Good day, ladies and gentlemen. I'm Harpreet Kapoor, the moderator of this call. Thank you for standing by, and welcome to Nucleus Software quarterly earnings conference call for the quarter and half year ended on 30 September 2021. For the duration of the presentation, all participants' lines will be in listen only mode. We will open the floor for Q&A post the presentation. I would like to now hand over the proceedings to Swati Ahuja. Over to you, Swati.
Thanks, Harpreet. Good afternoon, everyone. This is Swati from Investor Relations team at Nucleus Software. A very warm welcome to all of you for this Nucleus Software earnings conference call for the second quarter and the half year ended as on September 30, 2021. For discussion, we have here from the management team Mr. Vishnu R. Dusad, our Managing Director. Mr. Parag Bhise, CEO. Mr. Anurag Mantri, CFO and Executive Director. Mr. Tapan Jayaswal, [Karim] from the finance team. Ms. Prema Rajaraman, Global Head HR. As you all are aware, Nucleus Software does not provide any specific revenue earnings guidance. Anything which is said during this call which may reflect our outlook for the future or which may be construed as a forward-looking statement must be reviewed in conjunction with the risks that the company faces.
An audio and transcript of this call will be shortly available on the investor section of our website, www.nucleussoftware.com. With this, we are now ready to begin with our opening comments on the performance of the company for the second quarter and the half year ended on September 30, 2021 from the [MD]. Post that, we would be available for the question answer session. With this, I now pass it over to Vishnu, sir. Over to you, sir.
Thanks, and a warm welcome to all of you for joining this earnings call. As usual, I would like to thank you for your continued interest in Nucleus Software, and would request our CEO, Mr. Parag Bhise, to take you through the proceedings. Over to you, Parag.
Thank you very much, Vishnu, and a warm welcome to everyone who has joined. Thank you for joining this call. I hope you all had great festivities just last week. The second quarter has seen us emerging stronger after the COVID pandemic and the specific cyber security breach incident that we reported during the last call. We are out of it now. This turnaround would not have been possible without the untiring efforts of our leaders and our client partners who have been very patient with us and who have supported us all this while, and of course, to whom we continue to deliver immense value for decades now. We've also taken unprecedented calls to invest in our most important assets.
That is our high-performing associates, who continuously deliver our value and, come out with, world-class platforms, and ensure, high customer delight. While these measures that we have taken, have affected our profitability, but we are confident that we'll be able to get back to our standard profitability levels in near term. We believe that, this is an investment in our most important assets, as we said, and an investment in the future, for taking us to the next level of business performance. Thank you very much once more. Over to you, Swati.
Thank you, sir. Tapan, sir, please put some light on financial highlights.
Thank you, Swati. Key highlights from financials are our consolidated revenue for the quarter is at INR 114.1 crore against 108.4 crore quarter-on-quarter and INR 137 crore year-on-year. Overall revenue in foreign currency, including Indian rupees revenue, is $15.5 million for the quarter against $14.8 million quarter-on-quarter and $18.6 million year-on-year. Product revenue for the quarter is at INR 93.2 crores against INR 89.9 crore quarter-on-quarter and INR 114.7 crores year-on-year. Revenue from projects and services for the quarter is at INR 20.9 crore against INR 18.5 crore quarter-on-quarter and INR 22.3 crore year-on-year.
As for expenses, cost of delivery including cost of product development for the quarter is 81.5% of revenue against 81.2% of revenue quarter-on-quarter and 65.9% of revenue year-on-year. In absolute terms, this is INR 93 crore against 88.1 crore quarter-on-quarter and 90.3 crore year-on-year. Marketing and sales expense for the quarter is 3.6% of revenue against 5.7% of revenue quarter-on-quarter and 3.6% year-on-year. In absolute terms, this is INR 4.1 crore against INR 6.2 crore quarter-on-quarter and INR 4.9 crore year-on-year. General administration expenses for the quarter is 10.8% of revenue against 11.8% of revenue quarter-on-quarter and 6.1% year-on-year.
In absolute terms, this is INR 12.4 crore against INR 12.8 crore quarter-on-quarter and INR 8.4 crore year-on-year. EBITDA for the quarter is at INR 4.7 crore against INR 1.4 crore quarter-on-quarter and INR 33.4 crore year-on-year. Other income from investments and deposit at INR 8.4 crore against INR 8.8 crore quarter-on-quarter and INR 7.7 crore year-on-year. Total other income for the quarter is at INR 9.5 crores against INR 10.8 crore quarter-on-quarter and INR 9.1 crore year-on-year. Total expenses are at INR 2.4 crore against 3.1 crore quarter-on-quarter and INR 9.5 crore year-on-year. Net profit is at INR 8.6 crore for the quarter against INR 6 crore quarter-on-quarter and INR 29.5 crore year-on-year.
Other comprehensive income is at negative INR 1.5 crore for the quarter against negative INR 3.2 crore quarter-on-quarter and INR 0.5 crore year-on-year. Total comprehensive income, which includes net profit and other comprehensive income, is at INR 7.1 crore for the quarter against INR 2.8 crore quarter-on-quarter and INR 29 crore year-on-year. EPS for the quarter is at INR 2.95 as against INR 2.07 in the previous quarter and INR 10.14 in the September 2020 quarter. In terms of foreign currency hedges on September 30, 2021, we had $5 million of forward contracts at an average rate of 75.62. There is a mark-to-market gain of INR 24.36 lakh, which is taken to hedging reserve in the balance sheet.
Revenue contribution from the top five clients for the quarter is 23% as against 26% in the previous quarter. The order book position is INR 546.8 crore, including INR 514.8 crore product business and INR 32 crore of projects and services business. In June 30, 2021, the order book position was INR 534.9 crore, including 490.4 crore of product business and INR 44.5 crore of projects and services business. Total cash and cash equivalent as on September 30, 2021 are INR 724.5 crore against INR 734.3 crore as on June 30, 2021.
This includes balance in current account of INR 33.4 crore, various schemes for mutual funds, INR 518.3 crore, fixed deposits of INR 29.9 crore, investment in tax-free bonds of INR 115.1 crore, INR 27.8 crore in retained shares. With regards to the receivables, we are at INR 77.7 crore against INR 69.5 crore previous quarter. During the quarter, there is a gross addition of fixed assets of INR 2.81 crores, consisting primarily of INR 0.5 crore on plant and machinery, INR 2.16 crore on software, INR 0.03 crores on computers, and 0.12 crore on furniture and fixtures. Now I'll hand over to Swati.
Thank you, sir. With this, we are now open for the question and answer session. I will now hand it over to Harpreet. Over to you, Harpreet.
Thank you, Swati. With this, we will open the floor for Q&A interactive session. I request you to please press zero and then one if you wish to ask a question. I'll repeat. If you have a question, please press zero and then one on your telephone keypad. The first question of the day we have from Himanshu Upadhyay from Himanshu Upadhyay Company. Your line is unmuted.
Hi. I am Himanshu Upadhyay from o3 Capital. Okay. My first question is on the revenue. I was going through your annual reports and numbers. If you look at our revenue contribution of domestic market has increased from 27% to 38% in last five years. Exports have grown from INR 271 crore to INR 318 crore and domestic from INR 100 crore to INR 195 crore. Export is a bigger market and underpenetrated market. Why is it so that we have got more effectiveness in our sales in domestic versus global markets? And what are the challenges we are seeing in the global market that it is not at all growing or growing at a very, very feeble rate, okay?
Based on the order book we have, do you think this trend is reversing of slower export growth from here on? This was my first question.
Okay. Thanks, Himanshu, for raising that question. This is Parag here. I would answer that the domestic growth, of course, we have seen is primarily because of our strategy of going ahead with the cloud business, which we have launched so far in India, and now we started to expand it into the other geographies. India growth is because of that. There's no specific reason for not growing outside. As we've talked in the past, we got traction in Australia. Middle East, we were seeing slowdown for a couple of years, but now, again we started seeing traction there. No such specific reason. Of course, past one and a half years of pandemic
At that time, the export traction was less. Somehow in India, we did not see any challenge. After the initial few months, of course, but the moment the market opened up, the economy started opening up, India traction was fast again. No specific reason of not growing outside. We now got a few deals already in Vietnam, in Australia. In Middle East, as I said, we started to see traction. Probably, I can't predict, but probably the trend will change. That's all I have to say right now.
Based on the order book what we have, okay, and the inquiries.
Mm-hmm.
Do you think the exports will grow at least in high single-digit or low double-digit? Is it possible? Or you think that is far off from current time?
Look, giving a number won't be. In any case, giving number is not our policy also. I can tell you this, that we are seeing customer traction. We are already seeing some contracts materializing. I can only say that our existing customers who are on our older platform are also wanting to migrate to the newer FinnOne and FinnAxia platforms. That's a traction we are seeing and which includes the export market as well. I can't talk about any numbers in percentage terms right now.
Okay. The question was not just on numbers, but yeah, the situation is improving.
Mm-hmm.
That was what we were trying to understand. Okay, that is fine.
Definitely.
At last call.
Definitely.
You said that our growth strategy will be to increase the number of customers in particular geographies and gain market share. Which would be your focus geographies where you think you can reach at least 25% market share in lending on retail side in next five years? Or you think you don't want to have any targets? How are you planning in those focus geographies? Some light you can throw, it would be helpful.
Again, no numbers, but I can tell you that, look, as we talked in the past, reference-based business is probably the best way to grow in our business. Wherever we have customers already, which is Australia region now, which is Middle East region, which is Southeast Asia region, Africa region, those are the areas where we expect to grow. Of course, if leads come from other markets, we will be more than happy to match onto them. As regards our focus and our initiatives, we would like to grow these markets where we already have customers, rather than exploring big time or investing big time in virgin markets.
Okay, one last question and then I'll join back in the queue. I have a question that we are a large player in our chosen field of retail lending and also most respected even by our customers when we meet your customers. Let's say a CSL Finance or South Indian Bank, and we have seen your names in their con calls and annual reports in every place. Okay. Single digit EBITDA margins currently and mid-teens in last few years are very difficult to accept. When we see a ticketing solution company which had a very tough last year airline ticketing, but still margins better than us. The question comes, are we able to get the right money for the value we are providing to the customers? We also said that we'll soon move back to our margins.
In the last few years other than FY 2021, the margins were in mid-teens. Okay. Do you target those mid-teens margin? How are you pricing the product? Are you satisfied with the value you are getting from the money you are getting for the value you are providing to the customers? Just some of your thoughts and how are you working on those things will be helpful.
Sure. Firstly, I'd say that that's a very good question. It's kind of striking a chord because the kind of investments we have done definitely to activate the recent provisions that we have given that I just talked about keep or hike the revision. This is a recent phenomenon, but otherwise the kind of investments we have done, we definitely believe that our pricing should change. Of course, it's not so easy to change pricing, especially with customers which are there with us for past so many years. There is a definite attempt to work on that. We are getting some successes in that area. Definitely there is the.
To answer your question, briefly, yes, definitely we are looking at getting much more value, much more dollar value to our products and services in times to come, for sure.
Thanks. I'll join back in the queue for further queries.
Sure. Thanks, Himanshu. Thanks, very much for your questions.
Next is Vaibhav Badjatya from HNI Investment Services.
Yeah. Hi, sir. Thanks for providing the opportunity. Just to kind of follow up to the Himanshu's questions on the pricing. See whether this, the sharp rise in employee cost and per employee cost has shot up by around, you know, 25%. Otherwise this increase would have happened in four or five years. Now this thing has happened in just a matter of six months, now this year. Obviously to negate that impact, we need to have the pricing improvements. So that is. As you earlier said that, you know, near term we want to get back to our margins. On the other hand, you also said that is a difficult thing with the existing customers.
Both of these things are. I'm not able to tie up. That is the existing orders that we've already secured earlier before March 2021. If we are not able to reprice them, how we are going to get back to our earlier margins is something I'm actually trying to understand.
It's not purely when I say pricing, it is not purely the person months pricing that I'm talking about. Because especially in our business where we have created a significant IT, our focus will be to get more and more of license revenue and then related AMC revenue rather than per person [month based] revenue.
Mm-hmm.
Kind of the change in the structuring, if you may say the structuring of the so less of revenue which is dependent on more manpower and more which is like dependent on our IT. That is the direction in which we are moving.
That cannot be changed for the existing customer, right? We already have reached contract with the existing customer, so that cannot be changed for existing.
Okay.
Am I understanding right?
That's true. Yeah, as I also mentioned, a lot of our existing customers are also moving, wanting to move to our newer platforms.
Yeah.
We have more than 100 plus customers who are our existing customers. When they move to the newer platform, we get an opportunity to work out new pricing.
Got it. Apart from the pricing structure, you know, on the employee cost front, what can we do to improve our margin? In other words, what is the possibility to reduce the blended employee cost burden? What kind of productivity improvements can be realistically possible, possibly here, sir?
They are possible. I can tell you, there's sort of two parts. One is I already answered. If the composition of our business changes, of course, then we are not so much bothered about per person cost. Secondly, you know, if you see in a quarter one to quarter view, two. We already shown improvement in our revenue. It's marginal, but it is there. Our employee base has not grown so much. In fact, it has depleted a little bit. Even with lesser number of people, we were able to deliver marginally better revenue. The reason for that is very high focus on operational efficiency. There is a theme running within Nucleus of operational excellence, where-
Mm-hmm.
all teams are looking at how they can improve their work better. It has already, in some smaller way, starting to show results. That's how I'd answer.
Mm-hmm. Got it. Secondly, you know, if I look at your segmental thing, in few of our geographies, we have significant profit decline is in comparison to our revenue decline. In first half of 2022 is what I'm talking about. For example, in Middle East, the revenue has declined only by INR 5 crore, but profit has declined by INR 15 crore. Similarly for Australia as well, Southeast Asia as well. Apart from the increase in employee cost, are we facing any other issues in the cost structure on our international business or international segments? Otherwise why would the revenue has not resulted in employee costs or other savings on the variable cost front?
Because if the revenue is going down, obviously there should be some savings on employee cost and some of the other costs. But that has not happened in the international side of the business. I'm just trying to understand any other cost pressure that we are facing there.
No. You know, we've not experienced any other cost pressures at this point which you raised. I don't know, Tapan, if you have any ready answers for this. Otherwise, we can respond later. To answer your question, as such, no, we are not facing any other cost pressures than the employee cost going up. What is it? It will need some reflection ready and then at least with me is not there.
Okay. Because, you know, the profit decline has been very sharp in the international business as compared to the domestic business. It has been more than the revenue decline in first half. It's great if you can respond later on this thing.
Okay. Thanks.
Okay. I will actually come back in the question period. I think they're to provide the possibilities to answer question correctly.
Sure. Thank you, [Rahul]. Thank you for the question.
Next is Deepan Shankar from TrustLine PMS. Your line is unmuted.
Good afternoon, everyone, and thanks a lot for the opportunity. Could you throw more light on this BNPL platform? Is it a completely newer platform or extension of offerings in, on the current platform? What kind of revenue potential are we foreseeing over next two to three years?
BNPL is an extension in our FinnOne lending suite. BNPL, you know, is buy now, pay later, which is a popular model now becoming popular. It's an extension. You would know, Deepan, that we come out with our product releases every six months. As part of one of the releases, we have come out with this and we'll build upon this further. Since it's not a different product, plus numbers, you know, we don't project it like that. It will definitely be a value add into our offerings. There is already a set of customers who are interested in wanting to inherit this feature into their business.
I can respond that definitely this is a feature which people are looking forward to. Revenue projections, of course, we don't give.
For the last two three years, we have been saying that old customers are moving or migrating, but this is not happening at a faster pace. Can you share some names, few larger names who have already moved or are pending to migrate it?
Names at this moment would be difficult. Firstly, your observation is correct. We've not been able to move at a pace where we would want to, definitely. There is definitely one of the initiatives, and I mentioned briefly about it, for the current year and next year, is to put very high focus on migrating our existing FinnOne and [FinnAxia] customers to our newer platforms. It's going to be a focus area, a very definite focus area for next couple of years at least, for sure. I agree, the rate of movement is not as fast as we. Your observation is correct there.
Can you at least share the number perspective, how many have moved out of the total customers?
Difficult to share, but I would say either they are right now single digits or low double digits. I think that's what I can comment right now. I can tell you that in progress, WIP, there are many customers which are who are WIP, including large and small customers.
Lastly, that we have seen our product revenue that's been declining from INR 115 crores last year to currently around INR [94] crores. What are the key reasons for the same? When are we expecting that to bounce back to old levels of product revenues?
I think the traction, as I mentioned, is definitely from our customers who are wanting to get onto our products. Of course, there's equal traction from our services customers also. That's the good news. The decline in revenues primarily would be in the last one and a half to two years. Yes, there was a slowdown due to the pandemic, but then we've seen an upturn. The cloud customers which we have got, typically the model there is that we experience. In the first initial years, the revenues are lesser because there we typically engage with them on a growth-based revenue model. As their portfolio increases, our revenues also increase in multiples.
That's what we are banking on, and that's what we are experiencing. Definitely, product-based revenue growth is expected in the remaining part of this year and for the years to come, for sure.
Okay. Lastly, if I may squeeze one last one. Like couple of quarters back and also during AGM, we had requested for more disclosure from Nucleus in terms of revenue split, license, AMC, implementation and cloud subscription. Any progress on that? When can we disclose that kind of information?
Frankly speaking, not yet, within. We will have to defer that. We've been focusing a lot on these critical issues that we talked about. We faced unprecedented challenges, the unprecedented revision exercise that we did consumed a lot of our energy because it was such a big decision. We've been pretty much occupied in these things last couple of quarters. It will have to wait some time more. As we said that, we had said we will go back to our board and come back to you. That we will do for sure. Our focus last few quarters have been on dealing with this major challenges that we faced.
Okay. At least you can share this cloud decline percentage over last two quarters.
Cloud decline? Can you be more specific?
Percentage.
Okay.
Cloud revenues decline over past.
Yeah.
Hello?
Yes, yes. Go ahead, please.
Yeah. Cloud revenues decline over last two quarters.
Tapan, is that you? Because that's not what my intention is. Tapan?
This is Anurag, in the meantime.
Yeah.
I'm afraid that is not the case. There is no decline in the cloud revenue so far. Just to extend what Parag has mentioned, while we are working on these actionables, as mentioned in the previous investors call as well that whether we can really go to the slice and dice of the implementation AMC and all these things, that's something which we are not constrained right now. Based on our discussions internally and with the board, if there is a change in the approach, we will definitely let you know. As of now, this remains at the level what we are sharing the information.
If that is not the case, then where, how the revenue has declined, sir? If cloud also has not declined.
I think you are then talking about general revenue decline and not specific to Comp. Because I was a bit surprised on cloud because cloud is giving a good picture. Overall revenue decline as we discussed there in past investor calls also within revenue decline in the past couple of quarters has been because of the multiple challenges that we faced, which we talked about time and again. First the COVID second wave, then the ransomware attack, and then the massive attrition which not only hit us, the entire industry is facing it. These multiple factors one after another impacted us and which showed a definite decline in revenue.
This quarter, marginal improvement is there, and we expect the improvement to continue. The direction is at least positive. If that is the revenue decline you're talking about past couple of quarters, the reasons we talked about earlier. I would only say that now the things are looking up.
if you see over the past two, three quarters, the entire industry has been performing quite robustly. Only we are in that declining zone. That's why we wanted to understand what is actually the reason.
We know our reasons, and we've shared them in the past as well. The multiple challenges that we faced, including some that were very specific to us and some which were generic. Possibly commenting on how industry is doing otherwise won't be possible for me. I can tell you, we've talked very openly about our reasons for revenue decline, and why they were there and why there is a change now, a positive change now.
Sir, I'm sorry to say this, but the call is not giving much confidence on revenue traction at all. That's the kind of observation we wanted to make, and thank you and all the best.
Yeah, sure. I'm sure. I'm not sure if you attended that because we've been talking about it at length in the past, at least two investor calls, and this is the third one. So we've gone into depths, and we've been very transparent about the reasons of revenue decline from our side and the multiple challenges that we face. Now that things are looking, let's see that it only grows positive from here. That is our focus. Thanks, but for raising this observation.
Next is Vivek Ganguly from Nine Rivers Capital. Your line is unmuted.
Thank you for the opportunity. Two questions. One, in the first quarter, you all had this ransomware attack, and that obviously had an impact on your revenue profile. Now that it is all in the past, would it be fair to assume that you all will again go back into the double-digit growth track, or there are other challenges which you all are struggling with? That is one. The second is you all had mentioned that you all will be coming out with a dividend policy and also on the, you know, the revenue breakup, which is not asking for too much to begin with, given the industry and the transparency that is prevalent in the industry.
I was really wondering is the board so caught up that they can't take up these issues, which have been, you know, on the mind of the investor community for such a long time and, the other matters which are as important and y'all need to shed a light on that on the growth and the profitability aspects of. Is there like two such strong competing factors that one displaces the other altogether? Thank you.
Yes. Thank you for asking such pointed questions. First, on the revenue part of it. Yes, ransomware is beyond us. It had an impact. There may be some residual impact, but we've got out of it completely. You probably have also noted that the attrition challenges that we faced with the industry as a whole is facing are continuing. Though because of the unprecedented measures we have taken, the rate of attrition has surely declined significantly. Getting the resource strength back to where we were, it takes time. We're already on a very strong initiative on hiring both lateral and freshers that we had talked about in the past. There was a press release also to that extent.
Yes, growth is expected in the quarters to come. The rate of growth depends on because the impact of attrition has been large. It will take time to come back to normal. Definitely the trajectory is good. Apart from this, there are no challenges that are being faced. I mean, apart from the attrition, rest of the challenges are beyond us. The attrition it remains to be still a challenge for us and for the industry, but its impact is getting lower. Just to give you which we talked about, which I talked about earlier also, the traction from the customers is very high, so there is no strain on order book.
There is a lot of work that customers are expecting us to do. Our capacity today is a challenge, which is what we are trying to build. There are no other challenges, at least those are few today. How the industry dynamics will change tomorrow, that none of us can predict because industry is still very dynamic. If some new wave of attrition hits our industry, we don't know. Today the things are looking up. We are building our capacity. The customer traction is there. That's how I would respond. I think the dividend policy, revenue split, Anurag already talked about. Yes, operational growth and management is. We've taken some very significant decisions in last and come up and overcome some very massive challenges.
For sure the management has been occupied. We thought that was priority because getting back onto the growth trajectory was most important. Taking care of our employees was most important. Since those decisions were unprecedented, we had to put a lot more time on it as compared to what we would do on an annual basis. Yes, a lot of focus has been involved there.
Okay. Right. Thank you.
Thank you. Thank you for your question. Yes. Is there any follow-up question, maybe?
No, no. I'll come back into the queue later on. Thank you.
Sure. Thank you.
Next is Kunal Sharma from SMC Private Wealth. Your line is unmuted.
Hello? Hello?
Yeah. You are audible, Kunal.
Actually most of the questions have been answered. Just a follow-up question on the margin has drastically dropped down due to exceptional employee expense. Earlier you said that the exceptional due to the COVID issue and the ransomware attacks. Are we still facing the same issue as of now, or is it just only because of the attrition as you said earlier? Please just shed some light on it.
Yeah. COVID is hopefully behind us, and that's a worldwide problem, that's [not a Tech Mahindra problem, but hopefully it is] behind us. There are no residual impacts of COVID. Ransomware is behind us. There may be marginal impact because you could not work for a few weeks. That's behind us. Attrition, as I mentioned, is still a challenge. We are building capacity, and we are seeing good traction there. I can't say we are out of it because the impact was much. That's it. I hope I answered fully, or if not, then please do repeat the remaining part. Sorry for that.
No, no. Okay. Thank you.
Okay. Thanks once again.
Next is Rahul Jain from Dolat Capital. Your line is unmuted.
Yeah. Hello. Is my line audible?
Yes, very much.
Yeah, yeah. Okay. So, firstly, a question to Tapan and also a small request, you know, because when you read this data, you know, it's too much data to note down. Yeah, you know, it's little impossible to take down all that data that you read so fast. So if you could, you know, give that data in the presentation or press release that we share, that could at least the key data that will be of help. But for now, you can possibly give me the revenue split between product and services and also the order book data, if you can.
Kunal, can you do that in addition to what you have already done? Maybe, Tapan, can you repeat what he shared earlier.
Tapan, I think.
There's a background noise. Yeah.
Tapan, I think you'll be able to.
Pardon?
Yeah. You'll be able to read out that, the differentiation between the products and services, the revenue breakup.
Okay. We are having this product revenue for the quarter is at INR 93.2 [crores against] INR 89.9 crore quarter-on-quarter and INR 114.7 crore year-on-year. This was the product revenue. Revenue from projects and services for the quarter is at INR 20.9 crores against INR 18.8 crores quarter-on-quarter and INR 22.3 crores year. Am I audible? A lot of disturbance is coming on the background, I think.
Hello.
Yeah.
Yeah. If I heard, I'm specifically asking only for this quarter. I think you said product is INR 93.5 and services is INR 20.9. Have I noted down it perfectly?
Product is INR 93.2 crore and
Okay.
product and services, INR 20.9 crore.
Okay. Similarly for order book only for this quarter. What was the order book and what was the split?
Total order books for quarter, we have this current position, total book was INR 546.8, including INR 546.8.
Okay.
for the product segment and INR 32 crore for projects and services.
Okay. You said INR 546.8 and INR 32 is product out of that.
Right. 32 is project and services.
Yes. Sorry. 32 is project and 546.8 is total.
Right. Is the total order book position?
Right. Thank you. Okay. Now, the question for Parag. If you could share input on, you know, two, three accounts. Firstly, on the competitive landscape as we keep hearing more and more solutions are emerging on the origination segment, even from, you know, so-called fintech guys. Secondly, I think there has been some discussion on path to normalization on profitability. Just I wanted to understand that is it clearly function of revenue. So if we go back to pre-COVID revenue and some like let's 10, 15% growth on that, then ideally we should be more over around the profitability we used to do pre-pandemic. Not pre-pandemic, but let's say what we used to have two, three quarters back. So that is question number two.
Thirdly, on the hiring, you said in the press release that you would add 500 people. Can you tell the current headcount and what was the data in Q1 and Q2 last year as a QoQ and YOY? Based on that, where do you expect to end the year on a net basis? If you could share your thoughts on these two, three things.
Okay. Three questions. Swati, hopefully there's a lot of background noise. Can we do something about it? Yeah. Thank you.
Rahul, I-
Three questions.
Sorry, sir. Rahul, I have muted your line because there's background noise from your line. I'll unmute you later. Go ahead, sir. Please.
Yeah. Thank you.
Yeah. Thanks. Thanks a lot. Three questions. First is on competitive landscape. Yes, competition from fintechs and all is there. There's no doubt about it. We are dealing with it closely. Our product management team does keep doing a competition analysis and based on that, of course, inputs come for our product strategy as well as engagement strategy. Right now, that's not under. On revenue, you said if the profitability is only a function of revenue. I'll say no because considering the employee costs have risen so much, sheer increase in revenue may not give us that level of profitability. That's where, in the earlier part of the call I talked about a change in competition.
We definitely have to move towards a bigger chunk of revenue from license and related things like AMC and all, and less percentage of revenue from which is manpower dependent. Manpower is getting scarce so much. In any case, manpower dependent revenue is going to be becoming challenging. That's my personal view going forward. Thankfully, we are in a business where we have IP-based revenue, a large continuity of IP-based revenue, so that is what will be our focus. That's on revenue. Response from people, I'll ask Tapan to respond with specific numbers because you asked for some specific numbers. We have started hiring aggressively, both laterally and from campuses.
This last month, we had launched a very focused campaign for referrals, where existing employees can refer to their friends and colleagues from the other organizations. For that matter, we reached out to Nucleites, also as we call them. That has been a big initiative that is giving us traction. On the campus hiring, we are moving very good. There have been, in the past couple of months, about 60 campus connects. We have already batches running in our NSBT, which is Nucleus School of Banking Technology, which is our training ground where all fresh recruits come in. We expect by the end of last quarter of this year.
By the end of last quarter of this year that we should be fulfilling our numbers as we referred to the press release. That's that. We should be on target to reach those numbers. That's my answer generally speaking. Some specific answers, I think Rahul asked whatever answers you can give. He was talking about-
Okay.
the reason.
Okay. Headcount as of 30th September was 1,687, and in the last quarter it was 1,732. On 30th September last year, 2020, it was 2,064.
Rahul?
Can you now?
Yes. Operator, can you unmute?
You are already un mute, Rahul.
Yes.
Yeah, we can hear you here.
Yes. Thank you. Sorry for the background noise. If I heard you right, Tapan, you said 1,687 now versus 1,732 in the previous quarter and 2,062 in the YOY.
Right. That's right.
Yeah. Okay. Last bit from my side. Since we, you know, the way we are seeing the environment on the headcount side, do you think this remains a challenge to be, you know, net higher, you know, and that is also impacting on the revenue performance, you know. It will be very, very tough because, A, the inflation is definitely very, very high and availability is very, very low. Both ways, if you either you lose business on the table or you have option of having a very different cost structure, which you may not, you know, like to have on a sustainable basis. What's the view and what is the impact of that?
Secondly, is that also the reason or any other reason, if you want to highlight why our order book is not culminating into any, revenue growth performance? It's been so many quarters now, on that front.
Definitely, I talked about capacity challenge continues to be there. We are working on it. It's improving. Definitely so that kind of address because to your question, the last one. Look, there are multiple initiatives that we are taking. There's no one answer to it. I talked about the composition change. That for sure we have to work on that. I talked about pricing. That's another initiative that we are working on. I talked about improving our efficiency and the quality. The larger, you know, we're talking about an operational excellence where all teams are focusing on what they can do better with existing resources. We saw some reflection of that in our marginal revenue increase.
There is a lot of focus on quality that is going on. There's no one answer which can help us. It is a challenging situation, no doubt. We are hopeful that a combination of all these things and plus the hiring that we are doing, that will also, in the months to come, start giving us results. Combination of these four, five things is what is going to give us the answer to your composite questions. Right.
Yeah, are we saying that the supply side is the key factor for us to you know see this revenue culmination coming from the order book traction which we are having for some time? If the supply side issue eases out, we can be back to double digit kind of a growth, purely from a current order book status perspective.
When you say supply side, you're talking about the resources, I believe.
Yes. Yes.
Yeah. No, I repeat, unfortunately, that is not fortunately and unfortunately. I'm saying fortunately because our revenue model is not purely manpower based. That's a good part. That's a very positive part. We have built a great IP in the last decade. We already had great IP, but we have given it a new shape. Our revenue is not purely manpower based. I would say, as I said, I'll not talk more in general about industry, but companies whose models are purely manpower based are probably going to face more challenges. Our model is IP based and revenue related to IP like AMC, et cetera.
I do hope we'll be with all these initiatives that we talked about, definitely supply side plays a very vital role in it, especially because the kind of impact it had on us and it had on everyone. I'm not underplaying that, but that's not the only thing for sure. The thing for us is that our revenue model is not purely manpower based. It will just give us advantage. Yes, manpower is required for executing that. It is not purely manpower based.
Yeah. Parag, of course, we had that impression, and we understand the business model of a product business. If you just look at the 16% YOY growth despite having a strong order situation, and our headcount is also down, you know, almost 16%, 17% or little more than that. That clearly explain that there is some impact which is coming purely from our inability to, you know, complete orders on time. Maybe, you know, you are of course in a better situation, but, you know, it, the dots are connecting somehow, you know, which looks like a linear impact rather than any other factor.
No, no. Sure, sure. I'm not to be interpreted wrongly. I didn't say that. Because the attrition has been massive, I absolutely am not saying that there is no impact. Obviously, there is a significant impact. There's no doubt about it. What I was responding is that that's not the only factor. We have to work on many things. There are some which are definitely to our advantage. Our revenue, our model, business model is definitely to our advantage. That's how I was responding. Yeah, you're absolutely right. There is an impact because of manpower. There's no doubt about it.
Thank you. Thank you for answering all my questions. Best of luck for the timeline.
Thank you so much for holding this session.
We have a last question of the day from Imran Contractor, individual investor. Your line is unmuted. Please go ahead.
Yeah. Good afternoon. Are we on course to recruit 500 people that we have mentioned in our press release? Can you elucidate some timeline for the buyback which we intend to do?
Okay. First question, and I answered that a little, maybe there was dissonance, but.
Yeah, I heard about it but.
Yeah, we are on. I would say generally speaking, we are on track. We are getting good traction from the campuses as well as from lateral. I did mention about 60 campus connects which we've already done. Some batches are running in our training school, which is NSBT.
Right.
Right now, today the numbers are less, but the pipeline is very strong. Yes, we are on target to reach that number.
Okay.
Parag, should I take the question for timeline?
Yeah.
Yeah. Good afternoon. This is Poonam Bhasin.
Hi.
Sir, we'll be creating the
Yeah. I'm sorry. Yeah.
Yeah. We'll be declaring the results of our postal ballot tomorrow.
Right.
Post that, we have already announced that our record date will be November 27th. After the declaration of the results, we'll be filing the draft letter of offer with the SEBI. It will all depend that how much time SEBI will take for approval of our draft letter of offer. Tentatively, we are targeting that after the approval from SEBI, we'll be able to open the offer by mid or end of December, sir.
Okay. Just one more question. Will this NSBT become a profit center or it's going to be for internal recruits?
I'll say it like this, that we're primarily using it for our internal purposes. Our focus is not, atleast currently, our focus is not that NSBT should be a profit center. We are more concerned that it gives us trained manpower. That's our focus. If it becomes a profit center, we'll be very happy, but our focus is not that currently.
Okay. Thank you very much.
Thank you so much for your question.
I would like to now hand over the floor back to Swati to take final remarks from speakers. Thank you so much. Over to you, Swati.
Thanks, Harpreet. Thank you, Harpreet. We would like to thank all the investors for joining us today for this earnings conference call. I would now pass it on to Parag, sir, for his closing comments. Over to you, sir.
Thank you, Swati, and thank you very much, everyone, as usual for joining and for posing some very pointed questions. These are the kind of questions which keep us on our toes, which keep us thinking. Thank you very much for your confidence in us, and thank you for all your support. Thank you.
Thank you so much all the speakers. Thank you, investors, for joining the call. That does conclude our investor call for today. You may all disconnect now. Thank you. Have a pleasant evening.