Sify Technologies Limited (SIFY) Q3 2014 Earnings Report, Transcript and Summary

Greetings. And welcome to the Sify Technologies Reports Financial Results for Third Quarter Fiscal Year 2013. At this time, all participants are in a listen-only mode. A brief question-and-answer session will follow the formal presentation. (Operator instructions) As a reminder, this conference is being recorded. I would now like to turn the conference over to your host, Mr. Chris Chu, External Investor Relations. Thank you, Mr. Chu. You may begin.

Thank you, Operator. I would like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I’m joined on the call today by Raju Vegesna, Chairman; Kamal Nath, Chief Executive Officer; and M. P. Vijay Kumar, Chief Financial Officer of Sify Technologies. Following our comments on the results, there will be an opportunity for questions. If you don’t have a copy of our press release, please call us at 646-284-9400 and Grayling will have one sent to you. Alternatively, you may obtain a copy of the release at the Investor information section of the company’s corporate website at www.sifycorp.com. 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 the Sify corporate website. Some of the financial measures referred to you during this call and in the earning release may include non-GAAP measures. Sify’s results for the year are according to the International Financial Reporting Standard or IFRS. This will continue -- this will differ somewhat from the GAAP announcements 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 on the differences between non -- such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will be made available on Sify’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 developments 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’d now like to introduce Mr. Raju Vegesna, Chairman of Sify Technologies Limited. Raju?

Thank you, Chris. Good morning and thank you for joining us on the call. Our results for the past several quarter continues to encourage us that we are moving in the right direction. Our maturing portfolio of services reflects our desire to move up the value chain and capabilities into tangible benefits of our clients. We have always enjoyed a high degree of customer loyalty and attention. This reflects favorably on both our client management practices and our technical support. While we are pleased with the endorsement from the last and the long standing client, we are also very excited with the number of the new customer acquisitions, particularly among the small and medium size businesses. It is very encouraging to see small enterprises willing to take a risk investing in the new technologies such as cloud, the economics of scale, the distractive nature of the new technologies and the exponential rewards are what you know, [MT such] entice them to use the IT to differentiate their offering. That is the space we want to be in. We aim to provide the companies a callable portfolio of solution, a ready knowledge made and the agility to quickly implement, so that these enterprises of tomorrow get the best return on the investment in the quickest possible time. To reflect our past quarter, I would like to ask Kamal, our CEO to expand on some of the business highlights. Kamal?

Thank you, Raju. As our Chairman noted, our existing customers are signing multi-technology during their expansion and consolidation of favorable IT infrastructure. It is a very encouraging trend for us. We are also increasingly engaging also with new plants around their Infrastructure transformation projects aimed towards attaining agility, convergence and cost benefit. This is resulting into increasing number of multi-services and multi-year contracts for us. Telecom business grew by 96% over the same quarter last year. The business has retained one of its most loyal customers for a contract period of 7 years. This customer has significantly enlarged the current scope with a new (inaudible) structure into higher value. Let’s now go for a statewide power distribution company, this is the fourth such win in this segment in the last 12 months. Noida is ramping up. We have already secured a contract from a leading English daily and an emerging nationalized bank. We also won significant contracts for renewal for the banking, telecom and NBFC sectors. We have made a successful inroad into the gaming industry vertical. [Dealer] Services business won a large multi-year application contract from a State government department, contributing to the substantial growth this quarter and a large e-procurement system implementation. Other wins wins were a Government of India petro-chemical refinery, a leading mobile value addition player. I’ll now hand over to you, Vijay, our CFO.

Thank you, Kamal, and good morning, everyone. I will now provide detailed financial results for the third quarter of financial year ‘13, ‘14. Revenue for the quarter ended December 31, 2013 was INR 2698 million, an increase of over 21% over the same quarter last year. EBITDA for the quarter was INR 413 million, an increase of over 100% over the same quarter last year. Net profit for the quarter was INR 63 million as against a net loss of INR 56 million for the same quarter last year. The capital expenditure during the quarter was INR 400 million. Our practise of investing in infrastructure which is tightly-linked to demand has helped us monetize our infrastructure assets on hand, with asset utilization on an improving trend over the past 3 years. That said, the cost recorded this quarter associated with implementation of the large network integration project and commissioning of our new Data Center at Noida. Our focus is now on ensuring that these costs start bearing results quickly. The cash balance at the end of the quarter was INR 1304 million. I’ll now hand over to our Chairman for his closing remarks. Chairman?

Thank you, Vijay. While market conditions have been challenging over the past year, the resulting types of the market conditions, consolidations have been valuable for Sify. While we are seeing more customer consolidation services with a select set of service provider, and I see, trust on the innovation becoming the differentiator. This is a crucial time for us, Sify, to show consistent performance, differentiate our services and work towards a flawless delivery system. I formally believe that in this scenario, Sify has multiple advantages, services across the entire ICT eco-system, the people who matters to the customers and the passion to differentiate and deliver. Thank you for joining us again on the call. I will now hand over to the operator for questions. Operator?

(Operator Instructions) Okay, gentlemen. It appears we have no questions at this time. I’d like to turn it back to management for any closing remarks.

This is Raju. Thank you everyone for joining on the call. We look forward to interacting with you again next quarter. Thank you and have a good day. Thank you. Bye.

Thank you ladies and gentlemen. This does conclude today’s teleconference. You may disconnect your lines at this time and thank you for your participation.