Onward Technologies Ltd. (NSE: ONWARDTEC) Q4 FY22 Earnings Concall dated May. 16, 2022
Corporate Participants:
Anuj Sonpal — Chief Executive Officer of Valorem Advisors
Jigar H. Mehta — Managing Director
Devanand Ramandasani — Chief Financial Officer
Analysts:
Krish Kothari — Shinobi Capital — Analyst
Sriram Ranjan — Individual Investor — Analyst
Nikhil Jain — Galaxy International — Analyst
Pawan Punjabi — Hexagon — Analyst
Sachit Motwani — Param Capital — Analyst
Pratap Maliwal — Mount Intra Finance — Analyst
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Sanjay Awatramani — Envision Capital — Analyst
Bhavik Mehta — Roots Ventures — Analyst
Presentation:
Operator
Ladies and gentlemen. Good day and welcome to the Q4 and FY ’22 Earnings Conference Call of Onward Technologies Limited. [Operator Instructions] Please note that this conference is being recorded.
At this time, I would like to hand over the conference to Mr. Anuj Sonpal, CEO of Valorem Advisors.
Anuj Sonpal — Chief Executive Officer of Valorem Advisors
Thank you and over to you, sir. Thank you. Good morning, everyone. Very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Onward Technologies Limited. On behalf of the company, I’d like to thank you all for participating in the Company’s earnings conference call for the fourth quarter and financial year ended 2022.
Before we begin, let me mention a short cautionary statement. Some of the statements made in today’s con call may be forward looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs, as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings conference call is purely to educate and bring awareness about the company’s fundamental business and financial quarter under review.
Now, let me introduce you to the management participating with us in today’s earnings conference call and hand it over to them for opening remarks. We firstly have with us Mr. Jigar Mehta, Managing Director and we also have with us Mr. Devanand Ramandasani, Chief Financial Officer. Without any further delay, I request Mr. Jigar Mehta to start with his opening remarks. Thank you, and over to you, sir.
Jigar H. Mehta — Managing Director
Thank you, Anuj. Good morning, everybody. I hope you can hear me clearly. It’s a pleasure to welcome you all to the earnings conference call for the fourth quarter of financial year FY ’21-’22. I hope everybody is doing well. And please to — without going back to the operations and the business of the company over the last 90 days, I’m pleased to inform you the last year has been a historic year for our team in all parameters and we remain extremely positive about the opportunities in front of us going forward from all our existing clients and the amazing funnel that has been built up over the last two years.
We’ve delivered a record 28% annual growth, again, the first time for our team, and 225% PAT growth in the previous financial year, very happy to note that and share with all of you that these actually surpassed all our internal projections as well. And I know our team could have done much better as well based on the amazing visibility that we saw at the start of the quarter.
And coming back again to the operations, we have broken down into two business units now. One is the India business unit where we sell to all the large captive centers in the country, only MNC’s. And secondly, the international business unit where we have recently opened seven offices, three in U.S., three in Europe and one in Toronto, Canada. Both then averaged about 27%, 28% annual growth and it’s — the pipeline again is looking very healthy. In terms of Q4. the company recorded its highest annual revenue of INR87.5 crores, which is pure run rate revenue and we believe this somehow will keep growing. It was at 32% year-on-year growth and 13% quarter-on-quarter growth, again, the best that the company has delivered so far.
All the growth has come from mainly the two business verticals that we are primarily focused on, industrial equipment and heavy machinery and second is the transportation and mobility verticals, which predominantly is automotive and the transportation for us. We now have 11 OEM clients and Tier 1s where we each contribute more than $1 million of revenue run rate. We added 160 employees net during the quarter, which took our total employee head count at 2641 employees, with all full time employees across the company.
We also in line with our commitment to increase our offshore revenue, over the next few quarters, we started opening up centers of excellence across the country. As you are aware, traditionally Onward we had headquartered company out of Bombay. We were expanding predominantly in Puna. Then over the last few years, we have started sowing the seeds and investing big in Chennai, now where we have more than 500 seats. In Bangalore, right in Whitefield and third in Hyderabad recently where we have set up the Digital DevOps practice.
All of these programs and the new design centers that we have set up, we’ve added another 200 engineers net over the last 12 months and 150 in the last quarter to increase the talent acceleration program to 200 engineers right now. We have shared with you guys earlier that our goal is to take this program 5 times or 10 times larger based on the visibility that we are seeing and the demand that we’re seeing from all the clients on the digital and the embedded space.
We’re also hiring a lot of senior SMEs, subject matter experts, very strong domain experience in industrial equipment, in heavy machinery, in the automotive, mobility industries to meet the growing demand of our Europe and U.S. customers. I believe these investments will help us continue to grow at a record pace over the next few quarters and we believe the investments that we are doing in the talent acquisition program and the training will actually help us meet the strong demand for both digital and the R&D services.
Now, I hand over the call to our CFO, Mr. Dev Ramandasani to give you the financial highlights. Over to you, Dev.
Devanand Ramandasani — Chief Financial Officer
Hi, good morning, everyone, and I welcome to you on this earnings call. Let me take you through the fourth quarter’s financial performance of our company on consolidated basis. Our operating income as stated goal is INR87.5 crores, which has increased about approximately 32% year-on-yearly basis. EBITDA as reported INR6.3 crores for this quarter, which grew by 66% year-on-year basis. Our EBITDA margin is reported 7.2% and net profit after tax reported INR3.2 crores, which is up by 52% year-on-year.
Our operating income for the financial year ended 2022 is INR307 crores, which has increased year-on-year basis 28%, EBITDA as reported is INR21.4 crores, which has increased approximately 24% year-on-year basis. Net profit after tax, which has been reported INR23.7 crores, which is more than three years up from previous year.
Lastly, I am happy to inform you that we have the healthy cash flow in the books. We have approximately INR60 crores in the books as on March 31st. Apart from that, we have receival from the various tax authorities and departments is approximate INR18 crores. Put together, we have a huge healthy cash flow and we are anticipating department will release approximate INR10 crores to INR11 crores in the next four to five months. So, again this will churn out as a more cash flow in the system.
I’m again informing — delighted to inform you that credit rating of the company given by the ICRA has been upgraded by one level, BBB for the long term and A3+ for the short term. As well as a Board of Directors has also recommended final dividend of INR3 consecutive year for the financial year ’21-’22 which is subject to shareholder approval in upcoming AGM.
I’m open for — this floor for the question-and-answer session. Thank you, everyone.
Questions and Answers:
Operator
Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Krish Kothari from Shinobi Capital. Please go ahead.
Krish Kothari — Shinobi Capital — Analyst
Hi. I actually wanted to ask about your receivables. Have you — I mean if you could just give some sense of how having issues with that or fee-based clients asking for longer payment — sort of better payment terms on their end?
Devanand Ramandasani — Chief Financial Officer
Okay. Let me take you through the rationale behind that. If you see our revenue is quarter-on-quarter grew, particularly last quarter has been growing significantly and in DSO — while the calculated the DSO, the sales will be calculated average per day sales on that. So, when your amount uncollected as on the March 31, where the DSO has been calculated, your sales has been shoot up, but Your average sales has been not increasing in that fashion. Therefore, if you see the arithmetically, yes, DSO has increased, but it’s the — when the growing company, this is a common thing for everything and there is no issue in the collection of all because as I — as we explained in earlier calls is that we deal with all large OEM companies on that and we never faced any collection challenges and we have not provided any provision for doubtful debts. So, I personally believe that there is no challenge in the collection.
Krish Kothari — Shinobi Capital — Analyst
Okay. Got it. Thanks. My next question is actually related to this whole supply side issue that’s been there in the industry, I just want to get a sense of what you think needs to happen for that to normalize. Do you, for example, does there need to be some sort of cracks appearing in the unlisted startup world for things to normalize or is there anything else that you think needs to happen?
Jigar H. Mehta — Managing Director
Krish. Sorry. Can you repeat the question again.
Krish Kothari — Shinobi Capital — Analyst
Yeah, sure. I actually just wanted to get your sense of what needs to happen in the industry for the employee cost to sort of normalize. And what I mean by that is, I don’t mean your company specifically, I mean just expectations of increasing [Technical Issues] should be — what the compensation should be. So, I’m just trying to understand what you think needs to happen? For example, do you think that they need — some funding issues need to start happening in the unlisted space for those expectations to normalize?
Jigar H. Mehta — Managing Director
Sure. So, Krish. Our view is a bit different. I can talk to you and specifically startup world is very different, and excuse me, hiring is very different. I can talk about where we are at Onward. So, if you see from our perspective, we are hiring across three areas. One is the whole digital cloud area, second is embedded electronics and third is mechanical engineers. Now, in this particular space, we don’t see that big a challenge today than what it was six months ago.
While the demand is at an all-time high, I think most companies, whether it’s on the technology companies, even similar or companies across the country, all of them are now focusing more and more and actually they had internal talent acceleration program or re-skilling and upgrading or hiring a lot of freshers because there’s no way you can be in the market where you can just constantly survive on lateral hires and I think that’s a huge change coming in and most companies that I’m sure you’ve seen the press release and the notes of all these companies, we have hired in thousands and thousands.
And for a young company like us, we’ve hired 200 and we have an ambitious plan of taking this program right now to 2000 engineers. Because moment we do that. I think that whole supply challenge, which companies have. I think will go down drastically. So, it’s more about building your own capabilities in-house than depending on lateral hires is where my focus lies today at least surrounding it.
Krish Kothari — Shinobi Capital — Analyst
Okay, got it, thanks. I actually wanted to talk about something that you just mentioned in terms of building capabilities. What is your sense of — how do you compare building it in-house versus acquiring some capability? I mean, which — what do you see as the pros and cons of each of those sort of paths?
Jigar H. Mehta — Managing Director
So, what we are doing in Onward is we’re trying to create like — we are trying to create a pyramid model, right, so where we need to hire especially in new advanced technologies where we have no presence, so there we are entering for let’s say our clients, let’s say in the mobility industry. Now what we are doing is we are hiring very senior experienced SMEs as the top project leaders. These are guys who are coming directly from the market where we are doing lateral hires, but the entire bottom layer, which is 80% of the stock is going to come from our own internal engineers.
So, whether they are engineers transferred from the older technologies where they were working or engineers who we are hiring directly from the best colleges in the country. So, it’s a pyramid model that we are creating because we do need the external domain experience for sure, but instead of getting, let’s say, staffing a project with 100 engineers and all 100 coming from lateral hires, which was the case for Onboard two years ago. Today, we’re only hiring 10 people at the top and 90 people is going to come from our team members. And we are seeing more and more customers being appreciative of that. They have been very supportive and actually they are also investing with us to train those — the new 70%, 80%, 90% engineers in customized programs because they are hurting as well.
Krish Kothari — Shinobi Capital — Analyst
Got it. Okay, thanks. And just, if I can just ask one more question. On the sort of capex side, if you could give some breakup of what you see as maintenance capex or to say growth capex and also just over the next, say, three to five years, how much you think you need to invest on that front?
Jigar H. Mehta — Managing Director
Sure. So the good part Krish for our business, we don’t really have a capex, right. I mean, if you’ve seen the — our numbers in the last 12 months. So what we buy as a service as a company is only two things, the laptops and the servers and the high-end workstations and then there’s all the software. Traditionally in ER&D industry we were all buying capex, which is very huge because each license costs or it’s software cost per engineer was anywhere from INR3 lakhs to INR30 lakhs, right, based on how high end simulation software that you buy.
Today, the whole world has changed in the software side, where the entire thing is now moved as a SaaS model. So we are literally subscribing to all the software licenses now, so that doesn’t go into capex anymore. Even the hardware that we were buying, the laptops and everything during the last two years, all of them we ended up started — majority of them we are leaving now, whether it’s from HP or Dell or whichever companies. And so that model also is going up.
So some of the capex that you see in our books it might be actually for new offices that we are recently — new design centers and centers of excellence that we have recently opened up and the labs that we are — electronic labs that we are setting up in every city in the country.
Krish Kothari — Shinobi Capital — Analyst
Okay. And sir, do you have any number that — I mean in a broad sense over the next three to five years that you think you need to invest?
Jigar H. Mehta — Managing Director
There is a number in mind, I believe it would be very consistent with our net employee growth with every new employee who joins.
Devanand Ramandasani — Chief Financial Officer
Krish, actually, this question typically the how fast we are expanding on that maybe the — basis on the demand side, it will vary, but if you ask me the ballpark wise, capex wise, INR4 crores to INR5 crores on computers and software will be minimum requirement for every year. We believe so. This number can be accelerated or in proportionate to the mild revenue increment.
Krish Kothari — Shinobi Capital — Analyst
Okay, got it. Thanks so much. I’ll get back in queue.
Operator
Thank you. The next question is from the line of Sriram Ranjan, an Individual Investor. Please go ahead.
Sriram Ranjan — Individual Investor — Analyst
Hi, Sriram, here. Am I audible.
Operator
Sir, if you can speak closer to the device, please. Your audio is…
Sriram Ranjan — Individual Investor — Analyst
Yes. Is it better now?
Operator
Yes, sir. Please proceed.
Sriram Ranjan — Individual Investor — Analyst
Okay. Wonderful. So congratulations Jigar and the entire Onward teams, so wonderful set of results. Very encouraging especially the topline growth, which is critical for a young company. Just few questions, one is the EBITDA margins have grown actually year-on-year, but sequentially there’s a bit of a drop, any reasons for that?
Jigar H. Mehta — Managing Director
Sriram. Hi, good morning. The EBITDA margin is, again for us, we are focusing on building up the company. It’s more about building the foundation for the long term and all our investments are based on that. What’s happened, if you remember last call, we discussed, for the last six months now finally travel has opened up. Several international offices that we have, have been completely understaffed in the last five years, especially last two years when everybody was remote.
So large number of people are getting added in all these seven offices, both local hires that we are bringing on board and number two is, most of our senior executive talent or let’s call them my top performers are all getting transferred to these global offices. So, we had a vice president recently moved to Toronto. We have somebody moving the next couple of days to Frankfurt. We have several people moving to London. So and that — all of that is going to add to the cost. That’s all about building the right team and the right culture and investing for the future.
Sriram Ranjan — Individual Investor — Analyst
Wonderful. Got explained. Given the chip shortage and the other supply chain headwinds we expect because of the war, do you expect some kind of impact on our revenue at least on the automotive side of the business?
Jigar H. Mehta — Managing Director
In terms of increase or decrease, you are hinting at?
Sriram Ranjan — Individual Investor — Analyst
Decrease.
Jigar H. Mehta — Managing Director
Again, we are not seeing that right now, definitely, all of the supply chain challenges in the industry, but at least for us the embedded is one part of our business. We are also very focused on mechanical and the digital side, and both of those areas are — the demand is exponential today and it’s increasing as we speak. See what’s happening for us Sriram is the large — so our cost structure, obviously, is very lean and very low and that’s why we are able to provide services to some of the biggest companies out there in the world or Fortune 500 companies.
And as we speak more and more and more contracts, we are winning, just to give you an example, recently we won rebadging contract with one of the largest German companies where they were being a major vendor consolidation. This is on the mechanical side and this could become a huge avenue for growth for us going forward and on the technology has won that contract. So, we see that more and more as large big, big companies to the consolidation. So while embedded side, some pieces have slowed down, but the demand is exponential right now. And probably, we have the largest number of requirements in our ATS system on the embedded electronics side.
Sriram Ranjan — Individual Investor — Analyst
Very encouraging, Jigar. The goal we’ve set for ourselves by 2025 is 50% revenues from digital, so, currently at about 8%, are we clocking in the right direction for that, Jigar? Any guidelines there?
Jigar H. Mehta — Managing Director
No, absolutely. I mean, as I shared in my opening remarks, Sriram, we did better last year on the digital side and the offshore side than our internal projections and I think I said March was the pent-up demand when the world opened up, especially in U.S., things started really flowing for us, but I do believe on the digital side, coming back to your question 50% is our stated goal and we do believe we can get there and most of our new deals in that thing — sorry are in the digital domain and the cloud domain.
Sriram Ranjan — Individual Investor — Analyst
Sir, last question. So, this is my question, I keep asking. So in the space of EV or automotive, you had some plans to enter into that is that, are we near that execution of the plan this year or it’s a little bit of away?
Jigar H. Mehta — Managing Director
It is something that we want to start right away, right now. What’s happening for us is all our key leaders on the delivery side have all been absorbed in some of the large engagements and projects that we have won recently. So, most of them are on the field right now and we do believe we will start that in this quarter.
Sriram Ranjan — Individual Investor — Analyst
Excellent.
Jigar H. Mehta — Managing Director
We know the people we want to bring on board. I think it’s all done, I think it’s all about just making sure that all our offices are completely well staffed first before we get into new areas.
Sriram Ranjan — Individual Investor — Analyst
Yeah. So I think that was the penultimate question. Last one, so the — I see your introduction of AR and VR in your deck this time, which is extraordinarily encouraging again. So, any plans of actually some sort of immersive metaverse engagements, especially in your auto space?
Jigar H. Mehta — Managing Director
We started seeing traction there, we tried seeing RFPs and we had bought a small project as well. But that’s something where all — most of our customers, if you look at our top 25 customers in the — whether it’s automotive or industrial equipment or heavy machinery, all of them are asking us to build these capabilities. This is that’s something they have started looking at very seriously and they are very open to some more offshore constructing now, as you know, and that’s what we started investing in these areas as well. We do believe it will become a big avenue for growth for us and a differentiator for our existing clients.
Sriram Ranjan — Individual Investor — Analyst
Wonderful, Jigar. I think I’ve — my questions are done. Very encouraging and all the best for Q1 2023.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Nikhil from Galaxy International. Please go ahead.
Nikhil Jain — Galaxy International — Analyst
Thank you for the opportunity. I just wanted to understand. So what is the target that you’re actually looking for in FY ’23 as you build upon $100 million target for FY ’26. So, what is it that you would want to kind of achieve in FY ’23? If you can shed some light on that?
Jigar H. Mehta — Managing Director
Nikhil, we don’t really give projections, but as I’ve always shared before, our goal and the team that I believe I have built here, the things in focus for everybody is to beat the previous quarter’s numbers, that’s what we are doing. So, we do believe a very, very small base. But what’s important for us is to build the right foundation [Technical Issues] that’s where all the energies are going and the current — based on the current demand environment, customers and the opportunities in front of us, we do believe it’s [Technical Issues] next year for us going forward.
Nikhil Jain — Galaxy International — Analyst
All right. Okay, fair enough. That’s all from my side. Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Pawan Punjabi from Hexagon. Please go ahead.
Pawan Punjabi — Hexagon — Analyst
Hey. Hi, I just was curious to know if there is any kind of EBITDA margin that you are looking at, which would be like a stable EBITDA margin once the company is more stable once its done with its hiring etc.? Is there any kind of limit of EBITDA margin that you’re looking at?
Jigar H. Mehta — Managing Director
Pawn, hi, Jigar here. Again on the EBITDA margin, we believe, operationally, we are operating at a double-digit number right now, which is at par with the industry. Our focus again, I keep saying it, majority of our — we are investing all of it for the lockdown, right. So, we are not — while we are conscious of being a profitable company and making sure that we keep growing on the right parameters, what is important is we are still a very young company at a very young base, right?
We just crossed INR300 crores of revenue — INR307 crores. We have a long, long way to go and a lot of the reasons why we raise private equity and brought Convergent in last year when they partnered with us, was to build — invest in the foundation for the long term, right. If you see the investments that Onward is doing on the sales side, on the client engagement side, in entering new areas like digital and electronics and hopefully EV tomorrow, the investments that we’re doing are internal digital transformation. Just last year’s budget included about INR4 crores of investment in just digitizing entire Onward technologies right. So, we are at that stage right now and we do believe right now the focus is to build a very strong growth based culture supported with a very profitable business.
Pawan Punjabi — Hexagon — Analyst
Got it. Thank you.
Jigar H. Mehta — Managing Director
They’ve only shared about the cash that we have in our books and we do believe that will continue to grow going forward.
Pawan Punjabi — Hexagon — Analyst
Right, got it. Thank you.
Operator
Thank you. [Operator Instructions] The next question is a follow-up from the line of — the next question is from the line of Sachit Motwani from Param Capital. Please go ahead.
Sachit Motwani — Param Capital — Analyst
Yeah. Hi, Jigar. I had just one question. So, we didn’t see a good amount of offshoring come up in the last few years. Sir, offshoring has been hovering at 30% of revenues. So, two, three years down the line, how do you see this offshoring mix change?
Jigar H. Mehta — Managing Director
Sachit. Hi, good morning. So, if you look at the last two years were very different, right. For us last two years, where more has been actually Onward transform and just going a bit back into history, November 2019 is when Onward became debt free and since then — when we started investing very significantly and focused approach on the international market. And last two years with everybody remotely working or working from home because of COVID, all our revenues we position that in onsite because it’s not working from our offices that’s how we have classified our onsite-offshore mix so far.
That’s from the way — right, that’s the first part. And the second part is, I think I believe [Indecipherable] as well, right, to our Pune facility. If you see, we are upgrading all our infrastructure across Pune and now Chennai, Bangalore, Hyderabad and that’s towards increasing the offshore percentage because our customers are very open. Today, the kind of companies that we serve and we support is — they are not very focused about whether we do the work onsite or offshore, right, because Onward owns the SLA and the delivery or most of the services that we provide.
So, they are more interested and we’re having the ability to invest. And because earlier the offices were closed for the last two years, we were also very focused and we are comfortable on the onsite model. So, we do believe now the offshore numbers will go up. We’ll grow substantially as well.
Sachit Motwani — Param Capital — Analyst
Okay. Sir, can we expect this to surpass 50% in a couple of years’ time?
Jigar H. Mehta — Managing Director
It’s a possibility. As I said, we are not exclusively biased towards onsite or offshore, both the models work. Please keep in mind, our customers remain the same. If you look at our revenue profile, our top 25 customers now contribute 60% of our revenues. And that number we believe will become significant more and more going forward. So, from a large number of customer base that we had last two years to where we are today, we’ll have very, very few strategic customers. As I’ve said, about 25 or 30, where we will grow our revenues with. Now, those customers who might want us to do work onsite, offshore or near site to where they are.
Sachit Motwani — Param Capital — Analyst
Okay. And also can you throw some color on the opportunities in the healthcare side?
Jigar H. Mehta — Managing Director
So, healthcare has been an exciting vertical for us. We will have — I shared with you guys last time, we had a major win last quarter. This quarter we have an amazing [Indecipherable] customer in U.S., which is also growing at a very, very fast pace. This is all on the digital side and the analytic side. And so, now we have three large strategic customers. We are in the process of onboarding several new domain leaders in our Pune Design Center for healthcare, where we are investing in multiple different areas. Again, this is all focused on existing clients.
And we believe again this has become a significant growth driver for us in U.S. and Europe markets. And now once my new sales team and leadership team start in Europe and U.S., lot of them have lot of depth and experience in terms of this domain, which will also actually help us grow the industry vertical, the new vertical much faster.
Sachit Motwani — Param Capital — Analyst
Within this healthcare, like typically what would be the deal sizes right now? Because like you have like 11 accounts now giving more than a $1 million. I think they would be largely from industrial and on the mobility side, but healthcare would be contributing a relatively less. So, like from a client mining perspective, can — like these healthcare clients also become a significant portion in terms of size — deal sizes?
Jigar H. Mehta — Managing Director
I think. So for sure that what we believe internally. That’s why we entered the space. We believe the — customers entering the $1 million revenue per year in the healthcare on the new domain will be much faster than the earlier domains. In earlier domains, we are playing catch up because, obviously, we are new in this whole space, full outsourcing, offshoring perspective, it’s been relatively new for us since November 2019, I’m talking from a global market perspective.
But on the healthcare space, we are going with the strength of 2,800 people. So what’s happening there is our deal sizes are significant from day one itself. And those will actually outperform in terms of not the number of clients, but number of few clients, but we will do significant amount of work with them. Just to clarify again, we are not building a domain based practice, we are building a digital technology based practice on the client — on analytics — on advanced analytics. And because we have those skills in our house, we are seeing a huge traction and visibility and even our cycle in terms of, from the time we enter a new prospect to closing a deal is much faster.
Sachit Motwani — Param Capital — Analyst
Got it, Jigar. All the best and thank you for answering my questions.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Nikhil from Galaxy International. Please go ahead.
Nikhil Jain — Galaxy International — Analyst
Thank you. Thank you for the opportunity once again. Sir, I just wanted to check, in our business, roughly around 70% of the projects are on the time and material and the fixed time and fixed price only around 25%, 27%. Weatherly, it’s the reverse in the industry. So, any specific reason for us preferring this time and material work as compared to the fixed time and fixed price? Because I understand that probably the margins might be a little better in fix time, fixed price? Thank you.
Jigar H. Mehta — Managing Director
So, let me give you a bit of a background here. When you compare the industry, I think you’re comparing with some of the larger peers who had been there for the last few decades. We are very new in this space where a young service provider, as I said, we’ve just crossed INR300 crores of revenue. For us, if you look at our client profile, majority of the — some of the biggest customers, whether it’s in U.S., whether it’s in Canada. France, Germany, U.K., we have won, it has been in the last five years, a large number of them in the last two years in particular, right, since we started focusing on top line growth. Earlier, our focus was only on cash generation to become a debt free company.
Now coming back to your point, Nikhil, when we started engaging with a new customer, customers also trying to know us and get to know us and Onward has to build its credibility with the customer, both on quality, on deliverables and on having the best manpower, the best team and initially all engagement start two T&M or time and material and that’s our experience in Onward Technologies. So all the new engagements that Onward has won in the last two years, especially during this whole remote working environment has been on T&M.
Once we hit a maturity model with these customers, where we have with some of our larger peers, we’ll try some of the customers where we have engagement more than five years. Those will get converted more and more when the customer, especially the large RFPs, which are fixed price. So, initially, my focus continues to be on T&M. I believe that’s the trend that will continue at least for the next year or so, at least for few quarters. Post that when we do believe that we’ll have.
We shared, we have 11 customers now at a $1 million run rate, we have a clear visibility that we will hit 18 to 20 same time next year, a year from now based on the wins that we’ve had in the funnel that we have today. Now our whole perspective is when some of the customers will move from $1 million a year to $3 million a year, $3 million customers will move to $5 million a year run rate. And those are the big engagements where we will start bidding for at least on the access to RFPs which are fixed price.
Devanand Ramandasani — Chief Financial Officer
I would like to add here that T&M model will give the flexibility to our size of the company that — there is annuity business — annuity revenue you will do that without any affecting of your margin. So, we don’t have the much bench on the sitting in the company. That is a positive sign, which we feel so that at this junction, it is the best model for us and best suitable for us. So, therefore, we are focusing on the T&M model where the revenue will continue as we go.
Nikhil Jain — Galaxy International — Analyst
Understood. So, based on the excess capital to get to your customer, build a relationship, show your competence and then kind of migrate to the next level. So I understood that. One additional question. So how much is the percentage of revenue that is contributed by our top 10 clients as of now? Because we are going to focus on the top 25, top 30 clients, so I just wanted to have that number if it is available? Thank you.
Jigar H. Mehta — Managing Director
Nikhil, so our top 10 clients contribute approximately 47% of our revenues last year.
Nikhil Jain — Galaxy International — Analyst
Okay. And any specific deal wins in this quarter that you would want to kind of highlight or point out?
Jigar H. Mehta — Managing Director
So, we have number of new contracts that we have won. Some — one or the largest contracts we have won is with a mobility company and OEM on the digital space where we are being selected to build practice for them on DevOps. This is to start with a young team of 60 engineers to be ramped up to 120. This is one of the most significant contracts that we have won in the last few days.
Similarly, we have one a customer in Europe, which is for electronics and embedded, which will again become a very fast growing client for us. After competing with some of the largest companies in India, we were selected and we met them recently as well. I personally could meet them last month, which was significant. Like that we have won one of the large client in Toronto, which is automotive Tier 1, which is also growing at a very, very fast pace for us. So, these three transactions is where we are seeing a huge visibility in terms of the new deals we have signed and completely new clients.
Nikhil Jain — Galaxy International — Analyst
Great. So, congratulations and best of luck for the future. Thank you.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Krish Kothari from Shinobi Capital. Please go ahead.
Krish Kothari — Shinobi Capital — Analyst
Hi, I just wanted to ask about your sort of cash management and treasury operations. How do you generally park your money, you just — you tend to prefer leaving it as cash or do you invest it in say short-term funds or something like that?
Devanand Ramandasani — Chief Financial Officer
Okay. We follow the investment policy approved by the Board and our Board does not allow to invest in any equity — direct equity or the equity investments, so we park the funds in the different, different instrument basis on the — our needs of the funds in coming days. So, we park the funds in FDs, we park the fund in liquid and overnight mutual fund and major park the fund in cash as well on that. So, these are the key sort where we have parked. We have not exposed to any short-term or long-term mutual funds so far.
Krish Kothari — Shinobi Capital — Analyst
Understood. And my other question is actually related to the private equity investment that was made about last year, a year back. I just wanted to get a sense of how that — how you’ve always been and how you see that relationship evolving?
Jigar H. Mehta — Managing Director
Krish, hi, Jigar here. So, the Convergent deal came in last July. And it’s been amazing. They’ve been a super partner since they’ve come on board. We worked very, very closely with Harsha, who is on the Board and his entire team as well. And so far, we’ve been working on number of strategic transact — strategic things. One is the internal organic growth, where they are part of lot of the fun stuff that we do here in terms of moving on the digital side and making sure that we’re focused on the long-term, not short-term quarter-on-quarter, which can happen when you get onto some of these calls, but making sure that we have a long-term vision and we are investing and that’s some of the investments that you saw in Chennai, Bangalore, Hyderabad, Pune as well. And we will ramp up capacity in Bombay. So all of that will be a significant part of what they contribute.
Second part has been on the M&A side. I touched upon that last quarter as well. So we’ve looked at number of transactions, both in India and outside India and we continuously keep evaluating in terms of the opportunities in front of us. We thought we were very close last quarter, but then we decided that it was not for us, but we are evaluating and there’s lot of amazing deals on the table. I think it’s all about finding the perfect match culturally and obviously strategically as well.
Krish Kothari — Shinobi Capital — Analyst
Okay. Understood. Excellent.
Operator
Thank you. The next question is from the line of Pratap Maliwal from Mount Intra Finance. Please go ahead. Pratap Maliwal, your line is in talk mode. Kindly go ahead with your question, please.
Pratap Maliwal — Mount Intra Finance — Analyst
Yes, sir. Can you hear me now.
Operator
Yes.
Pratap Maliwal — Mount Intra Finance — Analyst
Yes. Thank you for taking my question and congrats on a good set of numbers. Most of my questions have been answered. I just wanted to know you’re saying that we are hiring more and more subject matter experts. So could you please maybe clarify in which verticals, in which areas. we are looking to add more experts across our verticals? And are we adding any of them in healthcare because I believe you said you’re not building a domain based practice. Any in healthcare and just color on which areas we are looking to add more and more subject matter experts please?
Jigar H. Mehta — Managing Director
Sure. So, we are adding in all the three primary verticals, right. So, our first largest vertical is industrial equipment, heavy machinery and that’s a very broad-based industry because it covered highway vehicles, it covers agricultural equipment, it covers heavy machinery, it covers engine manufacturers, it covers off-road vehicles. So, in each of those areas we have lines of businesses. We have digital, there’s embedded electronics, and then there’s mechanical. And in each of those NOVs [Phonetic], there are so many special product specialists that is required. So that should be a hiring a large number of people.
Number two is on the mobility side, especially on the automotive side, we’re hiring a lot of people in digital, which is on advanced analytics, cloud, DevOps. So that’s all the technology based. And on the domain side, we’re looking at what I can tell you on line of business side, it’s strictly based on electronics and embedded space kind of the digital space where again we are seeing a huge opportunity and demand from our clients.
On the healthcare side, we are hiring more — again more hardware engineers, more engineers, which are — which have experience working in the healthcare domain, but more on the digital side, on the cloud side.
Pratap Maliwal — Mount Intra Finance — Analyst
Okay. Thank you. That’s helpful. Just one other thing, I just want to clarify that right now we have 11 customers that are up to $1 million. So, did you say that this will go up to 18 this time next year? Did I catch that correctly?
Jigar H. Mehta — Managing Director
Our current run rate is — we believe we will — last year same time we had about six where we are now at 11, but based on the investments that we have done in the last 18 months, two years, since life opened up post COVID or during COVID. Our run rate is very good because we’re only focusing on large deals now and we do believe we will be at 18 to 20 same time next year. We have very good visibility.
Pratap Maliwal — Mount Intra Finance — Analyst
Okay. Thank you so much.
Jigar H. Mehta — Managing Director
Thanks.
Operator
Thank you. The next question is from the line of Vineeth Kumar Anchalia from Sadhana Textiles. Please go ahead.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Good morning, sir. Great, job again this quarter too. I have couple of questions. The first question is on the cash in the balance sheet. Is there any timeline you’re looking at to like use this cash?
Devanand Ramandasani — Chief Financial Officer
I’m assuming you mean more from an M&A perspective or…
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Any way, be it in hiring side or be in acquisition?
Jigar H. Mehta — Managing Director
So, again, absolutely right. So that’s what we’ve been doing over the last several quarters. We’ve been investing. If you see we almost have now more than INR25 crores Additionally, which is locked in account receivable based on the growth that we delivered last year. So, every day, every month, more and more we keep growing, more money is going to get stuck, which is required for our organic growth.
Second is, we are investing, much more aggressively for the future for the long-term whether it’s setting up these offshore design centers and centers of of excellences or labs for our customers and that’s also very important thing. And third is, we are looking at the M&A side as well. So, we’re keeping all the options open, just to simplify the answer. And we do believe having good six months of cash balance, which is for our payroll is a healthy way to move forward as well.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Yeah, but just any idea, like if you can give on completion of the tasks like…
Jigar H. Mehta — Managing Director
We are at…
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Actually if he have huge cash on the balance sheet given the market segment?
Jigar H. Mehta — Managing Director
Sorry, you’ll be happy with cash, you’re not happy with cash?
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Not happy with the cash, sir. It is huge, actually, if it is deployed — correct, but if it is deployed then we can have higher returns. That is what I was looking for.
Jigar H. Mehta — Managing Director
No, absolutely, I think you will see that and we keep growing, but we are very happy with having cash in our books. And which gives us the stability and the confidence to my employees, to my customers that also is very important. At the same time, we are always investing and you see us investing. The real fun for us now, next one, two years is to make sure we invest substantially in North America and in Europe, integrate all our new employees and train them to make sure that we are selling what we’re great at in terms of service lines. And hopefully then grow the offshore piece and eventually the margin as well. So, all will fall into place if I see over the next few quarters.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Right. That is all from my side. Thank you.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Sanjay Awatramani from Envision Capital. Please go ahead.
Sanjay Awatramani — Envision Capital — Analyst
Yeah, good morning. My question was on this EBITDA margin side. So, I get this that we are focusing on growth at this moment, but in the coming future, do we expect that these margins of roughly around 7% odd can be moving down more towards. I mean if we are focusing on growth or this can be a stable margin we can expect?
Jigar H. Mehta — Managing Director
So again questioned in different way. But again, our focus continues to be, is to grow the business and to make sure that we capture the opportunities in front of us. So, we are definitely long-term focused. On the transaction side or on the quarterly monthly basis, we do believe — we do run a very operationally healthy business from a cross margin perspective. So, it’s more about how quickly can we grow and meet the demand that is in front of us because we have not seen that environment, at least not since I’ve been in Onward Technologies in the last, in fact to go in 2016. And it’s a very exciting space. So, we don’t want to let go of the opportunities. We want to make sure that we’re investing behind that. My perspective should be much better going forward. And we’ll keep growing, both the top line, bottom line, everything.
Sanjay Awatramani — Envision Capital — Analyst
Okay. This is very clear, sir. And next, is that what is the attrition rate for quarter four and FY ’22? If you can quantify that?
Jigar H. Mehta — Managing Director
So our attrition rate is — last year was I think about 30%, 31% as an organization. Majority of that comes at the bottom end of the chain for us. Where there are people and the majority people who are working onsite, where we don’t really see the people at various client sites in India, especially at the captive centers. So that’s where our attrition comes forward. But I think we’re doing a lot of steps and we have done with our strong ESOP policy, with the increments on our. And I think it’s getting better every day.
Sanjay Awatramani — Envision Capital — Analyst
Okay. Thank you so much and good luck. That’s all from my end.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. The next question is from the line of Vineeth Kumar Anchalia from Sadhana textiles. Please go ahead.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Yeah, thanks again. Sir, actually, I have one more question on deal size. Are we looking to crack any deal worth INR70 crores, INR80 crores odd in near future from a single customer?
Jigar H. Mehta — Managing Director
I’m always ready when you bring them to me. Yes, just to keep it simple, we are always looking for large contracts, we’re always looking to bid for larger deals, again, please keep in mind, in our industry today, it’s not about lot of large contracts available in the market, it’s more about having the ready delivery capabilities in-house. So when you do win, you can deliver the projects. So, my recommendation and advice to my team all the time a clear direction to them as well is don’t pick up deals that you cannot deliver because one bad deal could actually spoil a lot of the hard work that we have put in. So, focus on deals where we can deliver and execute. And as we speak, we are short of hundreds of engineers across large number of our new project wins and which is where we’re trying to ramp up right now.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
Right. And I had another question on the AXISCADES stake like we’re holding some I think. So, any comments on that.
Jigar H. Mehta — Managing Director
We don’t hold anything in that company or any other company out there as they have already clarified. We don’t invest on the technology, does not invest in anything except any extra surplus is in FD or in HDFC Mutual Fund or something similar. We don’t do anything in any company.
Vineeth Kumar Anchalia — Sadhana Textiles — Analyst
That’s clear. Thank you.
Jigar H. Mehta — Managing Director
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Bhavik Mehta from Roots Ventures. Please go ahead.
Bhavik Mehta — Roots Ventures — Analyst
Yeah. So, first of all, congratulations on a very formidable roadmap the company has set. So, I’ve joined the call late, so just a small question, so are there any updates on your acquisition of NV Pune, the technology park that you had acquired I think around December because the presentation mentioned Bangalore and Chennai in terms of workforce. But just trying to understand what is happening there?
Jigar H. Mehta — Managing Director
Sorry happening on the office space that we bought. Is that the question?
Bhavik Mehta — Roots Ventures — Analyst
Yes.
Jigar H. Mehta — Managing Director
It’s — I don’t know if I got the question right, but again, it’s an office space, it’s a fifth floor of a building, which we were renting for the last seven years is what we acquired because our office space is running at full capacity and now it’s a 100% subsidiary of the company. We’ve changed the name from NV Technology Park to OT Park, which is Onward Technology Park.
Bhavik Mehta — Roots Ventures — Analyst
Okay. So, this was just the one floor that you have acquired, nothing additional over and above that. Okay.
Jigar H. Mehta — Managing Director
No, it’s just one floor, you have rights for the land. Yeah, that’s about it because I think it’s about 26,000 square feet.
Bhavik Mehta — Roots Ventures — Analyst
Okay. Thank you.
Jigar H. Mehta — Managing Director
Thanks.
Operator
Thank you. [Operator Instructions] As there are no further questions. I now hand the conference over to the management for their closing comments. Over to you, sir.
Jigar H. Mehta — Managing Director
Thank you all again for participating in the Q4 earnings call today. I hope you’ve been everyone for your questions satisfactorily. If you have any further questions and would like to know more about the company, please reach out to our Investor Relations Manager at Valorem Advisors. Thank you again, stay safe and healthy and see you all soon. Thanks.
Operator
[Operator Closing Remarks]