Ladies and gentlemen, good day and welcome to Redington Ltd. Q4 FY24 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 the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participants' lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then 0 on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hariharan, Group CEO. Thank you, and over to you, sir. Good morning, everyone. Thanks for joining in. We are happy to share with you our Q4 results. It has been another good quarter with the continuing story of profitability growth. We have continued sequential improvements on PAT, starting from the fourth quarter of 1.17% to 1.36% to 1.49%, maintaining at 1.45%. This has also been the highest Q4 revenue recorded at INR 22,530 crores, and our revenues grew at 3% top line and PAT grew at 5%. We also recorded the highest annual revenue of INR 8,610 crores quarter 5/2024, at 13% year-on-year growth. The results for the quarter were achieved by a strong growth of 9% from India and 15% from Kingdom of Saudi Arabia. In the overseas business, particularly in Africa and countries like Nigeria and Egypt, there were market stresses, and so the market was soft. We also continue to focus there on profitable business and trading off revenue maximization to manage our risks better due to the currency fluctuations in those markets. From the business unit's perspective for this quarter, both the cloud business unit and the endpoint solutions group unit contributed to the growth this quarter at 29% and 8%. For the year, all the business units grew well. For the quarter, we brought down our working capital from 36 to 34 days by focusing on operational efficiency, and this worked very well across all theaters. We brought business operations, sales operations, credit collection team together, really focused on this, and that resulted in a lowering of working capital. We also turned in a positive free cash flow of INR 1,102 crores. We continue to strengthen our brand relationships through initiatives and joint business plans, add new brands, and we continue to work on our go-to-market assets in each region and continue to build new revenue streams. This quarter also marked a very important event, the signing of an SPA for the divestment of our Paynet business from our subsidiary Arena in Turkey. Paynet is a fintech initiative specializing in payment facilitating services focused on payment transactions in the B2B sector. It was developed internally by our subsidiary Arena to work with their own channel partners. Then it got expanded to 30,000 partners within. It made sense as we reached the maturity level to divest this, and the SPA was signed with iyzico as published. The SPA was signed for $87 million plus adjusted net cash. There are regulatory approvals needed. However, once the deal is consummated, the proceeds would be used to correct the debt structure at Arena and focus on core business, business or IT distribution. So overall, we had a good quarter with a good balanced performance across growth geographies and growth business units. Regarding the dividend, it will be taken up at our board meeting in June, and we will communicate subsequently. Thank you. So we'll now begin the question-and-answer session. Anyone who wishes to ask a question can press star and 1 on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. Good morning. So I think when you look at the results and the numbers, it broadly looks like there is weakness in certain markets. If you could give some color on the weakness that you're seeing today and how long do you sort of expect this sort of weakness to persist? And even from, I think, the CSG business, the mobility has sort of weakened quite a bit on a sequential basis. So just your thoughts on the broader market, maybe if you could just spread it by different geos, what you're seeing, and how long do you think this weakness continues or when you think this sort of starts seeing a recovery? Some color and context. Okay. Thanks for the question. So let me start with the first one, and then I'll jump to mobility. Clearly, if you look at where we are, so we are in India, we are in MEA, and we are in Turkey. In India, as I mentioned, we had good strong growth. The mobility sequentially, we didn't do as well because typically there is an NPI quarter for Q3, and we do well in our key brand Apple in that quarter. So you can't do a sequential compare. So it was still decent performance in Q4 for mobility. When it comes to overseas market in Middle East Africa, we continue to do well in Saudi Arabia, as I mentioned, and UAE. We did have stress points in Africa, a lot due to currency fluctuations and how those markets behaved in the last quarter. So we had to really decide which deals to pursue and which business to pursue in markets like Nigeria, Egypt, and Kenya. That was the main thing. We expect this to continue for a bit more. We do expect in one or two quarters, things to improve as well. We will continue to make sure that we are focused on profitable business and not take undue risks in these markets. KSA and UAE offer us good opportunities to grow still. When it comes to Turkey, we had challenges because of the inflationary environment and the interest rates there. We continue to stay relevant and to do business in a way that we can maximize our top and bottom line. The Turkey market is stressed because of the high interest rates. I would say largely in the overall geography situation, India KSA and UAE will continue to be positive for us. We'll just wait and see how much more to do and how much to push the envelope on Africa and Turkey as things improve. Sure. Mobility economics specifically, I talked about India. A lot of the weaknesses in the mobility business was in Africa because of the currency fluctuation. So we did pull back on Africa. And for us, Apple didn't perform as well on Q4 this year compared to Q4 of last year. And when you compare a year-on-year compare, you'll see some of that. So those are the two key drivers. I think the Apple part definitely is correcting, but Africa will continue to remain somewhat of a challenge in the next one or two quarters. Sure. And during the quarter, the finance costs have sort of moved up. So one, has interquarter debt been high because we are seeing end of period? So that's one. And second, from a factoring cost, have they sort of started coming off? If you could give what the number is for this quarter versus the last and how that's evolving? Yeah, those are the two questions. Okay. So on the total finance cost, just give me a minute, please. One second. Okay. Overall factoring plus interest together for the quarter, we are at about INR 219 crore, which is INR 163 crore for previous year. And this is primarily on account of Arena, like we said last time in Turkey. Outside of it, if you just take the rest of the entities, there is a drop from INR 96 crore to INR 79 crore. So there is a significant increase in Arena in terms of the cost. They bought 106%. And this is primarily because of the increase in the interest rate there. Even post our call, there were a couple of increases that had happened in that market. The central bank rate is about 50%, and our borrowing cost is north of 50%. You can imagine in this business to have such a large interest rate. It's very detrimental. Just giving you a perspective for the full year, if you look at for the full year, last year, that's where the interest rate in Turkey started going up quite substantially. Interest cost as a percentage of our revenue was 3.2%, which itself was very high considering the nature of our business. This has further moved up to 4.7% of revenue in the current year, full year. So that's where we have a challenge. But full credit to the team there. They are trying to manage as much better as possible, but the situation is definitely volatile to the extent if you take the inflation rate, it's about 68.5%. I mentioned about the thing interest rate. If you also see the depreciation of the currency, it's about 59%. So everything is significantly higher there and because of which there is a struggle in terms of profitability. In that context, the payments business monetization was to sort of ease out the balance sheet. Broadly, is that a fair understanding? Absolutely. Absolutely. That's what is our expectation and hope. But that will take, as Hari said, a few more months or quarters for us to get all regulatory approvals and then get consummated. Sure. Okay. Thank you so much. I'll come back for a follow-up. Thank you so much. All the best. Thank you. Ladies and gentlemen, you may press star and 1 to ask a question. The next question is from the line of Aejas Lakhani from Unifi Capital. Yeah. Hi. Thanks for the opportunity. Krishnan, can you just call out how the accounting of the Paynet entity will work? What will be the accretion to the net worth of consolidated Redington on account of this deal? And will there be any business impact on Redington because of this deal? First, as Hari mentioned upfront, the consideration is about $87 million plus the cash available in the books. So we expect that to be north of $90 million. Post all the taxes and expenses, we think we should have about $80 million there as an accretion to the net worth locally since we have 50%. While you will find an $80 million increase, which is about INR 650 crores in the net worth of consolidated, but you will also have minority interest corresponding to that. So net net, you can take about INR 375 crores. Got it, sir. In terms of. Yeah. And sorry, I've just wanted to respond in terms of business. It is very focused on fintech. The main business of Arena on products, on mobility, and the IT distribution, that will continue undeterred. It does not impact that at all. Obviously, the Paynet part of the financials come out of the P&L and balance sheet. But outside of that, there will be very little business impact. In fact, this should improve our balance sheet because of being able to use this for debt and other things. One of the reasons for us to fast-track this divestment is also to solve our finance cost problem in Turkey. Got it. So my second question is, could you please call out what has been the sequential as well as YOY decrease in Africa? Okay. You need to give us some time. We will come back if possible before end of this call. Sorry, we don't have the time for three minutes. Okay, sir. So the third one is, last quarter, you had called out that there was some softness in interest rates, which has again gone up this quarter again. Is the entire incremental interest cost that we are bearing on account of Turkey only? Yeah, which is what I mentioned, right? Because if you take the quarter alone, our interest cost has come down compared to what it was in Q4 last year as well as Q3 of current year. I'm talking about other than Arena. Okay. Okay. Got it. Okay. Got it. Sir, the next one is that if you look at the standalone P&L, there has been a significant cutback in OpEx from INR 118 crores-INR 84 crores, and that has helped the OpEx line item. Is this OpEx line item, sir, fairly stable from year on, or is there scope for further reductions, sir? Okay. I don't want you to consider it's a significant reduction. Okay. So there are some one-offs and reclassifications that had happened because of which it was showing like that. For example, our AR management has been far better. That enabled us to get some refund from insurance companies. So that resulted in some drop in the OpEx. And of course, AR management has helped us to reduce our AR provisions also in the books. So these were some of the factors. And on a steady-state basis, I think you can take the current OpEx. I mean, we are at about some INR 2,700 crores. I'm not considering factoring as part of OpEx here. I mean, that's a run rate that we have today. All right, sir. So could you also just call out you've called out that Africa could see maybe one quarter or two quarters of weakness. You stated India and Saudi are doing all right. Could you call out how the operating environment for Turkey is and your demand outlook for each of these geographies, both from an enterprise as well as mobility segment for 2025? Okay. So very good question. Turkey is generally softer. So the market is softer, especially starting with enterprise. Enterprise, we can see a decline in the market size. The mobility part continues to offer good opportunity. And we are just trying to manage not to push the envelope there from a market share perspective because we're borrowing there, as Krishnan mentioned earlier, at 50% interest rates. So we are managing that. So there is business to be had in Turkey on mobility. Enterprise is softer. The consumer IT is also a bit soft, though not as soft as the enterprise. The participant got disconnected. Thank you. Ladies and gentlemen, you may press star and 1 to ask a question. The next question is from the line of Priya Rohira from Emkay Group. Please go ahead. Yeah, hi. Good morning to the management team. I had more follow-up with respect to the demand environment in India. So while in FISA, if I look, the revenue growth has been 8%. If you could shed some color with respect to which business segments are seeing growth. Secondly, despite the 8% top-line growth, the gross margin has been at INR 540 crore lag. Was there any accelerated investments which we did in the business? Okay. Let me talk about the growth part. Actually, all businesses are growing well. This quarter, particularly, CloudQuarks continues to grow strongly. And you have seen in the deck share that CloudQuarks at 33%. Enterprise, sorry, Endpoint Solutions Group, the PC units are also coming back strongly. This quarter, there was a good growth. TSG, the technology solutions, we could have had done more. I think thanks to the elections, there have been some delays, both last quarter and even we see some of that this quarter, both on the government deals and the corporate deals. Some of them are getting pushed out. Mobility continues to do well and remains strong. So I would say a balance. And as we see post-Q2 onwards, the things coming back even stronger. And the second question was related to. The gross margin. I mean, it was INR 540 crores last. We don't see any particular change in the gross margin on any of these business units. It will remain steady and flat. So was there some accelerated investments which you did in distribution or in some product tie-ups, I mean, partner tie-ups, which caused this flat despite the top-line growth? There is no accelerated investment specifically that caused that. I think it is just we are investing in all of the businesses to make sure growth is there. We do see many things happening in the route to market. We are improving many route-to-markets like all the D2R and the regional LFR and Redington-led technology solutions business. Each of these route-to-markets, we are building out to be ready for the growth for the next several quarters. We do see introduction of AI-enabled PCs and AI-enabled smartphones. And a lot of things are. The environment is heating up in that. So we are making sure that our go-to-market is ready for taking on these opportunities. Sure. And just two more bookkeeping questions from my side. You did mention that the board meeting in June is going to take up the dividend. And there is also an increase in the authorized capital. Is there some capital allocation strategy which you're likely to finalize that should be more streamlined in June, or is it something that you want to invest back into the business? See, the authorized share capital today post the bonus announcement last year is very close to the paid-up capital. Just to give the headroom, we thought it's important we have sufficient authorized share capital. On the dividend part, as Hari said, the board will again meet in the month of June before the annual reports are sent out and then take a view on dividend pre-act. For your capital allocation question, I'm just making a general comment, nothing to do with this. We are very particular on capital allocation. I mean, for us, the return ratios are very important. Every decision that we take, we would want to make sure there is sufficient return and the capital is efficiently utilized. If I can just give you the number with respect to the return on equity and return on capital employed, for the quarter, return on equity is about 18% and return on capital employed about 21%. For the full year, it is 17% and 22.5%. I just thought it is important that we make a mention about it. And one another point, which if I may intervene and then say, see, we have been talking about the growth. We all know that growth needs to be ensured keeping in mind the profitable growth and the capital efficiency. We had said this very clearly. While we will not be compromising on the growth, definitely that's not the objective. But we would want to make sure that there is a reasonable profitable growth and capital efficiency. I'm just giving you a perspective. We just did a comparison. We have FY23 numbers, which is one year old, of various peer group, the tech companies in India. Among them, all the four players outside of us, the working capital days was 42 days. Working capital days for Redington, all FY23, March 2023, it is 24 days. So we are very, very focused in terms of capital efficiency. I just thought I should make a mention about it. No, sure, Krishnan. I mean, there is a great history you all share both on the growth, the return ratios, and the working capital efficiency management. I just saw that from the point that maybe if you're seeing some growth likely to come back, as you already mentioned, that post-election, we could see some streamlining growth coming back. So I just wanted to take more of that as an add-on question over there. Okay, just one last question. Since you mentioned the election, Priya, sorry, I need to tell you, our TSG business could have done well as this election hangover is not there because the CapEx are all, the thing, postponed, which also had a negative impact in terms of our TSG growth in India. Sure, Krishnan. I did see that, in terms of 6%, that I think your explanation helps it much better. My last question, on the margin side, we have streamlined on the working capital. On the margin side, this quarter was 2.4%. Should we take that as a benchmark? Because I know during COVID times, it increased. And you all did mention that it should be streamlined to ensure that there's a little growth. And so this margin, should we take it as a benchmark? You can. We had mentioned this in the past, pre-COVID, our operating profit used to be in the range of 2.1%-2.2%. During COVID, it went up as close to 3%. We have been mentioning that on a steady-state basis going forward, we don't foresee this thing going back to what it was pre-COVID. We would want to mention that between 2. I mean, the thing, maintain that between 2.4%-2.6%. We are at that range. We are very clear about it. Similarly, working capital also, we have guided 35%-40%. We are within that range. Sure, Krishnan. This is very helpful. Wish you all the best. Thank you. And for the earlier question from, I think, Agis, Africa degrowth for the quarter is 16.4%. Africa degrowth for the year, 10.4%. Okay. Thank you. The next question is from the line of Kunal Khudania from DSP Asset Managers. Please go ahead. Hi. Good morning. This is Vivek. I have two questions. One, in terms of Turkey, which is going through such a turmoil, is there any kind of subvention or any interference you can expect from the manufacturers that how they helped you during the COVID period to help pass on the interest rate? That's question number one. And question number two is, do you see that there is any impact of the RBI guidelines on unsecured lending impacting the growth in mobile telephony business in India? And congratulations on the working capital control. Thank you. Okay. So on the government intervention in Turkey, we wish some of those happened. It is seriously a difficult market on multiple fronts, like I had mentioned. But we only feel that the things can only become better from here on. And with our team very focused on what they need to do, we should see definitely better results going forward. I'm not very aware about this RBI guideline on secured lending. I don't think it is impacting us because our funding is, I mean, as usual, we are quite okay in terms of the funding. While there is some liquidity issue in the market, but otherwise, our funding is not a challenge. Thank you. It was more on the fact that unsecured loans to end borrowers because mobile phones are bought on EMI and so on. So whether that had any impact, but I guess it's not so significant. And like you said, the election is the bigger mover for you. Thanks a lot and wish you the best. Thank you. Thank you. The next question is from the line of Kushagra from Old Bridge Asset Management. Please go ahead. Yeah, hi. Thanks for the opportunity. A few questions. One is on the strategy or the capital allocation front, if you can help us understand the way you think in terms of the levels of debt which you are comfortable keeping on your balance sheet. Because the way I see this is the balance sheet strength is superb. Your net debt levels are the same as it was 12-13 years back. And the working capital management has been superb. So keeping the working capital day same, are you thinking of revenues of taking a little more debt and probably grow a little higher and without compromising on the quality of the business or without compromising on the quality of the balance sheet? That is one first question. How should I tie up this with the comment you made on the Turkey debt and the transaction which you have done to reduce the debt in Turkey and hence reduce the overall impact of the higher interest rates? Blending the two, how should we think about the debt levels you are comfortable or how should that evolve over the next few years on your balance sheet? Okay. So I will answer it first for the rest of the markets and specifically about Arena. See, we are very focused in terms of return on capital employed. Anyone in Redington, you ask, ROCE, they can tell you what ROCE means, how it needs to be calculated. So we are so focused on that. So we will ensure that our net equity, our internal comfort is between 0.6%-0.7%. And that's something which we are quite comfortable. And with the current net equity ratio, we think we have sufficient capital for any spike in the future growth. Subject to, as you had said, the hygiene factors being in place and the return ratios are the thing being maintained. In the case of Turkey, it is current, I mean, first of all, you need to know that we don't hold 100% in Turkey. This is the only company within the group which is not 100% held by us. It is less than 50%. But we have the board control and it's a listed company. They have a little bit more debt. And that was on account of the acquisition that was done about two and a half years back. And at that point in time, the market was quite okay. And it has got deteriorated only in the last two years. We think with this divestment that we have done, it should give us significant relief in terms of our net equity ratio. And there again, ROE is something which is fundamental for us. I'm not sure whether I've answered your query, Kushagra. Yes, yes, sir, you have. All right. The second question is on, again, a broader related to Apple. So Apple has been consistent more than 30% for you. And if we try to map Apple India shares with and try to sort of back-calculate the Redington's wallet share, it has come down. So can you tell us how the distribution channel is divided for Apple between different players and how should we see this evolving? Because I think there could be some certain conscious calls as well from your side. So how should we see this evolving in the way that now Redington's wallet share should remain constant and they're hooked onto the Apple's India growth for you? How should one see that? So, Kushagra, we don't make specific comments about a brand, but I can tell you, see, the brands decide how much they want to go direct and how much they leave for distribution. It's really their call. But what we do is then what is called a DCAM, the Distribution Total Addressable Market. And we try to maximize when we play in that because we want to remain number one or number two so that we are relevant. So it's very hard to comment specifically about a brand in a call like this. So I'm sorry, not able to answer the question directly, but we will maximize the DCAM available. All right. All right. Sure. I just have one or two questions on data, quick ones. So one is if you can call out, so you called out factoring and interest together. If you can call out factoring cost overall for FY24, only factoring cost. And also if you can give some color on the Turkey numbers in terms of how big the revenues are and how profitable it was in FY24. Yeah, those were my questions. Thank you. Okay. So the factoring cost overall for the quarter is INR 79 crore. This is its 40% in growth in Q4 of previous year. Second, Arena is about 10%-11% of our takeaway business. For last year, our revenue in Arena in Indian rupees is about INR 10,200 crore. And for the quarter, it's about INR 3,400 crore. So roughly about 10%-11%. How profitable Turkey was in FY2024? See, we should feel happy if they are making profit at these interest rates, Kushagra. They are making profit. That comfort we can give you. Sure. Lastly, factoring cost, okay, I'll sum it up from the on-the-quarters. Thank you. Thank you and all the best, guys. Thank you. Thank you. Ladies and gentlemen, you may press star and one to ask a question. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. Thank you. The next question is from the line of Prolin Nandu from Edelweiss. Please go ahead. Yeah, hi team. Thank you for giving me the opportunity. I have two questions. One is on the Africa and Turkey business. So if we look at FY25, is it fair to comment that maybe the worst is over for both these geographies and this can be a good base on which we can see growth in FY25? Yes, I think so. I think we definitely see some positive signs. So let me just start with Africa first. We are beginning to start doing business in South Africa, which is a little bit more mature and stable. We just started in the last couple of quarters. And we have some reasonable plans in the coming year on South Africa. And we have signed up several brands and that should help us grow the Africa business. Egypt is also, with the IMF injection and everything else, is getting stabler even though the currency is volatile there and the interest rates have gone up. But the ability to do business has increased. So those two markets offer potential. I think Nigeria continues to be stressed. There are improvements in Kenya. So I would say all in all, directionally for the year or the next several quarters, we are a little bit more optimistic on Africa. So is it with Turkey? Two things that we see, as Christian mentioned as well. So as in when Paynet unlocks and they deal with consummated post-regulatory approvals, definitely our ability to show higher profits and to go after new business will be better. Also, we are hearing from the market that there will be better improvements in interest rates and inflation. But again, this is all based on economics and other people that we hear. So we think that the Turkey environment over the next few quarters should also improve. If you look at the last one year, the currency devaluation has been not as tough as the previous year. So we are hopeful in Turkey as well. Yes, sure. Complement to what Hari said. The four markets which Hari mentioned, I'm just calling out, what is the depreciation in FX the last three months between December 31st and March 31st? In Kenya, it appreciated by 17.7%. You all know what is our EBITDA margin, 17.7%. I mean, previously, it was at 132. From there, it moved up to 156 and then dropped to 133. In Nigeria, it got depreciated by 27% in one quarter. In Egypt, it got depreciated by 34.8% in one quarter. Please understand, in some of these markets, there are no proper hedging mechanisms available. And our business model, the thing model has a natural hedge built into it. But if the customer or we are not able to get dollars, which is what is the situation in countries like Nigeria, there is a big risk. And we need to be careful in that. No, thanks a lot. That's very clear. The second question is slightly more on a strategy level. So if I look at your top five vendor list, right, all of them are hardware companies. In our two segments like TSG and CSG, we have an element of software as well, right, in terms of cloud and enterprise solution. And both these segments have been quite robust in terms of growth, right? So how soon can we see a software company in your top vendor list? Is it five to seven years or will it be sooner? Will it be later? And from a point of view of selling software versus traditionally selling hardware, I mean, in terms of aligning the towards selling more software, go-to strategy, what all you have mentioned on the margins are pretty much similar for hyperscalers, right, and maybe slightly higher for SaaS. When it comes to ROC, is it meaningfully different from your hardware business? Always. So we are also very hopeful that we will see some of these hyperscalers/softwares that we sell through the TSG business get into the top 5. I don't know. I would hazard a guess maybe it will be in the 3- to 4-year time frame. But we are seeing definitely good growth. I would say overall in our business, the subscription piece has become more than $1 billion between the hyperscaler piece as well as the TSG platform as a service and the software as a service piece. The additional opportunity that we see is to appropriate and professional services. So in the cloud space, we do retail. And the retail part, as you rightly said, the margins are very similar to hardware. But the associated part is professional services where we provide assessment and migration. It's still a small business, but much higher growth margin. We're beginning to learn and walk on that. We will work on this partnering with our retailer community specifically focused on professional services. I think this will take time, but this can result in a higher margin, higher EBIT profile. I think ROCE might be similar because there will be investments we'll have to make on OPEX in this kind of a business on people. Definitely, there is increased focus on how we can organize ourselves. We are investing in a cloud platform called CloudQuarks. You already know that. We are already investing in a kind of a marketplace where we bring ISVs and MSPs and CSPs, modern cloud players together so we can create an ecosystem so we can go faster at it and also try to appropriate some of the services and build competencies internally. So there's a number of activities that we are doing that will enable this to happen. We are already organized well, I would say, within the ESG team, the technology solutions group. We have a software sub-business unit, and we also have the cloud unit as a separate unit. So we are largely organized well, and we continue to focus and invest the right way to get the best ROC. Sure. Can I ask one more question if that's fine? Yes. Can you touch base slightly on the competitive landscape in both your TSG and CSG business? Where I'm coming from is that there are traditional players who have been quite strong here, plus there are some telcos also who want to venture into this kind of an opportunity. When it comes to competitive landscape, is there any white spaces in terms of the way we are offering these services which is different and through which we are able to fill that white spaces? Yeah, very good question. So Turkey, outside of the cloud space, the hyperscaler space, within the hyperscaler, clearly, retail is a somewhat easier thing to do, and many of our peer distributors, IT distributors, do similar things. But to differentiate our awareness to really our understanding of how to drive consumption and workloads and how to drive the professional services around production. And these are not done by our peer distributors. To try to differentiate and take in a kind of a lead space there. In fact, I would say in India and some parts of MEA, particularly UAE and KSA, the key hyperscaler partners really appreciate what we have done, and we've become a larger distributor and kind of a role model and an example for some others to follow. Within the technology solution space, again, there is a whole lot of brands that we work with on platform as a service and software as a service. Again, I think the adjacency of being able to value add on professional services and implementation services and working with retailers is probably the differentiator. There, however, we find a lot of the value-added distributors or value-focused distributors are also there. We'll have to learn our way and compete better with them. Clearly, I would say in the hyperscaler space, we are having a leadership. The ability to have our own cloud platform combined with this ecosystem that I talked about is going to hold us good longer term because we're not behaving like at that time. We are behaving like a distributor and building this ecosystem. Great. Thanks a lot for this and all the best. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all the participants in the conference, please limit your questions to two per participant. Should you have a follow-up question, we will request you to rejoin the queue. Thank you. The next question is from the line of Drashti from Thinqwise Wealth Managers, LLP. Please go ahead. Thanks for the opportunity, Sir. When I look at our overall growth, our energy segment has declined by 12% quarter-on-quarter. TSG has also declined by 5% quarter-on-quarter. When our working capital base has improved by 2 rates, from 36 to 34, I wanted to understand, is it because the energy growth has been lower, which is why we've seen an improvement in the working capital base, or is there anything structural that we've done because of which we've got this efficiency, and can this continue going forward? Although you've guided for 35-40 days, but 34 is a very stark improvement. Is there anything structural that we've done in the working capital or to improve the working capital is what I wanted to understand. Drashti, efficiency, efficiency, efficiency. That's a buzzword. We are trying to do as better as possible without compromising on the growth. And the point that you mentioned in terms of MSG and TSG, see, it is more I mean, what should I say? In MSG, as Hari said, a quarter on quarter between Q3 and Q4 may not be an appropriate model because Q3 is the time where you find all the vendors announcing the new products. So there will be a spike in Q3, and hence, that's not a correct I mean, way to look at it. In TSG, as I've said, because of some postponement that had happened in India due to the elections, in Africa, our conscious decision to be the thing careful about the risk has resulted in the degrowth. It has nothing to do with our working capital. No, exactly. That's what I wanted to understand. Is the working capital improvement because the energy obviously, because it's a seasonal business, that energy has gone away? And the main is that TSG has declined quarter-on-quarter because TSG requires our working capital, right? And that has declined year-on-year as well as quarter-on-quarter. So is the working capital improvement because of that, or like you mentioned, it's efficiency in the business is what I wanted to get an answer on? For this particular quarter, most improvements have actually happened in ESG and TSG. It's not on account of MSG, the working capital improvement. MSG always is quite light on working capital, and it's a fast velocity item. I think to answer your question, I did mention in my opening remarks, we've actually put some additional focus. We've organized ourselves within both the geographies to have a more intensified operational focus between business operations, sales operations, credit and collections to really focus on working capital. Now, can we maintain 34? That's a different question. Our guidance is still to be within the certified 40 range. The improvement starkly has happened in the ESG space and a bit on the TSG space. These are the two business units where our biggest improvements are. I'm just reading note, Drashti, the earlier point that I mentioned, the other players in India, DAO inventory day, 31 days, 52 days, 52 days, 33 days, other players. We are at 24 days. DSO, AR days, 59 days, 63 days, 39 days, 43 days, we are at 49, right? So we are trying to be as good as possible in the ecosystem. If others go over 6, then we also need to accordingly manage to show. Got it. Got it. In your opening remarks, you've mentioned that the new brands we've that we've focused on adding new brands. When I see the other segment, that has also improved for us on a yearly basis. So if you could highlight on what brands have you added and whether the margin profile and working capital profile are similar to our existing business. In which segment have you added these new brands? If you could highlight something on that. A lot of it is in the cloud space. You'll see brands like Gogo that got announced that we're partnering with, SaaS, SAS. There are many brands like those we are adding and partnering. A lot of these brands used to go direct. As the cloud space is evolving, clearly, they want to work through the distribution model better. We continue to add many but I'm just giving some examples here. I understand. And sir, when I look at our employee cost of standalone business, which is standalone business versus the rest of the world, our employee cost as a percentage of revenue in the standalone is around 0.6 and has been maintained at that. But when I look at the rest of the world, it comes to around 2%. And actually, year-on-year, it's increased by 2.16%. So is there a difference in the structure of these employees or organization in the standalone versus the rest of the world, which is leading to this difference like 0.6 and 2%? If you could explain that. Drashti, each markets are different. I don't think we can compare it that way. But still, I'll give you a perspective. To see the gross margin, I'm just making a reference just to answer your query. Our gross margin in CSG is 4.98%. Our gross margin in the rest of the world, including Turkey, is 6.88%. So there is better gross margin. Obviously, there will be a better cost, I mean, incremental cost also. No, actually, yeah, yeah, Krishnan appreciates it. But why this question comes is when we look at the newly listed competitor which is Cummins, their employee cost is almost 1.4% and ours is 0.6%, which is I just wanted to understand why is ours so less and what is the structure and why is there so high? Okay, not there, but if you could comment on our employee costs. I think ours has been the steady state at these levels. We are quite comfortable with these. All right. Okay. Thank you. Thank you. Thank you. The next question is from the line of Krish Mehta from Enam Holdings. Please go ahead. Thank you for taking my questions. My question was just on getting the inventory and accounts receivable provisioning number for this quarter as well as for Q3. Okay. Just a second. Sorry. Okay. So inventory provision for the quarter at a consolidated level is at minus 0.21% and bad debt at 0.12%. When I say minus, it's reversal, yes. Oh, sorry, sorry, sorry. This was for last year, right? Excuse me, sorry, Krish. For the current year, it is minus 0.41% inventory and bad debt neutral. There is no, I mean, specific provision for the current quarter. For the full year, if you see, it is minus 0.1% inventory and bad debt 0.07%, bad debt. Okay. Thank you so much. Thank you. The next follow-up question is from the line of Aejas Lakhani from Unifi Capital. Please go ahead. Yeah. So thanks for the opportunity. I got dropped off in my last question. So I just wanted to understand the demand environment, both on the enterprise segment, the IT, consumer IT segment, and the mobility segment, Ex of this election performance that is taking place. But how is the overall demand outlook? Let me start with the enterprise segment. Clearly, and I think your question is more with regards to India, I guess. The enterprise segment, the demand continues to be very strong, and we are quite bullish in the next year as well. As I mentioned, both Q4, RQ4, and RQ1 have been softer because of the elections and postponement of capital decisions, both in corporate and government. When it comes to mobility and the consumer segment, clearly, consumer segment, we've seen an uptick in the last quarter. We will continue to see that as AI-enabled PCs are being launched this year and AI-enabled workstations on the brands. On the mobility segment, we are again waiting for the NPI to see a good growth, but it will be stable. We see upsides, definitely, on the enterprise segment as well as the consumer segment. Aejas, could you call out the same for global markets as well for ROW? Sorry? Can you repeat that? Sir, could you just call out the same enterprise as well as mobility outlook for ROW for the rest of the regions? Yeah, it is similar. So again, I will talk about markets outside of these fixed markets. So Saudi Arabia, UAE, and what we call as the rest of the Middle East, which is some of the smaller markets around UAE like Kuwait, Qatar, and similarly in South Africa, we're quite bullish about the enterprise segment in all of these cases. Within the consumer segment, we also have what is called as an emerging business outside of PCs in the Middle East where we participate in things like gaming and several verticals in surveillance cameras, etc. Both PCs and those segments, we're quite bullish on both for the rest of the world. Africa is where, because of the currency fluctuations, we're just cautious and careful. We do expect Egypt also a better opportunity in the next couple of quarters. We had completely pulled out of the consumer segment in Egypt as the currency fluctuation is happening. We are going to go back and re-engage and play cautiously. But we do expect more business to happen in Egypt in the next few quarters. Got it. Thanks so much and all. Thank you. The next follow-up question is from the line of Nitin Padmanabhan from Investec. Please go ahead. Yeah, hi. Thank you for the opportunity. So considering this is the annual, would be great if you could give some sense on the contribution breakup for Africa, Turkey, India, Saudi Arabia broadly. So that's one. And second, in the context of what you explained, it looks like Turkey growth, you'd want to push the pedal only once the money comes in post the approvals. And Africa, again, I think is something like that. So does it look like from where you're standing, does it look like this year is going to be a little more tail-ended from a growth perspective overall? And do you think that the so that's one. And second, do you think that double-digit growth in the context of where the economy, it's still there for fiscal 2025, or do you worry about that? So those are two questions on the revenue side. On the margin side, do you think margins are sort of bottomed out on considering where we are for the quarter? Do you think margins are bottomed out? I'm saying excluding the other income. Do you think that at least in the first half, considering we're going to be risk-off, basically the other income will take care of it and then the excluding other income margins actually begins to pick up only in the second half? Those are my questions. Thank you. Let me try and answer the growth question first. I think what we have done in the last few quarters, we've kind of bottomed out. I think the way we have approached the whole environment is maximize investments and growth in growth markets where we can grow profitably, which we have talked about in India, Saudi Arabia, and UAE. We are beginning to now look at new markets like South Africa, the renunciant, which should bear results for the next few quarters. Clearly, anything from here is positive because whether it's Turkey or whether it's the stressed African markets or Egypt, all of those, we've gone to a lowest baseline and we should only improve from here. So I don't know whether double-digit or what, it will depend on what the market environment is and what we can do. In terms of our growth, we will only get better from here in terms of whether it's sequential or year-on-year, but it's what the market has to offer. Africa, whatever business we thought was risky, we have already traded off and things could get better from here. In terms of gross margin, you have answered the question. Yeah. Before that, on the, I think, contribution part, Nitin, overall, India contributes about 47% to our revenue. Middle East and Africa, 40%. The balance, 12%, it comes out of Turkey. That's the split. Within Middle East and Africa, if you split that further into KSA, which is an important market as I mentioned, that contributes about 30%. Africa, about 20%, all these rough figures, ±1 or 2%. Rest of Middle East, which includes UAE, I think Qatar and other markets, the balance is 50%. On the gross margin, I think, I mean, we would want you to understand we have been talking about normalization post-COVID. I was talking about the EBITDA margin, right? So when you speak about EBITDA margin, you're actually speaking about EBITDA, which includes the EBITDA margin, which includes the other income. So there is always this moment wherein when we are risk-off, basically, we generate more cash and you see higher other income. And then when we are risk-on, obviously, it moves up into working capital and thereby the excluding other income margins start moving up. So the question was, excluding the other income, EBITDA margin, do you think that's sort of bottomed out on where it is today? And from here on, do we start seeing things improve? Yeah. Okay. First clarification, Nitin, our other income is not out of business. That period of me sitting on cash, putting it in deposits, making money was those 3 years of COVID, right? As you know, we have debt all the time. If at all there are any flow taxes, it's what is getting deposited, which is very minuscule considering our total scheme of things. Other income mostly comprises of interest income that we collect from our channel partners because, see, assume we need to give them 60 days credit, we decide to give them a 90 days credit. So that also has a component of, I mean, working capital, right? So we do consider this as part of our margins. We think that overall margins have stabilized. This can be considered as a steady state margin going forward. If at all with the services focus, it can only become better. Sure. That's very helpful. Thank you so much and all the best. Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Hariharan, Group CEO, for closing comments. Over to you, sir. Thank you, everyone, for joining the conference. As we have said, our focus continues to be on profitable growth and return on capital efficiency. We'll continue to make sure that we maximize the business in the market and not lose any share with the focus on profitable growth as well as return on capital efficiency. As I also said in my opening remarks, we do have a board meeting coming up in June where we'll discuss and assign the dividend. As soon as that is done, there'll be communication to the market. Thank you so much. Thank you. Thank you. On behalf of Redington Limited, we conclude this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.