Thank you. Good afternoon, everyone, and a warm welcome to all of you.

I am Janhavi Patil from Orient Capital, representing the Investor Relations team of Pelatro Limited. On behalf of the company, I would like to thank you all for joining us for the Q4 and FY26 earnings con-call.

Before we begin, I would like to state a brief cautionary statement. Some of the statements made during today's call may be forward-looking in nature.

These forward-looking statements are subject to certain risks and uncertainties that will cause actual results to differ materially from those expressed or implied. These statements are based on management's current expectations, assumptions, and information available as of now.

Investors are therefore advised not to place undue reliance on these forward-looking statements when making any investment decisions. The purpose of this call is to share insights into the company's business performance and financial results under review.

Now, I am pleased to introduce the member of the management team present with us today, Mr. Subash Menon, Chairman and Managing Director; Mr.

Sharat Hegde, Chief Financial Officer. With that, I now hand over to Mr.

Subash for his opening remarks. Thank you, and over to you, sir.

Thank you. Good evening, everybody.

Indeed a pleasure to host this conference and share our results to all of you. We have already uploaded the investor presentation for FY25-26 on our website and we also have shared it with NSE.

I presume all of you have received that, downloaded that, and have that particular deck with you. Along with me of course is my colleague, Sharat Hegde, who is the CFO.

The two of us will be taking you through the deck today. We will call out the page number and go through the details of each page.

At that point in time, you can follow on the copy of the deck that you have. Once again, welcome to this investor presentation.

I must say that we've had an excellent year for more reasons than one. We acquired a company and we have stabilized that operation.

We acquired the business of the company, Astel Technologies.

Are you able to hear me now?

Good. I was just welcoming all of you to the investor meet of Pelatro.

Thank you very much for joining. Good evening.

We have had an excellent year for more reasons than one. One reason is that the business that we acquired from Astel Technologies has stabilized and done exactly as we expected.

The acquisition, in our opinion, is turning out to be quite good. We've had wonderful revenue growth, very good growth.

My colleague will talk about that shortly. Finally, our EBITDA has expanded during the year.

On all fronts, be it the transaction that we consummated, the acquisition, be it the organic growth, be it higher profitability, on all fronts, we have done extremely well. That's what I would like to share with you right at the very beginning.

For those who are joining this Pelatro investor call for the first time, who have not been part of such a call in the past, if you go to slide three, you will see that we are a telecom software player with various software solutions, which we'll come to shortly. We serve about 46 telcos at this point in time across 35 countries.

We've got 11 patents, we are continuously increasing that. We've got about 490-plus employees at this point in time.

Look at the next slide. You will see a map where our presence is noted, the different countries.

That's quite a busy slide. We are in, as I said, 35 35 countries.

It's been a very good ride for us till now in Asia and Africa with respect to customer penetration and growth. That brings me to the next slide, which is business overview, and after that, you've got the results highlights.

To handle the next two, three slides, I'll hand you over to Sharat Hegde, who is the CFO, who has joined me on this particular call. Over to you, Sharat.

Thank you. Hello all.

Good evening and welcome to our con-call. Slide number six is what I'll be handling now, which talks about all the key numbers from financials point of view.

First one is revenue. The revenue stood at 138.23 crores for the financial year ended 31st March 26.

This revenue grew by 61.2% year-on-year as compared to FY25. Revenue of 138 crore has been a combination of contribution from both our continuing CVM division as well as the new acquired Astel division.

If we look at the divisions alone, CVM division alone has contributed a revenue of 116.5 crores with a growth of 36%, approx 36%, from that of last year. FY25 was completely CVM division.

When we compare on that, there is a healthy 36% growth, which clearly shows that the continuing business has been growing very well and is poised to grow as well. The remaining 21.7 crore has come from Astel division, which we acquired earlier in FY26.

Astel revenue of this 21.7 crores actually represents nine-month number because this division started operating only in July 25. Being a nine-month number, Astel division has very much achieved a revenue number, which is in line with what we had expected for the financial year, which is a good thing, which is a happy thing.

Just to highlight, Astel division actually, when we acquired, had almost no pipeline and happy to inform you all that it is steadily building a very healthy pipeline as we speak. The overall EBITDA stood at 31 and 1/2 crores, up from 17.98 crores from FY25.

EBITDA grew by 76% year-on-year. While the revenue growth was 61%, the EBITDA has grown at 76%, which is further the nonlinearity effect that we have been witnessing for the past two years.

The EBITDA margins, too, are steadily expanding, which was 20.9% for FY25 and is now 22.8%, which has been the expectation as well. While we are speaking about EBITDA, maybe some of you might want to look at EBITDA numbers or EBITDA growth excluding other income.

We have had other income last year as well, and we have had other income this year as well. FY25, we had other income of 3.8 crores roughly, while FY26, the other income was 5.5 crores.

Even if we exclude these, we can still see a steep EBITDA growth between the two years, FY25 and FY26. The margins, too, can be seen as expanded.

We can see that the margins, too, have been expanding even without the other income. The PAT grew year-on-year by 52%, which now stands at 18.1 crore as against 11.9 crores last year.

EPS growth has been good as well at 17 as against 13.16 last year. The next slide, slide seven, actually takes us through segmental details.

There are a few details between the continuing CVM division as well as the new Astel division segments that we have been retaining. As mentioned previously, CVM revenue has been at 116.5 crores, whereas Astel has given us a 21.7 crore revenue.

The CVM EBITDA stood at 28 crores, and Astel's EBITDA stood at 3.4 crores. While CVM achieved a 24.1% EBITDA margin, Astel, being a new division, has achieved a very healthy EBITDA margin of 15.6%.

We expect Astel's EBITDA margins to grow in the years to come, and we also expect it to come closer to that of CVM division's margin over next few years. That's on the segment side.

Then the next slide talks about a few key financial ratios, wherein we have given return on net worth, return on capital employed, as well as debt-equity. Return on net worth and return on capital employed have been growing steadily, from 14.97% in FY25 to 17% 17.4% in FY26.

ROCE has grown to 20.36 from 18.37. This growth basically reaffirms the number growth that we have spoken in the previous slides.

The debt-equity has been steadily coming down as well, as we have not been adding any major debt, and the existing debts have been steadily being repaid. These are a few key financial items.

I'll hand it over to our Chairman back for the remaining slides.

Thanks, Sharat. Are you able to hear me?

Yeah. Good.

Thank you. The next slide, which is slide number nine, is about AI.

Now, as we all know, the elephant in the room at this point in time is AI. Everybody is concerned about it.

Everybody's wondering whether it's going to help or hurt the business. We are taking the bull by the horns here.

We are looking at various aspects and working on that. I would like to apprise you all on that front.

This slide talks about two key areas where AI could or will impact us. One is on the product itself, as to whether we keep on bringing various AI capabilities into the platform, which the customers will be expecting to ensure that the product remains current.

The next thing is on the development side, coding, testing, and implementation, support. In various areas, today AI is penetrating, the use of LLMs is increasing.

How will that impact us? These are two areas that we need to be concerned about, we need to work upon.

The next slide talks about the first area, which is product features, slide number 10. There you will see that we have already launched a platform called mViva revenue acceleration platform, which covers a variety of GenAI, LLM-driven AI features.

Those are AI agents, copilots, zero-touch campaigning, these aspects. These take our entire product capability to a completely different level, and that will ensure that as we are constantly delivering these capabilities to our customers, that will ensure continued product leadership.

Not only won't our product become obsolete, but it will also actually keep on adding capabilities and leading from the front with respect to product capabilities. When you go to various telcos, they will see that our product is absolutely current and futuristic and exactly what they're looking for.

That will then lead to higher growth for us. On the product features front, we are definitely doing an excellent job with respect to whatever we need to do, and we are absolutely confident that this is the way to go on the product feature front.

The next slide, which is slide number 11, talks about software development. Here it is all about ensuring that we bring in efficiencies into our software development activities, we reduce costs, etc.

That's where AI will be used. We are already using LLMs in coding, to develop various models, to handle support functions, to handle a variety of testing activities, for implementation activities.

Across the spectrum of activities that we handle with respect to software development, we are already using LLMs. Now, this would mean the cost will come down, cost per dollar of revenue will definitely come down.

As we move forward, as it is, our business is nonlinear, which means we don't have to add, for every dollar of revenue, we don't have to increase the same number of people. That's our nonlinearity, which is already there in our business.

On top of that, with this lower cost per dollar of revenue because of AI usage, the increase in manpower will come down even further, so that'll be the second lever. This will be visible in the next 18 to 24 months, and this will also result in improved quality, better reputation, etc., resulting in higher growth as we move forward.

On the AI front, I think we are absolutely ensuring that we are leveraging the power of AI to deliver a futuristic product, to continue to deliver a futuristic products, and to ensure that our own development activities are moving forward in a cost-effective manner by reducing costs, improving quality, shortening the time to market, etc. That brings me to the next slide, which is slide number 12.

This lists the products that we have. I won't spend time on this.

We've repeated this multiple times and it's fairly straightforward. In the CVM division, we've got five products and managed services which go around that.

They all come together to form what's called as revenue acceleration platform. We spoke about AI capabilities in our products.

Those capabilities are getting added and have been added in all these products, we are not calling that out separately on this slide. AI capabilities, LLM capabilities, GenAI capabilities, those are all part of every product that we are seeing here.

That brings me to the next slide. That's the list of products for the Astel division.

We've got three products in Astel division and there are managed services along with that. Again, we have repeated this multiple times.

I won't spend time. If anybody has any specific questions at any point, once we get to the Q&A, I can explain those products.

Now we come to the next slide, 14. I'll hand you over to Sharat, my colleague, for the next two slides.

Thank you, SM. Slide number 14 speaks about the revenue model.

We basically divide our revenue into two major buckets. One is repeat revenue, and then one-time revenue.

The repeat revenue is further divided into recurring revenue and re-occurring revenue. Recurring revenues are essentially contracted revenues that keep repeating at every fixed intervals, say monthly, quarterly, or half-yearly or annually, depending on the contract.

These are basically fixed license fee, for customers who would go for a license subscription model instead of a one-time license purchase. There will be a monthly fixed license fee, which is one of the major parts of recurring revenue.

Then we have AMC for the customers who have taken up licenses, the annual maintenance contracts. Then there is managed services.

Managed services essentially have three major items: the IT operations, which is basically technical support; the business planning, which is basically helping the customers plan their campaigning activities, etc.; and then business operations, which help them to actually launch these campaigns and operate them. The final thing in the recurring revenue is gain share.

With certain customers, we do have contracts wherein if they earn incremental revenue out of the platform, a part of that will be shared with us. That's the recurring revenue part, and then there is re-occurring revenue.

Re-occurring revenues are basically change requests, which are customizations from existing customers, customers' needs keep changing every now and then, and they would probably need some new features and some new customizations, etc., which are very much repetitive in nature because they keep coming every now and then from these customers. The recurring and re-occurring revenue put together is what forms the repeat revenue, which come from the existing set of customers.

The one-time revenue is basically perpetual license and implementation fee. Overall, a higher repeat revenue, a combination of recurring and re-occurring revenue, is actually a very good indicator for our business wherein a higher repeat revenue as compared to one-time revenue will give us a better view of the future revenue, a better revenue predictability, etc.

The next slide gives us revenue bifurcation. As I was saying, a repeat revenue which is more than 75% of the total revenue is always a good thing for the business, and we would like to keep it that way.

For FY26, the recurring revenue was 60% and re-occurring was 22, giving us a total repeat revenue of 82%, which is a very good indicator, and one-time revenue was 18%. Although it will not be same year-on-year, we expect it to be anywhere above 75%.

That's on the revenue as well as the revenue bifurcation. Back to you.

Okay. Thanks, Sharat.

Presume you're able to hear me? Sharat, are you all able to hear me?

You're audible.

Thank you. Now I'm on slide 16, which shows the number of customers.

We've already touched upon this earlier: 46 customers spread across 35 countries, and out of those 46 customers, about 31—this is as on 31st December, not March 31st—we have 31 of them using managed services from us. Now, this is a lever for growth.

As we continue, we will keep on increasing the penetration of managed services within our existing customers. As you can see, as the graphs indicate, there was a time when it was a much lesser percentage and it continuously increasing.

Moving to the next slide. This is about the market penetration and opportunity.

When we look at the products that we have at this point in time and compute the potential market opportunity, we see a size of about 12,000 crores as opportunity. We are only at about 1% of the market at this point in time, maybe a little over 1%.

There is still a very long way to go. When we look at the market penetration with respect to customers, how many telcos have we penetrated, that is 10%.

Today we are at about 46 out of 450 telcos. Now, the reason why these numbers are different, when one is 1%, the other one is 10%, is because even where we have penetrated into a telco, we have not yet sold all the products that we have and all the services that we can sell.

If we were to sell all the products and all the services to this particular set of 46 telcos, then our size will also be equal to 10% of the market size, but that's not the case today. We have got only 1% of the market size in rupee terms, while market penetration is 10%.

Now, but this market penetration is important because it is not practical to expect to sell all the products to every telco customer we have. This doesn't work.

We have to keep increasing market penetration and keep increasing our penetration of products and services within each telco as well. Those are two levers of growth.

Today we are at 10% in market penetration. Over the next four or five years, we expect that to be of the order of about 20 or 25%.

That will be one area of growth. The next will be today our products penetration, I think, is about 1.3 products.

You can see that written. We've got eight products and our penetration is only 1.3.

At some point, the next four, five years, our objective will be to take it to two or two and a half products per telco. That would also mean much higher revenue coming from each telco.

It is about going into more telcos and at the same time going deeper within each telco. These are two very strong growth levers that we have and we'll keep working on those two levers.

The next slide, which is slide number 18, talks about our key strengths. We've got a very end-to-end offering.

It's highly referenceable. We've got some excellent customers, very large customers, including the likes of Vodafone Idea at about 215-plus million subscribers and several other large ones at 80 million, 90 million, 100 million subscribers.

We have a lot of patented technology which helps us differentiate from our competition. We've got very, very deep domain expertise.

We're handling very large volumes of transactions. There are various aspects which are very critical and very unique to us at this point in time, which form our key strengths when we go and stand in front of a potential customer to sell our products.

These then naturally become moats for others to cross and enter. They become barriers for others to enter.

That's what I'm now referring to in the next slide, which is the investment rationale, slide number 19. This is not in any particular order.

I've just listed them there. We spoke about market penetration.

We already have a very good penetration of 10%. We're constantly increasing it, and I'm absolutely confident of somewhere between 20 to 25% in the next four to five years, at which point in time we'll be handling more than 100 telcos with respect to servicing them with at least one product.

I believe it'll be higher than the current 1.3 product penetration. One is market penetration, one is product penetration, that will also increase.

Services will increase. With all that, the revenue per customer will keep increasing.

AI for us is a differentiating factor. We are absolutely scoring with AI.

We have brought in a lot of interesting features, very attractive features, very valuable features and capabilities for our telco customers. That will help us maintain our leadership and continue on the growth path with respect to organic growth.

At the same time, we are also reducing our costs, so that'll help the nonlinearity to increase further. I spoke about the higher barrier to enter, the kind of product, the kind of technology we have, the references that we have, the technologies that we have used, the patents that we have, and various aspects, the volumes that we're handling, the domain expertise that we have.

All these come together to form a very, very high barrier for potential competition to enter. Coming to the numbers, visibility and predictability.

We've got extremely high visibility in our business. As we look at the current financial year, FY26-27, although we're talking about FY20 financial year ended FY26, I would like to touch upon the new financial year, FY27.

As we started the year, we had 82% of revenue already contracted. Of the expected revenue for 26-27, we've got a particular internal target.

Of that internal target of revenue, we have already got 82% in contracts with us, contracts in hand. That means we only need to win and execute another 18%.

I'm sure that if some of you might remember that in the last year, by September 25, we had 100% contracted situation. Currently we're at 82% for this year.

Let's see how that progresses. I'm sure it'll progress very well.

This gives us a lot of visibility and predictability in the business. When I look at next year, FY28, already a lot of revenues for that is contracted because of the recurring revenues that we have.

As time goes by, this visibility and predictability will increase. Now with all of this, the penetration that we have, the barrier to competition, visibility, predictability, AI that we are leveraging, etc., etc., we are absolutely confident of excellent growth in the years to come, and we are committing to at least 15% annual growth on revenue, organic growth.

If there's some acquisition, that'll be on top of this. Organic growth of 15% at least over the next five years on an annual basis every year.

While that happens, EBITDA will also grow in the next three to four years, two to three years maybe even. EBITDA will be at a higher level than what it is today.

As we've said in the past, we have stated that in our kind of business, I'll be happy when we get to 30% EBITDA. I think that that's also something that could happen in the next two to three years, while the revenue itself will grow at 15% every year.

With that, I hand you over to Sharat if he wants to touch upon anything on the financials. Otherwise, we can throw the floor open for Q&A.

Thank you. On the financials, we have already spoken on all the key numbers.

In addition to that, we do have Q4 numbers given separately in the income statement on slide 21 for those who are interested to go through. I think with that, we can open the floor for question and answers.

Hi, good evening. Hope I'm audible.

Yes,

Hi. I just had two questions.

First, obviously on this threat of AI, and the more data and the more information and the more confirmation that we get from you, the better it is for our understanding and confidence. Coming directly to that, I understand from your slides and from your deck how you're integrating AI into the product suite, right, using LLMs to do the campaign management and for all the data analytics, etc.

That part I understand. What part I would want to understand further is that for any of your clients, right, earlier the problem usually was that it was very difficult for any small telecom player or any telecom player otherwise also to build an in-house software.

Now, the problem with these generic LLMs and these generic AI is that that cost has shot down drastically. The generic LLMs can help them build all the features of a campaign manager, including data analytics, everything.

The only thing that remains that cannot be done is probably live integration with the real-time data of the customer. I just want to understand that going forward, how are you protected from that?

How do customers don't use you only for the integration layer? They can have their in-house generic LLM, right, which does all the data management, all the campaign management, everything, and use you only for the integration layer.

There I wanted some more clarity that why is that not a viable threat for your business?

Okay. Good question.

We don't believe that is going to happen because of the overall complexity of a product like campaign management. It is and people may say, what is it?

You just take some subscriber segment, you plan a campaign, campaign being buy this, get that free, and shoot it out. It's as simple as that is what you would think.

The concept is that simple. To understand the product is that simple.

The nuances are very many. Now, if you take something called a state flow in our product, this is a journey builder.

Now, typical journey for a typical telco, imagine a flow chart. Now, that's the journey, right?

We all understand flow charts. Now imagine a flow chart with about 250 or 300 boxes, as in one box and various branches in that.

You can't have 250 boxes in a serial fashion, right, one after the other after the other. It doesn't work like that.

You start with one box, then you have three branches. Then you go into that, then you have multiple branches coming from each of these branches, and then further branches, then further branches.

That's how a flowchart works. Imagine a large flowchart with 250 or 300 boxes of decision-making, action, and stuff like that.

Imagine constructing a software to do something like that. It is extremely complex, extremely complex.

Now, first of all, you should know how to tell AI to do something like this. The whole prompt engineering will have to go to a completely different level, a totally different orbit, to be able to even think of building something like that.

Even if you have that kind of prompt engineering, it is not practical because of the complexity of that. Now trust me, we have tried this internally to know whether it works or not.

It doesn't work. This was the first question we asked ourselves as well, as to will the telcos do that?

This we asked some time ago, and we have the answer now because we tried ourselves. No, it just doesn't work.

Now, this is just one feature in our product. There are hundreds of features like this, which have to work together in a very well-coordinated manner.

Then you have got all the challenges of the integration as well. If they try to do that, it will easily take them whether they can do it or not is a secondary question, but if they really try, it'll probably take them a year to do something like this if at all they try.

What is the point? Because in that year, then who's going to maintain it?

Who's going to keep upgrading it? Now, today our customers all ask us.

A telco sees only their business in their country. They don't see what's happening in 30 countries in other markets, in other geographies.

They don't know what is going on in the world. They keep asking us about it.

That knowledge goes into our product. They don't have access to that knowledge.

That's why they keep asking us. In short, what will happen is if at all they develop something, what they develop will be substandard, will be way behind what we have even today.

Forget about what we will have tomorrow. It is much cheaper and more sensible for them and I'm not even thinking about how many tokens they will have to buy to do all this, okay?

I'm not even thinking about it. It'll be much cheaper for them and more sensible for them to rely on somebody like us.

I don't think this is a threat, and that's based on practical experience.

That helps. My second question was around recurring revenue, because I think that is one very important part of a new software business.

I just want to understand for your legacy client or for your top 10 clients who have been your customer for more than three, four years now, in terms of the recurring revenue, has there been an annual increase in contract value? That can always be linked to inflation, etc., but generally I want to understand from a product suite perspective and from a increase in module perspective.

For example, you were just saying that in this presentation you mentioned that on an average, a customer uses 1.3 of your products, right, out of the eight product suite that you have. I just want to understand that the contract value that you've seen increasing across your top customers, has it come on the back of increase in the product suite used by the customers?

Has it come on the back of more users of the module of the product at the client end, or has it just been inflationary increases? If you can just throw some light around that to understand whether your legacy customers are getting more entrenched in the company.

It really comes from us selling more modules, more capabilities, features, more services, etc. That is where whether it's in the form of a recurring license fee or recurring AMC, recurring managed services, it all comes from new things being done.

Generally, we sign three- or five-year contracts, and the prices, if it's a support fee in a year or a license fee in a year, something like that, that stays constant for the three-year or five-year period. It doesn't have an inflation-related increase.

When we price it, what we do is we take this year's price, we apply inflation. If it's a five-year contract, we apply inflation for the next five years, then we average it out to get to an annual number.

We're not losing out because of inflation. We're averaging it out and coming up with a fixed number.

That's what they prefer. At the end of five years when they renew, yes, it will go up, but not till then.

During that five-year period, the real increase is because of all the new features, functionalities, modules, services, etc., which they buy from us.

Perfect. Just going forward, can you just throw some more light around this in your presentation?

This will help us understand whether there is an uptrend in terms of more product suites being used by the customers. This 15% revenue growth that you're targeting for, do you have any sense or can you give us any sense in terms of breaking it down between inflation and volume growth?

Typically in any other business, you understand, right, there's a value and a volume growth. In your case, the volume and the value growth No,

no, this is on a constant currency basis just volume growth. That's what you're calling it, yes.

Okay. Inflation-adjusted, you're talking about

volume. That will sit on top of this.

Yeah.

That helps. Just going forward, if you can just throw more light around this per customer use of product, that helps.

All right,

that's all from my side.

Thank you and

all the best.

Thank you.

Yeah.

Hello, first am I audible?

Yes. Yeah.

Hey, Subash. Thank you for the details, and thank you for outlining your growth aspiration and outlining the key strengths that would enable you to achieve that aspiration that we've set.

On that, could you elaborate more on the sales strategy here? You said you wish to add more logos, and you also wish to expand or go deeper within your existing logos, right?

Could you help me elaborate your sales strategy here in terms of not just your employees, but also the sales pitch, because I'm sure your new telco clients would also be having these platforms. How do you wish or how do you intend on displacing the existing platforms?

Just trying to get a sense of all of that.

Right. It is actually I don't know whether this is a good answer or a bad answer for you, but the real answer is that it is no different from what we have done over the past 10 years.

We go and pitch all the new capabilities and the futuristic capabilities to our customers and establish that we have a product which is way better than what they have today and which is something which will be future-proof for them. That is, if they come with us, it'll be future-proof for them.

This is one thing. We establish our referenceability there.

We ask them to check with our existing customers for reference check and stuff like that, and that establishes a variety of things about us: our support capability, product capabilities, and all those things. That's the core.

Of course, we will keep adding more people as and when we require to have bandwidth and stuff like that. That's par for the course.

The strategy really is about having the best product out there. Then ensuring that we are able to get ambassadors who will vouch for the product in the form of existing customers.

Really that's what it is. These are the two key elements of our sales strategy.

Something we have done all along the way.

Got you. Is there anything more tangible that you could share in terms of how do you approach a new client or a new geography?

Trade fairs, or references?

Okay. That I can tell you.

We've got various ways. We use online tools like Lusha, we use LinkedIn quite extensively to reach out to people.

Every week we have two or three outreach campaigns which go to a very large set of potential customers and we get leads coming out of it. These days we attend two large trade shows every year and one trade show of our own, which is called CVM Executive Forum.

We invite people to that, customers and non-customers as well. There are three trade shows which we go to.

There's inside sales where they directly call up potential customers and pitch to them. It's a combination of going through these apps like LinkedIn and Lusha and others.

It is also general marketing strategy where we use LinkedIn, we use Twitter, we use other things for campaigns. Then there are trade shows.

Then, of course, there is word of mouth, not to forget, our existing customers spreading the word. If we have one telco, one OpCo within a group, we go to other group OpCos as well.

This is another way of doing it. For example, we had Sudani in the Sudatel Group initially.

Now we work with Chinguitel, we work with Expresso. There are three of them in the same group.

We went to them, took the reference of the first customer and used that. It's a combination of all of that.

Understood. Would you be able to share any example where you've successfully been able to displace an incumbent competitor or a peer platform?

Every contract we have won is by replacing either another vendor or an internal product, and I would say about 98% of customers have come. Maybe one or two of them have come through replacement of internal products.

The other 44 would have come through replacing a vendor, a competitor. There are no green fields.

It's all brown fields.

Understood. That's reassuring to know that.

Lastly, when you said you want to deepen relationships with your existing clients, upsell them more modules, where is the challenge over there? Why haven't we been able to move beyond that 1.3 on an average 1.3, the metric that you earlier disclosed in the presentation?

Just trying to understand where is the challenge and how are you tackling it?

Telco sales is a very slow sales process. It's a very long sales cycle.

On an average you would say about 10 to 12 months. There are cases where we have to knock on the door for two years before we get an entry.

This also, because telcos are extremely risk-averse. Replacement is something that they do only when they are absolutely certain, it takes time.

Really it is that. It is just a natural sales cycle which is taking time, and the fact that it's not that our competition is sitting doing nothing, they are also doing something.

It's a combination of all of that. It's a slow grind, it takes time, and we're working on that.

There's no specific challenge, it's just the usual sales activity and the sales cycle and all that.

Understood. Now that we have AI on our side, do you think the implementation and the sales cycle should ideally reduce?

The sales cycle will not reduce, it's got nothing to do with AI, it's the speed at which a telco takes a decision. We have no control over that.

Implementation time, yes, will reduce.

Right, it's just your corporate inertia.

Telcos are like that. There's a lot of inertia there.

There's a lot of risk-averseness there. There's a lot of bureaucracy there.

When they say we'll do it very fast, they mean they'll do it in three months. That's the way it is.

Understood. Again, thanks for sharing the details.

I'll join back the queue.

Thank you.

Hello, good evening. Thank you so much for taking my question.

Firstly, congratulations on a great set of results, sir. Sir, just wanted to understand that when you're talking about a higher product penetration and market penetration, isn't 15% growth a bit too conservative, sir?

Because even standalone CVM division has performed I think you said 25% better than last year. Sir, just wanted to get your thoughts on that, sir.

I don't want to call it standalone, I don't want that to be confused with consolidated. The CVM organic growth from last year to this year was 36%, I believe.

Sharat, am I right?

That was 36.

It was 36%, not 25. If you look at the last two, three years, we have been growing at a frantic pace.

I don't want to be committing anything more than 15% at this point in time, but you can read all the other signs and signals and track record and all that and come up with a number that you feel is appropriate.

Okay. Fair enough, sir, fair enough.

Got the point, sir. Sir, just wanted to understand in terms of competitive landscape, because as you said telcos take a lot of time for something to be finalized.

Just a two-parter. Once we are able to get into a company, then how long, how sticky is that, and what is the competitive landscape right now for us, sir?

Okay. I don't want you all to think that telcos are really bad organizations, they take time and all that.

Let me add some positive side to it. Their business is very complex.

They do have even if there are only three telcos in a country, it's a very competitive market. MNP is there, somebody can move from one telco to another telco at the drop of a hat.

It's a very competitive market for them, it's a very complex market for them. That's why they are extremely careful and risk-averse and they take time.

We need to understand that. If we were sitting there running a telco, probably we would do the same because of the nature of the business.

Now once we get in, we really stay there. In 10 years, we have not been pretty much replaced anywhere other than in one organization where the ownership changed hands and they want to bring something which they've been doing internally in the earlier thing for a long time or something like that, and there was a language issue.

They wanted everything to be in Russian and thing, not English. That's where we got replaced.

That's been it. In 10 years in one, I don't even consider that as a great number to focus on.

We don't get replaced. Now we could get replaced if we are not current, if we become obsolete, if our support levels are bad, it's actually up to us to ensure.

Really we may lose out, we may get replaced because of a political reason. That was what happened in that telco, it's a political reason.

If there is no political reason, there will never be, I believe, a technical reason for us to be replaced. We will never lose out because of technology, product capability, and stuff like that.

This is also the primary reason why we don't win some of them: political reasons. Political reasons, I don't want to be listing what the reasons are.

I'm covering a variety of things under this term, political reason, and I hope all of you understand. There are various things there.

We lose out because of political reasons, and we could get replaced because of political reasons, but not because of technical reasons.

Okay. That's really great to hear about it, sir.

Sir, just last, one bookkeeping question. Sir, what is the tax rate that we operate under?

Currently what I could look at it, it is sub-10%. Just could you help us out with that, sir?

Sharat?

Yeah. The effective tax rate for current year has been around 7 to 8%.

Effective tax rate depends on a lot of things. On a consolidated level, we have profits flowing in from our Singapore subsidiary, our UAE subsidiary as well, and which are mostly at a lower tax rate zone.

Singapore subsidiary also has some carryforward losses that we are utilizing. Further, there will be certain foreign taxes that would have got deducted while payments come in, and we get some rebates out of that depending on the global income and a ratio of that and all.

Given all that, it varies. I would say a 10% effective tax rate is something that we can work with for the current financial year and maybe a year or two.

Okay. Fair enough.

That's it from my side, sir. Thank you so much, sir.

Welcome.

Hi, sir. Good evening.

I hope I'm audible.

You are.

Yeah. Congratulations on a good set of numbers and the successful acquisitions.

Sir, just a couple of questions. Firstly, I just wanted to understand the kind of contracts we sign in terms of what sort of renewal period do we have and how do we price in our increase in prices, or do our renewals stay flat or how does it work?

If you could just put some light on it.

You're asking whether we get increased price every year or when we renew, we ask? I didn't quite get the query.

I just wanted to understand, in general, how long are the contracts.

Okay. As I stated earlier, our contracts are either three years or five years generally.

The price is fixed for that period of three years or five years. Subsequent to that, when a contract renewal happens, we would go in and try to increase the price to the extent we can.

Okay. That's when we actually

It is very subjective. There's no rule or something that we can expect.

Right. Secondly, sir, I just also wanted to understand what sort of geographic pockets are we looking into to add on some new logos or if you just have any in our mind or are we particularly tapping onto?

We are continuing to focus on Asia, Africa, and Middle East at this point, mainly because there is still a lot to be done in these geographies. We have not reached anywhere in the form of penetration or rather let's say saturation there, because if you take these three geographies, we are probably talking about some 250 to 300 telcos, something like that.

It's a very large number of telcos. There is a long way to go, and we are continuing to focus on this.

We are also looking at Latin America to some extent, but not as much as we are looking at these geographies.

Understood. Just one final question.

I just wanted to understand what is our long-term vision taking into play our CVM division and our Astel division? Are we planning to have an integrated stack where we just put in all our products at one place, or is it more of a separate offerings that will be giving to our clients or how are we planning?

The products that we have, they actually handle very different activities, so that's why we have eight separate products. Them being in two separate divisions is just only a matter of convenience.

It really means nothing. We will be selling them as separate products.

They will of course come together to sit on a platform, if need be, they're well integrated. All those things are there, but they will continue to be separate products.

Okay. Understood.

Thank you very much. All the best

for future. Thank you.

Thank you.

Subhas, just as a follow-up from the previous participant's question, how exactly if you could just quantify on the pipeline and where do you see that going in terms of conversion?

The pipeline is continuing to expand as we target more and more customers, and for two reasons. One, as we have more customers, from the same customers, we get more stuff coming in, so that'll increase the pipeline.

Then there are new potential customers adding to the pipeline, pipeline is continuing to grow. Our conversion typically is to the tune of about 30-odd percent of qualified pipeline,

okay?

Of qualified pipeline. Not the raw pipeline, of qualified pipeline.

By qualified, you mean

there needs to be an RFI There has to be an RFI or an RFP out.

Understood.

It can't be just that we went to them, they said, "Ah, we would like to have it," and that is where the discussion is at this point in time, that's not qualified. When they say, "Yes, they're interested," and they float an RFI or an RFP when they actually kick-start a process, that's when it becomes a qualified pipeline.

Understood.

Also,

I was looking to get some sense of what the revenue concentration is in terms of the top five customers or the top 10 customers, any number that you could share?

Sharat, would you have that at this point in time?

Top five customers are around 39 to 40%. Top 10 are around 60% at this point in time.

Top five was around 45% last year, which has slightly reduced. Top 10 has In the next three, four years

In the next three, four years, I would expect top 10 to be in the region of only about 20, 25%. It'll it'll keep coming down.

Okay. All right, you're looking to make the revenue more granular.

More widespread. See, as we keep on increasing more customers and each customer also grows within us, naturally these numbers keep on reducing, yeah.

Naturally, it gets diluted. All right, got it.

That's it from me. Thanks again for the opportunity.

Welcome.

Yes. Actually, this is Hansraj.

I just had a question about, by chance, the company is growing very fast and a lot of R&D spend are going on. Is there going to be any additional capital requirement actually?

No. From capital expenditures perspective, we're not heavy on that.

It's a very light model. Whatever numbers you have seen, that will kind of continue going forward as well.

It's not a large number to talk about, actually. Because

I was talking in terms of because we are spending a lot of money on AI development and features, right, and then we also

All that is being written off as well, right?

Okay.

When I say capital expenditure, I really mean only the computing infrastructure. Got it.

Okay. Next foreseeable future, two, three years, we don't have any plans to debt or equity or anything?

To what? To dilute equity to raise money for capital expenditure?

No, I'm saying in next two, three years, whether we want to acquire a company or we want to grow the company, we don't have any plans to raise any additional equity or debt, right?

No. To grow the company organically, absolutely no.

We don't need to. To acquire businesses, whether we'll do it or not, I don't know.

Right. Okay.

Okay.

Thank you, everyone, for joining the call today on behalf of the

I would like to add a couple of comments, please.

Sure, sir.

We have discussed the numbers, we have discussed the business aspects and all that, I would like to leave you all with this thought that the business is growing very well organically. Excluding the other income, because people know that most of other income comes from your forex movement, if you look at our EBITDA growth, you will see it is upwards of 80%, while the total growth has been not organic, including acquisition, has been 61%.

Whether you look at it from an organic standpoint or including acquisition, including the other income or excluding the other income, where you look at it, you will see that profit or EBITDA has grown faster than revenue. That is nonlinearity.

That nonlinearity will continue in the years to come, will only accelerate because of AI. This is a thought I would like to leave with you, and the fact that we are leveraging AI, we are using that, and we believe that that will help us to produce even better results in the year to come.

That's it from my side. Thank you.

Please go ahead from Orient.

Thank you, everyone, for joining the call today. On behalf of Pelatro Limited, we appreciate your time and participation.

For any further queries, please reach out to us at let'[email protected]. Thank you, everyone.

Thank you,

Thank you. Thanks, all.