Tejas Networks Ltd (NSE: TEJASNET) Q4 2025 Earnings Call dated Apr. 25, 2025
Corporate Participants:
Unidentified Speaker
Anand Athreya — Chief Executive Officer & Managing Director
Sumit Dhingra — Chief Financial Officer
Arnob Roy — Chief Operating Officer and Whole-time Director
Kumar Sivarajan — Chief Technology Officer
Analysts:
Unidentified Participant
Mohit Mishra — Analyst
Vimal Gohil — Analyst
Akash Mehta — Analyst
Manish Oswal — Analyst
Advait Lath — Analyst
Sugandhi — Analyst
Deepak Sharma — Analyst
Hiren Kumar Desai — Analyst
Manoj Shah — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to Q4NFY 25 earnings conference call off Tejas Networks Limited hosted by ICICI Securities. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Mohit Mishra from ICICI Securities. Thank you. And over to you sir.
Sumit Dhingra — Chief Financial Officer
Good evening everyone. Thank you for joining us. Tejas Networks Limited Q4FY25 conference call. We have Tejas Network Management on call. Represented by Mr. Anand Atriva, CEO and Managing Director, Mr. Ormogor, CEO and Whole. Time Director, Mr. Sumit Zendra, DFO and. Dr. Kumar N. Sivarajan, CTO. I would like to invite Mr. Anand. Akroa to initiate his opening remarks post which we will have a Q and A session. Over to you sir.
Anand Athreya — Chief Executive Officer & Managing Director
Thanks Mohit. Good evening everyone. So thanks for joining the Q4 FY25 earnings call. I’m here with Arnab Kumar and Sumit in this room. So I would like to give you a very clear update. The first one is as of yesterday your company completed 25 years. It was incorporated on April 24, 2000. So I have the founders here, Kumar Arnab Roy and Sanjay Naik was our previous CEO. I want to thank them and congratulate them on this fantastic milestone. Thank you guys. So one key important update I would like to give you is that we shipped 100,000 sites on the BSNL4G project.
You know, that’s something that we were on for the last one and a half to two years. So that milestone, it’s a great milestone that you know, we have accomplished as of last quarter. In terms of revenue, Q4 we landed up at 1907 crores. It was 1.4x year over year. And for the financial year FY25 we hit 8923 crores which is more than a billion dollars. And it’s 3.6x year over year. In terms of profit after tax we were negative 72 crores. And then the FY25 profit after task, we ended up at 447 crores. The order book at the end of Q4 was 1019 crores.
And some of the key business highlights is as I just said started, we shipped close to more than 100,000 sites for the BSML 4G 5G network. This is one of the largest single vendor RAN network in the world ever delivered in record time. So I think I’m very proud of the team and also the consortium of tcs, CDOT and also our customer BSNL for actually helping us make this happen. We also signed a very strategic technology collaboration agreement with NEC Corporation Japan and this is for the development of advanced wireless technologies, RAN technologies and also the CORE and EPC and also a joint go to market right? So as two companies we can take it to our customers.
We also had several key wins for our leading edge optical platforms both on the PTN and FTTX mobile backhaul and also for broadband services and power utility networks. And we also are expanding our sales footprint in Americas and EMEA and ANZ. In terms of corporate update, on the occasion of 25 years completion of registering the TEAGES networks, we are considering the performance of the company in the last fiscal year. The board has recommended a dividend of 25% which turns out to be INR rupees 2.5 per share subject to the approval of the shareholders. We also received around 123 crores for FY24 and the first tranche of 189 crores as PLI incentives.
And we also won the best mobile technology breakthrough award from ET Telecom recently. From a summary point of view, I’m really proud of what SAGE has accomplished. In fact, this is the largest revenue that we’ve had in 25 years and it’s a very milestone in a big number. So I want to thank our shareholders, our investors and also our employees and our customers for helping us achieve this fantastic milestone. Yeah, I’ll hand it over to Smith who will go through the financials and other details. Thank you.
Sumit Dhingra — Chief Financial Officer
Thanks Anand. Good evening everyone. For the financial year FY25 we had revenues of 8923 crores, EBIT of 9905 crores, profit before tax of 698 crores and pack of 47 crores. Looking at the fourth quarter the revenues were 1900 crores which is which is 1.4x year on year. EBIT for the quarter was 18 crores and PVT of negative 45 crores. The profitability for the quarter and to that extent the full year is partly impacted because of the provisions for inventory obsolete and write down of about 117 crores that we did in in this quarter Q4 the number for the full year was 181 crores.
We also wrote off certain expenses related to intangible assets. Under development during the quarter. So that sort of has suppressed the profitability for the quarter. Moving to the key financial indicators, inventory at the end of the quarter stood at 2,367 crores. This will get converted to finish goods and get shipped over the next few quarters. Trade receivables at the end of quarter four to that 4884 crores and the increase is mainly because we had higher shipments particularly on the VSNL4G project during the quarter. We collected about 1900 crores during the quarter and we expect to make further collections over these receivables over the next few quarters as the milestones get completed.
Cash position at the end of the quarter was 827 crores and a borrowing of 3269 crores implying a net debt of about 2300 crores. I’ll hand it over to Arnab to take over the business update.
Arnob Roy — Chief Operating Officer and Whole-time Director
Thanks Sumit. Just wanted to give a little bit of color to the business of FY25 and the upcoming year. So financial year 25 the revenue mix was India government was 3% of our revenue which is a year over year decline of 66%. And that’s primarily because as we are all aware the India government business is very tender driven and depending on the timeline of the tender and timeline of the execution of the tender, the revenues depend on on the particular time and the quarter and financial year in which they get executed. And that’s the reason why it’s very lumpy that part of the business India Private grew significantly and was the dominant share and of course as you mentioned that the 4G shipments through TCS we consider as part of the India private business.
But apart from that I think we saw a good amount of growth of our wireline business in the India Private segment. Among the private mobile operators international we had a year over year increase of 18%. In the overall scheme of things it’s still a small number. It was like 3% of our overall business and it was driven mainly through key shipments to the us, Africa, South Asia, both our existing customers and a few new strategic logos as well. We closed the year with a backlog of 1000 crores, 1019 crores where 900 plus of that also from India and 100 crore plus from the international.
Moving on to FY26 as you as you can make out, FY25 was a milestone year for us in terms of revenues and driven by the large BSNL 4G project. So obviously FY26 will be different in terms of revenue, revenue profile and so on. And our business of FY26 has to be seen in the perspective of the revenues of the previous years, right from FY24 and so on. So the good thing is that our portfolio got expanded significantly in FY25 and increased our addressable market during the year. We invested significantly in R and D and sales to support the development and execute on the roadmap for our products, especially in wireless.
And the good news is that got expanded significantly the portfolio. So we now we support 5G or multiple bands and that gives us a really good opportunity to upgrade 4G networks not only in India, but worldwide. We enhanced our portfolio with advanced 5G massive MIMO radios. So we have now a portfolio of not only our own 5G radios but also the ones with the partnership with NEC and you know, also leveraging their some of the advanced beamforming technology and all those kind of things to support more sophisticated and advanced features in our radios as well.
We also acquired a field proven 4G 5G core and that was part of the NEC partnership. And a lot of feature development in the core is going to happen or with the baseline of this core software which has seen a lot of international deployment. We also expanded our IP Billist router family. You know, based on the way, as you know we deployed a very large network in the BSNL network or the 4G 5G backhaul. And over the years we completed the deployment, completed the commissioning of that network which is carrying a significant amount of their mobile traffic as well as their broadband services are carried over this network.
We also added to the family by additional set of products both in the modular as well as the fixed platforms. We enhanced our optical portfolio from 400Gig and to release 800Gig and 1.2 terabit per channel DWDM systems. This is kind of absolute state of the art in terms of what’s available across the world. And with this it puts us in the league of the leaders in the in the optical networking products and companies. We also enhanced our FTX portfolio with Axies Pawn or basically the 10 gig pon products and shipped a few initial customer orders.
And with this we’ll see a lot more traction coming for our 10 gig GPON products internationally. Apart from that, I think the markets for our product, all the product segments, as you know we have a wireless product segment with the RAN and Core and for the wireline segment we have the routing switching, we have fttx, the broadband, the fixed line services and the Optical, the Packet Optical and the WDM transmission. They are the three product lines in Wireline and all of those product segments are projected to grow globally not only in India but also in the international market.
That gives us great opportunities especially with the expansion and the maturing of our existing portfolio. The domestic opportunity pipeline that we have includes large projects in the government sector which you have discussed before. Many of them are in a very advanced stage of negotiations and so on and hope to the next one or two quarters. There are. We have had several new customers and new application wins in both private and government sectors many of which we announced during the year. And you know we have deployed, executed these projects very successfully and they are those business we expect to expand.
In FY26 we had a significant event in terms of the partnership with NEC which not only gives us access to advanced technologies but also access to global customers and you know, which are NEC’s customers and also their prospective customers which helps us in joint go to market opportunities with nec. So with this we expect our international wireless business to get a significant boost with this. With this partnership we also invested in expanding our global sales footprint. So we set up more offices in Southeast Asia in AMC and expanded our operations in sales operations in Americas and we had also on the back of a few strategic wins in those markets.
We think that it will give us a strong momentum for increasing our international business in FY26. So that concludes our presentation of the results of Q4 and the outlook for FY26 and we’d like to open up the floor for questions.
Questions and Answers:
operator
Thank you sir. We will now begin the question and answer session. Anyone who wishes to ask a question may press STAR and one on their touchstone telephone. If you wish to withdraw yourself from the question queue you may press STAR and two participants are requested to use handsets only while asking a question. Ladies and gentlemen, we’ll wait for a moment while the question queue assembles. We have our first question from the line of Vimal Gohill from Alchemy Capital Management. Please go ahead.
Arnob Roy
Yeah, thank you. Firstly a question for Sumit sir. Sumit sir. On this inventory obsolescent and and various other write downs of intangibles which is amounting to roughly 140 crores. This, this is. Is there any Spillover expected in FY26?
Sumit Dhingra
I think evaluation of inventory for obsolescence, write down etc or even you know charging of certain expenses. It’s an, it’s an ongoing evaluation that, that the company whenever we work on our results so that in Various shapes and forms that keeps on getting evaluated. I think as we completed this project and we were coming towards the end of this year, this initiative was taken and we took these obsolescence and write downs and provisions. We don’t. I mean it’s an ongoing exercise. So there’ll always be certain provisions that would continue to make. But this is also a sort of one time significant effort that we had put in.
Arnob Roy
So basically what you mean is there can be. There can be. These provisions will happen, but the magnitude may not be as large as this one.
Sumit Dhingra
Yes, evaluation. This is an ongoing exercise. Always, you know, on a quarterly basis. Any organization would do so.
Arnob Roy
Yeah. I’d like to add that given the nature of our business that we are a product company, we have to continuously invest in newer and many different innovations and also products in anticipation of technology changes or building in newer innovations in our products. And all of them don’t often realize fruition. Right. So from that point of view, I think this is expected that some amount of our efforts that we put in or the investment that we put in that sometimes we need to be written off for inventory which is out there, which is not saleable.
So it is the nature of our business given outcome of the nature of our business given the kind of the product company that we are. And as Sumit said, we do this determination at the end of every quarter and every year to see what kind of right of the provisions we need to do.
Arnob Roy
Sir, is there a chance that this particular quarter, because we finished a large contract, a mega size contract, is there a chance that this particular quarter the expenses would have been particularly higher? Because I would have imagined that this kind of a provision would have been would have been scattered over four quarters or maybe more or over the year rather which has happened in one single quarter almost. So how should we look at this? I mean 140 crore occurs. It will depend on what, how much is expensed out or what is the kind of revenue we build for FY26.
But my point is that if we continue to have such large provisions going forward, it is going to hamper our profitability when we are entering FY26 at a significantly lower revenue base.
Sumit Dhingra
I think typically at the end of the year always this exercise is undertaken and given that this is one of the large provisions or write offs that we’ve taken, we wouldn’t expect such large numbers going forward. I think progressively as we continue normal provisions will continue to happen. So to some extent I can say that this is a one time initiative.
Arnob Roy
Fair enough. Fair enough, Sumita. So. The next question is on. I need a, I need a date on four specific contracts that we’ve consistently spoken about in our previous calls. One is on the follow up, follow up contract From BSNL for 4G and 5G. The second one is on the VIL order win that we had last quarter. The third one is on rail coverage and the fourth one is on Bharatnet. If you could, if you can briefly touch upon each of these, where are we in terms of either tender or execution?
Arnob Roy
Yeah, so for the add on bsnl, I think we’re in advanced discussions on this thing and we expect as you can see that you know, these times, these things often take time and beyond what you can plan for. But we can say that this is in an advanced stage of discussions and will hopefully close in this quarter. We expect it to close by this quarter. Regarding Gil, we won that last year. We did our shipments in phase one and successfully executed the project. We’ve got add on business as well and that business is expanding and we hope to expand that business going forward in FY26 as well as their networks expand real coverage.
I think the tender is getting delayed. We completed our PoC successfully but I think you know, they are taking more time to for the tender, for issuance of the tender and for finalizing the specifications. Bharatnet, as you know the, in most of the circles their size have been assigned the tender. Many of them have the pos and you know, their ongoing discussions with the, on the, with the system integrators on the, on the particulars of the products and the quantities that will be, will be shipped. They’re also in the part of that OEM selection and also finalizing the quantity.
So we are again at a very advanced stage of discussions with them and we is also something that we hope to close in.
Arnob Roy
Fair enough. Arnab sir, in your commentary, in your notes you mentioned that FY26 will have a different kind of a revenue structure which is understandable coming from this kind of a base. However, for FY24, we had closed the year at a revenue growth of close to 2500 crores with an order book of 1000 crores. How do we expect to sort of beat 2500 crores in FY26?
Arnob Roy
Well, as you know, we don’t give revenue guidance. Right. But you know, if you look at our opening backlog and the business pipeline that is in front of us and that’s, that’s the. So I want to give you a flavor of that both in terms of the large projects as well as, you know, the run rate projects from the private sector. If you look at all of that, I think there is a significant, there is a very good opportunity of having a pretty significant business in FY26 as well. And there is a good amount of business pipeline built out there.
And especially with our expanded set of products, I think we are, you know, we’re looking at FY26 very positively.
Arnob Roy
And sir, this one clarification on what you mentioned here. Some of these, some of the orders that you got or are expected to execute for the newer products, will it be fair to say that this will be a bit more short cycle in nature as compared to what we’ve done for bsnl? So some of the order intake which will come within FY26 will get executed within FY26 and which is why the order book for Q4 may not be as. May not be, you know, may not give you a correct picture of what is to come in FY26.
There could be a positive surprise.
Arnob Roy
Let me put it this way. Without getting into any specific guidelines, I think most of the opportunities that I talked about, we do expect them to close and get a large part of them getting executed in FY26. Of course, the larger orders, there will be some overflow onto FY27 also. But significant part of the opportunities we expect to get completed in FY26.
Arnob Roy
Fair enough. Sir, just one last data point. If you can help me with the number of employees that we closed in FY25. Employee cost, we just capitalized this year.
Sumit Dhingra
Roughly at around 2380. 2380 employees at the end of the end of the year. And sorry, what was the other question?
Arnob Roy
Sir, your employee cost that is capitalized this year. Last year it was somewhere near 250 on crawl.
Sumit Dhingra
Yeah, so about about 289 crores of cost was capitalized.
Arnob Roy
Thank you.
operator
Thank you. We have our next question from the line of Akash Mehta from Canada. HSBC guys, please go ahead.
Akash Mehta
Yeah, hi. So my just, my question is, I mean in continuation to the previous participant. So just wanted to understand in terms of the order book which is at about 1019 crores we are expecting. So what kind of addition we are expecting from the major projects that are there in terms of rail coverage, the Vodafone idea, one additional BSNL and BharatNet and other projects that we could see over the next, I mean getting executed probably over the next couple of years. If you could just help with that.
Arnob Roy
Yeah, I think we don’t share specific numbers with respect to each and every deal and many of them are yet to, yet to materialize. They’re very close. And so since we give don’t give specific numbers since we deal it’s very hard to say what is FY26 is going to look like and what are the numbers that we are expecting from them. But as you know I think the size of those projects and the opportunities are, you know you can probably make some estimate about those and we look forward to you know, fairly, you know, successful FY26 but not comparing it with FY25.
Akash Mehta
So. But any broad, I mean if you could just help us with any broad opportunity size from that perspective or that would be kind of helpful. I mean not guidance in terms of revenue but what you are internally targeting in terms of these projects.
Arnob Roy
No, I don’t have any specific numbers to share with any of them. I mean each of those large opportunities of Bharatnet and you know the ABL add on and all those kind of things are you know in the. I mean there are like several hundred crores and you know upwards of some, some of them, upwards of a thousand crores also. But beyond that I, I don’t have any specific number to share for each of them. But these are large.
Akash Mehta
Understood. Fair enough. And second is on you mentioning that there are certain large projects in government sector that would come through in the next couple of quarters. So can you help us in terms of what kind of projects this could be?
Arnob Roy
Right. Yeah. So those are the ones that I think Vimal was referring to the add on bsnl, the real coverage Bharatnet and so on the both the central and the state department. So each of these are very large groups. Some of them are several hundred crores, some of them are several thousand crores as well. So those are the large projects where we are hoping to bring a significant share of.
Akash Mehta
Okay, thank you. That’s it so much.
operator
Thank you. We have our next question from the line of Manish Oswal from Nirmal Bank Securities. Please go ahead.
Manish Oswal
Yes sir. Thank you for the opportunity. I have a slightly longer term question from last couple of years. We have expanded capabilities basket and the geography and we have built teams in different markets also. And you said in F26 outlook our addressable market is expanding. So if we take a three to five year view on the business where the size of post can you quantify the size of opportunity which we are target to capture or participate in. And secondly in terms of performance evolution Internally of delivery of against our budgets. What are the key metrics you look at internally to judge the performance or benchmark? So can you share details around these two things? Thank you.
Arnob Roy
Well, outlook over the next few years are good because overall in all the product segments that we operate in, they are all expected to grow significantly anywhere between 3,4% to going up to 6,7% globally. And India the investments are also growing substantially. India is one of the fastest growing market. So from an environment point of view and our products and the relevance of our product point of view, I think we are in a very good position right now. You know we have especially in India, we have incumbency in many of the customer accounts. Our key investment and the key challenge is really growing our international business as well.
And it’s, it’s a mainly a question of execution of successful business in a growing market for us. So I think the market growth and opportunity is not a challenge. It’s like a is a question of being able to execute successfully especially with the newer products and the upgraded portfolio that we have. So the second part of the question was regarding KPIs. I think it’s very simple. The KPIs are again just the financial numbers in terms of revenues, margins, profits, you know, cash flow. So I think all of this has to work out to the numbers and the financial performance of the company.
So those are the key parameters that we monitor and we evaluate ourselves on.
Manish Oswal
NEC the tie up which we have. So as per the some credit rating notes we have to pay certain royalty yearly basis. So can you quantify the amount? And secondly from this type, what. What is the size of opportunity we can visage for terrorist network and corresponding. This question is when you say we have increased the size opportunity for from the different aspect but in terms of competitive landscape for participating that opportunity. Can you talk about the competition level in terms of cost structures in terms of where we are losing the bids, can you name few competitors also in this space where we are competing one on one?
Sumit Dhingra
Yeah. So. As Anand mentioned, the NEC agreement is for development of advanced wireless RAN and core technologies and as part of that, part of that also through licensing their products and for joint go to market. So this gives us a lot of access to NEC’s existing customers worldwide who are deploying the products as well as some of the newer opportunities that they’re looking at globally. Right. So this gives us a significant boost to our joint branding and joint go to market with their existing as well as the newer customers in the international market. So that’s the big value coming out of that.
Quantifying the number is not possible right now. I mean we don’t share that, but we are looking at of course significant revenues and most importantly, these are going to be international business. That’s something that we are very keen to really grow and it’s very important for our business to increase our footprint globally. And this gives this initiative a significant boost. Second part is competitive landscape, the investment. One of the reasons that we invested significantly last financial year and continue to support that is for accelerating our product roadmap. I think right now, over the last 12 months, all the different initiatives that I talked about, all the product portfolio expansion that I talked about and now got us into a very good competitive space with the leading edge product manufacturers across the world.
And they are the people that everybody is familiar with. You know, in wireless they are the Nokia, Ericsson and so on. For optical, it’s like Sienna, Nokia and so on and routing, switching for the service providers Nokia and Cisco and so on. So those are, all of them are global competitors against whom we compete not only in India but also in international markets. And with all the investment that are made, all the development that has happened, we find ourselves in a very good competitive position with respect to them.
Manish Oswal
Thank you very much sir for answering my all my questions. Thank you.
operator
Thank you. We have our next question from the line of adv from Nippon India Mutual Fund. Please go ahead.
Arnob Roy
Yeah, hello sir. Am I audible?
Arnob Roy
Yes, you are.
Arnob Roy
Yeah, so just congrats on a great year and just wanted to ask what is the tariff related news flow or what is the impact of that on. Us and how are we looking at. That risk in the long or medium term?
Sumit Dhingra
Yeah. So the full impact of the tariffs and how varied lands finally is yet to be determined. As you know, there are discussions that are going on between the different countries. But the way we see it is that we see it with respect to our competitive landscape. You know, most of our competitors also manufacture outside of the U.S. right? I mean in different geographies, including Asia and various countries in Asia. So I think whatever the tariff impact on India is, they’re going to have the same tariff impact as well. So I think from that point of view it’s going to be new, it’s going to be neutral.
Right. Because I think they’re also going to get affected by that. I think the part that could potentially impact is that if there is a negative sentiment in terms of business, global business and the investments from our customers go down based on the negative sentiment. If there is a conservative approach that happens in terms of the investment in network. I think that secondary impact is. Probably has a. Could be a larger risk than the exact the tariff by itself.
Arnob Roy
Right. And just a follow on question on the PLI schemes. When do you think we we are eligible? Till which year?
Sumit Dhingra
Till FY27.
Arnob Roy
And after that that will cease to exit, right? Exist, right?
Sumit Dhingra
Yes, that’s right. Current scheme is for five years.
Arnob Roy
Yeah.
Sumit Dhingra
So which will end in FY27.
Arnob Roy
Sure. Thank you.
operator
Thank you. We have our next question from the line of Suharti from FedEx securities. Please go ahead.
Sugandhi
Yes. Hi. Thanks for taking my question. I wanted to understand in terms of the write off, you know if I see over the last since FY22, you know that’s our inventory levels were around you know, 200 crores. And then since then because of the BSNL contract, you know we significantly expanded. We also added because there are some component shortages. So the right of what kind of you know, equipment does it pertain to? Because it seems to be very significant, you know, in proportion to the FY22 base. And also in terms of intangibles. Can we talk about you know, what kind of projects these related to? That’s my first question.
Also on the Bharat contract we’ve seen a lot of announcements from system integrators, you know, from other companies in the. In the value chain fiber optic companies. So you know, and, and there as per market and we’ve made an announcement for Tamil Nadu for us as, as well. So you know, are there any other companies on the electronic equipment side that we are competing with and you know, what’s holding back, you know an announcement coming from Tejas on you know, their scope and involvement in the Bharat project. So just you know, in terms of how much of market share you know, in the project is, you know, whatever the estimate be on the total magnitude of the project.
But what is the market share that we are targeting for this contract?
Arnob Roy
Well, specific to BharatNet, as I said, the announcements have come from the system integrators mainly who have won the deal. And those projects are a combination of a lot of services, a lot of supply and deployment of fiber and all those kind of things. And then significant portion is also about the equipment. Right. So this is where I think the system integrators are working with the OEMs, with the equipment provider in finalizing them. And as, as well as all the OEMs including us are going through all the testing and certification process which are part of the, you know, without which you cannot be deployed in the, in the network.
So all that is happening in parallel, you know, the discussions and negotiations with system integrators as well as testing and certification of our products. So I think they will, as I said, they will probably close in Q1 and whether we announce that or not or announce it will depend at that point of time. With that there’s significant enough in terms of announcements and all this kind of thing, but since this is a deal between private entities kind of thing, we’ll need to see what can be announced or cannot be announced. However, their announcements is because it’s like a public tender and that’s what has got announced over there.
Regarding your first part of the question regarding inventory and write offs, as I said, that’s the nature of our business that we have to do a lot of experimental development, lot of trying out new ideas, new inventions and all those kind of things. And some of them may not lead to fruition, may not lead to products getting release kind of thing. So there is always some amount of. And since we are, we develop a significant amount of hardware as part of our products, you know, there will be some amount of inventory which goes stale or which becomes unusable in terms of business because of products that, that we couldn’t take to production and so on and similarly with projects as well.
So this, because this is the nature of the business, right? If you are in a direct services kind of business where we are only executing customer contracts and business was based on that, then there is a very direct connection to the business as well as the customer business and the investments in the company. But for us it’s more of, you know, we are a deep tech company. There’s a lot of investment that goes on to innovation. And you know, some of them, many of them are successful, some of them are not successful. And that’s the nature of the game.
And this happens. I mean, I think this quarter it has been a large one and as Sumit said that in the always we don’t expect it to happen to the tune of these amounts. But you know, this is, this is the nature of the business. This is nothing unusual. I think the number is maybe a little more higher.
Sugandhi
This is it fair to say that the. On the inventory side also, you know, there was some time with the, you know, the experimental products that we were doing and for batteries and there was an inventory right off. I mean, I’m just trying to understand the eight, you know, how old this inventory is on our books. I mean, because Most of the buildup has happened over the last two years in inventory.
Arnob Roy
No, I think the development is ongoing. Right. That never stops. It’s not, it’s not always connected to a particular business kind of thing. As you can see, while we were executing the BSNL4G, the network, huge amount of investment kept happening in 5G as well. Right. In terms of looking forward for business. So some, some amount of inventory is connected to that. Right. I mean maybe one particular approach you tried, you tried multiple design and finalized on one of them, the one which gives the best performance and you know, kind of a thing. Right. So those are experimental stuff that comes into the picture.
Some of it is maybe inventory built over, you know, to some customer, to some business forecast and may not have got consumed or kind of thing. Right. And or got end of life kind of thing. So it’s like a combination of this. As long as you’re in the hardware business, there is, you know, those kind of events do happen especially in the hardware product business. Those kind of events do happen and as I said, they will happen, but maybe always not to the tune that you’ve seen right now. And same thing to do with the project right now.
There will be experimental projects which may not reach commercial success and we write them off and this has been one of large numbers this year.
Sugandhi
And just on my other question, what I was trying to understand, are we competing with international vendors as well in the Bharat Net contract? And you know, how if you could give us, you know, if any, you know, light on the number and you know, the you know, size of these other OEMs. I mean how. What kind of pedigree of OEMs are we competing against? You know, just to understand what is our right to win in the BSN contract.
Arnob Roy
Yeah. I think you have to realize that any business that we do, any customer that we compete in are with the same international vendors. So it’s not something new for us. When we compete in a private operate like Vodafone India or in Airtel or Tata Communications, they’re always up against international vendors and we always have uniqueness and differentiators in our products which help us win whenever we do kind of a thing. Right. So it’s the same over here. There are, you know, several, you know, we won business for routers against global competition that all the names that you know of.
Right. And it’s a similar situation over here. And so it. Just because international competition is there, it doesn’t mean it our chances are any less. You know, we do that On a regular basis not only internationally but also in India because all those global competitions vendors operate in India. So it’s a part of it isn’t increase or decrease our chances of success in any meaningful way because that’s what we do every day.
Sugandhi
Thank you.
operator
Thank you. We have our next question from the line of Deepak Sharma, an individual investor. Please go ahead.
Deepak Sharma
Hello sir, thanks for the opportunity. As a retail investor just my concern is as Tejas is not covered by any research analyst. So from the retail investor point of view we are looking for some numbers or at least a broader idea about the sector opportunities. But without numbers very hard to judge where will we are and will be next two, three years and after overall from stock price to salary or Capex or revenue everything is numbers. I’m not saying you give me the numbers of quarter, quarter or even the year but can you please some give the hint? What are the exactly opportunity size for the sector in India for Bharatnet, Kavach and Vodafone? So and so and what are the opportunity sizes of the globally you are looking for? 526.
Arnob Roy
Yeah, as I you know as I mentioned we cannot discuss specific numbers and for specific customer opportunities for the large government tender as I said they range from several hundred crores to several thousand crores. So those are fairly, fairly large deals. I mean may not be as big as one BSNL4C deal but significant nonetheless. And so those are some of the significant projects based on which we to form the base for our FY26. But at the same time our a lot of our investment and initiative is towards the private operators both in India as well as internationally.
And each of those opportunities I would say the large, I mean the smaller customer opportunities are in terms of you know I would say would be in terms of several million dollars could go up to five to $10 million and the larger opportunities could go up to you know, 50, $60 million kind of a thing also. Right? Or you know sometimes maybe bigger than that kind of thing but it would be spread around a lot of customers, a lot of different operators in different parts of the world as well as in India. So there is a kind of spread of large deals as well as the smaller deals kind of a thing and the combination of those would work towards making our FY26 numbers.
Deepak Sharma
Okay now sir, can you put some highlights or any idea about that? What is the correlation with the capex of telecom companies and your revenue not your even the sectoral revenue?
Arnob Roy
Well yeah, I think their capex spend has a direct relation to us. Of course, a lot of the capex spend goes into the infrastructure of fiber or towers and power and all those kind of things. But roughly 10 to 15% of their overall CapEx budget goes into active equipment, the kind of stuff that we sell. So when you look at their capex spend numbers and projections, I mean that’s kind of factor that you can use to that this kind of spend that will happen in the active equipment space.
Deepak Sharma
Okay now sir, one more question. What is the CAPEX growth rate you are expecting from the domestic and international market from the telecom companies in the next one or two or at least three years?
Arnob Roy
So as I mentioned, I think the overall industry reports show growth, projected growth in all the product segments that we have, right from 3 to 4% going up to 7, 8% and our addressable market is, you know, fairly large over here. You know, each of those segments of service provider, the wireline is multiples of tens of billions of dollars. And same with wireline Also, it’s upwards of 30, $40 billion globally. So in each of this wireline and wireless space it’s a pretty large addressable market and growing at a fairly good clip. So from the point of view I think we are, we are very bullish and encouraged about our prospects going forward, not only in FY26 but also beyond that.
Deepak Sharma
Okay, sir, just, just a sub part of this question, this last question. So BS, you have completed the one like sites of BSnull. So if, if, suppose you are a BSN, you, if you are competing in a multi et al, Vodabone or even jio, then at least how many towers are means how many 4G expensive towers required by the BSN to compete with at least these companies.
Arnob Roy
So roughly from what I know that BSN has 100,000 towers but many of the operators have upwards of 200,000, upwards of 200,000 towers. Many of the private operators have. So we do, that’s, we do look forward to a lot of the expansion of BSNL network to be, for them to be able to compete with those private operators. And that is a significant opportunity for us both in terms of expanding the 4G network as well as upgrades to 5G, you know, which was part of the, the tender that that came out, right? I mean there’s a significant amount of 5G upgrades as well.
So a lot of work going on in that area, a lot of trials and testing and POC is going on and hopefully we should see some good business coming out of that, out of that incumbency that we have in the network. Okay.
Deepak Sharma
Okay. Okay sir. Thank you. Thank you.
operator
Thank you. We have our next question from the line of Hiren Kumar Desai, an individual investor. Please go ahead.
Hiren Kumar Desai
Thank you for the opportunity. My question was regarding employee benefit expenses. Last three four quarters, it’s around 100 to 110 crores. I’m assuming that this is all fixed cost. So what kind of revenue and EBITDA is required to have break in on a quarterly basis?
Sumit Dhingra
Yes, employee cost is predominantly fixed in nature. I think as we progressed over quarters there has been an increase in revenue in the employee cost mainly coming out of investments that we need to do in R and D, in sales and marketing and other functions. A part of our employee cost is also capitalized based on the R D projects that that we are working on. So I think from the perspective of quarterly revenue and you know, the revenue required to break even, I think a large part of this cost, our general cost structure other than the material cost is fixed in nature.
Right. So depending on the, while not giving the exact number but depending on the margins that you assume, which is basically between 20 to 30% range, you know, that could give you the implied revenue required to be recovering the fixed cost that we have.
Hiren Kumar Desai
Okay, yeah, that answers my question.
operator
Thank you. We have our next question from the line of Viman Gohel from Alchemy Capital Management. Please go ahead.
Vimal Gohil
Yeah, thank you for the follow up. Sir. Sumita, can you help me with one more data point for this particular year? What was the ESOP cost that we recorded in our PNM last year? I think we were at 107 odd crores. What would be, what would be. That number for this year.
Sumit Dhingra
Will be roughly around 80 crores. We can give exact numbers later, no problem.
Vimal Gohil
But this, this run rate is expected to be at this level or will reduce.
Sumit Dhingra
Look, I think it’s a function of, of how we over time choose to reward employees. I think over the last couple of years Also because of RSUs, that part of the transaction and otherwise. I think the expense may have been a bit higher but I think it would generally continue to be broadly at similar levels as well.
Vimal Gohil
Fair, Fair answer. This NEC capital outlay.
Anand Athreya
Finish. Why don’t you finish?
Vimal Gohil
So sir, my question was on the NEC initiative, the capital outlay is, is, has been recorded in the, in our balance sheet already. And if, if, which line item can we see that
Sumit Dhingra
It is not yet recorded. I think as we go along as the project delivery milestones get completed, it’ll, you would see that progressively over the coming year it will show up in Intangible Assets under Development. To begin with.
Sumit Dhingra
Only a small portion. Has been recognized in the books.
Vimal Gohil
Right, Sir, I interrupted you in between. You may complete your. Yeah, yeah.
Anand Athreya
It’s the time for one last question, please.
Vimal Gohil
No, I’m done. Thank you so much.
operator
Thank you.
Anand Athreya
Okay, can we close the call?
operator
As you see, sir, if you want to take another question, I will take another. If you want to close,
Anand Athreya
take one more.
operator
Okay, the next question is from the line of Manoj Shah from Legscop Investments. Please go ahead.
Manoj Shah
Thank you for taking my call. Just wanted to check on this BSNL 4G upgrade order. Does that involve any contract for the maintenance part also? Or it was just the upgradation one time? Upgradation?
Arnob Roy
No, I think the BSME contract includes maintenance. There’s over a period of seven years after the network is commissioned. So all these in fact in general any business anywhere we supply and deploy our equipment always comes with multi year maintenance and sometimes they get renewed year over year. But in this particular case it’s over multiple years. I think seven years of maintenance which comes along with the contract.
Manoj Shah
And what would be the run rate for years for the maintenance?
Mohit Mishra
There is no specific number that we can share for this.
Manoj Shah
Okay. And regarding this DSML 5G, there was a news item which says that government wants to Upgrade it to 5G. So you will. Your company will get a first priority of some part of the order will be reserved for you for that. Can you elaborate on that? Or it will be on a competitive bidding basis.
Arnob Roy
5G, it’s a. It’s a combination, I think lot of the 5G upgrade, whichever is going to happen in the same existing bands in which 4, 4G deployed, that will come through the upgrade of our equipment. And that’s where our equipment is designed for that. And even the original tender which we executed has scope for this 5G upgrade in those bands. So those upgrades will come through our equipment, but there will be newer bands, some of the performance bands, the 3.5 GHz and so on. So there we expect to be new tenders which come out. So.
Manoj Shah
What could be the size of this 5G order that you expect to get from this BSNL order?
Arnob Roy
Again, no specific numbers and it all depends on the number of sites they upgrade and all this kind of thing. But you know, it could be. Obviously it will not be as large as a fresh 100,000 site deployment, but based on the number of sites they upgrade, it will be. I think the cost will be kind of a fraction of the total, the base cost, which is there because this will be 5G upgrades. But and it depends on the number of sites that gets upgraded, that will determine our revenue. But again, it’s definitely significant in terms of several hundred crores for sure.
Right.
Manoj Shah
So it would be like for the 1,1 lakh sites what you have upgraded from to 4G. So those would get upgraded to 5G, those hundred thousand sites.
Mohit Mishra
No, no, no, no. I don’t think that all of the sites will get upgraded to 5G fraction of that. Yeah.
Arnob Roy
Okay. 8:30. So I want to thank everyone for participating in this. Thank you. Have a good evening. Thank you.
operator
Thank you, sir. On behalf of IPICI Securities Limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.