Q3 24/25

Feb 17, 2025

Summary

Q3 consolidated revenue was INR281cr, down 6% YoY, with a 6.9% EBITDA margin and INR19cr net loss, mainly due to an exceptional item. Standalone demand remains strong, but Canadian losses reduced FY25 EBITDA expectations to INR100cr.

Ladies and gentlemen, good day and welcome to Centum Electronics Limited Q3 and nine months FY 2025 earnings conference call hosted by DAM Capital Advisors Limited. 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. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital Advisors. Thank you, and over to you, ma'am. Good evening, everyone, and a warm welcome to the Q3 FY 2025 earnings call of Centum Electronics Limited. We have the management today being represented by Nikhil Mallavarapu, Executive Director, K. S. Desikan, Chief Financial Officer. At this point, I will hand over the floor to the management for their initial remarks, post which we will open up the floor for Q&A. Thank you, and over to you. Thank you, and good afternoon, everyone. Welcome to our earnings call to discuss the performance of the third quarter and nine months of the financial year 2025. Let me first mention a special thanks to our host today at DAM Capital. Now let me start by briefing you on the key performance highlights for the quarter and the year-to-date results under review. After which our CFO, Mr. Desikan, will take you through the financial highlights. In the third quarter under review, consolidated revenue from operations declined by 6% year-on-year, but increased by around 8% quarter-on-quarter. Similar to last quarter, it is important to note that revenue for certain contracts has been accounted on a net basis. The gross value of such contracts was INR 32 crores in Q3 FY 2025 and INR 71 crores for nine months FY 2025. Adjusting for gross value, the revenue for Q3 FY 2025 has grown by 13% quarter-on-quarter, and for the nine months FY 2025 by 6% year-on-year. For Q3 FY 2025, our consolidated EBITDA margin stood at 6.9%, and standalone EBITDA margin stood at 11.8%. Our margins were impacted mainly due to the losses in the Canadian subsidiary and lower utilization due to delays in new project starts in France. The company is considering various strategic measures with regard to the subsidiary's Canadian operations, and we will announce the same in due time over the coming quarters. The order book position stands at INR 1,675 crores as on 31st December 2024. The pipeline continues to remain strong for both build-to-spec and EMS customers in our standalone business. In other updates, Centum also received an export award for FY 2023/2024, recognizing the best performing electronic hardware exports from STPI in Karnataka. To conclude, we remain optimistic that the performance in the coming quarters is expected to improve in terms of revenue and margins, driven by growth in the high-margin build-to-spec business within the standalone entity. As we had mentioned earlier, a large part of the revenue for the build-to-spec business in the standalone entity is expected in Q4 of the financial year, and that should help improve the revenue and the margins. We remain confident in that happening. I would like to hand over the call to our CFO, Mr. Desikan, to brief you on the financials. Thank you, Nikhil. Once again, a warm welcome to all of you. At a consolidated level for the third quarter, the revenue from operations were INR 281 crores, which has increased quarter-on-quarter by 8% and declined by 6% year-on-year. The EBITDA for the quarter was INR 19 crores, which declined by 33% year-on-year, with EBITDA margins reported at 6.9%. We had a net loss of INR 19 crores for the quarter. That is primarily due to an exceptional item, as explained in the notes to the publications. For 9 months ended at a consolidated level, the revenue from operations were INR 787 crores, declining marginally by 1%. The EBITDA for this period was INR 55 crores, which declined by 19% year-on-year. The EBITDA margins were reported at 7%, and the net loss for the period was around INR 24 crores, again, mainly due to that exceptional item. At a standalone level for the third quarter, the revenue from operation was about INR 181 crores, which grew by 8% quarter-on-quarter and 2.5% year-on-year. The EBITDA for the quarter was about INR 21 crores, which grew by 3.4% quarter-on-quarter and declined by 5% year-on-year. With the EBITDA margins reported at 11.79%, the net profit for the quarter was around INR 9 crores, which declined by 5.2% quarter-on-quarter and 16% year-on-year. For the 9 months ended at a standalone level, the revenue from operations for the period was about INR 480 crores, representing a growth of 3.5% year-on-year. The EBITDA for the period was about INR 55 crores, which declined 9% year-on-year. With the EBITDA margins reported at 11.49%, the net profit for the quarter was around INR 23 crores, which declined by around 16% year-on-year. With that, we can open the floor on Q&A sessions. Thank you. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Before we move on to the question, a reminder to all participants, you may press star and one to ask a question. We have our first question from the line of Harsh Mehta from Perpetual Capital Advisors. Please go ahead. Hello, can you hear me? Yes, sir. Yes, we can hear you. Go ahead with your questions. Yes, sir. First of all, sir, we have been trying to contact the company since a very long time. We have emailed the IR team and the CS team, but we haven't received any replies, and we have sent follow-up emails also. This was the first issue that we faced. It was very difficult to get in touch with you'll. The question which I had. Sir, I wanted to know what is the roadmap to make the international business profitable? What are the margins that you expect in the long run? Harsh, first of all, to your first point, apologies that it was difficult to reach us. I will make sure that our IR team is aware about this, and we reach out to you to provide the necessary information that you need. Coming to the second question with regard to the roadmap for making the subsidiary operations profitable. Fundamentally, as we have explained in the past, we have two parts of the business in the subsidiary itself. We have the engineering services part of the business, which is more or less focused in France. Then we have a product business around passenger information systems for the railway market, which is sitting in Canada. When you look at the overall picture of the subsidiary as a whole, even if you take the 9 months period, our France operations, which is the engineering services business, has been more or less at a breakeven level. The loss is majorly contributed from our Canadian operations. Wherein, basically, the costs of having an engineering team sitting there is not being compensated through the margins and the billing that we are able to achieve in that part of the business. Our first priority and action is around basically addressing the Canadian losses that we have. Towards that, I think there is a couple of points. First, in the short term itself, we have been negotiating quite strongly with some of our customers to obtain additional purchase orders or additional variation orders to support the engineering team in Canada. In the meanwhile, what we have also been doing is, in the last 12 to 18 months, have created a team in India that is able to execute this similar kind of work. We have been shifting a lot of the work from Canada to India, especially on some of the new contracts that we have won, the majority of the execution has happened from India. It is the older projects and programs where the support is still continuing from Canada, for which we are having some hard discussions with our customers to come to a solution. It is a bit early for me to say that, but we will be basically making some strategic decisions with regard to the Canadian operations in the next couple of quarters, to ensure that it does not continue to drag the overall P&L. That is the first one. Second is with regard to the France business itself, where, as I mentioned earlier, it is still at around a breakeven level at the moment. Our objective there is to improve the margin by basically improving the utilization rate of the engineering team that we have there. We have worked quite closely with multiple customers. We have actually a very good feedback and engagement with multiple customers, including with Airbus, with Thales. In fact, just in the last few weeks, we have been recognized as a platinum internal supplier for their engineering services business. We have the opportunity to grow with them and improve the utilization rate. However, some of the projects that we had estimated to start in Q3 have been delayed. We expect that to happen in Q4 and going into the subsequent quarters as well. At a high level, those are the two key actions that we are taking to improve the margin profiles. Our objective is to try to move that margin up to a 7% level or so in the short term, in the coming year, and then push it up further as growth comes in to 11%-12% range in the subsequent years. Right. Sir, can you tell me what was the thought process and the expectations that you had when you actually acquired these two businesses? I guess the expectation was clearly not what we had today. I think, just to answer the question simply, if you look at the benchmark numbers that we are able to see, even for a French company, with largely onshore delivery, we see about 10%, 11% EBITDA is what is achievable. As we are able to do more work offshore, that EBITDA margin should improve up further. But I think we've not successfully been able to achieve that because of some of the issues that I already mentioned. But as I mentioned, we have a plan on what to do, and we're taking some tough decisions to make sure that, in the short term, we fix this margin issue on the subsidiary. Sir, just last- Yeah. Okay. Thought process. When we acquired, we had two businesses with us. One was the EMS business, the other was the build-to-spec business. But we never had engineering services as an offering. So while we had a team of 100-plus engineers for our own build-to-spec business, they were designing our own products. So the idea was to acquire this engineering services business so that we are able to address the entire spectrum of the OEM needs, and also to synergize that. But when we acquired, this product business of Canada came along with it, and we acquired essentially for the engineering service business. But like what Nikhil mentioned, for various reasons, we needed to clean up and then the COVID and all of that, we are not able to achieve that margins that Nikhil was speaking about. But just to tell you, there were a couple of good cases where we were able to synergize certain designs that were made at the France subsidiary, have been moved to manufacturing in India. And in a case or so where we were manufacturing, we were able to get the designs done by the French subsidiary. So there is some synergy, but not to a great extent. It has not been harnessed. And margins, we have a plan to improve it at the French subsidiary level. Right. Sir, in your French business, can you tell me your onshore and offshore split as of today? Yeah. So in terms of headcount, we are roughly about 60. You can say two-thirds, so 65% or so is onshore and 35% offshore. That's the rough breakup. Right. And sir, last question. What led to the slowdown in the build-to-spec international business? It was more or less almost zero in the quarter. Sorry, can you repeat that again, please? Sir, I wanted to know what led to the slowdown in the build-to-spec international business for the quarter. The build-to-spec business quarter-wise may be difficult to look at because it may be a bit lumpy in nature. But the overall build-to-spec numbers at the subsidiary level, as I mentioned earlier, is largely driven by the Canadian part of the business. It is maybe a bit lumpy in nature, but the issue there is not so much the revenue, as much as the cost that we have on the Canadian team. No, just to add a couple of points, that like what Nikhil said, today, the cost in the Canadian subsidiary is disproportionate to the revenue that we book. That is because there are older projects where we need to do certain kind of activities to get them completed where you do not get the revenue. That is number 1. Number 2, there is a general slowdown in the railway business. There were not significant fresh orders that came up. That, again, goes to say that we need to look at the cost structure in the Canadian business and look at it in a strategic manner to see what needs to be done with the cost, apart from moving to India to get the cost advantage. Sir, your current order book is executable over what period of time? The international build-to-spec business is what you're asking? Your overall order book. Nitin? Yes. The overall order book, again, just to break it up a little bit in terms of each of these pieces of the business. The build-to-spec part of the business is typically executable over, let's say, 2.5 year period. The EMS part of the business is roughly in the range of 9-12 months. And the engineering services part of the business is maybe even shorter, in the range of 6 months or less. Right. Yeah. Go ahead. Sir, are there any defense programs through which the company can benefit? Yeah. In the domestic build-to-spec business, the standalone build-to-spec business, is almost completely focused around the defense and space market in India. There are multiple different areas and programs that we've been working towards. Space has clearly been one area that we have been very strong in. We've just, in the last year, won over INR 300 crores contract for satellite-based payloads for electronic warfare applications. In Q4, we are also expecting some substantial orders. We will receive them from the radar domain. These are for naval programs. Also, in missiles has been another area that we've been in, and we have some opportunities there that will be coming up. Broadly speaking, land systems. These are even on tank electronics and so on. We've done a lot of efforts in terms of R&D, of indigenizing Russian-imported products, and we started to win orders for that in the past year. With all of this, I think these are electronic warfare, space, radars, and land systems are broadly areas that we have been building strong capabilities in. I think you will see that reflected in the form of our domestic or standalone build-to-spec order book, which has increased quite well from where it was at around INR 376 crores at the end of FY 2023 to INR 427 crores at the end of FY 2024 to INR 563 crores at the end of 9 months. We expect this to further improve by the end of this financial year with some additional orders that we're expecting in Q4 as well. The domestic defense part of the business is doing well for us, and we expect to see some strong growth coming in from this part of the business for us. All right. Thank you so much, sir. I am looking forward to learning from your IR team. Sure. Thank you. Thank you. We have our next question from line of Ankit from Subhkam Ventures. Please go ahead. Yeah, so good evening. A few questions from my side. Sir, since there is so much of volatility in all your businesses, plus on a quarterly basis also there is no linearity, I just wanted to know, based on the current order book and the visibility which you have across all your businesses, what kind of EBITDA you are targeting this year. Last time you mentioned around INR 130 crores, but after the performance of Canadian subsidiary, do you feel that this number needs a revision? Yes. I think we will have to revise what we had initially assumed because of the overall performance of the subsidiary. Essentially, the revenue on the subsidiary has been lower than what we had expected for a couple of reasons. One is, again, on the Canadian part of the business, we have been trying to negotiate an additional variation order with some of our key customers there as a result of some of these project overruns, which have not been secured as yet, but we are continuing to push that. So that has been one of the major reasons. Also, as I mentioned earlier, the utilization rate also, which we were in front on the engineering services, which was expected to improve with new project starts, has been delayed. So as a result of this, our subsidiary performance, both on top line and bottom line, is below what we had originally targeted for. So we will have a lower number. Having said that, I think it is important again to say that in Q4, on the standalone number itself, we will have a strong jump because as we have been saying, the build-to-spec domestic part of the business for defense and space is heavily skewed towards Q4. So we will see a good improvement from a margin and revenue standpoint on the standalone numbers in Q4. So maybe, Jesegan, if you would like to just come in terms of the overall- Yeah. So what is our revised number? Sure. So, like what Nikhil mentioned, essentially, the standalone is in the direction that we have been estimating and projecting. The problem is from the subsidiary and like what we mentioned in Canada, certain things, the variation order, and also some people on bench in the French business, and the new orders starting from the Q4 of current year. So in the light of this, I would say that considering the good performance of standalone in Q4, we should be doing about INR 100 crores of EBITDA for the full year. Okay. And for next year? No. Yeah. So basically what I am trying to understand is that, shall we be rest assured that the Canadian subsidiary won't be a dragger post-June quarter? That is what we are working towards it. So, the best case, I think we should be able to fix because it is taking a little more time than what we really anticipated because of the delicate situation that we have. We have customer deliveries in India to Alstom, and we have not fully transferred the knowledge to India. So we have to maintain this for some more time and also find a solution for the older contracts which are being maintained there. I would say June is a good estimate. The worst case, before September, we should be able to ensure that Canada is no longer a dragger. Can we expect some big exceptional losses coming from Canada? You might be taking some cost reduction measures like a VRS or something like that. So can we expect some major exceptional items in the coming quarters from the Canadian subsidiary? It is too early, Mr. Ankit, to say because these are matters that we need to balance it out and then we will keep you posted. But like I said, maybe June, we try to close it out. Or worst case, by September, we should be able to stop the bleeding from Canada. Okay, so considering that factor- Sorry to interrupt, Mr. Ankit. Just one last question. Earlier participants asked five questions. Just allow me to ask a couple of more questions. Sir, assuming that whatever losses you might be incurring in the Canadian subsidiary, considering that, what could be your EBITDA for the full year, next year, FY 2026? No, like what Nikhil was saying, at a standalone level, we should be able to achieve around 13%-14%. And at a subsidiary level, including Canada, we should be between 6%-7% of EBITDA. Thank you, sir. Ladies and gentlemen, in order to ensure that the management is able to take questions from all participants in the conference, please restrict yourself to only two questions per participant. Should you have a follow-up question, we request you to rejoin the queue. We have our next question from the line of Chirag from Ashika Institutional Equities. Please go ahead. Hi. A couple of questions. Hope I am audible. Hello. Yes. You are audible. Yeah. If I look at your performance between FY 2023 to FY 2024 on 9-month standalone basis, we have delivered around 52% revenue, and that time this growth and net accounting-related thing was not there a year back. Right now, on gross accounting basis between FY 2024 to FY 2025, aggregate three quarters performance, the growth is 16%, right? So on full year basis, at standalone level, on gross accounting basis this time, what growth we are expecting? Because last year on standalone, the growth was 26.5%. Okay? Yeah, I am not considering anything related to subsidiary underperformance on top line and bottom line. As we are expecting around INR 100 crore kind of EBITDA at standalone level for FY 2025, right? Yeah. On gross accounting basis at the standalone level, it should be similar to what you said last year, about 26%. So we are expecting Q4 to be blockbuster, and this spill over of the revenue. Yes. Which we have been saying even in the last quarter. In the second half, especially in the Q4, the revenues must be increasing significantly. And this gross and net difference will get normalized, from FY 2026 or when? Yes. FY 2026 it should get normalized. Okay. I tracked your company since past 5 years, and I am just trying to understand since past 3 years, we are taking steps to turn around the subsidiary. Okay. It is taking too much amount of time. Okay. That is somewhere impacting overall consolidated performance. So, when do you think this severance and all things get addressed and we will see a clear picture of P&L. You answered in previous participant question that somewhere in September. From directional point of view, this legacy contracts, which are there in the Canadian business, when will that complete get over and the impact will get reduced from the P&L? Chirag, fundamentally speaking, there are 2 options. One is the customer pays for the costs that we are incurring, or we need to cut the costs and try to do it in India or even discontinue the thing completely, right? This is the discussion that we are having basically with the lead customers on this point. We obviously want to arrive at a solution that ensures the continuity of the contracts and the projects and so on. So, we do not impact too badly the end customers. This is what we are basically in the process of doing right now, and that is what we will make those decisions in the coming couple of quarters, basically. Thanks. Okay. Shall we maintain our 15% plus kind of growth guidance for next 2 years? Yeah. For the next year, again, with regards to our standalone business, we remain confident of maintaining a healthy growth rate that we have been tracking for the past couple of years. I think, it is visible in the order book on the domestic build-to-spec part of the business, which we have won in this current year, in fact. Also on the EMS side of the business, we have a good set of new customers that have come on board, which we have in the ramp-up and qualification stage today, which should start hopefully coming into the revenues in the coming years and be into full swing the year after. So our growth visibility on the standalone business is quite strong for the next year. On the subsidiary front, obviously, it depends on what we will end up doing with the Canadian subsidiary and also in terms of the improvement on utilization in France, which we should do. But as I mentioned, the major objective of the subsidiary is not so much on huge growth, but rather fixing the margins. Mr. Chirag, your two questions are up. We request you to rejoin the queue. Ladies and gentlemen, we request you to restrict to one question per participant only. We have our next question from the line of Raman KV from Sequent Investments. Please go ahead. Hi, sir. Am I audible? Yes, sir. Sir, initially you guided for 18%-20% growth on gross accounting basis. Now that there has been de-growth in the subsidiary, what is the guidance as on the consolidated basis with respect to FY 2025? What are you guiding for FY 2026 on the consolidated as well as standalone basis? You think you have it? Yeah. On the revenue growth, yes, the drag in the Canadian subsidiary is pulling it down, and we expect to close the year with gross accounting 13% of revenue growth as against the 18%. Mainly because of the drop in the subsidiary. Sir, for FY 2026? At this point of time, I wouldn't guide anything. We have certain actions to take in the Canadian subsidiary. Perhaps we can see it in the next quarter. Oh, okay. Can we expect 20? Just to restate what I was saying earlier, I think the point is on the standalone figures, we can continue to expect a strong growth rate that we have seen in the past year and what we will see in this year. I think we feel we have the visibility to continue a strong growth rate Oh in the standalone level. With regard to the subsidiary, there are a few question marks around what we are planning to do based on how the discussions pan out with some of our key customers over there. So that's where I would say it's a bit premature to give any clear guidance with regard to subsidiary numbers today. Okay. Thank you, sir. Sir, also with respect to BTS, EMS, and engineering division, can you give the margin? What is the margin of BTS? What is the EBITDA margin of EMS project and EBITDA margin of engineering project? While we are reporting this. Okay, go ahead, please. No. The problem or the point in giving an EBITDA margin for a BTS business, I am sure like other participants mentioned, there is a volatility in quarter after quarter. So any number that you look at, my suggestion is, please look at it on a yearly basis. Yes, sir. Whether it is EMS and all of that. Having said that, build-to-spec generally is about 18%-20%, and EMS, it is between 11%-13%. That is what we are targeting and we are achieving on a yearly basis. Sir, what about the engineering division? Engineering division right now, which is the French subsidiary, it is at about 1.5%, 2%. That is what Nikhil has been mentioning that we are working to improve that. Okay. Thank you, sir. And just to clarify that point, I think on the subsidiary, the French operations has a better EBITDA margin, which is the pure engineering services, is maybe around 4% or so, but that's all been pulled down by the losses in the Canadian subsidiary. Okay, sir. Yes. Thank you. We have our next question from the line of Yash, a shareholder. Please go ahead. Yeah. Good evening all. Thanks for the opportunity. Sir, like all the participants have asked the other questions, which clarified a lot. Thanks for clarifying these things. Also, see our company is into great business. Also, most of our competitors are actually, their valuations are very high and all. Just want to understand, sir, win-win for everyone. When can we realistically touch some INR 10,000 crores market cap? Is it achievable in next three to five years like that? Just want to understand on that actually. Because our company is into great business and all. But still it's not getting the right valuations and all. That was the reason I asked. Yeah. I cannot really comment on the market cap and all of that right now. Okay Quite simply put, I think one of the fundamental points is that while our standalone business is doing well, the value for that we feel is not being captured appropriately because of the drag that we have on the subsidiary. Because in that the consolidated number is not reflecting a very good picture. This is the reason that we are going to be taking some key decisions with regard to the subsidiary and specifically the Canadian part of the business to address that fundamental part. Right. Yes, sir. Leaving aside the market cap and all, is it realistic to assume that our company can it reach, at a consolidated level, the revenue of INR 2,500-INR 3,000 crores in next 4-5 years? Is it achievable? Because of the huge demand in the defense sector and all the initiative by Government of India, is it a realistic expectation, sir? Once again, I will not comment specifically on the numbers. Okay but I think we have clearly big ambitions and we are addressing big programs both on the defense side of the business. We are tracking multiple different opportunities in the pipeline of opportunities that are substantial. Also on the EMS side of the business, we continue to add strategic customers with large spends. I think we remain confident in our ability to grow with the tailwinds that we are seeing both on the defense side as well as the EMS side of the business. On the subsidiary, we are taking the actions that we already talked about. Yes, sir. Thank you, sir. One last question is that, sir, if the companies are interpreting any QIP or any strategic investor, when there was some news in the media and all this onto your explanation on that and clarification on that thing. Yes. So we sought and got approval from our board to be able to raise some funds through either QIP or other means. We are pursuing those options but we will be able to share that information maybe a bit later on. Sure. But this is all in anticipation of some of the growth opportunities that we are seeing for us, especially on the standalone part of the business. Okay. Sure, sir. Thanks for your patience. Just to add Yes on that point, combining it with your previous questions about the growth. The very fact that we have obtained an approval from the board of directors to evaluate a fundraising activity, that should give us confidence of the growth possibilities that we are looking at. The fundraise, which actually we got the approval but timing-wise, we need to get that, is essentially a growth capital. That's what I wanted to add. Thank you. Yeah, sure, sir. Thanks for your patience in asking the questions and all. We are at tough times, I understand it is tough times for our company. We are a long-term investor, and probably will be in this journey with you, sir, several years ahead also. Yeah, all the best, sir. Thank you. Thank you. Yes. Thank you. Thank you. We have our next question from the line of Pranav, an individual investor. Please go ahead. Yeah. Good evening, Mr. Desikan and Nikhil. My couple of very restricted questions. One is on your, as I understand year-on-year, the subsidiaries are becoming a challenge, whether it is France, Canada or whatever it is. This is perhaps somebody said 5 years, but I have been seeing right from 2014 since we have acquired. Now, when I am looking at it, further INR 20 crores you are putting money into this subsidiary. When I segregate this business of subsidiary and this, and if I look at it that in last 8 or 10 years, the kind of time, money we have been spending on these subsidiaries. Then instead of that, if we start concentrating somewhere else, this company can grow to X level, which we cannot imagine because Centum has a very good presence abroad. Also, Centum has a very good name in India, and I personally believe space will be one sector which will get opened up this year. Defense, the way the Prime Minister is working on this line, I am sure for next 5 years it may happen that India will be an exporter status and people will be booked with this. That is the possibility for next 5 years if people go and read the lines or the way the strategies are being planned. I may go wrong, but if I go correct, that may be the thing. So are we wasting time on doing and improving these subsidiaries, or are we have a better plan for something else? Because lot of resources, time, and things are going into this kind of subsidiaries. This is my first question. My second thing what I would like to know is what is the kind of things we are planning in space? Because this is one sector or region where things are going to explode. I think so India will become a very significant player. Where Centum is looking at and what kind of opportunities we are going to have with collaborations and whatever it is. Since Centum has a very big presence and Centum has been performing very well in this sector. Yeah, these two questions. Thank you very much. Thank you, Pranav. I think I must in a way thank you for your constant reminder around the time that we have lost and the time and resources we have lost on the subsidiary. I think the message is well heard, and I can assure you that these discussions are being deliberated very seriously at our board level also. As I mentioned, some of the decisions or discussions that we are having with regard to the Canadian operations as a first, but more generally the subsidiary are being discussed and considered in light of the substantial growth opportunities that we and everybody believes exist for the standalone part of the business. So these discussions are being had, and we will be making some decisions on this going forward. But having said that, I would say that it is not all lost. There are certain synergies that, as Desikan mentioned, which have come in, and we are looking at how to basically better leverage some of these things to be able to grow. So, we are analyzing and assessing the feedback that you've given, and we will take some actions towards that in the coming quarters, basically. Second, with regard to your question on space. Or maybe, Desikan, anything you'd like to add on the first point before I go to the space? No, I think that's perfectly right. I think, Pranav, thank you very much for your valuable insights as you have been frequently giving. We are assessing the situation, and we'll come up with some action. That's the right answer, Nikhil. Thank you. Appreciated, sir. The second question. Appreciate it. Yeah. So, with regard to space, as I mentioned, we have a good position there. We've basically, over time, moved up the value chain from where we were many years ago, where we were delivering very niche components, to now delivering full satellite payloads. As I mentioned earlier on the call and also on the previous quarterly presentations, this year marked, or basically 2024 marked the biggest order that we've received in the space sector so far, which was for a constellation of three satellites, the payloads for that. And it is clearly first-time realization in India and many first-time realizations for the country itself. And these are for military applications. And what we understand, because we are more and more interfacing with the end users itself because of the criticality of the projects that we're executing. We do understand that once we are able to demonstrate this project that we will expect multiple other satellite constellations also, repeat constellations, so to speak, to come up in the coming couple of years. That's with regard to the projects that we are currently doing. In addition to that, there are some other areas within space itself which we are working on. One of the other areas is around situational awareness, debris tracking, and so on. There are different ongoing efforts and projects on that front where we're clearly, I would say, a frontrunner in the area for some of these projects as well. We are doing some of that, and then even at a subsystem level, we see some important opportunities coming back from ISRO. ISRO has been, I would say, relatively flat for the last few years. But with some new projects and programs coming in, we expect some new significant opportunities coming in from there also in the next couple of years. Finally, we are also looking at some opportunities to build full satellites, right, in these areas. These are, I would say, at a high level, some of the things that we're doing on the space side, and it is clearly an area that we've built a good position in, and we want to make sure that we continue to be a frontrunner in the space in India. Just to add, you are absolutely right, Mr. Pranav, that the space economy going forward will grow in a significant manner. We can say at this point of time, we have equipped ourselves to serve all the layers of this space thing. We have been building competencies and capabilities. Thanks to our historical track record, all the players in this segment, right from the ISRO to the private players, ranging from the startups to the big boys. Everyone considers us as an important electronics partner. I agree that this will be a very good growth. But only question is about the timelines on how soon it will happen. But it will definitely happen. The direction is very clear. We are ready, and I think it should happen going forward. Thank you so much, sir. Mr. Pranav, your two questions are up. We have a follow-up question from the line of Chirag from Ashika Institutional Equities. Please go ahead. Yeah. So, one forward-looking question. So whatever internally you decided on in terms of turnaround and progress, apart from top-line growth, should I consider that we are somewhere lagging one year? Hello? Yeah. Sorry, Chirag. If I understand your question, your point is, are we lagging by one year considering the subsidiary performance? Is that? Yes. Yeah. I mean. Yeah. I think rather than say that specifically like that, coming back to it, on the standalone part of the business, we continue to be, I would say, more or less on track with what we've said. On the subsidiary, yeah. We've clearly missed what we had hoped to achieve this year. In light of that, we have to take some strategic calls and decisions on the way forward, basically, for some of this. I would not talk about it as one year behind or anything like that, but rather split the two into what we're trying to do fundamentally. Because on the standalone part of the business, the growth profitability is coming from there. On the subsidiary, as I've clearly mentioned in the past, our objective is not to have some huge growth in the short term, but really to fix our margins. Even if it means some de-growth in the short term. Yeah. Just to add on that, I do not know that one-year lag probably is a perspective. But if you look at what Nikhil said, the past three years of standalone, it has been a very strong growth, both in terms of revenue as well as the profits. Subsidiary revenues have been stagnant or slightly lower, and it is a lot of multiple issues. If you keep them separate and see, I think in standalone, I do not think we have lost anything because we have been growing right from 2022, if you look at the numbers. Yeah. But we need to focus a little more and do something in the subsidiary level, while the standalone will continue to grow. Okay. Thank you, all the very best. Thank you. We have our next question from the line of Rohit, an individual investor. Please go ahead. Hello. I just want to know what is the drag of the Canadian business on our company. The second thing is, earlier also, we had sold the Centum Electronics business, the energy business, that the proceeds we have to put into provisions. This time also that is there. What do you say? This is a large provision which we can expect or are there some things which needs to be put aside also? That's my question. So- Deepika, do you want to- Hello? No, go ahead, Deepika. Yeah. I think there are three questions that you have put. One is, what is the drag of the Canadian subsidiary? What you see between the consolidation and the standalone, almost all the loss comes from the Canadian subsidiary, and the French one is almost like breakeven. That's on the drive. I did not understand about the energy division that you talked about. That was a couple of years ago, not now. Yes. The point that you referred currently, is that about the exceptional item that we showed in the current quarter? No. For energy one, yeah. Just to explain, this is an associate company of Centum T&S where we have about 30% shareholding. Our receivables were secured with a contract till September, but this company has now been referred to redressement judiciaire, which is a process by which the French court tries to revive the company towards its sustenance and growth. As a matter of abundant caution and prudence, we have provided for the entire exposure. As it evolves, perhaps in the next month or so, we should be able to get a better clarity, and how much of it we will recover depends on is there an investor who's taking it forward and all of that. That's about the current exceptional thing. I just wanted to know, what are the chances of any recovery? Is there something optimistic about it, like you can say, "Okay, we have a chance we get some payback or something? Nikhil, do you want to add? Yeah. In terms of the possibility of recovery, this company that we've provided for this exceptional item has, from what we understand currently, four interested parties who are bidding on the company to carry on the operations and so on. There is a reasonable interest in the company, and there is, in front of it, a substantial contract that the company itself is expecting to receive. They've already received letter of intent and so on. We are hopeful that we should be able to recover at least a partial amount of this. But as Basika mentioned, to be prudent, we have provided for the entire amount in the current quarter. Okay, thanks. I know you guys are working very hard, and I thank you for it and all the best. Thank you. Thank you. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Ms. Bhoomika Nair from DAM Capital. Please go ahead. Yes, thanks to all the participants for being on the call, and particularly the management for giving us an opportunity to host you and for answering all the queries. Thank you very much, sir, and wish you all the very best. Thank you. Thank you, everyone. Thank you, everyone, and thank you, Bhumika and the DAM team. Once again, just to summarize, I know this quarter was not a great one at a high level. I think it's important to just reemphasize once again that we are confident, and we're seeing very good traction happening on the core part of our business, which is around the EMS and the defense and space products piece in our standalone entity. With regard to subsidiary, all the feedback and points that we have received with regard to the amount of time and resources that have gone into it has been well received, and we are discussing this at the board level to make sure that we take the appropriate steps quickly, so this doesn't continue for too much longer. Once again, thank you all for your interest, and we look forward to your continued support. Thank you. Thank you, sir. On behalf of DAM Capital Advisors Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.