Bluspring Enterprises Limited — Q3 FY26

Bluspring Enterprises Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=-Lktl17avaU Published: 3 months ago

0:01 1 second Ladies and gentlemen, good day and welcome to the Blue Spring Enterprises Limited Q3 FY26 Earnings Conference call hosted by IIFL Capital Services Limited. 0:13 13 seconds As a reminder, all participant lines will be in the listenonly mode and there will be an opportunity for you to ask questions after the presentation 0:22 22 seconds concludes. Should you need assistance during this conference call, please signal an operator by pressing star then 0:29 29 seconds zero on your touchstone phone. Please note that this conference is being recorded. I would now like to hand the 0:36 36 seconds conference over to Mr. Nibod Shetty from Blue Spring Enterprises. Thank you and over to you sir. 0:45 45 seconds Good morning everyone. Thank you for joining Blue Spring Enterprise Limited Q3 FI26 earnings call. At this point, I 0:52 52 seconds would like to highlight that today's discussion may include some further forward-looking statements which are based on current expectations and are subject to business risk, regulatory 1:01 1 minute, 1 second changes and macroeconomic conditions. We do not guarantee these statements or results and are not applied to update them at any given point of time. These 1:10 1 minute, 10 seconds statements should be read in conjunction with the safe harbor clause outlined in on slide number two of our investor presentation. With that backdrop, I hand 1:18 1 minute, 18 seconds the call over to our CEO Mr. Kamill Paluda. followed by Mr. Papuler a CFO for the opening remarks. 1:27 1 minute, 27 seconds Thank you Nebot. Good morning everyone and thank you for joining the call today. Let me begin by sharing some brief context on Blue Springs operating 1:35 1 minute, 35 seconds environment during the quarter. In the continued push towards formalization of employment, the government notified the new labor codes in November after 1:43 1 minute, 43 seconds announcing employment linked incentive schemes in August. These codes significantly simplify the earlier framework of labor laws and remove 1:52 1 minute, 52 seconds ambiguities around the calculation and payment of statuto dues. We believe the implementation of these codes will act 1:59 1 minute, 59 seconds as a tailwind for fully compliant formal employers as it will become increasingly difficult for principal employers to 2:06 2 minutes, 6 seconds work with non-compliant vendors. As mentioned in our Q3 disclosures, we have provided for a onetime cost related to 2:13 2 minutes, 13 seconds higher graduity and leave-in cash. These costs are onetime in nature and going forward we expect both revenue and margin tailwinds from the implementation 2:22 2 minutes, 22 seconds of both the labor codes as well as the ELI schemes. Now let's discuss Q3 and 9 months performance. 2:30 2 minutes, 30 seconds Blueprinting recorded Q3 revenue of 844 crores excluding the investments vertical. This represents an increase of 2:37 2 minutes, 37 seconds 10% yearon year and 1% quarteron quarter. The 10% year-on-year revenue growth was driven by new sales additions 2:45 2 minutes, 45 seconds in the facility management and security verticles. Quarteron quarter growth remained flattish due to the industrial vertical as weakness in telecom network 2:54 2 minutes, 54 seconds rollouts persisted throughout the quarter. For 9 months, the revenue stood at 2458 3:01 3 minutes, 1 second crores, an increase of 12% year-on-year with all the three verticals clocking doubledigit growth year on year. Our revenue base 3:10 3 minutes, 10 seconds continues to be well diversified across customers and sectors with the top 30 customers contributing only 49% of 3:18 3 minutes, 18 seconds revenue and eight different sectors each contributing more than 5% of overall revenue enhancing the robustness of our 3:26 3 minutes, 26 seconds business. Q3 AITA stood at 32 crores, an increase of 12% yearonear and 12% 3:33 3 minutes, 33 seconds quarteron quarter while 9 months AITA remained flat at 85 crores. As discussed in the earlier calls, flat AITA on a 3:41 3 minutes, 41 seconds 9mon basis due to investments in leadership and sales team enhancements. 3:45 3 minutes, 45 seconds As these investments continue to get absorbed by the revenue growth, EITA growth will only pick up as evidenced by the 12% quarter-on-quarter growth this quarter. 3:54 3 minutes, 54 seconds The sales engine continues to perform strongly. In 9 months, we have secured contracts worth 278 crores across 4:01 4 minutes, 1 second facility management, food and industrial verticals. The security vertical deployed over 2,000 guards during the year from new sales only. The sales 4:10 4 minutes, 10 seconds pipeline remains strong and will continue to drive growth in the coming quarters. Moving on to segment wise updates, 4:18 4 minutes, 18 seconds starting with facility and food services. This segment had a solid quarter with Q3 revenue of 521 crores growing by 11% yearon year. The 4:27 4 minutes, 27 seconds year-on-year growth was driven by new contract mobilizations. 4:31 4 minutes, 31 seconds 9 months revenue stood at 1511 crores, a growth of 13% yearon year. New sales continued to be strong in Q3 with 4:38 4 minutes, 38 seconds business winning contracts worth 79 crores of ACV. Industrial and healthcare were the major drivers for new sales. 4:46 4 minutes, 46 seconds with strong Q3. The total ACV won for the year stood at 189 crores for this vertical. 4:54 4 minutes, 54 seconds In housekeeping focus on quality deals has seen the new deals being won at 150 to 200 basis points higher margins 5:02 5 minutes, 2 seconds versus last year with growth drivers in place. The business is now focusing on margin improvement initiatives through efficiency gains, accelerating digital 5:11 5 minutes, 11 seconds adoption across processes and vendor consolidations. Moving on to telecom and industrials. 5:18 5 minutes, 18 seconds Starting with safety updates, I'm happy to report that our industrial vertical once again logged zero fatalities and lost time injuries in quarter 3. The 5:26 5 minutes, 26 seconds industrial vertical has now logged over 19,000 health and safety training hours in 9 months itself. 5:33 5 minutes, 33 seconds Q3 revenue remains lattish at 151 crores as delayed rollouts by telecom majors continue to hamper the telecom business 5:40 5 minutes, 40 seconds growth. However, timely cost optimization efforts around resources, tools, and vendor optimization ensured profitability growth with business 5:48 5 minutes, 48 seconds delivering doubledigit AITA margins during the quarter. We expect telecom rollouts to pick up in quarter 4, driving high singledigit quarteronquarter revenue growth. 6:00 6 minutes The segment reported 9 month revenue of 458 crores, growing 10% year-on-year on the back of new sales done earlier 6:07 6 minutes, 7 seconds quarters. In the industrial sub segment, our focus on transitioning from a manpower provider to a strategic operational partner continue to yield 6:15 6 minutes, 15 seconds results. As we won a 20 cr ACV contract for consolidated electrical and instrument maintenance for a large manufacturing client, this contract will 6:24 6 minutes, 24 seconds be mobilized in quarter 4. Excluding this industrial vertical has won 51 crores of ACV for the 9 months uh in the 6:32 6 minutes, 32 seconds current financial year. As I mentioned during Q2 earnings call, our telecom active infra business is focusing on 6:39 6 minutes, 39 seconds diversifying its revenue streams. The business took a significant step in that direction with the first overseas project where we are now deploying 50 plus resources outside the country. 6:50 6 minutes, 50 seconds Moving on to security business, the business continued its upward trajectory in Q3 with revenue of 173 crores, a 15% 6:58 6 minutes, 58 seconds year-on-year increase. Similarly, the business clocked 9 months revenue of 489 crores, an increase of 14% yearonear. 7:06 7 minutes, 6 seconds This is powered by headcount addition of around 2,500 over last 12 months, a growth of 12% yearonear. 7:13 7 minutes, 13 seconds While the Q3 focus was on operational consolidation, the business continued to add new logos. In Q3, we deployed 594 headcount against the new contracts won. 7:23 7 minutes, 23 seconds The new sales have now added over 50 new logos in the present financial year. As mentioned in the Q2 call, strengthening of sourcing channels continue to be the 7:32 7 minutes, 32 seconds key focus area in this segment. We have invested in the sourcing team throughout the year and we are starting to see some early results in improved deployments. 7:41 7 minutes, 41 seconds With both sales and sourcing team in place, we are confident of achieving similar growth trend in the coming quarters. 7:50 7 minutes, 50 seconds Moving on to founded our AI powered job search platform which delivered a revenue of 18 crores in quarter 3 with 7:57 7 minutes, 57 seconds 45% sales productivity increase in quarter 3 over quarter 1. For Q3 our key focus levers for sales were driving new 8:04 8 minutes, 4 seconds productivity improving renewal rates and optimizing our channel mix on platform product revamp is completed with better 8:11 8 minutes, 11 seconds UI UX for both seekers and recruiter while positioning founded as a skill first platform. Focus for Q4 would be on 8:20 8 minutes, 20 seconds strategic sales and marketing spends to accelerate growth. I will now hand over to our CFO Pruler for the financial deep dive. Over to you Raful. 8:30 8 minutes, 30 seconds Thank you Kuml and a very good morning to all of you present in this call. At the onset I would like to speak about the elephant in the room the new labor 8:38 8 minutes, 38 seconds code. As you are aware the government has now implemented a major reform that has been in progress for several years. 8:45 8 minutes, 45 seconds 29 separate labor laws have been consolidated into transports. These reforms are aimed at strengthening compliance, ensuring timely wage 8:54 8 minutes, 54 seconds payments, formalizing employer employee relationships, and addressing the long-standing issue of labor exploitation in unorganized sectors. In 9:03 9 minutes, 3 seconds the immediate term, these changes do have an impact on operating costs. We have assessed an incremental liability 9:10 9 minutes, 10 seconds of 29.8 relating to past service cost in graduity and leave liabilities. We expect that these cost will largely be 9:18 9 minutes, 18 seconds passed to the clients over time as we have enough safeguards in our contract terms that allow us to revisit pricing in every event of statutory revisions. 9:28 9 minutes, 28 seconds We have already initiated discussions with clients on revised revision of wages to comply with the new labor code. 9:35 9 minutes, 35 seconds While such discussions will take some time to conclude, in the interim, management has taken a prudent approach and recognize this as a one-time charge 9:43 9 minutes, 43 seconds as a balance sheet debt. Given its regulatorydriven nature, materiality and non-recurring characteristics, this 9:50 9 minutes, 50 seconds impact has been classified as an exceptional item in our financials. Now, I will take you through the consolidated financial performance excluding founded 9:59 9 minutes, 59 seconds for quarter before discussing segment wise results and other corporate updates. We reported a consolidated revenue of 844 crores for the quarter. 10:09 10 minutes, 9 seconds It's a 10% year-on-year and 10% sequential growth. Yearon-year growth was driven above facilities, food, inial 10:17 10 minutes, 17 seconds and security solution verticals. While we saw some headwinds in telecom vertical due to slowdown in rollouts of new projects. During the quarter, we 10:26 10 minutes, 26 seconds have mobilized close to around 39 new contracts contributing to a ACV of 89 crores. We continue to have a well 10:34 10 minutes, 34 seconds diversified sector base with top three sectors that is industrials, commercial spaces and government and public infra 10:41 10 minutes, 41 seconds continue to contribute to close to around 50% of our revenue base. 10:46 10 minutes, 46 seconds EITA for the quarter stood at 32 crores which is up 12% yearonear and sequentially. EITA margins have improved 10:54 10 minutes, 54 seconds by 37 basis points over the last quarter to 3.8% 8% in line with our margin guidance as given in the previous 11:02 11 minutes, 2 seconds quarters. The strong growth in EITA and expansion of margins was aided by volume growth in food facility and security 11:10 11 minutes, 10 seconds space with new contracts being mobiliz mobilized at better margins. Margin expansion in food was seen as generally 11:17 11 minutes, 17 seconds in Q3 is a strong quarter for the education sector. 11:22 11 minutes, 22 seconds Second, we saw some efficiencies across businesses arising out of shared services teams consolidations. 11:29 11 minutes, 29 seconds Our for the quarter stood at 19 crores. 11:32 11 minutes, 32 seconds The part was upon 14. 11:37 11 minutes, 37 seconds EPS for the quarter stood at 1.2 per share. 11:41 11 minutes, 41 seconds Our interest cost has spiked by 3 crores of which 2.2 2 crores was due to true up of fair valuation of put liability of an 11:49 11 minutes, 49 seconds acquisition of Ved's remaining 1% equity. We continue on our previously stated trajectory of reducing DSOs and 11:57 11 minutes, 57 seconds net debt levels. As of 31st December, our net debt level is 107 crores, a reduction of 29 crores quarteron 12:05 12 minutes, 5 seconds quarter. While our DSO stands against 105 days reported in the last quarter with innovation activity largely 12:14 12 minutes, 14 seconds behind us, we are on course to bring net debt levels to serve and levels as guided earlier. 12:20 12 minutes, 20 seconds Moving now towards performance, our facilities and food verticals continues to be our largest segment contributing 12:27 12 minutes, 27 seconds to 60% of our revenues. This vertical grew 11% yearonear and 1% sequentially to 521 12:36 12 minutes, 36 seconds growth driven by continue client additions during the quarter with an annual contract value of 79 12:43 12 minutes, 43 seconds as reiterated in previous quarters. Our focus remains strongly on profit. We added new across 12:53 12 minutes, 53 seconds sir could you please come a little closer to the microphone? Your voice is a little distorted every now and then. 13:05 13 minutes, 5 seconds Is it better now? Yes sir. Please go ahead. Thank you. Hello. Yes sir. Please go ahead. 13:11 13 minutes, 11 seconds Okay. So I'll just Yeah, I'll just repeat the previous one. Our facilities and food services business continues to be our largest segment contributing to 13:19 13 minutes, 19 seconds 60% of our total revenues. This vertical grew 11% yearonear and 1% sequentially to 521 crores. This growth was driven by 13:29 13 minutes, 29 seconds 20 new client additions during the quarter with an annual contract value of 79 crores. As reiterated in the previous 13:36 13 minutes, 36 seconds quarters, our focus remains firmly on profitable growth. We added new clients across education, commercial, BFSI and 13:44 13 minutes, 44 seconds healthcare sectors. AITA for this segment stands at 4.5% a 50% bas 50 basis points jump from the previous 13:52 13 minutes, 52 seconds quarter. This was aided due to our food performance gaining momentum in education sector and new contracts coming at higher margins during the 14:00 14 minutes quarter. Commencement of our new central kitchen in Whitefield area remains on track and we expect the same to be operational starting next quarter. 14:09 14 minutes, 9 seconds Our telecom and industrial segment reported a revenue of 151 crores a growth of 2% yearonear and down sequentially by 3%. 14:20 14 minutes, 20 seconds Telecom business performance was muttered as network operators have briefly slowed down new network rollouts as mentioned earlier in our industrial 14:29 14 minutes, 29 seconds vertical. We have begun to reposition ourselves as an end toend O andM player in line with our long-term strategy to move away from traditional manpower 14:37 14 minutes, 37 seconds supplies and labor arbitrage businesses to SLA based. EITA for this vertical stands at 9.9% for the quarter, a 160 14:46 14 minutes, 46 seconds basis points jump. The strong EITA growth was aided by one-time shutdown activities, ACL improvement on account of better collections. 14:54 14 minutes, 54 seconds A security services business delivered another strong quarter with revenues up 15% yearonear and 3% sequentially to 173 15:03 15 minutes, 3 seconds crores. In 9 months, we have mobilized close to around 2,500 plus headcounts. 15:08 15 minutes, 8 seconds However, the evita for the business was muted for the quarter due to certain one-offs on bonus billings and provisioning towards receivables. 15:17 15 minutes, 17 seconds Investments in founded uh coming to founded u revenues for the quarter were 18 crores. We continue to maintain our 15:25 15 minutes, 25 seconds evita losses at similar levels as last quarter. We are confident that our new initiatives and revamp product will 15:33 15 minutes, 33 seconds start seeing some traction soon and it would reflect in the numbers. 15:38 15 minutes, 38 seconds To conclude, we are a company that has consistently delivered strong results since our listing. We remain confident 15:46 15 minutes, 46 seconds that we firmly are on course to achieve the guiding principles that we set out to ourselves and are committed to building on this momentum as we move 15:54 15 minutes, 54 seconds forward. Thank you again. Now the floor is open for Q&A session. 16:00 16 minutes Thank you. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on their touchstone telephone. 16:10 16 minutes, 10 seconds If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. 16:20 16 minutes, 20 seconds Ladies and gentlemen, we will wait for a moment while the question queue assembles. 16:27 16 minutes, 27 seconds Our first question comes from the line of Kushi Kapoor from Nan Capital. Please go ahead. 16:35 16 minutes, 35 seconds Uh hello this is Kushi James from Gen Cap. Uh so my first question is that uh 16:42 16 minutes, 42 seconds the founded revenue has decreased almost 27% yearon year basis. So but the 16:51 16 minutes, 51 seconds whole business of digital has been increasing by 15%. So at what time does the board consider that uh we 17:01 17 minutes, 1 second are going to divest our assets or sale of the asset is like a specific uh 17:08 17 minutes, 8 seconds deadline for the third round because it is impacting the consolidated margins. 17:20 17 minutes, 20 seconds Uh is it the only question? Kushi, you said this is the first question. 17:29 17 minutes, 29 seconds Kushi, do you have will record? Hello. 17:34 17 minutes, 34 seconds Yes, Kushi. Please go ahead. Any more questions? Yes, please go ahead. Yeah, more questions. 17:47 17 minutes, 47 seconds side. So you've writted out the revenues have dropped uh you know 17:57 17 minutes, 57 seconds I'm sorry to interrupt sir your voice is distorted again. Uh if you could come a little closer to the microphone. 18:05 18 minutes, 5 seconds Sir uh our apologies for not having a uh you know clear line. Am I audible now? 18:12 18 minutes, 12 seconds Yes, much better. Thank you. 18:15 18 minutes, 15 seconds Okay. So, uh as mentioned in the present earnings call, uh you know, most of the product related work and investments is 18:22 18 minutes, 22 seconds complete. Uh you know, the product uh revamp is now completed with a better UIUX for both seeker and recruiter. Uh 18:29 18 minutes, 29 seconds we're extremely confident that you know there'll be a upward revenue trajectory starting with this current quarter onwards. And in the you know run-up to 18:38 18 minutes, 38 seconds this we've also been bringing down our uh uh cost base to levels that you know 18:45 18 minutes, 45 seconds we have uh visibility of break even uh in next three quarters. So uh it has 18:52 18 minutes, 52 seconds probably taken you know three to four quarters more than what we had originally anticipated. 18:58 18 minutes, 58 seconds uh but uh like I said you know with with a revamp product and the strategic u sales and marketing spends that we are 19:05 19 minutes, 5 seconds doing uh presently we expect the revenues to significantly go up starting with the current quarter itself. 19:15 19 minutes, 15 seconds Okay, got it. So you're saying that uh the break even which is going to happen by next quarter uh which it will take 19:24 19 minutes, 24 seconds like three to four more quarters correct and Okay. 19:31 19 minutes, 31 seconds Okay. Thank you. Thank you. 19:36 19 minutes, 36 seconds Our next question comes from the line of Adar Spincha from Nijen Capital. Please go ahead. 19:44 19 minutes, 44 seconds Hello. Am I audible? Yes. 19:48 19 minutes, 48 seconds Yes. So my question was uh regarding the invest. 19:57 19 minutes, 57 seconds So my question was you have guided for founded break even by the end of FI26 but with revenue shrinking is break even 20:05 20 minutes, 5 seconds being achieved through cost cutting it might hurt future growth or do you see a genuine revival in recruitment demand? 20:13 20 minutes, 13 seconds If not, what is your plan B if you lost being in FI27? 20:21 20 minutes, 21 seconds Sure. Uh thanks for your questions. Uh so see we've used this year to do two three different things with Foundate. 20:30 20 minutes, 30 seconds One is on the product itself. uh we've revamped the product and you know uh the product obviously is now with much 20:37 20 minutes, 37 seconds better UIUX much much better search capabilities and we have some uh fantastic feedback from a lot of clients 20:45 20 minutes, 45 seconds to whom we have taken this new product only in the current quarter which is Q3 uh we've got some very encouraging feedback and we are confident and this 20:54 20 minutes, 54 seconds should now help us uh go back to the uh regular revenue trajectory of you know 25 plus crores a quarter which we used 21:01 21 minutes, 1 second to see in founded earlier Okay. Uh we we feel that you know starting Q4 onwards, current quarter onwards, we should be able to see that uptake in the revenue. 21:10 21 minutes, 10 seconds Uh and you know in in a runup to the product revamp we had actually reduced our spend base and brought down Founded 21:17 21 minutes, 17 seconds to uh you know a year back when founded used to we had almost a 45 crores a quarter kind of spend base to a present 21:25 21 minutes, 25 seconds year 30 crores quarter kind of a spend base. So we've right sized the company made it a very agile company and also 21:33 21 minutes, 33 seconds got the product up now with some strategic uh continent of uh reviving uh the P&L and 21:42 21 minutes, 42 seconds uh like I said you know we look forward probably another three quarters for a break even uh and I think we'll start 21:50 21 minutes, 50 seconds seeing uptake in the revenue starting this quarter itself. 21:58 21 minutes, 58 seconds Okay, thank you sir. 22:01 22 minutes, 1 second Thank you. Our next question comes from the line of Kausto Babna from BMSPL Capital. Please go ahead. 22:10 22 minutes, 10 seconds Yeah. Hi, thanks for taking my question. 22:12 22 minutes, 12 seconds So wanted to understand exactly how you feel margins will expand due to the new 22:20 22 minutes, 20 seconds labor code. also wanted to understand uh you know what's the update and 22:27 22 minutes, 27 seconds correct me if I'm wrong uh wasn't the government supposed to notify on a 22:32 22 minutes, 32 seconds universal bas minimum wage which they still haven't or have or have you all got some communication 22:40 22 minutes, 40 seconds uh could you please speak a little bit about this sure thank you kto this is pupul here uh 22:48 22 minutes, 48 seconds on this labor code uh it was a notification uh given by government of India on 21st November. Certain 22:56 22 minutes, 56 seconds clarifications on other aspects of uh national floor wages is still not announced but there are many laws that 23:04 23 minutes, 4 seconds is already uh effective immediately. Uh so based on those uh clarifications or 23:12 23 minutes, 12 seconds already law we have taken a liability uh based on the assessment of our graduity and leave components. Now uh to your 23:21 23 minutes, 21 seconds question as to what will happen to the margin profile post implementation of uh labor code. Uh so this is an exercise 23:30 23 minutes, 30 seconds not uh different from any of the minimum wages change that happen twice in in a year for every state or once in every uh 23:38 23 minutes, 38 seconds once in every year. So basically it will be a discussion between us and the customer. uh this time the additional 23:45 23 minutes, 45 seconds thing that we have to do is uh we have to actually see what is the right structure for an employee which is a discussion that we have to have a client 23:54 23 minutes, 54 seconds and our contract allows us majority of any changes towards the statute be passed back to the customer we don't see 24:01 24 minutes, 1 second any margin uh profile coming down because of labor code yeah if I may add cost while obviously 24:09 24 minutes, 9 seconds the downside is not there but there is a huge potential upside As these codes have obviously stringent compliance uh 24:18 24 minutes, 18 seconds requirements and we believe that it's going to be increasingly difficult for people to work with non-compliant 24:25 24 minutes, 25 seconds wonders and with you know nationally scaled safety first and high compliant environment in which we operate. We 24:32 24 minutes, 32 seconds believe that this could be a tailwind opportunity for players formalized players like blueprint. So basically you're saying your bargaining power 24:40 24 minutes, 40 seconds should increase with your customer. But but if you could please elaborate a 24:47 24 minutes, 47 seconds little bit on the codes that are already passed and will the codes that are already passed will they already start 24:57 24 minutes, 57 seconds impacting unorganized competition and why so? And 25:03 25 minutes, 3 seconds isn't the what the the announcement of the national minimum wage one of the 25:10 25 minutes, 10 seconds most important aspects of this code of the of this labor code and we can't really have the labor code to its full 25:17 25 minutes, 17 seconds effect until that's announced because obviously every state has different minimum wages right now and it's all very scattered. 25:28 25 minutes, 28 seconds Yeah. Sure. So let me attempt it's a very elaborate subject to be covered on an IR call but let me attempt that cost. 25:35 25 minutes, 35 seconds Uh there were 29 codes as mentioned by Proful and the 29 codes have been replaced by four codes now and the four 25:42 25 minutes, 42 seconds codes are already into existence. So to your question whether uh you know there needs to come something for let's say non-organized players. No the answer is 25:51 25 minutes, 51 seconds that codes have been already notified and they are already in place. So there were four codes on wages which have been replaced by a single code called the 25:59 25 minutes, 59 seconds code of wages. Uh you know there were almost 13 legislations on health and 26:06 26 minutes, 6 seconds working conditions which has been replaced by a single code called the OSH code. Uh there were almost nine existing 26:14 26 minutes, 14 seconds legislations on social security which has been replaced by a single code on social security. And then there were three separate legislations on the 26:22 26 minutes, 22 seconds industrial relations which has been again consolidated into one industrial relations code and all of them are already effective. Uh what we meant by 26:29 26 minutes, 29 seconds the minimum wages there is an expectation that government will come with a minimum floor wage which will be at a national level moving away from the 26:37 26 minutes, 37 seconds present statewise minimum wages. So that's something yet to be notified uh which you know once gets notified will have effect immediately. However, in 26:46 26 minutes, 46 seconds terms of the key changes which has already been done is there is a clarity now in the definition of wages, what has to be considered and what has to be 26:55 26 minutes, 55 seconds excluded and what will become let's say base for calculation of gratuty what tenurs to be considered what will be the 27:03 27 minutes, 3 seconds uh definition of a fixedterm employment and you know related obligations on employers towards graduity and leave 27:11 27 minutes, 11 seconds catchment. So there is abandoned clarity on some of these aspects and are already effective and hence you would see not just us but a lot of companies have 27:18 27 minutes, 18 seconds taken significant provisions. In our case we've taken a 29 crores provision which is a one-time effect which we 27:25 27 minutes, 25 seconds believe uh since most of our contracts have clauses where these statuto changes are passed through. We should be able to 27:33 27 minutes, 33 seconds over the course of next six months work with our thousand plus clients and uh you know effect the changes of the new labor code. 27:42 27 minutes, 42 seconds Okay. Okay. Thank you so much. Thank you. 27:47 27 minutes, 47 seconds Thank you. The next question comes from the line of Anand Mundra from my temple capital. Please go ahead. 27:55 27 minutes, 55 seconds Hello. Uh thank you for the opportunity sir. Uh so I had a few questions. uh one was uh the labor code charge that we've 28:03 28 minutes, 3 seconds uh put as an exceptional item that you charge on the on the P&M is this recoverable from the client that was question number one uh the second 28:11 28 minutes, 11 seconds question was as you mentioned that over 6 months you'll probably sit down with your client and uh you know uh revise 28:18 28 minutes, 18 seconds how the wage is structured salaries are structured so do you expect some kind of margin volatility or some kind of a revenue headwind over the next 6 months 28:26 28 minutes, 26 seconds as things stabilize And uh number three was that there was also a CLI scheme uh that the government had announced which 28:35 28 minutes, 35 seconds has now been notified I think from 1st August uh 2025. So have you worked around any numbers of how much that 28:42 28 minutes, 42 seconds could benefit us on the bottom line. So these are the three questions mainly around labor codes and 28:51 28 minutes, 51 seconds yeah thank you for that question. So let me cover the first aspect on the recoverability of whatever is the cost 28:58 28 minutes, 58 seconds that we have already provisioned for. So this 29 crores that you can see has two splits in this one is the core employees 29:06 29 minutes, 6 seconds of,400 people that we are having that is not passable back to the customer that is close to around 9 crores. So the 29:13 29 minutes, 13 seconds remaining uh 20 odd crores is what we have taken for what we call it as associate population who are our revenue 29:19 29 minutes, 19 seconds generators. So these cost on graduity and uh leave in cashment as iterated earlier we have to go back to the 29:26 29 minutes, 26 seconds customer uh and actually get uh we have a legal u framework already agreed with the customer which allows us to go back 29:34 29 minutes, 34 seconds and recover these cost. However we have to have such discussions with the customer before uh changing any of the 29:42 29 minutes, 42 seconds structure of wages and enhancing the cost. So that's why we have not recognized any unbuild revenue towards 29:49 29 minutes, 49 seconds these cost inflations during the quarter which we believe that uh should be predominantly a uh a revenue accurative 29:57 29 minutes, 57 seconds in the future quarters to come. So that's answer number one on the margin profile for your second question. We as 30:05 30 minutes, 5 seconds iterated earlier we don't see any margin uh profile tailing down because of labor code changes. In fact, we have some 30:13 30 minutes, 13 seconds tailwinds coming through because uh this will put everybody into a framework of all statutories and retires to be taken 30:20 30 minutes, 20 seconds at a uh particular level which will only enhance uh organized players like us in terms of either uh continuing with the same margin profile or enhancing it. 30:31 30 minutes, 31 seconds Number two, uh what was your last question? 30:33 30 minutes, 33 seconds That was on the uh ELI schemes. Ei schemes are effective from 1st of August. There are two parts of the 30:41 30 minutes, 41 seconds incentivization. One is towards the employer and one is towards the employees. Uh both these incentives are 30:48 30 minutes, 48 seconds only going to become due end of February after completion of the first 6 monthly cycle of the scheme. So we uh from 1 30:56 30 minutes, 56 seconds August we've been doing our workings and uh you know calculating the impacts but you know being a government scheme we 31:04 31 minutes, 4 seconds would want to uh recognize this only on received basis because this will be a first time that you know such a scheme 31:11 31 minutes, 11 seconds is announced. So we will wait for the money to be credited which may take a couple of months post it becoming due. 31:19 31 minutes, 19 seconds So the first date it becomes due is 1st of March after let's say the new set of employees have completed a minimum period of 6 months. Uh post which there 31:26 31 minutes, 26 seconds will be obviously some compliances that government would want us to do in terms of filing certain returns for claiming this money. uh and once this money is 31:35 31 minutes, 35 seconds received uh is when we would want to account it in the books and uh you know most likely that will happen either in the current quarter Q4 or Q1 of next 31:43 31 minutes, 43 seconds year and we'll come back to the uh investor community to share the impact as and when we receive this amount. 31:51 31 minutes, 51 seconds Got it. Got it. So just one more follow up on the labor code answer that you mentioned. Uh so just want to understand 31:58 31 minutes, 58 seconds this this quarter our revenue growth has been slightly weed as compared to the previous quarter. Are there any headwinds because of this Liverpool where clients are trying to understand 32:06 32 minutes, 6 seconds what the impact is and then take a call on new contracts and new hiring? 32:12 32 minutes, 12 seconds One more question as a followup to the Liver and and the other question was also like just want to understand do we also get benefits of ATJ on the tax side 32:21 32 minutes, 21 seconds just want to understand how should we look at our tax rates and also because we've I think had some accumulated losses because of impairments. So do we 32:29 32 minutes, 29 seconds I mean do we have any carry forward losses or we recognize GTA for those carry forward losses? 32:36 32 minutes, 36 seconds Yeah. So I'll take the first uh aspect of muted growth. You're right. Uh quarter and quarter at a blended level our operating businesses have uh 32:44 32 minutes, 44 seconds sequentially grown by 1%. Wherein you can see this uh telecom has telecom industrial verticles they grow by 3%. So 32:53 32 minutes, 53 seconds what we see is uh starting from September onwards uh the new rollouts and the network rollouts uh that we had 33:01 33 minutes, 1 second uh uh received the plans from the telecom operators have not happened. Uh it has slowed down. Uh that is the reason we see that telecom uh vertical 33:10 33 minutes, 10 seconds has seen a slight dip uh in revenue as against what we had planned. Uh in terms of our uh security business uh it's 33:19 33 minutes, 19 seconds grown 3% uh quarteron quarter which is on course. Our facilities and food business uh saw some uh revamp in terms 33:26 33 minutes, 26 seconds of the entire client profile. Uh while you can actually see a growth of 1% but if you actually take a gross impact it is almost a 3 and a half% growth that we 33:35 33 minutes, 35 seconds have done. There were certain accounts that uh uh we have identified at the start of the contract which uh we actually did not uh want those profiles 33:43 33 minutes, 43 seconds to continue because of the margin trajectory commitment that we have given and hence we have let go some of the contracts there uh which was there in 33:51 33 minutes, 51 seconds the Q3 that that is the net effect that you're seeing in facilities and food net on net except telecom vertical all our 33:58 33 minutes, 58 seconds operating businesses have grown close to around uh 2 to 3% quarteron quarter so that's one Uh with respect to your tax 34:07 34 minutes, 7 seconds question uh our Blue Spring Enterprise Limited the entire operating profile uh 34:14 34 minutes, 14 seconds uh effective tax rate is close to around 17 to 20%. But however you see a different aspect because of the deferred 34:21 34 minutes, 21 seconds tax asset that is being created for the differential on the retires that we actually provide for versus what is the 34:28 34 minutes, 28 seconds payout. So that's the difference that you you can see um in our uh uh ETR uh quarteron quarter. 34:37 34 minutes, 37 seconds Okay, got it. Got it. And on the security side, why were the margins impacted this quarter? And I you also mentioned that there was some stake 34:45 34 minutes, 45 seconds increase that happened. So I think it's about 75% now. Do we plan to get to 100% of this? 34:52 34 minutes, 52 seconds Yeah. So uh basically in our security vertical uh even 20 30 lakhs uh quarter movement in terms of the absolute makes 35:02 35 minutes, 2 seconds a lot of difference in terms of the percentages. So uh while the revenue has grown by 3% we would have expected IITA 35:09 35 minutes, 9 seconds to grow at 3% as well which is a miss of around 75 lakhs. So these 75 lakhs to 80 lakhs of uh one-time provision we have 35:17 35 minutes, 17 seconds taken on certain receivables which post confirmation from the client we have seen that there are certain uh leaways and penalties while we have provided for 35:25 35 minutes, 25 seconds it. Uh we are also um um you know going back to the customer in terms of reconciling these receivables back into 35:33 35 minutes, 33 seconds our P&L. This is a prudent method that we follow here uh which is called estimated credit loss uh which uh which 35:41 35 minutes, 41 seconds actually uh follows a flow rate of provisioning um based on the aging of a receivable that's the reason you see a 35:48 35 minutes, 48 seconds slight dip in security other than this uh 75 to 80 lakh rupees if at all we account for that I think it is they are in the trajectory of the growth of 35:56 35 minutes, 56 seconds revenue in terms of stake sale the stake sale actually stake purchase rather was in 36:04 36 minutes, 4 seconds Vang uh wherein uh you know we were already holding close to around 97% of the company and we've increased our 36:11 36 minutes, 11 seconds stake by further 2%age points uh as far as career is concerned uh you know uh 25% of the company is with the employee 36:19 36 minutes, 19 seconds trust and the balance 75% is with blue screen okay understood uh thanks for the 36:28 36 minutes, 28 seconds detailed answer sir I have a few more questions I'll get back to you thank Thank you. The next question comes from 36:36 36 minutes, 36 seconds the line of Aryan Shukla from Prudent Cooperate. Please go ahead. 36:43 36 minutes, 43 seconds Uh yeah. Uh so it's RMN from Prudent actually. Uh sir, I basically had two questions. Uh one founded actually. So I 36:51 36 minutes, 51 seconds understand that we are going through a recovery phase right now. that uh what can be the expected burn in the next three quarters uh till we break even uh 36:59 36 minutes, 59 seconds that you guided and then number two was on and on on telecom so I think you've seen uh decent slowdown here uh so I 37:07 37 minutes, 7 seconds mean uh should are you should there be a revision in the guidance for uh for the telecom segment and how should this 37:14 37 minutes, 14 seconds impact our margin guidance because uh they they they give a decent chunk of margin uh to our overall company so yeah 37:22 37 minutes, 22 seconds these two questions yeah thank Yeah, thank you Arman. So let me start with telecom. We've not changed our 37:29 37 minutes, 29 seconds guidance. We believe that uh while there has been a bit of a slowdown in the rollouts but we've also been working on 37:36 37 minutes, 36 seconds how do we diversify our revenue streams in the telecom business and one of them I have called out in my speech that 37:44 37 minutes, 44 seconds we've been able to go international and uh you know the first overseas project where we have deployed 50 plus resources 37:51 37 minutes, 51 seconds uh in one of the countries outside India. uh in the current quarter we actually plan to do one more. So we will most likely by Q1 of next year would be 38:00 38 minutes in two geographies outside India so that we can continue to maintain uh this better margin business that we have in the blueprinting portfolio. Uh we 38:08 38 minutes, 8 seconds believe on on a sustained basis this business should grow 12 to 15% yearonear. Uh coming back to found it as 38:17 38 minutes, 17 seconds I said we expect revenues to start coming back from the current quarter itself to disproportionate levels than what we have been reporting for last two 38:25 38 minutes, 25 seconds three quarters and on the back of that I'm confident that in another 3 quarters from now we're looking at break even uh in terms of burn over next three 38:34 38 minutes, 34 seconds quarters on a cumulative basis I believe you know somewhere between 30 to 35 crores we may have to invest further in the business post which the P&L will 38:43 38 minutes, 43 seconds start looking positive Uh, thanks a lot. 38:50 38 minutes, 50 seconds Thank you. The next question comes from the line of Priyanka Shrevastav from KC Capital. Please go ahead. 38:58 38 minutes, 58 seconds Um, hello. Uh, hi. So, thank you so much for the opportunity. Uh, so I want to ask what is your target return on capital at project level in facility 39:07 39 minutes, 7 seconds management business? Like do you have a threshold? 39:15 39 minutes, 15 seconds Uh are you asking about the capital of facility management? I'm sorry. Can you elaborate your question please? 39:22 39 minutes, 22 seconds Target return on capital. The target return on capital. Okay. 39:28 39 minutes, 28 seconds Okay. Got it. So our ROC currently is a double digit ROC at a blended level. Uh 39:35 39 minutes, 35 seconds because we manage cash and debt at a overall level including all other verticals. uh we don't have a ready answer in terms of what exactly is 39:43 39 minutes, 43 seconds facilities and food ROC that you are seeing uh but I would assume I I can give you an indirect answer here uh so we have made investments close to around 39:52 39 minutes, 52 seconds uh 300 odd crores uh uh in terms of facilities and uh food verticals to be where we are uh this was mostly 39:59 39 minutes, 59 seconds inorganic uh that we have done earlier um so we see that ROC trajectory uh 40:06 40 minutes, 6 seconds should only improve going forward uh right now I can only give you answer at the overall operating blueprint level 40:13 40 minutes, 13 seconds not at a individual facilities and food business but I can actually come back to you uh oneonone post uh we uh have the answer at a business level. 40:24 40 minutes, 24 seconds Okay sure thank you so much that was helpful and the second would you consider pursuing a buyback instead of allocating capital towards acquisitions? 40:36 40 minutes, 36 seconds See buyback is uh uh is is not an option as of now. Uh so basically uh we are not 40:44 40 minutes, 44 seconds thinking about any of such corporate restructuring as of now for the very reason that first we want to stabilize the entire operating business of ours. 40:52 40 minutes, 52 seconds Uh bring it to a stage where we believe the value will be right and post that and also mind you our cash uh scenario 41:00 41 minutes as of now is uh around 107 crores of debt. uh we have also called out in our previous calls that uh this is a company 41:07 41 minutes, 7 seconds that we will not hesitate in terms of growing inorganically as well. So the priority of buyback as of now is not there. Uh while we will have a priority 41:16 41 minutes, 16 seconds of growing this business organically and inorganically which requires capital. Okay. Got it. So thank you so much. 41:25 41 minutes, 25 seconds Thank you. 41:27 41 minutes, 27 seconds Thank you. The next question comes from the line of Aryan Shukla from Prudent. Please go ahead. 41:33 41 minutes, 33 seconds Yeah, thanks for the follow just to keep bookkeeping questions. Uh can you please call out the uh cash and debt on balance 41:41 41 minutes, 41 seconds sheet currently and then what what do our DS look like uh uh this quarter? 41:46 41 minutes, 46 seconds Sorry that yeah so our operating businesses if you 41:53 41 minutes, 53 seconds see we have a debt levels of 107 crores in terms of uh our debt levels as on December. Um our DSO days as mentioned 42:02 42 minutes, 2 seconds in my speech is close to around 98 days for our operating businesses which was around 105 days uh last quarter. Our 42:11 42 minutes, 11 seconds debt has reduced by 29 crores quarteron quarter and as I mentioned earlier that we believe that uh our cash generation 42:18 42 minutes, 18 seconds is usually robust in Q4 and uh we have guided the markets that we will be a OCF 42:24 42 minutes, 24 seconds to EITA ratio of around 50%. Uh so having said that uh we should actually 42:31 42 minutes, 31 seconds see a subund debt levels u by March end and our DSO levels from 98 days also should improve further. 42:41 42 minutes, 41 seconds No sir. Thank you. Okay. Thank you. 42:46 42 minutes, 46 seconds The next question comes from the line of KTO BNA from BMSPL Capital. Please go ahead. 42:53 42 minutes, 53 seconds Yeah, please help me understand better because I'm not really so soed cash burn how is it being funded because 43:02 43 minutes, 2 seconds for the last few years you have been OCF negative. So I'm just trying to 43:10 43 minutes, 10 seconds understand how have you been funding uh this this rise in short-term borrowings 43:17 43 minutes, 17 seconds over the last many quarters from March I'm just looking at the disclosed figures March 25 was 79 crores September 43:25 43 minutes, 25 seconds was 194 crores you're saying right now it's 107 crores in December uh so why was this debt can you exactly 43:35 43 minutes, 35 seconds list the purpose of the rise in debt and how is founded being funded and if we are going to do acquisitions and keep 43:43 43 minutes, 43 seconds funding the founded losses uh with uh how are we doing that with if cash approvals aren't coming in as of 43:51 43 minutes, 51 seconds the moment yeah so cost of there are two three aspects around cash flows I think uh 43:58 43 minutes, 58 seconds this year first 6 months we had uh not some great operating uh KPIs on cash 44:05 44 minutes, 5 seconds flows on the back of innovations that we had to do. So the entire thousand plus clients we had to go and novate our 44:12 44 minutes, 12 seconds contracts from quest to bluepring and that was one of the reasons why we had a higher DSO days poor cash flows in the 44:20 44 minutes, 20 seconds first 6 months and also a reason why our debt levels shot up uh irrespective of whether we were investing in foundator or not. That position has been 44:29 44 minutes, 29 seconds completely addressed. All our contracts have been novated. Our Q3 cash flows are much better than quarter 1 and quarter two and as Proful mentioned that on a 44:38 44 minutes, 38 seconds full year basis we believe that we will be able to do 40 uh 50% of operating cash flows uh with service the operating 44:45 44 minutes, 45 seconds which should help us manage our working capital levels. The second questions on uh acquisition and funding the 44:54 44 minutes, 54 seconds acquisitions through debt. We will come back when we have uh you know uh identified asset uh you know with proper diligence completed and a proposal. 45:03 45 minutes, 3 seconds We'll definitely share how are we going to fund those acquisitions. In general we have said that in long run we want to 45:10 45 minutes, 10 seconds grow 3x of GDP both organically and inorganically put together and hence we we would be looking at adjacencies to 45:19 45 minutes, 19 seconds some of our existing businesses which will give us let's say better margin better roe businesses or better digital businesses to add to our existing 45:26 45 minutes, 26 seconds businesses coming back to founded founded also as I said we probably are looking at only another 30 35 crores of 45:34 45 minutes, 34 seconds investment uh other than whatever we have so far invested We had done a fund raise for founded back in 2022 and we 45:41 45 minutes, 41 seconds had also taken borrowings at founded level to the extent of close to around 50 odd crores. So found it has been 45:48 45 minutes, 48 seconds funded basis the previous fund raise and the uh uh the debt levels that have been 45:55 45 minutes, 55 seconds raised at foundate level and uh I think we are very close to you know seeing a turnaround in this business and would 46:02 46 minutes, 2 seconds want to continue to uh push the revenue trajectory in this business which like I said is visible from the Q4 onwards. 46:12 46 minutes, 12 seconds Okay, just one last thing. You said 35 crores more investment and found it. How much investment has been made till date? 46:18 46 minutes, 18 seconds Not including the 35 crores. 46:23 46 minutes, 23 seconds Uh we would have uh invested 46:29 46 minutes, 29 seconds close to around 250 odd crores. Uh but that's not just our investment. This 46:35 46 minutes, 35 seconds also includes the fund raise uh for which the money was also raised from the uh investors outside of Blue Spring. 46:45 46 minutes, 45 seconds Okay. So 250 crores and plus 35. Yeah. 46:53 46 minutes, 53 seconds Okay. Thank you so much. Thank you. 46:56 46 minutes, 56 seconds Thank you ladies and gentlemen. We will take that as the last question for today. I would now like to hand the conference over to the management for the closing remarks. 47:10 47 minutes, 10 seconds Thank you. Uh before I conclude, I'd like to once again emphasize that over the last three quarters, we've taken all 47:17 47 minutes, 17 seconds round efforts to drive profitable growth and this has resulted in double-digit revenue growth in all verticals and 78 basis points improvements in our AITA 47:25 47 minutes, 25 seconds margins in quarter 3 to 3.8% 8% from 3.1% reported in quarter 1. Once again demonstrating that our strategy of growth with discipline is working. 47:35 47 minutes, 35 seconds Looking at our focus for quarter 4 will be on sustaining healthy doubledigit revenue growth while expanding EITA margins further to our stated guidance of 4%. 47:48 47 minutes, 48 seconds Thanks to everybody for joining this call. 47:52 47 minutes, 52 seconds Thank you sir. Ladies and gentlemen, on behalf of IFL Capital Services Limited, that concludes this conference call. 47:59 47 minutes, 59 seconds Thank you for joining us and you may now disconnect your lines.