Ladies and gentlemen, good day and welcome to the Redington Limited Q1 FY25 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 of the date of this call. These statements are not the guarantee of future performance and involve risks and uncertainties that are difficult to predict. As a reminder, all participant lines will be in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to V.S. Hariharan, Chief Executive Officer of Redington Limited. Thank you, and over to you, sir. A very good morning, everyone. This is Hariharan. I'm really happy to share with you our Q1 FY25 results. I will first focus on our performance, excluding Turkey, our subsidiary in Turkey, Arena Subsidiary in Turkey, to provide enough color on our performance in India, South Asia, and Middle East Africa. I will talk separately regarding Arena as well. It has been a good quarter with a continuing story of profitable growth. Our profit after tax grew 13% year-on-year, with a tax percentage of 1.42. This has also been the highest Q1 revenue recorded at INR 19,328 crores, and our revenues grew, excluding Arena, at 1% year-on-year. This was despite the headwinds we had in many markets on delays in India due to elections and capital decision delays, longer festive holidays in the same quarter in Middle East and Turkey, and government project delays in Saudi Arabia. For the quarter, our lower average working capital, also the working capital efficiency, resulted in reduced borrowing costs. Our free cash flow also saw improvements for the quarter. The result for the quarter was achieved by a 6% growth from India, a 17% growth from UAE. We're also seeing good signs of profitable growth recovery in Africa, both East and West, and Egypt. Nevertheless, we continue to operate cautiously in these markets. From a business unit perspective, the Cloud Business Unit continued to be our stellar performer with a 35% top-line growth, driven by continued success in the hyperscaler business and some of the subscription software in our portfolio. Cloud Business Group is also beginning to contribute well to the profits, and this quarter was in line with the overall net profit. Our Endpoint Solutions Group also contributed to the growth this quarter very nicely with 11% revenue growth, enabled by commercial and consumer PCs. The Technology Solutions Group grew well in Middle East Africa, while in India, we saw delays, as I mentioned earlier. In the Mobility Solutions Group, India continued to grow well, and all GEOs remained very positive with new product introductions happening and upcoming NPIs as well. Now, coming to Turkey, we had challenges in Arena and Turkey due to the high inflationary and interest rate environment, combined with a sharp decline in market demand for the IT business this quarter. The notebook PC market declined almost 30% as per analysts. We incurred a loss of the quarter, and lots of corrective actions are in place by the Arena team to manage the business to healthy levels going forward. The actions include inventory management, receivables management, and OpEx management, and many more. The last few quarters during the earnings call, we had mentioned the focus for us will be on profitable growth and right-sizing our investments. We've gone about understanding basics by cluster, country, and business unit, understanding stress points, and correcting for them. Similarly, on right-sizing of some of the investments we made on IT and digital platforms to get to the right ROI. We have now achieved much of this. We brought lots of hygiene and are now focused on driving growth profitably. We have rebuilt our corporate strategy around four pillars, leveraging our DNA, of course. The first one, we talked a lot about sustainable profitable core. The second one is about accelerating business growth. There are several focus areas here, starting from faster adoption of subscription and consumption business, not just the cloud hyperscaler business, but also in the technology solution business where we see a lot of software enhanced by professional services. Within accelerated business growth, we'll also have a very localized approach for expansion in growth geographies such as KSA, Indo-Malaysian area, UAE, South Africa, and Southeast Asia. India will continue to be a very key part of the growth plans, and we will continue to work, including up-country and other initiatives. The third pillar in our corporate strategy will be about route-to-market transformation. We already have a segmented approach where we enable high-touch coverage for large partners serving enterprise, mid-market, and consumer, and at the same time, ensuring efficient touch to tens of thousands of smaller partners, which are important for us, through the B2B digital platform and inside sales reps. We are also building our efforts into several unique routes to market for specific brands and business. Our focus on route-to-market transformation will be to build these and scale them and make them more unique and more high value for Redington. Lastly, a key pillar of our strategy is leveraging the power of one Redington. We are in three theaters and 30+ markets, and there are lots of unique executions and unique assets that happen in each country and cluster. Engaging our ecosystem by co-creating distinct initiatives and leveraging them globally as our best practices will really hold us in good stead. For this quarter, we continue to win many industry awards and recognitions. To mention a few, we were recognized as LinkedIn's India's Top Companies 2024, most trusted company by VARINDIA, best national distributor by Digital Terminal. Just a few days back, Canalys, which is a leading global technology analyst, published the list of top IT distributors globally. We were happy to see that Redington has moved from number nine position to number seven position, and this feels even more special since we are not present in the top three IT markets of the world, namely USA, Europe, and China. With the new growth trends that we see on cloud, AI, digital transformation, and even the focus of some of the brands on rural segments, we remain very positive on the outlook going forward. In all geographies, we are seeing positive trends. NPIs in the mobility business and AI PCs will hasten the refresh cycles, and we look forward to taking advantage of these trends. Thank you. We look forward to your questions. Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press star and one on their touch-tone telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets 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. In the prior quarter, I think the general thought process was that a lot of these headwinds are sort of bottoming out. I wanted your thoughts on two elements here. So one is, relative to that, it looks like across the board, there is relative weakness. So just wanted your thoughts on what sort of surprised generally. The second is that there's a gross margin drop across businesses. So what's driving that? And finally, your thoughts on the Africa business as well. You already explained Turkey, but how is Africa doing? And do you think both these geographies have sort of bottomed out and things will start improving from here, even in those geographies? Thank you. Okay. So some of the headwinds I mentioned are actually more of this quarter and transient. As I mentioned, in India, there were some delays due to elections. Again, this is a—we do expect things to be doing well going forward, and we can already find of that this quarter. With regards to the holidays that I mentioned in MEA and Turkey, it was, again, we had almost lost two to three weeks of festive holidays. That was what I mentioned. It was, again, a transient thing. So I don't see any of these headwinds carrying forward. Africa, as already mentioned, we've seen a nice uptick both on top line and bottom line this quarter, both on east and west. Whether we'll have more surprises, I can't really say, but it largely looks promising, and same with Egypt. A lot of the business we are getting back into is on the technology solution side, where it is government and enterprise line, where we are back-to-back business. Obviously, our mobility business also is coming back nicely. So Africa definitely looks more promising than what we've seen in the last year. And some of the corrective actions we have taken in terms of TPNs and how we work with the geography has helped us somewhat. I will turn it over to S.V. Krishnan for taking on the gross margin topic. Good morning, Nitin. See, there is some softness in terms of gross margin across here, right? But more than that softness, there are also some higher inventory provisions in a few places, which has had an impact in terms of gross margin. And in terms of market, also KSA remained soft in the current quarter. I'm sure you must have seen in the newspapers, there are some softness that's happening in that market. There are some postponements which are being done by government, which also had an impact because that was a large market and high-growth market, which also created a negative impact in terms of gross margin. But having said that, sorry, I need to continue. If you look at the PAT, I mean, PAT percentage, it still remained strong. At a consolidated level without Arena, we are at about 1.42%. Except for MEA, in all the other places, we have achieved, I mean, a PAT percentage of more than 1.4%. In MEA, again, if you recollect last year, I mean, the profitability was low. That has significantly increased with a degrowth in the turnover, but we are on course to maintain at 1.4% in MEA also. Sure. Just a quick follow-up. So one is, how much is the inventory provision for the quarter? And second, the softness that we saw in KSA because of postponements done by the government, do you think that sort of we are seeing some recovery there, or that will continue to be a weak market? Our inventory provision for the current quarter is at 1.3 basis points, which normally, as you know, would be about 0.6 basis points. That's the incremental inventory provision that we had seen. On KSA, we do see recovery, Nitin, and there was a very visionary set of projects. Some of them got readjusted and right-sized. But as we look at this quarter and going forward, we do see recovery in KSA. Sure. That's helpful. Thank you so much and all the best. Thank you. Thank you. The next question is from the line of Priya Rohira from Emkay Global. Please go ahead. Ms. Priya, may I request you to please use your handset? Am I audible? Sorry. I think my line was muted. Yes, ma'am. Please go ahead. Yeah. Thanks for the opportunity to ask questions. So the main question is, from the point, is when we obviously saw a couple of headwinds in a couple of countries being affecting our Q1, and you mentioned that it's going to be transient. Are we seeing, especially in India, post-elections comeback in terms of conversations on CapEx dialogue with corporate? I mean, especially the B2B segment would have got affected. Any color over there would be good. Second thing is in terms of the margin trajectory. I mean, a superb execution despite the top line being muted. You have executed very well. If the growth were to kick in, should we go back to 2.4%-2.5%, which is typically being our guided range? Okay. With regards to India, see, the mid-market, definitely commercial PCs are growing strongly. There were two types of delays. One is enterprises, which were closely watching the outcome of the election results, and some of them have actually now gone forward to make those decisions, and we are seeing signs of that coming back. We're still closely watching government projects, and we believe that this quarter, things should definitely unfold in all three of them. On the mid-market and the corporates, we're definitely already seeing the signs from the numbers in the first month. Yeah. So on the profitability, yes, we are confident in terms of maintaining the EBITDA percentage between 2.3%-2.5%. And I'm sure you know, if you look at the OpEx for the current quarter, again, excluding Arena, it has come down by 4% on a quarter-on-quarter basis and 11% on a year-on-year basis. So while we see that there are some stresses in the market, we also make sure there is some operational efficiency, which helps us to build the profitability better. Ms. Priya, does that answer your question? Yeah, that does. S.V. Krishnan, just one follow-up to that. We've seen the inventory base going up, and that typically happens when the momentum in the market is good. So is this a reason for building upon the inventory on the expectations that things would normalize from Q2 onwards? Okay. Uniquely, if you see, our inventory has been well under control. As we see the sales slowing down, we also became too cautious in terms of the purchases. However, for whatever is expected to happen in Q2, we have sufficient inventory. We don't expect a challenge. Our working capital is completely under control, Priya. Thanks. Thanks, Krishnan. Thank you. Ladies and gentlemen, you may press star and one to ask a question. The next question is from the line of Aejas Lakhani from Unifi Capital. Please go ahead. Hi team. Credit to you and the management for having delivered in what seems like a tough quarter. Mr. Krishnan, my first question is that in the last quarter, we definitely called out that margins were at rock bottom and we should see improvement. So how should one read into the slightly weak EBITDA? I know you've tried to call out the macro, which has been relatively weaker. But having said that, how should investors sort of expect the margin recovery at an EBITDA level in the rest of the year? Okay. See, first of all, I mean, Q1 by nature is a subdued quarter, Aejas. So that's something all of you should know. And we are also positive the rest of the year things will improve. And this is something that we have seen even in the earlier years. There are challenges in these markets, in fact, increased challenges. We have been there in these markets for various years. We have seen ups and downs. But having decided to be in these places, we have to make sure we, I mean, we run it efficiently and then come out successfully, which is our current objective. And as Ali said, we are focusing on hygiene. We don't want to, I mean, we don't want to drop the ball. We think on a steady-state basis, as I've said, about 2.3%-2.5% of operating profit and about 1.3%-1.4% of PAT is something that we are gunning for. And as we know, there are a few markets which are really challenging, but we will find a way out and address it. Got it, until for FY25, how should we think about margins? Because 2.3%-2.5% is the slightly long-term range that you intend to achieve. But how should we look at it for the year? Excluding Arena, I tend to think these should be in place. Okay. So could you then call out that you mentioned at the start, Hari mentioned that there's been a 30% decline in Turkey, what market analysts pointed out? Has this happened in the history where for a quarter, suddenly the demand drops so starkly in Turkey? Is this a one-off? What are we seeing on the ground there today from a recovery standpoint? So I need to answer your question. Even the last quarter in the last year, the PC market was growing in Turkey despite inflationary trends, despite interest rates and everything. So it was a bit of a surprise. It could have been a combination of the interest rate finally catching up as well as the two-week holidays that happened in the quarter. But between June and July, we already see an uptick of about 30%-40% business between the two months. So we believe there is a correction that is happening. The demand is softening because of the high interest rates. But maybe just that one or two months was a larger surprise, and maybe it will level out slightly higher is what our belief is. But we have to watch one or two more quarters, Aejas, before we can conclude on that. One other thing is, as you know, the payment divestment, the process is on. We are to get, I mean, approval from a few regulatory authorities. So we are just keeping our fingers crossed in terms of timeline. As and when that gets consummated, Aejas, I think that's going to help us in terms of our interest costs. That's key for us there. Got it. Sir, KSA gross margins are better than the company reported margins. Is that a fair way to read the situation as well? Not really. It would be similar, maybe slightly higher because that calls for higher working capital, I mean, days. But otherwise, I don't think it will be significantly higher than the rest of the markets. Got it. And sir, would KSA be the reason for the drop in TSG, given that enterprise demand is you've been calling it out to be strong? So the TSG decline, could it be largely because of KSA only? See, on the TSG, there are three factors. Number one, it's Turkey, anyway we have discussed. Right. Second, in India, because of elections, there were a lot of postponement of purchases by the government sector. So the TSG growth was impacted because of that. And the third aspect, see, this requires a bit of an explanation. There is something called gross revenue and net revenue. What we normally report in the hardware business, the gross and net revenue is the same. Meaning, I mean, we are buying the product from the vendor, say, INR 100. We sell to the customer, say, INR 105. INR 105 is our invoice. INR 105 is our revenue. But as this business is also more and more moving towards software subscription services, renewables, etc., which are non-physical, there are some changes that are required in terms of revenue recognition under IFRS. This is called net accounting. In the example, what I had said, assume we buy from the vendor at INR 100, we sell to the customer at INR 105, our revenue is fine, our revenue is not INR 105. So that net accounting is also having, as this part of the business keeps going up, that net accounting, net revenue is also having an impact in terms of growth rate, which is the reason why in TSG, you will always find that the growth rate, actually, what we make is better than what gets reported because of this reason. And for a quarter, this delta is almost about INR 300 crore. I'm sure your next question will be once this is becoming more and more, the profit margin should become better. Answer is yes. I'm sure over a period of time, you will see that there's a change in P&L. Got it, sir. Sir, could you lastly call out what is the factoring cost for the quarter? What is the cash and what is the debt? Okay. Good. The gross debt is INR 3,180. Net debt is INR 1,659. Okay. See, I will tell you the factoring plus interest cost. I think that will be better. For the current quarter, it is INR 149. For Q1 of last year, it is INR 148. For Q4, it is INR 185. This is factoring plus interest together. You can call it as finance cost. Got it, sir. And sir, the reduction in interest cost, which has finally started to take place, are we now at this new normalized level of finance cost that we should expect for the rest of the year? Okay. So answer is yes, but this mainly depends on the interest rate, Aejas. I'm just giving you my perspective. Overseas, all of us are expecting in the next two to three quarters, interest rates will start coming down, which should help us. I don't know about Arena. I mean, I don't know about Turkey. The Middle East and African market, this would be broadly true. In India, I'm not very sure whether there will be a decrease. We are currently running at about 7.3%-7.4% interest rate. With the deposits drying up, I only expect, and the deposit rates going up with the banks, I only expect the lending cost to go up. So in my view, we will try to do whatever best that we can. Just for your info, we had also got our CRISIL rating, AA+, reinstated recently. We are doing whatever best that we can to make sure our interest rates are competitive. I think this is where we are. Got it. And sir, when you are talking about Arena, you're referring to the three entities of Arena Connect and International FZE, right? Yeah. Arena is a subsidiary. Those are part of Arena. You're right. Yeah. So that is what that is the pool of INR 12,000 that we are referring to, right? Whenever we are referring to Arena. Can you say that again? Can you repeat that question? So there are three entities, which are Arena Bilgisayar, Arena Connect Teknoloji, and Arena International FZE. So these are the three entities that we should look at whenever you're trying to call out for Arena. Is that correct? See, let me explain this. Arena is a listed company. Arena has a couple of subsidiaries. There is one company called Arena Connect, which is an acquired company, the Brightstar about three years back. There is one Arena Mobile. There is Paynet, as you know, which is part of a transaction. And also, the Arena FZE is a Dubai entity, which helps them in terms of funding. So these are the subsidiaries of Arena currently. But what, I mean, we call it as Arena is consolidated Arena, which includes all this. Got it. That would be about INR 12,200 crores in 2024, FY24. INR 1.1 billion-INR 1.2 billion. You're right. Got it. Done. Thank you and all the best. Thank you. The next question is from the line of Kunal Khudania from DSP Asset Managers. Please go ahead. Hi, this is Vivek Ramakrishnan. I was wondering whether there's more seasonality going forward in your business. I did note that there were effects of the usual weaker Q1. But there are these Amazon Prime sales and, I mean, big shopping events that happen in Q2. And then there was also ebb and flow of government businesses. So can we expect more seasonality in your business, which makes looking at a quarter-on-quarter trend unviable? So if you look at my geography, Vivek, you're absolutely right. There is a seasonality trend based on fiscal season, back to school, government buying, etc. But in general, if I look at overall Redington turnover, Q3, Q4 are normally the higher quarters, with Q1, Q2 being softer. Q1 is the softest quarter if you look at the trend rate of the last decade. But if you go geography by geography, you will find slightly different seasonality trends. It's also a combination of not just the festival seasons, but it's also NPIs from mobility players. It also when is the government buying season, etc. And yes, Q1 is the softest, but I don't think the trends have changed much. Thank you very much. That was my only question. Thank you. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Payal Shah from B&K Securities. Please go ahead. Ms. Payal? Hello. Yes, ma'am. Hello. Am I audible? Yes, ma'am, you're audible. Yeah. Good morning. Sir, I have two questions. One, I wanted to understand how our mobility business looks like. Have we added any new brands, and how much is our non-Apple portion of mobility business? Okay. See, our mobility business continues to do well. In India, we work with Apple and a few Android brands, and same in MEA. On the Android front, we keep exploring new brands, but we are in the premium segment, how we play. I think it's a premium segment in India is the growing segment, greater than INR 40,000. That's one of the segments we focus on. So in MEA, so we keep looking at brands, but we can't specifically talk about what brands we add in a quarter. We don't share those information. I would say it's very healthy. That's helpful. That's helpful. My next question is on the cloud business side. What is the current breakup between cloud retail and cloud services, and what can be expected on this going forward? Okay. The cloud business retail is still very large. Services is just beginning to happen. It's still less than 2% of the overall revenues. But we do expect a bit more on the professional services side. What we are working on is areas like migration, spin-offs, and a little bit of modernization. These are one-step existence in professional services. We also work with our hyperscaler partners to drive consumption and workloads and based on their programs. But we do see a growth in the services segment, but it'll never be very large. It'll probably go to less than 5% still. In terms of numbers, our cloud revenue for the quarter is INR 899. Previous year, INR 668, I mean, showing a growth of 35%, out of which managed services is about INR 21. That's very helpful. Thank you so much. That's it from my side. Thank you. A reminder to all the participants that you may press star and one to ask a question. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Rohit from ASK Securities. Please go ahead. Yeah. Thank you for the opportunity. I have just one question. Just wanted to know if there are any plans to enter new geographies. Can you throw some light on this? Okay. So we had mentioned in the previous quarters, but maybe I'll get a bit more specific. So let me start with this part of the world. We have had an interest to enter Singapore and Malaysia. So we just formed an entity recently in Malaysia. And our goal there is to work with our cloud partners, hyperscaler partners, to be able to make a foray and entrance in both the cloud retail and the professional services side, more in the professional services side, but both in Singapore, Malaysia. Similarly, when I go to Middle East, Africa, we have mentioned before that we have entered Republic of South Africa in the Q4 of last year. And we are building plans with partnerships and brands to grow our business there. It's a more economically stable market and a large market. In fact, it's probably one of the three large markets in the MEA region, which we have not presented. Similarly, expansion to Turkey, the Central Asia. We had mentioned this before in one of our earlier calls as well, that we are planning to be there. We have already got an office in Azerbaijan, in Kazakhstan, and planning to look at Kazakhstan and Azerbaijan and that region. We've got some early wins, and we're looking at how to grow that space. Okay. Thank you for your detailed answer. As we are on the subject program, I also want to tell you how in various geos, we ensure leadership. In India, we are number one. In UAE, we are number one. In KSA, we are number one. In GCC, we are number one. In Turkey, we are number two. East Africa, we are number one. In West Africa, we are number one. So the message we want to tell you is wherever we get into, we would want to ensure we are in the leadership position in one, I mean, as a top-most distributor if possible, or the close second. So that objective still is there. That's the reason why I said, I mean, we are number one sorry, we are number seven globally among various tech distributors. Yeah. Got it. Yeah. That answers my question. Thank you and all the best. Thank you. The next question is from the line of Chirag Sureka from UTI Mutual Fund. Please go ahead. Hi. Good morning, sir. My question was on Middle East. So there, since we have seen some decline in profitability during the quarter, so from a guidance perspective, how do we expect the recovery to happen in that particular region, that is Arena? Okay. So you are only asking about Middle East, right? You are not asking about ROW? Yes. Only on the Middle East. Okay. See, Middle East margins remain better as we just discussed because of the demand environment in KSA and also some profit challenge in the, I think, mobility part of the business. We have had some erosion in terms of Gross Margin, but those are more short-term. We don't think this will be the case into the future. Yeah. Just to add, the profitability in MEA has grown year-on-year for the quarter, not declined. It's grown quite heavily compared to Q1 of last year. Okay. Any other countries in the ROW which is sort of contributing or resulting in the decline in profitability? Not really. Yeah. It is, I mean, Turkey entities and KSA. Okay. Thank you. That was my question. Thank you. Before we take the next question, a reminder to all the participants that you may press star and one to ask a question. The next question is from the line of Gunit Singh from Counter Cyclical Investment. Please go ahead. Hi Ritha. Thank you for the opportunity. So just to reiterate, our profitable capital in the rest of the world region has fallen by almost half on a year-on-year basis in Q1. So the main contributing factors to these two are Turkey and Saudi Arabia. Is that correct? Yes. That's correct. All right. So sir, just to, I mean, kind of repeat the question of the last participant. So, I mean, what kind of outlook or expectations do we see, especially in Turkey going forward? Because you mentioned that in Saudi Arabia, things look a bit one-off. But, I mean, how do we see this going forward? See, in Turkey, as I mentioned. Sorry, did you complete the question? Sorry, sir. Please go ahead. That's not good. Yeah. So Turkey, as I mentioned, there were a few factors at play. One is the sudden dip in demand in the IT and the PC segment. Two is the high-interest rate environment and how we are managing our working capital. So what we are doing this quarter and subsequent quarters is to really get a good grip on what the actual demand looks like and to work with our brand partners to stock inventory at the right level. At the same time, working very closely with our retailer partners on the accounts receivable because it's all about working capital management and because of the higher interest levels. And we have a very close tracking on this. And we are confident that we will manage this efficiently. What the bottom line will look like will show at the end of Q2, which is all our actions. We have a good grip on understanding both the demand side as well as what supply we should keep. All right, sir. Got it. That was my message. Thank you. The next question is from the line of Nikunj Mehta from Wealth Guardians Financial Services. Please go ahead. Thank you, sir. My first question is, can we get a status update on ProConnect and what's the expected performance that you feel is possible in the next maybe few quarters? Yeah. ProConnect overall is tracking good volume. As I had mentioned in one of the earlier calls, we had consolidated the ProConnect in all the markets under India. So the consolidated ProConnect numbers are INR 228 crore of revenue with the EBITDA growing by 21% and the PAT growing by 61%, out of which India is about INR 138 crore and UAE and KSA is about INR 90 crore. Mr. Nikunj, does that answer your question? Yeah. No, sir. I was just waiting for do you think this performance will continue or the restructuring and everything is complete? It is very well positioned. So we are quite confident about its growth. Okay. And sir, the other question is that we were expecting cloud and services, the combined services bundle of business, whenever it gets to $1 billion, to contribute meaningfully to the margin. And in the annual report, it's written that we've crossed $1 billion last year. Now, it still not impacted the margins, overall margins, meaningfully. At what stage do you think because the services bit, the managed services bit is still just 2%-5%, but the retail business is the main business. And where do you think at what stage will that start positively impacting the overall margins? Okay. I'll try and answer this in two, three parts. What we reported is a subscription business and a software business. It's contributing to more than $1 billion. A part of it is reported as CSG, Cloud Solutions Group, which is the hyperscaler business. And a part of it comes from the Technology Solutions Group, which is a software business that we work in, a technology solution. The margins on both of these are quite heavy and, in fact, a bit higher than same or a bit higher than the hardware business. For this quarter, specifically in the Cloud Solutions Group, we have reported about 1.38% PAT, which is almost in line with our overall PAT for excluding Arena, 1.42. So it's already beginning to contribute profitably pay-wise, almost on par with the rest. So we don't necessarily need services to grow more for the contribution. Obviously, as services grow, we will get a better contribution from this business. Today, we don't specifically call out the overall profitability for both parts of the business into that $1 billion. Clearly, we see this as not behind the rest of the business in terms of profitability contribution. Okay. And sir, we recently sold a small subsidiary, Citrus Consulting Services. And was it meaningful, the value that we fetched for it? A, and B, can we look at more such value unlocking happening in meaningful ways that could lead to some release of funds or better profitability or value unlocking for shareholders? Okay. Let me try and answer this. I'm indicating at ProConnect, sorry, I'm interrupting. I'm indicating at businesses like ProConnect or CSG Cloud, which are not particularly into the resale of either hardware or software. And for ProConnect particularly, 75% of the business comes from outside of Redington. So we just believe that it makes sense to have it as a separate entity. So this is a suggestion also. But are we thinking on those lines? Let me talk about Citrus first. We have been working on Citrus for several years. After a lot of discussion internally, we came to the conclusion that it is important to keep the business going. It is an important business. Since it's into managed services, it was not the right entity for us. We thought, at the same time, we built a valuable business. We wanted to keep the business going and make sure that the employees that we have in the business also continue to work on this. We sold it to a company that we partner with on the cloud business. It was a win-win in terms of keeping the business, unlocking the assets, at the same time for us to be able to partner with the buyer on growing our core cloud business. Yes, there are quite a few other incubation pieces within Redington. You heard of PayNet as well. And obviously, the debate and discussion we go through is, is it strategic to Redington? And does it make sense for it to be part of Redington? We want to build valuable assets inside. And if it makes sense for it to be strategic to be part of Redington, we'll continue to keep them in Redington. But if it's meaningful to unlock, we will do that. So we'll continue to debate these. There are quite a few other such incubations inside Redington. Thank you so much. I really appreciate it. Thank you. The next question is from the line of Sahil Doshi from Thinqwise Capital. Please go ahead. Hi sir. Good morning. My question relates to the situation on the increase in the inventory on the industry in Redington. Could you possibly explain that? Sorry to interrupt you, sir. May I request you to please use your handset. Thank you, Sahil. Due to no response from the current participant, we will move on to the next participant. Ladies and gentlemen, you may press star and one to ask a question. A reminder to all the participants that you may press star and one to ask a question. As there are no further questions from the current participants, I would now like to hand the conference over to the management for closing comments. Thank you once again for joining our call. As I mentioned, we've had a good quarter excluding Arena. Arena challenges we are addressing in a manner that we will recover. We are quite confident and bullish as we go forward with what we see in the next few quarters. The upcoming quarters are also our higher seasonality quarters because of all the trends that we see in the environment, the MPAs that are going to happen in Q2 and Q3 on mobility, the AI PCs that are coming up, the growth in infrastructure in India, UAE, Saudi Arabia will all contribute to a larger market size that we can tap on. We really look forward to better quarters to come. Thank you so much. Thank you. On behalf of Redington Limited, that concludes this conference. Thank you for joining us, and you may now disconnect the lines.