Ladies and gentlemen, good day and welcome to L&T Technology Services Limited Q1 FY 2023 earnings conference call. As a reminder, all participant lines will be in 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 touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Pinku Pappan, Head of Investor Relations. Thank you, and over to you, sir. Thank you, Aman. Hello, everyone, and welcome to the first quarter FY 2023 earnings conference call of L&T Technology Services. I am Pinku Pappan, Head of Investor Relations. To those of you who have joined from India, thank you for participating at this late hour. Our financial results, investor release, and press release have been filed on the stock exchanges and are also available 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 20 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. Let me now introduce the leadership team present on this call. We have Amit Chadha, CEO, Abhishek, COO, and Rajeev Gupta, CFO. We will begin with Amit providing an overview of the company performance and a commentary on the outlook, followed by Rajeev, who will walk you through the financial performance. Let me now turn the call over to Amit. Thank you, Pinku, and I hope I'm audible. Ladies and gentlemen, thank you so much for joining us on the call today. I know this is at a very late hour, 8:00 P.M. India time, and that too on a Friday. We normally host these calls earlier, but because of the board meeting and then the AGM being held today, we got delayed. Thank you so much for taking the time to join. I hope all of you are healthy and safe. With that, let me start with the key highlights of our quarter one performance. In USD terms, we had a sequential revenue growth of 4.7% in constant currency, with plant engineering and industrial products leading the growth. Operational efficiencies helped us to deliver an EBIT margin of 18.3%, even as we invest for future growth and capability building. We had bookings TCV at similar levels as Q4, which was our highest ever. Our large deal engine fired well with one $150 million deal, plus four $15 million deals and two other deals that were $10+ million of TCV. Let me now provide segment-wise performance and outlook, starting with transportation. We had a good quarter with sequential growth of nearly 3% and about 5% in constant currency. This was broad-based across sub-segments of Auto, T&OH, and Aero. In Auto and T&OH, demand continues to be good in the EACV space with programs on design of high power motors and inverters, test lab development, digital cockpit, and analytics. We are extremely happy to be investing incrementally in connected solutions to take advantage of the rising spends in the connected part of the EACV space. There are few connected and electric large deals that we are pursuing in Europe at this stage. Two quarters ago, we talked about our growing pipeline of opportunities in Aero and rail. Q1 marks a second consecutive quarter of a large deal win in Aero and rail with an INR 50 million deal in the rail space, which is on the back of an INR 100 million deal that we got in the EACV space last quarter. The new deal is in the rail signaling space, where we will work on next gen connectivity-based solutions. Recently, we've also been empaneled with a European Aerospace major. To build on that relationship and other OEMs, Aero OEMs in Europe, we have opened an engineering design center in Toulouse, which will cater to new age digital requirements of Aerospace. Overall, for transportation, we see a healthy demand environment driven by the medium to long-term trends of EACV, and we expect our growth trajectory to sustain. In plant engineering, we had a strong 7.5% sequential growth quarter, broad-based across FMCG, O&G, and chemicals. We are benefiting from a secular trend across the sub-segments towards capacity expansion, plant modernization, automation using smart technologies. Our clients are investing in expanding capabilities and capacities across product lines. Now, that means new plants or and/or ramp up retrofit to existing facilities. There are also investments being made on the digital side, especially automation, analytics, and Industry 4.0. In O&G, we are seeing engineering value center opportunities for customers with plants globally, which means we could start the work from a U.S. or a Europe side and then go vice versa, leveraging India as a low-cost location for delivery. Summing up, we are positive on the outlook of plant engineering and expect the growth momentum to continue. At industrial products, we had a strong growth of 4.4% in the quarter, which was led by electrical, followed by building automation. As more new factories get opened up, it is spurring demand for equipment across machinery and electric value chain. We are seeing demand being driven by digital engineering with higher adoption of IIoT and robotics as customers build factories of the future. There is also an increasing focus on electrification and sustainability with a conscious shift to renewable energy, which leads to design and development of new types of equipment. Overall, for industrial products, we are seeing demand continue with new product development, digital connected products, and platform development. In telecom and high tech, we had good quarter in terms of deal wins. Two deals in the semi space, one where we will be expanding an R&D lab setup, and the other where we are developing chips for the Auto industry, leveraging both our VLSI design and Auto functional safety expertise. Demand is likely to be there in the specialized chip space as newer capabilities like 5G and AI get added. Our investments into 5G labs are paying off well with repeat deals from customers. In high tech, we are seeing a good pipeline of deals with some of the largest technology companies where we were empaneled recently as vendors or partners. The large deal pipeline in telecom and high tech looks promising, but we are choosing the kind of deals we pick up. We prefer new technology that will help us scale and be profitable. Our pace of growth is likely to improve as some of these large deals close over the next quarter or so. Lastly, in MedTech, we picked up pace versus last quarter with growth of 2.6% in Q1. Demand is being driven largely by spends in core and digital. There's a rising trend of using software for enhancing existing devices. For example, using medical image fusion to diagnose and detect diseases faster. We are also working with chipset companies to develop chips for image processing. To expand the addressable market, we are investing in solutions like software as a medical device that will enable us to increase mindshare with clients. We have made good inroads recently acquiring new customers where we expect growth to come in going forward. There is some tightening of budgets and caution among some of our customers in MedTech on account of inflationary cost pressures. However, we are trying to offset the softness with broad digital play and targeted large deals. Now a few highlights on digital engineering and technology. On the innovation front, our engineers continued to innovate and filed 25 patents in Q1. We've been able to maintain this pace of 25 patents for a few quarters now. In fact, patents for customers were at 20 as well in the past quarter. Our offerings are consistently rated high by industry analysts. Happy to share that ISG in their recent ranking has rated us as leaders across design and development of products, services and experience, connected and intelligent operations of discrete industry, connected and intelligent operations of process industry across U.S. and Europe. Let me now discuss the outlook. The current macro environment is more challenged compared to the previous quarter, with headwinds like inflation, supply chain disruptions, rising cost of talent and capital. We had sensed some of this when we spoke to you last quarter. While we do see signs of caution emerge in some pockets like new age startups and newer business lines of clients, broadly wherever there is a paying end client, our customers are proceeding with their transformational programs, with digital being an area of priority and spend. We believe our six-part focus and capability investments are aligned with the multi-year strategic spend across the ER&D globally and will help us drive further growth. I am happy to share that the results we have taken towards greater employee connect and engagement yielded results. LTTS has been recognized as a great place to work in India for its employer-friendly best practices, and a testament to our standing as a preferred company for passionate engineers. Attrition likely indicated previously has risen, but we are seeing signs of it stabilizing, and we are working inclusively across our employee base. Finally, we reaffirm our FY 2023 guidance of 13.5%-15.5% in U.S. dollar terms. The current volatility in Q1 has impacted our reported revenue in Q1 and would have an impact on the full year. On a constant currency basis, our revenue guidance translates to 14.5%-16.5% using Q4 currency rates as a baseline. With that said, I will be around for questions. I wish you well, good health, and I hand over to my colleague, Rajeev now to provide further commentary. Thanks, Amit. Good evening to all of you. I hope you're keeping safe and healthy. I'm pleased to share our Q1 FY 2023 performance. It has been another quarter of good results with revenue growth and operational execution. Now let me walk you through Q1 FY 2023 financials, starting with the P&L. Our revenue for the quarter was INR 1,874 crore, a growth of 6.7% on sequential basis. Our double-digit year-on-year growth trajectory continues with Q1 revenue up 23.4% on YoY basis. The EBIT margin is at 18.3% compared to 18.6% in Q4 FY 2022, continues to be above our 18% aspiration level. During the quarter, we had gains from currency depreciation, which were offset by higher employee benefit costs. Moving to below EBIT, other income was at INR 34 crores, slightly higher on sequential basis due to higher income from investments. Effective tax rate for Q1 was 27.1% compared to our target range of 26.5%-27%. Net income for the quarter stood at INR 274 crores, which is 14.6% of revenue, up 4.7% on sequential basis and 26.8% on YoY basis, driven primarily by revenue growth and operational execution. Moving to balance sheet, let me highlight the key line items. DSO improved to 80 days at the end of quarter one FY 2023 compared to 87 days in the previous quarter. While unbilled revenues came at 22 days in Q1 compared to 15 days in quarter four. The combined DSO, including unbilled, remained flat from previous quarter. Our target range for combined DSO is less than 95 days. Now let me talk about cash flows. Our free cash flow was INR 91 crore, 33% of net income. This will improve as quarters go by. Our cash and investments rose to INR 2,241 crore end of Q1 FY 2023. Moving to revenue metrics. On a sequential basis, dollar revenue growth was 3.2% in reported terms and 4.7% on constant currency basis, mainly led by plant engineering, industrial products and transportation segments. The segmental margin performance improved in three out of five segments on a sequential basis. Now commenting on operational metrics. The on-site offshore mix shifted towards offshore. Offshore percentage now stands at 56.2%. We expect this to be around 57%-58% range going forward. The T&M revenue mix increased to 73.1% in Q1, reflects the wins in digital and leading edge space. Client profile, which indicates number of $1 million-plus accounts, shows a sequential improvement in $20 million, $10 million, $5 million and $1 million-plus range. The client profile numbers have seen an improvement over the past few quarters and this trend will continue in the coming quarters. Client contribution to revenue, all three categories, top five, top ten and top twenty, showed a slight decline compared to Q4. This is as some of our next twenty customers have been growing at a faster clip, which is also visible in the improvement in our $10+ million customers. Headcount increased sequentially by 572 employees while attrition moved up to 23.2%. We continue to invest in talent for future growth and believe the attrition trend will likely soften in the coming quarters as we take various employee engagement measures. Realized rupee for Q1 was 78.2 to the U.S. dollar, a depreciation of over 3% compared to Q4. Before I conclude, let me give some visibility on EBIT margin trajectory going forward. In Q2, we will have headwinds from wage hikes that are effective July 2022, which we will try to offset through a combination of growth and operational efficiencies. As indicated in the prior quarter, our aspiration is to maintain EBIT margin at 18% levels in the medium term with levers such as growth, better quality of revenue and operational efficiency gains. I thank all the investors and analysts for their continued patronage. With that, I now hand it over to the moderator for Q&A session. Thank you very much. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue you may press star and two. Participants are requested to use handsets for asking a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your question to two per participant. We will wait for a moment while the question queue assembles. The first question is in the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead. Thanks. Hi, Amit. Good evening. You know, first question was on the growth side. You know, it was good to see that you are regularly now winning $50 million-$100 million deals on a standalone basis. You also mentioned that the deal booking in Q1, you know, like Q4, was your highest ever. I'm just trying to put that in context. You know, can you share your views on the segmental impact, which is baked into your guidance, you know, from the macro weakness which you are seeing. You mentioned medical devices, but, you know, given that the large deals are coming in, you know, how do you see the impact of, you know, client spending slowdown, deal flow into different verticals? Mukul, hi. Thank you so much. Mukul, first of all, we do believe that our guidance that we've provided, and if I take the constant currency bit of 14.5%-16.5%, that takes into account the wins that we've had, not just in the current quarter. It takes time for stuff to start, but what we've been having in the last two, three quarters, right? As a trend, what we've seen is that deals in transportation, plant and industrial are there that we've been winning consistently. High tech, we've seen deals in specific areas while medical has been slightly smaller ticket sizes, if I may, right? That is not to say we don't want incremental revenue, we only want exponential revenue. I'm happy to take incremental because every client and segment is different. Where we are seeing, and I did mention it in my commentary, Mukul, is that, you know, there are areas where there's no paying customer for a project, right? Six months ago, everybody was saying even if there's no paying customer, they will come. Le t's go ahead and do the product development or deployment, et cetera. I have seen in the last quarter. That's why when we gave you guidance at the end of quarter four, we had baked some of that in because we were starting to see customers telling us that customers will buy. Like, one CFO turned around and said, "My customers will buy. They may just trade down to a lower version of the same device", right? In another case, a client came back and said that, "I am doing a rationalization of what skills do I have in-house to what I will give you externally, and maybe I may have over-hired in a certain area, so therefore I will look at you to help me in ABC space." There are clients coming back. The good thing I'm seeing is clients coming back and seeing you are an extension of my space, so you are investing in a 5G lab, you are investing in a sensor lab, you are investing in a device test lab. I will not do it. I will leverage your space. I do see that as a positive more than a negative. I hope I've answered your question. Right. Also, sorry, just to clarify, you know, except for medical devices, there is no clear-cut, trend which is developing till now, you know, in terms of impact. You know, second part, obviously, have you already started seeing, the clients kind of looking at, you know, cost rationalization through giving more work to LTTS? Yeah. In some areas, we are seeing people leverage us for speed to market, right? There are clear customers coming to us with cost to market as well, right? Those inquiries for deal closures are happening. We do see, like I said, and then you reconfirmed, medical and certain pockets of telecom high tech, where we do see a little bit of a pause. Like I said, profitable paying customer, those projects are going forward, those areas are going forward. In fact, some of our large deals that we've had. There are some deals that we are shaping up in telecom, which basically are going to be worked on with the fact that we'll be able to do it in our India centers cheaper, faster, better, faster. Thank you. The next question is from the line of Vibhor Singhal from PhillipCapital. Please go ahead. Yeah. Hi, good evening, sir. Thanks for taking my question, and congrats on a great performance in our current rather gloomy environment. Amit, I just wanted to rather ask you basically one broader level question. Given that you've been in this industry for such a long period of time, and I'm sure you've seen ups and downs in the industry from the client side and everything. Just wanted to basically pick your brains on the fact that typically when we I mean, right now we're all looking at maybe a possible recession somewhere two or three quarters down the line or whenever it is. Typically, when such an economic downturn or a recession happens, how do clients tend to basically react in terms of their budget cuts, and which specific set of clients tend to basically cut more or cut first than the other ones? A wider question to that is, does this capture some of the large part of the ER&D ecosystem across the world? Does an economic downturn like this actually make these companies do less work in their captives to save costs and outsource more, or is there any trend like that that we can probably allude to? Just if you could provide on a couple of those two points. Sure. You know, there's a recent report that's come out from Zinnov. They actually talk about the fact that, as late as the report was released in May or early June, which basically said that by 2025, they said ER&D spend is about $1.6 trillion in 2021. They expect this $1.6 trillion, by conservative estimates, to go to about $2 trillion by 2025, and optimistic estimates to go to $2.3 trillion. Now, there are two parts when you really look at the report, and then I'll correlate to what I'm seeing. Sure. Legacy engineering or traditional engineering ER&D, they are saying will go from the current odd $982 billion in 2021 to potentially $995 billion-$1 trillion by 2025. Not a lot of difference. The growth will come in digital, which will go from about $650 billion to between $1 trillion-$1.3 trillion. Now, therefore, what we are seeing is. What I've seen is, right, in times like this, wherever a customer can see. See, here are the positives, right? In spite of recessionary talks, et cetera, right? People are still going on vacations. Airports are full, jam-packed. Hotels are not available. Staff is less, people are more, A. B, staffing challenges and pressures will not go away, and therefore people are turning to automation. Third, people will pay for the experience at this point of time. Even in a business hotel, they want to be able to check in fast and check out fast, and therefore there will be a digital system that will be put in place. Truck rolls are becoming expensive. Nobody wants to sit in a truck and go, attend to, you know, maintenance issues. There is definite spend that people have to do if they want to stay relevant in predictive maintenance and reactive maintenance, et cetera, by automating more. Automation spends, digital spends are there and will continue to expand. The one thing that is definitely happening is clients are turning around and saying, "So when is payback? Is payback in 12 months? Is it 24 months? Is it 36 months? There is definite conversations that are happening. Second, I had shared this when you won the INR 100 million deal as well with you. Larger deals take a little bit longer, right? Nobody is flying in to write a check and leave. That behavior has not changed. The area where I have seen people coming back and saying, "Let's hold off and discuss," is where they don't have a paying customer. There's a new product launch. They don't know who the customer is for sure. Their payback period is seven years, their payback period is eight years. They are discussing it, right? At the same time, oil and gas and CPG is spending like there's no tomorrow, right? That is a positive that we are seeing. I do not want to paint a picture that it's gonna be as bad as COVID-19. That is impossible. That is a black swan moment in my view. What we are seeing is specific pockets. People are asking the question. We are having to confirm that this still makes sense, still possible for their consumers. That's what we are doing right now. That's where we see the market heading as we move forward. On our own terms as well, we are continuously working on improving utilization, et cetera, that we are doing, and reskilling, et cetera. Got it. On the captive front, if it is a front that I mean, is there a trend generally in recessionary times that clients tend to outsource more and give less work to their own captives or nothing like that? Again, it is different for different segments. See, I'll tell you one thing I am seeing. I am not seeing segmental problems. I am seeing specific company issues. There could be a client that has been in a problem because they were depending on a product line that's gone away, so they are in a problem. That I'm seeing. Overall segment standpoint, I still see ER&D cautiously optimistic, if I may. Thank you. The next question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. Good evening. I have two questions. The first is, you had mentioned that you're seeing some challenges or caution in newer business lines and clients and startups. If you think about the business, is this a significant proportion of the overall business, as a percentage? No, it is not. Please read my comments more as that. I was providing a generic commentary that see when there's a startup, again, like I just said, you know, number of payback time, et cetera, is a challenge. If I may say it in another way, the era of free money is over, right? You have a paying customer, I have money for you. You don't have a paying customer or you have an idea, please wait in line. That's broadly what we are seeing. Okay. In that same context, let's assume broadly global growth does slow down quite a bit. Then you contrast that with a shock kind of scenario that we have seen during COVID or GFC. If growth does slow down and there's no shock, then how would you think about growth? Do you think that's more beneficial versus a shock relatively? See, it's all segmental if you look at it. It varies, right? It depends. Even if growth slows down, even if oil prices come down to $80 a barrel, I do believe that oil and gas, CPG will continue to spend. They have longer cycle times, payback periods, et cetera. They will continue to spend. Chemicals will continue to refresh their businesses. A, B, people are looking at alternative energy very seriously, right? So anything to do with electric will continue to grow. Two, which has impact on Auto, IT, et cetera. That's a part of sustainability, if you may. Third, autonomous is going to grow. Whether it be autonomous robots, autonomous, you know, what do you call that, in a warehouse retrieving systems, you look at baggage handling systems, et cetera. Because a reality is that there is a labor shortage, right? So these three things plus telemedicine and governance around medical, these are areas that will grow. Aircraft traffic is back. That is not going anywhere. That will continue to grow. New design cycles will start. But there will be areas where there will be a pause, there will be a refresh, there will be a recalibration, and we are seeing that on the ground. When we had talked to you last quarter and we gave you the guidance, and we reconfirmed today, we do see those continuing on, that is there. Thank you. The next question is from the line of Sandeep Shah from Equirus. Please go ahead. Thanks for the opportunity, and congrats on a good execution. Just the first question relates to the top clients. This is the second quarter in a row where growth within top 10 clients being lower than the company average. Amit, just to relate to your comment, you are saying the issue is more client-specific rather than an industry-specific or segment-specific. Are we seeing any client-specific issue in any of our top 10 clients? Sandeep, I'd like to confirm to you that in fact more than looking at revenue from top five or top 10, right, I would request you actually to look at my client profile and compare that. Quarter one last year there was no INR 50 million account. I've got two. And this is LTM, by the way. We do not share the picture of run rate in the current quarter, but we go LTM. My run rate in the current quarter picture is a better picture than this picture on LTM, right? My 20 million plus clients have improved by one sequentially, and two year-over-year. I look at my 10+ million client, three added 10 million, four in four quarters and single quarter one. 5+ million added. I would not worry about top five just yet. I've always said we're not a quarter-on-quarter business. We are more a longer term business, medium term business. Kindly please look at it next quarter. You will see some of this refresh. I would not worry about it. I do understand where you're coming from, but I'm reconfirming to you and telling you I do not have any client situation or issues. We did have one in quarter three. We did have one significant project with a customer that we dropped in quarter four. We had told you about it at the end of quarter three, and that's done and dusted. Beyond that, we don't have any challenges. Okay. Just in this quarter, the employee cost as a percentage to revenue has gone up by 300 basis points. What was the offsetting in tailwinds which led to just a 30 basis point of a margin decline as a whole? I missed the margin walk, I got disconnected. Sorry for this if I'm repeating. Sandeep, this is Rajeev. I'll take that question. Yes, we did see the employee cost go up 300 basis points in this quarter, and that's, you know, at the back of the investing in talent that continues, right? This is a quarter where we see the full impact of the hiring that we've done in the previous quarters as well. The pressures that we've been talking around. We believe that some of this will start to yield benefit going into quarter two, and also that's an area where we think it's going to be one of the levers that will turn out to be more positive. In addition, we invest on certain accounts, right? These have been recent wins where we're building capability so that we're able to have these resources trained ahead of time so that they're able to deliver onto these new wins and accounts that we've recently won. Yeah, I just don't know what Rajeev was mentioning just now. Abhishek here. There are one or two deals that we have won in the last quarters, which needs a reasonable amount of investment before they start billing. I can't share the numbers with you. The upskilling and training that we're doing for these resources will start generating revenue from mid-July to early August. That is the other reason why we had to invest in the talent and SG&A percentage has been impacted to some degree. Also, this quarter we have, you would assume, we've not taken pressures, so our net headcount increase is more to do with laterals that we are hiring, unlike the last few quarters. That's because this is not the quarter where industry takes pressures anyway. Thank you. A reminder for participants, please press star and one if you wish to ask a question. The next question is on the line of Abhishek Shindadkar from InCred Capital. Please go ahead. Hi, sir. Thanks for the opportunity, and congrats on a good quarter. My first question is regarding your comments about challenges in telecom high tech. Can you just elaborate which pieces of telecom are you know under pressure? And also on the high tech piece, is it because of the semicon disruption, or is it you know the product companies are witnessing slower growth for them, which is driving their you know spending challenges? The second is on you know just a clarification on the guidance per se. The last quarter guidance we gave should we take that as a CC number and then assume what you gave you know which is the current guidance, which is an increase over the previous quarter? The third question is on the, again, on the employee number. Now, as per the filings on BSE, employee cost is up roughly 12.5%, while as per the presentation it is up roughly 7%. The disconnect is largely because of the subcontracting or how should we read that data? Thank you for taking my questions. Sure. We'll, Abhishek, answer it in the sequence it was said. If I look at high tech, I'll divide that up into six sub-segments. There's Consumer Electronics, there is Semiconductor, there is Telecom Operators, there is Media Entertainment, there is Telecom Infra, and there is, I want to call it Platform Companies or ISV Companies. Now, as far as Semiconductor is concerned, going well, gangbusters. No projects halts, no project pauses, design cycles intact. As far as Consumer Electronics is concerned, there is a little bit of a pause, start, pause, start because, you know, Chinese supply was not coming. People, you know, what do they design unless they're able to get the product out, et cetera. There's been a little bit of question being asked again in that C area, and not cancellations, but just delays in decision-making, et cetera. In Media Entertainment, no pauses, no stops. We are seeing continuous project after project, program after program. If I take Telecom Operators and Telecom Infra, I will lump it together, and I will say that areas where 5G has been approved, things are going forward. Where 5G has not been approved or people are trying to find paying customers, et cetera, there is questions. This is also the area where we bought Orchestra, and we seem to be doing fine and expanding and building out accounts that could be, you know, in a INR 10 million range, et cetera, in this space. Platforms is where we are seeing free money stop. You have seen the news as well as I have, and we've seen it in our projects, et cetera, that people are clearly questioning that will advertising come, and should I invest in this particular sub-product or package? Consumer Electronics and Platforms, the sub-segments, is where there are questions. If you ask the Telecom Operators, infrastructure was delayed in 5G, and we continue to see some pause, some stop, et cetera. Certain areas we are seeing 5G decisions, so therefore it's starting to pick up. That's your answer on high-tech. Again, I am not saying doom and gloom. I'm just saying there's a question asked, "Is there a paying customer? Who's paying for this in the room?" Right? That's coming up. Also, a lot of these companies had over-hired their own staff, not our work, so they are pausing to see whether they want to do it or not. Yesterday, one company came out and said, or the Gamma, one of the Gamma companies came out and said that, "I will fire 1,500 people, but I will hire in a different technology area." Technology refresh, technology reassessment is happening. That is question number one. Question three on employee cost, I think Rajeev will answer. What was the second one? Guidance. Guidance, I wanna say it unequivocally, our guidance in reported currency is at 13.5%-15.5%. If I was to take USD, not USD, currency at Q4 FY 2022, then please read our guidance as 14.5%-16.5%. I will pause. Rajeev, over to you on employee cost. You know, let me take the question on the employee cost, and I will guide you to look at the investor release. When you compare between the investor release and of course, the financials that have been shared on the BSE site, this is really on account of the ESOP costs that have been issued to the senior management. In the investor release, we classify ESOP costs under SG&A. That's the primary reason why you're seeing the difference. I hope that clarifies, Abhishek. Absolutely, sir. Thank you for taking my questions and best wishes for 2023. Thank you. The next question is from the line of Mihir Manohar from Carnelian Asset Management. Please go ahead. Yeah, hi. Thanks for giving the opportunity. I had a question. I mean, in the opening, remarks you mentioned, you know, you are having some conversations with the clients, particularly to the next year and, you know, clients are getting slightly cautious. I mean, if you could throw some more light as to, you know, what exactly are these conversations, that would be helpful. Secondly, also on the automotive side of the things, I mean, how are you seeing spends, particularly on the automotive side of the things, specifically on the EV, and self-autonomous? I mean, you know, are the global spends, still continuing or should there be caution over there? Sure. Let me give you some excerpts of conversation that has been happening with our clients. No names, but I will tell you some of the excerpts so you can get an idea. Number one, COVID-19 is there but not prominent anymore. We know it's there, but we have learned to live with it. Multiple CXOs. Second, the great resignation era looks to be easing and we are relooking at our talent mix. This is from the CXO of a high-tech customer. Third, this is from VP Engineering of a big three Auto company. The chip situation will improve throughout 2022 and hopefully stabilize in 2023. Four, this is from the CFO of a medical company, large medical company. Our customers continue to buy, but we'll start trading down. Next one is from an industrial company CEO. Product life cycle is getting shorter. Going digital is good for us. We have discovered new markets and will continue to expand leveraging digital technologies. Now this is from an Auto tier one CEO, so not an OEM, but tier one CEO. We are optimizing CapEx. Need to prioritize where we invest and where we can wait. Electric and experience will be the key differentiators for car buyers of the future. Finally, this is from a telecom infra customer CEO. Everybody needs faster, reliable networks, but we need paying customers. This is some of the verbatims, right? Lingo that we are hearing and language. I told somebody earlier today, I don't track the number of meetings our senior management does with our customers or the number of clients visiting us. I can assure you, year-over-year, that number of clients visiting us in our CXO level meetings has gone up more than 150% year-over-year. Last year people were anyway not traveling. Quarter-over-quarter we are up by about 35%-40% in terms of meetings and interactions. I want to confirm that there are interactions. I want to confirm there are conversations. I want to confirm there's ideation, idea generation, et cetera. Now in automotive, right, and again, you know, if I net summarize the whole thing, I'll say proceed with caution. Right? That's the net message I'm getting. But proceed. Surely proceed. Right? Now let me go to automotive. Automotive, there are four areas that are seeing spend areas. One is electric, and that is not fully electric, hybrid electric, et cetera, is happening. Second is autonomous and parts of autonomous. I do not believe there will be a complete highway that are only autonomous cars, and we are all reading newspapers, and I think it's a little far-fetched. Third, connected there is definitive conversations. In fact, one more thing happening is people are talking about V2X. That is, will the vehicle generate as it runs and pass back electricity back to the grid, and will that help in terms of paying for the cost of the car? The last thing we have seen definitely, which was not there two quarters ago, is people are pulling us in and talking about cybersecurity and cyberattacks on the car. There is a certain customer I have, he actually pulled us in and expanded, and these are not huge teams that you expand with. There are high caliber people that are working with one of our clients on a certain model year and model of sedans, European customer, who says that I feel that this set of sedans will get hacked and somebody will come in and create problems on the GPS system. Please come in and see what can you do to tighten it. Cybersecurity is a fourth area that is getting a lot of traction in this space. That's broadly I hope I have answered. People are talking about electric in off-highway backhoe loaders, skid steer loaders, et cetera. People are talking about electric for boats, partly electric. eVTOL we had talked about last time, that continues to happen. Sure. Yeah. Just one last extension to it. I think the aspiration that we had for $1.5 billion by FY 2025, I mean, does our confidence remain on that or would we turn out to be cautious, given the evolving situation? Just the last extension. I would like to confirm. Thank you so much for asking that. I had missed it. One, I'm reconfirming billion-dollar run rate either in Q2 or Q3 of FY 2023. Second, I'm reconfirming our aspiration to be at $1.5 billion run rate by FY 2025. Any one of those two options. Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors Private Limited. Please go ahead. Hi, sir. Thanks for the opportunity. Sir, can you give little more detail on our hiring plan and how are we finding it difficult to hire lateral talent the way which is required for our company? We continue to hire. In fact, I wanted one more point to make to Mihir, and before that I think Sandeep or Nitin had made a point. See, the six bet areas that we had taken, EACV, 5G, digital products AI, MedTech, digital manufacturing, sustainability, we are seeing continued traction in that space. In fact, on that report I talked about that has come out, that actually talks to it with the digital going up and the way we are seeing it go, we believe that these are very relevant. We are actually really fortunate that our teams, and I would compliment our engineers, our leaders that came together to create these bets. They were not bought top-down, they were bottoms-up. In fact, happy to share, a senior customer from one of our top 10 clients came to talk to a bunch of us in Chicago about two months ago, and four of the six bets that we have aligned with his bets. Our sales team turned around and said that we are so pleased that we have heard our customers. My response was, "We heard our customers, we heard you, and we built it bottom up." I did want to share that. It was a good moment for me personally, professionally, wanted to share it. Now your question was, hiring. See, our hiring continues to happen. Please remember that we took 3,000 freshers last year. We will take a similar number of freshers this year. 2,500 offers are already out. We will do a mix of laterals and freshers as we move forward. We are looking at inclusive growth, so that will happen. Abhi, would you like to add? Yeah, I just to add to that, our fresher strategy, of course, will continue. Our upskilling, reskilling strategy, on which our entire talent upgradation is built on will also continue because that is what we think is the core. The solution is not to keep hiring people from outside at the cost of people inside. We continue to invest in the people in our company in a very focused manner. In fact, I know, I mean to say it, but I will. I don't listen to Pinku often. Yesterday, ET has given us an award, the Gold Award for our global training academy, engineering academy. It's a very proud moment. Our head of global engineering has been awarded the Silver Award for the work done. I would compliment our leaders. I would compliment Abhishek for believing in it and bringing it. As he came on as CEO, that was one of the first things that he institutionalized. I do believe that this retraining, upskilling, side skilling is there to stay. I'm really truly grateful to the work that's been done in this area. Sir, I'm taking the question now on this offshoring. How big is the offshoring opportunity, the way our business keep on maturing, our delivery model capability improving? Let me take this one. See, I'm going back a few quarters, right? This is during the COVID times where, of course, the working model dramatically changed. We believe some of that model is getting reset now. With that, we believe the offshoring, you know, at least from our perspective, would be in the range of 57%-58%. We're at about 56%. I believe there's an opportunity to improve by another 200 basis points. That's at the back of the fact that a lot of large deal wins, new wins, the initial part of that project gets kick-started on shore and then moves into offshore over a periodic basis. Hence, I believe that it'll be more in the range of 57%-58% going forward for offshore. Thank you. I take the next question. That's a follow-up question from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead. Yeah, thanks for taking me again. Rajeev, just wanted a clarification. You know, you mentioned three of your verticals have seen profitability improvement. If we look at, you know, just the segmental level profitability, it's at an all-time high, but you had a meaningful increase in unallocated expenses this quarter, leading to, you know, a margin impact. Can you just help us, you know, make some sense of it? Because there was a, you know, sharp jump versus last quarter, and, you know, it is among the highest in last many years. How should we look at it going forward? Is that something which can, you know, improve, kind of give you some buffer for next quarter wage hike? Thank you so much, Mukul, for putting up this question. I should have highlighted it earlier. Really when you see that unallocable expenses and that sharp increase, I briefly mentioned, but I'd like to clarify. I mean, this is essentially the ESOP cost to the senior management, right? That, as I said, we tend to put, classify under SG&A. When you look at the segmental margin, it is under unallocable expenses. That sharp increase we can attribute to the ESOP cost specifically issued to the senior management. Right. Will this recur, or is this a one-time? This will recur. This is something that you see from Q1 onwards, and it will continue going forward as well. Thank you. The next question is from the line of Sandeep Shah from Equirus. Please go ahead. Yeah. Rajeev, just a follow-up. In terms of Q2, the wage hikes will be due, and you said it will be compensated through the growth and the operational efficiency. Are we expecting we can compensate the total headwind of wage hikes through these tailwinds? Sandeep, again, you know, appreciate the question. You know, again, it's something that we see every year, right? The wage hikes are in Q2. Now we believe as these wage hikes come into being in Q2, we will have levers like growth, quality of revenue, of course, we've seen productivity improvement, operational efficiencies and economies of scale. We will do, you know, in terms of the same counterbalancing. The fact is that, you know, there may be a possibility that not entirely gets absorbed, right? That's one to see in terms of how we see the quality of revenues panning out in Q2. Thank you. Ladies and gentlemen, that would be our last question for today. I now hand the conference back to Mr. Pinku Pappan for closing comments. Thank you, and over to you. Thank you all for joining us on the call today. We hope we were able to answer most of your questions. If you have any follow-ups, please, feel free to reach out to me. Well, with that, it's a wrap. I wish you all safe times, and, have a great day. Bye-bye. Thank you very much. Ladies and gentlemen, on behalf of L&T Technology Services Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.