Nucleus Software Exports Limited Q1 FY18 Earnings Conference Call July 21, Executive Director & Head, Global Product Management

Transcription

1 Nucleus Software Exports Limited Q1 FY18 Earnings Conference Call July 21, 2017 Members of Nucleus Management Mr. Vishnu R. Dusad Mr. R P Singh Mr. Ashish Nanda Mrs. Debyani Sinha Mr. Ashutosh Pande Managing Director and CEO Executive Director & Head, Global Product Management Chief Financial Officer Global Head - Human Resource Group Head, Financial Inclusion [Note: This transcript has been edited for improved readability]

2 Gaurav Agarwal: Good afternoon, everyone. This is Gaurav from investor relations team at Nucleus Software. A very warm welcome to all of you for this Nucleus Software earnings conference call for the first quarter ended June 30 th, For discussions, we have here from the management team Mr. Vishnu R. Dusad, our Managing Director and CEO; Mr. R. P. Singh, Director and Head, Product Management; Mr. Ashish Nanda, CFO; Mrs. Debyani Sinha, our new Global Head - Human Resource and Mr. Ashutosh Pande, Head Financial Inclusion. As you all are aware, Nucleus Software does not provide any specific revenue earnings guidance. Anything which is said during this call which may reflect our outlook for the future or which may be construed as a forward-looking statement must be reviewed in conjunction with the risk that the company faces. An audio and transcript of this call would be shortly available on the investor section of our website, With this, we are now ready to begin with the opening comments on the performance of the company for the quarter ended June 30 th, 2017 from the CEO and post that we would be available for the Q&A session. With this, I now hand it over to Vishnu. Vishnu R. Dusad: Thank you, Gaurav, and good afternoon, ladies and gentlemen. I m pleased to connect with you at this earnings call for the first quarter ended June 30 th, Building on the momentum that we generated with the launch of our cloud and analytics solutions last year, we have continued to expand our customer base. Digital continues to be at the centre of our approach to drive innovation in lending and transaction banking space, while enabling organizations to cater to the personalized requirements of their end customers. Our new solutions have been well received by our customers who continue to appreciate our focus on new age technologies, project excellence and domain expertise. Over to you, Ashish. Thank you, Vishnu. Good afternoon, everybody. This is Ashish and I welcome you all to this conference call.

3 Key Highlights from Financials are: The Company has adopted Indian Accounting Standards (Ind-AS) with effect from 1st April, 2017 (transition date being 1st April, 2016) pursuant to notification issued by Ministry of Corporate Affairs dated 16th February, 2015 notifying the Companies (Indian Accounting Standards) Rules, I will be referring the Indian Accounting Standards as Ind-AS during the call. The key financial highlights as I will be sharing have been restated to comply with Ind-AS. As always, as a part of good corporate governance, the company has prepared and submitted to stock exchanges, Ind AS compliant financial results for the preceding quarter and previous year ended March 31, 2017, despite having exemption for submission of the same. I will be summarizing in brief, the impact of Ind AS, on the financial towards the end of my commentary. REVENUE Our Consolidated revenue for the quarter is at Rs crore against Rs crore QoQ and Rs crore YoY. Overall Revenue in foreign currency including India Rupee revenue is US$ 14.4 million for the quarter, against US$ 13.8 million QoQ and US$ 13.4 million YoY. Product revenue for the quarter is at Rs crore, against Rs crore QoQ and Rs crore YoY. Revenue from projects and services for the quarter is at Rs crore, against Rs crore QoQ, and Rs crore YoY. EXPENSES Cost of delivery including cost of product development for the quarter is 70.0% of revenue, against 69.4% of revenue QoQ and 66.2% of revenue YoY. In absolute terms this is Rs crore against Rs crore QoQ and Rs crore YoY. Marketing & sales expense for the quarter is 8.7% of revenue, against 3.9% of revenue QoQ and 13.1% YoY. In absolute terms this is Rs. 8.2 crore against Rs. 3.7 crore QoQ and Rs crore YoY. G&A expense for the quarter is 10.5% of revenue, against 11.4% of revenue QoQ and 9.7% YoY. In absolute terms this is Rs. 9.9 crore against Rs crore QoQ and Rs. 8.7 crore YoY.

4 EBITDA for the quarter is at Rs crore (10.8 % of Revenue), against Rs crore (15.3% of Revenue), QoQ and Rs. 9.9 crore (11.0% of Revenue), YoY. Other income from investments and deposits is at Rs. 7.3 crore against Rs. 6.9 crore QoQ, and Rs. 6.7 crore YoY. Total other Income for the quarter is Rs. 7.6 crore against Rs. 6.9 crore QoQ and Rs. 7.3 crore YoY. Total taxes are at Rs. 4.5 crore against Rs. (1.1) crore QoQ and Rs. 1.8 crore YoY. Effective tax rate was higher during the quarter due to dividend income from foreign subsidiaries and also on account of reduction in weighted tax deductions as per the new norms of Income Tax for the R&D spend by the company. Net profit is at Rs crore for the quarter, 12.2% of revenue, against Rs crore, 21.8% of revenue QoQ and Rs crore, 13.8% YoY. As you may be aware a new segment in the Profit and Loss has been added as per the requirement of Ind-AS called the Other comprehensive Income Other Comprehensive Income is at Rs. (3.7) crore for the quarter, against Rs. 3.4 crore for the quarter ended March 17 and Rs. 5.3 crore for the quarter ended June 16. Total Comprehensive Income which includes Net Profit and other comprehensive Income is at Rs. 7.8 crore for the quarter, against Rs crore for the quarter ended March 17 and Rs crore for the quarter ended June 16. EPS for the quarter is at Rs as against Rs in the previous quarter and Rs in June 16 quarter. In terms of foreign currency hedges, on June 30 we had USD 4.65 million dollars of forward contracts at an average rate of There is a mark-to-market gain of Rs lakhs which is taken to hedging reserve in the balance sheet. Revenue contribution from the top 5 clients for the quarter is 42% against 42% previous quarter. The order book position is Rs crore including Rs crore of products business and Rs crore of projects and services business. In March 31, 2017 the order book position was Rs crore including Rs crore of products business and Rs crore of projects and services business. Total Cash and cash equivalents as on June 30, 2017 are Rs crore against Rs crore as on March 31, This includes balances in current accounts of Rs crore,

5 liquid fund schemes of mutual funds Rs crore, Rs crore in fixed maturity plans, fixed deposits with banks of Rs crore, investments in tax free bonds of Rs crore and Rs crore in Preference shares. With regard to receivables, we are at Rs crore against Rs crore previous quarter. During the quarter, there is a gross addition of fixed assets of Rs crore, consisting primarily of Rs crore computers equipment s and Rs crore on software. Now I will be sharing a brief synopsis of the Impact on the financial due to adoption of Ind- AS (As compared to the old Accounting Standards) : The impact on EBITDA is, increase of EBITDA by Rs. 0.6 crores for the quarter, against reduction of EBITDA by Rs. (0.3) crore for the quarter ended March 17 and increase by Rs. 0.8 crore for the quarter ended June 16. The impact on PAT is, increase in PAT by Rs. 1.5 crores for the quarter, against reduction of PAT by Rs. (1.9) crore for the quarter ended March 17 and increase of Rs. 1.6 crore in PAT for the quarter ended June 16. Detailed reasons for the impact of the transition on financials due to Ind-AS is already shared in the results filed with the stock exchanges and a copy of the same is also available on the investor section of our website. Now, I will hand it over to RP for sharing the product updates. Thank you, Ashish, and good afternoon. As Vishnu had started, digitization continues to be the buzz word in business. As Indians, it s the time to feel proud as the country takes digitization head on. On most fronts actually we are leapfrogging the developed markets by bounds. Two examples of this being the UPI platform for seamless online P2P payments and the Aadhar for ID verification for the large number of individuals. I am happy to announce that we recently launched our digital Neo suite supporting both platforms for our Indian customers. Neo mcas, which is our mobile based channel for customer on-boarding, enables business to use biometrics or iris-based identification of customers. This not only authenticate the applicant but also pre-loads, verified data automatically making the experience delightful and error-free. Our Neo mcollect, our mobility-based collection front end now accepts payments through UPI through any of the supporting apps like BHIM. Just to mention we are already accepting payments with credit card, net banking, cash and cheque. For UPI the request is

6 raised by the collector with a finger swipe; the customer simply accepts and boom the payment is processed. We are very excited with this launch and also continue to work on making the digital experience even more extreme. That s all from me. Thank you. Over to Gaurav. Gaurav Agarwal: Thank you, sir. With this, we are now open for the Q&A session. Hello, everyone. This is Parth Desai. I had a question regarding the marketing and sales expense and you mentioned for this quarter it was at around 8% versus 3.4% of revenue for last quarter, correct? So, Parth, if I understand you correctly, you are primarily trying to understand the reason for the marketing expenses where they are, is that correct? Correct. So, Parth, just to repeat, the marketing expenses for the quarter are at 8.7% of the revenue as against 3.9% QoQ and 13.1% YoY. The main reason of the increase, you know, it is lower in June 2017 as compared to the previous June 2016, because of the exit of certain sales people. However, as regards to the QoQ, in the March 2017, there were certain reversals on account of the SIP provision because of the performance evaluation. However, as the new era started and the new targets are on target where we are wanting to go ahead, so therefore there is some deviation from the SIP, which are in the current quarter which is there. Okay. Got it. And for the tax impact due to the R&D spend and the foreign subsidiary could you throw some more light on that?

7 See, as you are aware, you know, when we receive income from foreign subsidiaries, that income doesn t get reflected in the consolidated income, but the tax comes in the P&L. So because of the dividend distribution which will be doing which will happen effectively in July which has already been distributed. There were certain dividends which were taken from the foreign subsidiaries of dividend distribution tax equalization. The other impact is, as you are aware on the R&D under section 32AB of the Income Tax Act, the weighted deduction has gone down from 200% to 150%, so because of that the deductions are going down and therefore the effective tax rate has gone up. Okay. That s helpful. And another question I had on the P&L line item was the OCI, could you just throw some more light on that as well? First, as you are aware that, after the adoption of Ind-AS, one of the main significant of Ind-AS is primarily bringing everything on a mark-to-market basis. However, in order to maintain nonvolatility on the P&L there are certain items which are taken to the OCI. One of the key items in the OCI which is in the Ind-AS adoption for Nucleus is our investments in the equity investments which we have, but as a company we have decided not to route it through the P&L because of the volatility because they are non-operative investments for the company. So one of the key differences in the OCI is on account of the restatement of the financials or the investments in the equity investments at the current market rate, so that is primarily in OCI. The other things which have routed through OCI just for academic interest are things like, actuarial gains and losses, if there are any, on account of the leave encashment or gratuity provisions. The other are the exchange differences on the translation of the foreign operation of the foreign subsidiaries and also the impact of the provisional effective hedges which are there. So these are primarily the conditions or the items which are appearing in our OCI; there can be others under the Ind-AS for any other companies. Okay. And, sir, three new product orders that Nucleus won are these all related to the Cloud product suite? No. It s a mix of Cloud and others, so some of them are Cloud and some of them are on the mobility analytics.

8 Okay. Thank you. That s all from my end for now. I will get back in the queue, if I have any more questions. Thank you. Thanks, Parth. Good afternoon, everyone. Thank you for giving me this opportunity. Sir, the first question is, we saw a significant reduction in debtors in the last balance sheet, so can you just help us explain, what led to that reduction and what is the current state of debtors? Thanks for your question, Salabh. So anyway the reduction is primarily on account of the better collection cycle which are there; we have significantly made collections and improvement on our debtors. With regards to receivables, we are at Rs crores at the end of the current quarter as against Rs crores in the previous quarter. Okay. So the numbers are not really being changed because we ended the year with around 60 crores, right, so we are going to maintain this kind of a collection cycle, is that what is implied then? Yes, all our endeavours is from the side that, collections will be at the same pace and the debtors should be at the same level where they are in terms of the DSO days. Okay. Just another small thing on that, we also noticed that, you know, the debtors in more than 6 months bucket as an entire thing, they increased significantly, any specific reason? I would not say that from a perspective, yes, definitely they are there, but there are significant subsequent collections at the end of the quarter also from that side of it. One of our key debtors would have you know, moved from the 91 days to 180 bracket to the 181 to 270 still not in alarming pace which is there and still all the endeavours are there that we collect that as

9 soon as possible. Just to give you an idea at the end of the quarter the total increase in the bucket of 181 to 270 days was roughly 4 crores out of which in the subsequent 15 days we have collected 1.24 crores out of that. So nothing very significant on account of that. Also, as regards to the other bucket which is 271 to 365 days there was an increase of 13 lakhs, however, we have collected 20 lakhs on that, so it is not a worrisome picture, as far as we are concerned. Okay. Sir, another thing that we wanted to check on is, if we look at the last year s annual report, there have been a significant, reduction in the travelling expenses, so we just wanted to understand because travelling is more related to, business needs and requirements, so, what led to that kind of a reduction, I guess, the numbers almost reduced by around 60%, more than 20 crores to around crores? So travel in any case we are back on just to let you know that in the current quarter travel has again gone up. In the last 3 years we were trying to control the cost specifically on account of, travel which are not business-related. So there was a control on that very clearly and that reflected in our travel approach. However, in the current quarter if you see our numbers on travel itself, it has gone up to the same level as they were there in the previous year, rather it has an increase; the current quarter travel on consolidated basis has gone up by almost a crore rupees. Sure, that was the another thing that I was just going to ask you because if we see the kind of increase in the cost that we have had this quarter, is higher than what we had increase in the revenue which is why, the operating profit increases much lower, so, you know, just wanted to understand in terms of, how is the company trying to match the expenses with sales and what kind of a profitability can we look at going forward? So, Shalabh, yes, in terms of what the way you are looking as a number in absolute terms is right. However, there is a reason behind that, as they are very normal reason that in any Indian context. The first quarter is the quarter where appraisals and increments are there, so therefore the personal cost has gone up. The other cost which has gone up is on account of our travel which is there in our operating expense, as you can see, by a crore and the third cost which has gone up is because of certain increase in legal and professional expenses because we are going for a buyback and the fee by the government has gone up by almost 4 times which I

10 find as a CFO undue but that is where we are. However, in terms of the cost levels we are hoping to get the same cost level with minor increases going forward on account of the nonbusiness related expenses. We will continue to do investments in our products and our marketing activities, so you can see a slight variation of cost there, however, all the endeavours we will be there to ensure that every penny which we will spend as the culture of Nucleus is, that is paid on to ensure that we have the right output of that and right return of that coming to us as well as the other stakeholders. That helps. The other thing, is about the new features that we are being added in each of the releases that we are making in our products. How are we catering to our older customers who are still on our earlier platform? Are those customers, they don t require these new features or are we supporting them, on a project basis? This is R. P. When we come out with new releases, there are new capabilities built either in the core system or in peripheral modules, for instance, mobility and analytics are independent modules, the way we are building it is that these are available on the old core product as well. However if it s something which we have improved in the core then they will need to migrate to the new product which we are, considering on case-to-case basis. However, the new capabilities that I mentioned about the digitization this is also a layer available on the old product. Okay. If I may just ask you, how would you rate yourself in terms of how successful, you think the company has been in converting those old customers to a newer platform or newer products that you are bringing up? So I think when we launched our new product, we started, you know, we actually handpicked some of our marquee customers to move them to the new product. That transition is a big one, so we are actually currently at the stage where we are not and then, you know, luckily for us thanks to some good work done by the teams our existing customers are quite happy with the older product as well. So we are not pushing people to move over; we are actually at this moment taking the ones that we ve picked up putting them across and then, as I mentioned, case-to-case looking at those who would really benefit financially from the new product and

11 with the effort that they will need to put in. So are real focus today is on the new customers and those customers who really want to, you know, who need to exploit the new capabilities. Sure. That is very helpful, sir. Sir, lastly I wanted to check, if I look at the geographic breakup that you provide and if you look at the individual geographies, then apart from India, all the bigger geographies that we were present and they are not really growing, in fact, they ve been de-growing last two years, so any comments on other parts of the, you know, other than India of where we are losing out, where those geographies are taking more time to convert a customer than probably in India? So once again our original strategy, 15 years back was to start from India and then go out, well, and I think at this moment with the new offering which is where the growth is expected to come from is we are following the same model. Having said that we have managed to sell it outside India already, but actually from our focus perspective that is the path we were taking. Okay. So do you think other geographies will take time to come back to show growth? Yes. it won t take too long because, see, the geographies that we were in and I am talking of the existing ones, we were kind of the leaders in all these areas, so it s really a question of whether we move the customers across the new product at least in those geographies; there are not to many other customers who are left behind. I think sometimes we are also exploring the newer markets and that s probably where you will see action in the later of the year. Okay. Sir, and Southeast Asia was your second biggest geography after India and the profitability has been quite erratic last year and this year also it s around 5 odd per cent, you know, EBIT margins, so is there any reclassification on some cost here and there which is showing up on the EBIT numbers for Southeast Asia? So, Shalabh, you are right, when you said it is not in the same light. There s no reclassification that are, the strategic decision which we have been taken for Southeast Asia in the recent past. There was a team on the sales side of it which we are getting reorganized because of the

12 strategic reasons; some of the geographies we will handle directly from India, some geographies of the Southeast Asia part of it. This thing will continue for another 6 months or 3 to 6 months when we materialise our real strategy on the ground as far as the Southeast piece of it. There is no reclassification just to be precise to answer your question. So after 6 months we can expect better numbers from Southeast Asia, is that what you are alluding to? Definitely that s what is the intent of the organization is, that Southeast Asia, as you rightly mentioned, is the key geography for us. Our effort is to mine that geography more and all the efforts are there from the organization to keep it that way. Okay. Thanks a lot for taking my question, sir, and all the very best to you. Thank you, Shalabh. Deepan Shankar: Good afternoon, everyone. Thanks a lot for the opportunity. First of all, we d like to understand how is the pipeline of our Cloud deals in India business is overall doing and how is the growth we have been seeing as compared to past 3 quarters? So the pipeline is very, very strong as of now from a perspective of the interest shown by the people both the established players in the market and the newer players in the market. The traction is coming more from the newer players in the market very clearly in the NBFC segment which is there. Vishnu, would you like to add anything? Vishnu R. Dusad: Yes. I think, while you talk about the pipeline, as Ashish had mentioned, it s pretty strong. What I would like to highlight here is thanks to the way our Cloud offering has been made available to our customers. The last customer who went live was within 4 days of taking a decision. So I think that is communicating the strong offering that we have that in case someone takes a decision within 4 days he can start using the powerful IP to do the business.

13 Deepan Shankar: Also the proportion of Cloud to total revenues is to get a perspective on how we are doing. See, it is too early to even segregate that side of it, as you know, Cloud offering started almost couple of quarters back. Very clearly from a perspective of maintaining it in terms of the overall revenue will not be a right proportion right now to look at it. We are very hopeful and right now very clear target is to have captured the interest which the market is showing in the right direction and we are able to demonstrate these capabilities to as many people as many we can from the side of it. Deepan Shankar: What is the overall Cloud market size expected in India per se? Here, the Cloud, from our perspective the whole market which is there will be moving towards Cloud or not and it is very difficult to understand that how many would like to have on premise or Cloud which is there. Why we are so happy and hopeful about from the Cloud is the huge NBFC market which Nucleus has not been targeting till now. From our perspective that is the huge potential we see, however, regarding to put any number to the market will not be the right way to look at the whole situation in the Cloud offering with Nucleus. Deepan Shankar: Okay. And any update on transaction banking with FinnAxia, we haven t seen any major update on that section? All right. Of course, there are updates as far as the product is concerned. I didn t talk about it because we are in the process at this time to release the new release which is going to our customers. One of the customers is upgrading the release that they already have. So we are actually talking to some new segments who is again an NBFC wanting to adapt to this business which is otherwise a very corporate banking business but that is to use it in the SME area, so nothing to announce at this time, but we are hoping that we will move forward in. Deepan Shankar: Okay. Can you provide any breakup between the FinnAxia and FinnOne Neo revenues?

14 As we ve been tracking on for quite now we don t segregate the overall revenues on the type of products we have. It is the license revenue versus the other which we do. So as of now just to give you an indicative, so we don t track it. Lending has a significant share as compared to FinnAxia. I think probably it will be there. Deepan Shankar: Okay. License and the services breakdown? So the way we do the revenue very clearly it s the product versus the services it s around 78% as in the product side of it and the rests are of the services. Deepan Shankar: Okay. Thank you and all the best. Sikha Garg: Good afternoon. I would like to know what is the promoter holding post buyback? I will just come out with the number. Just give me a minute, Sikha, on that. Just to let you know, by that time, promoters have not participated. So, the promoter holdings from the current in case of 100% buyback will go up. I will just share with you the numbers in a minute. Can we have another question? I will come back to your question specifically. Sikha Garg: Okay, fine. To answer the previous question, the current promoter holding is around 61% and in case we have 100% buyback for what we have offered in the market, the promoter holding will go up to 67.6%.

15 Vivek Joshi: I just wanted to know the status of the buyback. Is it just a record date or anybody holding the shares at a certain date can participate in the buyback? Record date was 30 th June Vivek Joshi: Okay, sir. It s only eligible to those? Yes. Vivek Joshi: Okay. Thank you so much. Sikha Garg: No, I am done with my question. Thank you. Thank you for giving the opportunity again. Sir, just quickly I wanted to check the current employee strength. It is 1716 at the end of the quarter. Okay. Sir, if you look back, even March quarter and this quarter from the previous year, we have added close to around 100 odd employees, because we had 1565 last year and this year we closed at Sir, just wanted to check are there any specific domains in which these employees are getting added. If you can give components on that. Shalabh, as you have been tracking us, you know, we have been consistently saying that we are investing on the products. Primarily the people getting added are in the domain of product expertise.

16 Okay. Do we expect this number to further go up as we might be looking to add more modules in the coming quarters? There are certain expertise and domains which we are trying to kind of hire. So, very clearly these numbers will go up in the near future, Shalabh, from where we are now. Okay. Sir, just another observation from annual report and maybe I am misreading something. You give the number of employees along each age bracket. If you observe that the number of people who are between 20 to 25 years of age, you know, they came sharply down. Right? They used to be almost 25% of the entire workforce and now they are only 10%. So, can you explain that? What led to that change? It s something which I am misreading. It might be the timing because a lot of new joinees have come in now. Okay. Sir, it s not really any kind of any attrition which has happened? Not specifically attrition. Okay. What will be the current attrition in this system, sir? The current attrition will be around 18 to 19%. Thanks a lot, sir. Thank you for taking my questions. Samir Patel: Good afternoon, everyone. Thanks for taking my question. Sir, I wanted to know a little more about the PaySe module and where we have reached and the path ahead towards the revenue.

17 Vishnu R. Dusad: The PaySe module as we have mentioned earlier, we have deployed it in Nucleus cafeteria and we are also helping two microfinance institutions in Haryana to do their collections. The third implementation that is on and it will be on full swing next month is at an educational institution in Bengaluru. As of now, the implementations with microfinance institutions which of course are generating revenue and we do hope that slowly it will start spreading and start generating higher revenue. However, we do have some difficulty at this stage in terms of conversion points, and once we are able to address that issue, the small business establishments which accept cash and convert it into our electronic money, once we are able to address that issue, we can expect better revenue stream coming out better. Samir Patel: So, any timeframe for that whatever problems you are facing? Vishnu R. Dusad: We are talking to multiple people who have network on ground and we do hope that for the next couple of quarters we should be able to come up with some solutions. Samir Patel: Okay. Thank you, sir. All the best. Vivek Joshi: Thank you for taking my question again. I just wanted some colour on your acquisition plans, not with details as to whom you are acquiring. Just what is the structure you are like, is it being internally or have you hired somebody externally to help you or the targets are coming to you? What s the structure for scouting for acquisition? Vishnu R. Dusad: Our colleague Mr. Avnish Datt is looking after this important activity, and all the targets, the kind of company we are looking at and the various proposals that are coming, those decisions are being taken by Mr. Avnish Datt. Just to add on to that, I am reiterating what is the strategy we have been following is very clearly, we are open for acquisition. However there will be niche technologies which are augmenting the current situation and current shapes and form of our current products of BFSI

18 segment. That is the strategy we made and we are open to acquisitions. However, they will not be very large in terms of the value. Vishnu R. Dusad: We are talking about sub 50 crores size of acquisition. Vivek Joshi: Thank you so much. All the best. Thank you for the opportunity again. So, I just wanted to understand the long-term client s journey. For example, we have most of our clients right now on the legacy platform and as the contract expires, are we planning in moving all of them to the Cloud offering? How does that work? I think, as we move forward, we will have both our options open. We will continue supporting on-premise and Cloud. Currently, we see traction for the Cloud business from small, small to medium or start-up operations. I am sure there will be a lot change in the next few years. But, for the moment, we are looking at both offerings. Okay. Out of 1300 people who are working on the development site. How much of those would be working on the on-premise module versus the Cloud offering? First of all, It s not 1200, its smaller R&D team or the product team which is working. The rest are also into implementation and changes of the old product and the new product. That is where the focus would be. Vishnu R. Dusad: Just to add to what RP mentioned, the entire team works on the common code base which can even be deployed on Cloud or on-premise. Okay. That is very helpful. So, there is some overlap let s say the technology or the code that we are developing.

19 The code is common. I think it s more of business frontline operations and models which are different. Okay. Thank you. Just one final question on the cash and cash equivalent. I think, Ashish mentioned that there is some 52 crores of preference shares of investment. Is that correct? Can you throw some light on that? There are 52.5 crores of preference shares of various companies which we have invested in. if you need to discuss the portfolio we can have it separately. You can setup a separate time with Gaurav and we can explain and have a detailed discussion on that. Okay. Thank you very much. That s all from my side. Thanks once again. Gaurav Agarwal: Since we do not have any more questions, we would like to thank all our investors for joining us today for this earnings conference call. I would now pass it on to Vishnu for his closing comment. Vishnu R. Dusad: I would like to take this opportunity to thank you all for your interest in Nucleus, and we would like to reiterate our commitment on behalf of my colleagues to deliver value to all our stakeholders. Thank you.