Tata Communications Ltd

NSE:TATACOMM

Earnings Call Analysis

Tata Communications Reports Strong Revenue Growth and Focus on Digital Expansion

In Q2 FY '25, Tata Communications achieved consolidated revenue growth of 18.4% year-on-year, driven largely by a 52.4% increase in digital services. Data revenues also rose by 21%. EBITDA margins stand at 19.4%, with plans to reach 20% for the year. The company aims for INR 28,000 crores in revenue by FY '27, with digital contributing 60%. Key initiatives include asset monetization, such as a proposed land sale expected to bring in INR 750-850 crores. With improving order bookings, the future appears promising, despite a slow macro environment impacting some segments.

Strong Revenue Growth Driven by Digital Services

In the second quarter of FY '25, Tata Communications reported a remarkable 18.4% growth in consolidated revenues year-on-year, reaching INR 5,767 crores. The company's data revenues increased by 21% year-on-year and 3% quarter-on-quarter. The standout performer was the digital services segment, which surged by 52.4% year-on-year, showcasing the company's successful transition towards digital offerings and the growing demand within this segment.

Core Connectivity Challenges Amid Growth

While digital services flourished, core connectivity growth remained subdued, reflecting a 3% year-on-year increase. This sector accounts for 54% of the overall data revenues, highlighting the significant shift towards digital services (46% of data revenues). The muted growth in core connectivity has been a concern, compounded by operational challenges such as cable cut-related expenses from the Red Sea region. However, the management reported that these issues are largely resolved, paving the way for improved performance in future quarters.

Asset Monetization and Strategic Initiatives

The company is actively pursuing asset monetization strategies, with a notable proposal to sell a land parcel in Ambattur, Chennai, estimated to fetch between INR 750 crores to INR 850 crores. This aligns with Tata Communications' goal of enhancing shareholder value by unlocking non-core assets. The management is also evaluating several non-core assets for potential disposal to better allocate resources to growth-oriented segments.

Robust Order Book and Improved Win Rates

Tata Communications' order book saw a significant increase of over 25% year-on-year, driven primarily by strong demand from hyperscalers and Over-The-Top (OTT) services. The international segment recorded its highest quarterly order booking in five years, indicating a positive trend in customer engagements and the company's capacity to secure large deals. Improved win rates are a testament to the management's strategic initiatives and increased sales efforts, though the overall sales funnel had remained subdued in the first half of the fiscal year.

Margins Under Pressure but With a Positive Outlook

The company's EBITDA margins stood at 19.4%, slightly down from previous quarters, affected by maintenance expenditures in the connectivity segment and initial costs related to ongoing strategic reviews. Nonetheless, management remains committed to improving margins and has set a target of achieving a 20% margin for the full fiscal year. The net debt-to-EBITDA ratio is currently at 2.37x, indicative of a cautious but manageable leverage position as the company plans for future growth.

Future Growth Projections and Market Conditions

The management expressed an optimistic outlook for the rest of FY '25, contingent on leveraging growth from their digital services portfolio and capitalizing on expected market improvements. Continued investments in expanding network capabilities, particularly in Tier 3 and Tier 4 cities, and the upcoming revenue contributions from significant multi-year contracts are expected to drive robust growth ahead. Despite challenges in decision-making timelines in the broader market, Tata Communications is strategically positioned to benefit from emerging opportunities.

Earnings Call Transcript 2025-Q2

[Sudeshna Patnaik, executive]

Good evening, everyone, and a warm welcome to you all. Thank you for participating in the Q2 FY '25 Earnings Call for Tata Communications. My name is Sudeshna Patnaik, and I'll be your host for the call. We are joined today by our MD and CEO, Mr. Amur Lakshminarayanan; our CFO; Mr. Kabir Ahmed Shakir, and our Head of Investor Relations, Mr. Rajiv Sharma.

The results for the quarter ended 30th September 2024, have been announced today and the quarterly data pack is available on our website. We will begin today's call with opening remarks from Lakshmi on the business performance and outlook, followed by Kabir on the company's financial performance.

[Operator Instructions]

Some of the statements made in today's call may be forward-looking in nature and are subject to risks and uncertainties. The company does not undertake to update these forward-looking statements publicly.

With that, I would like to invite Lakshmi to share his views. Thank you, and over to you, Lakshmi.

[Amur Lakshminarayanan, executive]

Thank you, Sudeshna. Welcome to the Q2 FY '25 earnings call. I'm very pleased to share that this quarter, we have delivered a good revenue growth driven by our digital portfolio. Our consolidated revenues grew 18.4% year-on-year and 2.4% Q-on-Q. Data revenues were up 21% year-on-year and 3% Q-on-Q. Digital revenues grew 52.4% year-on-year and 3.6% Q-on-Q.

Core connectivity growth is muted at 3% year-on-year and accounts for 54% of our data revenues this quarter. Digital services account for the rest, 46%. Our EBITDA margins came in at 19.4% and our PAT grew by 3% year-on-year and came in at INR 227 crores.

Muted growth in core connectivity, combined with the expenses due to Red Sea and other cable cut related costs dragged our margins this quarter. That said, Red Sea cable is largely repaired and starting Q3, the revenue drag due to these cuts will be behind us.

Consolidated EBITDA improved 10% year-on-year. However, it was down marginally by 0.6% Q-on-Q. Our net debt-to-EBITDA ratio stands at 2.37x.

I would like to appraise you of the progress we are making on the asset monetization side, we have submitted for shareholder approval, the sale of the land parcel in Ambattur, Chennai. This is in line with our strategy to enhance shareholder value by unlocking noncore assets.

On the order book and funnel side, our funnel continues to be robust. Although the funnel addition has remained subdued in H1, we have witnessed an improved -- improvement in our win rate across all the regions. The improvement in win rate in H1 can be attributed to the large deals that have come in this year.

On the back of this improving win rates, our order book in Q2 has increased by upwards of 25% year-on-year. The growth in order book is driven across all segments in India and international, except the service provider segment. Our international region has registered the highest quarterly order booking in the last 5 years.

Our core connectivity order book is driven by hyperscalers and OTPs. Our core connectivity revenues came in at INR 2,613 crores and grew by 2.5% Q-on-Q and 3% year-on-year. India's data center industry is rapidly expanding, and we continue to be the market leaders in data center to data center connectivity space. We have signed major deals with hyperscalers for multiyear network build and capacity upgrade. For instance, for one particular hyperscaler, we are building the longest -- the long-haul dedicated network, connecting the data centers across different states. The deal is large and complex and its scale of operation in terms of the size with a multimillion-dollar TCV.

Straight over a period of 10 years, the revenue will -- for this deal will start coming from FY '26. We continue to expand our fiber network infrastructure in the country. We have a strong network presence in Tier 1 and Tier 2 towns and serve large enterprises needs. The rising prominence of Tier 3 and Tier 4 towns is creating new pockets of growth. We have been deepening our capillarity of our network in these areas to further augment our leadership in the enterprise data network market.

Coming to the digital portfolio performance. This quarter, our revenues came in at INR 2,221 crores and 3.6% Q-on-Q and 52.4% year-on-year. This growth is broad-based. We are pleased to report that our incubation business which is our IoT fabric, and it has grown in revenues by 33.8% Q-on-Q and 58% year-on-year.

The key highlight has been MOVE platform, which benefited from robust usage growth coming from addition of new vehicles. Further, there was an increase in our platform revenues as there was a rise in SOTA campaigns. We deepened our relationship with our existing customers by signing them on for enhanced platform proposition, particularly our intelligent connectivity solutions.

Our collaboration and managed CPaaS portfolio, which is our interaction fabric, grew by 6.6% Q-on-Q and 174.2% year-on-year. The media business has seen a Q-on-Q decline of 14.2% on the back of the sports calendar and large one-offs in Q1 like the T20 World Cup and Olympics, which we had in Q1.

Cloud and Security revenues are flat this quarter. The segment continues to see improving traction within the BFSI space particularly. The pipeline of deals in this segment is healthy. We are encouraged by the opportunities in this segment, and the deals that we have signed in Q1 and Q2. The next-gen connectivity, which is our network fabric, grew by 4.5% Q-on-Q and 7.7% year-on-year. The 3 pillars of next-gen connectivity services, namely the managed WiFi, IZO hybrid WAN and IZO Multicloud Connect are addressing the enterprise customers' end-to-end network transformation needs to connect the end users and enterprise to applications in the cloud.

Our digital fabric continues to resonate well with our customers. We now have an industry analyst recognition across all the 4 fabrics, reflecting our strong value proposition. You may refer to our Q2 press release for more details on the same. A solid value proposition, coupled with our long-standing relationships with large enterprises gives us a conviction to profit from the market opportunity.

With that, I'll now request Kabir to share the financial highlights.

[Kabir Shakir, executive]

Lakshmi, thank you. Hello, everyone. Let me walk you through our financial performance for the quarter. The Q2 FY '25 revenue growth driven by data and digital portfolio came in at INR 5,767 crores, consolidated growth of 18.4% year-on-year and 2.4% quarter-on-quarter. Data revenue for the quarter came in at INR 4,834 crores, a growth of 21% year-on-year and 3% quarter-on-quarter.

Digital Services revenue for the quarter came in at INR 2,221 crores, a growth of 52.4% year-on-year and 3.6% quarter-on-quarter. Emphasizing that business fundamentals continue to be strong. The most happening part of our digital business is that we are incubating new businesses to drive long-term sustainable growth.

As Lakshmi mentioned, we have put forth for shareholder approval, the proposal for land parcel sale in Ambattur. The estimated range for final sales consideration is expected to be between INR 750 crores to INR 850 crores. This action is in line with our strategy to monetize noncore assets.

Let me add that we are taking marketable strategic measures, which will start benefiting us in the quarters to come. These include strategic review of noncore assets, an assessment of their monetization opportunities, strategic evaluation of pockets which may not offer longer-term leverage and strategic review of subsidiaries, which we had suggested earlier. And we are making good progress there.

These measures will allow us to reposition our assets to drive longer-term value creation and maximize resources to invest behind our growth. Additionally, another set of measures are being pursued towards simplification, be it on the process side or cost structure to ensure that our company is competitive for future opportunities.

To drive all these measures, some of the costs will be upfront and are being incurred now. And over the next couple of quarters, we believe that with these strategic measures, combined with the right capital allocation and a robust governance framework, we are well placed to accelerate growth and maximize shareholder value.

Our EBITDA margins for the quarter were at 19.4%. We'll continue to make efforts to stay in the range of 20% for the consolidated full year FY '25. Our interest costs were higher this quarter, driven by an increase in short-term borrowings and the change in mix as there was an increase in INR borrowings.

On the tax component, there are 2 highlights. First, there was a one-off tax payout of INR 113 crores as we accelerate our process of streamlining and aligning various entities in various geographies to enable longer-term beneficial outcomes. The second being, we assessed the certainty of utilizing the past capital losses and recognized a deferred tax asset of INR 84 crores for the quarter and the period ended September 30, 2024. Our PAT was up by 3% year-on-year.

FCF for the quarter was negative INR 194 crores, significantly better than the previous quarter, and the drag was primarily driven by increase in working capital. Working capital was higher on account of dividends payout in July. Net debt for the quarter stood at INR 10,483 crores and net debt-to-EBITDA is at 2.37x. With our land monetization stated above, we see our leverage ratios improving meaningfully over the next couple of quarters.

Cash CapEx for the quarter stood at INR 447 crores. ROCE came in at 16.4, a decline of 110 basis points quarter-on-quarter. As of this quarter, the full impact of Kaleyra has been baked in.

Moving to subsidiaries. TCTS revenues declined by 26.4% year-on-year. EBITDA margins came in at 12% and EBITDA improved by 36.3% quarter-on-quarter. Our payment business reported a healthy double-digit EBITDA margin of 11.2% this quarter. As you already know, the business is completely on the franchisee model.

Let me now ask Sudeshna to open the forum for Q&A.

[Sudeshna Patnaik, executive]

[Operator Instructions]

The first question is from the line of Sanjesh Jain from ICICI Securities.

[Sanjesh Jain, analyst]

Can you hear me?

[Amur Lakshminarayanan, executive]

Yes, Sanjesh.

[Sanjesh Jain, analyst]

A couple of questions. First, Lakshmi, you said in your opening remarks that we have signed multiple hyperscaler and OTT contract, and you particularly mentioned about 1 multimillion 10-year contract, which you are connecting the various data center of in hyperscaler, I hope so.

So what is the -- because it's a 10-year scale. So what kind of growth can this particular deal bring to us from an opportunity standpoint of -- that is number one.

And number two, because we need to now also lay out the network in Tier 3 and Tier 4, so what is the incremental investment does this deal require us to do, additionally probably?

[Amur Lakshminarayanan, executive]

Yes. Sanjesh, first of all, the hyperscaler deal, this kind of build we have been doing for some time for many hyperscalers. As I said, some of these were passed because they had built capacity post-COVID, they all spent money on the back of increasing traffic after the COVID. And then there was a period of utilization of that capacity, and now we believe there is more demand, and these opportunities have come up. So I -- so that is -- these are -- one example of the deal is what we highlighted in this call today. But we have been doing these data center [indiscernible] and the connectivity for multiple customers, whether it's enterprise or the hyperscalers.

I don't want to break out the revenue, what it means because we don't give that breakout.

The second question that you asked was on the Tier 2, 3 expansion of capillarity and what it means by CapEx. We have been actually steadily increasing our capillarity in those spaces, and we are doing it very scientifically. We've analyzed all the PIN codes where there are demands, and we have identified those clusters, and we are expanding our network in those spaces. So this is not a big onetime exercise. We've been steadily doing it over the past 4 years, and we will continue to do so in order to make sure that we can address the opportunities of enterprises moving to the Tier 3, 4 cities in India.

[Sanjesh Jain, analyst]

That's clear. That means the $300 million, $350 million of CapEx, what we speak also includes the CapEx for laying out fiber in the Tier 3 and Tier 2 -- Tier 4 cities? That's right.

[Amur Lakshminarayanan, executive]

That's right. That's what we have been doing, yes.

[Sanjesh Jain, analyst]

Got it. Lakshmi, second question on the core connectivity. Even last quarter, we said that the Red Sea and the Cable Connect has hurt us. Is this completely behind us with the cable getting completely repaid? And the 5%, 6% growth what we have been speaking that we should be back from the Q3 onwards?

[Amur Lakshminarayanan, executive]

No, I don't want to comment immediately on the Q3. But to your first question, whether it is behind us, yes, it is behind us. I think the last of the cable cuts was bad. And we will now look for how to start utilizing that capacity more meaningfully.

[Sanjesh Jain, analyst]

Got it. But we are not seeing any issue from the demand side of the part or the higher pricing erosion, none of those issues which can otherwise hurt the revenue is visible, right?

[Amur Lakshminarayanan, executive]

No, no. The demand side has been steady. So just to remind you, we have been saying that the core connectivity as a business globally is a declining trend as a market, right?

[Sanjesh Jain, analyst]

Correct.

[Amur Lakshminarayanan, executive]

In that market. We had called out in our strategy that we will be in the low to mid-single-digit growth is what we said. But for various reasons, there was demand and also by the fact that the customers trust us deliver because these are all very critical connections to data centers across the globe. They value the kind of services that we provide. We have been able to garner more market share out of this and deliver a higher growth compared to the market.

So we don't see any issue with the market as such. But the overall market is having the color, which I just painted, I don't think that would change in the short to medium term.

[Sanjesh Jain, analyst]

Got it. And this hyperscaler contract, what we mentioned, that will be part of the core connectivity, right?

[Amur Lakshminarayanan, executive]

Yes, yes, yes.

[Sanjesh Jain, analyst]

The second question on the digital side of the business. If I look at the net revenue, the growth for this quarter is 1.4% quarter-on-quarter and on the gross side, it is 3.6%. We are still hitting only 15% growth, and the ambition was to touch 25%. Is the demand side issue? Or it's just that the order book and the sales funnel conversion has been slow but the discussion are encouraging. Where is that gap versus where -- what we were targeting and what we are delivering today?

[Amur Lakshminarayanan, executive]

I think we have set ourselves highly ambitious target. There's no doubt about it, and we are going after it. But the macro conditions and the challenges that have arise are something that we don't factor in when we create ambitions. And I don't want that. So setting that apart, our ambition continues to be that. And you're right in your observation that 6% translates to the number that you said, but our ambition remains the ambition and we are gunning for it.

From the demand side, we are very, very happy to see that the order booking has improved and we have been calling out that there is slowness in -- and you can see not just from our commentary, I think that's been true for everybody else, the markets and the slowness. But we are calling out increased order booking because I was always of the opinion that as you continue to improve your funnel and work your way through, something will come out of the funnel at some point in time, and this last 2 quarters has proven to be the case.

But the market conditions are still the same. I think the conversion of the decision-making time has not included in any significant way. But as it may -- we can't change the conditions. What we are focused on is continuing to invest in our fabric, in our products, continue to engage with our customers. And that is what -- and that coupled with we said that we are going to increase our sales footprint and we did that increase. And some of this, I've also been saying that as you increase the sales footprint, it takes time for the new sales team to understand the propositions, build relationships and make an impact in the market.

So I'm quite pleased with the outcome that we have had. And in order for us to continue to do this, we have to continue to invest in our products and invest in our sales.

[Sanjesh Jain, analyst]

That's fair. That's fair. Kabir, I got 3 questions, all bookkeeping very quickly. One, last quarter, you said that you want to achieve 20% EBITDA margin for FY '20? Do we hold that guidance still true?

Second, is this the only land parcel, which is put in asset held under sale? Or there are more land parcel we can expect in, say, next 12 months' time frame? And what is that amount we are looking at?

Number 3 is on the working capital, a sharp increase of $13.5 billion in the first half. This is significantly different than what we have seen in the last 4 years. So what has changed suddenly in the working capital side of it? Yes, that's it.

[Kabir Shakir, executive]

Thanks, Sanjesh. Look, our ambition is still in the range of 20%. I said range of 20%. We will maintain that ambition of range of 20%. Yes, cable cuts. I mean that's not the only reason, but if I were to filter out, there are multiple noises within that as you would have in any company in any quarter, did have a dent and we are a little bit impacted by that. But our ambition is still in the range of 20% for the full year.

On your second question on land, it is a significant one, and it's a related party deal, so it needs as per the regulations to go to shareholder approval. So it's in the public domain. I've given you the value of it, although it is there in the shareholder notice as well. I've called it out for easy reference for all of you. This quarter, we also had a small parcel, land parcel in Vikroli that we sold that is already recognized.

As I told you guys about almost a year, 18 months ago, there was a real estate strategy that was approved by the Board. And the team is constantly working on cleaning all the title issues and all the hindrances that were actually coming in the way of monetization. Now to go into specifics, we just got after enough follow-up with the local government. We got the patta issued in our name. And unless until you have the patta issued in your name, you can't really get on with the sales process, although we did the valuation, we did all of those work. So that's the reason why we are today in a stage we're able to do the monetization for Ambattur. In fact, STT is a current tenant there already, and it makes logical and strategic sense for them to become owner and then that's where we are awaiting shareholder approval to consummate the transaction.

We have a plan. I can't give you a number because all of those are mired with all of these complicated problems. And as and when we unwind each and every one of them get it ready, we will go on. Quite a few -- I mean there is no large thing coming up in the next 12 months. A lot of them are in the INR 50 crores to INR 70 crores, INR 80 crores kind of a bracket cup, 3, 4 of those properties. Some of them we went and there were some technical issues, we had to actually halt. We will restart them. So those are operational in nature, Sanjesh.

Lastly, coming to working capital, yes, I do recognize that it is -- it has gone up. Let me reassure you that the operations are completely under control. Nature of it, about, I would say, year-to-date, about INR 500 crores of the receivables of the total INR 600 crores that you see, INR 500 crores are not due. I mean those are the conditions either in the large deal contracts that we have where we have built and we recognized revenue, but they are not yet due. So they are not collectible as such.

So that has contributed to a big portion. Plus also a flavor of our deals are also changing in a way where we had to accept some of them came with the conditions of higher payment terms as well. So that was a conscious business call that we always take between margin and working capital and then do a right trade-off per se.

So that is, I would say, the anomaly of working capital, but nothing I would say is alarming that way. Also, Lakshmi alluded to large contracts that we actually signed. So when we see the holistic picture of it, a little bit of a cash timing is not something that I would be overly worried about in doing economically the right thing for Tata Comm.

[Sanjesh Jain, analyst]

Very clear. Just one follow-up on the land, what you said. You said that there is -- they are already a tenant on that land. That means other income will reduce. Will that be a fair assumption? And if, yes, how much will it dip?

[Kabir Shakir, executive]

That is correct. That's exactly the reason why I set it out even though you didn't ask for it. Look, you will have to look at other income that we actually have. And as I monetize that will come -- it will keep coming down...

[Sanjesh Jain, analyst]

Got it. And now that ST Telemedia has announced a very large expansion plan in India worth $3 billion. Is it fair to assume that they will keep requiring this land and we have planned at the very prime locations. These deals can continue.

And number two, what will be our contribution in $3 billion from the equity side of it? Will we maintain this 26% equity stake and all the equity infusion will be funded by Tata Communications for -- to the extent of our shares, sorry?

[Kabir Shakir, executive]

Yes. No firstly, I mean they have an ambitious plan of $3.2 billion, which they have communicated. That is a total outlay over 5 years. There is a large component that will be funded by debt. So then there is a balance equity portion. As of now, our stated position, which you have seen in the last few quarters as well, we will continue to maintain the 26% stake in STT. When -- what we want to do with that stake is a review that we will undertake along with multiple other things that we are doing within the business. That's what I alluded to in the first part of my speech that there is a lot of value is there in this company to be unlocked.

So a lot of costs are getting incurred upfront, which is as per accounting get booked in my current cost, but these are all the right actions that we are taking for setting up the company for success, relooking at capital allocation, how we have to invest behind growth, I think you should look at it from that larger perspective. We are a company in the digital transformation space. We are servicing the long-term infrastructure and transmission needs for our enterprise customers. We are the digital fabric, these have longer gestation periods.

And if our thinking as a management is not going to be long term and if we do not take long-term actions, we will -- I don't want to get myopic into short term. This is not from a -- I'm not saying it as an excuse, Sanjesh, but that is rightly the kind of thinking that Lakshmi drives in the organization, and it's absolutely the right thing to do.

[Sanjesh Jain, analyst]

Fair enough. I have taken more than the fair time and best of luck for the coming quarters.

[Sudeshna Patnaik, executive]

The next question is from the line of Amit Maskara.

Amit, we can't hear you. Please come back in the queue.

We'll move to the next question. The next question is from the line of Balaji Subramanian from IIFL.

[Balaji Subramanian, analyst]

Am I audible?

[Amur Lakshminarayanan, executive]

Yes, you are.

[Balaji Subramanian, analyst]

So I had 3 questions. So the first one was on the revenue aspiration that you had laid out in the analyst meet earlier this year, which was INR 28,000 crores of top line by FY '27, of which about 60% will be from digital portfolio. So that is basically around INR 17,000 crores. If I look at the annualized digital portfolio revenue for 2Q, we are somewhere around INR 9,000 crores, give or take INR 100 crores or INR 200 crores. So how should one expect the INR 9,000 crore number to move to something like INR 17,000 crores in a span of 2.5 years or so? So that is one.

And even though you have stated many times in the past that you would not like to do M&A just for the sake of hitting the revenue aspiration. What can be the -- what are the potential areas you are looking at as far as inorganic opportunities are concerned? And in that case, how do you look to fund it? I do get that you are also exploring multiple monetization opportunities, but how should one expect the funding to come through?

So that would be my first couple of questions. Once -- after I get the response, I will move to the last question.

[Amur Lakshminarayanan, executive]

Yes, Balaji, thank you. I think the aspiration remains intact, as I said in the previous question. And you are right in saying that for us to deliver this kind of a growth, our digital portfolio has to grow at a stronger clip, right? So that is what -- and that is the reason why we chose to invest in all the digital -- all the 4 fabrics. If you look at our next-gen fabric -- next-gen connectivity in the network fabric, we've invested in a new platform called IZO Multicloud Connect.

And in the coming quarters, we will be releasing a product which collects -- connects within the cloud. So with the increasing trend of people adopting more multi-cloud, that's an area which is today a small market, that is in a single-digit billion slated to growth in upwards of 20% CAGR in the networking space. So we've identified such a pocket, and we have invested in our product, and it's an early stage. This product is an early stage, and do you expect this to grow.

So in many of these areas, that is one example. So if you look at the interaction fabric today, the bulk of the revenues are coming from the SMS, the clear reading of the market and the expectation is that it will diversify from SMS to other channels and also more of AI capability and orchestration across multiple channels will become the norm. And those are the areas we're investing.

So these are all new areas, and we have placed our bets in a lot of these new areas, all of which are white spaces with good growth potential. So I think that is one dimension of where we are focused on in order to capture the opportunities.

The second dimension is about the markets itself. The international market is a bigger white space as we've been calling out. And that is a market where we are increasing our footprint. We do have a challenger proposition there. We have to go and replace the incumbents, and that is what we are working on. So the way we have set out our ambition is based on what we see as the market opportunity, our reading of where the technologies in each of the fabrics will go, and we believe we have placed our bets and investment in all the right places.

To your question on funding, if you chose to do inorganic. I think Kabir talked about the several monetization opportunities and value unlocking opportunities that we have. And those are the things that we would use to do. Kabir, do you want to add anything?

[Kabir Shakir, executive]

Yes. Look, Balaji, I would say we have a lot of growth ambitions both organically and inorganically. To your point on M&A, we have clarified many a times, there are core principles that drive our M&A decisions. It has to be responsible, it has to be strategic and it has to create value for everyone. The places where we will look at obviously are going to be deepest. Having said that, I am not averse to complementary capacities coming in the core connectivity space.

So we will actively look at it. We have an active M&A funnel. And as and when that funnel progresses to a level, it will go to the Board and go through the due diligence before it's approved and then it's ready for us to communicate externally as well when we do such things.

Funding of it, both organic and inorganic, are something we constantly look at and as Lakshmi alluded, there are multiple levers, monetization opportunities that we will examine. But let me rewind the clock 18 months before. What did we do? We did have an aspiration of M&A, we spruced up, we delivered a very healthy profitability in our business. We brought our net debt down to 1.3x, created the war chest and the capacity. We were operating at a very healthy 29% ROCE. And then we went and acquired these 3 assets.

And our task is to, of course, integrate and deliver on the synergies and the business case of these assets. And we have given you an indication of when net debt leverage, ROCE and EBITDA margins will come back to our ambition ranges. And when we get back there, I've said multiple times, our objective is not to stay there. Our objective is to use our financial muscle to invest behind growth.

Now what happens between the time we get there and now if there are interesting opportunities, that's why we will look at all these monetization opportunities. With the robustness of our financial performance, our own headroom on debt capacity has also gone up. So if required, we will look at avenues. We've also done theoretical exercise on varying target sizes, what is the right funding instrument that we need to use.

So depending on the opportunity, depending on the target, I think, Tata Communications today has the right hygiene and a robust balance sheet to tap on to the right capital asset that is required to fund that opportunity.

I'll leave it at that, Balaji, I can't go any further detail than that.

[Balaji Subramanian, analyst]

My next question was on the interaction fabric that you had mentioned. So you did allude to the diversification of enterprises towards non-SMS channels. But based on what I gather from market sources, it does look like even though WhatsApp volumes are on a tear, there have been some renegotiation of terms from WhatsApp's side towards CPaaS players. And I do understand that they have taken up the incentive, which you get -- the threshold, which needs to be crossed to be eligible for the incentive. And there is chatter that eventually the gross margins in the WhatsApp business will also settle down to something like 15%, 20%, which is what we see in the domestic SMS market.

So how do you kind of reconcile the fact that at the end of the day, something like a channel like an SMS is something which is owned by the telco while WhatsApp as a channel is owned by Meta. So considering the typical lack of ownership of these channels by a CPaaS vendor, do you think that, that will come in the way of monetization of CPaaS in the long run?

[Amur Lakshminarayanan, executive]

Yes. So we cannot really speculate on what will happen. There are not just these channels. There are voice channels, for example, which we own and programmable voice is another big opportunity. There are video opportunities. There are RCS opportunities. So the channels will continue to expand. So I think we need to just -- and we cannot also predict on which channels are going to pick up the most in the customer. So that is one area we do need to develop the products, which we are doing and take it to customers.

The second is, I think the customers also will settle on looking at what are the optimal channels to use in terms of across these channels, which is where our ability to orchestrate across multiple channels, build out those orchestration layers and bring AI to that will be crucial. So after all, finally, it will be channels, will be channels.

[Sudeshna Patnaik, executive]

The next question is from the line of Vibhor Singhal from Nuvama.

[Vibhor Singhal, analyst]

So Lakshmi, a couple of questions from my side on the overall growth environment. So as I think you have been asked by the earlier participants, I think the growth in this quarter was kind of stable, but of course, there's a big gap between what our aspirations are and what we are delivering at this point of time.

How is the basically overall macro looking like, especially with respect to the second half of the year? We've seen a lot of IT services vendors talk about the interest rate cut having reinvigorated talks about discretionary spends. Is that also something that we are also hearing and will that be applicable to us as well? But on a broader note, what is the kind of growth that we are -- I mean what is the kind of overall growth trajectory that we're looking at for the second half this year?

[Amur Lakshminarayanan, executive]

Yes. I don't want to comment on immediately the immediate quarters. I think the -- we are very encouraged by the order bookings that we have had in the last 2 quarters. And the second data point that I have is that the time taken to convert these orders actually have been longer as well. As I've been saying, as we put more in the funnel at some point in time, it will come out, right? So our effort has been to see how do we put good quality of deals into the funnel, increase our engagement. And that -- those are the things entirely under our control, and that is what we are focused on.

To the question on macro, there are different readings of it in terms of the geopolitical risks, that is even more heightened and in fact, worsened. Yes, the interest rate cuts have been encouraging. So it's hard to read into some of these. And the second aspect, which I have been highlighting also in the area of network, for example, they are -- the customers do not replace it just like that because it's a fairly complex process that they have to go through. And there is an inertia for them to do. So there is a lot of work that we are having to do with the customers to switch from incumbents.

And having done that, the time to realize some of these revenues are also longer. So yes, macro plays a role in which case, if they build more applications and if they put more into the cloud, their existing network architecture and infrastructure begins to crack. And that is when they look to see whether they can look to transforming the network.

So in a sense, that's a relationship between macro as macro improves more applications, more things moving to cloud, more stress on their legacy network and therefore, they need to transform. So it's a longer cycle from our perspective. But the good thing is we stay focused on. And the encouraging thing is also we have multiple fabrics, right? So hopefully, the discretionary spend goes up, our interaction fabric, I believe, will continue to stand to benefit from such a move.

[Vibhor Singhal, analyst]

Right. But if I were to vary the answer you just gave with the answer to Sanjesh's question in the beginning. You mentioned that, of course, there's a macro factor, there's a market dynamics. When we build aspiration, we, of course, don't take market dynamics into account, and we hope for the best. So what exactly are the market triggers or, let's say, drivers that you are waiting for? You had an interest rate cut. There is a talks of discretionary spend picking up. What exactly are we waiting for? I mean, what are those events? Or what is that something which you believe is going to be -- is going to drive our revenue growth to our aspirational levels?

[Amur Lakshminarayanan, executive]

No. I said, we're not waiting for anything for happening. So if you look at each of the -- I think I gave and elaborate answer as far as the network. So when do people undertake network transformation is particularly when they go to cloud, they see that their current network architecture is not able to cope. They become under cost pressure, and therefore, they look to replace their traditional network with more internet-based architecture.

And as they move to more Internet-based architecture, there is more need for network security and SASE, which is where, again, we have invested. So I think the trigger would be largely where the enterprises get to a point where as they move their applications to cloud as they have more distributed touch points either from their users accessing in multiple places, the application performance begins to go down. And as they go to use more Internet, they get more worried about security. And therefore, the network transformation, implementing network security-related thing sort of accelerate. So that's a trigger point as far as that is concerned.

So in the cloud and our security fabric, I've spoken to the security fabric. So the network security is one. The second is we are seeing a lot of opportunities on implementing a very state-of-the-art SOC for customers. And that is what we announced a deal last quarter, for example. And these are -- and there are multiple such opportunities where the threat landscape is increasing and people are wanting to implement.

So in a couple of these deals that we are implementing, we are -- it's a complex implementation, integrating over 20 different OEM technologies to deliver and we are enabling it through threat intel from our network and bringing AI capabilities to that, right? So that is another trigger event for that portfolio.

And of course, the cloud, we are strengthening our Infrastructure as a Service as well as the platform. We have -- we expect us to announce some relaunch of these products in this coming year. And we are investing in AI cloud, which is in a very, very early stage. So these are some of the examples I can talk about for each of the fabric. There are clearly trigger points in each of the fabric, which are driving -- which we believe will drive the growth.

[Vibhor Singhal, analyst]

Right. Sure. I got that Lakshmi. So I mean, okay, I'll probably just have a couple of very specific questions. The media revenue saw a very sharp decline in this quarter. Any specific reason for that? I'm sorry, if you've elaborated that already. I missed the initial part of your opening comments.

[Amur Lakshminarayanan, executive]

Yes. So no, I did mention that media is a bit cyclical with -- based on the sports calendar. A lot of our media revenues comes from our coverage of live sporting events, right? So we are the leaders in a lot of global sporting events like the Formula 1 and others. Last quarter, we had the IPL, it's not the international cricket, the T20 match in the U.S. and the Caribbean. And we also had Olympics. So all of that were in the last quarter. So depending on the sports calendar, it has a bit of cyclicity, I would say.

[Vibhor Singhal, analyst]

Got it. Sure. That's helpful. Just last question for Kabir. So Kabir, I think you -- I mean, this quarter margins, I suppose, were impacted because of the maintenance expenditure in the core connectivity segment. I mean excluding -- I don't know if you quantified that again, maybe I missed out in the initial parts. But excluding for that, are we looking at a trajectory in which we are looking to expand margins every quarter, especially in the digital space as we are now -- as we would now be starting -- as we should now be starting to reap the benefits of integration of both Kaleyra and Switch. Is that understanding correct? And is that also what we can also build in, let's say, for the next year as well.

[Kabir Shakir, executive]

Well, look, what I've said we want to get back to our ambition of 23%, 25%, and that will come in 2 years' time. This year, I've said we will be in the range of 20%. That's what we would like to get. 0.5% here or there is not the point, but that is the range we will get back in.

What your point you say -- I will not say only for Kaleyra, but all -- for the entire digital products itself, we have a glide path. We have mentioned this that we have a glide path which -- and there are multiple drivers and the drivers differ from product category to product category. And those are tracked in terms of margin expansion.

So absolutely, yes, we want to be able to drive faster, better growth in DPS and also profitable growth. So therefore, even that profitable trajectory also needs to go up. Even from the current levels when we drive faster growth, we have a headwind because of the mix effect on our margin profile. Despite that, our ambition is to stay in the 23%, 25%.

[Sudeshna Patnaik, executive]

The next question is from Vinit Manek from Karma Capital.

[Vinit Manek, analyst]

Just one question for Lakshmi. So Lakshmi, not specifically on the numbers, but we have seen a good growth Q-o-Q for this quarter and with a lot of revenue coming back on our core connectivity and few of the good order book that we have seen growth for the last 2 quarters. So can we expect a better second half versus the first half revenues that we have seen? Or any comments on that?

[Amur Lakshminarayanan, executive]

So Vinit, I sort of gave a color to some of these order books while I cannot give specific guidance. I've also given a color on the order book that some of the orders, I think I mentioned about the large hyperscaler network build. I mean that will come almost towards the second half of FY '26. Some of our network deals, we book the order by the time we realize the revenues take longer. But there are certain portfolios where booking the order to conversion is faster. So it's -- so the various portfolios have different colors. So it's harder for me to -- while we know how it's going to translate, we don't want to break that out and give a guidance for the H2 based on this.

[Vinit Manek, analyst]

Got it. Got it. And 2 bookkeeping questions for Kabir. So Kabir, any sense on the kind of usage of the cash that we're going to do from the divestment that we had announced. So will it be more towards the debt repayment or it will be required for some accelerated investments on the AI cloud or the GPUs that we will be doing mostly in the second half?

[Kabir Shakir, executive]

Yes. I would have liked if you did not call it bookkeeping questions. Finance in Tata Comm is quite strategic and we add value to the business in a fundamental way. So yes, bookkeeping is what we do to earn our salary, but we are here to drive business forward.

Yes, we look at source of funds and use of funds. We have a strategic plans that drives our actions. We have our ambitions to be the digital fabric for our enterprise customers. And we have INR 28,000 crores as our Northstar in FY '27. We have digital portfolio that we want to drive as an acceleration. So those are all our guiding factors. And yes, each and every opportunity will be evaluated based on the ROI that it needs to deliver. So we are measuring from a very careful angle of driving growth, driving profitable growth, yet delivering the ROCE that we want to do and maintain a certain healthy debt-equity ratio and leverage.

So there are multiple places from where this is optimized. So I would say we will look at every element, both in the P&L and in the balance sheet and sweat each and every piece of asset that we have towards driving profitable growth.

If you had probably been exposed to the finance strategy. There is a big pillar called Fit to Grow and the Fit to Grow is not just a conceptual model. It's a strategic planning model backed with multiple scenarios that the team updates on a monthly basis, which guides us in terms of the resource allocation for the business, both for organic and inorganic activity.

[Vinit Manek, analyst]

Got it. Got it. And can you just repeat the onetime expenses that were there in the interest cost of INR 193 crores this quarter. And could this be the peak absolute interest cost for us because we have already hit the threshold of the debt to EBITDA kind of a thing that we had on the aspiration side. So can we say that this is the peak interest cost on the absolute side?

[Kabir Shakir, executive]

Firstly, it's not a onetime cost. That's my interest cost bill for the quarter, INR 193 crores. Well, you tell me that the Central Bank of India and the U.S. will not increase rates. I will give you the guarantee that, that is the peak. Look, we have hedging that we do. We have an interest rate management policy that we actually run. In this particular quarter, the costs have gone up because of increase in short-term borrowings and a mix of INR versus dollar debt. So that is the reason. I'm sorry, I can't give you guarantees whether we have reached the peak or not because I do not control interest rates.

[Vinit Manek, analyst]

Okay. But how much was that? Can you quantify that for the quarter?

[Kabir Shakir, executive]

It's very marginal. Our weighted average cost of debt is still lower than the previous quarter. It's only the absolute that's gone up because of the mix between the short-term borrowings that are taken in India. So it's a few crores here and there.

[Sudeshna Patnaik, executive]

The next question is Priyank Parekh from Abakkus Asset Managers.

[Priyank Parekh, analyst]

Am I audible?

[Amur Lakshminarayanan, executive]

Yes, you are.

[Priyank Parekh, analyst]

Yes. Just wanted to understand from the perspective of -- that we have multiple segments. And within the digital portfolio, we have 5 segments. So when we are projecting the growth for next 3 years, I want to understand how correlated these segments are? Are they quite heavily driven by certain levers or they are completely diversified?

[Amur Lakshminarayanan, executive]

You mean if in each of the segments, yes, I don't think there is much of correlations. So there might be some correlation between the network fabric and for example, the cloud and security fabric. I think I answered in the last call, as people do network transformation and tend to use more of Internet, there's going to be more need for a different security architecture in the network through the SASE and other new technologies, which is linked to the network transformation that takes place. So that is one linkage.

But otherwise, I don't think there are huge amount of linkages between an interaction fabric and the network fabric or an IoT fabric. And also, we find that the buying personas within enterprise for many of these are somewhat different. Even within the network fabric, the person who looks at network and typically, the people who have been looking at network security have been different. And as it begins to converge, we are also seeing that in enterprise, there are changes on how they make the decisions. So there are certain convergence like the LAN and the WAN, the WAN and the security. But truly, there are different personas taking decisions, and there are different drivers. There are not many more links I can think of.

[Priyank Parekh, analyst]

Okay. And when we are speaking that INR 280 billion of the revenue in next few years, which segment you are really seeing driving that growth within the digital?

[Amur Lakshminarayanan, executive]

Yes. No, all the fabrics. I think I have elaborated before, the network fabric, the cloud security, the interaction, IoT, the media, all of them have potential, and all of them can grow at a very healthy double digit.

[Priyank Parekh, analyst]

Okay. Okay. Got it. And just the last one question for understanding, when we are saying that this land sale will impact our other income, that is the real estate income that we are reporting, right?

[Kabir Shakir, executive]

Sorry, if you repeat that again, please? I missed you.

[Priyank Parekh, analyst]

So when we are saying that this land sell will impact our other incomes, that is the real estate income that we are talking about.

[Kabir Shakir, executive]

Yes, that is correct.

[Sudeshna Patnaik, executive]

The next question is from Gautam Rathi.

[Nishit Rathi, analyst]

This is Nishit, can you hear me? So just a couple of questions, you called out the best international order book in the last 5 years. Can you give some color as to what is driving this? I know you gave a very detailed explanation with respect to some of the network transformation deals and how long it takes to kind of get some of those. Have we -- are we seeing some of those also in that kind of order book? Or this best order book is without some of those network transformation deals?

[Amur Lakshminarayanan, executive]

No, no. I think the order book, again, as I mentioned, is across the -- all the fabrics. But having said that, in some of the usage-based areas like the interaction fabric, we don't really include that in the order book because that is purely usage based, unless we have a firm commitment, we don't include that in the order book. But the order book color that I gave is across all the 4 fabrics.

[Nishit Rathi, analyst]

Anything incrementally that has changed, Lakshmi, one thing you called out is increased sales productivity. You're basically saying that your funnel had increased so much that something had to convert because you had put more manpower behind it. But is there anything incremental that you're seeing? Are you starting to win deals differently? Any other kind of color would be very, very helpful or this is it?

[Amur Lakshminarayanan, executive]

I think it's early to call. I mean, we -- obviously, the win rates have improved, which is simply a function of how much we are winning compared to how much get dropped because the customer is not simply taking it forward or they choose to stay with the incumbent, those kind of scenarios. So the win rates improvement is encouraging.

Yes. Other than that, no, it's a factor of gaining the confidence with the customers because especially in the -- in all of these digital infrastructure areas, they are very, very core and fundamental to the enterprise. It is not that if something goes wrong and in an area, they could easily replace. It takes time.

So they are a lot more conservative. So that's the reason why it takes time. It takes time to develop the trust, and there is a long engagement cycle that goes behind that. So -- but in terms of color, I don't think I can add any more color to that. Yes, there are instances where we have won against certain incumbents consistently. But other than that, I can't give you any further color.

[Nishit Rathi, analyst]

See, I just wanted to make -- I just wanted to call out what I understand. And just if you could help me understand that, right? If -- the way I'm thinking about it is that it's a long sales cycle and you guys have been at it for the last maybe 18, 20 months, adding more and more salespeople, which means that you've been adding to the funnel, but because of the long sales cycle, it takes time. And now you are starting to see fruit of some of those deals come through, though the market is still not improved, which is kind of showing up in your subdued funnel, right?

So it is more gradual, but there is a possibility that as incrementally both your productivity of the sales improves as you keep adding more products and the market improves, this could accelerate, right? Is that the way you are seeing it? Or is there anything different?

[Amur Lakshminarayanan, executive]

That is our plan.

[Nishit Rathi, analyst]

Perfect. So that is one. And just the subdued funnel in the context of increased salespeople, so have things got even worse on the macro side because your salespeople are getting more productive, which means that even with the macro being soft, you should have actually been -- the funnel should have been growing, right?

[Amur Lakshminarayanan, executive]

So I think you should read that in context with the conversions as well, right? So we have got deals which means that we have fruitful conversion of the funnel and when you convert, then it gets out of the funnel. So we have to replenish the funnel, right? So what I'm saying is the funnel is remaining constant, which is why we said the funnel is still robust. But in terms of the pace of new additions, that had somewhat slowed down because, rightfully so, the teams are also focused on closing some of them.

[Nishit Rathi, analyst]

Okay. So the staff -- okay, he's occupied there. And just is there any update on the NVIDIA partnership because Q3 is when we were expecting that to go live. Any kind of color you want to give on that? How do we see that starting? What kind of revenue impact should we see from Q4, Q1 onwards?

[Amur Lakshminarayanan, executive]

No, it's close to the period that you said Q3. So please wait for the launch.

[Nishit Rathi, analyst]

Fair enough. And just the media side, I understand the seasonality on a quarter-on-quarter basis. What I'm a little -- what I'm not able to fully understand on a year-on-year basis given the kind of commentary that we were hearing with Switch and the kind of opportunities that were opening up there, are these again work in progress? What is happening out there, if any, kind of understanding there?

[Amur Lakshminarayanan, executive]

Yes. I think we are closing deals. And -- but some of the seasonality is not a yearly seasonality, Olympics doesn't come every year. The ICC T20 doesn't happen every year, right? So some seasonalities are annual seasonalities, which reflect in the quarterly things like the Formula 1 race begins and ends in certain seasons. But some of the other events are not a yearly calendar one. So that's what I referred.

So -- no, I think the integration with the Switch is proceeding at pace. We were impacted somewhat by the Hollywood strikes last year, and things are beginning to pick up again. So we are quite pleased with the revenue opportunities through the Switch integration, particularly on the production side because it does expand our capability beyond just the transmission side that we were in before.

[Nishit Rathi, analyst]

That's fair. Kabir, you spoke about a lot of the cost getting booked upfront and a lot of investment being made. Can you just help us understand maybe a few examples for us to kind of just get a better understanding of this...

[Kabir Shakir, executive]

Nishit, there a lot of them are there already in the public domain. We've, for example, preparing ourselves to play really well in the acquisition game. We are reorganizing our subsidiaries. Now TC U.K. is a direct subsidiary of India. That's there in the regulatory filings, it's there in the public domain. So that's from an M&A perspective that we are competitive to be able to do that.

Then there are other projects in preparatory stage for any monetization opportunities that we may get, which are not yet approved by the Board. So I'm not privy to share any -- these are preparatory works. When it happens and when it reaches and when the Board approves, then this will be the reason for public disclosure. Until then, I can only tell you that as we are poised for growth, and a lot of you have asked the question on use of funds and how will we do it. So you've looked at all of them and say, how can we do that in a tax-efficient and a least cost way. And our structure, if that's coming in the way, we are trying to simplify that structure. That's the best level of information I can provide. I can't go any more detail than that.

[Nishit Rathi, analyst]

That's very fair, Kabir. Kabir, the employee cost also is this normal increment or the INR 50 crore increase quarter-on-quarter? Just can you help us understand, is there anything out there that we need to understand? Did you add more -- what was that?

[Kabir Shakir, executive]

No, no, no. It happens every Q2. If you actually look at it historically, so we will -- we accrue for a certain SIP costs and for the full year of the previous year, that gets paid out in the first quarter. And when there are excess provisions that get reversed. So therefore, you're comparing against the base effect, why -- that's why it looks increased, but it's not any increased -- increment. It's not an increment cycle. Q2 is not our increment cycle. So it's not increment cycle, not any extra hires. So that is not contributing for it.

[Nishit Rathi, analyst]

Look, Q1 had some reversals and Q2 is more normalized, and this is how you should be seeing this. Okay. That's correct. Okay. And this INR 86 crores, which has been included in revenue, what exactly is it? Is it like a debtors or provision made, which has been reversed? Is that understanding right?

[Kabir Shakir, executive]

No, no, no, it's not. Look, it's BAU for us. These are excess customer credits that we had, which would have otherwise given to customers on renewals and stuff like that and negotiations turn up better. So it's normally a very, very BAU activity that happens every quarter, every year because sometimes renewal happens and you go and close the discussions 2 months, 3 months later on. And so you obviously take a view that you may end up giving so much as a discount, but you get better than that.

The reason why we've called out this time is because it's an aged customer credit, which is greater than 5 years. And therefore, just as part of good governance, we said since it's an aged credit and not within the year, we've called that out. But otherwise, these are regular BAU stuff.

[Nishit Rathi, analyst]

Understood. And just one last thing on the working capital side. The inventory number seems to be very high. And also, is there any impact of Kaleyra in our working capital because it's a kind of business where you have to give advances upfront. So can you just call out -- help us understand the inventory and the Kaleyra.

[Kabir Shakir, executive]

Inventory is a deal-specific, Nishit. So there's one large deal where we've procured the inventory, but we are unable to build the customer because of the RFP condition that we have to stitch a solution and then only we can do it. So we have procured it for that particular purpose. It's -- most of our inventories, I mean, are for customer orders. They are -- we don't have an inventory policy. We don't stock inventory per se. So this is directly linked to 1 large deal.

[Nishit Rathi, analyst]

And Kaleyra, is there an impact on -- of Kaleyra on our increased working capital because you need to give advances to the telcos and stuff like that?

[Kabir Shakir, executive]

No. There is one specific deal in Kaleyra, where there was an advance payment that was -- that had to be given, which is factored in. I would -- as I responded earlier to Sanjesh, also, I would say these are -- this is BAU, and we have taken an economic call in totality per se.

[Nishit Rathi, analyst]

No, this is very helpful. Just one last request, Kabir, whenever you think it's right, it's very interesting what you spoke about the core and the noncore and you guys have a very detailed plan towards that, whenever you guys can share maybe whatever you can share in that context for us to kind of take a long-term view on that business, because I believe it could have a very material impact because you have a lot of capital coming out and costs getting saved, which will then be used to reinvest for further growth, right? And if you could share that plan with us at any point of time, it will be very, very helpful. It's a request from our side, you can consider whatever best you can.

[Kabir Shakir, executive]

It's not about request. Sorry, Nishit, let's not be irresponsible with that comment. We are a public listed company regulated by financial markets and SEBI. There are very clear laid out disclosure requirements. When proposals of this nature go to the Board, Board get approved, we are under obligation to report to the market. This is not a request. So please don't consider it. We, as a management, are obligated, and we will absolutely do everything in compliance with the law and to the strict levels of corporate governance. So don't even have an eye of doubt on that.

[Nishit Rathi, analyst]

No, no, I agree with that. I'm not saying what happens. I'm saying what is the way forward, what is strategic, what is not strategic? What can -- what kind of amounts are you looking at saving...

[Kabir Shakir, executive]

That's what I'm trying to say, Nishit. The moment I say this is an asset that I want to dispose, I'm obligated to call it as asset held for sale and put it in my account. So until that review has happened, until the Board has approved it, we cannot do it, and I can't be flippant with those remarks.

[Nishit Rathi, analyst]

Understood. Got it. Understood. Fair enough.

[Sudeshna Patnaik, executive]

Last question, and this is from the line of Amit Maskara from Sephira.

Amit, we still can't hear you. We will request you to please reach out to the IR team, and we'll help address your question.

With that, we come to the end of the Q&A session. Thank you, ladies and gentlemen. I will now request Lakshmi to please share his closing comments.

[Amur Lakshminarayanan, executive]

Thank you all. I think it's been a good interaction. I think we covered a lot of ground. Very pleased with the quarter in terms of the growth, both in the top line and in the EBITDA and PAT. Also pleased with the order booking in the first 2 quarters that we have had. We commit to stay focused on executing on our strategy. Thank you.

[Sudeshna Patnaik, executive]

Thank you, Lakshmi. This brings us to the end of the call. In case of any queries, please write to [e-mail]. Thank you for joining the call, and you may now disconnect your lines. Have a good evening.