Q1 24/25

Aug 13, 2024

Summary

Q1 FY25 revenue rose 37% YoY to INR 74 crore, with EBITDA margin at 17.9% and PAT up 42%. The INR 750 crore order book supports execution visibility, while project timing drove quarterly margin volatility and acquisitions and data-center consulting broaden growth avenues.

Good day, and welcome to the Q1 FY 2025 conference call of Ceinsys Tech Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir. Thank you. Good afternoon, everybody, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the investor relations of Ceinsys Tech Limited. On behalf of the company, I would like to thank you all for participating in the company's earnings conference call for the first quarter of financial year 2025. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings 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's beliefs as well as assumptions made by, and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Now, let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We have with us Mr. Kaushik Khona, Managing Director of India Operations. Without any further delay, I request Mr. Khona to start with his opening remarks. Thank you, and over to you, sir. Thanks a lot, Anuj. Very good afternoon, everyone. It's a pleasure to welcome you to our first-ever conference call for the first quarter of financial year 2025. Given that this is our first earnings call, in the interest of some of the people who may be new to the company, let me first start by giving you a brief overview of the company. Ceinsys Tech is a leading Technology Solutions provider in the IT-enabled sector. Renowned for its expertise in geospatial engineering as well as other engineering services and solutions. The company offers a broad range of geospatial intelligence services, including data creation, data analytics, decision support system, enterprise web solutions, and positioning itself as a key player in these domains. In the FY 2022, Ceinsys strategically expanded into mobility sector by acquiring Allygrow Technologies, a specialized engineering service provider with a strong international presence. This acquisition allowed Ceinsys to enhance its capabilities into manufacturing technology solutions, covering the entire product development process and industrial automation for diverse sectors such as two and three-wheelers, passenger cars, commercial vehicles, and off-highway equipment. Ceinsys serves a prestigious global clientele that includes large corporates, OEMs, asset management companies, and government bodies, highlighting its robust reputation in both the geospatial and manufacturing sectors. With offices in India, the U.S., the U.K., and Germany, the company combines local expertise with a broad international reach. Additionally, Ceinsys is venturing into software product development and emerging technologies through a new vertical focused on artificial intelligence and machine learning and embedded electronics. This vertical emphasizes advancement in Metaverse, ed tech, gaming, and mobility, reflecting the company's commitment to innovation and maintaining a competitive edge in a dynamic technological landscape. Now, moving on to the performance of the first quarter of FY 2025. For the first quarter, the operational revenue was INR 74 crore, representing an increase of around 37% year-on-year. The company was able to achieve strong top-line growth on a year-on-year basis despite adverse impact owing to general elections, where there was a code of conduct for most of the period. EBITDA reported was around INR 13 crore, which grew by around 16% year-on-year, and EBITDA margin stood at 17.9%. The net profit after tax was reported around INR 12 crore, which was increase of around 42% year-on-year, while the PAT margins reported at 16%. On our business segments, the geospatial and engineering solutions revenues for the quarter were INR 42 crore, a small decline of around 13% on year-on-year basis due to some deferred revenues on some projects. The Technology Solutions revenues for the quarter was INR 31 crore, which grew by almost four times year-on-year. On the operational front, the company successfully implemented major projects like IoT project under the water domain, digital project management systems awarded by the State Water and Sanitation Mission, Maharashtra, under the water domain, and consulting services for third-party inspection projects of various rural water supply schemes at Uttar Pradesh. All these were under Technology Solution segment. On the business development front, during the quarter, the company was able to generate fresh leads for fresh and renewal of business of almost INR 270 crore. Of these contract closures of almost INR 50 crore were achieved. The current order book stands at around INR 750 crore and a bid pipeline of around INR 200 crore is being pursued. With that said, we can now open the floor for question and answer session. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone phone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Our first question is from the line of Suresh Paul from Avendus Spark. Please go ahead. Thank you, sir, for the opportunity. Am I audible, sir? Yes, you are. Suresh, go ahead. Sir, my question is, I am new to the company. Can you please explain what is the tailwind that we are seeing in our company? Well, as I introduced, the company is primarily into IT-enabled sector, and there is a special focus on the geospatial vertical. As you may be also aware, the government of India, through the recent finance budget, has given a huge emphasis on the various projects which are geospatial related, including the land and other records mapping for the rural and urban area. On top of it, the company is providing the Technology Solutions, and it is not in the pure play of providing any products. We are into providing complete solutions, including development of software wherever required. The company is in the area where there is a huge growth opportunities. The sector itself is growing substantially well, as you may be aware. The growth potential of these sectors have also been multi-fold through this budget which has been stipulated in the month of July 2024. We see a huge opportunity for the growth, and we see good tailwinds as regards the growth opportunity. We don't find any headwinds in this sector as of now. Sir, can you please explain what is the rate of growth that we can expect for our company in the coming years? As I think we already mentioned, we would not be giving any forward-looking statements, but you would be aware that the sectors which we are into are growing in the range of around 20%-25%-30%. We are also benchmarking our growth to the sectoral growth. We want to be better than the sector, and therefore, the growth expectations could be of a similar nature. You could also see that in the performance of the past years, we have grown on a 25%-27% in the last one year, which is the history. As we already have mentioned about the order book, we have almost INR 750 crore worth of order book, which we are to execute in the period of next two to three years. We expect the growth to be in line with the targets, as well as the overall segment growth, which we expect in the range of around 20%-25%-30%. Okay. Thank you, sir. That is all from my side. Thank you. Thank you. The next question is from the line of Guneet Singh from Counter Cyclical PMS. Please go ahead. Hi, sir. Thank you for the opportunity and your time. You made an acquisition recently. Can you just share some numbers regarding the revenue, top and bottom line of that acquisition, and whether it has been consolidated in Q1 numbers? Thanks that you are keeping track of the company. We recently acquired VTS, which is in the geospatial area, and this company is based in U.S. It's a small company to begin with because we wanted to have a presence in geospatial for going further into the geospatial area at U.S. The company itself had a top line of around $3.5 million to $4 million year on year. We expect that the growth of that company, we will be able to push further. One, because we also have started deploying people over there, for the growth of that business segment. VTS has been recently acquired. It is in the month of July. These companies have been taken over by an asset, and the business is now being populated. Therefore, it's not included in the quarter results because the acquisition has happened after the end of the quarter. Let us know, basically $3 million to $4 million top line would be added Q2 onwards, basically. Year on year, that's the potential which the company had in the past. We expect that to continue or maybe improve further. But for that, we are doing all further efforts by putting more people over there to grow the geospatial segment focus in U.S. What kind of margins do we see there? U.S. margins are not so heavy as in India. The company which we have acquired had the historical margins of around 14%-15%. However, once we expand and it remains to be seen how much economies of scale we are able to obtain. But in U.S., margins of around 10%-15%-18% are said to be good enough. Okay, sir. We recently planned to raise money. Do we have any big acquisitions in the card this year? Are we working in that direction? What kind of target acquisitions are we looking at? Can you please throw some light on that? I think it's a very relevant question. You must have seen that since March onwards, 2024, we have already authorized the company to raise fresh funds by way of preferential allotment of shares and warrants. The overall fund raise will be in the range of around $25 million-$27 million. All this is for the acquisition. We have already appointed the agency, which is CARE Ratings, who is going to monitor the funds. The raise of the funds has still not happened. It will happen once we have timed it along with the acquisitions which are being lined up. We have identified a few acquisitions, but right now it will be premature for me to identify and highlight which are the acquisition targets. The acquisitions, however, I can say that they will be in line with the existing line of business, which is the engineering solutions, the geospatial solutions, as well as Technology Solutions. One area which we are also focusing, which you must have seen, is that we are also trying to add value by focusing into setting up of the data centers, which is a tech-enabled center. We are not into the physical infrastructure setting up, we are into the consulting part, and we have already set up 100% subsidiary at Singapore, for which the board has authorized for the investment of around INR 5 crore into the equity of that capital. The company has also appointed a very renowned and experienced professional who has exposure of setting up data centers for over the last 18-20 years in Singapore and in APAC region. We expect that also to be given a good focus in this coming 2 to 3 quarters, where we can find out new avenues to add our top line. Right. Sir, is it reasonable to expect about INR 20 crore to INR 30 crore revenue for the potential targets because of the kind of funds that we are raising? Also, sir, setting up of data centers, what is the rationale, and what kind of leads or order pipeline, or what gives us the confidence that we will be able to establish ourselves in that domain, given that we have not been present in that? One thing which gives us that confidence is, first of all, the prospect investor who is going to fund these new preferential allotment. They themselves had a very good kind of history in setting up of the data centers, and they are also giving us some leads and help onto these avenues. The data center, as I said, we are not a physical data center setup. Why we have identified, because it is a huge tech-enabled area, which we see a good focus. In fact, as per the study reports which we have had, there is a growth of the data centers business alone of more than 25% to 30% in the APAC as well as in India. We are talking of large data centers, like those set up by Amazon or Google and all. Therefore, we see a lot of potential to set up those as additional avenues for our consulting business. Right. Sir, as per the target acquisition, is it fair to expect 20-25 million top line considering the kind of funds we are raising? As I said, we have still not signed off any further acquisition except the VTS, which we already mentioned about. Once we are able to sign off, we will be able to publish that into the stock exchange, and we will be able to give you further guidance on that. Perfect, sir. My last question to you would be regarding the EBITDA margins. Directionally, can we expect to maintain 20%+ margins? Just in the directional sense, I don't want any specific numbers. Also considering that the industries we are in are growing at 20%, 25%, and we want to grow faster than that. Can we reasonably expect 30% to be a good number for growth for the coming three to five years? Well, I think, as I said, yes, I don't want to again be mentioning about any guidance of future, but we have our own targets to be ahead of the industry, and we are working on all the projects, and the projects which are in pipeline have a net EBITDA margin in the range of around 20%, 25%, 30%. I think over a period of this financial year, we will be able to see the sustainable improvement from the margins which we have been reporting year on year. If you see the last three years' margins also, they have been steadily enhancing and improving from 2022 to 2023 to 2024. We are on the track to see that the sustainability of the growth of margins also sustains. Perfect, sir. Thank you very much. I will join back the queue for more questions. Thank you. Thank you. The next question is from the line of Richa from Equitymaster. Please go ahead. Sir, thank you for the opportunity. I am new to this business. Could you help me understand what is the percentage of business or revenue from government? Is it a tender-based business, the order book that we are talking about? Also, if you could talk about the breakup of this order book of INR 750 crore. What are the constituents of this order book? Sure. Predominantly, three years before we acquired Allygrow, we were more so 95% onto government businesses. After the acquisitions and after going further into corporatization of the business, the present government business is in the range of around 65%-70%. The order book of INR 750 crore, which I mentioned, the breakup of that mainly provides into two, first of all, segment-wise breakup. Out of that INR 750 crore, around INR 550 crore is towards the geospatial and engineering services, and around INR 200 crore plus is towards the Technology Solutions services. As regards the government exposure, the government business is on the basis of the tenders, and many of them are in respect of the same water-based or the smart city solutions which we provide through Geospatial. These are the focus areas where we are having our expertise, and we try to tap the opportunities wherever available from the government auctions or tenders where they are available. Okay. And sir, could you name some of the peers or competitors who are operating in the similar area in India? How does this order book look on a year-on-year basis? What kind of growth has been there? Yeah. I would not be able to identify a one-on-one competition because we are into four or five major business segments. As we said, we are into geospatial. One can relate that to perhaps to that element. We can relate to the C.E. Info Systems, which is into MapmyIndia kind of width, but it is again, a product. We are not into the product. If we look at the Technology Solutions, we have some companies which are based in Nagpur or who are based in Mumbai also, which are of the similar size, and which can be kind of compared. But if you look at the kind of the bouquet of services which is offered by the company, I have not been able to come across any company which is an apple to apple company. That's my take on the competition. What was the second question? I missed it. It was about the progression in the year in the order book. How does it look on a year-on-year basis? I can give you the past, in the sense, when we started 2023-2024, our order book was in the range of around INR 250 crore. When we closed the year 2024, we were at around INR 700 crore. After execution of around INR 65 crore of projects, we are again at INR 750 crore. I said that there is a pipeline of the tenders which we are already tracking as of now of around INR 200 crore, of which there are 70% of the tender pipeline we are already L1. We hope that it could fructify. Although I cannot give a guidance because that's all subject to the final government approvals wherever they are in relation to the tenders and the invites. Going forward, we are trying to focus more on similar exposure of geospatial and smart city solutions. Going into the different states, like we are having major presence in Maharashtra, and we are also having presence in Uttar Pradesh. We are trying to tap further into the states of Chhattisgarh, Madhya Pradesh, Jharkhand, Delhi, and Rajasthan, where we already have people and infrastructure base. These are some of the states which we have identified to go into and tap further opportunities. I think the order book position, we will be able to update it on a quarter-on-quarter basis at the time of every periodic reports which we publish. Okay. And sir, typically, historically, what has been our strike rate? Like you mentioned, the pipeline is of INR 200 crore. Historically, what kind of success rate do we have when we bid for these tenders? To be very frank, we apply where we feel that we have the ability to strike the deal. Historically, we have had a strike rate of almost 90% plus. So it is something where after having done our diligence, after having seen that we have a good capability to execute the project, there only we apply. That is where we try to see that we meet the criteria of technical qualification as well as ensure that we also are kind of competitive on the commercial part. So, so far our strike rate has been in the range of around 90% plus. Okay. Thank you very much. Thanks a lot. Thank you. A request to all the participants. Please restrict your questions to two per participant. If you have any follow-up questions, you can rejoin the queue. The next question is from the line of Ankit Minocha from ADV Ventures. Please go ahead. Yeah. Hi, good afternoon, and thank you to management for starting the investor conference calls. I think this is a great initiative. Overall, my first question was regarding the order book as well. If you are talking about a INR 750 crore order book in the next two years, that is substantial growth over our last year numbers. Firstly, do we have the execution capability currently to execute a INR 750 crore order book over the next two years? Secondly, what would be the average or margin profile of this current order book? I think a very valid question, and thanks for your compliment. You are right, the order book has an execution timeline of two years, and two to three years in some case, because that also includes the O&M part of some of the orders. Capability-wise, we have added a lot of capacities over the last six months, where not only the execution part, we have also ensured that our systems are further upgraded to see that the execution are being monitored centrally. As of now, we have the order book which we are trying to tap. We have ability of execution and the capability even on the technological side, as well as management side. We do not see any challenge in execution of even a higher order book as of now, and we are trying to therefore tap further. As regards the margins of order book, which we have already kind of signed off, the gross margins are quite good, and I think we should be aiming, as I said, again, I should not be mistaken to give any kind of guidance. But going forward, we should be able to achieve our targets of having a higher EBITDA growth on a sustainable basis between 20%-25% to 30% in the next one or two years. Right. Thank you for the clarity. My second question is with regard to seasonality in the business. I was just kind of looking at the quarter-on-quarter numbers, and for example, the June quarter was very strong last year, and it also comes strong this year, but then we saw some kind of a dip in quarter 2 and quarter 3. Is there a seasonal element to the business wherein these executions and tenders are executed more over a certain point of time, and should we be taking that into account? Let me first of all clarify, these all projects which we do are little long-term projects, in the sense they either span from nine months to 12 months to sometimes two years also. Typically, we therefore have a structured way of doing business, which we measure, although the measurement obviously happens quarter on quarter. But the kind of the cyclical fluctuations which could happen gets evened out on a yearly performance parameter basis. I would rather look at the performance on a year-on-year basis. There may be various reasons for a specific quarter performance. For example, we just said that this quarter we had COC, which is a code of conduct. Without going into such kind of reasons, we normally have a cycle where financial year-end is the measurement, because even these clients, whether it is government or corporates, they also want the project to be kind of measured at the end of the year. Therefore, we would also measure our performance through the financial year performance. Quarter-on-quarter fluctuations may remain, but because as I said, it's an ongoing project, and sometimes the timelines to invoice a particular element of the execution may not have been attained. But over a year, I think that can be measured on a seamless basis. If I'm understanding correctly, then Q4 is your strongest quarter usually? If you look at the last year, quarter four, normally what happens is financial year-end is where the clients ensure that, let's measure ourselves, and that's where normally whatever pending issues are normally getting addressed within the year itself. That's why I said we look at the financial year-end. Typically, quarter four happens to be that way of closure. So year on year, if you have seen, perhaps the quarter four would be a kind of a balancing quarter where whatever has not been billed, not been achieved, those timelines also get fructified over there. Right. Thank you so much. Thanks. Thank you. The next question is from the line of Pritesh Vora from Mission Street India. Please go ahead. Hello, sir. Good afternoon. Thank you for the opportunity. My question is, sir, your margin has come off this quarter. I also want to understand the client profile. Who are our clients and whom do you serve? Is this a tender-led business or there is a fixed client? If it is a client tender-led business, what is our order book position as of now? Thanks for joining. I guess, you must have joined a little later. Most of the questions which you have raised, I will just repeat them. Yes, 70% of the total business is government business, which are awarded through tenders, and therefore, they are in relation to those projects. Second is, there will be quarter-on-quarter fluctuations. Therefore, we just requested all of you to kindly look at the performance on a yearly basis rather than looking into on a quarter-on-quarter basis. The third issue is the order book, which as I said in the beginning of the year, it was around INR 700 crore. We are at right now INR 750 crore of confirmed order book, and we have a further pipeline of around INR 200 crore, for which we already have a bid and the final decision for the allotment or award of the order is still pending. We expect the order book to continue to be strong, which will help us to perform higher execution targets year on year. My second question is about how do you rate your capability vis-à-vis other people in GIS space? There are a couple of people in India who sell to Google and other multinationals for the GIS space. How do you rate yourself in that aspect? If you ask me, we have various buckets of the business segments, and if I were to compare with any of the such competition, like those who are serving Google, or we have just acquired one company which was serving Ericsson, which is also a large multinational in U.S. We are serving those large clients also through such verticals, and it's only a part of the whole. We have various business segments where our focus remains on providing the smart city solutions as a solution, which also therefore includes parts of that which has, let's say, geospatial, more onto the technological-aided software development solutions. Therefore, we don't only cater to the large clients like Google or Ericsson or, for that matter, any of these Amazon. These are one of the buckets which caters to such businesses, which we had also in the initial introduction we mentioned about the manufacturing and other industrial customers. Sir, will you compete with Cyient? Like Cyient, will you go to U.S. and other geography to compete with Cyient and other people in this space? I have little knowledge about that, so I won't be able to comment on it. Our focus right now on U.S. is to set up the geospatial arm, and we are trying to focus over there. In that endeavor, we have acquired one VTS company, which is into geospatial, which also I mentioned in the past. I'm not quite aware about the Cyient, so kindly pardon me for that. Thank you, sir. I wish you all the best. Thank you. Thank you. The next question is from the line of Ankur Kumar from Alpha Capital. Please go ahead. Hello, sir. Thanks for taking my question. Sir, I wanted to ask in terms of our two segments, geospatial and Technology Solutions, is there a big difference in margins? How much of our order book can be divided into the two segments? As I mentioned, around INR 750 crore order book has around INR 550 crore book of geospatial as of now, and around INR 200 crore of order book on Technology Solutions. I can also mention, which I have not clarified earlier, the INR 200 crore bid pipeline, which we are right now banking on subject to the final award. 80% of that is into Technology Solutions. If everything had to come through, then this percentage of Technology Solutions into order book will further improve. That is a mix of the business which we are catering into. As regards margins, I think we have already given a kind of the margins which we have been sustaining, and we aim at improving it further on a sustainable business as we grow further. But there is no significant difference in the margin between the two segments, is that right? It doesn't make difference between overall segments. There will be some contracts which may have a higher margin because of our special exposure to that particular geography or that business. But typically, on an average, the margins for both the segments should be in the similar range, as I said, between 20%-25% to 30%. Got it, sir. On this INR 200 crore bid pipeline, when can we expect good numbers, good thing, information on that? I think we will be able to communicate as soon as we get, because as per the stock exchange requirement also, as and when we get a further order book confirmed, we do publish. Within the month of September, I think almost INR 150 crore out of INR 200 crore should be decided. Whether we are awarded or not, that I think we'll be able to communicate. Got it, sir. Any more bids in future coming, as in how are the things looking on the bid side? Because as you said, we get lot of confirmed orders on the basis of bids only. Yes. We continue to tap the options available. There are a lot of opportunities which are coming. I am sure you must have gone through the recent honorable finance minister's budget, where they have, in fact, if you look at the outlay budget, they have identified a total expenditure outlay of around INR 113,000 crore on the three elements, which is geospatial, smart city development, and the energy solutions, in which all of these we are there as a presence. Not that I am saying that we will be benefiting out of that INR 113,000 crore worth of outlay, but there are a lot of opportunities which we expect to happen because the government focus on these areas is significant, and has come out very startlingly in the budget, which has been announced by the honorable finance minister on the 23rd of July. Got it, sir. Any comments on working capital side, sir? How soon can we receive it? As we have been seeing that we are into projects which span into a period of one year, two years. Because these projects are, I would say, spread across large geographies which may cover sometimes multiple districts, the overall working capital cycle may be little more, but quarter on quarter, we have seen that the working capital cycle is now further reducing. We are able to see that the overall working capital cycle has improved substantially, which can also be seen from the fact that none of our banking limits on fund-based banking limits are being utilized. Right now, we are sitting on a positive cash flow, which I think even on the presentation, you would have seen that we have a negative debt equity, which means that we are right now sitting on a surplus of funds. I think working capital is not a major cause of concern, and I think it's a natural hazard to this business, if I can submit that way. Sure. Thank you, sir. Thank you. Thank you. Thank you. The next question is from the line of Saurabh Sadvani from Sahasrar Capital. Please go ahead. Good afternoon, sir. Sir, can you please tell us what are the margin levers which will help you to achieve your aim for your margins of 20%-30% range? To be very frank, the kind of expertise which we already have built, I would not say that it's a major constraint to the new entry. But the technological knowledge which we possess, I think it's not easily replicable, and therefore, the margins which we are looking at is something which is always possible. Therefore, the levers of margin is the delivery. As I already mentioned in the past, we have the ability to deliver. We have a good thousand technically qualified, skilled employees with us, which help us to execute with a good perfection. I also mentioned earlier that we are also having a technological-enabled tool to ensure that all the projects are being monitored through a central database system. We also have implemented a kind of certain software tools whereby the integration between different systems is also feasible, and which enables the execution faster. I think the margin story of 20%, et cetera, is given with the kind of size of business which we are into. Okay. And sir, could you give us an example of a project in both of your segments for geospatial and engineering and Technology Solutions that you might have done, a use case that you might have implemented? Well, one very interesting project which we are right now undergoing, and that's a very large project, which we have implemented within the short possible time of six months. It's called a digital project management system. This is a small project which is on the verge of completion, where we were awarded a contract through the government of Maharashtra, where almost 900 schemes of water irrigation systems were to be integrated, for which a technological platform was to be built by us. We got all the schemes onto different formats of the documents, which we converted all of them into GIS. We made them technologically enabled into a mobile platform as well as web-enabled platform. We set up a system whereby a person can, on a handset, go to the respective location and do the audit, it will verify the asset, et cetera. There would be asset mapping also being done for the purpose of O&M or asset tracking. Right now the Bhu-Aadhaar system, which is going to be implemented, will also be integrated to that. So this one system, which is a very, I would say, very good system which has been developed in a very short time, is one of the examples which I can talk about on the Technology Solutions which we have implemented. One system which we are already implementing is engineering services and geospatial engineering services, where we have been allotted a contract before a year or so, and we are right now on the extension or, I would say, the further extension of the project. It is called a third-party inspection, where we are consulting engineers to ensure a third-party inspection of all the projects which are being implemented in the state of Uttar Pradesh, where the contractors are doing the capital outlay, and we are monitoring through the physical as well as through the data tools to see that the project which is being implemented is as per the plan and is integrated through the different software systems of the state. That is how we integrate and then report on a monthly basis. This is an ongoing project. This is a geospatial where again, the geo mapping of each asset is also being done over there. This also enables for the rural water supply scheme under the State Water and Sanitation Mission of the Uttar Pradesh. These are the two just examples of each one of the segment which we mentioned. I hope I was able to clear. The first one was Technology Solutions, the second one was the geospatial engineering service. Yes, sir. Very clear. Thank you very much. Thank you. Thank you. A reminder to all the participants. We request you to restrict your questions to two per participant. If you have any follow-up questions, you may rejoin the queue. The next question is from the line of Riddhesh Gandhi from Discovery Capital. Hi, sir, and congratulations on a great set. On the geospatial, we sort of understand you are competing with Genesys and MapmyIndia. Just on the engineering services side, who do we typically compete with? Is it Tata Technologies? Is it Tata Elxsi? Just to understand in terms of what does our billing rates sort of stack up to, just to get a sense on how we are relative to the competition. It's very difficult to, as I said, identify whom we can relate to. Because at one project, I was competing with Tata Projects. In one project, I was competing with even the KPMG consulting services. I'm just giving you that kind of perspective as to who could be my competition as regards the engineering services. As I said, because we provide into the different kinds of services, but all of them, I would say, I would not even brand it, but it's more to do with either infrastructure related development services or smart city solutions or, in that sense, any complete solutions which an organization requires to maybe enable their execution of any particular project. As I said, it's difficult for me to identify which can be a competition for, but it will be different for different types of project. I forgot, what is the second question? The other question I had was, if you could highlight a little bit about the kind of team you have on the engineering services side as well, that would be helpful. As in terms of the leadership, how they're looking at it and in terms of. I think we have a very good experienced and a good team, which has an average age of almost 10 years into our company. I'm talking about, let's bracket them into two. One is the senior management, which has managerial and technical skills. Second is execution team, which has a technical and supervisory skills. In both the cases, I would say almost 70% of our people have an average age, I'm talking about the managerial skills, of more than 7 to 10 years of existence into our company. I think that's a big asset for our company because the continuity of people do give a lot of advantage as regards the aligning of the company's systems and execution skills. As regards names, I don't think you need names because they are all senior and they are expert into that respective field. Each and every vertical, we have at least 1 plus 2 as a senior management skills. Therefore, if I can divide my total number of deliverable segments, we have almost 12 deliverable segments. We have a good management team of, I would say, even on the project execution and management skills of around 35 to 40 people, who are on the top management skills. The rest of them are the execution and planning and various other skill related team members. Got it. Thanks. That is all from me. Thanks. Thank you. Thank you. The next question is from the line of Anik Mitra from Phenomic Solution Private Limited. Please go ahead. Good afternoon, sir. Am I audible? Yes, you are. Thank you. Sir, last time when I have spoken to you, maybe in last one month, I asked this question related to satellite-based tolling system, what Nithin Kamat has mentioned. Is there any progress related to the satellite-based tolling system? If there is any clarity, what could be the size of this business and where you can work on, if you can give me some. We have capabilities to do that. Right now, the project RFP has not come on this part as regards satellite tolling project. I think it's a wonderful project to have. As I said, we still need to have more details. Eventually, once we have the RFP published, I think it will be known little more better. We have LIDAR capabilities. We have the capabilities of doing the geo mapping on the basis of satellite, as well as drone facilities, as well as LIDAR facilities. We also are evaluating various other such projects. Once we get some kind of RFPs, then I think we will be able to give you further guidance on this. Okay. Sir, my next question is related to the data center. Sir, is there any timeline when we can see some revenue coming from the data center business? Well, I would not be able to give you any timeline. The segment has just started on 1st of August. In fact, a very senior member, perhaps if you were on the call, you would have Mr. Vijay, who is a very expert on this, he has joined our Singapore subsidiary, and he has an experience of around 18 to 20 years on setting up the data centers in the Singapore as well as APAC region. We are actively tracking the possibilities for getting those kind of new options available. I would be able to get more specifics once I have something more to share. As a normal, transparent corporate behavior, once we have some kind of signed documents for new orders, the same will be published in the stock exchange. Fair enough, sir. Sir, my final question is related to the government project. Sir, payment history of government projects are not very pleasant in India. As your 70%-75% projects are from government only, what kind of payment cycle do you get with the government, and what kind of receivable days you are maintaining with government? First of all, I think I have not had that experience, and I have not seen that as a history in our company. I would guess the government is also guided by its own parameters of corporate governance. We have seen that in these projects, like the water-related, or the IoT-based projects, or the DPMS projects, the overall outstanding has been hardly 15 days or 20 days. Okay. I don't think there is any major cause of concern when we look at the government projects. Yes, there are few projects, small projects, which had, perhaps the government allocation of funds was dried up, and we are waiting for the fresh allocation. That's where that outstanding remains due for two, three, four months. But that is, I think, unavoidable when it looks to the central end. These happen when there is the project which is co-funded by state government and central government. It could be possible that state government has the funds and central government funds are awaited and/or vice versa, in which case there can be small delays. But I have not seen major issues on the government project, the receivables. Absolutely. Fine. Thank you so much, sir. Thank you. Thank you. The next question is from the line of Hitesh Sara from Tusk Investments. Please go ahead. Hi, good afternoon. Congratulations on the results. Just wanted to get a sense of how you see Ceinsys Tech going in, let's say, five years from now with regards to the current business segments you have. How big do you envision each of the three segments to be, and do you plan to add any other lines of business? For example, you've just added data centers. Any color on how you're thinking about the business in the long run would be very helpful. Well, thanks for the compliment, first of all. Both the questions which you have a little bit of challenge for me, because we are all talking about future. I can only tell you that the two lines of segments which we have classified, which is geospatial and engineering services, and Technology Solutions, which are the two segment businesses which we have classified ourselves, seem to have a good kind of visibility for the next few years. I cannot give any kind of due date for when they will mature. It is difficult for me to give you any guidance as to from last year's of INR 250 crore, whether I will be INR 400 crore this year or what I will be this year. I think it is difficult for me to give you any guidance. As I said, it will be a forward-looking statement, which I am guided not to be giving such guidance. We are on a growth mode, which I think on a quarter on quarter, you will see the results. I am sorry that I am not able to answer your questions with a clear answer. No, that is all right. If qualitatively you could help us understand how you deepen the capabilities in each of the segments, what can we expect in 3 to 5 years? Then we can think around, okay, how the organization is going to shape up eventually. Yeah. Qualitatively, as I said, I think we have a huge capabilities of execution. The technical qualification, we are adding some more quality of people. We have added, as you already observed, we are trying to add into a new segment, which is called the tech-enabled services in the form of setting up or consulting for the data centers, which also we see a large options. Right now, I would not say that we are even 1% of the market. The market is huge, and even if we work to get 2% to 3% to 5% of the market, I think we can grow substantially. I would fail to give any clear guidance, but let us wait and watch for next maybe two quarters, three quarters. At the end of the year, you will come to know where we are heading to. Understood. That's very helpful. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Ashish Soni from Family Office. Please go ahead. Sir, you mentioned the hit rate of 90%. How does it work? Typically, what I have seen is generally hit rate in tenders are not more than 50% also. What's the special thing you guys do? I just want to understand that. We don't apply for everything. It's not something that there may be in a month, there would be around 15 to 20 to 25 tenders, even in our sectors may have come. But depending upon either prospective competition, depending upon the timeline by which the same has to be executed, depending upon the advantage which we have, let's say it may be in relation to specific state or a district or a geography or a timeline, where we see that we are better off, that's where we evaluate ourselves. Technically, if we find ourselves ahead of the prospective competition, that's where we apply. It's something where we are not because we have enough order books, so it's not something that we are craving for order book. We go for quality order book where we see that there are better margins and we are able to execute them within the technical skills which we have. Therefore, we only identify those segments where we feel that we can certainly be ahead of the competition, whether it is on a technical skills basis or on a commercial basis. I think it's a planned way to apply for tenders rather than a generic way to apply. In terms of execution, what sort of risks are you seeing in next 1 or 2 years, and how are you gearing up for it? Well, first of all, there are general risks which any industry or any company would have. Those risks will apply to me. But they are very general in the sense, inflation or government stability, et cetera. Otherwise, I don't see any risk as regard the skill set, as regard the capability issue on the funds, as well as on the technical skills. You would have already seen that we have presence in India at around 7 states as of now. We also have presence in U.S., which we are expanding further. We have presence in U.K. and Germany and also in Singapore now. I think we are trying to leverage our strength and get strength complementing from each other. That is where I think we are able to build up our strength. I do not see any major risk factors other than the normal, the way you mentioned when we look at a SWOT analysis. Same way, those particular Mukesh risk factors will be there. I hope I answered your question. Thanks. All the best. Thank you. The next follow-up question is from the line of Ankit Minocha from ADV Ventures. Please go ahead. Yeah. This is in reference to slide 11 that you shared the segmental performance. I was just looking at the margins for the geospatial and engineering services, and I believe this quarter, the margin has significantly gone down from what the margin profile was, say, for Q1 FY 2024 or for Q4 FY 2024. Could you please help us with what could be the reason for this margin going down significantly for this part of the business? I would again, like to emphasize that there will be some quarterly fluctuations on the margins, mainly because there are cycles where we are because these are projects on an ongoing basis, which has timelines of maybe one year, two year, and therefore, there will be sometimes the timelines to the issue the invoices may not have fructified. Therefore, we always believe that the margin measurement or the performance measurement should be done on a yearly basis, which is on a financial year basis. So the quarter fluctuations may be there. We would like to submit that let's look at the yearly review rather than the quarterly review. If you see year on year performance on a margins also, there has been a substantial improvement over the last three years or on a cumulative basis. If you see, you go on to slide 13, you would have seen that the margins have improved from 11% to 14% to 17% over the last three years. Even now, if you look at quarter one, it still improved at around 17.9%. But as I said, I don't want to give this quarter as an indication for the margin. Let's look at the financial year. Once it completes, we will get a better picture of a sustainable improved margins for going forward. Sir, that is clear. But what we are actually kind of getting to is specifically for the geospatial and engineering services. So if I look at the margin for quarter one, that's close to 17% versus I understand that we have to look at this on a yearly basis. But overall, I think last year, the margin profile for the geospatial and engineering services was close to 25%. So considering if we expect a lot of the growth to come from geospatial and engineering, then in that case is this growth margin dilutive that we are anticipating? As I said, again, I'm perhaps putting myself into going into minute detail, but I would just give one example, which I don't think I want to defend as an example. But in that, let's say in this quarter, there is a project which is a TPI, which I am doing at Lucknow. That TPI project for the entire quarter, which is April, May, June, could not progress well because the funds were not allotted at the Uttar Pradesh SWSM, and the projects were not implemented by the contractor because the funds were not allotted in view of the COC. Now, the funds have been allotted, and the project has already started. We have also got a substantial enhancement, or I would say the extension for the project. The first quarter which we lost on the TPI, the total turnover which we would have lost would be in the range of around INR 12 crore-INR 13 crore, while the cost continued to be incurred. That would be kind of recouped over the next three to four quarters. I am just giving an example. I think you are well-versed to understand the impact of it. There will be certain projects which perform well in one quarter, or which lag behind in another quarter because of some or the other external reasons. But on an overall basis in a year, these would be evened out. Understood, sir. That is very clear. Thank you. Just fine. On the same question, it is just a continuation of the same question. Would 17% be the sustainable margin for the GIS business on a yearly basis, or 25% be a sustainable margin on a yearly basis? I think I have already made First of all, I do not want to be giving a guidance for the margins. But we are aiming at sustainable margins on a growth. We should see that over the year-end, when we see that. The indication of the last three years should give you an indication that we are growing. We are not stable at last year, 14%, or this year, 17%. Our aim is that even the book which we talked has EBITDA margins on the range of around 20%-25%-30%. I think let us look at the year-end, and we will see the final margins, how they have fared well. Thank you. Thanks a lot. Thank you. Okay. Thank you. Thank you. The next follow-up question is from the line of Guneet Singh from Counter Cyclical PMS. Please go ahead. Mr. Singh, your line is unmuted. Please proceed with your question. Yeah. Hi, sir. Thank you. Thank you for your time again. I had a similar question as the previous participant on margins, but I believe you answered very well, so that has been clarified. In my understanding, GIS EBITDA margins would flow in probably in the coming quarters to maintain the annual margin trajectory that you have been guiding. I want to understand the numbers of our joint ventures, basically, which is consolidated, the other income. What is the revenue from that and the margins? There is the profit which you are talking about, the share of profit of joint venture? Yeah, the other income that we get. We have a joint venture company called Allygram, where Allygrow, which is our wholly owned subsidiary, has a 70% profit share, I would say the shareholding share, with Grammer of Germany, 30%. It is a 70/30 venture. Because it is a 70/30 venture, we are not able to consolidate the top line. We have to only factor into the share of profit as per the accounting standard applicable. Allygram is also into the same business as Allygrow, and which is specifically into mobility business, where we are giving them the engineering services on the automotive part. Grammer is world-known name on these engineering services, and they have a huge exposure on various automobile companies, including a major stake into General Motors and all. Our business is what we do for the business in the engineering services in Allygrow. We have Allygram, which is supported through Grammer. This year, in fact, we have already given a kind of stock exchange clarity, where Grammer has renewed further for a period of 3 years, where they have committed to give us a business of almost 100 crore, which is almost, I would say, 11 million EUR, and which is therefore a growing business as compared to what we had in the past. It is in the similar line of business of mobility and falls into the engineering services. All right, sir. Can you share the top line, bottom line of Allygram? The margins are in the range of around 26%. Our share, what you are seeing is this quarter share of 70%. If I have to gross it up, the margins will be in the range of around INR 4.2 crore, and on a total top line of around INR 12 to INR 13 crore of this quarter. And yearly, this business will contribute around INR 45 crore as per the advice which Grammer has already provided. So a top line of around INR 45 crore in this year with a margin of around 26%, which is the past year's margin, which we have achieved in this business. All right, sir. Perfect. Thank you very much. That's all from my side. Thank you. Thank you. The next follow-up question is from the line of Richa from Equitymaster. Please go ahead. Sir, thanks for the opportunity again. My question is, when it comes to these tender-based business, is there any criteria that, like amount-wise, that we are qualified and based on how we grow further, we would be allowed to enter into higher brackets? Do we have any such limit by bidding? Yeah. Every bid has a pre-qualifying criteria. See, qualifying criteria could be whether we had exposure to that kind of business, whether we had turnover for that kind of business, et cetera. If we qualify for that, we can bid for that. So it's based on experience with a certain kind of project, and it is not really limited by value of the project or order as such, right? Every pre-qualification criteria is mentioned separately, but not many pre-bid qualification criteria are linked to the value. I would give you one example where there was a tender which was floated by the State of Uttar Pradesh under the Ministry of Jal Jeevan Mission, under the Ministry of Jal Shakti, where they had given a qualifying criteria that you should have a turnover of INR 250 crore on consulting, which nobody qualified, and unfortunately the tender was scrapped. There are certain times qualifications have been mentioned, and if we don't qualify, we can't bid for that. Okay. But they are very rare. Okay. The second question is that you are mentioning O&M is a part of the order book. Is there a bifurcation within the tender business? If the duration is different, margins are different, what kind of percentage breakup would be there between O&M versus the order? You are right, not all projects have O&M. If I talk about INR 750 crore order book, there are only four to five projects which have O&M. O&M are again, not fixed for every contract. There is a project where there is 2-year O&M. There are two projects where there are 5-year O&M, and the O&M period starts after the project CapEx period is over. Out of INR 750 crore, the O&M part will be hardly around INR 55 crore to INR 60 crore. My last question is that, I think you were referring to a negative working capital cycle that is also a result of the high payable days that you enjoy, because being in the government business, the receivable days are on the higher side. But even the payable days have varied from 400 odd to 1,000 odd. What is the reasonable number that one can go with here? I didn't get your question, sorry. My question is that being in the government business, our receivable days tend to be a little on the higher side, but that is well-balanced by the payable days. But the days payable are also ranged between 400 to 1,200 to 1,600. What is a reasonable number to go with? Because historically, that variation has been huge. Normally when we enter into a contract of supply based on the government contracts, we normally try to have a back-to-back contract. In the sense, we have a condition that once we receive the money from the government, you will be paid. Therefore, we are not out of the money in most of the cases. Okay. I hope it answers your question. Yes. Thank you. Thank you. Ladies and gentlemen, we would take that as our last question for today. I would now like to hand the conference over to the management for closing comments. Good evening everyone. I am grateful for participation from all of you and your very positive related questions to the business. I am very happy to know that you have shown good interest into our business, and I am once again thankful to not only to all of you, but also to Anuj, who has made this happen. I am sure that we would try to be in touch with you. If you have any further questions, you can route it through Mr. Anuj. If you have any further follow-up questions, which we can then try to attempt any answers. We will also try to have a similar quarter earning call at the end of every quarter. Thanks everyone, and have a nice evening ahead. Thank you. Thank you, Anuj. Thank you. On behalf of Ceinsys Tech Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.