Tejas Networks Ltd

NSE:TEJASNET

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to Tejas Networks Q4 and FY '22 Results Conference Call hosted by ICICI Securities Limited. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Bhupendra Tiwary from ICICI Securities Limited. Thank you, and over to you, Mr. Tiwari.

[Bhupendra Tiwary]

Good evening, everyone. On behalf of ICICI Securities, we welcome you to Q4 and FY '22 Results Conference Call of Tejas Networks. We also thank the management for giving us this opportunity.

From the management, we have Mr. Sanjay Nayak, who's CEO and MD; Mr. Arnob Roy, who's COO and Whole Time Director; Mr. Venkatesh Gadiyar, who's CFO; and Dr. Dr. Kumar Sivarajan, who's CTO.

So without much ado, I'll give it to the management. Over to you, Sanjay.

[Sanjay Nayak, executive]

Thank you, Bhupendra, and welcome, everybody, to our earnings call. So we have uploaded the presentation on our website, so one which I'm going to be walking through. Earlier in the evening, we also released our results for Q4. So I'm assuming you have had a chance to at least have a preliminary look at the scene. Over the next half an hour or so, I will give you a little bit more color on the results and the state of the business.

I'm on Slide #1, which is the key update for Q4. And as said, as I had mentioned in my press release, we are disappointed with our Q4 performance because while we had a lot of orders, we have a lot of customer wins, because of the global supply chain shortages, we could not deliver as much revenue that we had originally planned for, despite the best efforts that the company and the management team could do. But that is something which, of course, we're not very happy about. But it is what it is.

Having said that, in terms of the Q4 numbers, our net revenue for Q4 of INR 127 crores and for the entire financial year, it was INR 551 crores, which is a year-on-year increase of just around 6.9%. We had a loss in Q4 of INR 50 crores, including some onetime items, which Venkatesh will talk about later. And for FY '22, we had a loss of INR 63 crores. Cash and cash equivalents are at INR 1,102 crores. And of course, we have more debt.

Clearly, we saw margin pressure due to increase in component cost. Semiconductor components have increased prices worldwide. And we had -- we could not pass on all of it to our customers. So as a result, we did have a dip in our margins as well.

In terms of the way our business, as many of you know, is that our manpower costs are almost fixed. So if the revenue comes down beyond the certain thresholds, we do not have a corresponding way to absorb the manpower cost. So that's why the financial performance does dip quite a bit with the decline in revenues.

In terms of the overall sales update, this is where things are actually going quite well. Our Q4 bookings, which is new order wins, was INR 316 crores, and our total order book has increased to INR 1,175 crores, which is a year-on-year increase of 73%. So this is the new business that we have won during the year, and these are the purchase orders that we have in hand. In addition to these purchase orders, as we always do, we will always have run rate business from existing customers. And in this particular case, there's also a potentially large order from BSNL via our system integration partner that we have not counted as yet because it has not yet come into our books.

The second thing I would like to highlight is that our 4G RAN, which is the 4G base stations, have successfully completed the BSNL’s Proof-of-Concept testing of the indigenous front stack, which is being continued by our system integration partners. And our products have also been cleared for commercial deployments, for which we are now awaiting the order. I think a matter of big pride for the company as well as for the country that in a record period of time we were able to create a completely indigenous base station, and it has passed all the testing criteria in the field trial and proof of concept, which was held over a period of 9 months. I think this is a very good start because it can potentially give us very large orders in the wireless 4G to begin with and then, of course, upgrade for future technologies as well.

The other thing I would like to mention is that our entire product portfolio has been approved as a trusted product by government of India. They have a rigorous process for doing that, and all our products have been approved.

International business was weak in Q4 primarily because of supply constraints. International orders and run rate orders usually come with a shorter lead time. And of course, we could not supply those orders. And as a result, a lot of that have gone to the backlog. In terms of the supply chain update, which has really had a big hit on our quarterly performance, I can pretty much clearly say that the shortfall was on account of component shortages, which we could not fulfill our customer orders and ship complete systems.

As I mentioned, I think in the earlier call also, we have more than 1,000 unique components. And even if a few components do not come, our entire systems get choked out. In the -- during the year, we had anticipated the supply chain shortage, and the high-cost, high-value components, as we call them, the class A components we had already covered for. But during the year, the Class B and Class C components, which are smaller components, which hardly cost anything, those also became short in supply. And our inability to get all of them in time basically resulted in us not being able to manufacture those systems and ship it despite having a very strong order book and customer wins.

What are we doing now? We have already placed orders for our entire FY '23 requirement, which is more than 12 months ahead of time. And we have a fairly large funnel of business that we have won both in the form of order book, in the form of run rate customer where we have visibility and also in the form of some of the larger orders we can potentially expect. And to cover for that, we've already taken inventory actions as of date already. So we are confident that as the year progresses, we should be able to recover the lost revenue that we had from last year and also to be able to grow our revenues quite significantly in this financial year.

I would also like to say that we have not lost any business. We have been working closely with the customers and all the critical requirements of the customers were fulfilled. Whatever we could not fulfill over the next few quarters, we will be able to supply to our customers. We could have one more business if we could have supplied in time. But since we could not, some of the run rate customers held back some of the orders. So despite that, I believe that we could get an order book going. But clearly, as I said earlier, the financial results are something that, from a revenue perspective, we are very happy about.

On the next slide, some other corporate updates, which are important, which I would like to share with you. First, today, in our Board meeting, we have -- the Board has appointed N. Ganapathy Subramaniam as Non-Executive Chairman of the Board effective from May 18 and Mr. V. Balakrishnan, who was so far non-Executive Chairman of the Board, has decided to step down with effect from April 23, 2022, which is tomorrow. And the Board unanimously expressed our deep appreciation and admiration for the skillful manner in which

Mr. V. Balakrishnan steered and

positioned the company in its journey from a start-up to India's first listed deep technology telecom product company. So with NGS coming in as a Chairman of the Board, we're also very excited because he has the experience of taking companies of our size like TCS and getting them to global scale. And with him in the helm really gives us a very good positive way forward as well.

Some of you would have attended the call on March 30, when we had announced the acquisition of Saankhya Labs, and that will enhance our wireless product offering. It will bring strong domain expertise and IPR in wireless communication in 5G, in broadcast as well as satellite communication. And as I said earlier, Saankhya Labs will be complementary in terms of our product technology areas and customer base.

[Unknown Attendee]

[indiscernible]

[Sanjay Nayak, executive]

Am I audible? I think there was an interruption.

[Operator]

Yes, your line is audible.

[Sanjay Nayak, executive]

Perfect. Okay. I just want to make sure there was someone -- the third thing I wanted to announce was, which again on 8th of April, Panatone Finvest Limited, a subsidiary of Tata Sons, exercised their Series-A warrants and their shareholding is now increased in the company to 52.45%. And they have a requisite number of equity shares were allotted to them as per the agreement that we had. Now we are a 52.45% owned by Panatone Finvest.

The last, I think, our product TJ1600 family of product won the Innovation Excellence Award from Voice and Data Magazine. This is our flagship DWDM, OTN platform. And it tells a lot about the competitiveness of our high-end product in the transport segment. Of course, ET Telecom selected the Tejas CEO and CTO in the same year as is for the CEO and the CTO of the Year award. We were given 3 patents in Q4, taking our total granted patents to 137 and are planning to 350. We also received the ISO 27001 certification, which is for information security management, especially in today's time in cybersecurity and such things are very critical, it was very important for our company to be able to get this certification. So that's really a quick summary of all the things which are happening in the company from a business as well as sales angle.

I'll dive a little bit more into the sales and the other stuff in a few slides, but I would request Venkatesh, our CFO, to walk us through the next couple of slides on the finance side so that you get a complete picture of the results as well. Venkatesh?

[Venkatesh Gadiyar, executive]

Yes. Thank you, Sanjay. On the slide of Q4 and FY '22 financials. Net revenues for Q4 '22 was INR 126.5 crores, which we saw a decline of 37.2 percentage on a year-on-year basis. EBIT loss of INR 110 crores for the quarter and PBT loss of INR 95.9 crores and a PAT loss of INR 49.6 crores and EPS of minus INR 4.34 per share. Similarly, for FY '22, the net revenues were INR 550.6 crores, which is a year-on-year growth of 6.9 percentage, EBIT loss of INR 157.2 crores and PBT of -- a PBT loss of INR 117.1 crores and a PAT loss of 62.7 and the EPS loss for the entire year is minus 5.97. Basically, the loss has happened for the multiple reasons. One is there was a gross margin pressure in the entire year. In Q4, particularly our international revenue was weak. Basically, international revenue comes with a higher material margin, because of that, our material costs are high. Secondly, the gross margins were under pressure due to material costs have been increased on a year-on-year basis with a 700 basis points due to the increase in the component costs. Costs have significantly increased. But however, we were not able to pass the entire increase in the component cost to the customers. That's how we may have to get that at some point of time cost.

Secondly, as Sanjay has mentioned, the expense structure of our size of the company where the -- most of the costs are fixed in nature. Such costs were not able to absorb in the revenue, what we have done so far, and it has resulted into the loss as well.

And the third point -- during the quarter ended March 31, 2022, we have assessed the recoverability of our overdue trade receivables from BSNL, which is one of the public sector customers. And in view of the delayed collections, we have made an additional provision of around INR 67 crores towards such receivables, which were aided about more than 3 years, which is a onetime kind of provision that we have made on the receivables. However, we are confident that money -- we are able to collect the money in the coming quarter in this financial year.

Next slide. Key financial indicators. The cash flow from operations, cash outflow of INR 49 crores in Q4 -- and the net worth has decreased to INR 1,593 crores from INR 1,636 crores. Inventory has slightly gone up from INR 271 crores to INR 278 crores, basically due to the critical component shortage, and there was imbalance in the inventory, what we are supposed to get in, and there is an increase in the inventory as at March 31, 2022.

And after making a onetime provision of ECL, INR 67 crores of -- in the ECL for the trade receivable, the receivable position as of March 31 has come down to now -- net receivable has come down to INR 292 crores as against Q3 balance of INR 358 crores. However, we have collected around INR 695 crores in the FY [indiscernible] towards the receivable collection. And in Q4, we have collected about INR 165 crores. And the net working capital has slightly increased by INR 18 crores, which is primarily due to the increase in the inventory level. And the cash and equivalents as of March 31, 2022, has been decreased to INR 1,102 crores. And we continue to be a debt-free company. And I believe with this strong cash in the -- our balance sheet, which can be able to invest in the business opportunities which are lying ahead of us.

Sanjay, over to you.

[Sanjay Nayak, executive]

Thank you, Venkatesh. I'm on the next slide now FY '22 sales update. So we have been sharing these pie charts in terms of how the business has been across the 3 segments that we track India government, India private and international. So if you see the chart on the right-hand side, which is the FY '22 numbers and the chart on the left-hand side is the FY '21 corresponding numbers.

So you really see that, on an absolute basis, India private has grown from INR 224 crores to around INR 257 crores. International has been almost flat at around INR 200 crores versus INR 205 crores. And the India government business has slightly gone up from INR 86 crore to INR 94 crores. If I look at the overall run rate business between India Private and international, it contributed to 83% of FY '22, which is almost the same in FY '21, which basically means that our existing customers continue to give around 53% -- 83% of the revenues each year, which is a good sign. The India government was -- for the entire year was 17% of the revenues, which grew, as I said, by 8.7%. In addition, I think there's a lot of orders that we have won during the current financial year, which have gone to our backlog, especially in the Critical Infrastructure segment, railways, oil, gas, power, smart cities, safe cities and so on. And even going forward for next fiscal year in terms of tenders that we already won or business that's already lined up, for example, the BSNL 4G business, we see a very healthy pipeline of new business in the India government sector.

On the India Private side, it was really 47% of the total revenues and year-on-year growth of 15%. In addition to the revenue growth, we also saw a very strong booking growth. So this is a segment which has been doing extremely well. We have now 2 segments within India Private, the telco customers as well as the system integration customers, and both of them did quite well during the year.

International as a total percentage of revenues came down to 36% compared to 40%, which was in FY '21. In the next slide, I will drill down in terms of which territories did well and which did not. But as an overall percentage for the year it was down. And as Venkatesh mentioned earlier, for Q4 international was 16% of total, and that is what partly also contributed to the margin pressure.

One thing, again, the run rate business typically comes with a shorter lead time because customers expect the orders to be delivered within a short period of time. And because of the inventory supply situation, some of the run rate customer order that we got later in the year could not be serviced, which will get serviced now in Q1 and Q2.

In terms of closing backlog of INR 1,175 crores, if I were to give the breakup, India backlog is around INR 992 crores and international backlog is around INR 183 crores. And out of the total backlog of around INR 1,175 crores, we expect around 70% of that are to be executed in the FY '23, which is the starting -- which is the new fiscal year.

Other than that, I would now go to the next slide, which goes a little bit further commentary on each of the regions in terms of the sales update. India private, we were selected by multiple telcos for Metro DWDM supplier for capacity upgrades for impending 5G backhaul as well as business-to-business services. We were also selected by FTTX deployment, which is the OLTs or the head ends that we supply and also for ONT by one of the large customers. A lot of wins also in the ISP segment, especially for FTTX, and 1 large ISP who is also building a large backbone network in the cities also has bought a 400-gig DWDM system from us during the -- rather we got an order from that customer during this current year. And many system integrator led wins for our switches in smart cities, safe cities, campus and some of the banking applications where the automation of networking of the banks was the application that we also won.

On the India government side, we won tenders in BSNL for WDM and MTNL for GPON, large-size tenders. And we also completed, as I mentioned, we successfully completed the proof of concept for our 4G rollout, which, as you would have been reading in the press, has a very large potential over the next 24 months. We also got a lot of new orders from power, rail, oil and gas. This was a segment where we almost won all the business that was to be won out there.

On an overall basis, if I were to look at, there's a lot of positive tailwinds from the Atmanirbhar policies of Government of India especially in the telecom sector. India is also trying to make sure that telecom being a security sensitive area, we want to be Atmanirbhar the push to create a completely indigenous wireless stack for 4G and which will be upgraded to 5G in the future is one of the schemes. And we are very proud and happy that we are a part of that stack. And our radio access network or the base stations, as it's called, have actually passed all the testing and now we are all lined up for getting commercial orders both for this year as well as next year.

We're also approved for the PLI scheme, and we have been meeting our criteria for the pre-PLI investments. So we do believe that we should start gaining from that scheme as time goes by. And I already talked about the other things on the India side.

Africa and Middle East actually continue to do very well. And we have a large run rate customers, now actually one customer has already crossed a $10 million run rate per year, which is a very good thing. And it's been a successive year in which the customer has crossed that. Our DWDM and OTN products are being used to build high-capacity backbone network for all the web scale companies who are pumping in a lot of bandwidth into Africa. And again, we've got multiple new order wins for West Africa for Tier-1 customers. And overall, I would say Africa is doing well. And we expect that with our reference customer base and all that, we should do -- we should continue to do well in the next fiscal year. A lot of the business from Africa is on a run rate basis. So as the year progresses, we should see a good order flow as well from Africa.

Southeast Asia was the one which underperformed this year. We had 1 large customer from whom we typically get year-on-year orders, which we did not get in this financial year, but we do expect that going forward we should be able to recover that as well. But as an overall basis, Southeast Asia did not do very well. We already strengthened some of the sales team in the Southeast Asia. And hopefully, we should see better results in the coming year.

In the Americas side, in the U.S., we signed a Tier 1 global OEM customer for our MSPP products. These are our older generation products, but still very relevant in many, many segments and we got large orders for that. Mexico was a little bit weak. The [indiscernible] , which we have been trying to work last 1, 1.5 years, has not given us as much success as we would have liked. So I would still say that it's been underperforming. But we will -- especially with the Tata Group involvement, we hope to come out with a little bit better strategy for attacking the American market and particularly our Tier 1 markets in both U.S. and Europe and ANZ going forward.

Europe, we had started investing last year, very happy to announce that we won a multimillion-dollar FTTH, fiber-to-the-home deal with a new operator in Italy. It's FTTH and WDM. And we believe that once we start executing on this order, there will be opportunities for multiple such engagements from the same group across Europe as well. Again, Europe is one area where there's a lot of Chinese replacement happening in terms of equipment that has been deployed. And if you have the right channels and the right sales team in place, which we hope to build up during the year, we expect that over some period of time, I'm not sure so sure how much it will be in the current financial year. But definitely, between this and next year, we should start seeing ramp-up in Europe as well.

Overall, I would say international last year wasn't as good as we would have liked it to be. But a lot of the things are in place and we hope that with all the work that was being put together we should see better performance both in terms of booking and revenues across India and international.

And again, just to reiterate, we've won a lot of orders in all these regions. We just could not execute them in the previous financial year. And we hope to do that as we start this new financial year.

I would go to the next slide, which is a slide I've used in the last time that I spoke to you at the -- after the Saankhya deal. But just to quickly summarize some of you who may not have been there. So clearly, the strategy for us now is to create a global scale telecom product company from India. And our ambition is very large. We've been now -- now that we are fully part of the Tata Group. This is something that is very, very important. And I'm very happy to say that there are 4 pillars of this strategy. First is really to create world-class product for building into networks. As you know, that in the optical and wireline space, most of our products are almost there. And for specific markets, if some investments are needed to really make them world-class and relevant to that market, those are the things we'll be doing.

Wireless products, we have again made a huge amount of progress especially with the BSNL POC, and we are confident that with all the momentum that we have and the kind of results we've been able to bring in, in the period -- of a short period of 18 months. We are very confident that very soon we'll again have an extremely competitive portfolio of wireless products as well. And to do that, as you all know, the job market is very hot, and our purpose is to really hire and retain top talent and really also look at inorganic growth. And Saankhya Labs acquisition was one such strategy. And we'll, of course, continue to look at options as and when they present to ourselves because we do have the capacity to look at inorganic growth as well.

Second, we have to use India's large home markets to get anchor deals for economies of scale. Anchor deals could be stuck, it could be a pan-Indian rollout of a particular kind of network. And we do believe that those -- that has been the recipe for success for any other global telecom OEM in the world, no matter which country they came from. They always have a large home market, a large anchor deal around which they could scale up a new product or a new business line, and we expect to do the same as well. India is going to be going to next 5-year CapEx cycle, especially because of 5G, which will come in, and also the broadband rollout. I think there's still a lot to be done on the fiber-based broadband rollout. And even for 5G, unless you have a strong fiber connectivity to the base stations, you will not get a good 5G experience. So any which way, we look at it, either from a wireline business or a wireless business, now which we have both, we do believe that India will be an important market for us. And especially when the Atmanirbhar mission is there. We clearly believe that we are the frontrunners to play a key role in this. And the combination of wireline and now wireless technology and the large home market should be a good way for us to scale up and get the economies of scale.

Expanding international business is very, very crucial for us. We've had good success so far. Last year was a little bit of an aberration where we could not do as well in international as we would like to. But going forward, I think with the Tata brand strength and synergies with other group companies and the relationship that exists, we believe in the markets where we currently are, which is emerging markets, as well as the new markets that we can be U.S., EU and ANZ, Australia and New Zealand, we do believe that there are a lot of opportunities to expand.

And the last but not the least, we will be focusing on building a global scale supply chain operations. We had a lot of learnings and a lot of lessons because of the challenges that we had in the supply chain worldwide. All I can say is, as a team, we have come out stronger, understanding the nuances of what it takes to really navigate through this, how long ahead do we need to look at in terms of ordering components and really planning. And I think -- as I said earlier, we have taken all the actions that are required for achieving our FY '23 revenues, which, as you can pretty much imagine, will be a significant growth compared to what we did in FY '22. And in addition, we also have to build a strong back end for technical support, field deployments, both for wireline as well as wireless. And these are the 4 areas that we will be investing going forward.

The next slide is the same product slide that I've been using for the last 2 things. Just to give a perspective, we have the transport products on the wireline side, which have been there. We've added 4G now with the BSNL POC that we talked about. 5G will be upgraded on the same system as well as the Saankhya Labs, we get both the open RAN architecture as well as the traditional architecture for 5G. So we have our hands quite full in terms of having a product portfolio that needs a very large addressable market. So if you see the things on the right-hand side, I mean, there's a lot of business to be won. I mean, the numbers are very large. Wireline equipment in India for what we do is around $1 billion right now, going to close to $1.7 billion in the next 4, 5 years. Globally, it's around $15 billion going to $32 billion. On the wireless side, for the product that we are doing, which is the radio access network, the base stations today, there's again a very large market in India, going to around $4.5 billion in the next few years. And globally, of course, it's a $30 billion market. So I think it's a large market that we are playing. The TAM is increasing because our product portfolio is going to be expanding. So we are aligned with all the products that we're going to be investing in this year. And those will start giving us opportunity to work.

So I think for us, the challenge is not that we don't have enough products and the markets that we can sell to is large. The challenge for us is really to make sure that our products are world-class in whatever we do. And secondly, building up a very strong sales channel to be able to sell these products not just in India, but around the world. So those are the ways that we are going to be looking at our business going forward.

On the last slide, after which I'll take questions, so what do we see in FY '23 going forward. Clearly, there are opportunities for very significant revenue growth. The fact that our order book is INR 1,175 crores, out of which 70% is already for revenue in FY '23. And on top of that, we have a visible pipeline of new orders from run rate customers as well as for the 4G for BSNL and others, which we have not yet factored in. I think we will have a fairly strong funnel of potential revenues that we can do in the next financial year. India revenues are likely to be very strong because of just the momentum that we've been having. And it is likely that India will be a higher percentage of our total revenues compared to even this year. So this year, we did around 36% was -- sorry, 64% was India and 36% was international. I expect that at least because of larger deals happening in India, while international, we expect still to grow on an absolute basis. But because India will be growing faster, we expect India revenues to be a higher percentage contribution.

And then beyond emerging markets on the international side, we do have plans to expand our international sales in U.S., Europe and Australia and New Zealand, leveraging synergies across Tata Group as well. And as I mentioned, since it is very important, we have already taken advanced inventory actions to secure inventory for our planned FY '23 revenues.

In terms of the investment side, as you saw the last picture, we are really now thinking that we should be creating a very large company over the next 3 years. For that, this is the year where we want to really ramp up a lot of areas where we think a significant heavy lifting needs to be done. So the main investment will be in manpower cost, in R&D, in manufacturing as well as in sales. And in R&D, a lot of investments would be in wireless products, which will further be augmented by the addition of the Saankhya team, which we think should be onboarded by the time we start Q2. Because by that time, the closure of the 65% of the shares of Saankhya should be done. As I said, we'll also be scaling up our manufacturing operations to deliver global-scale volumes. The amount of business potential which can be coming to the company over the next 12 to 24 months can be large and just need to make sure that we are well set up to do that.

And not -- last but definitely not the least, to do all of that, our balance sheet is strong. We have a very strong cash position as on date after the conversion of Series-A warrants, we are close to INR 1,800 crores of cash in the bank. And we really have the balance sheet to deliver sustainable high growth for years to come.

So again, just to summarize, FY '22 very good in terms of order win and progress in the business, but very disappointing in terms of the revenues. And as revenues fell short, naturally because of our cost structure, we had a loss, but we understand what things did not go right as we would have liked it to be. And those lessons are being carried forward for FY '23. And we are confident that looking forward should be an exciting time for the company.

I will pause here and then I will open up for questions. Thank you.

[Operator]

[Operator Instructions] The first question is from [ Tushar from Ratnabali Securities Private Limited ].

[Unknown Analyst]

Sir, could you please shed some light on the operations of Saankhya? Like what are its main products and customers? Because I believe Saankhya seems to have some existing use case and deployment in defense and infrastructure products. So are there prospective focus sectors for us and going forward?

And my second question is, sir, on your -- on the manufacturing operations side. So could you please elaborate a bit on what is our situation with our EMS vendor? Do we have vendor concentration? And what are our plans in scaling up our manufacturing operations per se?

[Sanjay Nayak, executive]

Good question. Let me start the second one first because that's the problem that we're dealing with. So we do have 2 EMS vendors at this point in time. And given the volume of business that we are anticipating in the times to come, we will be expanding our EMS base and finding out what's the best way to scale up our manufacturing. Our strategy will still be asset-light, which is that all the heavy lifting and the large CapEx would be done by our EMS partners and the final assembly and test would be done in-house. So we are already in conversations -- advanced stage of conversation with multiple EMS vendors of good scale, who have the capacity, quality as well as cost competitiveness to meet our things. I'm very confident that by the end of -- before the end of this quarter, our expansion of capacity -- manufacturing capacity would be in place.

Coming back to your first question in terms of what the Saankhya Lab brings to us. We had discussed the synergies of Saankhya Labs in the detailed call, which we had on 30th of March. And actually, there's a presentation on our website that gives you more details. But to summarize, as you rightly said, what Saankhya brings to us is complementary. So a, we are doing 5G ORAN, which is the Open RAN, which is the open architecture-based 5G. And they are in an advanced stage of product development, et cetera, et cetera. Second, we are also doing broadcast 5G broadcast. So 5G, one of the use cases is broadcast. And one of their partners and large investor was Sinclair Broadcasting Corporation, which is one of the largest TV broadcaster in the U.S. and in the world. So there's a lot of development that they have around 5G broadcasts. And in addition, they had satellite communication products, which were used by defense and even for some of the critical infrastructure. So net-net, once Saankhya comes on board after, as I said, by the end of Q1, we expect to close the deal. As of now, we just are in the process of completing all the formalities. But once that happens, we would potentially look at some of the segments that they have and if we can accelerate there. But my thinking is, from a Saankhya perspective, is that a lot of the synergies may not happen instantaneously. As we work during the year, we'll be able to figure out what things can be done together and how we can scale up more application areas together.

[Unknown Analyst]

Just a follow-up question. Like could you just delve a bit deeper into what are the main products and customers of Saankhya? Just like the presentation was self-explanatory, but just a deeper deep dive.

[Sanjay Nayak, executive]

Yes. So I think one was, as I said, there have been a co-development partner for ORAN, large ORAN opportunity in India, which one of the system integration partners of ours is also announced with the leading operator. So they will be developing the 5G radios, if you were to think of 5G base stations are equivalent that is called in 5G. Second, they also have a 5G broadcast product. What that basically means is think about it that in the earlier days when you used to have a TV, which used to beamed from a terrestrial base station, terrestrial tower, that spectrum is -- can be potentially reused for some of the 5G applications, for instance. And that's quantified the broadcast. And then they have some product based on their chipsets that they are designed for satellite communication. So you could receive the signal from the satellite on a station and then distribute that to those devices. So those are the 3 product lines that they have, in addition to their own chip, which was designed by them or fabless semiconductor chip, which was used in some of their own products.

And that chip is called software-defined radio chip, just for your -- so it's basically a chip that can be reprogrammed by software to operate in different kind of frequency bands and so on.

[Operator]

The next question is from the line of Sangam Iyer from Consilium Investment Management.

[Unknown Analyst]

A couple of questions. First, when we talk about 70% of our order book getting executed. Could you also touch upon the inventory that we are carrying that gives us the visibility of execution of that 70% by the end of this year?

[Sanjay Nayak, executive]

Yes. So first of all, all the inventory that we are carrying is -- think of it as all inventory available, but not in a perfectly balanced form. So what would happen is we will continue to deplete the existing inventory while we continue to buy new inventory to balance the thing. So the way to think of that is that, assuming that 12 months was a lead time for the longest component that we have. So we make sure that by early this calendar year, we placed orders for all the revenue that we expected to do during FY '23, actually for [indiscernible] we just couldn't get those components in time. So as a result of the inventory that we have in hand and orders -- that we have firm orders that were placed on a component suppliers as well as the EMS partners are covered for all the 70% of the backlog that we have.

And not only that, there is significant more revenues that we can potentially get from our run rate customers from whom we have forecast. So even against the forecast we have placed confirmed orders than a supplier. And in addition, for the large 4G opportunity, at least for some initial quantities also we have placed confirmed orders. When we look at all these together, we believe that since we took advanced inventory actions, more than 12 months ahead of when we needed, for a large part, as the year progresses, we should be able to get that inventory despite delays from 12 weeks lead time, 12 months lead time or 40 weeks lead time from our suppliers. So that's -- I hope that answers your question.

[Unknown Analyst]

So then to look at the cost side, given the fact that there is significant speculation and the order backlog that we have built up is over the past 6 months, right? So how should one look at the gross margin profile now? I mean given the fact that the costs have all moved up 30%, 40%, 50%, while the order wins were based on a certain pricing, right? So can you touch upon that in terms of how could one look at the margin profile here?

[Sanjay Nayak, executive]

As we said on the first slide itself, clearly, there will be some margin pressure in the supply chain constrained. Because in one sense, because of the component shortages, it actually becomes a little bit of a seller's market that if you want the components, they increase the price or the spot purchases going on. So I think at this stage, I would say that margin pressure will be there for the next couple of quarters.

Secondly, I would say is that, to the extent where we could have increased prices with our customers, we have done it. So when the rate contracts were renewed, which we typically do now at the beginning of the year or end of last fiscal year, we have been able to pass on the cost increases to our customers. Whenever we bid new in a tender, for example, we pass on the increased cost. But the tenders that, for example, we would have bid at the beginning of last fiscal year, naturally, we would have bid based on the earlier price and that price is locked.

So net-net, I would say, it's fair to say that for the next 2 quarters there will be margin pressure. And we -- our focus will be to actually secure the components, do the supplies. And yes, it's a transitionary thing that is going on in the industry. but this is something we just have a way to deal with it. And wherever we can increase price, we are doing it. But our headline level, I would say there will be some margin pressure, for sure.

[Unknown Analyst]

And a follow-up finally, in terms of the guidance that we are doing kind of indicates clearly, the run rate of INR 200 crores, that's been something that's elusive for us for quite some time. I mean we have been consistent with INR 200 crores because of various reasons, which is external to us. How should one look at this? I mean do we see that -- this year, definitely, there will be multiple quarters where components are available based on the bookings that we have done. The INR 200 crores plus already is something here to stay for from changes perspective. And incrementally, that's where we build beyond.

[Sanjay Nayak, executive]

Certainly. I think if I look at the fact that, as I said, just the backlog alone, if you do the math would come to a run rate that you have mentioned. And so we do believe that, that run rate we should be able to achieve at the soonest and then actually to be able to build up on that and accelerate as the year progresses. So that is exactly the purpose. And in fact, we are investing with that in mind that -- there's a lot of business that we have won. There's a lot of business we will win. And it is important that we build up the run rate of the revenue as well because there's no point of keeping on many orders, if you cannot complete and fulfill it to the customers. So yes, that is going to happen sooner than later is all I can say.

[Operator]

The next question is from the line of [indiscernible] Individual Investor.

[Unknown Shareholder]

Sir, I have 2 questions, sir. Sir, you mentioned that the company has won a multimillion-dollar deal in Europe with regarding to FTTH and WDM. Please provide some details regarding this.

[Sanjay Nayak, executive]

Yes. So it is a customer in Italy, and they are building a network to service high-end enterprise customers with FTTH technologies. So factories or a lot of offices or businesses which are not connected. It's not a residential broadband play, but it's a high-end -- and that is why they need a DWDM backbone to backhaul those high-capacity customers. So I think it's a very nice win which we've had and that also proves a good beachhead for hopefully getting more such things. So again, I mean, we cannot name the customer [indiscernible]. We have not yet delivered the revenues. We just got the bookings, which is we got the order. And we expect to deliver that customer order in this quarter itself because it was a forecasted win that we were planning for.

[Unknown Shareholder]

Sir, can I get the value of the order sir, if possible?

[Sanjay Nayak, executive]

Again, I mean, at this stage, we have not disclosed the customer or the order value. But what I can say, it's a good initial order and it's a run rate customer that we build up more and more network and expand into more and more cities and more and more countries because it's a multi-country potential opportunity. We hope to benefit from it. But that's something, as I said, we just got the initial order in Q4. We expect to get revenues out of it in this quarter and hopefully build on top of it from here on.

[Unknown Shareholder]

Okay. Sir, another question, sir. With the huge reserve in our hand, is there any acquisition in the process, sir, the company is on?

[Sanjay Nayak, executive]

Any acquisitions in the process? So yes, we just a few weeks back acquired Saankhya Labs, reasonably sizable amount. And as I mentioned as a part of the overall strategy, we will continue to, of course, invest organically because we feel that the foundation of the company should be very strong in terms of manpower, in terms of team, in terms of technology spend. But at the same time, there are opportunities for inorganic growth either in India or outside which are complementary to us. We will -- we can definitely look at them positively as well.

[Unknown Shareholder]

One final question, sir, regarding Saankhya Labs. So when we can expect the revenue addition from Saankhya Labs? Q3? Can we expect FY '23?

[Sanjay Nayak, executive]

I would say that if the acquisition closes as per plan, Q2 onwards will be the effective date for consolidation of accounts, from what I gather. So that, I think, we will again come back as soon as we are closer to that. But tentatively, I think the Q2 onwards, some of the revenues from Saankhya Labs will start crediting to us.

[Unknown Shareholder]

I'm pretty concerned that the company will have a [indiscernible] FY '23.

[Operator]

The next question is from the line of Pranav Kshatriya from Edelweiss Financial Services.

[Pranav Kshatriya, analyst]

My first question is regarding this interesting...

[Unknown Analyst]

Sorry to interrupt you. May I request you to speak to the handset. Your voice is breaking.

[Pranav Kshatriya, analyst]

Yes. Is it audible?

[Sanjay Nayak, executive]

Yes, yes, we can hear you well.

[Pranav Kshatriya, analyst]

My first question is regarding this impressive order booking, what we have got. So can you just give some more color on that? How much is from the optical product? If there is any contribution from the 4G product? And how much is from the government side? And how much is from the private sector side?

[Sanjay Nayak, executive]

So first of all, almost all the order is still wireline. So it's an optical and wireline products. We have not yet counted anything from wireless in a material way, except what we might have done a small amount, very, very -- probably 5% of the total order for the year would have been a 5% to 10% -- not even 5% -- 2%, 3% would be wireless, and everything else is really optical product at this stage, which also goes and answer your second question, which is that the 4G product that we have built and a lot of -- there's news around it. We have not yet counted that order into the order book because formally the order has not yet come in our hands, which we expect to happen for the initial requirements. And then, of course, the eventual deployment, which will be a nationwide deployment. So that's what it is in hand today.

In terms of the breakup between India, government, I would say, the highest order book, more than 40% of the order for the -- sorry, yes, actually more than 50% of the order booked this year was from India private, which is a very good thing. India government was around 20% of the order book. And then the international was around another 25% or something like that, right? So really, the star performer, I would say, in terms of order book as well as revenue this year was India private, followed by, of course, the international where some of the territories -- not really international, all the territories, but some territories did well and because Southeast Asia did not do very well, it kind of dragged down the international and overall basis. But really, the revenue profile for the year was short and all the numbers got distorted because of our inability to complete the orders.

[Pranav Kshatriya, analyst]

Sure. That's really good to note the higher contribution from the private business. My second question is on the margins. I mean, you did talk about that the first few quarters will have issues on the gross margin side. But I guess given you will be investing on the 4G product development and creating for basically addressing other markets as well, so should we expect meaningful employment -- meaningful jump in the wage bill and, hence, the significantly lower EBITDA margin than what we have historically had?

[Sanjay Nayak, executive]

So let me step back because that will give you a better perspective. So clearly, if I look at this year and it's important for us to make the right investments because we raised the money from the investment from Tata Group, primarily to ensure that we have enough capacity to invest aggressively early on so that over a 3-year period, if I were to look at, we should literally be able to drive the business much faster pace than we have ever done before and really start to become a global player in the next 3 to 5 years period itself.

To do that, there is no other way out except to invest into manpower and investing up in R&D and making all the products work, right? I mean to the best of what they need to be. So that is one area where the expenses will go up. On the other hand, I also said that the margins, a, because of the global supply chain situation; b, because of the blend of customer products will be under pressure. So there will be slightly lower margins compared to our historical margin profile. But then again, I think if I look at it from a big-picture angle, that's not something that we would worry about this year. What we would like to do is to be able to win anchor customers which are global scale. And if we can do that, it sets up very well for significantly increasing margins, profitability over a 3-year period because -- think about it this way, our costs are going to be the same, whether we do revenue of x or 5 per 10x, right? They've only increased linearly in the proportion of our manpower. But all the gross profits that approved, regardless of the percentage margins would straightaway go to the bottom line. So if you can scale up the revenues in a big way, make sure that we are investing to do the right things in terms of product development, market development and manufacturing as well, then I think we should be able to see all the results in the form of bottom line over a period of time. And that's really what we are lining up to do rather than optimizing it on a quarter-by-quarter basis.

[Pranav Kshatriya, analyst]

Sure. That's very interesting. My last question is on the trade receivables side. If I look at the last 2 years, there is almost INR 100 crore-plus amount has been returned off on the ECL and there is still a fairly healthy almost INR 300-odd crore trade receivables. So can you quantify -- I mean if this ECL was not there. I mean how much is the BSNL actual outstanding which is recoverable from traders? And what is the level of confidence you have of getting that money back from them?

[Sanjay Nayak, executive]

Yes. So over INR 90 crores of BSNL receivables, which has been provided as a ECL/provision that we have done. We believe the recoverability is extremely high. In fact, it's starting from this quarter itself, we should -- I mean we continue to receive money from BSNL except that once it caused a 3-year boundary and we have a very high amount of hygiene in terms of any receivable that [indiscernible] 3 year overview boundary, either we provide for ECL or if it costs us a 3-year boundary, we do this. There are INR 93 crores of receivables from BSNL. We expect that over this year itself, and we should be able to recover almost all of it, if not all of it, for sure. But that's something which we are confident because this is really no part of ours. Many of the sites were not there. There were payment issues with BSNL, as you all know. And our supplies are facing the [indiscernible] , except that our Board and the Audit Committee took a very, I would say, a prudent view that if a receivable has been delayed for some time, it's better to provide. And if we actually recover the money during the year, no one is going to complain. So yes, that's the situation there.

So we don't think the marketability in terms of whether we'll receive it or not is in doubt in our minds. It will come, except that the timing has been a bit of a challenge for us to predict despite the best efforts that we have been making our teams have really been doing everything they could to get the money out. But until the money comes from the government customers, you don't -- you cannot be 100% sure.

[Pranav Kshatriya, analyst]

No. Just a small clarification. So this INR 292 crores trade receivable, which is on the books now, the INR 93 crores what you talked about is part of this or INR 93 crore is the ECL portion which you talked about?

[Sanjay Nayak, executive]

This is above -- INR 293 crores, we'll have INR 93 crores which can come in is not [indiscernible] the receivables.

[Pranav Kshatriya, analyst]

Yes. So basically, for next year, if this money comes in, this will be the write-back portion and hence, to that extent, EBITDA margin can be higher? Is that how it will work? Or...

[Sanjay Nayak, executive]

That is a reasonable comment, yes.

And Pranav, in addition to BSNL, we really don't have any other sticky receivable of any kind in that sense.

[Operator]

The next question is from the line of Mukul Garg from Motilal Oswal Financial Service.

[Mukul Garg, analyst]

Just a couple of clarification questions. First, the Q4 bookings of about INR 316 crores which you have done, do they carry the updated pricing in terms of the new chip costs which you are facing? Or will there be some element of that which is based on older pricing?

[Sanjay Nayak, executive]

No, sir, this is booking, which is just the orders in hand at -- the pure value of the customer. So that is -- it has nothing to do with the chip pricing. I think when we execute those orders.

[Mukul Garg, analyst]

No, but...

[Sanjay Nayak, executive]

Yes, go ahead.

[Mukul Garg, analyst]

Sorry, but the -- is it fair to assume that a majority of these bookings, including the run rate contract, will be more recent discussions with customers and, hence, the price revisions would have happened?

[Sanjay Nayak, executive]

I would say it would be a mixed bag because some of it could be tenders or projects that we would have bid in Q1, Q2 and then they [indiscernible] into orders in Q4. Some of it, you're right, new customer wins that we've had, we would have priced them at the increased price. And by the way, going forward, even for the run rate customers that we have, to the extent possible, we will be increasing the price across the customer board wherever there is an opportunity to have a fair conversation. And at least I can tell you all customers, our large customers, all global customers who have the view of the world, including ours, are fair. And because all vendors are there including our competitors, have been considering to pass on the challenges to our suppliers and to customers and they have been able to do that.

So actually, yes, going forward, run rate customers will revise -- some of the orders could be older-priced. New price is not exactly clear. But as I mentioned, now I think there will be some margin pressure because uncertainty in supply chain is still there. I would not say we are out of the woods. We have taken enough actions to make sure that over the next few quarters we should definitely get out of the woods. But at any particular point in time, there's always a little bit amount of variability.

For example, the supplier would have accepted their order in January at the price x and then the supply time [indiscernible] percentage. I think those are all things that are happening in the market, which I'm sure all of us are and all our competitors are also exposed to.

[Mukul Garg, analyst]

Sure. And secondly, if you look at the constraints which you guys have because of the supply shortage, it has been kind of stalling your business for 4 quarters now. A, in terms of normalization, how should we look at the run rate getting back to that normal INR 200 crore? Is that something which you think is already at this stage and can happen from next quarter itself? Or do you think this will be a little bit more heavily tilted towards the second half given that there have been multiple push out from chip vendors in terms of supply and situation continues to remain a little bit adverse? So will this be -- are we ahead of the worst of the scenario? Or do you think it might continue for 1 or 2 more quarters before we take the full benefit of all the orders which we have in hand?

[Sanjay Nayak, executive]

If I take INR 200 crores as a baseline market like someone else has said, I think the worst is behind us, okay? So in that sense, starting from this quarter onwards, we can only see positivity going forward. Because -- think of it this way, Q3, Q4, both have not been very good for us, and things can't be bad forever. So I think we raised -- we placed Class A and Class B, whatever. But it's net-net, I think that I would say the -- those constraints are, at least from our perspective, are not coming to a close. So clearly, I believe that the positivity in the order inflow should start happening from the current quarter itself. And naturally, of course, it will accelerate Q3, Q4 because by that time, a lot of decongestion happen. There's also a possibility worldwide around September onwards, there could be a little bit of relaxation of the constraints in the supply chain. -- the overordering, overbooking that multiple companies have been doing, could potentially get decongested once the clarity comes. So I would say that for the first half of the year, based on the actions that we have taken in the last 6 months or 9 months, we should start seeing positive results. For the second half of the year, we again have taken enough inventory actions and a combination of our actions and combination of overall supply chain easing to some extent should help us at least execute this year in a reasonable way from a revenue perspective.

[Mukul Garg, analyst]

Sure. And just one related question. And this is given that almost INR 200 crores of your orders in hand are from the public sector space, just in the -- taking [indiscernible], given the uncertainty of the supply side, these tenders usually have a committed time frame. So is there a requirement upon you to prioritize them when execution starts happening and supply starts coming in because they are time-bound or which will require you to kind of delay your focus on the international side? Or how should we think about that overall mix of India versus international?

[Sanjay Nayak, executive]

First of all, very good question. In fact, nobody asked that question, but even though we did only INR 550 crores of revenue last year, one of the challenge was to ensure that we prioritize the inventory in such a way that customers where we have a 100% market share in international markets where dependent on us do not suffer and we continue to enjoy that full market share and really their success. Customers in India where there were time lines and liquidated damages, we [indiscernible] them. So I think it was a careful balance of all of that, and it will continue. All I can say is that when we are picking up the new government orders or whatever, there are ways and means in which you can give your acceptance in a time period so that you buy as much time as you can, but at the same time, avoid any situation of liquidated damages. So I would say so far, despite the shortage of revenues that we dramatically had, we could have done a lot more revenue last year, we have components; but we somehow were able to prioritize different customers at different points in time.

As I mentioned earlier, also some of the run rate customers who have a shorter time fuse, it's not a [indiscernible] situation, but you can always push them out by a few weeks here and there. So that's why we saw international only 16% or 17% of Q4, which would have meant that we prioritize some of the Indian customers of the kind that you just mentioned, higher to avoid the critical situation while we'll go back and manage those international customers in this quarter or vice versa.

It's been an extremely challenging situation, but we have somehow find a way to manage it so far, and I'm confident that with a little better supply situation as we start the year, we would ease into a better rhythm of execution as the year progresses.

[Mukul Garg, analyst]

Looking forward to FY '23.

[Operator]

The next question is from the line of Subrata Sarkar from Mount Intra Finance.

[Sanjay Nayak, executive]

Before -- so maybe we can make this the last question because we're already over the 1-hour period. So Subrata you can please go ahead.

[Unknown Analyst]

Yes. So I have 2, 3 questions. First, a quick question that, within the Tata Group now, like Tejas has applied for PLI or Akashastha technology has applied for PLI and Akashastha PLI is actually in the beginning size. So can you just differentiate what is the difference between Akashastha and [indiscernible] like is there any product difference, area of difference? Like what exactly is the difference?

[Sanjay Nayak, executive]

So we know about our PLI. And I think we have adequate coverage and with all the changes which are potentially expected in the design-led PLI, which also was announced in the budget. I think we should be able to maximize the benefit from the PLI skills as and when we become eligible. About the other name that you mentioned, I'm not aware of the details of what they do, but clearly, from a product perspective, we've been developing all the products which are eligible for PLI. So I would not want to comment on the other entity. But as far as we are concerned, we have adequate headroom for maximizing the benefit of PLI in our revenue growth as well as the investment profile.

[Unknown Analyst]

Okay. So the second question is in terms of the BSNL order, BSNL deal, basically. So now this POC is approved. Now what is the process like? Can you just explain the [indiscernible] forward? Like how much [indiscernible] take? And ultimately, like what is the total addressable market -- and similarly, in this context, like now again the [indiscernible] has also got like ORAN we need help from our perspective since our ORAN get accepted, we need help from that perspective to getting any synergy or anything on that.

[Sanjay Nayak, executive]

So the first question about what's the process, so BSNL had floated an expression of interest as an open tender to anybody who could demonstrate a successful end-to-end stack of base stations, core, et cetera, et cetera. And out of 4 or 5 initial parties who had expressed that interest, only 1 consortium, which is the TCS consortium, of which we are a part of, was successful in completing the POC. Others did not even start the POC. So once that process has been completed as per the tender guidelines, there is only one eligible potential bidder who can execute their entire order. They would, of course, have to find the process, to give initial order, follow-on order, close the price, et cetera, et cetera. And all of those processes are being done as a part of standard government processes for large tenders.

The opportunity for this, again, the original expression of interest that was floated by BSNL was for a pan-India rollout of more than 100,000 sites. And the initial order, which I read in the newspapers like [indiscernible] 6,000 sites to begin with. And because all the other commercial discussions are going on, between BSNL and the front-end system integrator. So that said, I would say the opportunity is very large. Time period of executing that opportunity would be between this next calendar year because from 4G then India is going to go to 5G, so there will be opportunities to get into that space as well.

So I would say a lot of that is work in progress. And as you all know, with any government deal situation until we get the order in hand until everything happens, we, of course, are well prepared to step up. but we will still have to wait for all of those things to actually work out in our table.

[Unknown Analyst]

Okay. My last question, it's more of like just to understand about the marketing side. So now out of our total order book, this is a still a rough figure of how much we get from SI a number one. And number two, since we are now into the Tata [indiscernible] so now like we generally -- I suppose we access through various sites. So -- but now since TCS is there, have we decided anything on that level that we will only go with TCS or still now we will continue to do with other SI also?

[Sanjay Nayak, executive]

No, no. First of all, we will be agnostic as a -- first of all, A lot of what we said is directly to the customer, private operators, large private operators, for example, typically directly buy from the OEM, which is a company like ours. So majority of our business is through OEM. I would say a vast majority of our business is direct with the customers.

In certain turnkey projects, for example, if a project sales of value of 100, if our equipment is only 50, let's say, right, we would be partnering with someone else who could do 100 and he can buy our 50. It could be a Tata Group company. It could be anybody else, for example, right? Of course, naturally, there is a synergy within the group, which we would like to explore first, but we definitely are open to everybody, and I'm sure from their side it should be the same.

But then there are projects in which things are very tightly tied up. For example, the indigenous 4G solution where everything has to be Indian. And there was a lot more close cooperation between all the stakeholders. In this case, it was TCS, Tejas and C-DoT, it's all public information. So we all work closely together and really created a completely indigenous 4G system, which can potentially be upgraded to 5G going forward. That's a part of the requirement as well. So in that sense, we will be working with everybody. But naturally, large anchor deals, we will be partnering with different SIs. And in this particular case, in the BSNL, we already know that who we are partnering with. So that's the way to think of.

[Unknown Analyst]

Sir, any last -- even like what's the percentage of our order book or revenue comes from SI.

[Sanjay Nayak, executive]

We do not disclose granularity of information at that level. We disclose our...

[Unknown Analyst]

And this will only help us to understand like the synergy in terms of like that we can give because of Tata Group basically. So I'm asking from that perspective.

[Sanjay Nayak, executive]

Yes, I understand your question. Again, as I said, I mean, we always have been very disciplined about what we disclose, and we continue to make sure that we increase the disclosure in a meaningful way that can be used by everybody. So since we do not disclose customer-wise revenues or SI versus non-SI, but I would answer your question in a different way.

If I look at India, some of the large anchor deals, which are system integration deals, like the one which we talked about for 4G, would require a system integrator to be there to be able to take care of a nationwide rollout, for example, with either government operator or a private operator whatever. In this case, it will makes sense to work with a system integrator because we are only a small part of the solution.

But the second place where synergies could potentially come is an international market, let's say, right, where we do not have access to a certain customer or -- another group company, whoever it could be, has relationship with their customers. It would definitely make a lot of sense for us to use that synergy, that connection, that credibility to win business in that account or position ourselves to the Tata Group company and say, you know what, we are part of the same group that you've been dealing with and you are confident. And we have all these products and we can give them a larger solution. So I think some of those things will evolve as the year progresses. And we have to find customers where we can add value.

But I'm sure the way world is growing, where customers are not just buying point products, they're buying solutions, for example, in 5G, a lot of sales will be solution sales, it's not the equipment sales. I'm sure that we should be able to leverage synergies and relationships and the brand name, especially in international markets, to be able to build a bigger business growth. It will take a little bit of time because all these things don't happen overnight. But I'm very confident that as time progresses and as our engagements within the group and with the customers outside increases, we will start seeing benefits of being -- us being a part of the Tata [indiscernible] in terms of meaningful impact to revenue section in the international side as well.

I think since we are well over time. Moderator, could you say this is okay to conclude or do you have any last...

[Operator]

Would you like to have any closing comments?

[Sanjay Nayak, executive]

No, I think, first of all, it's been a very good interaction. I'm very happy that questions were asked from a different perspective, from the backlog that we have, the breakup, the inventory actions we have taken, the margin change, the investment thing and, of course, about the BSNL results. So I hope we were able to answer a lot of questions.

In summary, as I said, FY '22 was a challenging year for us. We are not happy about the way the revenue is shaped out. Eventually, we thought we could have done much better. But it is what it is. We have figured out a way to move forward, manage our customers not lost any business. And as we start FY '23, a, we start with a strong order book; b, we have enough inventory coverage; and c, I think more importantly, we are also investing and we see good clarity that if we can make the right investments, we can scale up the teams and the product in the right areas. Over the next 3-year period, we can actually bring a significant amount of growth and profitability over a period of time in the company. And which we're very excited about. So that's where I would close. Thank you very much, and have a great evening and night.

[Operator]

Thank you very much. On behalf of ICICI Securities Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines.