Q4 20/21

May 12, 2021

Ladies and gentlemen, good day, and welcome to Himachal Futuristic Communications Limited Q4 FY 'twenty one Earnings Conference Call hosted by Arihant Capital Markets 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Visek Jain from Aadhihan Capital. Thank you, and over to you, Mr. Jain. Good morning, friends. On behalf of Aadhihan Capital, I welcome you all for the HFCL q four earnings call. And now I'm handing over to the management for the the outlook and outlook going forward. Please go ahead, Mahatash. Yeah. Thank you, Abhishek. Good morning to everyone, and thanks to all of you for joining this quarter four and FY twenty twenty one earnings call of HFC Limited. I'm sure that each one of you are keeping yourself and your loved ones safe in the midst of the second wave of COVID nineteen. The country ushered into a new financial year with surging infestation once again. Parts of the country are under varied lockdown measures. The pressure on healthcare infrastructure and vaccination drive keeps mounting. At HFCL, we have been adhering to prescribed guidelines and safety measures to keep both our people and our business protected. It has helped us deliver good growth for the quarter and also for the full year. I'm sure that you have had a chance to go through our results and earnings presentation. Let me share key operational updates from the quarter. We have won orders for Kanpur and Agra Metro. Sales projects for their telecommunication network was R221 crores. The order involves setting up of telecommunication systems across 32.4 kilometers length of Kantor Metro and 14 kilometers length of Agra Metro. Shipment of our indigenously developed wireless solution products crossed 1.5 less unit mark during the quarter. This comprises of WiFi access points and point to point online sales spend radios. These products are being sold under brand name IO. With increasing and accelerated digital shift, future demand of our IO range of products shall also accelerate. We have strengthened our portfolio of wireless solutions with the rollout of new dual band WiFi six products in in addition to the existing WiFi five range of products. In a promise promising diversification move, HFZ subsidiary company HTL Limited has forayed into wire wiring interconnect solutions aimed at aerospace and defense and automotive and industrial markets. STL has set up a dedicated production facility as it is generally planned for this purpose. With the state of the art wire harness facility, STL stands equipped to deliver indigenously developed products to the defense PSUs and global and Indian OEM majors across the aerospace and defense value chain. Having sharpened our technological edge through a number of initiatives in the last five to six quarters, We have strengthened our prospects for aggressive five g play. Every time when the five g opportunity starts to unfold, we have established a new five g business unit, which will consolidate our existing under under development strength towards developing a rich portfolio of next generation five g compatible products and services. Implementation of five g and associated technologies will help unlock the transformative power of digital communication networks and enable us to achieve the digital empowerment goal. Another area of our interest has been to explore system integration opportunities in the international markets. We have steadily been strengthening our engineering and product portfolio towards international standards and specifications. While our optical fiber cable has been exported to 30 plus countries, we are now confident our system integration footprints to beyond India in FY '22. I take immense pride in sharing that we are walking the talk in becoming an integral part of India's digital transformation and aligning with government's vision of Aatmanir Bharat. As a first step, we have set up a model PM1E village in Balsami, Haryana. A model village is providing high speed Wi Fi to all its regions. The project is testament of HFCS capabilities to supply PM one e compliant Wi Fi access points all over India. On the policy and reforms front, we believe that initiatives and schemes such as PLI for the procurement of telecom products and make in India will provide strong tailwinds to domestic telecom equipment manufacturing in India. Coming now to the financial performance, we have succeeded in keeping our order book robust, quantitatively, and qualitatively both. As of thirty one March two thousand and one, our consolidated order book stood at INR6875 crores. On the back of strong order book and execution and our capacity utilization has also remained at almost optimum level during the fourth quarter. Let me now summarize the performance highlights of the quarter and the full year. Revenue for quarter four of the financial year 2021 stood at INR1391.40 crores as compared to INR1277.48 crores in quarter three of FY21, recording a growth of 8.92. EBITDA for the quarter stood at 187.77 crores. EBITDA margin slightly decreased by 30 points and stands at 13.49% for quarter four of FY 2021. This happened because of revenue mix during the quarter, there is slight increase in the operating margin. For quarter four FY 2021, profit after tax rose to INR86.47 crores as compared to INR85.11 crore for quarter three, recording a growth of 1.6%. Tiet in absolute terms has also increased to INR86.47 crores from R85.11 crores in Q3. However, PED margin has slightly declined by 45 basis points in Q4 as compared to 6.66% in Q3, again due to revenue mix and interest cost. Segment revenue for telecom products during the quarter stood at crores as compared to INR387 crores for quarter three. We expect revenue from telecom products to continue this upward trend. Twenty Contract and Services reported a revenue of crores as compared to INR944 crores for the quarter three. For the financial year ended thirty one March twenty twenty one, our revenue stood at INR4422.96 crores, EBITDA stood at INR585.71 crores, and PAT stood at 246.24 crores. As against revenue of $33,838 of last financial year, that is financial year 02/2020, EBITDA in the same year was 516.17 crores, and PAT in the same year was 237 crores, which was March year ending March 2020. Looking ahead, we intend to further accelerate and amplify our innovation stick with r and d breakthroughs, technological advances through in house and collaborative efforts. We remain enthused and optimistic with promising order inflows from domestic markets and increasing inquiries from overseas. The pandemic has entered and we are ready with ever updating and expanding suite of products and solutions. Clubbed with our business extensions, initiatives such as five g and system integration exports, we shall continue to mine the opportunity landscape better and sustain our value creation drive for all stakeholders. I would like to conclude with the fact that Board of Directors has recommended a dividend of 15%, that is 15% per equity share for a face value of rupees 1 each for the year financial year 2021. With this, I close my remarks and leave the floor open for questions. Thank you very much, all of you. Thank you very much. We'll now begin the question and answer session. If you wish to remove yourself from the question queue, you may press 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. The first question is from the line of Sanjay Shah from KSA Securities. Please go ahead. Yeah. Good morning, sir, and thanks for opportunity. Sir, congratulating on good numbers in this current pandemic situation and circumstances. So my question was regarding I've gone through the presentation, and it's really very informative. Sir, can you elaborate on the opportunity landscape in defense segment? What are the what are we go what are the progress on that side? And are we going for any benefit given by the PLI scheme to indigenize products? One. If yes, then what are our plans on that side? Thanks, mister Sanjay Shah. Basically, if I divide opportunity landscape in the current scenario, there are four, five areas I can talk about. One, as you all know, additional spectrum has been given to operators for four g. This will enter some expansion of four g networks also. This is an opportunity for independent service providers like us. Then large scale FTTH rollout is happening, fiber to home. And as you know, we are the largest producers of FTTH cable in India. That is another big opportunity for us. As the FTTH rollout happens, there'll be huge demand for FTTH related cables also. Third opportunity is upcoming BharatNet. As you all know, government has cleared BharatNet implementation of PPP model. And once fully implemented in three years time frame, the total demand of fiber optic cable is projected to be 10 lakh cable kilometers, 10 lakh cable kilometers. It's humongous demand. Added to that, with the demand of Wi Fi systems, fiber to home equipment, routers, switches, which all of these products are now going to win the portfolio of HFCS. So not only the demand of fiber optic cable, but demand of all these equipment will result in very good market opportunity for HFCS in next three years to come. And I expect only FTTH is this BharatNet related market opportunity is going to be more than $6,070,000 crores. FTTH market opportunity, four g related market opportunity are again not less than $3,040,000 crores. Then comes upcoming five g. As you know, five g has taken well by storm. Right. It is completely going to change the way the communication happens. So five g auctions are expected to happen in India in India December January time frame. And in this December time frame, when auction happens, network rollout will start immediately thereafter. In fact, operators are already preparing. Now five g would mean many more number of cell sites because that it's a very dense network. It needs a large number of cell sites, which results in more cell sites, more equipment required, and more interconnectivity, which is mostly going to our fiber. So demand of fiber optic cable transport equipment, microwave radios, all are going to increase immensely. And that, it would result in demand of more of five g macro cells, small cells. So what we are doing in five g space is one, fiber optic cable we already have. Microwave radio, high capacity radio required for connecting cell sites of fiber optic is this three g. We already have e band radio. Then most importantly, now we have embarked upon this new development in our company. We started developing five g radio estimate, five g cells. Macro cell design has already kicked off from yesterday only. The small cell is going to be started in next couple of weeks. So by the time five g happens, India will be ready with our own radios, micro cells, as well as small cells for five g in our book of products. Then and that that those equipment are going to be required in huge numbers, thousands and thousands or lakhs in case of small cell all over the world. And this we are doing all frequency ranges. Sequencing range of three gigahertz as well as which is called mid band, and the millimeter band which is 26 gigahertz plus. And this is our own technology. This is not only for India. We will be exporting it worldwide. So these are major opportunities coming on telecom space in public communication. And demand because of five g is going to be 3 lakh, 4 lakh crores kind of investment is projected in five g network. And with these equipments which we have, fiber optic cable, met macro cell, small cell, routers, switches, I believe this is going to be another huge market opportunity for HFCL. Since publication communication systems, next seven, eight years, you can comfortably see the huge market opportunity there for the products which we are manufacturing, number one. Now coming to railway communication, as you know, we have a very good position in railway communication. Railway communication networks are also going to be expanded together with the signaling system. So with the expansion of new railway lines, modernization of signaling and communication system, that also is a reasonable good market opportunity for us. Then third comes the defense products. As you know, governments pushes more and more indigenization, and time to come 70% of the defense equipment they want to source from Indian manufacturers. So we have already our own design defense product. The important point is either telecommunication products, most of which we are now going to bring in market are our own design, other routers, switches, small cells, micro cells, Wi Fi, and I can go and count it. You know, these are all our own design products, which are effectively going to do two things. One, increase share of revenue from telecom products rather than projects in our overall top line. Number two, make profit margins better because our own products give you better profit margins. And then expand the market horizon because your own products, are able to export globally. So coming back to defense, we have electronic fuses already designed. Samples are ready. I believe Adi should be asking for these samples soon. We are ready to supply. We are the only Indian computer designed that extra modern product in the our by our own with our own IPR. Electro optics, we have started within IPR. First order also, we have received those small order, but order we have received of 11 crores. Many more tenders we have participated, which should be opened up in next couple of months time frame. And number of more put for our tenders, we are going to participate. And as I told you in past, in my earning calls, demand for night vision devices, we expect to be to be something like 40,000 crores in next six to seven years. So there are huge market opportunity communication. There are huge market opportunities in real communication. There's huge market opportunity in defense communication. Defense communication as well as defense electronics products. And they're active all across the segments and which would I expect, you know, from the market perspective, India and abroad, there's enough market. We only need to have the right products and right strategy to sell to take share of that market. In a small percentage, it would be thousands of crores. And then we are well geared up with the product design. We are we are well geared up with the expansion of our sales team, ability to market all over the world. So that was the first. Second, the PLI scheme. We will, of course, be applying for the PLI scheme. And whenever government gives approval, yes, that is going to result in advantage to indigenous manufacturers like us for the percentage 6% or so whatever PLI they have announced, that is going to be a major advantage to manufacturers like us, and we are definitely going to apply for that. Thank you. Thank you, sir. Thanks for replying my questions. I'll come back in queue for him. Thank you. The next question is from the line of Deepak Rao from Arihant. Please go ahead. Sir, I just wanted good morning. Good morning. Yeah. Sir, what is the kind of revenue revenue hit you may incur because of this pandemic and the lockdowns? That is the first question. And the second one is regarding can you have some highlight on the pledge shares, please? There are some 20% release or something has been given. So some highlights on that, sir. Thanks, Deepak. As far as first question on impact on revenue is concerned, till now, we have not seen any major impact on our revenue till now. But some impact at all, if at all it comes, you know, it can come from if people are not allowed to move into cantonments and install and commission, you know, system which you are putting because of pandemic. Let me see some small impact. But otherwise, I don't see at this moment any major impact. Good thing about this time of lockdown and all that, they have not closed down the factories. So all our factories are operational. So factories being operational, I don't see that there would be any major impact on revenue of the quarter one. We would maintain the revenues what we have been doing the past couple of quarters that would be maintained in this quarter also. I I do expect that. Now coming to the plan shares, some quantum of pledge shares have already been released as you know. The last last leg of the release of the shares, you know, where the eight banks are involved. Six banks have already approved the release of shares. Two banks, the proposal has gone to their higher authorities for consideration. I have no reason. Having the lead bank have approved that and having the six out of eight banks have approved that. These two banks would also approve it, and this should be taking another three, four weeks or so depending upon the lockdown situation how the banks are able to move. So next three to I think four to six weeks, these pledged shares would also be released. But again, let me tell you, this pledge of the shares is not against any loan taken against shares neither by promoter nor by the company. These are specifically as collaterals to the loan company had taken. And as per the loan conditions, they have all been fulfilled. These shares are to be released now. Thank you, sir. Thanks for the update, sir. Thank you. Thank you. The next question is from the line of Hemang from Annual Research. Please go ahead. Hello? Yeah. Hemang, please go ahead. Yeah. Sir, congratulations for the greater number. So I just want to have you on r and d spend. So how the company is going to spend on the r and d? Because in this kind of industries, we need to develop the very new technologies and the new equipment. So what is the spend on the r and d side? Is there any benchmark that percentage to sales or percentage of profit or kind of, basically? Look. I tell you. On that. Our r and d spending this year is going to be about hundred and 50 crores. Okay. Okay. And as I said in the answer of last question Yeah. RN is the key to our growth. It's key to our growth. And a lot of equipment we have designed, lot of them are under design. Like, for example, first equipment we designed for WiFi and this point to point radio, and now point to multipoint radio is also going to come in. Now that resulted in good success. First few first month of first year of the production and less than a year, we were able to sell 50,000 of those units. More orders are in our hand. More already, we have orders from about forty, fifty thousand units in our hand from various operators. So all product design has improved and will also improve further as we go in and designing more products and sales increase from that, our profitability, working capital cycle, and also revenues. So current year's r and d expense is good, a hundred 50 crores. We are opening up a new r and d center in Bangalore. And this would have opened by now, but with the pandemic, you know, and lockdown and all this, this has got a bit delayed. So as soon opens another fifteen days after that or maybe two two or three weeks. The new r and d center in Bangalore will be open. We have already started hiring people. So one r and d is being done by our own r and d people, Gurgaon and Bangalore. Moreover, we have a tie up with various r and d organization, engineering companies. We design equipment for us, and the design is passed on to us, and the further development for version two, three is done by our own company. So there are two, three such r and d tie ups where people are designing equipment for us, internally nationally and internationally both. Okay. Then third, we have taken equity in couple of companies which are r and d companies, which are designing products for us, which include one example is software defined. It is being designed for us. Then there is an r and d happening in cable business. That also you must understand. The cable business is also it's not so technology intensive as communication products, but still there is a new kind of cable cable to design less weight, less diameter, less raw material, consuming less space. So all are being done, micro module cables, IFR cables, and mostly those cables are required for export market. So that also is being done by us, and that r and d is being done by our chimney and Goa plant. So put together, r and d expense will be about hundred 50 to hundred 60 crores in the current financial, which is a reasonable number. It would be something like reasonable percentage. You know, I don't want to say percentage. Otherwise, I would be talking about the expected numbers of the current financial year, which I don't want to make make a forward looking statement. But hundred 56 plus will be our r and d expenditure in the current year. Okay. Okay. And one more question on the defense side. The how's the working capital will like, payment cycles and working capital and the order decision period for and order exhibition period for the defense? Is it the same as, like, a tele telecom equipment side or, like, it is a different ball level altogether? Look. You know, defense, for the product side, we have first order has been received, we will supply, and we will know the payment cycle. But it is as a product, it is, you know, reasonably good payment cycle. But on the project side, there have been some hiccups. Hiccups is not because people don't want to pay or there are any problems in payments, but because of pandemic last year. As I mentioned little while ago, last year, what happened throughout the year, there had been lot of pandemic issues as Yeah. Because of that restrictions were put on movement of people inside cantonments, particularly in northern and eastern command. Okay. And and reason was not only pandemic. Reason was the China border situation. So entry was completely restricted. So pandemic and China border situation both contributed to very little access to the cantons where the most of the equipments are going to be put. Not most of them, all of most all of them, probably 80% of them. But so the entry was completely restricted. And rightfully so, you can't blame defense forces for that, you know, because they cannot afford pandemic spreading in cantonments, particularly in the border situation, which we had last year, which all of us know, in northern and eastern areas both. So that resulted in not being able to achieve the milestones. But the payments are based on milestones. Is a milestone based payment that Yes. To do this particular percentage of completion of work, then you get so much of payment. So milestones could not be completed not because of our fault, not because of customer's fault, because of situation at that point of time. So what result happened as a result of that, that our working capital cycle increased, debtors increased because billing we did, but we could not receive payments. Some billing was done because equipment was supplied, part of services were ended, billing was done, but the entire milestone, like, completion was not being able to achieve. But certain places, you could not go inside that entombment. So that resulted in longer elongated working capital cycle. But now that situation has improved, barring some small issues right now because of pandemic, but which we believe we'll be able to overcome that in next couple of weeks time. It's not as bad as what happened last year in terms of going inside cantonments and all that. So and maybe there may be some restrictions coming up in next couple of months also. But by September, this cycle will will get corrected. And whatever elongated working capital cycle or data cycle has become because of this kind of a situation where milestones could not be completed, it will get corrected by the month of September this year, where most of the services part of that installment commissioning would also be finished, and lot of milestones will also be achieved. So there has been some turbulence in between, but we will overcome it by September. Okay. That's great. And, sir, on the last question on the margin side, so do we see any margin, like, a fall in margin because of the rising commodity prices and the raw material, mainly copper and all? So or we we will able to get a pass through in, like, coming quarters on a in a lag effect if you would But there is a small dip in the margin percentage if you could see in the q four, which was basically because of product mix and some increase in the commodity prices, not as much copper because copper does not impact much. More impact is because of rising the plastic raw material like HDPE, LDPE, those kind of and jelly and all that, you know, which is our product requirements for fiber optic cable. That did happen. But, again, that has started easing out. But even if they remain at the same level, now it has been passed on to the customer because we work on the in between margins. So the cable price have also been increased. Wherever it is a cost plus model, the price has increased. So for the time being, it impacted, but now that has been neutralized. Okay. Okay. Okay, sir. Thank you very much, and all the best for the future. Thank you. Thank you. The next question is from the line of Rahul Purwal from Marathon Capital. Please go ahead. Hello? Yeah. Rahul, go ahead, please. Yeah. Complication for this set of combustion. Yeah. Sir, sir, I have three questions. What is the revenue and EBITDA target for FY twenty two and FY twenty three? Second question is, are you looking for any technical collaboration? And third one is, how much revenue can be achieved through our existing capacity? What was the last question? How much revenue? Can we achieve through our existing capacity? So whatever capacity you have for telecom equipment manufacturing. How much revenue is the best that you can it, Raj? Sure. Sure. Understand. First of all, you know, as you very well know, I cannot make any forward projection of revenue of current year or the next year, but I can only say that we will maintain that same growth trajectory which you have seen in the last financial year. And on account of strong order book, and also number of more orders expected. And the numb and orders keep for the products, orders keep on coming small small orders, you know. And products, you don't receive order up to 2,000 crore at one go. Some order, a hundred crore, another order, 50 crore, another quarter, 80 crore. They kept on being received by us. So with that strong order book, good pipeline of orders, we will maintain the growth trajectory what we have seen in the past. Same growth trajectory would be maintained. In terms of margins, we again hope we are hopeful that with our own design products coming in, and they're being it has been becoming increased part of our sales revenue. I believe that part would also become margins could also become better than what we have seen in the last few years. I can tell you what we expect to be the share of products and turnkey services in our revenue mix. You know, in the last year, financial year '21, we had 73% revenue from turnkey and 20 with the projects and 27% from products. Year before that, it was 78% from projects and 22% from products. The current financial year, what we are in, I expect this 27% to become 45%. So so out of total revenue, 45% will come from products as against 27% of last year, and projects will go down to 55% from 73%. So this is a major shift happening, and I have been talking of this in all my earning calls that the focus of the company to is to increase revenue from products. And you would see a clear shift in the current financial year. That 27% is going to become 45%. Almost double, not exactly double, but about 80% increase in the revenue of the product. So this is going to be a major shift. Now coming to your third question and mixing up with that second question. Yeah. One of the shift is going to come from fiber optic cable. What we expect, the revenue from fiber optic cable business and accessories put together has been about a thousand 50 crores in the last year financial last financial year. We expect it to double. Our hope is to get it doubled in the current financial year to the 2,000 crores. Some part would come from wire harnesses business also, but major part is going to be from fiber optic cable FTTH and necessary related to fiber optic cable. So this thousand 50 crores, we expect we are hopeful to make it 2,000 crores. And, of course, that would need some CapEx. Some CapEx will be required for that purpose. And and we have already budgeted for that, and and some of those projects are already under implementation. Total CapEx expected on fiber optic cable and in an enhancement of capacity for optical fiber also. We produce 8,000,000 fiber kilometers right now, which we are going to enhance this year. So total CapEx expected to be is over hundred and 70 crores in fiber optic cable business. Then there is some CapEx going to be restarting manufacturing of different equipment. So as I said, now we have started receiving orders for different equipment. So we would have to expand our capacity to, you know, not you know, create new capacity rather for the manufacture of defense equipment. So that would have us have some CapEx. So about the in terms of achieving current year's numbers, I would say fiber optic cable and fiber business would see a CapEx of roughly about hundred and 70 crores. Okay. Okay. Okay then. Thank you. Thank you. Bye bye. Thank The next question is from the line of Jigarwalia from OHM Group. Please go ahead. Sir, Jigarwalia, go ahead, please. Congratulations, and thanks for the opportunity, My I have a few questions, sir, on link to the exports. First question is, which are the geographies that we export to? Well, you know, in terms of geography, if you see our presentation, which is put on the our website, they're exporting to about more than 30 countries, which includes Middle East, UAE, Saudi Arabia, Oman, Egypt. Then you will have countries in Europe, which includes UK, which includes Spain, Czechoslovakia, Lithuania, Ukraine. You can give some broader breakup in terms of how much is Middle East Africa. But I don't have the breakup at this point of time. Africa is very little. Africa Middle East is there, which are very quality conscious. Europe is there. And the North America, have exported and some part in South America. I don't have breakup of each countrywide, but I think major exports would be major export export I yeah. Maybe I think more traction are okay. Are there is with regards to exports, is it mostly government, or is it telecom companies? Or what are the They're all telecom companies. No government. No government. All telecom. Okay. And exports is all largely OFC, or you export products as well? Largely, there's been OFC. Some exports has been there in relay communication area also. Okay. Okay. And since these would all be just your product exports, right, no services with regards to exports? There are some pro services when we implement the Modishes metro project, for example, for communication, Dhaka metro for communication, there are some part of services also, but major would be implement only. Okay. So broadly, the margins and working capital cycle both would be better as compared to the domestic piece? Yes. When I say fiber optic cable, yes, margins are better. Working capital cycle in exports, some cases, it is better, some cases may not be. Because in some cases, in fiber optic cable in India, we receive very quick payments, very, very quick payments about a month, thirty days payment, which may not happen in export. Some companies, yes, but otherwise, mostly the cycle of Yeah. Payment is about sixty to ninety days. But it will be much better than the project business, generally. Yes. Absolutely. Right. Right. Sir, can we have the export numbers for FY '21 and maybe some color on margins for export versus the company You know, again, FY '21, we had a export of about 200 crores as against hundred 23 crores of FY '20. Of course, I don't have the percentage of margin on exports, but typically, I would say this will the net profit margin should be I don't have those numbers with me, but I'm just talking with the top of my head what I know from my business. Something like eight to 10%. Eight to 10% net margins. Yeah. Understood. Very helpful. Year, we want to increase our exports. Every year. And I said in fiber optic cable also, we are we have bought some very expensive machines to cater to the demand of European and American market, which are, you know, pretty expensive machines. But, yes, we have done that. And those machines would be exclusively for the production of cable, which are required in these countries. So we are put putting a lot of emphasis, a lot of efforts on the development of export market in the current year as well as the next year. And currently, our target is to reach to a number of $10.50 crores as against 200 crores what we did. We have seen other things together in the FY '22. Got it. Thank you, sir. Given that you're putting all these new machines and so can you give some idea on the longer term to know what is the level that we would be looking at over a three to four years period? In terms of numbers revenue numbers. In terms of revenue numbers, how much could or revenue number or as a percentage, how much could export be for us or something? Or absolute revenue number, maybe can this $3.50 be a thousand crore business for us? No. What I'm saying is revenue numbers, I can't can't look at forward looking projection. But, yes, looking at the market opportunity, what we have and and which I described little while ago, I have no doubt that the growth trajectory would be maintained would be maintained with increased profitability because of our more of our own products coming in play, more of our own products having share in the revenue, and the product revenue going up to estimated about 45% in the current year from that 27% last year. So it it it would definitely result in increase in revenue profitability growth. But in terms of export, as I said, our current year target, our we hope to reach to a level of 350 crores And same kind of the numbers trajectory of growth, I wish to maintain in the next financial year also. So next two years, we know what we have to do. That, you know, once we reach to the targets what we have planned for these two years, then we will be looking forward. So but this year, we want to make it 200 to three fifty, and same growth trajectory in terms of numbers we want to maintain in the financial year '23 also. Understood. Thank you so much, sir. Thank you. You too. Thank you. The next question is from the line of Nalin Shah from NBS Brokerage. Please go ahead. First of all, I would like to congratulate for excellent numbers, Nataji, in spite of this COVID situation. You have given us a fairly good idea about, you know, I mean, various distinct opportunities. And I'm sure that, you know, you would continue to perform very well. Now since you have said, sir, that, you know, the product component is likely to be around 45% from 27% and services, the projects will be around 55. Can you give us some idea about what is the difference between the margin between these two groups? Look. You know, mister Shah, there are two issues. One is margin. Another is the working capital cycle. Correct. And third is the overall working capital involvement. Correct. In the project business, working capital involvement is higher than the product business. Because project business, what happens, you get paid on the basis of milestone achieved. If you do this part of completion, then you get so much and so much and so much. Mhmm. Mhmm. So you have supplied the products, you get paid 50%. That 50% comes in stages. Correct. So then what happens? Working capital cycle becomes higher and involvement of money working capital becomes higher. Correct. In a product business, it doesn't happen that way. In product business, you have an order, you supply the product with nothing called milestone there. Nothing called milestone. You get paid once you get supplied, when you supply. So your payment cycle is quicker. Overall, working capital involvement is also much less because what you do let us say, payment is sixty to ninety days. You're also able to take back to back rate for the suppliers also. So your working capital involvement goes down. It goes down. So which is, you know, with less working capital, less stress on your funds, less stress on working capital, quicker payment. We are able to do more revenue with the same working capital. You can put it like that also. Either you are able to do the same revenue with less working capital or with the same working capital, you are able to do more revenue. So it is always better. Profit margins in the projects and the products is all depends. You know? Projects different projects can have different profit margin. You know. But more or less, if it is our own design products, profit margin would be higher than projects. Definitely, it would be higher than projects. If the project is 8%, own products could reach to twelve, thirteen, 15 percent also depending upon case to case. So Correct. That is the kind of situation you have. Mhmm. When you have a increased revenue from products, you have a higher profitability, particularly when they are your own design products, number one. Correct? Number two, your working capital involvement becomes less, and working capital cycle also becomes better if it is product than the projects. Correct. That is why I have been stressing if you would have attended our other earning calls that we want to increase our revenue from products, and that is showing results. 22 percentage and 27%. We are hopeful that this year, it should be down 45%. Correct. It's a major shift. And now since you you have defined so many opportunities which are running into, you know, thousands of crores is the first, you know, your presentation around five different segments you have defined the opportunities, which are all very large opportunities ranging from $3,040,000 crore up to maybe 3 lakh, 4 lakh crore as you said in five g sector. So can we just have some idea? Because these are little long term spread over long term situation. Can we have some idea about when do you feel the maximum kind of a momentum you may gather, you know, when, you know, this different cycle stages, you know, you reach in five g and other areas also. Where is the maximum in next three to four years? Where is the maximum momentum is likely to be gathering? Very high momentum would be there. Right now, also, is going on very well. Absolutely no issue. But if you ask you when the storm is going to come, you know, storm might be talking in the sense that huge opportunities were going to come. Yeah. This would happen, I would suspect, end of the current calendar year and going into the entire 2223. Excellent, sir. Excellent. Thank you very much. Thank you very much. One, because five g rollout would have started Correct. Going to change the landscape completely. Okay. Number two, HuddleNet would have started. That is going to be there is a huge demand opportunity. Correct. These two major things happening, which is expected to start from end of this year to continuing in the next two years. Those two years, you know, which I said '22, '20 '3 year and year Yeah. We'll do a major shift in terms of demand, requirement, and all that. And that shift has already started in terms of cable, for example. Uh-huh. Prices started firming up. But you had the fiber prices earlier and what you have now have have changed. If I could give you some data points on the fiber price, you'll be surprised. You know, for example, if I start from 1920 financial year 1920. Yeah. In quarter one, fiber price was 351 rupees per fiber kilometer. Now these are I'm talking our purchase price. Market prices could I do not know. I'm talking my purchase price. Correct. Which quarter two came down to $3.29. Quarter 3 and 4, which came down to about 350. 3 50 1 to $3.50. Then quarter one of the current financial year and the quarter two of the current financial year came around rupees $2.80. Oh. Quarter three and four, it came down to 250. Okay. So that's why you see reduced low realization per fiber kilometer of cable. What this was about, I would say, 12 or 1,200 rupees came down to 800 or $9,900 rupees per fiber kilometer. So with the same quantum of production, I was making less revenue. Though we increased the quantum of production, our revenue increased. That's a separate issue. But per fiber kilometer, revenue came down. But now this 250 rupees per fiber kilometer, the fiber price, it has already shot up to $2.75, 2 80 range. $2.80 range, it has already come up. Correct. $2.80 range, which means I am talking about what was in the beginning of the year that it started coming back. $2.80 became $2.50. Now $2.50 has again become $2.80. And I expect this would go up by another 20 rupees or so because there is a good demand in China. Mhmm. There is a good demand in India and many other countries because FTTH, 5 g, and all kind of things. Mhmm. So this $2.80 could go up to 303 hundred 10 also. So this would result in, again, the realization per cable kilometer, which is about 900, going up to about, I would say, 1,100 or so once again. So that would contribute to increase in revenue, which we have not factored in. When I say 2,000 crores, I'm not factored in this 900 to become 1,100 crores. I'm not at all factored in. I've factored in the OPs at the current prices, what it was in the end of the last financial year. So that that actually even it could be increased. It has a possibility of increasing, but that has not been factored in, and our margins will remain unaffected. So what we are doing, because of this increase in demand of cable Mhmm. We are increasing our cable capacity, cable manufacturing capacity in the current year. As I I explained, there is going to be considerable amount of CapEx, roughly about a hundred and 70 crores for the cable and fiber. We are increasing our capacity for fiber. So this is, in my opinion, is going to be demand scenario. And that two years, twenty two, twenty three, calendar year, I'm talking about 02/2023, they're going to see huge demand opportunity. Current demand opportunity is coming from expansion of PoEZ networks, FTTH networks, which are the ongoing things which are happening all the time. This there is a current demand opportunity. Excellent, Datadhi. Thank you very much. And my last question is that since, you know, I mean, this is the kind of situation of, you know, you're going up to maybe, you know, I mean I mean, some different kind of, you know, heights of this thing, top line, bottom line, etcetera. Will there be any plans in the near future to raise any equity funds to just, I mean, have a good ratio of debt equity, which you already have a very comfortable debt equity? We have 0.43, which is And right now, we have no plans, mister Shah, to raise any equity. Yeah. Thank you. Thank you, sir. Thank you very much, and all the best. Thank you. Thank you, sir. Thank you. A request to all the participants. Please restrict to two questions per participant. If time permits, please come back in the question queue for a follow-up question. The next question is from the line of Jaytan Shah from Jeet Capital. Please go ahead. Yes. Hi. Good morning, sir. Just two quick question. While explaining the OFC business and railway business and defense business, you gave some flavor of expected CapEx. So you said that OFC required some 170 odd crore of CapEx. So can you give us some highlight that how much CapEx we did in FY 'twenty one company as a whole in total? And what is the target for '22 and '23 just to get some sense of cash flow? Look. You know, FY '21, our CapEx was roughly about hundred crores on a consolidated basis. About hundred crores. Yeah. I may be wrong by few numb few crores here. Yeah. But about hundred crores. Then, you know, in terms of just one second. Yeah. Then in terms of CapEx for the current financial year, as I explained, you know, hundred 70 crores odd is going to be from OFC and optical cable business. Then there is going to be defense equipment manufacturing going to about 40 crores. That CapEx is going to be there. And, of course, r and d expense is going to be there, which I've already mentioned, but this entire r and d expense is not capitalized. All manpower expenses and all that kind of things are put in revenue, but only the equipment we buy from r and d or infrastructure we create for r and d or any technology fee which we pay to r and d partners or investment we make in their companies, they are capitalized. So Okay. That would be another hundred hundred 20 to hundred and 30 crore. So, sir, this hundred and 20, hundred and 30 crore of r and d capitalization is more than about hundred and 50 crore which we have capitalization. No. No. No. Sorry. That is included in that. Yeah. That's included in that. This is a total hundred 50 I talked about. Part capitalized, part is going to be OpEx. Understood. Sir, one last question from my side. In terms of the working capital cycle and the mix, when our revenue mix is likely to change in FY twenty two onwards, which will be more tilted towards product and less towards the project. So do we expect this to improve than what we had in last couple of years? Yes, mister. How do you see our balance sheet getting changed and return ratios getting changed in next couple of years? Because because I believe that our cash flow is tell you why. One, the project's getting completed. And by September, as I said, you know, this payment which got delayed because of milestones not being able to achieve because of the pandemic and border situation, that would be a doubt. So that money would be available, so cash flow will become better. And products becoming more part of our revenue, this will also increase our cash flows and the better working capital cycle. So I expect this would definitely improve in the current financial year. And that Ladies and gentlemen, please stay connected. The lines of the management is wrong. Participants, please stay connected while we rejoin the speaker back to the call. Ladies and gentlemen, thank you for your patience. We have the line from mister. Sir, you may go ahead. Sorry. This got dropped. I don't know why you said you in the line should not have dropped it. But, anyway, so this cycle would start improving, I would say, from the month of of July, August time frame. Understood. Understood. Understood. And, sir, one last question from my side. In terms of somebody asked a similar question. But in terms of our existing capacity and the CapEx, which we have already done till '21 and by end of twenty two, what kind of the optimum utilization and revenue one can generate without major CapEx? I'm not talking about the normal CapEx which we are doing, say, $2,300 crore a year. If you can give some sense on that, on a big picture. I'm not asking for any future guidance, but just to get a sense that how nicely we can sweat the existing assets which we have in our portfolio. That's it from my side. Yeah. Do you know in terms of manufacturing, the cable business or fiber optic cable business, as I said, including the CapEx which we are doing in the current financial year, in up to the and I'm talking the prices which were prevailing when we did our annual operating plan exercise in February and and February when it was completed. And the prices are lower and which are going to increase now. But even at the lower prices, we estimated that we would be able to have a capacity utilization of 90% plus with a revenue of roughly 2,000 crores in the fiber optic and fiber business. So that's the kind of a CapEx you can see vis a vis revenue in cable manufacturing. Now other manufacturing of telecom products which we do, which we are now getting them on a contract basis, you know, Wi Fi and all that. We don't manufacture ourselves. There's no CapEx required there. So we get it to manufacture contract, which is much easier for us because you don't have to bother about sourcing hundreds of components and the issues and all that. So and that's a worldwide thing. So there are no CapEx required for manufacturing additional telecom products. What is CapEx required in the defense communication? Because defense authorities want you to do your own manufacturing rather than doing it on a contract basis. So when we do and and we will be starting that. It will be too premature to say that with the current CapEx of about 40 crores or so we would do, how much production it would achieve. That would depend upon numbers and all that in order to receive, but it would be reasonable enough to reach to a 4 figure number. Sir, normally, you give a breakup between between government and nongovernment revenue. What is the status in the last financial year? Look. In the last financial, if you see the revenue mix, as I said, in the product mix, have already explained. In terms of order book, I can say right now, non government, I I think it would have been $50.50, mostly fifty fifty kind of a thing. I might I think government could be 60 and nongovernment could be 40. But going forward, it is going to become better in favor of nongovernment with the increase of products and all that and less projects. In terms of order book right now, can talk about the government and nongovernment is roughly about fifty fifty. Thank you. The next question is from the line of Chetan Bharia from Perlec Family Office. Please go ahead. Hello. Yeah, mister Chet. Go ahead. Yeah. So my question is on the CapEx fall on the five g by the telecom telecom companies. What what kind of trend are you seeing in that? Is it they're accelerated it in the last, let's say, one year or so? And how how how does it look for the next two to three years? And secondly, in terms of your own production run rate, because of this lockdown, everything here and restriction every elsewhere, are you seeing any kind of a blocks in your production efficiency delivery at this point in time. So then the first question is, five g no question of picking up because five g is to start now. Five g is major CapEx is only start when the spectrum is auctioned early part of, you know, next calendar year, as I said. So right now, preparation of five g is happening. Some small expenditure in fiber optic cable enhancement, and those are being done. A major effort kept at some five g gonna start from the time when the auction takes place. That is number one. And in terms of our, you know, production and all that, because of this pandemic, there's hardly any impact. Any impact which have happened, if it's small, is because of some of the people who are workmen falling sick because of COVID, and they had to be kept out and their primary contacts had to be kept out. There has been small deviation in our Goa plant in the last couple of weeks, but there's no such major deficiency or major stoppage of production in either of the place. Alright, sir. That's it from my side. Thank you very much, and all the best to me. Thank you. Thank you. Next question is from the line of Nilesh from Envision Capital. Please go ahead. Hi, sir. Thanks for the opportunity. So I had one broader question. Basically, as far as the optic fiber cable is concerned, so in India, what would be the share of domestically sourced and imported? And second question on the same itself is, what would be our market share in the domestic market? And who are the other players in the optic fiber cable? Whom we First of all, First of all, in terms of import of cable and domestic, I think more than 90% is domestic production. Hardly, is any import of cable. And even 10%, I'm saying, with a pinch of salt, it may not be even 10%. Now our market share. First of all, I have a lot of pride in saying that we have highest market share in domestic market in fiber optic cable business. Highest. Now exact percentage, I will know because these datas are not made available. But primarily, I can say and this is, again, you know, these are the estimated numbers which we have that in terms of but our market share should be 50% more or more. 50% or more in the domestic market. It can be reaching to 60% also, but in absence of, you know, numbers being available, alternatively, I cannot say that. But what I know of the market, who is buying what and all that, I think our market share would not be less than 50% in the domestic market, which is a very credible thing, you know. There's been eighteen, twenty manufacturers in the fiber optic cable business. If I'm able to maintain a 50% market share in the domestic market, I think that's a reasonably good thing to do. This 50% would be largely because we have a higher wallet share with Reliance Jio? That is one of the reason. That is one of the reason, but not the entirety of it. Jio, yes, of course, and they're very good customers. Quantitatively, good requirement, good payment cycle. They're very good customers. We are proud to have Jio as our customer. But then we supply to a lot of us. We supply to Larsen and Tugro as they are turnkey players. We supply to Tata projects. We have supplied to Bharat Electronics. We have supplied to BharatNet in Punjab, Kharkhand, Chhattisgarh. We are supplied in Maharashtra for the Bharatnat project. We supply to Airtel also. So we are supplied to all operators all operators. Understood. Understood. And then the last question would be on the five g deployment side. So we say there's a huge opportunity as far as five g deployment is concerned, but we are also seeing at the same time our share of products will increase going ahead. So are we talking about that we won't take lot of EPC projects going ahead in the five g deployment, and we will only supply products to the five g with the bandwidth. But there are two opportunities we are going to pursue in five g. One is the product, of course, which is our ongoing business, and new products are going to be added in the five g, you know, radio equipment, you know, which is MacroGen and small cells, both, which are under design right now. Second, we have opened up a new division in the company this time, system integration for five g. Five g system integration, which includes, you know, not really turnkey projects. It in maybe supplied by us. It in maybe supplied by Ericsson, Nokia, Samsung, whoever. Once you know, right now, as you would have heard, time has come from OpenRain. What we call OpenRain means different equipment would come from different suppliers. Earlier, it used to be if you are putting over a network Nokia, so then most of the equipment have Nokia because they won't interoperate with others. Now it is open then. You can buy a quote from somebody, radio network from somebody else, second part of radio from somebody else. So what it results in with multiple suppliers, you need somebody to integrate all that, system integration. So what we have system integration unit in our company in just pretty recently pretty recently. And we are going to expand that and make it a full flay unit for value added system integration business, more geared towards five g, more geared towards different components of five g. So it would not be turnkey projects as such, but it will be more of a system integration where equipment could be supplied by us or somebody else, but it will be a high value system integration. And, of course, our product business. As I mentioned, products will include switches. It will include front all gateways, routers. It will include small cells, macro cells, all those kind of things. Understood. Understood. Okay, sir. Those are my two questions. Thank you. Thank you. You. The next question is from the line of Malaysha from Infant Securities and Finance. Please go ahead. Hi. Good afternoon, sir. Thank you for the opportunity. Just a couple of questions. So one, if you can throw some light on the demand and supply scenario in China and help me understand what is the major deterrent for them to, you know, import products in the in the optical fiber cable products in a larger quantity to India. Look, as much as I understand China, now new tenders are coming on China mobile, China telecom, and demand is picking up in China. And particularly in fiber optic cable side, I've seen demand picking up in China. And if fiber optic cable is pick going to pick up, everything else is going to pick up because fiber optic cable is one part of the network. Five g FTTH, lot of that is happening in China. Five g has also started in China, Five g's good demand is going to be very good in China. Fiber optic cable, you know, there are, first of all, 15% custom duty. So it's not that, you know, they are 15% higher in any case. But even in terms of cost, you know, cost of production, we are as good as Chinese. We are able to compete with them in the export market, most of the case, unless they do dumping. One is able to compete. So with the final 15% custom duty and our cost being similar to that of China because we also produce fiber. They produce fiber. They produce cable. They produce cable. So there's no reason that we cannot compete with Chinese companies in our market. We are doing that. And very much so, we would be able to do in indigenous local market also. And if you look at it last five years even, Chinese companies have not been able to put any fold in the Indian cable market at all. Okay. Alright. So that's totally helpful. And, sir, the next question was around metro cells and small cells. Can you help me understand what would be the market size, say, or three years down the line, and what are we looking at? You know, the market size, if you look at India, I I'm not estimated particularly for those sales, but it is going to be thousands and thousands of crores thousands of crores because, you know, I just let me put some number in terms of number of sales. If somebody has got 200,000 sales sites for four g network, assuming, It would be easily 600,000 for five g network. That is only macro cell. And for micro cell for the small cell, it would be many more because that would be required for inside coverage and all that. So if we just say a macro cell and if yeah. And, again, I'm talking just estimated numbers. If one cell site cost $5,000, assuming $5,000, and 600,000, you can multiply and see what numbers comes in dollars. Multiply it by three or four operators, you can get the number. 500 $5,000 into 6,000, including three or four in India, and then multiply it by that by five times for the six times or 10 times for the world over quantity. You'll get the numbers. It's a humongous number humongous number. Understood. Understood. And where are we in the development stage currently for these particular products? We have just started. Macrocell has just started. Last week only, we did the start of the Macrocell. And small cell will be starting in couple of weeks from now. We are just finalizing our chipset and all that, which chipset to use and all that, you know, a company or b company, we're evaluating that. And that evaluation should be done in the next couple of weeks, and we will be starting small cell also. Okay. And what will be the time range for us to finally, you know, come up with the ready product? We have estimated roughly about, I would say, ten to eleven months. Alright. Thank you so much, sir. That's all from my end. Thank you. Thank you. The next question is from the line of Harvik Yas, an individual investor. Please go ahead. Good afternoon, sir. I had a couple of queries. To begin with, you have crossed over 50,000 shipments of Wi Fi in numbers. So in the fourth quarter, how much could we do? I think it should have been about 50,000 in my opinion. I think so. I mean, exact quarter number, don't have, but it should have been around. Okay. And the run rate would be the same for the coming quarters as well, 50,000 every quarter. So can we can we look at about 200,000 or more for the current financial year? That's that is what is our plan. That is what is our plan. Okay. So the second question comes as the capacity utilization of our Hyderabad plant. So has it has it come on stream more than 90% or 80%? Or It is %. Right now, it is %. Okay. We are increasing capacity. It is % capitalization. Rather than we are doing more than the rated capacity. You know, you have a rated capacity and you have actual production. We are doing more than the rated capacity. Rated capacity was let me just put my calculator there. 6.4 into 12, and we're doing little more than the rated capacity. So it's a %, you can say. Okay. So you guided for CapEx of about hundred and 70 crores for optic fiber and fiber cables. So from 8,000,000 fiber kilometers, we are likely to go up to how much for for the optic fiber? This is for optical fiber. We are going to 10,000,000 fiber kilometers from 8,000,000 fiber kilometers. And Go ahead. Go ahead. Optic fiber cables would that also would go up? Or that Yeah. Optical fiber cable would go up by about 4,000,000 fiber kilometers. Okay. Okay. Fine. Sir, one one last question I had. What is the status of our BharatNet apart from Punjab and Jharkhand where we have done a lot of work? And Jharkhand, if you could put some light on Jharkhand as well. Yeah. So, you know, BharatNet, Punjab, and Jharkand Jharkand is almost getting finished. Punjab is already done. Yeah. BharatNet next phase is going to come on a PPP basis as I've already explained. And whoever becomes the winner, we would surely like to supply cable and equipment and all those kind of things to them. And this is going to happen in my personal opinion, as I said. Government should come up with tenders in next two, three months. With this pandemic, things have slowed down a bit. Next two, three months, the pretender should come, and real implementation should start from the end of the year or the beginning on the next financial year calendar year. So that is BharatNet. And what was your second question? So gPON, if you could throw something Yes. Yes. So what we have done because g pawn is not the right word, I would say pawn. And pawn has got many variations, which includes g pawn. G pawn x g s pawn, n g pawn, n g pawn two. So there are various versions of pawn increment. So we have already tied up a CDOT for transfer technology and then partnership to improve upon that technology, which would then improvement would be specifically ours for development of this PON equipment, which includes G PON, XGS PON, and G PON, all variations of that. Okay. And we will be supplying that those equipments to the players? Yes. Absolutely. Okay. And that would also be a huge opportunity for us? Oh, absolutely. BharatNet and all FTTH players would need it in a good good good number. Okay, Sir, one last question I had, the that is about our order inflow. We have been having Agra and Karp Kanpur Metro order inflow of 220 crores. Apart from that, have you had any other order inflow this year? You know, this is a major order I talked about, but small orders, crores, 70 crores, 80 crores, we keep on receiving, you know, fiber optic cable or Wi Fi and all that. We keep on receiving those orders all the time. Okay. And you guided with 45% product contribution, the revenue is going and growing gradually from there as well. So we are also going to grow our services business as well. Right? So that the product is not eating away into the services business and the total For meeting, project business would also continue. I'm not saying that it will not. What I'm saying is that share of product business will go higher. Overall, revenue will also increase, but the share of product business would from 27%, it will become 45%. Okay. Okay. Thank you so much, sir, and all the best. Thank you. Thank you. The next question is from Dipesh from Mania Finance. Please go ahead. Hello? Yeah, Dipesh. Please go ahead. Yeah. First of all, sir, congratulations on excellent set of numbers. I had just a couple of questions. One was regarding the trade receivables. Our trade receivables have gone up almost about thousand crores. So wanted to know exactly what is the reason for that, and how much of this of this trade receivable receivables are good? I mean, has any of them turned bad or about three hundred and sixty days or something? Look, all are good. Absolutely, there is no receivable which is bad. There are a couple of them which are small ones which are more than three sixty days, particularly from BSNL and PCI. They're both government companies. BSNL is paying that back slowly. It is taking time, but slowly, slowly, they're paying back. Earlier, it was hundred 50 crores. Now I think it should have come down to some $60.70 crores. TCIL, again, has receivable from BSNL, and they will pay to us on back to back basis. So there is as they receive from BSNL, they will also pay us. So those are the ones which are more than three sixty days. There may be some small $2.04, 5 crores here, there, which may be more than that, but there's no bad debts. These are all good receivables. There's no bad debts at all. And if you recall what I explained in the beginning of my question and answer session, why it has gone up? Because those projects could not be they're not able to achieve the milestones against which you will receive payments or large portion of payments Because of this pandemic situation in the last year, for six months are very grossly impacted, and also the border situation where you could not go into the condominiums and execute project, particularly north and east border. That situation would start easing out from July. By September, it would completely ease out. So when you see the September, the situation would have changed completely. Okay. I actually missed out on the initial discussion. No problem. Yeah. Thank you for this. And my second question is regarding the finance cost. Finance cost every quarter has been consistently increasing. Going ahead, what what is question? I will tell you why. Two reasons. One, in the current current year, we have taken a loan of hundred 40 crores for the establishment of fiber facility in Hyderabad. You find increased cost there. Most important reason, because of pandemic, six months in the beginning of the year and later on also, the payment cycle got really disturbed from our customers as I have explained little while ago. So as a result of that, what we had to do and which was allowed by RBI, we had to increase the duration of LC's table. So if the supplier schedule of thirty days, we took it to ninety, hundred twenty, hundred eighty days. Of course, we had to bear interest for that. Then nonfund limits were converted into funded limits as allowed by RBI to the bank. That interest cost also increased. So as a result of these two incidents, what happened? Interest cost has gone up. One is a hundred 40 crores of loan for the factory in Hyderabad, and then also at the same point, right, increase in the LCO duration because of this pandemic situation, and also the nonfunded limits for the time being converted into funded limits. This resulted in a higher CapEx, higher interest cost. What you would find this year, as the working capital cycle eases out as I explained, this cost would reduce in the current financial year. Great. So in the next few quarters, you would like to we we would see it constant, or are we looking at it in some debt reduction? Quarter three onwards, it will start coming down. Start coming down. Okay. And are we looking at any debt debt reduction also in the coming in coming future? Debt reduction, we keep on paying our debt as and when it becomes due, term loan, and all that. Debt reduction would also happen in terms of working capital loans. We have taken specific to the projects, which are the defense projects. As this project start being, you know, completed, the that loan will also come down. Thank you so much. Thank you. I'll I'll come in the next time. Thank you. Thank you very much. Ladies and gentlemen, due to time constraint, that will be the last question for today. I will now hand the conference over to mister Abhishek Jain for closing comments. Abhishek Maybe if there are one or two more questions, I can handle. If we have one or two more questions. Sure, sir. The next question is from the line of Naman Dongar from Imax Trading Company. Please go ahead. Good afternoon, mister Nathal. Thank you for accepting my question. I would like to know all this CapEx and the r and d funding. I would like to know the funding profile of the company. Is it going to be internal funding or all the acquisitions in r and d, how they're going to be funded? Good. Good, Nava. Good question. There are two two two two three ways. There will be some term loan for the CapEx. Our term loan would be taken to some extent. Then internal funding. Internal funding coming with two sources. One, internal cash outflows, which you do because of your profit and all that. Second, we have two not unusual, you know, extraordinary cash flows coming in, which is income tax refund of about 75 crores in the current financial year. And Hyderabad plant, when we started, you had a subsidy from central government and state government. That would also be disbursed in the current financial year. That would be another about 78 crores. That's the 75 crores. A hundred 50 crore is going to be available to income. So income tax refund for which assessments are complete and 75 so hundred 50 crore of that additional money would be available for doing CapEx. So if there is a 300 crore CapEx, you would say hundred 50 crore loan, hundred 50 crore, and, you know, this two amounts which you would be receiving. If we take hundred 50 crore loan, but we may not take hundred 50 crore, we may do part from internal equity also. So these are the three ways we will be doing our one, some term loan and which is available at a very reasonable rate of interest. Two, you know, it's fund of income kind of subsidy of a hundred and 50 crores and internal records. So my second question is I've been following your results for the past eight to twelve quarters, and there has been some kind of inconsistency, be it whether due to the pandemic or there was some Kashmir temperature issue in between. And can we take this quarter's results as base moving forward, and can we expect some consistency going forward? I I think, you know, they're a little uncharitable in saying that it's inconsistency. Because if you see q one of this year and q four of last year, it happened with every company. It happened with every company. Because the pandemic, you can't handle. You can handle. Otherwise, we have been pretty consistent. And as far as the current situation is concerned, I have no reason to believe that there will be inconsistency in my results this quarter. But if the whole country is locked down and any such event happens, none neither you can help nor I can help nor any other company would be able to help. But I don't see any such thing happening, Bank. Thank you so much, sir. Thank you. Thank you. So good. I think, you know, any one more question I can. I said two, so one more. The next question is from the line of Deepak from Marihan Stockbroking. Please go ahead. Yeah. The the question has been already answered. Good. So thanks a lot to all of you. Thank you very much. Abhishek Jen, would like to make any closing comments? Thank you, participants, for being there on a HCL call. If for any queries, we'll be able to help you on any other further queries also. Thank you for being there on the call. And with this, I'm concluding the call. Yeah. Thank you very much to all participants being on the call and taking such a lot of interest. Any query, any question you have, kindly let us know. Let Abhishek know or our advisers know. We'll be very glad to answer all those queries. Thank you very much. Thanks a lot. Thank you very much. On behalf of Arian Capital Markets Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.