Q4 19/20

May 28, 2020

Ladies and gentlemen, good day, and welcome to KPIT Technologies Limited Q4 FY 'seventy Earnings Conference Call hosted by Dolla Capital Markets Private Limited. As a reminder, all participants in line will be in 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. Rahul Jain from Dollop Capital. Thank you. And over to you, sir. Thank you, Nirav. Good evening, everyone, on behalf of Dalat Capital. I would like to thank KPIK Technology Benefit for giving us the opportunity to hold this call. And now I would like to hand the conference over to Mr. Sunil Sanzalkar, who is EVP and Head, Ilaal FQP IT, to do the management introductions. Over to you. Thanks, Rahul. Good afternoon, everybody. A very warm welcome to all of you on the Q4 FY 'twenty and FY 'twenty earnings call of KT Technologies Limited. I sincerely hope all of you are taking good care of yourselves and your near and dear ones. I wish all of you stay safe and stay healthy. On the call today, we have Mr. Ravi Pandit, Co Founder and Chairman Mr. Kishore Patil, Co Founder, CEO and MD Mr. Sachin Tikhetar, President and Board Member Vinit Paredesai, CFO. We also have Priya Hardikar on the call, who is Senior Vice President and Head of Finance and yours truly from my heart. As always, we'll have the opening remarks about the quarter and the year gone back and the way we see the in the foreseeable future by Mr. Ravi Pandit, and then we'll have it open for questions. So thank you once again for joining the call, and I will now hand this over to Mr. Pandit. Good evening, everyone, and welcome to Apal. So in my initial remarks, I would like to cover how last year was and the last quarter was. I would then like to cover What are our goals or focus area in the face of COVID? Then I would like to talk about how do we see the overall year? And this is what you probably might be keen to understand about how do we look at revenues during the coming year. And maybe I'll make some remarks about what's happening in the industry that we are serving and our position in that industry. So as you would know that The year which ended on 31st March was actually our 1st complete full year as an automotive solutions provided focused company. And this was a good year. We had a revenue growth of over 14% on constant currency terms. It was an industry leading growth. The EBITDA growth was much higher than revenue growth, which was at 35%. Our market also increased from 11.5 percent to about 13.7%. And the SPAT growth was also correspondingly quite good. As regards to Q1, our revenue on quarter over Q3, growth was 1% year on year was 11.5%. EBITDA, Q4 over Q3 was 2%. Y on Y was 17.5%. At all the Q3 or Q4 was negative year on year it was 23% growth. So you would notice that in all aspects our and we talked about the top 25 customers. Growth in top 25 customers year on year was 20%, against the overall revenue growth of 14%. So you would notice that our emphasis on our key customers has given results. During the year, our attrition also came down because of the multiple actions that we took on the people front throughout the year and which we have kept the address off. So the attrition came down from roughly 25% the previous year to about 15%. Our higher profitability has also converted into higher cash. We ended the last year at INR90 crores net cash balance, and we ended 'nineteen-twenty at 3.28% cash balance. So our profits have been converted into cash. Our deal flow has come down from 87 days to 66 days. The 3 practices that about which we have been talking to you, mainly powertrain and autonomous contributed to almost 60% of our revenues. I wanted to talk about that in particular because these are the drivers of growth we think that could happen years to come as well. On the back of such year, we were looking for a similar growth during the current year when COVID happened. So naturally, in the light of this, we had to reorient ourselves, reset our goals. And the 3 goals that we have kept for ourselves in the face of COVID are as follows. 1st is keep and improve our service to the customers in such a way that we get their maximum wallet share. And we are doing that with maintenance of delivery excellence, maintenance of quality of the work that we do and the time on which we deliver the work. You would be happy to note that 98% of our people are already on full systems from their work from home to take care of customer requirements. We were pleased that we should never drop the ball as far as service to customers are concerned. Our second focus area has been the well-being of our people, and we have focused more on continuity of jobs over management of their continuation of their current level of reservation. So almost all our people have a VPI component and this is the part that they may probably has to further a part of that during the year, which could possibly mean a reduction in their overall payment. We have also been spending the time on training for them and improving the systems for work from home. As I mentioned, a large number of our people are working from home and that contributes, we believe, to their well-being while at the same time taking care of our customers' requirements. We are focused on our top talent and on retention of the top talent. Our third goal for the year in the face of COVID has been improving and keeping a good cash on hand because it is likely that The customers may also not pay in time. So we have now ensured that we have a good chest of cash to ensure that our cash and completion remains stable through the next year. Now coming to the question of the revenue, how do we look at the revenue for this year? The world is in such a phase of turmoil that nobody really knows how things are going to pan out. And but I'll make some conjecture about this year. This is no guidance, much less a commitment. And as I said, this is not our sole focus during the current year. There has been obviously a drop in Q1 revenues over Q4. But after the initial kind of panic in the market, we have seen the customer enquiries stabilizing and going up a little bit. So we expect that Q1 will see possibly about a 15% drop over Q4. But H2 will be better than H1. And we believe that over a period, we should be seeing some uptick. But again, as I said, this is no guidance because we don't really know how the whole thing about we will pan out. However, we noticed more conversations with our customers. Those customers those conversations are strategic in nature. And Ajay, our investor update shows we have been getting into some really nice good long term big deals. So on the whole, we feel optimistic about the overall future. See, finally, our future is tied within the future of the industry. And we believe that the industry, the automotive industry Our mobility in a broader sense will be an important growth engine for the world. It will continue to grow. Potentially, as a result of COVID, there would be more demand for personal vehicles rather than public transportation. Potentially, there will be more demand for People who are looking at self driven cars or fully autonomous cars, again, other than public transportation, and we continue to maintain our position as leaders in these We have invested in these technologies through building expertise in this area and we'll continue to do so. So we believe that our focus on this industry, our focus on a fewer number of customers, our focus on good people and our focus on Good client service should yield a good result over the years to come. So these are my initial remarks. Should we have any questions, we shall be most happy to Thank you. Thank you very much. We will now begin the question and answer session. Sir, first is on the 15% drop that you are anticipating in few months. So this will be largely volume driven drop? Or do you think there is substantial part which will come from price reductions for the year? So This is largely a volume driven part of the so specifically in U. S. And U. K, We have seen the customers have reacted very quickly. And this has been certain quickly stopping certain kind of programs, which or the projects, which I guess most of them we work on are in terms of platform of production programs. So at some point of time, they will come back, but we don't know. So right now, what we have seen is largely the bottom best dividend. And second, sir, I missed your initial remark on the cost containment So you were talking about stake home will be less, what will be the quantum of that and for what duration is it effective? What we have done basically, there are 2 things 2, 3 things we have done. 1 is, we see that in the First part, we have done is basically we are looking at consolidating the facilities which we have. As Work from home, as we as Mandik mentioned, 98%. That basically has worked very well. We have watched our productivity well, and we believe we can improve that going forward. So overall, we believe that work from home will become more normal. So we have started consolidating with facilities. So in India, we already have taken steps to reduce at least 3 facilities. And in Germany, we have taken steps to reduce 2 facilities. So that is the first kind of a thing. The second, of course, is Krishna explains. That is the second thing. And the third is on the compensation part. What we have done is we have converted some part of the salary. It is lower at the lower grade, going high at the higher rate into a variable component. And what we have told is we will take a call on this VPI payment. Generally, we do it twice a year. Instead of that, So first, the component of the VPI has increased. And the second, we have said that we'll take a view at end of the year, depending upon the overall yearly performance rather than a half yearly performance. So that is basically the step we have taken. So the payout will be at the end of 12 months, but you will provide for industrial on a quarterly basis? Yes, in line with the performance of the quarter. Right. So what is this percentage, sir, variable versus total? Like what was it in the compound? Roughly, we have increased 10%, 15% additional to what it was earlier. So of the total compound region, around 15% is available. No, no, no. I won't go into detail. I mentioned that we have increased by about 16% overall, about what the VDI percentage was earlier. Okay. So lastly, on this legacy thing that you have, If you could help us understand what is this primary collateral and what is the plan to repay because It's currently at 100% of your stake. So how should we look at it? So I think the basic point of it was a short point we are trying to make, and we will not go into details because actually it is not very normal to talk about this in case of a company. But still, The two short points we wanted to make is our main promoter company, which is the Proficient, where all our promoters are part, including myself, who are a part of that our main promoter company, which is free of any pledge, which is owning more than 33%. So that is the first short point we wanted to make. The second point we wanted to make was the second one, which and The second point we wanted to make is all this has happened because we have bought in additional shares. That is the second part we wanted to convey. And there is no other reason why we have purchased that. And the third thing, even in the personal case, the way we have this is not against loan against shares. So this is a collateral against shares. I think this is what we wanted to make a statement. I don't think we can go beyond that. So as per the current setup, you do not foresee any situation wherein That's exactly the point we wanted to take. Okay. Thank you, sir. That's all. Thank you. Next question is from the line of HR Gala from Synapse Advisors. Please go ahead. Hello. Thank you for these good results And your initial remarks are also very encouraging. I just wanted to know that over a period of longer time, maybe 4, 5 years, will we still remain in the OCA vertical or do we have plans to get into some other verticals also? That is my first question. Second question is, if you can just throw light on some of the fields which you have mentioned, you have just quantified €1,000,000,000,000 5 years on a European upper metasynics taken programs, but there are still some more. So what kind of revenue or visibility do they provide in FY 2021 subject to a host COVID development and next few years. So Yes, yes, yes. So basically, when we are looking at Automotive and Mobility as a vertical overall business, I think there are many factors to it. I mean most of our business has been in the passenger car for so many years. Now we have brought in a focus on commercial vehicle. And as you can see that during last year, actually, we grew reasonably well into the commercial vehicle part. And we believe while there is a good enough headroom for passenger car itself, plus Now the commercial vehicle is something which we want to really brought in more focus. And as you might have heard that Autonomous and some of these technologies will become more relevant into a moment of goods. So I think that Sector, even though even for some time during this year, will be, I would say, will show lesser growth over the period that will invest into the technologies because they have a stronger business case actually as compared to PASCA. And the third is the new mobility as we call and there are many areas into new mobility. So we believe that all these three areas give us a significant area for growth. Apart from that, there are many other areas which are coming. So the way we are looking at is how we can improve the pie of what we do today. So while we believe that there is a significant headroom in terms of our current strategy, which is to focus on P25 because all of these customers spent 100 of 1,000,000 of dollars, if not few 1,000,000,000 in terms of technology depending upon the customer. I think we may want to expand a little bit beyond P25, and we are exploring which Customers and specifically in the area of new verticals new sub verticals we are talking about like commercial and Others, they can add. That is one part of the business we are looking at, just growth area. The second we are looking at is in terms of Really, what we see is many of these customers had a tendency in the past to really they have grown many of these in these areas very traditionally. And I feel that we feel during What we have done in last few years and specifically after bringing a very sharp focus into our positioning, which is probably one of the very few companies which is focused on software integration. We believe that our ability to really go back and replace Their traditional model is significant. It will take some time, but that's kind of an opportunity exists for us. The third thing we believe is there are areas in terms of some other companies like in semiconductors and in some telecoms who have connected with the automotive industry. And they are trying to play certain services, specifically in case of connected as well as in autonomous. So in these areas, we can work with some of these customers in that part. And last but not the least, I think we can build a with many new generation companies who are again trying to play in this game, which includes something like Microsoft or you can say Amazon, those kind of companies. So we believe that overall the pie is much more. We believe our positioning and extending this plan. So we should pay an attention to really work with these opportunities. Yes, Globally also this COVID-nineteen has been, I mean, a COVID disaster. So do you think our major customers, the programs, as you said in your initial remarks, that some of the programs etcetera might be deferred or something like that. So can that affect over a period of 1 or 2 years? So what we mentioned is basically this impact has been while, of course, that COVID impacted globally. And And we said that we do not know how it will pan out over the period. But in the initial time, this impact we have seen, quick impact we have seen is in U. S. And U. J. And now we are not saying that it will remain limited. We are not making any statement like that. But we believe that Ivan, there are actually, we believe that some of our value proposition may be more relevant, though it may take a little bit more time to go back to customers. That's how we feel. Okay. Now last but not the least, you asked about the large deals. Yes, large deals. Yes. So I think as Mr. Pundit mentioned, I think major area remains electrification, where we see a significant growth. We see growth in autonomous and we see growth in connected. In these three areas, we see our deals, which are new deals which are coming up. And that's where we see our opportunity going forward. So overall, what kind of revenue visibility do you Like, dollars 50,000,000 is 1, you said, 5 years. Now it might get extended because of several factors. So all these new teams which you have got Hope together, it will give you what kind of revenue visibility, so maybe over the level of 2, 3, 4 years. Actually, I won't go into that number, but I must say that most of these deals are of a similar size and going across multiple years. So that basically is the change which we have Okay. And there are many such conversations which are going on. Okay. Last question from my side. Why is the UKEurope profitability so low as compared to U. S, where as you know the revenue level is almost same. Sorry, Europe profit as well. Europe profit. Yes, Yes. So you will see the changeover period, but I think we basically thought that While we are trying to establish ourselves as the leading player in this area, apart from India, we developed this we established I think I have been saying that actually we have a campus which has come up there. And we believe that, that allows us to really build a very key skill and domain knowledge, which is difficult to build otherwise. And that investment, along with some of the core technical knowledge in the new upcoming areas, both electrification and autonomous, That is the investment we've made in the Europe. That's why that profit and VAT looks less, but it is something which you will see a difference going forward. Okay. And just a last question from my side, if you can just submit to me. As far as our geographic presence is concerned, which geographies do you think will show higher growth in much to come? Hi. This is Sachit Kekar. As you can see the difference, lot of We especially Germany is the country that drives the future of automotive and mobility. And that's where we are actually expanding our presence, and that's where we've been making investments for the last few years. And we've been continuing to see growth coming from Europe over the years. We also believe that there is going to be growth from Asia, whether it's Japan and some of the other developing countries is within Asia. That's where the growth would be. And as U. S, I think U. S. Is our sort of Very dependable geography, very steady and profitable. So the combination of the 3 geographies from the long term perspective will Pan out really well for us. It sort of gave us a good balance. And that's what we actually see And I think when you look at the EBITDA margin higher than 15%, 16% because of work from home, you will be saving on lot of overheads and plus other cost containment measures which you have taken. So how do you see the EBITDA picture? We will not be in a position to right now say this. Basically, we'll How to see how things change? Of course, I already mentioned about consolidation of facility and other things. But I would also request some other questions actually coming. I think you have already taken the 5 months question. Okay. Thank you. And congrats on the last deal. Thank you. On 2 things. 1 is if you look at the conversations that are happening with clients, are you seeing any shifts So reprioritization of PEN, maybe if you could give some color from a geography This would be helpful. Or do you think that post once we come out maybe 3, 6 months down the line, You could actually see some shifts or if we haven't seen it yet. Okay. This is Sachin Pekka sir again. Obviously, the entire automotive industry and mobility has been impacted. It's been only 2 months before clients can actually assess the overall impact of the situation. They are trying to prioritize, As Mr. Punde said earlier on and Mr. Patel re iterated, the areas that are getting prioritized over the others at this point, electrification, AB and Mr. Batu spoke about connected led by digital software, right? So these are the 3 areas being prioritized as Of the business company, the OEMs respond to this situation. They are definitely being prioritized over all the other programs and other spend. That's the immediate response that we see from them in the last 2 months. We have reasons to believe That may continue in future. There is no reason for us not to believe that going forward. In Europe, obviously, electrification, there is a commitment and it's been reauthorization. We'll see more and more of that. I think the AD ADAS part, Again, Europe is the leader. U. S, Asia has picked up. And Connected, I think, is going to be across all three verticals. Again, we are taking a longer term view. We are not talking 1 or 2 quarters here. You asked about the general question. I'm giving you a general answer over a period of The details are speculation is what's going to happen today and tomorrow. Things are, as you know, what the world is going through. Things are fairly dynamic, but at least some of the trends over a period of time will remain the same. Does that answer your question? Yes, Inez. The second one I wanted to ask was, until now, we haven't seen any impact From a pricing perspective, it's largely been on the volumes. Do you think that our portfolio is relatively more resilient to any Pricing drops, considering the shortage? Or do you think that could be a potential risk as we go through the year as the automakers see some sort of trend in. Is that even a risk that you would even worry about? Okay. We all of the teams will understand what the automotive mobility and some of the other industries are going through, something that nobody is actually seeing. There is tremendous amount of deep pain. It's our responsibility to demonstrate empathy while they are going through this very difficult process, Correct. So we are working with them to make sure that our long term value proposition doesn't get diluted. But in the meantime, if you have to Suppose then get through the difficult periods, we'll make those adjustments, but we'll ensure that our long term value proposition, quote unquote, pricing in some case doesn't get diluted, right? I think that's really that's how we are engaging with our clients, and that's what we actually appreciate about this year. And Just to add to what Mr. Niketar mentioned, I think one thing we see is that clear opportunity to do more offshore than in the past. And basically because the remote working has even though it looks very intuitive, but Now the realization has struck that even people who were on-site were working remotely, right? And that has given a different dimension. So people are more open even in case of a critical program. So we do not want to rush immediately because our first priority is to make sure that we deliver well. And so but we certainly see an opportunity to move more towards offshore. Sure. So I'll just sort of press a bit on this. In client conversations, we've had some trouble, and let's say someone does ask for some kind of a cut. Now one way the way to think about it is to try and push them to say that we could potentially do the offshore, so let's just convert this to offshore. Or do you see clients really pushing for one time discounts of that sort? Or that's not something that's really happening at this point? And you get your thoughts on that. Right now, I think the focus is on doing more bit less. And I think our ability to do Globally, there is enough on the table that can be delivered for our global centers that can create more value for them, for the money that they are already spending. And that's how those are the constructive conversations that we are having with the clients. Given our positioning in some of these areas, we really don't want to get into the price conversation right now. So we are trying to and I think By engaging with them, we are able to find a little bit of it. Great. Just one last In terms of the daily pipeline that we have, how large is the pipe today? And what is what has been earlier? We just converted 1. Just your thoughts on the deal pipeline outlooks and also. So overall, to be honest with you, Mr. Pundej said that at the beginning of the year, the pipeline looked great. Mr. Parton said we are actually getting ready for A similar year to last year in terms of our growth, both in top line and bottom line. And so the pipeline per se remains pretty decent. It's just that COVID has put everybody into a dilemma in terms of prioritization. That's what our clients are doing. We have not heard of any of our large deals being completely taken off the table. What we are seeing is they are postponing and prioritizing some of these deals, Right. So the pipeline is not going away anywhere. It's just remaining. I think it's going to take a little bit longer. And at this time, it's has to speculate how much longer, right, as you would understand is the case. What is this industry but many other industry? Next question is from Glenda Pasi Chakravall from Sensible Mutual Funds. Yes, thanks. So just wanted to understand on the margins front, how should we look at your Profitability in FY 'twenty one given the steps you have taken? And secondly, just pressing some points on the Pricing side, it's almost 2 months into the quarter. Do you have your clients asked about the pricing, which could have an impact on your growth going into Q going into first half. Okay. Mr. Pankaj laid down our priorities for video. Number 1, Take care of our employees, make sure our top line for the key employees remain committed and remain very, very liquid, not only for the short run, but in the long run. That's our focus. So that's the answer to the question about the margins. We will not say anything more than that On the margin part, what was the second question? My question was on the pricing side. Has the clients asked for it till now? Or do you believe there is That's the asking question, right? Right. I think we have a question, I think my final question is about creating more value, doing more with less. We're not anticipating any discount pricing conversations at this point in time. Okay. And lastly, on the One thing which we mentioned was that there might be a higher credit period in us for the clients and everything. We have done Good work, it is now better days to 60 days. How much increase that could happen going into first half because of client assume more safety? See, again, [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] It's all going to be depending upon the revenue that we get clocked. As you know, the DSO is dependent on the revenue that we have given and the cash collection that happens. At this point of time, putting the number is not correct. We will, as Mr. Pundit and Mr. Patil mentioned, As we see a little bit of a drop in revenue, the first half would see a certain amount of our DSO going up, not because of the cash machinery not working, but because of the base becoming a little bit lower. But we anticipate that as of today, if all our clientele Collections have been pretty much streamlined. Even as we have passed into the last 2 months towards the completion of the financial year, We have not seen any places whereby our collections have been delayed. The clients have been pretty much committed to making the payment for all our invoices that have happened. Yes. I may add that in couple of customers, we have extended a credit period onetime for next couple of quarters. But that is not a very significant part, but I just wanted to bring it out as Mr. Ticker mentioned that we had to support during that time period. So in a very exceptional situation, we have extended that. It's not something which is very significant. Okay. Thanks a lot. Thank you. Thank you. Next question is from the line of Karan Aswai from Philip Kapolei, 3, 7. Yes. Thanks for the opportunity. Just one question on your T25 top 25 accounts. The concentration remains pretty high at 80% plus. So any stress do you foresee at the moment in FY 'twenty one because of this T25? Very good question. And this is something that we are monitoring at least twice a week. Again, we are committed to our T25. They are committed to us. That's why we call them T25. However, Given the magnitude of what's happening in the world, there are obviously some risks in terms of some of the OEMs and some of the clear ones. So we need to be very mindful about that and be proactive about it. Mr. Patel actually mentioned that we are actually are in conversation with Some Tier 1s and some of the other OEMs that are not part of T25 as a potential backup to see that maybe at risk. So we are continuously monitoring our relationship and index with the T25. And We are just trying to be prudent. There are going to be some risks with 3 or 4 of them. We hope that they come out of this successfully, but just in case this trouble, we are creating a pipeline of a few others who can potentially be replaced. But just to add, I must say that it is more of a strength for us. P25 strategy is more of a strength because most of our key customers are doing well. We have established ourselves very well with them. So we see actually more opportunity. And in case of a consolidation, more business coming to us from these customers. So While we are looking at a situation where if some of them struggle, largely in most of the other customers, like 80%, 90% of the customers, we see DX as a strength, which we have built. Okay. So thanks. So just One thing on this 3 to 4 customers that you mentioned, could you please throw us some light on how much revenue they contribute? Any average would be We wanted to present a macro Picture of the automotive industry and such, right? Anything of this magnitude, there will be a turmoil for 10%, 15%. We don't have any specific. We just have to be mindful. If something happens, we need to have a backup. That was the intent behind it rather than having specific clients in Sure. Thank you so much. All the best to our 5th anniversary. Thank you very much. Thank you. Next question is from the line of Nikesh Narbeh from SBI Capric. Please. Thanks for your question. A couple of questions. First about top line, whether we have seen any Their strategic program on electrification or let's say, autonomous, seeing some kind of deferment or considering the where crude oil price is, This is for medium term, not very short term from quarter or 2. But from their overall thinking perspective, medium term challenges in terms of they want to spend? Where they want to spend? Second question is about connected vehicle. Now connected Sir, which we reported separate segments showing weakness throughout the year. So if you can provide and that is one of the focus areas. So what is driving weakness there Even 3 COVID times, if you can provide some perspective. And the last question is revenue loss. We have indicated around 1.5 percentage revenue loss in Q4 because of COVID. So how much it was towards supply and how much was demand, if you can throw out that perspective? Thank you. So sorry, my apologies. We'll have to take one question at the time. I can't remember all three questions. Can you just ask one question? We'll go 1 by 1. Can you ask the first question first, please? Sure. So that's on the topic of having 24x7 states affecting our memory. Please just give us one question at a time. Thank you. No issues. Just on the first thing, about the top client overall strategic program, Whether you expect that strategic program to have some medium term implication, not for a quarter or 2 kind of thing, because where crude oil prices and Changing overall growth priorities, so electrification, autonomous, if you can provide some whether it's an implication on medium term priorities? If you take immediate term, the answer is really, we don't see much of impact. Especially on electrification, everybody is actually committed. Many of our key clients are actually cannot take with their commitment in the face of COVID. So we believe that, that will continue to grow. The ADAS side, there is no focus on ADAS production program. So we are not seeing any kind of changes on the ADAS Production program, especially for the next Q3. So the medium term trend regarding electrification will be ADAS and connected driven by e Cocktail. We really don't see we think that Most of our clients will continue to we don't see much of a shift there. Your question was about the top customer. I think absolutely, we see actually a significant traction. We will not go into details, customer specific. But in the public domain, there is enough information of key OEMs really committing to this. So we see actually certainly more emphasis on Electrification, specifically in connected. In autonomous, as Mr. Tikeker mentioned, Airaaps is what they are focusing on some of the AD programs and little bit spaced out. That is only, I think, in case of our weaker sense. Understood. The second question is about Connected Vehicle. Connected Vehicle is the segment which we report is showing weakness throughout FY 2021 pre COVID. So if you can provide some perspective, what is driving weakness there? No, I think it's a fair point. Year on year, Yes. You have to remember that we probably had the highest growth from the previous year to last year in connected. There were 2 really large programs That's a one time program that got over. We believe that there is also a shift from traditional infotainment and cluster, CE Topic. And those programs are getting rolled out now. We are engaging very deeply with our key OEM clients as well as Tier 1s to drive. We believe that we'll see that was coming back over a period of time driven by profit or digital profit, right? So it was One time and if it was not for COVID, we are getting we were actually getting ready for growth. So again, mid to long term, We are putting our best on connecting. The other thing I may just mention is these are also very large program and long term program. It takes some time to for the closure. So it may take some time, but absolutely, this is an area of focus and this will get prioritized by our customers. So whether the in connected vehicle, it is a few clients, which is where we are working on their program or it is fairly diversified. So if you can help us understand out of, let's say, top 25 key focus areas, What will be the presence across our identified areas, electric waste and how many clients we might have already penetrated? So if you can forward that, personally, it would be helpful for us to understand better. So we'll tell you what our goal is, right? We have a simple metric. We have 25 clients and there are 3 large service areas. Some of them are green for each. The point is over the next 3 to 5 years, all of them used to become green, right? That's what strategic relationship is all about. And I would say that with a majority of them, I'm using the word majority. We work with T25 across the 3 areas And some more, obviously. Okay. And the last question was about Revenue loss of 1.5 percentage in Q4, which we indicated, how much was supply and how much was demand led sector? If I understand your question correctly, see, when accurately across countries, across continents, there are lockdowns announced, There is a disruption and there is lots of press release only because of the disruptions that happened because of the sudden closure of geographies even better. Even though we have comparatively small presence in China, China was in complete lockdown for the entire quarter. And for 15 days, Most of the world, actually that is relevant to us due to the lockdown. It was due to that. Does that answer your question? [SPEAKER UNIDENTIFIED COMPANY REPRESENTATIVE:] So broadly, you're indicating it is largely supply. Demand is likely to play out from Q1 onwards. Yes. Understand. See, in my initial comment, I talked about about 15% drop in revenue that could happen over the Thank you, sir. Thank you. Next question is from the line of Archish Surya, Unmakim Surya Manager. Please go ahead. Yes. Good afternoon, gentlemen. My question is basically pertaining to our EBITDA margins, which we were emphasizing before this COVID thing came along. Could you give us any sense on What was the EBITDA margin that you would have thought we could have done in 2, 3 years before this COVID thing came along? Yes. So I think we had mentioned that before the COVID, we had talked about somewhere between 16% to 18% in 3 years. This is what we mentioned, and we would have won with them. Okay. So any changes in the pricing, etcetera, currently, which can I mean, 1 year, we may get offsetted by our lower capacity utilization, but the next year and the year after that can be I don't say, Otherwise, no fundamentals are changed? But this year's disruption, we cannot really So assuming that this Assuming that this COVID thing passes away and things get back to normal, we can hope to get back to our that kind of a margin trajectory. Yes. Right. Thank you very much and all the very best. Thank you. Thank you. Anyone who wishes to ask a question? Next question is from the line of Rahul Zheng So my first question is, what are the key Changes in industries and that you may see post COVID kind of environment, given your current conversation with them and also from your experience from previous cycle such as maybe industry consolidation risk and payment of shared mobility to transfer the value of more investment in the auto numbers. Do you see some major changes August as such on these factors. I think Mr. Pandit covered some of this in his initial today's remarks. So one is, again, early days, but we believe that electrification across will be key because it's good for the environment. People have made commitments to it. I think it will continue. Apartment, I think may get accelerated a little bit more because people would want individual mobility rather than shared mobility in the immediate future, especially against the public transportation. So we believe that there will be more small cars. Maybe the in developing countries, the 2 years ago, it's definitely electric similar and so forth. These trends are very obvious. And from connected perspective, whether it's Connectivity inside the car, inside the vehicle or outside the vehicle, e Cockpit and all the other connected services, that trend again is not So as things come back, I think these three trends will continue to be there in a different form because of what we are going to assist bank in that. One small addition, if I may do. But in the short term, it may be Reverse time for shared mobility, that may get impacted for some time. Yes. And shared mobility has two aspects. It's the mobility of people, which Mr. Fatim is referring to, where there could be a little bit of a fear, right? But when it comes to share mobility where moments of goods are concerned, we believe that that's going to pick up. So fleet from our commercial retail perspective and so forth, we'll see an immediate demand. You've already seen the stock of e commerce companies actually doing really well, and they depend heavily on commercial data. So that's another trend that we'll see. Right. And only on the consolidation side, So maybe from the previous equity reference also, there we have seen some consolidation or shared development kind of a program, which The call to continue the following. What are the risks or what are the opportunities you would like to highlight? Do that meaning Global Businesses, some of which T-twenty five customers collaborate better, more positive, negative or difficult to quantify? I think we look at it as an opportunity. I think this may happen specifically in the area where there are A little bit more uncertainty, and there is a more lesser standardization as of now like in Autonomous. And there are already 3, 4 such platforms which are being developed. In other cases, this is actually, most of the OEMs want to own software. So that in that sense, The sharing will happen at component level more on the manufacturing side hardware side, lesser on the So naturally, we see either of the way, we see a bigger role to play for us because we are playing closely with the ecosystem, both with the OEMs and the Tier 1. So we see as a Good opportunity because we are already part of certain platform development. As you are aware, we have made many few announcements in the past. As well as in other cases, wherever the standardization is happening again, we have been playing a good role for last 10 years. So we see this as more as an opportunity because even in case where the platforms are developed, there is a huge amount of work which is done in terms of integration for individual And I think that gives us benefit when we are a part of our platform development. Okay, okay. Lastly, any quantification we could do on total cost saving through various program, comp, facilities and so on. Any color you would like to give on the total picture? What kind of savings we could have? I think very difficult to quantify right now. I think we have given more color and information than most of the others, I think. This is what we are comfortable. Okay. Fair enough. That's it from my side. Thank you. Thank you. Thank you. Next question is from the line of Ashish Petrolia from Luckin Investments. Please go ahead. Yes. Hi. My question for Vince basically, sir, how satisfied are we with our traction in the American market? Sorry, can you say it again? How satisfied are we with the traction that we can see in the American market? Yes. Ashish, this is Ashish Nikhikhet. What we described earlier on Americas for us is A solid sort of steady high profitability, largest and 10 days the largest. I think What we were thinking pre COVID is we need to look a little bit more. There are opportunities that are taking place. There has been some consolidation with the OEMs and Tier 1s across global fees between U. S. And Europe. Given that and the leadership that the Europeans have taken, We were actually thinking about engaging more with additional clients from the U. S, Especially in the commercial vehicle, whether it's on highway or off highway. That's what we are planning, and that's exactly what we're going to continue to do. So to your question, as compared to Europe and Asia, the growth over the last 3 years was on the floor side. And we were responding to that because we didn't want our largest geography to move on. We have taken certain steps, But now we are going through, but we believe that we'll make sure that we see more opportunities not only on the passenger car side, but I think on the commercial vehicle side, On high grade and off high grade as far as the U. S. Is concerned. Also some of the partnerships I mentioned in my earlier comments, right, the new new generation players in automotive. Many of them have a good presence in U. S. And we believe that, that we can leverage much better. Right. My other question is basically with this commercial vehicle market in the U. S. Is it a big chunk of our sales at the current point of time? If you look at commercial vehicles, it's about 23%, 24% overall, but it's Obviously, since it's less than passenger car, we expect we were expecting higher I mean, just like the case last year, the growth was slightly higher in commercial vehicles as compared B. Balaji:] Given its size, I think the growth will be growth rate will be higher potentially. Okay. So this $23,000,000 can go up over a period of time as a mix of our sales? B. Balaji:] It has to. Because it's still in nascent stages, Right. We have had focus on it only for the last 2 years. So we believe that there is the headwind is lot more International week. But at the same time, we are aware that this year, it will be a bit slow. Commercial will be slower than the past quarter during the current year. Right. And my last question is basically from whatever we can understand. Tesla seem to have a higher market cap than many of the other companies put together. So how are you given the fact that we are not probably Tesla does a lot of their work in house. Then over a period of time, do we see that The rest of the industry is in a position to respond to the technological challenge on Tesla and because you are kind of looking at the front lines. So since we are not going to be able to work with Tesla, they have their own philosophy of working in house. So how are you seeing the preparedness of rest of the industry to kind of compete with them in actual product and delivery terms? I would say Tesla is Mystery, too many, right? But it is what it is. I think they have taken the lead. They have taken some bold steps, and the market has responded really well. They do work, most of the work in house. As we believe that as in case of any large OEM, As we become truly global and large, we need to seek partnerships outside. It's not a scalable model what they have. So we believe that they'll open up. There are we have 1 or 2 we have 2 actually Tier 1s who are our clients and who happen to work very closely in a strategic manner with Tesla. So we believe that there may be opportunities in future for us to work directly or indirectly for Tesla, That's point number 1. Point number 2, although OEMs, the Europeans and the U. S. And some of the Japanese ones, Obviously, they're responding very well to where Tesla is going. And for their programs, whether it's electrification or connected, where they have a We'll go ahead and start over some of the other OEMs. Those are the programs that we are actually working on as far as the other OEMs are concerned. And We believe that there are 2 things. Some of the existing OEMs Will respond really well and do complete very well with at Tesla. And secondly, there are some disruptors that Mr. Patel talked about, Correct. Some of the companies in Silicon Valley, all of that, they may not have their reach in public affairs, They are very strong on software and connectivity and software. They can also see some gender disruption and give Tesla Thank you. Next question is from the line of Sarta Saran from Marcon Edge Partners. Please go ahead. Yes. Hi. The treasury catalysts a lot of your and invested a lot in your R and D expenditure. So just a question, going ahead, are you looking at any changes in in terms of looking at availability of your R and D team, for the availability of the entire sort of investments that you do in practices and so on with customers? Thank you. So Prakash, let me understand the question. You're saying that we've made a lot of investments in R and D and there are people engaging in R and D. Are we going to move those people from R and D into delivery projects? Is that the question? Yes, kind of. But also in terms of whether you're going to look at even in an agreement they're doing good R and D work, I mean, sometimes it's good to kind of engage with the customers and test it by seeing if they're billable by jointly co engaging in R and D with those customers. So are you looking at any deliverable metrics for your R and D aim and so on going ahead is the question. So I think one of the reasons why we are We have established ourselves as a with so strongly. It's basically our ability, both in terms of domain knowledge as well as in terms of what we have been ahead in the curve in terms of when the customer wanted a new thing be introduced. We are ready with that. So that approach is not going to change in this. But of course, there are 2, 3 things which are happening. Number 1, we have invested very recently over last 3 years in autonomous. I think and where I think we see now many more projects And many of those people engaged as well as we have the VITICS, which we have developed. Similarly is the electrification where we have again made a significant investment. So there is a prioritization and in some new areas we will invest. So overall, There may be some few changes in terms of mix and the areas of work, but overall in the philosophy, we will continue to do it. And we will see whether we can do something which we have done in the past with some of the larger programs whether we can do something along with some customers. But nevertheless, we will continue to do investments into, I would say, work in terms of new ideas. Okay. Thank you so much. And the last new one, congratulations on that. Could you give us some color on how much of that You will see an impact in this year. It's a $50,000,000 win. Could you give us some sense of the ramp up and so on? That's my last question. Thank you. Pratak, again the question is the win that we talked about of JPY 50,000,000, you are saying how much of that will Lead to revenues during the current year, is that the question? That's correct. And how will we play out over the next few years? I think we will start the transition in a month or so. I think so we will see some revenue in the H2 part. Okay, great. Thank you so much. I appreciate your attention. Thank you. Thank you. Next question is the line of Ankit Deberwad from Yellowfirm. Please go ahead. Yes. Good evening, sir. My question pertains to CapEx Stans, I think you mentioned earlier in your earlier conference call that your CapEx guidance is about 2% to 3% of sales. We haven't changed to that. And if you could reiterate what areas are we planning to spend the CapEx amount? Yes. So as Mr. Patil mentioned in the initial comments, we have deferred a few of our of this program that we have planned for. And this year, our CapEx estimation is it will be somewhere in the range of around 1% to 1.25% of the overall revenue for the commitment that we have made. It will be mostly into the areas of consolidating our operations in certain geographies and then certain amount of IT upgrade ID and security upgrade that will be happening. Okay, got it. Thank you. Thank you. Thank you very much. As there are no further questions, I will now hand the conference over to the management for closing comments. Thank you all for participating in the call. And if you have any further questions, please feel free to write to me, and I'll be happy to get back to you. So take care and stay safe. Bye. Thank you. Thank you very much. On behalf of our Capital Markets organization that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.