3i Infotech Ltd (3IINFOTECH) Q4 FY23 Earnings Concall Transcript

3i Infotech Ltd (NSE:3IINFOTECH) Q4 FY23 Earnings Concall dated May. 08, 2023.

Corporate Participants:

Asha Gupta — Investor Relations

Thompson P Gnanam — Managing Director and Global CEO

Sanjay Rawa — Chief Financial Officer

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

Harish Shenoy — Chief Operating Officer Professional Services & Chief Risk Officer

TS Mohan — Chief Human Resource Officer

Analysts:

Diwakar Pingle — Ernst and Young — Analyst

Siddharth Gupta — Voyager Capital — Analyst

Ranu Parwal — Acura Solution — Analyst

Purushotam Savlani — Individual Investor — Analyst

Sanjay K — Individual Investor — Analyst

Dharmesh — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the 3i Infotech Limited Q4 FY’23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Ms. Asha Gupta from E&Y. Thank you, and over to you ma’am.

Asha Gupta — Investor Relations

Thank you, Darwin. Good afternoon to all of you. Welcome to the Q4 and full-year FY’23 earnings call of 3i Infotech. The results and investor presentation have been already mailed to you and you can also view it on our website at www.3iinfotech.com. To take us through the results and to answer your question, today we have top management of 3i Infotech Limited represented by Thompson Gnanam, Managing Director and Global CEO; Harish Shenoy, COO Professional Services and Chief Risk Officer; Sanjay Rawa, Chief Financial Officer; TS Mohan, Chief Human Resources Officer; Sax Krishna, CEO, Digital and NextGen business; Varika Rastogi, Company Secretary & Legal Head.

Thompson who will start the call with the business update, which will be then followed by Sanjay, who will provide an update on the financial performance. TS Mohan will give an update on people strategy, Harish will update on global risk and compliance, Sax Krishna will give an update on Digital and NextGen business, and then we will open the floor for Q&A session.

As usual, I would like to remind you that anything that is said on this call that reflects any outlook for the future or which can be construed as forward-looking statements must be viewed in conjunction with the risks and uncertainties that we face. This risk and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual report that you can find it on our website.

With this, I will now hand over the floor to Thompson. Over to you, Thompson.

Thompson P Gnanam — Managing Director and Global CEO

Thank you, Asha. Good day to everybody. Welcome and thank you for participating in our Q4 and FY’23 earnings call. I’m delighted to have all of you to join us today as we discuss our financial performance for the quarter ended. Before we dwell into details, I’d like to express my gratitude to our shareholders, analysts and investors for their continued support and trust in 3i Infotech. We will go to recognize the importance of transparency and open communication and this earning call provides us with an opportunity to share our progress, challenges and plan for the future.

Over the past quarter, 3i Infotech has to continued to demonstrate resilience, adaptability in a dynamic business environment. Despite the ongoing global challenges, we have remained steadfast in our commitment to deliver innovation, solutions, foster our strong relationship with our clients and drive sustainable growth. Throughout this call we will discuss our financial performances, highlights, key milestones, address market trends, provide insights into our strategy, way forward. Our management team will present a comprehensive overview of the quarter followed by an opportunity for questions and answers.

We are pleased to inform you that our fourth quarter performance was in line with expectations. We recorded a revenue of INR190.5 crores with a gross margin of 16% with a quarter-on-quarter improvement from by 12.5% on to 16% sequentially. For the current financial year, revenues grew by 7.7% to INR729.1 crores, with a gross margin of 12.5%. The noteworthy achievement for the fiscal year performance is clocking a PBT of INR9.4 crores. With the Q4 exit margin run rate of 16%, we expect to generate INR180 crores gross margin at the base revenue of INR730 crores for the next financial year prospect. This will enable the organization to turn positive at an operating EBITDA margin level and to create a scalable, sustainable business model.

Our India business region has grown tremendously with 27.5% increase in revenues compared to last year. This revenue contribution for the quarter is INR75.9 crores and for the year has been to INR269.3 crores. We expect the momentum from India business to continue in this fiscal year also and help us to overcome global headwinds in other western geographies. We have onboarded 16 new logos in Q4 and quarter 16 logos in FY’23 and have a big potential to develop and increase the order book vis-a-vis new MSAs we have signed, now focusing at least a INR100 crores based on our new products and platforms. In FY’23 we made major investments in new service areas such as NuRe Edge, another NuRe line or services and FY’24 is a year of execution for 3i Infotech. As per our vision ’30 statement, we have set the immediate goal in three years to reach $100 million, which we have come really close so fast. Going forward, we believe we should be in the range of INR825 crores to INR900 crores for FY ’24 at the lower and the higher end of the revenue aspirations. We believe this growth will be achieved while maintaining a positive EBITDA margin.

I’d just like to take you through our segment performance. Our AAA, which is our application, automation, analytics contributed 40% of our total revenues and gross margin of 41%. And AAAs highest revenue contributor was INR520.8 crores in FY23 and INR130.4 crores in Q4 FY’23, followed by IMS, which is INR98.2 crores. Our client concentration remains very healthy for the quarter with top five, 10 and 20 clients contributing to 11%, 27% and 41% respectively. And as a focus area, we’d like to expand multiple lines of businesses within our key accounts.

To summarize some few business highlights and we will see the teams expanding on some of these points. We won the first B2B2C deal of RailTel offering a WiFi monetization on railway stating networks to to the potential of deal size of INR1,000 crores over five years on a minimum, contrary to forecast and my colleague Sax Krishna will expand on this as he talks about in detail.

With Oracle CoE generally being operational at the level paved the way to win operational — Oracle transformation deals namely SBI General in Digital and NextGen business as well. Digital IMS has grown with revenues from INR98.2 crores, 80 new logos added towards bucket, and to name a few, right from HPCL, IOCL, we have expanded data center contracts in IOCL, which is a new contract, over and about our current contract, Dhan Lakshmi Bank, etc. in FY’23.

The future tech business which is in collaboration with IIT Madras is evolving very quickly and with Dig tech R&D and especially in [Indecipherable] and audio analytics to solve business challenges in health-care and other industries. We are conducting behavioral analytics POCs and pilots in universities in UK and go developing FCX cockpits for primary and tertiary care healthcare’s in UK.

Now coming to the way forward and the focus for FY’24, the new 3I is poised to take advantage of rapidly changing global economic landscape by leveraging agility and nimbleness as challenging. The company will create very highly customized country-specific business models that will deliver significant value at the right price. It will focus on driving onshore high-margin business using sovereign cloud led digital insights and AI-enabled services, but it will also leverage its investment in NuRe led branded platforms and product to solve business problems, drive outcomes for clients by providing complement services that coexist with legacy systems, companies will enable customers to monetize and extract the fullet value for the assets, reduce capex spending during the downturn, in addition to the traditional BFSI I focused, where we target Mid-Tier companies in telecom, media, entertainment, manufacturing and healthcare verticals.

Coming back to a certain organizational priorities and I want to just summarize some of them and I’ll leave the slot with all of you. The only real priorities will be, as we said, this is a year of execution — execution excellence will be a key priority, delivering quarter-on-quarter of profitable operating margins and ensuring predictable business model for our shareholders, rebrand and reposition, build our value brand under the NuRe brand in both sides of the products along with our 3I brands, people centricity, drive performance-driven our value-based culture across the organization to become a challenger, leverage the recession. I think this is a great opportunity, the macroeconomic downtown to re-launch ourselves in the Western market as an innovator. Challenger disruptor, aggressively compete with the Tier 1, Tier 2 peers as a value partner of the right size. So these are clear priorities for us for this year and if I got dwell deeper into a bit of business priorities.

Number-one for us is defend and protect the the US professional services and it’s a very important strategy and Harish Shenoy is taking additional responsibility of COO and will be based out US, its a key organizational change for this particular priority. Our country-specific business plans could be extended based on changing macroeconomic and geopolitical situations. We need to expand the enterprise businesses. We’ve done extremely well in India. You saw the growth of almost 27.5% in terms of digital infrastructure management. We want to see how we can use this as a growth strategy in the USA and UK as well. Execute our BFS CoE business plans for USA and India and Sax will expand on more on this when he comments about this. We also want to expand on the digital BPS CLM business in US and UK. Definitely, we want to monetize the cognitive computing services. CXO cockpits in US and UK, monetize the NuRe 3i investments we have made in Malaysia to accelerate our ASEAN business which is also a great opportunity to recession proof us in this tough environment in the western world and launch the mid market you EME vertical in the US, UK and Europe. So these are very clear business priorities where we want to kind of build on and take it to marked. And last, but not the least, and get our RailTel business off the ground. We’re going to give a commercial launch and allow Sax to expand on this. This is going to be a great game-changer for 3i as a B2B2C business.

So once again, I’d like to thank you for joining us today. We value your continued interest in 3i Infotech and we look-forward to sharing our achievements, addressing your questions and exploring the path ahead.

I will now hand over to Sanjay Rawa, our CFO, to explain on the financial update. Sanjay?

Sanjay Rawa — Chief Financial Officer

Hank you, Thompson. Good afternoon, everyone. I would like to provide key highlights of the financials for the quarter ended 31st March 2023. Quarter-on-quarter revenue growth was at 4.5% from INR182.3 crores to INR190.5 crores. This has been primarily due to our India region growth. For the year ended 31st March ’23, our revenues were at INR729.1 crore vis-a-vis FY’22 revenues of INR677 crores, reflecting an annual revenue growth of 7.7%.

On the other expenses part, I’d like to give give a highlight that for the quarter ended 31st March ’23, we are in line with our earlier expectations, earlier quarter numbers. There has been a slight increase due to some travel expenses which were there on the growth-related areas which we had to spend and certain areas wherein we had to as a project-based revenues which we had to consider as a provision for the quarter. Going forward, on the foreign exchange gain loss, we had one-time loss of INR10 crores for the quarter. This was due to the rupee getting strengthened against the dollar for the quarter. Overall for the year, we ended with an overall gain of INR71 crore, which has been the prime highlight for our EBITDA and our PBT and PAT to be on a positive business.

Going ahead on the balance sheet, I like to give key highlights for the key elements of our balance sheet. Fixed assets we have had certain areas wherein we have to — our [Indecipherable]v has grown by INR34 crores for the quarter and we had a Vashi property which we had to restate back due to the Azentio property that we had sold back but we had to get it back again in our books.

Our cash balance for the quarter has reduced by overall during the year and for the quarter has reduced by INR60 crores. This was partly due to fund our operational losses — the losses that we had and our capital work-in progress. DSO stands at 61 days for the year, which was primarily due to certain government customers collection which could not happen, but that we target to happen by the first of this year. So these would be highlights on the overall financial numbers.

Like to hand this over to Sax Krishna for his further the comments and then take on any further questions that may come.

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

Thank you, Sanjay. I’d like to take a leaf from Thompson’s comments a little earlier. This is the year of execution for 3i Infotech. We have invested in multiple engines of growth which make up our digital business and NextGen services portfolio. This year we will show execution of these businesses to monetize the investments. I have taken the responsibility of this execution this year as the global COO of Digital and NextGen businesses.

As we have reported before, we’ve been steadily building IP competencies and capabilities in [Indecipherable] that can disrupt the marketplace and provide solutions for unsolved business problems. To name a few of these are our NuRe coud and related products, and NuRe FutureTech, our Oracle CoE, NuRe campus and digi GPS. There are others which are more services-led, which also have an equal impact both on our existing and other customers that we’d like to serve.

On NuRe cloud, our objective is to create sovereign clouds, not just at the country-level, but within the country at the industry level. For example, we are planning to launch a sovereign cloud in North America just to cater to the credit unions, which are like small and mid-size banks with a nonprofit organization charter. I will talk about this a little bit more detail as I go through my comments. Our current sovereign cloud in Malaysia is being promoted as a hybrid cloud offering so legacy Oracle environments. We are also promoting the sovereign cloud as a disaster recovery as a service, both we believe our in quite demand in this in this recession centric online.

The NuRe FutureTech tech unit is developing AI, ML, MLP and computer vision-based products, Thompson referred to this a few minutes ago, which we will which will become IP assets eligible for valuations. But on a near-term basis, we are winning business which uses the skills to deliver solutions like the AI ML-based dynamic demand forecasting for spot energy purchases, which has a huge impact — or cost impact on energy companies. We have just won another contract to develop 360-degree view of our clients end customers that will help the banks increase their cross-sell ratio and proactively increase wallet share.

Another initiative that I am personally leading and quite excited about is the WiFi monetization project in partnership with RailTel. This business falls under our Meridian MediaTek and it’s actually specifically called NuRe Bharat network, which we are officially launching next Monday. This opportunity has again impact on multiple dimensions. As some of you know, Indian Railway network is the 4th largest network in the world, about 68,000 kilometers of of track, 7,325 railway stations. This is a staggering number when it comes the amount of populist, they are actually uses this network. 23 million passengers travel on a daily basis. It’s almost one Australia as an entire country going through these stations and railways. These passengers are going to increase as we speak in the coming years. Our opportunity is multi-fold. One is to create the social impact of getting small businesses that’s spurned in these rural and the true heartland of India called Bharat into the digital framework so they can get access to markets across the country. So that’s an economic objective — a socio-economic objective. It drives economy, in line with with the vision for India.

The second aspect is the access that sellers can get to these markets which they don’t do today digitally. The only way they can do it as print and billboard ads. Today, we are giving them an opportunity. The sellers across the country to reach-out to these buyers — this 23 million passengers that come the railway stations everyday. So that’s the second opportunity.

The third opportunity, of course is to monetize what was otherwise the free WiFi provided by RailTel network to make our shareholders wealth on both ours and RailTel side. So that’s RailTel opportunity in a nutshell, if any questions we can answer that more in detail. There are a lot more digital business growth initiatives we are executing this year. But in the interest of time, let me highlight one more business that has multi-dimensional impact, which is our North America BFS strategy for business. After in-depth analysis of the markets and advice from analysts, we are clear that the credit unions and mid sized banks are a conducive market segment where we can not only make an impact of the industry, but also use this to expand our presence in US, including local delivery of services. In the past quarters you may have heard our CEO, Thompson speak about going more local, which is global but local. This is one strategy which will help us because these credit unions are spread across the country in the United States and to service them you need to be proximity to them, you need to be close to them. So this gives us an opportunity to expand our services and become more local and close to our customers.

We have referenceable experience in digital banking, data journey from fragmented databases to one integrated data like house. And finally, next best action based advanced position support systems for this industry — for the BFS industry. These are referenceable experience so we can use to replicate and serve other credit unions and mid-size banks. We also provide digital transformation of compute infrastructure and contact center. So not to have missed the lower-end of the stack of their enterprise IT architecture. These and other engines of value are going to become the drivers of digital business and NextGen businesses this year. And I’m excited to have the opportunity to lead a very talented of high-octane team to achieve our goals this year. Thank you. I’ll pass it on to Harish.

Harish Shenoy — Chief Operating Officer Professional Services & Chief Risk Officer

Thank you, Sax. Good afternoon, team, and thank you for joining this call. So as you all have been part of this journey with the new management for the last two years, that we have stabilized the operations to a great extent from where we started in March — April ’21 to where we stand today. So. As we have to change as we grow, I will be taking the new role of CEO of Professional Services that will we spread across the globe and it will cover all sort of human resource engagement with various customers that we have and with the new customers as well.

So it has been an interesting journey so far. And as we are doing deep-dive analysis of this particular line-of-business across the globe, we see that we will be facing god headwinds in the US because of recession hitting them. So as a risk mitigation, we are trying to work out on innovative solutions. They’re trying to get them low-cost near-shore resources rather than depending purely on H1 or the local green card resources and there are very other similar initiatives that we are working on. So that way we are competitive in the markets there.

And at the same time we see lot of potential in other parts of the globe, especially Middle-East and Asia-Pacific where we have strong relationship with our existing customers and also potential to grow there. So we are also ensuring that our business is driven based on center of excellence rather than transactional resourcing projects. Three are clear plans for each of the accounts which we have worked out based on the tech stack that they work on and our center of excellence SMEs are very actively involved with each of the customers to ensure that they get the best value for the money they have.

In this journey, we are also working on to ensure that most of our staffing contracts get converted to managed services contracts so that revenue stream becomes more predictable rather than being vulnerable to abrupt contract conclusions. So to give a quick view about how we are approaching the professional services business as an organization. On the risk management front, that’s the up capped guide where in this organization, two years of operations, running an inherited business which has got lot of legacy issues we have had substantial learnings as to what has pulled this organization back when we are running our operations. So we have compiled that entire list. Based on that, we have redefined policies across the organizations, processes across the organizations so the risk analysis gets initiated right from the point where we are initiating it, running it through the delivery process and also ensuring that the revenue life-cycle is also taken care of and we are assessing the risks.

So what differently we are trying to do here is it’s not only the profitability and the impact model that we are looking at, it’s also the time element that we are looking at as to when the risk will hit us and how we can mitigate that. We are also focusing on controlling it rather than just monitoring it. We have also devised processes for early warning indicators rather than reactive risk mitigations. So there are lot of initiatives that we have taken on the risk management aspect also so that we are not take up by surprise and and there are huge project, operations, business strategy risk that we run through. And as an organization we are truly graduating too quantitative risk assessment as we have digitally transformed our internal processes. I think that’s a quick overview about — with professional services and the risk management activities that we’re doing. So I hand it back over to Mohan.

TS Mohan — Chief Human Resource Officer

Thanks, Harish. Hi, everyone. Thanks so much for joining the earnings con call Q4. So wanted to share quick points on human resource and talent during the financial year 2022-’23. We as an entity have grown by 733 net headcount. Primarily this headcount increase we have seen in India, corresponding to India growth. While we’re growing as an entity, like we shared in the previous years call, our continuous efforts to stay positively engaged with employees resulted in 5% reduction in our overall annual voluntary attrition from 34% to 29%. While some of the key attributes of the headcount increase we have seen and experienced in the stated direction that majority of this headcount got added to the value based business. That’s where we saw the ratio of the value revenue increasing in line with headcount increase.

I shared last earnings call that as a culture for 3i Infotech, we moved from a role or individual based performance to the organizational performance-based culture. Hence, last year we have institutionalized company performance, made an individual performance wait to measure each and everybody its contribution to the organization. That for the year ’23- ’24 we further enhanced to bring a weight of individual performance to the individual business unit or functional performance to the company performing. So now there are three variables to really, in that everybody into and build an umbilical cord to individual performance leading to the company performance.

In the same direction, we also have been very professional in terms of taking talent actions across the leadership for the growth as well as our out placements. So while we are moving in this direction, we are cognizant of the contribution by the non billed cost with the revenue and we have institutionalized processes now in place to utilize the support cost or unbilled cost to the larger revenue sizes and recast to a agile model of investing support cost to the revenue projections. So this is what I thought I’ll quickly update all our investors. Thank you so much. Thanks for your time.

Asha Gupta — Investor Relations

We will open the floor for Q&A session now. Darwin?

Questions and Answers:

Operator

Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Diwakar Pingle from Ernst and Young. Please go ahead.

Diwakar Pingle — Ernst and Young — Analyst

Hi. I just thought I’ll kind of kick-start the proceedings with a couple of pointers which I thought would make. Some more information available to investors. I think Thompson, I think one of the questions that I want to start-off with is that we had a guidance of about INR760 crores as the topline for this particular year. When I look at your numbers, obviously those targets have been missed and possibly the reason that has been given is because of the US Professional Services. So just wanted to understand how does the next year pan out because obviously for that year we have another number which has been stated there, so just want to understand as to the reason for the miss and how does the next year pan out in terms of your revenue targets?

Thompson P Gnanam — Managing Director and Global CEO

Yeah. Thanks, Diwakar for the question. So that probably helps us set into this entire Q&A and basically because I still remember last year we were just one year into as a new management team and we wanted to kind of set a very stiff target for ourselves and we called out a blood commit — a lot of my shareholder friends keep reminding me that you said we’ll do a INR760 crore, where we exited INR676 crores.

Given how we were — if you look at our Q4 number of some of the performance, barring the profitability, where our hitting goes topline and GM numbers. The reason why we couldn’t hit this numbers where we had unforeseen challenges in the US market scenarios will change dramatically and especially also not only the market, I think we lost lot of resources to green card very early. So these are some of the US-centric challenges which didn’t allow us to hit the INR760 crores, so we are shortly around INR30 crores. But broadly, we somehow we managed in all the other areas and we kind of — India grew very well compared to the US and continues to have that momentum. Some of the other geographies are doing similarly.

So to your point, yes, of course, for this year we are taking corrective actions. We have made the organization structure design changes as so Harish said. So we are are strengthening our North America presence of senior leadership being on ground to drive this. So beyond Sax, we also have Harish and other senior colleagues to kind of take this strategy had ring-fence us, Diwakar.

Diwakar Pingle — Ernst and Young — Analyst

Thanks, Thompson. I think the second notable point obviously, I looked at the press release, India standalone performance seems to be kind of picking up. How do you see that for the coming year? How will India perform given the general conditions in the IT exports market all over the world, do you think you’re at a slight advantage or do you think there’s nothing more to it?

Thompson P Gnanam — Managing Director and Global CEO

It’s a very interesting question Diwakar because normally I keep explaining this through the various calls if you look at it. Normally, I am challenged by saying that why is our margins so low compared to peers and then we have to tell our shareholders and investors that the revenue mix is predominantly domestic because we do more of American and America business or an India to India business and very limited — relatively a very less India offshore business due to our product legacy which we had.

So now if you look at that with the current scenario, I would say it’s a blessing in disguise and an advantage for us because this India to India domestic country business kind of makes us recession proof. In fact, we are very bullish about the domestic growth. Even in America like what Sax said, the domestic growth is good. There’s resistance for that. Every country is now looking at how to preserve the jobs for themselves. So that’s the positive. I see the silver lining for us as a strategy this year and this will help us dump these these headwinds which other peers are facing. And for us, especially India for us, it looks that are extremely young outlook for us. We are already existing with a INR25 crore run rate, which is pretty good for us — the March run rate of INR25 cores. We are talking about an exit of INR300 crores even at this point of time just for India business, which exited on INR267 crores, which is very positive for us as an organization and we’ll have to work on the gross margin, of course, where that is as we drive these topline growth. So we have to work on the India gross margins. So even if you’re able to remove some of the non-profitable businesses in India, we should be able to comfortably hit around 14%, 15% gross margin from where we are today.

Diwakar Pingle — Ernst and Young — Analyst

I think that’s nice to hear, which brings me to my next and possibly final question before — I think there are a bunch of investors waiting to ask, so I’ll kind of — how would you look at your EBITDA margins going forward Thompson, I think because that is key determinant and while you just talked about topline improving, obviously the thing that could kind of investors would be looking at how is the EBITDA profile going to be going-forward for the next full-year?

Thompson P Gnanam — Managing Director and Global CEO

Absolutely. As I said if you look at our quarter-on-quarter as well, now we have been systematically improving operating EBITDA. Even you look — dissect our numbers for this quarter, we have been able to — the adjusted EBITDA is around INR3.6 crores negative, which is far better. If we look at our cumulative H1, H2 comparison, we have dramatically improved our performance over — of H1 and H2 and we are systematically moving there. And except for a few variations and variables of EBITDA, so we are very close to a breakeven point. That’s very clear. Even if you look at the quarter numbers, like what Sanjay highlighted, it’s a predominantly in the overall year we had gains and losses on with regard to foreign exchange and Q4, unfortunately, obviously, the rupee was stronger and we’ve lost. But if you look at the overall year, it’s been positive. We been — our EBITDA positive because of that.

But coming back to your moot question, from all overall operating EBITDA perspective, the way I would look at it is, if you look at our numbers for this year, we are talking about INR190 crores for Q4 and our gross has gone up 16%, which is a dramatic increase over quarter-on-quarter. So that is a very-very important positive indicator for the organization because I also spoke about it in my earlier comments as well, I’ll justify this by Q4 performance of 16%, I’m talking about INR120 crores gross margin on the same pace of INR730 crores for next year, as simple as that. So today we are at around INR91 crores, you’re talking about 120 crores. If you look at the trade of INR29 crores of sight, which was clearly offset the current models. So I look at it, why we are moving on very but steady sustainable profitable operating margin because with the constraints that we have in terms of the gross margins in that type of business we do, but this movement of 16% of quarter four is an extremely positive outlook that way I look at it.

Diwakar Pingle — Ernst and Young — Analyst

Thank you, Thompson. That’s nice to hear. I’m done. Operator. I think you can take the next person on the line.

Operator

Thank you. [Operator Instructions] We have the next question from the line of Siddharth Gupta from Voyager Capital. Please go ahead.

Siddharth Gupta — Voyager Capital — Analyst

Good afternoon, everyone. Hi. I’m Siddharth from Voyager Capital. I think I’ll speak on behalf of all shareholders when I say this. The results have largely not made what the guidance was set last year by the management and even though it can be excused to certain downside on tech companies across, it’s largely disappointing that we haven’t met our guidance from the previous year. Also, I joined the call a little late so I might have missed this, if so pardon me if this information was already discussed. But I would like to know the following things. Firstly, what is our guidance for the upcoming year in terms of both revenue and EBITDA? Second, I would like to understand how our taxation policies are working because are we able to carry-forward the taxation losses from our previous year due to the accumulated losses that we were carrying on our books, are they not helping us offset taxes this particular year. I also want to hear more on the revenue mix, what is the revenue mix that we’re getting from our older services that we were entering and the new NuRe products that we are rolling out because that I believe is a key game-changer in terms of not the revenue increase, but where-is the revenue increase coming from because that from what I understand the newer products have a higher-margin, correct me if I’m wrong there, easily in the ballpark of 25% to 30%, right?

And a couple of more questions. One, there was an article in economic times mentioning that 3i Infotech in the running to make a bid for Rolta India. I would like to hear from the management on that if that is the case that we are considering bidding? If yes, what is it that particularly interested about the asset? And finally. I would just like to hear on RailTel deal. It’s great to hear that everyone is excited about it, but I think investors would like to know a revenue timeline to the extent that in which quarter can we expect revenue inflow and what are we internally setting the benchmark for what our projections that dictating in terms of our income against this project? Thank you so much.

Thompson P Gnanam — Managing Director and Global CEO

Thanks, Siddharth. So a long list of questions So what I would do is I’ll try and-answer some of them and I’ll get the taxation questions to be answered by Sanjay and I’ll allow Sax to talk about RailTel. So I’ll take your first question. I agree with you. I guess that I think I answered to Diwakar’s question as well in terms of. the outlook because we wanted to set a strong goal for ourselves and behind that, we fell short. But I think we are building our foundation strongly and that’s going to help us in this year.

With regard to the guidance for the next year, honestly I didn’t want to give a formal guidance, but since most of you are asking for the guidance. We just said that. We can look at our page because a lot of variables in the marketplace which are there. I kind of gave a indirect guidance in terms of, say even if I look at my GM, which has moved up because past seven years which is INR750 the crores, the same INR750 crores is going to to help us on far higher gross margins next year. That’s the one clear guidance which I already spoke. A clear upside of almost like around INR28 crores for us. That’s one.

The other one, broadly we are rather getting in a range of 825 to 900r. The reason I’m saying that is because we have multiple variables. We also have RailTel because we are investing in RailTel, as we invest in cost and we also need to look at the topline is there. So we want to keep a range of 825 to 900. So you can hold me for a minimum 825y. But definitely as I just said Siddharth that the focus is to tame the revenue mix. So we are not in a hurry to — we want to defend what we have. So for example, one of our lines of business is we want to defend because it’s very-very important, but growth we want to be very-very careful in terms of what you want to grow. So we don’t want to grow in the lines of business we do not want to drop. So we want to defend. We want to optimize, rationalize and drive efficiencies in what we have and then we want to grow with the new lines of business, like what Sax is driving in terms of digital business and extend business, that’s our areas of growth very-very clearly, driving the revenue mix change.

Your other question, if you look at it in terms of the revenue mix change we are talking about, definitely we want to at least 50% of our growth from this year. We want to focus on the higher revenues and that’s why we have Sax leading it as a global COO for our digital business and extend business, that’s a very important aspect for us. Even North American structural change as people like Harish and Sushant are driving the existing volume businesses. We have Sax driving the value business for us and which will give us the average gross margin which was higher to your question Siddharth.

One point on — before I allow Sax to about RailTel and then we will come to Sanjay for the taxation policy which you spoke about. With regard to Rolta India, definitely it’s one of those opportunities, definitely its an uphill task. We have made our intent. But this year a for a company like Rolta India with us a 3i. And now as we are now trying to revive 3i, the way I look at it as a management team and if we are successful in turning around this organization which is 30-year old and two-year behind as the new 3i, I think maybe as the next target we might look at turning some other company. That’s the kind of wishful thinking, but I think I’ll leave it with that on a high level. Okay, I will allow Sax to talk about RailTel and then maybe Sanjay can answer the taxation question.

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

Thank you, Thompson. Thank you, Siddhartha. Such insightful and candid questions. First of all I think it’s important we understand why are we different — how are we different in monetizing WiFi. This is not the first time we tried to monetize WiFi and many a times it’s not been such a great success. We knew that and in this project there is another incumbent who left because they could. The reason behind that is, nobody — I think very few players look at it from a tech lens perspective, which is dissecting and understanding who are the eyeballs that actually looking at this — looking at this product of what is called advertising on the WiFi, right? So, so which is where I think we come in.

Our thesis behind this was we use a heavily data analytics-based approach to advertising. Now when I speak about advertisers, they get really excited. Because still today they have not — and what we doing it against the base. We are doing it against the base of 2 million, almost 2 million subscribers per day, that’s about 70 and plus million subscribers, a year, right? That’s a massive, massive base. So our confidence comes from the fact that, having said that, that is the promise of the of the proposition. How to get there requires a few steps. You need to first have the tech platforms to be able to do what I just said we do, which will take some time to for this data. It has tech platforms which can therefore target the right people, the right platform with the right station, which all comes from new tech platform that we have to deploy. So there is a start-up phase of the business and which is what you’re doing like. And as soon as we do that, flood gates open and we already have — we already have proposals out there which even couple of if they are accepted, takes care of our entire years outlook. That’s the scale we’re looking at. To be honest with you, we may be cautious in the first year just because we’re starting off and we to put all these tech platforms in place. My estimation is that is Q1 starting Q2, we should start reporting revenues against against this initiative, which I’m hoping will be substantial. And the margins will evolve because first you are putting a lot of fixed cost in terms of evangelizing, in terms of awareness campaigns, all the way from physical awareness campaign to digital awareness campaigns. It might lift the cost a little bit higher in Q1, in Q2, but it will quickly get superseded by the revenue because you’re getting paid by ads, by the minute — by the second actually. So our business model is very, very clear. For once I can really say that our — I shouldn’t say hockey-stick, but close to hockey-stick model can work here because it’s ad revenue coming from different sources. So let me pause there and see if it answered the question. And if there’s anything more I can add, otherwise I can pass it on to Sanjay for taxation.

Sanjay Rawa — Chief Financial Officer

On the accumulated losses, yes, we do take that benefit to far our India standalone. So if you have seen us India standalone accounts, we don’t have a tax provision. The provision — the amount that we had indicated in our results, that is in our three entities, primarily US because US entity — US link is the profitable entity. So we do need to have a tax provision there and in our BPO entity. So these are the two entities wherein we have a tax provision, which is stated in our results. Accumulated over years, Siddharth that we have a huge number, it’s around INR200 crores. I think I have said that in my previous discussion as well in the last quarter. So it’s around INR200 crores is what we accumulated this in India.

Siddharth Gupta — Voyager Capital — Analyst

Perfect. Thank you. Thank you so much, gentlemen. Looking forward to hearing from you.

Operator

Thank you. [Operator Instructions] The next question is from the line of Ranu Parwal from Acura Solution. Please go ahead.

Ranu Parwal — Acura Solution — Analyst

Right. Hi, good afternoon, everyone. While I’m sure the RailTel part was very wisdomly answered, I just wanted to check, you also mentioned about your platforms and the revenues that would come from the platform products. Just wanted to understand which are the platforms for which we are majorly focusing on, what are the revenue lines? That’s my question number one.

And second of you mentioned that you’re converting your staffing business into project-based revenues. Now how much conversions have happened so far? And does this conversion increase the margin or decrease of margin for us? While I’m sure it’s a more predictable revenue.

Thompson P Gnanam — Managing Director and Global CEO

Tanks. Great questions. So I’ll take the first one. If you look at the platform-based, one of our mature platforms is NuRe facet, which has been our first product and platform which we lost launched in terms of [Indecipherable] product which reached commercial-grade. So this year we are kind of expanding that into a full fledged nodal market, both through direct and channel and through alliances, three — the market. Alliances, we are working with telcos and mid tier telcos in other countries as well where we want to take it to their SME segments to their medium enterprises, or small and medium enterprises, its a great opportunity the on B2BB in terms of the great opportunity we are looking at it because of the plastic — its like per license on per user or quality-wise we can look at it in our billing models and the profitability is pretty sizable in these things because we make almost close to 50% to 70% margins even after transfer pricingon these products.

Second, this also lends us into the next adjacency, say for example the moment we get into nNuRe facet, it also helps us to repay some of these traditional cyber tech applications and platform and it can also evolve into a one-stop shop is having multiple platforms and applications for both proactive, reactive and multiple trade management, NuRe facet can be also mid market one-stop shop platform as well. So which also helps us to consolidate the customer cyber tech off spends as well and then also try and see how we can optimize it and we had some good successes last year in demonstrating the capability, moving up from theoretical pilots to realign capabilities where if our existing customers where we went in with fact, expanded it into the cyber tech ops, then we transformed the offshore models, we took away business from our tier 1 for replacing our 40 people in India to onshore 10 people with our platform. So these stories are now falling in-place and where we have to now scale.

So this has two tracks. One is the platform revenue. Second, also using the platform to see if we can get into the cyber tech optimization as well. That is first one. And the second question you asked if the staffing to — manage staffing to manage services. Right now the challenge for us is, let’s say, some of the legacy contracts we have to first get into more managed staffing which has more long-term predictable because in this short-term in this tough times in the western world, we need to have more assured long-term revenue there than weak contract. So we are looking at more than margins, sustainable forecastable revenue at a steady market is the number-one priority, I would say because rather than trying to look at higher margins and then being thrown out of a contract, tis is better than reservative category.

Very-very clearly we want to ring-fence and fortify our contracts with more managed staffing or managed services also. And there is a very clear trend. Lot of customers are now moving from managed staffing to managed services because it suits them and and because of the cost pressures and revenue pressures, everybody has got. Its a very clear move which is happening there. So for us in that business we want to just consolidate our position and ring fence and for fortify us. So I’m not sure whether I answered your question.

Ranu Parwal — Acura Solution — Analyst

Yes, you did.

Thompson P Gnanam — Managing Director and Global CEO

Thank you.

Ranu Parwal — Acura Solution — Analyst

Just also wanted to understand your NuRe campus. Do you guys for, so focusing on that as well very aggressively for this coming year.

Thompson P Gnanam — Managing Director and Global CEO

I’ll probably allow sax to answer that question.

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

Yes we are. So actually this year — last year what we did it was — was to make sure that the product itself is stable, it can be scalable because it was for India previously in the past it was developed as a dedicated instance product, not a true Sassified product. So we want to transform that to a Sassified because that just is the need of the market outside India. This year we are already in front of prospects in both UK. We have a special initiative in UK where are going after higher-education market with a partner who has got a heavy presence in that market, it’s not like us cold calling them and generating leads from the stocks. Similarly in other markets like Middle-East we are taking to universities where we can truly modularize this. So to your point, aggressively going after it, not just in India, but outside India, with the product architecture which is more suitable to the needs of the universities today.

Ranu Parwal — Acura Solution — Analyst

Okay, okay, and Middle-East is one market and then UK is the second market where you’re focusing with this product now.

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

And before we go to US because US is a pretty large market, there are of players and we need to differentiate ourselves there. But before that we have opportunities to be more accretive in Middle-East and the UK. So we’re leveraging that.

Ranu Parwal — Acura Solution — Analyst

I may want to get connected for something that you base on this separately, but I’ll drop a mail to guys. But I think thanks from my side.

Operator

The next question is from the line of Purushotam Savlani, an Individual Investor. Please go ahead.

Purushotam Savlani — Individual Investor — Analyst

Hi, good evening. Am I audible.

Operator

Yes, yes.

Purushotam Savlani — Individual Investor — Analyst

Okay, great, thank you. Thanks for the opportunity. Now, sorry for asking this question, but this has been simmering in my mind for quite some time side, so i thought I’ll get it out. I really want to understand why is it that the management is always very defensive about the commentary when it comes to performance. We keep hearing about these challenges in. US etc., from a global recession perspective, but look at the reality. I mean, what are we doing in the US. We hardly do, say around $10 odd billion. I mean, if we compare ourselves with the Small Cap, Mid-Cap other IT services company, they do hundreds of millions of dollars. I’m not even talking about TCS and Wipro of the world, I’m talking about say science technologies, precision technologies, data metrics, LTTS, etc., which are your level kind of competitors. They are giving fantastic results. I mean, this year also the results their for this quarter and the year have been great and they have improved their market cap by, say, around 15% to 20% at least in last one year, whereas we are down by, say around 70% market cap. So somehow I feel that our commentary is very-very defensive, which may not be motivating enough the team — look at what we are doing. I mean UK as a country we are doing only hardly INR30 lakh of business in the quarter. EMEA is around $2 odd million. APAC is less than $1 million. US business has de-grown. So with this backdrop and we call-out the challenger, I mean we should be in a position to break some of these large contracts of large players and grow our business rather than that we aligned to the defensive commentary, which is very discouraging. If you ask me where we are. We have a backdrop of some 10 odd years of nonperformance and then sold-off the product business, etc., etc., thought that now everything will revive, but the story continues to be very-very, I mean as of now at least from a results perspective let’s not talk about the activities which are being done, but at least from a result perspective very-very pessimistic. I mean, we are losing revenue, our cost — I mean, look at the our forex. Forex gain last quarter was 10% of our revenue, last to last quarter was also 10% of our revenue, this quarter it is 5% adverse so far revenue, whereas look at any of the other organization which do close to 70%, 80% percent of their business from global readout. They hardly get impacted by 1%, whereas we as an organization, which does 50% from India gets impacted by 5% adverse or 10% positive.

Third, PDD, we thought that we took a one-time hit of around $2 million to $3 million last financial year and we were told that 50% of this will be back because we will collect that, rather than that we are again adding close to surround INR3, INR4 crores as PDD. So one fails to understand what is happening. Also in India, I mean there are so many enterprise-class customers — while we appreciate that we have done well in India. But if you get into the details, business what we’re getting is only from PSUs, which are price-competitive ask. I mean, so they’ll put us continuously on price pressure. We don’t hear any HDFC Bank orders being won or ICICI bank or Bharti, or for that matter Aditya Birla Group, nothing. It’s only PSUs. So I somehow feel that we have a very defensive kind of contour which is being talked about, and I really wanted to talk about it and get your perspective as to what is it that we are planning going forward? Are we continue to remain such a defensive player.

And finally a question how is our global pipeline looking because whatever business we are doing as of today seems to be — we can’t call ourselves a true global player, frankly speaking. Sorry for asking this, but I thought I should.

Thompson P Gnanam — Managing Director and Global CEO

No, thanks, Purushotma, I think that also kind of helps me put things in perspective. So let’s get some facts on the table. If you look at it, it is our global revenues is almost 50 — US revenues almost close to 50% of our revenues. So just to get our numbers Mr. Purushotam. Because if you look at our model and this is a repeat that model, I think I would probably spoken in eight quarters also. The uniqueness after post [Indecipherable] also. If you look at it again, I’m saying every country is a domestic business, even US is a domestic business. Unless all the peers which have gained from this windfall, all of them are built on fundamentals of services business which all of have been part of it for last 25 years. I have been part of it, all of us, Sax, everybody here have all built, Sanjay from Zensar and Sax is from HCL. So all of us have been, we have built those models. Okay. All these offshore led delivery models and all of them benefit out of this.

What we should understand from 3i perspective very-very clearly this is a domestic business which we are predominantly having. America got a domestic business. There are people sitting in America, delivering in America. There is an offshore mix our of this. That’s very clear. People sitting in Middle-East and delivering. That’s what is the company where we took our cover post the [Indecipherable] And from there we are changing the mix. So we have to be very careful Mr. Purushotam about the the tenure versus this two years. I think we are really clinically clear about, and I will strongly have a point of view about that. I’m very-very clear about it because we should take this very clear because 10 years ago the Company on a product for services company, which had multiple services. Two years now we are very-very clear sell company which has got domestic businesses in America. It doesn’t have offshore mix, 80% is America, 20% is delivered from India. That is all. If you see our numbers, wherever everybody else is making windfalls, we are struggling. I absolutely agree with you. That is a problem statement which we have to fix and we have to fix and try and see how we can move this offshore mix or high-margin mix by which we have to take it. That is one point number-one. Because that is also if you remember when the start of the year when we changed our transfer pricing policy as well because we said each of the countries and geographies will work independently and there is also a transfer pricing in policy works. It works both positively negatively. Three quarters it was positive for us. This quarter it was negative.

S it’s very — in my mind here you’re absolutely right. So that is one thing which I wanted to probably highlight in terms of the whole model which you spoke about. And we’re not defensive about it, let’s say — we have any realistic about, nothing is defensive about it. We are being very-very critical for us for us to build any of our new lines of businesses we have to hold our current revenues, whatever quality of revenues we have to hold them. So we have to find fortify them, we have to hold them. So that is very-very important. Now most of other peers you called, our companies together 25 years legacy of services business, they have all done that. So let’s be very clear about what we are not comparing it, okay. That is one.

The third point is Purushotam, in India also we are talking about. With our limited constraints,, we’re also fighting our legacy if you look at. There is a brand which is stuck with us in our services part. W have to rebrand ourselves, reforging ourselves even in India also. So to your point even in the non PSUs we are talking about, where we l have with our infrastructure management services and data center management services, we have led with that and we are now trying to see how we can differentiate ourselves and AAA services as you rightly said, our obligation automation and analytics we have to really differentiate ourselves and get into the market. We are winning our brands. Say for example, we have brands Dhana Lakshmi Bank for an example, we have won multiple banks. We are also in very-very advanced corner issues a lot of these type of logos which are not PSUs as well. So for example, and we are aggressively expanding that. So I don’t think we are very defensive about it and we definitely believe we are a challenger in these areas.

So in our area there e three tracks Mr. Purushotam. One track, you have to defend. Whether we like it or not, we defend. There is another track where we want to challenge and be aggressive as a parity because we have to be parity. We have a catch-up to do. We have to do a catch-up what companies are of 10 to 15 years head-start, I may have to do it in two years. That’s clearly we are catching-up on parity. The third, We want to innovate to differentiate ourselves. So we are very clear about these three tracks which are going.

And I understand your your frustration because I really appreciate that you have been with us these years. Definitely. If you think we are changing the entire contours and we are turning it around and now we can seen that and it is happening, because if it’s like the old saying like — I won’t call ourselves IBM equivalent like the elephant. Definitely it is tough kind of turnaround the company which has got such a deep legacy and issues as well, but we are very confident as a professionally our management team to turnaround and this is going to be a big opportunity for all of us to do that.

Coming back to your other question in terms of PDDs. In my mind I think where we started to be very clear, we wrote-off –we cleaned the books. If you remember, last year, my commentary was very-very clear. We were very proactive as an organization. We went across all of our Board, proactively cleaned, took all hits systematically. So that is different from what we’re doing today. Even now what we are doing. Even what PDD what we have provisioned also, we are hopeful that we’ll be able to turnaround or do whatever it is, but in a good governance and a good risk and compliance perspective we are just doing that. Now if you want to manage this, we are very clear about it. We’re not going back. We haven’t taken it. We have done it clear. Now we are able to collect it. This is good for the organization. But I think it’s good practice from a pure risk and compliance perspective. We wanted to do that. And this is of course in America. This is — and if you look at most of the the larger players, you look at all the larger players very closely, all the larger players, everybody’s DSOs have gone up. You please analyze all the tier 1 players, DSOs have gone up. There are provisions are increasing. All this gets hidden up because we have high base, high-margin base which we have developed over a period of time, it will not be visible. For us it is it visible. So that is clearly a indicator of what’s happening in the developed world for sure Mr. Purushotam.

And finally, you also spoke about the global pipeline. Definitely the global pipeline is really expanding steadily for us. Now if you ask me, we have already won certain — Sax talked about the entire transformation we have won in America [Indecipherable] space has also in our existing customers where we are expanding it into new lines of businesses, not just from our data warehousing perspective — data warehousing to data transformation. We have gone into an IRR360 cognitive AI-enabled prescriptive analytics finally to a CEO cockpit where the entire transmission happens, also the entire CMM transformations which are happening. So we are now expanding with an existing accounts in the more minds of businesses, which is highly profitable for us and also try and see how we can replicate to other similar companies in USA. So we are super focused on what we want to or do there in the [Indecipherable] and also on the other industries, especially in manufacturing in US in — discrete manufacturing in US also is an area where we want to kind of expand and the pipeline is building very steadily in those areas.

And also if you look at the UK, I think right now it is there. But we are in very — the pipeline in UK, but very good, in fact Sax touched upon it when he spoke about. One, clearly in higher education. We are looking at expansion of our NuRe campus like solutions which are happening. And even with the higher education we are looking at tops IOT based cognitive solutions which we are now going to implement. Maybe in the next quarter we can talk about the successes as they evolve. Third, we are working on now helping these companies move from descriptive analytics into more predictive and prescriptive analytics, and next in the healthcare, especially in primary and tertiary care in the UK as well from a pipeline perspective. So broadly, I’m not sure whether I answered your questions Purushotam.

Operator

Thank you. The next question is from the line of Sanjay K, an Individual Investor. Please go ahead.

Sanjay K — Individual Investor — Analyst

Hi, good evening. This question is about the cost of third-party products and services for this quarter is about INR38 crore compared to INR13 crore for the last Q4. So it’s almost three times increase though the revenue has increased only 10%, so can you please explain how this cost has gone so much high?

And second question is about, the business already I think is — Thompson spoke about business updates. It’s more about in your press release as well you mentioned about generative AI, so-so any work are you guys doing into generative AI and any business you’re doing in AI specific thing? Whether this AI is impacting any of this business for 3i?I.

And Just last quarter you had this event in US, I think the [Indecipherable] So any breakthrough? Are you getting any business, and any work you are getting from that because definitely the global business needs to be increasing on that. So these are two questions. I will come back if more questions are there.

Thompson P Gnanam — Managing Director and Global CEO

Thanks, Sanjay. Probably, first maybe Sanjay can answer the question on the cost of third-party and then we will take the other one.

Sanjay Rawa — Chief Financial Officer

Thanks for the question. See our cost third party product services. Yes, you rightly reflected with the year-on year number it is threefold. Okay, let me give you a perspective on this and what I’ve said in my previous quarters calls as well. So what has happened is our H1B associates, which were on our role has actually you know because of the opening up of the visa scheme in the US. So most of the resignation happened in the US and to fill-in the gap we have to go and hire it from the market. So that’s the reason we have this cost going up. So you would have seen a drastic decrease as well — substantial decrease in the employee cost. So that is the reason that has gone up — our cost of third-party products and services going up in the US primarily. And also we announced systematically trying to replace them with our own people. This year you will see an improvement because our own people will be replacing some of those sub con. So because we have to save the customer contracts. So we have taken us the sub con. Obviously, there is a hit on our margins there, but we will replace it with our direct employees shortly and you will see the movement away from this. So you will see the movement in the coming quarters, Sanjay.

Thompson P Gnanam — Managing Director and Global CEO

And the second question is you spoke about generative AI. This is the hot topic right now. Two-three aspects of it from a generative AI perspective. because as you know, we also have pretty good cognitive computing and AI practice in Chennai in collaboration IIT Tech Park, which we are building. So we not trying to do two-three things. One is also trying to assess the impact of generative AI overall across our revenue streams. The good news is that we have more to gain than to lose. That’s the positive side of it because that is where I think the previous question on I think Mr. Purushotam was asking as a challenger. We see a great opportunity for us to be a challenger in this space because if we are able to adapt our generative agenda AI and complement our services and capabilities around that, we have a huge opportunity to change the way we — the traditionally business models that deliver and we can still manage competitive gross margins even by doing onshore business with generative AI. So that’s the way forward we are looking at it in a hybrid model where the mix change will happen from onshore to offshore versus onshore to nearshore if the trend which is happening. very-very clearly.

We are also putting together in our own small way a small CoE to build-on the generative AI because we also have to figure out, we don’t have to waste our time on things which have already progressed. So we’ll have to figure out a way how to coexist, complement and leverage some of the generative AI like chat GPT4.0 and try to figure out briefly if we can offer services around that. Definitely, that’s the way forward. We will update you in the next quarter on how we are progressing on that because this is something which we have quickly adopt and adapt as an organization. So that’s on that.

The third third question you asked on the [Indecipherable] event. Probably, Sax you want to update on that.

Sax Krishna — Chief Operating Officer, Digital & NextGen Business

Let me also add something about the generative AI here. I think this maybe some contrary,but I think it’s true technically. The generative AI is top sort of point. Transform AI is what really does the benefits for you. What we are focused on is transforming AI. So we can use generative AI as a complementing technology to provide. So for us it’s all enabling. For us is the best thing to happen to us just on that point. On [Indecipherable] thanks for noticing and observing and remembering that. We went with couple of objectives when we went to this even. It’s actually it’s even the largest events, 5,700 people come to that event in a year in Washington DC.,We went because if you remember my comments a few minutes earlier, we did lot of analysis and realized is a very conducive market for us the various hypothesis.

The first was to the hypothesis because we couldn’t have got better [Indecipherable] of credit unions coming into one place, so we did that. So we very quickly in less than three days got a pretty good sample test of what we are thinking is relevant or not. So tick box number one. The second of course is what can we get as as business and then you know if you’ve been getting these conferences, constant selling in our yields quick business results. It’s more to do with your presence there, but it also gives us familiarity. What we have done is we have gained familiarity with approximately 70 odd leads and we’re following-up on those and doing the second roadshows in their offices and so on so forth. I’m hoping that we can produce, we can we can announce logos from that 70 in the coming quarter.

Operator

Thank you. The next question is from the line of Dharmesh, an Individual Investor. Please go ahead.

Dharmesh — Individual Investor — Analyst

Yeah, hi Thompson. Good afternoon. A couple of questions. In the past you have spoken about the pilots that we have been doing for telcos in Africa, I think for B2B2B and B2B2C. Do you see any of those pilot getting converted into orders for us, that’s question one. And question two, is the RailTel deal, the INR14 crores payment, has that been done for this year? Thank you.

Thompson P Gnanam — Managing Director and Global CEO

Thanks, Dharmesh. Two great questions. The first question I think I did answer slightly ahead. I think somebody asked the question on platform and stuff. So that is based on some of these pilots and they have all become commercial grades and the good news is we have this NuRe Edge facet contract with some of them. So that is why we are very bullish that this year we want to expand this alliances with telcos, especially the mid tier 1 and try and see how we can get into their SMB base. So that’s a good news. So that is happening positively and we will update you on that because it’s extremely important for our B2B2B as you rightly said because these are non-traditional B2B2 services revenues and which will help the organization accelerate revenues. So that is happening and it’s in the right direction.

Second, on the RailTel. Thanks for reminding. I think Sax did not touch upon that. I think if you look at it, the RailTel contract is the minimum guarantee is INR14 crores per annum. So quarter-on-quarter we will have to make a minimum guarantee payment of INR3.5 crores from our side. So just to recap on what Sax spoke about, we are going for a commercial launch next week. We are fully ready with the ad servers and that. So fundamentally, we are open for business if I can look at it. Obviously, at the cost of doing business we’ll have to invest in the first investment as a whole the. But I think that the positive is there’s lot of enterprise companies who are very interested to us and this business model works on revenue per user So Q2 definitely we are looking at revenues flowing into us and we’ll be able to go manage our outflows from thereon and breakeven from Q3 onwards, that’s the way we’re looking at it.

And to your question, INR14 crores has to be paid over a year, it’s quarter-on-quarter, it is not one upfront. Obviously, we have to give our business a bank guarantee which we already given for the project because that’s part of the contract itself.

Operator

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. Over to you, sir.

Thompson P Gnanam — Managing Director and Global CEO

Thank you all, and thank you all. And fantastic questions as usual and extremely sharp focus and it also reminds us that how interested and invested all of you all, and thank you all for the support and we look forward to see how we will come back with more stronger and positive reserves and want to kind of reassure everybody, especially one of them might be spoke about, Mr. Purushotam and Sanjay all you folks, be rest assured that your company is in the part of revival and we rebooting ourselves and we will be a challenger. Thank you.

Operator

[Operator Closing Remarks]