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spk00: Good day, ladies and gentlemen, and welcome to the SIFI Technologies financial results for third quarter and fiscal year 2021-2022. At this time, all participants have been placed on the listen-only mode, and the floor will be open for questions and comments after the presentation. It is now my pleasure to turn the floor over to your host, Praveen Krishna. Sir, the floor is yours.
spk01: Thank you, Holly. Good morning. I would like to extend a warm welcome to all our participants on behalf of CP Technologies Limited. I'm joined on the call today by Mr. Raju Vegsina, Chairman, Mr. Kamal Nath, Chief Executive Officer, and Mr. M.P. Vijay Kumar, Chief Financial Officer. Following our comments on the results, there will be an opportunity for questions. If you do not have a copy of our press release, please call Grayling Global at 646-284-9400 and we will have one sent to you. Alternatively, you may obtain a copy of the release at the investor information section on the company's corporate website at www.siffytechnologies.com slash investors. A replay of today's call may be accessed by dialing in on the numbers provided in the press release or by accessing the webcast in the investor information section of SIFI corporate website. Some of the financial measures referred to during this call and the earnings release may include non-GAAP measures. SIFI's results for the year are according to the International Financial Reporting Standards, or IFRS, and will differ somewhat from the GAAP announcement made in previous years. A presentation of the most directly comparable financial measures calculated and presented in accordance with GAAP and a reconciliation of such non-GAAP measures and of the differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will be made available on CIFI's website. Before we continue, I'd like to point out that certain statements contained in the earnings release and on this conference call are forward-looking statements rather than historical facts and are subject to risks and uncertainties that could cause actual results to differ materially from those described. With respect to such forward-looking statements, the company seeks protection afforded by the Private Securities Litigation Reform Act of 1995. These risks include a variety of factors including competitive development and risk factors listed from time to time in the company's SEC reports and public releases. Those lists are intended to identify certain principal factors that could cause actual results to differ materially from those described in the forward-looking statements, but are not intended to represent a complete list of all risks and uncertainties inherent to the company's business. I would now like to introduce Mr. Raju Vexana, Chairman of the Free Technologies. Chairman.
spk03: Thank you, Praveen. Good morning. Thank you for joining all of you. Given the proactive governance through the pandemic, India is better placed through the third phase that we are currently experiencing. Digital IT infrastructure across the country has been scaled up aggressively since the networks and the data centers are declared essential services. Indian businesses are now convinced all the importance of the business processes continuity and convergent services of seamless business output. It has led to the both a surge of the services from a cloud-based local startup, cloud-born, you know, native cloud-born startup local, on growing hyperscaler investments in Indian IT infrastructure. As, you know, CP's digital at the core, as the plan, we are seeing as the right time for CP to scale up, to capture all these opportunities. Let me bring in Kamal Nag, our CEO, to expand on some of the business highlights for the past quarter. Come on. Yeah, thank you, Raju. Enterprises looking for cloud-based digital transformation services see our digital first bouquet of services as a natural fitment for their evolving business demands. We are seeing an upswing in demand for our cloud at core services as the right delivery model for these demands. Our successful delivery for hyperscalers is a strong endorsement of our agility and capability on the data center front and increases the attractiveness of our data centers to our enterprise clients. With the market learning to work around the pandemic, these demands should continue. As with previous quarters, I would like to expand on the business highlights and summarize our business performance. As part of our corporate venture capital initiative, SIFI has further invested during the quarter, in the earlier announced startups in the Silicon Valley area. Chiffee committed to a capital outlay of INR 9900 million toward fresh capacity building for data center expansion in the Navi Mumbai region. This is in addition to the capital outlay of INR 1200 million for expansion of DC capacity in the same region. Chiffee Technologies has been recognized as a niche player in the 2021 Gartner Magic Quadrant for Managed Network Services. The recognition is for completeness of vision and ability to execute leading to superior quality of service. The business continues to grow the reach of the network. As of 31st December 2021, SIFI provides services via 769 fiber nodes and 1,893 wireless base stations across the country. a 6% and 11% increase respectively over the same quarter last year. As part of his digital experience project, SIFI completed full automation of service assurance, asset management, and service provisioning across his network. This will accelerate the deployment of a streamlined customer experience in the coming quarters. To summarize our business performance, revenue from data center co-location services grew by 44% over the same quarter last year. Revenue from digital services fell by 18% over the same quarter last year. And revenue from network-centric services grew by 8% over the same quarter last year. The revenue split between the businesses during the quarter was data center co-location services at 30%, digital services at 24%, and network centric services at 46%. A detailed list of our key wins is recorded in our press release, now live on our website. Let me bring in Vijay, our CFO, to elaborate on the financial highlights for the past quarter. Vijay.
spk02: Thank you, Kamal. Good morning, everyone. Let me briefly sum up the financial performance for the third quarter of financial year 2021-2022. Revenue was INR 6783 million, a growth of 8% over the same quarter last year. EBITDA was INR 1574 million, an increase of 22% over the same quarter last year. Profit before tax for the quarter was INR 477 million, an increase of 19% over the same quarter last year. Profit after tax was INR 344 million, an increase of 36% over the same quarter last year. Capital expenditure during the quarter was INR 2887 million. The customer demand for digital infrastructure services continues to be encouraging. We will continue to expand on our data center and network capacity. Our fiscal discipline will continue right through our investment journey without impacting customer experience. Cash balance at the end of quarter was INR 2381 million. I will now hand over to our chairman for his closing remarks.
spk03: Thank you, Vijay. India was already in the midst of the transformation of legacy systems to the adoption of automation. The pandemic only accelerated that process. In this process, some of our services matured through their adoption of enterprises. Several are fine-tuned by the enterprise demand. Some are more had to be completely overhauled. In all, the current CP bouquet of services sits well with the market demand. Thank you for joining us on this call. I will now land over to the operator for questions. Operator?
spk00: Ladies and gentlemen, the floor is now open for questions. If you have any questions or comments, please press star 1 on your phone at this time. We ask that while posing your question, you please pick up your handset if listening on speakerphone to provide optimum sound quality. Please hold while we poll for questions. Your first question for today is coming from Greg Burns. Please announce your affiliation, then pose your question.
spk04: Good morning, Greg Burns with Sidoti and Company. I just wanted to ask about the first, about the Kotak investment. What was the rationale behind taking that investment in the contact center business? And, you know, what benefits do you see from their involvement? Thank you.
spk02: Shall I? Yeah, Vijay Kumar, please go ahead. Yeah. Thanks, Greg. Kotak is an alternate investment fund which is managed by one of the most established bankers in India, where the fund has LPs, which includes sovereign wealth funds, which are among the best names who participate in data center investments across the globe. As you are aware, SIPI has a very active business presence in the data center services. And we have been continuously investing in expanding our data center capacity, considering the highly encouraging demand for data center co-location services. So this investment from Kotak is through a compulsorily convertible instrument where it is meant for financing or rather part financing some of our Greenfield data center capacity expansion over the next three years. So that's the background of the investment and the investment house.
spk04: Okay. In terms of I guess, does it accelerate your ability to invest? Does it give you greater flexibility? I'm just trying to understand a little bit better what advantages taking that outside capital has for you.
spk02: Yeah. So it actually does multiple things. One is it helps us fast track our data center capacity expansion as we tend to raise about 1,000 crores, which in terms of INR million is 10,000 million. Amount of capital, which will be accessible to us for our expansion needs. Along with the debt financing, which we can raise from the banking system, approximately with a debt equity ratio of two is to one. It helps us to create substantial capacity over the next three years. And lastly, Participation by an established banker and the sovereign wealth funds who are globally respected LPs also validates our data center business model and our competencies in this business. So it places before us capital for expansion and also gives us access to raise capital beyond what we have already contracted.
spk04: Okay, great. I guess then you mentioned also committing to 9,900 million incremental investment in the data centers. Is that all part of this, like with the incremental capital you raised from Kotak? Or is that separate from that? Is that incremental and new? Or how should we read into that? And what's the timeframe on kind of when you expect that investment to be made?
spk02: The numbers which have been communicated to the press release are for the data center projects where there is currently work in progress. Those will be financed by internal accruals and debt from the banking system. What we are raising from Kotak Fund is for new greenfield projects for which the projects will be taken up effective from March of this calendar year.
spk04: Okay. Okay. And then in terms of, I guess you're reclassified the way you report your segments. Within digital services, could you just give us an idea of the growth of the different pieces I'M ASSUMING CLOUD AND MANAGED SERVICES WAS CONTINUING TO GROW, BUT CAN YOU JUST GIVE ME A LITTLE BREAKDOWN OF THAT 18% DECLINE?
spk02: YEAH. SO AS FAR AS THE CIFI DIGITAL SERVICES ARE CONCERNED, AS YOU RIGHTLY OBSERVE, THE CLOUD AND MANAGED SERVICES CONTINUES TO GROW, WHEREAS IN THIS PARTICULAR QUARTER, OUR TECHNOLOGY INTEGRATION SERVICES where we had a couple of large projects to be executed. Those projects execution is work in progress. And given the pandemic associated supply chain issues, those projects will get completed hopefully in this calendar quarter, in this quarter four. So the cloud and managed services grown during the quarter. and the other, particularly the technology integration services, there's a deep growth.
spk04: Okay. I guess, since you brought it up in terms of the pandemic, where, I guess, what's the status of the conditions in India? Like, are you constrained by, like, mandates or lockdowns anymore? Is business getting back more back to normal there? And, you know, what's your view, I guess, looking forward in terms of maybe some of the constraints on the business in terms of the pandemic?
spk02: It's getting back to normal, normal, except that with this Omicron, there are lockdowns specified in a few states for the weekend. Otherwise, the business continue to work as they're almost limping back to normal, except that many organizations are still pursuing work from home as a model. From a business perspective, as far as Chairman observed in his opening remarks, the network and data center services demand continues to be high and growing. And on the digital transformation services, the customers are having extensive conversation and these conversations we expect to get converted into tangible orders and revenue conversion in the foreseeable future.
spk04: Okay, great. Thank you.
spk02: Thank you.
spk00: Once again, if there are any questions or comments, please press star 1 on your phone. There are no questions in queue at this time.
spk03: Thank you. Appreciate your time on this call. We look forward to interacting with you . Thank you very much. Have a great day.
spk01: Thank you very much.
spk00: Thank you, ladies. Thank you, ladies and gentlemen. This does conclude today's conference call. You may disconnect your phone lines at this time and have a wonderful day. Thank you for your participation.
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