Note: This is a preliminary transcript and may contain inaccuracies. It will be updated with a final, fully-reviewed version soon.
Pelatro Ltd (NSE: PELATRO) Q4 2026 Earnings Call dated May. 11, 2026
Corporate Participants:
Subash Menon — Chairman, Managing Director and Founder
Sharat G Hegde — Chief Financial Officer
Analysts:
Janhavi Patil — Analyst
Majid Ahamed — Analyst
Varun Gandhi — Analyst
Darshan Zaveri — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Palato Limited’s Q4FY26 earnings conference call hosted by Orin Connect. As a reminder, all participant lines will be on listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Stars and zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Ms.
Janhvi Patil from Oreem Connect. Thank you. And over to you.
Janhavi Patil — Analyst
Thank you. Good afternoon everyone and a warm welcome to all of you. I am Janhvi Patil from Orem Connect representing the investor relations team of Collateral Limited. On behalf of the company, I would like to thank you all for joining US for the Q4 and FY2 earnings Concord. Before we begin, I would like to state a brief cautionary statement. Some of the statements made during today’s call may be forward looking in nature. These forward looking statements are subject to certain risks and uncertainties that will cause actual results to differ materially from those expressed or implied.
These statements are based on management’s current expectations, assumptions and information available as of now. Investors are therefore advised not to place undue reliance on these forward looking statements when making any investment decisions. The purpose of this call is to share insights into the company’s business performance and financial results under review. Now I am pleased to introduce the member of the management team present with us today, Mr. Sudhash Mainan, Chairman and Managing Director, Mr.
Sharad Hegde, Chief Financial Officer. With that I now hand over to Mr. Subhash for his opening remarks. Thank you. And over to you, sir.
Subash Menon — Chairman, Managing Director and Founder
Thank you. Good evening everybody. Indeed a pleasure to host this conference and present to all of you and share our results to all of you. We have already uploaded the Investor presentation for FY2526 on our website and we also have shared it with nse. I presume all of you have received that, downloaded that and have that particular deck with you. I will be along with me of course is my colleague Sharath Pegday who is the cfo. The two of us will be taking you through the deck today. So we will call out the page number and go through the details of that particular each page.
At that point in time you can follow on the copy of the deck that you have. Once again, welcome to this investor call investor presentation. I must say that we have had an excellent year for more reasons than one. We acquired a company and we have stabilized that operation. SL acquired the business of a company. SL Technologies. We.
Operator
Sorry sir, you’re not audible. Mr. Menon. Ladies and gentlemen, please stay connected while I check the management line. Thank you. Ladies and gentlemen, we have Mr. Menon back on the call so please go ahead. Are you,
Subash Menon — Chairman, Managing Director and Founder
Are you able to hear me now?
Operator
Yes.
Subash Menon — Chairman, Managing Director and Founder
Okay, good. So I was just welcoming all of you to the investor presentation, investor meet of collateral. Thank you very much for joining. Good evening. We have had an excellent year for more reasons than one. One reason is the business that we acquired from SL Technologies has stabilized and done exactly as we expected. So it’s been a. The acquisition in our opinion is turning out to be quite good. We have had wonderful revenue growth, organic growth in our continuing business which is the CBM division, we’ve had a very, very good growth.
We’ll talk about that. My colleague will talk about that shortly. And finally our EBITDA has expanded during the year. So on all fronts, be it the transaction that we consummated the acquisition, be it the organic growth, be it expansion of profit, I mean higher profitability on all fronts we have done extremely well. And so that’s what I would like to share with you right at the very beginning. For those who are joining this in a Pallachro investor call for the first time who have not been part of this call such a call in the past.
If you go to slide three you will see that we’ve got. We are a telecom software player with various software solutions which we’ll come to shortly. We serve about 46 telcos at this point in time across 35 countries. We’ve got. We’re continuously increasing that. We’ve got about 490 plus employees at this point in time. If you look at the next slide you will see a map where our presence is noted. I mean the different countries. So that’s quite a busy slide. We are in as I said, 35 countries. So it’s been a very good ride for us till now in Asia and Africa with respect to customer penetration and growth.
That brings me to the next slide which is business overview. And after that you’ve got the results highlights to handle the next two, three slides. I will hand you over to Sharath Hegne who is the CFO who has joined me on this particular call. Over to you Sharath.
Sharat G Hegde — Chief Financial Officer
Thank you. Hello all, Good evening and welcome to our con call. So slide number six is what I’ll be handling now which talks about all the key numbers from financial point of view. So first one is revenue. The revenue stood at 138.23 crores for the financial year ended 31st March 26th. So this revenue grew by 61.2% year on year as compared to FY25. Revenue of 138 crore has been a combination of contribution from both our continuing CBM division as well as the new acquired Estel division. So if we look at the divisions alone, CBM division alone has contributed a revenue of 116.5 crores with a growth of 36%.
Approximately 36% from that of last year. So FY25 is completely CVM division. So when we compare on that there is a healthy 36% growth. So which clearly shows that the continuing business is very well poised to grow. I mean has been growing very well and is poised to grow as well. The remaining 21.7 crore has come from Estel division which we acquired earlier in FY26. So Estel revenue of this 21.7 crores actually represents a nine month number because this division started operating only in July 25th.
So I mean like being a nine month number, Astel division has very much achieved a revenue number which is in line with what we had expected for the financial year, which is a good thing, which is a happy thing. So I mean like just to highlight Estel division actually when we acquired had almost no pipeline and happy to inform you all that it is steadily building a very healthy pipeline. As we see the overall EBITDA stood at 31.5 crores from 17.9, 18 crores from FY25. So EBITDA grew by 76% year on year while the revenue growth was 61%.
The EBITDA has grown at 76% which basically I mean which is furthering the non linearity effect that we have been witnessing for the past two years. The EBITDA margins too are steadily expanding. Like which was 20.9% for FY25 and it’s now 22.8%. It has been the expectation as well. So I mean like when we, while we are speaking about ebitda, maybe some of you might want to look at EBITDA numbers or EBITDA growth excluding other income. So we have, we have had other income last year as well and we have had other income this year as well.
So FY25 we had other income of 3.8 crores roughly while FY26, the other income was 5.5 crore. So even if we exclude these, we can still see steep EBITDA growth between the two years FY25 and FY26. The margins too can be seen as expanded. I mean we can see that the margins too have been expanding even without the other income. The PAD grew year on year by 52% which now stands at 18.1 crore as against 11.9 crores last year. EPS growth has been good as well at 17 as against 13.16 last year. The next slide, slide 7 actually takes us through segmental details.
There are a few details between the continuing CVM division as well as the new Estel division segments that we have been reporting. So as mentioned previously, CVM revenue has been at 116.5 crores, whereas Estel has given us a 21.7 crore revenue. The CVM EBITDA stood at 28 crores and Estel’s EBITDA stood at 3.4 crores. So while CVM achieved a 24.1% EBITDA growth, I mean EBITDA margin, Estel being a new division has achieved a very healthy ebitda margin of 15.6%. So I mean we expect this, I mean Estel’s EBITDA margins to grow in the years to come and we also expect it to come closer to that of CBM division’s margin over next few years.
So that’s on the segment side. Then the next slide talks about a few key financial ratios wherein we have given return on net worth, return on capital employed, as well as debt equity. So return on net worth and return on capital employed have been growing steadily. So from 14.97% in FY25 to 17.4% in FY26, ROCE has grown to 20.36 from 18.37. So this growth is in line with the. I mean this growth basically reaffirms the number growth that we have spoken in the previous slides. The debt equity has been steadily coming down as well as we have not been adding any major debt and the existing debts have been steadily being repaid.
So these are a few key financial items. I’ll hand it over to our chairman back for the remaining slides.
Subash Menon — Chairman, Managing Director and Founder
Thanks. Sharath, Are you able to hear me?
Operator
Yes, we can hear you.
Subash Menon — Chairman, Managing Director and Founder
Okay, good. Thank you. The next slide, which is slide number nine is about AI. So as we all know, the elephant in the room at this point in time is AI. Everybody is concerned about it. Everybody is wondering whether it’s going to help or hurt the business. So we are taking the bull by the horns here. We are looking at various aspects and working on that. So I would like to update you all on that front. So this slide talks about two key areas where AI could or will impact us. One is on the product itself as to whether we keep on bringing various AI capabilities into the platform which the customers will be expecting to ensure that the product remains current.
The next thing is on the development side, the development coding test. I mean that’s testing and implementation support in various areas. Today AI is penetrating, the use of LLMs is increasing. So how will that impact? So these are two areas that we need to be concerned about, we need to work upon. The next slide talks about the first area which is product features slide number 10. There you will see that we have already launched a platform called NVIVA Revenue Acceleration Platform which covers a variety of Genai LLM driven AI features.
Those are AI agents, copilot, zero touch campaigning. These aspects, these take our entire product capability to a completely different level and that will ensure that as we are constantly delivering these capabilities to our customers, that will ensure continued product leadership. So not only won’t our product become obsolete, but it will also actually keep on adding capabilities and leading from the front with respect to product capabilities. So when you go to various telcos, they will see that our product is absolutely current and futuristic and exactly what they’re looking for and that will then lead to higher growth for us.
So on the product features front, we are definitely doing an excellent job with respect to whatever we need to do and we are absolutely confident that this is the way to go on the product feature front. The next slide, which is slide number 11 talks about software development. So here it is all about ensuring that we bring in efficiencies into our software development activities, we reduce costs, etc. That’s where AI will be used. We are already using LLM in coding in to develop various models to handle support function, to handle a variety of testing activities for implementation activities.
So across the spectrum of activities that we handle with respect to software development, we are already handling this. You are already handling LLM using LLM. Now this would mean our cost will come down. So cost per dollar of revenue will definitely come down. We will keep, I mean as we move forward as it is, our business is nonlinear which means we don’t have to add for every dollar of revenue, we don’t have to have increase the same number of people. That’s our non linearity which is already there in our business.
On top of that, with this lower Cost per dollar of revenue because of AI usage, the increase in manpower will come down even further. So that will be the second lever and this will be visible in the next 18 to 24 months. And this will also result in improved quality, better reputation, et cetera, resulting in higher growth as we move forward. So on the AI front I think we are absolutely ensuring that we are leveraging the power of AI to deliver a futuristic product, to continue to deliver a futuristic product and to ensure that our own development activities are moving forward in a cost effective manner by reducing cost, improving quality, shortening the time to market, etc.
That brings me to the next slide which is slide number two. This lists the products that we have. I won’t spend time on this. We have repeated this multiple times and it’s fairly straightforward. In the CBM division we’ve got five products and managed services which go around that they all come together to form what’s called a revenue acceleration platform. We spoke about AI capabilities in our products. Those capabilities are getting added, has been added in all these products. So we’re not calling that out separately on this slide.
So AI capabilities, LLM capabilities, GEN capabilities, those are all part of every product that we are seeing here. And that brings me to the next slide, this list of products for the Excel division we’ve got three products in Ethel division and there are managed services going around that along with that again we have repeated this multiple times. I won’t spend time if anybody has any specific questions at any point. Once we get to the Q and A, I can explain those products. Now we come to the next slide 14.
I’ll hand you over to Shereth, my colleague for the next two slides.
Sharat G Hegde — Chief Financial Officer
Thank you Ersan. So slide number 14 speaks about the revenue model. So we basically divide our revenue into two major buckets. One is repeat revenue and then one time revenue. The repeat revenue is further divided into recurring revenue and reoccurring revenue. So recurring revenues are essentially contracted revenues that keep repeating every at every fixed intervals, say monthly, quarterly or half yearly or annually, I mean depending on the contract. So these are basically fixed license fee, like for customers who would go for a license subscription model instead of a one time license purchase.
So there will be a monthly fixed license fee which is one of the major parts of recurring revenue. Then we have AMC for the customers who have taken up licenses, the annual maintenance contracts. Then there is managed services. Managed services essentially have three major items. The IT operations, which is basically technical support, the business planning, which is basically helping the customers plan their campaigning activities. Etc. And then business operations which help them to actually launch these campaigns and operate them.
The final thing in the recurring revenue is gain share. So with certain customers we do have contracts wherein if they earn incremental revenue out of the platform, a part of that will be shared with us. So that’s the recurring revenue part and then there is reoccurring revenue. Reoccurring revenues are basically change requests which are customizations from existing customers. Like customers needs keep changing every now and then and they would probably need some new features and I mean some new customizations etc.
Which are very much, very much repetitive in nature because they keep coming every now and then from these customers. So the recurring and reoccurring revenue put together is what forms the repeat revenue. So which comes from the existing set of customers. The one time revenue is basically perpetual license and implementation fee. So like overall a higher repeat revenue, a combination of recurring and reoccurring revenue is actually a very good indicator for our business wherein like higher repeat revenue as compared to one time revenue will give you give us a better view of the future revenue, better revenue, etc.
So the next slide gives us revenue bifurcation. So as I was saying, higher repeat revenue, I mean a repeat revenue which is more than 75% of the total revenue is always a good thing for the business and we would like to keep it that way. So for FY26 the recurring revenue was 60% and reoccurring was 22 with a giving us a total repeat revenue of 82% which is a very good indicator. And one time revenue was 18%. So I mean we expect, although it will not be same year on year we expect it to be anywhere about 75%.
So that’s on the revenue as well as the revenue bifurcation. Back to you.
Subash Menon — Chairman, Managing Director and Founder
Okay, thanks Sharath. Presum you are able to hear me? Are you all able to hear me?
Sharat G Hegde — Chief Financial Officer
Yeah. Yeah. Thank
Subash Menon — Chairman, Managing Director and Founder
You. Thank you. So now I’m on slide 16 which shows the number of customers we already touched upon this earlier. 46 customers, product of 35 countries and out of those 46 customers about 31. This is as on the 31st of December, not March 31st, we have 31 of them using managed services from us. Now this is a lever for growth. As we continue, we will keep on increasing penetration of managed services within our existing customers. As you can see as the graphs indicate, there was a time when it was a much lesser percentage and it’s continuously increasing.
Moving to the next slide, this is about the Market penetration and opportunity. When we look at the products that we have at this point in time and compute the potential market opportunity, we see a size of about 12,000 crores as opportunity. So we are only at about 1% of the market at this point in time, maybe a little over 1%. There is still a very long way to go. But when we look at the market penetration with respect to customers, how many telcos have we penetrated? That is 10%. Today we are at about 46 out of 450 telcos.
Now the reason why these numbers are different, one is 1%, the other one is 10%, is because even where we have penetrated into a telco, we have not yet sold all the products that we have and all the services that we can sell. So if we were to sell all the products and all the services to this particular set of prosthetic sensors, then our size will also be equal to 10% of the market size. But that’s not the case. Today we have got only 1% of the market size in rupee terms, while market penetration is 10%.
But this market penetration is important because it is not practical to expect to sell all the products to every telco customer we have. This doesn’t work. So we have to keep increasing market penetration and keep increasing our penetration of products and services within each telco as well. So those are two levers of growth. So today we are at 10% in market penetration. Over the next four or five years we expect that to be of the order of about 20 or 25%. So that will be one area of growth. The next will be today.
Our product penetration, I think is about 1.3 products. You can see that written. We’ve got eight products and our penetration is only 1.3. So at some point in the next four or five years, our objective would be to take it to two or two and a half products per telco. So that would also mean much higher revenue coming from each telco. So it is about going into more telcos and at the same time going deeper within each telco. These are two very strong growth levers that we have and we keep working on those two levers.
The next slide, which is slide number 18, talks about our key strength. We’ve got a very end to end offering. It’s highly referenceable. We’ve got some excellent customers, very large customers, including the likes of Vodafone Idea at about 250 plus million subscribers and several other large ones at 80 million 90 million 100 million subscribers. We have a lot of patented Technology which helps us differentiate from our competition. We’ve got very, very deep domain expertise. We’re handling very large volumes of transactions.
So there are various aspects which are very critical and very unique to us at this point in time which form our key strengths. When we go and stand in front of a potential customer to sell our product or product, and these then naturally become more for others to cross and enter, so they become barriers for others to enter. And that’s what I’m now referring to in the next slide, the investment rationale slide number 19. So this is not in any particular order. I just listed them there. So we spoke about market penetration.
So we already have a very good penetration of 10%. We are constantly increasing it. And I’m absolutely confident of somewhere between 20 to 25% in the next four to five years, at which point in time we’ll be handling more than 100 cell phones with respect to servicing them with at least one product. And I believe it will be higher than the current 1.3 product penetration. One is market penetration, one is product penetration. That will also increase. Services will increase. With all that, the revenue per customer will keep increasing.
AI for us is a differentiating factor. We are absolutely soaring with AI. We have brought in a lot of interesting features, very attractive features, very valuable features and capabilities for our telco customers. So that will help us maintain our leadership and continue on the growth path with respect to organic growth. And at the same time we are also reducing our cost. So that will help the nonlinearity to increase further. I spoke about the higher barriers to enter. The kind of product, the kind of technology we have, the references that we have, the technologies that we have used, the patents that we have, and various aspects, the volumes that we are handling, the domain expertise that we have, all these come together to form a very, very high barrier for potential competition to enter.
Coming to the numbers, visibility and predictability. We have got extremely high visibility in our business. As we look at the current financial year, FY26 27, although we’re talking about FY20, financial year ended FY26, I would like to touch upon the new financial year, FY27. As we started the year, we had 82% of revenue already contracted. So off the expected revenue for 2627, we’ve got a particular internal target. Off that internal target of revenue, we have already got 82% in contracts with us, contracts in hand.
So that means we only need to win and execute another 18%. And I’m sure that some of you might remember that in the last year, by September 25th, we had 100% contracted situation and currently we are at 82% for this year. Let’s see how that progresses and surely progress very well. So this gives us a lot of visibility and predictability in the business. So when I look at next year, FY28, already a lot of revenues for that is contracted because of the recurring revenues that we have. So as time goes by, the visibility and predictability will increase.
Now with all of this, the penetration that we have, the barrier to Competition, visibility, predictability, AI that we are leveraging, etc. Etc. We are absolutely confident of excellent growth in the years to come. And we are committing to at least 15% annual growth on revenue organic growth. So there’s some acquisition that will be on top of this organic growth of 15% at least over the next five years on an annual basis every year. While that happens, EBITDA will also grow in the next three to four years, two to three years, maybe even EBITDA will be at a higher level than what it is today.
And in the past we have stated that in our kind of business, I’ll be happy when we get to 30% EBITDA. And I think that that’s also something that could happen in the next two to three years while the revenue itself will grow at 15% every year. With that, I hand you over to Shereth if you want to touch upon anything on the financials, otherwise we can throw the floor open for Q and A.
Sharat G Hegde — Chief Financial Officer
Okay, thank you. So on the financials, we have already spoken on all the key numbers. So in addition to that, we do have Q4 numbers separately in the income statement on slide 21 for those who are interested to go through. So yeah, I think with that we can open the floor for question and answer.
Questions and Answers:
Operator
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press Star and one on the Touchstone telephone. If you wish to remove yourself from the question queue, you may press Star and two participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. We’ll take our first question from the line of ABHI Jain from AJ Capital. Please go ahead.
Majid Ahamed
Hi, good evening. Hope I’m audible.
Operator
Yes, you are. Go ahead.
Majid Ahamed
Hi, I just had two questions. First, obviously on the spread of AI and the more data and the more information and the more confirmation that we get from you, the better it is for our understanding and confidence. So shooting directly coming Directly to that I understand from your slides and from your deck how you’re integrating AI into the product suite using LLMs to do the campaign management and for all the data and apps, analytics, etc. That part I understand. What part I would want to understand further is that for any of your clients, right.
Earlier the problem usually was that, you know, it is very difficult, it was very difficult for any small telecom player or any telecom player otherwise also to build an announce software. Now the problem with these generic LLMs and these generic AIs is that that cost has shot down drastically. So the generic elements can help them build all the features of a campaign manager, including data analytics, everything. The only thing that remains that cannot be done is probably live integration with the real time data of the customer.
So I just want to understand that going forward, how are you protected from that? How do customers not only the don’t use you only for the integration there, they can have their in house generic LL which does all the data management, all the campaign management, everything but in and use you only for the integration there. So there I wanted some more clarity that why can’t. Why is that not a viable threat for your.
Subash Menon
Okay, good question. We don’t believe that is going to happen because of the overall complexity of a product like campaign management. People may say what is it? You just take some campaigns and sorry, you just take some subscriber segments, you plan a campaign campaign being buy this, get that free and shoot it out. It’s as simple as that as what you would think. The concept is that simple to understand. The product is that simple. But the nuances are very. Now if you take up, you know, something called a state flow in our product, this is a journey builder.
Now typical journey for a typical telco. I mean imagine a flowchart. Now that’s the journey, right? And you, we all understand flowcharts. Now imagine a flowchart with about 250 or 300 boxes as in one box and various branches in that. You can’t have 250 boxes in, in a serial fashion, right? One after the other after other. It doesn’t work like that. You start with one box, you. Then you have a, then you have three branches, then you go into that. Then you have multiple branches coming from each of these branches.
And then for the branches, then for the branches. That’s how the flowchart works. So imagine a large flowchart with 250 or 300 boxes of decision making action and stuff like that. Imagine constructing a software to do something like that. It is extremely complex, extremely complex. Now first of all, you should know how to tell AI to do something like this. The whole prompt engineering will have to go to a completely different level, a totally different object to be able to even think of building something like that.
And even if you have that kind of prompt engineering, it is not practical because of the complexity of that. Now trust me, we have tried using Germany to know whether it works or not. It doesn’t work. This was the first question we asked ourselves as to will the telcos do that? And this we asked some time ago and we have the answer now because we tried ourselves. No, it just doesn’t work. So this is just one feature in our product. There are hundreds of features like this which have to work together in a very well coordinated manner.
And then you have got all the challenges of the integration as well. So if they try to do that, it will easily take them, even if whether they can do it or not is a secondary question. But if they really try, it’ll probably take them a year to do something like this. If at all they try. What is the point? And because in that year then who’s going to maintain it? Who’s going to keep upgrading it? Now today our customers all ask us at Semco sees only their business in their country. They don’t see what’s happening in 30 countries, in other markets, in other geographies, they don’t know what is going on in the world.
They keep asking us about it and that that knowledge goes into a product. They don’t have access to that knowledge. So that’s why they keep asking us. So in short, what will happen is if at all they develop something, what they develop will be substandard, will be way behind what we have even today, forget about what we will have tomorrow. So it is much cheaper and more sensible for them. And I’m not even thinking about how many tokens they will have to buy to do all this. Okay, I’m not even thinking about it.
So it’ll be much cheaper for them and more sensible for them to rely on somebody like that. So I don’t think this is a threat. And that’s based on practical experience.
Majid Ahamed
Does
Operator
That answer your question?
Majid Ahamed
Yeah, that helps. My second question was around recruiting revenue because I think that is one very important part of any software business. I just want to understand for your legacy client or for your top 10 clients who have been your customer for more than three, four years now, in terms of the reckling revenue, has there been an annual increase in contract Value, I mean, that can always be linked to, you know, inflation, etc. But generally I don’t want to understand from a product suite perspective and from increase in module perspective, for example, you’re just saying that, you know, in the presentation you mentioned that on an average a customer uses 1.3 of your products right out of the a product suite that you have.
So I just want to understand that the contract value that you have seen increasing across your top customers, has it come on the back of the increase in the product suite used by the customers? Has it come on the back of more users of the module of the product at the client end? Or has it just been inflationary increase? If you can just throw some light on that to understand whether, you know, your legacy customers are getting more intense in the company.
Subash Menon
It really comes from us selling more modules, more capabilities, features, more services, etc. That is where whether it’s in the form of a recurring license fee or recurring AMC recurring managed services, it all comes from new things being done. Generally we sign three or five year contract and the prices. So if it’s a support fee in a year or a license fee in a year, something like that, that stays constant for the three year or five year period, it doesn’t have an inflation related increase. So when we price it, what we do is we take this year’s price, we apply inflation for if it’s a five year contract, we apply inflation for the next five years, then we average it out to get to an annual number.
So we are not losing out because of inflation, we are averaging it out and coming up with a fixed number. That’s what they propose at the end of five years when they renew, yes, it will go up, but not till then. So during the five year period, the real increase is because of all the new features, functionalities, modules, services, etc. Which they buy from us.
Majid Ahamed
Perfect. Just going forward, can you just throw some more light around this in your presentation? Help us understand whether you know, there is an uptrend in terms of more products being used by the customer and the 15% revenue growth that you’re targeting for. Do you have any sense or can you give us any sense in terms of, you know, breaking it down between inflation and volume growth? Typically in any other business, you understand, right, that there’s a value and volume growth, in your case the value, volume and the value.
Subash Menon
This is on a, you know, constant currency basis, just volume growth. I mean, that’s what you’re calling it. Yeah.
Majid Ahamed
So inflation you’re talking about. Yeah.
Subash Menon
That will. That will sit on top of this. So, yeah.
Majid Ahamed
So, yeah, going forward, if you can just throw more light around this, you know. Yeah. All right. That’s all my. Thank you. All the best. Thank you.
Operator
Thank you, ladies and gentlemen. To ask a question, please press star N1 on your phone. Next question is from the line of Varun Gandhi from Finn Avenue Growth Fund. Please go ahead, Varun. Sorry to interrupt. Can you use your handset mode, please? Yes.
Varun Gandhi
Yeah, yeah. Hey, Subhash, thank you for the details and thank you for outlining your growth aspiration and outlining the key strengths that would enable you to achieve that aspiration that we set. But on that, could you elaborate more on the sales strategy here? You said you wish to add more logos and you also wish to expand or go deeper within your existing logos. Right. Could you help me elaborate your sales strategy or in terms of not just your employees, but also the sales pitch? Because I’m sure your.
Your. Your new telco clients would also be having these platforms. So how do you wish or how do you intend on displacing the existing platforms? Just trying to get a sense of all of that.
Subash Menon
Right. It is actually, you know, I don’t know whether this is a good answer or a bad for you, but the real answer is that it is no different from what we have done over the past 10 years. We go and pitch all the new capabilities and the futuristic capabilities to our customers and establish that we have a product which is way better than what they have today and which is something which will be future proof for them. That is, if they come with us, it will be future proof for them. So this is one thing.
We establish our reference ability there. We ask them to check with our existing customers for reference check and stuff like that. And that establishes a variety of things about us, our support capability, product capabilities, and all those things. So these are. That’s the core. I mean, that’s our. Of course we will keep adding more people as and when we require to cover, to have bandwidth and stuff like that, so that. That part for the course. But the strategy really is about having the best product out there and then ensuring that we are able to get ambassadors who will vouch for the product in the form of existing customers.
Really, that’s what it is. These are the two key elements of our sage strategy, something we have done all along the way.
Varun Gandhi
Got you. But is there anything more tangible you. That you could share in terms of how do you approach a new client or a new geography, trade fairs or references
Subash Menon
That I can Tell you so we have got various ways. We use online tools like Lucia, we use LinkedIn quite extensively to reach out to people. We have got our marketing on a regular. Every week we have two or three outreach campaigns which go to a very large set of potential customers and we get needs coming out of it today. These days we attend two large trade shows every year and one trade show of our own which is called CBM Executive Forum. So we invite people to that customers and non customers as well.
So there are three trade shows which we go to. So it’s a combination of. And there’s inside sales where they directly call us potential customers and pitch to them. So it’s a combination of going through these apps like LinkedIn and Lucia and others. It is also general marketing strategy where we send campaigns to. I mean we use LinkedIn, we use Twitter, we use other things for campaigns. Then there are trade shows. Then of course there is word of mouth. Not to forget our existing customers spreading the word.
We go to the, you know, if we have one telco, one opco within a group, we go to other group, other, you know, group opcos as well. So this is another way of doing. For example, we had Sudeten in the Sudani group. Sorry, Sudani in the Sudan group initially. Now we work with Shingitel, we work with experts. So there are three of the three of them in the same group. So we went to them, took the reference of the first customer and used that. So it’s a combination of all of that.
Varun Gandhi
Understood. Would you be able to share any example where you’ve successfully been able to displace an incumbent competitor or a pure platform?
Subash Menon
Every contract we have won is by replacing either another vendor or an internal product. And that I would say about 98% of customers have come, maybe one or two of them have come through replacement of internal products. The other 44 would have come through, you know, replacing a vendor, a competitor. There are no green field, it’s all brown feed.
Varun Gandhi
Understood? Understood. That’s reassuring to know that. And lastly, when you said you want to, you know, deepen relationships with your existing clients, upsell them more modules, where is the challenge over there? Why haven’t we been able to move beyond that? 1.3 on an average, 1.3. The metric that you earlier disclosed in the presentation. Just trying to understand where is the challenge and how are you tackling it.
Subash Menon
Telco sales is a very slow sales process. It’s a very long sales cycle. You, I mean on an average you will pay about 10 to 12 months. There are cases where we have to knock on the door for two years before we get an entry resolve. Because telcos are extremely risk averse. So replacement is something that they do only when they are absolutely certain. So it takes time. So really it is that it is just a natural sales cycle which is taking time and the fact that not that our competition is sitting doing nothing, so they are also doing something.
So it’s a combination of all of that. So it’s a slow, it’s a slow grind. It takes time and we’re working on that. So there’s no specific challenge. It’s just the usual sales activity and the sales cycle and all that.
Varun Gandhi
Understood. Now that we have AI on our side, do you think the implementation and the sales cycle should ideally reduce? Since
Subash Menon
The sales cycle will not reduce. It’s got nothing to do with AI. It’s the speed at which a telco takes the decision. We have no control over that. Implementation time, yes, will reduce.
Varun Gandhi
Right. The telco is usually. It’s just your corporate inertia
Subash Menon
Like that. It’s a. There’s a lot of inertia there, there’s a lot of risk averseness there. There’s a lot of bureaucracy there. So when they say we do it very fast, they mean they do it in three months.
Varun Gandhi
Again, thanks for sharing the details. I will join back to Kinsey.
Operator
Thank you. Participants who wish to ask a question are requested to press star and one on their phone. Next question is from the line of Darshan Zaveri from Crown Capital. Please go ahead.
Darshan Zaveri
Hello, good evening. Thank you so much for taking the question on the greater of the Darfur, sir. Just wanted to understand that when you’re talking about a higher, you know, product, you know, penetration and market penetration, isn’t 15 growth a bit too conservative, sir? Because even, you know, even standalone CVM business division has, you know, performed, I think you said 25 better than last year. So. So just wanted to get your thoughts on that, sir.
Subash Menon
The standalone CBM or I don’t want to call it standalone, I mean I don’t want to get that to be confused with consolidated. The CVM organic growth from last year to this year was 36% I believe. Sheridan, I. Right,
Sharat G Hegde
Yeah, that was 30. Yeah,
Subash Menon
It is 36%, not 25. If you look at the last two, three years, we have been growing at a frantic pace. I don’t want to be committing anything more than 15% at this point in time. But you can look at, you know, read all the other signs and signals and track Record and all that and come up with a number that you feel is appropriate.
Darshan Zaveri
Okay, okay, I’ve got the point, sir. And so I just wanted to understand like in terms of like competitive landscape because as you said, like, you know, you know, telcos take a lot of time for, you know, something to be finalized. So just a two parter. So once, you know, we, you know, we are able to get into a company then how long, how sticky is that? And what is the competitive landscape right now, you know, for us?
Subash Menon
Okay, so, and, and I, I don’t want you all to think that, you know, telcos are really bad organizations. They take time and all that. So let me add some positive side to it. Their business is very complex. They have, they do have a little. Even if there are only like three telcos in the country, it’s a very competitive market. MNC is there. So somebody can move from one telco, another telco at the drop of a hand. So it’s a very competitive market for them. They’re very complex market for them. That’s why they are extremely careful and risk averse and they take time.
So that is their, you know, that we need to understand that. So if we were sitting there running a telco, probably we will do the same. I mean because of the nature of the business now once we get in, we really stay there. In 10 years we have not been pretty much replaced anywhere other than in one organization where they actually, the ownership changed hands and they wanted, you know, some, they want to bring some, something which they have been doing internally for, in the earlier thing for a long time or something like that.
And there was a language issue. It was, they wanted everything to be in Russian and not English. So that’s where we got, we got replaced. So that, that we need in 10 years, in one. So I don’t even consider that as a great number to focus on. So we don’t get replaced. We could get replaced if we are not current, if we are, if we become obsolete, if our support levels are bad. So it’s actually up to us to ensure. So really we may lose out. We may get replaced because of a political reason. So that is what happened in that cycle is a political reason.
If there is no political reason, there will never be, I believe a technical reason for us to be replaced. We will never lose out because of technology, product, capability and stuff like that. We could lose out because of. This is also the primary reason why we lose, why we don’t win. Some of them. Political reason and political reason. I don’t want to be listing what the reasons are and I’m covering a variety of things under this term. Political reason, I hope, I hope all of you understand. So there are various things there.
So we lose out because of reasons and we could get replaced because of reasons, but not because of technical reasons.
Darshan Zaveri
Okay, that’s, that’s really great to hear about it, sir. And so this last one, bookkeeping question. So what is the tax rate that you know, we operate under currently? What I could look at it in some 10%, which is like. Could you help us out with that, sir?
Sharat G Hegde
Yeah. Okay, so the effective tax rate for current year has been around 7 to 8%. But I mean, so tax rate, effective tax rate depends on a lot of things. I mean on a consolidated level we have profits flowing in from our Singapore subsidiary, our UAE subsidiary as well. And I mean which are mostly at a lower tax rate zone. And Singapore subsidiary also has some carry forward losses that we are utilizing and further, like there will be certain foreign taxes that would have got deducted while payments come in and we get some rebates out of that depending on the global income and a ratio of that and all.
So given all that, so it varies, but I would say a 10% effective tax rate is something that is, that is something that we can work with for the current financial year and maybe a year and two.
Darshan Zaveri
Okay. Okay, fair enough. That’s it from my paper. Thank you so much.
Operator
Thank you. In order to ensure that management is able to answer queries from all participants, kindly restrict your questions to two at a time. You may join back the queue if time permits. Thank you. Next question is from the line of Murtaza from Pinpoint X Capital. Please go ahead.
Majid Ahamed
Hi, sir. Good, good evening. I hope I’m audible. You are, yeah. First of all, congratulations on a good setup number and the successful acquisition. And just a couple of questions. Firstly, I just wanted to understand the kind of contracts we sign in in terms of what sort of renewal period do we have and how do we price in our increase in prices or do our renewal stay flat or how does it work? If you could just put some light on it.
Subash Menon
You’re asking whether we get increased price every year or we ask for renewal or when we renew we ask. I mean, I didn’t quite get the question.
Majid Ahamed
Yeah, I just wanted to understand in general what, how long are the contracts and how do we. Yeah,
Subash Menon
Okay, so as I stated earlier, our contracts are either three years or five years generally. So the price, and the price is fixed for that period of three years. Or five years subsequent to that, when a contract renewal happens, we would go in and try to increase that, increase the price to the extent we can.
Majid Ahamed
Okay, okay. And that’s when we have very
Subash Menon
Subjective. There’s no rule or something that we can.
Majid Ahamed
And secondly, sir, I just also wanted to understand what sort of geographic pockets are we looking into to add on some new logos, if you just have any in our minds or are we particularly tapping on things?
Subash Menon
We are. We are continuing to focus on Asia, Africa and Middle east at this point because there’s still a lot to be done in this, in these geographies. We have not reached anywhere in the form of penetration or rather let’s say saturation there. Because if you take these three geographies we are probably talking about some 250 to 300 telcos, something like that, with a very large number of telcos. So there is a long way to go and we are continuing to focus on this. And at some point we are also looking at Latin America to some extent, but not as much as we are looking at these geographies.
Majid Ahamed
Understood? Understood. Just one final question. I just wanted to understand what is our long term vision taking into play our CPM division and our EFTIL division. Like are we planning to have an integrated stack where we just put in all our products at one place or is it more of a separate offering that we’ll be giving to our clients? How are we planning
Subash Menon
The products that we have? They actually handle very different activities. So that’s why we have eight separate products. Them being in two separate divisions is just only a matter of convenience. It really means nothing. But we will be selling them as separate products. I mean they will of course come together to sit on a platform if need be. They are well integrated. All those things are there. But they will continue to be separate products.
Majid Ahamed
Okay. Okay, understood. Thank you very much. Thank
Subash Menon
You.
Operator
Thank you. We will take the next question from the line of Varun Gandhi from Penn Avenue Growth Fund. Please go on.
Varun Gandhi
Just as a follow up from the previous participants question, how exactly? If you could just quantify on the pipeline and where do you see that going in terms of conversion?
Subash Menon
The pipeline is continuing to expand as we target more and more customers for two reasons. One, as we have more customers from the same customers, we get more stuff coming in. So that will increase the pipeline. Then there are new potential customers adding to the pipeline. So pipeline is continuing to grow. Our conversion typically is to the tune of about 30 odd percent. A qualified pipeline. Okay, A qualified pipeline, not the raw pipeline of Qualified pipeline.
Varun Gandhi
And by qualified you mean
Subash Menon
There has been RFI or an RFP out.
Varun Gandhi
Understood.
Subash Menon
It can’t be just, you know, we went to them, they said ah, we would like to have it and that that is where the discussion is at this point in time. That’s not qualified. If when they say yes, they are interested and they float an RFI or an RFP to when they actually kick start a process, when it becomes a qualified cycle.
Varun Gandhi
Understood. Also I was looking to get some sense of what the revenue concentration is in terms of, number of, sorry, the top five customers or the top 10 customers. Any number that you could share.
Subash Menon
Would you have that at this point in time?
Sharat G Hegde
Yeah. So top five customers are around 39 to 40%. Top 10 are around 60% at this point in time. So top five was around 45% last year. So which has slightly reduced
Subash Menon
In the next three, four years. I would expect tops tend to be in the region of only about 20, 25%. It’ll keep coming down.
Varun Gandhi
Okay. All right. So you’re looking to make the revenue more granular.
Subash Menon
I mean most widespread. As we keep on increasing more customers and each customer also grows within us naturally these numbers.
Varun Gandhi
All right, got it. That’s it from me. Thanks again for the opportunity.
Subash Menon
Welcome.
Operator
Thank you. We will take the next question from the line of Hanshraj Patil, an individual investor. Please go ahead.
Majid Ahamed
Yes, I just had a question about. Since the company is growing very fast and we know that a lot of R and D spends are going on, is there going to be any additional capital requirement? Actually
Subash Menon
No. I mean we are adequately from a capital expenses perspective. We are not heavy on that. It’s a very light model. So whatever numbers you have seen, that will kind of continue going forward as well. So it’s not a large number to talk about. Actually
Majid Ahamed
I was talking in terms of we are spending a lot of money on the AI development and futures. Right. But that’s all
Subash Menon
That is being. All that is being written off as well. Right.
Majid Ahamed
So
Subash Menon
When I say capital expenditure, I really mean only the computing infrastructure.
Majid Ahamed
So next for the future, like two, three years, we don’t have any funds to that or equity. Nothing
Subash Menon
To what? To dilute equity? To raise money for capital expedited.
Majid Ahamed
I’m saying in next two, three years, whether we want to acquire company or want to grow the company, we don’t have any plans to raise any additional liquidity or debt. Right?
Subash Menon
No. To grow the company organically. Absolutely. No, we don’t need to acquire businesses whether we do it or not. I don’t know.
Majid Ahamed
Right. Okay. Okay.
Operator
Thank you. A reminder to all the participants, you may press Star and one to ask a question. As there are no further questions, I would now like to hand the conference over to Ms. Janhv Patil from Orin Connect for the closing comments. Thank you. And over to you, ma’. Am.
Janhavi Patil
Thank you everyone for joining the Call today. On behalf of the.
Subash Menon
I would like to add. I would like to add a couple of comments, please.
Janhavi Patil
Yeah, sure, sir.
Subash Menon
So we have discussed the numbers, we have discussed the business aspect and all that. So I would like to leave you all with this thought that the business is growing very well organically, excluding the other income. Because people know that most of the other income comes from your forex movement. Excluding the other income. If you look at our EBITDA growth, you will see it is upwards of 80%. While the organic revenue growth has been. While the total growth has been not organic, including acquisition, has been 61%.
So whether you look at it from an organic standpoint, or including acquisition, including the other income, or excluding the other income, whichever way you look at it, you will see that profit or EBITDA has grown faster than revenue. That is non linearity. And that nonlinearity will continue in the years to come, will only accelerate because of AI. This is a thought I would like to leave with you. And the fact that we are leveraging AI, we are using that and we believe that that will help us to produce even better results in the year to come.
That’s it. From my side. Thank you. Please go ahead.
Janhavi Patil
Thank you everyone for joining the Call today. On behalf of Pilatro Limited, we appreciate your time and participation. For any further queries, please reach out to us at. Let’s connect. Odin.in thank you everyone.
Operator
Thank you, members of the management. Thank you on behalf of ODIN Connect. That concludes this conference. Thank you all for joining us. And you may now disconnect your lines.