Tejas Networks Limited (TEJASNET) Earnings Call Transcript & Summary

Good afternoon, everyone. I welcome all the members to the 20th Annual General Meeting. I hope all of you are healthy and safe. This meeting is being held through video conferencing in accordance with the circular issued by the Ministry of Corporate Affairs and SEBI. For safety reasons, each of us are at different locations. Before we start the main proceedings of the meeting, I would like to introduce my colleagues who have joined through video conference. Let me first introduce Deshpande. Desh, can you introduce yourself?

I'm Gururaj Deshpande. I'm based in Boston, Massachusetts, and I'm very pleased to be joining the Annual General Body Meeting.

Thank you, Desh. Mr. Bhave?

I'm Chandrashekhar Bhave, joining the meeting from Bangalore from my residence. I'm happy to be here. Thank you.

Thank you. Leela?

I'm Leela Ponappa, joining the meeting from my home in Greater Noida on the outskirts of Delhi. Glad to be here in Tejas's 20th year.

Thank you. Now Sanjay?

This is Sanjay Nayak, CEO and MD of the company, and I'm delighted to join the Board meeting and the AGM from our corporate office in Bangalore.

Thank you, Sanjay. Arnob? Arnob?

I'm sorry. Hi, I'm Arnob Roy. I'm the Chief Operating Officer of Tejas Networks. I'm joining from the Tejas' headquarters in Electronic City, Bangalore.

Thank you, Arnob. Gadiyar?

I'm Venkatesh Gadiyar, CFO. I'm attending this meeting from the Registered Office, Electronic City, Bangalore.

Thanks, Gadiyar. Ravi?

Good evening. This is Ravikrishnan, Company Secretary, joining from Bangalore.

Thank you. I do confirm that the Chairperson of the Audit Committee, Mr. Bhave; and Chairperson of Stakeholders Committee, Mr. Deshpande, are present for the meeting through video conferencing. I also confirm that the statutory auditors, PwC; the secretarial auditor, Dwarakanath; and the internal auditors, Singhvi, Dev and Unni, are also present in the meeting through video conferencing. We have the requisite quorum present through video conference to conduct the proceedings of the meeting. Participation of members through video conference is being reckoned for the purpose of quorum as per the circulars issued by MCA and Section 103 of the Companies Act, 2013. The quorum being present, I call this meeting to order. I now request Ravikrishnan, Company Secretary, to provide general instructions to the members regarding participation in this meeting. Ravi?

Good evening, everyone. Members may note that this Annual General Meeting is being held through video conference in accordance with the Companies Act, 2013 under circulars issued by the Ministry of Corporate Affairs and SEBI. Facilities for joining this meeting through video conference or other audiovisual means is made available for the members on a first-come, first-service basis. The company has also provided webcast facility to view the live proceedings of this Annual General Meeting on the company's website. The register of directors and the key managerial persons, the register of contracts or arrangements has been made available electronically for inspection by the members during AGM. Members seeking to inspect such documents can send their requests to [email protected]. As the AGM is being held through video conference, the facility for the appointment of proxies by the members is not applicable, and hence, a proxy register for inspection is not available. The company has received requests from a few members to register them as speakers at the meeting. Accordingly, the floor will be opened for these members to ask questions or express their views. The moderator will facilitate the session once the Chairman opens the floor for questions and answers. It may be noted that the company reserves the right to limit the number of members asking questions depending upon the availability of time at the AGM. The company has provided a facility to cast votes electronically on all resolutions set forth in the notice. Members who have not cast their votes yet electronically and who are participating in this meeting will have an opportunity to cast their votes during the meeting through the e-Voting system provided by NSDL. Members can click on Vote tab on the video conference screen to avail this feature. Members are requested to refer to instructions provided in the notice or appearing on the video conference page for a seamless participation through video conference. In case members face any difficulty, they may reach out on helpline numbers. Thank you very much.

Thanks, Ravi. The company has taken all feasible efforts under the current circumstances to enable members to participate in video conference and also vote at the AGM. I thank all the members, colleagues of the Board, auditors and the management team who are joining this meeting over video conference. I hope all of you are safe and in good health. Let me start the proceedings with the Chairman's speech. Good afternoon, shareholders. I welcome you all to the 20th Annual General Meeting of your company. On behalf of the Board of Directors of Tejas, I thank you all for joining us today. The recent pandemic caused by COVID-19 has resulted in a new normal, and for the first time, we are connecting with you all over video conference. In this current situation, when we all are working remotely, I can proudly mention that Tejas is one of the enablers of remote connectivity, since it provides the telecom equipment required for building such robust networks, which can handle the sudden surge in network demand. Fiscal year 2020 was a challenging year for us with both the revenue and profitability declining due to challenges in the telecom sector in our country. This was accentuated by the COVID-19 crisis, which happened in Q4. Our revenue declined by 56.7%, while the gross margins declined to 35.6% of the net revenues. Consequently, we made a net loss of INR 237.12 crores. With delay in collection of receivables from certain large PSU accounts, our receivable days also increased. The silver lining last year was a strong cash position of INR 280 crores combined with our zero debt position. The uncertainties related to COVID-19 are difficult to predict. But we clearly see new opportunities opening up in front of us. We have already started witnessing the wave of enhanced culture of work-from-home, videoconferencing, video streaming and video calling applications coupled with emergence of new technologies like 5G. Post COVID-19, significant growth is expected in the fiber-based home broadband leading to greater investments by telcos and also internet service providers to keep pace with the huge growth in network traffic. From where I see, this definitely looks like one of the best phases coming for the telecom industry across the globe, which could be beneficial to our business. We also aim to increase our International sales and reach close to 50% of our revenues from export markets in the next 2 to 3 years. We have increased our investments and are gaining traction in Southeast Asia, Africa, Mid-East and North America. We are also seeing new opportunities coming our way, as our global customers look to derisk and diversify their supply chain investments in the wake of new geopolitical environment. As a leading pure-play telecom product company from India, we are also well positioned to capitalize on the opportunities opening up due to Government of India's focus to create Atmanirbhar Bharat. We had also taken several steps to reduce our costs, refocus our investments and be relevant to the new normal. We are facing a global pandemic today, and it has made the life of people in general tough and challenging. However, as quoted by Helen Keller, "Character cannot be developed in ease and quiet. Only through experience of trial and suffering can the soul be strengthened, ambition inspired and success achieved." Every person today working for Tejas is fully geared to face this trial with perseverance and come out triumphant. On behalf of the Board of Directors of Tejas Networks, I thank the Government of India, Government of Karnataka, all government agencies, governments of various countries where we have business operations and look forward to their continued support. I am also grateful to our customers, employees, shareholders, suppliers and bankers, all of whom have supported us during these challenging times. We are more relevant today to our customers than in the past. We are confident that our strategy will help us to tap new opportunities in front of us and get back to growth path very soon. I now invite Sanjay Nayak, the CEO and MD of your company, to address the shareholders. Sanjay?

Thank you, Bala. Before I start my presentation, I would like to share that this is a very important milestone for your company. This is the year we have completed 20 years of our existence. And to share what has happened in the past 20 years, the excitement that's gone by, I would like to share a small video that summarizes our 20-year journey. [Presentation]

Thank you. As you could see that we've had a very exciting journey over the last 20 years. Now I would like you to kind of put up my presentation, so that I can walk you through what holds for the future for our company. To give you a quick sense of the summary of the achievements that we had in the last 20 years, as you would have seen, we have, as a company, done cumulative revenues of more than $1 billion. We have done exports of more than $400 million. Our equipment is deployed in more than 75 countries around the world. We have 15 offices worldwide. We are among the top 10 in optical aggregation and #1 in this business in India. We have shipped more than 500,000 systems to more than 500 networks around the world. Our R&D investments cumulatively have crossed INR 1,000 crores, and we are selected by many top 10 global operators in the world. We've won several awards for innovation and entrepreneurship. We have more than 345 patents and more than 300 silicon IPs. In summary, we have been one of those flag bearers for design and make in India for the world, and as a company, we are the first deep tech startup which went public in India. Coming to summarizing the last year in terms of FY '20, as Bala said, it was a challenging year for the company. We were really impacted by the sectoral challenges in the telecom sector in India and, as a result, because the dependence on India revenues was 79% of total, that portion declined 63% year-on-year. And the primary reason there was, the government business because of all the economic challenges and all the other things which are happening in terms of the large operators the government own, that part of the business really shrunk significantly, about 88% year-on-year down. The India private business was also down in the fourth quarter of the year, especially after the adverse judgment of the AGR issues and the hyper-competition that happened in the sector. International also declined primarily because in Q4, which is traditionally a big quarter for us, got hit by COVID. So the combination of all of those things resulted in FY '20 revenues being very low. Correspondingly, since a lot of our operating costs, other than the material costs, are manpower-related, which are quasi-fixed in nature, we had a PBT loss of INR 138 crores. And taking other losses like the R&D impairment, including loss of capitalized work and R&D capitalized, we had a total loss which was much larger. In terms of balance sheet, it was a strong balance sheet. We still have INR 280 crores of cash and cash equivalents. We are a zero-debt company. In addition, we have INR 252 crore of inventory, which will be used during the financial year '21, which is the current year. Trade receivables are INR 456 crores, but we expect to collect a large part of them during the current financial year. In summary, as the quarters go by and as the year progresses, we should be able to really make better cash in the bank and strengthen our balance sheet further. Our R&D focus continued. We launched multiple award-winning products, which have been recognized in the world. For example, the world's largest multiterabit packet switch, which is a pay-as-you-grow architecture, which is a very unique architecture. Similarly, for instance, we were the equipment providers for rolling out the world's largest public WiFi network where -- which covered more than 4,000 railway stations within the country on our unique GPON technology. In terms of the financial trends, the revenue, as you saw last year, went down and, correspondingly, the profit went down. Because of a lower revenue base and delays from one particular large PSU customer, our working capital increased significantly. In terms of expenses, as you can see, the R&D expenses were almost flat. So we continued to believe in R&D, and we've invested. The SG&A expenses and the other expenses were marginally down. And cash and cash equivalent, as I said, we still have INR 280 crores of cash in the bank. However, whatever has happened has happened. When I look at where things are today, we see a very exciting future. Today, we are in the age of digital living, working and learning. A lot of us are working from home. A lot of our children are studying from home with online classes and -- offline as well as online classes. Over-the-top entertainment in the form of streaming videos is pretty much a part of everybody's daily life. We're talking of telemedicine, remote health care, automated manufacturing and the whole digitization of economy. And all of this is going to get further accelerated by 5G, which is impending, which will have a disruptive impact on the society as well as economies for the next 10 or 20 years. So this is the exciting time that we're living in today. COVID-19 has actually accelerated digital adoption. If you really see what has happened in the past 4 months, there has been 10x increase in video conferencing, more than 40% increase in the video traffic and more than 200% increase in gaming traffic. In terms of where things are heading, today, in 2019, we have 1.7 zettabytes per year of data in the world which is being consumed on Internet. That is expected to grow 244% to 5.7 zettabytes per year in the next 5 years. And just putting things in perspective, 1 zettabyte equals 1 trillion gigabytes. This is the kind of data which is growing the network, and that is why we really need to make sure that the networks are going to be adding into the capacities, and this is leading to an increasing demand for optical and broadband equipment. That part of the industry that we address is a $15 billion industry for optical network going to be $18 billion. Fiber-to-the-Home, which is the GPON or the home broadband segment, is another segment of our business, a $6 billion industry globally is going to $7.6 billion. And fixed wireless access, which is where we have made the base stations, which can do 4G and 5G, is going to start with a small base of $0.2 billion going to $2 billion over the next 5 years. So essentially, what I'm saying is that we are an industry which is growing; we are an industry which really requires a lot of equipment; and it is really an opportunity that lies ahead of us. So what's our growth strategy? So we have 3 very important pillars for our growth. Number one, we had a situation last year where because of the India dependency of our revenues, we had a bad year because the Indian economy and the Indian telecom sector went through a tough time. We really do not want that situation to be repeated. We really have been focusing on International business, and we expect International to be more than 15% of our total revenue in the medium term. Second, we're going to be really focusing on the growth of data and broadband in India. If you have seen, India still has a lot of mobile broadband subscribers, but the home broadband connectivity or high-speed connectivity on fiber optics is still very low. We have less than 2% of the homes in the country, which are currently having a high-speed fiber optic connection. It is expected that, that will grow by 50x over the next 3 or 4 years. We see a very large opportunity opening up there. The whole clarion call of Atmanirbhar Bharat, which is so relevant in current times, is something that we really can play a big role and that will provide a very strong tailwind for our business. The third is product differentiation through innovation in R&D. We've really been investing significantly in R&D. We have a very unique approach of building products, which is software-defined hardware. And as the networks and the equipment is progressing, there's more and more software element into our telecom equipment, which is a sweet spot for a country like India and companies like Tejas. And we really think that that's something we're going to be expanding our product portfolio as well. So let me go down one step further into each of the 3 elements of our growth strategy. We have decided that rather than going to all the different markets in the world, we're going to be focusing on 3 different geographies: first, Africa and Middle East; second, South and Southeast Asia; and third, in North America. These 3 markets together represent $8.4 billion worth of addressable market for us. Southeast Asia and Africa, in particular, are India-like markets, which basically means that success in India can easily be replicated in those markets. U.S., including North America, including U.S. and Mexico, is another market, which has a very different geopolitical system, which is very favorable to a company like us. So the 3 together provide us a great opportunity where we have the right products. We have a favorable environment where customers want to diversify their supply chain risk. They don't want to beg -- all the equipment coming from one country. And I think we are really playing very well into that kind of a situation. Secondly, in terms of India. India represents about $1 billion market for us. If you see, fiberized cell towers in India are only 25%, which is expected to grow 60% because without fiber going to the cell towers, you will not have a good broadband connection. And with 4G and 5G being really the play in town in the future, this is going to happen. Second, mobile broadband subscribers are still going to grow, and the fixed broadband subscribers or wireline or a home broadband, as we call it, have a significant amount of growth left there. From an Indian Government business, which was very bad last year, we think that the preference to make in India and the Atmanirbhar project -- Atmanirbhar Bharat project, these are all things which are going to lead into significant business opportunities for us. The mission of the government to extend broadband to all villages in the country by 2022 and with 500,000 subscribers in the villages, which will be the rollout of Digital India, again, is a great opportunity for us. In the private sector, telcos, home broadband and enterprise broadband connectivity is going to be a very high ARPU and a very profitable business for the operators. We have the equipment to supply to enable those home broadband connections and enterprise broadband connection. Third part is, again, critical infrastructure, which is another area where all the electricity, power, defense, smart city, all of these utility companies are getting automated. They all have a very high capacity network, and they are modernizing the networks. We have the dominant share of all the telecom equipment in these sectors, and we'll continue from there. The third piece of our growth strategy is the R&D and innovation piece. Over the last 5 years, we have been systematically expanding our product portfolio. We started out as an optical transmission company, which was providing backbone networks for cities and so on and so forth. In the last few years, we have expanded that to address the broadband access segment. For example, the home broadband segment or Fiber-to-the-Home segment, one good example of network rollout that we did was BharatNet, where more than 75,000 villages, which are connected out of the 100,000 villages, run on Tejas equipment. The same technology with next-generation upgrades will be offered via private operators in India to home broadband customers as well. The second, enterprise connectivity on Ethernet switches and routers. Lot of the critical infrastructure of the country, the defense network, the mission-critical networks of electricity companies and power companies and railways and so on again run on Tejas equipment, which are secured, trusted equipment that can be used for running this critical infrastructure. At the core of the network, as the capacities go from gigabits to terabits, we also need higher capacity switches, which can basically carry all the data which is being generated in the country and, again, for which we have expanded to create the world's largest multiterabit switch. The good part is, the ownership control of all hardware, all software, all design, all intellectual property and 100% of the manufacturing is done in India, and this is something which is completely advantageous for the country. With more than INR 1,000 crores of R&D investment, this is a very tough industry to build, and 20 years of our experience and our creativity is going to come into picture. And with more than 50% of our investment in terms of employee strength in R&D, we really think we are well positioned to expand the portfolio and to cater to a large part of all the telecom equipment that India needs and many of the countries in the world need. If you really see the places where our products are competitive compared to global people, home and office broadband connectivity on GPON technology, which you will see going and becoming very, very popular in India, we have among the most competitive products in the world in terms of critical infrastructure, which is what powers the networks of defense, oil and gas, railways, electricity companies, smart cities. Again, we have one of the best technology portfolio for any company in the world. For metro capacity expansion, we have, again, technology, which allows you to have gigabits or terabits of things and 5G-ready backhaul. When all the base stations will be upgraded to 5G, you need to back haul a lot of data and traffic from there. And again, we have the technology which is ready for this. We have really created award-winning products, which have got global recognition, global customer success, and we're really confident that going forward, all of these things and all these investments are going to be coming into good business use. In summary, if I were to say, what have we accomplished and where do we stand today? So at a macro picture and macro angle, the data growth in the world is a very strong driver for our business. Work from home, learn from home and all the other things, which are happening, are all positive signs for our industry and our business. Telcos are really going to be going into a long CapEx cycle over the next 3 to 5 years because they've got to make investments into wireline broadband, which is home broadband and all the enterprises getting higher speeds as well as the impending 5G infrastructure. We have been making sustained R&D investments, and we really have expanded the product portfolio. Earlier, we were only an optical transmission company, now we've got fiber access to home, and we also have now built our base stations so that we can give 4G and 5G services on our own products. We have continued to increase our focus on International, which we believe will be more than 50% of our revenues in the medium term. In the whole emerging geopolitical situation, customers are really wanting to diversify their risk, and we, as a secured, trusted supplier of equipment from a very neutral country in the world, really have a great advantage in that scenario. India itself, after having seen the worst in the telecom sector in the past year, hopefully, will be in a growth mode for data, home broadband and, really, the Atmanirbhar Bharat that we are all planning to create. And we, again, have strengths in playing into all the segments that constitute that growth opportunity for us. In terms of the COVID-19, I must say and I must really thank the entire team of the company who's really stepped up. All our customers have got uninterrupted support. We've been able to offer 99.9999% uptime for our networks. All our R&D labs, manufacturing operations are fully up to speed and really feel that despite the challenges that we've had, we have stepped up to the game. In the short term or the near term, we will have uncertainties. There could be delays in terms of customer orders, which can impact quarter-wise financial performance. But from a longer-term angle, as I described earlier, we seem to be in a good sweet spot. In terms of the balance sheet because, after all of this, you do need cash in the bank, you need to have a healthy position, again, we are in a very strong position where we have 0 debt. We have INR 280 crores of cash, and we are well covered to invest for all the growth opportunities that lie ahead for us. At this point in time, I really wanted to thank all the shareholders, all the investors, venture capitalists and the private equity people, who were with us before we went IPO, all the public market investors who have come after them. And I really believe that as a combination of all the factors, which are lining up right now, the opportunities we have created for ourselves by investing in R&D, by investing in International sales and being really the leading technology company in the telecom sector in India, we actually have a great opportunity and great future ahead of our company, and we really look forward to taking advantage of those and executing flawlessly to really take this company to great heights in the future. Thank you.

Thank you, Sanjay. Now I request Ravi, Company Secretary, to provide a summary of the auditors' report. Ravi?

Thank you, sir. The statutory auditors Price Waterhouse, chartered accountants; and secretarial auditor, Dwarakanath, have expressed unqualified opinion with respect to auditors' report for the financial year 2019-'20. There are no qualification, observations or adverse comments on the financial statements and matters which have any material bearing on the functioning of the company. As such, the auditors' report on the stand-alone financial statements and the consolidated financial statements are available in the annual report. The secretarial audit report is also enclosed as Annexure 5 to the Board's report of the annual report. Thank you.

Thank you, Ravi. As the notice is already circulated to all the members, with the consent of the members, I take the notice convening the meeting as said. Before we proceed, I'm pleased to bring to the notice that as referred under the Companies Act, 2013, the company had provided you all the facility to cast your vote electronically on all resolutions set forth in the notice. Members who have not cast their votes electronically and who are participating in this meeting will have an opportunity to cast their votes through the e-Voting system provided by NSDL. Members may please note that there will be no voting by show of hands. Other members can seek clarifications and comments -- offer comments on items of business, if any. Mr. C. Dwarakanath, Company Secretary in practice, has been appointed as the scrutinizer for the e-voting process. The results of the poll shall be placed on the company's website. Also, the scrutinizer's report will be placed on the website of the company and on service provider's website within 48 hours from the conclusion of the AGM. We now take up the resolutions as set forth in the notice. I will open the floor for any questions by members after all the resolutions are tabled. And remember that we are not taking hand vote here, so I will just raise the resolutions. The first resolution is on adoption of accounts. The financial statements of the company, including the consolidated financial statements for the year ended March 31, '20, including the reports of the Board of Directors and auditors, have already been provided to the members. The second resolution is on reappointment of Dr. Gururaj Deshpande as a director, who is liable to retire by rotation. The third resolution is a continuation of directorship of Ambassador Leela K. Ponappa as an independent director of the company. The text of resolutions, along with the explanatory statement, is provided in the notice circulated to all the members. The proposal is to -- continuation of directorship of Ambassador Leela K. Ponappa as independent director for the remainder of her term and to authorize the Board of Directors of the company to do all such deeds, acts and things to give effect to the aforesaid resolution. Now I request Ravi to give some -- thank the shareholders.

Dear shareholders, thank you for joining the 20th AGM today and for taking time to participate in today's AGM. Before we go live with the question-and-answer sessions, there are some points to note for your convenience. Kindly turn on your video when you are projected on the broadcast screen. Kindly unmute yourself and proceed to ask a question. Please mention your name, folio number and the location from where you are joining. Each shareholder will have 2 minutes for the questions. To avoid repetition, the Board will respond to all the questions at the end. Once you have asked all your questions, you can log off and continue to watch the proceedings. Thank you, Mr. Chairman.

Now the floor is open for questions.

We now request Mr. [ Abishek ], a speaker shareholder, who had requested the company to ask the management of the company certain questions. Mr. Abishek?

Yes, madam. Can you hear me? Am I audible?

Yes, sir.

Yes.

Yes. I'll start my video. My name is Abhishek, shareholder of the company. My DP ID, IL301637; my Client ID is 4135 [indiscernible]. I must, first of all, congratulate the management on the eve of 20th Annual General Body Meeting. Sir, I have some few observations, clarifications and grievances on the balance sheet, which I would like to go by page number wise. In Page #2, we can see our revenue has dropped from INR 876 crores to INR 379 crores. It is an enormous drop. And gross profit, we can see it is INR 135 crores versus INR 366 crore previous year. So that is also being dropped. And EPS, we can see minus INR 25.76. So what steps have been taken by the management to increase our EPS? The annual report is really excellent, and the details provided are very transparent and designed in an excellent manner by providing algorithms, flow charts, images, et cetera. Sir, in Page #54, we have our subsidiary companies, Tejas Communication Singapore and other 2 also have been provided. So what is the dividend or any interest we received from the subsidiary company [indiscernible]? [indiscernible] during this pandemic situation, the management would have thought of reconsidering or sacrificing the remuneration at least for 3 to 4 months in order to arrive at a profit. And when shareholders get at least a meager dividend, at that point of time, even our remuneration can be increased. Sir, if you would have reconsidered your remuneration, you would have not incurred losses this year. Sir, Page #118, we can see a number of shareholders, 26,433. So how many shareholders have attended AGM today, and what is the quorum required? Page #118, a very big correction is there in the stock price. We can see from 52-week high, that is INR 206, it has been dropped to INR 30, and now it is traded around INR 50. So instead of our money appreciating in the market, it is being depreciated, sir. And Page #132, we have intangible assets, that is INR 32.77 crore. So who evaluated the intangible assets, sir, an auditor or a technical expert? Because an auditor cannot evaluate the intangible assets. Sir, Page #137 and 138, we have contingent capabilities and disputes pending with various departments like income tax, central excise and Karnataka value-added tax, so what measures -- and these are pending since 2000 and 2001. So what measures and steps have been taken by management to arrive at a compromise or settlement so that as soon as possible the disputes may be settled? And have you thought of making use of the Pradhan Mantri Yojana, in which most of the disputes are getting settled and at a very earlier stage? Sir, then other expenses...

Abhishek sir, thank you so much for your question, sir. After we receive all the questions from all the shareholders, we shall revert to you. Thank you so much, sir.

But I have not finished, no, madam? I have not finished.

Sir, due to lack of time...

Let him finish.

Okay, sir. You may continue.

See, 365 days you have run the show. I have around 5, 6 shareholders in my family. I'm only one registered. I'm only going to speak.

Okay, okay. Continue, continue.

Sir, other expenses, for business promotion, our company has spent INR 2.80 crores. So promotional activities -- what are the promotional activities done during the year? Legal and professional charges, it is INR 8.5 crores. So every year, we are spending a lot of legal charges. So what -- any legal issues being faced by the company during 2019, '20? Bad debts written off. So what is the reason? And why we were not in a position to recover? CSR, we have spent generously, that is, around INR 2 crore we have spent. So this year, I hope that the company is going to spend towards the pandemic COVID-2019. And since Tamil Nadu government is affected more when we compare to Karnataka, so dedicate some funds for the state of Tamil Nadu as a relief for COVID-2019. Sir, then some few clarifications that, like, what is the real impact of COVID-2019 in percentage terms in our company? And where do you see the light in the end of the tunnel? What will be the growth? Because in the first half and second half, the coronavirus and the subsequent lockdowns have left virtually no industry untouched after the COVID. How many employees we have sacked, hired and salary cut in percentage, if any? What are the cost-cutting initiatives management has taken up? And any salary cut taken by the management? What efforts we are taking to increase our ROC, EBITDA and interest coverage ratio? Sir, then why don't we arrange a concall and increase our company's image through investor relation exercise and by meeting global investors? What steps have been taken by the management in the past 2, 3 years? Sir, then please give us the details of the parties in other current and noncurrent liabilities in order to make us understand. And our CS can also arrange a video call with our legal [ team ] in order to learn the perspective in detail. Any of my few of queries leftover, I will drop an email and get it clarified later also. Thank you for giving the opportunity, sir.

Thank you. Thank you for asking so many questions.

We now request [ Indrajeet Shah ] sir. Indrajeet Shah, sir? Mr. Indrajeet?

Mr. Indrajeet, are you there?

Due to technical errors, sir, we are unable to connect you. So maybe we'll get back to you through e-mail and personally address your questions. Thank you so much, sir. We now have Mr. Muralidhar? Mr. Muralidhar sir?

Yes. Hello, everyone. I'm Muralidhar Reddy, heading Apoorva IT Solutions, which is a system integrator. We deal with the defense and public sector units. And my Client ID, DP ID is IL3015495, 6758920. First of all, congratulations to all the team. I'm very proud of you. Tejas, an Indian company, investing around INR 1,000 crores in R&D. I think claps to all of you. And my question -- and my special thanks to Mr. [ Laxminarayana ] because I was just trying to figure out to connect to you, and he was very helpful. That shows the kind of people -- great people you have. Thank you, Laxminarayana sir. And my questions -- I think Abhishek has asked a lot of questions, so my questions will be few. One is, you've got an order from BEL, which is really exciting. There is a INR 60 crores, and you say that there's a strategic partnership. I want to understand what is the time frame for the execution of this order, one. Two is, what do you mean by strategic partnership with them? My question number two is, recently, I attended AGM of Reliance. Mukesh Ambani sir was telling about 5G, and they are doing that. So are they -- are we the OEM for Reliance? Are they a competitor, if they're doing some equipment? This is an important question as an investor. And third one, like, we see Ericsson, Nokia are our competitors. So how are we pitted on patents against them? Are we 30% of them, 20% of them or really good? Now I repeatedly come across Tejas very confident on BSNL. Whenever I see your data, when I read, this BSNL comes in that. Why are you so confident of winning BSNL? I think recently, Chennai is getting retender. Is that because of Atmanirbhar Bharat you are so confident? And if so, are we the only people under Atmanirbhar? And when I've gone through all the things, I haven't seen much of the work Tejas done with DRDO. So I can be of great help because I have spent 22 years with just DRDO. I can really give you some inputs if you really are interested in that. And as I said, you are really doing great job. And you have been talking about inventories of INR 238 crores recently, which you submitted to BSE. So why do you have this inventory? Is that against some orders? That's what I want to understand? Or is that you are keeping some stock with you? And you have been repeatedly telling that you have -- you are debit-free. That is very good, sir, but the reputation is too many bad, sir, telling as if we don't have anything except that. That's what I get a feeling. It's a [ great mark ], but everywhere you see, debit-free -- debt free, debt free is the one thing which I come across. That focus is too much on the news, on the presentations, everywhere. But what is that we have cash, INR 272 crores, not too big. If you remove 50% for your R&D, you don't even cover 1 year expenditure. That's really worrisome. So these are the things which I want to really understand. But again, I am telling you, I'm really proud of this company, and I want to be transparent. And if I can do some value to you, I'll be very proud to be. Thank you very much.

Thank you. So Sanjay, will you answer...

So yes, I can answer. So there were a lot of questions asked. So I'll try to summarize some of the questions into a broader theme and maybe address, hopefully, a lot of the sub-questions that were asked so far. Let me start with a broader question that I was asked that what went wrong last year which got reflected in the financial performance and what is the company doing today to really turn that down and go forward? So if you didn't see, as I mentioned in my presentation earlier, last year was an exceptional year in terms of things that went wrong. In fact, prior to last year, we did significantly good amount of revenues and profit, but last year was an exceptionally wrong year. Two things really happened in India. And India, unfortunately, was a large part of our total revenues, around 80% the year before. So in India because of the government business almost coming down to 0 for BSNL and other BharatNet projects, critical infrastructure getting delayed because of the economic slowdown, and the second half of the year, the India Private segment was really hit pretty badly because of all the regulatory headwinds and the Supreme Court judgments and so on. So a combination of all of these things hit us pretty bad in India. While we are investing in International, it does take time, and in Q4, when we started to get good traction, the COVID situation hit us. Net-net, a lot of things which could go wrong last year went wrong, and we went into a revenue decline. And given the situation of the company, once the revenue declines, our costs are almost manpower related, 75%, 80% of the cost, other than material, are manpower-related. So we had a corresponding set of losses. However, what has happened has happened. And let me kind of again share you what are the specific things which we are doing now to really take things forward. So number one is, from a cost and operating perspective, we have really tightened the belt. So I must tell you that -- someone asked a question that -- in terms of remuneration and how do we manage that. In terms of the senior management of the company and many others, 50% or approximately 50% of our salaries are variable in nature. And if the profit of the company doesn't happen, we do not get paid. So in that sense, we do take a 40% to 50% salary cut in -- if the year is not good, which was the case in the last year. Even as an example, the independent directors of the Board, after last year's performance, voluntarily took a small pay cut in terms of really showing the solidarity. And entire company's 20% of the salary is variable, which is linked to the financial performance of the company. So if the company doesn't make profits, we do not pay a variable pay. So in that sense, we have a self-correcting mechanism going forward to make sure that we really take care of stakeholders' interest while being competitive enough to attract the best talent that we need to have in the country. So that's one part. Coming back to the business aspect in terms of -- and if you really see the Q1 performance, our operating costs are significantly under control compared to the previous year. Coming back to the business part of the stuff, a lot of things are happening to go in the right direction. Number one, the Indian telecom sector, hopefully, the worst is behind. The competitive landscape is now whittled down to 2 or 3 operators who are financially healthy. They've been able to raise significant funds. Globally, people are thinking that Indian telecom sector is the right place to invest. And correspondingly, if you see where the investments are going to go, the broadband on mobile, the mobile penetration in the country is almost saturated to 80% or 90%. But the home broadband, if wireline broadband, which is what is needed to give the high-quality video services that we are now all wanting to have at our homes, we require a significant investment in the fixed wireless broadband infrastructure -- fixed broadband infrastructure, and that is the part where our company comes into the place. We've already, in the last 3 or 4 months, made significant progress in terms of being selected by the Indian telcos, and we believe that going forward, this will present us a very good opportunity for business. Second, the whole clarion call of Atmanirbhar Bharat in this whole emerging geopolitical situation, which you're all painfully aware of, is really creating an opportunity for our company where we would design and make in India products, products that can be trusted, products that we can have entire supply chain within the country. And Tejas, as a company, with all the R&D investments we have made over the 20-year period, actually cover a very large part of what the telecom equipment network needs. So we have the optical fiber transmission equipment, which builds the high-capacity backbones. We now have the equipment for home broadband, and we also have this fixed wireless equipment for giving you mobile base station kind of connectivity. So all those 3 things we have. And then the International part, again, has started to play out very well for us. We have started the year with a good traction in terms of International business. And we do believe that with worldwide concerns around equipment coming from one particular country, either on security reasons or from a supply chain surety or assurance reasons, there is a natural reaction where in the customers or in the countries where we already have a presence, we have an opportunity to increase our market share into those countries, and we do believe that that's an opportunity which will come. So as a combination between the India market really starting to take off for a, hopefully, 3- to 5-year CapEx cycle, especially in the part of the business that we are in, the international markets really retuning themselves to have diversity of supply chain, which augurs well for us. And the fact that we have a right kind of products, which are world class, which have been created with Indian innovation and Indian R&D and are second to none in the world, and combined with the fact that we have a strong balance sheet, the 4 things together, in a sense, is creating a very favorable environment, and we are really excited about the opportunities ahead of us. And I can assure you that in the years to come or quarters to come, we should see a better financial performance for our company. Coming back to the second gentleman's question about what is the relationship we have with a PSU like Bharat Electronics. We have signed up a relationship with them for rolling out the Kerala fiber optic network. Some of that network rollout has already started to happen this year, and it will get completed during the year. And the second question is about the strategic partnership, what does it exactly mean? So if you really see that there's a lot of government projects in smart cities, in defense, in Naval networks, Air Force networks, all kind of things which are coming in where there is a need for trusted, secured, indigenous, high quality and high complexity telecom equipment. And to the extent that we have those equipment, we will be very happy to offer those products to Bharat Electronics, which is a great system integrator for Indian defense and others. Coming back to the last question, someone asked about the 5G ecosystem emerging in the country and some of the other announcements we have been making. So the 2 things we should read out of those announcements and what's happening in terms of the environment around us. Number one, India as a country has now become very serious that it is high time that as a developing country or rather as a global major power that we aspire to be, we have to have control on critical technologies like telecom, and the fact that the largest company in India said that India has the capabilities to build its own 5G ecosystem, and I really enforce the word ecosystem, and we are a part of that ecosystem. We are providers of products to all the telecom operators in the country. And as a leading R&D-driven company from India, I'm sure that the Indian ecosystem will collaborate with each other and, really, we will be creating a third force in the world, which will be from India for the world, which will be Indian telecom technology for the rest of the world. That, I think, almost answers all the different questions that I had. There are a few others, Bala, if you would like to touch upon.

There are a few other questions about the CSR. CSR, we have mandated to spend 2% of last 3 years' average profits, which we cannot reduce. We have spent that money in various initiatives, including COVID-19-related initiatives in Karnataka. There was a suggestion to spend it in Chennai. Let's take the suggestion and see what we can do. On professional charges, why it has gone up, I think there were some legal and professional charges related to some of our issues we faced with the income tax department. There is nothing extraordinary about that. And even the bad debts were in the normal course of business. And somebody asked about what is so great about having cash and being zero debt. I think it's very important because cash is not king, cash is god. There are several companies which have gone down, not because they don't have a great product, but have gone down because they don't have liquidity. They don't have cash to sustain the business. I think we have sufficient cash in the balance sheet to sustain our business and take the opportunities which is in front of us. And being zero debt gives some more confidence. I think that when you have a business risk, we don't add a financial risk. Because the company has got both financial risk and business risk, the chances of the company getting impacted more is very high. We can manage the business risk, not a financial risk. So being a zero debt gives us much more confidence to invest and take on the opportunities in front of us. I think we answered almost all the questions. If there is anything, you can send us an email, and we can send you the replies.

Thank you, Bala. There are a couple of more questions.

There are a couple of questions which came through email. Let us flash it, and probably we can answer those. The first question is, in light of telco consolidations, 5G, interest on [indiscernible] band, does our company have an internal capability and capacity to take advantage of all 3 and grow revenue? Arnob can answer...

Yes. Hi, this is Arnob Roy, COO of Tejas Networks. So the answer is, yes, our company has the incumbency, the track record, the products as well as the capability to take advantage of all these positive macro factors. Post the telco consolidation in India, we are already an incumbent supplier in all the telcos. So their growth should automatically translate into growth for our own business. In terms of 5G, we are addressing multiple elements in 5G. So first of all, 5G will lead to large-scale densification of towers and fiber network and would require high capacity and low latency backhaul and front haul over optical fiber. Our optical transmission products and access products are 5G-ready, which would be used for servicing this demand. And the other aspect of 5G is that fixed wireless access is one of the top applications and use cases of 5G. And over the past few years, we have invested in developing our own 5G-ready base stations. These are targeted for fixed wireless-based solutions for broadband services. So that's how we see 5G as a major opportunity for our products and business.

Okay. What is the second question?

Very few homes in India have wired high-speed broadband connection. With work from home and online classes, does it directly benefit the company's business? Again, Arnob, you can answer this.

Yes, it directly benefits our business in 2 ways. So firstly, our GPON-based Fiber-to-the-Home products are directly used for deploying high-speed broadband services over fiber. So we had deployed these products based on this technology for BharatNet, and a new version of the same has been selected by multiple leading private operators in India for home broadband deployment. And secondly, the increased broadband traffic in the network will also drive upgradation in the backbone networks, where our scalable metro/core products are being used.

Okay. What is the third one?

In the context of Atmanirbhar Bharat, our country should make a large part of telecom equipment leader. What role is Tejas playing in this sense? Sanjay, you can answer this.

Yes. As I mentioned earlier that our whole foundation of the company has been design and make in India. So we've been actually practicing for this for almost 20 years now. Over the years, with all the investments we have made, I am very happy to say that we have created ample products which can be used to pretty much build all the high speed, high capacity fiber optic backbones of the country. We have the capabilities in the country with Tejas where all the optical transmission equipment that is needed in the country can be provided by us. So that's one part. The second part is with home broadband that Arnob mentioned a few minutes back, again, we have created products. So the next phase of growth for wireline broadband, again, we have the right products which are globally competitive to address that. The third segment is these switches and routers, Ethernet switches and routers, and that's again very security-sensitive. So over the years, we have taken the same technology and created these products, which are being used for defense, video surveillance, smart cities and many other applications. And the fourth part, which is going to become very relevant and, again, it was again a question someone else asked that what are we doing about 5G. So in the context of 4G and 5G, fixed wireless access is a very important thing. And again, Tejas team has developed our own base stations for wireless, which can give those services. And in fact, some of you might have read in the newspapers a few weeks back that India as a country has contributed to the global 5G standards. I'm again very proud to say that people from Tejas, including our Chief Technology Officer, Dr. Kumar Sivarajan, and few other members of the team were a part of that core group which created the standard from India for the world. So we are taking all kinds of approaches and making everything that we can and we are well-leveraged to make sure that we can rise to the challenge of Atmanirbhar Bharat and create a situation where India can become self-reliant in this critically and strategically important telecom sector.

You have been talking about opportunities in India and globally for some time now. Looking at your performance last year, what is...

Bala, you can summarize. I kind of mentioned this already.

No, I think, look, if you look at our business, there are 3 major parts of our business. One is our domestic business, mostly government-related and government -- domestic business related to private sector and then the International business. Last year was a difficult year because the Indian economy has been slowing down. It impacted the spending from the government. So there was a huge drop in government revenues. Second, the telecom sector in India was stressed, both regulatory-wise and financial-wise. So it impacts us in spending. And of course, at the end of the year, we had COVID-19 situation. We had clearly articulated how do we want to deal with our business. In the next few years, we want the International business to contribute at least 50% of the revenue. We started actively investing in our international markets. Today, we have opened up markets in Africa, Asia, we're going to North America. We hired some local sales [indiscernible] in those markets, and we are doubling down on our investment in all these markets. Hopefully, [indiscernible] business, which more than 50% of our revenue coming from international markets. At the same time, our core market, the Indian market, a lot of things have changed in the last few months. COVID-19 situation had increased the consumption of data in India. It is like the demonetization impact for the wallet companies -- digital wallet companies in India. So suddenly, you're seeing a surge in data consumption in India that is resulting in huge investment happening from the domestic players, the private players, and also, the government clearly understands that if we really want to build a digital India, they have to spend more money in creating the digital ecosystem, and that is where Tejas plays an important role. And in international markets, since we are spending more money, we are seeing good growth coming from international markets. Even in the last year, we have seen good growth happening in international markets. And we believe in the next few years, more than 50% of revenues come from international markets. And add to all that, we have the ability to spend and take advantage of the opportunities in front of us. That is where a strong cash position plus a zero-debt status helps us to invest and take on those opportunities. So if you look at all these events and, of course, the China factor, right, because of the geopolitical situation, India is more talking about Atmanirbhar Bharat. [indiscernible] the competition is less, and also we have the right product for the market. And even our international clients, they are looking at derisking their country, and Tejas can play a larger role in that. So for the first time, I think all the stars are getting aligned for our business. We have the right product. We have right -- there are a lot of opportunities right in front of us. We are financially strong to take care of those opportunities. So I think last year was an exceptional year. We all understand that. But going forward, we believe that we are in the right market with the right product, and the market opportunities are large and, hopefully, we'll be showing better performance in the next few years. Thank you. I think this completes all the questions from shareholders. And let me come to the last item of the agenda. Today, we had 70 members participating in the 20th Annual General Meeting. That is more than the quorum requirement. We are grateful to all our shareholders who have participated through the video conferencing. Let me now come to the last item on the agenda. The Board of Directors have appointed Mr. Dwarakanath C., Company Secretary in practice as a scrutinizer for the e-Voting process. I hope all of you have gone and taken part in the polling. Further, I hereby authorize Ravi, the Company Secretary, to declare the results of the voting and place the results on the website of the company at the earliest. The resolutions as set forth in the notice can be deemed to be passed today subject to receipt of the requisite number of votes. Further, the combined results of remote e-voting and electronic voting at the venue, along with the scrutinizer's report, shall be communicated to the stock exchanges. The results shall also be placed on websites of both the company and the NSDL. All the items of today's AGM have now been transacted. Thank you for attending the meeting. With this, I formally conclude the Annual General Meeting. Thank you.