Tejas Networks Ltd

NSE:TEJASNET

Earnings Call Transcript 2024-Q4

[Operator]

Ladies and gentlemen, good day, and welcome to the Q4 FY '24 Tejas Networks Limited Conference Call hosted by ICICI Securities. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Ashvik Jain from ICICI Securities. Thank you, and over to you, sir.

[Ashvik Jain]

Thank you, Sagar. Good evening, everyone. Thank you for joining on Tejas Network Limited Q4 FY '24 Results Conference Call. We have Tejas Network Management on call, represented by Mr. Anand Athreya, CEO and Managing Director; Mr. Arnob Roy, Chief Operating Officer and Whole-time Director; Mr. Sumit Dhingra, Chief Financial Officer; and Dr. Kumar N. Sivarajan, Chief Technological Officer. I would like to invite Mr. Anand sir to initiate with opening remarks, post which we will have earning presentation and Q&A session. Over to you, sir.

[Anand Athreya, executive]

Thanks, Ashvik. Welcome to Q4 FY '24 Tejas Earnings Call. Good evening. My name is Anand Athreya. I'm the CEO and MD of Tejas Networks, and I have Arnob Roy, who's the Founder and COO; Dr. Kumar Sivarajan, the Founder and CTO; and Sumit Dhingra, who's our CFO. Happy to inform that Tejas had the best ever quarter and the best ever year in its history and a profitable one, too.

Over the last year, Tejas has been insanely focused and we've been executing ruthlessly on major projects such as BSNL 4G RAN and many other products. What we have witnessed in this recent quarter is growth in all segments. And we have also secured the supply chain. So I'm very pleased having completed 1 year at Tejas. I'm very pleased with the progress that we have made. And I'll hand over to Arnob Roy to go other details. Thank you.

[Arnob Roy, executive]

Thanks, Anand. I'll take you through our earnings presentation that we have uploaded, which has 2 sections. One is the results of Q4 and giving some further details to it as well as a refresh of our production technology and the outlook for the future. So the first update is about Q4. As Anand mentioned, we ended the year on a very strong note with a strong revenue growth. We changed our business with the profitability and ended the year with a strong order book for acquisition in FY '25 and beyond.

So for the quarter, we had a net revenue of INR 1,327 crores, which is significant jump year-over-year and a profit after tax of INR 147 crores. For the year, we ended with INR 2,471 crores, again strong growth from the previous year and a PAT of INR 63 crores.

We also ended the year in the order book of more than INR 8,200 crores. To add some more color for the quarter. We had made a lot of progress in all fronts for both wireless and wireline business. For wireless, our -- we shipped a lot of equipment for the 4G/5G RAN into BSNL network, which is cumulatively more than 10,000 sites have been shipped and the installations are progressing quite well.

Apart from this, we've also engaged with some of other customers for our RAN products. And as of now, we have multiple ongoing proof of concept, POC, like with potential customers in the private and utility verticals. So we've started making business development progress beyond the immediate BSNL [indiscernible].

We made good progress on our wireline business as well. I think one of the highlights was completing the supplies of the large volume of IP/MPLS routers for BSNL [ 5G ] network, which is 4G -- the backhaul network for 4G/5G wireless networks and this is one of the largest deployments of indigenous IP/MPLS routers in India. There are close to 15,000 routers deployed in BSNL networks and this complies completed supply, and the installation, finishing and deployment is going on as we speak.

We also had some several strategic wins for our WDM and our [indiscernible] housing products in the critical infrastructure sector. We entered into expecting its partnerships with Telcom [indiscernible] equipment. It includes, apart from local manufacturing and supply, sharing the experience of BharatNet and end-to-end network projects in India and also contributing to the training and manpower development initiatives.

They also [indiscernible] to many countries with who they have free trade agreements and there could be a potential gateway for supplies to many countries in Africa and Middle East. So the other highlights are the approval of our PLI application and the grant of INR 32 crores for the past year of FY '22, '23 and also, Saankhya Labs, our subsidiaries, also got approved under the semiconductor DLI scheme, and we see the incentives as well.

During Q4, Tejas and subsidiaries were granted 22 patents and the total patent count of 335. A few corporate updates. We received the Voice and Data Excellence award in the Make in India category for our carrier auto portfolio, which are basically [indiscernible] products that we shipped to BSNL or a small network.

We are also starting to get recognized globally as key vendors for our products and for our wireless products [indiscernible] very respectable industry analysts, they recognized us as a representative vendor in their open brand, vRAN market report. And Omdia, which is a leading analysts in the wireline space, they also recognized us in the [ FTTS ] report as an established PON and GPON vendor in the rest of Asia and [indiscernible] markets.

Apart from that, our merger talks with Saankhya is progressing well and the resolution was approved by the [indiscernible] of the company. And after the voting that was conducted [indiscernible]. And we expect the next few steps to get considered over the next couple of quarters for formal closure of the merger. So I would myself [indiscernible] reappointed as the Executive Director and CEO. Mr. Bhave, who has been Director for many years, is retired as a nonindependent director on the completion of his tenure. And Mr. [ Lakshminarayan ] also resigned as a nonindependent director to spend time for his professional commitments.

So coming on our -- on the revenue profile for FY '24. We see on the right-hand side, you can see the Indian government was -- [ 36% ] of the overall business, Indian government was -- sorry, India Private was 54%. India government was 36% and International was 10% of our revenues, and this is an area where we're focusing a lot in terms of growth for our International business.

And I'd like to definitely remind you that our -- the shipments that are happening for BSNL 4G has been categorized as International Private -- India Private because our [ India ] customer is TCS with a private entity. And [indiscernible] we had a strong closing backlog of INR 8,200 crores, of which substantial part of India at INR 7,900 crores and the International was INR 262 crores.

I'll now hand you over to our CFO, Sumit, to share some details about the financials.

[Sumit Dhingra, executive]

Good evening, everyone. From a financials perspective, we had a revenue of INR 1,327 crores for the quarter, which was a growth of 343% over the previous quarter same -- previous year same quarter. EBITDA of INR 248 crores and PAT of INR 147 crores. This implied an EPS of INR 8.6. From a full year perspective, consolidated revenue was INR 2,471 crores and EBITDA of INR 83 crores and PAT of INR 63 crores with an EPS of INR [ 3.79 ].

So from both on a quarter-on-quarter perspective and on a year-on-year perspective, we had a strong growth this quarter.

From the other key financial indicators, if you look at net worth of about INR 3,150 crores, inventory of INR 3,700 crores, decrease compared to the previous quarter, which was around INR [ 2,680 ] crores.

Predominantly because we are -- as mentioned in the previous call as well, we are securing long lead items for expedited delivery of some of the projects, including the BSNL 4G projects. And as we go along as the project continues to get executed, the inventory will totally absorb. Our trade receivables stand at around INR [ 1,458 ] crores at the end of the year. This is partly also linked to the revenues that we've done during the quarter, had collections over INR 650 crores this quarter. Working capital increased to about -- increased by INR [ 1,519 ] crores, again, driven mainly by inventory and receivables.

Our cash position at the end of the year was INR 641 crores and working capital borrowings of INR 1,744 crores, which is essentially all for working capital.

[Arnob Roy, executive]

Thanks, Sumit. So a recap of what happened in FY '24. FY '24 has been a mindful year for us. We had a significant growth in revenue and return to profitability, starting with Q4. We had growth in all product segments in wireless and all the different product segments in wireline as well. We had a successful entry into 2 new large product exposure segments with high growth, the 4G/5G RAN and the service providers within routing market. And we entered this market with large projects in hand with [indiscernible].

We are executing the largest ever network sales in India with indigenous technology and 4G/5G RAN, routers as well as satellite transponders we talked about last quarter for the retail [indiscernible]. We demonstrated our ability to scale manufacturing by executing shipments in a record time. We finished the March spend of 15,000 routers in [ this early 2 ] months.

And we made significant investments for enabling future growth. We grew our headcount by 42%, mainly in R&D, manufacturing, sales and so forth. We expanded our facilities for supporting our growth in R&D and manufacturing operations. And we also made major CapEx investments in R&D and manufacturing, and we have been talking about this over the last couple of quarters as well.

So I'll quickly switch on to a little bit of a refresh on our business. As you know, we make end-to-end products for building telecom network. And with -- we have entire range of products, starting with -- on the left-hand side, wireless and wireline access in the wireless 4G/5G radio and wireline access with the GPON equipment and also Internet and IP/MPLS customer premise equipment for enterprise -- standard enterprise services.

We also have the metro aggregation products within the middle of the slide -- in middle section of the slide with multiple technology [indiscernible] network. And then we have the metro core and long haul products using DWDM and OTN technologies and all of these managed by a single network management solutions.

So this kind of gives us a unique advantage of being able to build complete end-to-end networks for any customer. So that's where we are today as our products. And the key applications that we serve are the 4 key applications, one is the mobile brand, the 4G/5G mobile brand network and the backhaul network [indiscernible] BSNL right now.

We do our equipment business for doing wholesale and enterprise business services, a big section of our business with home and business broadband as they developed where we are deployed in ISPs -- several ISPs globally and also network for critical infrastructure where the utilities, [indiscernible] rail, oil and gas, where our equipment is used to fill their critical networks for [indiscernible] networks for the data applications and also other wholesale network branded business.

So our products are targeted towards a high-growth market segments in wireless and wireline and on the left-hand side, you see the addressable markets for the RAN and core, which is growing significantly large market, growing significantly over the next 5 years. And also on the right hand side, we've got a wireline market, these are our addressable markets, which has even stronger growth. And all the -- and in all the segments that we are in are seeing strong growth, both in India as well as global markets.

So looking forward to the future, beyond the overall market growth, we are looking at several high-scale opportunities both in India as well internationally. In India, we have -- this is [indiscernible] several large projects which are one part of it is, of course, the BSNL 4G/5G continued investment. There are going to be more investments in 4G [indiscernible] network for the Pan India 5G networks and for the backhaul expansion.

For the private telcos, we see -- anticipate a lot more CapEx spending happening for the 4G/5G network and also for -- and similarly for the [ backhaul ] network for the mobile application. We all have -- know about the BharatNet Phase-III project, the initial specification and tender documents have come out and it's in the process of getting finalized.

And just the CapEx that you see, which is asked for is more than $500 million, that's an initial estimate and [indiscernible]. And the other part is the broadband rollout in India continue foreseen and the plans of all the private operators, higher fees. We have more than $600 million of investments are planned over the next few quarters. So these are summary of all the significant projects and the opportunities that we see, which are addressed by the product portfolio that we have.

Similarly, globally, there are huge investments going out in broadband equipment where more than $100 billion are getting spent in the U.S. and Europe and the lead projects and the other in Europe, which is actually building the digital divide in the different countries by expanding the rural broadband network and a huge investment is going over there, which are addressable by our product.

There is a large replacement market of [indiscernible] in the U.S., and more than $5 billion have been assigned for that market. For the -- in some of the emerging economies in Africa and Asia, we see a lot of investments which are planned for expanding 4G/5G network, which are particularly -- where the deployment is initially starting right now and speaking at this time and we see that as an opportunity to grow in this market.

And a lot of investors are actually planned for utility modernization, actually going to be higher, but this is more than an $8 billion of addressable market for helping transition utility network from the traditional [indiscernible] equipment to IP-based networks, and that's one of the technologies that we are very strong in.

So net debt -- in summary, I gave you a picture of FY '24 and our outlook for the next few years and our continued investments. I'll stop over here, and we'll open up the floor to Q&A.

[Operator]

[Operator Instructions] The first question is from the line of Sohan Joshi from ASC Consultants.

[Unknown Analyst]

Am I audible?

[Operator]

Yes, sir.

[Unknown Analyst]

Congratulation for these numbers. So this backlog order of INR 8,200 crores doesn't cover the 5G order side, right? Is just for the 4G coverage of [indiscernible], right?

[Arnob Roy, executive]

That's correct. It just covers our existing backlog using 4G and other wireline -- the order book that we have, it doesn't cover 5G coverage.

[Unknown Analyst]

Okay. But my second question is the system on chip IP design regarding the semiconductor developed by Saankhya, I presume it will be captively consumed for a first buyer wire -- 5G wireless equipment and then we will market it for the outside market, right?

[Arnob Roy, executive]

So the current SOCs are actually getting used one of the [indiscernible] for the satellite transponder products, which has been designed using the semiconductor, but newer chips that we are designing, I mean -- we will evolve our products subsequently when the chip products are ready. But our current 5G products are not held up by that because our current [indiscernible] products are getting designed and will get launched this year. And when their semiconductor gets ready, at the time we will look at optimizing the equipment at this point of time.

[Operator]

The next question is from the line of Santosh Sinha from Emkay Global.

[Santosh Sinha, analyst]

My question is regarding the BSNL project. So what exactly is the time line for this project? Is the whole of any portion will be executed in FY '25 alone or will it [indiscernible] '25, '26 as well? Is the resource related to [indiscernible] because we were reading...

[Operator]

Mr. Sinha, your line is breaking up. Can you please see your cellphone reception?

[Santosh Sinha, analyst]

Yes. So my question is regarding this BSNL project. So we were reading about some news articles that there has been concern regarding delays in the project and BSNL is also looking for help from the vendors as such. So do you want to comment on that. And last question is what kind of margins do we expect in the long run?

[Arnob Roy, executive]

Okay. So you've asked 3 questions, Santosh. The first thing is BSNL supplies. Yes, I think, we expect to finish our supplies in this financial year in FY '25 itself, right? And I think again, most part of the network will also get deployed and commissioned during that time. So that's the answer to the first question.

Second question was about news reports that have come up. And just to reiterate what has -- that is what really meant, which is [indiscernible] subsequent clarification that came. See, the RAN equipment is actually getting deployed all across the country right now in different zones right, north and then west and other zones also started right now.

But what has happened that the core has been deployed in few of the zones, not in all of them, so wherever our RAN is getting deployed and installed, at that time, whenever the [indiscernible] is not there, the equipment is getting integrated to the existing core. So when the core -- when the [indiscernible] gets deployed in those circles, in those zones, they will patented to the [indiscernible] as well. So this is just a temporary situation where the RAN is deployed and in that zone, the core is not available, so it is getting integrated with the existing core in the network. So that is all that the report has meant, okay.

Your third question was about margins. Yes, so yes, as you've seen, our margins have actually grown over the last quarter. And going forward, it will be -- we don't comment on how the margins are going to look like. But I would probably [indiscernible] our wireless and wireline equipment. I mean we've been saying that our long-term goal is that as you see our historical margin that we had in the company and in over time, we will be [indiscernible] and I think those kind of numbers in terms of margins and financial [indiscernible].

[Santosh Sinha, analyst]

Just 2 more questions. After that, I will fall in the queue. One is regarding [indiscernible] because ultimately, now FY [indiscernible] we will have to grow on the international side. So what kind of -- are we seeing any new [ interactions ] or interests from the client? And second is regarding BharatNet. So what is the update there? And where can you see actually the revenue coming from BharatNet?

[Arnob Roy, executive]

Not sure, we could follow your questions because the line was not too good. I think your question was if I understand was international business. I mean what kind of opportunities we see and how do we see in BharatNet. If you recall the last slide that I presented on the immediate and upcoming opportunities in the international market, yes, I mean, we are increasing our focus on investments in the international markets and all the -- we've kind of given you a big picture of the opportunities that we're looking at, both in the U.S. and Europe as well as the kind of opportunities in utilities as well as emerging markets.

And there are several projects and the opportunities we are currently engaged in these markets without giving a lot of details, but that's going to be a focus area for us. That's going to be where our investments are also going to happen in the next few quarters, that's internationally.

As far as BharatNet is concerned, as you know, the project has already announced, lot of the technical documents and tender documents are out. But right now, the questions and clarifications are going on, which was with a tender. And we expect that sometime during the year, the tender will be big and completed and so on. And a lot of the active equipment over there is for IT [indiscernible] time that we have and that we have shipped to BSNL and also for the [indiscernible] equipment or GPON equipment, ONT [indiscernible]. So we are well covered in terms of products for the opportunities in BharatNet -- in the upcoming BharatNet tender. I hope I've answered your question.

[Operator]

The next question is from the line of Deep Mehta from Bank of India Mutual Fund.

[Deep Mehta, analyst]

Congratulations for very robust set of execution, which you've done for this quarter. I just have one question. This quarter we've significant stretching of our working capital cycle. How should we look at this number as we're going to ramp up our orders? And what can we [indiscernible] working capital cycle if you comment on it?

[Arnob Roy, executive]

Yes, I'll let Sumit take this question.

[Sumit Dhingra, executive]

Yes. So as we've commented earlier, the working capital currently needs to be looked at in context of the BSNL 4G project. We are in the midst of executing this large project, which is INR 7,700 crores worth of value over the next 2 quarters, a lot of working capital buildup is in context of or in preparation for execution of that project. As we go along over the next couple of quarters, you will see eventually the working capital tapering down as the execution progresses.

[Operator]

The next question is from the line of Ashish from JM Mutual Funds.

[Unknown Analyst]

Sir, in terms of our RAN, if you could highlight the competitive scenario in the Indian market, we understand there are international players also having similar radios. Is there a cost advantage for private telcos? So basically, are our products cost competitive? And if you could also highlight whether there is a difference in technology stack for 4G and 5G RAN between ours and those guys?

[Arnob Roy, executive]

Yes. See, we have [ beaten one ] in this highly -- in this large BSNL network. And BSNL has ensured that they get the most competitive prices, which are available in the market. So you can be rest assured that the products that we have designed and that we're selling are extremely competitive as far as the global [indiscernible] growth. So that's one part from a cost competitiveness. The other part is that our technological differentiator. Yes, any product that we make are always made with several technological differentiators and I'll let Kumar will give you [indiscernible] of that.

[Kumar Sivarajan, executive]

One of the important differentiators we have is that we integrate optical transport into the wireless, which no one else is doing in the industry and that's the key differentiator. We also have the ability to integrate other forms of optical access into the same part, what we call universal [indiscernible].

So that's -- this integration actually helps bring down the total cost of ownership of the wireless operators by doing multiple technology integration into our RAN equipment. So we save a lot of money in building the -- buying and building the backhaul equipment. And as well as it gives them the platform for launching other services apart from either the mobile services, which has been met with all the home and enterprise broadband opportunities in and around the area where they are installed.

So this is one of the key differentiators and customer really appreciates it and is leveraging this technology advantage as well.

[Unknown Analyst]

Yes. This is helpful. Secondly, on the private telcos. What -- so apart from BSNL obviously as far as the private telcos are concerned, is there an opportunity for us. Obviously, you have mentioned on the slide that more than $3 billion of CapEx will be rolled out. In terms of opportunity size and are we in discussion with some of the bigger private telcos as far as these radios are concerned?

[Anand Athreya, executive]

So as I mentioned in the earlier slide that we are actually engaged in few opportunities of the Telco and -- in the critical infrastructure system. And as we speak, we are to gain them. We are into multiple POCs, where our review has actually deployed and are undergoing trials. So yes, we went beyond this, I mean, there are much good opportunities when we started engaging with other customers. And they are all in India, and we hope to actually line up some opportunities in internationally as well.

[Unknown Analyst]

Okay, fair enough. And lastly, do we have sufficient manufacturing capacity on our side? And to that extent, would you say that the borrowings would not increase from current levels or would stay at current levels.

[Anand Athreya, executive]

So, No. No. of course. the manufacturing capacity has been driven, that's why the investments have been happening over the last few quarters. And now we have our -- we have established a chain where we can execute a project of this size within the timeline of the expected and we are very aggressive, right? So we have to invest in that type of manufacturing capacity. So that is there. And I think your question was about the working capital going forward. So we got on the working capital. So one part is the investment in manufacturing from selling it up, but a lot of the working capital team is in fulfillment of components with going to the manufacturing line. And that is a temporary phenomenon for executing these large products where subject to inventory. They're getting converted into the finished product, and they will get shipped out and the -- and we are getting our collections with this in as well and that's where the working capital cycle will go through and go on over time.

[Operator]

The next question is from the line of [indiscernible] from [indiscernible]. Please go ahead.

[Unknown Analyst]

Sir, I just wanted to make a request that if they could release our results a bit early because today, the conference call was scheduled at 7:00 and results were declared at 7:10, so we didn't get much time to analyze the presentation and ask the question. Otherwise, my questions have mostly been covered by other analysts. Just this request.

[Anand Athreya, executive]

Sure. Yes, this was the first for us. But yes, definitely, we'll do that next time.

[Operator]

The next question is from the line of Pratap Maliwal from Mount Intra Finance. Please go ahead.

[Pratap Maliwal, analyst]

Congrats on the great set of numbers. So just wanted to confirm that I was seeing in the presentation, that we cumulatively shipped equipment for about 10,000 plus sites on the wireline business. So just to confirm the overall order was for about 100,000 sites. So we'll be executing the remaining [ 90,000 ] in the next 3 or 4 quarters going ahead. Is that correct?

[Anand Athreya, executive]

That's correct.

[Pratap Maliwal, analyst]

Okay. And just one more thing. We've had an improvement in profitability as well this quarter. So last quarter, we have seen that last quarter, we're seeing that the low-margin part of the network equipment were deployed in that it consequently affected the profitability a little bit. So has that actually been compensated for this quarter? And going ahead, can we expect this improvement to sustain now that the low-margin parts are right?

[Anand Athreya, executive]

So yes, your observation is right. I mean, we mentioned that last quarter, and that's correct. I think this quarter we set the components of products, which is not a higher margin, and that's what is showing in our overall margin kind of a thing. So going forward, I think the blended margin as I said we don't comment on future margin kind of thing, but you can see the trend there. And as we said, our margins a blend of wireless and wireline products. So yes, the trajectory is there and will depend on the combination of products that we sell.

[Unknown Analyst]

Okay. So we do expect to hopefully maintain the improvement going forward as well?

[Unknown Executive]

We don't give guidance on that.

[Operator]

The next question is from the line of Hiren Kumar Thakorlal Desai, who's an individual investor.

[Unknown Shareholder]

I have just one question. Do we have an estimate of what [ CLI ] incentive we may receive for FY '25?

[Ashwini Agarwal, analyst]

The CLI estimates for the year are dependent on the revenues that we do for the year. For FY '25, since we don't give any guidance on the revenue, it will be difficult to give you that estimate.

[Unknown Shareholder]

Okay. Can you provide some percentage of revenue as an incentive that is there. I mean, what is the percentage number.

[Unknown Executive]

Policy states that the CLI would be between 5% to 6% of the manufacturing revenue, which is incremental revenue over the base year. So for every year, whatever is the manufacturing revenue less fee revenue for the base year. On that number, you'll get, let's say, a 6% kind of CLI.

[Operator]

The next question is from the line of Prathamesh Dhiwar from Tiger Assets.

[Prathamesh Dhiwar, analyst]

Firstly, sir, congrats for your great set of numbers. So just I was having this one question. How are we looking at our strategic partnerships with Valiant communication? Are we looking at any acquisition, which will help us doing any backward integration like...

[Unknown Executive]

Dhiwar, Valiant technologies, we have a very strong partnership going over for many years. They are our key partners for our equity markets. Their teleprotection and technology gets integrated with our transmission products to provide a very optimized solution to our utility and critical infrastructure customers. So that partner utility put up a terminal set of products between both companies, but they we have worked very well together to address this market. And this is going to continue, right? We are looking at opportunities together in markets, not only in India but globally, but that's how it's looks like.

[Operator]

The next question is from the line of Gurvinder Juneja from Fortuna Investment Advisors. Please go ahead.

[Gurvinder Juneja, analyst]

My first question is about getting some clarity on this proof of concept you're doing on the utility side. What does that mean? Is that including any work with Valiant. And second question is I probably misunderstood or didn't understand the split of revenue you gave between India, government and India private, what gets classified as India government revenue and what gets classified as India private, I just wanted some clarification. I missed that, please.

[Unknown Executive]

Yes. So for some of the POCs that we are doing is on our wireless equipment, 4G, 5G RAN equipment, and this is not including Valiant. This is purely applications with wireless. Your second -- so these are multiple networks where they are getting tried out as we speak for potential deployment.

The second question is about India government and all. As you see, as you know, we split our revenue -- revenue in terms of 3 sectors. One is the Indian government, which is mainly the public sector companies, the operators, [indiscernible] companies, [indiscernible], BSNL and so on. And then the Indian private which has a telcos, private telcos and ISPs in India to India private. And the third part is the international customer.

So the clarification we gave was, in India private, in the last 2 quarters, our shipment to BSNL 4G is categorized as India private because they are actually our immediate customer is CCS and not BSNL. And we look at our immediate customers who we are shipping to -- to get it through kind of classify this business segment. So we want to make sure that we understand that the India private numbers that we are showing -- reporting that includes the BSNL 4G, 5G segments.

[Operator]

Our next question is from the line of Harshit from Wallfort PMS. Please go ahead.

[Harshit Kochar, analyst]

Just wanted to get a sense on the kind of order book buildup that we can have going forward. Could you give some sense on that?

[Unknown Executive]

We don't give guidance on future business. You have the order book and the kind of painted color of the opportunities in front of us, both in India as well as internationally. So I think that's the best that we can do, right? Talk about our products, talk about our current order book and talk about the markets for these products and the immediate large opportunities that we see in front of us. I think that's the best we can do.

[Harshit Kochar, analyst]

So globally, sir, the kind of business that we do globally, how many competitors would be there comparable competitors if you can just put that kind of a number?

[Unknown Executive]

If you look at in India, the same -- all the global vendors and our global competitors are actually doing business within India, right? I mean all the names that you know of. So internationally also -- so we compete against them in India and in the same set of [indiscernible] same set of vendors that we compete against in the rest of the world. So there's no difference. I think it's the same competitive environment that you see in India, that we see internationally.

[Harshit Kochar, analyst]

And sir, would you like to share how many tenders have we filled in or how many, what is the win ratio or something like that? Is that possible?

[Unknown Executive]

Yes. I think there are far more [ leadership for ] business. It unfortunately we cannot share, but I think bidding happens, keeps happening all the time and we're doing some bidding stuff kind of thing. But those are numbers that we really don't share in terms of how many bids and main ratios and all this kind of thing, and there's really confidential information within the company.

[Operator]

Next follow-up question is from the line of Hiren Kumar Thakorlal Desai, who's an individual investor. Please go ahead.

[Unknown Shareholder]

Yes, one more question was just regarding the inventory part of it or you may just say the entire inventory cycle. The fact that we are dealing with TCS in a way. Do we have a sort of a better estimate a better certainty in terms of how long that cycle will be having? I mean what is the inventory turnover that we need to maintain, especially for BSNL business?

[Unknown Executive]

Okay. See, as I mentioned, this project is INR [indiscernible] crores worth of projects. The execution in terms of number of sites is a 10,000 sites as against 100,000 sites, about 90% yet to be executed. And from a lead time procurement -- we have done some advanced procurement to be able to ship these products in time. Now surely from -- surely from that perspective, if you see the order size versus the inventory, we have inventory for the next few months of delivery. We've not fully yet procured all the inventory for the project, but a significant part of it is in place, and it helps us have better assurance with respect to being able to deliver.

[ Basically, ] operating cycle is less than 12 months from a working capital standpoint. But that's a -- that's that would essentially as we go along, it would [indiscernible].

[Anand Athreya, executive]

So Hiren, I think the inventory is basically, the time cycle between the time we fulfill the components and we actually manufacture them and ship them out. So it's really not connected to TCS, it's connected to the cycle of manufacturers and shipments to the way of securing some additional warehouses.

[Unknown Shareholder]

No, I understand. I mean I'm assuming the context that payment from TCS will be fairly predictable in that context. So.

[Unknown Executive]

But payment wouldn't depend on -- I mean, the inventory levels wouldn't depend on the payments. That is something that we have essentially that we procured from our vendors. And against that, we would have favors in the books. And as we go along as we ship and deliver the sites to TCS then the payment cycle starts.

[Unknown Shareholder]

Yes, you just mentioned that we have built inventory for a few months. Can you quantify few months?

[Unknown Executive]

See, when I say few months, I was referring in context of the BSNL project execution.

[Unknown Shareholder]

Yes, That's what my question is.

[Unknown Executive]

Over the next 2 to 3 quarters is what we're looking to execute this project. And -- and the inventory that we have is a proportion of what we really need to execute that. There are some advanced actions that we've taken. So this inventory would -- that they have peak up a little bit from here. And thereafter, as the execution progresses, we would progressively see it coming down.

[Unknown Shareholder]

Okay. In that case, are you in a position to specify okay, not exact, but some ballparks number as to -- at what level will it peak?

[Unknown Executive]

It's difficult to give any guidance on what level would it peak, maybe next 3 to 4 months is where you would see this peaking up and then possibly coming down. But as I said, it depends on the pace of execution for the project.

[Operator]

Thank you. We will take our last question from the line of Sohan Joshi from ASC Consultants.

[Sohan Joshi, analyst]

Just want to understand, where will be the PO of the 5G sites will be out? Will it be out by this year only or first, the entire executions completed then the PO will be out for the 5G sites?

[Unknown Executive]

Yes. So the PO. It's not -- we don't wait for the entire product to get over. We will be doing a POC for this 5G upgrade in the in the next few months and once that completed, I think we expect to get the 5G upgrade business out there.

[Sohan Joshi, analyst]

Okay. Sir, guidance for the 40% sites of the existing 1,00,000 sites, right?

[Unknown Executive]

That's correct.

[Sohan Joshi, analyst]

Okay. So the current order book doesn't contain debt, 40% of the upgradation, right?

[Unknown Executive]

That's correct. It does not contain.

[Sohan Joshi, analyst]

Okay. And then the maintenance will be -- PO will be out, which is for the next 7 years post 3 years?

[Unknown Executive]

That's correct. Yes.

[Operator]

Thank you. Ladies and gentlemen, we would take that as a last question for today. I would now like to hand the conference over to Mr. Anand Athreya, sir, for closing comments.

[Anand Athreya, executive]

Thank you. So as the FY '24 closes, first I would like to thank our employees, customers, Board members, investors and stockholders for their continued support. This has been a record year for us. And we will continue to stay focused and execute month-over-month and quarter-over-quarter to put Tejas on a world map. Again, I wish you all the best, and thank you very much.

[Operator]

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