3I Infotech (NSE:3IINFOLTD) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to 3i Infotech Limited q two and h one FY twenty seven earnings conference call. We have with us the senior management team represented by mister Raj, group chief executive officer, and mister, chief financial officer. The management will be sharing the key operating and financial highlights for the quarter and half year ended 09/30/2026, followed by a question and answer session. Please note that some of the statements made in today's discussion may be forward looking in nature and may involve risks and uncertainties. Documents relating to company's financial performance is available to the stock exchange.

0:49 Trust you have been able to go through them. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Raj Aujar. Thank you and over to you sir. Okay. Thanks, Hans. Before I start, just to add our company secretary, Warikh is also in the call. So we have all the three KMP representing, represented 3i in this call. Okay. At this time, good afternoon, everyone, and thank you for joining us for 3i Infotech's quarter two and half year one FY 'twenty seven earnings call.

1:47 It's my pleasure to connect with our shareholders, analysts and stakeholders as we review our performance for the first half of the financial year and share our outlook for the period ahead. At the beginning of February twenty seven, I had spoken about our transition from building the foundation of transformation to deliver measurable business outcomes. During the first half, we have made steady progress in strengthening our core business, improving execution and aligning our health organization with our evolving capabilities. We are done with the base work of building capabilities and execution. And now, as we move into the second half of FY 'twenty seven, our focus is on building business momentum, expanding our market presence and driving sustainable profitable growth.

2:40 We will continue to prioritize operational and delivery excellence and disciplined execution as we advance towards our Vision 2030 ambition. I believe the progress made so far provides a strong foundation for the next phase of our journey, where our priority will be to translate our strategic initiatives into consistent business performance. With this context, let me take you through our financial performance, key business developments and strategic priorities. Let me begin with our financial performance. During quarter two FY 'twenty seven, revenue from operations stood at approximately Rs. 182 crore, representing year on year growth of around 4.1% and sequential growth of approximately 2.3%.

3:29 For H1 FY 'twenty seven, revenue from operations reached approximately Rs. $3.60 crore, around 4.2% higher than the corresponding period last year. For the second quarter, EBITDA stood at INR 13.7 crore with a margin of approximately 7.5% and profit after tax was INR 6.7 crore. For the first half, EBITDA stood at INR 25.2 crore with a margin of approximately 7% and profit after tax was INR 13.2 crore. The numbers are strictly not comparable to the last year's number, where we had onetime income of approximately INR 27 crore net of taxes in the first half of the last year due to U. S. ERC credit.

4:17 For the H1 FY 'twenty seven, despite investment of working capital in new contracts for more than INR 20 crores, especially in India and Middle East and expanding capabilities through COEs, cash flow from operations were positive at INR 2 crore, adding to our cash reserves. Our focus remains on sustaining growth in both operating revenues while improving delivery productivity, strengthening cost discipline and enhancing the quality of our business mix. We are aligning our investments in sales, talent and technology with opportunities that support strong operating performance over time. Our results include investments made so far in creating capabilities through AI, automation, ERP, security and application modernization center of excellence, adding relevant subject matter expertise, completing creation of our leadership team and investment in processes and technologies.

5:14 It also includes one time cost pertaining to cybersecurity event, some old tax dispute settlements and legal cost pertaining to our investor matters. We continue to maintain a healthy talent environment with voluntary attrition declining to 18% in half year FY 'twenty seven from 22.2% in half year FY 'twenty six, reflecting improved workforce stability and the positive impact of our people focused initiatives. Turning to our business performance. Quarter two FY 'twenty seven saw continued momentum through new business wins, product renewals and expansion of existing engagements. We added 25 new clients during the quarter, strengthening our presence across banking, insurance, energy, manufacturing, government, consumer and technology sectors.

6:09 In India, our engagements covered application development and maintenance, infrastructure management, data analytics and business intelligence. Internationally, we secured opportunities across North America, The Middle East, Asia Pacific in digital engineering, cloud services, APIs, integrations, DevOps and automation. Our efforts to diversify the consumer portfolio are also reflected in the revenue mix with the contribution from our top five customers declining from 27.2 in half year FY 'twenty six to 23.5% in H1 FY 'twenty seven, reducing concentration and strengthening our business space. During the first half, we recorded a total contract value order booking of INR 4 and 67.3 crores and an annual contract value of INR 379.5 crores, including renewals and new businesses, reflecting continued business opportunities across our portfolio.

7:13 Going forward, our focus will be on strengthening existing accounts, acquiring new customers and converting our opportunity pipeline into larger solution led engagements to support sustainable growth. Coming to the geographical performance, our international business continues to be the key contributor to overall performance with The U. S. Remaining our largest market, accounting for approximately 49.1% of quarter two FY 'twenty seven revenue followed by India at 34.9%. The Middle East delivered strong growth with revenue increasing 54.3% quarter on quarter to INR 4.5 crore, driven by new business engagements.

8:00 During the quarter, The U. S. Contributed INR 89.4 crore, India INR 63.6 crore and Asia Pacific, INR 4.5 crore. Going forward, we'll focus on strengthening our presence across key international markets, expanding strategic accounts and pursuing new opportunities aligned with our evolving technology capabilities. We are also focusing on increasing our base in new geographies added last quarter, namely Canada and East Africa, where the initial interactions have been good, creating a reasonable funnel in the very first quarter of operations. As part of our ongoing business transformation, we have moved towards a more capability led structure. Building on the center of excellence led model introduced last quarter, we have aligned our business offerings with our growing capabilities to better serve our customers and support technology led growth.

8:58 Effective October 26, we transitioned our business into three capability aligned service lines to depict our new and evolving center of excellence. One, Digital Engineering Services, which was formerly known as Application Automation Analytics Division second, Cloud Infrastructure and Security Services, formerly known as Infrastructure Services third, Business Process Services, which retains its existing identity with an enhanced focus on AI and automation led services. This transition brings together our domain expertise, technology capabilities and delivery strength under a more focused structure. Our objective is to move beyond individual service engagements towards broader integrated solutions and long term customer partnerships.

9:50 With this business realignment, let me take you now through the performance of our three business segments. Digital Engineering Services remains our largest business, contributing approximately 74.1% of FY 'twenty seven revenue. With capabilities spanning application engineering and modernization, enterprise applications, data and analytics, intelligent automation and quality engineering, we are focused on supporting customers in their digital modernization and transformation journeys. Cloud infrastructure and security services contributed approximately 17.9% of H1 revenue. Our focus in this unit is on strengthening capabilities across hybrid cloud, cybersecurity, digital workplace, enterprise automation and AI ops to help customers build secure, resilient and efficient technology environments.

10:49 Business Process Services accounted for approximately 7.8% of H1 revenue. There are a lot of headwinds in this business due to increased usage of AI automation and regulatory tightening, especially in BFSI segment in India. We continue to enhance our offerings across customer experience, intelligent business operations and digital restaurant services, leveraging AI and automation to improve efficiency, quality and scalability. Across all such three businesses, our emphasis remains on developing market ready solutions, strengthening delivery capabilities and translating our expertise into measurable customer outcome. Alongside our business capabilities, artificial intelligence remains an important focus, as we continue to integrate AI and automation across all our services, platforms and internal operations.

11:45 During the quarter, we advanced our capabilities in GenAI, Async AI, intelligence automation and AI led quality engineering, while developing a centralized AI repository to bring together reusable solutions, frame box and use cases. Our technology capabilities are supported by over 150 data and advanced analytics professionals and three fifty certified automation and quality engineering specialists, serving more than 20 active customers globally. Going forward, our focus will be on translating these capabilities into scalable AI enabled solutions that improve customer outcomes, enhance delivery productivity and create new business opportunities for us. To create an enhanced value and focus synergies, we have decided to integrate all our AI analytics and automation COEs into a separate legal entity.

12:40 These businesses require a different rhythm with consulting and senior level partnership mindset to be successful. To enable this, the Board has already approved setting up of a subsidiary in their last meeting, which is part of our stock exchange filings. We also might look into some partnership in this entity in future to increase share overall stakeholder value. To further support our technology led growth, we continue to strengthen our New Ray platform ecosystem and proprietary solutions focusing on scalable offerings that complement our core business core services business. There has been some improvement both in product and GTM strategy in this area, which should mature by the year end FY 'twenty seven and will start adding their base to the 3i story.

13:28 We're also deepening our strategic technology partnerships to expand our solution capabilities, strengthen market fees and create new business opportunities. Our emphasis remains on leveraging these collaborations to deliver greater customer value and support long term growth. With the addition of leadership in this area, we have started working closely with large partners, both in India and internationally to focus on long term industry specific solutions rather than just being in services. As we move forward, operational efficiencies, delivery excellence and accountability remains key priorities. We continue to strengthen our delivery practices, optimize resource utilization and leverage automation to improve productivity and support sustainable profitability. Our people remain central to this transformation.

14:17 We are investing in leadership development, multiskilling and future leading capabilities across AI, cloud, cybersecurity and digital engineering to support our evolving business needs. Our six pillar framework, people, process, productivity, platform, partnering and profitability continues to guide us our efforts towards building a stronger, more agile and scalable organization. Before moving to our outlook, I would like to briefly touch upon two ongoing matters. The Intel contractual dispute continues to progress through the arbitration progress, while the Imudra related matter remains under review post response from EOW and we are expecting closure of the matter in the current quarter.

15:05 In parallel, we continue to work on all legacy matters pertaining to RBI, FEMA, entity simplifications and closing all intercompany transactions. Being old matters, the progress has been slow but steady and the impact of that will continue to be part of our financials and disclosures as per requirements. We remain committed to following the appropriate legal processes and will keep stakeholder informed of any material development as required. Looking forward to second half of FY 'twenty seven, our priority is to build on the progress made so far by driving business growth now. By strengthening our sales pipeline, expanding customer relationships and converting our COE led capabilities into larger solution led opportunities.

15:53 We'll also continue to advance our AI and platform initiatives, develop industry focused offerings and improve delivery productivity to support sustainable and profitable growth. Our Vision 2030 is not just about achieving a financial milestone, but about building a stronger, agile and technology led organization recognized for its capabilities, customer trust and persistent execution. The first half of 'twenty seven has laid a foundation through our business alignment, capability development and operational improvements. Our priority now is to translate this progress into measurable business outcomes and long term value creation for our shareholders. I believe we are moving in the right direction and my leadership team and I remain focused and committed on delivering the next phase of our transformation with discipline and commitment.

16:45 Before I conclude, I'd like to thank our customers for their continued trust, our technology partners for their cooperation and our employees for their commitment and dedication. I also extend my appreciation to all our shareholders and investors for their continued confidence and support. We remain committed to building a stronger, more agile and technology led 3i Infotech with a clear focus on sustainable profit, growth and long term stakeholder value. Thank you once again for joining us today. With that, I'll hand over the call back to the moderator for the question and answer session. Thank you. Thank you very much. We will now begin the question and answer may press star and one on the touch tone telephone.

17:33 If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembled. The first question is from the line of from Robo Capital. Please go ahead. Good afternoon. Am I audible? Yes, ma'am. Okay. I just wanted to know what do you expect the revenue growth to be in h two f by '27 and '28? Hi, Rasha.

18:24 If the question is only on the revenue numbers, we don't give any, like say, outlook for the future as of now. What we are expecting is this momentum to continue to build and the growth will continue from where we have finished the H1. We have sent the base at this point of time. And from here, the only based on our order booking, based on other funnel what we have and based on our customer relationships, what we have built in the last one point five, two years, now we are working on increasing the revenue base from here to the next levels. I we don't give a formal outlook of the numbers. So all the numbers are in line with what we had given our vision of 2030, and we are progressing towards that.

19:19 Okay. The second concern is that in the last several years, our revenue growth has been pretty modest. So what type of growth catalyst do you see in the future for our Vision 2030? So, Risa, the revenue growth has been modest. And in the past, I don't know whether you have followed our past interactions. We have given that guideline that the revenue growth will be like the revenue will be decreasing in the FY 'twenty six and FY 'twenty seven will be modest growth. They are in line with the expectation which we have set for the market. And the reason is that the last FY 'twenty six, we had taken a lot of time to clean up the whole revenue book.

20:06 And we have decided to give up some of the businesses, which were loss making or very low margin businesses not adding value to our overall well, market value. So FY twenty six was announced that we will be de growing in FY twenty seven. We said that since we are building up capabilities was the issue of our rights issue, which we did in October. And then those funds have are being invested into the next level of growth. And that has taken some time from the October since we got the funds and then investing those funds into building capabilities, center of excellences. And now we are currently seeing the modest growth. And now after that, we will start seeing more than modest growth in the next one or two, three quarters to go.

20:56 And the growth catalysts are going to be more in the newest technologies. Our focus has been very, very clear. There are few areas where we are focusing in building capabilities beyond a reasonable investment, which is AI led technology platforms, then the cybersecurity, cloud, and other automation led opportunities. So these are the three or four areas where we are very, focused to grow the other reasonable number. Okay. Thanks so much. That's that's all from us, sir. Krishna. Thank you. The next question is from the line of Sanjay Rama, an individual investor. Please go ahead.

21:45 Hi, Raj. Good afternoon. Hope everything is okay. All going well. Congratulation on the good set of numbers. I have two questions more on the operating side. I'll come back if the time permits on any other questions that I have. So first is if we can indicate what the revenue growth in constant currency in both Q on Q and year on year? That was my first question. Second, know, looks like the DSO has gone up. So how is the company looking into getting the this on track and improving the cash conversion cycle? That was my second question.

22:32 Third, I think on the tax, there is no tax provision for the quarter. So is it something that has been looked into going forward, or how is it, you know, placed for this quarter? So other question... Because one more question. With the rupee, you know, appreciating, is the company looking into any hedging policy to cover any foreign risk that may come into the p and l, you know, in the future period? These are my few questions Raj. I'll come back to the time permits later. Thank you, Sanjay. Thank you for joining this call and being a ex KMP of the company.

23:18 I think it's good to hear why it's again after some time. Revenue growth in constant currency, we actually don't calculate and don't publish because all our units are self sufficient in nature. Like The U. S. Has its own operations, which is managed from U. S. Other than a small, like say, things is done outside. We can calculate and maybe we can publish that going forward. And so everything is like say, consolidated at the latest currency levels as of now. So maybe I think that's one parameter which we don't track, but we can look forward to adding that parameter also in future.

24:11 Our U. S, especially U. S. Business, which is 49% of the total business, is basically itself managed because most of the business is managed through the staff in US only. So while my revenue is in US dollar, my cost also mostly is in U. S. Dollars, except for very small portion, which happens from India. The DSO number has gone up, yes. In the DSO number, there is a specific reason. We've got two big opportunities in Middle East and couple of reasonably sized opportunities in India, which has built up in, like, the end July, beginning of August times. So the collections have started happening post September and that itself has added roughly around INR 20 crore of receivables in the last two months and the collection obviously has started happening in quarter three onward.

25:08 So primarily it looks like that the DSO has gone up because we got revenue only for two months and then the complete revenue is outstanding as in September. But as we go forward and the cycle will keep improving and the revenue will start getting accrued for the full quarter, the DSO will come back to the normal levels. Tech, as you know, we have used carry forward tax losses. Because of that in India, is no tax liability and U. S. Tax liability is calculated based on there also we have some carry forward adjustments to be done. Based on that, the teams have done in consultation with the statutory made relevant provisions, whatever is there. So there is no exposure or there is no under provision of the taxes in that regard.

26:01 We have a hedging policy not to hedge for exposure. And then the reason is very clear, which I just mentioned in as a response to your first question, that most of our U. S. Operations are independent, while my revenues are in dollars, my cost also mostly is 70% or so in dollars. So they are self hedged from that point of view, and that's why we don't have a hedging policies on that. We have hedging policy not to hedge. So I was more into because as part of the receivable in India from the exposure that we have in various countries, so that part are recovering because of that that movement it's the p and l or it it comes back as a, you know, income in the p and l. So if it cover that appropriately, the the variation may not hit the p and l as much. That's the reason I was more, you know, covering the question on hedging.

27:01 And on the on the content that will be passed, that would be great if that can be added because we'll know the true revenue growth in the consolidated books because most of the element, you know, I... When the group... In the dollar, either it has an impact on the growth, on the revenue. My... One more question I had, Raj, before I, you know, come back again, is is the wage increase taken into account or that is going to come in in the future quarters? It will come in the future quarters because our wage increase happened from October 1. So quarter three, we'll see a uptick in the wage cost. Any any impact that we see in the... On the EBITDA level? Because there is a good improvement in EBITDA.

27:51 So do you see any... All that getting nullified on the in the margins? Yeah. It'll get nullified. I'm not seeing any impact to flow through the EBITDA and the past levels. So it'll be self funded. Okay. Thanks. I'll come back again if the time permits, Thank you. Sure. Sure, Sandeep. Thank you. Thank you. The next question is from the line of Deepak, an individual investor. Please go ahead please go ahead. Hello. Yes, you are. Okay. Hi, good good afternoon and congratulations on a good set of number. I have couple of questions regarding the business and the balance sheet.

28:40 So, like, recently, you stated that you have realigned businesses into DES, CIS, our legacy from October 26, supported by our 12 specialized CEOs and the two corporate CEOs. So how is this new structure translating to measurable our productivity gain, deal win, or profitability? Okay. That's the only question you want. There is only question I have. Multiple question. Could I connect to Yeah. Yeah. Yeah. You can just mention all, and I'll keep holding. Yeah. Sure. Also, in our investor presentation, we have stated that we have some legacy issue, which has been closed. So I want to know that these legacy issue is, like, fully resolved or there are some legal proceeding is pending.

29:34 And also on a balance sheet front, we have a short term borrowing increasing to the $40.45 odd crores. With a cash in hand, we have nearly $70.75 odd crores. So, like, what led to increase in the borrowings? Like, how does we are planning to balance working capital and investment growth? Okay. And anything else, Deepak? No. Hello? Hello. Yes, please. Yeah. Okay. So with respect to the realignment of the businesses, what we are trying to do earlier, we had a very confused structure where we were trying to do everything, whatever comes in our way for the customers.

30:24 Now we have started working on setting up of the COEs, which is very very focused on the offerings that we have and we don't offer anything which is not there as a part of our the COE structure. So the COEs which we have created and some of the COEs which I mentioned during my like, the type what I just mentioned about AI, cybersecurity, cloud, automation, your hybrid cloud. So we are working on some of those, the POEs, create a value for us. So the business realignment are... Is happening through this POEs that unit.

31:09 Each business unit, like I explained last time also, is supposed to be a independent business unit, completely independent business unit, which will have its own pipeline, which will have its own funnel, which will have its own relationships, partnerships, and the capabilities, SMEs and delivery models. So each of those COEs will be treated like a separate business unit and they will be evaluated based on their individual performances. Other than the corporate function, obviously, which remains at a center. So that's the working model which we have created. And each of the business units and each of the the COE will be monitored and evaluated based on their initial performances with no connection with each other's performance, which was not the case earlier because we were monitoring it only at the triple a or a infrastructure level and not the business time wise.

32:01 So that will help us in very focused approach across all our LOBs. Okay. On the legacy issues, we had couple of legacy issues which we have been reporting over the last, I think, almost three years now. Majority of that had been cleared, but there's a lot of items still pending, so which I also mentioned during my text. One is there is old RBI and FEMA issues, which we had represented to RBI for closing those receivables, settlements of that. And that application is still pending with the RBI and we are actively working with RBI on that. Secondly, there's a lot of old receivables and payables within our intercompany companies and obviously we can't write off right back without looking at the complete tax and accounting implications of that including given the payment requirement here.

32:57 So we are working entity by entity and clearing it up and like you would have seen the last two annual reports, our number of subsidies has come down close resolution of some of those balances and there's some more subsidy which keeps getting closed, cleaned up after we do a proper analysis of the tax accounting and the legal aspects. So I will able to some of them are open. Similarly, of the intercompany hold transitions are open. The biggest legacy matter, which is eMutra, where we are where we have done a legal complaint against the eMutra promoter. That also is being discussed and sorted out with the new information which we have received, the EW and things... Other things which we didn't have at DirectX being a private company.

33:54 So we have got little bit more information, which is being evaluated and will take care very soon. And so so that's all the legacy issue. On the balance sheet side Yes, Please. Yeah. And on the balance sheet side, on the short term borrowing increase, there are a couple of things we need to understand on that borrowing. One is that in India, after the right issue proceeds were received, we have done short term investments of that into the FTEs and into the bonds and other things. We are parking those funds. And we found that, let's say, it is beneficial for us not to break those FTEs because the loss on breaking the FTEs is higher than the savings. So we are keeping those FTEs and against the FTEs we take loans, short term overdraft facilities, which gets used in the last day of the month because of salary payouts and all, which gets recouped in the next week immediately after that. So, at any month end or the quarter end, you will see the borrowing number goes up, but that's not the average number. Average number is hardly maybe 15, 20% of the balance sheet number.

35:10 Please get three trades in the first week of then instead of breaking after then between losses for that. So these are more like working capital borrowings. They are not permanent warrants. We also have in U. S. A credit line, which is utilized and the net number keeps coming down on a month to month quarter to quarter basis based on the profits we generate in U. S. I think that's the reason for the short term borrowings in the balance sheet. Okay. Understood. I have a follow-up on this legacy. Like you have said that some receivable and the payables are there. So, across to what are the potential cash outflow is remaining?

35:59 Actually, cash outflow is huge and that's why we're not able to settle it. In some entities as huge as almost like say 900 crore to 1,000 crore. Where the past legacy receivable table, so it is a group and wherever we have like say understanding that these these are not payable and we cannot generate enough cash in FY '24, we also made some provisions that case there. And after that, we have continue to evaluate that every half year to see if there is more provisions or write offs required. So we continue to drop it up if there is more, which has not been the case in the last two quarters at least. So INR 1,000 crore, to answer your specific question, 1,000 crore plus is the cash outflow, which we don't have to do the transaction. And that's why we approached RBI for doing a settlement of renewal payable rather than physically cash movement.

37:00 Okay. Raj, And you stated about eMudra, like, in q one that eMudra matter was under investigation of economics of. And while related group had indirectly acquired over 5% of the company shareholding. So what is the, like, status of that investigation? It will, like, any h two... Any financial or operational implication we can see? On the legal case, EOW has finished their investigation, and they have obviously used some of the data which was available in their domain, government domain, and they got some more information as a part of investigation from the team.

37:48 And accordingly, they have taken the call that this complaint is not a criminal complaint. At the best, it can be a civil complaint. And we are evaluating that additional information which you received from EW and indirectly through Infotech and we are evaluating that new information which we received and accordingly we'll take a call whether we want to pursue this case further or whether we want to drop the case. So I think that clarity should emerge in the next two, three weeks or so or four weeks max. And there is no financial implication of this because there was no claim from their credit, our claim and which we are not accounted for. So if we get some money from them, obviously, it will be a one time gain in future. But if you drop the case, there is no implication on the balance sheet.

38:39 And approximate, what will be the inflows we get from? It's very difficult to assess because our claim, which we made public also in the stock exchange was upwards of INR 100 crore. But there's a lot of calculations and there's a lot of assumption in that, which obviously will have to be seen when the case is being heard and going to the next level. Our expectation is even if you want to go ahead, this is not the case, it will get settled in one or two quarters. This is a case which will take maybe a few years to get because this might go through a lot of litigation thing. So we continue to pursue and another reason for us to evaluate, evaluate it with regards to civil or not, because there'll be a lot of legal costs involved in pursuing the case as well as if you are doing a civil case, that the law of limitations and also the court case becomes applicable.

39:38 So we are taking a holistic view of the situation and also taking a view if we can still challenge that we want to pursue it as a criminal case or civil case. All the options are open and we are... We will take the call in the next few weeks. Okay. And one last one, retail dispute had, like, entered into abbreviation and the equivalent provision had been made for a claim and payable. So is there has been any material development since then? The... There there have been multiple hearings which we started arbitration hearings have already started. Arbitrator was appointed. Three arbiters, one from their side, one from our side and one common arbitrator from both the arbitrator side. So that proceedings have started.

40:27 As of now, it's all about documentation where we have filed our statement of claims, they have filed their statement of counterclaim. And with both party again had opportunities to present and dispute their other party's claims. So that has been done. The witnesses have been identified and documented. And now the hearings will start with the witnessing. So think it will take maybe one or two quarters more before it gets into a shape where we can assess whether they will be like there any kind of exposure to us or not. As of now, whatever has been their claim, the base claim, not whatever they have added more obviously for the legal case. But the base claim as per the contract is already provided and it's there as a part of our provision in the balance sheet.

41:19 So in this, like, any financial or execution risk will be there? There's no execution risk now because the contract is already closed and everything is done. And financial risk, we have provided for the base value. If there is any further liability comes as a part of the arbitration proceeding, that might be over in the process, which might include some interest or maybe any other kind of cost investment, but that I'm not expecting to be huge. Okay. Understood, Raj. Thank you. Thank you for the time and answer. If anything else, I will join back with you. Sure. Thanks, Deepak. Thank you. Thank you. The next question is from the line of from Kapoor Co. Please go ahead.

42:12 Yeah., sir. Hope I'm audible. Yes. I can. Go ahead. Yes. Yes. Yes, sir. Thank you firstly for the opportunity and for giving us a very detailed understanding of the number part. Sir, as this segregation or that new moment as defined by you in the digital engineering, cloud and client business services. If you could just provide us the industry... Any industry or the end user industry, which we are getting to quickly. So business unit wise, industry specification is more from the region or the geography and not from the businesses. Business line is open, and we are creating solutions across all the business industries. But we have a metrics which has focus of the COEs with the geographies.

43:05 Like, give you some example, like cybersecurity, we are focusing everywhere. Like, say, all the three regions we are focusing on cybersecurity and there our focus is more on the BSI industry and telecom industry. There are two industries which we are focusing on the cybersecurity, but the solutions which are we are creating is across all the businesses. Like, second one is, like, the ERP practices. In US, are focusing more on SAP. In Middle East, we are focusing more on MLC. And in India, we are focusing more on Oracle, while all the three ERP practices will be available for all the geographies. In U. S, we are focusing more on BFSI. Again, BFSI remains common across, BFSI being our strong core.

43:52 BFSI healthcare in U. S. Is the second one and the technology companies, supported technology companies, the third one, which is industry focus. In Middle East, we focus more on the retail and the logistics in addition to BFSI. And in India, in addition to BFSI, it's government which we focus and some bit of retail and some bit of manufacturing. And all our solutions which we are creating is agnostic to the industry, especially the top three core industries, not obviously all the industries, but top three core industries. So in summary, data side, telecom, IT companies, and retail, health care, and logistics. Okay. And sir, then what kind of differentiation 3i offers since the industries which you are getting to have a larger span.

44:50 So how is the... What is the differentiation that has been created which will garner... Which will allow us to garner more business going. Right? So so our Or into our order range. Yeah. On Yeah. Our our decision has been more on the trading subject matter experts from the respective industries. So most important piece in any other solution in any other industry is that you should be able to talk and understand the customer business and customer requirements and translate that back to the customer in their own language. I think that's the most important piece. And that's the I'm not very different because I think most of the IT companies behave the same way and till now we have not been working like that. We have been like seen more as a beauty like customer. So when we go to, let's say, or a healthcare customer, we still talk banking language.

45:40 That's the change we are doing. So I will not call it as differentiation as compared to the market practices, but that's a change we are doing within ourselves that how we are getting subject matter expertise from very focused industry veterans. And so that we can understand the nuances of each of the industries and and provide them the solution, which is very industry specific and not generic or BFSI driven. Right. ESG has also become a very prominent aspect in today in all the businesses. So creating tools and and functionality that that help us in productivity model also would be a good business opportunity for for technology company facing complete like us. So what what percentage of our grid pipeline is towards this ESG aspect, if any?

46:36 And second second... Just a second. Yes, sir. First, please answer, and I'll come with a follow-up. So so in... Very frankly, ESG has not been our focus. We don't have a separate product line or service line on the ESG side. We have a tool called NGRC, which is of the governance risk and compliance framework. That's the product which we had created. And that's the product which we have, which we are working with couple of resellers and distributors as well as through the direct customers to implement NGRC. Other than that, and that's a very small product. It's more like a workflow tool as of now. We're trying to enhance the functionalities of that and cover a lot of other things. But other than that, we don't have anything on the ESG side, neither we are focused.

47:25 Maybe we can evaluate internally and see if that makes sense or not. But as of now, we don't have any specific strategy around ESG. Okay. Sir, two balance sheet questions rather, and one business aspect. Firstly, the business aspect is about the, our our pie of business coming from the global capability center, the GCC. Our end end customer phase or interface that are serving to the GCC platform. What what kind of... Can you give us aggregate or quantify to us what percentage of business is directly going to us through the GCC platform? I'll I'll answer it. Like, why don't you finish your questions? Because Sir, the other other one is other one... Yeah. Yeah. No. No.

48:13 The other one is relating to your balance sheet line item, the property, plant, and right to use asset. So that's a very different set of questions. Okay. I'll answer both of them. I understood what you're trying to answer. So in the GCC, we we we are starting with new industry segment GCC. We don't have any major presence in the GCC segment today. So very short and sweet answer is that we are near zero in the GCC space. It's a different like the market segment and very different to handle these customers. We don't have internal expertise to manage GCC clients. We are setting up a within our sales team, we are setting up a separate sub team to manage GCCs, which we are which we'll have to create it from outlet market.

49:03 On the right to use assets, I think Okay. So this is one of our locations. We have signed a long term lease, which is five year lease, think, right? Yeah. It's five year lease and based on the accounting, you have to, like they show the rights of usership for the next five years of rental and then obviously over a period of time that rental gets charged to the P and L. So the right of use assets has certainly gone up in this half year mainly because of that one long term lease which you have signed in one of our locations. Okay. And about goodwill also, sir, if you could show some more, like, how did line item checks up and what effect or this number going ahead? Because of goodwill is sponsored. We're not adding anything to goodwill. This is a historical when we bought one or two companies, which is now integrated into 3i.

49:56 The goodwill is actually part of that. Every quarter based, because it includes goodwill also in foreign currency. So every quarter based on the ForEx fluctuation, that goodwill getting getting revalued and there is a P and L impact to that. It is direct balance sheet to balance sheet adjustment. Last point, and then I'll join the queue, sir. Do we have... I think we've garnered some business from the Vedanta group also earlier. Correct me there, sir? No. No. We don't have any business in Vedanta of India. Maybe you may be confused if we got one business from Vedanta in Middle East. So that's a different group. Okay. And they are catering to which which segment, sir?

50:43 They they are a IT services company, and we are working with them in couple of big projects for the Middle East Government. Sir, the short point I'm trying to understand, when we pursue the long term goals of two zero three zero, this should be directly aligned to the industries, which will grow in leaps and bounds and and then will add to our revenue profile. So the category or the business verticals should be should should be the ones which are which are anticipated to grow. So that is that is the reason I was I was looking why my main... Absolutely right, Sakend. And that's how we have selected this industry what I just mentioned. We have done a full detailed study around it, that in each of the geographies, what are the industries, what are the solutions which are like the in demand and where the area is expected to be higher than other industries.

51:37 And the choice of this BFSI healthcare in one country and retail logistics in other country and retail and FMCG. So this is a way we have eaten every geography. We have shortlisted industries based on their growth rates expected and the focus areas which the industries are focusing on which matches with that. So it's a three by metric, geography, business line and the industry. Based on that, we did analysis in the last two quarters or so and then finalize this focus industries. Yeah. So, Swati, why I'm coming to the point is because we are seeing many industries opting to robotics and all in in terms of the industrialization activities. So how do we as a company offer them the solution led because robotics and all all will be enabled through the software software programming and will be monitored constantly by a group group of people having an understanding on the scale.

52:36 So mines, minerals, infrastructure activities, lot of properties, lot of automation goes into into what the growth which we are entering in the years to come. So that was my question that how is our company placed or our product offering placed to Gartner's business out of that business? Second, we are not into the production robotics as of now. And I think we don't even have expertise. If we need to create expertise, we'll have to evaluate it later. We are into the process automation, process robotics as of now, which is on automating the packet processing and not the manufacturing, the real manufacturing robotics. So we are very clear that we are not into the robotics, the physical robotics at this point of time.

53:25 Can you explain, sir, where we are present? Which you're you're... I'm... I do not got the understanding. We are more into the process robotics, which is more process automations, not not the physical manufacturing automation. Any example you can give me to understand, sir? Sorry? Can you give me an example? I'm unable to comprehend it. What you're trying to explain, I'm... Yeah. I'm not able to understand, sir. Can you help me out? So so, Saket, what I'm saying is that in robotics or automation, there are two things. One is that physical manufacturing robotics. Right? We are using a physical robots to speed up your manufacturing. Secondly is the which is more of the process side, which is like, say, you are processing applications or processing claims or automation of those. So we are more into the automation and process simplification on the process side and not on the manufacturing line, the production line.

54:23 Okay. Thank you, sir. Hardware, software, deployment Correct. At the same Correct. Thanks. You. Thank you for our... And because manufacturing is not our strong area, and then we are not into focusing on manufacturing as an industry. Please please, sir. Thank you. Thank you, sir. Thank you. As there are no further questions from the participants, I now hand the conference over to Mr. Raj for closing comments. Okay. Thank you. I would like to thank everybody who has joined the call. It has been a good interaction. Couple of homework points, have taken it for myself. And thank you for your valued comments.

55:09 See you next quarter. Thank you. On behalf of 3i Infotech Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your line.