U.S. Markets closed

Edited Transcript of INTELLECT.NSE earnings conference call or presentation 3-May-17 11:30am GMT

Thomson Reuters StreetEvents

Q4 2017 Intellect Design Arena Ltd Earnings Call

CHENNAI May 4, 2017 (Thomson StreetEvents) -- Edited Transcript of Intellect Design Arena Ltd earnings conference call or presentation Wednesday, May 3, 2017 at 11:30:00am GMT

TEXT version of Transcript

================================================================================

Corporate Participants

================================================================================

* Arun Jain

Intellect Design Arena Limited - Chairman and MD

* Praveen Malik

================================================================================

Conference Call Participants

================================================================================

* Mohit Jain

Anand Rathi Financial Services Limited, Research Division - Analyst, Technology

* Nishid Shah

================================================================================

Presentation

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

Thank you for standing by, and welcome to the Q4 FY '17 and full year FY '17 investor earnings call presented by Intellect Design Arena Limited. (Operator Instructions)

Now I would like to hand the conference to Mr. Praveen Malik. Over to you, sir.

--------------------------------------------------------------------------------

Praveen Malik, [2]

--------------------------------------------------------------------------------

Thank you, operator. Welcome, everyone. Thank you for joining us today to discuss Intellect Design Arena Limited consolidated financial results for the fourth quarter and the fiscal year 2016-'17 and for the full year FY '17 ending 31st March 2017.

The investor presentation and the press release is available on our website.

Our leadership team is present in this call to discuss our results. We have with us today Mr. Arun Jain, Chairman and Managing Director; Mr. S. Swaminathan, CFO; and all the CEOs of all our lines of businesses. Besides, there are some other members, senior members, of the leadership team.

As you may be aware that we are in the middle of our (inaudible). In view of the theme, we have an adviser, our legal counsel to be the (inaudible) about commenting on the forward-looking statements and certain other aspects. Hence, some of your questions may not be answered directly.

Mr. Arun Jain will touch briefly on the performance. This will be followed by question-and-answer, which will be replied by our senior members of our management team.

With this, I hand over the mic to Mr. Arun Jain for the brief on the results. Over to you, Arun.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [3]

--------------------------------------------------------------------------------

Good evening, everybody, on the call. Let me welcome my management team: Pranav Pasricha, who leads Insurance business; Manish Maakan, who is CEO of our IGTB business; Mr. Jaideep Billa, who leads our Wealth business; Mr. Venkesh Srinivasan, who's leading our TM business; Rajesh Saxena, who's the CEO of GCB business; Govind Singhal, who handles our Group Enablement function; Mr. Swaminathan, the Chief Financial Officer; Mr. Balaji, the CIO.

We just completed years '16, '17 with lots of high end (inaudible). During the year, Intellect brand has established its roots as an independent brand with trusted products, impeccable deliveries and wider reach of sales network. Last month, Intellect was recognized as #1 in retail banking systems, #2 in digital banking exchange, #1 in payment systems worldwide by IBS Annual Sales League Table 2017 among the crowded competition across the world. This has provided the right kind of tailwinds for our guests. I would like to thank each Intellect associate who contributed to this journey of transformation by applying design thinking in building digital products for financial industry worldwide.

At Intellect, we made our performance around the BELIEF model where B stands for brand, E stands for end customers, L signifies for leadership, I signifies intellectual product, E stands for execution in the business and F stands for finance capital. So this is a [cube] on which we made our capability and competency and major the business capacity, which is around brand and customer leadership, product execution and finance. In product business, the finance capital is the outcome of the first five.

But let me take the finance capital first for the Q4 '16, '17. The company (inaudible) INR 250 crores of revenue this quarter, locking growth of over 11% quarter-on-quarter. The company has fielded EBITDA, positive results and generated INR 15.64 crores of EBITDA during the quarter compared to INR 18 crores negative last quarter. Company also became PAT positive, [enduring] net profit INR 10.6 crores during the quarter.

During the quarter, we have been able to manage our costs better. The marketing, product awareness costs have come down during the quarter because we have developed sufficient pipeline for our business. We also rationalized some leakages in our cost structure. On the card and even the finance capital collection, we collected more than $40 million, close to INR 270 crores in single quarter on the back of great deliveries, resulting in 19 days reduction in DSO. That is from 180 days to 161 days.

If I take finance capital on a longer horizon since we went public, Intellect revenue has grown from INR 608 crores in FY '15 to INR 914 crores in FY '17, reaching a CAGR 22.61%.

Software license revenue has grown from INR 86 crores in FY '15 to INR 156 crores in FY '17, reaching CAGR of 34.68%. And AMC revenue has grown from INR 109 crores in FY '15 to INR 170 crores in FY '17, reaching a CAGR of 24.89%. Our annual gross margin stood at 49.3%.

Now I'll move to quality part of business. This product business is about global market leadership and driving towards crossing the chasm that has critical changes in the product business. We start from just starting the product early stages and then crossing the chasm then adoption and then monetization. So the core business that you started, one of the businesses is in early stages of crossing the chasm while the other one has reached adoption stage. The two businesses out of four have -- coming closer to the crossing the chasm.

Now let me speak about the (inaudible) of BELIEF model, that is brand and sales capital. Any product company ranked #1 in retail banking system, #2 in digital banking exchange and #1 in payment system by global research firm, IBS Intelligence, in their Annual Sales League Table. This is a cornerstone of our Intellect digital brand.

The second cornerstone is we established the thought leadership by setting up iGTB Oxford School of Transaction Banking, and the 8012, the fintech design center, is helping to get the brand to the thought leadership.

If I look at second element, which is (inaudible) is coming from balanced portfolio of advanced and emerging market customer base including the order wins recorded in this quarter Intellect stands at 209. (inaudible) of our reach and diversified customer base is (inaudible) for driving product business closer to the crossing-the-chasm stage.

It's time for me to speak about leadership, the team which we have, which is the third element of BELIEF model. Our key businesses out of 4 LOEs have very comprehensive leadership and (inaudible) strategic thinking, innovative products, (inaudible) service deliveries and (inaudible) customer engagement. Our leadership team consists (inaudible) building and new leaders during the last 2 years who are best-in-class from the competition, who love Intellect Design leadership story (inaudible) fintech space. We are fortunate to have a team of chairman as well as a council of 6 members coming from financial industry who provide (inaudible) access to the market.

Product business foundation is about productive challenge. Intellect has been built on a single (inaudible) back in 2011 because we believe that this still will be (inaudible) financial services in the coming decade. And that continues till now. Our investments in AI, the block-chains, natural language processing is continuing to keep our products on cutting edge on digital banking. Our digital transaction banking suite is uniquely positioned for helping our corporate banking customers to drive (inaudible) portfolio. (inaudible) platform is being used by more than 45 million end customers worldwide and have complete function and delivery in a simplified way by using digital apps.

The digital distribution platform created by Insurance has been accepted by leaders like Royal Bank of Canada in Canada, (inaudible) in U.K. and (inaudible) in India.

(technical difficulty)

It's like digital lending. It's like Digital Payments. It's like Digital Wealth. It's like (inaudible) influx markets. It's like (inaudible) and supply chain. And it's like (inaudible) other products driving the growth for the company.

Now moving to next point, which is devil is in the detail; that is, execution. But fifth element of this day is a final capital. During the year, 44 customers have gone live. 5 of the customers went live as single-digit (inaudible) during the user acceptance testing stage, which is one of the latest phenomena in financial service investing. 16 customers went live in this quarter. We are proud of (inaudible) ways of our clients like CIBC, RBI, (inaudible), Lloyds, HSBC, et cetera. With the number of customers going live, the (inaudible) are also growing in a sustained manner.

In conclusion, this is a satisfying year in our journey. I would like to take this opportune time for all the shareholders on the list who trusted (inaudible). I'd also like to thank all the sales warriors in the field, fighting battles with long, established period in the market and some (inaudible) proposition with under 20% more purchase. (inaudible). I would like to thank our product engineering team who have designed cutting-edge products using (inaudible), blocks chains, big data machine learning, et cetera. I would also like to thank (inaudible) delivery unit who understands the (inaudible) requirement and helps them driving the account (inaudible) as their place like true partner.

It's also the time to acknowledge the corporate support team for supporting very unique model of core (inaudible) driving the business growth, which consists of human resources, (inaudible) management, the strategy team, the finance team, legal and risk team, marketing (inaudible) for the requirement, all the businesses, and (inaudible) thankful harmonized deliveries.

Finally, I think our existence is based on our customers who loved us. The customers who loved our technology are the leading customers in the marketplace. So thanks a lot for all the customers who have (inaudible) us.

With this, I will open this platform for questions and answers. Thank you very much for participating in this conference call or investor call.

--------------------------------------------------------------------------------

Operator [4]

--------------------------------------------------------------------------------

Shall I open the lines, sir?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [5]

--------------------------------------------------------------------------------

Yes.

================================================================================

Questions and Answers

--------------------------------------------------------------------------------

Operator [1]

--------------------------------------------------------------------------------

(Operator Instructions) First question from Nishid Shah from Ambika Fincap.

--------------------------------------------------------------------------------

Nishid Shah, [2]

--------------------------------------------------------------------------------

Arun Jain, I have 2 questions. One is regarding your net borrowing. From a net cash of about 30 -- last year, you had a net cash. And from there you moved to a net borrowing this year of INR 116 crores. So what has actually happened? Why the cash has been all consumed now? The net cash of INR 31 crores last year has gone into net borrowings of INR 116 crores. So you used out INR 147 crores of cash?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [3]

--------------------------------------------------------------------------------

Yes. That's the nature of business.

--------------------------------------------------------------------------------

Nishid Shah, [4]

--------------------------------------------------------------------------------

Sorry?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [5]

--------------------------------------------------------------------------------

That's the investment required for this nature of business where we need investments for driving business growth and building product.

--------------------------------------------------------------------------------

Nishid Shah, [6]

--------------------------------------------------------------------------------

So my issue is very simple. Why did we change the policy of writing off all the product development expenses? And what is the point of showing a profit when actually we are not making profit. You see, before this year, while I look at your balance sheet, the intangible assets under development has gone up from INR 32 crores to INR 134 crores. So that means that this year you're incrementally deferred INR 102 crores of product development expenses.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [7]

--------------------------------------------------------------------------------

Thank you very much for this question. It will clarify of lot of other investor to understand what the business of -- nature of business we work in. The capital addition practice is a global practice of the product competition. We are a product leader, global product company designed for global competition. And we follow the practices, as I mentioned in earlier business calls, but we follow the industry practices, which are global industry practices of our competition. And I think all our practices of capitalization when removed last year was advised to us, that we should align ourselves with a global competitor in that space. So maybe I think we need to educate our investors more to see what models are there because this is (inaudible) product industry, which is very new to the Indian space compared to the global market space.

So thank you for asking these questions. So this helped me out in clarifying that.

--------------------------------------------------------------------------------

Nishid Shah, [8]

--------------------------------------------------------------------------------

That doesn't answer my question. I mean, when are we going to see the products actually starting to show the results? I mean, fine. I'm fine with INR 130 crores, INR 135 crores, INR 140 crores of -- for the expenditures so long as those products are meaningful and they are going to give us returns in the future. But this has been going on for the last 2 years. I mean, we have grown practically in the low double digits, 12% caliber top line growth. And your expenses have shot up substantially. So in that light, I would like some more clarification, please.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [9]

--------------------------------------------------------------------------------

The clarification is that the business has grown from INR 600 crores 2 years back to INR 900 crores, 22% (inaudible) cannot be achieved without (inaudible) investments. The best kind of model -- anyway, maybe we will get on to this next question.

--------------------------------------------------------------------------------

Operator [10]

--------------------------------------------------------------------------------

Next question comes from (inaudible) from (inaudible) Associates.

--------------------------------------------------------------------------------

Unidentified Analyst, [11]

--------------------------------------------------------------------------------

My question was since we have already filed the (inaudible) having prospectus for the rights issue, by when are we likely to announce the final dates of the rights issue?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [12]

--------------------------------------------------------------------------------

I think our teams are working on rights issue. So we are looking as quickly as possible to get the issue on the table. So I think that I cannot able to do it. So I think we got an observation from (inaudible), which we are probably (inaudible) observation. We'll be filing a (inaudible) in the next few days. And let's see when we can come out of it.

--------------------------------------------------------------------------------

Unidentified Analyst, [13]

--------------------------------------------------------------------------------

Have we got full clearance from (inaudible)? Or are there any objections or any observations?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [14]

--------------------------------------------------------------------------------

We got (inaudible) observation (inaudible) from (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst, [15]

--------------------------------------------------------------------------------

Okay. So it's up to the company to decide as to when to come now?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [16]

--------------------------------------------------------------------------------

That's right. Some people want it to be completed. (inaudible) announcement. We need to complete (inaudible).

--------------------------------------------------------------------------------

Operator [17]

--------------------------------------------------------------------------------

The next question comes from (inaudible) from MH Capital. You may speak.

--------------------------------------------------------------------------------

Unidentified Analyst, [18]

--------------------------------------------------------------------------------

My question is your gross margin stand at around 50%. So how sustainable are they at the levels which is going higher at 50%? That's my first question.

And my second question is in regard to the rights issue and your shareholding. Currently, I see your shareholding from the promoter group is a little less than 30%. With the rights issue on [cars], won't it further dilute the promoter holding, which could be a concern for minority shareholders? That's my 2nd question. That would be all from my side.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [19]

--------------------------------------------------------------------------------

Let me handle the first question. Rights issue doesn't dilute equity. The rights issue allows every shareholder to participate in the same proportion. So the proportion doesn't change after the rights issue for the promoter.

And first question was?

--------------------------------------------------------------------------------

Unidentified Analyst, [20]

--------------------------------------------------------------------------------

In regards to the sustainability of the markings, which currently are at 50%.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [21]

--------------------------------------------------------------------------------

(inaudible) margins are sustained. So that is track record. So it's sustainable.

--------------------------------------------------------------------------------

Operator [22]

--------------------------------------------------------------------------------

Next question comes from Mohit Jain from Anand Rathi.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [23]

--------------------------------------------------------------------------------

First is on the deal pursuit, like you -- I couldn't find any data in your presentation. But if you could help us understand what kind of pipeline we have for '18, both in terms of number (inaudible).

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [24]

--------------------------------------------------------------------------------

(inaudible) I think we can't share this further right now. We used to share earlier but (inaudible) not able to share that.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [25]

--------------------------------------------------------------------------------

Anything in terms of like why increase or any movement, which you can --

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [26]

--------------------------------------------------------------------------------

Just a (inaudible) rights issue, that's all we'll share with you.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [27]

--------------------------------------------------------------------------------

So second, I missed your initial remark on number of clients for this year. What is the total number for FY '17.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [28]

--------------------------------------------------------------------------------

The total number as of now, which stands 209.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [29]

--------------------------------------------------------------------------------

These are active clients for FY '17 number?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [30]

--------------------------------------------------------------------------------

(inaudible). It's all active clients.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [31]

--------------------------------------------------------------------------------

And this number for FY '16?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [32]

--------------------------------------------------------------------------------

'16 number. I don't have right now. I'll share with you.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [33]

--------------------------------------------------------------------------------

Was it last time when you disclosed? I think it was closer to 280 or something.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [34]

--------------------------------------------------------------------------------

No, no, no.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [35]

--------------------------------------------------------------------------------

Okay. So I'll get it --

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [36]

--------------------------------------------------------------------------------

We'll share with you, Mohit.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [37]

--------------------------------------------------------------------------------

The third is reason of breakup is also missing. So what drove this part of the (inaudible) before the (inaudible) quarter?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [38]

--------------------------------------------------------------------------------

Which -- region the totals come from.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [39]

--------------------------------------------------------------------------------

Regional breakup of revenue.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [40]

--------------------------------------------------------------------------------

Okay. So I think it was this 2% we can just put it on. Is your question is that the (inaudible) year-over-year (inaudible) could all come from advanced market and 476 --

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [41]

--------------------------------------------------------------------------------

That I noted I was trying to find a split between Europe and U.S.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [42]

--------------------------------------------------------------------------------

Okay. Europe and U.S., we don't give it right now.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [43]

--------------------------------------------------------------------------------

So that will not available to us at this quarter?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [44]

--------------------------------------------------------------------------------

No, not for this quarter. We'll (inaudible) in rights issues. We need to share in the same manner. So that's a limitation we have. Otherwise, we'll (inaudible) next time.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [45]

--------------------------------------------------------------------------------

Okay. (inaudible) how much was capitalizing for this particular quarter?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [46]

--------------------------------------------------------------------------------

This quarter is 28.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [47]

--------------------------------------------------------------------------------

And any change in expenses, like when we are building in expenses for next year? We had seen the production in SG&A and R&D. Is it more like a onetime production or should we expect this level to be maintained for (inaudible) ?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [48]

--------------------------------------------------------------------------------

This is -- how much (inaudible) of this model start, 1 common model? It varies from quarter-to-quarter. But, of course, in earlier, lesser events, it doesn't (inaudible) savings in the quarter [4]. But in the future, we can't even communicate about it to you because of rights issue, but that particular pattern is there.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [49]

--------------------------------------------------------------------------------

But last year, you had a jump in 4th quarter. This time you have a drop.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [50]

--------------------------------------------------------------------------------

Yes. This time we are bringing up full -- full customer pipeline was strong enough. So we look at it that is how much marketing dollars (inaudible) were spent on this (inaudible) of pipelines (inaudible).

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [51]

--------------------------------------------------------------------------------

But like shouldn't we expect any step-up function in FY 18, right? Is that a fair assumption or?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [52]

--------------------------------------------------------------------------------

Let me just resolve this question.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [53]

--------------------------------------------------------------------------------

On taxation, can you comment on what could it be for FY '18? And what kind of [ride back] we got in this particular quarter?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [54]

--------------------------------------------------------------------------------

Again, these are (inaudible) We're looking for (inaudible) legal counsel sitting next to me. (inaudible).

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [55]

--------------------------------------------------------------------------------

Last one. I'm playing this out. Any comment on (inaudible) can you make or...

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [56]

--------------------------------------------------------------------------------

(inaudible) published.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [57]

--------------------------------------------------------------------------------

(inaudible) like 161 is the number or like...

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [58]

--------------------------------------------------------------------------------

That's sustainable.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [59]

--------------------------------------------------------------------------------

That's sustainable. Okay.

--------------------------------------------------------------------------------

Operator [60]

--------------------------------------------------------------------------------

Next question comes from Nishid Shah from Ambika Fincap.

--------------------------------------------------------------------------------

Nishid Shah, [61]

--------------------------------------------------------------------------------

I was just looking at your (inaudible), INR 176 crores and INR 56 crores in financial averages. So this aggregates to almost INR 230 crores. So (inaudible) rights issues that we are connect of cash position, (inaudible). So you need actually a much bigger rights issue than INR 200 crores.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [62]

--------------------------------------------------------------------------------

(inaudible)

--------------------------------------------------------------------------------

Nishid Shah, [63]

--------------------------------------------------------------------------------

(inaudible). While I agree on one side that people like to see profit globally -- and these are rational for doing a deferment on the product development costs, but then right from (inaudible) to TCS to all the companies in software services business or even in products business. They have cash. And we are in a unique position that we are in a borrowing situation. Even after we do a couple of rights issue, we'll still be in a net borrowing position.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [64]

--------------------------------------------------------------------------------

Nishid, (inaudible) permission system, but we can (inaudible) IT product space is here. [Foreign language spoken].

So one data point is right with you. You already have is INR 217 crores.

--------------------------------------------------------------------------------

Nishid Shah, [65]

--------------------------------------------------------------------------------

Right.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [66]

--------------------------------------------------------------------------------

The cash in the balance sheet is also INR 140 crores --

--------------------------------------------------------------------------------

Nishid Shah, [67]

--------------------------------------------------------------------------------

I see that.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [68]

--------------------------------------------------------------------------------

I don't know. (inaudible) numbers there?

--------------------------------------------------------------------------------

Unidentified Company Representative, [69]

--------------------------------------------------------------------------------

(inaudible) on appendix.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [70]

--------------------------------------------------------------------------------

This is a product strategy. And I think (inaudible) where to invest in our business.

--------------------------------------------------------------------------------

Mohit Jain, Anand Rathi Financial Services Limited, Research Division - Analyst, Technology [71]

--------------------------------------------------------------------------------

What I'm try to get at is that are we still in an investment phase for another 2 years?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [72]

--------------------------------------------------------------------------------

We'll remain in an investment phase (inaudible). There's no question of (inaudible). You need to be constantly investing. There's nothing, call it, this phase or that phase of the investment because (inaudible) the thing is just technology. It may well. It's still not profitable (inaudible). It will be (inaudible).

--------------------------------------------------------------------------------

Nishid Shah, [73]

--------------------------------------------------------------------------------

I want to correct you. (inaudible) is now very profitable. Do you see the numbers? I think they are very profitable now. I take your point and I got my answer. Thank you very much.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [74]

--------------------------------------------------------------------------------

(inaudible) investments what you want to do here. Let me clarify to all the (inaudible) investors (inaudible). We can't be just keeping (inaudible) baseline and then compare (inaudible).

--------------------------------------------------------------------------------

Operator [75]

--------------------------------------------------------------------------------

Next question comes from (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst, [76]

--------------------------------------------------------------------------------

Last year, we had issues because of the Brexit and (inaudible) vertical. So this year, are you going to see vibrancy because of some of the peers they're talking of (inaudible), the outlook there?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [77]

--------------------------------------------------------------------------------

Looking (inaudible), that's only I can comment. I cannot comment on future (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst, [78]

--------------------------------------------------------------------------------

Looking good. Answers -- we have (inaudible) on INR 100 crores this year, so that will be similar amount for next year?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [79]

--------------------------------------------------------------------------------

(inaudible) R&D costs in the last 2 years.

--------------------------------------------------------------------------------

Unidentified Analyst, [80]

--------------------------------------------------------------------------------

So that will be capitalized. What is the going into the balance sheet? Around INR 100 crores?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [81]

--------------------------------------------------------------------------------

I mean, we can't tell exactly future amount. But I think this is a pattern which we had from last year, which you can just extrapolate if you want to.

--------------------------------------------------------------------------------

Unidentified Analyst, [82]

--------------------------------------------------------------------------------

(inaudible) if I'm right is INR 80 crores? I mean, (inaudible).

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [83]

--------------------------------------------------------------------------------

That's right. That's right.

--------------------------------------------------------------------------------

Unidentified Analyst, [84]

--------------------------------------------------------------------------------

INR 80 crores.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [85]

--------------------------------------------------------------------------------

That's right. So I mean, that's (inaudible) was saying.

--------------------------------------------------------------------------------

Unidentified Analyst, [86]

--------------------------------------------------------------------------------

So I mean, after the rights issue, we will move to a net cash. And so this will be the last time (inaudible) because now the margin target is including and --

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [87]

--------------------------------------------------------------------------------

(inaudible) the rights issue (inaudible)

--------------------------------------------------------------------------------

Operator [88]

--------------------------------------------------------------------------------

Next question comes from (inaudible) from [Transient].

--------------------------------------------------------------------------------

Unidentified Analyst, [89]

--------------------------------------------------------------------------------

(inaudible) could you speak a bit about this (inaudible) space in India where 10 licenses were allowed to (inaudible) very little business out of it? And how does that (inaudible) was off the existing client for us?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [90]

--------------------------------------------------------------------------------

So we haven't gone live (inaudible) in this quarter. And complete end-to-end technology has been delivered to them. One of the best is just technologies have been implemented in small financing.

--------------------------------------------------------------------------------

Unidentified Analyst, [91]

--------------------------------------------------------------------------------

Secondly, my question is for (inaudible). The payments for that in the iGCB space has already reached the adoption stage. Now as you mentioned in the current presentation that we're getting good feedback in the market and good (inaudible) when you were talking about the idea so really well. Do you see the inching towards the (inaudible)? Can you talk a bit about it?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [92]

--------------------------------------------------------------------------------

No. This is, again, a forward-looking statement. So commenting on this product, we share that we got an [accolade] and in the circulation, which is one-way definition. So when we see #1 in payment space, it's (inaudible) by definition. And that's the way we can drive our growth product. I have mentioned in my address that curtailments we get and these kind of recognitions are there. #1 in the global marketplace is a great place to be.

--------------------------------------------------------------------------------

Operator [93]

--------------------------------------------------------------------------------

Next question comes from (inaudible).

--------------------------------------------------------------------------------

Unidentified Analyst, [94]

--------------------------------------------------------------------------------

That's one bigger point. What is the total capitalization for the year and total CapEx for the year?

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [95]

--------------------------------------------------------------------------------

(inaudible) is the new product development is at INR 98 crores.

--------------------------------------------------------------------------------

Unidentified Analyst, [96]

--------------------------------------------------------------------------------

INR 98 crores.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [97]

--------------------------------------------------------------------------------

That is a major (inaudible). The (inaudible) new product development, the regular CapEx, about INR 20 crores.

--------------------------------------------------------------------------------

Unidentified Analyst, [98]

--------------------------------------------------------------------------------

(inaudible) crores.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [99]

--------------------------------------------------------------------------------

(inaudible) 98 indiscernible]

--------------------------------------------------------------------------------

Unidentified Analyst, [100]

--------------------------------------------------------------------------------

(inaudible) INR 22 crores.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [101]

--------------------------------------------------------------------------------

(inaudible) is INR 22 crores, 120.

--------------------------------------------------------------------------------

Operator [102]

--------------------------------------------------------------------------------

There are no further questions from the participants, sir.

--------------------------------------------------------------------------------

Arun Jain, Intellect Design Arena Limited - Chairman and MD [103]

--------------------------------------------------------------------------------

Thank you very much. Thank you very much for participating. And if you have any other questions out there, connect Praveen Malik, Investor Relations.

Thank you very much for your participation.

--------------------------------------------------------------------------------

Unidentified Company Representative, [104]

--------------------------------------------------------------------------------

Thank you, everybody. Thanks, operator. You can close the call now.

--------------------------------------------------------------------------------

Operator [105]

--------------------------------------------------------------------------------

That does concludes our conference for today. Thank you for participating on the lines conferences. You may all disconnect now. Thank you all.