Ladies and gentlemen, good day and welcome to the business update conference call of L&T Technology Services Limited. 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. Pinku Popat. Thank you and over to you, sir. Thank you, Faizan. Welcome everyone, and welcome to the LTTS conference call to discuss our acquisition of the Smart World & Communication business of L&T. I am Pinku, Head of Investor Relations and M&A. The press release and investor release relating to this acquisition has been uploaded on our website, www.ltts.com. I hope you have had a chance to go through them. This call is for 60 minutes. We will try to wrap up the management remarks in 15 minutes and then open up for Q&A. The audio recording of this call will be available on our website approximately one hour after this call ends. We will be discussing only the acquisition today. Our Q3 results are scheduled on the 19th, I would request you to hold your questions about the quarter and the demand environments till then. With that, let me introduce the leadership team present on this call. We have Amit Chadha, CEO, Abhishek, COO, Rajeev Gupta, CFO. Amit will provide an overview of SWC and talk about the growth potential we see, Rajeev will take you to the financial details. Let me now turn the call over to Amit. Sure. thank you, Pinku, and I hope I'm loud and clear. Yes, sir. Perfect. Thank you all for joining this call today at very short notice. Let me begin by wishing all of you a very happy new year. I'm happy to share that earlier today we signed an agreement to acquire Smart World & Communication business unit of L&T. We are excited about joining hands with SWC and entering a new phase of growth in the areas of next-gen communication, sustainable spaces, and cybersecurity. For us, this acquisition is a continuation of our big bets-driven growth strategy and aligns with our bets in 5G, digital products AI, and sustainability. Let me first provide you some background. SWC was started within L&T in 2016 with a mandate to leverage technology and address opportunities arising in India around smart cities and mass connectivity. SWC has surely risen to the challenge with a track record of winning and implementing several large-scale city, state, Pan-India projects for cities, utilities, government entities, leveraging disruptive technologies such as AI, cloud, and 5G. It is talent with decades of experience from marquee telecom services and OEM companies and in just 6 years crossed an annual run rate of INR 1,000 crores. They are also innovation-driven like LTTS, having built a software platform called Fusion, which is a state-of-the-art platform for data analytics. G-Edge, a green data center that can be used at the edge, which can deliver significant savings in CapEx and OpEx. The moment we believe is right for this business to be taken to the world to address the growing market across next-gen communications, sustainable spaces, and cybersecurity. With LTTS' reach globally, we've got a client base that includes six of top 10 telecom infra OEMs and 4 of top 10 telecom operators in North America and Europe. We believe that this base of marquee customers, we can take SWC capabilities globally. On the capability front, with SWC, we get a full spectrum technology stack in communications, cybersecurity, and a bigger platform that play across sustainable spaces. Together, we have the qualifications to participate in large opportunities globally that may involve design, build, rollout, and managed services across SOC, NOC, and data center rollouts. I would like to now take you through the three segments in detail. For each segment, I'll cover three broad questions: What capabilities will LTTS and Smartworld have? How are we better together? What is the market that we now can address? Starting with next-gen communication. Capability-wise, SWC has strong credentials in network design, planning, implementation, and management, including network operation centers, OSS work, data center, cloud, and private 5G. It has assisted multiple state governments in India with network operating centers and network management systems while establishing end-to-end network connectivity and public safety projects such as T-Net and Telangana Fiber Grid. LTTS, on the other hand, has been a strategic partner for OEMs for a long time with a track record of delivering device R&D for more than 100 product families. Our 5G offering and services have resulted in the company taking complete ownership of 10-plus labs in the service for customers in product R&D, 5G network assurance with over 100 5G use cases for our clients. How are we better together? We now have a full spectrum of offerings in consulting, network planning, managed services, automation, NOC, and SOC. We can also address opportunities across segments like device, RAN, 5G, edge, data center, applications, and orchestration. What is the market that we can now address? We can qualify for large global opportunities across conceptualization, network planning, architecture, proof of concept, rollout, and managed services. We will expand this in the U.S. and Europe primarily and target operators, OEM, and in partnership with our hyperscalers. In addition, we plan to address the huge private 5G network with ability to architect rollout and cloud managed networks for enterprise clients. Moving on to sustainable spaces. Capability-wise, SWC brings capabilities around public safety, smart cities, and critical infrastructure. Smart metering, along with the L&T Fusion platform and the integrated command and control center. We've implemented mega projects, safety projects in Mumbai, Hyderabad, Nagpur, where tens of thousands of devices, including cameras and network equipment, have been implemented for city-level surveillance. SWC has also architected, conceptualized, and implemented smart metering in states like Uttar Pradesh, Haryana, Delhi, in tune of six million meters. LTTS brings the smart building and experience management capability, through its agents platform that is being deployed in the world's smartest office campus in Israel with over 14,000 sensors. Together, LTTS and SmartWorld gain the ability to offer end-to-end solutions across efficient campuses, cities, utilities, mobility, public safety, and environment. We can also leverage a track record of executing mega projects in safety and solutions, traffic, waste management, water and power, with the ability to establish and operate an integrated control and command center, which differentiates us with our scale and to win global opportunities. With over 70% people living in cities by 2050, there is a need to make living sustainable. The ability for cities to govern, survey, and act is paramount. The line between smart spaces and sustainability is blurring, with more participation and action initiated by countries, as was seen during the COP27 summit. Our scope increases from buildings to utilities, hospitals, sports arenas, infrastructure, transportation, amongst others. This was an area that we were present in a very minor manner. We plan to take target markets like Middle East, where huge new city infrastructure projects are being undertaken, in addition to U.S. and Europe and Canada. LTTS' own enterprise customers, including oil and gas and CPG customers with large, ultra large plants are another opportunity for us to address. Cybersecurity, the third block. SWC brings with it full lifecycle threat management capabilities with offerings in risk management, threat monitoring, security architecture, design, DevOps and SecOps. LTTS has been offering cybersecurity services to our clients for OT cybersecurity and product cybersecurity globally. Together, the joint team can provide security operating centers or the SOCs, full lifecycle threat management, OT cybersecurity, and product security preventions. Managed services is an opportunity for us as we plan to offer SOCs as a service along with cyber advisory and consulting. In terms of market, one in three companies have experienced cyberattacks since 2019. The trend is only increasing. With growing digitalization, cybersecurity needs to be embedded in all our solutions. We plan to treat cybersecurity or cybersecure, as we call it, going forward, as a horizontal along with the digital products and AI work that we do, leverage existing relationships to expand. Our global partnerships and alliances with hyperscalers, scalers, and product companies will be key to penetrating this market. Let me provide a view on our outlook. We believe this acquisition will enhance and augment LTTS' capabilities across next-gen communications, sustainable spaces, and cybersecurity, allowing us, one, to address the ability, have the ability to address 5G in a much more meaningful manner and expand addressable market in multiple segments, operators, enterprises, and tap into potential of large future trends like sustainable spaces. Address the market from a cybersecurity standpoint and enterprise security in a much more meaningful and bigger manner with the SOC that we get. Third, it will help to take India, which has been a testbed for disruptive technologies at scale, to the world and expand our footprint in the Middle East, as well as India, APAC, US, and Europe, as multiple countries are starting to invest in smart and sustainable spaces and future. While this is early days, and we have about two months of closure of this acquisition, we have put in place an integration plan that will help us create a joint go-to-market and capture synergies as early as possible. We are excited about the future growth potential and reconfirm our aspiration to get to a $1.5 billion run rate by FY25. Let me end by wishing all of you great health. Thank you. Have a great day. I will hand over to Rajiv for the end. Thank you, Amit. Wish all the participants on the call a very happy New Year. Thank you for joining us on this call today. We are happy to start the new year on a high with the announcement of the acquisition of SWC, a unit of L&T. We believe this acquisition will open new avenues of growth in three of our big bets: 5G, digital products and AI, and sustainability. Amit gave an overview about the business and potential synergy. I would like to give you some color on the financials of the business and the plans to integrate going forward. SWC's business is broadly split into three segments. Communications, which contributes to around 75% of the revenues. Safe and smart solutions, which contributes to 24% of the revenues. The newest vertical, cybersecurity, contributes to 1% of the revenues. The EBITDA margin profile of the acquired business is in the 8%-10% range, relatively lower for two broad reasons. One, currently SWC operates in the Indian market, executing modernization projects involving design phase, build phase, and then operate and maintenance phase. This was the plan to get established in the market. Now they have started positioning themselves to more services-oriented playbook of design, operate, and manage services that has higher margin profile versus CapEx and build programs. Secondly, higher initial investments in terms of people, labs, and product development that will start to yield benefits with scale. Amit already talked about talent and innovation at SWC, evidenced by their Fusion platform and the G-Edge data center solution. Going forward, our goal is to improve EBITDA margin profile of SWC business in line with that of LTTS. With the commercial and financial diligence, we've identified levers that will enable us to achieve the margin target. First, take the capabilities of SWC to global markets where there is a good potential to win large transformational projects. A complete end-to-end offering stack, combined with strong customer relationships and track record of large implementations, will help us create differentiation in the market. Secondly, in the Indian market, focus more on the higher margin services business, which includes managed services, SOC, NOC as a service, design and consultation. Last, we also leverage the solutions and platform play of SWC to drive nonlinearity. Our success in telecom with our own Intelli-Agent product gives us confidence of the market potential. To summarize, the combination of leveraging joint capabilities in global markets, a strong differentiation to win larger deals, and an improving services share in the India business will help drive scale and improve business mix towards higher margin areas, resulting in margin improvement. Let me talk timelines. We've drawn up initial plans to integrate our offerings and be ready with a joint go-to-market of our services. The leadership teams are ready and excited to take this forward as both LTTS and SWC. The common L&T DNA gives us the confidence of a faster and smoother integration to realize synergies early enough. We are planning for closure of this transaction before March 31, 2023, subject to shareholder approval. We will provide more details as we approach Q4 FY23 closure. With that, we are reaffirming our aspiration of a $1.5 billion run rate by FY25 and a sustainable 18% EBIT margin trajectory in the medium term. Thank you for all your continued support, and wishing you a very happy new year once again. With that, moderator, we can now take the questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants on the conference, please limit your questions to two per participant. Should you have a follow-up question, we would request you to rejoin the question queue. First question is from the line of Vibhor Singhal from Nuvama Institutional Equities. Please go ahead. Hello. Hi. Hope I'm audible. Thanks for taking my question. Amit, my question was basically just couple of questions on the nature of this transaction. One is, I would assume that a large part of this revenue, if not 100% of the revenue of the SWC, would be coming from the Indian markets, the Indian geography itself. If that is the case, do you believe having company having worked with the government entities in India, and as I see that the company was formed in 2016, maybe to cater to the smart city project, Is there a case for a similar kind of work being done for private entities in markets outside India? Do you really see I mean, is there a real, like for like mapping that we can do in terms of, basically, catering those services to that set of clients that we have? Sure. Vibhor, thank you so much. I'll address the question this way, that like Raju pointed, 70%+ of this business is in the communications area. When you look at communications, the kind of work that they do around conceptualizing an entire network, right? Or if you look at the work that they do on in terms of the GH data center that they have got, or you look at the work that they have done around, you know, around private 5G rollout, et cetera, all these three put together, this is something that we can immediately take to our OEMs and our telecom customers, our operator customers. In fact, we work for six of top 10 OEMs, and we work for four of top 10 global operators, US and Europe operators. There is an immediate, it creates a full stack offering along with the NOC, right? Therefore, this immediately becomes applicable to our U.S. and European market and Japanese market customers. That's number one, right? Now, in terms of Safe and Smart, we were working with our enterprise customers around with IBM, we were working in building automation, et cetera. What this gives us is a scale of work done around safety surveillance, traffic management, waste management, smart metering, and the Fusion platform allows us to be able to give us an immediate upside in terms of going after utilities as well as going after markets in the U.S., Europe and Middle East and parts of Asia. Taking this scale advantage of the kind of work that's been done, right? Thousands of cameras managed, if you look at it, so many nodes brought together. The Fusion platform, which actually allows us to be able to do analytics on top of the feed. It does bring together that particular part. The third, on the cybersecurity, again, with the work that they have done along with the SOC that they have got, Security Operations Center, taking that to our North American and European clients is an immediate thing that we would play because we will all of a sudden have a end-to-end playbook, if I may, rather than having just product and OT. We do see a lot of applicability with work. Not only that, today, worldwide, I say this because I've, you know, been talking to a lot of our clients here based in the U.S. and in Europe and in Japan, they look up to India and they look up to Indian technology from a standpoint that the kind of work being done in India and the scale being done in India, has not been done in other places. I'm very confident that this provides an upsell. Right. If I could just maybe extend this argument a bit. I mean, we've been tracking LTTS for quite a while now, and we, like, speak very highly of the delivery capabilities that the company has. Did many of these capabilities exist already with LTTS? I mean, is this a void they are filling that we didn't have these capabilities? Specifically, I think in the communication space, 5G space, we talked a lot about what we are already offering to our existing clients. I mean, are there specific white spaces that this acquisition is filling? If yes, my question again is that, couldn't we have made an acquisition, let's say, outside India with already existing set of clients, which would have probably given us access to new clients maybe, which we didn't have, rather than trying to, basically, cross-sell the capabilities that they have, that SWC has delivered in India into clients outside India in a completely different government to private kind of setup. Number one, thank you so much. Vibohr, we did. If you go back, we did acquire Orchestra Technology in, I guess, 2020. They brought with us, with them capabilities of the network operator assurance, network assurance for operators, right? They brought that capability. When we did our assessment, what we were missing as a white space was the ability to architect, conceptualize, architect an entire network. As 5G became a bet area, we tried to organically develop it by creating the lab as a service, by doing more than 100 5G use cases for clients globally, et cetera. We did see that the ability to conceptualize, architect the network, was one thing that we were looking for. That was what Smart World brought to us that we did not have. We were also looking for a company that had done it to scale. We didn't want somebody that would have done it for you know, for a telecom operator or certain telecom operator, et cetera. Based on what we saw in the market when we did our diligence, we realized that Smart World brought that. Second, they've got key things like the GH data center, right? Which is actually a software-defined edge data center with immersion cooling technology, which is again a great asset to have to take forward. Second, when we were looking at our, you know, the business space that we were looking at, smart, we've been talking about sustainability for a long time. We looked at the COP guidelines that came out. We started seeing a lot of utilities starting to spend, right, spend revenues. A lot of people that we were seeing had a product. There were very few companies that only do services, right? From a smart sustainability standpoint. That Smart World has got. That is not there outside. We do not want to become a product company. Therefore, it was an excellent fit for us, or it is an excellent fit for us, along with the smart metering capabilities they have got, et cetera, and the Fusion platform. From a cyber standpoint, of course, it provides the SOC capabilities that we did not have. Therefore it is complementary, if I may, in terms of the white spaces that we had to take it forward. Got it. Got it. Thanks for taking those questions. If I could just maybe get a couple of data points. What% of revenue would be in India and outside India? I'm assuming it is 100% India. If not, please correct me. What% of revenue is government business or private business? The third is, what would be the Sorry. Yeah, sorry. Please go on. Why don't you finish your question, please? No, go ahead. The third is, yeah, if you could provide a color on what is the receivable days of the entity that we are acquiring. Sorry, what was the third question? receivable days. The DSO days for the company that we are acquiring, SWC. Sure, sure. Number one, from a revenue standpoint, it is 100% India. There is an active pipeline for APAC and Middle East and parts of Euro-- parts of North America. I can confirm that. Number two, from a government and private, I don't think we give that data out. I'll hand over to Rajiv to handle that and the DSO part. Rajiv. Two points on this. One, these are largely government driven projects. Second, in terms of receivable days, I mean, given that these are largely government projects, generally the duration of these projects in terms of receivables is relatively high and would be in the range of 400 days plus. Like we said, you know, there is a good opportunity for us to take this business and offer it to our customers globally. As we start to change the profile of the business, we see that there is going to be improvement both in terms of receivables and other operating levers as well. Sure. You said 400 days, right? 400. Yes. Sure, sir. Okay. Thank you so much for taking my questions, wish you all the best. Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead. Yeah. Thanks for giving the opportunity, and congratulations for this acquisition. Sir, Mihir Manohar, please use the handset mode, sir. Yeah, sure. Am I audible now? Yes, sir. Yes. Yeah, sure. Yeah. Yeah, sure. Sure. Thanks for giving the opportunity. Sir, I mean, largely I wanted to understand the existing business which is there, I mean, INR 1,100 crores kind of a business, largely government-oriented business and over where, you know, we are having a 400 days plus kind of receivables. I mean, would you still continue the existing business after making the acquisition? What is the strategy of the existing business which is there, currently at SWC? My second question was on the GTM strategy. I mean, you know, how are you looking at the overall GTM strategy, to take this particular business to maybe APAC or US? Something, you know, you mentioned about you want to take it to other geographies. Largely wanted to understand what are the changes that you are making in the organization to have a meaningful GTM strategy. My third question was on the one and a half billion dollar aspiration. I mean, lastly, when I recollect, I mean, you know, this one and a half billion dollar number which was there, I mean, that was largely organic kind of a number. I mean, after addition of this 1,100 crores INR, does that aspiration still hold or would there be a upside from that? Let me address your last question first because your line was not clear for the first question. We'll address the second question. The first, he'd ask you to repeat. We, when we had told you we will get to in FY25 we will be at a $1.5 billion run rate. We did have it as organic plus inorganic, and therefore this is the inorganic part that has been added. Does that change the goalpost? It's early days, and as we go forward, if aspirations change and goals change, we'll keep you informed. We wanted to reconfirm at this stage $1.5 billion by FY25 for sure. That's number one. Number two, in terms of strategy. See, we've been seeing over the last few quarters or months that we've been working on the 6 bets that we had taken in, you know, we took almost about 21 months ago now. We were focusing and we were seeing that we did not have certain capabilities. In the communication area, clearly that was around, and 5G area, it was clearly in the areas of network architecture, SOC, NOC that we did not have. We also saw that we wanted to. There's a huge market that is coming up for global enterprises to roll out their private 5G. We also see operators spending money. We thought that the capability they bring plus our larger service, et cetera, provide us that ability to go further. When we were looking at sustainability, often we used to talk about product sustainability. If you remember, some of you recall, I've talked about water waste, water management, I've talked about, you know, utilities, et cetera. Whenever we would talk to them, we only end up going to the OEM, right? We would not able to go on to the utility itself. We were not able to go to the municipality itself, et cetera. Because we had smaller projects, we were not able to show scale to them. We believe that the scale that SmartWorld brings in terms of the kind of work that they have done and executed, is huge in terms of what we'll be able to handle, right? For just one example, the Prayagraj Festival in India recently, you know, that was concluded last year. SmartWorld managed 250 million people along with complete coverage, face recognition, including AI, et cetera. If I look at Smart Meeting, I cannot think of another company that's rolled out 6 million meters across 3 states, right? The Fusion platform brings with it a certain degree of data visualization not seen before. We believe that, again, that Azure and clients in U.S., Europe, as well as Middle East, are actively looking at such stuff. We've done some bit of polling, et cetera, and we believe that there is a good market for it. Cybersecurity is again, you know, I believe that from a strategy standpoint, it fits very well into our digital products as a bet as well as taking it forward. It's aligned with that. Now, could you repeat your first question so that we can answer it? Yeah, yeah, sure. I mean, it's a large deal we wanted to understand. You know, given the fact that this business is largely a government business, and we are having 400+ days of receivables over here, and making 8%-10% EBITDA margin, certainly, I believe that they won't be contributing much to the ROE and ROCE. You know, would we continue such business in the existing L&T structure where we have higher margins, sustainable working capital business and good capital efficiency? I mean, would we continue the existing business or we would like to, you know, scrap it out gradually, the existing business of S&T? I would request Rajiv to take that question. His key point, keep in mind, Rajiv has already said that our medium term, this is to do 18% EBIT. You've seen us operate at those levels. Our whole goal is to take this business to international markets and do higher value services business if we do it in India also. We are fairly cognizant of that. Rajiv, could you please answer the ROE, ROCE as well as the basic? We've already talked about the fact that, you know, we can, we can look at improving the profile of this business, which has been more in the nature of CapEx and build programs to more managed services programs, right? That is one. Second, to also take this business to global customers and newer geographies. To your question, the government projects will conclude over a period of time, right? That, by the very nature, we may not look to renew because those are, of course, programs that have come into play in the past few years. We see over the course of next 18-24 months, naturally, some of that business concluding. As we spoke, changing the profile of the business would start immediately post the integration, and a lot of that thinking has already gone as part of the due diligence. Hence, as you see over the next three to four quarters, the profile of the business will start to improve. The EBITDA that we've indicated, which is currently at 8%-10% over the course, will start to improve. Our aspiration of $1.5 billion in terms of run rate by FY25, like Amit said, included in organic strategy. Our aspiration of 18% sustainable EBITDA in the medium term remains to be 18%. Sorry, 18% sustainable EBIT remains to be 18%, and we'll continue to work to improve the profitability of Smart World & Communication. Sure, sure. Yeah, understood. That's it from my side. Yeah. Thank you. Thank you Thank you very much. Thank you. The next question is from the line of Bhavik Mehta from JPMorgan. Please go ahead. Thank you. I have a couple of questions. Firstly, you know, if I just do a rough math based on FY22 numbers, it looks like the EBITDA margin hit is going to be, like, 180 basis points. If you can just elaborate on, you know, how do we plan to maintain 18% EBIT for the combined L&T going forward? You know, what are the timelines you're looking at to maintain the 18% EBIT? Because my sense is that initially we will take a hit of around 180 basis points. What are the levers available to, you know, make up for that? That's one. The second question is, you know, what is the typical pricing model of this business? Because this is not a typical ER&D business. How does the pricing work over here? This company has, like, they have 700 people, but the revenue are, like, INR 10 billion. If you can just throw some light on the business model in terms, especially in terms of how the pricing work or how the contracts are structured. Thank you. let me- So, um- Let me take it. Go ahead, Amit, please. No, no, you go ahead, Rajiv. Why don't you cover the EBITDA, and then I'll cover on pricing model as you can start and we will follow up. Let me do that. I'll cover the bit part of it. Bhavik, like I said, in the opening commentary, we've done our due diligence. We've identified certain levers. As we look at over the next two months or so, we intend to close the transaction by 31st March 2023, subject to shareholders' approval. We will come back with more details in terms of some of those levers and how we will improve. I again maintain that into the medium term, aspiration is to maintain that 18% EBITDA range. We will come back with more details in quarter four of FY23 once we see more details around this business. Amit, you want to take the pricing model? The pricing, yeah, pricing largely, Bhavik, is in, is fixed price for them. We don't work on TMM. We are also looking to expand our own fixed price model as we go forward. It's in line with that. Like Rajiv mentioned, our whole goal of taking over this business is that we have high confidence, given our leadership bandwidth, given our ability to be able to improve profit margins in the past as well of our own business. If you remember, we used to be at about 14%, we did recover to 18%. Our own ability to manage our business and take it forward, and third, our ability to scale. We believe these three internationally, globally, give us the ability to have the confidence to turn this around. I would not be worried about pricing models at this stage. I do believe that this is doable, and as well as make sure that we are back at that. That's why we wanted to make sure we made that statement, that we are medium-term, we are back at the 18% EBIT levels that we've always been at. Okay. Just lastly, what was the rationale for L&T to go ahead and sell this business to LTTS and not, you know, continue within L&T? The way L&T. That question you should maybe ask L&T, but I'll attempt to answer the question in a different manner. L&T has, our chairman has gone on record, vice chairman has gone on record to say that L&T looks at LTTS as its expression of engineering and technology to the world. L&T has spent the last 6 years to sort of incubate this business, right? Building the Fusion platform, building the GS data center, building out the smart metering capabilities, building the NOC, and this invested in this business to take it forward. I think the time has come for this business to go global. At that point, we thought that LTTS being an engineering technology company and this business that we are doing, right, is largely engineering and technology, we thought it was the right fit for us to take forward. That probably is what went on in the minds then. Got it. Got it. Thanks. Thanks a lot. Thank you. Reminder to the participants, anyone who wishes to ask a question may press star and one. The next question is from the line of Akshay Ramnani from Axis Capital. Please go ahead. Hi, thanks for the opportunity. Amit, just one question. How should one think about the growth profile of this business? You mentioned that some of the government contracts may be ending over the next few quarters, over the next 18 months. We are also focusing on improving our international presence and managing this presence in India. There will be a headwind and there will be growth. Some sense on the, over the past two years, how has the business grown and how should we think about the growth profile of this business going forward? Sure. I understand your question. You're talking about the growth prospects. Let me try and answer it. Akshay, right? Yes. Okay. Yes. If you look at the growth prospects, see, we do believe that 5G spends have yet to roll out completely. They haven't completely come out. In fact, there are numbers thrown, there's public information of about that, you know, that by 2050, 5G is expected to have a global impact of $1.3 trillion, right, on the global economy. That is not just operators. It's across, you know, it's from operators, it is from healthcare providers, it is from, so overall, right? We believe that that's a, that's the kind of revenue that is expected to be rolled out. Right? Now, we believe that we are in the right space with this business to be able to take that forward. That's number one from a growth standpoint. We already got demand. I mean, we've been actively recruiting. SmartWorld has been actively recruiting to try and take this forward and creating 5G use cases. We've talked to you before about investments we have made already in setting up labs in Bangalore, setting up labs in Mysore on 5G. We announced a partnership with Mavenir, with Qualcomm that we have done. There are others that we have not taken names, but we've done work. There is a lot of work that we have done with one of the largest operators in the US actually, to connect 911 calls to rural areas in the US, right? There's a lot of this case study work that we have done along with the OT acquisition that we have done. The uptick that we saw in our OT acquisition and the work that we've been able to generate from there gives us the confidence that this is an area that's up and will see tailwinds from a spend standpoint over the next two years at least. Right? In terms of sustainable spaces, again, various numbers being thrown, but the market size seems to be about $240 billion by 2025 is what we're talking about. Across infra, buildings, utilities, mobility, public safety, et cetera. Which again, I think is the right place to do and take it forward. That we're not gonna be selling directly to them only, but we've got hyperscaler partnerships. I mean, you've seen this partnership we have with Microsoft. There are others that we've announced, not given the name, which I can't name because, you know, we don't have the permission. There are these hyperscalers we've got partnerships with that are addressing these spaces and these capabilities we bring will address it. If you look at the growth profile, I do believe it's in line with the growth profile that LTTS has shown, traditionally, without the COVID aberration that we had. You should look at the growth profile in a similar manner. Got that. Just to confirm that, despite headwinds from ramp downs from Indian government contracts, we should still expect a growth on this run rate, what they reported on 2022. Yes, absolutely. Yes. In fact, as you will see like Rajeev mentioned, and like I said in the early days, you'll see more of it coming along. You know, We are, have confidence that we will turn around, that we will take the case studies and the quals that we are getting from this business and leverage it globally. That allows us to be able to change the profile of some of the business that we are doing and the customers we are doing, so that growth continues to happen and margin improve. Got that. Just another clarification, that, this $1.5 billion, would that include another round of acquisition or are we done, what are your thoughts there? We have an active pipeline of M&A prospects that we continue to look at. I'm fairly confident we, when we made a commitment to you, if you remember last year, two years ago, September, we told you three things. $1 billion run rate by 2022. We committed to you 18% EBIT in the medium term. We committed to you $1.5 billion run rate FY25. We had a little bit of acquisition built into that $1.5 billion. The $1 billion did not have acquisition. We delivered $1 billion to you in constant currency in Q2. We delivered 18% actually the quarter after all the following that, and we've stayed in that trajectory, right? In spite of wage hikes, et cetera, et cetera, that we had to do. I'm again reconfirming the $1.5 billion at this stage is doable. Do we need another tuck-in? I don't think so. Will we get another acquisition? We'll see. The right price, if we get the right thing, right technology. We don't look at an acquisition only because of revenues. We look at an acquisition, we look at market potential, we look at, of course, top line, bottom line. We look at the tech assets because we are not an IT company. We are an engineering technology company. We look at the tech assets. We look at the ability to grow and expand and across the quals and reference case studies. We take all of that into account. If there's another one, maybe we'll do it and then maybe we'll come back and give you another number for 2025 or 2026. Story to be clear, we are right here. We continue to engage. Got that. Thanks a lot. Thank you. The next question is from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead. Thank you. My apologies, first of all, if you have already answered this, as I joined a bit late. I just want to understand, Voice is not clear. Your voice is too- Mr. Garg, please use... Could you change your handset? Is it better now? Slightly, yeah. Yeah. Sorry. I just, you know, wanted to understand, you know, from Rajeev, how should we look at the EBIT margin of, you know, of this acquisition? Because obviously there's a fair bit of capital intensity to this business, and while you have shared 8%-10% EBITDA margin, is it also possible to share the EBIT and PBT margin for this business? Mukul, let me clarify, and like you said, you may have joined a bit late. I did respond to this question earlier. We continue to look at this business over the next two months. We've identified initial levers. The levers being, one, we would see more projects in the managed services and in the OpEx space. That's one. Second, take this business globally to existing customers, to new customers, right? That should be more margin accretive. If I look at in the medium term, our aspiration remains to see this business in the 18% margin trajectory. We will come back with more details as we see this business over the next two months in our quarter four FY23 closure, we will clarify further on this. I hope, Mukul, that should address, but we will certainly come back with more details as we look at this business over the course of next two months. Rajeev. I heard, you know, this part of your answer, but sorry, I still just, if it will be possible for you, given that, you know, you've just acquired this entity, historically or maybe most recent period, if you can share, you know, what kind of, you know, below EBITDA level, what kind of numbers are? You know, we have seen historically, especially for the large project companies, profitability being very, very low, due to high depreciation, amortization or interest expenses. Also if you can share, you know, the way you have arrived at the valuation, does that also include some assets or IP, you are taking over? A majority of the valuation is, you know, the skills and the projects which they already have. Project value obviously will get impacted as you will ramp down the Indian government projects. I think interesting questions, Mukul. Certainly happy to respond to those. One, beyond EBITDA, this profile of business is not asset intensive. From a balance sheet standpoint, we are not taking over assets that will load onto the balance sheet. Second, there is not a high interest cost, right? That will also not be a burden beyond the EBITDA. Hopefully that should give you some comfort. The third part, question and maybe can you repeat that, Mukul, because you had quite a few questions. I just wanted to clarify all of those. The third question was on? The third question was on the, you know, when you look at the INR 800 crore which you have paid for this asset, you know, are you also onboarding some, you know, some, physical assets or, technology IP, in addition to, you know, the business as well as the team. So which you have valued separately. I did respond to the fact that this is not a business with high physical assets. Certainly this is a business that brings in technology. Amit earlier talked about Fusion platform, G-Edge data center solutions. These are certainly all technologies that have been baked in as part of the valuation. Again, I reiterate, this is not an asset intensive business and certainly does not bring the burden of higher interest cost. Understood. I think thanks for, you know, answering this aspect. You know, in terms of, I think obviously you guys will probably come back in the next quarter with more details. You know, in terms of, when we look at, you know, the areas where overlap was limited or the skill set which LTTS had was less, if you can just highlight a few points where, you know, it was probably something which will accelerate rapidly for you, something, an opportunity from a global aspect which you did not have right now? Uh. Sorry, Rajeev, go ahead. Yeah. No, go ahead, Amit. Go ahead. Sure. One from our telecom operators and infra space. You look at Hi-tech, right? You look at Hi-tech as telecom operators, telecom infra, which is the Nokia Solutions with the world, the Nokia Ericsson with the world. You've got Sem-con, then you've got consumer electronics, you've got ISV, and then you've got, you know, these hyper-scale with the, you know, ISV side. If I look at this particular business, this business is largely a telecom operators business, and they've operated, right? And we've operated as in OEM space. Though with the OT acquisition, we did get the 5G part with some operators. Like I said, we work for four of top 10 across U.S. and Europe in terms of operator. We work for six of 10 OEMs globally. I believe that this adds our ability to go to current clients with a much wider offering. It allows us to be able to expand into other operators in US, Europe and the Middle East, right? That is one clear area that we see provides us that upside. Second upside that we get is that we've been largely working with the building management, et cetera. I will not give names here on this call, but we work with a lot of these guys who create those equipment, so refrigeration equipment or metering equipment, et cetera. We didn't have the ability to stitch a solution and take it to, say, a city or take it to an airport or even take it to our own clients in oil and gas or chemical that have got huge large plants, and they want to, you know, let's say they want to make the whole thing smart. They want to implement a 5G network and also want to do Wi-Fi six. We didn't have those quals. We may have capabilities in parts, but to do the whole thing at this scale, we didn't have that. This brings that, and it allows us to be able to participate in some of these RFPs, et cetera, that continue to get rolled out. Third, cybersecurity has been an area that we've been keenly doing. In fact, we've talked about digital products and some of you that have been to our centers in Mysore have seen that we built out and we tried to do, you know, a lot of work there. We had some very good talent that we've got there. That coupled with the software we've got, we believe is a high-powered, high-growth story that we can take forward. Understood. you know, that's really helpful, and thanks for answering my question. Best of luck for the acquisition. Thank you. Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead. Yeah. Hi. Yeah. Hi. Thanks for giving me follow. sir, largely I wanted to understand and, you know, I understand that it is difficult at current juncture, to see as to what kind of synergies could prop up. As the background that I'm coming from is that, you know, we are paying INR 800 crores for this acquisition, that will get added to our network. Across the next 18-24 months, there are some of the programs which are getting concluded, and we will not go for renewal. You know, so with the revenue ramping down of the existing business, we are paying INR 800 crores. Just wanted to understand, I mean, the existing INR 200 crores of telecom and, I mean, $200 million of telecom and Hi-tech business, which is there, I mean, what kind of number are we looking at over the next two years? So, you know, so to understand as to what sweating of the asset will happen. Rajiv? Amit, you want to take this one? Sure. Mihir, if you look at synergy, like I already explained just now to Mukul prior, we do see growth expansion opportunity, right? We've always been a top line focused with a sustainable bottom line company. That's been our mantra, right? With that said, we do see synergies in, if I tell you from a technology standpoint, right, we do see the fact that we've done some 5G use cases, more than 100. SmartWorld has done about 100 use cases in 5G. Together, when the labs come together, right, is a great story, right? We don't need to build our own NOC. That NOC now exists in communication, exists in communication with them. We have our IBM platform and our UbiqWeise platform. We're doing technologically with the Fusion platform that Safe and Smart brings is a huge plus for us. We've got OT and product security capabilities. We've got SOC capabilities along with full lifecycle threat management. Again, A plus B, we see those synergies. With that said, given that we see synergies, I already mentioned prior that the profile of growth of this business is similar to our business, we do believe that we will be able to accelerate growth in a profitable manner as we move forward. Sure, sure. That's it from my side. Thank you very much. Thank you. Ladies and gentlemen, we'll take one last question from the line of Sameer Dosani from ICICI Prudential AMC. Please go ahead. Hi, Amit and Rajiv. Just one, actually two clarifications. I joined a bit late, but, what is the managed service part of the portion where we will be trying our, this, new acquisitions? We are trying to increase the managed services portion, right? What is the proportion now and what is the plan to take up it? You know, what is the plan or a milestone that you would be trying to get it up to? We are today, I don't know if Rajiv will give out exact data. We'll come back in quarter four and give it. I should say that the business. Again, as I said, Sameer, if you look at the business and look at it this way, that last 6 years we've been incubated by L&T and done a lot of projects, et cetera. Whatever projects we're getting over, actually are converting to managed services, right? Correct. Because you have to then manage whatever you've built, et cetera. Correct. Correct. Traditionally have been in managed services. As you go forward, you'll see a lot more content in India, in Middle East, APAC, US, Europe, in managed services in this business. That's one of the reasons why we are betting on the fact that we'll be able to turn around the margins of this. We are very confident of what we've done with our recent other acquisitions. We've done three acquisitions in the Hi-tech space, as you're aware. We did OT, we did Esencia, we did Graphene before that. All these three, if you look at it, have been over a period of time allowed us to be able to grow our top line in a sustainable manner. We believe this will do the same as well. Any ballpark number, what will be the percentage? 10%, 20%, 30%, any? I mean, just overall, just to understand. Sameer, maybe I can add to. Yeah, I can add to what, you know, Amit was sharing. Sameer, first, yes, we will come back with more details as we are looking at various aspects of this business. The part that I would want to add, right, like we said at the opening of this call, this is a business that seceded in 2016 as a unit of L&T. The first six years really has been at the back of a lot of investments in terms of technology, people, labs. Going forward, the pipeline is more representative of the managed services. I think in addition to the fact that, of course, like we said, we should be able to take this business even further, we will come back with more details and give clarity in terms of the breakdown and the profile of this business. Second. Yeah, understood. Second, what is the government part of the business that you would look to ramp down or not renew right now? What is the percentage of that revenue? We did respond to this earlier, Sameer. The current business is largely representative of the government business, and these have been projects that commenced over the last few years, and likely will continue over the course of next 18 plus months or so. lastly, I think that valuation question was not answered. I think what is the valuation basis right now, I mean, on which we have arrived at INR 800 current value? The valuation has been arrived using, clearly the platforms, the technology. We talked about Fusion. We talked about G-Edge. Of course, the people, also, various assets in terms of labs, et cetera. These are some of the things that have been factored in as part of the valuation. Correct. 18% EBIT margin would be including the amortization hit that would come, right? That would also be there in wallet. Sameer, to clarify, the current business of LTTS is operating at 18% plus EBIT levels. Correct. Hold the aspiration of a sustainable EBIT margin over a medium term. There certainly will be some impact. We will come back with those details. Clearly there is going to be a curve, and we will bring this business back over a period. Correct. Okay, thanks. That clarifies. Thank you. Thank you, Sameer. Thank you. Ladies and gentlemen, that was the last question for today. I now hand the conference over to Mr. Pinku Popat for closing comments. Thank you everyone for joining us on the call today. I know it was a long day for you, and I really hope, you know, we get to interact, in the coming days, and especially on 19th when we report our Q3 results. With that, let me say goodbye and it's a goodbye from all of us here at LTTS. Thank you. Thank you. Ladies and gentlemen, on behalf of L&T Technology Services Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.