Q1 20/21

Jul 22, 2020

Ladies and gentlemen, good day, and welcome to the Tata LXC Q1 Earnings Conference Call. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Vedanathan. Thank you, and over to you, sir. Yes. Good afternoon to you all. Thank you, Stanford. So welcome to the Q1 earnings call of Tata Electricity. In Bangalore, we have Mr. Manoj Raghavan, CEO and MD Nitin Phay, CMO and CSO. Request to the participant to restrict to one question. If we have time, you can join the queue for the further question. The agenda goes like this. Mister Manoj Raghavan will give a brief of the q one performance, and Nathan will talk about the market and strategy. Later on, you can pose your question for the clarification and answer of the same. Now I request Mr. Manoj Raghavan to take it over. Thank you, Jeevi. Good afternoon to all the investors. Thank you for joining us today. And I hope you and your families are safe in this crazy COVID situation. Considering the uncertainties that we saw across all the verticals at the end of the last quarter and beginning of this quarter. I would say that performance for the quarter gone by has been quite satisfactory both in terms of top line and bottom line. As you guys would have seen, our revenues for the quarter grew by 10.7% year on year, and our PBT also grew 33.9% year on year. Of course, quarter on quarter, we have seen a dip, but I think you should see the dip in the context of the difficult situation that we had in the industry due to COVID. The company's largest division, Embedded Product Design division, EPD, grew by 13.2% year on year. Within EPD, I'm happy to let you know that both the media and communications business unit and the medical and health care business unit recovered sharply during the quarter and posted sequential growth as well as a very healthy 20% and upward year on year growth. The media and communication vertical grew 23.3% year on year and 3.3% quarter on quarter. And the and the medical and health care vertical grew by 26.5% year on year and 5.3% quarter on quarter. However, the transportation vertical continues to be muted. This has an impact both on our embedded product design business as well as on our IDV business, the design business. The significant part of the IDV's business is from the Transportation segment. However, when we when we see that Transportation segment is muted, it is while we say that it is muted, we continue to win both new deals as well as add new customers in the segment. But but just that the deal closure cycles have definitely become longer due to deal deferrals, higher scrutiny, and of course, inevitably a slowdown in the decision making across the value chain. Lastly, I'm really happy with how we have successfully managed to institutionalize remote working and continue to serve our customers across the world seamlessly. We in a in a matter of couple of weeks, we were able to move more than 95% of our workforce to work from home with, you know, the right infrastructure, the right security practices, and and so on and so forth. You know, during the quarter, we've managed to have maybe about 15% of our employees come to office and 85% working from remote. However, the last couple of weeks, we've once again moved back to 95% working from home because in many places, have had this additional lockdowns, which necessitated our employees to work from home. Right? I would really want to thank all our employees for embracing this change so quickly and continue to deliver and contribute to our success. And of course, to all our customers who are still with us in these very challenging times. So with that, I would hand it over to GV for the Q and A session. Thank you. Thank you so much and look forward to your questions. Thank you. You. Yes. Can I can you Yes, sir? Start the few other participants coming one by one? Sure, sir. Ladies and gentlemen, we will now begin the question and answer session. The first question is from the line of Vimal Gohel from Union Mutual Fund. Please go ahead. Yes, sir. Thank you for the opportunity and congratulations on good execution this quarter. Sir, my question is on your gross margins. On a sequential basis, there is a three seventy five odd basis point dip in your gross margin this quarter. What would you attribute this to? Would it be more to do with your probable non fungibility of employees employees in the in especially in the on-site project or and pricing pressure? That is my question number one. And the second it's a relate the second one is a related one on your op operating costs. So you have managed to keep your costs down extremely well. How sustainable is this? As and when revenue growth improves, what portion of your cost savings would come back? Thank you. Sure. So I'm not sure why you saw the 375 basis point reduction. But, however, you know, our our our top line has has has de grown, right, by by about 88% 8.7%, you know, quarter on quarter, and that has a direct impact on our even bottom line as well. Whatever you you talked about, including the fact that, you know, fungibility of resources are concerned. And, of course, we've had additional expenses because we've had a number of our employees that were stuck in in overseas locations because of COVID. They could not come back. We had to bear all those additional expenses. So I think that explains the, you know, sequential dip in our profitability. Right? I think about 14% or so. Regarding operating costs, yes, we have been able to control our operating costs. We're able to we have had very, strict controls in in hiring, you know, in any expenses. We've we've also not added any new office space. No travels happened during the quarter. So a number of things also helped us to manage, you know, the operating cost. Of course, we are not going to hike in the salaries, you know, this this financial year. So all of that has actually helped us to to manage our operating cost better. And then what portion of it is sustainable? I mean, with what portion of your cost would could come back once the growth come comes back? See, as long as COVID is there, a lot of those big ticket items like travel, you know, office space, and so on will continue to be muted. See, it this is a new normal. You know, the industry is is going through a lot of changes. So I would say, at this point of time, it's very difficult to say when things will get to normal and how much of that cost addition will come in. As of now, I I don't think in the in the coming quarter, at least q two, at least, we see any any additional, you know, cost pressures coming on us. And then lastly, could you just comment on the demand environment, especially on the auto? What has changed incrementally over the last quarter? Yeah. Auto demand is still muted, I would say. We are winning deals, but at the same time, some of the large deals that we have been chasing with some of our key customers, those are getting slowed down or those are getting pushed by a quarter or so. So we continue to be, you know, cautiously optimistic about the auto segment. We're not writing it up, but we are placing our bets correctly so that we don't depend overly on that particular segment for our growth. Thank you very much, sir, and all the best. Thank you, Arun. Thank you. Next question is from the line of Madhu Babu from Centrum Broking. Please go ahead. Yes. Congrats on a strong execution, sir, despite the COVID challenges. Sir, on broadcast and communication, now it is now the biggest vertical, so how do we see the sub segments there? And could you talk about the top account there, how it is growing? Thanks. Sure. The top top account is is a large multi services operator based out of The US. So our business with this particular customer has been growing pretty well, I would say, over the last I mean, we have been engaged with this customer over the last twelve years. So it is not a it's not a it's not a new customer. It's been with us for more than twelve years now. And over this twelve years, we have won significant deals, significant consolidation opportunities, a lot of high technology, especially in the new broadband space as well as OTT space. So a number of things that we are doing for this particular customer. What was the first question about broadcast? The other sub segments within broadcast and communications, what are the new opportunities we are taking? Yeah. So, basically, if you look at it, one is the operator segment, which I talked about. Apart from the large operator in in US, we have a large operator business in in Europe. We have in India. We have in South Africa. We are looking at Middle East as the next opportunity where we have a number of deal pursuits that are that are happening. So this is a globally, you know, spread sort of a business that we have. We also work with the broadcasting, you know, companies, the broadcasters. So that is another segment that we have, the OTT OTT players and so on. The third segment is a devices segment. The the device the companies that provide devices into this place, set up boxes and other devices. These are three main segments in this particular industry. Okay. Okay, sir. And just on the work from home, can it be the new normal even post COVID? Because engineering design is a bit different from IT services. So how do you see the post COVID, the CapEx, OpEx, and, you know, the work from home? Thanks. That's it from my side. No. That is a set of opportunities for which there is no hardware dependencies or there is no very strict customer confidentiality sort of requirements. Those requirements can still, you know, work from home if possible. But, you know, a lot of our requirements also mean that we need access to special labs, special hardware, and so on. So those it will be difficult for us to have a complete % work from home. We may have a mixture of, hey, you know so so far, we have always been % work from office only. We not had a work from home policy till COVID happened. But maybe we there is an opportunity based on the learnings that we have to to dilute this a little bit so that we have we give we give options to our employees who can have, you know, partly work from home and partly work from office. So this is something that we are working on right now. There's no straightforward answer here. It is based on deal to deal, customer to customer, and so on. So we we cannot like, IT companies, we cannot give you a blanket sort of a statement here. But we would definitely encourage a lot more work from home now that our employees have have seen the advantages of work from home. The next question is from the line of Ritesh Bhagwali from Rockstar Capital. Congratulations on good set of numbers. I have a question on our industry verticals. So as we are seeing muted growth in consultation, can we expect strong growth on medical devices front from this fiscal and contribute significantly as a percentage of sales in this year? Or this growth will be gradual one? That's my question. And if you can just let us know what has been the utilization rate in this quarter versus last year. That's it from my end. Yes. So medical devices continue to grow for us. I think we've we've grown 26 year on year and about five slightly more than 5% quarter on quarter. I I think we would continue this growth trend as I said in as I, you know, communicated in my in my last investor calls and so on, we have been investing significantly in this business both from a delivery capability perspective as well as from a sales, you know, sales force and demand creation perspective. So I'm I'm happy to to to to let you know that this growth momentum would continue. COVID is is like a blip here. We could have done much better if not for COVID. But having said that, even now, we see strong deal momentum happening in that in this in this industry. From a new utilization perspective, I would say last quarter, we were about 75 or 76%, and I think now it's slightly below seventy percent. So that is the room for us to really, you know you know, as the demand, you know, creation goes up, we'll be able to absorb, you know, the additional capacity that we have. Okay. Thanks a lot. That's it from my end. Thank you. The next question is from the line of Naveen Bhotra, an individual investor. Please go ahead. From that, you said himself for good set of operating performance, even in these difficult, very challenging times. My question is regarding the growth opportunity. In in our last phone call, two for phone call, you had said that we do have two or three opportunities that are being evaluated, but at an early stage. So if you can call more, like, on that growth opportunity, has that moved forward? As an You're talking about acquisition opportunities. Right? Yes. Yes. You know. No. We have we have in the last quarter also, we have evaluated, you know, about three opportunities, but we couldn't see a a strategic fit into our our domain our, you know, company as well as evaluations that on the on the higher side. So we are not we are not progressed on on those. But however, we are we are evaluating. There are because of COVID related issues, there are opportunities that are coming up to us. I would say we are in the evaluation stage. Nothing to report. Nothing significant to report right now, mister Navin. Okay. So in in this year, there is some chance of inorganic acquisition going forward in the future if you have some sort of Sure. We are constantly, you know, evaluating on on on this front, and there is definitely a a team with a mandate that is going after it. There's anything anything that comes up at the appropriate time, we will keep the investors informed. Okay. And my next question is regarding the top five customers. In absolute terms, JLR has a year and a decline by 7 crores. But the if we see second to fifth top customers, they have grown from 80 crores to $1.00 6 crores this quarter. So that is a growth of more than 30% suggesting increased engagements with our all these four customers. So is there any other room to ramp up these going these customers? Of course. Of course. Level in the in the in these customers? Is this growth sustainable going forward? Of course. I think, you know, the good part about our not just the top five, top 10 customers is that they have been with the company for a long time. We've had issues in a in a couple of customer places where we had some dip in business because of COVID. But everybody else, we have really strengthened. You know, if you look at compare, you know, last quarter the q one of last year and q one of this year, we've we've shown a a a pretty good, you know, bounce back, and that has really helped us, you know, to to mitigate some of the, you know, revenue dips from, you know, accounts like JLR. So in this sustainable going forward, that is my question. Absolutely. Absolutely, mister Botra. This is Yes. That's good. And last my last question is regarding the JLR. Have you seen the bottom of JLR in the absolute terms? Will it be stabilized or further will grow from here on? Your guess is as good as mine. No. Just the visibility and the deal pipeline and the executive Yeah. It it is a difficult business. I mean, the company itself is in a difficult situation. 98 crore top two, we have come to 53 crore from JLR. Ninety eight crore, if I am not wrong in q one FY nineteen, we have come to 53 crore. So so this is there like here around 50 crore? So so we have two objectives, mister mister Brodra. One is to protect, you know, our revenues from our top customers. And I I I I feel, you know, I I you know, my my intuition is that we have bottomed out, and we are getting good vibes from the management out there that we will you know, there are some new deals that we're talking of and so on. So hopefully, next quarter will be slightly better is my my hope. And then the other thing that we're doing is we we we we definitely want to derisk the situation. This is not something that is a good situation for us when we have dependency on on one key customer. I think we have derisked to a large extent. We have derisked. However, in the subsequent quarters also, we'll derisk that. Other accounts, we are growing far more aggressively. So that, you know, any, you know, plus or minus in in some of the key accounts should not affect us disproportionately. That is a focus for management is able to address questions from all participants in this conference call, please limit your questions to two per participant. For any further questions, you may come back for a follow-up. The next question is from the line of Harish S. Savalkar, an Individual Investor. Please go ahead. Thanks for the opportunity, and congratulation for your performance. I have around two to three questions. First one is regarding your transportation vertical. That is it is impacted and how it muted. Right? So what are the company's plan to mitigate this sluggish demand? This one is what? And second second one is regarding employee benefits. It's increased. So it is increased due to salary increments, or it has some bonuses or performance incentive? And third one is regarding you had in the financial report, we had said allocable assets and liabilities. So what it it is exactly and what it includes? Okay. So transportation business definitely is is is showing muted signs right now. So traditionally, we have been working with automotive OEMs and and tier ones. So so what what consciously, what they have been doing over the last, I think, at least two or three quarters, we have been looking at adjacencies to this market, which is we are looking at, you know, rail, off road, and commercial so that the skill sets are similar. We the skill sets are fungible. So that is a segment that we are really focusing on, having additional sales bandwidth, you know, delivery bandwidth, and so on. So to an extent, yes, we have been pretty successful. It's it's early days, though. We have some new customer engagements there, and that business is growing. So that is one of the key derisking plans from our transportation business overall. And, of course, the other thing is we have been aggressively growing our media communication business as well as the medical business. Again, in the last three, four quarters, that has been the focus for the for the organization so that we sort of derisk the automotive industry and, you know, the potential downturns in in the particular industry. So I think we have been doing that consciously. And I would say that is one of the reasons that we have been able to mitigate this steep decline that we've had and, you know, come out with a respectable sort of, you know, numbers. Employee benefits have gone up slightly. Think That is the other way around. Marginal decline. There's a marginal decline? I I okay. We've added about 200 people, you know, in the quarter. Right? But we've also had a set of people from overseas who have come back. So if you see net to net, what I what I understand from my team is that the expenses actually come down slightly. Right? There has not been any new bonus or any other incentives that have been paid. So we have to actually manage the cost very, very well, I would say. Okay. I just think take it year on year basis. That's why I've seen this increases. Yeah. Year on year, if you look at it, I think that okay. Let me just open the so we are seeing year on year in June 2020, we say 217 crores. 2 hundred and 17 crore. No. That is '19 2019. Correct. Yeah. From 02/2017, it's gone to $2.51. 2 50. Yeah. $2.51. Yeah. And that is explainable because we think about it. We have added employees from that period because February, we already had plans to add about 600 fresh engineers that we added over that period. So in general, overall employee has gone up, and we had revisions between that period. From that time to now, we've had one round of revisions. So it accounts for those two costs. Right. Right. Right. There is nothing let me put this. There's nothing unusual here. Because if you look at it quarter on quarter, you'll find that we have managed costs quite quite well. While on a year to year basis, simply because of headcount increase and there's some amount of employee benefits increase that has happened during the one year that you're talking of. Right. Right. No issue. And regarding the third question, I I I'm sorry. You are not clear regarding the assets and liabilities. What I would suggest is please frame your question and send it to a company secretary. We will have our finance team, you know, respond back to you with the right answer. Okay. Okay, sir. Thank you so much. Thank you so much. Thank you. Thank you, Mr. Kavankar. Thank you. The next question is from the line of Tishore P, an individual investor. Please go ahead. Hi, sir. Congratulations on a good set of numbers in the challenging years. And my question is, like, like, the did we found any opportunities from this COVID crisis, so which could be implemented in the company's, like, future, like, path that may help us to reduce the cost structure and all. Okay. So, mister Kishore, from what I understand, you're not talking of opportunities from the market. You're talking of opportunities within the company to reduce cost. Is that correct? Yes, sir. Okay. Okay. So from a if you if you talk of reducing cost, I think that will happen over the long term where we rationalize our office space and the requirements and so on. But right now, we are still maintaining all our office space and, you know, in fact, we are spending more because of the additional IT security requirements and, you know, you know, laptop for employees and and so on. Right? In the short term, I I won't say you will see any reduction. But in the mid to long term, as we relook at our overall, you know, overall infrastructure requirements, office space requirements, and so on, we could see a reduction in in in some of those expenses. But you have to also bear in mind that many of our office rentals are long lived rentals. They're locked in. So we can't we can't just get away. We'll have to pay before we can get away. So we have to evaluate all of that, and I think we'll do that at an appropriate time. Okay. Any large deals deal wins in any of our verticals, sir? Yeah. We've we've had, you know, deal wins, I would say, in the in the you know, I I wouldn't say large, but in a couple of million dollars, we've had, you know, a couple of deal wins, one in automotive space and one in the medical space. Our existing our existing engagements, you know, continue to grow, especially in the media communication as well as medical space. Yeah. Thank you. And all the very, very, very best for the future prospects of the company. Thank you so much. Thank you. The next question is from the line of Mayank Babla from Dallaland Brochure. Please go ahead. Good evening, sir. Thank you for taking my question. My first question pertains to basically, sir, we've seen Broadcast and Communication grow over the last two years and Transportation reduce in the revenue mix. Where do we see going ahead, what is the management's vision? Where do we see this normalizing? As in what what kind of mix can we see going ahead, if you could point us in the direction? Yeah. So I think we have been communicating this in multiple calls. In the long term, we definitely look at forty, forty, 20. 40 from transportation, 40 from media and communication, and 20 from medical. So that's that's going to be the long term, you know, in a in three to five years, that's going to be the way the the revenue is going to look like. That would be the short term, you know, ups and downs, but in the long term, that's what we're looking at. Okay. And, sir, my second question would be if you could help us with any new platform platforms that is in the pipeline, like we have Autonomy and Falcon in transportation and media. Any new platforms that we are developing which is in the pipeline? Hi, Mayank. This is Nitin here. Yes. We do have a few platforms that are under development. Some of them actually relate very very appropriately to what is happening with COVID, especially where customers do not have the ability to manage and maintain operations with human capital at the site. And therefore, they're looking at how they can remote remote operate many of their operations or network operation centers and so on. So we are building not not just building. In fact, we have built some very, very interesting platforms that allow you to remotize or virtualize some of your management of these assets. And at this time, in fact, it's actively being deployed as a leading operator. So we already have our first customer win there. We are actively trialing and scaling that deployment. And the idea is to go from 100,000, two hundred thousand to a million devices under management and then go beyond. So I think we are on a we are on a very, very good wicket as far as this particular platform goes because when we built it, we did not have COVID in mind. It was just meant to move customers in the direction of automation and remote operations. But with COVID, I think we're only gonna see accelerated interest in this these kind of platforms. Oh, okay. And then since which industry This platform? Which industry? Telecom industry. This is meant for operators who actually have operation centers right now, which and in fact, even in India, people have had problems because there is these are 24 by seven network operating centers, and you need a large set of people sitting inside operating and managing these centers live. And what we are building is a solution that is now logged where from which you can log in from anywhere. You can monitor, but not just monitor. The monitoring is not enough. You can manage the network too. Okay. And sir, last question for Manoj. Sir, you guided that you were seeing some green shoots in the top client and overall transportation. Like most of it is the worst is behind us. So q two, can we see a a good bump up? I'm not asking for a guidance. I know you don't give a guidance, but qualitatively, you could guide us for transportation. From the transportation industry, I would still say it's early. We really don't see of course, situation is improving, but at this point in time, I wouldn't be confident to say that we have a recovery and things will improve and so on. However, from the media communication and the healthcare medical practices, definitely, we see increased spend, a lot more customer attractions and so on. So at least in the short term, which is one quarter, I would say we would see the trend that we saw in Q1 continue. However, I would say maybe Q3 and Q4 or in H2, we would see some amount of recovery in the automotive industry. I think Q2 still, I'm not so confident that we will see a great recovery. The next question is from the line of Henrietta Seligman from Somerset. I have about three questions. The first is just on the trend of working from home. Will that also help you to increase your offshore ratio going forward? And how could that sort of impact the margin? And then the second is on the security of working from home, which you sort of mentioned in the introduction. Could you perhaps go into a bit more detail about how you are able to keep customer data secure and, and and sort of reassure them that it is safe when when your engineers are working from home? And then the third question is just what is the I understand that there's limited visibility on some of the outlook, but how does the deal and tender activity compare at the moment versus this time last year and perhaps breaking it down by vertical? Thank you very much. Thank you. You've seen in this particular quarter, our on-site offshore ratio actually came down to more offshore and less of one side. I think it was sixty sixty three point five to, you know, about 36.5. So that's the I mean, so far, we have always been in the in in in in the, you know, three forty sort of a situation. So definitely because of COVID, you know, many of our customers, you know, their budgets have been affected. So we have gone back aggressively to to our customers and push the model of more offshoring so that within whatever is the reduced budgets of the customer, we'll still be able to, manage overall activity and provide services to our customer. At the same time, moving work from on-site to offshore also helps us improve our margins. So I would say we will see that accelerating a little bit, at least in the short term, we will have maybe in the quarter or two, we will have more offshoring and less of on-site. Also the fact that air travel is still not to different countries, air travel is still prohibited. So we have to use local resources, and we'll not be able to have engineers travel from India. That also pushes us to really move a lot more work offshore. Yes, work from home perspective, we do have you know, the security related issues are there, but we have a pretty, you know, very good security architecture that we have built. We have, you know, we have we have we have used, you know, Microsoft's, you know, advanced threat protection. We use McAfee. So there are multiple ways we use Palo Alto firewalls. There are only employees who need to access, you know, resources directly over Internet, like office mail and so on. They come in directly with the with the, you know, multi factor authentication to have a secure application login. For everybody else who needs to access work code and so on, though they're working from home, they they do a VPN and dial in remotely into into a server that is within our firewall. And and so we are really able to use many of these, including VPN, multi factor authentication, firewall that is there, and remote, you know, RDP into our into our, you know, network. Right? That is where we have been able to ensure that none of the information, you know, goes out of the organization. And as usual, all the endpoints that we have deployed, we have USB is disabled, we have endpoint protection software that is installed, we have no admin rights on any of those machines And multiple of these factors that we're looking in. And and we have also looked at, you know, red teaming, and we have organizations like BidSite that they have used to really check, you know, how secure is our overall infrastructure. I think the last count that I heard was we were about seven thirty or seven forty points, which puts us in the top half of many services companies from an information security point of view. We continue to really use internal resources and external resources to ensure that, you know, we do all the retaining ethical hacking and all that and see that there are no holes that any hacker could exploit. So we've looked at, you know, the maze ransomware that had attacked, you know, in another company. All of that within within minutes of that, we had all the all the patches installed across the across the network and, you know, we are well protected. So so I I believe I I believe I mean, it it is ultimately a cat and mouse game, but we have done all the investments for a for a secure, you know, work environment. And we continuously, you know, focus on, you know, really really evaluating best in class, you know, security architectures available, and they're constantly on the lookout for better options to protect ourselves. So this is something that we are very, very careful, and we will continue our investments in this line. So so I hope I've answered that. Regarding deals and tender activity, I would say, as compared to q one last year, definitely, you know, we we we do see some some slowdown, and that is natural because of the scenario COVID scenario that that we had. We're hoping that q two and q three, we will see a better you know, we we already see some signs of, you know, at least in a few verticals, activities, you know, restarting. So we're we're fairly confident that things will improve from now on. Thank you very much. That's very helpful. And just on about the offshoring ratio, do you expect that to be sustainable to some degree beyond COVID? I think so because the customers also have you know, see, more see, we given you know, if you if you leave it to us, we would like it to be 98¢ because, you know, it it is it is it is very much possible to really go all the way there. But most of it is that customers are not confident that we'll be able to manage remotely and and so on. Right? But right now, because of COVID, I think slowly customers are also, you know, getting around to understand that, yes, offshoring can work, remote working can work. Even in their own locations, people are working from home and are able to contribute effectively. So I I I think the resistance is more from the customer's end and which I hope will come down because of COVID. Thank you very much. That's very helpful. Thank you. Thank you, Andreas. Thank you. The next question is from the line of Jairaman Keay, an individual investor. Please go ahead. Hello? Yeah. Yes, sir. Tell me, Rahul. Thank you. Thank you for the opportunity. I just wanted to have a lead on the revenue mix going forward we can expect from the company. Could you phrase your question a little better so that we understand what you want? One minute. I just wanted to have a guideline from the company and the revenue mix going forward. We we have three verticals, and I can see the the medical sector is around 8%. Given the opportunity, COVID time, do we see any remarkable increase in revenue? Are we exploring opportunity in this particular field? As I said, you know, our long term revenue mix is is about 40% in automotive industry, 40% in the media and communication, and 20% in medical. So that's the revenue mix to which we will be moving. Okay. Thank you. That's Thank you. The next question is from the line of Rohan Advan from Multiac. Please go ahead. Yes. Thank you for the opportunity. Most of my questions have been answered. Sir, on the drop in JLR revenue, I wanted to understand how much of the drop is on account of, say, business volumes itself dropping or it's more on account of reduction in value going to offshore onshore mix? That is my first question. And secondly, on the Industrial Design segment, we've seen revenues at around crores for around nine quarters now. So just wanted to get a color on the opportunities we see here and also the kind of end industries we serve here. Is this mostly transportation, or is this more than that? And, you know, are there growth opportunities? Thank you. JLR. Right? Okay. So so JLR revenue drop is a is a is a mix of both offshore and, you know, pure reduction in their overall budget. Right? I I I would say I would if I I don't have the numbers immediately, but my interpretation is almost 80% of the drop is because of the budget issues, and 20% is because we are moving to the offshore. Plus or minus, I would say, percent. You know, this is a broad indication. I don't have the numbers offhand with me. But the real fact is that, yeah, it is it is more it is more budget related. IDV, I think, industrial design business also, I think, has has been affected significantly due to COVID because a lot of work that they do are on design intervention, research, need people to go out into the market, interact with people. So many of these activities could not happen because of COVID, because of lockdown across the world. Having said that, we've in the beginning of Q1, we have a leadership change there. We have a new person who has come in. And there are a set of activities that we are doing to really refocus on this business because we believe this is one of the key differentiators that's compared to competition. There is a lot more that we can do in this business. And I would just give us a couple of quarters, and we will see amount of turnaround in this particular business. So that's something that we're working on. Okay. Thank you, sir, and all the best. Thank you. Thank you. The next question is from the line of Kartik Sambandhan from Unifi Capital. Please go ahead. Good afternoon, sir. Thank you for taking my question. So my first question is regarding the capital efficiency that we usually see historically is quite high for us. But in FY 2020, we saw a little bit dip in the ratio. So given the amount of cash that's been built up, how do we see it going forward for this year, sir? Are we looking at a better payout or bonus? Or could you shed more light on that? So our dividend policy is up there in, you know, in our Internet site. We'll definitely relook at it. I think even in our AGM, we've had some questions about it. So so we we we will really evaluate it with with our, you know, board of directors and come out with clear, you know, plans of how we are going to use our, you know, capital. Right? So, yes, we have we have about 650 crores of of of of of reserves. So we we definitely, as a growing company, we we need a significant cash portion, especially when we're trying to do some inorganic, you know, activity. So we'll keep that in mind and come out with a with a clear policy, you know, shortly. And, sir, just one one more question. We see that, you know, even the year on year increase is around 10%, but the bottom line has increased significantly. And we've seen, like, in travel expenses, almost 30% of our bottom line in previous fiscal years. So given that this year, because of COVID, we might see some tailwinds from that. Are we expected to have this kind of a margin uptick going forward? Because you mentioned you want to focus on the year on year growth for this fiscal. Sure. Yes, absolutely. So we will continue to focus on the year on year growth. Our margin guidelines, PPD guidelines remain the same. We would want to be in the 22% to 24%. I think we had a dip in a few quarters in the last financial year. But if you see over the quarters, have smartly been able to ramp up our margins and almost end the year with slightly lower than the 22%. But we began Q1 with a very positive you know, you know, increase in our margins. So I think we want to continue that, and we want to be in that 22% to 24% range. Yes. Your your observations on travel cost is valid. Because of COVID, you know, we there was no international travel, and hence, that expenses have been saved, and it also contributed to improving our margins. And, sir, are we seeing any like, you you mentioned that work from home completely is not possible for any r and d kind of a firm. So are we going forward, we are looking at any rent negotiations that could probably happen? We've already done that. So rent rent negotiations happened. We've got some minor, you know, concessions and so on. But what we will do is we'll really look look at, hey. Do we really need all the all the office spaces that we have currently? Right? And we will take a call, but we want to take this call once we have a clarity on when this pandemic is coming to an end. And also, we need to restructure our own policies and, you know, work from home and so on. Right? So so we are in the process of, you know, doing all of that. Of course, as I said, we have gone back and negotiated, you know, some some some reduction in our overall spend. Sir, what is the overall USD revenue for this quarter? I guess I probably couldn't get it out. Just just hold on. I don't have the data upfront. So it's about 55,000,000, I would say. 54 to $55,000,000. Hello? Sorry? Yeah. It's about 54 to $55,000,000. Sure, sir. Thank you so much for taking my questions. I'll look for the future. Thank you. The next question is from the line of Gaurav Hinduja from GEPL Capital. Please go ahead. Yeah. Hi. Congratulations on a great set of numbers. My question was broadly on the order book. If you can sort of give a guidance on the growth going forward, say, from a two year point of view. And do we see most of these orders coming from high margin accretive segment, like you mentioned, broadcast? And also, you mentioned regard to the off road transportation mix with regards to the railways and auto ancillary. So what percentage of the overall transportation revenue can we look at that in the next, say, two year to three year guideline? Sure. So we we don't give predictions for, you know, order book and and and so on. Right? But however, what I would what I would like to tell you is we would definitely want to, you know, grow year on year. Right? If you look at it in the last last investor call, I I said that our focus is to ensure that in q one, we definitely grow more than '1 last year. But I'm happy to say that we have even beaten the Q2 numbers, both top line and bottom line. So we are ahead of our own our own, you know, whatever, you know, estimations. We would want to continue that definitely in Q2. We want to really accelerate and and and and grow beyond q three last year and so on and so forth. So we want to keep this growth momentum up and and and and hopefully end the year on a on a pretty positive note. Maybe if you extrapolate it to between five to 10% is the growth we are looking at in this financial year. Of course, high margin, you know, both our health care medical health care business as well as media and communication business are relatively, you know, from a margin perspective, better than our automotive margins. So we would continue as we continue to grow that, that is definitely a benefit that would accrue to us. Off road, rail, and so on is still a small percentage of our overall transportation business. I would say, currently about 4% four to 5%. Yeah. Currently, it's about four to 5%. But having said that, this is a new initiative, so it it takes some time. And over the over the three years, our, you know, stated objective is to have these adjacencies grow to between 20% of the overall transportation business. So that's what we're looking at. Okay. Thanks a lot. Thank you. Thank you. The next question is from the line of Ashish Agarwal from Principal Asset Management. Please go ahead. Yes. Thanks. My questions have been answered. Thank you. Good job. The next question is from the line of Deepan Mehta from Alexia Equities. Please go ahead. Yes, good afternoon on a good set of numbers. I have two quick questions. One is that, have any of our orders been deferred or canceled because of this COVID situation? That's question number one. And question number two is that because of this COVID nineteen and there are perhaps changing spends as far as technology is concerned, changing trends in technology spend. Will the company be benefiting from those changing trends, or is it not gonna make much of a difference because of what the world has gone through in this pandemic? Thank you. Yes. So orders differing and canceling. Yes, we've had a few of them, especially in the automotive industry. So and I think that is a direct result of you know, why we are showing this dip in that automotive industry segment. Regarding technology trends, I would ask Nitin to respond to you. Sure. So I think it's a bit of a mixed bag on how we see technology trends and whether they whether they really have a a headwind, tailwind, or a neutral effect on us. In general, because we are in the ER and D space and r and D is a discretionary spend, so in general, I would have said that that any any pressure on companies typically tends to reduce a little bit of their technology spend, especially with discretionary. But having said that, you would notice that that is not true in media and communications because what you're actually seeing is a upsurge in in consumer demand, whether it's OTT, whether it's data, voice, and so on. Equally, if you look at health care, again, is accelerated demand in certain sectors for the kind of medical devices and equipment that is required. So this is a bit of a mixed bag. So in general, auto is depressed because of the fact that mobility as a market is affected, whether it's a shared mobility or whether it's individual consumers buying cars for their own. On the medium communication and health care, it's always a positive trend. The second headwind sorry, tailwind that we see is what I described as our platform play. Right? For example, what we are building out is intelligent consumer experience, ICX. That's a platform that is meant to automate and enable remote operations for companies. So platforms like this, I think, will see an upsurge in demand and requirement. So I think there are certain positives. So anything that you're doing for companies which enables them to digitize or enable automation or to do things remotely, I think there is a new demand for it. While for everything else, it is subject to their own market position and their own ability to spend. Thank you very much. Thank you so much, Deepa. Thank you. The next question is from the line of Prakash Chelan from Marathon. Please go ahead. Yes. Hi. Could you just give us some color on the revenue growth in terms of constant currency both year on year as well as in dollar terms, please? Thank you. Sure. This quarter on quarter and year on year constant currency growth, right? That's correct. Yeah. Sorry. Just just the number here. Just just give it a minute. I'll just I'll just come out. Yeah. There it is. Okay. So sorry. Yeah. On year on year is, know, about year on year growth is 10.7%, and quarter on quarter decline is 8.7% Sorry, that was year on year growth of 10.7% in constant currency. Is that right? Yes. Great. And maybe on the transportation vertical, could you give us some sense of the sort of projects that you're seeing in terms of demand growth? Is it in the powertrain side? Is in the connected car side? What are you seeing growing? What are you seeing dropping in that segment or the ADS segment? So there's a listen here. I think what we're definitely seeing is a lot more activity in the electric car space. So I can tell you what is going up and what is not necessarily growing. So the the pivot towards electric platforms, electric components, and electric vehicles is a definite definite trend that we see. Connected technologies are definitely seeing an upswing partly because that is very consumer facing, partly also because that is being seen as a new revenue stream, where with connected cars, you have new revenue streams that OEMs can drive better value that they can drive. Autonomous, I think, is definitely seeing a slowdown. Right? So without question, autonomous technologies are definitely seeing a bit of a slowdown in terms of R and D investments, deployment as well as expected production program dates? Sorry. I think I I I made a mistake in the numbers that I gave earlier. Apologize. The constant currency year on year is 4.1% growth, and quarter on quarter, there's a decline of 10.9. Thank you. Alright. Okay. So you were saying electric car rate, but you're definitely seeing trends in terms of growth. Is that right? Sure, yes. Great. Thank you so much. Thanks. Thank you. The next question is from the line of Arjun Balakrishnan, an individual investor. Please go ahead. Yes. I just have one question. It's regarding the fact that over the years, we have developed a niche and all our intellectual property oriented more towards the automotive sector. But now there's a decrease in spending in the sector. So do you think that we have enough news and IT developed in the other two sectors to exponentially grow? Is Nizen here. So if you look at how we are we are investing, automotive and broadcast and communications always in almost near equal investments because though you hear or rather we have talked more of what we've been doing with AutoNoWi and other platforms in auto products, there are equally great solutions that we have been developing and deploying in the video and broadcast world too, including FalconEye, which has been our automation and test automation solution. That's that's been on for the last four, five years now. Intuitive consumer experience is really a solution for the telecom operators and similar companies. T Play is a new OTT platform that we are building out that enables very, very rapid launch of new OTT services. On the medical side, at this time, we are not trying to build too much of intellectual capital. By the way, we do have patents filed even in the medical space. We have about eight or nine patents that have been filed just over the last one or two years. But having said that, the focus for medical is right now to scale customers and scale business volume. And investments in platforms, etcetera, are being considered a little more slowly in that space simply because of where they are. Okay. Okay. Thank you. Thanks a lot. Thank you so much. Thank you. The next question is from the line of Naveen Bhattra, an individual investor. Please go ahead. Thank you, sir. Thank you once again. My couple of questions have already been answered, currency terms and all these things. One small question regarding the the only by industrial vertical, it's been around 4.2, four point three percent for the last four, five quarters. So in the absolute terms, it is around 16 to 18 crores. So is there any component of licensing recurring revenues which we are getting? Because the revenue mix revenue absolute terms are more or less $10.16 to 18 crores. So any recurring licensing revenues we are getting in that other segment? You're talking of industrial design business? No. Revenue by industry others, 4.3%. Oh, the other other group. Okay. No. Other is a is a set of set of different activities that we do in consumer appliances and, you know, one off projects from other industry segments and so on. So, no, we don't have any intellectual property. These are all one off projects that we get. Okay. Okay. And it will be better if you from now on, if you can present the fact sheet in the constant currency terms also. That will be quite helpful. Sure, mister Boksha. So we will consider including that in the fact sheets, constant currency. So Yes. Yes. Thank you. Thank you. Thank you very much. Thank you. Ladies and gentlemen, we take the last question from the line of Bharat Syed from Quest Investment Advisors. Please go ahead. Hi, Congratulation on good execution. Thank you. You have been beautifully I mean, more, I mean, from on-site and offshore mix ratio. So going ahead, can you give us some sense how do I really move move, I mean, from on-site offshore? And second thing, isn't that how much I mean, do you think because of once you move the on-site to offshore, a revenue hit on the revenue side approximately as a broad part? Not, I mean, over Yeah. So we we we don't see it happening all of a sudden in one quarter and so on. Right? This quarter, we've had we were able to change the onset of the mix fairly a little bit because of COVID and so on. But I think it will stabilize. There will be slightly more, maybe, I would say, by end of the financial year, we may reach anywhere 68% or 70% offshore and 30% on-site. So we're also conscious of the fact that suddenly if you move everybody from on-site to offshore, it will be a hit in revenue. Even though margins may look better, there will be a hit in the revenue. So I think we will we will, you know, moderate that so that, you know, along with our business growth and, you know, other areas and so on, we will we will gradually move the move the, you know, ratio to about seventy thirty. So I I I don't think you'll see a hit in our revenue because of this. We will we will take care of that. But that will be definitely, I mean, helpful on the margin side. Correct? A bit per time? So so and not just the margins. It is in general, you know, ease of doing business, you know, motivating our, you know, employees, ensuring that we are in charge, in control, you know, a lot of things. Right? Training our employees. Once they go on-site, many of these, it becomes very difficult to manage. So we we do see a lot of other positives when we have a better, you know, on-site offshore ratio. Okay. And sir, one question to Nitin. Mean, Nitin, about the platform which you said, can you give some color? I mean, one is where you are talking of millions of devices, I mean, connecting with the COVID. I mean, how much big is an opportunity do we see? And have you already started commercializing that platform? Right. So, yes, we have already started commercializing. So what we did was that because it's it's a mission critical product, because it actually works in the operation of customer. This is not R and D where you can delay by one month or the program delays by two months and your launches get affected, but nothing more. Here, it is managing active devices in the field and monitoring and managing active consumer devices. So to that extent, what we did was even as we developed it, we started to pilot this about four months back, in fact, just before COVID. So that is very interesting in terms of timing. We started to pilot this before COVID. We we didn't know about COVID at that time. And what happened with COVID is it just accelerated. So the customer also forced us to make sure that it works better, it implements better, it manages more devices. So we have reached a point where now we are controlling more and more devices that the customer currently has under, the deployment. Right? And the idea is to increase the amount that is under deployment. But the good part that is happening for us is that solution is also becoming hardened. So when I say hardened, I mean, terms of it getting baked better in terms of how we can take it to other customers. So we already started to take that case study and the capability and start we have started to already discuss this with certain other customers across across the world, and we are seeing very encouraging interest in the platform. But, however, you have to note that adoption is not gonna be sudden because these are also big decisions for customers. The automation is not just something you can do as a casual decision. You will have to take a strategic position on saying, yes. I will implement the solution. Please start piloting. Please start implementing. Now switch over from what we were doing before to this. So that is gonna take some time. But I think what is good for us is COVID has taught that you have to have something like this as your plan a and plan b. And that is why we think there is great potential with this. And is it fair to understand, I mean, that you said that this is for this communication center? That's right. It is for and, yeah, it is for typically, it's for operators who may have set top boxes, who may have gateways and other devices deployed either with enterprise customers or retail customers like us. Okay. Thanks. All the best. And any other platform that in near term that we would like to launch? We are thinking and conceptualizing a few, but of course, we will announce them at the right time. Okay. Thanks. All the best. Thank you. Thank you so much. Thank you. Thank you. Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Vedanathan for closing comments. Yes. So this become to the end of the call. I would like to thank Manoj and Nitin for joining the taking the call and all the participants for joining the call. Please stay safe and healthy. See you in Q2 results conference call. Thank you. Thank you very much, sir. Ladies and gentlemen, on behalf of Tata LXC, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.