risk. I mean even as Venkatesh said, we did collect INR 12 crores even in the last week or 2. But clearly, what happens to BSNL's own funding and the rollouts of 4G and so on will really determine the kind of business we get from that account, both for BSNL as well as BharatNet. The critical infrastructure is not one business, but through lots of little businesses between railways, metro, power, oil and gas. So these are there. Telecom is like a very small portion of their total spend. And since those are infrastructure projects, which continue at their own pace, we don't see any difference coming into that. A lot of these video surveillance projects and stuff like that, we have orders, which the execution got delayed. We also have bid into a lot of tenders last year. Some of them we have won, and the POs are not in our hand, which we expect to come out for execution next year. So net-net, this is a business that we primarily have now shifted to doing through system integrators so that we are not having any direct exposure, both in terms of payment or in terms of risk, but at the same time, building a pretty strong funnel for next year as well. Lastly, I would say the preference to Make in India policy is being strengthened from all the indicators we are getting from the government. They are really serious that telecom being a critical infrastructure, they do want to diversify the supply chain risk. They want to see if Make in India can be used. And maybe this is the time that they think Indian companies need to step up. And clearly, we have the product and technology to get there. We have, again, as I said, in the critical infrastructure segment, there are some large tenders for -- again, through the SI partners for defense and some state-led fiber network, which we actually won in FY '18 and in FY -- sorry, FY '19. And we were expecting the orders to come in FY '20 and execute, but the entire year has gone and given things were slow, we do expect those orders to come in and get executed in FY '21. In terms of private accounts, you all are aware of the AGR issue and how it pretty much stressed out the sector and everybody was really focused on taking care of that issue rather than any CapEx investments and so on. But I'm again happy to say that for one of the largest GPON rollout that's going to happen in the country, we have been selected as a supplier for that. We don't see any revenue impact in the near term because we have to do all the integration of our equipment into their management and other systems. But Q2 onwards, we do expect to start seeing business from that. And this can be a long-term revenue driver for us because home broadband is where a lot of focus will be, and we being into that application should give us good business. Of course, we partnered with Tatas to roll out one of the largest public WiFi networks for 4,000 railway stations last year, which was done, again, on our GPON technology. You would have seen even Prime Minister tweet about 4,000 stations being done, and we're happy to say that we partnered with the railways to execute that project on behalf of Tatas. Again, coming back to the private operators for next year, we feel that the data traffic has gone up. Home broadband and business broadband connectivity, which is a segment that we focus on, would definitely have a lot more demand. And given that we are incumbent suppliers in all the major telcos, as and when they spend CapEx, which we expect at least for our part of the business should start happening soon, which I've at least heard some public announcement that they would like to accelerate the home broadband rollouts, we expect that this part of the business should show a good business next year. But again, I would like to caution that all of these things are all subject to the macro environment of how things pan out. And clearly, we will not be insulated from that, except for the fact that telecom is a critical infrastructure that everybody wants to build up for. Going to the next slide, on international, this again just is a quick summary slide in terms of which part of the world are we focusing on and what is the addressable market. I mean the short answer is we are focused on 3 geographies. This has been consistently something that we've been doing for the last 18 months or so. So we are focusing on Africa and Middle East. Africa has now become a very important territory. In fact, despite all the other regions slowing down, Africa did show a good growth last year, and it's actually becoming a fairly large piece of our business. We have had strong leadership there, and that part of the business itself is $2 billion to $2.5 billion per annum. South and Southeast Asia, again, we are targeting a few countries, Malaysia, Bangladesh, Sri Lanka, Vietnam and so on. Again, we won a lot of business last year. Orders did not fructify in Q4, but we do expect that this year, in Q1, hopefully, once the opening of those countries happen, and going forward, we should see some orders inflow from these countries, and this should again become a good region. U.S. and Mexico, again, Mexico is something which we have been doing well. U.S. is a market which we've been trying to do well, and we have still not made much progress, but it's a very large market. So if you look at all the 3 markets, we have a fairly large addressable market of about $9 billion per year. Going to the next slide in terms of each of these segments, how did they do and where we are. So Africa and Middle East, I think, again, was the strongest growing region for us. We grew 20% year-on-year last year. And more importantly, now we have 3 Tier 1 operators in Africa, which are our customers. And we are, of course, getting significant repeat business from large carrier of carriers and some other large customers. The team is in place. We have split the team. We have strong leaders, which is a local leadership based in Johannesburg. During the quarter, Q4, we also hired a strong local leader based in Middle East, based out of Dubai. So now literally, I would say that, that region is well invested with local teams, local people, local relationships. And despite all the other challenges, we expect this region to give us good results in the next year because we see a strong order funnel from existing customers. And one thing I must tell you that the way we are planning our FY '21 business, we are assuming that a significant part of the business has to come from existing customers because winning new customers in this uncertain environment with travel restrictions, especially internationally, is going to be a little bit tricky. So the initiative from our side is that we have a lot of products to sell. We may be in 1 or 2 applications in every customer, but can we find a way to get into more applications and get a larger wallet share from them. And given the fact that in Africa, lot of broadband infrastructure is being built, especially from web scale companies, the Googles and the Facebooks and the Microsofts of the world are building large bandwidth into Africa, we do expect that our converged access solution for GPON and wireless would give us good business in Africa. In South and Southeast Asia, on FY '20 basis, our revenue declined, primarily due to some large order pushouts by customers, existing customers actually in Malaysia, Bangladesh and Vietnam in Q4. We also got a new Tier 1 win during the year out of Hong Kong, which is a global customer. And we got initial orders, and we see that we will be able to increase our footprint into that account during the current year. And again, as I said, because of the pushouts of Q4, we should see a good inflow of orders in the first half. And of course, we are increasing focus on a few specific countries like Philippines and a couple others where we have not focused earlier and, hopefully, by -- with some local sales team that we have put already in place, and we expect those to start delivering. In terms of North America, Mexico, again, recently, we won a new Tier 1 customer in Mexico, and we continue to get repeat business from existing customers. Although the revenues on an absolute basis declined in Mexico, again, due to pushout of orders in Q4, but if I look at the FY '21 funnel, from existing customers, we see a pretty strong order funnel plus we have won a few new applications in them and -- which should give us a higher wallet share in the Mexican accounts. And again, we are fully staffed in Mexico with local teams, and we are confident that the -- even the travel restriction should not come in the way of business as and when it happens there. U.S., as you remember, we rejigged and we hired a new Head of Sales and CTO for the U.S. market last year. The business in FY '20, to be honest, was still very low, although we did get 6 new customers. These are small customers. And we also signed a couple of new system integrator channels. So this is something which we figured out in the U.S. that the Tier 3 accounts are very small accounts, and it's very hard for us to cover them directly. So we have now been talking to a few system integrators who already have a fairly large reach into these accounts, and they are selling all kind of different products. They're not OEMs, but they are more like channels. So we have developed a few channels. And if you look at the leads that these channels are generating for us from Tier 3 customers, that is something which is encouraging. While the Tier 2 customers, we are going direct. So as a combination, our direct sales team can attack the bigger accounts. Our channel team through these system integrators can attack the smaller Tier 3 accounts. And the combination of the 2, we expect to deliver results this year in FY '21, although in FY '20, as I said, it was really not as per our own expectations. So that's kind of a quick summary on the international business for last year and the outlook for FY '21. I'm now on to the last slide, which is more like just kind of the summary of how we look at the whole business. So clearly, FY '20 was not a year that we are happy about in terms of either revenues or profit. Really, we got hit by -- initially by the India government business, which absolutely did not happen at all. And secondly, we got hit by the AGR issue in the India private sector. And then later on, when we were expecting the international to come up in Q4, some of our orders were pushed out because of the COVID and other situations. So I think FY '20 was a year where we had a rough weather [Audio Gap] to move on. So what we're doing really is the #1 focus and priority for the company, given the uncertainty of the environment, is the cash position. That is one area where we feel that with INR 280 crores of cash and no debt at all, we at least feel that we stressed out all our different business models, the best case, the worst case and all the other situations. And we feel that we are absolutely in a comfort zone in terms of having adequate cash to have and grow our business despite all the challenges in the future. We also have a receivable of INR 456 crores. And as Venkatesh mentioned earlier, we expect to collect INR 300 crores to INR 350 crores out of it. Even with some amount of BSNL money getting delayed, we still feel that most of this money is something which we have a very strong visibility. A lot of it should come into the first half of the year itself. And inventory of INR 252 crores, which we basically built for Q4 and some of the earlier shipments, we should be able to ship that out. It's all perfectly live and current inventory. And with incremental inventory investments during the year, we should be able to generate revenues. So these 2 alone should bring a lot more cash into the system. And the last part is really to do the expense management and burn rate, and we have consciously looked at all expense items. Of course, manpower and salaries are largest items. So any variable cost that we have in the company, including the manpower cost, we have really tightened all of that. And we will make sure that expense wise, we keep a very tight shift till we start seeing the overall macro environment and business improving. So really, the sales focus is going to be the big thing for us, and we have to increase our market share in international countries where we already have a presence and get a larger market -- wallet share of our existing customers, both in India and internationally. And again, this is the best way for us to ensure that in a turbulent year with existing relationship, we can get a lot more business. We have a lot of products to sell. We have not sold all the products to all the customers, and that's an opportunity that we are taking it as a challenge. Order book, again, would give us a certain amount of revenues from INR 483 crores, as I said, 35% to 40%, we have a very clear visibility, should happen in FY '21. Again, the next part is the GPON, made in India. And GPON is one thing which, as a technology, we think and I talked about the Ovum report earlier, where home broadband is going to be a big focus for all the operators around the world. And this is one area where we seem to be competing with the biggest and the best in the world and are winning in the toughest RFPs around the world. So we have a good amount of confidence and comfort that with the number of engagements we are having in GPON around the world and NGPON, which is the next-generation technology after that, we think we should have a fairly strong product portfolio to get multi-year revenue growth. And of course, as and when the Indian telecom sector recovers, which, of course, is as good, I guess, that is mine versus yours, we do think that Make in India policy and diversity of supply chain risk and the product fit that we have, we should be able to see some benefit from that. Last but not the least, I want to make sure that while times are tough and we are taking a real hard look at every expense, we are also conscious that as a company, making R&D investment in a judicious way is very, very crucial to increase our product competitiveness. So we will continue to invest in R&D but, of course, in a very focused manner and make sure that our R&D priorities are set based on the application wins and based on the business outlook that we are seeing so that we really get a lot more productivity out of everything that we are investing. In the near term, as I said, we are cognizant that there's a lot of uncertainty because of the COVID situation. There could be delays in shipments and orders could be pushed out. We are also seeing some delays in receivables. Customers are saying, well, next week, banks are closed, all kinds of things. And in fact, a lot more collections actually we were expecting in Q4 pretty much got pushed out because of these reasons. So I believe that all of these things will continue. And it doesn't -- it's not very clear that how this whole thing will pan out. So till this clarity happens both in India, where we are located, as well as internationally, where a lot of our customers are, we will continue to see choppiness in the near term. Whether it lasts 2 quarters or longer, we don't really know. We are -- of course, the only thing we could do is make sure that cash is what is in our control and expenses are in our control and getting more from our existing customers is something that we are pushing hard. So what we can control we are doing. But beyond that, we do need to be aware of the overall uncertainties. Medium term if I look at, clearly, telecom is one of the sectors around the world, which should gain out of the new normal as they're calling in terms of how people's life will be in terms of work from home, lot more home-based entertainment, learning and every other thing that we are all actually experiencing every single day. Directly, that will impact, that networks have to become bigger. Fiber-to-the-Home and other kind of services have to be there because wireless can only do so much. And that's basically the area of focus for our company's products for the last couple of years. So we believe that, that turnaround as and when it happens, we are ready for it and should gain out of it. Of course, the macro drivers in terms of data usage, broadband consumption, the cloud, all that stuff continues to still stay put, except that the timing of some of those investments may shift a little bit. And the last one, again, as I must tell you, and it's kind of an evolving situation every single day, that there is a significant amount of opportunity, which could potentially open up because people do want to diversify their supply chain risk away from China. And clearly, we feel that that's an opportunity that we may be able to take advantage of, given the richness of our product portfolio, the fact that we have been able to compete with the best in the world, except that we do need the right opportunities from the customers. So I think many customers, in fact, now it's becoming very interesting, where some of our sales people are coming back and say, this used to be 100% account, which was only being run by Chinese companies. And customers' explicit mandate is to get an alternate supplier, and that's why our opportunity is opening up. So I hope that some of those things should come into play. But overall, I would say that last year, again, was a disappointing year, both in terms of revenues and profits. We did what we could, but there's so much of things which happened around us that we did not have much control on the output. What we are controlling is cash and going forward, once the COVID situation clears, we do feel that as and when things get ready, we should be in a position to get better business. And at this stage, I would say, the management team and the Board are really watching the situation very closely and making sure that we take this as more like a cash conservation being the #1 priority of the company and then while we look at revenue growth and all the other opportunities. So that's kind of the way we are working in the company today. At this stage, I would pause and maybe we can take questions from everybody.

[Operator Instructions] The first question is from the line of Rahul Bhasin from Baring Advisers.

Thank you for that very comprehensive overview. Can I just request you to give us some color on what your competitive landscape is, who are your competitors? And if you were to go out of business tomorrow, what is it that the customers would miss? And who else could fill that slot?

Sure, sure. So competitive landscape, actually, is -- we are in the optical and the home broadband, which is the Fiber-to-the-Home segment. So the competitors really are from the Western world for GPON, which is the FTTH, we have Nokia, which is Alcatel-Lucent as one competitor. Then we have Huawei and ZTE from China as the 2 other competitors. So really, if I were to see in any deal in the world, it's between these 4 of us. And primarily, Nokia, Huawei and us are the 3 main players in the broad markets in the GPON. In U.S. alone, there's a company called Calix, which is just focused on the FTTH segment of the market for GPON and NGPON. So in the U.S., Calix is the competitor in that segment. Coming to the optical infrastructure, which is the backbone and the -- in the access network and the technology there, which we use, is DWDM, so again, it is -- there, again, the main competitor from the Western world is Ciena, which is the #1 company in the world in terms of the optical transmission today. And by the way, for many, many years, we are the OEM partners to Ciena for certain parts of their portfolio. And then, we have Nokia, which is, again, the Alcatel-Lucent portfolio from the Western world. Third company from the Western world is Infinera. These are the 3 guys. But primarily, if we see in the markets that we operate, almost all the time, if you were to look into, we would either run into a Ciena or a Nokia from the West. And again, we would run into a Huawei or a ZTE, and there's another -- third company called Wuhan Research Institute, which was called -- which has now been rechristened to FiberHome. So those are the companies that we see in terms of the competitive landscape. One thing I must tell you that in -- everywhere in the world, whether it is in India or in Africa or in Mexico or in the U.S., we are running against the same guys. And given a fair shot in all the markets, we are winning, if we get a fair opportunity against these competitors.

And what are the market shares at the moment?

If I'm not mistaken, for optical transmission, Ciena is at around close to 25% to 30% market share in the world and Huawei is in a similar range, followed by Nokia, which will be around 15% to 20% of the global market. But the global optical transmission market is around $16 billion to $17 billion per year. And as I said, Ciena's revenue is around $4.5 billion, $5 billion. So between Ciena, Nokia and Huawei, they would probably be 70% of the market, and then ZTE and Infinera and ADVA and many other companies who come into the tail end. And for the broadband market, which is the Fiber-to-the-Home GPON, it would again be -- Nokia would be the market leader in the world, followed by Huawei, and then followed by different segments, different countries have different champions, like in India, we have the largest share of GPON market; in U.S., it's Calix; in China, of course, it is Huawei and ZTE. So that's what it would be.

The next question is from Pranav Kshatriya from Edelweiss.

Sir, my first question is with regards to the international business. So if you look at past few quarters, our commentary has been fairly positive regarding international business. And whereas we have seen a sharp decline in the revenue from this part, I mean, I remember you were talking about U.S. Tier 1 client win. So do you think that scaling up in certain account has been a challenge? Or I mean, what exactly would you -- because I understand that this COVID-related issue was mostly like last one-month phenomenon, mostly like a March phenomenon. But if I look at for the 11 months, I mean, we should have been at a much higher level. So what would you put that as? And do you think those problems are behind us and we should be seeing growth going ahead?

Yes. No, good question, first of all. So there are -- if you see the international business, our optimism was based on 2 assumptions. One is getting orders from existing customers, whether customers in Malaysia or Africa or Mexico. So those orders, which we kind of take it for granted, if I were to say it in more simple way because it's a forecast order, they know -- we know they need it. They -- so those are the ones which actually got shifted in the 11th month because most of the time, those orders come late. If you really see, March revenues have been very heavy for us. So when I mentioned that there's a significant part of revenues of Q4, which we could not ship because of those orders getting delayed, those are from the existing customers. Now coming back to the new customer wins we had, we actually did win a significant amount of business. In fact, actually as late as in Q3, where the RFPs were decided in our favor, and we were expecting that the orders will come in Q4. But maybe procedural delays, maybe whatever other reasons were happening in those countries, some of those orders basically got pushed out. So for example, we have won a large deal in Middle East, which is a multimillion dollar deal. A large deal in West Africa, which again is a multimillion dollar, large in South Africa, large in Mexico. These are new customers beyond the existing. So we were expecting, when -- even when we had the commentary in January that those orders should fructify based on what it is. So those things we have won, but just the conversion has been a little bit behind plan, if I were to say. So those were the 2 reasons that I would say the international has not shown results in terms of the Q4. And instead of an increase, it actually declined because the base was not that big. And the only disappointing thing in terms of what was below our expectation in terms of even customer wins was actually U.S. because in other territories, we did not get revenues or even confirmed orders in our hand by Q4, but we did get the wins, which means we've been selected officially. And it's a question of now getting the orders from them. But in the U.S. market, I think we are still kind of finding our feet in the direct way and just going after the Tier 3s through a channel strategy, which we kind of devised because we're not able to cover enough accounts. So U.S. was something which clearly we are still getting a better handle on, but the other geographies seem to be doing okay, except that they have not shown in the results yet.

Okay. My second question is regarding the India private business. So here, we saw a decline. Would you say that the market itself has shrunk for India private or you lost some market share in this business? Because I would have expected higher fiber rollout because a lot of CapEx is happening towards fiberization. So how would you say that this -- see the decline?

Yes. So in India private, as we explained earlier, it always -- in each -- there are 2 factors. By the second half of the year, the active electronics CapEx definitely shrunk because of the post-AGR issues from what we know, after October, hardly any orders went to equipment vendors of any kind, by the way, across any private operators, except for the minimal stuff that people needed. So that was one factor. But more than that factor, was a question of which all applications in each customer account have we been selected for. So for example, in one operator, we are in one application, which was doing fine, but they did not expand their metro capacity as much as we wanted or as much as we thought. So -- which didn't happen last year, but it should happen this year because now we're already designed into that. In another operator, as I mentioned, we have now been selected for their -- the Fiber-to-the-Home rollout. But no real business has come. But as and when the rollout start happen and as and when we get integrated into their system, we should be able to see revenues from that. So I would say we have not really lost -- in the DWDM category, for example, which is where some of the intercity and the larger backbones are there, we were not designed into any of these applications for those guys. We would have, of course, not got any business from that segment. So given the segment that we are operating, we believe that last year, while we would have got a reasonable amount of business, but the more comforting thing for us from a structural angle was that we won a few new applications, which should give us a consistent revenue going forward.

Okay. And can you just comment on this, the large GPON customer win, which you have talked about for India private, is it -- are you the exclusive supplier in that segment? Or you have some competition and -- how was...

Yes, we are definitely not exclusive. They already have an incumbent supplier. And we believe that going forward -- with whom they have rolled out to a limited way. But we believe that going forward, once we are integrated into all the systems, we should be able to get a larger part of their build-outs based on all the competitive advantages that we have. So it's not -- definitely, we're not the only one, but there are not too many competitors either in that account.

Okay. And lastly, can you just comment a bit on the write-off? Because if I look at historically, FY '17, you had a INR 30 crores write-off of the similar nature. Now you've got almost INR 70 crores write-off. Do you think that your amortization policy needs to be adjusted to writing off or maybe have faster write-off of the intangible?

Actually, in FY '17, if you remember, we actually wrote off because of that work that we were doing, we had abandoned that project, whereas what we have done right now is we have only taken an impairment in the value of the asset that we are carrying. So if you see from an R&D policy, we're not changing the R&D policy. After we capitalize, we anyway amortize the thing over a 24-month period. So if we capitalize on month X, 24th month from that we amortize, which is what is already 2 years. What we are doing is, given the current situation, we just thought that if there's a potential to kind of take a more critical view of which asset we are carrying on the books, and Venkatesh had explained earlier, if we see that -- if it's more prudent to say that you know what, you already have a slightly newer version of this so the current version will sell slightly lesser, we would -- we have taken the impairment of that asset as far as the carrying of the asset. Coming back to -- I don't think we're going to be changing the R&D policy, but we will critically continue to evaluate any asset that we create, whether it should be expensed off in the same year itself or it should even be capitalized in the first place because that's something which we'll continue to do so that given the R&D nature, as I said, we anyway have a 2-year window for the amortization, and we'll continue to evaluate that.

Okay. And lastly, on BSNL, you said that INR 2.4 crores was received in this quarter. And after that, there was certain more portion which was received. Can you please repeat what was the comment?

Yes. So in Q4, we only received INR 2.4 crores. And if you've all been reading the press, nobody really got paid after December tranche of money that BSNL had released. And in this quarter, which means since April 1, we did receive another INR 12.5 crores of payment. So the payments are coming. Of course, BSNL itself still doesn't have -- while all the policy measures and the financial package was announced, on the ground, the money which is being released from the government to BSNL is still not as per the plan. And as and when they keep getting money, we keep getting paid as well. So that's why in the first 2 weeks of this quarter, which is the April quarter as -- the one which we are talking this month, we got another INR 12.5 crores of payment from them.

The next question is from the line of Mukul Garg from Haitong Securities.

Sir, just wanted to understand a bit about -- I think you earlier mentioned about the criticality of holding cash. If you look at Q4, due to partial sales in this quarter, you had an operating loss of over INR 50 crores, if I don't take into account the credit loss, which you guys have booked this quarter. How long do you think you have a comfort on cash given this kind of burn? Especially, it seems like Q1 will be a wash out. Do you have ways to bring down salaries or other costs meaningfully to kind of elongate your cash position?

Very good question, and this is something which I kind of alluded to maybe in my earlier comment, and I can get into a little bit of more detail. So the way we are looking at cash flow is that the #1 is that out of the INR 450 crores of receivable, we actually have a month-wise collection plan, which basically -- which we have a fairly high degree of certainty and visibility in terms of what is going to come into the company. So that's going to be a fairly large amount. And if you remember, I mentioned that a significant part of our collection should come into the first half of this year itself. So that is one part where just the receivables alone -- and these are just, by the way, time-bound receivables, except for some things which -- because of the banking system lockout in late March in many countries, some of the remittances could not come to us in that sense. But as things open up, that money should just come to us. So I feel that the receivables alone gives us a lot of comfort in terms of taking care of our burn rate. So if you really see our burn rate is around what -- fixed burn rate is close to, if I include salaries plus all the rentals, utilities, everything else is in the tune of something like INR 18 crores to INR 20 crores per month. So if I look at it this way, we are talking of INR 60 crores outflow from a basis of our burn rate. And that, again, as Venkatesh had mentioned, we are continuing to tighten to the extent possible. So we need to -- I mean, if I just see from a very simplistic angle, we need to collect much, much more than INR 60 crores per quarter, which, I think, we already have a very strong visibility in terms of what money is coming in this quarter. That's one part. Second part is for the revenues, even though we will have a slow Q1 clearly because April is gone, May also nobody really knows what's going to be there, and so it can be a pretty bad quarter. But the good news is the inventory is already there. So my outflow on inventory payables will also be very marginal because I already have the inventory which was supposed to ship out in Q4. So that, again, will not require new cash out of me. So the resultant of these 2 alone, we will be able to make sure that as long as we collect more than INR 60 crores, just as a rule of thumb basis, per quarter, we will be continuing to actually add cash into our system rather than deplete cash. So if you really see over the years, if you can actually collect anywhere between INR 300 crores to INR 350 crores out of the INR 450 crores that we have because some of it is retention money, which will come later, so that plus, if I can convert, say, out of INR 250 crores of inventory, I convert another INR 100 crores of inventory or INR 125 crores of inventory, which will result into, say, INR 250 crores of revenues. So for up to INR 250 crores of revenues, I hardly have to make incremental investments in my outflow. My only outflow is the monthly burn rate of INR 20 crores. My inflow is going to be INR 300 crores to INR 350 crores spread over the next 9 months or 12 months. So as a result, when you do that math, our cash position is clearly going to be improving. And clearly, as I said, on an operating cash basis, the employees, the third-party contractors, that we are tightening it up, and we think around 10% year-on-year reduction we will be able to achieve anyway. So I think those are the measures which give us confidence and comfort that even if Q1 is a washout, even if Q2 is a washout or a Q3 is a washout, I think, cash wise, we will still build up a stronger position by the time the year progresses.

Understood. And in terms of opportunity or potential to bring down the operating cost, you said INR 50 crores per quarter, do you have any levers to cut your salary cost?

Yes. We have actually -- the way our salaries we have structured now is 80% of the salaries will be fixed and 20% of the salary -- I'm talking about an average for the company. Of course, for senior management, it's almost half and half in the sense 50% of the salary is fixed, so 55% is fixed and 45% is variable. So -- but across the company, if I take the average, 20% of the salary is variable, and in the compensation committee and the Board and the company, we have decided that 20% variable will only be linked to the profitability of the company. So if we are not [Audio Gap] grow to a certain minimum level and all that stuff, that 20% is an amount which is available to us in terms of the savings of costs. So that's point one. Second thing is there's a lot of variable costs, which we have in our services team because [Audio Gap] business, the installation and commissioning, we outsource to our third-party contractors. So if those -- that business is going to be slow, clearly, we will be able to save our services cost, which, by the way, were quite significant last year. If you really see our services cost here were something to the tune of INR 37 crores, which is about close to 15% -- 10% to 15% of our total operating cost. So that cost significantly can come down, at least the third-party installation cost. So those are the 2 big levers in terms of the operating cost. The bigger money outflow actually happens in the case of inventory, because we would have -- and the fact that we have built inventory -- by the way, building inventory actually in one sense, assuming if and when the business environment stabilizes, is actually an asset because worldwide supply chains are getting disrupted. We have inventory in stock. We can use if customers want quick surveys or quick deployments of products, we actually have. In fact, for example, I'm just highlighting in the last 2, 3 weeks, within India, certain customers said, you know what, do you guys have inventory of x, y, z because I just need critically. And those are the kind of questions sometimes get come to us. So I think the inventory that we have in hand, as long as we can keep our net outflow on inventory, new inventory to a minimum, it will add up to our cash flow situation as the year progresses as well, irrespective of how the revenue pans out.

Understood. Moving on to the business loss, which happened in Q4 due to nonshipping and the purchase order which got delayed, is it possible to quantify the revenue loss due to nonshipment, the orders which you already had, which kind of like you guys were ready to ship out, but which were impacted because of COVID-19? If you can break that out and if you can quantify the orders which you were anticipating and which were basically confirmed where, I think, the purchase order got delayed.

Yes. Yes. So in fact, we basically have that data. I can share it with you. So essentially, around INR 35 crores to INR 40 crores was inventory, which was just supposed to be shipped out, and it just got stuck. I mean that's basically confirmed order, confirmed everything. People just couldn't come to the factory to test or pick up. So that was around INR 35 crores to INR 40 crores. Another INR 60 crores to INR 65 crores was amount which were confirmed orders. It means they are confirmed orders, except that they did not physically come to us or, in some cases, we had the order, but for instance, we were supposed to give a bank guarantee against which they give from a what is called the letter of intent we get from our international customer, you submit a bank guarantee and then they issue you a confirmed order against which you ship. But we ship -- we send them the bank guarantee to confirm, but during that period, they had a lockout in their country, so they could not send us the confirmed PO. So if I take that, that was around, as I said, INR 60 crores to INR 65 crores. So the 2 together around INR 100 crores is what was safely when we anticipated something that we could have done, which actually got pushed out in Q4.

Got it. And the final question from my side. If you look at the U.S. market, and that was alluded earlier as well, can you help us understand what's -- what are the missing parts on your end still while I understand that you have hired leadership in the local market, and you are now trying to partner with local system integrators, but the reality is that you are targeting the market since almost 3 years. You have also changed the local leadership last year as well, but still it looks like you are seeing continuous degrowth in that market. Is it really worth targeting? Or do you think it probably makes more sense from a cost perspective to still focus on the emerging market?

Very good question, and this is something which we have analyzed quite a bit over the last few weeks because since all of us were working from home, we spent a huge amount of time doing a review on this particular aspect...

Mukul, look at my question.

Yes. So the specific thing, which we found out was that the U.S. market has 2 challenges for us and which we are continually kind of trying to overcome. Challenge number one was the -- how do you access a lot of -- see, because our status strategy was go after Tier 2s and Tier 3s. But the Tier 3s, we found out that we're getting a lot of orders which are 30,000, 50,000, 70,000 in size and replicating those orders requires a lot of sales investment. And unless we change our strategy of getting these channels, we're not going to win it. Our hope was that the same guys will buy a lot more, but we found out that they buy in sporadic efforts and the effort to cover is very large. So that was one learning which -- with the new sales team that we had in place, we have concrete data which we've analyzed that that's going to happen. The second thing we found out that for the Tier 2 operators, which are relatively larger deals. And Tier 2 of the U.S., by the way, could be a CapEx size of a Tier 1 in India, for instance. There, by the way, there were those small little features in the product in terms of -- we have, say, 95% of what they need but this 5%, which is very specific to the way they build the network, it is not a customized technology or a nonstandard technology except that the way they build the network versus the way rest of the world builds the network, those 3%, 4%, 5% delta R&D deficiencies were there. So what used to happen -- and that was one part. The second part we learned in the U.S. market in the Tier 2s is unlike in the emerging markets, where if you are only short by 3%, 4% in terms of the product fit, you can sell them the equipment, they give you a purchase order and say, you know what, you take the purchase order and before you ship, finish these 3%, 4% delta things, and I'm okay to go. The U.S. is a reverse. They say, okay, finish those 3%, 4% things, come into my lab, do a testing and then I talk business. So I think that basically meant that the strategy, which we used to do in our R&D prioritization for the rest of the world did not really work for the U.S. because U.S. guys would say, no, I agree, it's on a road map and it's coming next quarter and it is in my lab today before I induct you in or at least I have a closure with you. So those are the 2 specific lessons that we have learned. So we have now taken those 2 feedback and given, as I said, we are really in many -- most of the product categories, 96%, 97% of the work is done and just a few bits and pieces to be completed which are in the road map, we are taking a conscious call that prioritize those things in the right way and then address the market in terms of the Tier 2s. I would say, it is still a very large market. All the macro elements for success are there. So for example, GPON, it's a big market opening up. The competition in GPON is literally 2 vendors, which is Nokia and Calix. There is really no significant third vendor there. And I think there's an opportunity available because there are no Chinese, there is no price pressure. So I think it's still a good opportunity for us to attack the U.S. market and win. Clearly, we have not been very successful so far. We understand what is missing both on the sales channel and the R&D side. And hopefully, as I said, going forward, we should see -- we should make some progress in the U.S. in the current year. But it has been frustrating, but that's the nature of the business.

Understood. And then if I may just ask one final question. Given what we have seen in FY '20, what will be the breakeven revenues for you on a normal year? Do you have any sense of what the minimum amount of sales you need to do in a year to be breakeven on the operating level?

So I think at an EBIT level, because EBIT is a good way to think of because it's the amortization versus the R&D capitalization washes off. So at the EBIT level, I think around INR 650 crores is when we will be breakeven is the analysis that we have done.

Doesn't seem that you will make any profit for next 3, 4 years then?

Well, I would not say that because predicting next 3, 4 years today is difficult because of all the uncertainty. But from whatever things we are doing, we clearly see a path to profitability as soon as we can. If the environment clears up in the near term, we should be able to see more progress in this financial year itself. However, if the environment continues to be bad for the next 2 quarters or 3 quarters, I don't know, yes, it will be a challenge for us. And that's when I'm saying we are keeping all the levers available to us, making sure that we either minimize the loss or make sure that at least we can get to breakeven under even the worst situation, which is what we are ensuring from a cash flow and P&L perspective.

The next question is from the line of Vikrant Kashyap from Kedia Securities.

I just have one question. You said INR 300 crores to INR 350 crores of receivables are expected in next year. How much is from BSNL?

Yes. So if you see the breakup of the INR 456 crores of receivable that we had on March end, around INR 190 crores was BSNL, out of which INR 120 crores is receivable this year and INR 70 crores is retention money. The balance, about INR 103 crores or INR 105 crores is international, which almost everything should be collected because it's just a question of getting due. And the rest INR 90 crores or so is from other government customers, which again, we believe that around INR 60 crores, INR 65 crores is collectible during the year and remaining will be retention money. And the rest is private customers of around INR 70 crores, out of which INR 60 crores, INR 65 crores, we should be collected, another INR 5 crores or so will be retention money. So that's kind of the broad breakup of the receivable. And out of the INR 120 crores of BSNL, we have received INR 12 crores as on date -- INR 12.5 crores or whatever as on date.

So have we accounted INR 120 crores and INR 60 crores in the INR 300 crores, INR 350 crores that we are expecting to cover in FY '21? Because a lot of your cash inflows are depending upon this amount, since we are not expecting to do much of business.

Yes. So if you see, the other government is not at all at risk because that is a payment which we are getting, while I call it government in some cases, many times it's system integrators. I feel that a lot of that money is not at risk in that sense. The BSNL money of INR 120 crores, again, as I said, I don't see any risk in terms of payment, I just see risk in terms of delays. So even at different scenarios, one can model, if you get 50% of that money because we got some percent already right now and some else we know is in the process. We were expecting to get actually much more in Q4 itself, and we are in touch with all the authorities. And we get assurance that it is getting paid, don't worry. But -- so even if -- at different scenarios of different amounts of money that we get from BSNL, independent of that, we still seem to have a cash flow plan, which seems to support the comment that we made earlier that independent of anything else, even in the worst case with BSNL or government money coming to a trickle, we should be able to improve our cash flow position before the end of the year because of, as I said, a combination of inventory usage and the collection that we are talking about.

One more question. Since you talk about a lot of cost optimization, cost-cutting measures that you are taking place, but still you are going for R&D spend because I understand you need to do product optimization as well and you need expenses on that. Can we -- can the expense be similar to what we have done in the previous years? Or you have given some thought over there that you need to do R&D on certain products where you see future revenues. Have you planned out something on R&D side also?

Yes. In fact, I alluded to that when I mentioned earlier that what we are saying is even if we are going to -- so first of all, on an overall basis, we think about 10% cost savings across the board, we should be able to make just by far more tighter operation expenses as well as keeping some part of the salary linked to the company's success. So that's something which will anyway happen. But with the amount available, we are taking a much harder look in terms of all our R&D investments and say which are the products and which are the categories in which we are winning and we can win long term. So let us concentrate our R&D efforts more on those things and things which are not producing as much, we need to kind of either keep them in a holding pattern or over a period of time reduce. So that's kind of the philosophy we are following in terms of making sure that we -- the bang for the buck for whatever R&D we are investing is maximized because of: A, the places where we are winning; and B, because of the market uncertainty because doing prospective R&D for new geographies where we have not won much business may not be a very prudent thing to do at this stage.

[Operator Instructions] The next question is from the line of Hardik Shah, an individual investor.

I have one question. For the business size that we have, especially this year, INR 50 million and overall, if I see last 3, 4 years, around INR 100 million, is it prudent to share that we kind of go back, say, probably too diverse -- we have too much of a diversified portfolio and also too much larger geographical base and kind of relook at stuff and see if we have a niche market strategy in terms of market segments and product portfolio?

Absolutely, Hardik. I mean, in fact, what we are doing is really matching out our market success with the product success and making sure that both of them are synchronized. So rather than investing into products, assuming that we will find a customer somewhere, the prudent thing that we are thinking right now is that among the different things we are doing, of course, it's not good to overnight shut something off, but the better thing to do is let's make sure that where we are winning either because of the product capabilities, combined with the market capabilities, we invest a lot more and we concentrate our bets onto those things. And where we are not being able to be more successful, we really figure out that is that the space we want to compete in. So I think this year, we are not increasing any geographical things. The U.S. is the one which I already talked about in terms of how we are changing the strategy. So I don't think we'll be increasing our sales investment in the U.S. Our objective is to make sure that the sales investment in the U.S. actually becomes worthwhile. We will not be doing too many product changes just for the U.S. market. We'll be picking and choosing which all the things which make sense and actually attack after that. But really, the broad market, we are looking at say, for example, Tier 1 customers in India, if you have, say, 95% things in our product, and we need to develop another 5% or 10%, it's better to make sure that we target those features which are common across all the customer base, prioritize them higher and actually ensure that they get delivered and done quickly. So that's kind of the way we are really ensuring that by concentrating our bets, both in terms of thinking of the market and the product, we basically get better results. Otherwise, we'll have way too many countries to go after and way too many products to introduce.

As there are no further questions, I would now like to hand the conference over to Tejas Networks' CEO, Mr. Sanjay Nayak, for closing comments.

Thank you, everybody, again. Your questions are all very insightful. And I know we actually had a tough Q4 and not so good FY '20. Given the situation, we understand what we need to do. We are very conscious of the current COVID environment and the uncertainty it has, and we believe that caution is the word to be more using in terms of operative sense. Macro environment is still good, but we have to ensure that from a cash flow as well as prudence in terms of investments is really exercised to the maximum limit. And as a management team, we are doing our best to make sure that we do that. And as and when the opportunities open up, we feel that we will have a good opportunity to scale up the business. And for that, all the action that we have talked about [Technical Difficulty] Thank you again for joining the call.

Thank you. Ladies and gentlemen, on behalf of Haitong Securities, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.