Tejas Networks Ltd (TEJASNET) Q3 FY23 Earnings Concall Transcript

Tejas Networks Ltd (NSE:TEJASNET) Q3 FY23 Earnings Concall dated Feb. 06, 2023.

Corporate Participants:

Sanjay Nayak — Chief Executive Officer and Managing Director

Venkatesh Gadiyar — Chief Financial Officer

Arnob Roy — Chief Operating Officer

Analysts:

Bhupendra Tiwary — ICICI Securities Limited — Analyst

Mukul Garg — Motilal Oswal Financial Services — Analyst

Vimal Gohil — Alchemy Capital Management — Analyst

Sangameshwar Iyer — Consilium Investment Management — Analyst

Sugandhi Sud — InCred Asset Management — Analyst

Naveen Bothra — Subh Labh Research — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Tejas Networks Q3 FY’23 Earnings Conference Call hosted by ICICI Securities Limited.

[Operator Instructions]

I now hand the conference over to Mr. Bhupendra Tiwary from ICICI Securities Limited. Thank you, and over to you, sir.

Bhupendra Tiwary — ICICI Securities Limited — Analyst

Thank you, Seshan. Good evening, everyone. Thanks for joining in for the call. From the management we have Mr. Sanjay Nayak, who is the Chief Executive Officer and Managing Director of Tejas Networks; Mr. Arnob Roy, who is Chief Operating Officer and Whole Time Director; Mr. Venkatesh Gadiyar, who’s the CFO; and Dr. Kumar N. Sivarajan, who’s CTO.

So without much ado, I’ll hand over to Sanjay. Over to you, Sanjay.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thank you, Bhupendra. Welcome to Tejas Networks Q3 earnings call. We had uploaded the presentation on our website. I hope you had a chance to review it or download it because I would be going over that presentation during the next in a course of the call.

So I’m on the slide one, which is the key updates for the Q3 FY’23. On the financial side, our net revenues were INR275 crores, which you will see that on a consistent basis between Q2 and Q1 we have been improving. Loss after tax is around INR11 crores on a consolidated basis and we have been — the account for Q3 include the consolidated accounts of Saankhya Labs that we acquired. And on a standalone basis, we were profitable at around INR5 crores. Cash and cash equivalents are at INR1,221 crores and we again continue to be a no debt company. And order book at the end of Q3 stands at INR1,431 crores, which is quite healthy.

In terms of highlights of our business, the optical business which has been the one which has a lot of product that we’ve been working on for many years, the strong momentum continues. In addition to the routine business that we win, we are also L1 in a very large PAN-India tender for building a backbone for our 4G and 5G, winning against global MNC’s and we believe this will have a significant revenue potential during next year. The order we expect to close sometime in this quarter and this will possibly be the largest single order for optical networking business till date. On the wireless business side, we’ve been working on a 4G project, again a PAN-India project with a large customer in India. All the technical, commercial and all other related issues have been closed with the customer and it’s just the process that is going through, and we again expect the order to come to us in the next few weeks.

On the R&D side, in line with our significant increase in product portfolio and our aspirations to become a much larger business, we do need to continue to invest a lot more in an R&D both in wireline as well as wireless products. So we have a lot more focus on 4G and 5G. And as such, we have increased our employee strength to 1,250 out of which around 800 are in R&D and which compared to one year back is a 60% increase in headcount on R&D compared to December 31st of the previous year. So this just gives you a sense of the significant investment focus we have. Arnob will talk about what all are the key initiatives within R&D that we are working on.

On the supply chain and manufacturing side, which is a very important aspect for our business, because we have a lot of orders, but we are supply constrained for fulfilling customer orders due to shortage of certain chips. But overall, the semiconductor shortage situation is improving. There still are many category of chips and there are certain specific components that do have long lead times. We discussed in the previous earnings call that we’ve reengineered a supply chain processes and instead of just relying on contract manufacturers, we have now got far more better visibility. So we have upgraded our internal systems, processes, tools and of course added more manpower as well. But net effect of all of that is, we believe that we have far better control on the situation, and given that the lead times for certain components will continue to be more than 52 weeks, even during the current calendar year, we do believe that with the inventory actions we’ve taken with the changes that we’ve made in systems and processes, we are confident that we will continue to see revenue improvement. And most importantly, we have lined up a lot more production capacity, because on the large orders that we are talking off not just in wireless but also in wireline. We do believe that there is significant revenue scale up opportunity in the next financial year, and we have signed up three new EMS vendors as our contract manufacturing partners. In addition, we have made investments in our own internal facility in terms of warehousing or production floor or people, so that we can execute these large orders that we’re expecting on time and within the criteria that have been set out.

We do have — in Q3, we have seen some gross margin pressure. A lot of the deals that we had signed were in rupees and were signed six months, nine months, 12 months or even earlier. So combination of chip prices for certain kinds having increased and hit us. Second is the exchange rate, which from the time that we had signed the deal to what we have been supplying right now. And third, as you saw, as you’ll see in our total numbers, the percentage of revenues in India has been higher. Our international revenues in this quarter have been lower. So the combination of these three things have resulted in gross margins being lower compared to previous quarters. We do believe that going forward, we will have much larger revenue, so the percentage level of gross margin may be lower, but the volume advantage that we will get because of economies of scale should mitigate that and give us the right amount of profitability that we are looking at, despite India business going to be a higher percentage of revenues in the next year. So on overall basis, between R&D and supply chain, our philosophy is that we are investing in our business both from a technology angle and processes systems, the manufacturing angle, so e rather than focusing on very short term profitability for the quarter or so, we would really be focusing on long term profitability, which should start resulting and be visible starting from next fiscal year itself. So that’s the kind of viewpoint we have been taking on our business.

In addition, we’ve also received investment of additional INR300 crores from Panatone Finvest, which is a subsidiary of Tata Sons against the final subscription of Series-B warrants, for which in today’s Board meeting shares have been allotted to them. Post this, Panatone would be owning 56.38% of the total shareholding in the company. Of course, the additional investment will ensure that our balance sheet gets stronger and we are able to take the right business calls to grow the business for the opportunities that are ahead of us.

Now going into this next slide, which is titled Corporate Update. So we talked about last time that we had applied for the PLI scheme for the design-led PLI where we had upgraded our application from INR100 crores to INR750 crores of investment commitment. This can result into PLI incentives of potentially close to INR2,800 crores over the next five years of the PLI scheme. So we do — subject to of course we’re getting the higher revenues and so on. So, so far, we will be meeting the year one requirements for investment as well as the incremental sales and do expect to get the payouts starting from — I mean, based on the first year performance itself.

Next is, we’ve also on the product side, the products — converge optical products, the wireless and optical product that we have won the Broadband Innovation of the Year Award at the Mobile Breakthrough Award Conference in USA at last year. We, of course, are expanding R&D both in Bangalore but we do believe that IIT Madras has fairly good amount of talent, which rather Madras has a — Chennai has a lot of talent and we’ve set up our R&D facility in IIT Madras Research park, where we can actually now hire local talent and augment the team that we have in Bangalore as well as in Gurgaon and Mumbai.

On the patent side, we have increased our portfolio to 443 patents between Tejas and Saankhya. And later this month, we will be showcasing a lot of our products at the Mobile World Congress in Barcelona, both in terms of the new 4G and 5G products as well as the optical and xPON products that we have. Saankhya Labs integration is on track, we had acquired 64.4% in July of last year. And for the balance we filed for the amalgamation through the NCLT process, which is underway. In line with synchronizing things much better, we have transferred 169 people from Saankhya and now they’re part of Tejas, and reported as in the Tejas financials. And this will, of course, strengthen the 5G radio programs and time-to-market for our some of the new products in the wireless side. And the Saankhya team, which is the subsidiary at this stage continues to focus on the 5G Broadcast and Satellite Communication and fabless chip, which they are designing for use in 5G and 6G products.

Next slide I’m going to — on the Q3 financial update in terms of details, I would ask Gadiyar to walk us through the next couple of slides. Gadiyar?

Venkatesh Gadiyar — Chief Financial Officer

Yeah. Thank you, Sanjay. Good evening, everyone. Your in slide Q3 FY’23 financial update. Yeah, as Sanjay just mentioned, despite of our supply chain challenges, we had our quarterly revenue consistently grew over the three quarters. The net revenue — the consolidated revenues for the Q3 was INR274.6 crores, on a year-on-year growth of 156.4%. And we had — for a Q3, the EBIT loss of INR21.3 crores and the PBT loss of INR5.1 crores and a PAT loss of INR10.9 crores. And similarly for the nine months, the revenues were INR620.3 crores. On a year-on-year basis, the growth was 46.3%. EBIT loss of INR56.3 crores, PBT loss of INR7.1 crores and a PAT loss of INR16.4 crores. It’s important to note that on a standalone basis, Tejas had a revenue of INR253 crores for Q3, and profit of — PAT profit of INR5 crores in Q3 ’23. And standalone basis for a nine months, we have crossed the last year’s of FY revenue and typically Q4 — the Q4 revenues will be large in nature. And above revenues — in the above revenues, the Saankhya revenue for the quarter Q3 was INR20.9 crores and for the previous nine months, it was INR34.9 crores. And the Saankhya EBIT was EBIT loss of IR14.5 crores and for a nine months EBIT loss of INR20.1 crores. And the Saankhya PBT loss of INR13.5 crores in Q3 and INR18.8 crores for the nine months.

Next slide, you are in Q3 FY’23 key financial indicators. The cash outflow from operations was — for the quarter was INR114 crores. The net worth was INR2,567 crores. Inventory has increased from INR399 crores to INR494 crores and that is an increase of INR95 crores during the quarter. It’s primarily increased because we could not shift the complete or imbalance or balance system due to the a critical component shortages we had. And also we have secured some long lead inventory in anticipation of the expected order requiring faster delivery of the products.

And the trade receivables have moved up from INR380 crores to INR500 crores, and despite we have collected about INR215 crores during Q3. The net working capital has gone up from INR639 crores to INR766 crores, primarily due to the increase in the inventory and receivables. Finally, the cash and equivalent as of December 31, 2022 stood at INR1,221 crores. Post our quarter end on February 3, 2023, we received an investment of INR300 crores from Panatone towards a final subscription of Series-B warrants, for which the allotment of the shares has been taken place today. With this strong cash in hand, we have earned a strong balance sheet. It will enable us to execute large opportunities and scale up our business going forward.

With this, I will hand over it to Sanjay.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thanks. I’m on the next slide, which is the sales breakup on a cumulative basis for the first nine months. So if you see the chart on the left hand side, it is the total FY’22 revenue breakup between India Government, India Private and International. And the chart on the right hand side gives the corresponding numbers for the nine months period. So if you see, we have done INR620 crores year-to-date. If I look at the run rate business, which is India Private plus International during the nine months contributed to 76% of the total. India Government was 24% of that nine month cumulative revenues, which constitutes a year-on-year growth of 139%.

India Private was 54% of the nine month total, which is a year-on-year growth of 83% and international was 22% of nine months, which is a decline of 24.1%, which is what I had mentioned earlier that we did have a decline on the international side. On the backlog that we have — of the total backlog, India is INR1,189 crores and international is INR242 crores. So one other thing we expect that Q4 we should have significantly higher international revenues. Part of it is because for international customers we are expected to ship complete systems in most cases and we cannot ship part inventory. So if something was missing, we had to held back those shipments, so we do expect international to improve in Q4.

If I were to look at the sales outlook going forward, so our focus is to say over the medium term would be to really expand the business volumes and achieve economies of scale at the earliest possible. What this really means is that we have to grow the top line much more aggressively and the opportunities are clearly visible to us, not just for wireless business, but also for wireline business. And as a result, we do see that given all the growth opportunities in India, the capex push in India, the Atmanirbhar agenda and our own positioning in all of that, we do see that there is a very large revenue opportunity in India in the next four to eight quarters and we are well leveraged to get — take advantage of that.

So once we gain the market share in India, we should get the economies of scale. So for example, on the large order that we have been working on, using that as a volume, we have now been able to derive cost advantages for the rest of the business as well. So what is likely to happen going forward is that on a percentage basis, while our gross margins may look challenged but at a profitable level — profitability level, at the EBITDA level or PAT level, we expects things to continue to expand and achieve closer to the long-term business model that we would like to see. So I just wanted to kind of call that out that while on an absolute basis, international will continue to grow. The growth of India on a relative basis will be much faster, hence the percentage of international contribution in our business will be reduced both this fiscal year as you’ve seen as well as in the next financial year. One other thing was that in terms of this financial year that while we have a backlog of international, which will, again as I said, make sure that the international revenues have come up in Q4, the challenge for growing and winning new customers in the near term was that we did not have enough inventory coverage to give them deliveries in a short period of time. And if we required a very long delivery period, they had less motivation to shift from their existing suppliers. So we really kind of focus more on retaining the international customer that we have rather than going and — going after too many new customer wins. However, with the supply chain situation coming under control, both because of internal actions as well as macro improvement on the overall semiconductor situation, we will be changing that and the growth on the wireline business for international exports during the next fiscal year will continue. Wireless, of course, we will continue to focus more on India to begin with and then go international in the subsequent — in the next calendar year. So I just kind of wanted to give a broader view of the sales strategy that we are thinking from a business perspective.

At this point, I will ask Arnob to go over the next two slides, both in terms of just a recap of the portfolio the different segments and from an R&D investment perspective, what are we doing to kind of make our portfolio more competitive and catch up on things where we may not already be there.

Arnob Roy — Chief Operating Officer

Yeah. Thanks, Sanjay. So, as you’re all aware, our conventional business and our product line has been in wireline where we have a very strong end-to-end portfolio of products from access aggregation to the core, which are used for building optical networks for many different applications. However, over the past few years through our investment in wireless technologies and our recent acquisitions, we have also acquired a fairly comprehensive wireless portfolio 4G, 5G base stations, broadcast radio heads and satellite communication products, all of it put together gives us a fairly large additional addressable market to grow our business. Together with all of this, I think one of our huge, big differentiator is our end-to-end network management system, which is very unique in terms of being able to manage an end-to-end network across multiple technologies and multiple layers. So this — we are in the technology business, which where our technology is continually evolving and we require significant R&D investments to make sure that we are upgrading our technology products and staying competitive.

So in the next slide, I’ll kind of give you a flavor of where our R&D investments are going in right now. So in the area, wireline products for the long haul equipment, the DWDM/OTN, we are investing a lot in higher capacity long haul transmission and OTN switching where the data traffic capacity is for transmission and switching are going up significantly year-over-year. For the fiber to the home, for the PON technologies, we already have a very comprehensive portfolio of 2.5 gig and 10 gig PON. Now we are evolving on our portfolio to grow to 25 gig and 50 gig PON, so that will enhance significant capacities in the access network, which will enable many more applications than what [Indecipherable] serves today. For packet switching and transport, again, we are investing in higher capacity switching fabrics for addressing metro capacity growth and also investing a lot in software protocols for the next generation mobile backhaul applications.

For the wireless products, we are expanding our range of TTD/FDD radios supporting 4G and 5G in low and mid-band including, massive MIMO configurations. We’re also investing in evolving our broadcast radio head solutions for direct-to-mobile and data distribution as a service applications. And finally, we are also upgrading our RAN solutions to support the latest 3GPP releases and also achieve ORAN compliance. We are investing in both the standards in terms of our RAN product development.

I talked about our management software and the strength of this being a multilayer multi-technology solution. And we are investing a lot in building intelligence in our management software solutions to be able to manage this network more efficiently. One of the areas of investment is our AI based network failure prediction engine given the visibility of our network management software across the network, across multiple years. We have a unique opportunity of correlating in all the events and data which can be extracted from the network at all levels and hope to be able to predict failures that can happen based on the events and alarms that we see today. So we expect this to be a very big, a huge benefit to operators going forward in terms of maintaining the networks proactively. We are also evolving our management software to make it more affordable for smaller vendors using cloud-based NMaaS as a service products. We’re also investing in management software for making radio networks more efficient by developing intelligent video mapping and control technologies for interference reduction and network power savings.

We also — with the acquisition of Saankhya, we also acquired a lot of semiconductor design capabilities and IPR and the investments going on over there is one of the important ones who’s developing the next generation television broadcast standard ATSC 3.0 with receivers, modulation/demodulation chips. And also the development on next generation software defined radio processors for 5G, 6G radio design. So with all these investments, we are taking our portfolio and our products and technologies to the next generation and we hope to see significant customer traction in using all the upgrades in all products.

Sanjay Nayak — Chief Executive Officer and Managing Director

Okay. Thank you, Arnob. On the last slide, just to summarize and then we’ll open up for questions. So again, if you see that — we’ve seen consistent improvement in revenues with better supply chain management in terms of internal processes. And of course, while the external environment will stay challenging for some more time or at least on few chips, we’ve figured out how we can manage the situation better. Our order book is good and the pipeline of new order book for optical as well as 4G is quite significant and substantial. So we expect that we will accelerate our quarterly revenue growth to quite a good level. And next financial year, we expect to achieve serious economies of scale in terms of the growth of the business. We continue to invest in R&D to increase our time-to-market for our 4G and 5G products.

We have scaled up all our manufacturing capacity between what we needed to do internally in Tejas and externally with other EMS partners and the local vendor ecosystem. And we are confident that we can execute any large order that we’re expecting — orders we are expecting on time. And the Saankhya integration is progressing well. Cash flow position is good, and the additional INR300 crores from Panatone. From a balance sheet angle we are in a very good shape.

In summary, our focus is to — focus our efforts in business to scale up to global levels very quickly and all the proactive investments are in place. And I can mention that with everything that we’ve accomplished in terms of progress during the quarter, I can confidently say that we are on track on achieving our objectives of scaling up the business in a short period of time.

So thank you, and maybe this is the good time to open up to questions and we’ll be happy to answer specific questions that you may have.

Questions and Answers:

Operator

[Operator Instructions]

The first question is from the line of Mukul Garg from Motilal Oswal Financial Services. Please go ahead.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Thank you. Hey, Sanjay, good evening.

Sanjay Nayak — Chief Executive Officer and Managing Director

Hi, Mukul.

Mukul Garg — Motilal Oswal Financial Services — Analyst

So, Sanjay, first of all, congratulations on achieving the highest revenue number in your history on a quarterly basis. Good to see the INR275 crores figure. First question was to ask on the philosophy in terms of investing into the business —

Operator

Sorry to interrupt Mr. Garg, the audio is getting slightly muffled, please use the handset mode.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Is this better?

Operator

Yes, sir. Thank you.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Sure. Sorry, So Sanjay, couple of questions from my end. First was on the philosophy in terms of operating expenditure, clearly, as you highlighted there were lead time impacts on the inventory cost. What really is kind of keeping the semi cost still elevated or will [Indecipherable] like almost a year, given that we are hearing from multiple semiconductor companies that they are now running into a oversupply kind of a scenario. And also in terms of the R&D investments, which you again indicated. How should we see the impact of that on the profitability side? I think it’s fair to invest and kind of come up with a good portfolio. But kind of given indication of, like, how we should kind of look at that from a profitability perspective, is it something, which we’ll kind of weigh on margins for next one to two years, or can that be absorbed far earlier than that?

Sanjay Nayak — Chief Executive Officer and Managing Director

Okay. So let me answer your first question. So in general, yes, the semiconductor supply situation is improving, but there are two categories of semiconductors where there are still problems there. One is the analog and power systems kind of things. There are a few specific companies, I wouldn’t turn in them here, but whose parts still have a lead time of more than 52 weeks. So that is one area where you could have done and they may not cost a lot more, but they do influence whether your system gets complete or it gets remains incomplete till those particular parts come. We do believe that as this calendar year progresses, those things will also improve. The second category of semiconductor chips, which are digital chips where there is still a challenge in shortage or is that lot of the semiconductor capacity of the older nodes, which is more than 28 nanometers or 28 nanometers and above, was shifted for newer semiconductor node technology. However, the demand for those things are still there. Hence, there is a backlog of those parts which sometime again block the rest of the supply chain as well. So given these two categories of things, we do believe that we have to continue to be more proactive and more advance in terms of our planning action. As regarding the cost is concerned, yes, for semiconductor components like memory chips and others, there is a cooling off both in terms of lead times you can literally buy memories in spot, as well as in terms of cost, I think there is a lot more competition in capacity available. But for the specialized chipsets, which go into our kind of products, I don’t think that tipping point has come as yet. As the year progresses, it will, we are seeing improvement signs, but given that we have to do planning for next fiscal year, almost right now it is prudent for us to take actions on those, which is what we have taken. So I would say that the supply situation continue to improve. We have made progress and we’ll continue to do far better in Q4 and Q1, and so on and so forth, but I would still be a little bit cautious in terms of saying that everything is all under control. The second question you had in terms of, yes, we are increasing R&D investments if we have to compete with the best in the world, we have to have the best products and it requires investment. So when will that investment come into play and when do we see the benefits of that to the company and to the investors? I think we’ll start seeing the benefit of that as early as next fiscal year itself. So while if you see, it’s one of the good parts of our business and the product business in general is that our costs, which are R&D costs in primary terms, if you saw, we have INR800 crores out of INR1,250 crores — 1,250 people are in R&D, they are almost quasi fixed in nature. So as long as we continue to increase the revenue significantly, that percentage of R&D costs are — all our operating costs. Why just R&D? R&D, SG&A and everything else will start diminishing quite significantly. On an absolute basis, it may increase, but it will significantly increase the revenues. On a relative basis, the percentage will quite dramatically reduce. So we do expect that next fiscal year itself on a consolidated because — again on a consolidated basis, because our revenue base is small, I think the contribution of Saankhya once we consolidated the accounts had a negative financial impact. But once the revenue numbers scale up, I do believe that the profitability will start showing up. So I would say that next year itself we should see significant improvement in profitability because of the scale of business. And despite the fact that we are anticipating and planning that the percentage GM will be lower than what we have been historically operating, but the absolute number of gross profit will more than compensate and give us the economies of scale, which I talked about earlier. So short answer is whether the R&D investments, the manufacturing investments and all the investments that you’ve made during this fiscal year are in line with the business that we expect to scale up starting from, yeah, I mean Q4 itself in some way, and then continuing over the next fiscal and the fiscal after and so on. So I think we are prudent about making sure that we’re investing in that, that should give us a decent return in the medium term itself.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Got it. And just one more question. The L1, which we are on the optical side were interesting to see us come back very aggressively on opex. But is it the same customer like now which given that it is an L1, is it fair to assume that, say, public sector customer and 4G, 5G indicate that it will be the same customer where we are looking at radios?

Sanjay Nayak — Chief Executive Officer and Managing Director

We — for consolidation reasons, of course, we cannot name the customer as yet. But all I can say that it was open bid for all the global competitors to bid into and on the strength of our product and everything else. I think we are L1 and as I said, it’s a very, very large deal, the largest that we’ve ever had in optical. So that again gives us a good cushion in terms of revenues as well as profitability going forward.

Mukul Garg — Motilal Oswal Financial Services — Analyst

So that basically means that next year, the public sector will be a fairly large portion of our revenues, if they both the orders kind of go through?

Sanjay Nayak — Chief Executive Officer and Managing Director

Potentially, yes.

Mukul Garg — Motilal Oswal Financial Services — Analyst

Got it. Thanks. I’ll get back into the queue. Thank you, Sanjay.

Sanjay Nayak — Chief Executive Officer and Managing Director

Okay. Thanks.

Operator

Thank you. The next question is from the line of Vimal Gohil from Alchemy Capital Management. Please go ahead.

Vimal Gohil — Alchemy Capital Management — Analyst

Thank you for the opportunity, sir, and very heartening to see the improvement in revenues despite challenging circumstance. Sir, my question on your L1 disclosure has been answered. On the second question is on our operations and supply chain. I wanted to sort of have the overview, it’s been almost two years since we’ve been grappling with this issue. In your opinion has this issue sort of panned out in line with your estimates, let us say, whatever your thought and that till end of last year to where we are currently, how has the situation been, could it be — could that have been a bit better than what where we are or no? We are probably where so?

Sanjay Nayak — Chief Executive Officer and Managing Director

So with the wisdom of hindsight, since you asked that what would compared to what we expected it to last year versus this year. So I think there are two parts of the supply chain improvement that we are finally seeing. One part is, as I said, the external environment is certainly improving. Certain category of semiconductor components the lead times have reduced. But there still are certain category of components where the lead times haven’t reduce as much as they should have. And unfortunately, in our business, the weakest link dominate, so even if there are few parts, which are not available it chokes the entire supply chain. So, I think in that sense, we had anticipated that things could be better by now, but they are in most cases, but there are still some cases where they are not there. The second part of the question is that if we knew this one year back, we would have taken more aggressive procurement actions for those parts and set — we’ll let secure not for 52 weeks but for 80 weeks because that’s what it takes. So it was always a balance between how much of inventory risk you take in terms of ordering 12 months in advance, 15 months in advance when you don’t have a direct visibility into the business. So I think that balance of judgment, of course, if we are able to say with the wisdom of hindsight, I would say that, yes, some parts did not come back in time as much as you said. But there is the second aspect, which I think I had articulated a little bit more detail in the last earnings call that we were working in a turnkey model with the EMS companies and we figured out that if the EMS companies saw that the lead time for certain components is 52 weeks ahead, many other component they would not order because that’s how their tools and systems work. Hence many other parts, which would have 30 weeks or 20 week lead time, they would not audit in the guy with the 52 week lead time as visibility, whereas with our efforts we were able to pull the gap of 52 weeks down to the 40, but when the other materials were not available. So what we have done and which is what I mentioned that we have reengineered our supply chain. Now we have entire visibility through our MRT system, our planning system into the EMS systems, so that we can see the end-to-end problem and actually solve it upfront, which is why we have been able to see some improvement in last quarter in Q2 and a little bit better improvement in Q3, and hopefully a lot more improvement in Q4. So essentially as a company we were tooled to completely rely on the EMS companies to do all the supply chain management, which we felt that in the turbulent times that we have been living in the past two years. They have not been able to respond as effectively and not just a problem for us but anybody who did not look at the end-to-end supply chain ran into this problem. So again, with the wisdom of hindsight, If I would have figured this out a year-and-a-half back, we would have been far better shape, we figured this out that we needed to do things differently about six months back. And in the last six months, I’m happy to say that we have a good handle on the problems. So going forward, we do believe that we have far better visibility into every single component where the problem are, where the weak areas are, and we are finding a way to manage it. So net-net, I would say, could have anticipated better, but where we are today, I think we now know what needs to get done. And again, one last part I didn’t precisely say that that for executing the large orders going forward, we would be using a model where we will use a lot more EMS, but the component procurement will be done by us and we would be giving them a conversion on a job book basis versus on the turnkey basis that we have been doing historically. And of course, to do that we have sewed up with the suppliers adequate payment terms, so that it does not at all come back and challenge us in terms of a working capital flow. So those are all the changes in supply chain, which I think has been done. We are kind of also we’re in a unique situation because in the electronic industry, if you were a very large company, you got the right kind of attention from the suppliers and you are able to manage things a little bit better. If you’re a very small company, your needs were too little, so it could have been managed from pocket chain but for mid-sized companies like ours, we are kind of not getting the right amount of attention, the EMS guys didn’t do the right things in terms of processes and systems, and we came back with a revenue shortfall. Because revenue shortfall also had an impact, because if you’re not clearing the backlog of the orders we could have won a lot more business if we had cleared backlog of orders. So when I say with confidence that our wireline business is quite healthy, I mean, actually I can see that lot of run rate customers could have given us a lot more orders, we could have won international deals and said okay if you supply in time I’ll win that deal. But we were handicapped in those and I feel that having solved the supply chain issues in a reasonably holistic way by now, we feel confident that going forward we should see less surprises on this account.

Vimal Gohil — Alchemy Capital Management — Analyst

Thank you, sir. That was very detailed. I have a two part question on your financials. Firstly, on your gross margins. We’ve historically comfortably operated at 40%, 45%, we are way below that at this point in time. So, your comment about your gross margins remaining in pressure, I hope that is not very structural in nature, that is point number one. And the second point is on our balance sheet, so if I were to look at our cash and cash equivalents in Q4, we were at about INR1,100 crores, since then we have received roughly INR1,000 crore of capital from our parent and despite that our cash accretion, if we look at our net-net cash where we are this much, it’s just about higher by about INR100 crores, and our working capital has gone up by roughly INR300 crores. So if you can just help us understand the math over there?

Sanjay Nayak — Chief Executive Officer and Managing Director

Okay. So let me answer the gross margin question first. So for the wireline business, I do expect our gross margins to come back to our normal levels starting from next fiscal year, because just the way things are happening, I feel that the dip that we had in this quarter or in the near term would be offset by all the other actions that we have in place. So the wireline gross margins or the optical gross margins should be close to our historical numbers in the — during the next fiscal year. The wireless, which is the new business that we are entering and especially for — if you’re going to start off with one large order, naturally, we will not be in the same gross margin level that we have been — we will achieve in the wireline business. As a percentage, the gross margin will be lower, but that would be more than offset by the volume of the business. So on a volume basis at a gross profit level in an absolute basis, we feel comfortable that we will have in our gross profit to sustain all the investment and also deliver profits at the end of the picture. So that’s kind of the view I would see that. Our wireline business will be back to normal levels. Wireless business will be a new. Now coming back to the working capital thing and Venkatesh can add to that as well. Basically in the near term, what has happened is our focus because of the imbalance inventory situation. Our inventory levels, if you really see over the last nine months have gone up. Part of it is what I have already described in the context of supply chain. So once the inventory start becoming smooth and we are able to get that going, we should be able to get that working capital on a normalized basis come to normal levels. Again, then what is going to happen is if our business volumes increased quite significantly, which is what we’re expecting, we have to make sure that the payable and receivable gap, which is what assuming their inventory happens on a smooth flow, the payable and receivable gap is managed. We have done all the advance working of all of that and we feel confident and comfortable that there will be no working capital stress on the system and the balance sheet that we have as is should be quite adequate to increase our revenues to quite significant levels as we are anticipating. I don’t know, Venkatesh, you want to add anything or if any part of your question didn’t get answered Venkatesh can.

Vimal Gohil — Alchemy Capital Management — Analyst

Sir, I just wanted to understand what has happened in the last LTM — on an LTM basis, if you can just help us — help me understand the cash accretion, because if I were to look at your cash as on Q4, it was about INR1,100 crores, right now it is INR1,200 crores after your capital infusion of roughly INR1,000 crores in the middle of these four quarters. So your working capital has increased by roughly INR300 crores, there is hardly any capex because we don’t, I mean, cap balance which is like that, so –?

Sanjay Nayak — Chief Executive Officer and Managing Director

Okay. So I think a two things. We invested in Saankhya, there’s a cash outflow there. Yeah.

Venkatesh Gadiyar — Chief Financial Officer

It was the investment in the Saankhya, that’s around INR284 crores. That was in Q2, Q2 of this fiscal year. And as Sanjay was mentioning, the net working capital increase was primarily due to the inventory, which we had filed up in the last several quarters just to secure the long lead of our inventory in anticipation of the expected orders and for the imbalance inventory in the system.

Vimal Gohil — Alchemy Capital Management — Analyst

Understood, sir. Thank you so much, and all the very best.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Sangameshwar Iyer from Consilium Investment Management. Please go ahead.

Sangameshwar Iyer — Consilium Investment Management — Analyst

Yeah, hi, Sanjay. Good to see two consecutive quarters of INR200 crores plus in revenue. My question here is to understand the Saankhya bit here in terms of operations, is this INR40-odd crores, is that the fixed cost out there? I mean, when I look at the standalone business and the consol business, it’s about INR20 crore revenue, we are doing a INR15 crore EBIT loss. So is it something that speaks that which on scalability will be covered up, or is there any one-time that is involved — one-time cost that’s also involved here, which we need to keep into consideration?

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah, actually good you asked that. So in October, actually there is a one-time charge — no, I won’t say one-time, but once we — as a part of the Saankhya acquisition, we have to issue RSUs to Saankhya employees, right, in due of as a part of the transaction deal. So the non-cash charge of RSU for this gradually across between Saankhya and Tejas. I mean, what is the fee that we charge total?

Venkatesh Gadiyar — Chief Financial Officer

For the Saankhya, it was around INR15 crores.

Sanjay Nayak — Chief Executive Officer and Managing Director

INR15 crores. So INR15 crores of the expense that is shown on Saankhya’s expense for this quarter is on account of non-cash charge of RSUs that has been issued to them. From a cost structuring perspective, we — the significant costs of the Saankhya team, which is 169 people, we already transferred them to Tejas. So if you see the corresponding cost of Tejas on an absolute basis when you look at our R&D cost and others have increased. So we expect the Saankhya merger by this from an overall angle in another three or four quarters, it should be over. But the way to think of the Saankhya business is as follows: They have an existing business, which is on broadcast and some of the other selling of the chips, which is currently the main revenue source. We need to find ways to increase that. The prospective investment that they were making on 5G is what is now a part of the Tejas ecosystem. And one thing I did mention — I didn’t mention, sorry but I should mention now, is that part of the 4G deal that we’re working on in the same order there will also be an additional portion for upgrade to 5G, so in a sense, it would be a deal that would be for 4G and 5G and hence it is important for us to accelerate those programs and also release 5G. And then we talk of the closure of technical and commercial that’s on account of both 4G and 5G. So I think we are investing on the 5G side using the Saankhya team in Tejas along with what we’re doing. So that the total product focus in the time-to-market has improved. So coming back standalone Saankhya, which you are seeing, the finance will continue to increase revenues from the broadcast and the chip side and everything else has come into Tejas for now.

Sangameshwar Iyer — Consilium Investment Management — Analyst

So on a — excluding the RSU it’s like one-time, it will not be there every quarter, right? So when you look at that Saankhya at INR20 crore revenue run rate is breaking even at the EBIT level?

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah. Ballpark Saankhya was breaking even. That is what the objective is because the standalone Saankhya entity, we wanted to be at least at a breakeven level. So that they can continue that business. And all the larger investments, which are getting net will be there. So RSU in that sense is, I wouldn’t say exactly one-time but you of course when you’re assigning for the first time, the numbers are higher and going forward, of course, it would reduce as per the charge because it’s a non-cash charge, yes.

Sangameshwar Iyer — Consilium Investment Management — Analyst

Correct. So, now, secondly, at the end of Q2 — sorry, June, September quarter, we did mention that 40% of the order backlog, which was around INR1,400 crores would get executed by this year end, right, which wherein we are halfway through with INR275 crores on the — in Q3 revenue on the standalone. So how is the traction going ahead and in terms of the availability of your key components etc.? Do we see that what we saw or what we guided for at the end of Q2 should stand good stead in terms of overall execution or is there any hiccup or any headwinds there, A? And B, because of the inventory of close to INR100 crores that’s got added this quarter because of finished products not shipped in time etc. Was it finished products or they’re waiting for some components to be received before it will be finished. I mean just trying to understand the cost component or gross margin dynamics in Q4 and going forward.

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah. So first question, yes, we are on track so we should — Q4 typically has been a good quarter for us and we expect to see the same especially now with the supply chain situation under more control than it was in the past. So we should be seeing a continual improvement in Q4 revenues compared to Q3, so compared to what we had guided at the end of Q2 that from the backlog we will be able to ship. I think that looks fine. And in terms of the inventory build up that you talked about INR100 crore, there are two elements. When we say imbalance inventory, it is in two forms, so think of some of you have seen our products and realized. So suppose the system has 10 different kinds of cards, we may have built nine cards and everything is ready, on the 10th card, there is one chip which has not come out, we had demand for 1,000 and we only got 500. So but we cannot wait for all the others to be not manufactured because then you would be perennially waiting. So when we talk of imbalanced inventory, it is of, I would say quasi finished goods, which is at the PCB assembled level, which is there. So that is part one. Second part is, for the anticipated order, we do expect that we will get some pressure potentially to supply in this quarter itself, some of the wireless stuff at least for a minimum number of sites. So we have also procured the chips and the others and, of course, trying to avoid procuring all the material, but at least the long lead one has been procured, so that in case we are required to supply at least some initial quantities or test quantities in this quarter, we should be ready to do that and should have to start from zero because the success of the project and success of our execution is on being able to do things very fast. So those are the two combination why the inventory went up in this quarter.

Sangameshwar Iyer — Consilium Investment Management — Analyst

Got it. And finally if I may, in terms of your international business, we used to do — we used to have a very strong international business earlier when domestic private was not doing that well but now with order books swelling predominantly on the domestic side be it private or the government, we are seeing that there is a stagnation on the international front. Is there any strategy that you are looking at? Any way to kick start or go — take it to the next level, so that the growth is uniform or at least there is a good backup growth coming into the international also? So the order book is not swelling that much there as compared to domestic front.

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah. No, good observation, Sangam. And — so there are two things we are doing. So for the wireline business, which is, let’s call, where we have matured products which are proven and all that. We were supply constrained even for the orders in hand. So winning new international customers and giving them a very long lead delivery commitment would not have served our costs well at all. In fact, we are even for the existing customers run rate customers internationally, as I mentioned earlier, we could not be — if we fulfill the order, we get a lot more orders. So I think what we believe is that by fixing the challenges around supply chain, we think we are in a much better position to go back and get more orders from existing customers internationally for our wireline products and also target new customers. So that effort in terms of business development effort is on, but I think in the pushing it to business closures. So we do expect that on an absolute basis, international orders and revenue next fiscal year will be better than this year, but that would primarily be on account of the wireline products. Now the wireless products, as I said, even in the earlier call that our first priority is that a couple of large anchor deals in India, which is where we will supply the product, get all our processes, systems, product, maturity, scale, everything established. And a later part of this calendar year, in the second half of this calendar year, we will start testing our wireless products in the labs of various operators around the world with whom we are in constant touch. So we believe that later part of this calendar year, we would get qualified, we would be — I won’t say selected or order secured, but at least be in the fray to secure orders, so that as things settle with respect to our execution capabilities and all the product capabilities that are supposed to be in place, we can actually start closing international deals and actually start supplying because once we win, then you have to supply and execute. So I would say, wireline business will grow next year, and all the action is in place, for example, revamping different territories, adding things there and so on. Wireless will be still domestic focused at least for this calendar year in terms of business. Revenues, business development, yes, but revenues will still be. So if I blend the two together, international as a percentage of total will be lower next year compared to what we — if you remember, at some stage, you were at 40% international and 60% India, but that number will be less. And the other — plus I would say that among other economies, at least, India is still in a very strong capex mode and it’s a home market for us and all the experiences of anybody who has scaled up for telecom, OEM company to global levels. One of the recipe for success has been dominance in the home market. So given that our home market is scaling up quite well with 4G, 5G, the FTTx investments, we are right there, we are getting stuff done. We believe that we want to continue to not miss out on the India opportunity to begin with, while keeping our eyes internationally, which may have other challenges in terms of which economies are spending are not spending and so on. So that’s the way I would calibrate ourselves. But if I were to say, calendar ’24 onwards, we should start ramping up international business quite significantly again.

Sangameshwar Iyer — Consilium Investment Management — Analyst

Got it. And what percentage of your order backlog would get executed over the next 12 months?

Sanjay Nayak — Chief Executive Officer and Managing Director

I think around 70% is what I think should get executed, 70%, 75% depending on what it is. But — so — and if I were to take Q4 of this year and next fiscal year, around 70% would be the number.

Sangameshwar Iyer — Consilium Investment Management — Analyst

Got it, got it. Great. Thanks a lot, Sanjay, and all the best.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thank you.

Operator

Thank you. The next question is from the line of Sugandhi Sud from InCred Asset Management. Please go ahead.

Sugandhi Sud — InCred Asset Management — Analyst

Yes, hi, am I audible?

Sanjay Nayak — Chief Executive Officer and Managing Director

Little bit faint. If you may either speak up or directly speak on the phone.

Sugandhi Sud — InCred Asset Management — Analyst

Yes, hi. So thanks for taking my question. I wanted to understand your outlook on profitability. You have mentioned and in absolute terms, the volume of business would make up for the additional investments. Just to get clarity, how much of that profit contribution? Are we baking in some benefit from the PLI incentives and from other income? Are we completely talking on core operational level this breakeven of incremental investments, whether it’s in R&D, business development and the delta that we are going to get in the gross — at the gross margin level, from the business mix changes? So if I were to set aside the non operational income, would you still be — would there still be a delta, the additional investments we made up by the additional gross profit that we’ll make?

Sanjay Nayak — Chief Executive Officer and Managing Director

Absolutely. In fact, the way we are running our business is to make sure that the core business is independent of the PLI incentives or anything else should be healthy. It should generate our steady state business model profits, which we have achieved in the past and PLI and other incentives should be on top of that. But all though they can be quite substantial and meaningful but the investment philosophy is that our core business should be healthy, it should grow, should show the right kind of PAT percentage and EBITDA percentage and the PLI incentive will only be adding on top of it. So, yeah, I mean, I would say that — we — that’s the way we review our business.

Sugandhi Sud — InCred Asset Management — Analyst

So is it possible to give a kind of range of EBIT margin that you are targeting, I mean, you would be calibrating your investments, and I know that it has to be front-loaded. But at least on the commercial side, you would have some criteria of how much — how far you are willing to negotiate with a certain margin percentage. I’d like you kind of given us some kind of indication on historical basis. Is that sort of the range that you’re hoping to fall within?

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah, I think historically, I think couple of years back, I think we were at EBITDA level of around 50% if I’m not mistaken, Venkatesh correct me.

Venkatesh Gadiyar — Chief Financial Officer

Yeah.

Sanjay Nayak — Chief Executive Officer and Managing Director

And I’m not saying that we’ll achieve it next year itself. But with the investments that we’re making, I think in between the medium term, which in between next year and the following. I think we should be able to reach our EBITDA levels at that level. By the way this is on the core business and if the PLI incentives get added and hopefully we reached sooner than otherwise. So that’s the way to think of.

Sugandhi Sud — InCred Asset Management — Analyst

Sure. And also you mentioned that with your wireless customers there is an element of 5G also involved there. So, is it something that’s in discussion phase with the customer and is it going to be a non-standalone network?

Sanjay Nayak — Chief Executive Officer and Managing Director

No, it will be — so it’s not at — I mean, it’s more than the discussion state. So as a part of the bid we had also added, they have requested us to add for certain percentage of the site whether our equipment can be upgraded to give 5G services on the same bands for which they have currently got the spectrum. So that is where we have closed their — the conversations with them. So I think it’s more of a — it will be part of the potential rollout order that they’ll give a different points in time during the year.

Sugandhi Sud — InCred Asset Management — Analyst

Sure. And then could you give us an idea of the pace of investments you just mentioned that as earlier next quarter, you will have to make the inventory available for the wireless shipments. So are we, — could you give us an idea of the pace of this — the contract that whether it is more [Speech Overlap]

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah. So one hand the customer wants the deployment happen asap. But if I look at the — what is required in the tender within 21 months from the date of the order, we should have completed the supplies. They want us to do it faster hopefully. We are also, I mean, technically geared up to do at a faster pace. But then it’s a function of how the rollouts happen and all that. So I would say, primarily between next fiscal year and the year after those two fiscal years, we should be able to execute all the order, including the 5G upgrade, which will start at a later part of this calendar year or early next year, something like that.

Sugandhi Sud — InCred Asset Management — Analyst

Sure. And just — I just had a — I just noticed that your order information that you provide, there is a slight dip in the domestic order book, is that come from the Q2 number that you had reported? And you had mentioned some public the PSU orders that you had received — government orders that you have received which are wireline in nature. So, has there been any change there?

Sanjay Nayak — Chief Executive Officer and Managing Director

So I think if the — I mean if I look at the — I’m assuming you’re alluding to the backlog that we have at the end of Q3. India part, that just could be that we have shipped more of the India customers and less of the international customers compared to during the Q3. And by the way, in terms of the order book, when I mentioned that we are L1 in another wireless — wireline tender and other stuff, we don’t yet count that into our order book because till we get the purchase order in our hand, right. It’s still a prospect and not a firm order in that sense.

Sugandhi Sud — InCred Asset Management — Analyst

Thank you. That’s very helpful. And one final one, on the international order book, is it largely driven by Tejas’s legacy business and or is it Saankhya material portion of that?

Sanjay Nayak — Chief Executive Officer and Managing Director

I know it’s mostly Tejas’s historical business, there is some element of Saankhya order book I think which you also mentioned, but significant part of this is the Tejas services.

Sugandhi Sud — InCred Asset Management — Analyst

Thank you. That’s very helpful.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thank you. I think we’re almost out of time or have actually overrun on time. So we will take one last question maybe.

Operator

Yes, sir. The next question is from the line of Naveen Bothra from Subh Labh Research. Please go ahead.

Naveen Bothra — Subh Labh Research — Analyst

Yeah. Congratulation, sir, for continuous improvements in our operating performance and the investments we are making in the 5G side to increase — 5G as well as the EMS side to increase our capacity for the upcoming orders. My question is to Mr. Arnob, regarding the — you talked about the management stock threshold instance and as well as DAS and mass on cloud based platforms. So my question will be, if you can throw more light on these service — expected service revenues. How do you see it panning out in the coming quarters this service side of the business software?

Arnob Roy — Chief Operating Officer

Yeah. Well, I cannot quantify in terms of absolute numbers for the enabled server service, we already — we have a lot of interest from a lot of operators, the smaller — the ISPs are looking at a solution like this and are ready to engage. So we are working out with the commercial model with them in terms of how the service would be — subscription will be paid for. So I don’t have any absolute numbers right now. So we are working out the business model. For the DAS, for the distribution-as-a-service, that’s again in early stages of customer engagement into how to take this forward because this will be very targeted towards some specific application segments where the data distribution over wireless kind of thing broadcast, our technology will be very relevant. There are few sectors that we are engaging with partners who have the infrastructure, who have the spectrum and stuff like that. So that is still a little early stage, but the market opportunity looks quite big over there and especially in terms of international business, but we are not yet in a position to quantify those numbers.

Sanjay Nayak — Chief Executive Officer and Managing Director

Yeah, I mean the flavor of the kind of technologies that we’re working on which Arnob had articulated was also to give a sense because from an investor perspective, two questions get asked to us many times. One is, are we investing enough and second thing is, what are you actually investing into. So we just wanted to give a feeling of both of those areas that these are the technology areas we are investing. We are continuing to increase our investments, I think will continue. We’ll have to do a lot more investment as we go forward. But I think with the scale business that we are thinking of right now of achieving, we should be able to absorb those R&D investments in a meaningful way like, one of the person who had asked earlier question. So that is really the way we are seeing things.

Naveen Bothra — Subh Labh Research — Analyst

So apart from the hardware revenues, we do see service revenue is scaling up in the future, that’s quite nice. And if you can — question to Mr. Sanjay, regarding the PLI incentive and the size of opportunity we are seeing in this is best for the coming four to five years as we will be making — we have got the approval for INR75,000 crores, the highest approval, almost 25% of the scheme incentive we have got the approval for. So if you can throw some more light, the calculations will be as per the earlier con calls or some difference will also be there?

Sanjay Nayak — Chief Executive Officer and Managing Director

[Speech Overlap] No, no I think — yeah the same service, with the design-led PLI, as I had mentioned in the earlier con call, we get 1% extra incentive compared to the other PLIs, this is only PLI scheme of the Government of India where there is a design link and they give 1% extra for design in India product which we qualified. So, your observations are absolutely right Mr. Naveen, that the INR750 crore we have a subject to — so the investment part, now that our R&D investments or the manpower investment is also counted as capital investment. So we are confident that the investment commitment of INR750 crores will be met without breaking the discipline of the financial model of the company. The second aspect in terms of the incentives that can accrue, I think the calculation we had done could come to something like INR2,800 crores of incentive over the five year scheme period for us. So if we are able to scale up our revenues, we do see that as an opportunity to secure those incentives. And as I mentioned to one of the earlier question person. We are still designing our base business that the investments and the return should be good on their own merit and the PLI incentives will top of those and help us have bigger envelope to for profitability as well as for making more investments to accelerate the growth. So, yeah, all the calculations and all the assumptions about the design-link PLI we had articulated earlier are still intact. And we do expect that the year one, we will meet the thresholds and at least we eligible to claim some incentives based on incremental revenues and the investment term A.

Naveen Bothra — Subh Labh Research — Analyst

Sure first year will be this financial year only know?

Sanjay Nayak — Chief Executive Officer and Managing Director

This first will be this financial year as well. Yeah. Right.

Naveen Bothra — Subh Labh Research — Analyst

Okay sir. Okay, thank you very much. Thank you and all the very best. And we look forward to seeing the BSNL order very soon in the coming two or three weeks because it’s getting quite late. Thank you, sir. Thank you very much.

Sanjay Nayak — Chief Executive Officer and Managing Director

Thank you again. And I guess I’ll hand it over to the moderator.

Operator

Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to the management for closing comments.

Sanjay Nayak — Chief Executive Officer and Managing Director

Now, thank you everybody. I guess, we had a very insightful set of questions, we tried our best to give you as much insight as we could. All I can say is, from a business angle, we feel quite positive that all the efforts that we’ve been making over the last several years, and more recently in the last few quarters to upgrade our technology, to upgrade our processes, systems, manpower and lining up to build a good, a fast growing profitable business. I think we have made a good amount of progress. The supply chain is thing which was constraining us, but that also is coming under control. I wouldn’t say it’s 100% under control, but it’s getting in the right direction. So I would say we are quite positive and confident about the potential for the company and look forward to a solid execution going forward, so that we can realize all the potential for which we have been lining up things. So thank you again and thanks for your patience and commitment to Tejas.

Operator

[Operator Closing Remarks]