Ladies and gentlemen, good day, and welcome to Redington Limited Q4 FY23 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. Hi. Good morning, everyone. I hope my voice is clear. Yes, sir. Thank you so much. I'm very happy that all of you could join us this morning. Along with me on the call is our Global Chief Financial Officer, S.V. Krishnan, and we've got Deepika, who is our Lead Analyst and our Lead Investor Relations Manager for the country. I'm gonna give you a bit of color on what happened in the quarter and the year, and also a bit of a commentary on how we are seeing the industry shape up and what is Redington doing to maximize the opportunities in the market. We are very pleased to report another strong quarter of sales and operating margin growth. At INR 21,893 crores, our overall global revenues for Q4 have been the highest ever, and for any quarter, growing by a strong 26% YoY. At INR 590 crores, we have registered the highest ever Q4 operating profit with a 15% growth. Our PAT obviously is down 11%, and we'll talk about that as well. For the full year, our FY23 revenue is INR 79,500+ crores, which is a growth of 27% year-on-year, and an operating profit of INR 2,261 crores. This is the highest ever revenue and operating profit, both in absolute number terms as well as in terms of growth for revenue and operating profit on a year-on-year basis. Supported by solid execution across businesses and geographies, Redington continues to gain share and secure new opportunities in the markets that we compete in. We achieved a record revenue and operating margin for the fourth quarter of the year, as our continued investment in improving our technology capabilities, building deeper partner relationships, making our breadth of offerings more comprehensive than ever before, and bringing in innovations in our business model begin to pay off. This is the highest ever quarter for revenue and second highest ever operating margin, like I said earlier. First time ever in our history that we've had 4 consecutive quarters of 25% growth every quarter. Just as an additional information, this has been the highest ever full year growth since the company started. When you compare this with what's going on in the market, you can really see the magnitude of what we are delivering right now. Redington's digital transformation has been one of the key growth catalysts as we transition from the role of a traditional distributor and aggregator towards becoming a more holistic technology solutions provider. Currently we are addressing the market demand for consumer devices and smartphones for hybrid work and learn environment as the world moves between work from home to work from office and learn from home to learn from school and colleges, from your institutions. We address the requirements of all of that. We address the requirements of SMB and enterprise technology solutions, including cloud infrastructure for servers, storage, networking and security. We are also responding to the emerging technology requirements which are fueled by growing adoption of 5G, Internet of Things, edge computing and generative AI. While tech distribution has been our core value proposition, we are focused to building competencies and capabilities to provide managed services for private and public cloud, for security and for audit, IT audit. Our initiatives ensure we are able to add more value, provide more value to the customers we serve, thereby gaining share and accelerating our growth momentum. You will see from our results that our delivery has been really broad-based. It has been broad-based across all the operating regions that we have. All the operating regions have contributed to the growth. Figures like India, Middle East and Africa, Turkey and South Asia, all of them have been pretty robust. Just so you know, while I call out all the IT products, we had a very robust growth in our solar business as well, which is becoming even more important as the world turns towards more green and more sustainable energy. You will see our investments and you'll see our engagement initiatives getting far more aggressive in the space of renewable and sustainable energy. Business dynamics during the quarter has been mixed. We know that tech demand related to work from home and learn from home has been subdued. In fact, demand from home has degrown. I'm sure you would have followed the IDC results for the global PC industry. That industry in Q1, which is JFM, which is HCL's Q4, has declined by 29%. Smartphone shipments globally have declined by about 15% YoY. In fact, if you map the PC industry and the smartphone industry, you'll see a trend, which is the size of the industry today is pretty much what it was in 2014. I think that's something which really we need to be navigating. However, because we are a broad-based company, the demand has been very robust for data center infrastructure products, servers, storage, networking, software, and security, and for cloud products too. The phenomena of back to office, data center procurement, migration of applications to cloud have been the catalyst for our growth. Hence our improved engagements with enterprises, with large markets, with SMB customers and the partners who serve these and their customers have more than made up. Hence we have grown our enterprise product category by more than 38%. We have grown cloud business by more than 61% in Q4. The same numbers portfolio, enterprise portfolio, 34% growth, cloud portfolio, 52% growth. I think those are very, very strong, and I'm glad we made a clear shift towards serving and managing more value-oriented customers. These are very strong numbers indeed. Each one of their new technologies are the ones which are leading the growth for us. Our geographies. Just to give you a bit of a color on economic situation in the geographies we operate in, our geos are largely consumption and investment-driven. Most of the GDPs for the countries we operate in continue to show a positive growth trend although the guidance for growth has been reduced, has been muted, just like in the rest of the world. Clearly, there is a negative to a stable business climate that operates in the environments geographies we are in. Governments continue to be very major spenders because it's a largely investment and consumption-driven economy. Let me also give you a bit of a readout on the financial situation across the world, which we see as continuing to be driving caution, volatile, and there are obvious headwinds. Let me call out a few of them. You would have seen that the global GDP growth rates have been called down, and as per analysts, there is a 70% chance of recession in U.S. and U.K. The global GDP growth rates have been called down from 3.6% to 2.6%-2.7%, depending upon which year is calling out those numbers. Inflation seems to be high, though it is cooling off in most parts of the world. Very high inflation regime, high commodity prices, increase in interest rates. The cost of capital has gone up significantly, and you will see this reflected in the results that we are reporting today. In fact, the borrowing rates across the world are the highest since September of 2007. All of these factors which are leading to cost escalation impact demand. They impact margins, impact on profit before tax, profit after tax. The financial regime is demanding that we stay cautious and we play it out rightly. There has been a serious currency devaluation in a lot of our operating countries: Egypt, Nigeria, Kenya, Ghana, Turkey, Sri Lanka, Bangladesh. The good thing is, a lot of these countries are oil-driven economies. Oil prices have been stable at relatively high levels, and that positively impacts a lot of countries we operate in. You will see this reflected in the buying behavior and buying patterns of these countries, and ultimately, as a corollary, it reflects in the results that we drive as well. While there continues to be a bit of a delay in networking products delivery, which impacts the large project business, shortage situation of technology products across the world has eased considerably. This will play out differently for different vendors because everybody has got a supply chain of their own. Some work better than others. By and large, the supply chain situation of technology products has eased up significantly. There are some good and some average and not so good financial indicators, and we expect these to balance out because of the nature of the geographies that we operate in. We will continue to be watchful and cautious over the next few quarters. As we project ourselves into the future, we anticipate a constrained demand environment in certain categories, like access products, and a much better demand environment in other categories like data centers, cloud services, etcetera. Therefore, we expect to sustain a reasonable revenue and margin growth from our recently implemented operating improvements amid the backdrop of all the geopolitical and financial rundowns that I gave you. Over the course of the year, we demonstrated that despite an evolving macroeconomic environment and the conditions that are there for the industry, we remain well-positioned to continue to grow our business profitably, like we demonstrated by four consecutive quarters of upwards of 25% growth. That's huge, given what the rest of our industry is going through. We do this by helping our customers and suppliers navigate an increasingly complex market. In our opinion, our strategic initiatives, the technology positions that we are making, all the investments that we've done in our business, coupled with our strong execution capability is delivering for us, and that makes us really optimistic about the future. At this point in time, let me stop and open it up for any question and answers or any comments that you may have, and I'll be more than happy to make sure between me and my team we are able to respond. Thank you very much. We 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 while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Participants, you may press star and one to ask the question. The first question is from the line of Vivek Ramakrishnan from DSP Mutual Fund. Please go ahead. Good morning. You had mentioned about the move from work from home to office and cloud. Does that in any way change the working capital requirement? Is there any business which is more working capital-intensive than the other? The second thing you also spoke about was the slowdown, which is global. In fact, in many other businesses, we've seen a rundown of inventory and, you know, that slowing down sales. Do you see that also in the tech business and how is the inventory at your customer end? Those are my only two questions. Thank you. Okay. I will give a bit of a color to that, and then I'll leave our CFO, Krishnan, to address that as well. I think the work from home has moved away to work from office a lot. A lot of offices, a lot of companies across. It's a very interesting question, Vivek, as well, because you see a trend coming up over here. A lot of companies initially had said, "We will give work from home for life." When the real world started to operate in post-COVID, those very companies have come back and said, "No, no, you gotta come to the office at least 3 of the 5 days in the week," or, you know, at least more than that. The work from home has partially shifted to work from office, and that really helps us because as we develop a company towards more enterprise, more official office kind of a commercial kind of a buying in SMB and enterprises, the work from office demand has really picked up. You would see that in our segment growth this time, the work from office business has really taken off. It has a different metric as well. When you shift to work from office, work from office is always the project-driven business. There are more lead times, so cash flow or the payment cycles are a little longer than that. That's how the relationship happens to working capital. The payment cycles start to become longer. Project business is inherently a longer cash conversion cycle business. It impacts working capital in a manner which allows or which forces working capital to go up. Let Krishnan give more comment to that, but let me also address the inventory portion. The inventory across the globe, in the last couple of quarters went up because there was a slowdown in the consumer buying, but the speed or rate at which the slowdown happened wasn't anticipated by any vendor or any company across the globe. Hence, people shipped more and inventory built up. Now, that has a negative pressure. It has a very strong context because it impacts prices, it impacts discounting, it impacts capital, working capital flow. All of that comes together. While the vendors took a call to reduce shipments and thereby reduce inventory in the channels, across the world, including the areas in which we operate in, it is still there in the channels. Inventory continues to be there. We will go through a cycle of trying to liquid inventory. The flow of the consumer buying is going to be subdued for a bit more time. We are hoping less time than what we anticipated earlier. The, the office buying has gone up, and both of those have a correlation to the working capital. Krishnan, you want to add some more color to it? Please go ahead. No, I think you have explained all the points, Rajeev. Thank you very much. That was a very detailed answer, and wish you good luck. Thanks, Vivek. Thank you. Next question is from the line of Aniruddha Joshi from ICICI Securities. Please go ahead. Thanks for the opportunity, sir. Sir, just 2 questions. Where are you seeing the growth right now? Means if you can indicate region-wise, East, West, North, South, which are the markets which are growing at a faster rate? Secondly, whether it is urban versus the tier two, tier three cities to rural markets. Is that market also growing? Third question is, last question, is there any reduction that you have seen in the users' period of a laptop per se? Means definitely mobile we can see. People are changing mobile, at least in urban markets, in a period of around 18 months. There is a drastic reduction in the users' period. Have you seen any such notice any such thing in case of laptops also? Yeah. That's it from my side. Okay. Thank you. Okay. Let me Aniruddha, right? Or Ani? Yeah, Aniruddha, sir. Yeah. Aniruddha. Okay, Aniruddha. Thanks so much for your questions, Ani. Let me give you an answer on all three of them. Since you are right, asking about growth region-wide, I'm assuming you are restricting yourself to the Indian geography. Is that right? Or should I give you a color on the whole world as Google? Yeah. That's right. Although we are Only India. Only India. Only India. Okay. See, in India, there are two ways to cut your costs. You have to cut your costs by region, and you have to cut your costs by vertical segment. Not all segments grow simultaneously at the same pace. Not all regions grow simultaneously at the same pace. Right now, what we're seeing is a very strong buying cycle which is happening in FSI. This is a financial services industry. Banks like your bank to banks like HDFC, Axis Bank, and all the government banks, also nationalized banks, are going through a very strong product refresh because the financial systems are so, so critical right now to the revival of growth across the world. By virtue of that, there is a requirement to make sure that there are adequate controls in the financial system. We are seeing a very, very strong buying happening in the FSI, the FSI industry, banking, financial services, and the insurance industry. What we saw also is a bit of a reduction. Because west is our financial capital of the country, west region becomes very important for us. The second big, strong buying that we are seeing today is happening in data, retail, and healthcare space. Those are two spaces which continue to grow very strongly. We know for sure that India has a lot of catching to do in provisioning of retail best-in-class retail experiences to all our customers and consumers. Retail continues to be a very strong buy. Healthcare, obviously, for all the right reasons, because people realize that during COVID, if you don't have a very strong healthcare system, which is tech-enabling, you can really be losing out as a country. I think, that's something which is happening there. Retail and healthcare is something which is also very strong. The last segment that has been very strong, come back is by government. Our government to citizen services need to be boosted up all the time. They need to be more made smooth and streamlined. Government is also seeing a very strong buying. Government is all the time upgrading systems like Income Tax and GST, education, local healthcare in all the states are a very strong buying that is taking place. Education is also a very strong segment. Education is... Because a lot of education buying happened during the learn from home time, we are seeing that education is right now much more steady and much more stable right now. Those are the areas in which we are seeing a lot of buying that is taking place. The differentiation between urban and tier one and tier two towns used to be very strong earlier. The buying of technology equipment became much more democratic over the last couple of years. Which means the urban tier two, tier three cities started to contribute a lot more to the buying. In the recent times, I think the SMB buying and buying from startups has really plateaued, has gone down. You're seeing the tightness in the financial market. You've seen that the off-take of credits by the startups has gone down, significantly gone down over the last couple of months. We are seeing that the startups are making much more thoughtful, much more considered decisions. Those are impacting the buying in that particular segment. Urban tier 2 and tier 3 cities are impacted similarly. They are buying much less, but they're much more stable in their buying. The reduction in usage period, which is the life cycle of equipment, is the question that you asked about the first question. Look, whenever this kind of a thing happens, whenever there is inflationary regime, whenever the cost of equipment has gone down, whenever the prices are up, there's always a bit of a slowdown in buying. That's exactly like the point I mentioned to you earlier, that the consumer buying has slowed down. Because consumers are always impacted when the prices are high. Consumers are always impacted when interest rates are high. Whether they go for leveraged buying or they go for buying from their own, from their, from the cash that they have, either way, the prices are high or the cost of capital is high, and hence they will always reduce the buying. That impact you see on the consumer market. Which means that the life cycle of products has gone up. Which means people are going to be refreshing, at lower frequency than they used to do earlier. If earlier their time was 3 years, 3 and a half years, it'll probably become 4 years, 4 and a half years. That is the way it is happening. Like I said, a lot of that has got balanced out in our portfolio, through buying by the office and the value system shift. That's the dynamic I wanted to give you. That's what the market is playing out right now. Okay. Okay. Sure, sir. This is very helpful. Many, many thanks for the detailed answer. Thank you. Yeah. Thanks so much. Thank you. Next question is from the line of Sarath Reddy from Unifi Capital. Please go ahead. Hi, team. Congratulations on very strong execution. Rajeev, your voice has been muffled since the start of the call. Krishna, sir, my first question to you is the OpEx line item sequentially has gone up by INR 70 crores. Could you explain that? Sir, last quarter you had higher provisionings. Has there been a reversal there or a write back which has led to better gross margins? If you could first explain these two elements. OpEx sequentially is an account of two count. One, as Rajeev mentioned, we are constantly making certain investments in terms of building the capabilities in the cloud and the services space, that's something that is inbuilt in that. Second, we also had certain Forex loss in one of the markets, which is also part of it. That's the reason why the OpEx has gone up in the current quarter. Your second question was with respect to inventory provision. Yes, there has been a subsequent reduction in terms of older inventory and some of the provisions have got reversed in the current quarter. Got it. The other thing, is that you have explained in earlier calls that you want to pivot to being a digital distributor. Could you quantify what% of sales today are digital-led? Will this help in reducing the OpEx line as, you know, revenues scale up? Could you quantify the investments you have made for the full year in this digital and cloud that you mentioned? Okay, let me take that question. Saritha, can you hear me clearly? Sir, your voice is still a little muffled. Is it the same for everyone? Do you want me to dial in, dial out, or are you able to actually make out what I'm saying? Sir, I think, this seems fine, Rajiv. Only thing you may have to speak slowly. I think it's otherwise clear. No problem. Okay. All right. I think Krishnan answered that question beautifully about investments that we made to your question about OpEx. In all our earlier calls, in the last few calls that we've had, we talked about pivoting our company to a much more digitally transformed organization. What it means is that our routes to everyone we deal with, whether they're vendors or they're partners or our employees, whoever it is, will be a digital-first route. That's the reason we started a digital platform. We talked to you about it in the last two calls as well. We started a digital platform that allows us to engage with our partners and customers in a very digital manner without any intervention. You'll be very happy to know that in Q4, in JFM quarter, the digital part of our revenue was more than 20% of our... or close to 25% of our overall revenue that we transacted in India of INR 9,900+ crores. Close to 25% of that was done on the digital platform. Now, think of it, in less than a year, we are transacting more than close to, you know, that high a number on the digital platform, which is very good. Second thing, I'll come to OpEx before let me give you a color on the, a bit of a thing on the cloud platform also. On the cloud platform, equally robust story on the cloud platform as well. In our cloud business, we shifted to. We created a cloud platform called CloudQuarks. In this year we are exiting our cloud platform with a revenue ARR, annual recurring revenue, of INR 269 million. That is huge for any company to come to in just a year. In less than a year, we've got to a point where our investments in cloud and digital platform are actually starting to become much more visible and stand up and be counted for themselves and they were starting to give us a very strong return in both digital and cloud platform. It really talks to you about the power and the coverage that you can get, the power of the platform that you are able to do potentially many new things which you couldn't do earlier in the platform. Our OpEx in these areas is that over time, as we go forward and we convert more and more our business to a digital, you'll find that the. Because our investments would have started to pay off much more, and the operational efficiency. Because the digital platform also gives you a huge amount of operational excellence and operational efficiency. It allows you and your customers to be having a deriving a much better experience from doing business. Over time, these translate into a much reduced operating OpEx versus technological OpEx, which we can differentiate. A much reduced operating OpEx as we move forward because you are so driven by our mission. Our desire, you're right, is to be the number one digital distributor in the world. I'm sure we're gonna get there very soon, because of all the investments that we are making. More importantly because of the comprehensive vision that we have of what digital distribution can do for the industry that we are in. It will be transformative. Got it. sir, what is Redington India Apple revenues as a percentage of the India Apple revenues? How has that trajectory been for the last couple of years? Sequentially, we've seen that third quarter is a strong quarter for Apple India because of product launches, but the revenues for this quarter have increased to 32% versus 30% last quarter. Could you please quantify with Apple's strategy of going direct, how does this impact Redington India for Apple? Yeah. I think any vendor, and it's not Apple specific. Let me broaden the question and then I'll narrow it down to your point about Apple specifically. We've seen that whenever any vendor becomes more active in the market, whether it is Apple or it is Dell, HP, Lenovo, Microsoft, Amazon, anyone becomes more active in the market directly through a direct presence. The market for that particular brand, particular range of equipment expands. That is such a wonderful thing to happen for the industry overall. When Apple is coming into the country and trying to set up their own shop over here, they have opened up Apple direct stores. We believe it will help lead to expansion of the Apple business and Apple market in India. Apple has a very small own market share and even smaller PC and iPad market share, tablet market share. With their coming in directly, we expect that or we hope that their market share expands, which will be a gain for partners like ours who do a lot of Apple business. Just from your perspective, from your question about the relative size of the market, and how it is going up and down. Look, Q3 and Q4 are always mobility-intensive quarters. Q3, because in that quarter, Apple does a launch and most other mobility brands also do a launch. Mobility as a part of the business sees a lift in Q3 and Q4. Okay? That's the cyclic nature of the products that we sell. Some products sell better in some quarters, some products sell less better in some quarters, and they sell better in other quarters. I think that's the nature of the business, and that's how the whole our product mix continues to shape up in and out because of what, the launches with other vendors do. Thank you. Saritha, sorry to interrupt you. I'll request you to join the queue again for the follow-up question. The next question is from the line of Priya from Emkay Global. Please go ahead. Thanks so much for giving me an opportunity to ask question. Congratulations to management team on always delivering consistently quarter after quarter. I have two broader questions. One is a follow-up on the working capital. Now that everything is normalized, and as you highlighted that, the B2B business or the movement of work from home to work from office is something would mean that the businesses and us will have to ensure a little bit more inventories. Do you see the current working capital cycle being a norm which we should look at? That is first question. The second question is, the intensity or the importance of a business only keeps on increasing as and as the technology advances. Combination of 5G and say PLI manufacturing in India, which are the 2 major forces going to happen in the ecosystem for us in India, would be largely seen as positive in true sense, but any color which you had from the vendors, because each new technology, let's say from 2G to 3G to 4G, envisages an increase in the ASP of the devices. In 5G particularly, we are going to see more a device-led sort of technology adoption. Any color over there which you had with your vendors, what are their thoughts? We've also seen Google introducing like, you know, Google Cardboard and all and the AR/VR related devices. A more macro trend over there, would be helpful. If PLI manufacturing becomes the norm four, five years down the line, do you envisage any change in the distribution landscape for us? Priya, two great questions and all good ones. Let me leave it to CK, Krishnan. Krishnan, you take the working capital normalization norm, and I'll take on the intensity of tech advances that you've mentioned here. Yeah, Rajeev. It's like this, Priya. If you go back to our commentary in the last 2 to 3 quarters, we have been saying that implement fees will settle about between 30-35 days. As we speak now, it's at the top end of that range. In our view, there could be some more increase, may not be significant, to see whatever the thing need to be done to control it. We tend to think because of the slowdown that's happening across, there could be some slight increase in terms of the overall working capital days, but we don't expect that to be significantly higher than what it is today. To answer you, in our view, majorly the normalization process is over now. Sure, Krishnan. Okay. This is helpful. Okay. Let me give you some insights on how we see the tech intensity increasing and tech advances happening. You mentioned about 5G. Priya, 5G is a device play, which means people will shift towards a phone which is a smartphone which is 5G enabled and supports 5G. That's happening right now. As we speak right now, whoever is buying a new phone is very particular that the phone run 5G or support 5G. Okay? Let me tell you, that is just one tiny part of the way the technology industry is going to be utilizing or the consumer industry is going to be utilizing 5G. 5G is a lot about increased bandwidth, faster communication and people being able to do things remotely on a much more real-time basis. That is the real genesis of 5G. Devices support that, which means lots and lots of applications over time will start to utilize the capabilities of 5G and become real-time. For instance, if your company does, your Emkay Global company does remote training, you can be almost live in the places through a slew of technologies that are being made available right now. Or when you do advertising, learning, remote manufacturing, remote operation in a remote healthcare consultancy and advisory, 5G will start to enable a lot more of their application. 5G has a much deeper impact than handsets. It has a deeper impact on technology consumption across the world, across many, many such industries. We see a very intense, very strong uptake as applications start to utilize the technology of 5G. We as Redington, we are working on a few such use case scenarios in the automotive industry, use case scenarios in the healthcare industry, which will almost be very revolutionary and disruptive in many ways, from a manufacturing and from a healthcare perspective, and so on and so forth. AR/VR is again, those are tools, those are technologies which people utilize in use case scenarios. You know, augmented reality will help you a lot in the advertising world, which is what is happening. If you go to a lot of countries and I'm sure you guys wanna travel all the time. When you go to countries like Japan and China and Australia and US and some of the countries in Europe, you'll find how augmented reality is now starting to make a strong dent in advertising. I'm sure you've seen videos of how billboards are becoming AR-enabled. Same thing with virtual reality. You can sit, like I said, you can sit in a home and visualize yourself to be in a training room. Visualize yourself to be in an operation theater. That's how those advances are going to take place. 5G's relevance is going to be a lot more in the application domain beyond just the devices. The devices' average selling price, ASP of devices going up, is going to help surely our revenue. The tech advances and the tech intensity that 5G creates and 6G, which is getting tried out in some countries now, is going to be supremely beneficial for the technology industry and for the consumers at large, because they will get the ability to do many different things and many creative things as we go forward. Realize manufacturing is last question. As we go forward and more and more things started get manufactured locally, it will help India generate revenue, local revenue. It will help India create more jobs locally. It won't help create lower prices because all these global companies which do manufacturing in India, they do manufacturing in India for India, but also for the globe. They cannot disrupt the prices to that extent. Their pricing policy, I come from that background, so I know it very well. The pricing policies of these companies is much more global. You won't have a reduction in prices, but you will have an enhancement in job capabilities, job opportunities. You will have advancements in newer models becoming available even faster to the Indian population. All those benefits will come to the Indian population. Thank you. Priya, I request you to join the queue again for a follow-up question. I request to all the participants, please restrict to two questions per participant. If time permit, please come back in the question queue. The next question is from the line of Akash Mehta from Kapasi Investments. Please go ahead. Hi, sir. Good morning. Thanks for the opportunity. I just had one question. Compuage basically reported on the stock exchanges that there were disturbances. Akash, your voice is not coming very clearly. Yeah. Can you hear me now? Yes, the mic is too close to your mouth. There's some airy sound coming. Can you speak through the handset directly? Sure. Compuage, they are reported on the stock exchanges that there were some disturbances in their business. Given that they are a INR 4,000 crore revenue company, does it benefit us in any way? Oh, it does. Absolutely. Absolutely, it does. Compuage has given. The products are products that Compuage was distributing, some HP and some other products. Those become available to Redington really to manage and to sell in the geographies they were present in. Like I said, it's a time where you have to manage a lot of financials and business dynamics simultaneously. We execute extremely well. I think that is going to be really beneficial to us to manage our exact capability of our sales engine now to go and take away most of the share of that INR 4,000 crores that Compuage has dedicated. We see a significant headroom here, right. Yeah. We should spend less on that. All right. I think that's it for me. Thank you. Thank you. Next question is from the line of Pritesh Chheda from Lucky Investment Managers. Please go ahead. Yeah, sir, I just have 1 question on your interest cost, you know, which has impacted your PBT growth rate. We have seen the inventory day normalizing and accordingly, debt or leverage coming on your balance sheet. The pace of leverage is slower than the pace of interest cost increase. We just wanted to understand your funding cost. How should we look at it? What percentage is your funding cost? If you could explain that. I'm suspecting that because of the global interest rate rise, the funding cost for you would be materially different from what it would be earlier. Yeah. SJK, you want to take that? Will do, Rajiv. To answer you, Pritesh, see, I mean, as you said very clearly, the interest rates are going up across and being present in multiple markets, it impacts us also. To the extent that in India, our interest rates have gone up by almost 2 times. If you go to, say, a Dubai, our interest rate has gone up by about 4-5 times. This is something which all the corporates do face. Uniquely, if you see in terms of interest cost and comparison, when you have very low utilization of debt and I mean, at that point in time, you will see all the networks would have got fully utilized for which there wouldn't be any interest costs. Any increase in working capital from then on will have an interest cost attached to it, which is the challenge that we have. In our view, the interest rate increase cycle is more or less done. Maybe for the next three to six months, there could be one more increase that may happen overall, but after that we should see a downward trend and that should help us. From an interest cost perspective, if I need to give you, I mean, a view. I mean, as a percentage of revenue, we are at about 0.35%, 0.4%. I think we should be able to maintain around this or maybe it can get stretched by another 5-10 basis points. Okay. Now I'll ask the other way. If this is the peak working capital cycle that you're looking at in terms of days which is normalized, would you be fair to assume that the debt would have peaked out? Because from here on, you will have your cash flows. See, it's like this. As I'd mentioned to one of the other query, we expect some increase in working capital still. That's also we understand. You also need to understand... You mentioned it was temporary- Yeah. -that you're looking at, right? not a material- Yes. -different. Yes. Second is also you should see the growth rate, which is significantly higher. We expect the debt level to go up because of the growth rates. What is the type of growth rate that you're looking at, on a sustainable basis? Should we refer? You know very well what has been our growth rate over a long period and also what has been in the last few quarters. I mean, our growth rate depends on how the market grows, but we will ensure that we are definitely better compared to the market. Okay, sir. Okay. Thank you very much, and all the best to you, sir. Thank you. Participants, please restrict to 2 questions per participant. The next question is from the line of Devesh Mehra from Ytok Capital. Please go ahead. Yeah. Thank you, sir. one, just, want to confirm my understanding that when Apple sells direct, either through online, their website, or through their COCO stores, we have no role to play in it, right? No logistics, nothing. We don't benefit at all from that channel. That is right. Understood. In rest of the world market, which as per your presentation is about 56%-57% of your EBITDA PAT, what would be the underlying currency exposure? Like which currencies would we be more exposed to? Look, we do, we do a lot of our business in dollars, so our exposure is very restricted. That's the reason you see that whenever we have a currency losses, it's not really material from year-on-like business perspective, because we have an inherent policy of how we hedge ourselves against currency fluctuations by doing business in dollars. Sometimes we get impacted because the country policies change very significantly. Those are geopolitical risks that we accept and move on. I'll leave S.V. Krishnan to give more commentary in detail if you want that topic. Yeah. Krishan, if you can give, like, for the rest of the world PAT, like dollar, underlying dollar would be what percentage of that PAT and, you know, whether other currencies like in Nigeria, Kenya, Ghana, where we have experienced depreciation, what would be the currency exposure? I'm looking for some quantification. Thank you. Sure. See, first of all, what I want to give you a comfort, we always try to make sure that we hedge all our exposures wherever forward contracts are available. If you take India, for example, forward contracts are available all the time. The moment there is an exposure on the day one, we take a cover and build the, I mean the cost of the premium as part of our pricing. This is what we do across various markets. There are few countries where the currencies, the currency rates are pegged to US dollar, hence naturally there is no FX exposure for us. As Rajeev just mentioned, if you take Turkey for example, while the currency volatility is very high, we do the business in US dollar, I should say majorly. To that extent, we are not covered. For the balance we need to manage. This is the broad thought process I would want to tell you. Overall, in markets where there are currency variations and Forex contract is not available, we have a model that we will sell at the then prevailing rate whenever the sale gets done. At the time of collection, the customer has to pay as per the exchange rate that was prevailing on the date of collection. We are more or less covered in terms of our business model for the Forex exposure. However, the challenge comes in cases where remittance is not possible. I mean, you mentioned few countries, let's say Nigeria, Egypt, few other countries where The currency repatriation sometime because of various geopolitical, I mean, challenges is not possible, which is where we get stuck and it is taking time for us. In the meantime, if there is an exposure, it, I mean it is coming and hitting us. Which is where we are, and as much as possible we reduce the impact and we also run down our business, which is what happened in the case of Sri Lanka, Egypt and right now with Nigeria also. It's not significantly high, if I need to answer you in a simple form. Uh-huh. Is it possible, just, you know, to the extent that you can quantify. Let's say you get 56% of your PAT from rest of the world markets. What percentage of that is USD business? What percentage of that in the second-largest currency, whichever it is, what percentage of that is that currency? Something like that, if you can share. If I need to put a percentage, I don't have that ready-made now. In my view, it would be between 15% to 20% of the business that happens in markets where we are not able to cover effects or we don't do it in US dollar terms. Okay. Understood. Thank you. Thank you. Next question is on the line of Bala Kumar from HDFC Asset Management. Please go ahead. Hi. Thanks for taking my question. I have two questions. One, could you just give the breakup of the provisions, there's quarter inventory receivables and then the total provisions. Second one, if you look at the growth, we had in FY23, it was broad-based across markets. Maybe FY24 and beyond, if could you just throw some sense on the growth drivers by both market as well as the segments within the markets? Thank you. SK, will you take the first one, then I'll take the second one. Sure, will do, Rajeev. Inventory provision for the quarter is negative at 21 basis points, and AR provision for the quarter is about 14 basis points positive. Inventory provision is negative because it was positive in the last quarter. As I had mentioned, there was some reversal that had happened in the current quarter because of liquidating older inventory. Got it. Thank you. Okay. On your question on the growth drivers for India and overseas. You're right. Our business has been really broad-based. It's grown pretty much across all the regions that we operate in very consistently. The growth drivers happen to be couple of them. One is an external growth driver. The way the tech industry is shaping up right now, bringing more technology to the market, and companies, organizations like yourselves, in HDFC or any other organization, really continuing on the path of digital transformation. I think the momentum that has got created towards digital transformation during the COVID times is almost irreversible. You can't just plug it back anymore. Companies will continue to invest in digital transformation. Companies will continue to invest in improving their efficiency, productivity and their own environment of innovation. That drives a huge amount of technology buying, because for companies to become more capable and enabled, for efficiency and productivity, it is almost a straight line equation. They have to make more investments on technology. That's one thing which is very strong, growth driver for us. The second growth driver for us is the geographies that we operate in. India, Middle East, Africa, Turkey, all of those geographies, like I said earlier, they are investment and consumption driven. The governments have a necessity to make sure they are all the time upgrading the infrastructure, upgrading the infrastructure of physical and infrastructure of knowledge, like both. Economic infrastructure, education infrastructure, healthcare, all of that has got to get investment. A huge amount of investment is happening in these areas, by the governments to make sure that these things come up and that drives a huge amount of tech buying. Second is, as the population is becoming, more from the lower to middle class to upper middle class to more evolved and more richer segments. As the migration is taking place of all these populations, there is a consumption of technology that is taking place. I think those are the two broad drivers that I think. One is the digital transformation. Second is the investment-led nature of the economies and geographies that we operate in. We align very strongly with that, Bala. Our, if you read our, read about us as a company and if you see where we are headed, the mission of our company is to bridge divides. Our purpose is to bridge divides. We operate in a very strong underprivileged section of the global market. Whatever we can do to bridge those divides of technology, to bridge the divides of economy, of education, of healthcare, of retail, of manufacturing, anything that we can do by bringing the latest technology to the market, that's our mission, that's our purpose that we exist for as a company. The regions that we are operating in plays very strongly to our purpose, to our mission, and it really is helping us get to grow. Those are the two very strong growth drivers which align with our proposition. Got it. Thank you. Thank you. Next question is from Nitin Padmanabhan from Investec India. Please go ahead. Yeah, hi. good day. good morning. Am I audible? Yes, please. Yeah. Hi. I had a few questions. One is if you could quantify the investments on the other expense line and how should we think about that on a going-forward basis. The second is, you mentioned that 25% of the India business is now sort of a digital distribution. Just wondered, your thoughts on what you're seeing in terms of any difference in the working capital intensity there. Is it much lower? Or, do you think that once it settles over a period of time, there's a lot of room for optimization on the capital intensity in the business as this business gets more and more digital oriented? That's the second. Third, yeah, just wanted your broad thoughts on the last year we saw the highest ever growth. If you could just contextualize that in terms of what drove that strength and how we should see that on a going-forward basis and how the context is changing. Should we expect a normalization, a fair normalization of growth considering the broad macro? Those were the three questions. Thank you so much. Okay. I think we gave you some numbers in our investments last time also Nitin. Our investment in technology infrastructure is moving costs. Obviously I'm not going to give you the exact numbers, but are moving costs from, you know, INR 90-100 crores to INR 250-260 crores over the course of combination between CapEx and OpEx, all of that. We believe this will differentiate us. You will continue to see us making the right level of investment at two levels. One investment we make is in creating the right level of digital transformation or digital enterprise that we want to be, which allows our partners and customers to engage with us in the ways they prefer. Whether they want to do a brick-and-mortar discussion with us or they want to engage with us on the digital platform, or they want to do the business with us on an as a service model. We are providing a huge lot of choices to our partners and customers to engage with us. That is not going to be starved of any investment. Whatever it takes to get that, we will be absolutely making the right investment. That is one. The question number 2 of yours on trying to get digital distribution, does it reduce the working capital investment? Maybe over time it does. Right now it doesn't. Right now. Because the nature of business, the partners we interact or engage with, the customers we engage with, the economic environment of the country is not changing because we've gone digital. What digital does is it makes us more efficient. It makes us deliver a much better experience to our customers and partners. It makes us easily discoverable. It makes it really easy for partners and customers to do business with. It is a much more growth-oriented topic than a working capital motive, because like I said, the dynamics of business are not altering to change the working capital there. Over time it may be. Assuming I try and liquidate something or try and sell something on a fast sale basis, those kind of things will really enable us to do much better working capital. Those are in the future and we'll see as that goes. That's the second element that I wanted to make sure that you get that. The third thing that is there is about you mentioned the point about growth drivers. What is driving growth for us and is that going to be looking any different or will it change and what are drivers for the future? Look, growth is an outcome of many things that we do. Many small things that we optimize in the business lead to growth. Our engagement with the vendors and our partner network leads to growth. Our planning, the way we detail our planning with our partners and vendors leads to growth. The range of financial and fintech solutions that we provide between us and our partners, that leads to growth. Our framework of go-to-market model, which is a basis of digital and non-digital and a coverage model that is really helping us reach to maximize the number of partners and the market that we can reach to. There was an earlier question about urban Tier 1, Tier 2. The number of locations that we can go to, the number of pin codes that we can go to sell our product helps us. The coverage and GTM model allowing us to grow faster. Our investments in technology enable us to become far more easy and robust and agile in aligning with whatever we need to make changes to from a business perspective. Those are the things that really drove huge growth for us. You are right, when the market is -25% and Redington is +25%, that means we had a shift between the market, a delta of almost 50% between us and the market. This happens for 4 consecutive quarters. That's a strong thing, which means something that we're doing has helped us get this level of growth. Those are the growth drivers. Will it normalize to a lower level? God knows what normalization, what you meant by normalization. Our view would be that one of the things that we hold ourselves really accountable to is something which is about making sure that we continue to grow faster than the market in every point in time. That is dear to us, and I'm hoping that the investments that we are making in technology. The second investment we are making is in people, because the things that we are doing from an e-commerce perspective or from a cloud perspective is a lot of services capability driven. Services capabilities we know for sure are very different from a product capability. We are investing in technology, we are investing in people capabilities as well. All of this is very helping us and helping us stay ahead of the market at any point in time. Thank you. Nitin, I will request you to join the queue again. I think we're done for the day. I got to leave, guys, for now. It's already more than an hour. I'll have to leave. Thank you so much. If there's anything, Krishnan, Dilip, is there anything else that you wanna add? Probably we should probably be winding down here. No, no. I think it is done. We can close the call, Dilip. Yeah. In case anyone has... Yeah, sorry. No, no. You can give some closing comments before we close. Yeah. Yeah. I think it's fair. I think it's a fantastic interaction. I think all the questions that you guys ask us, they are very always incisive and insightful. If you play back our calls over the last few quarters, you'll exactly have seen an asteroid running a course. We guided the market on working capital. It is turning out to be exactly where we guided. We guided the market on tax. It is turning out exactly to be where we had given the guidance. We guided the market on our growth that we'll be ahead of the market. It's turning out to be completely correct. We had guided the market on how we see our investments and how the investments will pan out. We talked to you a lot about what is, what is it that we're doing from a future perspective and how is Redington reinventing itself. How is Redington re-energizing and transitioning or transforming itself to do business, to stay ahead in the new world, and all of that you heard us talk about. Your questions, like I said, always extremely enriching, whether it is questions on financials or it is questions on the way the market is shaping up or your questions on future directions, new tech. Priya's question was absolutely fantastic on new tech. All those questions help us stay the course. If there is anything that we've not been able to address or answer, I know there's always a time to hold this, but you can write to us, and we will make sure that you get a response from us. Thank you so much for joining the call today early in the morning. Have a great day and weekend. Thank you very much. On behalf of Redington Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.