Nucleus Software Exports Ltd — Call Transcript 2024

Nov 19, 2024

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November 19, 2024

The Listing Department The Listing Department The National Stock Exchange of India Ltd. BSE Limited Exchange Plaza, Bandra-Kurla Phiroze Jeejeebhoy Towers, Complex, Bandra (E) 25th Floor, Dalal Street Mumbai-400051. Mumbai-400001 Fax Nos. 022-26598236/237/238 Fax No. 022-22722061/41/39 SYMBOL: NUCLEUS SCRIP CODE: 531209

Dear Sirs,

SUB: TRANSCRIPT OF THE INVESTOR EARNING CALL OF THE COMPANY

In pursuant to above mentioned subject, we are hereby enclosing the Transcript of the Earning conference Call of the Company for the Quarter and Half Year ended September 30, 2024 held on November 13, 2024.

This is for your information and records.

Thanking You

Yours Sincerely

For Nucleus Software Exports Limited

Poonam Digitally signed by Poonam Bhasin Bhasin Date: 2024.11.19 11:26:45 +05'30' (Poonam Bhasin) Company Secretary

Encl: as above

Registered Office 33-35 Thyagraj Nagar Mkt, New Delhi - 110003 Tel.: +9.11.2462.7552 F.: +91.11.2462.0872

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Nucleus Software

Q2 Investor Conference Call

Event Date / Time: 13/11/2024, 15:00 Hrs

Registered Office 33-35 Thyagraj Nagar Mkt, New Delhi - 110003 Tel.: +9.11.2462.7552 F.: +91.11.2462.0872

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Moderator:

Good afternoon, everyone this is Pelsia a very warm welcome to all of you for this Nucleus Software Earnings Conference call for the quarter and half year ended on September 30[th] 2024. For discussion we have here from the management team Mr. Vishnu R. Dusad our Managing Director, Mr. Parag Bhise CEO and Executive Director, Mr. Anurag Mantri COO and Executive Director, Mr. Surya Prakash Kanodia Chief Financial Officer, Mr. Ashwani Arora Senior Vice President, Mr. Ashish Khanna Chief of Staff and Chief Marketing Officer, Mr. Mukesh Bangia Vice President, Mr. Abhishek Pallav Vice President, Mr. Pradeep Malik Vice President, Ms. Swati Patwardhan Chief Human Resource Officer and Mr. Tapan Jayaswal Financial Controller.

As you all are aware Nucleus Software does not provide any specific revenue earning guidance anything which is said during this call which may reflect company's outlook for the future or which may be considered as a forward-looking statement must be reviewed in conjunction with the risk that the company faces. An audio and the transcript of this call will be shortly available on the investor session of company's website www.nucleusoftware.com. With this we are now ready to begin with the opening comments on the performance of the company and post that we would be available for the question-and-answer session. With this I now pass it over to Mr. Vishnu.

Vishnu R Dusad :

A warm welcome to all of you to this conference call on our performance for the Q2 FY25. We're very happy to let you know that the quarter has been a reasonable quarter and we are looking forward to more exciting news in coming quarters. With those words, I would hand it over to Parag.

Parag Bhise :

Thank you very much Mr. Dusad for your comments and just to add to what Mr. Vishnu mentioned I would want to reiterate on what I had said last quarter that our strategic initiative of Hoshin Kanri which is a lean based initiative is progressing and we are starting to already realize some benefits from it and we would continue to work on it which will give us multiple benefits in the subsequent quarters. Thank you very much.

Tapan Jayaswal :

So, starting from revenue, our consolidated revenue for the quarter is at INR 202.2 crores against INR 195.4 crores QoQ and INR 205.3 crores YoY. Overall revenue in foreign currency including India rupee revenue is USD 24.1 million for the quarter against USD 23.4 million QoQ and USD 24.9 million YoY. Product revenue for the quarter is at INR 171.4 crore against INR 168 crore QoQ and INR 174 crore YoY. Revenue from projects and services for the quarter is at INR 30.8 crore against INR 27.4 crore QoQ and INR 31.2 crore YoY. As for expenses cost of delivery including cost of product

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development for the quarter is 71.4% of revenue against 75.5% of revenue QoQ and 61.6% of revenue YoY.

In absolute terms, this is INR 144.4 crore against INR 147.5 crore QoQ and INR 126.3 crore YoY. Marketing and sales expenses for the quarter is 4.5% of revenue against 2.2% of revenue QoQ and 5% YoY. In absolute terms this is INR 9.1 crore against INR 4.2 crore QoQ and INR 10.4 crore YoY. G and A expenses for the quarter is 8.5% of revenue against 7.6% of revenue QoQ and 8.2% YoY. In absolute terms this is INR 17.2 crore against INR 14.9 crore QoQ and INR 16.9 crore YoY. EBITDA for the quarter is at INR 31.5 crore against INR 28.8 crore QoQ and INR 51.7 crore YoY.

Other income from investment and deposit is at INR 18.5 crore against INR 14.8 crore QoQ and INR 11.1 crore YoY. Total other income for the quarter is INR 19 crore against INR 15.1 crore QoQ and INR 11.9 crore YoY. Total taxes are at INR 13.5 crores against rupees INR 9.7 crore QoQ and INR 15.3 crore YoY. Net profit is at INR 33.1 crore for the quarter against INR 30.2 crores QoQ and INR 44.6 crores YoY. Other comprehensive income is at negative INR (2.7) crore for the quarter against INR 1 crore QoQ and INR 3.4 crore YoY.

Total comprehensive income which includes net profit and other comprehensive income is at INR 30.4 crore for the quarter against INR 31.2 crore QoQ and INR 48 crore YoY. EPS for the quarter is at INR 12.35 as against INR 11.28 QoQ and INR 16.65 YoY. In terms of foreign currency hedges on 30[th] September 2024 we had USD 3.75 million of forward contracts at an average rate of 84.29. There is a mark to market gain of INR 0.01 crore which is taken to hedging reserve in the balance sheet. Revenue contribution from the top five clients for the quarter is 28.2% against 28.8% in the previous quarter. The order book position is INR 720.5 crore including INR 672 crores of product business and INR 48.4 crore of project and services business. On June 30, 2024, the order book position was INR 813.4 crore including INR 752.2 crore of product business and INR 61.2 crores of projects and services business.

Total cash and cash equivalents as on 30[th] September 2024 are INR 895.1 crore against INR 920.8 crore as on 30[th] June 2024. This includes balances in current accounts of INR 56.7 crores. Various schemes of mutual funds INR 609.7 crores fixed deposits of INR 193.8 crores, investments in tax free bonds of INR 34.9 crore. With regards to receivables, we are at INR 99.7 crore against INR 175.4 crore previous quarter. During the quarter there is a gross addition of fixed assets of INR 2.55 crores consisting primarily of INR 2.2 crores on computers and servers and INR 0.27 crores on office equipment and INR 0.08 crores on software. Now I will hand it over to Swati.

Moderator:

Thank you, sir. With this we are now open for the question-and-answer session. If you wish to ask a question, please press * and 1 on your telephone keypad and wait for your name to be announced. If you wish to cancel your request, please press * and 1 again. We will wait for a moment for the

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question que assembles. First question comes from Grishma Shah from Envision Capital please go ahead.

Grishma Shah :

Good afternoon to the management team, I am keen to know what was the strategic initiative that we embarked on as we mentioned in the opening comments and given that the order book QoQ has not seen a significant increase if you could show some color on the deal pipeline and how the order book would pan out going ahead?

Parag Bhise :

Yes, hello thank you for your question. This is Parag here; I will talk about the strategic initiative. I had probably talked about it in the last quarter as well. This is an initiative called Hoshin Kanri which is more on which is kind of talks about the strategy that we have identified a few areas of improvements. Now Hoshin Kanri is based on lean principles, lean principles actually come from Toyota which implemented Toyota production system which became very popular and almost an industry benchmark in manufacturing. After that services companies and software companies have also very recently started adopting it so we are probably one of the very few who have adopted it so there are initiatives which we have identified, essentially it talks about streamlining those initiatives, identifying waste in those initiatives, making operational efficiencies.

So, we have identified a few initiatives which relate to improving customer experience which relate to improving agility. There are some internal HR initiatives those are which we are working on there are senior level leaders who are leading these initiatives there are teams associated with these initiatives. We are being guided by an organization grown as LEI i.e. Lean Enterprise Institute based in US, their vision is to propagate lean philosophy in various industries so that is with the vision they progress so their senior consultants are guiding us on a regular basis so this is a very broad level if there are any follow-up questions I would be happy to answer.

Grishma Shah :

Yes, so what will it entail in terms of margins or better response time to consumers I mean what is the final outcome of this all initiative?

Parag Bhise :

Okay so ultimately yes so, these initiatives are not short-term initiatives, these are targeted at making fundamental changes in the way the organization functions so of course the positive impacts of these initiatives are long term. But ultimately yes these will in due course we expect them to result in profitability increased margin better orders because as I mentioned specifically a couple of them are targeted at improving customer experiences and our business depends a lot on differentiability so when we improve those experiences take the experience at a different level, we also expect this to

Registered Office 33-35 Thyagraj Nagar Mkt, New Delhi - 110003 Tel.: +9.11.2462.7552 F.: +91.11.2462.0872

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contribute on business growth so can't say in percentage numbers but it's a long term impact that we are expecting.

Grishma Shah :

Okay and what is the reason for softness in sales this quarter and how do you think it will pan out given that even the order book has also growth has also slowed down?

Parag Bhise :

Yes, you talked about pipeline the pipeline continues to be strong. Yes, we are facing some I think temporary delays in closing orders. We are having pipeline which is at an advanced stage can't say what's if there is any specific reason but it's just that they are taking time to convert but pipelines continue to be strong.

Vishnu R Dusad :

I will just add here, this is Vishnu. The cycle time for orders has almost increased 50% in some cases 100% and 50% also something that would be that a typical organization would take a decision in one year now it is taking two years more than that.

Grishma Shah :

Okay so is it that there is more competition which is there in the market there are more alternatives because our offering is core for any bank to operate as in you know given how banks are adopting to digitization and moving customer experience why should we take double the time to get in order commissions?

Vishnu R Dusad :

Talking about competitions clearly there are more competitors and that could be another reason why our customers are getting confused. We make it a point not to oversell, our commitments we try to make them as robust as we can and that's where maybe our customers may be getting lost.

Grishma Shah :

Okay fine. Thank you and good luck.

Vishnu R Dusad :

Thank you

Moderator:

Thank you. Next question comes from Anuj Sharma from M3 Investments, please go ahead.

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Anuj Sharma :

Thank you for this opportunity, see if I look at the business in the last 6 and 7 quarters there was a reset of pricing which flowed down to the income and of course the operating profit. Over the course of time, we have seen that we have managed to hold on to the revenue or maybe say the price increases, but the operating margins have sort of come down to our long time average. If I were to just normalize all of the scenario, can we say that we are now at a quarter which is more sustainable and replicable going forward that's question number one and second in terms of again resets both domestic and international customers, that exercise is broadly done?

Surya Prakash Kanodia :

Yes, hi Anuj this is Surya here thanks for the question. So let me take the first one related to margins so you're right I mean in the last couple of years we have been doing a lot of reset of our pricing which went into our revenue and jumped into our margins as well. At the beginning of the year we kind of took a conscious decision to invest in our people and invest in our technology because these are like our biggest asset to be prepared for the next round of growth for the organization. And because of that you would see that the margins have dropped by almost like 10%. But having said it we would not believe these are the sustainable margins we would want to go back to what it was last year.

And what Parag Bhise spoke about Hoshin Kanri that is actually one of the steps in that direction where we would be looking to kind of take care of or remove all the internal I would say excess expenses, optimize the cost so that is also one of the objective of that so as a combination of these two and selling more of our IPs we believe that we should be back to our margin that we have done in the last year.

Anuj Sharma :

Alright and on the second part of?

Surya Prakash Kanodia :

Yes on the domestic and international obviously if you see as compared to last year our percentage of revenue from domestic has increased to 58% from 55% but what I would say that when we look at our pipeline, existing pipeline the good news about our pipeline that's still spread all across so it is not like kind of concentrated only in domestic or concentrated only in one particular region in the international as well so that is something which is giving us a confidence that our growth which is going to happen should happen all across given that we are having presence and engagements and discussions all around the globe.

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Anuj Sharma :

Yes, okay and the second point on the reset, is that reset broadly over including the surpluses overflow and is that is today's revenue of air indication of all resets into the revenue?

Surya Prakash Kanodia :

So let me put it this way most of what we are set to do has happened it has not like completely happened but yes what you see now is more or less taking into account all the research that would have happened.

Anuj Sharma :

Alright see also one commendable thing is this reset was long overdue another of our illustrious past has been a very strong international presence I am talking a couple of years ago what are we doing to get back and which geography is so spread out is a good idea but do we get more confidence on certain geographies that in the next 3-5 years we'll be able to develop more confidence out there and yes so what's the long term plan on international business?

Ashish Khanna :

Hi this is Ashish Khanna. I think definitely in multiple geographies and region we are getting kind of good traction starting in Southeast Asia so a couple of countries within Southeast Asia are picking up well including Vietnam, Philippines. Similarly in Middle East we are getting good traction both in terms of financial institution opting for a digital transformation and opting for a solution like ours and on the lending front as well as on the transaction banking front. And similarly, if we move towards Australia similarly, we are getting good traction there in Australia as well as a focused approach we are following as an organization for seventeen plus countries as of now with a lot of our customers now trying to look for a solution or a product which can give them an advancement in the ecosystem. And our new product is fully aligned from a technical stack on those areas so I think in a nutshell I think we are getting good traction in different markets which Surya also mentioned and we are having a focused 17 countries focus as of now to expand and extend our position.

Anuj Sharma :

Yes, see in addition to that in the 17 countries in how many countries we would be currently dominant or let's suppose we expect to be dominant in 3-5 years like the way we dominate in India. Do we envisage maybe in the next 3-5 years we could have the dominance as we have here in any other country, or we will even after 3-5 years be spread out playing across geographies what is the strategy there?

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Ashish Khanna :

Thanks for the question I think definitely we as from a strategy standpoint we do have a focus to play a dominant role at least in 30-40% of these countries which I mentioned the similar way we are behaving or we are operating in India and we are as part of our strategy we are kind of zero down on those countries where we will play our dominant role and countries where we'll continue investing to strengthen our position strengthen our product and eventually maybe after 5 years or 4-5 years from now probably we'll increase this percentage to be more dominant player in other countries so definitely the strategy is mix of playing a dominant role as well as playing a role to strengthen our position in some of the countries.

Anuj Sharma :

Okay and my last question is I think you have alluded to your detail a bit earlier but this new initiative and foundation which we are now undertaking how different Nucleus will be in the next 5 years let's say I understand the initiatives will take time but how different Nucleus will be and what is driving these investments what difference can we say in nucleus of today and let's suppose 5 years since?

Vishnu R Dusad :

Okay thanks for the very meaningful question. I think our customers are used to getting high quality delivery from us for decades now. Where this strategic initiative is going to take us to ensure that every single engagement we have to admit that not all engagements are to our satisfaction so where this strategic initiative will take us is to be in a position to say that every single engagement is a very very robust engagement where the customers are delighted. So that is the core and likewise we are also equally confident that all the Nucleite to be very happy with the work environment some of us might be working many long hours some others may not be thankfully required to work that.

We have a confidence that everyone would be able to have a meaningful balance of work and life and our contribution to society continues to be there we hope to increase that so it's a very very important strategic initiative and as we are just 5 months into it but we are getting very good vibes as we are progressing.

Anuj Sharma :

Okay alright Vishnu ji if I may just put in what is driving this change is it that we want to a bigger be a bigger enterprise what's driving the thought process?

Vishnu R Dusad :

Again that in some manner that goes without saying but what is more important for us is ensuring that every single penny that we take from our customers they see reasonable amount of value if not

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immense value coming out of the money that they spend on us and likewise we want to just make sure that every Nucleite is happy as a professional, as a human being, as an individual and likewise we would be able to make sure that our shareholders are also satisfied.

Anuj Sharma :

Sure, thank you. Thank you so much for the answers

Vishnu R Dusad :

Thank you

Moderator:

Thank you. Next question comes from Rahul Jain from Dolat capital, please go ahead

Rahul Jain :

Yes, hi thanks for the opportunity. Just looking at the quarters regional or geographical growth basis the growth was largely driven by two specific markets so is it safer to assume that a large part of incremental revenue came from reset of AMC repricing on those market or is it led by new deligant alone.

Surya Prakash Kanodia :

So, Rahul just to be more clear so when you say growth of revenue you mean growth QoQ?

Rahul Jain :

Yes, incremental on a QoQ basis.

Surya Prakash Kanodia :

QoQ basis yes. So a part of the growth was definitely contributed by the repricing exercise because I mean there are certain customers that still have to be updated so repricing has happened for those customers and a part of the growth has been contributed from them and the other part has been contributed by the regular growth in business by bringing in more of particularly time and material revenue so these are the two major factors which contributed to our revenue increment.

Rahul Jain :

Right and secondly is there a way to quantify or give a color in terms of how much of our new wins or overall revenue signing is coming on the subscription model versus on premise upfront signing model?

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Surya Prakash Kanodia :

So incrementally see what we are doing right now is like more in the June of Neo selling that is something where the upfront revenue recognition would not be that great but yes, I would say still there would be substantial part which will come from that.

Rahul Jain :

So, would you attribute that on a like for like you are getting a little bit of disadvantage of more and more signing coming from a subscription model so the revenue recognition is a slight disadvantage which is also impacting profitability?

Surya Prakash Kanodia :

I would not say disadvantage it is just like the recognition of revenue gets spread over a larger period but still the total revenue remains the same so I would not put.

Rahul Jain :

Yes, I mean in a particular financial year still mathematically that could be a disadvantage I am not talking about the lifetime potential

Surya Prakash Kanodia :

How it will happen is like over a period of time then you will start kind of getting revenue from pieces which you have sold earlier as well which we are not getting earlier so that is what you have said if you look over a larger period of time it will compensate each other that is how I would want to say it.

Rahul Jain :

Yes, I understand the merit of that model what I am trying to understand is it meaningful enough to impact some bit of profitability or it's purely function of lesser revenue growth which is impacting the profitability versus last year.

Surya Prakash Kanodia :

Yes, it is the second one that you said Rahul.

Rahul Jain :

Okay and one more thing on the cost side of it of course you alluded that there is an intent to take care of it. But what is an ideal band of profitability you would like to operate at because we have seen a very bit volatility in this thing and we've been consistently investing both in G and A and S and M and of course on the headcounts wherever required. So is there a way where we would be more

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comfortable in a broader band which we may kind of be moving into as a safer zone for us to model from a future perspective?

Surya Prakash Kanodia :

See I will not be able to give you any range of number because then it will tantamount to forward guidance that we don't do. But having said that as an organization our endeavour is to see that we come back to the margins that we were able to deliver last quarter and for doing that we are like banking on sorry last year so for doing that we are banking on obviously new sales that should happen given the pipeline that we have and the cost optimization that should eventually come through after doing everything that we are like initiating to do as part of Hoshin Kanri as Parag had mentioned.

Rahul Jain :

So, you're saying let's assume we did 25% EBIT margin in last year it is potentially achievable in near future?

Surya Prakash Kanodia :

That is what we are striving to do.

Rahul Jain :

If you just look at the kind of a growth that we saw in FY24 a bulk of that incremental revenue came from a onetime incremental revenue that came in from AMC repricing which didn't come up with any new cost base and that's why the profitability was way way sharper. Now from a purely cost perspective if you look at our annual run rate from FY24 to FY25 that has already moved meaningfully so you still think despite that aspiring for 25% plus margin is not a big ask?

Surya Prakash Kanodia :

Yes, because we are banking on the new sales as I said now because once we do the new sales we don't see because we being a product company IT company we don't see that the proportionate increase in cost would be as much as the new sales comes in and that is something which should help to bump up the revenue as well as margins.

Rahul Jain :

Right and this decision-making concern that we've been observing for quite some time. So would you attribute a little bit of whatever bold attempt that we took in terms of the repricing of the AMC this is also kind of becoming a hindrance for a lot of people on their decision-making part because anybody who would be signing now would be trying to understand the long-term pricing for the product before committing it to the new signings.

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Ashish Khanna :

Thank you for the question but I think this is a trend we are observing across industry and not just very specific to Nucleus. The sales cycle today has been a little longer in the entire industry itself and this is the trend we and our peers’ companies are also experiencing. On the perspective which you bring in with the change in pricing is there a change in thought process in the market? I think my good guess I think that's not the case the reason being because the pricing structure which we have done is very happily accepted by our customers and they understand the kind of a cost we are agreeing to support them from last so many decades, so I think that was never raised as a concern from any of the existing customer.

And that acceptance was very smooth in terms of our conversation with the customers so that's not the case I think the case is primarily more on the decision making in terms of digital transformations what kind of initiative financial institutions want to take and finalizing on the scope I think growth and internal procurement decisions are taking some time and this is something which most of the organizations are facing today not just Nucleus

Rahul Jain :

Right and last bit from my side do you see any near-term respite on this elongated decision-making cycle kind of a thought process or it is difficult to gauge at your end and secondly the amount of regulatory involvement that we observe nowadays in the banking and BFS space you think will it drive a new set of growth in tech investment or you think it's not a meaningful trigger for us?

Parag Bhise :

Sure, I think you are both parts to your question one we can draw conjecture that because of the regulatory needs changing so far customers have also become more careful they want to even evaluate that part so that probably adds to the time that they take for decision making. Secondly yes the regulatory changes coming in so fast is also contributing to business growth and there we definitely see us at an advantage because the flexibility of the product even if they are the knowledge that we have of the industry for us to deliver those changes either to existing customers or to build it into our new releases is much easier for us that's definitely an advantage so yes it is definitely going to contribute to an extent to the business growth because they're coming in pretty frequent and a lot of them.

Rahul Jain :

Thanks for the color. I will jump back into the queue.

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Parag Bhise :

Thank you.

Moderator:

Thank you. Next question comes from Vinay Nadkarni from Hathway investments private limited please go ahead.

Vinay Nadkarni :

Yes, thank you just wanted a couple of bookkeeping questions how many new clients have we added in this quarter and this half year?

Vishnu R Dusad :

So, we haven't added any new client in this quarter.

Vinay Nadkarni :

Neither in this quarter nor in the half year?

Vishnu R Dusad :

No half year we have added.

Vinay Nadkarni :

How many? Can you give the number?

Vishnu R Dusad :

One.

Vinay Nadkarni:

Okay and have you lost any clients during this period?

Vishnu R Dusad :

No

Vinay Nadkarni :

Neither in the quarter or in the half year?

Registered Office

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Vishnu R Dusad :

Yes

Vinay Nadkarni :

Okay and the order book breakup that you have given INR 720 crores. Can you just give me a breakup of products and services you have given me I thought it was 600 and services at 48 but it didn't add up to 720 so just wanted to check out if I got the numbers wrong.

Surya Prakash Kanodia :

Yes, Vivek can you repeat the question please?

Vinay Nadkarni :

Yes, the order book as on 30[th] September can you just repeat those numbers, I thought you said INR 720 crores am I right?

Tapan Jaiswal :

Okay so this INR 725 crores it was including INR 672 two crores of product business and INR 48.4 crores of project and services business.

Vinay Nadkarni :

Thanks a lot, second part was on are you facing any significant headwinds in your growth which because for the last I mean it's not only you other companies also are applying the same again. The last 7-8 quarters have been very stagnant in terms of plus minus INR 200 crores. Is there anything significant which is holding you from growing and breaking this INR 200 crores barrier?

Vishnu R Dusad :

Yes essentially, we talked about it earlier also that some of the I mean most of the players in fact most of the players are taking much longer time to take the decisions and that is essentially the biggest barrier they are being very cautious they are being very careful in taking the decisions.

Vinay Nadkarni :

But it could spill from one year to the other one quarter to the other quarter right or is it just going cyclically?

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Vishnu R Dusad :

No that's what we wanted to say that if it's earlier some people who take decisions in 2 quarters, 3 quarters, today they are taking 6 quarters, 8 quarters to take the same decision.

Vinay Nadkarni :

Okay and is there any new product that you are looking at launching because when I look at your cash and cash equivalent it has been above your one-year sales number for a long time now so is there anything that you're planning to add into your product basket in order to service a larger variety of customers or a larger requirement of a single customer?

Vishnu R Dusad :

Certainly, our engineering teams are working on have been working on and are continuing to work on the latest technologies including AI and as and when they are in a shape to be shipped to our customers we'll be making the announcements.

Vinay Nadkarni :

Okay and lastly on operating expenses from last quarter last year same quarter to this year same quarter it has grown by almost 10% points 61.6% to 71.4% this is basically caused by employee because that could be a major chunk, right?

Surya Prakash Kanodia :

Are you referring to the consulting number Vinay?

Vinay Nadkarni :

Yes, the number that you gave at the beginning of the conversation you had said that YoY it has been 61.6 % compared to 71.4 % expenses to revenue am I right or did I take it wrong?

Surya Prakash Kanodia :

Yes, you're right so basically, you're talking about the commentary which was given at the beginning of the call right?

Vinay Nadkarni :

Yes

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Surya Prakash Kanodia :

So, see the most of it is attributable to the employee cost change that has happened and that is what I referred to earlier in my speech that is what we have done is like we have invested both in our employee base as well as in our technology and based on that the cost has increased as a percentage of revenue.

Vinay Nadkarni :

Okay that's all from me thanks a lot.

Vishnu R Dusad :

Thank you

Moderator:

Thank you. Ladies and gentlemen, if you have any question, please press * and 1 on your telephone keypad. As there is no more participant, I would like to pass it over to Mr. Vishnu for his closing comments.

Vishnu R Dusad :

I would like to take this opportunity to thank you all for your continued interest in Nucleus Software and we would like to reiterate our commitment to deliver value to all our customers Nuclei and the society at large thank you.

Registered Office 33-35 Thyagraj Nagar Mkt, New Delhi - 110003 Tel.: +9.11.2462.7552 F.: +91.11.2462.0872