session. With this, I now pass it over to Vishnu, sir. Over to
you, sir. Thanks, Swati, and warm welcome to the investor call for the Q1 ending 30 June 2021. The Q1 this year was one of the toughest for us. As we were barely recovering from the COVID-nineteen second wave, as we had mentioned in our call on 4th June, we were hit by a ransomware attack that almost crippled us for a couple of weeks during the month of June 21. Thanks to the phenomenal effort by our leaders and our partners, we are fully back on our feet and have emerged wiser and stronger.
The other challenge that we as an industry are facing is that of industry wide ambition due to huge increase in digitization work to the country. To ensure that nuclei is continuing to add value to our customers in an uninterrupted manner, we took some major steps. The compensation has been raised efficiently. While this has affected our profitability, we are confident we will be able to get back to our standard profitability in north 2% of future. We believe that this is an investment in our future.
With those words, I would now like to hand over to our CEO, Bharat Gijay. Over to you, Bharat.
Thank you very much, Vishnu, for your comments. Yes, I echo Vishnu's confidence. The quarter that has gone by is arguably the 1st quarter that I have seen in my 30 plus years of association with the company and the industry for that matter. We were hit by 3 major problems in fixed succession within the same quarter. The last one of them being something that the entire industry is working, the senior resource demand stroke challenge, the way we look at it.
We have responded to all these 3 all 3 of these challenges appropriately. And while it is still not sure where the bloodbath caused by the extreme surge in demand of trained technical people will stop, where it will stop. We are obviously closely monitoring the situation and will respond to it as required. While our profits have been impacted due to the rise in personnel cost, with the business opportunity is shaping up that are visible to us and already in our hand, We are quite confident that we will be back on track soon. That's all from my side.
Thank you.
Thank you, Parag sir. Key highlights from financials are, we have a consolidated revenue for the quarter is at INR 108.4 crores against INR124.2 crores quarter on quarter INR 128.4 crores year on year. Overall revenue in foreign currency including India rupees revenue was US14.8 million dollars for the quarter against US16.9 million dollars quarter on quarter and US17.3 million dollars year on year. Product revenue for the quarter is at INR89.9 crores against INR105 crores quarter on quarter and INR107.1 crores year on year. Revenue from the project and services for the quarter is at INR 18.5 crores against INR 19.2 crores quarter on quarter and INR 21.3 crores year on year.
Moving on to the expenses side of it, cost of delivery including cost of product development for the quarter is at 81.2 percent of revenue against 63.6 percent of revenue quarter on quarter and 62.6 percent of revenue year on year. In absolute terms, this is INR88.1 crore against INR 79 crore quarter on quarter and INR80.3 crore year on year. Marketing and sales expense for the quarter is 5.7 percent of revenue against 3.7 percent of revenue quarter on quarter and 1.6 percent year on year. In absolute terms, this is INR 6.2 crores against INR 4.6 crores quarter on quarter and INR 2 crores year on year. Moving on to general and depreciation expenses for the quarter is 11.8 percent of revenue against 7.3% of revenue quarter on quarter and 6.9% year on year.
In absolute terms, this is INR12.8 crores against INR9.1 crores quarter on quarter and INR8.9 crores year on year. EBITDA for the quarter is at INR1.4 crores against 13 against INR 31.5 crores quarter on quarter and INR 37.1 crores year on year. Other income from investment and deposit at INR 8.8 crores against INR6.7 crores quarter on quarter and INR10.7 crores year on year. Total other income for the quarter is INR10.8 crores against INR7.2 crores quarter on quarter and INR 13 crores year on year. Total taxes are at INR 3.1 crores against INR 8.2 crores quarter on quarter and INR 10.1 crores year on year.
Net profit stands at INR 6 crores for the quarter against INR 27.4 crores quarter on quarter and INR 36.3 crores year on year. Other comprehensive income is at negative INR3.2 crores for the quarter against negative INR1.5 crores quarter on quarter and INR2.4 crore year on year. Total comprehensive income which includes net profit and other comprehensive income is at INR2.8 crore for the quarter against INR25.9 crore quarter on quarter and INR38.7 crore year on year. EPS for the quarter is at INR2.07 as against INR9.42 in the previous quarter and INR12.51 in June 20 quarter. In terms of foreign currency hedges, on June 30, 2021, we had $35,000,000 of forward contracts at an average rate of 75.14.
There is a mark to market loss of 3.69 lakhs which is taken to hedging reserve in the balance sheet. Revenue contribution from the top 5 clients for the quarter is 26% as against 26% in the previous quarter. The order book position stands at INR 534.9 crores including INR 490.4 crores of product business and INR 44.5 crores of projects and services business. In March 31, 2020, the order book position was INR477.9 crores, including INR 445.9 crores of product business and INR32 crores of projects and services business. Total cash and cash equivalents as on 30 June 2021 are INR 734.3 crores against INR 692 crores as on 31 March 2021.
This includes balance in current accounts of INR 35.1 crores, various schemes of mutual funds amounting to INR 528.1 crores, fixed deposits of INR 29.6 crores, investment in tax free bonds of INR 113.2 crores, INR 28.3 crores in preferred shares. With regards to receivables, we are at INR 69.5 crores against INR 85.7 crores previous quarter. During the quarter, there is a gross addition of fixed assets of INR 2.62 crores consisting primarily of INR 0.34 crores on plant and machinery, INR 1.18 crores on software and INR 1.10 crores on computers. Now I hand over to Swati.
Thank you, sir. With this, we are now open for a Q and A 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 and A session. First question of the day we have from H&C Private Limited. Your line is unmuted. Please go ahead.
Great. Am I audible now?
Yes. You're audible.
So I yeah. So I have a couple of
questions, sir. First is the so I'll put together if you want. So, sir, are we still seeing difficulties in the NVAC sector as we said in the last call? If you see, as of now, the most of the NVAC now stands at a pre COVID level. And the collection efficiency also is nearly standard 90%.
So we are still having difficulties. Please give some color on it.
Hello? Hello? Yes. Hello?
Yes.
Hello?
Should I respond, Vishnu?
Yes, yes, yes.
Yes, this is Suraj here. Thank you for your question. So NBFs you've shown from a business perspective, orders of Chitungro, now we are not seeing any challenges. We are as I indicated in my initial comments that the business perspective looks good including LVFC. So to be precise, no, we're not now facing any challenges.
We are getting good traction.
Okay. So we are not taking any dividends out of the NDA.
No. Not that one. Okay. And the
second question, we can see there is a huge jump on the employee benefit expense, which stands at 85% as a percentage of sales during the quarter and the last quarter was 59%. So will it continue for the coming quarters, sir? We are quite actually higher than the peers on the employee expense.
So you're talking about personal expenses, right?
Yes, yes, yes. I'm talking about the personal expenses, right, employee benefits expense.
Okay. So this quarter is exceptional because if you note, our revenues are also down because of the problem that Nishnish has talked about. We have seen the problems in succession. COVID, we were impacted severely and followed by We don't expect the same in next quarter. At least that is what is the expectation because as I said, the business is looking good.
At least other key problems are behind us and
Okay. So we'll still maintain 64% on a year basis?
We're not very sure whether as
Parag has highlighted this issue. As Parag has highlighted, we do hope to recover from obviously this hopefully the U. S. Quarter, we will certainly recover, but how much how long will it take for us to come back to the same ratios? We are not in a position to comment right now.
Next,
we have Divesh Mehta from Dollop Capital.
Hello. Thank you for taking my question. Am I audible?
Yes, you are audible.
Okay. So my first question is that, even when in the last quarter you had seen some revenue decline, which was due to supply side partners or lower attrition from the order book. Is this the same case this time? Even if it is the same case, I think the decline in revenue is a bit steep, if you can give some clarity on that. And what is the current status in July August?
How are things going on right now? And how do we expect to again get traction from the order book because our order book is increasing, but the revenue is not? And can you share the quantum of the bonus on hike given and what is the addressing percentage? That's it. Thank you.
If you can answer this.
Okay. As far as the addition percentage is concerned, I think it is a 4th of 30% annualized. And in fact in 1 month it was fairly close to 40%. However, thanks to the substantial increase that we have given, it is certainly and then at the industry level and we will be taking the steps accordingly. So broadly, this is what we can say at this juncture issue.
Is there anything else that you would like to understand, please?
If you can give an idea that why the so why there was such a big decline and how will how are you planning to recover from this? And how would the Okay. The orders would fall into the revenue?
Right. So as far as the steep decline is concerned, as we had mentioned earlier, the COVID second wave and the ransomware attack, these are the two main reasons along with the attrition that I have talked about. And as far as the order book is concerned, it is a combination of both immediate term, short term and long term orders that are there. And that's how you see this increase in order book. However, part of it may or may not be executable immediately.
So that is the reason for while order book is higher, partially it may not be executed. I hope that answers your question about steep decline and the order book.
Next, we have Rahul Jain from Golub Capital. Your line is unmuted. Please go ahead.
Yes. Hi. Thanks for the opportunity. Vishnudri, from the ransomware side, could you little bit elaborate in terms of what was the precise impact? Is it some client side revenue recognition which could not happen for some period?
Is it some revenue reversal or it is loss of time which led to this impact from ransomware on revenues?
Essentially, it was loss of time that for some of the customers, thankfully, we were able to procure within days. For some of our customers, it took us a couple of weeks. So it was basically a lot of time where some of our teams could not work. And that is what has resulted into drop in the revenue to the brand of revenue. And of course, as we have mentioned earlier, other part of the and then of course, we did recover in fact in timely manner from ransomware.
There's a partner with whom who helped us out in this recovery. They have mentioned that this is one of the fastest recovery that they have seen. So clearly, we have come out, as I had mentioned, wiser and stronger. We need to be far more vigilant than we were. And that's what now we are very closely working on to make sure that we have learned from our from this incident.
Sure. Sure. And of course, you said how you would recover over a period of time and difficult to gauge. I can understand that part. But just simply from a pure supply side factor and ransomware side factor, which is more like a onetime kind of an impact.
So is it fair to assume from a July August run rate basis, we are at least back to our, let's say, Q4 kind of a run rate? Or it is too early to even conclude that?
Yes. It is too early to conclude even that because we are while we have started functioning fully by end June or 1st week of July, the impact that is the suspension of work by whatever days, weeks that happened that we are still working out how we will impact the revenue for this quarter as well as when it's true.
Right, right. And on the attrition side, as
you said, it went alarming
all the way to
40% side, as you said, it went alarming all the way to 40% monthly run rate on annualized basis. So is this new hike effective month of July? And if yes, then has this helped in some curtailment, has this helped in some curtailment of the attrition in the July data so far?
Certainly, this hike is effective April 21. However, because of the issue that we were facing, the communication was done in the month of July. And yes, we do feel that the worst is behind us even on this side.
Okay. So you are essentially trying to say that although the salary was revised up from April, the for Q1, the increments were rolled out, the arrears were rolled out in the month of July from a cash flow point of view?
It was not cash flow point of view.
It was cash flow was not an issue. The entire process that
Yes, I understand. So people who received this money for increased salary was paid eventually in July. So people didn't receive that increased salary in April, May, June as those months happened because that communication itself happened in July, although it is effective from April.
And you got it absolutely right.
Okay, okay. So that's why even any benefit from an attrition point of view could have the decision making could have helped only in July, not earlier, right? Because they were not aware of the spike.
You got it absolutely right.
Right. So that way so again, moving back to my original question, which is like has July attrition cooled off to a normalized level or the market is still hot and that's why it will take some more time for us to normalize?
Okay. Let me put it this way, market used to be hot. We are keeping a very, very, very close eye on how things are unfolding. As of now, we feel the worst period is behind us. But we will let you know when we connect in the month of October or early March, I'm not sure, in the next
move after
our board meeting.
Right. And sorry if I can squeeze one more. Just last question. Have we done any kind of analysis in terms of who we are losing this talent to? Is it going to start up ecosystem or more going toward IT services, which is again hiring big time?
Given the nature of the talent we may have, could be a little more specialized on the product side. So where we are losing these people? Which kind of company we're losing to these people?
Surima, would you like to take this?
Sure, sir. Thank you. So they are very kind of companies. There is no specific place that I can name. The multiple of them, there are midsized and also the big size that people are going to.
And of course, the compensation is the major factor for which people end up seizing. And it's started as soon as the big five that people are going to. Next we have Himanshu from PGIM.
I have 2, 3 very basic questions related to the business. In one of the calls, we stated that existing product has used a huge opportunity and we have only done a very small portion of it. And the steps we said that we need to expand geographically. And in few markets we have 1 or 2 customers only, hence we need to gain market share in those markets. Generally in this business what leads the customer to change his vendor or add a new service line.
What is your strategy besides good product to gain market share in these geographies? And what progress have you made in this in last one year? Because I think this was stated in Q1 FY 2021.
Yes. Thanks for the question. I think right through the year that has gone by, we have been reaching out to our prospective customers through various web conferences. And thanks to that, there is adequate amount of inflow of inquiries for our solutions. And what is happening is while the inflow is adequate, the inflow of inquiries is adequate, the decision making cycle is slightly longer.
We do have some orders coming in, but we don't see them at the pace that we would like to. But at the same time, we're confident that as things start settling, we would be able to see upsurge in the orders coming out.
No. See, my question was so this is what we are seeing, but my question was on our strategy to gain market share and what leads the customer to add change his vendor or let's say add new product to his system. So in many of the markets where we stated that only 1 or 2 customers and the focus has to be to gain market share in those properties. So just on those aspects, if you can elaborate, I wanted to my question is to understand the business.
Yes, sure. Okay. The way I would
answer this part of the question is,
with our implementation, wherever, major markets we have, we are demonstrating the value that is getting delivered to the prospective customers from the existing customers that we have in those geographies. And then we encourage them to look at our line of business getting starting to use our solution. And once that they are able to see once that goes live, they are able to see the value. And over a period then we visualize that other lines of businesses, they would be able to see the value in our product. For example, buy now, pay later is a functionality or is a need that is arising in a substantial way.
And there are adequate number of queries on that part of the functionality, which we are talking to at least maybe 5 to 10 customers. Now once these customers who want to start offering buy now pay later functionality product to their prospective customers, Once they see how easily they can offer that to their customers, we are confident that they will use our product for their automobile offering, their mortgage offering and so on. That's the way we are approaching this situation. Himanshu, I hope I have answered your question now.
Yes. Can I ask 2 more questions? Yes, please. We had said
Yes.
We had said that
we have 3 modes of business growth. Okay? 1 is product, the second was upgrading and third was service business from gaming and Singapore where we do customized products, okay, that that service business. How is this business of services doing in terms of growth? Because what we understand is the digitization and so many things improving and we being more specialized, are we getting higher traction?
Or do you think that business can also have a higher growth? Or what's your what are you seeing ahead in this?
I would request my colleague, Anurag Mantri, who looks after this business as well apart from his CFO hat to answer this question.
Hi, this is Anurag. Thanks for your question and you are absolutely right that in these days, services dimension is actually is gaining lot of traction and we are also leveraging on the same. We are expanding our digital services offering in services business and in recent times, we have received some very good traction from Southeast Asia market as well as Middle East and we are seeing some we are expecting some significant increase in services business around the digital transformation offering. Okay. Yes.
But are the margins also improving in such businesses because where the customized solutions are there and are you able to differentiate e being because of the financial domain? Definitely, yes. So, the way I would like to answer is that the margins are not that great in the traditional IT services business. In last 2 years, we have predominantly moved towards the transformative services business and there we are taking a unique blend of our functional and domain knowledge as well as technical expertise to our customers and that is helping us to demand a premium or higher margins. Okay.
And my last question, as investors are our understanding in the product businesses, it's a steady business in cash flow terms, Our revenue line will be more volatile, but once customer is logged in, it will remain with the company for a long period of time. And incremental costs are low, okay, for getting the or selling the products, okay. Hence, such companies will pay good dividend. So we see Oracle or let's say, Australia, Cali and all these companies whose dividend will be more than 60%, 60% of the profit. Why and what risk does the Board see and we as investors are not able to see?
Can you elaborate on the because I think there is a lot of questions historically has been asked. And but as investors, we come with such a mindset because we look at other product companies in such domains behaving in this way. And this company behaves in a different way. So I think the difference in the way you see risk and we are not able to comprehend. So can you elaborate on in 4 minutes on the risk which Board and management is able to see and the investors are not able to see in the business?
Okay. Let me attempt answering it this way that we are scheduled to have a Board meeting essentially on this single topic alone in near future. And when we connect next quarter, we'll be
able to give you a
comprehensive perspective on how Board is looking at this, as you have very correctly said, the longest standing question.
One thing, just elaborating on this. So do you think that risk we are seeing or do you think we have a prop as investors, we have some decent understanding, but it is just a competitiveness of management, the risks are able to understand the investors. Or do you think the gap is between our understanding of risk results? The way management and Board thinks and the investor thinks is very different.
Fair enough. And that's what I would just like to repeat that Board is meeting essentially to discuss these issues in near future. And then when we connect next quarter to update you about the 3rd quarter in the month of October or early November, that is the time we'll bring
you up the call. Okay. Thank you. I respect your answer. And I really appreciate the way you conduct the call for Comcast.
Thanks.
Thank you. Thanks for the appreciation.
Next, we have Deepan Shankar from Trustline Chambers. Your line is unmuted. Please go ahead.
Yes. Thanks a lot for the opportunity. And firstly, I would like to understand the outlook on our business, specifically on export side. So how is the outlook looking on the current business environment?
Our outlook as far as our business is concerned continues to be good. We as we have mentioned in last call also and earlier today also, we continue to get good queries and very serious queries, both on our product and services part of the business. We obviously are facing the challenges that industry is facing in terms of attrition, etcetera, for which we are taking necessary steps. And we see a much stronger company coming out of this difficult period. And that's the way I would like to describe the outlook of our business.
Okay, okay, sir.
And the employee cost, this current quarter run rate, will it continue in the future also or are we expecting some more increase in this cost?
That's an excellent question, Mr. Rudin Shankar. I think we are keeping a very, very, very close eye on the developments in the marketplace. You are tagging the industry. So, you know that 300,000 people companies are planning to hire 100,000 people and so on and so forth.
This is, as my colleague, Parag, you mentioned, it is really a birdbath. So, is it difficult for us to say anything about where the costs are going to be, what the ratios are going to be? All I can say is we're keeping a close eye and we would respond to the development in the marketplace appropriately and we are absolutely confident that we will come out stronger. Okay. That's good to hear.
And lastly, during our AGM discussion, we also discussed about getting more input on our disclosures on cloud business. So can we expect any action trend in the coming quarters in getting more Yes, certainly. You can expect more disclosures on cloud business.
Before taking next question, I'll announce participants if you still have any questions you may please press 0 and then 1. Next we have Vaibhav from HNI Investment. Your line is unmuted. Please go ahead.
Hi, sir. Thanks for providing the opportunity. So I have one observation or comments to offer and then 2 questions probably. So in terms of upcoming Board meeting before next quarterly result for the deciding on cash distribution or capital allocation, whatever topic you see. So we would prefer that whatever you decide in terms of whether it's buyback, whether it's additional payout or whatever it is, it has to be a long term policy.
It should not be that one reasonable dividend is declared and then again our payout is reduced again to 20%, 30% or so. I think given the nature of the business and cash generation, as one of my earlier participants said, the dividend payout has to be higher on a constant basis. Given the fact that we have already accumulated, I mean, INR 7.34 crores of cash and I can't imagine where we are going to deploy that. So I would request management and both to think on that front rather than just giving one time thing to satisfy investor. It has to be a continuous capital allocation policy rather than just one time policy.
So that's an observation. Now on the question front, so when do you have this revenue decline? Obviously, some of the installations at client and has been delayed or because we are not able to deploy it means that we are not able to work and if we are not able to work obviously client they also suffer to some extent. So are there any penalties or any revision in contracts that can happen due to this or you are not foreseeing this as of now?
Thank you for the comment as well as the question. Let me just assure you that preference of having a long term policy rather than one time will certainly be communicated to the Board. And now coming to revenue decline, thankfully, I would like to say because of the value that this company continues to deliver to all our customers, all our customers have been understanding enough, appreciative enough of
whatever
Yes.
Thank you for that question and contribution. So, no, we have of course there has been temporary impact that customers have faced.
Yes, it's not sorry, I think that some voices are mixing up probably. I think there is some problem in Vishnu's slide, if I'm not wrong.
So, this is Gaurav here. I'll add to what is to say that while I guess because of the challenges we faced, there was a company impact on how things are moving. So there have been certain delays, NLP or anything like that, right? And as we bounce back, we expect that I will do nominal business. But the answer is that, actually, there have been no penalties.
Okay. And second question is around the employee cost. Obviously, the numbers are in front of us. But maybe I missed the number of employees count if you provided earlier. If you can provide the number of employees at the end of June at the end of March and June 2020, all the three numbers that would be really helpful.
Tapan, you mentioned all the three numbers?
Sure, sir. So we are having 1732 headcount as of 30 June 2021 and 1932 headcount was at 31st March 2021 and 2,117 as was 30 June 2020. Okay, got it. I think that's it from my side. I will come back in the question queue.
Thank you so much. Thank you so much.
Next we have Parag from Covalent Capital. Your line is unmuted. Please go ahead.
Yes. Hi. Can you hear me?
Yes. You're all welcome.
All right. Thank you. A question for Bharat Dussej. So I understand that attrition is high in the industry and not our costs will go. What are we doing long term in terms of making attrition, management?
So are we looking at increasing the soft and other long term compensation in line with what typical product companies like or if I'll just go to? And how would that impact the way our TSOP's structured how things tackle this attrition or retention. So one of the long term strategies and we believe that has got in 20 years is that we are going in this time in terms of recruitment of pressure. So we might have come across our press releases in the media about hiring of 500 professionals in this year essentially success. That's what we believe will help us long term.
Whatever we have done in terms of increments, we have done as Vishnu has been saying repeatedly. We are monitoring it very closely. So we will respond as a market response. We don't know yet. We think we've done significantly.
But if that's not enough, we'll see what needs to be done. But long term strategy definitely is of hiring pressures and making them ready at the best hospitals. That's what we believe is going to help us.
And I
just want to let me just add to
what hello. Let me just add to what sorry,
sorry, sorry. Now mentioned.
Yes, you wanted to understand also our perspective on ESOP. We are not exactly in favor of ESOP, but at the same time, we are looking at alternatives to Ethos and we will talk about them in coming quarters.
Okay. So is there any specific reason why you do not favor ESOP's over long term compensation and retention too?
Yes. That's an outstanding question actually. We want to be thanks for reading it. We want to be extra careful when it comes to maintaining the integrity of the system. And we fear that with Ethos, the risk is relatively higher.
So, that is the reason we are avoiding Ethos as a instrument to for taking care of the long term.
So do you see the dilution happening? So if you Sorry? Some of these thoughts. It's not it has
nothing to do with dilution. It has you know it is more you know more to do with how it is structured and how it can be there is a risk of being played around it. Please, we'll talk about this maybe in next time when we are ready with our comprehensive
call. Next, we have Vivek Ganguly from 9 Rivers Capital. Your line is unmuted.
I had one question. While we were talking about the impact of the ransomware, I got the impression that and while we said that it is sorted, I got the impression that there is some lingering impact of the ransomware attack on the company in terms of the ability to execute projects on an ongoing basis. And that's why you said, we'll see over the next couple of quarters how we recover from that. Please can you clarify on that? What is their impact still an ongoing thing or has it been totally sorted and we are out of that phase and all necessary actions have been taken post
that? Thanks for raising this very, very relevant question. We see no there is no lingering impact of ransomware attack that happened in the month of last 2 days of May and the entire June. There is no lingering impact from that perspective from execution of business perspective. However, when I said that it will take some time, there is clearly there were a few programs which got suspended for a couple of weeks, maybe some would have got suspended for a slightly longer period.
And ensuring that they are back on track it can take some time. That is what I meant by it will be clear in the quarter. Okay. Does that answer your question?
Yes, absolutely. So my next question is on the employee cost. So there was a overall over last quarter or last year, there was about a 20% hike that you'll have given. So has that been done uniformly or a particular where you all want to do people or the set up or a class of people you all want to retain, you all have given them disproportionate hikes and it is much lower in the other section. Is that how it has worked out?
And going forward is on a steady state basis, these pressures can still be there. But if the attrition and the external macro pressure were to kind of abate, would 92 odd cross be the steady state number to work with?
Yes, yes. That's right. That's a reasonable assumption to make. If things are to abate now, that's the number that we are or a slightly higher number would be the steady state number to work with. And having said that, your earlier part of the question, as you have yourselves very correctly elaborated, the increment are obviously given depending upon the market reality.
So and market reality is different for different set of skill and so on and so forth.
Okay. Thank you. Yes. Thank you. Thank you.
Next we have Samaj Jain from DBS Capital. Your line is unmuted. Please go ahead.
Hello, am I audible?
Yes.
Yes. This is Samarth Singh from PBF Capital. My question was, I read a recent article regarding the merger between Centrum Capital and BharatPay and how Centrum Capital would be using sort of BharatPay's loan origination system. So, my question to you is, do we see that as a risk to our business in the future where NBFC is combined with FinTech players who sort of have their own loan origination and servicing systems?
Let's look at this marketplace as it is unfolding. Clearly, you have fintech who are wanting to offer their loan origination solutions to our set of customers. There are other players who want to offer similar functionality. And I think there is more than adequate competition that exists for the solutions that we provide. And now having said that, the humongous amount of investments that we have been making and we continue to make, that gives our customers kind of confidence that, yes, all their needs will be fulfilled by us.
And that is what gives us confidence to make the bold statements to all of you analysts and investors that yes, this is a long term play, which would continue to deliver value to all its stakeholders and of course customers being the number one of them. So that's the way I would like
to
answer your question. I hope
you're comfortable with it. Yes. Thank you for that. And just, I guess, one statement, we appreciate management not giving out ESOPs and rather taking the hit on the P and L, it gives a clearer picture of what the actual the real P and L is and doesn't dilute shareholder equity. So, we appreciate that.
And hopefully, in the Board meeting to be held, as we mentioned, soon, there is a talk about a buyback so that we can further reduce the shares outstanding.
Thanks. Thanks a lot so much for your appreciation.
That's it from me. Thank you.
So the last question of the day we have from Wabhu from HNI Investment. Your line is unmuted. Please go ahead.
Thanks for providing the follow-up. So just slightly on a longer term impact of this increase in employee costs, which is obviously driven by attrition. So, this is a fairly recent phenomenon. This has happened just mostly in last 6 to 9 months. And this has hit the whole industry completely unguarded.
I mean nobody was actually predicting that this would actually happen. And given the kind of our business, which is product business and we have generally long term contracts with our customer for AMC as well and for product maintenance and installation everything. Do you think the profitability is actually has been impaired on a relatively medium or long term basis because of this increase in cost? Or do you have the relevant clauses with the Yes.
Sorry? Hello?
No, please go ahead. Please go ahead.
Yes. So the profitability has been impacted on a relatively medium and to long term basis due to this or do you have the relevant increment price contract with the customers?
That's a brilliant question, Vibal. Thank you so much. While we do have the adequate clauses in the contract, but even beyond the contract, this is a value delivery that we make to our customers, which gives us the confidence that even if it is not there in the contract and if we go and talk to them and explain the logic to them about how they need to ensure that we remain profitable for their own benefit, for their own long term benefit. We are confident that they will listen to us and will do the need for it. So that answers your question.
Yes, I think that's helpful. And I will also add to what earlier participants said in terms of eSOP. I think I completely agree with management on the integrity issues that are involved in ESOP. And it's very essential to have a good long term culture. And ESOPs have a lot of these issues.
So I commend the management for having this in mind while deciding on ESOPs. That's it from my side. Thank you.
We deeply appreciate your appreciation of some of these long term decisions. They are difficult to make, but we see the value getting delivered to all our stakeholders for
the coming decades, thanks to the decision. Thank you. Thank you so much.
With this, I would like to now hand over the floor back to Swati for final remarks. Over to you, Swati. Thanks, HP. So we would like to thank all the investors for joining us today for this earnings conference call. I will now pass it over to Vishnu sir for his closing comment.
Over to you, sir.
Once again, this was another opportunity for us to connect with all of you. And we would like to thank all of you for your continued interest in Nuclear Software. And I take this opportunity to reiterate our commitment to build a long term institution and make sure that we take care of the needs of all our stakeholders. Thank you so much.