Q2 20/21

Oct 22, 2020

Good day, and welcome to the Q2 FY 'twenty one Earnings Conference Call of KTIG Technologies, hosted by Dollott Capital. Jens after the presentation concludes. You. Please note that this conference is being recorded. I now hand the conference over to Mr. Rahul Jain from Dollop Capital. Thank you and over to you, Mr. Jain. Thank you, Rituja. Good evening, everyone. On behalf of Golub Capital, I would like to thank KPIT Technologies for giving us this opportunity to take this call. And now I would like to hand the conference over to Mr. Sumeeti Pankhilkar, who is EVP and Head IR at KTIT, KPIT to do the management introductions. Over to you, Sohrab. Thanks, Raul. A very warm welcome to everybody on the Q2 FY 'twenty Earnings Call of KPIT Technologies Limited. On the call today, we have Kishore Patel, CEO and MD Sachin Ticker, President and Board Member Bria Hardikar, Senior Vice President and Head of Finance and Sunil from the Investor Relations. As we We will have the opening remarks about the quarter's performance and the way we look at the remainder of the year from Mr. Batib, and then we will have it open for your questions. So Once again, a very warm welcome, and I hand it over to Mr. Batib. Over to you, sir. Good evening. Very happy to take you through this quarter results. This also happens to be one of the most challenging half year in the history of the company. So I would like to Just go back and cover what were the 3 goals we had set out at the beginning of this period when COVID hit us and the world. So we had identified 3 main goals at that point of time. 1 was the So it really builds resilience. The second was wallet share, we keep if not increase the wallet share with our T21 customers. And 3rd, we focus on delivery and operations, specifically from work from home, how do we keep the productivity, how I must say that we had a very detailed review every customer projects wise and we are very happy to say 1st on the conservation of cash. We moved from INR328 crores to INR 5.28 crores in the 1st 6 months, Which is one of the best half yearly increase in the cash. So wallet share, in most If you look at it, while our revenue has come down during the quarter 1 quarter 2 in the half year, more than half of the It has been stable or gone up. And in some specific customers, it has come down. So there are very few customers where it has come down, both in case of where we have seen growth And both the clients in cases where the revenue has come down, we at minimum we have maintained the market share, if not it has increased. So we are very happy With the engagement with our clients. And the third was delivery and operations. We have really We have invested in building processes, building automation and delivery excellence, Specifically considering the kind of complex projects and technologies we are involved and of course work from home scenario. And overall, our metrics, quality metrics have improved significantly during this time. So I'm very Happy to say that what the 3 goals we have set up, we have done reasonably well on that. Now coming to the quarter 3 as quarter Sure, Ritu. Overall, the growth has been flattish, as we mentioned, in the past at the beginning of this period And the beginning of the last this quarter, the growth was mainly in Europe, followed by America and then there was a America In Asia, there was a degrowth. The main thing is during this period, we have 1, 5 OEM projects and they have been across Europe, Americas and Asia and across the technology, electrification, ADAS and connected. So I think one important We have given some details about this in our investor update The OEMs have started, even though conservatively, new projects with us apart from the continuing projects. So I think That is a very good sign. And the another point I wanted to talk was that on-site revenue has reduced. So about 120 people work has been observed during this time. So there were 3 specific reasons for this. One is in USA, as you know there because the Visa restrictions and etcetera, some of the people whose Visa has been expired or was due to expire. Some of those people Along with some of where the customer wanted a cost reduction, all those people we have got back to India. That was the point number 1. Similar significant part happened in UK that many on-site projects were moved to offshore. And the 3rd part is subcontracting, specifically with some of the complex projects we have subcontracted some work in the high cost countries in Europe because we did not have that point of time those skills. But during this period, we have been in a position to move that work Offshore. With this, roughly 2.5% to 3% of additional work we moved offshore. So that was our volume growth during this time, though the revenues looked at flattish. On the profitability front, In spite of rupee appreciation, which hit everybody and the impact would have been 0.4%, there has been increase in EBITDA About 1%. And again, apart from the change in the mix, as I mentioned, that is reduction in On-site and reduction in subcontractor. There are other reasons as well. So one is the office consolidation. The office consolidation, specifically in India. It, of course, had some revenue impact of this. But along with that, all the expenses in pre termination of leases as well as the So overall, there was no impact during this quarter. But we have been in a position to consolidate These offices during this quarter, which will have some impact next year, positive impact next year. The other thing was As you have seen, the liquidity has improved. And that's why we have been in a position to invest 70% of Into Investments. So the yield on this has increased. Of course, it could increase more as we go further. There are 2 expenses which have incurred during this quarter. One was the depreciation in Munich facility, which we had mentioned and told We made of 5 crores for doubtful debts. And we made this basically because some of the financial situations of the customer Actually, in fact, we will rigorously pursue to recover this, but we thought it prudent to make this Pravin during this quarter. On the liquidity front, as I said, we have a DSO 59 days, which is one of the best in our And increased our cash by INR 200 crores during the last 6 months. 70% is invested And this gives a very good comfort for us. Now, of course, this would give us while we would like to maintain this liquidity, if not improve, During next few quarters, still I would say, overall, there is a better Aglity. And we pass through this uncertain times. But of course, during that time, it would earn Some interest income, which will improve the EPS. On the people side, as we had mentioned, There is we had already announced restoration of variable pay, which we had reduced. So that will We'll be there from the 1st October sometime in October. The second is we have the reinstated And we are happy that in spite of some of the measures we took proactively, our people morale Last but not the least, on the technology front, you might have seen an announcement on QL Cell. We worked with CSIR. And this was R and D project and to really build this as was The first fuel cell vehicle. This is quite a proud moment. But more importantly, as our many customers want moving to the fuel cell in To the Cortex. So that is very creditable to the team. Last, on the technology front, we continue to invest significantly R and D expenses. We are in one of the places where the technology is changing very fast. And we want to make sure that we are AHEAD in the technology area and we help our customers to really go to the market quicker with the new technology. So we spend 7% of our workforce work on R and D projects. This is not bench. This is not this. These are specific projects in the new technology. We have not reduced this part at all during this time. So 7% of teams continue to work on this. We believe this for the future growth of the company. So we have not reduced any of Despek. So coming to the outlook, I think T21 revenues has been 80 6% of our total revenues, which remains very strong. It has increased quarter over quarter over the last year. I think that is a real strength for us as we look forward to the second half, the large deals which we announced last two quarters, along with the 5 OEMs engagements we have talked about and a strong pipeline we have about some of the large deals and Significant Deals. We are confident about growth in H2 over H1. The growth will be in Q3 as well as in Q4. We will increase the percentage of offshore. So there is some possibility of But we believe that with this strength what we have and the customer's Experience in managing this as well as our experience in managing this, we are in a much better position to handle this. So even in case of That situation, we are very well placed to deliver on the promise. Under Q3, Sri, if you look at, our revenues will go up. As we had mentioned that restoration of variable pay There will be increments for the promotion link. The depreciation will go up. And in spite of the significant expense, which will increase, we will our profitability We will have more offshore and EBITDA improvement will be beyond the Current quarter, for sure. So this is how we look at the Q4. So overall, we believe At the H2, we will show reasonable growth in terms of revenue and improve our profitability reasonably well. And overall cash will be higher and I think we will be in a very strong position to go into the New Year post act on a strong one. Thank you. Thank you very much. We will now begin the question and answer session. Star and 1 on the touchtone telephone. ANTOO. The first question is from the line of Baidik Sarkar from Unifi Capital. Please go ahead. Hi, good evening and thanks for asking. Let me send a quick change in your So, my question was, we There's been a change in your onshore and offshore revenue mix due to a flattish headline number in revenues. How would you how should we understand the quantum of the volume growth That you alluded to in your results. And secondly, in accounts where you're seeing sluggishness right now, probably the PASCAR segment, how serious is And how would you see recovery panning out from these accounts? So Basically, this on-site to offshore is basically we have yet top so I've given 3 specific examples. And Looking at the headcount count, which is on-site versus this. So I must say that we have a center like Germany, where which is like a center India, where we have not where we don't look at moving people out here and there. But in In case of specific projects where it was these projects I talked about in USA, Europe or the subcontractor, that is the headcount which we have brought in. I That is basically internal information about the on-site movement to offshore, which is reflected into profitability improvement. I think that is the only thing I can The second your question is Pascar. That's why we have also if you look at the new wins During this quarter, there are 5 new wins on the OEM side. That's why I mentioned that the OEMs have started bringing the spending again and new projects they are beginning to start spending on the new project, though cautiously. So I think that along With the deals which we have won in quarter 12, that's what gives us the confidence That the growth will be back in the PACCAR segment. Yes. Just to add to that, to give you a Macro perspective on the segment. If you look at Q1, the drop in the industry was anywhere between 30% to 50%. Now some The OEMs have started to announce their results for what is our Q2 now, which is their Q3. The quarter on quarter, the results are encouraging even though year on There is still lot of sort of gap to break. So from Q1 To Q2 our Q1 and Q2, there is a positive momentum. And we hope that it continues and that gives us We are looking at H2 little more optimistically. How do you see the quantum of your payout evolving from here on? Is that a higher dividend No, so I Actually talked about it. We feel that till there is a bit of uncertainty, of course, we would like to keep and The payout ratio we have talked about around 25% as a policy. So we'll do that. The rest How we deploy whether in any form or the other, we will take that call later part of the year when I would say the uncertainty will be lower. All right. Thank you very much for the patience. Thank you. Thank you. Thank you. The next question is from the line of Sandeep Agarwal from Edelweiss. Hi, good evening to the management team and thanks a lot for giving me the opportunity. First of all, I wish good to everyone and And also congrats on a good execution. I have a question from Keshav, particularly. I was just wondering, we Like for example, in this quarter signed 5 OEM and I understand your the negative impact of the revenue or if not on margins of the offshore Subhad, but if you take a little broader view of next 12 months to 24 months, is it fair to assume This kind of signings which are happening on the OEM, it will lead to a very significant acceleration in growth or you think it is too early to call that out, number 1? Number 2, if you read the international different journals and research on the autonomous cars and powertrain and everything. The kind of outlook which those journals are putting out for this segment is very, very optimistic. And we being specialized in this area, how do you see our next 2 to 5 year kind of scenario For our company, you think we can grow really extremely well in these areas because of the substantial potential, which is showing up In the outlook. So if you can give some light from a longer term perspective, not like for a quarter or 2, but little longer term view. And I'm not asking for a guidance or a quantitative number. Yes. Thank you for your question. I think as you have I mean, we have talked In the past, how we have delivered our results in last 3 years. I feel that we are in a good place Where we have, I would say, clear focus strategy on our customer. Our relationships are strong. We are investing continuously even during this period on the new technology. So we believe that we will hopefully go back to that in the New Year. And that is what our objective is. During this period, we talked about all the financial numbers. But our client engagement, We have increased quite a bit. And I mean, other than any Any other possibility, we believe that we should get to at least, I won't say the best year, but one the better years next year and the year after. So this will be a very good time for three reasons at a High level this. One is the electrification. We are in a very well positioned in Europe because we have a Significant presence in Europe on electrification. And we have a very significant engagements. And You may say it in the past deals and maybe in some future deals. And that allows us to really capitalize on this market. As you have seen, some of the on this market. As you have seen, some of the customers like BMW had an increase in the electrification vehicles 50% or 40% 40% to 50%, something like some number like that. And overall, there is a tremendous push in this area. I think our credentials as Our strength is significant in this area, which will allow us to do that. Also on autonomous, While people have prioritized ADAS already, that is level 4, level 5 automation is little bit pushed out and more focusing on Level 3, A3 plus Automation. That is again by itself a good opportunity and our Credentials and market size is pretty significant in that area. Also, we feel that in commercial vehicles, we feel that option of autonomous And even though it has not started with the same, if I would say rigor till now, we think in next 6 months and looking at how the market is bouncing back in some of these areas. We believe in next 6 months we see that some of these things coming back. So And the third is because the autonomous was pushed out to deliver a value. I think the differentiation is happening on Digital Copic. And so these three area of post spend will remain strong, apart from normal growth in other areas. So we Based on this, we see a good environment for us as we go through this uncertain time. Thanks. That's very helpful and best of luck for the current quarter. Thanks, Ajay Sandeep. Thank you. The next question is from the line of Mohit Jain from Anandrati. Please go ahead. Hassan, first is on the margin outlook from a longer term perspective. You highlighted the trend towards higher offshore. So if you have to just extrapolate Let's say, to FY 2022 or 2023. Earlier, our margin aspiration, I guess, was closer to 16% to 18%, This was pre COVID. How it has moved from that perspective given that facility cost benefit will come and you I think we would maintain that right now, 16% to 18%. We don't know what else will happen and how Things will change otherwise. So we believe we feel that is a good profitability, I would say, for us, so it allows us to invest in whatever other areas we need to. So 16% to 18% I would keep that as a guidance as I had talked about in the past. And second is On the top 25 account growth, like what are last quarter you highlighted that there was significant uncertainty that you were expecting some movement in the top 25, strategic 25 accounts. Has anything materialized or is that risk behind us and You expect the strategy accounts to continue at a stable number doing that? Yes, this is Sachin Takeda. Mr. Patel mentioned that You can see we had significant wins. All of them are from our top 25 accounts. And The overall outlook from their perspective, especially in the area in which we operate looks very optimistic. So the recovery of Automotive, which consists of both passenger car and commercial vehicles, may take some more time, but recovery for KTIT will be at an accelerated pace because the spend that they have in software is coming back. There are in the last few months, there have been Lot of constructive conversations about future. Some of those conversations have materialized into good sized deals with RT25. And given their results, there are Q2 results for them That are on the positive side, we feel that our confidence will go up as we get deeper Next was on utilization. If you could give a range of where the utilization is and when can we expect Headcount addition to start again. So on the people side, let me tell you about the headcount addition. I think We have used this time also to really go deeper. I mean, specifically, we have positioned ourselves very strongly as a software integrator, Which is a very critical part, but it's almost like a new category of a player, pure software player, So I believe we will still not have or maybe we will have de growth another 700 people for this. So basic for the current year, which will join later part of this year. And that will start Looking from the quarter 1 onwards. So that is how I look at it. On the I can't say that right now, but I'm Just saying that we have made those are the people who will join in next 2 to 3 Currently, Mohit, if you look at the combined utilization, we are at around 72%, 73%. And as we move ahead, we believe that over the next 3 to 4 quarters, we should be able to increase With by at least 4% to 5%. So 78% would be the estimation. Yes, I mean 76% to 78%, I think that is the range as a combined Share tax rate, we've been saying that it is for the complete year as a whole. The quarterly movements happened because of some of the index This impact has happened because of the index impact on the office consolidation and otherwise. You should look at it H1 As of period, it will fall in the line with what we had given as an outlook. So we'll continue to be in a similar range from a 1H perspective. Yes, Thank you. That's all from my side. Thank you. Thank you. Our next question is from the line of Madhu Babuk Santrum Broking. Please go ahead. Yes. Hi, sir. I guess on the Cash deployment, I think INR520 crores is the current net cash. So how much of it is abroad and how much we have actually give a higher yield and how the other income Breakup of how much cash is invested in India and how much is outside India. Of course, our endeavor is to increase the amount of cash that we bring back in India. That will happen over a period. So if you look from last quarter to current quarter, it's almost double. It was about £10,000,000 last quarter, it's £19,000,000 this quarter. And you'll see that this quarter and you'll see that going up every quarter as we move out. So I mean all that in India is in high yielding asset In the or Yes, I mean that is what the obviously safety comes first for us and then the yield. So that is how we think about it. Okay. And the other thing On the depreciation, I think there was a spike. So how the steady state depreciation, when it will moderate? See, on the depreciation side, As we had given even in the investor update, we believe that by end of this year in Q4, the depreciation should normalize when we will Please we have the office consolidation impact. Okay. And just one last one, sir. I mean, next year, do we see this Revenue deflation continuing into next year because I think post COVID when the clients analyze that a lot of has been done from work from home. So would you see further offshore that revenue growth momentum might be like 10%, 12% on next year because of this deflation continuing. I think we have to strike the right as you know, our proportion of low cost country is already on Higher side. And last quarter, we made some shift. I think for the rest of the year, some more people will move. However, we have to keep Keep in mind that we are building a world class practices. And in order to remain on the cutting edge of the world class This is important for us to have large presence in countries like Germany, especially Munich, hence our investment. So beyond this year, we'll have to strike the right balance. For The next two quarters, I think the trend will continue to some extent. After that, we have to make sure that We have enough presence in areas that are on the cutting edge, whether it's Europe, parts of U. S, parts of Japan And in China, we'll have to maintain some numbers there. And the 5 deals we mentioned in the release, so like who are Competition like LTTA or Tata Lexi or even the Tier 1 vendors or some local place. So just wanted to understand whom we are competing in these On the side view that we have on the OEMs which we announced. Yes. There are so We have different competitors in different areas. So the competitors on the powertrain side, whether it's electrification, There are certain competitors then on the ADADAS there are very limited competitors. And also on the infotainment overall digital cockpit, I think it's The competition is little more wide across the geographies. For the first two areas, most of our competitors are from Germany and U. S. In infotainment and connected vehicles generally, there are competitors from U. S. Europe to China, that's right, including India, right. And so that's really our The footprint, they're very mostly we compete with very specialized players from Europe and U. S, especially for the first two practices. Okay. Okay, sir. Thanks and all the best. Thanks, Madhu. Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Hello. Good evening, everyone. Last quarter, I think you had made a mention That 60% of the revenue decline that we saw last quarter, some of that should sort of come back Over a period of time. But what's been your experience there in terms of the spend coming back from those clients? As we mentioned earlier on, by passing off every month, our confidence is going up. I think 1st 3 months, everybody was in a frozen state. Last 3 months, there's been lot of constructive conversations and actual conversions into actual business. And we believe that the trend is going to continue. So to give a more go into a little more detail, I think the what places where we had lost revenues on the existing customer, we Have a visibility that 50% of that will come back on the same program, out of which maybe 30% has come back and few or some will come back in next 2 quarters. Sure, sure. That's very helpful. And it's with regard to these that we have actually seen the offshore shift, I And not on the new deals that we large deals that we signed. Am I right? No, no, I think let's just clarify. So when the dip happened from last year's Q4 to this year's Q1, there were handful of customers on which this happened. Out of that, 30% has already come back. We believe another 20% to 30% will come back before the end of the financial Yes, that's one part. On top of that, with our existing clients and with some new clients, we are signing And most of the out of the 4, out of the 5 deals that we talked about earlier on, they are all beyond the areas Where we took a little bit of a cut. Is that drawing clarity? Sure, it does. Just from the wins that we had, right, the large deal wins, have they started the revenue So I think we I mean, out the 2 deals, large deals which we have announced. I think we have started work on both the projects. And Initially, of course, there is some time where we start taking over some of these projects from the existing client staff Or the other vendors. So that we have started. I think we'll start the revenue occurring from this in Q3 as well as in Q4, of course, and onwards. So, 2 has happened already. Sir, that's very helpful. Thank you and all the best. Thank you. Thank you. The next question is from the line of Amkeet Agrawal from Yellowstone Equity. Please go Hello. Yes. Good evening. Yes. Good evening. Hello, sir. My Question is regarding the variable pay. So you said you're going to reinstate some debt. Could you give some Idea is to like to what level it will go compared to pre COVID? No, no. We are reinstating the 100 percent of that from the quarter 3. Okay. So the reason I am asking Because you also made the ESOP change. And at that time, I think the argument was that ESOP change plus some The favorable in soft exercise price together with reduced variable plan would give you a good compensation structure. But now we are I think so Both the swap plan would be favorable as well as the variable fee would go back to 100%. So would that impact the EPS overall? No. So that is, Of course, factor in whatever we are saying, but I would like to give a little further clarity. 1st is, 1st 6 months, people have lost that anyway. So That is significant impact, which they will get back from this. So that is We have not given generic increment. We have given only commercial based increment. So at least to our key staff, The third thing is it will also allow us to really retain the critical staff because they are a special Flavia to make sure that we retain our key staff. So I think these are the three reasons why we did restructuring of the software. And as As we have said, in Q3, the EBITDA margins will be above 14%. And in Q4, we'll see an expansion in both EBITDA as well as PAGS. So there will not be a negative impact. But Obviously, going ahead, we see a positive impact on EPS due to the overall growth and improvement in operational efficiency. Okay, got it. But just to confirm then, so the EFA plan is more applicable to senior level staff, the same, No, the critical staff. No, it is see, we are a technology company and we have made sure that all our key technical I mean, there's a leadership team is it's quite a spread out plan, and Significant part of that goes to our technical team. Okay. Okay. And the variable pay, is it fair to say that the number of employees receiving the variable pay would reduce? Because Agender, you would be more selective than No, no, no, no, no, no. We didn't say that at all. We said that we had said that we will not pay variable pay during first 6 months. So and we had changed some of that more in the 1st 6 months, made more amount variable. So that we are reinstating Risto. And so they will have their VPI. And of course, it depends upon the performance of the company, how much we pay Okay. Okay. And the individual. Okay. Got it. Thank you. Thank you. Thank you. The next question is from the line of Shashi Bhushan from Axis Capital. Please go ahead. Yes. Thanks for taking my question, sir. The deals that would have got deferred or canceled due to pandemic, Are we seeing those coming back in the pipeline for discussion? Yes, this Sachin TK. Karas, as we mentioned earlier, so out of the deals that went down in Q1, 30% of those Sure. And do you see any change in client behavior that is in our spending pattern in terms of changed priority in the post COVID world, like they are prioritizing few Things which they were not earlier and they are deprioritizing few. Absolutely. As you know, the impact on manufacturing, Including automotive has been dramatic of COVID in a negative way. So obviously, the pattern and the behavior has changed and they needed to reconfigure everything. They are prioritizing They are prioritizing what is important to them very, very clearly. And what is important to them is the future. And the Future fortunately for KPIT lies in software driven vehicle. So I think we see change in the behavior. Obviously, they want to do more with less and they also want to prioritize the programs that they have and Invest more in the areas that will sort of continue to give them edge in future, right? So there is a clear barrier from that The prioritization, they have taken it to another level, right, given the situation. Sure, sir. Very helpful And all the best for the year. Thank you very much. Thank you. The next question is from the line of Sanket Gauradia from MVEC Investments. Please go ahead. Thank you for the opportunity. Wanted to kind of just get your view on We've seen a good improvement in the DSO. Is that sort of sustainable? And going forward, are you looking to further So this is Priya Hardikar. What happened this quarter was we had a couple of days gain because of some of the customers whom we had given extended credit payers that Those monies were received in this quarter. Therefore, at least 3 to 4 days were benefited because That the rest of the day is benefited purely out of our operational efficiencies and, river on operations. So 59 will not I don't believe that it will be a regular sustainable DSO for us going forward. Just on your the hydrogen fuel project, could you kind of just maybe give some color on what we're doing? And What is the kind of maybe CapEx, if at all, we are incurring for this? And sort of what is the broad It is not it's quite funded by the government. Apart from the employees who were Allocated on the project. I think we did not have any CapEx or any other expenses, but mainly of the people who were working on this project For a long time, I think the main thing the area in which we work was basically on the control And integration of powertrain with the fuel cell. So these were the mainly two areas on which we worked. And from KTIT's perspective, as Mr. Pachal mentioned earlier on, this is a really To create a new offering for KPIT as more and more of our clients in future will get into field sales, right? So that gives us higher Our credibility because of the real hands on experience. Hopefully, we can make some difference to Indian market. Understood. Could we And this will be a government funded project where KTIT is kind of offering us its resources for sort of the Yes, we co invested on the people side along with the Okay. And sorry, just one last piece Sorry, I'm just going back. It's a largely innovation effort, I must say that. As I said, we have 7% of our employees work on new technology projects and building that. So it is one of those. Understood. So It's more on the innovation side, which we can then maybe use for our other clients, yes. Okay. Just one last piece, I wanted to understand, So for H1, we have about INR 28 crores CapEx. Wanted to just understand what is the So we have a new center established in Munich, Germany, and that was the major CapEx that we have done in H1. We are done with The CapEx there. And so I think that was the major component of the CapEx apart from the normal CapEx that happens on hardware, software licenses, I mean software licenses and the hardware Required as maintenance CapEx. Understood. Okay. Thank you. Thank you. Thank you. The next question is from the line of HR Gala from Fine West Advisors. Please go ahead. The beginning. Sir, I just wanted to know that shifting work from on-site to offshore does increase our margin, but what impact does it have On the top line. Can you, yes, explain to us? Yes. Roughly, I mean, I cannot really go into very 100 percent workout, but roughly if you look at it is about a couple of $1,000,000 $2,000,000 to 2 1,000,000,000,000. The work would have remained on on-site. Okay. So then that is compensated more than that by the gain in the margin. So in the Absolute amount of the EBITDA that company generates. It doesn't make difference or does it make any difference? It doesn't make much difference. Okay. It is, I would say, alternate technology. So it will go As an integration of fuel cells with the electrification technology, for some of the projects have already started outside, most of the OEMs have some of the projects which are not for a production grade, but in some in 1 or 2 cases it is. Specifically in some Markets, we believe this technology will get an update quicker than the others. So So it will be a technology which will work Arunali along with electric vehicles? Yes. So the difference there is the fuel cells This will benefit the commercial vehicles, especially trucks and buses more than the passenger cars. It is not to say that passenger cars will not go there, but it will be dominated by the So that is what I wanted to know that do you think that the OEMs will be more prone to go for, say, hydrogen fuel cell rather than going for electrification. Can that also scenario happen? Yes, it will happen over the period in commercial part For a long day, but it takes quite some time because see what happens is, as you know, the vehicles are on the road for more than 12 3 years now, maybe 15 years. So to mature this technology takes significant time. So many of See, even the production programs go for 3 years once you start a production program. So it's not as something will happen next No, that's fine. I think overall a longer period. Yes. Because we understood from some Mother, I mean, the sub auto component people, that is hydrogen cell can have a very big fire anti explosion hazard. What is Your thinking on that. You said technologies keep on changing. I think we don't know, but it is something where many companies are Many of our customers have invested into specific vehicles. So it is all about when you start and when where you go, right? So As I said, it gets matured and that's why I said that adoption really depends upon when it is hazard free and people see it more Capital Dependable Technology. So my second question is on that Lavonia that we have acquired. What What are we looking at it, no? Why OVA? Why OVA? Sorry, why OVA? No, so we are Frankly, evaluating the impact due to COVID because as some of the technology prioritization of the areas of The customers get changed because of the discretionary nature of some of the technologies. So we are evaluating from that perspective and the impact on the financials. So that's why we will take a decision sooner. Yes, we have not completed the acquisition. It is not yet closed, and we are still evaluating. Okay, thank you very much. Wish you all the best. Thank you. Thank you. Thank you. Anwan now. The next question is from the line of Shalu Assija from Investment Newton Aziza. Please go ahead. Yes? Hello. Good evening, sir. Good evening. Yes. My first question is regarding I want to know the revenue segregation between one time client versus continuous client. Can we have this segmentation? Our business model is a repeat We are basically focusing on T21 customers, which is 85% of the revenue, which is a completely repeat customer. Now Outside of that, we have another set of 25 customers, which at some point of time may enter in this P21 customer. So we are not Really, I mean, there may be 2% or 3%, couple of percent maximum. I don't exactly see which may be Like that. Most of the our basic business model is a repeat customer. Okay. Okay, sir. And sir, can you So tell me the impact of consolidation of offices you mentioned in the presentation on top line and bottom line consolidation on the financial statements is more or less neutral as the remeasurement of its liability towards the lease discontinuation the depreciation for those premises and certain other expenses as per the accounting standards those were accounted for. In the current quarter, because of office consolidation, there is a neutral impact, no significant impact on this. And give any impact, what are you saying? I haven't No, obviously, there is no impact on revenues because of office consolidation. It is only the impact which has happened on the cost side, and there are positives and negatives which almost cancel each other. So neutral On the cost side and obviously no impact on the revenue side. Okay. Thank you. And can you also say Give me the segregation between on-site and off-site offshore revenue. Like Ulthroid. How much the value comes from Ulthroid? And how much value comes from I think that is an area where what we have said is we have a center in Munich. We have a similar thing in the U. S. So the mix keeps on changing. People keep moving. What we have said is roughly about 2% is the shift that has happened. In terms of percentage, it can be roughly about 50% to 53% on-site, roughly in that range. Okay. 52%. Thank you. The next question is from the line of Neet Mehta, an individual investor. Please go ahead. Good evening, Congratulations for your good set of numbers. Well, actually, I wanted to ask you, like, you said you are going to increase the Krish, I mean, wallet share of the existing customers. So what is the strategy or rationale behind doing that? As we As we mentioned earlier on, our strategy is essentially to focus only on handful of clients that we call T25. We have 21 such identified clients and the whole approach is to go deep and wide. And what that means is, if you are working with a client in the electrification area. We want to make sure that in a strategic manner, we also get into the other areas in a strategic manner. That's what we want to do with each one of those 21 clients. We believe that our current engagements are And it also suits KTIT's business model. So that Remains our focus. The whole thing is all about expanding our footprint Across the canvas of our C21 client. So we are engaging more and more deeply with that. We Even during the COVID, we are doing multiple tech shows virtually. We are also doing many workshops to help Do more with less. So some of the programs that they are forced to put on hold, we are coming up with creative ways so that we are able to execute And we are able to increase our wallet share. And just to add, for example, you I mean, I'm just taking One example, there are many, but so, but if you take the electrification program now, people will come with more and more electrification platform and program in Europe. So if we are working with a customer, I think basically we'll engage with more platform. That's what it will mean. Okay, great. Sir, could you just give me your current rating numbers? So it is about 65 or so I feel right for which we are piped and There are many technologies which where we don't fight better because it is not necessary that you should fight better. So I think There's a lot we are with, I think, on that area. That's one investment we have not reduced at all. Okay. And so like I wanted to ask, Is there any update of you working with Tesla? I would not go into customer specific thing, but I can only tell you that we work with many OEMs and many Tier 1s, which look at that. We do not directly work The next questions from the line of Karanupal from Philip Capital. Please go ahead. Hello. Yes, hi. Yes, hi. Thanks Just one question on the 5 OEM projects, which you have won. Could you give us a sense about the size and the duration And are these similar to the large two deals which you had announced in Q4 and Q1? Thanks a lot. So first of all, All 5 of them, they cut across the 3 geographies and they also cut across the 3 areas. So some are in electrification, some are in ADRS and there is one that is in connected vehicle. They cover the 3 All of them are multi year, multi $1,000,000 programs, right. And our hope is that, as Mr. Patel explained Earlier on, if you are working with them in a program now, there will be more and more platforms. So hopefully, they will continue for a long So these are not one off kind of engagements that will start and abruptly end. Okay. And the projects Which will ramp up in H2, correct? As Mr. Patil mentioned, yes, I think most of the ramp up will happen during the course Suresh, you are right. Okay. Thank you so much and all the best. Thank you very much. The participants. The next question is from the line of Sanket Goradia from VEC Investments. Please go ahead. Yes. Thank you. I'm back with your question. Just wanted to understand on the doubtful debt and advances. If you could just give more commentary on Are we providing I mean, are these the client base from our the T25 list and we've even written off about 4 crores. So, directionally, what is going on with that piece? These two couple of customers are not the 21 OEM accounts where we focus on. These were a couple of customers who got impacted owing to the COVID situation. And under abundant precaution, we have made the provision. While I say this, we are making all the efforts to recover the our deals from both of them. And the ones which we've written off? We have made a provision. We have not written them as Badday, and therefore, we are making efforts to recover the monies from them. Yes. But we have written off Yes, 14 crores is what we are providing for and 4 crores is what we have written off, right? So during the quarter, we have provided for 5 crores among these two customers. Thank you. Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments. Thank you. Thank you, everybody, for participating in the call. And if you have any Any further questions, please feel free to get in touch with me. Thank you and have a good evening. Thank you very much. Thank you. Thank you. On behalf of Dollitt Capital, that concludes this conference. Thank you for joining us and you may now disconnect your lines.