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Good day, ladies and gentlemen, and welcome to the NIIT Technologies Q3 FY 2018 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Mr. Abhinandan Singh, Head, Investor Relations and M&A, NIIT Technologies. Thank you. And over to you, Mr. Singh.
Good afternoon everyone, and welcome to our Q3 FY 2018 earnings call. You would have received our e-mails with the results already. Those are also available at our website, www.niit-tech.com. As the moderator said, we will have an initial session of remarks from our leadership team after which the floor will be open for your questions.And with that, I would now like to first hand over the floor to our Chairman Mr. R.S. Pawar for some key comments he want to make before we initiate discussion of the operations. Over to you, Mr. Pawar.
Thank you, Abhinandan, and good afternoon to all of you in India and good morning and good evening, depending on where you are.As you know, I do always join the conference but my remarks are limited unless there are some questions. But this time I think it important to start the conversation because we have an important announcement.I have an important announcement to make, which is that the board today decided that we would have Sudhir take over the role of CEO from tomorrow morning.So as you know, he's been with us 7 months, a little over 7 months and has got very well integrated into the company, has built a very strong growth momentum. So the board took this very important decision to make him the CEO of the company.And along that of course, Mr. Arvind Thakur is elevated to the post of vice chairman and managing director. So this period has also seen, as you will hear, a very significant strengthening of senior talent in the global market, particularly in the marketplaces.So with all of that, we are on, today, a very strong growth momentum. And I thought I'd take the opportunity to share this very important news with you, a very significant in our history and very important for us at this point in time.So with that, I will hand you over to Arvind Thakur who now takes over as vice chairman and managing director of NIIT Technologies. Arvind?
Thank you, Raje. I would like to congratulate Sudhir on his appointment as the CEO. Over the past many months, we had worked closely across all parts of our business, with our customers, staff and other stakeholders to affect a smooth transition.He has infused new energy into the organization, which is visible in the improved business momentum that we see. As CEO, I will now invite him to share with you the analysis of our quarter performance and lead the discussions in this earning call. Sudhir, over to you.
Thank you, Arvind, and thank you, Raje. A very good evening and good morning to you folks. So onto the revenue analysis, this was a good quarter for us.Our revenues have expanded 2.6% sequentially to INR 7,565 million during the quarter, and that represents an improvement of 9% over the same period last year. In constant currency terms, revenue has grown 1.7% quarter-on-quarter as we derived currency gains on account of [ rupee depreciation ].We saw increased revenues from EMEA and that region expanded 7.2% sequentially on the back of growth in Travel & Transport and in NITL. And these 2 are the prime reasons for the growth during the quarter in this geography which now contributes to 30% of our global revenues.The Americas again grew 1.5% despite the drop in revenues on account of Morris as planned, and the growth in the Americas has come on the back of growth in BFSI. BFSI as a sector globally now reflects 50% of our revenue mix. India and APAC today contribute 10% each to the total revenue mix.We continue to experience good traction in the BFSI segment with the revenues expanding 4% sequentially during the quarter. Travel & Transport grew by 4.4% and Travel & Transport now represents 28% of the total revenues. And revenues in Manufacturing/Media & the Others declined sequentially due to the decline in Morris, and they today represent 30% of our overall aggregate revenue.Top 5 clients contribute to 30% of the total revenues and the top 10 and the top 20 clients contribute 42% and 54% of the total revenue respectively. [ Onsite revenues for us represents ] 61% of total revenues.So with that piece around revenue analysis, let's move onto margin analysis. Operating profits have improved 8.7%, that's 8.7% sequentially to INR 1,295 million representing 11.4% improvement over the same period last year. Operating margins have improved 96 basis points to 17.1%.Increase in revenues from NITL and digital engagements in U.S. and EMEA have led to this improvement in operating margins that I talked about. The net profit for the quarter are INR 756 million, up 12.4% quarter-on-quarter and up 21.2% year-on-year.Our effective tax rate during the quarter was significantly lower at 16.4% due to credit arising from the company's claim on investment write-off of one of the subsidiaries on tax filings during the quarter. Excluding this credit, normalized effective tax rate is 23.9%, a quick margin update.Now moving on to order intake, large deals, new logos, market outlook, we've seen yet another quarter with good deal momentum. The order intake story is positive. We secured fresh business of a USD 130 million during this quarter.You will recall that the corresponding number for order intake for the last quarter was a USD 122 million. Out of this, USD 130 million order intake this quarter, USD 82 million came from the U.S., USD 25 million came from EMEA, and USD 23 million came from rest of the world.You will also recall that in the last call we had shared that we had signed 2 large deals in quarter 2. I had also indicated that we expect to sign at least 2 large deals in the current quarter. I'm very happy to share that in the quarter, we actually ended up signing 3 large deals, and all these 3 large deals were signed in the U.S.We're also particularly happy with the quality of the large deals since all 3 of these were secured against Tier 1 [technical difficulty] and in some cases against multiple Tier 1 contenders. 2 of these 3 large deals were strongly reflective of the domain debt we had built in insurance. And within insurance, more specifically in the [ DuckCreek and the CSC domains ].This domain and within the domain the specific product debts that we built clearly differentiated us through the [ pursued cycle ]. The third large deal that I talked about was an expansion of our footprint with a client which was off the back of a complete digital and [ extreme dealer ] proposition.At this stage, we believe that our focus on the sharply defined industry sub-segments and creating propositions leveraging digital and emerging technologies is what has helped us with these events. And this effort of ours also is paying out very well with the large deal pipeline that we see in the future moving forward.Overall, the deal momentum continues to be exciting. And we expect to add once again 2 large deals in quarter 4 across Europe and the U.S.Moving on to new logos, new client acquisitions. We added 8 new customers during the quarter, 4 out of these 8 were in the U.S., 2 were in EMEA and 2 were in rest of the world. You will recall we had added 7 new customers in the previous quarter.A little more flavor around these 8 customers and 8 new clients. One of these 8 new clients added to our roster happens to be one of the top 10 retail banks in the world. And it was our integration and automation capabilities that allowed us to create a [ beachhead ] here.Another one of the top tier -- another one of the 8 new clients came from the travel domain where we signed on one of the world's leading cruise lines as a new product. And it was our capabilities around automation, integration and digital that allowed us to make an entry.And finally, giving you another quick flavor, a third flavor of a new client and the kind of deal that came through was multiyear, digital and [indiscernible] based deal for upgrading the website of a large travel provider.Quickly making a segue onto order book and executables. Order book executable for the next 12 months stands at USD 329 million. This number has risen from USD 320 million in the last quarter.In the last 2 calls you will recall we had called out the investments we are making in strengthening the front-end sales and capabilities team and that's what Raje talked about at the beginning of the call as well. That process continues and the positive outlook that we've shared around market momentum right now has also been a function of the impact that we have seen from those [ moves ].Quick update on leadership addition. In addition to the EVP who was hired to run the Europe business in quarter 2, we've added a new Senior Vice President in Sydney to run our Asia and Australia business from Sydney. Another new EVP to oversee our market push into data and automation has been hired in New Jersey in this quarter.Two new cloud leaders have been positioned in the Bay Area and in London. And overall our investment in additional hiring for the markets and moving our center of gravity towards the market to drive pipeline and growth will continue.A quick report out on delivery. The delivery engine at NIIT Technologies continues to operate at high utilization levels. You've seen some of those metrics. And our plans around [ AI ] insertion, higher levels of automation into our delivery factory have underpinned some of the margin improvement that we saw.The focus continues to be on execution quality and on [ customer desire ]. And beyond just regular testimonies one of the strongest endorsements we had around delivery excellence was when the chairman of one of our largest clients came on to the operations floor last quarter to personally congratulate the NTL delivery team on an on-time, on-budget delivery of a 15-month complex integration program across 2 wealth management entities.Moving on quickly to people. There was an increase in headcount by 59 during the quarter. Total headcount now at the end of the quarter is 9,081. Utilization during the quarter declined marginally to 79% and attrition stands at 10.6%.Our balance sheet highlights you would've seen some of this cash and bank balance as [ standard INR 6,906 million ], that's an increase of INR 443 million over the previous quarter and an increase of INR 1,220 million over the previous year.The CapEx spend during the quarter was a INR 127 million and the debtors at the end of the quarter stand at 70 days of sales outstanding. Last quarter the corresponding number as you know was 66 days.Hedge position, outstanding hedges in USD are USD 65.25 million at an average rate of INR 67.39 per USD 1. In GBP, we have GBP 13.05 million outstanding at INR 88.18 per GBP and in Euro it is EUR 4.5 million at INR 77.84 to EUR 1.Finally, the positive global macro environment coupled with our own growth momentum backed by the strong pipeline of large deal closures that I talked about this quarter, the previous quarter, the new logo additions, give us clear confidence of sustained growth despite the setback caused by Morris being acquired by GateHouse. As shared earlier, Morris was acquired by GateHouse and the immediate impact on revenue was expected to be $1 million in quarter 3.Despite that, we have grown in quarter 3, which is traditionally a soft quarter for the industry on the back of the strong deal momentum that we've been referencing. For us deal momentum continues to be good. There is very healthy order intake even in this quarter including great momentum around large deals and increased number of new logos coming in as referenced.Based on discussions with GateHouse it appears, going forward, we will be able to retain only a quarter of the business on an annualized basis. We anticipate a decline of another USD 1.5 million in quarter 4 and a further decline in fiscal year 2019 in this account.Despite this, we expect robust growth in quarter 4 on account of our deal momentum with margins to also expand sequentially. We also expect to continue securing large deals in quarter 4 and we are planning for double-digit growth in fiscal year '19. That's a quick update, I'm going to pause right now.
Just a clarification. I think somewhere in the beginning you mentioned BFSI was 50%, it's actually 43%.
43%.
Just want to make that clear.
Thank you, Arvind [indiscernible], yes.
Should we open the floor for Q&A now, sir?
Yes. Yes, Margaret.
[Operator Instructions] The first question is from the line of Rahul Jain from Emkay Global.
Congrats on good number, my question pertains to the strong commentary that we talk about on large deal and the near term outlook as well as outlook for FY '19. So if I've to correlate this with the kind of order intake that we had for the first 9 month, I mean there is definitely an uptick, but that uptick does not look very significant. And even from an 12-month order execution perspective that number is not growing that significantly for us to believe that this growth could be upwards of double-digit kind of a thing. So is it to do with deals that we are anticipating going forward, and we are in advanced stage of closing some of them, or is it also to do with this being driven by digital, which may not necessarily reflect in the order book data that we disclosed?
So I think great question. Thank you for the question. Two [ pivots ] to the question, one reason for that is exactly the one that you talked about towards the end of the question, which is that with the digital revenues now increasing and digital revenues now standing at 25% of our global revenues, digital revenue time line and execution tends to be shorter cycle. So some of that gets built into the order executable number that you have seen. The second and I think the more important point that I want to make is that you have seen our order executable this quarter end at $329 million and that is a material shift after multiple quarters. The reason why the order executable has moved up, but possibly not as much as it could have is on account of the [ CETA ] drawdown that you had seen 3 quarters back and the Morris impact that we looked at in the last quarter and we called out. However, as you would have noticed order executable has gone up from $320 million to $329 million and the order intake is at a $130 million for the quarter.
Right, and on the profitability front, despite a very strong quarter end, continuous improvement on the margin during the year, but if I have to see from a 9-month perspective of the full year possibly the number that we end up closing would not be significantly better and there has been significant investment that has gone in the SG&A. So what is the SG&A that we would be building for the next year? And also how we try and work out about the sustainability from a profitability perspective which often get impacted by some client related issue or other factors?
So the way we're looking at margins, our outlook on margins for quarter 4 continues to be where Arvind had pointed it out the last quarter. Quarter 4, we expect to hit operating margins of 18%. From our point of view, G&A cost, if there is a reduction there is to some extent going to get funneled back into creating the growth momentum that we are talking about and the growth outlook that we talked about for next year for the firm.
So lastly if you could say with the kind of mix of the business that we are operating now and the kind of growth that you are trying to forecast what is in a band that we should ideally be operating at from a EBIT margin perspective?
This is -- I think what we have mentioned is that we typically go down in the first quarter because of the salary hikes and then you kind of keep expanding every quarter going forward, we'll experience the same thing next quarter when we decline in Q1 but it will be gradually increasing over the next 4 quarters, but the overall annual thing would be better than the previous year's.
So you mean to say FY '19 over FY '18?
That's right.
[Operator Instructions] The next question is from the line of Sandeep Shah from CIMB.
Congrats, Sudhir, for the elevation, sooner than expected. Just in terms of the U.S., it looks -- is it -- the belief is correct that most of the peers are saying that the conversion of the deal pipelines is now getting faster converted into deals. So is it also you are foreseeing and it looks like from this quarter's addition of 2 insurance deals out of 3 deals, we are now successful in terms of cross-selling the insurance to the U.S. and the opportunity has just started, it could be more for such opportunities going forward?
When today we look at deal pipeline and demand from the U.S., things are looking positive across the 3 industry segments that we are playing in, Travel & Transport, Insurance, and BFSI. And you're absolutely right when you talk about 2 of the large of the top 3 deals coming from that Insurance sector coming in. The deals have come because of 2 things as we see them. One, of course, is the fact that we've been able to even within insurance start targeting sub-segments; and two, because we've also been able to leverage the debt that we built in the insurance products business and start incorporating that in the propositions that we're bringing out to the market. That's how we see this. Overall, the demand outlook across the 3 industry segments that we play in appears to be strong, appears to be stable and the pipeline that [Audio Gap] earlier is coming from across all 3 segments that we play in.
Okay, on the travel side as there are a few large accounts which we had a client specific issue, there were some change in terms of the CIO, CTOs as well. So one can say that largely those issues are behind and those couple of clients are now on a growth path. And second I think the large players are also targeting this vertical, though for them it's a small percentage to the overall revenue. But they are also very -- talking positively and growing the numbers at a high single digit Q-on-Q. So you believe that large players increasing focus on this segment, is there something in terms of a competitive worry for you or you believe no, that's -- the spend would be enough for everybody?
So at this stage answering the first part of your question Sandeep. The issues we referenced earlier in the past around travel clients is firmly in the past. The large travel clients that we've talked about are on a very sharp revenue rebound for us right now. We've grown sharply in those clients and we expect the momentum to continue and it appears it might accelerate further from where it is. So that's question number one for you. Second, travel for us has in some ways represented for many years for a decade or so, a core strength area. The clients that we have happen to be marquee clients, the relationships we have tend to be -- I mean, for a lot of these clients as old as 20 years in terms of relationship tenure and quite honestly at this stage, we're not too worried about Tier 1 players focusing on this sector. I must point out that Tier 1 players have always been focused on this sector. So any large deal and any client relationship that we've operated in over the last 10 years, at least in our top 3 to 5 clients, all the clients have Tier 1 players in the mix for the last 10 years already. So just summing it up, the answer to your second question is not terribly bothered at this point in time around Tier 1 players coming in because they've been there for a while.
Okay, so is it fair to say, FY '19 you will start with almost no portfolio or client specific issues and the momentum would be better on a organic basis [ ex of Morris ] for the FY 2019?
That's correct, [ ex of Morris ], no other issues that we foresee.
Okay, just last thing in terms of the this year has been very good in terms of execution of the delivery, so if you look at the growth which is likely to be a kind of close to double-digit for -- in dollar terms in FY '18, the manpower addition would be close to like 2.5% or 3.5%. So there is a deliberate effort in terms of building more automation to the delivery. So whether we can expect this trend to continue where the revenue per employee may start improving even in FY '19?
We expect it to continue Sandeep, because there are 3 very conscious interventions that we are making into the delivery factory, automation is one pillar that we talked about. We are working through how to make sure that AI injection becomes more systematic, and we're also trying to leverage tools working off the cloud. That trinity, I think, will lead us to the path that we are talking about, which is more automation and a stronger delivery factory getting constructed.
Okay, so this trend can continue in FY '19 as well?
That's how we see it right now, yes.
Okay, just last question on the taxation in the U.S., so firstly just want to ask whether the BEAT provisions of the U.S. are applicable to you, looking at your size, or it's not at all applicable. And if you can give a color on how the effective tax rate will look like in FY 2019?
So this is Arvind here. If you really look at the [ gross receipts ] of NIIT Technologies' business in the U.S., we do not meet the threshold of $500 million, which has been set for BEAT. So it's not applicable to us and we are disqualified by our performance. On the effective tax rate impact, I -- we believe that we should be able to pull -- move [ from 34% to 25% ] would give us a 100 basis point on ETR.
Hello, the voice was not clear.
[Audio Gap] you're talking about the corporate tax in the U.S. or you're talking about something else?
No, I'm talking about the impact of the U.S. tax reforms on the effective tax rate on FY '19 on a consolidated basis.
Yes, yes, it's 100 basis points -- about 100 basis points will be advantageous.
Okay, so for us the ETR will reduce by 100 basis points in FY '19?
Yes.
Okay, any range which you can give, at which range we would be in terms of tax rate?
24%.
24%.
Okay, I may have more questions, will come in the follow-up.
The next question is from the line of Dipesh Mehta from SBICAP Securities.
Just 3 question from my side. Whether now we believe our leadership team is fully in place kind of thing which can drive, fire all cylinder for us to meet double-digit kind of what we are indicating or we still believe there are some gaps, and if there are where you would like to have some changes? Second question is about the deal intake. Do you think [ $120 million, $130 million range ] is sufficient for us to reach to double-digit or you expect that we should monitor it and it should show some uptick, and what that number would be where you are comfortable for sustaining double-digit growth rate. And last question is about Morris, can you help us understand how the decline would be in FY '19, it would be staggered or in Q1 it will be fully reflected?
Thank you for the question, Mr. Mehta. Let me just take each one of them in order, the first question that you had was around the leadership team and whether we believe there are gaps. Sitting where we are right now, we actually see no gaps, but we do see opportunities to augment the leadership team and the augmentation that you might hear about as time progresses is going to be largely in the market, but no gaps is the current assessment that we have. The second question that you had was around order intake and whether USD 120 million to USD 130 million is a figure that we are comfortable with. I think the honest answer to that is it's a number that we are pleased with, because if you look at our numbers over the last 2 quarters around order intake this quarter is $130 million, last quarter was $122 million and the quarter before I believe was a $112 million, right? So we're very pleased with the trajectory around order intake. Obviously, the ambition in line with what I said, the commentary that I provided around planning for double-digit growth for next year means that we will try to keep pushing it northwards. So that's a quick answer around number 2. Number 3, Morris, we do expect Morris to go down along the same trajectory that I talked about. As I said it's going to go down to about a quarter of the revenues. And we do expect as I said $1.5 million impact will come in quarter 4, and we do expect further impact in quarter 1 of next year as well there, yes.
Yes, so question was in Q1 it would be fully reflected or it would be over Q1, Q2 or there -- on subsequent quarter kind of thing?
Most of it near-fully would be reflected in Q1. There shouldn't be anything beyond that.
And last if I can squeeze in more, can you give us the revenue breakup which we generally give Morris, GIS, NITL and those, and with margin?
Absolutely, so the revenue breakup and the currency term I'm using is Indian Rupees million. NITL, the revenue was INR 415 million; GIS INR 347 million; Incessant INR 832 million; Morris INR 342 million.
JV.
For the JV. The number INR 342 million in [ Morris' first quarter JV ].
Yes, so it is comparable with last quarter [ INR 391 million ] or it is different?
It is comparable.
Sir, and what will be the margin of these businesses?
I am looking at the margins, NITL 23%, GIS 23%, Morris 15%, Incessant 20%.
But when Sudhir says, "Morris," -- just a clarification, Sudhir says Morris -- it's a joint venture with Morris. So it's not just Morris, but it includes other clients that the JV has as well.
Yes, so only question is the way earlier we used to give, is there any definition difference now when you say INR 342 million?
No, there is no definition difference.
Dipesh, Abhinandan here, because we do not share client specific revenue numbers, the reason why we had such huge shares, the Morris JV numbers, is because it's a JV. So whenever we have shared those numbers, those always have been for the JV.
The next question is from the line of [ Abdul Karim ] from HDFC Securities.
Congrats for best set of numbers, see, you are expecting margin to be better in the Q4 FY '18, and also could you expect a better margin scenario in coming years, and my question is what the margin lever you are looking at?
So -- go ahead, Arvind.
Okay. So I think that number 1 is the quality of revenues. I think the -- as we grow our digital revenues, the margin profile improves with digital revenues. Second is on obviously the efficiency that we are getting in our delivery organization particularly with automation and now with AI getting injected that's driving even more efficiencies in our execution. So predominantly, these are the 2 margin levers and as far as next stage is concerned I have only shared that there'll be a dip in Q1, but it'll gradually improve through the year in each quarter, and it will be better in FY '19 as compared to FY '18.
The next question is from the line of Vipul Shah from Sumangal Investments.
Congratulations for good set of numbers, I would like your view on utilization rate, which is around 79%, which is on a much lower side if we compare it to last year's. So what is your view on utilization rates? Can we expect it to move significantly higher in coming year?
So Vipul our utilization for this quarter is 79%, 80% is for -- is the number that we are targeting on the outside. It is not our intent to go beyond 80% and 80% given industry benchmarks is a highly competitive number. So as we see it this quarter was 79%, this quarter as you know tends to be normally a softer quarter for firms, and there are follows that happen on the client side, but we are very close to the number that we want to operate at, which is 80%.
[Operator Instructions] The next question is from the line of Sandeep Shah from CIMB.
Yes, thanks for the follow-up, Sudhir, when you say FY '19 double-digit growth you mean to say on a organic basis?
Yes, Sandeep, good question. And I do want to state this clearly. I mean double-digit growth on an organic basis, yes.
Okay, so that means that the deal inflows, which is improving, you have to further improve it and looking at the team and the investments which we are making we are confident enough as of now.
That's correct, Sandeep. So the deal inflow that's coming in as I said I do expect another 2 large deals in quarter 4, and the leadership team that we have right now on the ground and the augmentation we might do in the short to medium term again convinces me that we have what we need to plan for and target the double-digit growth organic that we're talking about.
Okay, and just on the GIS, there was some admin issues in terms of the procurement, this time it looks like there is a fantastic growth in the GIS, is it fair to say that those issues are behind and Q4 being seasonally strong for the GIS so the growth may even continue in Q4?
So those issues were around rate contract and supplies which actually still continue, because the DGS&D contracts are not fully uploaded under the new [indiscernible] platform. So this quarter we've been able to find ways around some of those problems, but those problems still persist and we expect those to get cleared in this quarter to have a better growth in Q4.
Okay, so the seasonality may even continue in 4Q with the Q-on-Q [ growth trend ] coming in?
That's right.
[Operator Instructions] The next question is from the line of [ Ganesh Shetty ], he's an individual investor.
Congratulations, sir and very happy to see the all-round performance of NIIT Technologies. Sir, can you please throw some light on RuleTek integration and the revenue from RuleTek and how we are moving ahead with RuleTek acquisition going forward?
Yes, thank you, [ Mr. Shetty ] for the question. We don't call out separately the revenue for RuleTek, but the integration that you referred to has been going well. We are very pleased with the fact that both organizations, not just operationally and not just financially, but even culturally seem to have worked very well. We see clear revenue momentum coming in from the RuleTek acquisition as well and the overall integration, the overall synergy that was expected seems to be playing out exactly as per plan. So we have positive news on that front, almost on the same lines as we experienced [ as we had within our September target ].
And sir, my second question is regarding Lloyd insurance market, how the business over there is shaping up?
So there, [ Mr. Shetty ], the business again is shaping up very well in the Lloyd's market in London. The entity that has been servicing that business has shown positive revenue momentum once again. The business plan that we had for this year for that business has been slightly exceeded and the outlook for next year again appears to be positive.
The next question is from the line of [ Govind Agarwal ] from Antique Stock Broking.
Yes, congratulations to the management team on a very good execution and to Sudhir on earlier elevation. I had one question on the last deals which is that you had won against Tier 1 companies. So can you throw some light on what is helping us win against Tier 1 companies and how do we see competition over there?
Sure. [ Mr. Agarwal ], if I look at the 3 large deals that we called out 2 of them came from the insurance vertical. What allowed us to win there were 2 or 3 different factors, factor number 1 was when it comes to insurance and when it comes to our expertise we have been focused on not just a broad segment like insurance but within very sharp sub-segments. That expertise was called out in the proposal and during the entire deal cycle. The second thing that worked for us is, within insurance, we have over the years built very strong partnerships with the leading product providers in that space specifically [ DuckCreek and CSC ]. That experience, that alliance, again came into play here. And the third piece that worked very well for us was the fact that we also have an insurance product in Europe, and the positive rub-off of the experience of running a product business where you need a lot of domain and technology depth also played out in the proposals that we had put out there. So there was a lot of positivity that came from that front I'll very quickly add a flavor around the third large deal. The third large deal was largely digital led in a client where the revenue also is predominantly digital and has seen a very sharply accelerated growth curve for us. So the digital expertise around automation, around digital experience, around emotionally empathetic experience that we've taken to market again has played out and allowed us to secure the third one.
And if you could also throw some light on the deal sizes, total deal wins of large deals and how will they ramp-up across FY '19?
So the way we define a large deal, [ Mr. Shetty ] (sic) [ Mr. Agarwal ] is a deal with DCT of greater than $20 million. Each one of these deals was not of $20 million, and as you can imagine all of these were secured in quarter 3, all of them are multiyear deals so the revenue flow will definitely go into fiscal year '19 and beyond.
Sure, and one last question on Morris JV, see when we say Morris revenue will go to become 1/4 of the original size so what is our revenue over here INR 342 million is more than that right, is not the revenues will go down?
As I said the number will become a quarter of the revenue that we derive from Morris as a client not a quarter of the overall JV number. So from Morris as a client which is part, which is a subset of the overall JV number, the revenue will come down to a quarter.
The next question is from the line of [ Dhanshree Jadhav ] from [ Anvil Shares and Stock Broking ].
Congrats to the management on good set of numbers, I have a question related to the government vertical, just wanted to know what are, I mean how the project, smart city project is panning out and if you can throw some more light on it and the revenues that we would get from it in FY '19?
So the business in smart cities that we do is in our GIS technology, where GIS is a core component of a smart city solution. So that business actually is the one which has grown significantly, and in fact it has grown on the back of the opportunities that we've seen in smart cities. We now see a large number of system integrators engaged in this activity and we have been able to partner with these system integrators with our platform, which is now becoming more or less the de facto standard for GIS in smart cities.
If you can throw some light on what is the revenue that we could see coming from this side of the business considering that the guidance that you have given of double-digit growth for FY '19?
Well, the [ gross revenue ] will come from international markets, because as I mentioned earlier the focus of the organization is to drive business in our international geographies there is not focus in our domestic -- particularly the government business we don't have that focus. Smart cities is not treated as government business, because we work with system integrators as well as SPVs that have been created for engaging with smart cities.
[Operator Instructions] The next question is a follow-up from the line of Sandeep Shah from CIMB.
Yes, sorry for coming again, just on the large deal wins which has happened in this quarter is it fair to say all the 3 are a fresh business, new business, not any part of the renewal coming into this?
No, not all of them are new business Sandeep, but half or more than half in some cases is new business, incremental business.
Okay, so you are talking of the $130 million, half of that, or you are talking just for these 3 business?
I'm talking about the 3 large deals, Sandeep, that we talked about.
Okay, and even the chasing, which we are doing and hoping to close 2 new deals in this quarter even that split could be more for fresh or new business or it's evenly spread out on renewal and fresh?
It'll be higher than what we've realized in quarter 3. So the new component will be likely even higher than the number I just talked about for quarter 3.
Ladies and gentlemen, that was the last question. I now hand the conference over to Mr. Arvind Thakur, Vice Chairman, NIIT Technologies for closing comments.
Thank you everybody for joining us on this call. I think now with Sudhir at the helm the company enters into a new era of growth with a fresh perspective particularly with the new leadership team that he's inducting as part of his organization. We look forward to his leadership to embrace the new opportunities particularly around new technologies. With that we conclude this conference. Thank you very much for joining us.
Thank you. On behalf of NIIT Technologies Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.