ESDS Software Solution (NSE:ESDS) Q2 2027 Earnings Call

0:00 Ladies and gentlemen, good day, and welcome to the ESDS Software Solution Limited Q2 and FY 'twenty seven Earnings Conference Call. 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. Please note that this conference is being recorded. I now hand the conference over to Mr. Prateek Japhtha from E and Y Investor Relations. Thank you, and over to you, sir. Thank you, Rayo. Good evening to all the participants, and welcome to q two FY twenty seven earnings call of ESDS Software Solution Limited.

0:50 The results and presentation have already been mailed to you, and they are also available on the website of ESDS. In case anyone has not received a copy of press release and presentation, please do write to us, and we will be happy to send it to you all. To take us through the results today and to answer your questions, we have with us the top management of the company represented by Piyush Sumani, chairman and managing director, Nadukuru Sita Ramayya, chief financial officer, to whom we will be referring as Ram Saurabh Daga, account and finance team and Prasad Devkar, company secretary and compliance officer. Piyush will start the call with brief overview of the quarter on business, which will be then followed by Ram, who will take us through the financials.

1:41 Then we will open the floor for q and a session. As usual, I would like to remind you that anything that is said on this call, which gives any outlook for the future or which can be construed as a forward looking statement, must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with SEBI and subsequent annual reports, which you can find on our website. With that said, I now hand over the call to Piyush. Over to you, sir. Hey, Pradeep. Thanks a lot. Good evening, everyone. A warm welcome, and thank you for joining our q two FY twenty seven earnings call.

2:28 So we also have our h one numbers to disclose today. Before I talk about the quarter, I would like to take take a moment to reflect on an important milestone for all of us. We became a listed company on four September this year, and I would like to once again thank all our shareholders for trust and confidence you have placed in us. Our first earnings interaction as a listed company happened very soon thereafter on September 25. As we are still relatively new to the public markets, we thought it would be useful to spend a few minutes today explaining ESDS, our business model, and how we look at the business, particularly for shareholders and investors who have joined us after the IPO. If you look at ESDS journey over the past two decades, we have witnessed significant shifts in the technology landscape, and we have proactively evolved alongside them. Alongside this, our approach to innovation and solving customer problems has remained consistent.

3:27 Back then, we began with web hosting, supporting businesses as they established their digital presence. As the requirement became more complex, we expanded into data center and mission critical IT infrastructure. We have been early adopters of emerging technologies. We recognize the potential of cloud computing early and developed our own cloud platform with patented vertical auto scaling technology. As customers increasingly sought inter... Integrated services, greater control, and digital sovereignty, we developed an artificial intelligence based autonomous sovereign platform with Swaraj Cloud and AI enabled sovereign product, bringing multiple capabilities together within one ecosystem. Today, as artificial intelligence transforms the technology landscape, we are building on this strength through AI factories, large scale GPU clusters, and end to end AI enabled solutions.

4:22 At every stage, our approach has been to look beyond individual products, understand the larger customer challenge, and bring together the right technologies to deliver a complete end to end solution. This philosophy has remained the foundation of our evolution and continues to guide the future direction of ESDS. Today, our business can broadly be understood across three offerings, infrastructure as a service, managed services, and software as a service. Instead of looking at this as independent businesses, we look at them as an integrated technology platform through which we support customers across infrastructure, cloud, software, security, and the ongoing management of their technology environment. Let me briefly explain how our three core business segments work together.

5:11 Infrastructure as a service from... From the foundation of our business. This is where we provide customers with the AI infrastructure or cloud infrastructure or data center infrastructure. They need to run their applications and critical workloads, including be it their data center, cloud, colocation, AI compute, AI factory. So whatever compute capacity or whatever the the hardware capabilities are required that we provide to our customers. Managed services takes this a step further. Beyond providing infrastructure, we help customers manage, monitor, secure, and optimize their IT environment. This allows them to focus on their core business while we take care of their ongoing technology operation.

5:56 And software as a service represents our proprietary software and platform capabilities, our growing product portfolio across cybersecurity, observability, automation, and enterprise technology. What is important to understand is that these are not three isolated businesses. They are interconnected capabilities that allow us to address the customer's complete technology requirement. A customer may begin with infrastructure, expand it to manage services, and subsequently adopt our software platform. This integrated approach enables us to build deeper customer relationships, address evolving requirements, and deliver end to end technology solution. Our customer base spends enterprises, government organizations, and BFSI client. ESDS is also not only an infrastructure company, we have built our own technology and software capabilities over many years. Solar Cloud is our patented vertical auto scaling cloud technology, and we continue to build our capabilities across AI, cloud, cybersecurity, and GPU infrastructure.

7:01 What differentiate ESDS is that we don't look at technology requirements in isolation. We focus on understanding the larger business challenge and bringing together the right technology, services, and expertise to deliver tailored end to end solution. The integrated approach allows us to serve as an accountable technology partner, simplifying complex IT environments while enabling digital sovereignty and giving organizations greater control over their data infrastructure and technology services. Looking ahead, over the next three to five years, we believe this model will become increasingly relevant. AI is fundamentally reshaping businesses, and enterprises need an integrated technology foundation to build, deploy, and scale it. Through our AI factory ecosystem, we bring them capabilities together under one umbrella.

7:51 ESDS represents more than a traditional cloud or data center company. We are an end to end AI ecosystem and IT service provider focused on strengthening our competitive position and delivering sustainable long term growth. As we start our journey in the public market, I would also like to provide some context on how we believe our performance should be valued. Given the nature of our business, quarterly performance can be very based on, okay, project execution and revenue recognition. We therefore believe year on year trend provide a more meaningful view of our underlying progress and encouraging investors to evaluate ESDS over a longer period rather than focusing only on any single quarter. Coming to q two FY twenty seven, we are pleased with the progress made during the quarter. During the quarter, we continued strengthening our core business while accelerating our transition towards an integrated AI enabled sovereign technology ecosystem.

8:49 Our priority is centered on expanding the Swaraj product portfolio, advancing AI factory business model, and GPU infrastructure initiative, and bringing together cloud, managed services, and AI capabilities to address increasingly complex enterprise requirements. Going forward, our focus remains on strengthening the core ESDS business by building our AI and GPU infrastructure opportunity in a major manner. We are excited about the opportunity ahead, but equally, our focus remains on execution, capability, capital discipline, and creating sustainable long term value for our customers and shareholders. With that, I will hand over to our CFO, Najukun Chitaramaya. You can call in Ram as well to take you through our q two financial performance.

9:37 Thank you. Thank you, Hush, and good evening, everyone on this call, and thank you for joining this call. Really appreciate. As mentioned, I'll take you through the key financial highlights for q two fiscal year twenty seven. I'll start with the year on year performance, which we believe gives a better view of our business strength while also explaining the important sequential moment, whatever relevant. So the revenue from operation in q two is $13.08 3,400,000 INR, whereas for q one, it was $13.03 6,600,000 INR. So resulting in a growth of 3.5%. Whereas, h one, when I compare h one fiscal year twenty seven one fiscal year twenty six, the revenue in h one fiscal year twenty seven was 2,719 million, whereas the revenue in h one fiscal year twenty six is $21.08 3,700,000 with a growth of 24.6% that we achieved. And the total revenue in this... As well as fiscal year twenty seven is $27.88, which includes 68,000,000 of other income.

10:54 Against the total income in h one fiscal year twenty six of $22.01 9,000,000. So the... Thereby, we see a growth of 25.6%. EBITDA margin for h one is $11.03 7,500,000, whereas for h one fiscal year twenty six is one zero one two point seven million. So we, again, see a growth of 4.3% there. Similarly, PAT has also increased $2.60... 603,700,000 in this... At twelve fiscal year twenty seven against $477,900,000 in at twelve fiscal year twenty six. Thereby, we see a growth of 26.3%. So total amount raised to IPO issue is 7,200 million.

11:56 You close out of the same is $469,130,000. The unutilized amount stands at $67.03 870,000 as of date, which is most of them. We have close to 6,500 million. We have put that in fixed deposit and remaining amount has been that in the monitoring account. We had we had a cash and cash equivalent amounting to INR $16.03 68,310,000, and other bank balances equal to $3.41... $34.01 9,800,000 as on 09/30/2026, which includes FDR due to IPO proceeds close to 6,500 million.

12:46 The total assets as on 09/30/2026 is INR $41.09 5,000,000, and reserve stands at INR $126.08 22,760,000. With this, I hand it back to moderator to open the floor for q and a session. Thank you very much. We will now begin the question and answer session. Participants are requested to use handsets while asking questions. The first question is from Deepak Poda from Sapphire Capital.

13:44 Please go ahead. Yeah. Hi. Am I audible, sir? Yes. You are audible. Yeah. Thank you very much, sir, for this opportunity. So just wanted to understand on the Sharon part, I mean, we were expecting to get commission, the Sharon GPUs this month, right, November. So just wanted to know the status of it and and how much revenue it can contribute in FY '27 and '28 and corresponding EBITDA margin we can expect in. Yep. That that would be from my side. Yeah. Yeah. So we are in the final stages of testing now. So NVIDIA testing is happening simultaneously. As we speak, NVIDIA is doing the cluster testing. So this is expected to complete within the next two to three weeks time, maximum three weeks time. So on the upper higher side, they have mentioned that by November 27, they will be hand over to us for testing.

14:42 And after that, we have to hand over to our customers for twenty days of testing. So on the higher side, the the go live would happen. RFS ready for service would happen on December 17. This is on the higher side. Lower side, it can happen somewhere in the first week of December also ready for service. We are hopeful we should be able to... In this quarter, we should be able to book one month of our revenue and one month of our profits. And next quarter would be full or three months for the next quarter. So somewhere around, like, 50 to 60 crores fees in that range is going to be a monthly pack once the cluster goes live. So 50 to 60 crores per month, I mean, after the entire 8,200?

15:34 Yeah. All 8,200, once they fire up, then somewhere between 50 to 60 crores will be our pack per month from this project alone. A pack. Right? 50 to 60 crore start per month? Per month. Yeah. From this project. And top line? So what sort of revenue we can generate from this? Top line, one... Just a minute. I'll give you an approximate number only. I cannot give you an exact number. $2.88 crores monthly revenue. Yeah. $2.88 crores would be the monthly revenue. So can you just repeat that number? Approximate number would be 288 crore of revenue.

16:26 Okay. So annually around 3,000 crores revenue, we can do it at... I mean, next year? Yeah. So so the bad margin that is coming is close towards 15, 16%, around 3,000. So $506,100 crores kind of a path we can generate from this entire utilization of this 8,200? Yeah. So domestic patent margin would be, like, in the range of 26, 27%. And this one year factory patent margin would be in the range of 16 to 18%. And once our AI factory also goes live in India, then that will have a higher margin. Sure, sir. That would be from my side.

17:11 Thank you so much, sir. Thank you. Thank you. The next question is from from Integrity Ventures. Please go ahead. Hi, sir. So you you told us about the revenue and the profit numbers. Can I can I get to know the? For our revenue rentals that we are earning from this new customer? Hello? Yeah. Yeah. Can you hear me?

17:58 Yeah. Now I can hear you. Yeah. Yeah. Asking, can you just let us know the hourly rental rate that we are charging from this customer for this seven year deal? Yeah. So as I mentioned, we can't be giving far many... Too many details about it. But, yeah, our monthly revenue would be 288 crore and monthly pack would be in the range of 50 to 62 rupees. Okay. Got it. Just another question on this seven AI deal only. As you know, share on AI is also selling the services to other customers. And in the light of recent increase in GPU prices of V300, How you see sharing themselves competing with you guys in terms of selling the services?

18:55 This is a committed AI factory and private dedicated AI factory for us. It is not shared with anyone else. So in this AI factory, there is no competition. This 8,200 GPUs are fully contracted ESDS. Okay. And what's your what's your view on recent increase in b 300 GPU prices? We are also committed to some clients, so that's the reason we also cannot increase our prices. Looking at the current prices, we could have had a potential to earn almost 150 crore fees back every month. Even more than that was a possibility. But, unfortunately, because we are already committed to our clients, is committed to us, so we cannot charge more.

19:43 Yeah. But the support for, like, thousand... For 8,200 is committed to another client from you. Yeah. To certain number of clients, so that's why we now don't have a possibility to increase the time. Okay. But we will be able to increase the prices in our own data center that we are building in India. Correct. In India, what we are building, so there we will be able to charge higher price. Okay. Got it. Thank you. That's all. That was so nice. Thank you. Thank you. The next question is from Amit Chandra from HDFC Securities. Please go ahead. Yes, sir. Thanks for the opportunity. So my first question is, again, on the cheddar.ai.

20:29 Obviously, you have mentioned that there hasn't been. So any specific reason that you want to highlight why the deals happen, especially if I see the share on AI performance in terms of their performance, the enterprise performance over the last one month, they have been under stress and the market cap of share on AI has gone down with them again. Is there any kind of funding issue from Seshit from Serenay's point of view where, I know they have been, I don't know, they have been, like like, not been able to deliver on their commitments in terms of, like, I don't know, like, even the AI factory. And if there is any delay in this contract. So in terms of the experience that we have with the, you know, the the client just think they have signed the contracts, what are the kind of, you know, in the in the contract terms. If you can have it from.

21:25 Yeah, Amit. Thanks. Good to connect with you. But, Amit, we should never compare a company and company's performance with the stock market because stock markets may one day buy, one day sell, but the company has certain cultures, certain principles. Sharania is a very, very strong and ethical organization, very much firm on their commitment, their delivery timeline. Or they're committed to us. They are on the... They are in the final stages of delivering also that. They have more than $2,000,000,000 sitting with them today. So though their market cap is, like, $1,500,000,000, but they have in their bank account the cash equivalent of $2,000,000,000 sitting with them. So much hardware which has already come, multiple AI factories, primarily going live.

22:17 So cash wise and financial positioning wise, they are very well-to-do. And we are lucky that we identified them as our partner very early because now the same b 300, the rates are being quoted at $7 an hour. What we got at $3.5 an hour from them, now the market is demanding $7 for the same b 300. So they are home to deliver this, run this project for 7 years for us. We have contracted with them. We have a pricing that... With them, we have done with them for seven years. So that's the reason I think to be worried about, and we've met them many times. They have come to India. We have gone to Australia.

23:02 Again, this month, they are also coming again back to India. We are again next month going to Australia. So We keep on meeting on a regular basis. Every month, we meet each other, and there's a strong camaraderie between both the organizations. Okay. And, sir, you know, there has been a there has been a recent resignation of the CTO. So is that going to have any impact on this thing in terms of the timeline? So a year back, we initiated a concept of CAI, so chief artificial intelligence officer and chief product officer. So what happened was that the young people were brought to this position. So, okay, for the CIO role, we found someone internally.

23:51 For CPU, we got a person from outside. We did not have a clue that the CIO would eat up the role of the CIO and CTO. So over the period of six months time, it so happened that both the functions, the CIO role and CTO became became redundant, and there was nothing left for the CIO and CTO to handle. And since the arrival of CTO in the company, we further realized that the products and the entire operations around products and services, those also got taken over by AI. So AI brought massive changes and the CAIO that we brought and under the CAIO and CTO, all the AI skills that came in, they made certain rules redundant.

24:41 But we have seen this happening from last twenty three years. This is not the first time this is happening in any case in ESDS that a rule has become redundant. We have seen many such rules in the past becoming redundant. Five times, company has diversified, and five times we have seen multiple roles getting redundant. So probably we do not need to hire. CIO role is 100% redundant now. CTO, we may decide whether we want to hire, but at the moment, we don't see any reason to hire a new CTO. Okay. And, sir, for the for the India business is the, like, existing business for us. What is the kind of... That obviously you mentioned the IT and also if you can update that, what is the CapEx guidance for the next year? And what is the expansion plan in terms of the total like megawatt like capacity we have? And in terms of additions, like what is the pipeline?

25:41 So it would be difficult to give guidance, but I can tell you that we have a pipeline of 3,000 crores for India. And we are also doing from our IPO proceeds plus customer advance, we will be doing CapEx of 1,500 rupees where we expect that to go live by June next year. So that would be definitely a smaller AI factory, but that will go live from India. And we are looking for delivering more AI factories. The aspiration is to quarter on quarter deliver more AI factories in India, outside India. So definitely, we are quite positive that the numbers where they are today from a 500 floor domestic revenue, we are hopeful that this will...

26:28 This should triple or quadruple in in the next one or two years. And, sir, one last question from my side. So we have the seven years kind of in single client that's... It's it's going to be kind of credit and then... Or how the functioning will be, you know, in terms of who is going to use that AI factory? See, this kind of AI factories are consumed by AI labs only at the moment.

27:13 So majority of the consumption of AI compute, AI factories is being done by AI labs. So we are now connected to the top 70, 80 AI labs across the world and also the banks that are consuming AI. So, obviously, banks are smaller compared to AI labs, so we are connected to the entire ecosystem. And we are quite hopeful that as and when more capacity comes and as and when renewal comes, we will be able to demand better pricing from the clients. Okay. Okay, sir. Thank you, and all the best. Thank you, Amit. Thank you. Before we take the next question, a request to participants to please limit your questions to two per participant.

28:03 For follow-up questions, we request you to rejoin the queue. The next question is from Prateek Srivastava from Nevesh Wisdom. Sir, I just wanted to understand the economy a little bit better. I see that in the deck you mentioned it's 1,250,000 contract. And you've mentioned around also around INR $2.88 crore of, you know, revenue per month once it starts, you know, once it starts getting fired up. So I just wanted to sort of tie these two, sir. How is this... Well, is this committed contract, and is this over a five year or seven year?

28:52 Earlier, I was hearing also that, you know, it was seven year logged in. Now I'm hearing five year plus two years. So can you please clarify some of these multiple things where I've... Where where I have confusion? Yeah. So our our commitment to Sharon AI is for five years, but we have a a lot of the rate for seven years. So if we will renew with Sharon AI after five years, we will renew at that lower price of 30%, 40% discounted pricing to the first five years. But with our client, we have kept the price flexible. At the end of five years, we will increase the price or maybe we will retain the same price that we will be billing to them for the first five years. Got it. And, sir, this contract value, sir, that US$1,250,000,000 contract, this is the one which we are talking about when we are seeing this 3,000 crore revenue per year once it goes live.

29:48 That is of Sharon That is our liability. 3,000 crore per year is our liability to Sharon AI, and 288 per month is our billing to our customer. Okay. Got it. Got it. Got it, sir. And any color on our core business, sir? I see that our cloud, you know, services sell 919% Q on Q, the infrastructure SaaS are 4%, BSSR revenue is down, and customers have also dropped from 2,216 to seventeen oh nine. So is there any color on that? Is this how are you seeing this business, you know, from here on?

30:35 Yeah. So what we've done is that we've created an internal subsidiary, which is a virtual subsidiary. It is not an active subsidiary. And all the small customers that we had, we are transferring those. So we are trying to keep only 400,500 customers in ESDS, not more than that. And all the smaller customers go to internal subsidiary. They sit in a separate office. They have their own operation. People come at a lesser price. The support services cost are lower there, and they are given a certain profitability target that you achieve towards the profitability or as ask your customers to go. So out of this 2,500 customers we had last year, we have actually asked some 50, 60 customers to exit also.

31:20 And we are looking to to make a strong base between this top 400,500 customers only. Maybe in future, we may want to limit ourselves to two fifty, 300 customers only. But at the moment, we are wanting to focus our energies only on the top 500 customers. Got it, sir. Got it. Thank you very much, sir. Thank you. The next question is from Deepak Pandey from Capital. Please go ahead. Right, sir. Thanks for the opportunity. Sir, on the international demand side for the GPUs, you had mentioned around 50,000 GPU pipeline from your existing clients. So how is that shaping up for you? And will the setup be similar as in... It is in share in AI, or anything else can be done?

32:14 Yeah. So so we are targeting to have similar arrangements. We are looking for American partners and South Korean partners, Taiwanese partners. So we are working very closely with partners from multiple regions. We recently signed a MOU with a partner in Sweden as well. So we are aggressively working on how we can conclude on this pipeline, have some and if they signed with the customers and advance to meet from the customer, and how fast can we deliver. So very important to note that ESDS carries a reputation in the market that they signed the large deal and they deliver the large deal. So that perception that ESDS has in the market offers strong delivery partner.

33:04 We have to retain that. So we... All the time when we we communicate with various AI labs, we very clearly give them a deadline that this is the timeline by which we will deliver. Either e 300, e b 300, warehousing, or, whatever the customer is wanting. We are giving them a timeline, and we are very calmly telling them that we will deliver that for this timeline. So these things take time. Large AI factories, of course, of 8,000, 16,000, you do kind of AI factories. They take time. Signing an MSA with the customer can get track for almost two months. So their legal team, two, three different different legal on sales. We have our own legal counsel. That is where it takes time, but we are on track.

33:53 Understood, sir. And, sir, on the balance sheet, there are some elements. Other noncurrent liabilities was $6.70 crores, and there is some other current liability around 1,900 crores. What does this pertain to? Yes. We have paid an advance to share share an AI of $140,000,000. Out of which, the 50 per... Percent will be amortized over a period of three months from Go Live, and the remaining 50% will be amortized in the month of '34, '35, and '36. And exact similar arrangement we have done with our customers. So customer have given us that one, which is sitting in the liability. You can see the exact replicating replicating amount in the noncurrent asset and current assets.

34:44 Okay. The last question is on the domestic side. When you say you have a pipeline of 3,000 crores, can you elaborate a bit on that? Where does, you know, it is coming from and how the supply side of it will will be taken care of? Is it around managed services or, again, enterprise and service largely? Mostly, enterprise and service only at the moment. All the demand that is coming to us from different ESUs or different departments, central government, different departments, this is mostly for AI infra. So these are obviously small AI factories that they are wanting. So we are at the moment positions very strongly for AI and travel through of government and also enterprises and banks in India.

35:36 Managed services and SaaS funnel is not as promising as the AI at the moment. Okay. Thank you, sir. Good luck for the future. Thank you. Thank you. The next question is from Ashish Dash from Systematics. Please go ahead. Yeah. Thank you for the opportunity. Sir, I just want to understand the... Your expansion plan in the domestic side. So you have existing data center and also some data center will be coming... Upcoming data centers are there. So, sir, could you please guide us, like, what is your expand expand... Expansion in existing as well as of the being data centers?

36:26 Yes, Ashish. Very good question, but I will not disclose our business strategy. But I will tell you that we are in the process of acquiring data centers with a lot of power, 50 megawatt, 100 megawatt kind of power capabilities. At the moment, it is the most vital thing across the world to get power allocation. To get a land, which is power. So we... In our business language, we call it power land. So if you are getting a power land, immediately get the contracts done and then get that power land locked with you. So that is what is our focus at the home, but the detailed strategy that we have for domestic and detailed strategy that we have for international, that obviously cannot be shared. Okay.

37:17 Thank you so much, sir. That's all for me too. Thanks, Ashish. Thank you. The next question is from Vedant Sartha from Nirmal Bank Securities. Please go ahead. My questions have been answered. Thank you. We'll move to the next question. The next question is from Anmol from DAM Capital. Please go ahead. Yeah. Hi. Thanks for the opportunity. A couple of things I wanted to understand. Firstly, in this quarter, was there any international revenue in terms of, you know, design sort of revenue for the international contract that has come to us? No. No, Anmul. Nothing of international customers for design already.

38:04 Okay. And secondly, I wanted to understand that you've spoken about $1,515,100 crores... Sorry. You've spoken about the GPUs, you know, that you you will be building in our factories. Now from perspective of that, what... Will there... Will this be international customer, or will it be for domestic customers largely? We are speaking to both simultaneously, but because we don't have a delivery date at the moment that can be delivered by April, May, June, what date we are going to deliver. So the negotiations are going on. Whoever gives us better pricing and better advance, we will give it to them. Right. Right. So this 1,500 per watt worth of GPUs, this is not for one particular customer. This would be a... For a particular set of customers.

38:59 Maybe two customers, three customers can be one single because in the funnel we have, international customers who are looking for this kind of capacity or even two times, three times, four times more than this capacity. So we have international customers who can take one single AI factory of thousand... Where are the wins or 4,000, 8,000 there are wins also. Understood. Understood. And just one thing more into this. Is it... If you can sort of explain us that what would motivate a international customer to come to India and set up its GPU factory rather than, you know, in this sort of country.

39:46 So does... Is there any benefit for the same? Power shortage. So wherever NVIDIA GPUs can be sold, in none of the countries, power is available now. So be it America, be it Europe. So Europe had this 30, 40 gigawatts three, four years back. It's all gone now. So Europe is left with no power. Australia is left with no power. So every country which had power, GPU... Air factories are there now, and they don't have enough power left. So India is the only country which has got 40, 50 gigawatts surplus to be given for AI factories over the next four, five years. Understood.

40:32 Understood. Yeah. That... That's it from my end. Thank thank you so much, sir. Thanks, Anwar. Thank you. The next question is from Shiv from Aryan Investing. Please go ahead. Hi, Piyushi. I have a question. I know that meaningful numbers will come q four onwards that you have already explained in number of calls. I have a question on the future engagements. So since you're saying that Power is a major bottleneck in terms of our expansion and also in terms of the future of AI compute, So what are the new geo... Geographies we we we are targeting?

41:27 For example, I see that you have been traveling a lot also in other South American countries. And also, I I saw I saw a report that in the existing facility in Sydney, where this installation is happening, there also there is a possibility of another eighty eighty megawatt expansion cleared by Australian authorities. So can you throw some light on on these these facts also? Yeah. So she's... Now, obviously, we have put up our strategy in place and how we want to bring one gigawatt of power under our captivity, under our control.

42:14 So we have put up a strategy in place, and we are targeting all those countries where hydropower is available, wind power is available, or geothermal power is available. We are targeting India also because 40, gigawatts surplus power will be available for AI factories, and government is also trying to promote AI factories in India. But will we give this to Indian customers, or will we give this to international customers is completely dependent on how much profit we can make from each of the AI package. Got it. So in terms of new inquiries from across the world and the the GPU funnel, which you already have had.

43:02 So from which kind of geographies these these demands are coming to us? From which parts of the world? That would be my last question. So demand is coming from AI labs. Now there are these 17, 18 top AI labs in the world, and very easy for anyone to find out which are the countries where most of the AI labs are there today. So we are talking to all of them. Okay. No worries. Thank you so much, and all the best. Thank you. Thank you, Shiv. Thank you. The next question is from Akash Jain from Visit Global Services. Please go ahead.

43:50 My question is regarding the Indian business. We are talking about a client GPU expansion in India business as well. So what is the expected timeline? And what is the expected revenue potential from that business? Timeline target is June, July next year, and we are targeting thousand rupees of revenue from that business per year. Okay. And with regards to technology leadership transition, our CTO and CIO, Sanjay Nai, has joined. So what led to the... To this transition, and who will lead this technology product development functions? So the CTO was onboarded two months back, and all the product portfolio is with the chief product officer.

44:38 While all the technology operations, we had created a position of chief AI officer. This was done almost a year back. And the entire technology operations were, like, taken over by the CIO function. And people started, like, all the new generation people who joined the organization, be it the IIT and or those who were hired through our autonomous human hiring platform. Those people also started reporting into the CA IO, which made the CIO chief information officer and CTO chief technology officer. Those two functions became redundant because of the changes that we did. So the the chief product officer, which was mostly AI product officer and chief artificial intelligence officer, they have made this two positions redundant.

45:35 Okay. And, sir, my question is regarding customer advances. As we have already tied up 8,200 GPUs with global customers, so any customer advances you received in q two? No. No major advances received in q two. We've not signed any major contracts in q two. So that's the reason we don't have any advance in q two. Okay. So for this 8,200 GPUs, the contracts has not been signed yet. We No. No. That was signed. The... It was signed earlier, we said. It was 100 GPUs signed one day back. Yeah. And with global rates going up for GPU, so when can we expect that the rates would be revised for our customers?

46:25 Is there some lock in for the price? The Sydney GPU factory, we cannot change the rates now because we we we offer that to customer who are available that time to give us the price which we wanted. Now that the rate has increased, so we cannot... So the rate is not floating. Today, the rate has increased. After a year, the rate will decrease. So then, again, the client will negotiate with us, so that's not the right way. These are some largest of the of the companies in the world, which are ready to commit this kind of money for AI labs, AI pro... Factories. So they they stick to the contracts. Same as with Charent AI. They have committed to us. They will stick to the pricing.

47:12 We have committed to our customers. We will stick to our pricing for five years. Okay. And my next question is regarding the India data center business. So what is the utilization rate as of now and any capacity addition we are expected in this business? Yeah. So currently, we are utilizing close to 85% of our existing data centers, and we are also increasing capacity in other three data centers, which would be up and running in next two to three months. Okay. And my next question is regarding technology obsolescence. Like, with NVIDIA continuously launching newer GPU architectures, So how does the company protect the residual value of its existing GPU fleet?

48:07 And what is the expected useful life of GPUs? It is very important to understand that NVIDIA GPU is not like a car model that it becomes outdated. NVIDIA GPU and CUDA platform from NVIDIA, they both have a fantastic combination. And what Uda does, every GPU that gets old, Uda improves its performance because Uda improves with time. So it's typically in an iPhone, the software becomes slow after some time. But in case of NVIDIA, OOLA makes the hardware faster and faster with time. That is the reason h 100 and h 200 in a retail market also is selling at three to four times of its buying price two years back. So whatever price at which you bought an 800 or x two hundred two years, three years back, anyone in the market is ready to pay four times today of that price. So this is the reason... The... Pura is the reason why NVIDIA GPUs continue to have continue to demand so much premium in the market. Same thing is going to happen with with the b 300 or g b 300. They will also continue to demand price for next six years, seven years, eight years also.

49:26 Okay, sir. My next question is regarding Swaraj cloud business. So what is the scalability do you expect from this business? Concerning the trust on the data protection in India. We are very, very hopeful that DPDP... As soon as DPDP kicks in next year, there will be a kind of a chaotic situation where people may want to exit the foreign cloud platform and come to ESDS. So that would create a kind of a demand for us, which we've been anticipating. We are preparing for that kind of an opportunity to come, and we definitely love to grab that opportunity. So as of now, are we in talks with some customers for this business?

50:13 Any visibility? Yes. So that is what we mentioned that the domestic cloud and collocation opportunities that we have. Majorly cloud is around 3,000 for kind of a minute. Okay. And, sir, going forward with the sharing AI deal, are we in talks with some other players who have contacted GPUs from NVIDIA? Yes. Yes. We are talking to other new cloud companies, AI, infra companies also, and looking to contact with them. Okay. I'll come back in queue. Thank you, sir. Thank you, sir. Thank you. Thank you. The next question is from Bharat Seth from Deva Investments. Please go ahead.

51:01 Yeah. Thanks very much for the opportunity. I just have very one simple short question, sir. That our deal with Sharon... With with our customer for the Sydney Data Center is on a take on... Take or pay basis. Right? So which means every every available GPU per hour will be billed to the customer irrespective of the fact that how much ever is the utilization, right? Correct. Okay. Thank you so much, sir. That's all from my side. Thank you. The next question is from Raj Mohanvi, who is an individual investor. Go ahead. You for the opportunity. Actually, you indicated to NVIDIA evaluation currently happening for the Sharon AI project.

51:52 Has it revealed any challenges vis a vis your initial assessment in terms of time lines and other technicalities, or has your harness been satisfactory? And then you have indicated two fifty thousand GPUs in the pipeline. In this light, based on the seven a project, when can one expect you to garner the next deal of this kind of a cluster? Also, based on your internal assessment of your capacity and capabilities, what kind of frequency do you see in garnering such deals? Logically, you should improve on this incrementally. So, broadly, I wanted to know the challenges you faced for this, the next deal anticipated, and the future frequencies.

52:43 Yeah. Thanks, mister Raja. Fantastic question. It is very important for people to understand that such a large AI factory which can use 16 megawatts of power, 8,202 GPUs in one single data center. So it's not an easy thing. Many things go wrong in this process, and NVIDIA is a very, very, like, strong edit... Like, their their auditors are very, very strong edit. They will not audit even smallest of the configuration mistake. So they run through... I run your entire cluster to very, very stressful test and... But they will make sure that the class... Cluster goes up to a 100% utilization, 100% power, 100% CPU, GPU, RAM utilization for one hour continuously.

53:34 And then from that, they will decide whether this cluster can be certified or not. So so, fortunately, all of that has now been cleared. The toughest of the test that our cluster had to go through, those have been cleared now. And we are just hoping now that they will be submitting a report. And as soon as they submit a report, then we should be in a position to take over and then hand it over to customer for testing twenty days. Okay. So based on this experience of yours, which has been certified, which will get certified by NVIDIA, your next deal in terms of grabbing the... Or garnering the next deal should happen at a slightly... One would expect objectively to... For it to happen at a more quicker frequency.

54:25 Is my understanding correct? Okay. And when do you anticipate, like, the next deal of such a proportion rather? Like, obviously, one cannot expect it to happen, right, but very much then broadly I'm seeing in a matter of one quarter, two quarters, one deal. Is that the kind of frequency that one should be looking at? Yeah. So we are preparing the ground for the next few deals. We obviously... Because if we disclose everything today and then from here, it takes eight, nine months to deliver the next day of equity. Again, that year has butterflies in the... Some of the investors. So that's the reason we are trying to make sure that how we can bring the timeline to less less than six months time, and then we make the announcement.

55:11 So we are very closely working with NVIDIA, Super Micro, Dell, and the new cloud companies, data centers where power is there. We are ensuring that everything that is required in the factory is already there so that the only thing that has to happen is the GPU system and then NVIDIA to do the testing and hand... And it will work. So all that is happening simultaneously. We will definitely come back and tell... Share with the regulator first that where... Once we have signed the contract and the delivery timelines are there in the full site, we will accordingly come and notify the regulator. Okay. Finally, on... What are your holistic views, which are normally generous with on the US midterms?

56:01 If I had anticipated the democrats in any of the house or the senate, do you think it could undergo some change in terms of deployment of data centers? Generally, your perspective on In both scenarios, they don't have power in US. So our companies in US and Europe have nothing with them at the moment. So whoever wins, will he be able to solve our problem? Can they immediately give 300 gigawatts of power in American? Can they give, like, a 150 gigawatts of power in Europe? Well, the answer is no. So where do they have to come? They have to go to those countries where power is available. Fine. Thank you very much, and best wishes.

56:47 Thank you, mister. Thank you. The next question is from Gaurav from GFS Capital. Please go ahead. Thank you so much, sir. You just gave a guidance that by next year, June, July, we are expecting INR 1,000 crore revenue. Is it per month or per year? Thousand crore per year will get added to our India business. Understood. India. Yeah. Small India. Yeah. And the expectation on number of GPUs to be increased in India? In India, it it will go up by 1,200. One one thousand one hundred and fifty to 1,200 GPUs is what we will be adding on an immediate basis in India.

57:33 Immediate means, like, by the time they go live again, it is due July next year. So there will be more that we will add in India, but then that will be maybe August, September next year. So by June, July eleven fifty is is fixed, and by August, September, it will be plus plus add on to to the existing one. Then. K. Okay. And and then, sir, I know you have answered it in quite a different questions as well today. I'm not asking new deal or nothing, but just asking that in the next five years, can I expect three to four share on AI kind of deals? I don't I don't need timelines. Nothing. Just a broad expectation. Aspiration is to do many more such than what you are targeting. You have a positive aspiration for the company which you have invested. We also have very strong aspirations to deliver more.

58:27 Let's see where we reach beyond the work together, create a kind of a positive mindset, and things will automatically happen. Lots of meta to you, sir. Thank you so much. Yeah. Thank you. Thank you very much. We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments. Yes. Thank you everyone for attending this conference call for our results of q two FY twenty seven and h one FY twenty seven. Thank you for showing trust on us. We would continue to work for the purpose of investors and our shareholders and the company. Thank you.

59:18 Thank you very much. With that, we conclude today's conference. Thank you for joining us, ladies and gentlemen. You may now disconnect your lines. Thank you. Thank you, everyone.