Infinite Computer Solutions (India) Ltd Earnings Conference Call Q2 FY 17

Transcription

1 Infinite Computer Solutions (India) Limited Q2 FY 17 Earnings Conference Call November 15, 2016 Infinite Management: Managing Director & CEO Executive Vice President & CFO MODERATOR Ladies and gentlemen, good day and welcome to the Infinite Computer Solution (India) Limited s Q2 FY 2017 Earnings Conference Call. As a remainder, all participant lines will be in the listenonly mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during this conference please signal the operator by pressing * then 0 on your touchtone phone. I would now like to hand over the conference to Mr. Anuj Sonpal from Valorem Advisors. Thank you and over to you, sir! ANUJ SONPAL Thanks, Mohsin. Good afternoon everyone and a warm welcome to you all. My name is Anuj Sonpal -- CEO, Valorem Advisors. We represent the investor relations for Infinite Computer Solutions (India) Limited. On behalf of Infinite Computer Solutions and Valorem Advisors I would like to thank you all for participating in the Company s earnings conference call for Q2 FY Before we begin, I would like to mention a short cautionary statement. Some of the statement made in today s concall may be forward looking in nature. Such forward looking statements are subject to risks and uncertainties which could cause actual results to defer from those anticipated. Such statements are based on management s beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward looking statements in making any investment decision. The purpose of today s earnings conference call is purely to educate and bring awareness about the company s fundamental business and financial quarter under review. I would now like to introduce you to the management participating in today s earnings call. We have with us Mr. Upinder Zutshi -- Managing Director and CEO; and Mr. Sanjeev Gulati -- CFO. Without much ado, I request Mr. Upinder Zutshi to give the opening comments. Thanks and over to you, sir! Thank you, Anuj and good afternoon everyone and thank you very much once again for taking time to come on our earnings call for Second Quarter of the Financial Year I will briefly give you an overview of what we have done in this quarter both in terms of financial numbers as well as some of the business highlights. After that Sanjeev will give you the read out of the different metrics and numbers and after that, both Sanjeev and I will be very happy to respond to any questions that you may have or any additional information that you would like to have.

2 So to start, this quarter has been a fair performance especially given the nature of the market conditions, we are reasonably happy with the performance of the quarter. It has been in line with our expectations as well and what we thought that we are going to do in this quarter. Very briefly as the numbers are concerned in INR terms, we did revenue of INR 558 crores, which is about 11.5% year-on-year and about 4.4% Q-on-Q. As far as EBITDA is concerned in INR terms it is INR crores, which again is up by 12.9% year-on-year and up by 4% Q-on-Q. As far as PAT is concerned, we did a PAT of INR crores, it is up 13.6% year-on-year and up by 2.4% Q-on-Q. Very similar profile as far as the USD is concerned; in terms of USD we did revenue of USD million. EBITDA of USD 7.43 million and PAT of USD 4.65 million. Revenue is up 8% Y-on-Y and is up 4.4% Q-on-Q. EBITDA is up 9.3% Y-on-Y and up 3.9% Q-on-Q and PAT is up 9.9% Y-on-Y and up 2.3% Q-on-Q. So, overall, it has been a reasonably good performance, most of the projections and the client s growth has been in line what we had expected at the start of the quarter. We had another good quarter in terms of addition of new clients. We have added 24 new clients during this quarter and this has been quite significant. What is very exciting for us that, out of 24 clients about 14 clients we have signed-up are for our two products EMS and NetSfere. We signed six new clients for EMS and eight new clients for NetSfere. This is very exciting and we are slowly and steadily building the client base for our messaging products, the next generation messaging products and revenue has also started coming in from these clients and we continue to be very optimistic about the future growth potential of these products and more specifically the EMS and NetSfere. In addition to these two products, in the recent past especially in this quarter we have seen some renewed activity for our RCS product. There are quite a few discussions with the service providers in different parts of the world regarding RCS, as these are still in early stages there is nothing very concrete to share, but this is a positive sign because RCS is coming back on the radar. Last quarter, I had spoken about the vendor consolidation which happened with our top client, we were successfully qualified and we are now one of the short listed vendors. There is a good traction after the vendor consolidation and we believe, we will start seeing significant growth in revenue from next quarter onwards. This is moving ahead as per our plan and as expected. And lastly, I am very happy to announce that we have signed a very large five year contract with one of the large power corporations in India. The contract is for providing solution for online billing, online portal, consumer portal, consumer management and communication. The total value of the deal is INR 130 crores over five years and this has been a very good business development in this quarter. From cash and other aspects, we continue to see growth in our cash and cash equivalents. The cash and cash equivalents has increased to INR 325 crores a growth of INR 25 crores from the

3 end of last quarter. The free cash flow is INR 10 crores, cash per share is INR 84 and EPS for the second quarter is INR This is in brief about the financial and business performance of the quarter. A quick update on the buyback that we had announced. The buyback is going ahead as per the plan as you would be aware that we had a board meeting and we increased the maximum price of the buyback from INR 250 to INR 270. Based on that we started the postal ballot process, all the postal ballot notices have been dispatched to all the shareholders and that was completed on 7th of November, and the last date for shareholders to respond is 7th of December. The result of the postal ballot will be announced after the Board Meeting on 9th December. The result and the final price of the buyback will be announced in that Board Meeting. Some of the other parameters of the buyback remained same; the total buyback size is INR 150 crores and the cash offer for the buyback is up to lakhs shares, which represents 14.35% of the total paid-up equity share capital of the Company. The first two quarters, looking at the performance, I think we are fairly in line with our annual projection of the guidance. We believe we will continue to see moderate growth in the third and the fourth quarter which lets us to believe that we should be on-track to achieve the annual guidance that we have given at the start of the year. Based on what we see, what we have achieved in the first two quarters and what we see for the next two quarters and at a conservative level we probably may end up at the lower end of the revenue and the margin guidance. We continue to work towards improving that and hopefully in the next two quarters we may be able to change that, but for right now that is what the forecast looks like. So, with that I will hand over now, to Sanjeev, who is going to give you a read out of the numbers and then I will be happy to take the questions. Thank you very much, Upinder and thank you everybody for joining this call. Now, I will take you through some of the revenue matrices and the other numbers pertaining to quarter two of Firstly, it is the revenue analysis which is revenue by offering. Technology Solution contributed about 79.3% of our revenues in this quarter compared to 77.3% in the previous quarter, in absolute terms there was an increase in this. Product engineering did about 10.4% compared to 11.2%, Messaging did about 10.3% compare to 11.5%. In absolute terms both these numbers were flat compared to the last quarter. Revenue by industry, telecom and media contributed about 32.3%. Healthcare 23.9% compared to 24.1% in the previous quarter, marginal increase in absolute terms. Technology contributed about 40.8% compared to 39.5% in absolute terms there was an increase. BFSI did about 0.4% compared to 1.3% and others did about 2.6% compared to 2.2% in the previous quarter. Here again there was a marginal increase in absolute terms. Revenue by region U.S. continue to be a dominant region from where we secured business it gave us about 88.1% of our total revenue, APAC about 6.2%, Europe was 0.4% and India 5.3%.

4 Revenue by model, time and material contributed about 69.2% of our total revenue compared to 65.8% in absolute terms there was an increase. Fixed bid contributed about 19.6% compared to 21% in the previous quarter in absolute terms it was about flat. Revenue share contributed about 11.2% compared to 13.2% in the previous quarter, in absolute term there was a slight decline. Our top client contributed about 54.4% compared to 51.6% in the previous quarter. Top five clients contributed 80.8% compared to 81% in the previous quarter and the top ten clients contributed about 92.08% compared to 92.05% in the previous quarter. Clients who gave us a revenue in excess of USD 1 million were 17 clients in this quarter, clients who gave us a revenue in excess of USD 5 million were seven clients in this quarter; clients who gave us a revenue in excess of USD 10 million were seven, clients who gave us the revenue of more than USD 20 million were three in this quarter and clients who gave us more than USD 50 million was one in this quarter. The one-site revenue contributed about 84.1% of the revenue in this quarter compared to 84% in the previous quarter, off-shore is about 15.9% compared to 16% in the previous quarter. Our average billing rates for on-site business was about $81 per hour and off-shore is about $21 per hour. Our total head count for the quarter is about 4,735, net addition of about 123 compared to the previous quarter. Our global attrition rate was about 19% and utilization was 82%. The DSO for this quarter is pretty much in line with what happened of the DSO in the last quarter. The DSO as per the financial is about 132 days. The DSO without unbilled and pass through revenue was 84 days. EPS was about INR 7.91 per share compared to INR 7.73 in the previous quarter. Cash per share increased from INR 77.6 per share to INR per share. Net worth has gone up to INR crores in this quarter. The gross margin to revenue was about 27.5%, EBITDA was about 8.9%. PAT was 5.6% and the effective tax rate for this quarter was about 27.8%. So that, now we look forward to questions from your end and we will be happy to answer them. Thank you. MODERATOR Thank you very much, sir. We will now begin the Question-and-Answer Session. We have our first question from the line of Sachit Kheda from Smart Equities. Please go ahead. SACHIT KHEDA Just wanted to know what happened on the working capital front this year? Actually I missed your opening comments, so, I apologize if you have already answered this.

5 Sorry, could you come again please, and repeat your question? SACHIT KHEDA Working capital front, because the cash flows is negative for working capital last quarter and this quarter and in the last quarter you said that a large part of the receivables which you were expecting had come in Q2; but in spite of that, I think Q2 there is a significant net outflow from account of working capital, I just wanted your thoughts there. Yes, but the change in working capital is a net result of changes in current liabilities and current assets, but if you look at the total, the operating cash flows have been positive in this quarter. Operating cash flow is about INR crores compared to negative of INR 0.04 crores in the previous quarter. So, from a cash flow perspective this quarter was better than last quarter. This is very cyclical that you may have one quarter where the payments get delayed and this is pushed to the next quarter and that may impact this number. But, if one is to look at the previous quarter this is much better, we have free cash flows of about INR 10 crores this quarter compared to a negative of INR 6.59 in the previous quarter. SACHIT KHEDA Right, sir, not at all denying that. I was just a bit curious because in the last quarter you said that a large payment of around was USD 4 million - USD 5 million had come I Q2 so, I thought. So, that is what has resulted in INR 16 crores increase in the free cash flows. SACHIT KHEDA Right, okay, great. You know each individual bill are paid in large amount, there is no significant invoice that has slipped to the next quarter, but sometimes some of these bills do not get paid at the end of the quarter but they come in the following months and it s really cyclical. As far an overall year is concerned we are fairly confident and this quarter has been definitely better than the last quarter. SACHIT KHEDA Right. Second question sir, your contribution ex of your top client I think if I just look at the revenue ex of the top client then in absolute terms the revenue has actually stayed flattish or actually decline Q-o-Q if I am not mistaken. So, wanted your thoughts that you have been regularly acquiring a lot of new clients and deals, when can we expect a reasonable amount of translation of that into sustainable revenue growth from the ex-top client? As we mentioned, earlier in my talk, there is the consolidation which happened and a significant amount of business will get redistributed. There has been some business during this quarter as a part of that and last quarter but a significant increase in business we would see perhaps from

6 the next quarter onwards. If you look at it in this quarter the top-line percentage has gone up compared to the last year on an increase of revenue base. SACHIT KHEDA Right, sir. Actually, what I did was I multiplied the percentage of the non-top clients basically one minus 54% and just multiplied that with this quarter s revenue and then I was look at the figures Q-o-Q so, that is how I was actually noticing at this, actually have been a decline of the non-top client revenue so, that is what got me a bit curious about that. Anyway, last question sir, as far as your IP and product led revenues are concerned, again there has been a lot of attraction as far as your client wins is concerned so, can we expect a healthy Q3 because I think that is where a lot of renewable and licensees come in. Yeah, Q3 has been a wild quarter for us so, to be honest, I do not know at this stage how Q3 is going to shape up but every year in Q3 there is a license top up by the clients, they have surplus money and they end up buying more licenses in Q3 which is their Q4, so traditionally Q3 has been a very strong quarter for us. But as of now, we do not have a clear visibility on how it is going to pan out, weather we see that similar kind of bump up this year as well, the way we saw last year or year before last. It will definitely be on the higher side for sure, there is no question about that because that has always been the trend but how much one has to see. SACHIT KHEDA Okay. But you do not expect any hurdles which are apparent right; I mean no warning kind or anything like that? No, normally what happens is that like every corporation or every department if there are budgets left at the end, they tend to buy things before the end of the year and as a result of that what happens is that our Q4 is down because you know a lot of the buying from those clients happened in Q3. I mean there is no downside for sure, Q3 invariably is definitely highest or best quarter as far as we are concerned, but what upside would be there in Q3 one does not know. MODERATOR Thank you. We have our next question from the line of Rajeev Agrawal from Doordarshi Advisors. Please go ahead. So, it seems like I think we were able to maintain on the 10% growth that we have talked about. I wanted to ask a few questions, the first one, we added around 24 clients in the quarter. But when I look at the number of active clients, it has gone up by five from last quarter so, what is the difference? Do clients fall off or are they not revenue generating, how does it work? It s both, it is a combination, some of the clients have fallen off who are the small clients which are kind of one project clients where the project came to an end and there is no revenue from them. What I mean is that the client does not really falls off; the revenue stops because that is the end of the project and, if there is no revenue from a particular client in the quarter then we do not include that client in our list of clients.

7 In the active clients, okay got you. And just carrying on from what the previous person was asking, if I take out the revenue from our top client, it leaves with the next nine clients, right, the revenue actually has gone down from them so what I am trying to understand what is it that we have seen with the rest of the clients clearly with the top clients we have a lot of traction, we have done very well we are part of the vendor consolidation but what are we seeing with the next nine clients which is causing this impact? Out of the nine clients, there are two clients who are doing extremely well. One is the healthcare client and the other one is the telecom products client, they are doing fairly well and there has been a growth Q-on-Q with these two clients. There are two clients in the top ten clients where we have seen de-growth. With one client their business has come down, and with the other client particularly this quarter there was less revenue as some of the projects came to an end, but we expect them to come back to original levels by next January onwards. So, broadly speaking that the traction in the balance nine clients. Two clients have done extremely well they have grown quarter-on-quarter and two clients are down, and rest of the clients are more or less same. Got it. And does the margin profile defer for our top client versus the rest actually give them more discount because they are top client? No, it is not with top client but it is the nature of the business, the margin that we generate from the top client are lower compared to rest of the clients.. If we see increased growth in a client then overall margin as a percentage unfortunately comes down as that is a lower margin business compared to rest of the clients and obviously being a big client the client engagement terms are different Right. Changing gears a little, this is the first time at least I have noticed you are disclosing the numbers of clients you have added in NetSfere so, is it fair to say that now we are getting revenues from the NetSfere clients earlier we use to have trial right clients now are we started generate revenue from them? Yes, some of the clients have started generating revenue. EMS clients are generating revenue earlier and now NetSfere clients have started generating revenues, just to give you an idea the revenue, is anywhere from USD 10,000 per month to may be USD 30,000 or so per month. Right. And with NetSfere I mean NetSfere is the is the WhatsApp for the enterprises how as per the interpreted whatever offering is and knowing that Facebook has come up with an offering for the work place, do you see a concern whether WhatsApp can come for an enterprise and impact our product the NetSfere product?

8 It is an open market place, we saw an opportunity in the corporate enterprise world as far as the communication is concerned and based on that then we embarked on this journey. Now, others also saw this opportunity including the big names that you just mentioned. So, it is not an exclusive space for us, we are in the market and our product is strong, it has got a very good track record in terms of what we have been doing with Verizon. But, it is a very competitive market place, no question about that and we too are competing, if you see from the number of clients that we are signing and are seeing some success. Hopefully we will continue to start seeing success and then eventually, the revenue that will get generated from these clients are significant in our overall scheme of things. But more important, if you track this space in business, it s a very high value business and the value of that business is more with the number of users and the number of transactions on your platform rather than the revenue that is being generated. So, it is slightly different business and obviously different competition. There are about six or seven companies that are direct competition to us outside Facebook and other big ones. We are reasonably successful as it s a product business, it is tough and it takes time. Also would you say that the offering that we had at Zyter is that sort of competing with the Facebook from a just a new offering would we say or that is sort of different? Zyter is much different, if you look at NetSfere or Facebook, they are secured enterprise communication platforms. You chat and communicate on WhatsApp and you do the same thing securely using products like NetSfere or messenger. Zyter is a different, it is a collaboration tool, if can I can give you a name of a company, which is called Slack, they have a product with an $8 billion valuation, it is a collaborative tool. While you can collaborate it will get integrated with the corporate application of the company. For example, currently we are doing a pilot project, for a hospital, in this environment patient is the central object and there are multiple entities that are connected with the patient there are doctors who are treating, the medicine that is being prescribed or administered, there are pharmacies, there are insurance providers and there are labs. This is an integrated network, what Zyter does is, it becomes the core platform around which the work flow of management of the patient happens. Patient being at the center and patient can be anyone, it s a patient in a healthcare environment it can be a customer in a different environment, whatever happens in terms of the medical records is on that platform in terms of doctors communicating with each other, communication with the patient, communication with the insurance companies, everything happens around that platform. If their existing applications have open API it gets closely integrated with their core systems, like with the medical record system. So, if a patient is on Zyter, it goes to the medical record system which already exists with the hospital picks up the data, takes the medical record data and then puts it on this platform. So, it is a lot more, I am not sure if I have been able to explain but it is a lot more than just secure communication platform and that is a difference between NetSfere and Zyter. Got you. And I know Zyter is what you are looking for the U. P. Electricity board the side using Zyter for the U. P. Electricity board. Do you want to talk a little bit about how that is going and also the new deals that we have signed with the Power Corporation?

9 It is for the same board so, one deal we have already implementing that is for the two Discoms.Essentially it is a billing system, and payment system and all that actually is being built for them. Zyter is on top of these systems which is essentially a mobile app for a consumer. You download Zyter app and through that app you can do various transactions with the board you can see your bill, you can make payments, you can communicate, you can have a question posted and you can raise tickets and other things and then the ticket goes to an individual officer in the board and for his action.. All these happen using the Zyter platform which sits on top of the billing applications, the payment application and the consumer management application. Right. Sorry, I missed that so, what is this new deal that we have done in this quarter versus of we have done in the past? It is for the two rural districts it is essentially Zyter based platform. Zyter, unlike NetSfere, is not a product. Zyter has to be customized and parameterized depending on what the work flow of the particular company is, it is very similar to the first project we are executing, and is very similar deal and it is a transaction based deal, we charge x rupees per consumer, per month. And it is with the same board you said but basically earlier it was building and now the system maybe. Yes, they are going step by step, they are taking 2 Discoms and then they are looking in districts and then gradually extended across. Okay, that is pretty powerful; it could be very powerful over time. I know I am Yeah, fingers crossed if we are able to succeed with Zyter strategy in addition to NetSfere, I think it could be. Another very interesting conversation that is going on in India itself is in one of the central departments that deals with a lot of consumer, all that information will be provided and Zyter will be used for that, it is a very interesting space and the world is moving towards these kind of platforms and eventually it gets integrated with BOTS. Everyone is taking about BOTS, that is integrated into Zyter and it is completely device secure communication because in the U.S. you cannot send health data over unsecured networks, this one is device to device encrypted so, you can use and can send medical information on Zyter securely. Right. So, I know we are doing work in healthcare. Are we having any client yet on Zyter or which is leveraging with Zyter platform? There are three clients which are in very advance stage right now, but nothing signed yet, but in a fairly advance stage.

10 Right. And I know I have taken a lot of time so, just I will ask a few questions and get back on the queue, I know we have signed a lot of clients on EMS product, right, clearly that seems to be having good attraction. But is there a way for us to disclose and I do not know if you want to right now but at some point, it will be great to see what are active clients on EMS and what sort of rate run are we getting on that product clearly saying new client on EMS but how big of a revenue is that product contributing and clearly even with Zyter and NetSfere we have done pretty compelling product out there so, just understanding those products a little bit better and tracking them will help in terms of how we are moving towards a bigger product company which I think you also wants to be. Right, unfortunately with every client there is a non-disclosure agreement and unfortunately, I cannot give the name of the client, but one of the clients that we disclosed as we got their permission was Western Union. So, Western Union as of today is a biggest client of EMS and annualized revenue is few million dollars just to give you an idea and is the largest client as of now. Right. And what will be the aggregate sort of revenue across all the clients on that? As far as EMS is concerned, I do not remember the exact number off the shelf but it most probably will be about USD 3 million to USD 4 million right now. Great, that is a wonderful for a company it takes a while to build but I think it becomes very powerful over time. The good part of it is that we have installed these products in very large companies, in large banks and it is a gradual adoption by the client. As they start adopting by more and more people since this is a transaction based services, the more they use our revenues keep going up and there is no cost associated with it and directly hits the bottom-line, that is a very good part about it. Yes, it s taking time; I mean we are as impatient as some of you are. We have got the clients, we have done the first step, we have got quite a lot of clients that have signed, using it and are paying for it and I think in due course we will also see significant increase in revenue. MODERATOR Thank you. We have the next question from the line of V. P. Rajesh from Banyan Capital. Please go ahead. So, couple of housekeeping questions, just to get them out of the way. So, our net cash Sanjeev is around INR 245 crores is that right, if I back out the borrowings from the cash figure. That is right.

11 Okay. And then so, are we still on track because I think on the last call you said you will add INR 150 crores cash in the current year so are we still on track on that figure? Not INR 150 crores, I think I probably said about INR 100 crores, we should be on track unless there is some money that gets stuck. Largely whatever PAT we generate has to translate into cash, if you look at PAT guidance, I mean PAT of last year and guidance from this year, broadly speaking we do not see any potential bad debts and hence, roughly I think we will be around that number. But, on a big ticket wise yeah, I think that is a fair assumption. Okay. So, because last year we generate INR 122 crores of cash, right and this year I was just looking at the numbers I thought, on the last call you said we have INR 300 crores of cash we will use up INR 150 crores in the buyback and then we will generate INR 150 so, that we finish the year at INR 300 that is what I remember. So, that is still on track, right? That is fairly on track. Okay. And then on the, and I assume that will be primarily driven by change in working capital coming down, right because that is a big number in the first-half or you think you will have to invest more in the working capital? Working capital is essentially the money which is stuck, and the money has to come in. By the way one of the good news I want to share is that we finally got substantial money from Uttaranchal State Electricity Board in Q3. In Q3 meaning, okay so, after the September financial After the September financial, the user acceptance is completed as that was pending long time back and the payment was supposed to be paid after user acceptance and we have finally received it. We are still about INR 30 crores due from that client. But INR 20 crores or INR 30 crores till the end of the last quarter. Sorry. So, we received INR 30 crores from them

12 Upinder Zutshi: No, Rs. 30 is still to be received. Okay, it is still to be received, I see, okay. And then on the CAPEX side, there was a big jump this quarter any I mean if you look at the first-half it has been around INR 12 crores or so, anything major going on or this is just your maintenance CAPEX? This is largely maintenance CAPEX because Y-T-D we done about INR 12 crores as compared to about INR 62 crores last year. Right. So, that is what I was trying to understand that There is no additional CAPEX which has happened in the two quarters. Okay. So I mean this is sort of the run rate like around INR 24 crores of CAPEX, no? INR 24 crores is so far the maintenance CAPEX and if there is any additional CAPEX if we do that will come on top of that. Okay. And generally what is the nature of this CAPEX? This is all plant and machinery computer, network equipment, furniture, things like that which are needed for the business. I see. And then shifting to the business side, a little bit, this power company it looks like a veryvery interesting transaction within that what is done with a private power company or a public one? Public company. Public company, okay, I mean it is a government enterprise, right? Government enterprise. Okay. And do you foresee like just could just lead into other similar kind of you know revenue potential with other government enterprises in the power sector.

13 Yeah, absolutely, in fact we are talking to another state for similar kind of work. Okay. And hopefully the payment would not get stuck in these situations, right I mean this is some Maharatna companies or Ratna companies so that they are good in paying the vendors. Unlike the Uttaranchal as it was a fixed bid and milestone based payment, this is a monthly payment, this is an OPEX model, we set-up everything and at the end of the month depending on the number of consumers multiplied by the rate we raise a monthly invoice. I see, wonderful, that is great. And we were talking a lot about the product; in response to one of the other questions I was just curious, what is our total product revenue in the current quarter or in this first-half? All of that under mobility and messaging is all product revenue. So, mobility was around 10%, INR 55 crores and should we say product engineering is around INR 51 crores so, that is about INR 110 crores, is it? Sorry, come again, I did not get that. See, your mobility is around 10.3% this quarter, the revenue and product engineering is 10.4% so, if I do just a math it is around INR 110 crores is that sort of the product revenue? Yes, 10.3% is product revenue, pure product revenues. If you see our revenue analysis there is messaging products so, that is the products revenue so, in Q2 it has been 10.3% and in Q1 it has been 11.5%. Right. So, that is what I am talking about that is that mobility is all product revenue, but the question I had is product engineering is that also, a portion of that is also product revenue or not? No, that is not, product engineering, is product based revenue and it is all about product, but we do not own the IP in the product that we support and is not owned by us hence, we do not consider that as product revenue.

14 Okay, all right. So, we are doing roughly around INR 55 crores of quarterly revenue from products. That s correct. The one takeaway. Yes. Okay. And that is primarily coming from NetSfere, EMS and potentially Zyter now, right? All MMS, MSA, all products put together. All products, so, if I were to look at these products, NetSfere, EMS and Zyter what would you say is roughly revenue from those, I know you mentioned a figure of USD 3 million to USD 4 million for EMS but which itself. I said, USD 3 million - USD 4 million overall. For this year, it will be broadly about USD 5 million to USD 6 million. Total revenue from the three products? Largely from these three products outside the legacy products so, these three products and another product which is MSA which is the fourth product. Sorry, how much did you say, USD 5 million to USD 6 million? Yes, that is right. Okay. And then just curious, we have added a lot of clients but the revenue has really not gone up so, I think you were saying something around USD 10K to USD 30K per month so that the reason why the revenue has not gone up even though the client adds are pretty sizeable?

15 After the 24 clients, 14 clients have been added for EMS and NetSfere. So, in this quarter there will be very small revenue from these clients and even for the next quarter which is Q3. As I mentioned earlier the revenue from these products is very small compared to our overall revenue, a particular client has giving me 10,000 per month so, that is about 1,20,000 per month so, overall scheme of things it is small number. Right. And that is in dollars, right 100 Yes, dollars. But this is a long-term revenue, every year they will keep increasing. And as I also mentioned earlier this space and this business is not just only about revenue it is the number of users, the number of transactions that is really what determine the value of the business. And the way you were saying product revenue is around 10.3% what is the revenue that we are getting from the platforms? That is mix that is in product engineering, and in technology solutions. We do not have a breakup of that but all the platforms revenue a lot significant part of that comes from the technology solutions, the healthcare platforms and that is outside of products revenue. Now if you add all of these that revenue will be a much bigger number, but unfortunately right now I do not have the exact number. Okay. But I think it will be helpful to just get a sense of what is that platform revenue as well especially when you are getting these power company transaction and more and more you will have that kind of linkage where you are getting either a product revenue or a platform revenue, right so We can and that is good suggestion, in the next quarter onwards we can include that. That will be wonderful. And then on the healthcare side it seems we are getting good traction; the revenue contribution has gone up. But it seems that is mostly coming from IT services and the margin is not that strong, is that sort of right takeaways from these numbers? The healthcare segment is doing extremely well and we are most excited about it. There is more than the revenue that we see in Q2, there are a lot of potential deals that we are in the process of discussing and signing. So, we are currently seeing a lot of traction in the healthcare space both for our IT technology solutions, platforms, and also products like Zyter. We are very bullish about that vertical and in terms of the margins it is not necessarily true, I think a lot of the business that we do the margin is fairly good but, as a lot of that work in healthcare work is being done on-site in our US offices, because of the U.S. regulation.. So, naturally the margin as a

16 percentage is lower of the work that is being done in the U.S. compared to what we do out of India. Right. And that was actually my question that your revenue has gone up but onsite revenue, year-over-year has gone up but the rate has come down. So, clearly is it primarily because of healthcare or is it that healthcare is doing well but your technology. That is primarily because of the top client. MODERATOR Thank you. We have the next question from the line of Rajeev Agrawal from Doordarshi Advisors. Please go ahead. So, Upinder, I wanted to ask about the buyback, I know the promoters are going to participate in the buyback, would you as a CEO of the company would also be participating just want to see how patient you are? If you look at the nature of this buyback and I will be very honest, this is a tender based buyback, it is unlike the earlier buyback that we did from the market. The way we look at these buyback is essentially returning value to all the shareholders in a more tax efficient manner and I think that is a purpose. We have not been giving dividend for the last couple of years, so it is essentially returning value proportionally to all the shareholders in a more efficient manner, I mean that is what the buyback is all about. Okay. And so, I should interpret that as you will be participating. I think proportionately everybody should participate; all shareholders should participate if you ask me. Okay, great. The second question I had is around the tax rate. So, we have seen in the first-half the tax rate has gone up to 28%. Sorry, we miss that. The tax that we are paying, so, if I look at the tax rate in the first-half it is around 28%, right and then when I look at the previous fiscal the last few years it has been around 22%. I am just trying to figure out what is the reason why the tax rate has gone up.

17 Yes, the main reason is that one of our SEZ units has moved from five years to six years. So, the tax what is paid on that unit has increased and that is the reason. And also what happens is that in the fourth quarter there is MAT credit so, that adjustment happens in the fourth quarter and that kind of brings down the overall yearly tax rate. And so, what should be the expected tax rate going forward, will it be somewhere 22% and 25% or something? 25% - 26% unless Mr. Trump turns things around. Great, okay, so that actually leads me to the question on Trump, which is I know, IT services has generally been beaten up because they are concerned around the outsourcing or off-shoring Infinite has always positioned themselves a company based out of U.S. or wherever the client wants them, right. So, do you see yourselves getting impacts by the win of Trump and if so, what would it be? It is very early to say what is going to happen, so many things have been said, so, it is very early to comment, but having said that especially from Infinite point of view, I think we have positive from both sides and I can explain to you. If nothing happens business as usual off-shoring continues all is fine and we always be like others. And yes, if jobs do move back into the country, we are present and we have many employees, as we keep saying that we hardly do any L1 or H1 visas from India which is very negligible, we create a lot of jobs as all these headcounts that we see in the US are the jobs that we have created. So, if the demand for the work in the U.S. increases, I think in my view that we are very well positioned for that. But it is very too early to comment on what might happen, but either way, I do not think we are concerned about these developments. Right. And then I had a question on the payment firms that question you so, other than Western Union, I think we had another big client who is in the similar space signed up, right so I have then noticed also the BFSI revenue has been sort of quite muted so, is it that client has not picked up or if you want to share what is happening. It is not picked up as expected, one of the earlier question I have said that two of the clients have come down, one of the client which came down quite significantly is the BFSI client. I see, that is why the BFSI is not picking up.

18 MODERATOR Thank you. We have the next question from the line of V. P. Rajesh from Banyan Capital. Please go ahead. Just President elect Mr.Trump it is very difficult to say that but do you see any impact of his poll promise of abolishing majority of Obamacare and that having impact on our healthcare revenues, any early signs or any early assessments in the plans? No, what we do in healthcare is nothing to do with Obamacare. What is going to happen one does not know but whatever change happens I do not think that it has any direct impact on us. Okay. And then the AT&T transaction that has been announced, will we see any opportunity coming out of that or is there any risk on the flip side from that blast on the action? What is that announcement? The AT&T transaction you know AT&T is buying a content company I forget the name, but I was just curious because I do not think we do any business with AT&T but I just wanted to make sure. AT&T is our client, but we do very little business with them. In fact we have a global MSA with AT&T but somehow we have not been able to really translate that into revenue. But this development obviously is not going to impact us in any way. Right, okay. And then just you know sort of big picture question, you know our revenues are obviously increasing year-over-year and I thought I heard you say earlier in your prepared comments that you are more in the lower end of the guidance range. So, which means that on the back half you will not see double-digit revenue growth is that what you are really saying? One has to be conservative so, I think we will see revenue growth and I do not think that should be too much of an issue. Right, no what I mean is like see, if you see double-digit growth like in the first-half you have done around 12.5% growth, right and I am just trying to understand if you are saying that in the back half in the second-half you will not see double-digit growth I mean I am sure we will growth but. If you look at I am just doing a quick calculation, in the first-half we have done 46% of our annual guidance.

19 Right. And that is the question so, I am just doing the simple math, you have done around INR 1,092 crores of revenue and that is around 12.5% growth from last year s first-half so, therefore if I back that out at lower end you will do around 8% revenue growth so, that is just a math. So, are you saying that you know it will not reach 10% or so, because at the higher end of 15% you will have to do around 17% of growth in the second-half so, I understand a little challenging but I am just curious if you think like you would not be able to hit double-digit growth for the secondhalf? No, that I said is that we are reasonably okay with lower end of the March guidance which the lower end starts at 10. So, it will definitely be higher than that but it may not, it will be close to 10 rather than 15. For the whole year you are saying, right? Yes, for the whole year. Yeah, so my point is if the whole year is 10% and you have 12.5% at the first-half then on the second-half it will be obviously less than double-digit meaning less than 10, right to get to overall 10% so, is that what you are really saying? Not really, I mean hopefully we will do better than that and if you see for the last two years to three years, our third quarter and fourth quarter are kind of as you all know they go in many different ways. Correct, no, I understand because that one client doing a lot of transactions in the Christmas season can really skew the numbers but I just wanted to make sure, you are not seeing anything which makes you more circumspect that particular situation. What I am saying is at a very conservative level we will do the lower end of the guidance and as you rightly pointed out and you have seen the analysis it is quite probable that we will do much better than that. Okay, good. And then the second thing on the margin side, we are continuing to be hanging around 9% margin with all these wonderful developments on the product side, customer side, so do you see us getting in to the double-digit margins anytime soon, I mean one side I am sorry to give you this context, one side I see all the IT services companies specially midcap companies guiding down on their margin guidance since you guys are good, you are maintaining their margin but do you see any upside like given all the client traction and product traction that we are seeing.

20 To be honest, I was and perhaps very hopeful that we would have achieved that barrier this year itself. Now, we need to wait and see how things pan out this year, I think we are reasonably sure that we should be able to do much better this year. As you have tracked us for a long time in this situation what happens is that our top client s kind of squeeze things up quite significantly as far as the margin profile is concerned. Right. And maybe you know I think another suggestion would be to then let us split the financials to say that look this is the margin we are getting on the rest of the business. Yeah, I am seriously thinking of that because if we do that then you will immediately see the rest of the businesses where the industry is or probably better. Right. And I think that is something you should definitely look seriously about because it just skews the number so much that one cannot really appreciate all the hard work that is being done at your end to really grow the business and the margin profile as well. And then just a final on the buyback side so, I suppose the record date for the buyback will be announced on the 9th after the Board Meeting? Yes, Rajesh, as you are aware the process after the 9th meeting is that we have to apply to SEBI and depending upon when we get the SEBI approval we will fix the date for the buyback and the record date. So, it could be further down meaning that date is still a moving target, till we get the SEBI approval. So SEBI approval could take may be one week or three weeks, as soon we get the SEBI approval we will get the ball rolling and we will announce the record date and the date from which the buyback will open. MODERATOR Thank you. As there are no further questions, I now hand the conference call back to Mr. Upinder Zutshi for closing comments, over to you sir. Thank you very much. See you again next quarter. Thank you. MODERATOR Thank you. On behalf of the Infinite Computer Solutions that concludes this conference. Thank you for joining us and you may now disconnect your lines.