Take Solutions Ltd — Call Transcript 2019

May 31, 2019

TECHNOLOGY ANALYTICS KNOWLEDGE ENTERPRISE

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May 31, 2019

TAKE/BSE/2019-20

TAKE/NSE/2019-20

The Manager Dept. of Corporate Services-Listing Bombay Stock Exchange Limited,

P. J. Towers, Dalal Street, Mumbai - 400001

The Manager-Listing Department National Stock Exchange of India Limited Exchange Plaza, Bandra - Kurla Complex, Bandra (East), Mumbai - 400051

Dear Sir,

Sub: Intimation re

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Institutional meet.

Scrip: NSE-TAKE & BSE: 532890

We refer to our letter dated May 10, 2019 regarding the intimation of Analyst/ Investor Conference Call to discuss the audited financial results of the Company for the quarter and financial year ended March 31, 2019 on May 16, 2019 at 4:00 PM (1ST).

In this regard we herewith enclosed the transcript of the conference call as required under Regulation 30 read with Part A of Schedule Ill of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015.

We request you to take the same on record and confirm.

Thanking you.

Yours sincerely,

For TAKE Solutions Limited

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Avaneesh Singh
Company Secretary
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Encl: As above

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www. takesolutions. com

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"TAKE Solutions Limited Q4 FY2019 Earnings Conference Call"

May 16, 2019

MANAGEMENT:

MODERATOR:

MR. H.R. SRINIVASAN -VICE CHAIRMAN & MANAGING DIRECTOR -TAKE SOLUTIONS LIMITED MR. RAM YELESW ARAPU - PRESIDENT & CHIEF EXECUTIVE OFFICER-TAKE SOLUTIONS LIMITED MR. D.V. RA VI- EXECUTIVE DIRECTOR-TAKE SOLUTIONS LIMITED Ms. SUBHASRI SRIRAM -EXECUTIVE DIRECTOR & CHIEF FINANCIAL OFFICER-TAKE SOLUTIONS LIMITED Ms. SHOBANA N .S. -EXECUTIVE DIRECTOR -TAKE SOLUTIONS LIMITED MR. HARDIK SANGANI -ICICI SECURITIES LIMITED

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TAKE Solutions Limited May 16, 2019

Moderator:

Ladies and gentlemen good day ,111d welcome to TAKE Solutions Limited Q4 FY2019 Earnings conference call hosted by ICICI Securities Limited. As a reminder all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call please signal an operator by pressing . .,,,,. and then --o-- on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Hardik Sangani from ICICI Securities Limited. Thank you and over to you Sir!

l-lardik Sangani:

Thank you, Nccrav. Good evening ladies and gentlemen. On behalf of ICICI Securities, a warm welcome to the Q4FY20 I 9 Conference Call of TAKE Solutions Limited. We have from the management team Mr. H. R. Srinivasan, Vice Chairman and Managing Director, Mr. Ram Yelcswarapu, President and CEO, Dr. D. V. Ravi, Director, Mrs. Subhasri Sriram, Executive Director and CFO, and Ms. N. S. Shob8na. Executive Director. I shall hand over the call to Mr. Srinivasan to give us a brief overview on the quarter, post which, we will open the floor for Q&A. Thank you and over to you. Sir.

H.R. Srinivasan:

Thank you very much. Good afternoon ladies mid gentlemen and welcome to this annual and Q4 earnings cull of TAKE Solutions.

First of .ill, I am very happy to announce that this is the first time that we have crossed Rs. 2,000 Crores in revenue. From the company perspective, it is a very important milestone. We ended the year at Rs. 2,039 Crorcs, which is a 28.5% growth year-on-year in rupee terms and a 19% growth in dollar terms. In terms of EBITDA, our EBITDA was Rs.383.4 Crores, unadjusted and the adjusted EBITDA was Rs.417 Crorcs. The unadjusted EBITDA is about 25% growth year-on-year.

I am also happy to say that we have maintained very good operating margins at 18.81 %, while comparable lo 20.46% on the adjusted side for the year. This year, I want to call out specifically, especially in Q3 and Q4 of the year that the total one-time adjustments that we have had were to the tune of $4.83 million. Of this, $2 million pertained to the acquisition of the two companies that we made, which is DataCcutics and KAI Research Inc. $1.73 million is the provision that we made towards the restructuring expenses in EU <111d $1.1 million was on account of the forex movement. So overall from the company, it has been a very satisfying year, but I would now like to move on to Q4 and draw your attention to the fact that in Q4, our revenue growth in rupee terms was 2.4% but if you look at the Q4 growth in dollar terms, it was 5.4%. During the period under consideration, the rupee has strengthened, so as against the period average rate in Q2 of 72.02, for Q4, it was 69.93. So, on dollar terms. we have grown well.

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On the EB ITDA side, the quarterly EB ITDA on an adjusted basis has grown by 11.4%, which is at Rs.115 Crores and the unadjusted EBITDA is at Rs.96.6 Crores. Now this, again, is due to the provisioning that we had called out last quarter itself.

I also want to state tlrnt with reference to the two acquisitions, which were to happen in March, both were consummated only in the last week of March and therefore, there was no accrual of revenue on either of the acquisitions during the fourth quarter of last year.

The m:quisilions have since been completed. They have been amalgaim1ted into the TAKE Solutions Limited consolidated balance sheet as on March 31, 2019 and from April I, 2019, we will have the income pertaining to both those companies accruing to TAKE Solutions Limited. Other than that, operating performance has been good. Strategically, whatever we had intended to achieve during this period, we have been moving in that direction.

There is a datu point on a three-yem basis ever since we started our journey towards becoming a full service platform enabled CRO. If you look at the revenue CAGR, it is at 23% from FY2017 to FY20l 9 and the EBJTDA CAGR is at 21 %, so directionally, I think we are moving in the correct manner as we had planned. Customer acquisition has been strong; customer retention has been strong. The IP development in terms of methods for BA/BE or the strengthening of the OneClinical platfom1, as well as the other proprietary platforms that we use to ddiver our Life Sciences Services have been coming along as per expectation. The customer renewals have been al an all-time high, 96% customer renewals we have had, so overall, we carry a very strong momentum as we move into FY2020.

In terms of order book, we have a closing order book on March of $251. 70 million, of which, $245.12 million pertains lo the Life Sciences. This compares very favorably to a total order book of $189.36 million, which was al the end of FY2018, and the Life Sciences in particular, which was at $179.46 million. So, the year-on-year growth in order book in Life Sciences has been 36.6%, which is better than expected. And th is order book docs not take into account the order book of DataCeutics and KA I Research, which is roughly about $30 million o11d would get added to this.

I think we start off FY2020 on a very strong footing. With these words, I will now hand over the mic to my colleague, Ram, who will give a little more grnnular color on the Life Sciences business. Over to you, Ram.

Thanks Sri. Good afternoon everybody. As Sri said, certainly, I think we have seen good strong performance for the entire year and looking ahead, I must start off by a summary statement and saying, the industry trends look extremely promising. I think the industry that we are in, our confidence levels, our understanding of the trends in the industry continue to aggressively scale and grow and we arc making those adjustments required, so that we are aligned to the trends and the

Ram Vclcswarapu:

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growth aspects f[r] om an industry angle. So clearly, the headroom for growth in the industry is quite significant. Y cs, I musl also mention at the same time, that there are shifts in the generic industry that arc happening around us and I must also assure you that we arc absolutely aware of those, and we are taking note of some of those developments.

But clearly, I think the business that we arc in, involves us to work with the generic phannaceutical industry, as much as it allows us to work with the innovator companies. So, given the spread of our business, we are adequately protected in ensuring that we are working with the industry segments across both our generics and the branded companies. That said, clearly, I think I will try to probably give some color to each of lhese business segments.

So, starling off with the generics, we continue to expand on our traditional BA/BE opportunities. Our inf[r] astructure, our delivery quality, the repeat business we get f[r] om our existing customers continues to grow in scale. We have not witnessed anything contrary to that. Plus, in addition to this, we arc noticing new opportunities from ge0graphics like North America. Clearly, the generic presence in North America also needs to be catered to. We, of course, have been trying to kind of entrench ourselves through 0Lir sales teams into North America as well as Eurnpe to secure some of these very traditional BA/BE opportunities. The recently concluded DCAT meeting in New York City, certainly we were there and our meetings with not just existing customers, but also of course prospects they continue to show promise that the industry will e0ntinue to lean on traditional BA/BE CROs for enabling services and hence, we arc adequately poised there.

In addition, clearly, 1 think our company is adequately poised, as you may all know, that post approval support whether it comes to managing the lif yclc of approved regulatory dossiers or providing for example pharmae0vigilancc support for these generic customers or even branded companies for that matter, we have an entire division catering just to that part of post approval support. So, our conversations are not necessarily just on the development side with these companies, but clearly once the drugs are approved and they are commercially available in the markets, there is a lot of spend that happens there and we as a company arc adequately poised and prepared to support our customers in these areas of post approval support.

Moving on f[r] om traditional BA/BE, the complex generic space is evolving. We see a lot of traditional generic e0mpanies now aggressively pursuing the SOS(b) (2) alternatives, which require an NOA to be filed, so many of these arc patient studies. So, from the very traditional healthy volunteer studies of the generic comp,1nies, we see a shift happening rapidly towards patient studies. These are premium products, these are complex generics. some of these are technically challenging, but once again, our presence in running clinical trials, as a company, as a CRO, allow us to adequately address the needs of this evolving market, �o we are in lc1lks. Our pipeline of opportunities in the 505(b)(2) space is

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TAKE Solutions Limited May 16, 2019

growing and given our recent acquisitions in the U.S., that allows us to really tap into the patient studies, if you will, in the North American region, so that is a big plus for us and we are aggressively pursuing the 505(b)(2) alternatives. As you ,ire also aware, we have built capabilities in the technically complex generic space in cert�in areas like dose inhalation studies to insulin clamp studies, etc. We <1rc pursuing those opportunities. There appears to be clearly a need and an interest in the market and we arc pursuing that as well.

Moving on to biosimilars, it is an expanding market. We have mentioned this in the past. We, as a company, have done good amount of work in the biosimilm· space. Of course, we started off with biologics. Biosimilars, being the genetic equivalence to biologics. We have been tapping into the biosimilar market also pretty reasonably well and we have continued to build our experience in this space. The good news is that a limited number of biologics having come to patent expiration and more coming off of patent expiration in the near future. The ones that have expired, I think, they arc limited in nature in terms of the indications that they address and our experience in monoclonal antibody, as we have mentioned several times in the past, allows us to participate very actively. Unbelievably so, there are scvernl companies that seem to be pursuing a very similar traject01y in developing some of these MAbs. So, the good news is, as you are aware, biosimilars require a Phase Ill and then a Phase IV ancl we are adequately poised to tap into the Phase 111 and Phase lV segments.

The trends, just so that you are aware, the Phase III studies arc being designed by many companies now to span India and Eastern Europe and once again, our presence in Europe, both Western and Eastern and of course in India, allows LIS to tap into this growing and burgeoning Phase Ill and Phase IV opportunities for biosimilars. In fact, there are some complexities in this area that also position LIS extremely well. Some of lhe customers and prospects we are talking to are looking for biowaivers. In other words, they have Phase l data by running a biosimilar study in India. The pathway so they are trying to explore how things like can they get a biowaiver and instead of repeating a Phase I study in Europe where they just do a Phase Ill and file to the regulatory body in Europe. So, these are interesting, challenging conversations and we arc ve1y pleased that we are seated at the table having these very innovative and forward-looking conversations.

Moving on lo NCEs or the new chemical entities, our focus on the SME segment of phanna and biott:ch positions us extremely well. Our fi:icus continues to be oncology and immuno-oncology, we sec a good deal of opportunities in the pipeline and recent deal closures that we have had arc extremely promising. The deal size is materially growing. The expansion f[r] om local and regional move to global portends very well. In a recently won study, for example, we will be running this study across Europe, across I<.orea and across North America. So, it is moving steadily from being the local regional coverage to a little bit more global and so are the deal sizes, so we are very encouraged

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by this trend that we an;; witnessing and we have several opportunities in the pipeline and several very interesting conversations that arc in tcnns of opportunities we are pursuing in the NCE space.

Clearly, [ think as Sri mentioned, the differentiation of OneClinical continues to grow. Our belief in lcvcr;1ging technology platforms to be a differentiator CRO is serving us well. Our customers uctually have begun asking fr1r more features and functionality, which is a very positive trend. While we certainly started off with a bascl inc of OncClinical in how we wanted to make a difference in the market. The f dback now that we have been running several studies on a steady state basis, the feedback we are receiving as well as the features and functionality requirements src all fantastic inputs for us to kind of enhance the features and functionality of the platform to, kind of, continue to deliver our more comprehensive services and certainly deliver outcomes that are well differentiated in the industry, as we compete with others in the same space.

OncClinical. as a portfolio product, as a platform, continues to expand. We have built predictive modeling capabilities into that platform now. We arc also aggressively working on workflow enablcment. Such a concept. while it has existed in other industries and it has been talked about for a while in the Life Sciences industry, hick of action has prevented adequate oversight and transparency. We, as a eompm1y, again, arc strong believers in technology in automation and innovation and we are believers in driving services of our platforms. Given this, we are enhancing the OncClinical platform with predictive model and worktlow enablcrnent for transparency and oversight. At the end of the clay, our quest is to kind of do more with fewer people and do more with more skilled people. If you clo that, I think the financials will reflect our ability to make a difference in an industry, which is traditionally been entrenched in past practices.

Post approval support is the next area. Very quickly, we arc securing more work in the regulatory dossier lifecyclc management area. We have, of course, as you arc aware, developed a very strong trust across different parts of the world. Not only do we continue to scale and grow with our existing customers, I think our unit pricing model there to very specific metrics, operational metrics, that we have delivered are allowing us to really have ve1y interesting conversations and we continue to expand our portfolio of customers in that area. Once again, in the post approval support, pha1111acovigilance services arc on the rise. We are having more i ntcresting conversations now with more customers. We arc expai1ding, scaling and investing in our skill, in the post market PY safety area and so that continues to grow as well as.

So, if you kind of look at the overarching coverage, there is coverage for development and leading to approval of clrngs and then once the drugs arc approved, there is coverage that continues to extend in the post approval support. So, in other words, for a given account, we arc now witnessing a heat map

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that continues to get checked <1way with us trying to do more services for a given customer, which is extremely exciting.

Leadership team expansion, clearly, I think we have added a number of key leaders across the globe in a variety of differc11t departments and some of these have come in with very strong credentials f[r] om the industry and their belief in joining us is predominantly, it hinges off of the fact that we arc a well differentiated company and that is exciting not just for us. but also to get a ratification f[r] o111 someone who spent enough time in industry, who is certainly 011 board 110w believes in this vision and is c1bsolutely alongside in this journey.

Process cnablcment, tech auto111,1tio11 innovation focus, we have talked about that stuff. 1 have mentioned few aspects of it. 1 am happy to answer 111orc questions on that, but our quest continues to be lo invest and grow and scale for differentiation f[r] om a technology and auto111ation angle.

We, of course have acquired additional capabilities in North America mid we arc extremely excited. 1 think the prospects of us trying to kind of get into full service in North America through these assets we have acquired recently is exciting. We are already getting into some very interesting conversations and pursuing opportunities so 011 and so forth, so more on this as, of course, we move into the next couple of cruarlcrs.

Events, wcbinar through our sales and marketing channels, our client partners are spending an increasingly more time with customers trying to look at these heat maps. There are a lot of cross and upselling initiatives that arc corning into our CRM for visibility, so all these potent extremely well, again, f[r] om an account management and account mining perspectives.

Lastly, clata-clriven, we arc data-driven not just for delivering differentiated outcomes for our custo1m:rs, but for internal processes as well. We are certainly watching our growth and performance very slrnrply. The propositions have been sharpened. They continue to get sharpened with the feedback we receive, so FY20 I 9 while it was a fabulous year. 1 think it also has positioned us extremely well for sharpening our propositions for FY2020 and from inside sales activity to sales, to presales assets being built, let me explain quickly what I mean by presalcs assets. We want to be re.1dy and prepared. For example. we arc pursuing indications across therapeutic areas like oncology, cardiovascular, urology. ophthalmology, dcr111atology, etc. For us to have a meaningful conversation and relate to our sponsor·s priorities in a cc1iain indication, it is important that we put ourselves in their shoes ahead of ti111e. What I mean by that is, if the endpoints of the certain clinical study protocol for a given indication arc known to us upfront, given that experience, to translate those to visualizations and to have meaningful conversations upfront with the prospect or a customer, allows us to do a better job in giving the adequate comfort responses. So, these such prcsalcs assets have been built as we speak. So, all in all, I think it is a fabulous year that we have had, and we arc

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extremely excited as we look ahead at FY2020. With that, I certainly kind of going to hand it over back over to the team and we arc certainly ready to answer questions. Thank you.

H. R. Srinivasan:

Thank you, Ram and I think before we get into Lhc Q&A, there are a few key points on the financials that Subhasri will nrnke, so over to you, Subhasri.

Subhasri Sriram:

Thm1k you, Sri. Good afternoon all. I suppose most of you must have got to sec the company's presentation just a few minutes before the call and my apologies for that. So just in case if you have not seen it or hnvc had not had a chance to go through, I thought I would just explain a few high-level data.

We lrnve our currencies. This quarter has been a very interesting quarter where in terms of our income from the last quarter, it was 72, it has dropped down to 69.93 with a balance sheet number of 69.57 remains the same as with Q3 and as well as Q4. So effectively, there has been a change in the P&L without a significant impact on the balance sheet. Well the reverse was true in the previous quarter, so these factors need to be kept in mind both in terms of our revenue growth and in terms of our expenses.

ln ll:rms of our EBITDA, there arc several references we have given 111 terms of our adjusted EBITDA, specifically the reference to spccitic one-time expenses, which wus detailed in the previous call and explained earlier in the call by Sri and these arc one-time and hopefully we should bounce back soon.

As far as the capex investments, this time around, we have had a more or less normal capex investment. which we invested in. It was in our facilities in technology and clinical trial. In the year gone by, (lllJ' expenses on intangibles h�s been marginal. There are several work in progress, but no new IPs in place cit this point in lime, but hopel'ully several arc in a very interesting state. Hopefully, in the coming year we will have more on the technology space.

The point next is on the tax rate. We had indicated that our effective tax rate is likely to be inching up f[r] om below I 5%. We arc now close to about 17%. It is also a fact that during this year, there is an element of rntionnlization of a number of legal entities. We have looked at it, seen where we have benefits of tax rate and where we could rationalize them and to the extent about five legal entities have been merged and/or taken into our parent company in the U.S.

The next point is 011 our receivables. As I said, the balance sheet has been flat in terms of currency and therefore we have had a benefit in Lerms of our receivables, in terms of our DSO it has sig11itica11tly come clown. Some attempts we have made in terms of factoring and we see some benefits coming out of it ancl tlrnt going forward, we should be able to get some benefits in our

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receivables nrnnagement or working capital management. While on the other side, our unbilled receivables have gone up. In some of the larger projects, the 111ilestones were not completed. The billing time cycles have not been reached. As on March 31, 2019, the a111ount is slightly more than usual, but during the next 45 days, scvcru\ of them have been billed and therefore, we should be seeing this back to normal

The next is in terms of our liability. In terms of our funding, we have maintained our options to raise credit. We have credit lines, which 11rc available to us. We have been able to co111plete this acquisition of$52 111illion which was funded out of our internal accruals and the capital infusion, which happened in Lhc previous year. We, right now, have ,1 limited war chest of cash, but we do have credit lines, which sh1111ld help us grow for the next coming several quarters.

As for as cash flow, in terms of our balance sheet, we have provided for the committed payment on our acquisition. The pun.:hasc considerntion, which has not yet been paid out, will be paid out based on the performance ol' the two entities. They have been provided for and have been restated in our balance sheet liobility section. So, there is a $20 million increase in our liabilities. This has been provided for. Our endeavor is to make sure that the acquisition performs as we desire and as we had planned and thereby the sellers arc able to earn their consideration, which we have committed for thc111. These are the few highlight P&L balance sheet points, which I wanted to spell out.lam happy to answer your questions.

H. R. Srinivasan:

Thank you Subhasri. The team is now happy lo take questions.

Moderator:

Thank you very 111uch. We will now begin the question and answer session. The first question is f[r] om the line of Devansh Nagotia from SIM PL. Please go ahead.

Dcvansh Nagotia:

Thanks for the opportunity. I had these few questions related to the balance sheet. So, in other financial assets, we sec that the amount has jumped from Rs.75 Crores to Rs.203 Crores. Just wanted the breakup of exactly what these financial assets arc and if they arc related to advances? Which part of our business arc they related to? Arc they related to Regulator PY, Nets consulting or our CRO business? If the business grows, will they continue to grow and if they arc not related to revenue, by wlrnt time they should come down and when can we expect them to realize in our cash flows?

Subhasri Sriram:

Thank you. l think this is something, which I wanted to call out myself The increase, which you see is in the other financial assets is largely on account of the assets coming out of acquisition of DC and KAI where there is no corresponding revenue to the P&L have been taken as financial assets and that is the large part of the incremental assets in that section and as we know of the details, certainly, we do expect that in the next three to six months most of them will be liquidated. The incremental mnount will be liquidated, a significant portion of that.

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Dcvansh Nagotia: Out of this Rs.203 Crores how much do we ex peel that would realize in next three to six months? Subhasri Sriram: About Rs.53 Cror<::s to Rs.55 Crorcs will be the incremental portion which will get liquidated in the next three months. Dcvansh Nagotia: Madam but what arc these ex,1ctly related to? What is it exactly? Subhasri Sriram: These arc advances paid where we have partnership arrangements or have specific co\laborntive ainngements where the third party arc working on certain tools for IT and we have paid an advance for us to lrnve a preferential right over for those products. Dcvansh Nagotia: Can you share a breakup'/ Subhasri Sriram: In terms of breakup as in terms of clinical and regulatory? Dcvansh Nagot.ia: So the complete Rs.203 Crorcs is related to the partnership rights that you are talking about, is it? Subhasri Sriram: Yes, partnership. It will be advances for our sites in terms of where we have block facilities, so it pertains to both clinical and regulatory. Predominantly, it is on the life sciences f[r] ont. Dcvansh Nagotia: Madam, similarly in unbilled receivable, what do we expect in a steady-state case? How much should be the unbilled receivable days going forward? Since even in the last quarter, we were expecting that some milestones were not complclcd because of which they increased by some amount? Subhasri Sriram: It has come clown In fact, last time, it was not so much, but we typically expect about 15 clays of revenue, so 15 days of revenue at any point of time on an average. but there can be skewness at quarter ends. Dcvansh Nagotia: In that case then, these unbilled receivables should come clown going forward, right? Subhasri Sriram: Yes. I did mention, so this too is a bit of an abenation while the nice part of it is our AR. Dcvansh Nagotia: Just wanted one clarification related to other expenses like since you have told us $4 million, were the total other one-off expenses that has happened in the second half? Out of this, $2 million is related to DataCeulics ancl KA 1, so in this quarter, one off expenses would be Rs.14 Crores. Would that be the right interpretation? H.R. Srinivasan: Come again with the question please.

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Oevansh Nagotia:

The onetime adjustment expenses that you were talking about that lrns happened in the second halt; you mentioned the $2 million were related to acquisition expenses. Rs.16 Crores was that happened in the last quarter, a restructuring expense, so in this quarter that amount should be Rs.14 Crores, which would be the one-off expense, which is related to our acquisition and which will not happen going forward, right?

H.R. Srinivasan:

Yes. The total expense is $4.83 million. It has got three components. $2 million pertains to the acquisition, which will not happen in the future. $1.73 million pertains to manpower rationalization in Europe, which also will not happen in future. $1.10 million is on account of forex movement, which is notional on the balance sheet. lt is not a cash outflow, but it is notional on the balance sheet and therefore it must go through lhe P&L for the quarter. So $3.73 million is one time, which will not happen in the future and $1.10 mil lion is a forex movement, which can happen in future. I do not think we will be able to predict that.

Dcvansh Nagotia: Since we ,ll'c like 2 to 2.5 months post the acquisition, so how are we seeing the synergies playing out with KAI and DatHCcutics and in which part of the value chain are we seeing these synergies playing out[? ] Art: we able to get the clients because of the physical presence in US or anything of that sort that we arc witnessing right now?

H.R. Srinivasan:

I think, like we said we have not even had $1 of revenue in Q4, so effectively, it has started f[r] om April I, 20 I 9. While the PM I plan is moving as per target, it is too early to call what is the synergy that is happening at this point of time. If you ask me in the last 45 days is the PM I plan going as per schedule'/ The answer is yes, but I may not be able to articulate synergy beyond that because it is too early to call that out The fi[r] st 45 days in any acquisition is to understand and make the employees feel comfortable, address several queries with that, solve inf[r] astructure problems, client communication with reference to the changes that arc there, then there is e-mail ID changes of all the employees, so there ,ire several of those that take place. So, it is not that after one week you sec results, I have not seen that happen in the past even in the acquisitions that I lrnvc been involved in. From a broad perspective, in DataCeutics, you should be able to sec several low hanging f[r] uits because it pertains to clinical data management where the sales cycles and the delive1y cycles are fairly quick and sharp. In the case of KAI Research, which deals primarily with the Phase II and Phase Ill studies, the sale cycles itsell' arc longer and so you will take a little more time to sec synergies. This I had called out even in the earnings call at the end of Q3, when we had alluded to this. I am going to pause here and maybe ask Ram ifhe wants to acid to what I already said here. Ram, you want to throw some color?

So I think to the point you made and obviously, these arc initial clays right now. We need to certainly ensure that we take stock of some of the poor housekeeping activities, if you will, as part of the PM!,

Ram Yclcswarapu:

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but if I could just maybe lend a little bit of color to what we expect to sec or at least what we are seeing in terms of the credentials that both these assets have brought to Navitas ancl TAKE. Clearly, there is a lot of synergy there. There is a focus 011 data services and 011 statistics, biostatistics, so 011 and so forth when it comes to DataCeutics. We are certainly looking forward to expanding with their curn:nt customers to offer more services and solutions that arc from the larger family and bring some of those benefits to these customers. As well as of course expand and scale a bit more not just in terms of opportunities, but also into additional geographies, if possible, especially in the delivery front. And on KAI, clearly, I think it is a full-service unit our focus is musculoskeletal, oncology, neurology, mental health. so 011 and so forth. Sn once again, it adds a certain extra therapeutic areas to our portfolio. It also augments our current expertise. There are a lot of possibilities, including with agencies like National Cancer lnstitutc. National Institutes of Health, Department of Defense, Centers for Disease Control, so 011 and so forth. So. I think a lot of those things certainly are things that will kind of start taking concrete shape as we kind of progress through this part, but as we progress toward these over the next couple of quarters, 1 think we will certainly be able to comment more on that. Hopefully, that answers your question.

Devansh Nagotia: Thanks that makes sense and what would be your current revenue mix between the Regulatory, PY, Nets, and Consulting; and within clinical between the BA/BE and CRO?

H.R. Srinivasan: Come again. Dcvansh Nagotia: What will be your current revenue mix in Regulatory, PV, Nets, Consulting and clinical? The share of revenue for the yec1r-en<l, what would that be?

H.R. Srinivasan: Nets and Consulting, 1 think it is at about Rs.160 Crores in that region. l do not have the schedule right in front of 111c. Clinical woul<l be, overall, both the CRO and the CDS piece put together, and this I am not including any of the acquired assets, would be about 36% to 37% of our total revenues.

Dcvansh Nagotia:

The remaining would be regulatory and l'V 9

H.R. Srinivasan: Yes. Dcvansh Nagotia:

This is it from my side. Thank you.

Moderator:

Thank you. The next question is from the I inc of Yijay Kajaria from Securities Investments Marn1ge111e11t. Please go ahead?

Vijay Kajaria:

Thanks for the opportunity. In other financial liabilities, there is a significant jump. Is this the amount which is left to be paid to the company that we have acquired?

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H.R. Srinivasan: Yes, exactly, Vijay Kajaria: That is $20 million['l ] H.R. Srinivasan: Correct. Those arc the earn oul figures. They go into this. Vijay Kajaria: This is it f[r] om my side. Thank you. Moderator: Thank you very much. The next question is f[r] om the line of Nirav Dalal f[r] om Maybank. Please go ahead. Nirav Dalal: Thank you for the opportunity. A couple of questions. One is just harping on the other expenses, if I were to just convert the Q3 and Q4 numbers, the other expenses numbers excluding one-offs comes to about $16 million for QJ and $19 million for Q4 and if we see the run rate for the last three quarters or the Q4 of 2018 to the Q2 of 2019. it had been between $16 million and $17 million, so should this be the new normal and then rel,1ted to it how do we see the margins panning out excluding the acquisitions and then including the acquisitions'[1] Subhasri Sriram: I would not want to take it this way and say that this will be the way for the coming quarters, but one thing, which cletinitcly was a differentiated process was the last two quarters, in fact, some of the work of the last third quarter, much of the work was done out of US and thereby, there was an incremental element of cost, but tlrnt was well factored in our pricing. Will this be the new norm? Will we have the growth coming out of the US geography mid delivery out of US? Well maybe for a few more quarters we will require, but there is an clement where the Indian arm providers us a portion of the services and some of it was delivered out of our US and Europe offices. Nirav Dalal: So, net-net, how do you sec the EBlTDA panning oul, so Q4 EBIT was about 10%? How do you see this going forward? Subhasri Sriram: So, EBIT, as we had indicated earlier in the commentary, EBIT or EBfTDA, the way you look at it, we f l confident 1hat it is slightly under control and maybe a few basis points here or there between quarters it may move, but there will not be a significant change in the near future.

Nirav Dalal: FY2019 number was about 12.3% and FY2018 was about 12.7%, so excluding the acquisitions do you see this number to be maintained?

Subhasri Sriram:

Yes, that is the fair expectation,

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Nirav Dalal:	In terms of the acquisition. what arc the margins that one should factor in because you said that
	EBITDA would be about 16%, so what should one factor in?
Subhasri Sriram:	Our objective is to take them to what we have been able to deliver, but how soon will we be able to do
	that may be too premature to comment about it, even the ear-out is structured in such a way that they
	will have to deliver not only on the 1evenuc, they will also have to deliver on certain EBITDA
	numbers. In this way, we expect it to help the two acquired companies to improve on their EBITDA
	numbers.
1.R. Srinivasan:	Nccrav, just to acid to that. The first six months, in the case of KAI, we may not be able to impact
	anything on the EBITDA numbers because KA[ really depends on the opportunity of getting more
	trials and then the sales cycle for the trials is a little longer. You may see an uptick in EBITDA in
	DataCeutics portion of the business after about three months, primmily on the account of off shoring,
	which is possible. Today, there is a possibility of already off shoring roughly about 15% of the
	DataCeutics work and there is a plan underway, but to execute that properly will actually take about
	three months to start executing that. So, you may start seeing an uptick in that portion of the business
	in about three months, but KAI, we will hav. to look at atleast six months befre there can be any
	nrrgin expansion.
Nirav Dalal:	FY20' I 9 EBITDA for the company was about 19.8%, so 19.8% ancl 16% for the acquisition that
	should be the number that we should look at fr FY2020 technically?
1.R. Srinivasan:	Correct.
Nirav Dalal:	The last question is on capex. What are the capcx expectations for FY2020 ancl FY202 I?
Subhasri Sriram:	111 our own interal eapcx requirement, I think we arc fairly okay, but as [ said, there are several
	work-in-progress in our IPs and in the last two years there have not been too many from our side anc
	we do expect some arc at an interesting stage, we should be able to capitalize and go to market soon.
	111 the case of DC and KAI, while DC may not require much of a capex, KAI is one and we do see
	even in our original plans, we did see a gnp there. There may be a requirement of an investment, but
	how soon and after what milestones, we will have to look at it, it is again a bit too early, but yes, in
	our original budget, we have factored some of the investments for KA[, but that will come in maybe
	one to two quarters fom now or we will start looking at it one to two quarters fom now, nothing
	immediate.
Nirav Dalal:	To be very clear, FY2020 cnpcx would be anywhere between Rs.120 Crorcs to Rs.150 Crorcs or less
	than that?

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Subhasri Sriram:

Yes. 111ore or less.

Nirav Dalal:

Between Rs.120 Crores to Rs.150 Crorcs?

Subhasri Sriram:

Yes. you arc on dot.

Nirav Dalal:

Thank you.

Moderator:

Thank you. The next question is from the line ofTushar Bohrn from MK Ventures. Please go ahead?

Tushar Bohrn:

Sir, if you can just explain a little bit about the different balance sheet items? There have been a lot of changes on both the asset and liabilities side. So, unbilled receivables, there was a mention and also other financial assets. If you can just help as to what really the reason for a sharp spike in both and c01Tcspondingly on the liabilities side, the reason for sharp spike up in the borrowings and other liabilities?

Subhasri Sriram:

Tushar, Subhasri here. 1 had explained that while we do sec a spike in unbilled, but if you look at receivables arc f[r] o111 last quarter I 08 days have co111e down to aboul 94 to 95 days, so there is an cle111ent which as I had indicated earlier, certain cycles could not get 111ilcstone in terms of certain projects were not clone by March 31. 2019 t-J-0111 inco111c regulation and matching costs if we had to and a, per accounting standards, we have recognized it. It was unbilled as on March 31, 2019. Several of tlmn have been billed right now and they a1 ca part of their credit cycle right now and one head, which is lhe trade receivables, which has also come clown, which 1 highlighted. In terms of investments, last year, we had a posl equity infusion, there was cash surplus beyond our debt and a portion of it was invested in mutual fund and the same was redeemed somewhere around June to September and that is why thcrcfo1·c you sec the drop in our investments schedule. I explained the incrc111cntal value in other financial assets. Nol all of them, but a significant large portion of them is on account of assets coming out of DC and KA I acquisition in terms of consolidation of accounts and as I had mentioned, this has been specific as well as a financial asset because we do expect a very short period of these iiSSets getting liquatcd and we should be in cash soon. This is a part of the working capital cycle and this should come back to the system. And f[r] om the financial liabilities, I think the borrowings, arc lines, which were drawn in March 31, 2019 and some of them arc new lines. And I need to call out that previous year 31[st ] March, since March 23, the capital infusion had lrnppenecl. Some of the even existing lines had been funded off because there was cash surplus as of the end of March of last year, so there are not necessarily comparable numbers. The cash balance is also not comparable; different scenarios. And ns far as trade payables, it is a part of our management. We have had not too much credit to the clinical trials and others. We have had very short cycle in trade payables and other financial liabilities indicated that almost the entire incremental amount is on <1ccou11t of the provision mudc for the cam out on this new acquisition.

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Tushar Bohra: Madam the unbilled receivables that have gone up how does that impact? This is essentially revenue that has not been billed to lhe client, right, but the revenue is taken 011 the books and associated costs are also taken on the books, right, so there is 110 effect on the margins, right? Subhasri Sriram: No, absolutely not. It is only question of classifying it as an acknowledged debt because its invoice has not been raised. Since the invoice has m,t been raised and there is 110 counterparty at this point as an acknowledged debt, it continues lo be shown as unbilled receivables. From March 31, 2019 to the next 15 to 30 days, the billing has happened.

Tushar Bohra: If we were to just look at the overall working capital cycle in terms of number of days how would it be stacking up for FY2019 versus FY2018? Subhasri Sriram: In fact, looking at receivables in adding both the trade receivables and unbilled receivables, largely it will be 120 to 125 days. Typically, the receivables are about I 00 days to I 05 days and about 15 to 17 clays unbilled receivables. This time around, the receivables arc around 94 to 95 days while the unbilled receivables arc about 25 to 30 days.

Tushar Bohra: Roughly, the working capital cycle has remained in the same range as earlier? Subhasri Sriram: Almost identical in fact. It is just like it has moved f[r] om trade debtors to unbilled receivables. Tushar Bohrn: Madam as we scale up and CRO becomes a bigger portion of the total business in terms of size, as you scale up in CRO, how do you expect working capital cycle to move going forward? Let us say not just the next year, but if you could give us a three-year outlook maybe on working capital in the context of increasing CRO revenues'[1 ] Subhasri Sriram: If I were to go by the other players in the CRO space, especially global players, we definitely see an opportunity open to us and even more so with the global preference in clinical trials where we will be able to operate on a multi-servicing, and multi-site trials. Our ability to be able to draw or claim more trade advance and profit-advance is far more prospective. In a reasonable period of time, the net working capital should co111e down, but it may not be apples-to-apples in terms of the debtor and the creditor. We will not advm1cc in one account and receivables in another account, but overall, we do expect the working capital to 111ove downward, but not significantly, but yes, f[r] o111 the 120 to 130 days, it c,1n come back to about 90 clays.

Tushar Bohrn:

From 120 to 130 ln 90 days, this cycle?

Subhasri Sriram:

It is about ,1 30-clay cycle, so we should be able to cover off in about may be two years.

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Tushar Bohra: Madam, w..: :ir' �1,;l:mg on an expanded h,1sc or an expanded balance sheet in two years' time, we should be abk Ill g,;1 working capital cycles down by about 20 to 30 days I am getting this right, right, in terms of c11H.:l11 ·inn? Subhasri Sriram: Reduced by 30 days. Tushar Bohra: Reduced by 20 to 30 days. It should come down by that much,

Subhasri Sriram: That is righl. Tushar Bohra: In terms of the payouts that we arc still to give for the acquisitions, we have adequate cash provisioning with us, right? We will not need incremental cash drawing out, further debt or anything into the business to pay off the rema111111g company debt. Subhasri Sriram: These are owr a one and a half to two years away and both from internal Hccruals and with the cu1Tent line, we are comfortable to take care of the payment.

H.R. Srinivasan: I think the internal accruals should take care of this. Tushar Bohra: That is Rs.139 Crores or Rs.140 Crores, the payouts that arc still left? H.R. Srinivasan: Yes. Tushar Bohra: Sir one more thing. Moderator: Sorry to interrupt you Mr. Bohrn. Please come back in the question queue for a followup question. Tushar Bohra: It is just a clarification, if I may, for the numbers . .lust one thing Sir the operational EBITDA we mentioned is Rs.115 Crores and Rs.96 Crores adjusted and unadjusted, if you can just clarify how that works out because the numbers we look at is Rs.81 Crores and maybe Rs.96 Crores to Rs. I 00 Crores f[r] om what w,1s the reported? Subhasri Sriram: Sorry, you are looking at the press release? Tushar Bohra: Yes. Subhasri Sriram: I am sorry. I think between Lifescicnccs and SCM vertical, which largely pertains to the c0111orate office costs and others have been left out in terms of considering for the operating EBITDA, so if you go to this stock exchange publication, the other unallocable expenses of Rs.11.89 Crores that has been

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inadvertently missed out in terms of considering for the operating EBITDA, so the Rs.81 Crores is right.

Tushar Bohra: So, then wlwt would he the adjusted EBITDA, ,1djustcd for the exceptional one-off costs for this quarter against the Rs.81 Crores reported? 1-1.R. Srinivasan: Rs.96 Crorcs or thereabouts. Subhasri Sriram: IL is Rs.81 Crores and Rs.99.6 Crorcs. The adjusted is Rs.99.6 Crorcs. Tushar Bohrn: Rs.81 Crorcs and Rs.99.6 Crores. Thank you very much. That is all. Thank you. Moderator: Thank you. The next question is f[r] om the line of Dhar111ik Patel from Active Alpha Group. Please go ahead'[1 ] Dhannik Patel: Good evening. l have a couple of questions. First, regarding the European business, your revenue has not grown or it has nol done well for this year and post restructuring, how do you see this European business to grow?

1-1.R. Srinivasan: I think post restructuring, because we have kind of brought the team down, be it infusing whatever new blood is there and there is some expansion that we arc trying in other parts of Europe, especially Eastern Eurnpe. which is what we arc bu ii ding. So, this year in Europe it is likely to be flattish. Much of the growth is going to come from U.S. and Europe. That is our estimation because the new teams that come in will take a bit of lime to settle down, so we do not want to be ambitious in terms of guiding Europe towards growth this yca1·, so you should expect a flattish revenue in Europe. Ram, you support that view?

Ram Vclcswarapu: Yes. I think clearly post restructuring, l think, there arc a couple of things that would certainly be, I guess, talked about. Number one, clearly in a global delivery model, that will certainly kick in for European oppo1iunitics. which necessarily was not the case earlier, so certainly for centralized services around data management stacks, tile stacks, medical services, etc., we intend to certainly change the landscape of the delivery and lean more lowards global delivery done very localized, which w,1s the prior trend, number one. Number two to Sri's point, I think we see a shift into Eastern Europe. There is a preference response towards taxes in some of the Eastern European locations, so we certainly are aw,ire of Llrnt and wc arc building towards it. The third thing is we lrnvc brought on client partners. as we call. in our parlance who certainly are taking stock of our existing customers as well as the newer opportunities and last but not the least, we arc also adding to our medical and scientific capability in the local region of Europe. With all of these, l think, FY2020, I think there is a lot of activity that will happen on these lines that I just elaborated, but we will look to certainly build

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on that stuff in the future, but FY2020 would attempt to kind of bring all these features to the foref[r] ont and we expect to build on that stuff, so perhaps flattish and perlrnps some signals as we look ahead into the next fiscal, so on and so forth for, well, growth on top of that.

Dhannik Patel:

And the second question is where arc we in the process of selling the supply chain business?

H.R. Srinivasan: As you may be aware, we have sold two out of the three units of supply chain that we had. The current one that rc1m ns on the books is a joint venture where we have 58% interest. This business cunently has revenue of about Rs. I 40 Crores and a profit of around Rs.5 Crores odd. It has been a dividend paying business, so there is no investment or managerial time that is involved here. We expect to get good value for this business. There is a mandate out there, but we do not have any effective bids at this point of time where we arc holding conversations to give a timeframe. We are certainly looking forward that during lhc course of this FY, we will make a very earnest attempt to see that this business goes. l have to though callout llrnt even the other two businesses tliat we sold took us maybe 8 to 12 months more than what we had originally anticipated to sell the business, so I do not want to comment 011 a time f[r] ame. In terms of readiness, I think both the JV partners are ready to sell the business and the understanding is there. Once we have an offer that is fine, we will certainly go ahead and execute the transaction.

Dhannik Patel: My last question is to Ms. Subhasri. It is rcgaruing the other comprehensive income can you please help me in understanding the items, which will be reclassified lo profit or loss? It indicates negative figures for FY 20 I 9 and as well as for Q4, so can you give us some color on the same?

Subhasri Sriram: They arc largely between our subsidiaries, transaction between our subsidiaries on account of difforcntiated currency. This is not a P&L transaction; it goes through as an OCI and it gets adjusted in the lxilance sheet. So, these arc the noncash, no net cash outflow or cash inflow. These are largely a rc\tatcment between the subsidiary in terms of cunency restatement, transactions between home currencies and the reported cu1Tencics.

Dhannik Patel: Thank you.

Moderator: Thank you ve1y much_ Ladies and gentlemen, due to time constraints that will be the last question for today. I will now lwnd the conference over to the management for closing comments.

H.R. Srinivasan:

Ladies and gentlemen. tlwnk you very much for joining the Q4 and annual earnings Call for FY2019 for TAKE Solutions. My team and I are very happy to answer any further questions that you may have. Please reach out mail, which IS available 011 our website, invcstorelations(t .takeolu!ions.com or reach out to us by phone or maybe e-mail in any other form and we will be happy to take fu1iher questions. Thank you again for all your support. by

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Moderator:

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

Contact lnfomrntion: Investor Relations: i nvestorrelations@takesolutions.com

Registered Address: TAKE Solutions Limited No. 27, Tank Bund Road, Nungambakkam, Chennai - 600034, India Tel: +9144 6611 0700/701 CTN: L63090TN2000PLC046338 www .take so I u ti ons.co rn

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