U.S. Markets closed

Edited Transcript of NIITTECH.NSE earnings conference call or presentation 23-Jul-19 12:30pm GMT

Q1 2020 NIIT Technologies Ltd Earnings Call

Jul 26, 2019 (Thomson StreetEvents) -- Edited Transcript of NIIT Technologies Ltd earnings conference call or presentation Tuesday, July 23, 2019 at 12:30:00pm GMT

TEXT version of Transcript

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

Corporate Participants

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

* Abhinandan Singh

NIIT Technologies Limited - Head of IR and M&A

* Sudhir Singh

NIIT Technologies Limited - CEO

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

Conference Call Participants

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

* Aniket Pande

Prabhudas Lilladher Pvt Ltd., Research Division - Analyst

* Ashish Aggarwal

Principal Mutual Funds - Senior Research Analyst

* Dipesh Mehta

SBICAP Securities Ltd., Research Division - Information Technology Analyst

* Madhu Babu

Centrum Broking Limited, Research Division - Research Analyst

* Pankaj Kapoor

JM Financial Institutional Securities Limited, Research Division - Director of India IT Services and Software Equity Research

* Rahul Jain

Dolat Capital Market Pvt. Ltd., Research Division - VP of Research

* Ravi Menon

Elara Securities (India) Private Limited, Research Division - VP of IT Services & Internet and Analyst

* Ruchi Burde

BOB Capital Markets Limited, Research Division - Research Analyst

* Sandeep Shah

CIMB Research - VP

* Shashi Bhusan

Axis Capital Limited, Research Division - Executive Director of IT and Telecom

* Shradha Agrawal

Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile

* Shyamal Dhruve

PhillipCapital (India) Pvt. Ltd., Research Division - Analyst

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

Presentation

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

Operator [1]

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

Ladies and gentlemen, good day, and welcome to NIIT Technologies Q1 FY '20 Earnings Conference Call. (Operator Instructions) Please note that this conference is being recorded.

I now hand the conference over to Mr. Abhinandan Singh, Head, Investor Relations and M&A and IT Technologies. Thank you, and over to you, Mr Singh.

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

Abhinandan Singh, NIIT Technologies Limited - Head of IR and M&A [2]

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

Good evening, and welcome, everyone, to our Q1 FY '20 earnings conference call. You have already received our e-mails with the results. The same are also available at our website, www.niit-tech.com.

Present around with me on this call today are Mr. Sudhir Singh, our CEO; and Mr. Sanjay Mal, our CFO. We will begin today's forum with opening remarks by our CEO, Mr. Sudhir Singh. And after that, the floor will be open for your questions.

With that, I would now like to hand over the floor to Sudhir.

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

Sudhir Singh, NIIT Technologies Limited - CEO [3]

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

Thank you, Abhinandan, and a very good evening and good morning to you across the world, folks. We are pleased to report that we just registered a good performance in fiscal year '20 quarter 1. As I walk you through the results, I would like right to call out the framework under which I shall articulate things.

You are aware that in April 2019, we divested the GIS business. And on June 14, 2019, we closed the WHISHWORKS acquisition. As indicated in the last quarterly call, I shall be discussing numbers and analysis only in the context of the continuing business, which excludes the GIS business and consists of only 0.5 month's revenue from WHISHWORKS during the quarter.

So with that, I'm going to move on and roll on to the revenue analysis. We would like to share that revenues on an organic basis, net of the divested GIS and the acquired WHISHWORKS businesses, registered a quarter-on-quarter growth in constant currency of 4%. This growth comes on the back of a 1.3% growth in constant currency in the previous quarter.

In constant currency terms, BFS expanded 2.8% quarter-on-quarter, contributing to 16.5% of revenue. Travel & Transport was up 5.9% quarter-on-quarter, contributing to 28.3% of revenue; and Insurance grew 6.6% quarter-on-quarter, contributing 29.1% of overall revenues. Other segments collectively grew 1.5% quarter-on-quarter, and they now represent 27% of overall revenues.

From a geo perspective, Americas, EMEA, APAC and India contribute 49%, 35%, 11% and 5%, respectively, of the revenue mix. The top 5 clients now contribute 27.2% of the total revenue and the top 10 and top 20 contribute 38.8% and 53%, respectively, of the total revenue.

The broad-based growth is reinforced by the number of million-dollar-plus clients, which stood at 91 this quarter, after excluding 2 of GIS clients. On-site revenues was stable quarter-on-quarter at 66% of total revenues.

With that, I want to close the revenue section and move on to margin analysis.

On margins, we are pleased to report that we registered a good performance in quarter 1. EBITDA margin for the quarter under review, adjusted for onetime nonrecurring expenses, stood at 17.1%. This reflects the negative impact of 240 bps on account of annual rate hikes, which take effect in quarter 1 every year. A 90 bps negative impact on account of booking the annual EBITDA fining costs in this quarter alone is also part of this margin number. Finally, the upside of 90 bps from the adoption of Ind AS 116 accounting standards is also baked into these numbers.

The onetime nonrecurring expenses during the quarter were INR 235 million, translating to a negative impact of 240 bps. The effective tax rate for the quarter stood at 26.2%, which reflects capital gains tax incurred on the sale of the GIS business. Net profits for the quarter, adjusted for onetime nonrecurring items, are INR 1,021 million.

That was the margin story. Rolling on to the order intake analysis.

The order intake story remains positive. We secured fresh business of USD 175 million during the quarter. This number represents the ninth consecutive quarter of increase in order intake numbers. Out of this USD 175 million order intake, the U.S. contributed USD 100 million; EMEA as a geo contributed USD 58 million; and we secured USD 17 million from rest of the world. 11 new customers were added during the quarter.

As I noted in the last quarter, we have timed our hunting engine to focus on select-but-highly scalable projects. We have also repurposed some of our hunters to drive accelerated growth across existing accounts. The order book executable over the next 12 months has expanded, and it now stands at USD 395 million.

The delivery operations of the firm continued to create real-world impact across our 3 chosen verticals. The touch point kiosks rolled out for one of the largest airlines in the world, where we developed the entire software and constructed the cloud-based solution, is now live and operational.

For a robo advisory firm, we completed the transition of their entire technology stack from another vendor in 4 weeks flat. Our DMS framework, AutoEasy, was rolled out fully across the key national market for one of the automotive majors. Our recently created [Mix Pro] framework in the data analytics space that essentially consists of industry-specific jump-start use cases, built leveraging [quota] ML on a data leg backbone, has crossed 15 -- it's actually crossed the 15 use case milestone.

Furthermore, in line with our focused initiatives around automation, cloud integration and data, our team at the Cognitive CoE has been hands down delivering on our vision of Engage with the Emerging with AI, artificial intelligence. We created a core technical group on AI this past quarter. This charter is to work with academia to commercialize the latest research and engage with our clients on advanced AI use cases. Our intent is to make AI real, exploitable and explainable, all the while delivering business value to our clients.

Our [BPS] team also provides this human envelope for those advanced AI use cases where manual data allocations are required. And as an example, at NIIT Technologies, we are ensuring that we embrace AI-based technologies internally as well. We have developed and productionized an HR Digital assistant called [NIRA], which helps communicate benefits like leave, policies, et cetera to all employees and uses committed services such as language speak, speech and knowledge mining.

At a large financial institution in the U.S., we are helping and creating an advisory relationship platform using NLP, natural language processing, capabilities to better target client customers as well. And finally, at a large talent management firm in Switzerland, we have retooled their products to include cognitive services, driving more effective recruit map and strengthening the recruitment engine, along with streamlining their HR evaluation processes.

While these are just few use cases, we shall continue to invest and build our capabilities in AI across all our verticals and horizontals, which is core, again, to our strategy of transform at the intersect.

With that, I'm going to roll on to the people section. The total headcount at the end of the quarter was 10,297. This includes an addition of 275 on account of WHISHWORKS and a reduction of 363 people due to the GIS business divestment. The net increase in headcount on an organic basis was 122 during the quarter. Utilization during the quarter has risen to 80.5%. Our attrition stood at 12.9%.

Moving on quickly to 3 bullet items around the balance sheet. The cash and bank balances stood at INR 7 billion, INR 7,296 million. The CapEx spend during the quarter was INR 339 million. The DSO at the end of the quarter were at 67 days of sales outstanding. You will recall last quarter, this was 62 days. And the DSO, including unbilled, is at 83 days.

A quick commentary on the hedge position. Outstanding hedges in USD are $69 million at an average rate of INR 73.09 to the dollar -- U.S. dollar. In British pounds, we have GBP 13.05 million outstanding at INR 95.94 to the British pound. And in euro, it is EUR 4.5 million at INR 85.53 to the euro.

Finally, the outlook. Overall, for the quarter and under review, the company clocked good revenue and margin growth. The fundamentals of the business are strong, and we continue to plan for robust, predictable and profitable growth in the future.

That was the update from my end, folks. Abhi, I'm going to hand this back to you.

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

Abhinandan Singh, NIIT Technologies Limited - Head of IR and M&A [4]

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

Operator, let's please open the floor for questions.

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

Questions and Answers

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

Operator [1]

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

(Operator Instructions) The first question is from the line of Shyamal Dhruve from PhillipCapital.

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

Shyamal Dhruve, PhillipCapital (India) Pvt. Ltd., Research Division - Analyst [2]

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

Congrats on a good set of numbers. So my first question is on the growth in EMEA region, so like a large part of it, that would be from Europe. And why are the competitors who witnessed headwinds in the Europe geography in this quarter. So which part -- like which verticals are helping in -- helping us in growing at a very strong rate?

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

Sudhir Singh, NIIT Technologies Limited - CEO [3]

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

So the growth in EMEA and in Europe, specifically to the question that you asked, Shyamal, is coming from the insurance and the travel verticals for us. There's also an additional upside that's coming from the 16, 15 -- 16 days of revenue on WHISHWORKS from last quarter that we recognized.

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

Shyamal Dhruve, PhillipCapital (India) Pvt. Ltd., Research Division - Analyst [4]

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

Okay. And how much -- sorry, I missed on the remarks, so how much would be the revenue from the WHISHWORKS in this quarter?

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

Sudhir Singh, NIIT Technologies Limited - CEO [5]

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

The revenue from WHISHWORKS in Indian rupee million terms in the quarter was INR 108 -- INR 108 million.

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

Operator [6]

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

The next question is from the line of Madhu Babu from Centrum Broking.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [7]

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

Yes, so congrats on a good quarter. So in terms of core vertical travel, what is the potential of selling digital services to the airlines? I think you have around 50 clients. So how many have we penetrated through the digital or UX, CX kind of -- related kind of work?

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

Sudhir Singh, NIIT Technologies Limited - CEO [8]

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

Almost all of them had been penetrated through the digital route because travel at this stage is a vertical, not just at this stage, Mr. Babu, has been a big consumer of digital services, especially when it comes to services centered around customer experience and ancillary revenue creation.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [9]

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

Okay. And sir, last quarter, we said that we formed -- when we have -- we disclosed about that tight consulting team around 27 people. So how is the progress there? And what other technical hiring we have done this quarter? Any fresh additions on the management side?

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

Sudhir Singh, NIIT Technologies Limited - CEO [10]

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

That's an ongoing process, Mr. Babu. So the technology consulting group that we talked about continue to focus on enterprise architecture as it's [train] core focus. And we continue to add automation architects, cloud architects, data architects and integration architects. So the progress there has been satisfactory from our point of view.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [11]

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

Sir, and lastly, on the capital allocation. What was the payout for interest? And I think the -- one more tranche was supposed to be done in May. So what was the total in -- for the interest in? And where -- how is the transition happening? Because the earlier term there was supposed to exit now?

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

Sudhir Singh, NIIT Technologies Limited - CEO [12]

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

We paid out 95 crores -- INR 95 crores, Mr. Babu.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [13]

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

So total for interest until now, I think, the amount is available, sir, from right -- from the start of acquisition. We had different tranches overall, so the total payout was [220]...

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

Sudhir Singh, NIIT Technologies Limited - CEO [14]

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

We have to stand back and look across the years and aggregate it, and we will get back to you. The indicated number at this stage would be about [INR 450-odd crores].

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

Operator [15]

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

(Operator Instructions) The next question is from the line of [Patel Nikhil] from CGS-CIMB.

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

Sandeep Shah, CIMB Research - VP [16]

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

Hi, this is Sandeep here on behalf of (inaudible). Congrats, sir, on a good set of numbers. I just wanted to understand, there are some companies talking about client-specific issues because of some delay in project starts or ramp ups of that sort. And NIIT has been witnessing any line-specific issue or delay or ramp-up of projects as well as in terms of conversion of deal pipeline into deal wins. Is it taking slightly longer than expected?

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

Sudhir Singh, NIIT Technologies Limited - CEO [17]

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

Sandeep, as you might have noticed on the numbers that we shared, our top 5 and top 10 account growth, we've seen some softness around the BFS space in one of our top 5 clients. And to that extent, the feedback that we have is consistent with what we noticed as well.

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

Sandeep Shah, CIMB Research - VP [18]

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

Okay. Okay. So can you -- is it more into that -- you should be in the capital markets, right?

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

Sudhir Singh, NIIT Technologies Limited - CEO [19]

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

Datas for us is largely capital markets and that's why you've seen the softness right on this quarter.

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

Sandeep Shah, CIMB Research - VP [20]

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

Okay. Okay. Any nature of this softening in terms of -- is it the cancellation? Is it the delay? Is it -- how does it play?

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

Sudhir Singh, NIIT Technologies Limited - CEO [21]

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

It's very difficult to characterize it, Sandeep. But what we've seen at this stage has been the IT spend getting compressed into financial pressures, business pressures.

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

Sandeep Shah, CIMB Research - VP [22]

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

Okay. Okay. And this is a U.S. base or euro, basically?

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

Sudhir Singh, NIIT Technologies Limited - CEO [23]

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

It's about 5 clients, Sandeep. As you're aware, we don't give out year-over-year breakout of our top 5 clients.

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

Sandeep Shah, CIMB Research - VP [24]

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

Okay. Okay. Any other client-specific issue within top 10 or top 20?

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

Sudhir Singh, NIIT Technologies Limited - CEO [25]

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

None at this stage.

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

Sandeep Shah, CIMB Research - VP [26]

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

Okay. Okay. Okay. But sir, I think you have been successfully consistently improving the order intake on a Q-on-Q basis. So you believe that you have enough business on the table, which will help you to compensate such issue and may not break the growth momentum significantly.

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

Sudhir Singh, NIIT Technologies Limited - CEO [27]

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

As I said, Sandeep, in my closing remarks around the outlook, right, we believe that the fundamentals of the business are strong. And we continue to plan for -- we don't give guidance, of course, but we continue to plan for robust, predictable and profitable growth.

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

Sandeep Shah, CIMB Research - VP [28]

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

Okay. Okay. Sorry. Actually, I joined late so sorry for -- if I asked this question again.

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

Sudhir Singh, NIIT Technologies Limited - CEO [29]

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

No problem at all. Thank you for your question. We appreciate the fact that you made time for us.

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

Sandeep Shah, CIMB Research - VP [30]

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

Yes. And last thing, sir, in terms of this nonrecurring expenses, any more details can you share in terms of nature and how necessary, if it was, the ex gratia payment and all that? So this was for -- because it comes in the SG&A line, it doesn't show in the direct cost.

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

Sudhir Singh, NIIT Technologies Limited - CEO [31]

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

Sure. The nonrecurring payments for professional expenses related to the WHISHWORKS and to the GIS transaction, and they're also related to a onetime and ex gratia payment to employees in light of their continued association with the company.

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

Sandeep Shah, CIMB Research - VP [32]

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

Okay. Okay. So that ex gratia is largely in the SG&A line? Yes?

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

Sudhir Singh, NIIT Technologies Limited - CEO [33]

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

That's correct.

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

Operator [34]

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

The next question is from the line of Ashish Aggarwal from Principal Mutual Fund.

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

Ashish Aggarwal, Principal Mutual Funds - Senior Research Analyst [35]

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

So I just wanted to understand, first of all, on the profitability front. How should we now look at your EBIT margin? I'm thinking EBIT because of the Ind AS 116 effect, right? So is there any major headwinds now left into the business, which would have an impact on the margins going forward?

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

Sudhir Singh, NIIT Technologies Limited - CEO [36]

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

Ashish, we remain consistent with what we've said over the past few quarters. We believe we had indicated that we are planning for an 18% EBITDA, and we stay aligned with that plan for now.

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

Ashish Aggarwal, Principal Mutual Funds - Senior Research Analyst [37]

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

Okay. No, because Ind AS 116 would give you almost 100 basis points of tailwinds, so to speak. So that's why I was looking at more on the EBIT side, not on the EBITDA side.

And also, sir, I wanted to understand, apart from your one of your top 5, is there any other primary issue? Because I was looking at your -- the non -- the other 6 to 7 -- 10 client, right? The revenues from those have also looked -- seem to have declined. Is there any concern around there? Or...

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

Sudhir Singh, NIIT Technologies Limited - CEO [38]

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

Not at this point, Ashish. It's the revenue -- the softening that we'd indicated. And in the client spend and one of our top 5 clients that is going down, to a large extent, into the numbers that you see for top 10 as well.

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

Operator [39]

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

The next question is from the line of Ravi Menon from Elara Securities.

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

Ravi Menon, Elara Securities (India) Private Limited, Research Division - VP of IT Services & Internet and Analyst [40]

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

My first question is about the ex gratia payment. Is this lighter than (inaudible) and you have to change the holding from promoters to private equity players that want to be better -- it's a onetime nonrecurring expense?

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

Sudhir Singh, NIIT Technologies Limited - CEO [41]

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

It's a onetime nonrecurring expense, and it's not an expense that is likely to -- as we called out, it's not an expense that's likely to recur. And that onetime nonrecurring expense also included professional expenses associated with the WHISHWORKS and the GIS transactions.

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

Ravi Menon, Elara Securities (India) Private Limited, Research Division - VP of IT Services & Internet and Analyst [42]

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

And that's all together INR 235 million?

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

Sudhir Singh, NIIT Technologies Limited - CEO [43]

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

That is absolutely correct. Yes.

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

Ravi Menon, Elara Securities (India) Private Limited, Research Division - VP of IT Services & Internet and Analyst [44]

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

Okay. And the CapEx of INR 339 million, given that your capital is already fully [considered by] (inaudible) correctly. What was this leading to?

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

Sudhir Singh, NIIT Technologies Limited - CEO [45]

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

Quarter 1 for us tends to be a higher CapEx quarter because this is a quarter in which we actually go ahead and buy our annual licenses or renew the licenses. Our CapEx for the year will remain consistent with the spend in the past and with last year. Q1 tends to be a spike on account of licenses, which is what you're seeing. But overall, the aggregate will stay consistent with the numbers for last year.

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

Ravi Menon, Elara Securities (India) Private Limited, Research Division - VP of IT Services & Internet and Analyst [46]

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

And one last question, if I may. The financial services capital markets, is it only in asset management [funds]? And once [located] to that, like a solid services and all that, that you're seeing weakness? Or is it more broad-based?

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

Sudhir Singh, NIIT Technologies Limited - CEO [47]

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

At this point in time, it's specific to one place. I don't see a broad-based weakness. As I've spoken in the past, most of what we do is in the buy side of the capital markets. Innovation dollars, they continue to come in. And the commentary that I just provided right now is in the context of a top 5 client and the IT spend getting contracted.

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

Operator [48]

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

The next question is from the line of Dipesh Mehta from SBICAP Securities.

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

Dipesh Mehta, SBICAP Securities Ltd., Research Division - Information Technology Analyst [49]

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

I have a couple of questions. First, if I look at the segmental performance, which you have reported, Americas and India showing some weakness, especially on operating margin side. If you can help us understand what is going in those 2 geographies in terms of the segmental margin performance?

Second question is on about can you give the data, which we typically hear about in terms of NITL growth revenue and margin performance for the quarter.

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

Sudhir Singh, NIIT Technologies Limited - CEO [50]

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

I'm sorry, can you repeat that question, please? I think there are a lot on the second question. If you don't mind, can you repeat the question?

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

Dipesh Mehta, SBICAP Securities Ltd., Research Division - Information Technology Analyst [51]

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

Yes. You used to report intrinsic NITL that is [around solution], revenue and margin performance, separately. So if you can provide those data points?

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

Sudhir Singh, NIIT Technologies Limited - CEO [52]

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

Sure. So the very first part will be NITL data point here. Revenue in the quarter in INR million was INR 529 million and the EBITDA percent was 29%. This quarter, because we will also be providing WHISHWORKS in line with our standard policy of providing data for all acquisitions, where we've not done a complete simulation and a complete payout, so WHISHWORKS was INR 108 million with an EBITDA of 21%.

In percent terms, you are aware the details is equal this quarter, in which the last tranche was paid out to the promoters. The organization has now been completely integrated and assimilated after 4 years. So moving forward, starting today onwards, we will not be providing the key percent data.

Coming back to your first question around the U.S. margin being -- going down. As I had indicated, this is the quarter in which we put in all our annual visa filing cost. We booked all of that on account of the H1B visas that are processed, so that's why you're looking at the U.S. margin having come down. And India is down because GIS has been sold. And that was, as you're aware, a high-margin business for us.

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

Dipesh Mehta, SBICAP Securities Ltd., Research Division - Information Technology Analyst [53]

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

So just on India side. Now that business is currently loss-making business. Do you expect, because GIS was fairly profitable business, now we sold GIS business, then how you look this business and profitability going forward or medium term?

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

Sudhir Singh, NIIT Technologies Limited - CEO [54]

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

So India for us, the base is now -- it's come down to just being 5% of our aggregate revenues, which as we look back at history is a very, very significant drawdown. The pieces of business that we have here are -- and especially the ones that we signed in the recent past are profitable businesses, which are on par with the rest of the biz -- of the firm's gross margin.

The loss that you're talking about is on account of old government accounts, which are now in the O&M phase. And once they move to the O&M phase, as we know, the predictability of the revenue goes down and closure is -- and they do close down pretty soon. So I'm not sure if I answered your question very directly, but that's how we're looking at India right now.

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

Dipesh Mehta, SBICAP Securities Ltd., Research Division - Information Technology Analyst [55]

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

Broadly, you expect once this ramp down is on O&M side for government business, normal profitability to return for India business?

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

Sudhir Singh, NIIT Technologies Limited - CEO [56]

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

That is correct. And that drawdown has been -- I mean, we've been very consistent in terms of doing that drawdown. And I expect that to continue and to -- actually, on the same call line as earlier.

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

Operator [57]

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

The next question is from the line of [Meghna Chandary] from [MC Resource].

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

Unidentified Analyst, [58]

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

My question is, has this change in the ownership, meaning, if principal business, fall in terms of opportunities or challenges?

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

Sudhir Singh, NIIT Technologies Limited - CEO [59]

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

No, [Melisanda]. Yes, Melisanda , I heard your question. We have had very productive discussions with the newly constituted board. And the board has indicated and has been fully supportive of our [region] now, driving robust, predictable and profitable growth in the future.

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

Unidentified Analyst, [60]

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

Yes. I mean, I appreciate that answer. But my question is, the new -- I mean, has it made any difference in terms of reaching out to newer clientele? Or any color that you can throw on that.

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

Sudhir Singh, NIIT Technologies Limited - CEO [61]

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

It's early days. And the number of agenda -- the definitive agreement was signed only on the 17th of May. The closing was done. The closing happened on (inaudible). So it's still early days. And what we have at this point in time, have had interactions where the support has been absolute. And over time, as newer revenues are opened up when they're opened up, we'll keep you posted on that.

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

Operator [62]

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

The next question is from the line of Pankaj Kapoor from JM Financial.

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

Pankaj Kapoor, JM Financial Institutional Securities Limited, Research Division - Director of India IT Services and Software Equity Research [63]

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

Congrats for a good quarter. Just a few questions. First, on the decline which you spoke of. So just curious to know if this was something which you noticed through the quarter? Or was this something which was concentrated more towards the end of the quarter?

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

Sudhir Singh, NIIT Technologies Limited - CEO [64]

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

So thanks for the question, Pankaj. And I think it's good for my -- a good time for me to add some more color. When I say that the IT spend is contracted, I do want to be clear. Our wallet share has not fallen. The IT spend of the client has fallen. And I mean, the tightening has been a progressive affair, which was noticed right through the quarter. And depending on when renewals come up in the normal course of business, one ends up observing cuts or nonrenewals as appropriate and as they happen.

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

Pankaj Kapoor, JM Financial Institutional Securities Limited, Research Division - Director of India IT Services and Software Equity Research [65]

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

Got it. And you said that this is something, as of now, restricted largely to this total of client, and you haven't seen this spreading to any other, either in financial services or in timing of other verticals -- in client and other verticals on the top 20.

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

Sudhir Singh, NIIT Technologies Limited - CEO [66]

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

Yes, it's restricted essentially to the top 5 client that I had referenced on this.

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

Pankaj Kapoor, JM Financial Institutional Securities Limited, Research Division - Director of India IT Services and Software Equity Research [67]

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

Sure. And this second question was on the margin impact that you mentioned of the ex gratia payment as well as the wage hikes. So wage hike impact you mentioned of 240 bps, that seems to be slightly on a higher side. So just curious at what kind of wage hike we gave out this year? And was this more widespread? And in terms of percentage, was it higher compared to what we had paid last year?

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

Sudhir Singh, NIIT Technologies Limited - CEO [68]

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

No, Pankaj. The 240 bps for us does not reflect a higher number. The blended wage hike that we gave across the organization globally was 4.9%, which has been consistent with numbers in the past. And the 250 -- 240 bps also, accordingly, is in line with what we've done in the past.

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

Pankaj Kapoor, JM Financial Institutional Securities Limited, Research Division - Director of India IT Services and Software Equity Research [69]

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

Okay. And this increase of payment, who would then be the typical recipient? Or there's largely, in a sense, say, function or in terms of any specific level that we target it at?

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

Sudhir Singh, NIIT Technologies Limited - CEO [70]

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

No. It was -- as I said, it was employees who got this ex gratia in light of their continued association with the company and their ability to impact it positively.

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

Operator [71]

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

The next question is from the line of Aniket Pande from Prabhudas Lilladher.

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

Aniket Pande, Prabhudas Lilladher Pvt Ltd., Research Division - Analyst [72]

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

Congrats on the great set up numbers. So I have just one question, sir. So basically, what is leading for your insurance segment to post a robust growth since last 8, 10 quarters? So basically, is it pending license renewal or new licensing? And what can we project or do prognosis for the same?

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

Sudhir Singh, NIIT Technologies Limited - CEO [73]

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

Aniket, 1/4 or slightly less than 1/4 of our insurance business comes from the product side. The remaining 3/4 does not have any license component to it at all. There has been a bit of a spike in the current quarter because of a license sale. But as you noticed, the insurance business has been doing well. That business has been driving on the back of a reconstituted front-end team, which has done a very good job on the back of partnerships that we did with the leading industry -- leading product players in the insurance space. And of course, it's also driven -- it's also being driven on the back of the good work that's been done in terms of rearchitecting, reconfiguring and revitalizing the Advantage core product suite that we have for the lines market.

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

Operator [74]

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

The next question is from the line of Sandeep Shah from CGS India. (Operator Instructions] As there's no response from the current participant, we move to the next question from the line of Madhu Babu from Centrum Broking.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [75]

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

Sir, on the others vertical, where you're almost 27% of revenues, so would we start to create some subsegment where we might again try to build out the main competency?

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

Sudhir Singh, NIIT Technologies Limited - CEO [76]

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

That's something that's under consideration, Mr. Babu. And this segment has, like some of the other segments, done well for us. At this point in time, we haven't decided to pull the trigger on any one specific subsegment, right?

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [77]

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

And sir, we used to call out new deal wins over the last few quarters. Any special deals, which you would like to announce, which we closed this quarter? And we used to announce some IMS deals, I think, a couple of them we closed. So any further deal wins in the IMS space?

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

Sudhir Singh, NIIT Technologies Limited - CEO [78]

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

So in this quarter, we did not have -- the large deal definition for us, Mr. Babu, is the deal with the TCV greater than $20 million. We did not have any large deal in this quarter, and that was the case in quarter 1 of last year as well, which was greater than $20 million. We did, however, have 3 $10-million-plus TCV deals: one of them was with an insurance major; the other one was with one of the large -- one of the largest airlines actually in the world; and the third one, again, was with an insurance major but more on the L&A side. So that's how I would characterize the large deal numbers and the not-a-large-deal pipeline that we secured.

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

Madhu Babu, Centrum Broking Limited, Research Division - Research Analyst [79]

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

Okay. And sir, WHISHWORKS, what could be the trajectory this year in terms of momentum? I think growth has been very strong when we acquired it. And how the payouts of that company will be?

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

Sudhir Singh, NIIT Technologies Limited - CEO [80]

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

So Mr. Babu, as you are aware, right, we do not provide guidance, but as far as our plans are concerned, we would like to keep the WHISHWORKS business also consistent with our broader strategy that we've articulated over the last 9 quarters -- 9, 10 quarters, trying to keep them on robust, predictable and profitable growth.

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

Operator [81]

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

The next question is from the line of [Abhishek S] from [E-Credit Securities].

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

Unidentified Analyst, [82]

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

Sir, the first question is regarding your perspective on the U.K. market. One of the smaller peers called out challenges in the U.K. market. Any thoughts what are you seeing on the ground?

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

Sudhir Singh, NIIT Technologies Limited - CEO [83]

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

Abhishek, from our perspective, the play that we have from a services space in U.K. is largely centered around travel and specialty insurance. Travel has so far, and the IATA numbers also bear it out, not been impacted by Brexit-related concerns. And the specialty insurance market also has not been affected. So I suspect our view, when it comes to Europe, is somewhat myopic and restricted to travel and specialty insurance, and at this point in time, we haven't seen headwinds.

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

Unidentified Analyst, [84]

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

Okay. That's helpful. And the second is a two-part question. Could you break the impact of ex gratia and within the segment that you -- within the impact that you called out? And what is the reason to kind of lower the adjusted margin guidance from 18% now which includes the AS 116 contribution?

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

Sudhir Singh, NIIT Technologies Limited - CEO [85]

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

So I mean, we don't -- we haven't given that breakup, Abhishek, when it comes to the onetime nonrecurring costs, but the one thing that I do want to underline is, it was nonrecurring costs. So that's where I'll leave that. The second thing is, I just want to be clear, I haven't called down the guidance on margins. Our margins are one of the best when it comes to mid-cap IT providers in the industry. All I said is, we have consistently, for many quarters, said that we will deliver 18% EBITDA and we stand by it. If there are upsides and you would have seen a 90 bps upside in the current quarter results around -- because of Ind AS standards, we shall take a call in terms of how much of it would flow back into the business and how much of it to get added to the 18% plans that we created for the business.

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

Operator [86]

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

The next question is from the line of Shradha Agrawal from Asian Market Securities.

As there's no response from the current participant, we'll move to the next question. It's from the line of Rahul Jain from Dolat Capital.

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

Rahul Jain, Dolat Capital Market Pvt. Ltd., Research Division - VP of Research [87]

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

Congrats on good numbers and as well as order book win. Just to client win through the unexecuted book of the executable book over 12-month perspective, I mean how we should try and map this with the revenue traction because as our order book data continues to surge and so is our revenue? However, the traction in this number is not that significant. Is it continuously on account of these smaller projects that do not feature part of the order book on how one should track to correlate this with the annual growth prospect?

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

Sudhir Singh, NIIT Technologies Limited - CEO [88]

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

Once again, I think your observation is correct. If you look at the -- some of the businesses that are -- the process is going for us, one of them happens to be, (inaudible), to be a short-cycle business. So you're absolutely right. The order intake number has been galloping at a higher level, at a higher pace than the order executable. And a part of it, as you rightly observed, has to do with the fact that Incessant tends to be a business, which is high growth for us, but at the same time the orders pay be -- the contract cycles tend to be shorter.

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

Rahul Jain, Dolat Capital Market Pvt. Ltd., Research Division - VP of Research [89]

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

And also, if I refer to your comment in the beginning of the last year, I think one of the key factor for us that was driving was the change that you made to the incentive structure on the large deal in the focus areas, and secondly, in terms of the shift from geography to vertical perspective. So is this enough for us to continue on the momentum? Or are we adding new spear that would drive or continue the growth in the order book?

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

Sudhir Singh, NIIT Technologies Limited - CEO [90]

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

Rahul, I think you rightly noted that we did focus on securing large deals and the numbers were there last year. We did focus on the vertical structure, and as you would have noted, the growth across verticals has been broad-based. The incentive structure that we've shared earlier has clearly delivered for us as a firm and for our employees as individuals, and the bonus payouts have gone up materially for them as in revenues. So all of that has worked. Some of the other things that we focused on was creating new capability vectors and that continues to be an ongoing process. So over the last few quarters, we've talked about how we progressively created a data service line and intelligent automation service line, a cloud service line and RPA service line. And today, I talked about the cognitive service line, a CoE that got incubated. So it's a journey. How do you capture the transformation, initial pieces, initial elements of that journey very well. For that, we've added the capability vectors that I talked about. And there's the new one that I talked about today as well.

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

Rahul Jain, Dolat Capital Market Pvt. Ltd., Research Division - VP of Research [91]

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

Okay. Just lastly, if I may, these numbers, obviously, saw a much bigger leap in the last year. And though this number is very exciting at $175 million, is it still trending the way we would have been planning for the year? Or we expect this number to meaningfully improve for us to sustain the kind of growth we expect?

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

Sudhir Singh, NIIT Technologies Limited - CEO [92]

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

Mr. Jain, $5 million is very hard work every quarter. So repeating it, it's meaningful improvement that's already happened. Our intent, of course, as you can appreciate, continues to be to try to move it as fast as we can. But at this point in time, as we look at the numbers and as we -- and if you reflect back on the commentary that I provided, I think the growth in numbers is consistent with the plans that I shared in the outlook section at the end.

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

Operator [93]

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

The next question is from the line of Shradha Agrawal from Asian Market Securities.

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

Shradha Agrawal, Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile [94]

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

Sorry for the disturbance last time. Congratulation on a good quarter. Sir, first thing, what is the stake in RuleTek now for us?

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

Sudhir Singh, NIIT Technologies Limited - CEO [95]

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

So at this point in time, we're at about -- we're not about, let me be specific, we are at 80%, Shradha.

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

Shradha Agrawal, Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile [96]

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

And how much if we payout for the stake this time around for the additional stake?

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

Sudhir Singh, NIIT Technologies Limited - CEO [97]

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

At this point in time, INR 40 crores for the 12.5% stake that was applied.

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

Shradha Agrawal, Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile [98]

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

And what is the payment schedule for the remaining stake?

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

Sudhir Singh, NIIT Technologies Limited - CEO [99]

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

That's tied to the performance. There is one more payment that -- which is going to be made, which is going to be the final payment in May of next year. It is at this point in time contingent on the performance of the firm in the next 12 months over the...

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

Shradha Agrawal, Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile [100]

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

Sure, sir. Right, sir. And one question, we have always been highlighting that GIS is a higher-margin business for us, but if I look at the adjusted business, the adjusted margin ex GIS, it's 17% and adjusted margin for the company is 16.9%. So -- I mean how does that discrepancy -- how do you explain that discrepancy?

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

Sudhir Singh, NIIT Technologies Limited - CEO [101]

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

I think it's valid, and I think it's a good observation. Q1 for GIS -- Q1 last year for GIS was a low-margin quarter, and if you go back and track the numbers for that specific quarter which we had called out separately, I think, that will underline it. So that's -- the cash lag is there in that Q1 of last year for GIS for the low-margin quarter for GIS compared to the normal margins that they operated at.

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

Shradha Agrawal, Asian Markets Securities Private Limited, Research Division - Analyst of IT and Textile [102]

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

Got it, sir. It's a seasonality quarterly which has impacted, yes.

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

Sudhir Singh, NIIT Technologies Limited - CEO [103]

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

That's correct. It was, in some ways, even -- yes, seasonality or a one-off in that specific quarter for GIS that came into play.

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

Operator [104]

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

The next question is from the line of Shashi Bhusan from Axis Capital.

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

Shashi Bhusan, Axis Capital Limited, Research Division - Executive Director of IT and Telecom [105]

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

Congrats, good quarter. Both quarterly performance and deal win against tough macro is heartening to see. What exactly is working for us with these deal wins? Do you see increase in size of the deals that we are participating that will lead you to a stronger deals every quarter?

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

Sudhir Singh, NIIT Technologies Limited - CEO [106]

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

I think it's a great question. It's a very difficult one for me to answer. My -- the way I would posit it is that good performance is a mix of many factors. It's a mix of the folks out there in the market, who are actually sweating it out and working daily. It's got an overlay of the culture, which continues to be led by a team in the market that are, for lack of a better word, very hungry for growth. And I think it's also, in many ways, been a validation of some of the elements that one of the earlier questionnaires on this forum talked about, the fact that we treat their leadership team, the fact that we treat their compensation structure, the fact that we focused our strategy very, very sharply. It's been a mix of all of these that have contributed to the good numbers that you were talking about right now.

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

Shashi Bhusan, Axis Capital Limited, Research Division - Executive Director of IT and Telecom [107]

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

Did you see any increase in the size of deals that we are participating? Or is it more or less the same still for the last 2 years?

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

Sudhir Singh, NIIT Technologies Limited - CEO [108]

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

See size of deal tends to -- I mean, size of deal tends to be a point-in-time issue. And we never really shared data around the TCV of the deals when it comes to a pursue of time line. So I wouldn't want to go there. But as I've shared in the past, our ability to win large deals, which, for us, by definition, are greater than $20 million TCV, has been improving over time, and I think it's been reflected in the numbers also.

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

Operator [109]

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

The next question is a follow-up from the line of Sandeep Shah from CGS India.

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

Sandeep Shah, CIMB Research - VP [110]

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

Sorry, last time I dropped out; so got reconnected. Just, Sudhir, wanted to understand that looking at a bit of a client-specific issue and some macro issue highlighted by most of the other peers, do you believe there is still enough pipeline and deal win momentum, I'm not asking Q-on-Q but you still believe deal win momentum can continue at this level? Or there could be some aberration, which can come on a near term, as a whole?

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

Sudhir Singh, NIIT Technologies Limited - CEO [111]

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

So -- I mean, like, just about any other CEO whoever you speak to, I'm sure, Sandeep, I hope it will continue. It's very difficult for me to say whether it will or not. But as I have noted in the outlook and the commentary that I have provided, we believe the fundamentals of the business are strong. And I know I'm saying this for the fourth time, so I apologize, but we continue to plan for robust, predictable and profitable growth, and I'm smiling and laughing as I say that, Sandeep.

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

Sandeep Shah, CIMB Research - VP [112]

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

No, no. Got the message, sir. Yes. And just last few book-keeping questions, in terms of cash and bank balances have gone down by INR 246 crores. So largely because of the WHISHWORKS payment side, the upfront payment.

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

Sudhir Singh, NIIT Technologies Limited - CEO [113]

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

Yes, you are right, Sandeep. That, in some ways, is being the principal reason that's gone accounted for it. There's also been the Incessant and the RuleTek impact, which, again, you're aware of.

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

Sandeep Shah, CIMB Research - VP [114]

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

Correct, correct, correct. And the future acquisition liability, the figure of INR 190 crores also includes some earnouts for the WHISHWORKS or...?

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

Sudhir Singh, NIIT Technologies Limited - CEO [115]

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

That's correct, it does. The future acquisition liability includes that. There's obviously no future acquisition liability going forward for Incessant, whereas as I've said we've done the last tranche, but it does include the sale for the WHISHWORKS transaction.

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

Sandeep Shah, CIMB Research - VP [116]

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

Okay. Okay. And just curiosity that most of the companies' gross block have gone up because of the right-of-use asset creation on the balance sheet because of the lease accounting; with that, the lease liabilities have also gone up? But for us, the fixed asset movement has not been that sharp from INR 422 crores, it's INR 510 crores, with a CapEx of this quarter being INR 34 crores. So if I can take it offline, but if you want to...

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

Sudhir Singh, NIIT Technologies Limited - CEO [117]

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

No, I think it's a valid observation, Mr. Shah, and this is something that, obviously, we were also observing both on an absolute and a relative basis. And the reason for that, fundamentally, is that unlike a lot of our peers, we tend to have our own campus and own facilities. So the quantum, when it comes to leasing out facilities, our usage tends to be significantly lower than some of our peers.

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

Sandeep Shah, CIMB Research - VP [118]

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

Okay, okay, okay. So this -- all the balance sheet entries are after considering the right-of-use asset and some creation of lease liabilities as well?

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

Sudhir Singh, NIIT Technologies Limited - CEO [119]

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

You're absolutely right. They are. Yes.

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

Operator [120]

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

The next question is from the line of Ruchi Burde from BOB Capital Markets.

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

Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [121]

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

Congratulations on excellent growth this quarter. My question is on the client-specific issue that you've called out. So the IT spending compression that you mentioned, in your sense, is it done already in the run rate? And from here onwards should be stability or improvement? Or how do we see this moving into the following quarter?

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

Sudhir Singh, NIIT Technologies Limited - CEO [122]

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

As I said, Ruchi, our wallet share has not contracted. So the compression of the IT spend at the client is what has caused this softening. Given the fact that the wallet share remains intact, rebound is going to be contingent on the IT spend at the top 5 client going because we're working back to normal level. So it's -- I think the dependent variable here is their IT spend. Wallet share remains intact. So whenever their business bounces back and their investment into IT services bounces back, we will hopefully start writing that deal again.

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

Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [123]

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

Okay. But at this point of time, that visibility is not clear is what we are trying to say?

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

Sudhir Singh, NIIT Technologies Limited - CEO [124]

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

I guess, you're right, yes. And underlying with that, it's very difficult for us to predict when they will take a call around opening the taps when it comes to their IT spend.

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

Ruchi Burde, BOB Capital Markets Limited, Research Division - Research Analyst [125]

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

Understood. The second question was around the visa expense. So a 90 basis point impact this quarter seems a bit higher if I look at your historical spend. So I'm just curious to know if there is any change to our visa or on-site talent management strategy as we applied for more visa? Any tweaking of the model over there?

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

Sudhir Singh, NIIT Technologies Limited - CEO [126]

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

So if you look at our visa spends over the last couple of years, you will see that the cost has progressively been going up, and we figured out ways of managing our aggregate operational expense to offset it and manage margins. In this specific quarter, the 90 bps impact that you are looking at on visa was largely because the visa filing cost for the whole year, which is largely the H1 visas that we file for, are fully booked into quarter 1 itself. That's why there's a blip, but it's also been, over the last 2 years, a steady increase in overall visa filing and visa transfer costs, which are built into the margin numbers that we've been sharing over the quarters.

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

Operator [127]

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

The next question is a follow-up from the line of Sandeep Shah from CGS India.

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

Sandeep Shah, CIMB Research - VP [128]

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

Sorry, just the last question, sir. As last time because of the corporate event, I think you have not announced the final dividend. Any time line or any details or any planning which you can share in terms of capital allocation going forward?

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

Sudhir Singh, NIIT Technologies Limited - CEO [129]

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

Mr. Shah, that dividend and capital allocation is a call that I suspect, as both of us know, is a Board decision. So the Board will deliberate on it, and it's a call that they will take.

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

Operator [130]

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

The next question is from the line of Rahul Jain from Dolat Capital.

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

Rahul Jain, Dolat Capital Market Pvt. Ltd., Research Division - VP of Research [131]

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

Just a bookkeeping kind of a number. I wanted to understand, do we make any other payment related to incentive or any kind of appraisal subsequent to Q1 also now in the subsequent quarter?

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

Sudhir Singh, NIIT Technologies Limited - CEO [132]

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

No, the material payment is done in quarter 1, which was -- which is a quarter that is behind us. There's nothing which is significant that is made in other quarters.

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

Operator [133]

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

(Operator Instructions)

As there are no further questions from the participants, I now hand the conference over to Mr. Sudhir Singh, CEO of NIIT Technologies for his closing comments. Over to you, sir.

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

Sudhir Singh, NIIT Technologies Limited - CEO [134]

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

I just want to thank everyone who's made time for us late in an evening for this conversation. Thank you for your questions. They continue to be, as always, insightful, probing and very useful for the management. Thanks, once again, for your time, and we look forward to speaking to you next quarter. Thank you.

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

Operator [135]

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

Thank you very much, sir. Ladies and gentlemen, on behalf of NIIT Technologies, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.