Allied Digital Services Ltd (NSE: ADSL) Q3 2025 Earnings Call dated Feb. 03, 2025
Corporate Participants:
Nehal Shah — Wholetime Director
Paresh Shah — Chief Executive Officer
Gopal Tiwari — Chief Financial Officer
Ramanathan Ramanan — Global Head of Strategy, Growth, Innovation, Partnerships
Nitin Shah — Founder, Chairman and Managing Director
Analysts:
Mayank Vaswani — Analyst
Prateek Dedia — Investor
Arjun Agarwal — Investor
Jyoti Singh — Analyst
Gaurav Desai — Investor
Hiten Boricha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to Allied Digital Services Limited’s Earnings Conference Call. As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr Mayank Vaswani from CDR India. Thank you, and over to you.
Mayank Vaswani — Analyst
Thank you,. Good afternoon, and thank you for joining us on Allied Digital Services Limited’s earnings call for the 3rd-quarter of financial year 2024 ’25. We have with us on the call today Mr Nitin B Shah, Founder and CMD; Mr Ramanan Ramonath, Global Head of Strategy for Growth, Innovation and Partnerships; Mr Nehal Shah, Whole-Time Director;; Mr Paresh Shah, Global CEO; and Mr Gopal Tiwari, Chief Financial Officer. We will begin with comments from Mr Nehal Shah, who will cover recent developments across the business. MR. Shah will then discuss the operational performance and order wins, followed by Mr Gopal Tiwari, who will walk us through the financial highlights. Thereafter, we will open the call for the Q&A session. Thank you. Before we begin, I would like to point out that some of the statements made in today’s call may be forward-looking in nature and a disclaimer to this effect has been included in the earnings documents that have been shared with all of you earlier. I would now like to hand over the call to Mr Nehal Shah for his opening remarks. Over to you, Nehal. Thank you
Nehal Shah — Wholetime Director
Thank you. Thank you,. Good afternoon, everyone, and welcome to today’s earnings call. Thank you for joining us. I trust you have had the opportunity to review the earnings material shared earlier. Despite a modestly challenging macroeconomic environment, we are pleased to report a strong performance this quarter. For quarter three ’25, consolidated revenues reached INR220 crores, reflecting a 29% year-over-year increase. This marks the second consecutive quarter of revenues exceeding the INR200 crore threshold, maintaining the improved momentum in our business performance., our India operations continued to excel with standalone revenues growing 45% year-over-year-over-Year during this quarter, reinforcing the solid growth trajectory in the domestic market. We are also pleased to report strong growth in EBITDA and PET with a sharp improvement in margins.
Given evolving market dynamics and persistent cost headwinds, combined with our investment in talent development and geography expansion, we are delighted to report a rebound in margins, especially on a sequential-quarter basis. In India, India business remained robust driven by a healthy pipeline of demand across both enterprise and government sectors. The Union budget’s commitment to capital investments along with measures to support manufacturing and consumption should result in improved economic activity in the coming quarters, aiding the prospects of the domestic market.
Internationally, we are encouraged by the signs of renewed momentum in the US market following the presidential election, which is expected to have favorable spillover effects across the global markets as well. We are pleased to report order intake of INR200 crore-plus this quarter, further strengthening our order book. Over recent quarters, consistent high-quality order wins have resulted in a more diversified portfolio, strengthening the visibility of our long-term growth., our global CEO, will cover the order wins in greater detail. Our business has position to capitalize on key market tailwinds, increased technology spending by global enterprises, particularly in digital engineering, cloud and cyber security solutions. Growing maturity of Indian enterprises as they scale, driving demand for advanced solutions. We have seen all of these levers start to play-out over the past few years. Further ability to compete and win larger, more complex contracts with greater scope of transformative potential is enabling us to expand our total addressable market for the quarter, our entire geography, US witnessed improved traction. This enabled us to grow revenues from the rest of the World segment by 16% on a year-on-year basis. The Indian — the India business continued its momentum to report revenue growth of 56% year-over-year and by 12% sequentially.
The service segment reported revenue growth of 22% on a year-on-year basis, while revenues from solutions were higher by 59% year-on-year. As all of you are aware, the activity in the solutions segment serve as a pipeline for services segment, indicating good visibility for our anchor segment representing recurring revenues. Coming to the outlook for the remainder of the fiscal year, we continue to execute in an environment that is steadily moving in the right direction as we are seeing signs of recovery in discretionary spending. We have good momentum with us given the business added in the last two quarters and are in active discussion with several customers indicating — indicative of a strong pipeline. Thank you. That’s it from me. I will now hand over the floor to.
Paresh Shah — Chief Executive Officer
Thank you. Yeah, thank you, Nehal. Good afternoon, everyone. Here is a quick summary of our operational highlights for the quarter. Allied Digital secured over INR200 crores in new orders and contract renewals. Key wins include, we are honored to have been selected by a leading US-based multinational investment bank to provide End-User and investor service desk solutions and services. Our team will deliver first-level assistance to employees, investment managers and brokers across their offices in Ohio, USA, London, UK, Hong-Kong and Japan. Now another win I want to announce is has been interested in transforming IT services for a major US-based eye care provider. We will manage their IT infrastructure, global services, end-user support and field services across the nation, nationwide clinics, ensuring seamless operations and enhanced user experience. We have been chosen also by a leading non-profit organization focused on education and job skills to optimize their IT operations and reduce costs. Our scope includes digital workplace services, global services, endpoint management and field services. Okay. Allied Digital has secured a significant operational technology security engagement with the world’s largest vaccine manufacturer. This reinforces our expertise in protecting critical infrastructure and delivering robust cyber resilience solutions. We will be providing IMS services, including and end-user services for the corporate offices and plant operation of a joint-venture multi-national automotive brand. This project further strengthens our foothold into global automotive sector. Allied Diesel has been awarded a large-scale cloud deployment project aimed at simplifying and expediting the map and layout approval process. The initiative will enhance transparency and efficiency in-land usage, changes, FAR approvals and other housing related clearances. So we are implementing driver monitoring systems and advanced driver assistance systems for a leading automotive company headquartered in Mumbai, reinforcing our commitment to automotive innovation. We have received an additional work order for a smart industrial township project contributing to Maharashtra’s industrial expansion and economic growth. To add to the wins, India’s second-largest public sector bank headquartered in Vadia, Gujarat has entrusted Allied Digital to implement data center and data recovery solutions, enhancing the bank’s resilience and operational efficiency. We have also secred a network — network upgradation project for a client engaged in the expiration — exploration, mining and processing of iron-ore, ensuring operational efficiency and connectivity in a critical sector. These contracts reflect our continued growth and expanding capabilities across diverse sectors. We remain committed to innovation, excellence and driving transformation change across industries. Now, I will hand over to Mr Gopal Tiwari, who will share the financial updates during the period under review. Over to you, Gopal.
Gopal Tiwari — Chief Financial Officer
Thank you,. Good afternoon, everybody. I’m sure all of you have reviewed the financial performance of the company for Q3 FY ’25. I’ll now walk you through some key developments regarding the financials. As my colleagues have covered earlier, it has been a strong quarter with an acceleration in top-line growth. Further, we are encouraged that the improved growth has been accompanied by an improved margin profile. I would like to invite your attention to page number two of our press release. As you can see from our table showing five-year trend of revenues for each excessive nine months period, revenues in nine months FY ’25 have picked-up once again. The CAGR for the five-year period is 23% as — and is now reverting to the CAGR of 25% plus that we delivered from FY ’22 FY ’23 I’ll now quickly turn to some of the line items in the consolidated financial statements. Firstly, there has been a reclassification of employee costs in our US operations. As a result, some of the costs that were earlier being booked in employee costs have been moved into direct expenses. Due to this accounting treatment, gross margin in Q3 FY ’25 was lower as compared to Q3 last year. Secondly, there have been a mix of factors which have impacted employee cost this quarter. Costs have risen as we have increased the number of associates to serve the increased business. Further, there is the effect of wage hikes, factors that have contributed to reduction in employee cost include the reclassification that I have just talked about annualized reduction in the notional loss on ESOPs, which is accounted for each quarter. The net effect of these factors have meant — has meant that employee cost of INR37.5 crore in Q3 FY ’25 are higher by only 11% as compared to Q3 last year. That, I would now like to invite your attention to Slide 13 of our investor presentation. This quarter, we have slightly modified the presentation of our P&L statement. As you may recall, in Q2 FY ’25, there has been a change in treatment of interest earned by our subsidiary and the finance costs incurred by it. While these items were being Being set-off earlier from — from Q2 FY ’25 onwards, these are being represented separately. As a result, other income has increased as does the finance cost on a Y-o-Y basis., in order to enable a like-to-like comparison with earlier quarters, it is essential to include the other income while calculating the EBITDA and margin. Hence, we have shown the operating profit separately, which doesn’t include other income while also showcasing the EBITDA, which is inclusive of other income. This enhanced disclosure will make the margin trajectory comparable with the — with that of the earlier few quarters. Thank you so much. I’ll now hand over it to the moderator to open the forum for Q&A session.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. Anyone who wishes to ask a question may press R&1 on the touchstone telephone. If you wish to remove yourself from the question queue, you may press R 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. We’ll take our first question from the line of Prateek Dedia, an individual investor. Please go-ahead.
Prateek Dedia
Hello. Am I audible? Yes. Can you use your handset mode, please? Pratik? Yeah, I’m in handset mode. Yeah, please go-ahead. Yeah. Okay. So I have a question regarding your geographical distribution. So a lot of revenue now comes from US and we are seeing strong growth on the India side as well. So more in terms of how do you see your margins expanding, given I assume that US business would be on the higher side as compared to the India business. So if you could give some color or trajectory towards that? And when do you see your margins expanding primarily from the US business?
Nehal Shah
So if you see currently, we have been telling in the previous quarters, previous years also, thank you for the question by the way, 62% of our revenues currently come from the US market or the global markets and about 38% of our revenue comes from India. We typically would want to continue in that range. However, keeping the business synergy in mind, this might change a little bit here and there.
Ramanathan Ramanan
So I would like to add Amit, it’s a year. We would not like to benchmark our international business with India business. What we are emphasizing and focusing is on the class of business that we do and the kind of business that we keep getting, the kind of clientele that we addressed and we have lot of options coming, but we are very cautiously growing. Hence in the process, the caution is very important factor or lever that we look upon while selecting the kind of an opportunity and the kind of clientele. So currently, the traction is quite good in India. So you may see here and there some deviation every quarter, but it purely depends upon the kind of good business that we get and that’s how we address the market. So it’s not a benchmark between US or India. Okay. Thanks. Yeah. And if I can add, here, see, our strategy is to look at long-term business, not just short-term business because short-term business has its own volatility. And therefore, long-term business means in the India scenario where we are doing large-scale system integration projects, there is always a one-time solutioning part and then there is a continuous operational revenue part, which comes as a result of managing for multiple years. In the US also and other parts other geographies, we are looking at long-term business strategies. And therefore, there is always even in such businesses as an initial investment that is required followed by continued growth as well as revenues and increased profitability. So this is a multi-pronged strategy that we are involved in. And the fact that Allied Digital is very strong in smart cities and large-scale system integration is a very good opportunity for us in India because India is a growing market and it is also one of the desired markets of many other Western companies.
Prateek Dedia
Okay, fair enough. So I’ll just have a follow-up. So you mentioned that you are looking at multipronged strategy in a combination of investing looking at long-term strategy and expanding the profitability. So if you could just throw some color in terms of how the margins would expand, specifically for US business. I think that we have a diversified strategy, not only just the US geography, but multiple geographies, which are now demanding technology management services, you are seeing a huge growth in-demand for technology management services because of advances in technology, sensor technologies, GPU technologies and so on and so forth. Obviously, there would be a better margins in the US market where there is service orientation concern. At the same time, in the Indian market, you have large-scale solutions and even solutions which are you in the areas of our focus. We are not looking at opportunities which are just revenue-driving. We are looking at opportunities which have core service component and innovation component and solutioning component, which are much more profitable.
Nehal Shah
Our strategy is also to improve — include more-and-more diversified set of tools and technologies, which is helping in increased productivity and thereby increase profitability. So this is what I refer to as multiprong strategy, where we are looking at the diversity of geography, our diversity of customer-base, both direct through the partnership of course, which we have been very strong in, as well as direct clients, whom we are increasingly being able to tap into. And in the India market, we are increasingly looking not just at government projects, but also at enterprise solutions and large-scale enterprises where our solutions and services are very relevant to them because they are growing their size across the Indian market.
Prateek Dedia
Okay. Thank you. I will come back-in the queue.
Operator
Thank you. We’ll take our next question from the line of Arjun Agarwal, an Individual Investor. Please go-ahead.
Arjun Agarwal
Hello, am I audible? Yes. Please go-ahead. Yeah. Congrats — congratulations on a good set of results. Sir, my first question is like what kind of guidance are you giving for like FY ’26? And what contribution will be for the new projects means and what will be the contribution from the recurring one? And also on the EBITDA mix on both the verticals. This will be my question. Thank you.
Gopal Tiwari
Thank you, Arjun. In the past previous quarters and previous years, we’ve been saying that FY ’26 looks at a top-line of about INR1,000 crore and that is what we are right now looking towards. The mix is going to be anywhere between 75% of our recurring revenue, 25% solutions business, that is the project business. EBITDAs are typically should be at the — at a similar level or we will try to improve it over the quarters depending upon the kind of business that we keep on closing in. Because as we are growing, as we are getting new business, we are also investing a lot of our money on getting new talents, expanding geographically. So I would suggest that if you are able to sustain the margins and try and take an upward trend from here, it would be great.
Arjun Agarwal
Thank you. Okay. Thank you. And my next question is regarding the cybersecurity incident that was mentioned in results. Can you throw some light on that what really happened over there?
Paresh Shah
So that — so this — this was regarding one of our customers — one of our clients who had typically — there was a data bridge that had happened before we had started onboarding the customer. Post that data bridge, there was a person who impersonated one of the ex-employees and tried to enter the access systems to the reset side. One of our agents mistakely took that person to be the employee and gave him the access, which resulted in a cybersecurity attack. However, there are two things that are good for us. One is that the customer is still with us. We are continuing servicing since it was absolutely not our mistake, which was — because of which the data was leaked, it was due to the previous vendor. And second is that we are absolutely covered with our cybersecurity insurance as well. So we feel that it is not going to be an impact — too much impactful for us financially. However, since it was a material information, we thought of sharing it with our investors.
Arjun Agarwal
Thank you. Okay. Thank you and all the best for the future and I’ll get back-in the queue for further questions.
Operator
Thank you. Thank you. Ladies and gentlemen, to ask a question, please press RN1 on your phone now. We will take our next question from the line of Joti Singh from Arihant Capital Markets. Please go-ahead.
Jyoti Singh
Yeah, thank you for the opportunity. Sir, just my question on the previous participant that they have asked on the cybersecurity front. So you mentioned Mentioned not too much impact on the financials. So how much exactly if you can explain on the financial side impact we have? So the — so there has been a claim and the claim is still not in the court. It is a claim from an existing customer to answer and to safeguard all our investors. The customer is still with us and we are servicing them. The incident had taken place way back-in December of 2023.
Paresh Shah
We are almost in January 2025, while we are speaking as servicing that customer. And this is a process for which there has been a breach, so they will have to go through the process of posting a claim on us. We are — while we are talking, our lawyers are speaking and getting a solution out of it. But to be rest assured, even if there is any claim, it will always be settled through our insurance, the global insurance that we have taken covered. And we are absolutely more than two times covered, I think more than three times covered with our the cybersecurity insurance. So we don’t see any impact financially coming on our books on through this.
Jyoti Singh
Okay. Thank you, sir. And sir, on the margin side, if you can tell us about the impact, how much bps we are having in terms of wage hike and? I mean, little bit if you can elaborate us on that side.
Paresh Shah
So margin side, I think we are trying to improve our margins every quarter. While we see that you are right, we are in a growing industry. While we are growing, we are also seeing a lot of wage hike and ESOPs being given to our employees to retain talent and we’ll continue to do that. At present, we are at about 12% of EBITDA. We will try to maintain 12% and try to improve from here on. Having said that, I wouldn’t want to block myself by giving a number. So the reason is that while we are growing, there are a lot of things that we’ll be investing in expanding growth and that’s one of the reasons that we would want to sustain our margins at the current level that they are?
Jyoti Singh
Yes, sir. That is very helpful. But sir, like how much impact we are having on the wage hike side in this quarter margin?
Paresh Shah
Or so wage hike is typically we are — this quarter or the previous quarter, the wage hives have been very minimal in the range of 7% to 8%, 7% to 8% is something that we are seeing. We don’t see exceptionally — of course, there are exceptional that we need to pay more to retain them. But however, on a standard basis or a sequential basis, 7% is something that you’re looking at.
Jyoti Singh
Okay. And sir, also you mentioned about you got a deal on the driver monitoring business. So how big is this business? And you know, how much it will be revenue generation for us and margin trend? And how big this opportunity going-forward, if you can little bit explain on that sir.
Nehal Shah
This probably may not be looked upon in terms of the scale at which we have got the business, but it’s a very innovative ideas that we are looking into it. And it’s a solution developed by our digital engineering services team and that’s very innovative where we keep monitoring continuously the fatig — driver fatigue systems and lot of other parameters and which is futuristic. So we see a very large curve, two of the large clients have signed-up with us and we see good opportunity to scale this business up so currently, if you talk about the total business, it may not be very-high of — compared to the total revenue that we have got.
Nitin Shah
So if I can — if I can just add to what Nitin jee said, our strategy very clearly in an emerging world of AI is to have to have — how to have an inside AI strategy or an AI inside strategy in every solution and service that we are rendering. One of them is facilitated with the development of our own tools, which he mentioned about digital desk. But the other is also to leverage tools out in the marketplace that are rapidly evolving. And these have a role to play in almost every aspect of the work that we do, whether it is in technology management, how do you use AI, for instance, in being able to detect or prevent incident management so that we are able to increase the productivity, reduce the costs, increase the reliability and so on. That is one part. Second is, how can we also collaborate in developing new tools because this is a very nascent marketplace along with our partners. And these are many of the OEM are our partners and they are evolving tools, but there is a need for understanding the customer domain, which we understand very well in the development of these tools. And the third-part, of course, is in the SI world that we are in, especially in India, there’s going to be a large scope for leveraging AI in anything we do, for example, surveillance management or we are talking about you know intra large-scale system integration or we are looking at database of information related to people, etc from a safety point-of-view or from a insurance point-of-view or from an applications management point-of-view and so on. So we are seeing increased scope for these sort of technologies to be used. Technologies that are developed in-house by us, technologies that are developed by our partners and technologies and tools available outside. But the whole attempt and strategy is how do you leverage all of that to be able to increase productivity and thereby reduce costs and thereby increase our profitability.
Jyoti Singh
Thank you, sir. Sir, why I have asked this question because already one or two company, they are working towards this and also government is going to make the mandatory from April onwards? And the company who is already working on this data, a lot of insurance company US using to provide the insurance because it give the accurate data. So that’s the reason I ask how big is this opportunity for us going-forward. So if you can give us some idea on that front, if we are targeting on a bigger-picture
Nehal Shah
So I can — the Paris, if you want to answer. But I just want to say that the opportunity is big, but it is — it is big for the people who get it right because there are three parts. One is the accuracy of data. Second is the cleansing of data, whatever is available. And the third is the analytics part with which we are able to derive newer and more innovative insights into the data that we get. And therefore, while the opportunity is big and there are many companies who are trying it, I think the key is those who would get it right, who understand the domain and who already have involved themselves in development of tools related to that. And that is where, personally, I think we have a slight edge in terms of both the base of customers we are dealing with today in India as well as in the overseas market and the type of services that we are entering. But yes, this game is open to many, many other players and whoever gets it right and fast and quit are the ones that will — that will succeed.
Jyoti Singh
Okay. Thank you, sir. And also, sir, one question on the —
Nehal Shah
Wanted to say something. So I can let him say that.
Paresh Shah
Yeah. So yeah. So what I would like to say is you were talking about the insurance companies, right? So that is one of the areas insurance companies are very keen to see how they can derive insurance through the driver scores. So that’s one of the area. Also logistics companies who wants to make sure their large trucks are well-being well navigated well. And the third is lot of supply-chain companies who want to see that they can reduce and loss. So yeah, it has multiple applications and this is one of the areas where automobile manufacturers are also trying to get into these solutions where they can build their solutions within their company, okay. So we are working with both the automobile manufacturers also where we are actually demonstrating this technology as well as working with large companies like a mining companies, oil industry where they want to make sure their pilfridge and logistics are well-managed, okay. So that’s another area that is also being picked-up. So yes, it has lot of. Y
Jyoti Singh
Eah, sir. Thank you so much, sir. And sir, if one more question I can ask on the Smart City side, as we are working towards that and we have capabilities and long-standing relationship, but a lot of you know larger company they are also working toward this smart world side. So are we facing any kind of competition on that front or we are fine with it and we are getting good orders
Paresh Shah
See, we have secured a very unique position in smart cities. We are very hands-on technology players, okay? There are large companies, but they are mainly outsourcing or they are just doing financing, okay, but we are pretty much strategic players. We do right from the top to the bottom-right from the architecture, design, all the way to implementation. So we are an end-to-end IT services integrator as well as service provider. So that is a unique position which we carry and we see that as a big strength in terms of our capabilities and We have proved that over and over-time in last many years.
Nehal Shah
And just to add to what by said is that for the larger companies, there are multiple business levers that they work on at multiple times. However, for us, this is our core business and we are absolutely focused on getting more-and-more such similar orders so that we keep on growing. So this becomes a core business activity for us rather than just being in one business. So I hope that answers your query.
Jyoti Singh
Yes, sir. Thank you so much. And sir, just last question, like earlier we have expanded in Dubai. So similarly, we are targeting any other geography to expand further?. Yes, we could — there is always business opportunities that is coming in.
Nehal Shah
However, we take a conscious decision whether we will open up our own subsidiary or not. We are getting lot of larger client requirements coming in for various geographies in Europe as well. So there is a possibility that in the coming quarters, we would be expanding in some European geographies as well.
Jyoti Singh
Thank you. Thank you so much, sir.
Operator
Thank you. Thank you. And we’ll take our next question from the line of, an Individual Investor. Please go-ahead. Shadab, can you go-ahead with your question, please? Since there is no response, we’ll move on to the next question from the line of Gaurav Desai, an Individual Investor. Please go-ahead.Hello. Am I audible? Yes, Gaurav. Please go-ahead. Yeah. So my question was more on the US and the export business, like what — since we have long-term contracts which go over five years, do we calculate some kind of average billing rate per resource that we are able to fetch on these contracts on an hourly basis or on a yearly basis?
Nehal Shah
Yeah. So our — so thanks, Yor for the question. For us, most of our revenue is booked on asset wise rather than hourly wise and bank power wise. So it depends on the customer’s assets. So we bill per asset rather than doing it per hour or per employee. And in most of the cases, the prices are fixed per asset. So if the asset of the customer grows, our billing grows. But however, there is a minimum asset confirmation that is or guarantee that is given by our customer bill accordingly. So rather than doing it as a manpower wise or an employee wise, we do it as a managed services through the asset account wise. That gives us a lot of leverage on reducing and increasing the mantur as per the requirement of that particular plant. And that’s where the leverage comes in for us to at a later date on a larger contract period to improve our margins as well.
Gopal Tiwari
Yeah, just to add to that, you know, the way Allied Digital works in all of these is how do we drive improved performance and how do we bring the benefit of the cost not only to ourselves as a vendor providing that service, but also to the customer. And that enables the stickiness with the customer and that also enables us to get increase the portion of the pie that the customer is willing to give to us because they see continuous value addition in the way we are delivering our services. And so if it is purely manpower-based type of costing, then the customer doesn’t benefit too much. But if you are leveraging intelligently technology and now AI in all of this, then we have the opportunity of driving down the cost further, bringing benefit to the customer as well as bringing benefit to ourselves in the process. And so that is our sort of general strategy. At the same time, when we are penetrating new customers and so on, we are willing to work on flexible models that is advantages to the customer, but also not harmful to us okay.
Gaurav Desai
And so one additional question on that expansion was like, do we have to keep employees on-site in these Indian projects or on the foreign projects? And what could be the ratio between the onsite and offsite outside also.
Nehal Shah
So most of our clients are — we have people who are on-site doing service delivery and presently we hire absolutely local employees there. So people who are locally citizen or, local citizens of that particular country. However, a portion of project management or other services could be offshore here. That is how typically a project from a longer perspective works. There is another line-of-business that we do where we do complete remote management services for our clients, wherein 100% of client service delivery is done out of India. So there are two set of different customers that I’m talking of currently. I hope that answers.
Gaurav Desai
Yeah. And what could be the mix between the two?
Nitin Shah
Sorry, I’m Shah here. I think you must-have asked that question from background how regarding bench, how many people that we keep on bench? Is that what you’re asking about?
Gaurav Desai
No, I was asking more from the cost point-of-view, like earlier I asked on the billing rate. Now so since more of the people are on-site, like I wanted to understand like what could be the
Paresh Shah
Okay. Sorry, I understand. So as Nehal pointed out, there are two different services. We have digital workplace services, which has more focus on on-site presence and less focus on the offshore presence. But it all depends on the customer. Customer says we want a more localized and US-based services, then that’s where we go. Within this digital workplace, there could be a lot of offshore presence if the customer wants a lot of remote work, okay. Same thing we have another enterprise infrastructure services, which is mine — minorly onsite and majorly remote, okay. Hardly 10% is onsite and 90% remote. So that’s how the onsite-offshore model works and we have customers who take their choice and figure out what portion they want onsite, what portion they want offshore, okay. Usually that’s the kind of approach that we take. And as far as you’re talking about the billing point-of-view, so you can just thumb-rule basically, when it’s offshore, obviously, we have a much better margins and obviously much better profits. When it’s pure on-site, definitely there is a local impact there at the margin level, but definitely there is an offshore component which takes care of lot of margin capabilities.
Gaurav Desai
Thank you. Thanks for your answer. Thank you. Thank you.
Operator
Thank you. We’ll take our next question from the line of Hiteen Boricha from Sequent Investments. Please go-ahead.
Hiten Boricha
Hello. Yes,. Please go-ahead. Yeah. Thank you for the opportunity. Sir, I have only one question left. That’s on the tax-rate. So our tax-rate was down to around 12% this quarter. So if you can throw some light on that and also if you can share what would be our rate in FY ’26
Gopal Tiwari
Our rate basically this is because of some adjustments in the tax experience because of deferred revenue — deferred tax application. But overall, it will be in the range of 24%, 20% 20 plus percent only FY ’26. So 20% for next year and okay.
Hiten Boricha
Okay. So for next quarter, it would be in the range of normal 20% 25%, right?
Gopal Tiwari
Yeah, around 20%, yeah. It will be around that could be.
Hiten Boricha
Understood, sir. Yeah. That’s all from my side, sir. Thank you.
Operator
Thank you. Thank you. We’ll take our next follow-up question from the line of Pratik Dedia, an Individual investor.
Prateek Dedia
Please go-ahead. Pratik. Yes, am I audible. Your audio is not very clear. Is it better now? Can you go-ahead with the question, please? I’ll let you know. It is not clear. Okay. Thank you. So I have a question regarding the data centers. So you mentioned that you received an order from a private sector bank — sorry, public sector bank. Can you throw some light on what kind of order it is and what kind of work are you doing? And are you getting similar traction from other clients as well?
Paresh Shah
Yeah. So this was an implementation project for one of the very well-known banks, public sector banks and this was mainly to, you know they were actually moving their data centers. So there was a lot of relocation work to be done to move the assets to a new data center, implement transformation there and ensure there is a good data recovery process also. So we implemented a lot of change in their data center as well as you know, implemented new storage to manage their recovered data requiry process. So it was a very important exercise for the bank, which we have completed that project and received lot of appreciation.
Nehal Shah
Yes. Pratik, just to add what said, apart from this, there are lot of data center projects that we keep on getting. We have delivered close to about 16 cities — part cities where we have made data center reach of them. Apart from that, we also manage lot of data center Center of our enterprise customers as well. And data center management, data center migration from on-prem to cloud, all of this acts as our prime core business and we have absolute in-house capability of delivering all of these projects.
Prateek Dedia
On that. Okay. Thanks. This is helpful. Thank you. Thank you.
Operator
Thanks. We’ll take our next question from the line of Joti Singh from Arihant Capital Markets. Please go-ahead.
Jyoti Singh
Yeah, thank you for the follow-up opportunity. Sir, if you could just talk about on the revenue has been booked from Pune project in Q3 and what kind of jump will be seen in Q4?
Nehal Shah
So, we have taken — so generally, any smart CD project that we get-in, we do milestone-wise billing. So there are about two milestones that we have successfully achieved in this quarter for which some portion of the billing is done. In the next quarter — in the next two quarters, there’ll be remaining portion. So the solutions side of the numbers might be a little higher for the next two quarters while we are implementing the new project in the Pune city and we expect once the implementation is done, the recurring business — the recurring revenue for that will be start from the third or the 4th-quarter of next year.
Jyoti Singh
Okay. Thank you, sir. And sir, on the DSO front, we have reduced significantly that is good. But what will be our target and range that we going-forward? So currently, I would say that we would want to come down below 70 as fast as we can. We would be very happy if we can do anywhere between 60 to 65 days. Okay. And any target timeline sir for that?
Nehal Shah
So we are — we are constantly working towards it. If you see historically we’ve been improving every quarter on September half year, we had come down to 72 ’22 and hopefully we’ll keep on improving. I don’t have a timeline in mind because we think this is a continuous process and we have to keep on improving until we reach to that milestone of 60 to 65 days.
Jyoti Singh
Okay. Thank you so much. Thank you.
Operator
We’ll take our next question from the line of Arjun Agarwal, an Individual Investor. Please go-ahead.
Arjun Agarwal
Hello. Yeah. I just want to ask that what is the cash on books and how management is planning to utilize it?
Gopal Tiwari
So cash on-book currently that I recollect of was about INR100 crores INR180 croress and we are keeping this money in our watches for larger customer that we acquired so that if we need to invest in acquiring those customers, we can invest upfront. Also, we are constantly keeping our eyes for good acquisitions as well. So if any of that happens, we want to make sure that we have good money at hand and we don’t have to go and secure money from the banks. These are the two things typically that we have kept the money for.
Arjun Agarwal
Thank you. And I just wanted to know that regarding this deep seeking — deep seek impact, if — like what — how industry is looking into it means will it help in growing the AI application or means if you — I just want to hear your thoughts on this? Thank you.
Ramanathan Ramanan
Yeah. If I can answer that. Yeah, okay, Paris, go-ahead, sir. No, no. Got it. So Deep Seek has actually just advanced the possibility of reducing the cost in ChatGPT type of applications because essentially it is doing whatever ChatGPT was doing or ChatGPT 4 were doing, but at a highly reduced cost because of more efficient utilization of GPUs, floating point CPUs, they’re using eight-point floating point CPUs and they’re also done some tremendous software modifications to ride-on what has already been developed. So from the point-of-view of deep, what we need to see is how that can influence further application development using the tools that are being created in generative AI. But the important thing is that the cost of generative AI may come down as compared to what was originally being envisaged. And so from the point-of-view of approach, one is we are going to see how digital desk can be enhanced, leveraging new deep-seek features if they are relevant and if the Zuri is still out on what are the limitations of deep-sea. So we need to carefully study that. But at the end-of-the day, I think this is also going to lead into increased competition amongst the big players, whether it is Microsoft, Facebook, Meta or OpenAI to come up with a with less costlier models. And therefore, the pervasiveness of AI would increase. And since the pervasiveness of AI usage and generative AI usage would increase, it means that becomes an increased opportunity for organizations to leverage or develop new tools on that. And that is what this is my per understanding of what is happening in the marketplace, but Paresh, you can add something to it.
Paresh Shah
There are a couple of areas of deep seek is still to be talked about is on the security side. So not much has been discussed that yet. But yes, it shows a lot of promise and obviously, it will cut-down the cost of Gen AI. These are the two criteria that we see that’s much valuable. And for us, it gives an opportunity to actually run more good AI projects also in India with a cheaper cost. Today, the cost of ChatGPT is much high.,
Arjun Agarwal
Thank you. Thank you for this — this — for this elaborate answer. My final question is, what is this — what is our current order book for and yeah, I want to note that.
Nehal Shah
So,, I think we’ve stopped giving the current order book numbers for the past previous quarters because there are a lot of factors that goes in the line-of-business that we do. We have a constant order booking that happens with respect to new orders being — net-new orders being coming in apart from renewals that keep on happening and the new revenues in the existing account that we Call-IT farming. So typically what happens is the number that I’ve given the investors divide that number by the number of years that the business order is booked for. And that typically doesn’t give an accurate number from the top-line perspective, right? And that’s the reason that we say that you keep on looking at us that sequentially we’ve been growing. We’ve been announcing order wins and we’ve been every quarter giving out a number of new revenues that we have locked-in.
Arjun Agarwal
Okay, fair enough, sir. Thank you. Thank you and all the best for the future. Thank you.
Operator
Thank you. As there are no further questions, I would now like to hand the conference over to management for closing comments. Over to you, sir. Thank you.
Nehal Shah
Thank you all for your participation and engagement in today’s call. As we look-ahead, we remain confident in our ability to sustain consistent and long-term growth. With the right strategies in-place, we are well on-track to achieve our goal of INR1,000 crores in annual revenues in the coming quarters. Encouraging signs of revival in key markets, coupled with stronger customer activity and improved decision-making further reinforce our optimism for the future. Our continued focus on direct customer onboarding, expansion and smarket initiatives and strengthening our global footprints will be key drivers of our momentum. As we move forward, we are committed to leveraging this opportunity to unlock even greater value. Should we have any further questions or require additional insights, please feel free-to reach-out to our team of CDR India. We appreciate your support and look-forward to connecting again in the next quarter. Thank you.
Operator
Thank you, members of the management team. On behalf of Allied Digital Services, that concludes this conference. Thank you for joining us and you may now disconnect your lines.