Q1 24/25

Aug 10, 2024

Summary

Q1 consolidated revenue was flat as net accounting obscured underlying 7% growth; margins were pressured by lower BTS mix. FY25 targets remain 18%–20% gross-basis growth, with H2 expected to drive BTS billing and margin recovery.

Ladies and gentlemen, good day and welcome to Centum Electronics Q1 FY 2025 Earnings Conference Call, hosted by JM Financial Institutional Securities. I would like to mention a cautionary statement. Some of the statements made in today's conference call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management beliefs as well as assumptions made by and the information currently available to the management. Audiences are cautioned not to place undue reliance on these forward-looking statements in the making investment decisions. 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 Mr. Bhavani Kumar. Thank you, and over to you, sir. Thank you so much. Good evening, everyone. On behalf of JM Financial Institutional Securities, I welcome you all to Centum Electronics Q1 FY 2025 Earning Conference Call. From the management side, we have Mr. Nikhil Mallavarapu, Executive Director, and Mr. K. S. Desikan, Chief Financial Officer. First of all, thank you so much for giving us the opportunity to host this call. I would now like to hand over the floor to the management for the opening remarks, post which we will open the floor for Q&A. Thanks, and over to you, sir. Thank you, and good afternoon, everyone. I would like to extend a warm welcome to all of you to our Q1 FY 2025 Earnings Call. I would like to mention a special thanks to our host today at JM Financial, Mr. Bhavani. Let me first brief you on the key performance highlights for the quarter and the year under review. After which, our CFO, Mr. Desikan, will take you through the financial highlights. In the first quarter under review, revenue from operations was flat year-on-year at a consolidated level, primarily due to a particular contract with a certain customer that was accounted on a net basis in accordance with Ind AS 115 amounting to INR 4 crore. The gross value of invoicing in respect of this contract was to the tune of INR 23 crore for the quarter ending June 30, 2024. Had it not been for this accounting treatment, the adjusted consolidated year-on-year revenue growth would have been 7% to INR 264.5 crores for Q1 FY 2025. Additionally, due to the lumpy nature of the BTS business, some domestic defense contracts have been skewed towards the second half of the year, where we expect 70% of the invoicing expected to happen in H2 FY 2025 for this business. In our subsidiary, we saw a slight improvement with the EBITDA margin improving to 3% as compared to negative 0.7% in Q1 FY 2024. On the margin front at the standalone level, EBITDA margin declined due to this adverse mix between the high-margin BTS business, which was lower in contribution in Q1. This is expected to recover in H2 FY 2025 with higher level of BTS deliveries to defense and space customers, thereby improving the margins. Overall, at the consolidated level in the current year, we continue to work towards achieving our medium-term targets for both growth and margins. Next, on our order book position, this has grown marginally to 1,674 crores at the end of the first quarter. Our pipeline remains healthy, and we expect a strong order booking, especially in the domestic defense and space BTS business in the current year. In other updates, Centum received a supplier award from Baker Hughes in the collaborate category as a result of the exceptional work done to increase capacity and manage supply chain qualitatively effectively. This is a great recognition of our team's work to maintain the highest levels of service and customer satisfaction. Now, I would like to hand over the call to our CFO, Mr. K. S. Desikan, to brief you on the financials. Thank you, Nikhil, and once again, a warm welcome to all of you. At a consolidated level, the revenue from operation was INR 246 crores, which was kind of flat year-on-year. The EBITDA for the quarter was INR 16 crores, which is down year-on-year, with the EBITDA margins reported at 6.34%. While we had a net loss of INR 3.8 crores for the quarter, at a standalone level, the revenue from operations for the quarter was about INR 133 crores, which grew by 4% year-on-year. The EBITDA for the quarter was about INR 13 crores, which was down on year-on-year, with the EBITDA margin reported at 9.6%. The net profit for the quarter was INR 4.5 crores, which declined by 37% year-on-year. Since you have all the numbers with you, I will stop here, and we can open the floor for Q&A session. Thank you. We will now begin with 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. We take the first question from the line of Nirali Kapani from Unique PMS. Please go ahead. Yeah. Hi. Thank you for the opportunity. First question is regarding this contract where the gross value of invoicing was INR 23 crores and the revenue recognized was INR 4 crores. Will the rest of the revenue be recognized in the coming quarter? Can you just briefly explain it? Yeah. A very quick background here. This contract that we're talking about here is with a new customer that we've added in the past year. It is for the UAE market, and it's for a defense customer. We won a significant order in the past year, which is to be delivered in the current year to the tune of about $9 million-$10 million. The reason for this treatment is essentially that the material needed to execute this order was secured by our customers in the past due to the supply chain situation. For this current order, the customer has asked us to buy the material from him and manufacture the product and sell the finished product to the customer until this inventory is depleted. After which it will be a regular turnkey contract where we will be responsible for procuring all the material and supplying it. In the current quarter, as a result of that treatment, the auditors have asked us to account it on a net basis rather than a gross basis. For the quarter, as mentioned, the impact from the top line only, was to the tune of about INR 23 crores. We expect on a full year basis that this contract value will be, as I mentioned, around $9 million. Okay. Coming quarters will also see a similar kind of an impact, right? Yes. Just to be clear, this contract or the revenue impacted will have no impact on the margins. This is only on the revenue side. Correct. Exactly. Correct. You sound very confident about growing in double digits. Should we expect an 18%-20% of growth for full year FY 2025? In summary, basically, we continue to work towards that. We feel that even in the current year, as I mentioned in my opening remarks, in the current year as well we expect to achieve that. Of course, continuing, this was accounted on a gross basis. Obviously, this accounting treatment itself will have a certain amount of impact at a top-line basis to the tune of about 5%-6% or so on a full year basis. But if you were to consider the full revenue at a gross level, then we expect to maintain that 18%-20% growth. Right. What gives us the confidence to achieve this 9%-10% level of margin? Because last few quarters, our margins have been slightly impacted. If you can just talk briefly on that. Sure. Two things. Simply put, I think one is, as I mentioned, in the current quarter, again, the high margin business was quite low. We expect 70% of the billing for this part of the business to come in the second half of the year, and perhaps a little bit more even skewed towards Q4. But this has been the pattern for most companies in this space. These are government contracts. You see a lot of billing happening in Q3, Q4, typically. As and when those invoices happen, the margins will definitely see the improvement, as I mentioned in the second half. Secondly, on the subsidiary level, as I mentioned, we have been working on this restructuring plan. We have taken certain costs out. We expect those to start impacting us positively towards the end of the first quarter and going into the second quarter subsequently. Even at the subsidiary level, we expect a margin improvement in the subsequent quarters. With these two contributors, we feel we should be able to improve our overall EBITDA margin for the year on a full year basis. Perfect. Just last one question. What was the contribution from BTS for the quarter? It was about 13%-15%. Okay. Thank you so much. Thank you for answering. Thank you. Before we take the next question, a reminder to all the participants, anyone who wishes to ask a question may press star and one on the touchtone telephone. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone telephone. The next question is from the line of Chirag from Ashika Institutional Equities. Please go ahead. Hi. A couple of questions. What margin trajectory we expect for standalone as well as consolidated level going forward? What factors which has impacted the raw material cost as a percentage of sales during the quarter? Going forward, how we going to manage those volatility to maintain our desired level of margins? I will ask a follow-up later on. Chirag, Hello. Just to repeat, the first part of the question was with regard to the EBITDA margins, and the second part was on our material cost? Yes. Okay. First, in terms of the overall EBITDA margin, we are still working. As we mentioned in the past quarter, we are continuing to work towards on a full year basis at a standalone level to be in the range of around 13+%, and at a consolidated basis in the 10%-12% EBITDA margin on a full year basis. That's the answer to your first question. The second one with regard to the material cost. Basically, this is two things. It's clearly related to product mix and what projects or programs are delivered in any given quarter. Our view on why we feel the material cost should improve subsequently, as I mentioned earlier, the higher margin BTS business is much more heavily skewed towards the second half of the year. That will play a part in terms of improving the product mix and consequently margins in the second half of the year. Just to add, in terms of raw material cost is influenced by the business mix and not material cost increases. Sure. The cost remained constant, but because the mix changed adversely, BTS being low, I stand corrected, one small correction. Earlier question, the contribution of BTS to the total is about 26%. I said 13%, but it is 26%. Because BTS being low, raw material cost is high. But if you look at consol as a full year, last year we were about 48%-50%, and it will be in the same order for the whole year also. Okay. If you look at your other expenses as a percentage of sales at consol and standalone both, it posted a remarkable improvement. Is it one time in nature or due to lower business work volume or is it like a permanent phenomena going forward? Yeah. The reduction in both manpower cost as well as other expenses, mainly from the subsidiary, is a result of the actions taken over the past six months. We can say that we expect levels to be maintained at the Q1 levels. For both consol and standalone, right? Yes, please. That is right. Okay. If I look your commentary of previous three con call and all, you mentioned that in FY 2025, EMS is going to be a growth driver from automotive, electric mobility and all such verticals is going to contribute industry-wise. Is that outlook remain intact or are we experiencing that the industry mix is somewhat changing than what we expected two quarters back for FY 2025 top line? Yeah. Again, Chirag, the FY 2025 outlook, as I mentioned earlier on, if you look at it on a gross accounting basis, we are still maintaining the growth of 18% or so on the consolidated basis. Again, more heavily skewed clearly towards our EMS business in the current year. So that remains intact. In terms of contribution by industry, I think in this year as a whole, we are seeing a higher growth contribution coming from the defense and aerospace part of the as compared to earlier. But we are also seeing some healthy new customer additions and pipelines happening on the industrial side as well. But for the current financial year, I would say the biggest growth contributor in terms of segment is expected to be more in defense and aerospace. Nikhil, in the defense and aerospace, some of our top players facing issue in procuring engine parts from the OEM. So do you see that as a risk in execution, or is that the issue now get addressed or not? Any comments. Sorry, Chirag, your question was a little bit muffled. Can you repeat, please? Yeah. So in defense and aerospace side, some of the players who can be your client are facing issue with respect to procuring the engine part and other relevant components from the global OEM. Do you think that's going to be somewhat challenging to execute order in this vertical? Any color on that? Yeah. Supply chain is always a critical aspect and a risk aspect, as far as execution is involved in this business. We continue to maintain a strong close monitoring of it. I would say one area of risk, which we continue to monitor closely, is around the delivery of their PCB boards from our supply base in France, which is specific to one of our large customers in the segment. Having said that, we are taking various mitigating actions to address that well in advance. We still feel that our numbers that we are projecting are achievable considering this risk. In short, there are issues, but they are quite manageable, and we are quite confident about it. Okay. Thank you. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touch-tone telephone. The next question is from the line of Ankit Babel from Subhkam Ventures. Please go ahead. Yeah, good evening, sir. Nikhil, actually your voice was not very clear, so I missed that margin guidance point. Since your voice is still not clear, I would request Mr. Desikan if he can reiterate what is the margin guidance both on standalone and consolidated. What is your? Like what Nikhil was saying, the midterm targets, we are doing our best to achieve them. Which have been at a consol level. We were talking about 18% growth on the top line. With the gross accounting, we should be able to achieve that at 18%. Unfortunately, we have this problem of net accounting now, so it may reduce by about 5% or so. We are working with the auditors, but I think like what he mentioned, this gross accounting, net accounting is going to be an issue. Top line, 18% at gross accounting level is what we are saying. At EBITDA level, consol level, we are targeting about 10%-11%, as we had mentioned earlier. We are still on the same target. Okay. On a gross basis. If your revenue is 18% growth, then on that base, 10%-11% EBITDA margin. Is that the right way to? That's right. Yes. Okay. My second question is that in every quarterly presentation and in every conference call, we mentioned that the order pipeline is very strong, but somehow on the order book side, we are not getting that traction. Are you facing any delays in receiving any orders, or how is the case? Two things, Ankit. One is that we have a different horizon of orders for the different parts of the business. The BTS part of the business, as you know, has little bit higher horizon, whereas our EMS part of the business. I mean, the BTS business can have 2 plus years, 2 and a half years kind of execution horizon. Whereas EMS business historically, in a normal time where supply chain is stable, you normally will have 6-9 months of orders, and then customer forecasts beyond that. But in the supply chain period that we had in the past couple of years, customers gave us an extended time horizon of orders, which is now coming back to a normal basis. That is one factor, where basically our numbers that we are reporting here is only based on firm purchase orders from our customers. It does not take into account customer forecasts that extend beyond that. As customers come back to normalcy with the lower time horizon of firm purchase orders, that will obviously have an impact in terms of our overall firm order book. That is one. The second is on the engineering services side also, as we had mentioned earlier, one of our strategies in the short term to be able to improve our margins is to reduce the number of high-risk fixed price contracts where we have historically had overruns and so on, where again, those kind of contracts, you have little bit longer time horizon. Whereas in a delivery center, service center, or consulting type of business model, you have a shorter horizon of firm purchase orders. So these have obviously played a role in terms of the reflection on our firm order book. Having said that, as I mentioned earlier also, we are expecting a strong order intake in terms of BTS orders in the current year, coming from various programs that we have invested in developing products in the past around space, defense satellites. Second is around radars. Third is around land systems for tanks and so on. All of these are in advanced stages, and we expect to have a healthy order intake in this part of the business in the current year. So sir, since your BTS projects have the highest margins, and you are expecting good orders in this year, is it fair to assume that the margin trajectory will be very good next year also once these orders get into execution? That's right. Yeah, exactly. We continue to work on improving the margins by obviously growing our higher margin BTS business. Okay. And sir, in the current year, you mentioned that going forward, both revenues and margins will improve. This will happen only from H2 onwards, or we can see some traction in Q2 of this year also, the current quarter which is going on? We expect the majority of it to happen in H2. As I mentioned, the two factors, one is the BTS defense business, where we are expecting almost 70% of our invoicing to happen in the second half of the year. Also in our subsidiary, normally Q2 is a slower quarter because of the summers in France, which is lower in terms of invoiceable working days. Q3 and Q4 are a bit stronger on that side. With both of these effects, we expect the margins to reflect more in the second half of the year. Okay. Sir, last one clarification. When you give this 10%-11% EBITDA margin guidance, is it including other income or excluding other income? No, EBITDA margins, we do not include other income. You do not? Okay. Sir, sorry, one more question to squeeze in about the debt and working capital. How are they shaping up? In terms of working capital, there is a slight increase in the Q1, and roughly about INR 20 crore-INR 25 crore over the March levels. But by end of September, when we come to you with the balance sheet, we plan to be at the same level like March. In number of days-wise or in absolute? Because in number of days-wise, it was just 61 days at the end of March. Correct. It will be around that by end of September. Okay. What is the debt position currently on a net basis? At consol level, we are at INR 190 crores, and it should come down by about INR 10-15 crores. We should be about INR 180 crores. By September? Yes. By the end of the year, what are your targets for debt? By end of the year, we should bring it down by another at least INR 10 crores because we have some CapEx coming up, so that will be there to that extent. So we should be closing at about INR 170 crores. This reduction in debt level you expect in spite of increase in the BTS revenue, which typically has a higher working capital. That is right. Exactly. Okay. How would it be possible, sir? What he said, the second half of BTS business, bulk of the BTS, 70% of the BTS business will get executed, and that should be generating cash. Plus also we expect certain customer advances for these new orders that we are looking at. The debt levels, I think we should be able to manage. On the interest cost point of view, it will be that same INR 35 crores to INR 40 crores. Exactly. I think last time also you asked the same question. Yeah. Yes, we maintain that the same levels. Yes. Okay. Thank you so much, and all the best. Yeah. Thank you, sir. Ladies and gentlemen, if you wish to join the question queue, you may press star and one on your touch-tone telephones. The next question is from the line of Nirali Gopani from Unique PMS. Please go ahead. Thanks for the opportunity again. Just a couple of clarifications. You mentioned that BTS was 26% of the revenue for the quarter, and for FY 2024 it was 48%-50%, right? Yeah. No. It will be close to 30% or so. Yeah, it was 30%. Yes. Sorry, it's not very clear. Can you repeat? FY 2024, it was 30%, whereas Q1 we are at 26%. Okay. For this full year, FY 2025, also we expect it to be around 30%, right? Yes, it will be about 30% for the FY 2025. Yes. Just one last clarification. If we recognize the revenue on gross basis, for full year, it would have been around INR 265 crores, but the EBITDA would have been only INR 15.5 crores, which we have already reported, right? Optically, the margin would have been still lower than what we have done. It would have been lower than 6%, right? Are you talking about the quarter one, INR 265 crores? Yes. On the gross level. At the gross level, that is right. It is about INR 23 crores more than what we have actually published. But in terms of EBITDA, it will not make a big difference because this is EMS business. The impact in terms of EBITDA margin may be to the tune of half a percent or 0.6%. Yes. Okay. Fine. If you can help us, what kind of EBITDA margin do we make in BTS? What we've been basically saying is typically, build-to-spec business, we should be operating at close to a 20% EBITDA level, whereas EMS should be at around 11%-12% level. Okay. Fine. That's it. Thank you so much. Thank you. Before we take the next question, a reminder to the participants, if you wish to join the question queue, you may press star and one. The next question is from the line of Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead. Mr. Chirag, your line is in the talk mode, sir. Please go ahead with your question. Hello, am I audible? Yes, sir. Nikhil, one question. During the quarter, from our EMS vertical, what sort of projects we deliver to the client? Just to repeat, your question was what sort of projects? I mean the type of project, what sort of work we deliver to the client and which industries we catered during the quarter. Yes. As we show in our earnings presentation, I would say roughly half of our business is for the defense and aerospace segment, where we are delivering various types of projects. These are all build-to-print programs when I say EMS, right? These are exported to our customers globally speaking. It may be for a missile program, it may be for communication radio, it is for air traffic management. So different types of applications that we deliver on the EMS side for defense. Apart from that, on the industrial side, these can be for grid automation applications, industrial automation, and so on. On the transport and automotive side, you can say on the transport side, we are delivering for, again, the railway programs and stuff, which is delivered actually through our subsidiary over there. On the automotive side, it is primarily for electric vehicles, for heavy vehicles, trucks and buses and so on. Finally, on the healthcare side, for digital radiography and a few other diagnostic equipment like that. These are recurring business in nature. Obviously, there may be, in certain cases, a little bit of fluctuation quarter to quarter. But for the most part, these are recurring business. Okay. Thank you. Thank you. The next question is from the line of Dilashri from ThinkWise. Please go ahead. Hi, sir. Would it be possible to give us the total addressable market of each of your segments, which you've just mentioned, geography-wise as well, just to give us a sense of what our potential target market would be? It's a bit of a difficult question to answer, to be honest. I mean, the potential target markets in these kind of industries are massive. I mean, these go to the tune of billions of USD in terms of addressable market. But I think it's more relevant to talk about, I would say, just in terms of what we are seeing and projecting as a growth rate in terms of new customer additions and so on. But as I've also said in the past, typically, whenever we have a customer engagement, our target is to be at a minimum engagement level of around $10 million with a given customer. And our bigger customers have a $20-plus million kind of engagement. We are seeing a good pipeline of new customers that are either looking at us because of Make in India requirement or because of China Plus One, which we are in the process of qualifying and adding, which we hope to get into production in the next financial year. And those, again, we feel in a one-and-a-half to two-year kind of timeline can get up to a $10 million kind of engagement. Okay, sir. In the 18%-20% growth that we are estimating for FY 2025, could you help us with what is the repeat customer of this and what is the new customer contribution in this? I do not have an exact answer for you on this, but I would say to the tune of about maybe between 10%-15% or so, maybe new customers, completely new customers that we are executing, and the rest of it would be repeat customers. In certain cases, part of repeat customers may be new business from repeat customers itself. What I would say, roughly around 10%-15% is new customers that we added. All right. Thank you so much, sir. Thank you. A reminder to all the participants, if you wish to ask a question, you may press star and one on your touchtone telephone. Ladies and gentlemen, if you wish to ask a question, you may press star and one on your touchtone telephone. We take the next question from the line of Bhavani Kumar from JM Financial. Please go ahead, sir. Yeah, thank you. Hope I'm audible. Yes, sir. My question was regarding the order book, which you have approx INR 1,600 crores. Can you just help me with the bifurcation, which all segment you are having the same, and also within how much time this order will get executed? Breakup. Breakup will be in the same like what we have given as the revenue, which is ER&D is about 32% and EMS is about 42%, and BTS will be about 30%. That will be in the same order. It won't change. What was the timeline for the order execution, sir? In how much time this order will be executed? I think our order book, if you say again, the time horizons for each of these are maybe slightly varying from each other. But overall, I think what we've been saying is this, on an average basis, is like a 15-month kind of execution period. Got it. Which all segments you are seeing that- 13 to 15 months. It may vary a little bit plus or minus 4. Got it. Thank you so much for this. Also, on the category side, which all segment you are seeing that the demand is improving there? Also on the abroad side, because Europe is facing the significant headwind over there. Can you help us how things are shaping up there and down the line, down this one or two quarters? I want to look at your employee expenses also. Sorry, just to repeat, the question is with regard to how the demand is looking from a geography standpoint or from an industry standpoint? First from the geography point of view, and then from the industry. The third question is with regard to the employee. How one should look at your employee expenses going forward. Okay. From a geography standpoint, I would say, the two areas where we're seeing the healthy pipeline is, one is some North American customers, which are like I mentioned a little bit earlier, we're in the phase of qualification right now, which we expect to secure orders for and forecast for by the end of this year. Those are from North America. Also, domestically for the Indian market, we are also seeing a very healthy pipeline of opportunities, both from defense and space, as well as from the railway segment. I would say these two are the ones that we are seeing a healthy pipeline of opportunities. Got it. Quite helpful. On the employee expense side, how one should look at? Yeah. Employee expenses, obviously, we have a very different model for the different types of business, because as you know, on the standalone part of the business, which is a manufacturing business, employee costs are one part of the thing maybe to the tune of about 15% or so of the standalone revenues. That I think we should continue to be in line with that as we grow, maybe some marginal operating leverages and costs that we may have in terms of employee cost of revenue. The second is with regard to the subsidiary, which is fundamentally a man-hours billing kind of business. As the revenues grow there, you will see the proportionate increase in terms of manpower cost also. Our objective there is obviously to try to have as much of that increase happening in India, rather than in France to be able to improve the overall gross margin of the engineering services business. I would say that in short, the difference between the two types of businesses and the view in terms of projection going forward. Obviously, the subsidiary, we expect to grow at a much lower pace than the standalone business. Standalone, we target to have at a 25% plus kind of growth rate, whereas the subsidiary is at a high single digit or around 10% kind of growth rate that we'd like to achieve. Got it. That's quite helpful. Thank you so much for this. Thank you. The next question is from the line of Jayesh Rao from Cass Capital. Please go ahead. Hi. Thanks for taking my question. I have a couple of questions. First is, can you just elaborate on the customer concentration in our revenue? What will be the proportion of our largest customers in total revenue? Roughly, I would say our top five customers contribute to about 50% of the overall revenue, and the rest is after that. In terms of customer concentration, that's what it roughly looks like. Okay. Second is, in terms of competitive intensity, last few years, after this sector has been opened up for private sector largely, especially on the defense side. We've seen a spate of new companies, including startups and all, coming in. How do you see the competitive intensity in the business, and is it actually impacting our margins? I will answer your second question first. What is impacting our margins most is clearly the subsidiary part of the business. That is where our major focus is to basically fix the margin at the subsidiary because that is operating at a very low level compared to what we feel we can achieve with that. From our numbers reporting standpoint, the biggest leverage from a margin standpoint is clearly fixing our subsidiary, and those are the actions that I have mentioned earlier. We hope that it will play out in the coming year and going into next year as well. Second will be the contribution in terms of the mix of the business, because as I mentioned, the build-to-spec part of the business carries a little bit higher margin compared to the EMS part of the business. While the EMS has been a strong growth driver and contributor in the past year and also in the coming year, we expect with the visibility in terms of order intake, we are hoping to have this year. Even the build-to-spec part of the business should continue to contribute in terms of growth in the subsequent years. These are the two factors that impact margin from our perspective. As you mentioned, our medium-term objective is to move towards a 13%-15% EBITDA level at a consolidated basis. Now, to answer your first question. Sorry, was there a question? No, go ahead. To come back to your first question with regard to competitive intensity. Absolutely, there is existing players being more aggressive to be able to capture as much business as possible. That is a clear thing that will happen as opportunities grow. This is where it is important also for us to identify growth opportunities, but also where we have an advantage in terms of being able to have strong relationships with customers. I think on that side, there are two things. One, on the EMS part of the business, I think we have a strong export orientation. Even if it is in many cases for the Indian market or for exports because of China Plus One, we are able to build strong relationships with global OEMs that have a large spend that they are having. I think that is one thing that we continue to push and focus on. Second is also on the BTS part of the business. As I mentioned earlier, there has been a lot of work that has gone in over the past couple of years in terms of designing products that are either for new platforms or products that are the replacement of an imported product where there is IP involved. This again, is something that we are one of very few companies that are able to do these kind of products. Just as an example, on the railway side of the business, we are delivering passenger information systems for trains. This was a technology that came actually through our Canadian subsidiary, that we have now shifted a lot of the development work and also all the manufacturing to India already. There is a huge demand for metros and now also for the passenger trains, like Vande Bharat and so on, all of which require these passenger information systems. Globally speaking, even for these Indian projects, large part of this was imported previously from China or other parts of the world. We are one of the first companies to be able to deliver this product at a world-class performance level domestically. That has opened up some good opportunities for us, which we are focused on converting. Like that, there are other examples also on the defense side. We continue to focus on some of these IP creation kind of opportunities to capture the opportunity. Okay. In a nutshell, what you are saying is that although competitive intensity may be high, but considering our pedigree and the vintage that we have, maybe we have certain advantages. That is right. Yeah. But how long will this last? Because the new companies or the existing ones will also catch up in terms of the same pedigree and the vintage. My question is that, is it that over a medium term, we will continue to see very high level of competition leading to moderation of margins not only for us but across the sector? Let me put it like this. It's an interesting question, first of all, I should appreciate that. But if I look at our business and take one by one, if you look at the BTS business, of course there is a lot of competitive intensity, but the way we are positioning is what is important. For example, in the BTS business, the domestic defense space, et cetera, I think the opportunity is exploding in terms of the Make in India or the Positive Indigenization List. The pie is only increasing, and we choose to operate at a certain high end of the technology areas like the radar, the electronic warfare, et cetera. So in terms of opportunities, I think that's quite high. But the competition is not very much there in those high-tech areas. Also the BTS, the railway opportunities that Nikhil mentioned, because of our association with our Canadian subsidiary, which has this technology. We are able to win orders locally in the railway infrastructure market, which is booming. And we operate under PAPIS, which is Public Announcement and Passenger Information System. And we enjoy a very strong position there, I would say. If you look at the EMS model, yes, there are competition, but the way we are positioned, we are at high-end high-tech markets and export markets. And the factors that would be in favor of us are like the China Plus One and again, Make in India in the industrial electronics. The third, in the ER&D services, our customers are either in France or in Europe, and they are being served from the French entity. Now we are trying to change that by increasing the offshore mix. Actually, that market is still, which we can address in a bigger way. Overall, I would say, yes, that you see a lot of competition, but the way we are positioning in each of these segments, I think we are ensuring that we should be able to grow at the numbers that what we are projecting. Fifty more and yes. Okay. That answers my question. Thank you so much, Ananda. Thank you. As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments. Thank you all for participating in the earnings conference call. I hope we were able to answer your questions satisfactorily and at the same time offer you insights into our business. If you have any further questions or would like to know more about the company, please reach out to our investor relations managers at Valorem Advisors. Thank you. Stay safe and stay healthy. Thank you. Good evening. Thank you, members of the management. On behalf of JM Financial, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.