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Edited Transcript of ECLERX.NSE earnings conference call or presentation 30-Jan-20 11:30am GMT

Q3 2020 Eclerx Services Ltd Earnings Call

Feb 4, 2020 (Thomson StreetEvents) -- Edited Transcript of Eclerx Services Ltd earnings conference call or presentation Thursday, January 30, 2020 at 11:30:00am GMT

TEXT version of Transcript

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Corporate Participants

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* Anjan Malik

eClerx Services Limited - Co-Founder & Non-Executive Director

* Priyadarshan D. Mundhra

eClerx Services Limited - Co-Founder & Executive Director

* Rohitash Gupta

eClerx Services Limited - CFO

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Conference Call Participants

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* Akshay Ramnani

Axis Capital Limited, Research Division - Senior Manager of IT, Internet & Telecom

* Manik Taneja

Emkay Global Financial Services Ltd., Research Division - Research Analyst

* Ruchi Burde

BOB Capital Markets Limited, Research Division - Research Analyst

* Sandip Kumar Agarwal

Edelweiss Securities Ltd., Research Division - VP

* Sumit Modi

Arete Investments - Analyst

* V.P. Rajesh

Banayan Capital Advisors Llp - Managing Partner & Portfolio Manager

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Presentation

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Operator [1]

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Good day, ladies and gentlemen, and welcome to the Q3 FY '20 Earnings Conference Call of eClerx Services Limited. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Rohitash Gupta from eClerx Services Limited. Thank you, and over to you, Mr. Gupta.

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Rohitash Gupta, eClerx Services Limited - CFO [2]

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Thank you, Margaret. Good evening. I welcome you all to eClerx earnings call for the third fiscal quarter of FY '20 ending December 2019. eClerx completed Q3 with USD 51.8 million in revenue at constant currency growth of about 3% both on sequential as well as Y-o-Y basis. Our onshore business grew strongly at about 15.8% constant currency Y-o-Y, whereas offshore business dipped marginally by about 0.1% Y-o-Y, and that was despite uptick in FTE pricing during the year.

Analytics and managed services have maintained double-digit growth on a year-over-year basis. The offshore roll-offs continued in line with the past trend, however, they were concentrated towards the calendar year-end, resulting in better Q3 growth but also posing additional pressure on Q4 revenues.

Further, we were benefited in Q3 with short-term demand for holiday season in our CLX business and also certain large milestone approvals in our fixed-price contracts.

Growth in managed services was supported by a recovery in volumes in Q3 against a rather subdued level in Q2. We are seeing some delay in ramp-up of projects that were previously won and awaiting outcomes on several RFPs that we participated over last 6 months. Overall, we expect Q4 to be a very soft quarter of this year. Lastly, we do not have any adverse news as yet on SEIS front, so we will reassess the certainty of FY '20 SEIS during our FY results.

We made great progress on margin improvement this quarter. This was a result of relentless efforts on aligning our cost base to decreasing offshore work by leveraging RPA, machine learning to reduce bench in FTE business and to improve productivity in managed services projects, reduction in the [discretionary] travel, reduction in recruitment-related costs due to lower attrition, favorable pricing and favorable hedges. Although some of these levers will sustain through the softer Q4, our margins will remain highly influenced by offshore revenue trend.

EBIT and PAT in Q3 stood at an INR 971 million and INR 699 million, respectively, which is the highest level in trailing 8 quarters. We expect our FY '20 effective tax rate to be between 26% to 27%. We are very pleased with the all-round outcome of this quarter as our margin improvement initiatives are increasing profits and cash balances. Attrition is showing early signs of moderation as we continue to put efforts to revive offshore growth in FY '21 by focusing on our core strength areas.

With this, I will open up the call for question and answers.

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Questions and Answers

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Operator [1]

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(Operator Instructions) The first question is from the line of Sandip Agarwal from Edelweiss Securities.

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Sandip Kumar Agarwal, Edelweiss Securities Ltd., Research Division - VP [2]

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Congratulations to the team for excellent execution and margin improvement. Rohitash, just wanted to know that on the margin front, we have done excellent progress in this quarter. How much more progress we can expect? I'm not asking for a guidance but the trajectory whether a sharp northward movement is still possible somewhere. Or we are like 60%, 70% done in that journey, number one.

Number two, on the growth front, with the worst growth almost behind us, are we still seeing some challenges? Again, here, the idea is not to get any number, but just trying to understand the trajectory.

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Rohitash Gupta, eClerx Services Limited - CFO [3]

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So Sandip, I will take the first and ask PD to take the second one about growth. So if you see in my comments also, a large portion of margin expansion in this quarter was contributed by those one-off revenues that came in. Some portion of that expansion will continue to accrue to us. So I think, generally, at flat revenues, we'll be better than probably where we were in Q2 and Q1. But Q3 performance, repetition looks very, very difficult in near term.

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [4]

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Sandip, this is PD. So just on your question on outlook for growth, to be completely honest, I think we've had a strong Q3, but I wouldn't say that the environment has changed dramatically. So I think we will continue to see some volatility in revenue. We'll have some strong quarters up. We may have some softness in Q4. But the outlook is still the same, I would say. Nothing much has changed. Some of our quarters in the past were pretty bad. This one was relatively good. So it's natural volatility.

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Sandip Kumar Agarwal, Edelweiss Securities Ltd., Research Division - VP [5]

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Okay. Last question which I would like to know, is that this on-site, we have seen significant deployment. So you see that this kind of trend, it was there because of lower utilization. That is what my understanding is. So is that behind us?

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Rohitash Gupta, eClerx Services Limited - CFO [6]

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Sandip, your question was not very clear. Can you repeat it?

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Sandip Kumar Agarwal, Edelweiss Securities Ltd., Research Division - VP [7]

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I'm saying that on-site utilization numbers, I'm assuming, they have gone up significantly. Is there still more scope for that improvement?

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [8]

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Sandip, this is PD. I'm not sure exactly where you're drawing that inference from. But I will say that most parts of our onshore business were already margin accretive. The one area where we had some challenges from a financial perspective was our center in Fayetteville. And it's true that with increasing utilization of that center, we've been able to amortize the fixed costs a lot better. So that center is now EBITDA positive for us. And we hope that over the course of this year, it will become positive even at the EBIT and maybe net income level.

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Operator [9]

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(Operator Instructions) The next question is from the line of Manik Taneja from Emkay Global.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [10]

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This question essentially is with regards to your opening remarks. You're suggesting that Q4 is expected to be soft. When I look at past trends, Q4 typically tends to be much better than Q3. Any particular reason why you're suggesting that Q4 will be soft? And does that imply that we could essentially be looking at sequential decline in revenues in Q4?

And the second question, once again, to prod you a little bit further on margins. You said some of these -- some of the onetime revenues that you've accrued in the current quarter could sustain with us. If you could delve deeper into that?

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Rohitash Gupta, eClerx Services Limited - CFO [11]

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Manik, so the -- I think second question I will take first because I did not say about the revenue. I said some of the margins may sustain. A small portion of margin expansion may sustain through Q4, irrespective of the revenue, but a large portion of that expansion was revenue dependent. So to the first question, if revenue were to be soft in Q4, that part of expansion will not be available to us in Q4, right? But it will -- still, hopefully, we'll be better than where we were in Q1 and Q2. So that was my comment.

Coming to your -- sorry, what was your first question?

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [12]

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So my first question was around Q4 being soft. How should we be reading that given the fact that, historically, our Q4 is when we see some onetime projects, at least that's what we've seen in the past?

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Rohitash Gupta, eClerx Services Limited - CFO [13]

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Right. So it is a mix of 3, 4 factors, which I alluded to in my comments. So one is that it depends on when the roll-offs, which were happening anyway in the quarter, actually end up happening. And luckily, they were at the year-end, which benefited us in this quarter. But that poses additional pressure on the Q4 because some unexpected roll-offs will further happen, plus whatever ended in 31 December will also add up to that downfall.

The second one was that there was some milestone approvals, et cetera, in fixed-pricing contracts that got bunched up in the quarter. And the third is CLX seasonality, which we were beneficiaries of. And it comes time to time. You are right that in some times, it would have been in Q4. In some times, it would be in the holiday season. But this time, this year, we saw it in Q3. This is pertaining to CLX seasonality.

So these were the 3 factors. And as you can imagine, many of these will not come in Q4, right, anymore.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [14]

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And how should we be reading into your comments saying that some of the deals that we've won in the past, there is some delays in terms of those project starts? Is there some vertical, some segment specific? If you could talk a little bit about it.

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Rohitash Gupta, eClerx Services Limited - CFO [15]

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Yes. The one specific example I can talk about, which actually we talked about in -- 2 or 3 calls back, so it was a large customer operations new client, offshore business. And there were several phases of that ramp-up. The first phase, we ramped successfully and it's running perfectly well in the H2. It started in September, October. However, the phase 2 ramp-up is likely getting delayed and not as per our original plans. So that's just one example, but my comment was more broad.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [16]

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Sure. And how should we be reading our -- into our employee headcount trends, given the fact that headcount essentially have been coming off on a quarter-to-quarter basis for the last several quarters now. When do we see essentially -- see this trend reversing?

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [17]

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You mean about reduction in total headcount?

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [18]

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Yes, PD.

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [19]

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I'm not sure, Manik. I'll tell you a couple of things that have happened. One is, as in the past, you experienced a loss, it takes some time for the delivery headcount to adjust to that because, basically, you have to wait for attrition to run its course. Therefore, some of the reduction in headcount that you've seen is because of that. Other factors that are driving lower headcount is more broadly automation has the effect of automating the lower end or sort of lower skill set jobs. And therefore, what's left tends to be the more complex, higher-end skill set type work, which also typically comes at higher revenue per FTE, so for the same revenue base. As you know, we've largely been planting revenues for the last 2, 3 years.

Revenue base, you have fewer build FTEs and fewer deployed FTEs because of the nature of work that you are doing. So I think we'll see our headcount numbers increase systematically once we see that revenue growth will also kick in on a sustained basis. That means you have small revenue growth of 1% or 2% a year. You may not see the headcount increase because that basically is the realization increase because of higher-end work. I mean if you have revenue increase of 8% to 10%, then, obviously, that can't all be just pricing.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [20]

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Sure. And if I can prod you a little bit further with regards to the Q4 outlook. When you essentially suggest that Q4 will be soft, are we suggesting that we could essentially see a sequential decline? Or growth may be soft?

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Rohitash Gupta, eClerx Services Limited - CFO [21]

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Manik, if I knew exact answer to that, I would have told you. So yes, I still don't have that much visibility, but I mean, it could be either of those 2 outcomes.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [22]

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Okay. And how should we be thinking about the price increases that we were seeing through this year? Are we done with most of the price increases with the FTE-based business?

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [23]

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I'll let Rohitash respond to that.

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Rohitash Gupta, eClerx Services Limited - CFO [24]

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Sorry, Manik, can you repeat the question?

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [25]

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So you've been talking about getting some price increases with your top customers. Are we done with that phase, or some more tailwind from that effect to follow through?

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Rohitash Gupta, eClerx Services Limited - CFO [26]

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Manik, it's a continuous process because for some clients, this happens in 1 quarter, for others, subsequently. So I would say a large portion of it is already done, but we are expecting 1 or 2 more to come in next 3 to 6 months. But again, every year, there'll be some discussion on this, and results could be upwards or downwards, as you can imagine, right? So in the current cycle, I think we are largely there.

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Operator [27]

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(Operator Instructions) The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.

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V.P. Rajesh, Banayan Capital Advisors Llp - Managing Partner & Portfolio Manager [28]

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With the cash building up on the balance sheet, could you comment on the capital allocation side?

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Rohitash Gupta, eClerx Services Limited - CFO [29]

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I think as we've disclosed in the past, our general thought process around this is to endeavor to return at least 50% of net income back to shareholders every year, and I think that hasn't changed. Now the mix of instruments we use to do that in terms of dividend, buybacks, et cetera, a lot of it also is a function of regulatory changes. So let's see how the tax legislation shapes up, and then we can take a call as to what is the best mix of instruments to achieve that goal.

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V.P. Rajesh, Banayan Capital Advisors Llp - Managing Partner & Portfolio Manager [30]

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Okay. Relatedly, what are you seeing on the acquisition side? Are there any plans to buy a business to augment one of the business lines or go in a different direction?

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Rohitash Gupta, eClerx Services Limited - CFO [31]

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Yes. So I'll ask Anjan to respond to that question on what acquisition opportunities we are seeing and what the thought process around that is.

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Anjan Malik, eClerx Services Limited - Co-Founder & Non-Executive Director [32]

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So we continue to be opportunistic around acquisitions. So we continue to see assets being shown to us, as they have been for the last few years. And we investigate them as far as -- until we can bring them to some logical conclusion. So at any given time and in any given quarter, we have conversations and due diligence continuing, and that's what's happening right now.

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Operator [33]

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(Operator Instructions) The next question is from the line of Akshay Ramnani from Access Capital.

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Akshay Ramnani, Axis Capital Limited, Research Division - Senior Manager of IT, Internet & Telecom [34]

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Just have one question. You mentioned that our margin was supported by some one-off revenues. So if you can quantify what was the impact on margins by these one-off revenues? And if they were not accrued in this quarter, what would -- our margins would have been, a qualitative sense on that?

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Rohitash Gupta, eClerx Services Limited - CFO [35]

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I will probably be repeating myself because I can't be more specific, not because I don't want to tell. It's just that we are also not as clear on what Q4 flat will be, right? So all I'm saying is that even if revenues remain flat at Q1, Q2 level, our margins in Q4 should be better than what we achieved in Q1, Q2. So that's all kind of direction I can give.

To your other question about quantification of one-off effects in the revenue in Q3. Again, as I largely said, the 3 factors I talked about, whether it was CLX or milestone-related things or delay in roll-offs, I would say that almost -- substantial portion of 3% sequential growth came from those 3 factors.

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Akshay Ramnani, Axis Capital Limited, Research Division - Senior Manager of IT, Internet & Telecom [36]

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Okay. And again, were these one-off revenues in your top 10 clients because I see a strong growth there as well?

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Rohitash Gupta, eClerx Services Limited - CFO [37]

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So there are 2 things. I don't know from where you are picking the data because the Y-o-Y growth is actually still...

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Akshay Ramnani, Axis Capital Limited, Research Division - Senior Manager of IT, Internet & Telecom [38]

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I'm speaking about the Q-o-Q over here.

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Rohitash Gupta, eClerx Services Limited - CFO [39]

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Yes. So as I was talking about earlier, there has been price movement upwards. And as you can imagine, this is largely in the top 10 clients, right? So some of it could be that effect. But the one-off project when I talked about, it was our CLX business, which is outside of top 10, typically.

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Operator [40]

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(Operator Instructions) The next question is from the line of Ruchi Burde from Bank of Baroda Capital Markets.

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Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [41]

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Rohitash, my question is regarding our North Carolina delivery center. Could you highlight what is the utilization that we are running today? And going ahead, what are the factors would come into play for margins or profitability there to improve?

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Rohitash Gupta, eClerx Services Limited - CFO [42]

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So I think we have to understand the utilization in the sense of its margin impact in 2 ways. One is how much of the facility is filled up, and the second is, what is the productivity of current team there, right?

On the first, as we explained even last time, I think we are nearly 80% full on the single shift basis feed capacity. So that's the similar position even in the Q3 end.

On the second factor, I think it's a little hard to say because you can't do people math simply because some of these projects as well as costs are hourly, and they get mashed more or less. So I think the second factor is not very relevant or clear in terms of its margin impact. But yes, there is some bit of training, et cetera, which is there, but that's more of a function of attrition out there rather than utilization or skill set level.

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Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [43]

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So I mean not near term but over medium term now, what would be your strategy to improve profitability at this level -- at this on-site operation? Would it largely be based on change in the billing rates? Or do you see that there is some leeway? 80% utilization, so you still have some leeway. Or is there anything else that you think would matter over medium term for the on-site business to show decent profitability?

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Rohitash Gupta, eClerx Services Limited - CFO [44]

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Ruchi, just for context, out of our -- about $50 million, $55 million onshore business, roughly half or more than that is CLX, right?

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Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [45]

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CLX, yes.

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Rohitash Gupta, eClerx Services Limited - CFO [46]

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That business works a little differently, a little more project nature and things like that. What you are talking about is probably only ...

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Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [47]

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Your Carolina center.

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Rohitash Gupta, eClerx Services Limited - CFO [48]

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Kind of number. So you have to see in that context, number one.

Number two, as part of our overall approach, we are seeing offshore and onshore business and customer operations segment as more and more linked than interrelated in the sense that some of the onshore work rubs off on offshore. Some programs are co-delivered and things like that. So our first objective since we started our Fayetteville center was to get into positive territory. And as PD mentioned, we are almost there, right, through this year, at least.

So whether we -- so we don't see too much materiality in going from 0% to 2% or 3% because it won't really show up. I think what's more important is can there be more co-delivered programs, wherein, whatever we have in Fayetteville actually is closely interlinked and protects the offshore business, which is related to that. And we are seeing some of that. So I think that's more important part of it rather than margin expansion purely Fayetteville by itself.

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Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [49]

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Understood. That's helpful. Secondly, could you share your comments regarding the health of your top 10 clients?

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [50]

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Yes. I mean this is PD. I think top 10 clients for this year are more mature client base for us. As you would have seen from the revenue growth numbers, we've had more success in growing our emerging portfolio than growing the top 10 clients, but they continue to be very important for us because, basically, we have to broaden our relationship and trust with them that they allow us to experiment with them in terms of developing new services collaboratively. So I think that's the general environment. We don't really see a big pickup in revenue in the top 10. But the hope continues to be that as we can build out the emerging business, it becomes a more stable and diversified revenue base. And also, as it becomes a larger and larger part of the business, hopefully, starts having more of a contribution to overall revenue outcome.

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Operator [51]

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The next question is from the line of [Umang Shah] from Asian Market Securities.

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Unidentified Analyst [52]

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So with respect to your top 10 clients, they form 65% of revenues right now. Would you be able to give a breakup of onshore and offshore revenue in your top 10 clients?

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Rohitash Gupta, eClerx Services Limited - CFO [53]

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So [Umang], thanks for the question. Actually, we don't disclose it in that kind of granularity. But if you look at our top 10, they are roughly 2/3 of the company. And again, at the company level, 25% is offshore. So I think if you apply the same metric for top 10, you won't be too wrong.

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Unidentified Analyst [54]

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Okay. Great. And one...

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Rohitash Gupta, eClerx Services Limited - CFO [55]

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Sorry, just one sort of correction or caveat. Keep in mind, as I previously said, CLX business is almost $25 million or thereabouts, and that's outside of top 10, yes?

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Unidentified Analyst [56]

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Okay. Well, great, that will be very quite helpful. And sir, on profitability front, is CLX profitable now? And if yes, what would be its margins?

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Rohitash Gupta, eClerx Services Limited - CFO [57]

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Actually, I think on the CLX front, we've been seeing fairly good performance through this year. So the business is profitable. I think as we indicated when we bought the business, EBITDA profitability was in the high teens. So it continues to be in and around that benchmark. Actually, it's been higher than that last quarter. But on a sustainable basis, I would say mid- to high teens.

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Unidentified Analyst [58]

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Okay. Great. Yes, perfect. A bit similar to what I think was at March '19 level also under financial year close.

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Rohitash Gupta, eClerx Services Limited - CFO [59]

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Yes. You are right. But remember -- I think you are picking from the subsidiary performance, right?

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Unidentified Analyst [60]

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Yes, yes.

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Rohitash Gupta, eClerx Services Limited - CFO [61]

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Yes. Yes.

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Unidentified Analyst [62]

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Okay. And last -- sorry, one last question is when you're deciding or when you're looking for contracts, do you look for -- or when you're booking contracts, do you look at contract-level profitability? And if yes, then how much is the difference in contracts that you sign up for offshore and onshore?

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Rohitash Gupta, eClerx Services Limited - CFO [63]

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So I think, yes, we do look internally at contract or engagement level profitability also. Typically, on -- offshore business will have 30% kind of EBITDA, give or take, or maybe more in managed services projects would mature. Onshore business, as PD explained, CLX is what we just discussed, right? So onshore is typically either Fayetteville where we just talked about as being breakeven. And the balance portion of onshore outside of CLX and Fayetteville is basically consulting business, which typically earns 15% to 25% kind of gross margin on consultants that we deploy.

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Operator [64]

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The next question is from the line of Manik Taneja from Emkay Global.

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Manik Taneja, Emkay Global Financial Services Ltd., Research Division - Research Analyst [65]

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PD, just wanted to prod you with regards to the way we've seen our S&M expenses trend. Given some of the challenges around growth, how should we be thinking about our investments on this side because they've just been coming off for a very long time now?

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Priyadarshan D. Mundhra, eClerx Services Limited - Co-Founder & Executive Director [66]

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No. Manik, I'm not sure I agree with that statement. I -- certainly it's true, I think, in the last quarter to 2, they declined a bit. I think that's just a process of adjustment of us being where we are getting return on investment in terms of different functions and different sales teams and then trying to optimize our spend. So the other side to that coin is, do you feel that you would accelerate growth outcomes if you threw more dollars at the sales team? And at this point, we feel no. I think we are not convinced that we have adequate ways to productively employ additional salespeople. So I think that is just an exercise in optimization at some level, and I think we've taken some actions in the near-past in areas where we haven't seen appropriate return.

But I'll ask Anjan also to step in and share some perspective on this topic. So here he is.

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Anjan Malik, eClerx Services Limited - Co-Founder & Non-Executive Director [67]

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Manik, our focus continues around a couple of axes. We've spoken about the importance of being much more focused on differentiation and specialization. So over the last year, 1.5 years, our focus has been in making sure that our service offering has resonance with the marketplace, and in the areas in which we're finding resonance and we have demonstrated capability and tenure. We're doubling down on our future sales. So I think our focus hasn't -- so when you see a reduction on onshore, it's not because we're dialing down on cost as much as optimizing that cost to where we feel that we get the best return. And actually, that's working to some extent.

Second axis continues to be that we made a bet, let's say, 3 years ago that we wanted to invest onshore with the following caveat that we said that onshore would drive offshore, one. Two, that onshore investments will also, to some extent, provide inside sales capability, right? So -- and I think both of those have (inaudible). So even though you see classified business numbers come down, even the fact that our consulting business, our analytics business and even the footprint in North Carolina is substantially larger than it was last year. Overall footprint is bigger.

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Operator [68]

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(Operator Instructions) The next question is from the line of Sumit Modi from Arete Investments.

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Sumit Modi, Arete Investments - Analyst [69]

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Just wanted to know that excluding the one-off projects and milestone revenues, would we still have grown on a sequential basis?

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Rohitash Gupta, eClerx Services Limited - CFO [70]

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I think, Sumit, it's the same question being asked in the fourth different way, and I can answer only the same. But all 3 factors put together led to substantially all of the 3% sequential growth that we saw. It's not fully clear whether some of these things can come, let's say, in March, which we don't have visibility to today. But largely, those factors don't need to be repeatable at least 'till the January visibility that we have now.

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Operator [71]

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(Operator Instructions) The next question is from the line of V.P. Rajesh from Banyan Capital Advisors.

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V.P. Rajesh, Banayan Capital Advisors Llp - Managing Partner & Portfolio Manager [72]

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Rohitash, just looking at these EBIT business analysis, I just want to make sure I understand this correctly. The core revenue increase of 174 million, are you saying that that came with 100% EBIT margin and that is sort of comprising of the 3 factors that you have been talking about on the call?

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Rohitash Gupta, eClerx Services Limited - CFO [73]

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That's right. Rajesh, just to add, as you can imagine, this has the price impacts also, right?

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V.P. Rajesh, Banayan Capital Advisors Llp - Managing Partner & Portfolio Manager [74]

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Yes. So that's what I was trying to figure out that's -- the 3 factors plus the pricing led to an increase of this $174 million of core revenue with 100% margin. That's the way to think about this. Okay.

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Operator [75]

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(Operator Instructions) As there are no further questions from the participants, I now hand the conference over to the management for closing comments.

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Rohitash Gupta, eClerx Services Limited - CFO [76]

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Thank you very much for joining us for this quarter's call. Look forward to talking to you next time. Thank you.

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Operator [77]

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Thank you. On behalf of eClerx Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.