Ladies and gentlemen, good day, and welcome to the Tata Elxsi Limited Q4 FY 2022 earnings conference call. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Shashank Ganesh from EY. Thank you, and over to you, sir. Thank you very much, Faizan. Good afternoon to all the participants on the call. Good morning to those joining in from the western side. Before we proceed with the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. Therefore, it must be viewed in conjunction with the business risks that could cause further result performance or achievements to differ significantly from what is expressed or implied by such forward-looking statements. To take us through the results and answer your questions today, we have the senior management of Tata Elxsi, represented by Mr. Manoj Raghavan, Managing Director and CEO, Mr. Nitin Pai, Chief Marketing and Chief Strategy Officer, Mr. Gaurav Bajaj, Chief Financial Officer, and Ms. Cauveri Sriram, Company Secretary. We will start the call with a brief overview of the past quarter by Mr. Raghavan, followed by a Q&A session. We would appreciate your cooperation in restricting yourself to two questions to allow participants an opportunity to interact. If you have any further questions, you may join the queue, and we will be happy to respond to them as time permits. Having said that, I would like to hand over the call to Mr. Manoj Raghavan. Over to you, Manoj. Thanks, Shashank. Good afternoon, everybody, and thank you for joining us today for the Q4 earnings call. I hope all of you are safe and healthy. On the financial performance part, I'm very happy to report that we delivered you know once again segment-leading results in the last financial year 2022. Our revenues from operations during the year grew by 35.3% year-on-year to INR 2,270 crores. For the year, we reported profit before tax of INR 745 crores and profit after tax of close to INR 550 crores, which is a 49.3% growth over the previous year. Our Q4 revenue from operations stood at INR 681.7 crore, growing sequentially by 9.3% year-on-year. The year-on-year revenue growth during the quarter was 31.5%. Our profit after tax during the quarter was INR 160 crore, growing 38.9% year-on-year. EPD, our largest division, continues to show strong growth. EPD grew 9.6% sequentially in constant currency terms. Our industrial design division too witnessed strong sequential growth of 8.7% in constant currency terms. Interestingly, we are seeing good traction for our design digital offerings. That's a key reason for our industrial design division growing well, along with EPD in this quarter. Our Transportation business unit grew 8.3% sequentially in constant currency terms during the quarter, which was aided by large deals across autonomous electric vehicles and digital. We won new customers as well as multi-year deals across geographies led by Europe. We were selected by a leading German tier-one supplier for establishing an off-road development center for autonomous driving and ADAS technologies. We won multi-year, $multi-million-dollar deal for EV system development from a global automotive leader. Our Media and Communications business unit continues to demonstrate consistent growth, growing 7.2% sequentially in constant currency terms in the last quarter. This growth again is powered by large deals from markets where we are gaining from competition and transformation as well as platform-led deals. As an example, we won a five-year deal with a Middle East broadcasting leader for an end-to-end streaming video implementation and multi-year operational support. This is a truly design digital deal which includes end-to-end streaming video solution, you know, the IP that we have, TEPlay, Tata Elxsi's worldwide streaming video and OTT solution. User research, experience design, UX and UI from our design team. The healthcare business too witnessed strong growth. We grew upwards of 20% year-on-year and 6.8% sequentially in constant currency. This was supported by demand for our regulatory services offerings and digital and connected health related engagement. As an example of the kind of deals we are winning here, a North American healthcare provider selected Tata Elxsi for providing cloud engineering services. Overall, for the company, we continue to win large deals across our key business units and keep the deals pipeline healthy. We've also been able to maintain a favorable onsite-offsite revenue mix, which helped us maintain our margins at a healthy rate. As a part of our innovation efforts, in the last quarter, we unveiled TEngage, which is a digital health platform for omni-channel care and patient engagement. This was launched at the HIMSS Global Health Conference and Exhibition in March 2022. We are also taking a strong position on the ESG front. Tata Elxsi has committed itself to ambitious goals of achieving 100% carbon neutrality by 2030, and by 2025 we aim to halve our carbon footprint. We've outlined multiple streams of action along with the key areas of materiality for the company. On the talent front, you know, we are all aware of the current supply side challenges the industry is facing. We continue to invest in accelerated hiring of both freshers and lateral talent, as well as training and leadership development for our future. During the financial year 2022 and the last quarter, we continued with adding to our resource base in line with the growth of our business. We added more than 2,000 employees on a net basis in Q4. We've also been proactively engaging with our employees and have deployed a number of measures to engage better, engage more. As a result, our attrition numbers this quarter were better than the overall industry. That said, you know, it is still at an elevated number, and we need to constantly keep watch on our attrition numbers. At an overall level, the quarter was a very rewarding one for us with a good top line and bottom line growth. Our strategy of growth is playing out well, and we are able to maintain our margins as well. We're also witnessing good success in winning deals in adjacencies, and that has also helped us in maintaining our growth momentum. As we enter the new financial year, our order books look strong. We continue to see traction in the large deal discussions, and our deal pipeline is also very healthy. With that, I would like to hand it over for a Q&A session. Thank you. 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. Reminder to the participants, anyone who wishes to ask a question may press star and one. The first question is from the line of Mayank Babla from Dalal & Broacha. Please go ahead. Good evening, everyone, and thank you for the opportunity. Congratulations on a great set of numbers. My first question is regarding talent. As you said that, you know, you're accelerating hiring of freshers and also laterals. As far as freshers are concerned, how much time does it take to train the freshers and, you know, make them billable? Because ER&E services is a relatively more specialized field compared to IT services. I was just wondering, how much time does it take to make them billable? Second, when do you see the beneficial impact on margins because of this? From a fresher's perspective, I think anywhere between six to nine months is typically what it takes to really make them billable. As you rightly said, ER&E takes, you know, we need to train the engineers, you know, both classroom training as well as on-the-job training. Even after six months, they usually, you know, basically get in as a bench resource or buffers within existing projects and so on. Usually after about nine months or so, we actually convert them into billing. Sorry, I didn't get the second question. I was asking that when can we. 6-9 months is the gestation period. Probably by FY 2024, we can expect some positive impact on margins because of this, because of the substitution, product substitution? I think we don't hire freshers for anything to do with margins, right? That's wrong. We're not an IT company that really, you know, flattens the pyramid by hiring freshers. That doesn't work in our business. We consider freshers as people who will contribute, you know, moving forward. Typically, when you look at hiring, you know, last year we added about 1,100 freshers. This year we might, we are looking at an increased number of 2,500 or 3,000. That's the plan. The plan is not to really hire them so that I can, you know, improve my margins. Okay. Sir, and just one data question. What would be the onsite offshore effort mix for this quarter? It is about 90/10. Okay, 90/10. Sir, a last question, if I can squeeze in. This April, we can expect a wage hike, a normal wage hike cycle? I'm sorry if I missed that in your commentary. We have given a wage hike in January itself for you know all the junior people. You know, I would say almost 65% or close to 70% of the workforce has already been given a wage hike. The senior people will have a wage hike from April onwards. Sure. Thank you so much and best of luck for the future. Sure. Thank you. The next question is from the line of Bhavik Mehta from JP Morgan. Please go ahead. Yeah, thanks for the opportunity and congratulations on a good set of results. On the wage hike, can you please quantify the impact of wage hike this quarter? Because if I look at your employee cost, it has gone up by just 4.5% sequentially, and while revenues are up 7%, even as a percent of sales, the employee costs are, like, the lowest in the past eight quarters. Can you please help me understand this? Sure. This is Bharat. Let me take that question. As Manoj said on the earlier question that we have done the wage hike for almost 65%-70% of our workforce. On a quarterly basis, the impact of the wage hike is about 150 basis points. However, that has been partially offset by the other operating lever that are present in the organization in terms of the utilizations of the pyramid rationalization. Also it has been helped by the better realization from our fixed price projects and some of the rate hikes. Net-net, the impact what you see is already, you know, partially offset during the quarter. What we believe that with our volumes and further, you know, leverage on the operating efficiencies, we would be able to, you know, kind of neutralize that over the next one or two quarters. Okay. That's helpful. Just looking at FY 2023, what are the headwinds and tailwinds we are looking on the margin side? You know, because the supply issues remain elevated, and you know, there could be some potential return of travel and facility costs also coming back next year. How should we look at margins for FY 2023? Yeah. Let me take that again. Of course, there are certain, you know, inflations and cost inflations in the industry, and there are supply chain constraints, and that is not, you know, hidden from anyone. I think we have been taking the right steps, whether in terms of the wage hikes retention or the employee engagement. Of course, with all those, you know, the supply chain constraints and the wage hike that we have done, but we think that is important from the, you know, the employee perspective because that will help us in terms of, you know, retaining the key talent to deliver on our, you know, critical projects and all the deals and the new programs that we are winning. I think there are enough levers available, you know, to utilize, as I said on the earlier question as well, whether that is our offshore-centric model on the delivery or the, you know, the superior management execution on the projects to take that, you know, FP already, you know, 5 fixed price projects are already 54% of the total delivery. What we see is that that is helping us in terms of the bottom line because we are able to, you know, execute perfectly, you know, deliver those projects on time, and that is helping us in terms of realizing the better rates. We are able to source better rate hikes on the T&M engagements also from the customers. Thirdly, I think the forex currency has also supported. That will also help too in terms of taking off some of these cost inflation impacts, whether in terms of the wage hikes or the attrition. Thirdly, and lastly, I would say that I think we're expanding. With our volumes and the scales, I think that some of the other cost line items would be nonlinear, you know, which will help us, you know, in terms of maintaining or I would say, you know, offsetting the margin inflations or inflation on the margins. We are also expanding into the SEZ, which will also help in terms of bringing down our effective tax rate. Net-net, I think we see there are enough levers available for us to, you know, to manage our margin well and in the range that we are operating today. Okay. Thank you. That's it from my side. Thank you. The next question is from the line of Vimal Gohil from Union Mutual Fund. Please go ahead. Yeah. Thank you for the opportunity. Sir, firstly, the question is related to the previous one. On the fixed price projects, I think that has been one of the big levers for margin for your margins. You've got better realization there. Over a period of time, we've seen the fixed price projects increase in terms of mix. Now, could you just give us some sense based on your assessment of your own contract or your own deal pipeline as to how sustainable are these fixed price project mix going forward? That's question number one. The second one is on the impact, how do we see this impact of, you know, your OTT apps seeing some sort of a slowdown? We've seen the recent results of Netflix. They had a severe impact of, you know, losing subscribers. How should we read the impact on that? Lastly, if you could just highlight, you know, you've seen a bit of hiring slowdown. I mean, in Q2, we saw 705 people getting employed. We've seen half of that in this particular quarter versus what we've observed generally in the industry is that the industry is sitting at a lifetime high, you know, hiring. How should we read that data point? Thanks. Okay. Let me take the first one. I think your first question was on the sustainability of the fixed price projects. I think, for the last few years, if you see that we have been operating in a range of 50-50, you know, plus, minus. I feel that in the, you know, next 1 or 2 years, that ratio and proportion is not going to change much. It could move, you know, 2%, 3% here or there, but it's going to be in this range about. Yeah. Okay. Just on the second question, Vimal, OTT slowdown. There's a little here. Let me take that. I think what you're seeing from Netflix is really the intensity of competition in the market and not so much turning away or a slowdown in demand for OTT. Right? I think there's a fundamental difference there. One is if there's an overall decrease in demand for OTT itself. And the second is whether increased competition which is then taking away customer wallet and customer money away from Netflix. I think it's really the latter. To that extent, more power to us because we are all for more competition because that powers more deals for us. That powers what we are in business for. No, absolutely. As Nitin said, I don't think there is a slowdown in the OTT market. I'm not sure why you read it. If you're making that assumption from the Netflix news, then I think that's a wrong assumption. Hiring slowdown in Q4, typically, our freshers typically come in Q2 and Q3, and that is why you will see slightly higher numbers that we have added in Q2 and Q3. That it is nothing to do with slowing down and so on. We continue to add people. I think over the last 3 quarters, we have added upwards of 1,000 hires each quarter. I think we are pretty good there. Fresher addition for 2023, is it quantifiable? How many freshers are you expected to add? We are expecting to add between 2,500-3,000 freshers. In 2022, how much is it? How much do you have there? We've added about 1,100 or so. 1,100, and that is going to go to 2,500-3,000. Yeah. Oh, great. Okay. Thank you so much, sir. All the very best. Sure. Thank you. The next question is from the line of Ankur Jain from Research India Private Limited. Please go ahead. Hi, sir. Thanks for taking my question. I have a couple of questions. My first question was with respect to the recently launched platform, TEngage, that we have launched. Just wanted to understand, like, what kind of response we have got, did we got any major leads on this? My second question is about the Renesas and Tata Elxsi EV Innovation Center that we have established. What potential benefits do we see from this partnership? Sure. Ankur, maybe I'll take that since I'm present here. TEngage, as you know, we actually did a global launch for it just towards the end of March, right? We are really just about 3 weeks, 4 weeks into the time from where we first launched it, announced it to the world. Having said that, we've had a brilliant response in U.S. because we were very clear that our first target market should be U.S. Our first deal should have results from there. I think we're already having multiple customer conversations. Enormous interest in what the platform represents and the direction that we're taking in terms of leading with patient experience. Right? Typically, because most of the platforms that have been developed, currently developed more to serve the operational needs of hospitals, we are taking a different view, that it comes from an experience perspective rather than an operational perspective. That's a quick view on TEngage. I think we just have to wait, because we also know that platform deals always take time. One is to establish interest, the second is to actually get people to adopt, because this is a major decision for them. It is not a one-time consumption. We expect that it'll take some time, but I think there are good times ahead. On the NEVIC, which is our EV accelerator innovation center, I think it's really about the fundamental point that the world is divided into two parts, right? Traditional OEMs who know how to build vehicles but are now trying to make them electric and build in digital layers on top in terms of connectivity, IoT, data management and so on. You have the other world which is digital to start with and are now trying to build vehicles. Right? This is really the kind of companies that you see in the world. Our job is to act as a bridge in between, right? Because what we are bringing together with Renesas is really the point that both parties, whether you're born digital or you're born traditional, fundamentally have a gap when it comes to electronics and software, first of all. That is also the entry point for what makes up the electric powertrain and electric vehicles and what differentiates. Our job is to make that journey faster and easier for both sides. For the traditional OEMs, we have other offerings, including TETHER, which is a connected vehicles platform and so on, which we believe will be an added value offering on top. To that extent, it is a core offering of electronics and software that is needed to accelerate electric powertrain development and a layer of software that comes above which powers the digital part for customers who need that. We're really targeting India to start with, India and APAC, and then we want to go global, right? Because we're very sharp in our focus. Our general EV capabilities apply to everybody, but they are predominantly passenger car. What we're doing now is we are targeting the two-wheeler, three-wheeler light vehicle segments. For those markets, we believe they're far more sensitive to cost and time pressures, and that is where ready-made offerings helps. We are not going to go down on the path of full development. Just to add to this, are we planning to launch our own operating system for automobile division? No. Okay. Yeah, thanks. Thanks very much. Thank you. Thank you. The next question is from the line of Karan Uppal from PhillipCapital. Please go ahead. Thanks for the opportunity. Just two questions from my side. One on the onsite-offshore ratio that you talked about 10-90. So is this historical low for you? Or what is the normal onsite-offshore ratio which... And do you expect this to reverse and affect very soon, which can be a margin headwind? That is question number one. The second question is on transport vertical. If it would be very helpful if you can give some color in terms of the demand in the subverticals of transport, let's say ADAS, EV, and connected vehicles. How are you seeing the demand? And if it is possible to quantify the contribution of these three subverticals, that would be really helpful. Thanks. Sure. Our on-site/offshore, you know, I think it has been in this 10/90 for, I think, a couple of quarters at least, or in and around this. You know, pre-COVID, I think it was more like 30/70 or something around that, right? Whether it'll go back to those levels, I don't think it'll go back to those levels. It could settle somewhere in between. But for now, I think we're okay with this number. As long as our customers don't insist on everybody coming on-site and so on, our delivery processes are structured very well in such a way that we can deliver offshore remotely. I think we would want to leverage that, you know, so that we can deliver both cost benefits to our customers as well as, you know, from a margin perspective also, you know, retain the kind of, you know, margin sets that we have at this point in time. Regarding the transportation business that you asked about, if you have noticed over the last three quarters, the transportation business has been accelerating and has been really leading the growth for Tata Elxsi. This Q4 also I think transportation showed a smart growth led by, you know, multi-year deals, large deals, both on the electric vehicle side, EV side, ADAS, and, you know, connected infotainment, you know, side. We definitely are seeing good traction in all the three areas of automotive. For once, I think it's a good position to be in. I'll not be able to share, you know, break up or details because we usually don't share those details. Having said that, the fact that we have been growing aggressively over the last three quarters would give you a good indication, good idea of how our automotive business is performing. Sure, sir. Thanks. Thanks a lot. Last question is on the conflict in Europe. Any impact on your business aspect and specifically from the auto OEMs and Tier 1 side? You're talking of the. Talking of the- The Russia and Ukraine thing, correct? Yes. Yes. Is it also the conflict? I'm sorry, repeat the question. Yeah. I'm talking about that. The war. Okay. I don't think there is any. We are not seeing any effect of that. We don't have any customers or any development centers in that geography, in that part of the world. So far, as most of our customers are in the Western Europe region, and we have not seen any slowdown or any effect of this on any of our projects so far. Sure, sir. Thanks. Thanks a lot. All the best for second quarter. Thank you. Thank you. The next question is from the line of Naveen Bothra, Individual Investor. Please go ahead. Yeah. Congratulations, sir, for excellent set of numbers. My question is partly, you have answered partly regarding the hiring outlook. If you can guide us about the net hiring targets for this year in view of the accelerated fresher hiring, which you told us about 2,500-3,000 range. If you can enlighten on this one. In view of the high attrition rate of 20% and high demand outlook, how do you see the net hiring outlook for the current year, sir? Because we added around 27% of our employees in the last concluded financial year. In this view, if you can enlighten us on the hiring, net hiring targets for this year. You're talking of net hiring targets, yeah? We don't have net hiring targets. We really don't. I mean, we can't work like that because it is such a dynamic world that we are in, right? We only have gross hiring targets and, you know, and of course, you know, every quarter we need to really see how we can control attrition and so on, right? The numbers that I talked to you are all gross numbers, right? And if you look at it, last year, we've added upwards of 2,000 people net. Yeah. I mean, if you ask me a number, I would say net hiring will be somewhere in between 3,000-3,500. Okay, sir. We have not really planned it in that way. Okay. Because in this financial year, we added around 27% that you said 2,014 employees, net employees, and our revenue has gone up by 35%. Some currency impact is also there. Currency impact is there. How will you- Utilization is also there. Of course, you know, lot of, what do you say, fixed price, you know, project, impact is there. Understood. There is of course, IPs and platforms and all of that. All of that put together. Okay. This trend you see continuing for this financial year as well, because we are signing many multi-year deals now, so you would be having some outlook on this one. Yeah, definitely. I think we have you know, as compared to, I would say even starting of the last financial year, I'm starting with a much healthier order book this financial year. Okay. Sir, last question is regarding the number one customers from the automotive or the from the media side, if you can enlighten. Because if you can broaden our database, because this year we see sometimes media from the media vertical number one is there, sometimes automotive is number one. Because in the past few years related party transaction limits were increased for JLR. This year also it has been increased for 50% for JLR related party transactions. So in the data side, if you can provide us more granular data about this is from automotive or this is from media side. Because earlier all the previous it was JLR. So to make the data granular. I'm not sure why you are so bothered about that. If you look at our competition and so on, nobody discloses this, right? They only talk about top five or top ten. No, we usually disclose about net. Top one, top five and so on, so. Yeah. Okay, sir. Thank you. Congratulations again. Is from the line of Priya Ruvera from MK Global. Please go ahead. Thank you, sir, for giving me an opportunity to ask a question. My first question relates to, you know, the observation that you're entering the year with a very strong deal pipeline and maybe the highest ever customer additions. If you can give some qualitative or quantitative color on the customers which have been added and maybe if you can quantify the deal pipeline, which gives a much higher confidence as reflected in your voice as well. You know, usually we don't give the details, quantitative details about the deal pipeline and so on. But having said that, I think in each of the quarters, we have been talking of a number of additions of new customers, you know, whether it's in the automotive area, you know, the OEM customers as well as suppliers, you know, companies. So some of the leading automotive companies, both OEMs as well as suppliers are our customers right now. A few of them have been added in the last financial year with a multi-year, multi-million-dollar product deal pipelines and so on, right? I think, if you look at the automotive, you know, industry, both with the OEMs, including new age OEMs, as well as, the suppliers, we won some very good deals in the last financial year. That has actually helped, you know, accelerate, you know, the automotive, you know, growth over the last three quarters which we have seen. On the media and communications, again, we continue to talk about the new deals that we have been winning. Like last quarter, we talked about the operator customer that we have won in the Middle East. The good part about the media and communication business is traditionally we have been focused on the U.S. as well as Europe. In this last financial year, we've expanded geographically also. We now have customers in Latin America. We have customers in Middle East and Africa. Of course, there's a lot of customers in India as well. From that point of view, definitely, from a media and communications perspective, we have shown steady growth, steady customers, and a steady revenue growth. That has come with new customer additions in all these new geographies. At the same time, we've also been able to win platform deals, you know, our own intellectual properties and products. That's also another key area for us where we are investing in. On the medical side, again, you know, we've talked about the large deals that we have done in each quarter. As compared to the previous financial year, we have grown close to about 58, 50, 67%. That would indicate the sort of, you know, growth that we have seen in that particular business. I would say overall, as compared to the previous financial year, we've had good deal wins. We've opened up new geographies. We have larger, you know, multi-year deals that gives us the confidence that, you know, the deal pipeline in the order book is pretty strong as we get into this financial year. Sure. That's helpful. Just as a follow-up of that question, is it possible to say some directional color on whether both in, say, the transportation and mainly automotive and maybe media and communications between the traditional guys and the next gen born digital guys? Like, say, an OTT player or, say, a 5G implementation. You know, some sort of mix between the two, because that clearly indicates in terms of the, you know, growth pipeline, which would mean there are more chances of next gen becoming a higher share in our composition of revenues. Yeah. I mean, in case you are tracking this internally, I'm sure, but just maybe a more qualitative color over the, say, past one year, how this has shaped up. Yeah. Priya, if you listen here, maybe I'll take that. I think we look at it more from a portfolio creation, right? Because when you think about this, there are pluses and minuses for each part. The traditional players are pivoting and transforming. To that extent, we are running along with their speed of transformation. With the new age, you know that there are a whole set of things that they don't bring as capabilities. We have the ability to craft larger deals, but they bring with themselves enormous risk. You've also seen enough of the new age OEMs go belly up, with no funding or no money left, and then either getting sold for a song or just stopping right in the way, right? This is true both in the media and communication space, where you have as many new OTT players who are popping up and then dying or running out of money, as much as it is the traditional players who are now moving to a direct to consumer, right? Whether it is like you have seen a Disney or a Discovery or anybody else going digital directly, I think for us, it's a very careful portfolio management problem. What also matters to us is the brands that we want to be working with. On one hand, there's the excitement of new age because a lot of the lessons and capabilities are built with them, but it's also a matter of risk. That is all that I'd tell you. I think what I would say heartening thing for us is, if you can take any sector that we work in and you can take the top 10 leaders in that, and you can be sure that we work with half of them at least. Sure. This is very helpful. Just more data quick win question. You mentioned about addition of 2,500 to 3,000 freshers, which would be freshers, and the total additions could be in the region of 3,000-3,500, basically. That's correct. That's a range that we indicated. Sure, sure. Sir, this is very helpful. Thank you, and I wish you all the best. Thank you, sir. Thank you. The next question is from the line of Abhishek Bhandari from Nomura. Please go ahead. Hi, sir. Good afternoon, and congrats on very strong number. Sir, I had a couple of questions. The first is, you know, if you could give some sense on, you know, the mix of your business in terms of broadly speaking, how much portfolio would be annuity and how much would be, you know, project different business for you. Second is, you know, now we are touching, you know, close to $300 million+ kind of annual revenue. Do you think time has come now for you to start investing very aggressively on sales, you know, to accelerate, you know, the growth further from here? Because, you know, now we also have the benefit of, probably one of the highest margins we have ever seen in our history. So maybe you could, you know, elaborate on these two, and if I have any more, I'll come back. Thank you. Yeah. We have been investing aggressively on sales over the last 4 quarters. We have brought in a lot of good, you know, resources that can support us, you know, both in the U.S. as well as Europe. That is a given. I mean, that we continue to do, and not just investing in, you know, sales resources alone, but also investing in tools and training for them, right? We have planned something, you know, along those lines, you know, in the Q1 and Q2 of this year. There are a lot of action on the sales front. Definitely a lot of action on the sales front. From an annuity versus fixed price or project-based engagements, what I can tell you is that, you know, over the last couple of years, we have moved the needle strongly towards annuity businesses. I'll not really give you a percentage of how much is annuity or how much is fixed bid and so on, but that's a journey that is taking place. I think the kind of consistency in revenue that you're seeing quarter- on- quarter is largely because of this, the movement from project-based engagements to annuity and long-term customer relationships. I think that's a positive trend that we are seeing and we hope that that will continue. Sure. That's helpful. Sir, one last follow-up. You know, while I heard through the call that you don't quantify your pipeline, you know, you only give qualitative colors, and possibly the only indicator for us to gauge the growth could be your headcount addition. Could you give us some other indicator, you know, which could give us some sense of, you know, where your business is growing, you know, in terms of, headcount addition is one, but do you think there are anything else what you report, could you give us some indication there? Yeah. I mean, I can't imagine what else we can give you, but Abhishek, the simplest one I would say is that if you look at what we've called out as strategic direction, we talked of in the long term, our mix of industries going to a 40/40/20, right? Between automotive and media and communication and healthcare. We have moved the needle of course. We've gone from 2-3 years back where it was 5% in healthcare, about 50+% in automotive and the rest being media. We are almost there, 15% in healthcare and about 42-43% each in the other two. If you look at it, the trajectory will continue on that path if you look at our strategic direction. If you take the bulk of the resources, hiring and you distribute them back in a 40/20 – 40/40/20 plus ratio, you'll actually get the direction of where we are looking at staffing and where our numbers will come from. That's one way to look at it. The other way to look at it would be, of course, the fact that, we are looking at a better balancing of our geo mix. That has lesser bearing for us. Why? Because we don't do too much onsite. In any case, for us everything is offshore or large part of it is offshore. We don't have to worry about, people addition or staffing overseas. That's a much smaller problem for us. I would say that's the largest guidance that we can provide. Thank you. Mr. Bhandari, may we request that you return to the question queue for follow-up questions. The next question is from the line of Madhu Babu from Canara HSBC. Please go ahead. Sir, just on the emerging vertical, we have been investing a bit on the, that like even on the rail transport and on the transport side add on. How is that diversification on the emerging verticals going on first? And second, in terms of Ukraine impact, see, are there any boutique vendors in Ukraine? And where is there any possible market share shift towards us there? Because on the digital engineering there has been some large vendors like EPAM there, but on the embedded side, are there any players there and are there potential market share shift? And last one, with the kind of a strong valuation where stock is getting, could we use this as a tool to go for acquisitions? Thanks. How we are doing on adjacencies, even to you, client and boutique vendors? Sure. Adjacencies I think on the transportation business we called out rail and off-road vehicles as an adjacency. I would honestly say it has been a little slow. Maybe about 5% is what you know we have achieved. Our target is to achieve close to 20% over the next three years. We don't have much to report in this quarter regarding adjacencies. It is hard work. It is business development. It is, you know, new sales additions. All of those investments are happening as we speak. I'm confident that, you know, in a couple of quarters we should see some good, you know, traction there. Regarding companies like EPAM and so on, yes, we are seeing a few inquiries coming our way, where customers have outsourced to companies like EPAM, and they're really looking to de-risk and looking to see if, you know, they can move that work to companies like us in India, right? We do see a trickle of such inquiries coming our way. We can't claim a large set of inquiries, but definitely there are a few inquiries. Regarding M&A, yeah, I think that's always there. You know, like I say, some other investors of ours tell us very clearly that we have been growing very aggressively 30%+ growth organically. What we need to look at inorganic. Don't lose your way by doing inorganic. That's the advice. We are keeping that in mind. We're definitely keeping that in mind. At the same time, if there is a good company that's a strategic fit for us, and it comes within our valuation range, definitely we would go for it. Yeah. Maybe I'll just add to what Manoj said as we listen here, Madhu. On the adjacency side, while we didn't of course call out what's happening with us on the transportation part, do note that we have similar adjacencies of media and new media and, in our LTV vertical we have similarly pharma and digital health and healthcare. The ultimate goal of course is to converge to a 20%-20% in each of these adjacencies as a mix of the overall vertical. We are at different points of the journey. If you look at media and new media, we are far ahead of what our targets were from this point of time. In the case of digital healthcare, we're well on our way. In pharma, we're a little behind. Like transportation, we are a little behind again. For us, I think that's the way of business. Why? Because we look at two parameters, revenue is one, marquee customer is another. I think we are tracking well on the customer front, so we just need to give it time. Okay, sir. Thanks. Thank you. Thank you. The next question is from the line of Debashish Majumdar from BNK Securities. Please go ahead. Hello to the management team. Thank you very much for taking my question and congratulations for extremely This is the operator. Sorry to interrupt you, sir. We are not able to hear you clearly. Please use the handset mode. Yeah. Can you hear me? Yes. Congratulations to the management team, and thank you very much for taking my question. Sir, I have a question which is not linked to Q4, more linked to FY 2023 and beyond. If I understand the R&D business nature correctly, it's a long gestation, high investment business at the initial stage. Once you reach the inflection point, the fruits are also equally very, very high. From your delivery for last 2 years, especially last 6 quarters, it seems to be that we have reached to that inflection point, where the investment is behind us and we are getting the fruits of that investment. Just wanted to get some sense at what stage we are with most of our clients, especially top 20, top 50 clients? Have we reached to that stage where we are getting these fruits back, and which is visible into your growth and margin? That is first one. Second one is if I also can get some sense that how is the client mining activity happening from your side, especially in the top 50 clients. Are we getting some pricing power with them? What is the direction going forward? Sure. So definitely, when we look at the top customers and when we look at the top list, there is a lot of, you know, client mining that is happening. A lot of the growth that we see, you know, in the last few quarters, has been growing our existing customers, growing our existing revenues. We look at, you know, top five customers, you'll see that the amount of, you know, mining that we have done to really, you know, grow the customer base, right? We are winning market share from competition. There is also a lot of new services that our customers wanted to take up, digital engineering services and so on. The market is also expanding and they're also eating away market share from competition. It's a combination of both that is really helping us grow. When we look at the life cycle where we are at this point in time, I would say it depends on. There is no one answer there, right? It depends on each customer situation. Customers that we have been there for, you know, the last 10 years and so on. Of course, you know, we are deeply entrenched. As the customers are looking at new areas, new digital opportunities and so on, we get engaged and, you know, we grow. In case of customers that have added recently, there is a lot of headroom left for us to really tap into and so on. As I said, right, we have been in U.S. and Europe for a number of years. In some of the major verticals, it is Media and Communication and Transportation. We have pretty established relationships. In Healthcare, it's a relatively new business, the relationship is still new. There is again a lot of headroom for expansion and really seeing how we can grow. Similarly, from a geography perspective, if you see the newer geographies, you know, we're just starting, we're just understanding the market. We believe there is a lot of headroom in each of those geographies as well. I think at this point in time I don't think we need to be worried if we have reached a saturation point or so. There is a huge potential available still to be exploited, and I think we are on the right track as far as growth per se is concerned. Excellent. One last question, if I may please. If you see our last 4 quarters performance, there is no seasonality as such. There were consistent 6%-7% growth sequentially each and every quarter. Is our business completely structured in that way that there's not really seasonality going forward or at least in the near-term visibility that we have? That's the last question that I have. If you look at it, not just the last 4 quarters, I think about the last 7 quarters also we have been consistently growing. I think that is, that's again due to all the efforts that we have put in of course 1 is mining the accounts. 2 is, you know, getting those new logos and getting those, you know, multiyear deals also, right? Yes. What happens typically is every quarter when we win these deals, in that quarter the revenue may not be significant. It may be a small revenue. Over the next 2, 3 or 4 quarters is when we really ramp up teams, we mine those accounts, and we keep growing. As long as we continue to, you know, open new logos, I mean, get into these large multi-year deals and so on, I think the trajectory is good for us. Excellent. Thank you very much for answering my questions. Thank you. Thank you. The next question is from the line of Hiren Ved from Alchemy Capital. Please go ahead. Hi, Manoj and Nitin, you know, congratulations for consistently delivering superb numbers. Actually, most of my questions are answered, but I guess one of the participants asked that question and I would reframe it, is that given the kind of tightness that we are seeing in resource availability, right, are you therefore able to translate that into better pricing, especially in the transportation vertical? Yeah. Definitely we've gone back to customers, you know, wherever possible, and we have benefited from, you know, a rate increase also from some of our customers, especially for whom we have been consistently delivering value and so on, right? We benefited, definitely benefited from that. Yeah. At the same time, you know, the demand is so much that, you know, the challenge for us is to have those, you know, trained engineers available so that we can tap into that demand. That's where, you know, we are putting our focus and attention. Also for the next 2 quarters, that is where the attention will be. Okay, great. Yeah, I mean, I agree with your strategy, and I would recommend that we don't do any hasty acquisitions because I think there's just enough to grow organically rather than being distracted by any inorganic opportunities, unless obviously you know you guys find the right fit. You know, thanks again and keep doing the good work. Congratulations. Thank you, Hiren. Thank you. The next question is from the line of Bharat Sheth from Quest Investment Advisors. Please go ahead. Hi, Manoj and Nitin. Congratulations on extremely, I mean, which Hiren has already said, so there is no word to put additional word. Manoj, I mean, when we are aware, I mean, evaluating in inorganic, so which are the gap that we find that thing can, I mean, help us in again accelerated growth where we are envisaging? Sorry, sir. Can you repeat the question? We didn't get it. Hello. Sorry. If I can put it this way, when we are evaluating as a inorganic opportunity, which are the area which you think that can help, I mean, by acquiring can help us in- Okay. ... growing at accelerated pace? Second, the new geography which you said, is that Japanese market are we looking or any other region? If not Japanese, then we were evaluating Japanese market also. If you can give some color on that. No. Regarding the M&A, you know, typically as we indicated, I think in the earlier calls also that we're looking at a few adjacencies that we need to where we don't have, say, capabilities or the right customer connections and so on. That is clearly one area where we would focus on to see how we can build capabilities. Or if there's a marquee customer that we want to access and we have been trying to get into that customer, but for whatever reason we've not been able to get into that, can an acquisition help? If there is a existing vendor that is already working with that customer, can we acquire that company and then as a result of which get an access to those customers, right? Those are the things that we look at when we're doing an M&A. Okay. From a geography perspective, I talked about Middle East, I talked about Latin America. These are two new geographies that we have entered. When I say entered, we have customers and so on, and we are looking at, you know, should we have a permanent establishment there, right? Should we open up offices and should we set up, you know? Those are some things that are under active consideration. Japan has always been one of the earliest countries to be in Japan since, I think 1997 onwards we have been in Japan. Japan is not a new geography for us. Of course, Japan has of late not been delivering. I mean, that's true for the entire Indian IT industry, right? Japan as a country has sort of fallen off and then it takes that much more effort to get business from Japan. Yeah, but Japan continues to be on our radar. I mean, we continue to have operations and we continue to service customers there. Sorry, you might have answered this because I joined a little later. On the platform business that we have launched, are we looking at kind of a SaaS model? I mean, some of that IP that we have developed or what is our thought process on that? Yes. On products and platforms, we definitely have a view of leveraging cloud and SaaS. If you look at TEngage, which is on our healthcare side, or you look at TEPlay, which is our OTT white label platform, they're all fundamentally SaaS in their construct. The business model is, of course, subscriber-based and linked to growth. Definitely, as far as products and platforms are concerned, we are definitely looking at building SaaS. Sir, is it fair, Nitin, to say that if the product has been developed for, say, a specific client, and then can it cannibalize our businesses, those clients, if we offer it on a SaaS base to all the people? No. If you look at what we're developing, for example, OTT and so on, it is meant for those customers who do not have the technological muscle or the financial muscle or the engineering capability to run and manage by themselves, right? There'll always be in the world set of customers who are saying, "Look, the platform, ultimately I'm not gonna license somebody else's. I'll develop it in-house, but I don't have the capability or the capacity, and I need somebody to help me." That's outsourcing. Our customers are gonna say, "Look, I'm not in the job of running technology. My job is content and brand and business." They will be the tier two or regional players or customers who don't look at technology as a core, who are gonna say, "Look, I would rather that the platform came in and did what I need to do." We see the two segments are very distinct. The ones that we do services for may or may not become platform customers at some point of time. Definitely there's a clear segment which are only platform potential customers. Why? Because they're not gonna do the technology on their own. It's only a question of whether we become only integrators, helping them integrate somebody else's platform, or we provide our own. In this case, we have decided we'll give them our own. Thank you. Mr. Sheth, may we request that you return to the question queue for follow-up questions, as there are several participants waiting for their turn. Thank you. Ladies and gentlemen, in order to ensure that the management is able to address questions from all participants in the conference, please limit your questions to one per participant. Should you have a follow-up question, we would request you to rejoin the question queue. The next question is from the line of Suneet Jain, Individual Investor. Please go ahead. Yeah. Am I audible, sir? Yes. I just had one question, sir. First of all, congratulations to you and your team for consistently good results, great results I mean. Sir, I just wanted to know, you had laid down one five-year plan internally in 2019. If you can speak a little more on that, as because three years have passed, and, how do you review or how do you assess the achievement in the scale from one to 10? If you can throw some light on that. I'm very happy to report that, you know, whatever we have planned from a strategy perspective, the three-year plans that we laid out, I think we are almost there. I mean, we have definitely set very aggressive goals for each one of us. On a scale of 10, I would say, whatever we've thought about at that point in time, we have achieved 9 out of 10. I would like to thank the, you know, entire management team and, of course, the delivery organization and the sales organization. The entire team has literally worked very hard for us to reach where we are today. For those of you who know how we used to perform, you know, 3 to 4 years earlier to now, you'll see the marked difference in the way we approach, you know, consistency of, you know, performance and so on. This is something that we laid out, you know, 3 years ago. I'm happy to say that, you know, we are whatever we set out, we are almost there. Thank you, Mr. Jain. May we request that you return to the question queue for follow-up questions. The next question is from the line of Mayank Thakker, individual investor. Please go ahead. Mayank Thakker, your line is in talk mode. Please go ahead with your question. Mayank Thakker, please unmute your line from your side if muted. As there is no response from the current participant, we'll move on to the next question from the line of Praveen Kumar Gurram, a retail investor. Please go ahead. Hi. Congratulations on very good set of numbers. My question is on, in terms of employees. Like this financial year, like, the financial year 2022, you started with 7,300 employees, and you lost close to 23% of the employees. Like, was there any effect on the business due to, like, losing 23% of the employees? Yes. Praveen, I think you're reading it a little wrongly. Why? Because that reflects the attrition numbers for the latest quarter, and that it does not equal to 23% of all the people added. However, having said that, I mean, you have to remember, any business lives with attrition. It's only a question of how much percent more or less, right? It is not that attrition was not there five years back, suddenly it has come up and now there's attrition. Attrition has been a reality for the last 30 years that we have been in existence. It's peaked at certain times, it's dropped at certain times. To that extent, I think it's only left to the capability of organization to deal with attrition and how do you manage impact on customers? I think we are doing an extraordinarily good job considering the fact that we continue to grow, continue to delight customers, and our CSAT continues to improve. Thank you. Mr. Gurram, may we request that you return to the question queue for follow-up questions. Next from the line of Amit Thawani, Individual Investor. Please go ahead. Hi, Nitin. Hi, Manoj. Hi, Gaurav. All my questions have been answered, and I just want to congratulate you guys on a fantastic quarter. Just one, you know, maybe I can just sneak in one question. You're doing a lot of offshore development centers for auto ancillary companies. I was just wondering, does that mean more longevity of business? Does that mean longer contracts or not really? Yeah, offshore development center typically is a longer-term engagement, right? It's a commitment from the customer that they want to work with us for, you know, X number of years and so on. Yes, longevity is implied in those projects, contracts. Thank you. Thank you, Manoj. Yeah, thank you. Thank you. The next question is from the line of Mayur Mathani, Individual Investor. Please go ahead. Yeah. Congratulations on the stellar set of numbers. I had 2 questions. One is with regards to your interview in ET today morning that you were saying that demand is outpacing supply, and we see challenges in the supply. My question is that what is the management bandwidth, and what sort of growth can we handle? Because in these times when the demand is far outpacing supply, so what is our capability to cater the clients, and how much growth can we handle over the next 2-3 years? That is first set of question. Second is with regards to your website. You mentioned regarding the EdTech sector. What are your plans in the EdTech sector? As I said today morning in the interview on TV, as we sit today, when I look at the deal pipeline and we look at the sort of demand that is coming in and the sort of deals that we are winning, definitely we've never been in such a situation of abundance, right? We have, as I said, right, demand is not an issue. Our customers are entrusting more and more work to us. All this great resignation and so on that is happening in the western region, U.S., Europe, even the geopolitical situation in Europe, what essentially they are looking at, you know, companies, say, in India who both have capacity and the ability to take up these projects, right? Due to all these reasons, we see a lot of, you know, demand coming in to India at this point in time. Having said that, when I say supply, you know, I'm not talking of generic engineering capabilities or skills or general engineers. For every project that we need, we need, you know, a senior level, you know, project manager, you know, subject matter expert and architect and so on, right? The people who'll actually hold those projects and will be able to deliver those projects, right? The supply for those, you know, critical profiles is where, you know, there is a shortage. We are working overtime to see how we can bring in that, you know, sort of, talent into the organization. At the same time, there are, you know, already the existing talent pool which are at a mid-level, you know, within Tata Elxsi, within our organization. We're really seeing how we can quickly upscale them so that they can play those roles. They can play the SME role or the architect role and so on. We do both. We really see how we can promote our internal talent, and at the same time we also look at how we can hire these people externally. It's a combination of these that we are doing in this tough market situation. I'm hopeful that, you know, in a quarter or two, you know, we will be able to manage this mismatch of demand and supply and really catch up on, you know, the sort of opportunity that lay in front of us. Thank you. Mr. Mathani, may we request that you return to the question queue for follow-up questions. Next question is from the line of Ananda Dasgupta, individual investor. Please go ahead. Yeah. Good evening. Am I audible? Yes, you're audible. Yeah. Yeah. First of all, congratulations for a brilliant result. Now, my question is coming from the investor presentation, what I was reading through. There it's mentioned that you have unveiled recently TEngage, this is a digital health platform in the USA. What do you think, is it going to be coming in the future in India also, and what is the scope of that in India? This is my first question. The second question is that even though the latest attrition rates compared to other companies are slightly lower, but we are seeing it has increased in the past few quarters. I agree with what you said earlier on that attrition is part of the business. What is the level in which the at- Sorry, we lost you there, Ananda. How do you plan to counter it? Sorry, we missed part of your. Mr. Gupta, I request you to repeat your last question, please. Pardon? I request you to please repeat your question, the last question. Yeah. Last question was the attrition rate is happening more from which level? Is it from the junior level or middle level or the upper level? How do you plan to counter it in the future? A lot of attrition is in the lower level. You know, we've had a good track record of retaining our mid and senior level people. As I think I mentioned earlier, you know, during this COVID time and so on, a lot of people have been working from home and including the new hires that we've done, a lot of them have not you know, visited our office at all. We have hired them virtually, and we have lost them virtually also. That team bonding nothing has you know, worked out during this COVID time, right? We've had a lot of what you call infant mortality, which is people leaving us within six months of joining or 12 months of joining. That is where we see attrition at this point in time. However, the senior people and the mid-level people, we have a good track record of retaining them. Thank you. Ladies and gentlemen, due to paucity of time, that was the last question. I would now like to hand the conference over to the management for closing comments. Yeah. Hi. Good afternoon, everybody, and thank you so much for joining us on this earnings call. We hope we've addressed all your questions, and we look forward to hosting you again next quarter. Until then, goodbye and stay safe. Thank you. Thank you. Ladies and gentlemen, on behalf of Tata Elxsi Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.