Good day, ladies and gentlemen. And welcome to the Sify Technologies Financial Results for First Quarter and Fiscal Year 2019-2020. All lines have been placed on a listen-only mode and there will be a question-and-answer session following the presentation. [Operator Instructions]At this time, it’s my pleasure to turn the floor over to Mr. Shiwei Yin. Sir, the floor is yours.

Thank you, Tom. I'd like to extend a warm welcome to all of our participants on behalf of Sify Technologies Limited. I am 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 do not have a copy of our press release, please get in touch with us, we'll have one sent to you. Alternatively, you may obtain a copy of the release at the investor information section on the Company's corporate website at www.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 during this call and in the earnings release may include non-GAAP measures. Sify's results for the year are according to the International Financial Reporting Standard, or IFRS, and it 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 of the differences between such non-GAAP measures and the most comparable financial measures calculated and presented in accordance with GAAP will be made available on Sify's website.Before we continue, I would 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 protections 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 would now like to introduce Mr. Raju Vegesna, Chairman of Sify Technologies Limited. Sir?

Thank you, Shiwei. Good morning. Thank you for joining us on the call. The new government of India has chosen to continue with the pro-industry measures that we're started in their earlier term. This is a good news for the industry and the investment community, as it assures the domestic and international multinational companies that their plans for India can now pick up speed, we already seeing that. For us, that translates into focused pursuit of opportunities that these domestic and multinational companies will present, while continuing to cater to the home-grown players.Now I’ll have Kamal Nath view to expand and some of this business highlights for the past quarter. Kamal?

Thank you, Raju. We are continuing our focus on enabling Enterprises to adopt Cloud. Our assets and services are providing significant value add to our clients to achieve their digital objectives without increasing the cost. With our Cloud@Core service lines and our recent Cloud interconnect alliances with global players, we are best placed to help them in this transition. Our order book, revenue and profits reflect this change.In line with the continuing this event, I would like to expand on the business highlights on our growth drivers. Our revenue from Data Center centric IT Services grew by 26% over the same quarter last year. Segment-wise, revenue from Data Center Services and Technology Integration Services grew by 13% and 92% respectively, while those from Cloud and Managed Services and Applications Integration Services fell by 4% and 5% respectively.Revenue from Telecom centric services grew by 13% over the same quarter last year. Segment-wise, revenue from Data and Managed Services grew 12% while revenue from the Voice business grew by 16%.Next we will expand upon growth drivers in the market. The primary growth driver in the market continues to be cloud adoption, led by digital initiatives and transformation. This trend is triggering movement of workloads from on-premise Data Centers to hyperscale Public Cloud and hosted Private Cloud in varied degrees, based on the digital objectives of the Enterprises.This results in transformation of the traditional network architecture and transformation at the edge, which connects the end user. The need for digital services like analytics, data lakes, IoT, et cetera, are shifting the balance to adoption of hyperscale Public Cloud versus Private Cloud. Collectively, these trends are generating opportunities for full scale Cloud, Data Center and Network service providers with digital services skills.Let me summarize the categories of customers, who was sending of a Sify. Customers choosing Sify for migration of their on-premise data center to multi-cloud platforms like Cloudinfinit, AWS and Azure. They also entrusted Sify with management and security services. Customers choosing Sify as their Data Center Hosting partner as they embrace hybrid cloud strategy. Customers choosing Sify as their Digital services partners. And customers choosing Sify as their Network Transformation and Management partner as they migrate to Cloud-ready network. A detail list of our key wins is recorded in our press release now live on our website.Let me bring in Vijay, our CFO, to elaborate on the financial highlights for the past quarter. Vijay?

Thank you, Kamal. Good morning, everyone. Allow me to to present the financial performance for the quarter of financial year 2019-2020. Revenue for the quarter was INR 5,518 million, an increase of 18% over the same quarter last year. EBITDA for the quarter was INR 874 million, an increase of 18% over the same quarter last year. However, considering the new accounting standard IFRS16 on leases, which was adopted from April 1, 2019, the increase is 5% on a comparable basis.Net Profit for the quarter was INR 216 million, an increase of 8% over the same quarter last year. Capital expenditure during the quarter was INR 1,407 million. Cash balance at the end of the quarter was INR 1,568 million. Our investments in building capabilities in Managed Services and Applications-led Integration services will continue alongside infrastructure, especially Data Centers.These will enable us to be relevant partners to Enterprises in an ecosystem where policies regarding data residency, it’s a localization are taking final shape and the government accelerates the adoption of digitisation. The tax benefit of the past accumulated losses having been fully utilized, the net profit for the quarter is after tax expense.I will now hand you over to our Chairman for his closing remarks. Sir?

Thank you, Vijay. Over the years, enterprises have taken – have been seeking our service provider, who has the right mix of services and are in tune with the demands of the evolving ICT environment. With our mix of four sites, digital services and alliances, we have been able to sink with their IT needs to their emerging business goals. As the landscape guess more challenging the focus and going forward to its conservative the right mix of the partners and services.Thank you for joining us on this call. I will now hand over to the operator for questions. Operator?

Thanks, sir. [Operator Instructions] We’ll take our first question from Greg Burns with Sidoti & Company.

Good morning. First, I just had a couple of housekeeping items. Going forward, how should we model taxes – what tax rate should we be modeling for the company?

The tax rates are about 34%, but the effective tax rate up to around 30% considering some of the tax benefits on accelerated depreciation.

Okay, thank you. And so the full year, what do you project CapEx could be?

It should be in the same order of what you expect – the quarterly expense should be in the same order.

So the same order as last year or…

Last quarter.

Whatever we spent in quarter one, we should continue similar rate.

Similar rate for each quarter, okay, okay. And then we look at – could you just give us an update on your data centers? How many are currently operational? What's the capacity utilization of the existing data centers and kind of what your build plans are for this year?

We have about 10 data centers effectively. Out of it six are fully monetized, full capacity is sold out. The others are capacities which have been recently built and are getting added in a modular manner. And to the extent of the capacity is created in a modular manner, they get tend to get populated within a period of 9 months to 12 months. In terms of IT power capacity, they currently are north of a 60 megawatt.

Okay. And then just with the CapEx projections, what your DCs are building and what – how high view see the leverage on the balance sheet getting? What do you give a target or a comfort level in terms of leverage?

We expect to have leverage presently at the same ratio, which we have now between the equity and tax. We generate an annual EBITDA of INR 3,000 million approx and net profit of INR 1,000 million which gets added. So we should be able to use this accrual or retained earnings along with fresh date in the same ratio as what we're having now to fund our capital expenditure requirement.

Okay, thanks. And then lastly I was a little bit surprised by the decline in the Cloud and Managed Services. Did you lose a customer there? Can you just give us a little bit more color on why that declined year-over-year?

Yes. So Vijay I’ll take this question. So I'm Kamal here. So what is happened is, I mean, in our Cloud and Managed Services business apart from the generic view of the revenue. There are two components, which is based on the division of customer projects as well as users pattern of our customers. So what is happened is, this quarter vis-à-vis the previous quarter – in the same quarter of the previous year and same quarter of the previous year, we handed over Sam migration product to some of our customers, right. Where he was an one time services revenue, which got built and that was quite a number of projects were included in that category.The second part is, as you know that’s a cloud revenue is completely based on users or mostly based on users. So we’re also seen some seasonal effect of lesser users of the cloud infrastructure this quarter. So we have taken a note of that and obviously it is very reflected in the revenue. But I don’t think it’s a matter of concern for us, because we’re acquiring more and more cloud customers, as you might seen in our latest K.

To answer your question Greg, this is Raju, we’re not seeing any downturn on the cloud users in India. Every CIO, we are talking, everybody is looking towards the cloud, okay. So that momentum is going. So you will see, I think maybe this one quarter we had around something, but we are seeing a lot of the cases coming in the pipeline in the cloud cases, right. You will see that accelerating, India every CIO you talk – everybody talking about a cloud story.

Yes. Okay, thank you.

[Operator Instructions] We’ll go next to Allen Klee with Maxim Group.

Yes, hi. Few also a few housekeeping and then some bigger picture questions. Can you tell us how much total debt was at quarter end? And then related to that, I noticed that net finance expense of around INR 64 million was down compared to the run rate it had been running at. And maybe if you could explain why that is and if that’s sort of the new run rate of the kind of INR 64 million it was this quarter. Thank you.

As far as the borrowings are concern, borrowings are concern net of the cash we have carrying in the books. It is add on INR 5,500 million approx. And the interest cost compared to the earlier counter is less for the reason that we had some interest income accruing, that line item which you see is the net interest expense, net of interest income. And for the future quarter, the interest expense is likely to be in the same order as what we had in the last financial year.

Okay, thank you. Then another kind of question, just on to more financial related. Can you talk about if there’s a – it looks like there’s typically some seasonality in the first quarter of – its maybe a little lower than the other quarters. Is that something we should continue to expect or is there anything to think about seasonality of revenue, percent of revenue per quarters. And then the gross margin that you had this quarter is, is there any reason to think that that should meaningfully move in one direction up or down as we go through the year. Thank you.

I cannot confirm on seasonality, but if I were to look at the last four financial years they have always had situations where the quarter one of a financial year happens to be lesser than the preceding quarter, which is the last quarter of the previous financial year. And that's a trend that we have observed and it appears to be largely because most of the customer orders, they tend to pick-up momentum sometime during the second quarter, third quarter. And once they get executed, they tend to contribute to the revenue in the last quarter. So that's a trend we have seen, within the company in the last four years.

Okay. And then, it's interesting how you – talk about how you benefit from your cloud interconnecting with alliances with other global players that, we might – without knowing enough, might just assume they would be competitors, but it sounds like you're actually gaining business. Could you maybe explain a little of how you benefit from that?

Yeah. So based on – the global players like AWS, Azure, and even Oracle who will be launching cloud in India very, very soon. They are not exactly our competitors. In fact, we collaborate because if some of the projects that you might have followed in our press release, quite a lot of projects which we are signing, where we are helping the customers to move from their data center to hyperscale cloud providers like AWS, Azure and in the coming days it will be Oracle also.Now when we connect to each of these operators, the cloud operators given an high-speed connectivity with the cloud, Sify being a networks services provider also which is an additional advantage with Sify we have products which are high speed secured connectivity to the hyperscale cloud providers.To that extent we not only migrate, the customers to the hyperscale cloud providers, but also connect them from their data center to cloud, their users to cloud securely and also manage them over the entire contract period.So that’s our main business which is being on the table vis-à-vis the other traditional cloud providers.

Okay. Thank you. And then could you expand a little on your comment that the new government has chosen to continue with pro-industry measures to maybe talk about what that is?

No, like the important thing is, government initiatives for investments overall, very promising. And now if you look at some of the finance budget numbers and all what it is proposing, so some of the measures they are encouraging through startups, they are encouraging to do the manufacturing and so all these things, what happens ultimately creates more MNCs coming to India, multinational companies and favorable for investment aspects, all those processes, regulations those are getting relaxed and also that will create more opportunities for the Indian industry to start new companies also.So what is that mean is? Pro-government means doing all these initiatives, it is more, becoming more business friendly and opportunity is growth you know. Yes. At the end of the day and how the India GDP is growing right? And the highest, fastest growing, biggest GDP in the world now.And what is that [indiscernible] is as long as the industries and enterprises are going, so we are in middle of those things providing either a connecting, networking services, providing data centers for the cloud platform. So we are in the middle of that growth story. That is our hope. That's what we are presenting.

Okay. That's, that's very helpful. Thank you. And then just lastly, I apologize, but I think I missed some of what was said about the number of data centers you had now, and how many were fully filled and how many you're planning to add this year?

We have total ten in the data center for us. Six of them are fully populated and monetized, the other four are capacities which have just gone live or about to go live. And they're all getting, built on a modular basis.

Mr. Klee, were you done?

Yes, maybe just one last thing of the, so there's four that were, that are just gone live and you're building, adding capacity. Are there or adding, filling them up? Are there any new ones in addition to those four that are being planned to be built this year?

There are plans and at this stage, I shouldn’t like to make any observation which is forward looking, we do have a land bank, which we have acquired in path to create new facilities. Based on the progress of our, customer conversations with large customers. We will decided on the timing of taking of those projects.

Okay, great. Thank you so much and congrats on the results.

Thank you.

Thank you

[Operator Instructions] We do have a follow-up question from Greg Burns with Sidoti & Company.

Hi. I just had a question about your wireless spectrum. I think in the 20th year, you had mentioned that the government is repurposing some of that spectrum. So I just wanted to see, get your view on your wireless, the capacity of your wireless spectrum. Do you have enough? And will you need to source some new spectrum in the future? Thank you.

For our enterprise business which is both wireless and some amount of fiber on the ground as well. The spectrum which we use is largely in un-licensed band and the solutions, which we provide do not require a license band or additional spectrum to be acquired.So our business model does not envisage acquisition of spectrum or carrying on our enterprise network or telecom business.

Okay, thank you

And we did receive another follow-up question from Allen Klee with Maxim Group.

Yes. Are you able to tell us what percent of your revenue came from the data center centric businesses as a percent of the total? And is there any reason we should be thinking that that business should be growing at a faster rate than the telecom services centric going forward

As far as the revenue is concerned, the data center centric services and telecom are approximately in the ratio of 50-50 more or less equal, telecom centric being marginally higher. We expect, both businesses to grow. But the data center centric IT services I don't want to again sorry for repeating, I don't want to sound forward looking, but given the momentum of the government and the various companies towards digitalization, which is happening, it is quite possible that, this part of the business might see a little higher growth rate than the telecom.

Okay. Thank you so much.

At this time, there are no further questions in the queue. I'd like to turn the call back over to management for any closing remarks.

Actually the number is 58% for telecom concentric and 42% for data center centric, I think so.

So thank you everyone for joining us on the call and we look forward to interacting with you through the year. Have a good day. Thanks you.