Ladies and gentlemen, good day, and welcome to the Q2 FY 2024 earnings conference call of Happiest Minds Technologies Limited, hosted by ICICI Securities. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Sumeet Jain from ICICI Securities. Thank you, and over to you, Mr. Jain. Yeah. Thank you, operator. Good morning, ladies and gentlemen. Thanks for joining us today on Q2 FY 2024 earnings call of Happiest Minds Technologies Limited. On behalf of ICICI Securities, I would like to thank the management of Happiest Minds for giving us the opportunity to host this earnings call. Today, we have with us from Happiest Minds, Mr. Ashok Soota, Executive Chairman; Mr. Joseph Anantharaju, Executive Vice Chairman and CEO, Product Engineering Services; Mr. Venkatraman Narayanan, Managing Director and CFO; Mr. Rajiv Shah, President and CEO, Digital Business Services; Mr. Ram Mohan, President and CEO, Infra Management and Security Services; Mr. Aurobinda Nanda, President, Operations and Deputy CEO, Product Engineering Services; Mr. Sridhar Mantha, CTO; and Mr. Sunil Gujjar, Head of Investor Relations. With that, I will hand over to Sunil for safe harbor statement and retain the proceedings forwards. Thanks, and over to you, Sunil. Thank you, Sumeet. Good morning to all participants in the call. Welcome to this conference call to discuss the financial results for the second quarter ended September 30th, 2023. I'm Sunil, Head of Investor Relations. You can review our financial statements, quarterly fact sheet, and press release, which are uploaded on our website. The agenda for this call is as follows: Ashok will begin the call by sharing his perspectives on the demand, business environment and our results. Venkat, Joseph, and Rajiv, will speak about our financial performance and operational highlights, after which we'll have the floor open for Q&A. Before I hand over, let me begin with the safe harbor statement. During the call, we could make forward-looking statements. These statements consider the environment we see as of today and carry a risk in terms of uncertainty, because of which our actual results could be different. We do not undertake to update those statements periodically. Now, let me pass it on to Ashok. Thank you, Sunil. A very good morning to all the participants in the call. I'm happy to share with you that Happiest Minds has continued to deliver industry-leading performance, growing 3.6% sequentially in constant currency. On a revenue growth plus EBITDA, we were at 38.9%, which is another quarter of superior performance. Our EBITDA margin at 24.5% has been well above our guided range of 22%-24%, and this is now for the 14th quarter in a row. We crossed two significant milestones during the quarter. We completed 12 years as a company, and we completed three years as a public entity. I would congratulate all the stakeholders who have contributed to and been a part of this journey and express my gratitude for your continued support. During the quarter, we raised capital through a QIP, and I also sold a small portion of my equity at Happiest Minds. Both these events led to a small dilution of my equity interest. The latter was primarily done to fund the capital requirements of SKAN, the not-for-profit medical research entity that I started, and also to enhance the capital structure of Happiest Health. This capital infusion for these two entities should take care of their requirements, their capital requirements for the medium term. As part of my commitment, I believe to have Happiest Minds exist in perpetuity, my controlling interest in Happiest Minds will not be allowed to go below 40%. I should also clarify that my current shareholder percent of 51.3% is safely well above this threshold. While many companies in our industry are seeing a declining headcount numbers, we in the quarter have added 237 Happiest Minds to our teams, in line with our commitment to work and execute on our larger vision to be a billion-dollar enterprise in sales by FY 2031. In quarter one, we had given a revenue growth guidance of 35% without making a distinction between organic and inorganic growth. Based on an assessment of the market dynamics, we are revising this growth guidance for the year to 12% on an organic basis. Additional growth, if any, due to acquisition, will be over and above this guidance. We retain our EBITDA guidance of 22%-24%. I'm now happy to announce a major new organizational and strategic initiative for Happiest Minds. In order to avail of the transformational opportunity being presented to the entire industry, I would say and to every industry through generative AI, we are creating a new business unit called Generative AI Business Services, which will be abbreviated as GBS. This will become a new engine of growth, and it will require a lot of collaboration because the sales will take place through the entire organization and through every industry group. Accordingly, we have selected Sridhar Mantha as the President and CEO of GBS. Sridhar is a Happiest Minds stalwart since inception and the best person to lead this in view of the interactions and collaboration that are required. Sridhar will be a part. The initiative will be led further by Rajiv Shah as a member of the executive board. While we are doing this, we are also integrating our existing PES and DBS businesses into one combined business called PDES, and this will be under Joseph Anantharaju, who has led our most successful business unit up till now. There will be no change in IMSS. Therefore, we will retain our three BUs, PDES, IMSS, and now the third one will become GBS. We believe these three engines of growth will take us forward to our future goals. I do want to emphasize again, though, that since it will take time to build out the whole organization in GBS, there will be no meaningful revenue until the beginning of the next financial year. And accordingly, we will only start reporting their numbers, once that new year begins as a part of a plan, that we will draw out. Let me conclude my commentary by wishing all on this call a very happy Navratri. With this, over to you, Venkat. Thank you, Ashok. A very good morning to all of you on the call. Wishing you and family a very happy Navratri. The next few minutes, I will take you all through the financial performance and certain key operational highlights for the quarter and the half year that ended September 30th. For a start, amidst all that's happening in the world, I'm very grateful for the place we are in. Coming to the financials, very happy to share that our total income for the quarter, for the first time, has crossed the $50 million mark. Total income for the half year, at the same time, has crossed the $100 million mark. Now, coming back to the quarter, operating revenues at $49 million grew sequentially by about 3.3% in dollar terms and about 10.8% year-over-year. While in constant currency, this growth was 3.6% and 11.6% respectively. Clearly, our results demonstrate our ability to do what is right for our customers and stay relevant and agile to their needs. Total income for the quarter was INR 429 crore, showing a sequential growth of 6% and 19.3% year-over-year. EBITDA margins for the quarter stands at 24.4, compared to 25.5 in the previous quarter. The 100 basis points impact was mainly due to wage hike that was rolled out to a major part of our people, effective July 1st of this year. It's important to note that we continue to beat our margin guidance of 22%-24%, in spite of above industry pay increases, payment of variable pay, and net additions in people, all areas where we have seen divergent approaches taken by other industry participants. After taking the increases as well, our EBITDA for this quarter stands at INR 105 crore, showing a sequential and year-over-year growth of 1.8% and 11.1% respectively. Profit before tax was INR 79 crore, 18.5% of revenues, and showing a growth of 0.6% sequentially. The marginal decline of 1.2% on a year-over-year basis was primarily due to the amortization of intangibles that came about from the acquisition of SMI that we did in December of last year. We are taking a quarterly hit of about INR 7.5 crore on this count. Profit after tax was INR 58 crore, which is 13.6% of revenues. Now, switching to our numbers for the half year. Like I said, our total income for the first half of the year crossed $100 million. Operating revenues grew 11.7% to $97 million, while in constant currency, the growth was 12.7%, half-year over half-year. Total income stood at INR 833 crore, which was a growth of 21%. We continue to demonstrate good cash flow conversion, with almost 98% of our EBITDA coming in as free cash flows. We ended the quarter with about INR 1,300 crore of cash and cash equivalents, which includes the INR 500 crore that we raised through QIP and the INR 35 crore that we raised through issue of... I'm grateful to all market participants for their continued support to the company. Talking about a few operational highlights, at the end of the reported period, we have 5,285 Happiest Minds, a good addition of 237 over the previous quarter, which include joiners on campus. Our utilization has improved from 74.5% in the previous quarter to 76%. Attrition levels on a trailing twelve-month basis have trended down nicely and now it's at about 14.4% compared to the 16.6% in the previous quarter, and a significant reduction from the 23.5% we saw a year back. As expected, our return on capital employed has dropped to 23% from the 33% in the previous quarter, primarily on account of the capital raise that I talked about earlier. It will be our endeavor and this is our endeavor to improve this return ratio by deploying capital into growth avenues like the new BU that we are creating. Ashok talked about in earlier, and establishing and also through acquisitions. I request all of you to go through the investor deck on our website, which has much more details on operational highlights. Finally, in line with our progressive dividend policy, the board of directors of the company have recommended an interim dividend of INR 2.50 per equity share. The record date for this payout has been fixed as October 30th. Cash outflows on this count will be about INR 38 crore. With this, I conclude my commentary, and over to you, Joseph. Thanks, Venkat. A very good morning to all the participants in the call. We have yet again delivered industry-leading growth in the second quarter, which reflects the continued confidence of our customers in our value proposition. During the reported quarter, we acquired seven new logos, with many of them being large Fortune 500 enterprises. Our continued ability to open doors across these large high-tech companies, energy conglomerates, and retailers emphasizes our value proposition. We continue to execute on our land and expand strategy, as reflected by the consistent increase in the average revenue per customer, which is at $804,000 now. We were also able to increase the number of large customers, as evidenced in an increase of our $10 million and $5 million customer cohort during the quarter. Now, I would like to share a sense of the conversations we are having with some of our customers. I'd like to share that a leading global online retailer and hyperscaler chose Happiest Minds as their engineering partner to design interactive user interfaces and to provide automation services for their IoT platform based on our IoT cloud automation and product engineering DNA. With our Mindful 4D Framework, which is explore, envision, engineer, and enhance, we have been assisting companies in their innovation and digital transformation journey. For a multi-billion dollar enterprise in the energy distribution sector, we leveraged this framework to transform their document management systems for automated retention, intelligent search, and faster retrieval, thereby improving customer experience. Our comprehensive and integrated suite of solutions are helping our customers secure their distributed IT environment 24x7. During the quarter, a leading warehouse club operator in the United States chose us to provide security assessment services on threat modeling and application security. Companies are reinventing every part of their enterprise using technologies, data, and AI to optimize operations and accelerate growth. For a large U.S.-based utilities company, we have been chosen as a key partner to provide data engineering and governance services. We're working closely with alliance partners to deliver the benefits of digital technologies, and in one of a common customer, we are helping an industrial internet platform provider to build a data platform for their farm-to-table process using our deep IoT data and AI capabilities. Speaking a little bit about the demand environment, multi-year digital transformation initiatives are being broken down into shorter, composable engagements. That's what we've seen. This creates the right kind of opportunities for a company like Happiest Minds to exhibit agility, create value faster, and gradually expand into other related areas. However, in the face of macro and geopolitical uncertainties, customers are getting more prudent and seeking more bang for their buck and taking longer to take decisions. To accommodate this shift in trends and uncertainty, we have decided to revisit the guidance, as alluded by Ashok earlier. With the creation of the Gen AI BU, I'm happy to share that we are merging PES and DBS business units into one Product and Digital Engineering Services business unit as a first step in our strategy to virtualize and better leverage synergies and capabilities as part of our $1 billion goal by 2031. I'm excited to be given the responsibility to lead this integrated business unit and draw learnings across customers, better focus on white spaces, and take our land-and-expand strategy to the next level. With this, I would like to end my commentary wishing you, all of you a happy Dussehra, and I will now hand over to my colleague, Rajiv. ... Thanks, Joseph. I'm really excited to guide this new function of GBS and work with a fantastic team led by Sridhar Mantha, President and CEO of GBS. At Happiest Minds, we are known to take technology bets well ahead of time. Take, for example, IoT, which we started building capabilities well ahead of time around 2015, before it became a mainstream area of investment for the customers. We've been working since 2018 on the earlier form of Gen AI as part of our AI focus. With a strong base of AI and analytics capabilities, the dedicated focus to Gen AI will open up significant opportunities for Happiest Minds. Over the next few months, we will define processes and timelines to ensure that all of our 5,000+ Happiest Minds get exposed to the practical application of Gen AI in their line of work. The charter includes training on Gen AI and develop teams to engineer business solutions. An outreach to our existing customers to showcase our prowess in the space. We're already working with 20+ customers in the Gen AI area. We want to strengthen and forge new partnerships in the alliance ecosystem, including working with Microsoft, OpenAI, Google, AWS, et cetera, and other open source platforms as well. A broader go-to-market strategy to the addressable market with our value proposition. Start tracking the financial parameters of the GBS going forward, and we'll be starting, we'll be announcing them for the next financial year, as highlighted by Ashok. To conclude, we foresee that generative AI can be a significant revenue source for us in the years ahead, and help us reach our vision of becoming a billion-dollar enterprise by 2031. With this, I end my commentary, and we can now open up the floor for Q&A. Thank you very much, sir. We will now begin the question and answer session. Anyone who wishes to ask questions may please press star and one on their touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We'll take the first question from the line of Ashish Dash from Mirae Asset Capital. Please go ahead. Hi, good morning. Thank you for the opportunity. So I... My question is on the guidance. So you have made a cut in organic revenue growth guidance. I wanted to know what happened during the quarter so that you cut this guidance sharply, so from 25% to 12%. And also you mentioned last quarter that there is a recovery in the demand. You are expecting a recovery in demand in H2. What is your view on that right now? Venky, shall I just address the point on overall on the guidance? And then I guess, really, all the business leaders can talk about what they see about demand vis-a-vis any other statements we may have made. And so you're right in one sense, that we've never differentiated in the past from between organic and inorganic growth. We were certainly expecting, even as we began the year, to get almost a whole year of a very large acquisition getting reflected in our results. And therefore, the numbers that we had projected were really not out of line to the extent that this particular guidance will indicate. On the other hand, we also know that getting an acquisition through is sometimes a bit of a uncertainty. You really don't know whether the deal will go through or not. This particular deal we are talking about actually has not gone off the table even now, and yet we don't expect even one... Assuming we even close it this year, we don't think we'll get any revenue out of that. So that is the major dramatic increase that I think has led to the difference in this guidance. Overall, there's no question that the markets have had declines. You see this in the results of all the entities who have been declaring their results. In that respect, I'd say our result continues to be, as we said, an industry-leading performance. Some of the issues on the, in terms of giving color to this as well as the demand outlook, I think, my colleagues will take up for you, and I think it's really best if, each of the three business units, gives you the response to this particular point that you have raised. I do want to add that we do need, see a need for giving a further thrust to growth, and that is one of the reasons why we have created, this Gen AI, business unit. It's a, it's a major change. We've, we believe nobody's taken a change of this sort towards addressing this opportunity. It won't realize results overnight, but we believe in the long run, it will certainly play a very, not only long, medium or long run, it'll play a very important role in terms of taking us on to our declared vision of achieving $1 billion by 2031. So with this, let me pass this over to Joseph, Ram, and lastly, Rajiv, because he can then also talk about the new business area. Thank you, Ashok. And before I, you know, talk about the overall demand environment, I just want to, you know, sort of give a little bit of context on Q3. I think all of us have to be, cognizant that Q3 has a lower number of working days, which is around, three days lesser than the other quarters because of Dussehra, Diwali, and, Christmas holidays, and we're trying to work our way through that. So I just want to put that as a, context. Now, if you look at the broader, demand environment, I, you know, I, I, I see, customers having enough, needs and initiatives that they need to get done to, you know, to, to digitize their, processes, their offerings, and the way they interact with customers. So that's, you know, at a high level, and I think the demand is there. What we also are seeing is that, just given some of the macroeconomic, I would say a little bit of uncertainty, but more importantly, you know, at repeated intervals, some geopolitical developments. There's also a little bit of that, you know, let's take a look at what's gonna, you know, what's gonna happen. And, instead of having large initiatives that they would typically have started, they're looking at doing things in smaller, multiple smaller packages. And, you know, to this, as I mentioned earlier, works out to Happiest Minds' advantage because, you know, we are not looking for $20 million, $100 million-dollar kind of engagements. We're looking at, you know, engagements where you can go and work closely with the customer, validate some of your assumptions, doing POCs, pilots, and then take it to implementation. And while it's elongates the sales cycle a little bit, it actually works to our advantage, of a company that's more agile, that's nimble and more of a partner than a vendor. And that's what we are seeing in terms of demand. Uh, Ram? Yeah, this is Ram. As Joseph mentioned, there will be, you know, holiday season and, you know, lesser number of working days in quarter three. But that is also a period where a lot of budgets are going to be finalized for the subsequent year. And we believe that, you know, the beginning of the next year will be much more better, and that is something which we are seeing in the market. Apart from that, what I'm really excited is about, you know, our integration of PES and GBS business, which actually makes the IMSS to become a horizontal across all... Your land and expand strategy. And also the GBS business, which will also bring a lot of generative AI capabilities in the IMSS space as well, whether it is in terms of service-based automation or in terms of security and infra operations, where GenAI can be very easily integrated to provide better solutions for our customers. And that is what customers are also looking at. So looking ahead, with the integration of PES and GBS and also creating the GBS, I believe that there will be a much better opportunities for us to land and expand in our existing customers and go after new business. Over to you, Rajiv. Hi, this is Rajiv Shah. So, just adding to what Joseph and Ram said. Yes, there is some sort of uncertainty that continues to happen, and there is a pressure on the macroeconomic environment. So given that, I think the kind of work that we perform for our customers, and the value that we deliver, we continue to see a level of traction. They're still under continuous cost pressures. They still want to take advantage of the newer technologies, OpenAI, ChatGPT, generative AI, et cetera. And, with our platform of integration of, low-code data, AI, et cetera, I think we are in the right space for us to really provide, create value for our customers. At the same time, you have larger integration, opportunities as well. That is, customers are looking at optimizing their own environment, monetize their own set of investments. This, we continue to see, more and more integration opportunities. So from that perspective, I think that we, the reason we set up the GenAI unit is to really work with the customer, to really help them drive, how to set up their own organization, how to increase consumption in their own environment. At the same time, optimize their own environment to become more efficient and effective as well. So yes, there is pressure. There are, disruptions that are affecting all of us, but fortunately, there is no cancellation of contracts or no, real price pressures that we have undergone. But at the same time, the opportunities are there as well. Okay. So, one follow-up question on that. So you are saying there is no cancellations and no pricing pressure. So are we thinking that the emerging contribution would have been more than 10%, but as it got delayed, so that contribution is not coming? And, yeah, that is the reason, or do you see that also, you cut down your own, organic growth guidance to 12%? ... Just wanted to know your view. Yeah. Venkat again, I'll take it, and maybe Rajiv, you may want to add a little bit. So the first really important thing is to say that actually there was never any distinction in our guidance between organic and inorganic. So we ourselves did it internally say so much will be organic, so much will be inorganic. And largely because you've got to visualize that when a company of our size is planning even a decent-sized acquisition, let's assume it's a company with $50 million. That's going to impact us in a very significant way. Whereas if you take a multi-billion dollar company, even if they do $100 million as an acquisition, it doesn't matter, they don't need to make the distinction. They may get a $100 million account, or they may get that acquisition. Either way, it will become a part of their growth story. Whereas in our case, it's a very distinct difference. It has to make a distinct difference. And, you know, it's, it's another matter that in the previous years we managed to obtain the research guidance number, in spite of the fact that we had really very little acquisition. Negligible, I would say. Here, obviously, while we were hoping for one, it isn't that we made the distinction even this year. So to that extent, it's difficult for me to say that because we had planned to say X%, but now we've reached 12, that's a reduction. That is not the case. It was a composite total, and that is why we are giving you a non-composite total, because we know the acquisition element is not going through. Therefore, we're giving you the number reflecting the current state of the market. Venkat, do you want to add anything to it? Ashok, I'm not able to hear Ashish very clearly, so that's why I've not been able to. But if you... Were you able to hear me clearly? There is a little bit of static when you speak as well, but, I understand this is about the guidance, and Yeah, but if you've not heard it clearly, you go ahead and explain, though I believe that maybe we can ask Ashish whether he's got what he needed from my response. Sure. Sure. Look, I got your response, but just a last question from my side. Do you still pursue the acquisition plan in during QH, though it got delayed? Now you have to repeat your question, even I've not heard you clearly this time. Just say that again. There's quite a bit of static. There's static on the line, I guess. Yeah. Can you hear me? Is it better now? I can hear you yeah, very clearly now. Mr. Dash, I have a request. You know, can you use your handset, sir? It's better. Because when you use your hand, headphones, there is a lot of static on the line. Okay. Is it better now? Yeah, much better. Yes. Much better. Yeah, sure. Uh- My question is, do you still pursue the acquisition plan during Q2, though it got delayed? Yeah. So, very clearly, there's been... I mentioned that in the very beginning. We clearly had an expectation of a very large acquisition, and I also mentioned that, assume that's not done off the table. But we don't expect any. If you are considering the stage we are in now, if we've not signed, let's say, at least a letter of intent and begun due diligence, you won't get any revenue into this year. Maybe in a smaller entity, you may get a small, bit of revenue, which is why we said, additional revenues from acquisition, if any, will be above the 12%. But the larger one, if it's signed during this year, it will yield revenue only in the next year. So that's-- but it's not done off the table. That is the good news, and hopefully it will come through. Okay. Thank you so much. Thank you. A reminder to all the participants, anyone who wishes to ask questions may please press star and one. We'll take the next question from the line of Sumeet Jain from ICICI Securities. Please go ahead. Yeah, thanks for the opportunity. You know, just want to probe on your guidance. So actually, I mean, if I look at your 12% organic growth guidance for FY 2024, that does imply a CQGR of around 5%-6% for the second half of FY 2024. So I just want to understand, you know, what gives you confidence of a sharp revival in growth in second half, given the overall, weak macro environment from the discretionary spend perspective? Venkat, do you want to handle this? Hey, Venkat? Yes, I just joined again because, Oh. So did you hear the question from Sumeet? No, I didn't hear. I think I heard it. Yeah. Sumeet, please repeat it for Venkat. Yeah, yeah. So basically, I mean, I just wanted to understand your guidance of 12% organic growth in FY 2024 does imply close to 6% CQGR for second half of FY 2024, which is obviously a sharp revival of growth, what you are assuming. So just want to understand, you know, what is giving you that confidence. Is it the current order book or, you know, certain top clients increasing their spend? Just want to understand what is giving you that confidence. Yeah. Yeah. Sumeet, so the first half of the year, we have done 12.7% in constant currency. That's half year over half year. So we are hoping to continue a similar trend of growth for the next two quarters, and that's how you get the 12% for the year. So I didn't look at the CQGR, but if you look at it- Yeah. You have to continue what you're doing right now for the next two quarters. This, this is essentially coming from, you know, the repeat spend, the repeat client business that we are getting. ... the pickup in business from the new logos that we have signed up, seven logos this quarter, 13 the previous quarter and 14 the quarter before. So it's been a strong sign-up that's happened. It's been taking a little while than what you would have expected, maybe a year, year and a half back on the ramp-up. So those aspects have been considered, and most importantly, the, you know, 2 less working days in this quarter. So we, we have to really, you know, take some alternate steps on that, making a Saturday working. We're working with the project teams to make sure that we are able to make up for those lost days, because a day is close to $700,000 in revenue. So we have assumed all of those and a repeat of the first two quarters, reasonable repeat of the first two quarters, and that's how the number of 12% comes from. Sure. So in summary, that actually we're not projecting any major increase in the quarterly growth in the second half of the year. We are literally saying if we did what we've done in the first half, at least then we will achieve this number, and there's no reason to believe that, certainly that we will not be able to do that. But of course, that's still a guidance. Okay, got it. So secondly, we want to understand, you know, you guys obviously are sitting on a significant amount of cash for the QIP. So what kind of M&A candidates are you currently evaluating in terms of capabilities or industry verticals? So I start- Maybe, I think we could really get Joseph to talk about the angle of types of capabilities. And then if you, because we do know the size is a reflection of the fact that we raise cash to do a big one. But maybe, Joseph, you could talk about the types of things we think we are interested in, and it can be so many of them for that matter. Sure, sure. Yeah. So, you know, Sumeet, there are multiple angles that we are looking at when we are evaluating or even shortlisting acquisition candidates. The first one is looking at it from a domain angle, looking at where we can vertical angle, where we can get companies that would fill in wide spaces that we have from a sub-segment standpoint, right? If you take, let's say, BFSI. In BFSI, there's insurance. In insurance, you have reinsurance, car insurance, and multiple kinds of things. So we've identified a few wide spaces in terms of our sub-segments or sub-domains, where we would like to strengthen our capabilities. So that's one, you know, huge angle that we are using. The second one is, again, from a technology standpoint, there are wide spaces, you know, whether it's in, you know, some of the low-code, no-code platforms, some of the, data and AI, platforms and products that we are partnering with, where we would like to have more, skills and, you know, more customers and revenue. So that's the other one, the technology part of it. We are also looking at it from, you know, how it can get us into, some of the named accounts or large customers that we have as a, a target, you know. And if you look at the, some acquisition that we made, it led us into a customer that we had been targeting for some time, that got us into the healthcare space, where they had, where they were the largest vendors for a long period of time, and hence understood the customer, environment. So that was the other, that's the third angle that we're looking at, where it gets us into, a shortlist of customers that we want to break into, that can also map onto the first two parameters that I talked about. And the fourth, which is, you know, which, which is a good to have, is more about, does it give us, capabilities or market presence in a new area that we've not, a new duo that we've not been in? But having said all of that, I think the common parameter or criteria that we use is to ensure that whichever company that we are considering, there's a good cultural fit, so that from an integration standpoint, we don't run into challenges. Sure. And if I can add, Sumeet, I think it's equally important sometimes in an acquisition to be clear what we will not do. So one thing we are not going to go and do is to do anything which takes us away from our 100% digital position in the industry, where... or a 100% digital business. Second is we will not do something just for the size of scale. Third, though we will look at areas in AI, which is important, we are not going to look at saying, "Hey, the latest area is now GenAI, let's go and acquire that capability." We believe we will build that capability. We're going to build an organization, and we are already doing that to build that capability. It will be wrong to go out and try and leverage on what others are doing. This has to be done very closely linked to the nature of our business and add to each one of our industry groups, so that's something we will build ourselves. Within that, you can activate the areas that Joseph said we will do. I got it. That's helpful. And just last question, maybe for Ram. I can see your infra management and security services business line has been now flat for last six quarters. So can you explain the reasons for the weakness, and when can you see the ramp-up happening in that service line? ... Yeah, actually, what had happened was one of our large customers had some difficulty in their business, which reduced some of the revenues for us. But on the other hand, we have been growing and making up for all those revenue reduction which happened, so that's the reason why you are seeing flat. And as I told you before, we are seeing a possible growth in this particular account as well in the future. So we are hopeful that, you know, we will be able to continue our growth starting, you know, quarter four of this year. We are also seeing an increased demand in the security area, which also we believe that we will be in a position to make up for all these issues which we had with respect to growth starting quarter four of next year. This year, sorry. It's still a very valid observation, and, I'm sure now Ram is coming into it from a period of confidence, because it has been a stress, the fact that we've had this well-observed statement of yours, that, yes, there's been a softness for several quarters in a row. But it takes time sometimes to revive from that when you've had a setback for no real reason. It's a reflection of the customer's own business. But that business is a steady, robust business and is now beginning to get back into, giving us the sort of business that we were used to getting from them. Plus, of course, exploring many new opportunities, which have taken time to build up. Would it be right to say, Ram, that we've signed a few contracts which we hope will grow? Because it takes time for an account to grow, and it's those new accounts which will then make up for, providing growth, even while the accounts which went down still takes a quarter or two to revive. Yeah. The new deals which we have signed up, though we have started small, there is a tendency to grow these accounts because the services have been good. And also, our customers are seeing the growth happening in their segments as well. So the new deals which we have closed in the last, you know, couple of weeks, we believe that that is going to grow. In the next couple of quarters, it will start seeing growth. And that is the reason we are confident that, you know, we will be able to grow as usual in the past starting quarter four of this year. Got it. That's helpful. Thanks for taking my questions. I will come back in the queue. Thank you. Before we take the next question, a request to all the participants to please pick up your handset while asking a question. This is required to ensure optimum audio quality on the call. Thank you. We'll take the next question from the line of Dipesh from Emkay Global. Please go ahead. Yeah, thanks for the opportunity. Just one clarification: SMI acquisition, we consider it as part of organic revenue growth guidance or it would be additional? Because last year it added for about a quarter. I just want to get that clarity. And second thing is about the M&A. We are pursuing M&A for some time, no major progress so far. So what explains in terms of, whether the valuation mismatch is driving some kind of delay in closure, or in terms of the, targets are becoming difficult, considering their performance might have suffered, considering overall macro uncertainty. If you can provide some reason which explains, delay in, some of the deal closure. Thanks. So, I just... Venkat Joseph, both of you could respond to that. Yeah. So, we closed SMI last quarter and last quarter of last year, adding in about $2 million-$2.5 million, $2.4 million into revenues. Part of that has been taken into the organic growth, which is how we have planned. And if you look at it, technically also, it is organic because they came in with three good accounts, and we have been growing on the base of those accounts in this year. With respect to the M&A delay, Joseph? Yeah. So, you know, what I would say, Dipesh, is that, you know, we've almost on a weekly or biweekly basis, we've been in conversations with customers. And, where, you know, where, there have been two, three reasons why we've not been able to get a closure. One is, I think some of the companies that we spoke to, we didn't feel that there was a cultural fit out there, and we did see risk in integration, and therefore, we didn't move forward. The other reason why we were not able to close is that some of these companies also had PE as private equity funds that were pursuing them, and they tend to be much more aggressive than you know than we would be in terms of valuation and our comfort. And the third is we also saw that there were some differences in the deal structure in terms of you know what is the upfront and the earnings component. And so these are some of the reasons. But having said that, ... You know, we did hope that the current market conditions would get some of the expectations from acquisition candidates to a manageable level. And by and large, we've still not seen that. But we continue to plow away, and as I said, you know, we're in conversation almost on a bi-weekly basis with acquisition candidates. And, you know, we are, you know, the Ashok and the board has made it clear that we need to really deliver results out here, and so Venkat and I, and the rest of the executive board are seized of this matter, and it's something that we are working hard on. Sure. Well, I'll add just one thing, which may be a bit of a consolation for ourselves. You know, if you see the way valuations have gone in the industry, as reflected not only by the deals, but by the market cap of the companies who have got, you know, in the industry, and you can see that these valuations have declined enormously. So if we had bought something two years ago, we would have been left with an asset which is reduced maybe 40%-50% in its own value, which is what's happened to the entire industry for the better. Now, so that's a consolation. This may just be the right time. There's also another angle, and this is a psychology of the person who's come up for acquisition. That person also says: "Look, I could have got so much more two years ago. Now, why am I going to settle for less?" And there's a little resistance then to accept what is, we believe is being a realistic valuation offer. So it is an exercise, but we are learning, and there's no question that sooner or later we'll strike that one big deal. And these things, in a sense, it's more important to get the right one than it is to say, "Hey, okay, sure, we, we didn't get that growth in the previous year, but it doesn't matter." It's more important that we get the right deal when we do the deal. And again, as Joseph said, we are clearly very much focused on that task right now. Mr. Dipesh, any further questions? No, thanks. Thank you. We'll take the next question from the line of Gauri Mishra from Narotam Sekhsaria Family Office. Please go ahead. Hello, am I audible? Yes, ma'am. Please proceed. Yeah. Good morning, team. Actually, all my questions have been answered while answering Ashish, Dipesh and Sumita. So I kind of don't have any more questions. Okay, thank you. Thank you. We'll take the next question from the line of Anand Sudani from Sudani Securities. Please go ahead. Hello? Yes, sir. Hello. Please proceed. Yeah, good morning. Hello. I'm Anand Sudani. Yes. From Sudani Securities. I'm a Securities. I'm a retail shareholder of your company. Seeing the results of last, like, five quarters, and it's always coming flat on flat. So, in the expenses column, we are seeing the finance costs every quarter, 1,000, more than $1,000 of finance cost. So can you elaborate on what does the finance cost includes? I mean, is the, is it the pledge, the shares which have been pledged by the company? So does that add to the finance cost? I'm not sure. Are you talking about the revenue being flat, or are you talking about- Yes. - the share price being flat? No, no. Profit, profit. That is flat, right? Quarter after quarter there's no growth. There's no growth. The revenues are, the revenues are improving, but because the finance costs, I mean, the, and the expenses go, are going every quarter that is coming through flat, right? There are some statements you made which I'm not sure what bearing it has to your question and whether the pledge on the shares is relevant. I'll just give you the absolute data. The pledge is very visible. The pledge is on a very good call. By funding a not-for-profit research entity, which is, I'm putting a lot of money, and that entity is going to be a showcase for the whole country. So it's a very valuable, entity being created. There's no speculative, process here. My shareholding still remains at 51.3%, versus the 5 that you said I would at least always keep it above 40. So I'm not sure whether that question has got any bearing on what your first part of your question, but let me get Venkat to answer that for you. Yeah. Yes, Ashok, thanks. So, Anand, like Ashok mentioned, pledges on a personal side, Ashok, as promoter, has pledged a very small portion for, Yeah. continuing to raise funds and, some interim gap financing that he's doing for the activities that he just mentioned. That has no cost on the company. So that's one. Second is if you come down to our PAT, you should not look at interest costs in isolation. You should also look at the money that it generates. See, the average cost of funds for us, interest cost, which we pay, is about 4%-5%. Our other income is generating 7.49%, because we have about 95% of our money or 99% of money is in safe fixed deposits. So the arbitrage is one. Second is, the funds that we are raising is to obviously build, you know, a sort of corpus for the acquisitions that we're talking about. This is the interim place where we are raising money through capital and through a little bit of debt, which will then be deployed on acquiring companies where the return on capital will be more than 20%. So if your cost of funds is about 7%-7.5%, you pay, you are able to generate 22%-23% o n the capital that you employ in an acquisition, or for that matter, into your existing business or to a new business, that will generate, you know, the alpha return that we talk about on the company. So that's the reason. The drop for profitability year-over-year, if I should say, is because we have taken close to INR 8-INR 9 crore of intangible write-off this year. Because we had couple of acquisitions. We follow a quite aggressive way of accounting for the split of the purchase consideration. We have acquired the company, SMI, and before that, PGS, and there is a significant part of that purchase consideration which goes and sits in our intangible. We don't put all of it in goodwill. So there is an assessment which is done. Based on that, it goes into your goodwill, sorry, intangible, and the intangible is then written off over five years. We don't carry it. So if you really look at the PAT number, you should compare it to the cash flow that we talk about. So 98% of your EBITDA going back to cash has to be seen in line with PAT as well. So there are leverages that are there in your financials. Second is, year-over-year, on the EBITDA front, we have taken a drop. No way, there's no two ways about it. Primarily because we have divergent—like I said, unlike other companies, we have met our commitment to the campus joiners. We have, we are making investments into the business in terms of, people. We are paying, giving pay increases. So if you have seen, our competitors or comparators, industry participants, other industry participants, as I like to call it, they've all deferred their pay increases. They're talking about headcount reduction. Compare that to what we are doing. We are, we are increasing our headcount. We are making increases- Sir, I don't think we should say that all have deferred pay. Some may have done and some may have been. Some of them, yeah. Sorry, yeah. Some of them have deferred the payouts. Some of them have made differences in how they do their, you know, variable pay, payout commitments and how we, we take them. So there are divergent approaches being taken with intention to, you know, manage that cost. Whereas we, keeping in line with what we see as, we've been saying, building that billion-dollar company, the platform is being built with investments being made into the company. And it was with that in mind, we had always made this guidance of 22%-24%. While we were breaching 25%-26%, it would not have taken much to say, "Hey, you know, we are upping our guidance to 25%." But we always mentioned that we would not sacrifice, future growth, growth possibilities by not making the investment that is needed today. So you have to see all of this in conjunction, and you will get that, that will give you a better fit of the, the company that we are trying to build and the organization that we are trying to build. Sir, the participant has left the queue. Okay. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Sunil Gujjar for closing comments. Over to you, sir. Yeah. Thank you for joining us today. We thank ICICI Securities for hosting this call on our behalf. We look forward to interacting with you. You can reach out to us at ir@happiestminds.com. Thank you. Thank you. Thank Thank you, sir. Thank you, members of the management. Ladies and gentlemen- Thank you. Thank you, sir. Thanks a lot. Bye-bye. Thank you. Thank you. Bye. Ladies and gentlemen, on behalf of ICICI Securities, that concludes this conference call. We thank you for joining us, and you may now disconnect your lines. Thank you.