Tejas Networks Limited (TEJASNET) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Tejas Networks Limited Q3 FY '24 earnings call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashvik Jain from ICICI Securities Limited. Thank you, and over to you, sir.

Thank you. Thank you. Good evening, everyone. Thank you for joining on Tejas Networks Limited Q3 FY '24 Results Conference Call. We have Tejas Networks' management on call represented by Mr. Anand Athreya, Chief Executive Officer and Managing Director; Mr. Arnob Roy, Chief Operating Officer and Whole-Time Director; Mr. Sumit Dhingra, Chief Financial Officer; and Dr. Kumar N. Sivarajan, Chief Technological Officer. I would like to invite Mr. Anand sir to initiate with opening remarks, post which we will have a Q&A session. Over to you, sir.

Thank you. Good evening. Welcome to the FY '24 Q3 earnings call. This is Anand Athreya, CEO and MD of Tejas Networks. And I have here Arnob Roy, COO; Sumit Dhingra, our CFO; and Dr. Kumar Sivarajan, our CTO, is on the call. I'm just happy to inform you that we had a very strong revenue growth this quarter of INR 560 crores. And the last 9-month revenue in FY '24 exceeded the entire FY '23 revenue. And we have a strong order book of INR 9,028 crores. We had a loss of INR 45 crores in this quarter. And we continue to focus on execution and also investment to set Tejas for good growth in the coming quarters. Thank you. I'll now hand it over to my colleague Arnob to go over the details for this call. Yes.

Thanks, Anand. So in the next few minutes, I give you a color of the business that we had in Q3. And after that, our CFO, Sumit, will walk you through the details in the financials. So first of all, we continue to see good business traction, both for our wireless business as well as in our wireline business. So for our wireless, I think the big thing is that we have continued to ramp up our BSNL 4G RAN shipments, it's like several thousands have been shipped. And the combination of radios in Band 1 and Band 28 both single-band and dual-band radios. As a continuing part of this project, we received additional purchase orders of INR 107 crores for additional sites as part of this network build-out for BSNL 4G. And we have -- another important highlight has been, our subsidiary Saankhya Labs, received an INR 96 crores provisional purchase order from National Space India Limited from Department of Space for the deployment of 2-way Satcom transponders for communication and support system of marine fishing vehicles. So this is a very niche application. And this is part of the vehicle tracking system solution that Saankhya has. And this particular solution -- this particular application is for enhancing the safety and security of fishermen deployed for -- operating along our coastal waters, providing navigation assistance and weather alarms and boundary crossing alarms and so on. So very strategic project and which will have many other applications, both nav-based as well as marine application. And we look forward to seeing how we can replicate this success in other countries as well as in other applications as well. So we also continue to see strong traction for our wireline business after successfully deploying 150-plus channels, WDM channels 100 gig, 200 gig channels on the alien wave networks lighting up several thousand kilometers of fiber on an existing WDM infrastructure. We received an add-on order for a pan-India deployment of a similar size. So this is a very unique application that our WDM equipment will be served, where given an existing optical infrastructure that an operator has built, and he wants to add capacity onto that by adding additional data channels. We provide the technology which can do it on any foreign infrastructure in the sense that infrastructure built by any other operator's equipment. So for the BSNL 4G network for the radio network, we also started supplying the backhaul equipment of IP/MPLS routers. If you remember, we had announced this as a project in several -- of several hundred crores for deploying more than 15,000 routers. And this will enable the backhaul network of the BSNL 4G nationwide network. A few highlights also are successfully commissioning a high-capacity metro network in the U.S. for video production and distribution applications. This is using our state-of-the-art WDM processing equipment of 600 gigabits per channel capacity. This is going to be a good showcase for the network for us and the application is for a no-latency network for distribution of video. We also executed a commercial contract for supply of optical networking backbone equipment for a leading government telco in Africa. This is the initial order. And with the success of this, we expect to see future build-outs in this network as well. Our -- we also continue to see success in the utility sector. I mean as you know, our utility business in India is very strong, especially for the modernization of utility networks in India. And we could replicate the same success for a leading power utility in Southeast Asia, where these older TDM based network is getting upgraded with PTN and our IP/MPLS 3G technology. So the same project that we've done in India, we've been able to replicate in other countries as well. And on the same token, in a power utility company in India, we've commissioned a high-capacity national optical backbone, including the access portion of the network using a combination of our PTN as well as our high-capacity WDM network. So from a revenue perspective, in the 9 months of 2024, around 55% of our business has been for India Private. And let me also tell you at this point that our BSNL 4G radio order, we consider part of India Private because our direct customer is TCS, and that's how we categorize our revenues. The International has been 15% of our business up till now, and the Government has been the rest. We have a strong closing background -- backlog of INR 9,000 crores out of which the international is INR 221 crores. So in all aspects, this has been a very good quarter for us, especially compared with our business, our revenues in FY '23. I'll now hand over to Sumit to walk us through the financial update.

Thanks, Arnob. Good evening, everyone. Our consolidated revenue for the quarter 3 of FY '24 was INR 560 crores, which is more than double the revenue we reported in the same quarter previous year. As compared to the previous quarter, that is quarter 2, we've grown at a 41% growth rate. EBIT for the quarter was negative INR 56 crores, and PAT was negative INR 45 crores. On a 9-month basis, we had aggregate revenue of INR 1,144 crores, which is a growth of 84% over the previous year. We continue to make our investments to ramp up the R&D team and our operations, which are essential to deliver the growth potential that the company has going forward. Moving to some other financial details. We have a net worth of INR 3,000 crores as of December '23, inventory of INR 2,683 crores. The inventory has grown as compared to the previous quarter. This is mainly to secure long-lead items that we require for meeting our delivery time lines for some of the larger projects that we are executing. Trade receivables stand at INR 855 crores. We had cash and cash equivalents of about INR 559 crores at the end of the quarter with borrowings of INR 274 crores. This is eventually for funding the working capital requirements that the company has at this point in time. With this, I'll hand it over to Arnob to take this.

So a few other updates from a corporate standpoint is that in this quarter, we received several awards and recognitions as we were granted 31 patents for Tejas and its subsidiaries during Q3 FY '24 and our total patents grew to 313. An important recognition was a recognition by Gartner as a representative vendor in its Market Guide for Optical Transport Systems. So basically, a leading global analyst will be tracking our business and also kind of using our business to attract the global market for optical transport. In one of the events that happened in Q3 which is Network X in Paris, which was the erstwhile Broadband World Forum. Our FTTH solution won the award for the leading PON-based Smart City solution for an application, partly the application that we have built in India. I think the Indian Mobile Congress in New Delhi this year, our 1,600 optical and packet transmission product was selected as the Best Indian IPR of the Year in Telecom. From the corporate update perspective, from a Saankhya Labs merger, that's in progress. And we have made good progress over here. And the next upcoming event over here is the Equity Shareholders and Unsecured Creditors meetings which are going to be held in early February as per the direction of the NCLT. So this is basically the next step in the merger process. So before I hand it over for questions, just wanted to refresh all our investors in terms of our products. And as you know, we have a very comprehensive wireless and wireline portfolio, both comprising of 4G, 5G radio and baseband units, our multi-gigabit fiber broadband access, our converged access and edge solutions and also our high-capacity WDM use of building backbone network. And above -- on top of that, we have added our switching and routing portfolio. So in -- altogether, these products can build complete end-to-end network for any operator. And now the unique selling point is that also it is managed using a single network management system. Next one. And using this technology, some of the key applications that we serve is 4G, 5G data mobile network as well as their backhaul network -- fiber based backhaul network, services for wholesale and enterprise data between critical infrastructure for power, gas and utilities and for home and business broadband. All of these sectors are showing high growth globally. And we are in markets and products and applications where we see very good growth in the upcoming future. So thank you. So with this background, I'd like to hand it over for the Q&A.

[Operator Instructions] The first question is from the line of Santosh Sinha from Emkay Global.

My first question is regarding this margin. You have seen a low margin for this company. So what kind of margins we can expect for the BSNL project and other government projects that the company is executing? And second is regarding the trade receivable, increase in trade receivable. What has caused this? And what kind of trade receivable or working capital increase we can see from the execution of this BSNL project?

So on the margin front, while we don't give any guidance on the project-specific margins, what we've also stated in the past is that wireless segment, to begin with, may have slightly lower margins compared to the wireline segment. But given the order of magnitude of the project and the opportunity, it would, on an aggregate basis, compensate for the lower margin percentage. And on the working capital, could you please repeat the question? I didn't get the first part.

So there has been a marked increase in the trade receivable. So what actually has caused this?

Trade receivables, yes. So as you would see, our revenue for the quarter was INR 560 crores. That's a reasonable accretion in revenue compared to the previous quarter. And a part of this is what has contributed to growth in receivables, and we are expecting these to be realized over a period of the next few months.

Okay. My next question is regarding the BharatNet project. So any idea, any color in terms of when this project execution will actually -- BharatNet 3 will start and what kind of opportunity that can create for Tejas?

Yes. So I will take this one. So the BharatNet project is currently under definition. I think project authorities BSNL/BBNL are actually working to -- and DoT are working towards finalizing the specs of the project in terms of the scope and the exact technologies and the specifications of the equipment that will be procured for this project. And Tejas -- this -- the technology and the products are very much accessible and addressable by Tejas. And we look forward to significant success of this project as well because we have the products and the technology that are -- that is being called for in this particular project. So this is going to be a very exciting opportunity for us going forward. So in terms of time line, right now, from what we know, is that the specs are getting finalized, the government is in conversations with all parties regarding finalizing the specs and it should -- the tenders should get rolled out in the next few months and targeting executing towards maybe the later half of the financial year.

My last question -- last 2 questions. One is whether there are other POs that are expected with respect to BSNL project, like maintenance projects or other projects that are expected with respect to BSNL project from TCS or ITI?

Yes, so the BSNL project for the 4G RAN, as you know, that it will be for the first 100,000 sites. So there will be additional sites for additional coverage across the country. So that is expected to come. That's one part. And second part is that the tender also calls for a 5G upgrade of 40,000 sites. So that part of the business has not yet come to us. I think that will happen subsequently after the initial network gets deployed. So this tender also has a scope for additional business for us as part of this project. And after the network is deployed and after the warranty period, of course, the services are involved for many years. That will come later on.

The next question is from the line of Vimal Jamnadas Gohil from Alchemy Capital Management.

Sir, my first question is again on the cost front. If I were to look at the raw material cost, the sequential growth in raw materials cost has been higher as compared to the revenue. Is it mainly because of the increase in the wireless business? Or are we still sort of -- the problem of increased component prices for us is still not completely behind? That's question number one. The second question is on working capital. So if I were to see, starting this year FY '24, till date, we have had incremental inventory of roughly INR 2,000 crores. And just to take forward Santosh's question here, if I were to look at our working capital days, right now, we are operating at around 213 days versus our working capital (sic) [ inventory days ] was down considerably last quarter at about 150 days. I mean when I -- sorry, our inventory days were down by almost 150 days. Now it is at 213. So if you can highlight this incremental inventory of INR 2,000 crores, the time line of realization of revenues, if you can help us a bit.

Okay. So maybe I can take the margin question first and request Arnob to supplement that. I think the increase in raw material costs this quarter is actually more on the account of factors -- multiple factors, I would say. One is essentially the product mix within the wireline segment, which is -- which is essentially tended towards slightly lower margin products during this quarter as compared to the previous quarters. That essentially is one of the key factors where you would see why the material costs as a percentage of revenue has gone up. Also as -- from a contribution standpoint, if you see this quarter, export revenues were slightly lower than the previous quarter, which had an incremental impact on the material cost as a percentage of revenue. These are the key aspects as to why our material cost looks a bit higher. As we go along, I think we would expect the project profitability for wireline business also to kick in and some of these things to normalize over the next quarter. Arnob, you want to add anything here?

Yes. So just to add to this, in terms of margin profile, if you see when we ship equipment for our network, there are different components of the network where -- which come at different margins, right, where the blended margin is, of course, what it is that we have for the company. But for example, in the network, the access part of the network, where it has customer premise equipment and lower capacity, lower-cost devices, they have -- usually have lower margin, but as we move deeper into the network and go to the higher capacity elements, that's where the cost and the margins are also much higher. So what happens there, in the networks typically it's a blend of all of these things that go on. And that's what the blended margin comes to our -- the margins that we are aware of. So in this what happens is that quarter-by-quarter based on the blend of shipment that happens, there is a small amount of margin movement -- some amount of margin movement that also happens based on the blend of shipments, right? So I think in this particular quarter based on what we have shipped out during the quarter, it has gone more heavy towards the lower-margin components, which will get compensated in the next quarter by the other part of the networks that we are going to ship. So it's like a one-off temporary phenomenon in terms of -- that's why you see the higher cost to our revenue.

And sir, on the working capital, incremental inventory?

Yes. So on the working capital front, I think, see, we are in the middle of executing the large projects particularly on the -- both on the wireline and the wireless side. Now as we've mentioned in the past as well, in order to manage the lead time for some of the key components and to be ready for execution, we've been taking inventory actions for specific situations, specific components. And that has sort of getting reflected in the inventory number that you see. The point to note also is that while -- if you look at it from the phase of current revenue, I think it may throw up a picture where we are referring to, let's say, 200 days, et cetera. But given the phase that the company is in and where it is evolving from the current revenue levels to executing INR 9,000 crores worth of order book over the next few quarters, I think the increase in inventory has to be looked at in context of that number, right? And as we go forward, this INR 2,600 crores worth of inventory is essentially to be predominantly used for some of these large projects, which will get executed over the next few months. And hence, this increase in inventory as, let's say, days of order book, if one were to look at it that way, maybe a better metric to look at as -- instead of days of revenue or the historical data in the context of where the company is right now.

Understood. And sir, just one follow-up on the margin part, as you explained. So if I understand it correctly, there are some components in the wireline side, which happens to be, by the way, are better margin business. But there are certain components within that also which are probably like maybe a pass-through or have lower margins, which are higher in terms of mix this quarter, which is causing a lower gross margin. Is that understanding correct, sir?

That's correct. That's correct. The network always has a blend of equipment as it shows our entire equipment, where I talked about lower-cost access equipment customer premise as the margins are lower and the aggregation and the core has higher cost and higher margins. Another example is in the WDM network. The traffic of carrying equipment at the endpoints, they have a -- which is actually pumped in hundreds of gigabits and terabits of traffic. They have the higher cost and higher margin, whereas the transmission chain with the optical component, they have a lower margin. So as a -- when we ship a network, it's a blend of this is what gives us the overall margin. And in this quarter, the blend has been one part of it. And as we ship the other components of the network, the blended margin for that particular network or that particular shipment will come back too.

So this -- that shipment is expected -- so the higher capacity shipment where our margins are higher is expected to kick in from Q4?

Yes, yes. That's part of -- this is part of the same project. So part of it gets executed in Q3. Part of it gets executed in Q4. So that's how it's going to happen.

The next question is from the line of Sangam Iyer from Consilium.

Sorry to harp on the working capital again. The receivables that we saw shooting up significantly in this quarter, was it primarily due to shipments more happening towards the latter half of the quarter? Or is this the new norm in terms of the receivables for the -- for this execution of this project? Just wanted to understand that first.

See, it's related to the revenue that got shipped during the quarter. And we will collect this based as per the payment terms and as per the collection cycle as we go along over the next few months, it's not specifically limited only towards the end of the quarter.

Okay. Because for an incremental INR 560-odd crores of revenue generated, our receivables went up by INR 370 crores. So that's why I was just trying to understand what's the kind of payment terms for this particular project. Because the project is large, and this could actually stretch the balance sheet incrementally, given that our cash -- net cash balance has also come down to INR 200-odd crores. So that's why I was just trying to understand how to look at the incremental cash flow that would come in based on the execution of the project.

So I think while as Sumit explained it's nothing to do with the shipment profile. But usually, during the quarter, the shipments all build up so that as the quarter progresses and towards the end, like any other business, the volume of shipment increases over the weeks as it goes towards the end of the quarter. So from that point of view, yes I mean the larger volumes happen in the subsequent months and towards the weeks and so on. But I don't think most of this is connected to the time at which the shipment happens.

Got it. And secondly, on the margin front, I understand that we have product mixes that can alter margin on a quarter-on-quarter basis. So on an annualized basis, when we look at the mix of order backlog that we have and the mixing towards more wireless, should one be assume -- should one be looking at closer to 30% as the base case -- stable-state gross margin? Or is that something too early to predict for now?

What was the number you mentioned, with margin?

Around 30% gross margin. Is that something which would be more stabilized, given the kind of mix that we have between wireline and wireless in the order backlog?

See we don't give any guidance on margins or anything, right? But as you've seen our blended margins in the past, and directionally, that's where we'll be at as our business continues.

The next question is from the line of [ Saloni Jain ] from Nirmal Bang.

Yes. This is Manish Ostwal from Nirmal Bang. I have a question on our export opportunities. So how we are seeing the traction over there. And secondly, the investment which we are making on R&D side. So how long this will continue because in the presentation, we said that loss because of the R&D investment. So the investments in R&D, how long it will continue at this pace?

So as far as exports are concerned, I think we have a focus in growing our export business, because of which we continue to invest in international territories, in our direct sales force as well as signing up with partners in different territories. So our goal is to increase our international business substantially. But as you know, we started that process in a couple quarters. And it will take some time to really -- there's a gestation period to winning initial deals and getting a footprint in different countries and building on top of that. So it is going to take some time before we see large projects internationally, which we are replicating what we have in India. But I think the investment and the focus is certainly over there. As far as R&D investments are concerned, I think R&D investments are going to happen for some time because there's a lot of products and a lot of technology as well as project commitments that we have upcoming. So we will continue to invest. But at the same time, I would say that as our business grows, as we keep delivering on the large backlog that we have. I mean that business will certainly start offsetting the investments that you have seen up till now on the [indiscernible]. But yes, investments will continue to happen for some more time. So we see a large opportunity going forward, it has to be a global company with world-class products. So we still have some time in terms of investments.

The next question is from the line of Mukul Garg from Motilal Oswal Financial Services.

Couple of questions from my end. First, to Anand. Anand, I was just trying to understand the revenue you guys have recognized for international business this quarter, it seems a bit low compared to -- and especially when during the prepared remarks, you guys have mentioned that you guys implemented a couple of kind of solutions in the U.S. and in Africa. So can you just help understand, is this more about timing mismatch between the kind of revenue recognition and implementation? Or is there something else which is going on for the international revenues to kind of show such a large dip in this quarter?

Mukul, so yes, it is actually a timing mismatch. We have -- we are making the necessary investments to build the team out. I'm sure you know this. So it takes time for that to materialize. There's a lot of activity and proof of concepts and customer interest that's happening in the Americas, in particular. So we hope that we will start bearing fruit in the coming quarters.

Understood. So do you expect the international revenues to kind of see a meaningful ramp-up from here because this -- I mean getting the number right, it's only INR 9 crores of international revenue?

No, no, no, I don't think so. I don't think that's correct. We don't give the split of this thing, but that's not correct. And as Anand mentioned, yes, there's a timing gap because we ship in one quarter, project implementation happens in another quarter. So whatever we're reporting in terms of product implementation is something that got shipped earlier. Whatever we're shipping right now will get implemented next quarter and so on. So whatever I think, from a point of view, yes, as Sumit mentioned, that proportionately, it was long but not it's what we're indicating. And our focus is growth over there. There's already a backlog of international that you see, all of us want to really grow that business.

Understood. The second question was, I mean, a follow-up to what earlier participants have kind of also alluded to, and this is like for both Anand and Sumit. You guys currently are sitting on about INR 500-odd crore of net cash. Your working capital is something around INR 1,300 crores. You still have INR 8,000-plus crore of domestic, predominantly public sector, execution to do. Is there a risk of requirement of additional fund raise maybe in the coming years to fulfill the requirements? Or do you think the payment timelines will be comfortable enough for you to convert this into cash and not require incremental money for working capital? And I would also want to throw in, if -- because this would not leave any flexibility for potential inorganic scaling up for Tejas. So if you can just help us understand, is this something which might require incremental funding?

So see, currently, we don't envisage any equity funding requirement. Like you rightly mentioned, increase in working capital requirements are there, and they're expected to be there for the next few months as we execute these large contracts. But these are generally going to be a short-term funding arrangement, short-term facilities that we would intend to look at as compared to longer sources of capital like equity or anything else. Also, as we go along, we expect to continue our focus on collections, and that should help us in managing this working capital as we go along. Also from the point of view of investments in particular, I think the way we see it, currently, the business should be able to meet its future growth aspirations based on the current expectations out of the business. We don't expect any incremental equity right now in the immediate term to be required.

Understood. And the final one was for Arnob. Arnob, you mentioned about, again, the impact of the products, which kind of got expensed out this quarter. But if I look back at the history of the business, we have never had this high kind of equipment or raw material cost in our business even though we have previously had cases or instances where we shift towards the product profiles, which were relatively lower profits. Is this something which is partially also on account of these deliveries which you are making on BSNL and our gross margins should remain below where we have historically seen going forward as well? Or am I reading too much into this?

Yes, yes, yes. I think you're reading a little bit too much into this. I think the reason you're seeing it now and didn't see it, first of all, because our overall business for wireline has also gone up, right? So if you see if the overall business has increased, then the proportion of the low-margin component of the network and the high margin of the component of the network would have also gone up, right? And it just happened that it's more of a timing issue that in this quarter, a lot more of the low-margin component got shipped, and the other component gets shipped subsequently. So it is -- and I hope that answers that question that while yes, on a smaller revenue base, you saw the effect of the blended margins of the network. On a larger base, you are seeing the effect of only the lower-margin part. I mean not the only, I would say, predominantly it becomes the lower-margin part. So that's about it. I think it's nothing more than that.

The next question is from the line of [ Hiren Kumar Thakurlaal Desai ], an individual investor.

I have 2 questions, one of them is again related to the margin. So our gross margin has been declining as pretty much everybody has mentioned. I mean do we see the sort of bottom around this place? Or -- now see the significant chunk of the business will be dominated by BSNL supplies 4G? So I mean does it have anything to do with this margin profile? Are we around the bottom? I'm not asking for any guidance or number. That's my question.

So yes. So as -- [ Hiren ], as Sumit explained, so there are 2 parts of the business. One is the wireline and the wireless part. So the wireline business, you basically know what our overall company gross margins are, as has been done in the past. So there is no change to that, except that as far as we are talking about the blend of margin that happens across different products. The wireless products that we have the margins has -- it's slightly lower margin. That was something we've talked about in the past but -- because want to get -- this gets offset by the higher volume of the business, right? So that's about it. And there is nothing in terms of overall -- I mean that's the overall story about the margin. There are 2 components, one where there is a margin protection, and we will continue with. Overall we don't see any impact overall to that -- on the wireline side. And wireless, at least for this project, with the large volume, we will have slightly lower margins and -- but will get offset by the higher-volume of business.

The second part is about the currency movement. So now especially the wireless part, of wireless sales I assume, contract or sales or whatever is in rupees versus most of the components in dollars. Is the company doing something?

[ Hiren ], we lost you, could you repeat that question, please? We lost the first part.

Yes, yes. The question is, again, so next few quarters, the revenue profile will be dominated by BSNL 4G business. And I'm assuming that -- you can correct me if I'm wrong, I'm assuming that our revenue will be in rupees and that's the contractual value, but the raw material is in dollars, right, for the components. So are we doing something to protect margins in that aspect?

Yes, yes. So basically, it's our ForEx management and I'll let Sumit answer that question.

So I could only partly hear. I think what you're saying is, while our revenues are going to be in rupees, our procurement is in dollars. And how are we -- so from a ForEx management point of view, I think we actively hedge our exposure through various instruments. We continue to monitor the currency risk or the currency exposure that we have. And we suitably hedge our short- to medium-term exposures in particular as we go along.

I'd also like to add that especially for our BSNL radio products, we've done a significant amount of localization of the components that go into the product, a lot of the costly portions which are there. I mean not the electronic components, but there are many other components that go into the radio design. And we have significantly localized that. And a lot of our partners are manufacturing in India or we have original Indian manufacturers who are -- who we have used in our design. So I think while there is a significant dollar component, it is not as dominating as you would expect because of the amount of localization that we have done in the product.

The next question is from the line of [ Moid Ansari from Hyderabad Investment Forum ].

Yes. My question is with regard to 4G technology or the BSNL that we have developed. There are a lot of questions in the markets with regards to how effective or how developed the technology is. Recently, the BSNL Telecom employee union has written to the minister -- telecom minister that our technology is not up to the mark, and that is causing delay in rollout of 4G by BSNL. Similar questions were raised by the opposition in the parliament also that the indigenous technology which the government is promoting is subpar and not up to the mark. So there is a lot of questions regarding our efficacy of our technology that we have developed. Can you explain in detail? Means are we up to the mark? How is it compared? How are we performing vis-a-vis our competitors? Some explanation is needed on this issue because as investors, we are having a lot of concerns on this particular point. Everybody seems to be blaming Tejas only.

Yes. So what I'd like to add, and I will also ask Kumar to add to this. So this technology has gone through extensive trials, okay? It's like a more than a year of trials that happened over a large testbed in the north, okay, in Punjab. And this has been selected after pretty heavy proof of concept, free trials, so quite a lot of amount of traffic running on the network. So from a technology point of view, I don't think there is any concern. I think I've only just recently heard about things, there are some -- I think there were -- from whatever we have seen in terms of network build-out kind of thing, I think whatever I have heard is in terms of the phase of the network build-out more than the actual technology itself. And this technology has been tried and tested. And compared with even the world-class, the leading foreign vendors in terms of performance and robustness, it has been tried and tested. And only after that have we -- have the tender, have the contracts been awarded to the consortium. So there is no issue with respect to that. I think the project rollout is where I think the concern is in terms of getting the network rolled out in time so that they can grow their business around it. So on whatever I've seen and that seems to be the issue.

Yes, I have a follow-up question also. We are supposed to get an order from supply of equipment from ITI. Only TCS, has received the purchase order? Why has the ITI order not come? Means we are supposed to be the ones who are supplying equipment for both ITI and TCS. Can you give some clarification on that?

So the -- [ Hiren ] this was discussed earlier also that the ITI order is coming through TCS. So whatever is 100,000-plus site orders that we are working on. That includes the ITI component also.

The next question is from the line of [ Sachin Jain ], an individual investor.

My question is more on your international side. Can you offer me some qualitative comments on business development effort on international side? Basically, what kind of traction you are getting over there? Or can you also highlight in terms of how our product, particularly wireless, getting perceived in international market? Where are we in the business development journey? Or when can you expect some significant event in those markets? And why I'm asking because once, in next 18 or 24 months, you are done with BSNL or some part of BharatNet probably it's a traction in international markets which will keep our revenue momentum on. And so that's the context.

So I think very, very valid questions. And we are also cognizant of that. And a lot of investment is happening as to not only from a direct investment from our side in terms of investing in our presence, of sales teams and support teams and all those kind of things. But we're also using our partnership with the TATA Group companies, TCS and Tata Communications, TCTS, and all those kind of things and using those channels and partnerships as well to get access to customers across the globe. So we have seen initial traction. There have been ways that we have worked together with them, and there are many other customers, they have got -- connected to interactions and all, where we have been able to access. So we are also, apart from our direct business development, I mean, leveraging the brand and the relationships of the group as well, right? Except that this -- in this business, any business development, any significant result takes time. So while we are focusing on the smaller network opportunities where we can get in quickly and do our business. We're also working with good companies as well as directly for the larger opportunities in Tier 1 operators across the globe. So the focus is there, and we hope to see results sometime down the line. I mean we are just conscious of the fact that these things take time and effort. And once we have significant breakthroughs in certain markets, the replicating them in those it becomes that much easier and that's what our focus is on right now.

So in your initial discussion with customers, can you give some qualitative input in terms of how we're getting perceived in those markets post we are doing this BSNL order bid? And I understand that business development takes time. But internally, when you guys are thinking, how far we must be from a good win, a sizable win? I mean just need your qualitative inputs.

So maybe I can take this. So as Arnob said, this is going to take time, that's number one. The thing is, I think we have to get to a point where there is a reasonable size rollout in BSNL because, I mean, everybody is watching. We are doing it for the first time here. So I think when that happens, then I think people will be more interested in doing proof-of-concept trials and all other good stuff. So again, our focus is going to be twofold. One is developing countries, and there are lots of them in Africa, in Southeast Asia and other places, but also in developed countries, where there are rip-and-replace programs where we can -- definitely we'll have an opportunity to participate. But I think net-net takeaway is everybody is going to be watching this. And when we pull this off, then I think the doors will open up.

The next question is from the line of [ Sohan Joshi ], an individual investor.

Am I audible?

Yes, you're audible.

Just one question. When we'll be able to monetize our Renesas strategic partnership? I mean are we going to -- are we looking at the revenue after the BSNL project is executed? And what will be approximately R&D spend? Is the R&D spend currently which is getting reflected is of the Renesas partnership? Or it will get recognized in the P&L from the subsequent quarters?

Which partnership were you referring to?

Renesas, Renesas.

Renesas. No, I don't think anything over here is reflective of any partnership with Renesas. No, it's not. I mean the -- all the technology partnership like we have with many other people for innovating technology and co-development and stuff like that. But [indiscernible] is not connected to our partnership with Renesas.

The next question is from the line of [ Ranjit ], an individual investor.

I have a question about this margin blend and product mix. So the question is, do we have any strategic business product plan for enhancing the margin mix? And the second part of the question is, are the low-margin products are necessity for winning higher-margin business? And if so, is there any plan to partner with a third party so that the company focuses on -- more on the higher margin? That's my question.

Thank you. So let me take a stab at this. So a couple of things. As a OEM company, we will always constantly look at our products to see how we can make it faster, better, cheaper. And there are many ways to do it with alternate designs, with working with our suppliers. So that is a work -- always, constant work in progress. So that's number one. Then in order to win deals like this, it is always good to have a complete portfolio where it makes sense. And also, we are definitely open. And where if it does not make cost sense for us to build it own and we can partner, outsource it from someone, we will definitely look at it all the time. So it's actually a combination of all of these 3. And finally, once you have a complete portfolio, then it increases the chances of winning a deal. But also, it also helps in how we can structure the deal.

So in terms of the business wins, or the plan for the win, is there any conscious effort in controlling this mix of low and high margin?

Any deal, any network that we supply for, we have a mix of low margin and high margin as I said, right? So we have all aspects of the portfolio. So that's why when we ship all of the products in a network, the blended margin is what you see usually in all those kind of thing, right? So it's not a question of that we ship low-margin products, and we are looking for high-margin products. I mean we have the entire portfolio, which is a combination of margin profile of low margin, of the lower-cost products and higher margin for the higher-cost products.

Yes. We have no further questions, sir. I would now like to hand the conference over to Mr. Anand Athreya for closing comments. Over to you, sir.

Thank you. So as I said in my opening statement, we had a strong revenue growth quarter, and Tejas will continue to focus on investment and execution because I think we have a job to deliver. We have large opportunities and commitment to our customers, and we will continue to focus on execution. And I'm really happy with the progress that's been made on wireless in terms of, as Arnob said in the beginning, the Band 1, the Band 28 and the dual-band radios, they're all actually looking good and well. So I think that gives us a lot more confidence and optimism that they're ready to take off, right? And the optical products also are getting delivered. So the last couple of quarters, we've been focusing on building all of this and delivering with volume and scale. So I think that stage is being set. And you will start to see the effects of that in the coming quarters, right? And last but not the least, supply chain always used to be a problem. Now I think it's in reasonably good state. There are some long lead items, but I think it's more predictable and in more control than its ever been since I'm here. With that, I would like to close this call. Thank you very much.

Thank you. On behalf of ICICI Securities, that concludes this conference. Thank you all for joining us. You may now disconnect your lines.

Thank you very much. Bye-bye.