Ladies and gentlemen, good day, and welcome to the Tata Elxsi Q1 FY 2024-2025 E arnings 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. Good evening to all the participants on the call. Good morning if you're logging in from the Western side. Before we proceed to 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 risk that could cause further result performance or achievements that 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 yourselves 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. With that, I would like to hand over the call to Mr. Manoj Raghavan. Over to you, Manoj. Thank you, Shashank. A very good evening to all of you, and thanks for joining us today for the Q1 FY 2025 earnings call. I hope that you and everybody in your family are safe and healthy. I'm happy to report that we have delivered a steady quarter of growth. It was a good quarter for us, especially with our transportation business unit picking up on the growth momentum. Our revenues from operation during the first quarter was INR 926.5 crores, growing 2.4% QoQ and 8.4% YoY in constant currency terms. Our EBITDA for the quarter was INR 252.3 crores, staying flat at 0.3% growth YoY. Our PBT for the quarter was INR 252.4 crores, as against INR 262.4 crores in the previous quarter. We executed very well on operational excellence and fiscal discipline in this quarter towards bottom line performance, despite the impact of an exceptional one-off expense in this quarter. The company made a contribution to the Progressive Electoral Trust of INR 19.78 crores for the quarter ended June 30, 2024, which is included in the other expenses. If not for this one-time expense, our EBITDA margin would have been 29.4%, and our PBT margin would have been 28.4%. In terms of verticals, I'm happy to share with you that the transportation business reported a strong growth of 5.3% QoQ and 23... 20.3% YoY in constant currency terms. Our deep domain knowledge and strong focus on engaging with leading OEMs and suppliers across the globe position us well to capture the growth opportunities in the coming quarters. Given the current challenging environment for the media and communication industry, I believe we have done well by protecting our business and increasing our wallet share among our key customers, which has resulted in 0.5% QoQ revenue growth in constant currency terms. Our commitment to strengthening client partnerships continues as we introduce new solutions aimed at enhancing growth and efficiency within the sector. The acquisition of a strategic network transformation project from a top telecom operator in North America, facilitated by our NEURON platform, is particularly gratifying. Our healthcare and licenses business reported a decline in top line by 4.3% QoQ in constant currency terms. A significant delay in the renewal of certain projects with a major client in the U.S. is primarily responsible for this revenue decline. On the people front, we are doing well, with our attrition rates declining further during the quarter. Since we normally do not add any freshers in the first quarter, the net employee numbers at the exit of Q1 FY2025 is a result of usual attrition plus some lateral hiring that was done on a need basis. We will add fresh engineers through the next two quarters as they graduate and become available. We continue to invest in digital, AI, and Gen AI technologies across our verticals, targeting efficiency and quality in product engineering, as well as novel applications of Gen AI combined with domain and design expertise to solve complex business, product, and engineering problems. We aim to... We are aiming to have 25% of our talent pool to be AI ready by December this year. As we step into the second quarter of the financial year, with confidence of a healthy deal pipeline, continued growth in our transportation business and new customer wins and expansion of business with strategic customers across verticals. Thank you, and, with this, we would let the floor open, and, we'd take questions from our investors. 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 touchtone phone. 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. Again, if you have any questions, please press star and one. Our first question is from the line of Sulabh Govila from Morgan Stanley. Please go ahead. Yeah, hi. Thanks for the opportunity. So, my first question is on the growth piece. So just wanted to understand on the healthcare customer, the moderation that we've seen in this particular quarter. Is this something which is over in 1Q and 2Q should normalize going forward? Or this will see some effects in the coming quarter as well? Let me answer that. You know, maybe this will have an effect in H1, and we hope to normalize that in H2. Okay. Okay, understood. So, and the related question to that is that, last quarter we had called out that, we are sort of aiming to deliver revenue growth, in FY 25, better than FY 24. So, given the performance in 1Q, as well as this healthcare customer moderation continuing in 2Q as well, does that outlook change or that sustains from here on as well? No, we continue to stick with our guidelines that we've talked about in the last quarter. We definitely want to exit, this financial year with a better growth rate than... as compared to last financial year. Understood. And then, with respect to the transportation vertical, just wanted to understand the, the strong growth that we've seen in this particular quarter. Is this, is this broad-based or it's driven by the top client? In FY 2024, we saw, strong contribution from the top client. So is that the trend that is continuing in 1Q as well, or is there a change there? No, it's a broad-based growth, across, you know, multiple customers. You know, some of the deals that we had closed, you know, ramp-ups have actually started happening, and all of those contributed to this, performance. Okay, thank you. And the last bit is on the tax rate front. Just wanted to understand, whatever we've reported this quarter, is the tax rate we should assume going forward as well, and for how long will that continue? Hey. Hey, Sulabh. Hi, this is Gaurav. Yeah, I think we indicated during the last couple of quarters that, you know, in this financial year, our tax rate will go up because, you know, we are coming out of the tax holiday in few of our SEZ unit. So one more SEZ unit came out of 100% bracket to 50% bracket. So going forward in this financial year, it would be likely in this range only. I think, it would be very difficult to put any number beyond one year because it also depends upon the various other regulations and the disclosures or upcoming budget. We will see how to, you know, position it better for the company. Understood. Thanks for taking my question. Thank you. Thank you. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Hi, thank you for the opportunity. Manoj, I just wanted to understand your thoughts on wage hike cycles for FY 25 and also the hiring plan, because last quarter when you spoke, you said we will probably go... We have much more leisure hiring in FY 25. Yeah. So the wage hikes will, you know, we are dividing the wage hikes into the junior staff and the senior staff. So the junior staff would get their wage hikes effective Q2 from July, and the senior staff would get their wage hikes from Q3, that is October. Sure. Is that, if I understand correctly, this is different compared to the usual policy? If you could also give us some sense on the quantum of wage hikes and the likely impact on the margin that we should expect, on a going forward basis. You know, the average wage hikes would be in the range of 5%-6%. But I think we are well covered with respect to margins and so on. We have enough levers to address that. So I don't see too much of an impact on the wage hike on our margins. Sure. And if I could prod you further, if you could talk about how the center that you put up in Michigan last year, how is that playing out in terms of improving our positioning with global auto OEMs? It would be great to get your perspective on that. Yeah. So, so all these, you know, proximity centers are important for us, you know, basically from, you know, from a view of, you know, being closer to the customer, right? So it also shows our intent and our commitment to those markets. So from that point of view, it is, you know, very important that we take some of these initiatives. It's not just in Michigan, you know, across the globe, we have opened, centers specifically, focused on, you know, certain specific customers and, and so on. So I think, you know, all those investments are definitely helping us, playing a role in revival of, you know, you know, some of the, you know, large engagements that we're seeing. Okay. The last one, if I may, while we saw... When you've been talking about FY 25 being a better growth year than 24, but last year transportation was the vertical which led growth while we saw challenges in media and communication, as well as to some extent even on the healthcare side. How should we be thinking about the growth mix across verticals from an FY 25 standpoint? You know, the same, I think, you know, from an FY 25 perspective, definitely, you know, again, growth will be led by transportation. Our industrial design, you know, you know, accelerated growth. And actually, you know, the initiative that we started in terms of design, digital, and combining design with our, you know, embedded offerings is really, really resonating with the industry, and we're seeing, you know, good traction. We are seeing green shoots in the media and communication space. A lot more discussions happening, a lot more customer traction is there. There are, you know, significant, you know, consolidation opportunities that we are bidding for. So we are hopeful that, you know, we will see a turnaround in that particular business. Healthcare, as you know, is a relatively smaller business. We have to, you know, we have to really work through this particular one engagement. And, unfortunately for us, healthcare business is also, you know, the number of customers is also not too many. So we have some, you know, pretty good logos, you know, good customer base. Unfortunately, even if there is some issues in one or two of those customer bases also, we will get hit, right? So our aim is also to broad-base our customer engagements in the healthcare space, and I think we will get there. And I'm not too worried about the situation because this is the, you know, ER&D business. We will always have, you know, one or two of these challenges. But I think it is very much contained and, you know, we should be able to recover and grow. Manoj, if I can prod you a little bit further on this one, because you spoke about the focus on broadening our presence across some of these verticals. If I'm looking at your longer-term performance over the course of last couple of years, our client concentration has only gone up on account of the exposure to group companies. Top two customer concentration has gone up. How should we—what will we have to do differently to essentially reduce the concentration at our end? No, see, if you look at it for the size of our company, it is definitely going to be, you know, the top 10, top 20 customers will drive a lot of our revenues. There's no escaping that. There's no point to grow, you know, you know, focus on, you know, a broad set of, you know, 100 customers and each of them not being relevant, you know, significant enough. So from our perspective, from the size of business that we have, we will continue to have a lot more focus on our top 20 customers, because that is what will drive our growth. So we want to be a lot more relevant to these customers, build strategic relationships with these customers and grow with these customers. So that would be the focus. And I'm not overly concerned with that sort of a client concentration. Thank you, and all the best for the future. Thank you. Thank you. The next question is from the line of Aayush Rastogi from B&K Securities. Please go ahead. Yeah, hi. So just wanted to understand on the healthcare vertical side. So we are aiming to, you know, to go ahead with 20% of the overall revenue, so, or the SDS revenue. So how are we planning or what's the strategy behind that? Because if we see in the last two quarters, we are reporting the degrowth in this vertical. So can you just let us know how... what's the strategy behind aiming to go to the 20% kind of? Hi, this is Nitin here. Maybe I'll take that question. I just want to clarify that the whole call out for a 40-40-20 mix was a strategy call, right? Which is to do with how do you see ourselves in the long term? How do you see ourselves de-risking the fact that fundamentally in the R&D business, you have industry cycles. Every industry will go through a cycle. Equally, you have geopolitical risks, you will have currency mix risks and so on. So the question was: How do you manage your portfolio well? But having said that, as much as all of you are fantastic portfolio managers, you would also appreciate the fact that you would leverage an opportunity when it presents itself. To that extent, automotive and transportation is the largest growth opportunity at this time, and therefore, we are not worried about it becoming 50%, for example, even as the percentage contribution of the other two shrink. But having said that, if I were to step back about 8, 10 quarters back, all through COVID and a little beyond, automotive was the one that was delivering negative/flat growth, and it was media and communications and healthcare that were driving all the top-line growth that we needed, right? So to that extent, think of this as a larger, broad guideline for the fact that we want de-risking of industries. We want a little better mix of industries, rather than overly concentrated industry presence. But having said that, the actual percentage of revenue contribution of any given industry at a given time will actually be dependent on the market opportunity. Okay? Please treat it as a guideline. Thanks. Thanks for the detail. Just a second, question on transportation. So if you look, so transformation is doing phenomenally well. So is it, like, totally driven by, you know, the top 20 set of clients? And on, on what, and how kind of, you know, the visibility are we gauging in for the next set of, let's assume, post-20 clients? Yeah, so maybe I'll take that question again. So if you look at the automotive industry, you have to remember that we have a very large base of customers there. The base of customers comprises of OEMs, Tier 1 suppliers, as well as some select tool software and Tier Two suppliers within the same industry, right? So it's a broad-based portfolio. In fact, we have significant depth there. Some of the challenges that we have had was also that not all segments of that particular industry are doing well. The OEMs are doing very well in terms of spend. Now, remember, when I said doing well, I mean it from a perspective of outsourcing and engineering. So we are in the process of also carefully pruning and curtailing the portfolio and looking at how do we consolidate and grow around a set, rather than it being a question of whether you can derive revenues from a very large number. So again, this is a strategy call, that the number of customers that we have is significantly higher in automotive, and it's a choice for us to kind of figure out where we want the growth to come from.... Thank you so much. Thank you. Cheers! Thank you. The next question is from the line of Bhavik Mehta from J.P. Morgan. Please go ahead. Yes, thank you. So couple of questions. Firstly, on the transportation vertical, you know, I mean, the strong growth we saw this time was maybe driven by the ramp-up of some of the deals we had won earlier. But how should we think about the trajectory from a sequential growth momentum perspective going ahead? Do we expect some moderation to happen, given that this was something which was bunched up this time around, but maybe we see some moderation going ahead? So, you know, any thoughts over there? You know, I think we see a good deal pipeline and a good momentum that is there. I mean, if you ask me, I would assume that we will be able to show similar growth. I'm not sure that we will better the growth, or it'll be around the same growth. So, I know it is, you know, it's coming off a quarter where we were, we had shown, you know, very, very, you know, slow growth. So I think it's good that we bounced back immediately, and we were able to deliver this, you know, satisfying performance. We hope to continue this growth. So, we have that visibility. It's now up to us to convert that visibility into revenues and, you know, deliver that growth. So there is... There are opportunities, and there is that visibility that we have. Okay, got it. And secondly, on the margin side, any reason for pushing out the wage hike? Because typically it happens over 1Q and 2Q, but this time we are doing it over 2Q and 3Q. So any particular reason? And, so the related question is: how should we think about margin from a full year perspective? Are we looking at flatness, or is there a scope for some expansion as well? I think, we will, you know, continue to be within, the stated, you know, margin range, you know- 28% to 29%. Yeah. Around 28% is what, you know, we would... Essentially, the way to look at it is, look, you know, from, so if you look at the entire, you know, financial year perspective, we hope to maintain last year's, you know, performance, maybe beat it a little bit. And all of that depends on, you know, our revenue growth and, you know, in the, in the subsequent quarters and so on. Yeah, so what was the question? There are enough levers, so- Yeah, there are enough levers for us to manage that. Wage hikes, it's not always that, you know, we go... I mean, we even in the, I think the previous year or the year before, we have done exactly the same, July and October. So, again, we take a call, depending on, you know, from an overall, what do you say, our wage budget perspective, right? We look at it, and we model it, and we take a call. We typically, you know, want the people cost to be anywhere between 56%-57% of revenue. So, we do a lot of modeling, and then we take a call in terms of, "Hey, what is the right thing to do? Okay, got it. Just lastly, outlook on media and telecom, are we seeing any green shoots, or do we expect this to- Yeah, I told you earlier in the previous question also. Yeah, there are. We see some good, you know, we see some. I won't call it good. We see some green shoots, definitely. There are some large consolidation opportunities that we are bidding for. And at the same time, let me tell you that that industry is still under a lot of stress. There is a lot of M&As happening. There is a lot of pressures to bring down the overall budgets and move work from, you know, high-cost countries to, you know, best-cost countries like India. So there are a lot of things happening in that industry. So, but however, we are on top of, you know, many of these, and there are deals in the pipeline, so we feel a little bit more confident now. Okay. Thank you. Thank you. The next question is from the line of Urmil Shah from Ageas Federal Life Insurance. Please go ahead. Yes, good evening, and thanks for the opportunity. Just to follow up on the outlook for transportation vertical. In this quarter, we had called out that ramp of the large deal and- Sorry to interrupt, Mr. Shah. Your line is breaking up in between. Is it better now? Much better, sir. Please go ahead. If you can repeat the question once again. Yeah. So my question was on the transport vertical. In Q4 earnings call, we had said that the ramp up of the large deal would be done in Q1. So when we are talking about similar sort of growth in the near term, are there more such deals, you know, or there are smaller deals which are expected to drive the growth? And also, when in Q4, we had spoken about the OEM share now being 56%. So is that part of the pie expected to drive the growth in the vertical? Yeah. Answering your, the latter part of the question, yes, definitely, we see a lot more traction in the, in the OEM space. And, and yes, you know, when, when you look at a, when you look at our pipeline, it's a bucket of opportunities, right? Not everything is large opportunities, not everything is smaller opportunities. There's a bucket of opportunities that we are, we are chasing. And it's I can tell you it's a pretty healthy, you know, bucket that we are chasing. And, and, yeah, I think we are, we are confident that, you know, you know, we will, we will be able to show good growth, again, next quarter. ... And, you know, in the last few quarters, the transportation vertical growth has relatively been inconsistent versus what we have done earlier. So this time you are more confident that growth should be more consistent, at least over the next couple of quarters, right? At this point in time, sitting today, that's the visibility that we have. Sure. Yeah. Those were my questions. Thank you. Thank you. The next question is from the line of Abhishek Shindadkar from InCred Capital. Please go ahead. Hi, thanks for the opportunity, and congrats on a good quarter. So two questions. This quarter we saw an increase in the on-site mix, presumably, maybe because of the ramp-up. But any color in terms of what could the mix be or, you know, what is a sustainable level? And the second is on the headcount. Anything that you want to add in terms of, you know, the numbers of headcount that we have seen for the quarter? Is this a one-off or, you know, the mix could keep on changing as you highlighted, as you hire the freshers? Yeah, I think, you know, this quarter we had a slight uptick in our on-site, you know, percentage, which is pretty normal, I would say, especially when you start up new engagements and so on. Customers would definitely want, you know, the initial phase typically would be on-site. A sustainable level, I mean, from our perspective, is definitely, you know, 25-75, and we will hover around that, you know, range only. From a headcount perspective, yeah, so, you know, over the past, I would say four quarters, we have, you know, very, very diligently built up our, ramped up our resource pool in expectation of, some of the large deals, you know, picking up. We see that some of these deals are really picking up now. So from that perspective, I think, you know, I think we are well-placed. Further hiring would exactly be based on, you know, improving our utilization and utilizing the resources that we have already hired, and so on. So we will, especially when you look at a lateral hiring and so on, it will be muted. However, it will be on need basis. As and when, you know, we definitely need certain skills, we'll go out and hire, but we won't be hiring in bulk, especially from a lateral perspective, because we already have built a sizable bench, and we're pretty confident on the capabilities and skills that we have. Fresher hiring, again, you know, will be spread out over the next two or three quarters. And, again, we will take a call based on, you know, based on the, you know, revenue, based on the project ramp-ups and, you know, revenue uptick. So we will be a little cautious in adding costs, you know, especially, you know, engineering headcount, because we want to get back to our, you know, preferred, you know, margin, given that we had this one-time expense and so on. So, we'll be a little cautious as compared to the last financial year. But having said that, we will keep our commitments in terms of, you know, whatever we have, you know, onboarded the resources and so on. Thank you, sir. This is helpful. So just to clarify, the net reduction in the employee was more about prudence rather than an uptick in attrition. I mean, I know the attrition number is flat QoQ, but there is no change in the quarterly annualized attrition for us, right? Annualized attrition actually has come down. So typically, you know, what we do is, even though we have attrition every quarter, the number of resources we add is far higher. But in this quarter, we have not added any freshers, you know, because, Q1, typically, we don't add too many freshers. Even if we add freshers, it's usually in the last week of the quarter and so on, that people join. But this quarter we have not added, so that is why I think our addition is also, you know, net addition is, is come down. Having said that, again, I say we will be cautious moving forward. Noted, sir. Thank you, and that was very helpful. Best wishes for the year. Thank you. Thank you. The next question is from the line of Rajesh from Zenith. Please go ahead. Yeah, good evening. My question is, like, you mentioned about one, a one-time expense. I didn't get that. Can you please elaborate on that, please? Yeah. The company made a contribution to the Progressive Electoral Trust of INR 19.78 crores in the last quarter. That is the one-time expense that we talked about. Okay. And secondly, our revenue has grown, but our profitability has been very constant for the last few quarters. So what can be done to increase the profitability in time to come, please? You know, I'm not sure when you, when you say that, you know, our profitability is down or, you know- No, I'm not saying it's down. It's just being very stagnant. Yeah, I mean, we have, we have peaked our efficiency, right? You know, a bit of you know, 28% plus, not too many companies in the industry have such EBITDA. If you add that one-time expense, I think you can draw a better conclusion in terms of the absolute margin that we would have, you know, grown compared to the previous quarter. Mm-hmm. Mm-hmm. Can we also expect some kind of a bonus in time to come or as a retail investor? ...Yeah, that, I mean, that is, you know, we have been discussing at the board level as well. We will, you know, inform, you know, the investors and market, once we have a approval from our board. These are items that weekly is discussed. At this point in time, we have nothing to share. Okay, thank you. Thank you, and all the best. Thank you so much. Thank you, Rajesh. Thank you. The next question is from the line of Ashish Shriram Thavkar from JM Mutual Fund. Please go ahead. Yeah, thanks for the opportunity. My question was related more so from the GCC angle. So given that, every day we are seeing a lot of setups happening in India, and the narrative that they want to do more and more innovation work by themselves, would you like to comment on how that event is going to pan out for, especially for a company like us? Is there a coexistence thing which is coming into play, or you feel the near term there could be some hiccups? GCCs are both an opportunity as well as a threat, right? It's not that every company, you know, would move all the work to their GCCs, right? Most of our customers have a balance between what they give to their own centers, GCCs, and what they outsource or work with strategic partners like us. So we have not seen a case where 100%, you know, they only work with their own centers, and they don't want to work with anybody else. You know, GCCs also are in the same market, right? They also struggle to get resources, to train resources, to keep them, you know, to upskill them and keep them ready and so on. So, I think, in most of our customer places, even though they have GCCs, they also work with us. So we definitely bring in a certain set of capabilities built over, you know, many, many years, right? 30-plus years of, you know, history that we have in doing, you know, ER&D business, right? There are not too many companies that have such a, you know, strong domain knowledge and deep history, in this domain, right? What is a GCC? GCC is just built by, you know, hiring people. You know, so GCCs take time. You know, you need to build that culture, you need to build that bonding, you know, you need to build, you know, what do you say? Talent base. And, so it's very easy to look at GCC and say that, "Oh, they set up a center, and all the work will go there." But practically, that doesn't happen. Yeah, maybe, Ashish, I can just add a little bit. This is Nitin. The risks are much higher when you're talking of typical back offices, because if what you're doing is you're outsourcing very classical IT work, BPO work, and so on. There, the risk of GCCs taking over what was otherwise done by IT companies is quite high. And engineering is a lot more difficult and a lot more involved. At the same time, I'll also say there is a positive here, which is the fact that GCCs also break down barriers within the organizations that we're working with about moving work to India. So in that sense, we also see a positive halo around the fact that, look, the very fact that the leadership is endorsing a GCC also means that there is that much more lesser barriers to outsourcing and offshoring. And just to take that point forward, you also said that in terms of the skillset that is available, you'll be cautious on adding the talent. So whatever we have on our bench, do you think that is sufficient enough to take care of the growth for the next year? No, I won't say that. I'm. It's not that we are, you know, choking off or stopping hiring. We will still continue to hire on a need basis, right? It's not that, you know, that we have all the capabilities ready for a large deal that comes up or ramp up and so on. We, you know, at any point in time, if any deal comes up, you know, you know, 70, 80, 90%, you know, we would have, the capabilities and the resources available. We may still need to go out and add a few people, you know, depending on, the technology areas and so on, right? So, so but we will be cautious is the thing. It's not that, you know, I'll go out and add 1,000 people, you know, without that visibility. I'm not going to do that because I already have that bench. Yeah, that's helpful. Thank you so much. All the best. Thank you. Thank you. The next question is from the line of Abhinav Ganeshan from SBI Pension Funds. Please go ahead. Good evening, sir, and thank you for taking my question. I had just two questions. If I look at your client concentration in top five and top ten versus Q1 FY 2024, you know. In top five, we have seen the concentration go up by almost 500 basis points, and top ten by almost 600+ basis points. So would this be explained by the larger pro- clients growing faster? Or how does this add up? If you could give some color. It is a mix of, you know, you know... We can't say that it is only due to one customer growing or, you know, it's a mix. You know, top ten customers also have a mix of customers, not just only from the automotive industry, from the media industry, as well as the healthcare industry. So there's a mix of customer base in the top ten. And, you know, we've seen, you know, I would say we've seen broad-based growth. Our strategy has been, you know, to really, really, you know, mine these accounts, you know, deeper, go for new buying centers, you know, build strategic relationships, build deeper relationship with these customers so that we can have a longer term business with them, right? I think that is a strategy that we laid out, not just for the top 10 customers, top 20 customers also. That is where we are seeing this, you know, positive business growth and, you know, positive outcomes. I think we are comfortable with that situation. Fair enough, sir. Just a follow-up on that. When I'm looking at your geo mix also, you know, when I look at it, same time last year, you know, our, you know, our, Americas contribution was around 40%, which is, dropped down to 33%, and, Europe has gone up from 37% to 42%. So can, just, just, trying to understand, you know, whether, you know, European, OEM, European transportation businesses have been doing better for us, compared to, say, the U.S. telecom and U.S. healthcare. Is the understanding correct? Yeah. So the transportation business for us is largely driven through Europe customers. Whereas our media and telecom and healthcare both are largely dependent on the U.S. market. And if you look at it, both those segments have not been growing aggressively. That is basically how our U.S. share is also, you know, dipping slightly. Fair enough, sir. Thank you for the great understanding. All the best. Thank you. Thank you. Thank you. The next question is from the line of Bharat Sheth from Quest Investments. Please go ahead. Hi, Manoj, here. Good evening. Am I audible? Sir, your line- Hello. is breaking in between. No, now is it better? No, you're breaking now. One second. Now? Yeah, this is okay. Any better? Yep. Yeah, please go ahead. Yeah. I have a question on this, particularly on our transportation piece. First is opportunity side, 3-4 years back, we were the problem, and a lot of investments were going on, and now it is, it is- Sorry to interrupt, Bharat. Sure. Your line is clear, still not clear. So maybe request- No. Disconnect the line and then reconnect it again. Now is it better? Hello? Hello. No, sir, your line is not clear. Okay, I will rejoin. Thank you so much, sir. The next question is from the line of Manik Taneja from Axis Capital. Please go ahead. Thank you for the follow-up opportunity. Manoj, just wanted to get your sense with regards to what we've seen in the recent months or quarters, is that a number of traditional IT services companies have made substantial acquisitions on the automotive R&D space. How does that change the competitive landscape for you? If you could share your thoughts on that. No, true. Yeah, we have seen, you know, the likes of HCL, Infosys, and so on, make, you know, large acquisitions. So far, we have not seen, an immediate impact in any of our, you know, customer base. Also, we understand that a lot of, the companies that they've acquired are a lot more in the traditional, you know, mechanical, engineering space, not too much of, you know, focus or capabilities in new age, you know, whether it is, digital, you know, space or the connected car space or, you know, the electrification space, right? We don't see any of them. So, we are watching that space, carefully, but at this point of time, we don't see too much of an impact on our current, customers. Sure. Thank you. Thank you. The next question is from the line of Bharat Sheth from Quest Investments. Please go ahead, sir. Today, am I audible? Your voice is still not clear. Breaking, sir. Okay. Sorry, I'll rejoin later on. Thank you. I would request you disconnect the line and then reconnect the call once again. Yeah, sure. Thank you. The next question is from the line of Ashwini Kumar Singh from Statpro Fintech Pvt. Ltd. Please go ahead. Hi, thank you for this opportunity. So my question is that in the previous few concalls, we read that you said that almost 25% of the workforce will be AI-ready by quarter two or quarter three of the current financial year. So I would like to understand, it's like, are we on that path or not? And which particular sectors are you looking at in the AI segment, and how it can add to the top line of the company? Yeah, so we are aggressively working on that, Ashwini, and you know, the target is to have over 25% of our staff trained in these technologies by December. And we have more than 100, you know, POCs, you know, across segments, right? Automotive, media and communication, healthcare. As well as there are some very interesting design, you know, POCs as well. So it's broad-based across the organization that we are, we are going ahead. We are having some very, very interesting conversations with customers. So it's early days, and you know, as you know, it's not just us, but even our, for our customers, it's early days. So we are trying to really, you know, together figure out the impact of these technologies and, you know, what benefits you know we can bring. We are pretty excited on this, and that's something that we'll continue to focus on. Okay. And are we doing something in the semiconductor space? ... we don't do directly the semiconductor chip design. But however, you know, in each of our industry verticals, because we are in the embedded space, we definitely need to partner with the major chip companies, build solutions on top of, you know, the chips, right? So whether it's on the, you know, firmware layer or the application layer. So we have in each vertical, we have partnerships with the semiconductor companies. So I think that's, that's our focus and that's the way, that's our strategy. So the revenues for these should be flowing in from the next financial year? I would say it is not linked to—I mean, revenues are already there. I mean, we have revenues coming in from semiconductor companies as we speak. Okay. Okay. Okay, thank you. Thank you. Thank you. The next question is from the line of Moez Chandani from Ambit. Please go ahead. Yeah. Hi, good evening, and thank you for taking my call. I wanted to understand your outlook on utilization. Given that headcount has declined, do you feel the utilization levels right now have peaked, or do you think that there's still more leeway for increasing the utilization, and could that have an impact on margins as well? Absolutely. I mean, utilization has not peaked at all, right? We have a long way to go, and that is where we are confident that, look, we have enough levers to you know, manage the margins. So, so yeah, so that will be the focus in the coming you know, three quarters in the year, right? We really need to ramp up our utilization. So as the deals pick up, definitely utilization will also increase. All right. Thank you. Thank you. Thank you. The next question is from the line of Chirag Kachhadiya from Ashika Institutional Equities. Please go ahead. Hi. Sir, I have one question on media and communication vertical. So what's the behavior of clients who experience for this vertical during the quarter, and what's the outlook going forward? Because in previous one of the call, we mentioned that, by end of the year, we were expecting that this vertical to bottom out. So is this still intact or any behavior change you witness even in the Q1 Q2 as well? Yeah. I explained about it in a few questions before. I believe that, look, you know, we have bottomed out and there are some green shoots. There are some, you know, good opportunities that we are chasing. Yes, it's still a tough market. There are still, you know, a lot of M&As going on, a lot of focus on cost reduction. You know, there are a lot of layoffs happening at our customer places. There's a lot of push towards, you know, best cost locations and offshoring and so on and so forth, right? So having said that, there are some good, you know, large consolidation opportunities and large deals that we are seeing. Of course, it will take, you know, one or two quarters to fructify and move forward. But I think we are seeing some positive developments. Plus, we have some good, you know, deal wins, especially with the NEURON platform that we have, you know, launched. So we are really looking at opportunities in 5G and 6G space as well, as we speak. So these are all, you know, opportunities for us that can really help this vertical to grow in this financial year. Okay, all the very best. Thank you. Thank you. Thank you. The next question is from the line of Apurva Prasad from HDFC Securities. Please go ahead. Yeah. Thanks for taking my question. Manoj, could you give out how much would be the OEM mix within the transportation in the current quarter? It would definitely have increased slightly, maybe approximately 60%, you can take. No. More than that? 66. 66, sir. Oh, sorry, I'm mistaken. So it is 66%. 56? 66. 6, 6. 66. Yeah. Okay, got that. On the healthcare life sciences segment, this delay and renewal, what would you attribute that to, by the large customer that you mentioned earlier? Yeah, Apurva, I'll take that. In this particular case, I think it's simply business challenges at the customer side. So they have had some growth challenges on their own top lines and so on. So there are very specific, I think, CFO-led initiatives to ramp down on costs, which is affecting our R&D programs. So we expect that to be short term, but having said that, we are keeping a close watch. Right. And would you expect a similar decline next quarter? I'm asking this because I believe last year you added some marquee names in the vertical, and I think that goes along with the ODC setup. So would that sort of offset the impact that you're seeing from this, or this could likely continue for a quarter more? To that extent, ramp-ups that we do in other deals cannot fully make up for what we have here. So that is the expectation that some, if not all, of the renewals should come through, and I think that is what we're aiming for. But look, it may not be 100% pullback of everything, which is okay. As long as we have partial, we should be able to fill back with what we're doing with other customers, some of the great logos that we won, because there is a growth path there, even though typically healthcare is a little bit of a conservative industry. It doesn't kick in too early, too quickly. But there's a good, good pipeline there. There's a good visibility there. But it is important that, yes, we recover some of the renewals, and get them going, even if not all. So that is the only place where there is some dependency, Apurva, to that extent. Okay, got that. Thanks. Thanks a lot. Sure. Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments. Thank you, everybody, for attending the investor conference. We really look forward, you know, to talk to you again the next quarter. And, we really are, as a management team, we're really focused and keen to continue this, you know, growth path and, you know, continue on the recovery in, at least in some of the verticals like media and communication. We're fairly confident that, you know, we have a good sort of, you know, pipeline and fairly confident that we'll end the financial year, you know, positively. So that's something that, as a management team, we are really, really focused and committed. So thank you again, and look forward to talking to you again next quarter. Bye. Thank you. On behalf of Tata Elxsi, that concludes this conference. Thank you for joining us. You may now disconnect your lines.