InfoBeans Technologies Ltd (INFOBEAN) Q4 FY23 Earnings Concall Transcript

InfoBeans Technologies Ltd (NSE:INFOBEAN) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Surbhi Jain — Company Secretary & Compliance Officer

Avinash Sethi — Director & Chief Financial Officer

Analysts:

V. P. Rajesh — Banyan Capital Advisors — Analyst

Faisal Hawa — H.G Hawa — Analyst

Hetal Sonpal — Myphco Advisors — Analyst

Varun Agarwal — — Analyst

Varun Gupta — — Analyst

Bhagwat Naik — Prosperity Wealth Management — Analyst

Presentation:

Pratik Jagtap — Analyst

Good evening, everyone, and thank you for joining Q4 FY ’23 Earnings Call of InfoBeans Technologies Limited. For the introduction, I’ll hand over the call to Surbhi. Over to you, Surbhi.

Surbhi Jain — Company Secretary & Compliance Officer

Thank you, Pratik. Good afternoon, ladies and gentlemen. Welcome everyone, and thanks for joining this Q4 and full year earnings call of InfoBeans Technologies Limited. I request all the participants to please mute their mic. The results and investor update have been updated on our website and it is also available on the stock exchange. In case, anyone does not have access of the same, please do write to us, we’ll be happy to send it over to you.

To take us through the results of this quarter and answer your questions, we have today with us all Co-founder, Mr. Avinash Sethi. We will be starting the call with a brief overview of the company’s performance, and then we will follow with a Q&A session. Kindly ask your questions by raising hand after the brief overview by Avinash is over. And then we will address all the questions one by one.

I would like to remind you all that everything said on this call that reflects any outlook for the future which can be construed as a forward-looking statement must be viewed in conjunction with uncertainties and risks that we face. These uncertainties and risks are included, but not limited to what we have mentioned in the prospectus filed with the SEBI and subsequent annual reports which you will find on our website.

With that said note, I’ll turn over the call to Mr. Avinash Sethi. Over to you, Avinash.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Surbhi; and thank you, Pratik. Thank you for all the ladies and gentlemen for joining this call. We are now presenting the final numbers for this year.

Before we jump into it, just a quick brief overview for people who are attending for the first time. InfoBeans is a company founded in 2000 in Indore, and we have now offices across the world, in U.S., Europe, Middle East and India. In India, we have four offices, Indore, Pune, Chennai and Vadodara. And we are a publicly listed company with now more than 1,450 members in the company, focused on digital transformation and product engineering as the core offering. We have been blessed with the partnership from Salesforce, ServiceNow, Microsoft, UiPath and Automattic. These are the leading software companies in the world. And we have been able to benefit from our partnership with these companies year-after-year.

This is a quick journey chart of how we have grown over the years. 2000 started in Indore, 2004 opened in Pune, and then in the U.S. And some key points that I would like to mention. In 2007, our revenue was INR4 crores. In 2015, it became INR43 crores. And in ’23, we are about to close at INR399 crores, which is almost INR400 crores. So, 10x journey between 2007 to 2015 and 10x again in 2015 to ’23. So, eight years, we have been able to deliver 10x kind of a growth. And we continue to focus on that kind of momentum for the next eight years also. We went public in 2017 and we have our first acquisition done in 2018 — 2019; second, in 2021, and we also got listed on BSE last year. So, this is a quick snapshot.

Look at the numbers, for the first 13 years were — first 10 years were more fundamental and foundational. The next 13 years have started with an active growth, which is what I talked about 10x kind of growth. We work with less number of customers, but want to expand into those accounts to a much larger value, repeatedly year-over-year. And we see some data points in the coming slides. We focus on those 74 customers where we invoiced more than INR1 crore a year. Out of them, 13 customers which are a $1 million businesses. And we have much larger set of clients, Fortune 500 clients, billion-dollar businesses and unicorns also in our entity.

This year we closed at INR399 crores; INR85 crores of EBITDA; INR36 crores of PAT and about INR176 crore cash and cash equivalents which includes account receivables. And we’ve delivered a 38% growth from last year. We’ve been growing at 42% CAGR since inception.

Multiple partnerships and awards. One of the best awards that we really, really appreciate is about Top 10 Best Companies to Work in India for Women, which has been recently awarded to us.

These are the services that we offer to our customers, mostly around cloud and mobile technologies. We focus on Salesforce, ServiceNow kind of platforms. User interaction, user experience, blockchain is the new kid on the block, we are building this practice and we also have a baseline for this practice. RPA is quite an expert capability that we carry, which is particularly on CI/CD, DevOps and so on.

The founding team, please note that we had Mr. Santosh Muchhal retired by rotation, and we have now replaced with Mayuri Mukherjee. She is an IIM Ahmedabad graduate and she has been working with — she has a working experience of 20 years, worked with Nestle kind of MNCs. She has been out to U.S. She recently joined as Independent Director on our Board.

A very popular, very strong core team, founders of Eterna’s and founder of Philosophie that we acquired. So three founders here. Denise has recently joined us to manage the Design and Innovation Practice in the U.S. All these people have been with InfoBeans for quite some time. They are the backbone of the leadership and they have been contributing to the growth of business successfully. Darshana joined recently. She is handling Blockchain. All these people are longtimers in InfoBeans and have been leaders at the forefront of the growth momentum that we witnessed.

So here is the quarterly number for January to March quarter ’23. And if you attended past calls, I have always told that this quarter is going to be suppressed because of one-time incentives that we’ve offered to our team which is [Indecipherable] of about INR6 crores. And we also had certain provisions for bad debts in this quarter, which accounted for about INR2.2 crores. So INR8 crores has been lost because of these two one-time activities I assume. And therefore, the PAT and EBITDA numbers have significantly dropped from previous quarter or previous year numbers.

By the way, the previous year numbers were unsustainable and again that has been a repeated commentary from our end that high amount of EBITDA margins and PAT margins are not sustainable. We have a steady state margin, which we’ll talk about again later. But this is where we are. We are happy that we are able to hit that kind of a revenue number and EBITDA is still in a controlled situation. We should be able to recover from this one-time from coming quarters.

This is our yearly number. And if you look at it, we have grown 38% on the revenue side, INR289 crores in last March ’22 versus INR399 crores in March of ’23. And that’s a significant growth. By the way, in another column, if I were to look at March ’21 number, it was INR196 crores, and we have doubled our sales from INR196 crores to INR399 crores in just two years. That’s an active strategy we followed. We consciously chose to focus on increasing our revenue, particularly in the demand time — the high demand time of COVID — post-COVID scenario. And that scenario is no more existent now. But we certainly chose an active strategy and benefited from it.

We also had to pay a cost to it, but we are sure that we will need to recover all of that cost in time to come, but revenue is something that stays with us long enough. And I’ll tell you another slide where we talk about how we have been able to retain our customers year-over-year, and then grow into those accounts year-over-year. So the strategy of getting the — capturing the client and capturing the revenue has really worked very, very favorably for us.

So another interesting point here that I wanted to highlight is, cash flow from operations has kind of remained the same, INR81 crores last year versus INR77 crores, because the EBITDA component has a lot of depreciation towards the intangible assets created because of our acquisitions of both Philosophie and Eterna’s. So the cash is, you know, gathering or collecting in the business, but the balance sheet has a different story to tell. However, since we are increasing our cash reserves, we are in a strong position to look at another acquisition in time to come.

Look, so the key performance indicators, as we look at the last five-year data, a CAGR of 35% year-over-year for last four years of FY ’19-’23. EBITDA margins have jumped up in ’21-’22 just because of the COVID scenario. But we’ll come back to steady state margins of 24%. PAT has rolled the same graph. Here, I wanted to highlight a very interesting point [Technical Issues].

So if you look at this, as I said, our strategy was to increase our revenue. And since the talent cost was very, very high, we took the chance, and therefore, there is a depression in our profit margins. So this is an active outcome. It was a known outcome of the strategy that we followed. Therefore, it doesn’t come as a surprise to us. [Technical Issues]

The last 10-year growth metrics, in terms of the cash reserves, in terms of the net worth. There is a 16x growth here [Technical Issues]. There is a 13x growth in terms of the net worth. Revenue numbers have grown significantly. Look at the CAGR, revenue, EBITDA and PAT, they are also all growing at a healthy pace.

So, the key clients, I’ll not delve much on this. You can download the presentation from the website after the call. Here is a data point that I must highlight. In last one year, we have onboarded three Fortune 500 customers and six enterprise clients, which has a revenue of more than $1 billion for themselves. And this again goes back to our focus on entering into large accounts, so that we can generate repeat business from each one of them year-over-year.

And if you look at the share of revenue from existing clients, we’ve been doing repeat business [Technical Issues] some of customers at 90% year-over-year. So once the client comes in, onboarded and then we continue to expand into those accounts successfully.

So here is that chart which I was referring to. Look at the kind of growth that we have into each of these accounts. You know, 250% growth in one single year, 136% growth year and 126% growth year, 70% growth year. So these accounts has been successfully grown year-over-year. These are the accounts, which remains with us over like a 10-year period and they have dropped — they have remained flat. This has dropped, because the project got over. But essentially, if you look at out of the top 10 clients, we have grown in eight of them. The top 10 clients gives us 51% of the revenue and the average age of these top 10 client is more than seven years. Despite having some of them which are like one-year or two-year old clients, we still have been able to have a much larger relationship carried over year-over-year.

This is the revenue breakup by segment, by business, and by geography. 50-50 more or less in digital transformation and product engineering. 81% from InfoBeans and 19% of Cloudtech, which is what all investors keep asking. 70% of the U.S. market, India [Indecipherable] has grown-up very well for us 16%, 8% from Europe and 6% from Middle East, all the markets are growing for us, so which is quite a significant thing.

I mean, acquisition remains an active strategy for us for growth. And in the last six years since IPO, we have done two acquisitions and the market is now right for another one, where we have [Technical Issues]. The focus area for us is either on the four practice areas that we are in like ServiceNow, Salesforce, UiPath or Design, maybe Blockchain also, add new competencies, which is Blockchain, go into verticals like BFSI, or expand into geographical presence like U.S. and Europe. The sweet spot is INR10 million to INR15 million in revenue.

Here is our current pipeline. And as I mentioned, the timing seems right because the valuations had come down from what it was just six months ago. The peak valuations are coming down as other valuations of IT businesses. So, I think, it is now coming to our sweet spot, where we don’t want to overpay for a business because outweigh doesn’t justify that. So our wait for last one-and-a-half years has now seemingly right for next acquisition in next six months to 12 months.

There are three companies we are looking at. One is the ServiceNow company that is out of Europe. The second one is a user experience company, it is a low revenue, it is below radar, but since it is quite a business with much higher EBITDA margin, we are willing to look into it. Another management consulting company which goes up the value chain for us, which is another possibility that you can make out.

And let me also clarify here, we are just talking at a founder level right now. There is no definitive agreement that we’ve signed with them in form of a letter of intent or term sheet or anything. So we are just discussing with them, but we find that these are some three attractive options for us.

We talked about the financial summary. I think the same numbers are here in more detail. So, I’ll quickly skip that. We’ll go to the yearly number. Here, I think, I have something to talk about. When I look at the revenue number, we have grown by 38%. There is a increased team cost at a yearly level, which we talked about in the previous quarters. There is a one-time incentive of INR6 crores. There is a provision of bad debt for INR6.2 crores.

Our targeted EBITDA normally is 24%. We are at 21% right now. So the pendulum has swung in the both the directions. We have seen very high — we have seen very high EBITDA margins of 28% to 29% over last two years and that was the swung on — swing on the positive side. Now we are seeing the swing on the negative side. But I think we’ll be able to settled down at 24% in a shorter period.

And then the same goes with PAT margins. We will be able to recover that quickly. As I said, there is a one-time impact of these two big items, plus this continues to be a challenge for us which is increased by cost.

Tax rate has also increased over the years, which you would have witnessed, because we are getting a lot of profits from ICL, InfoBeans Cloudtech Limited, which is at a very healthy 30% EBITDA margins. And therefore, we pay significant tax which is a non-SEZ unit. So we have a higher tax incidence.

So we, this time we introduced this margin movement because we see lot of questions coming in the Q&A session. We’ll try to pre-empt it. The team expense has increased by 8%, our sales and marketing got to increase which is natural for the business that we are in. The provision for bad debt, which is the new item. We’ve not been seeing a little high amount of bad debts. But since we have been through our subsidiaries, we have been working with some of the start-ups during the tight reversal of zero funding or no funding with a lot of stress in that start-up segment.

We actively focus on reducing start-up exposure and we continue to work towards that goal. But [Indecipherable] some of the ghost that even they start to bother us. Other income has also reduced. Operating leverage, we have improved some margins here. Exchange rate has been on the beneficial side, but that could have been set off with the income reductions.

As for EBITDA, from 29%, again as I said, 29% is not sustainable. It was never sustainable. So, we are at 21%. But yes, as I said, 24% is something that we look forward to.

Balance sheet, the reclassification between non-current assets to current assets, addition of profits from the last year. And DSO improvement, because we have also provided for bad debt. So some of the long-standing accounts have been cleared off. Equity increased from profits generated last year, and non-current liabilities came down because of the payments to be pretty [Indecipherable] items.

These are the events that we are attending for generating a lot of sales and marketing attempts for generating business, meeting clients on blockchain, on emerging technologies, Web3 and Design Trends. And also getting awarded, as I said, best — Top 100 Best Companies for Women in India, India’s Growth Champions year-over-year for fourth time in a row, Dream Companies to work for we get it every year and then another one is Great Place to Work, have you been getting it from 2015-’16 onwards.

Some CSR updates. We have been constantly investing into community expansion and here is the report card of last three, four batches that we have conducted successfully. And almost everybody from those one-year program, engineering program, has got placed. And trusting [Indecipherable] the candidate who has joined InfoBeans two years ago has now joined Salesforce at a much larger package, till [Indecipherable] package. He was BCom graduate. There are two other who have — notable who have joined the TCS. Most of them have joined smaller companies in Indore and around nearby region.

And driver support that we do with SD Foundation, which is a foundation supported by Shibulal, ex-founder — I mean Co-founder of Infosys and ex-CEO of Infosys. We have been sponsoring 46 students there. 27 has graduated and nine out of them have got job, therefore pulling out their family from poverty.

We do a similar program at Sant Singaji University that we have been supporting over 25 students there. And then another one in Pune, which is we’re trying to support the working women house help kind of billing in Pune which is in a village called as Mulshi, near Pune, where we have supported 40 women to enable their skill development and build more — earning more money from this — their jobs. So, here is the market data.

And I think we are done with the presentation. We can open the question and answers. So, back to you, Pratik.

Questions and Answers:

Pratik Jagtap — Analyst

Yes. Thank you, Avinash. [Operator Instructions] In the meantime actually, we already have one question in the chat question box. So Shashank Rastogi is asking, what is your revenue and EBITDA guidance for FY ’23-’24? And are you looking for new acquisition in the current financial year?

Avinash Sethi — Director & Chief Financial Officer

Thank you, Shashank. We usually don’t give any guidance for revenue and EBITDA. And our attempt is to obviously grow better, grow higher than what we have been doing. And if you look at the past, we are attempting to grow at a faster pace. And with the combination of organic and inorganic engines, we aim to grow at 25% to 30% year-over-year. And obviously not every year is the same, but that is our long-term target that we should be growing at a faster pace. That is the simple answer I can give you.

And there is another question to it, right. What was that? Acquisition, yes, we continue to do that. As I said, we have three targets that are there in the pipeline. And we like them, we find them in our budget and we have detailed — we have discussion, we are in discussions [Indecipherable] however next level. But as I said, [Indecipherable] that is still at discussion. There is no concrete paper work that we’ve done in terms of signing a term sheet.

Pratik Jagtap — Analyst

Okay. So we have first question from V. P. Rajesh. V.P., I have unmuted your line. So, you can unmute and ask the question.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Thanks for the opportunity. So, Avinash, a few questions. On the numbers, if you can talk about what was the organic growth year-over-year, that will be helpful?

Avinash Sethi — Director & Chief Financial Officer

So, if I look at organic growth year-over-year, let me go back to the chart itself. Yes, so if you look at this number, so INR271 crore versus it will be INR314 crores [Phonetic], just look at the revenue from operations.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Right. So INR271 crores…

Avinash Sethi — Director & Chief Financial Officer

INR271 crores versus — sorry, let me redraft. So INR252 crores versus INR374 crores — sorry, INR314 crores. So if you can do a comparison INR252 crores versus INR314 crores is the number, which is roughly 30% — which is about 30% plus growth on an organic basis.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay. And…

Avinash Sethi — Director & Chief Financial Officer

[Speech Overlap] V.P., I might keep telling all the time, we don’t really look at business like that, because when you work together, a lot of synergies there will be to start to generate for each other. For example, the [Indecipherable] has been able to sell in our own clients, their services and that has increased their revenue significantly, almost by 20%.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Right.

Avinash Sethi — Director & Chief Financial Officer

So, it is difficult to — because now we are working in an integrated manner. I mean, we don’t look at business like you would like to think, it’s not very simple math that I can just remove the numbers and be able to figure it out. But it is a combined synergy that has led us to be reasonable growth.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Understood. My second question was your number of Unicorn clients dropped by 1. So, any comment on that? It was wonderful to see that you’re getting lot of Fortune 500 clients last year, but I was just curious about the drop in the numbers of Unicorns?

Avinash Sethi — Director & Chief Financial Officer

All the Unicorns are facing a lot of troubles. And I think we read it every day in the newspaper right from layoffs to funding getting dried to where investors are asking for interest rate increase and interest rate coupons and they are now searching for debt, all kinds of challenges in their businesses, which is obviously they will want to reduce their expenses dramatically. So, we are — something from that, but that’s okay, that’s part of the business.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Understood. And last question was this INR6.2 crores of bad debt. If you can give more color in terms of how old these accounts were? And you know whether it was one or two accounts versus more granular across a number of accounts? I think some commentary will be helpful to understand because this…

Avinash Sethi — Director & Chief Financial Officer

So there are — yes, there are four to five accounts and they have been billing their payments and I think the overdue was more than 180 days. So we’ve made a provision. We are still chasing them, we are still behind them. But from an accounting governance point of view, we’re just [Indecipherable] part of the provisioning on debt. So, some of them are start-ups and they funding got right. One — a couple of them were expected funding and it didn’t happen for them. Some of them, they just lost the entire business. So these are — as I said, these are the companies from the acquired entities. And we have an active strategy which we don’t want to go to the startups, but then since we have this coming in as part of legacy, we are just giving it out.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Understood. So, most of these bad debts were created in this year, right? There was nothing which came over from last financial year. Just wanted to make sure of that?

Avinash Sethi — Director & Chief Financial Officer

There are a little bit, I would say, around 10% or so from the last year, because, let’s say, the noise are done in March. We were just waiting for payments and realize that it is not going to come. So we had to ultimately take a call and then just make provision [Phonetic]. Usually, we have a practice where we — 180 days is where we restrict it.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Right. So there were some accounts which were due over 365 days, right? Is that correct or no?

Avinash Sethi — Director & Chief Financial Officer

Yes, because we were very hopeful. We actually made some payments in between, so…

V. P. Rajesh — Banyan Capital Advisors — Analyst

I see. Okay.

Avinash Sethi — Director & Chief Financial Officer

And that’s how it is.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Got it. Got it. And my last question was on Eterna’s. So if you can just refresh us on the earn-out payments, where we are on that? How did it work-out for them?

Avinash Sethi — Director & Chief Financial Officer

So, we — so they have achieved 100% target for this year. And therefore, they have to pay the 100% achievement money — I mean, handout money. So which is going to be INR16.25 crores. Plus they were able to recover some bad debt and some bank guarantees that they were able to clean-up, which is their surplus cash, so we will paid that which is about INR1 crore.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Wonderful. Thank you and all the best, Avinash. If I have more questions, I’ll get back in the queue.

Pratik Jagtap — Analyst

Thank you, V.P.

Avinash Sethi — Director & Chief Financial Officer

Sure. Thank you very much, V.P. So, the next question is from Faisal Hawa. Faisal, I have unmuted your line. You can ask your question.

Faisal Hawa — H.G Hawa — Analyst

So, Avi, like system integrators for ServiceNow and for Salesforce and so like similar business which many decades ago that Infosys used to do for SAP and that was their main state. So is that like our go-to-market where we start out with these implementations and then you’ll go deep into the organization?

Avinash Sethi — Director & Chief Financial Officer

Yes, Faisal, that is one of the common strategy that almost all the IT services companies follow. We have chosen to stay with the players like ServiceNow and Salesforce, because that allows us to enter into large enterprises. And therefore, we have been able to get these large names, they’re still a micro company, if you look at it, in the whole IT universe of India or maybe the world. And despite I think that we have very, very large Fortune 500 customers as our clients, it is because of the virtue of these large application software platforms like Salesforce and ServiceNow. So, yes, that has worked fairly well for us. We start with implementation or integration within that existing systems and we have been able to expand into those accounts for other services, digital transformation services that we have.

Faisal Hawa — H.G Hawa — Analyst

So, I mean, what is the story of how you have founded this company, and who are the key other members and what has been your driving force to get to where you are and to really be an entrepreneur and go into…

Avinash Sethi — Director & Chief Financial Officer

Faisal, we have to do a separate call for that. There are so many people waiting in the line, so we’ll have to take that separately. But I’m happy that you have the curiosity to figure out how this company is started. We are into — like we have done 23 year so far. There is a roadmap that I shared, which is a very highly extracted version of the story. But let’s connect later and as I said it is going to be at least 1 hour call [Speech Overlap].

Faisal Hawa — H.G Hawa — Analyst

Can you just tell me something about how — so can you just tell me how our structure is? And I mean how many hands do we have in Europe and the U.S. for hardcore sales and how they really do the remaining and what are [Technical Issues]?

Avinash Sethi — Director & Chief Financial Officer

So we have — if you look at the people chart here, I think it is mentioned.

Faisal Hawa — H.G Hawa — Analyst

Yes, I saw that.

Avinash Sethi — Director & Chief Financial Officer

Yes. So if you look at, let’s say, Tarulata is managing sales and marketing from India for the U.S. market. Ram is handling client success, which is the account management, particularly in the U.S. market. Then we have — we have Geetanjali; she is handling sales in the UAE market. Then we have Emerson, handling sales in the U.S., along with the founders, Siddharth, Mitesh in the U.S. market. Siddharth does a lot of sales in Germany and in Middle East area and India. Jitendra and Shreyas again sales into Indian market. So, yes, this is where we have the details. But there are more members in the U.S. market. We have at least four to five salespeople in the U.S. market. We are four sales people in Germany market. We have two in the Middle East, and we have at least a couple in India. India is not our focus anyway, but it is growing naturally for us and we are able to get our wage. So we continue to grow in India naturally.

Faisal Hawa — H.G Hawa — Analyst

So in a previous slide, you gave some orders that you have backed. So any — in that you have said INR18 million to INR20 million revenue. So is that the total pie that you have or is that the value of the order to be executed over many years?

Avinash Sethi — Director & Chief Financial Officer

No, no. You got it wrong. INR18 million to INR20 million was…

Faisal Hawa — H.G Hawa — Analyst

This one, yes.

Avinash Sethi — Director & Chief Financial Officer

A target company that we are looking at for acquisition.

Faisal Hawa — H.G Hawa — Analyst

Okay, okay. Okay.

Avinash Sethi — Director & Chief Financial Officer

So, this is M&A pipeline, this is not a sales pipeline.

Faisal Hawa — H.G Hawa — Analyst

So these are all implemented [Technical Issues] like ServiceNow implementer, then consulting company, okay.

Avinash Sethi — Director & Chief Financial Officer

Yes, yes.

Faisal Hawa — H.G Hawa — Analyst

Okay. So these would be available at what 1 time sales or 1.5 time sales?

Avinash Sethi — Director & Chief Financial Officer

That’s a difficult question to answer right now. Actually, more than what you’re saying.

Faisal Hawa — H.G Hawa — Analyst

That answers all the questions. Thank you.

Pratik Jagtap — Analyst

Yes, Faisal, I would like to ask you to come in the queue. There are other participants as well. So, I would request you to come in the queue. Thank you, Faisal. We have next question from Rajesh. So, Rajesh, you can unmute yourself and, I would request participants to limit their questions to two, so everyone can ask their questions. Thanks.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Yes. Good evening. I just wanted to check on the bad debt — provision for bad debt. Is it INR2.2 crores or INR6.2 crores?

Avinash Sethi — Director & Chief Financial Officer

No it’s INR2.2 crores for the quarter and INR6 crores for the year.

V. P. Rajesh — Banyan Capital Advisors — Analyst

INR6 crores for the complete year? Okay. And then…

Avinash Sethi — Director & Chief Financial Officer

Yes.

V. P. Rajesh — Banyan Capital Advisors — Analyst

And you’ve also mentioned that Europe is growing at 36% CAGR in the revenues. So can we — is it safe to assume that we can grow at 20% to 25% in revenues CAGR for next couple of years and profit after…

Avinash Sethi — Director & Chief Financial Officer

That is what our target is, Rajesh. That is what we want to do. We want to better than — do better than that. But as I said, not everything is in our hands. Our aim and our target is to grow at a faster pace at least maintain the past pace if we can. So we made all the efforts, but the outcome is not enough [Phonetic].

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay, because for the last four quarters, if we can see, the revenue is around INR90 crores to INR95 crores per quarter. So how do you intend to increase that revenue year-on-year from hereon?

Avinash Sethi — Director & Chief Financial Officer

So there are multiple ideas around it and there are things that we’re working on the ground. One is obviously expanding into existing client base. Second is increasing the sales attempt, so that we generate more clients. And the third is enhance our capability set, so that we can continue to delight our customer. Fourth is, figure out areas where we can create a vertical expertise. So we are currently investing in storage and blockchain to become a subject matter expert. And then we can probably be able to generate more value for our customers moving from there.

The next strategy is to acquire companies in the geographies and the capability that we operate in, so that it’s both build and buy as a strategy for us. So we continue to make attempt, as I said, in all the directions, and at times, the market is not favorable. So their numbers remain stagnant. But at times, but if you look at the yearly number, we have actually grown by 38%.

V. P. Rajesh — Banyan Capital Advisors — Analyst

That’s an excellent number. But the point is from here on, can we grow at 25% to 30% CAGR?

Avinash Sethi — Director & Chief Financial Officer

Nobody knows, Rajesh.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay. And do you also work in IoT and artificial intelligence or electric vehicle segments?

Avinash Sethi — Director & Chief Financial Officer

No, we don’t.

V. P. Rajesh — Banyan Capital Advisors — Analyst

I recall, you don’t intend to build the capabilities on that also?

Avinash Sethi — Director & Chief Financial Officer

No. So we are, as I said, we’re building capability on blockchain. We are also trying to work towards AI. We are training our team on that, but we are far from building a perfect capability that we can sell.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay, okay. All the best. I’m all set. Thank you.

Pratik Jagtap — Analyst

Thank you, Rajesh.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Rajesh.

Pratik Jagtap — Analyst

So the next question comes from Hetal Sonpal. Hetal, you can unmute your line to ask a question.

Hetal Sonpal — Myphco Advisors — Analyst

Hey, thanks, Avinash, and congrats again for a great quarter. So, I have couple of questions on the number of clients slide, can you get to that? What I noticed is the number of Unicorns has gone down. Your explanation to Unicorn a minute back was on the same numbers going down from seven to six?

Avinash Sethi — Director & Chief Financial Officer

Yes, that will be for the Unicorn number, yes.

Hetal Sonpal — Myphco Advisors — Analyst

And these Unicorns are referring to our India — in India or in general?

Avinash Sethi — Director & Chief Financial Officer

No. So we have four unicorns in Indian, two or three in the U.S.

Hetal Sonpal — Myphco Advisors — Analyst

Okay, okay. You typically use the term Unicorn for a $1 billion corporation, whether it’s — it does not have to be a start-up — in start-up definition balance right.

Avinash Sethi — Director & Chief Financial Officer

No, no. So Unicorn is a $1 billion valuation business and Enterprise which is greatest than $1 billion is in revenue. There are two different things here.

Hetal Sonpal — Myphco Advisors — Analyst

Okay. Got it. The other thing was the total number of clients has dipped. Anymore updates on why you lost these clients, seven clients?

Avinash Sethi — Director & Chief Financial Officer

No. So, we actively — as I said, we actively reduced our focus on business which doesn’t give us more than INR1 crore every year. So we cut it long till consciously that is part of the strategy. We consciously dropout clients which are startups, we don’t want to go with startups, just because of these uncertainties. So, yes, we make an active attempt to reduce the count.

Hetal Sonpal — Myphco Advisors — Analyst

Got it. My last one is your strategy to expand into existing clients is great. When you are increasing your business, are you getting more business from their in-house operations or are you replacing an Indian competitor? In the same light, net-net what is the share of wallet in your large customers? Is that a number you are accounting for?

Avinash Sethi — Director & Chief Financial Officer

So. Yes, we have been able to do all of those things where we expanded into internal business units. We have been able to replace competitors, which are most of the times are Indian competitors. And we are still — as I said, we are still a tiny company looking at the Fortune 500 companies. Our wallet share is not significant at all in their books. In our books, obviously it is very, very significant, but in their books we are still non-existent in that tranche.

But there are companies where we have worked for a very, very long-time, 14 years, 15 years and each of these — and I’m talking about at least five to six names where we have more than 10 years of relationship. We are all mighty big corporations. And each of them have their captive in India for almost seven years to eight years. So despite that, we continue to get business is something that tells us we are doing good work and we continue to earn their trust and their business year-over-year. And we are expanding in each one of them. So, that way — even though the wallet share is a very, very tiny thing, they are still making a positive impact in their business. Therefore, the business comes to us and not to their captives.

Hetal Sonpal — Myphco Advisors — Analyst

Wonderful. Client testimonials from such clients would be good tradition in your quarterly results next time. Thank you.

Avinash Sethi — Director & Chief Financial Officer

Yeah, thank you, Hetal.

Pratik Jagtap — Analyst

Thank you, Hetal. The next question comes from Varun Agarwal. Varun, I have unmuted your line. You can go ahead and ask your question.

Varun Agarwal — — Analyst

Hi, Avinash. Congratulations for the good set of numbers. Am I audible?

Avinash Sethi — Director & Chief Financial Officer

Thank you, Varun.

Pratik Jagtap — Analyst

Yes, you are audible.

Varun Agarwal — — Analyst

Yes. So, you have announced in the margins and bottom line numbers are understandable. In terms of topline, when I see the other peers, who are smaller and even larger than us, lot of them have shown decent growth. So any color on the headwinds we are facing in terms of growing the topline?

Avinash Sethi — Director & Chief Financial Officer

See, there is a cautious mindset right now in the migrating clients particularly in the western markets, where high interest rates and inflation plus the entire bubble burst on valuation again has kind of maybe people are very, very cautious. But that doesn’t mean that they have stopped doing [Phonetic] business. So the Unicorns are some of the large companies who have done a very high amount of layoffs. And therefore, they have kind of passed the work that have been given to companies like us. Now, so that is a macro factor. But I think what we’re seeing is the demand is coming back and we have a long list of open positions back to us. So, I think, it is just a roller coaster in my mind where it will just remain cautious and then it’s a self-fulfilling prophecy where everybody remain cautious, and then all of a sudden, the market starts to slowdown. But then, I think it will come back and it is starting to show signs that it is back into action. So I wouldn’t worry much about it. It’s a short-term temporary thing, but there is no long-term worry that we see here.

Varun Agarwal — — Analyst

No. Other than the macro factors comparatively to our competitors or our peers, we are not seeing more competition or we are losing market share or any such kind of a scenario know?

Avinash Sethi — Director & Chief Financial Officer

Varun, market competition was there from day one, right. And all the markets that we’re operating in, we see competition every day.

Varun Agarwal — — Analyst

Yes.

Avinash Sethi — Director & Chief Financial Officer

So there is no — I would say, there is no variation in that, I mean, the competition remains.

Varun Agarwal — — Analyst

Because last three quarters, if we see, all last three quarter Q-on-Q, we are continuously seeing de-growth. So that is where I am asking.

Avinash Sethi — Director & Chief Financial Officer

Yes, don’t worry about the short-term. I would say, if you look at the long-term, I just had the charge in front of you, ’21 to ’23, we have doubled, right. That’s not any less achievement, right.

Varun Agarwal — — Analyst

Right, right. Absolutely.

Avinash Sethi — Director & Chief Financial Officer

So, yes, I understand quarter-on-quarter, there is a change, but we’ll find a way to overcome it. We’re actually working towards it. So, [Indecipherable].

Varun Agarwal — — Analyst

Sure, sure. One more thing. We’ve brought in Ms. Mayuri as a Independent Director. So there — in her profile, I see that she’s from the FMCG sector. So any particular reason for choosing her? Because if we bring something — somebody from our sector, we will get a better mentor, right?

Avinash Sethi — Director & Chief Financial Officer

So we continue to do that. And it’s a continuous process. First, counting with the right people for the Advisory Board, as well as other independent board, not everybody is keen to joining the Board. They cite a lot of reasons like conflict of interest. So, we have a little choice there, but yes I understood. She is IIM Ahmedabad pass out and she has very good experience in cross-border marketing and FMCG sector. So we can [Indecipherable] some of that marketing knowledge for our markets which we are operating, particularly in Europe and U.S.

Varun Agarwal — — Analyst

Sure, Avinash. Thank you so much, and all the best for the coming quarters.

Pratik Jagtap — Analyst

Thank you, Varun.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Varun.

Pratik Jagtap — Analyst

So the next question comes from Varun Gupta. Varun, I’m unmuting your line. You can go ahead and ask your question.

Varun Gupta — — Analyst

So, hi, Avinash. Congratulations on good set of numbers. I have a couple of questions.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Varun.

Varun Gupta — — Analyst

One on the emphasis of matter. In the audit report, EY has highlighted one error like there was some error in the previous financial year financial results. And for that we have done some remix [Phonetic] of the numbers. So the numbers are not material, but what are the controls or what are the steps the management is taking to avoid such instances in the future, because since it’s a listed entity, any error in the audited accounts is not liked by the market?

Avinash Sethi — Director & Chief Financial Officer

Yes, absolutely, and we’ve taken immediate corrective steps. That is how — so it was observed in the first quarter by EY of this year. So that has been corrected and because… The reason why we got EY was obviously to improve our corporate earnings and compliances. And that is what they found in the first place and that’s how we got corrected. We also have implemented several control features after that, which is where we have been able to make it more strong and robust from where we were. So there is no such material observation after that quarter. So, three quarters have been past after that. And now, in our Annual Report, annual audit, a through audit done by EY in this quarter. So I think we’re on track in terms of making it more robust.

Varun Gupta — — Analyst

EY is our group auditor or EY is doing the audit for only India entity? Who is doing the audit for the U.S. and Europe?

Avinash Sethi — Director & Chief Financial Officer

EY is our group auditor.

Varun Gupta — — Analyst

Okay. And Avinash, second question on the salary cost, even though our topline is not growing, but there is a huge spike in the salary cost. So how much salary cost is increasing on account of new hires, which we did in current year? And what is the value of increment component in the total increase if you throw light on that?

Avinash Sethi — Director & Chief Financial Officer

So, in previous quarters, I’ve mentioned that very clearly. We had 40% jump in salary cost from March ’22 to April ’23 — sorry March ’23 to April ’23. And then — so that was the big factor driven by the external demand and the salary that people were getting in the market. We had to redo and take a much large effort which is what we did in the start of this fiscal year. And so that is one of the largest impact that we’ve seen.

We also hired significantly from I think around 500 people to 600 people last year. And we also lost 200-odd people last year. So therefore the cost and the churn was much, much higher. This year we did see attrition rate dropping to less than 12%. So that impact should be reduced. But the cost continues to haunt us for coming years.

We also tried to pass some of the cost back to the customer, where we have renewed our new contracts but at higher rate. So, yes, as I said, we’ve been taking a lot of measures. We’re also trying to increase the utilization levels for our team by cross killing them and ensuring that they don’t sit idle. So the long work is going on in each of those corrections to contain the cost. So if you look at quarter-on-quarter numbers in detail, then we will find that we have actually saved on some cost if I remove this one-time incentive from the salary expenses. So we were able to reduce the people cost also quarter-on-quarter.

Varun Gupta — — Analyst

Okay. That’s good. Thank you, Avinash.

Surbhi Jain — Company Secretary & Compliance Officer

Thank you, Varun.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Varun.

Pratik Jagtap — Analyst

The follow up question coming from V.P. Rajesh. V.P., you can unmute your line.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Yes, hi, thanks for the opportunity again. So, Avinash, a quick question on generative AI. I know you mentioned AI, but I was just curious, what are you doing about generative AI with respect to the clients on the Enterprise side, as well as the Fortune 500. What kind of opportunities do you see because of that?

Avinash Sethi — Director & Chief Financial Officer

So, as I said, we are still at a exploratory stage. Generative AI can actually do multiple things right from coding, software engineers to coming out with ideas which can speed-up the entire… So we were talking to couple of companies out there and they are trying to see if we can create an enterprise repository and enable it with AI. So that anything that you want to search within the company for any purpose, can be just build-up right there. Things like the contract is due 30 days from now, you have not exceed the date for three years, you have an opportunity to go and increase the days. All of these human intelligence can actually be fed into AI system, and then can come out of — becomes a very strong business case, not only for us but for our customers also.

So, as I said, we are at a very early stage, we can’t tolerate any expertise whatsoever, we are learning by the day and we are trying to explore the [Indecipherable] other AI companies, and tools out there to see if we can make an impact for our customers. Customers are also asking how they can enable the AI into their existing software. Both Salesforce and ServiceNow are heavily working towards coming out with AI-enabled modules. So we are also keeping a track of that, that we can learn and create value addition for our customers using those modules. So very early stage there V.P. to comment anything on that.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Understood. And just on the numbers side, you know, what is our cash at the end of the financial year?

Avinash Sethi — Director & Chief Financial Officer

So, we — I think you had that number to start, we have about INR176 cores [Phonetic]. This includes INR64-odd crores of account receivables.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay. So INR112 crores of cash and then INR64 crores of receivables. Correct?

Avinash Sethi — Director & Chief Financial Officer

Yes.

V. P. Rajesh — Banyan Capital Advisors — Analyst

Okay. Okay. Thank you. That’s all I had.

Pratik Jagtap — Analyst

Yes. Thank you, V.P.

Avinash Sethi — Director & Chief Financial Officer

Thank you.

Pratik Jagtap — Analyst

Yes, and we will take the last question for today…

Avinash Sethi — Director & Chief Financial Officer

Pratik, have you looked at the chat? There are multiple questions in the chat, have you looked at some of those?

Pratik Jagtap — Analyst

Yes.

Avinash Sethi — Director & Chief Financial Officer

Have we covered all of those? Okay.

Pratik Jagtap — Analyst

Most of them, most of them like it’s on AI and the margins.

Avinash Sethi — Director & Chief Financial Officer

Sure.

Pratik Jagtap — Analyst

So, we will take the last question from Shashank Rastogi. Yes, Shashank, you can unmute your line and go ahead. Shashank? I think he can’t talk like. So his line has dropped. So we will take the last question from Bhagwat Naik. Bhagwat, you can unmute yourself and ask the question.

Bhagwat Naik — Prosperity Wealth Management — Analyst

Hello, sir. I would like to know about the blended tax rate for FY ’24. So could you please update on that?

Avinash Sethi — Director & Chief Financial Officer

I think, it is coming at 21% right now.

Bhagwat Naik — Prosperity Wealth Management — Analyst

Yes. For FY ’24, sir, I’m asking?

Avinash Sethi — Director & Chief Financial Officer

We used to have it in single digits, but now it is actually much higher.

Bhagwat Naik — Prosperity Wealth Management — Analyst

Okay.

Pratik Jagtap — Analyst

Okay. Thank you, Bhagwat. I think we are about to close to our session now. So I’ll — thank you for participants for joining this call and I’ll hand over the call for the closing comments to Avniash. Over to you, sir.

Avinash Sethi — Director & Chief Financial Officer

Thank you, Pratik, and thank you all the investors for posing your trust and confidence in InfoBeans. And as I said, there is a slight dip in terms of the revenue quarter-on-quarter. But if you look at year-on-year your worries should go away. As a company, we focus on a very, very long-term. We are already in business for the last 23 years and there has been multiple such downturns and tough times, but it didn’t bother us because we have always come stronger in each of these times. And as I said, this is a good opportunity for us to see how we can maximize from here in terms of our focus areas on those four things that we continue to focus on with cloud platforms, the automation practices and the user experience practices, plus how do we — this is a good time for M&A opportunities also. So we see lot of positivity in this time. And as I said, we are here for long-haul. We continue to aim for growing at a much faster pace. And we work towards that objective. All right, thank you very much for your time and attention. Thank you once again.