Blue Spring Enterprises Q3 FY26 Earnings: Labor Reforms and Growth Outlook

Gentlemen, good day and welcome to the Blue Spring Enterprises Limited Q3 FY26 Earnings Conference call hosted by IIFL

Capital Services Limited. 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 concludes. Should you need assistance during this

conference call, please signal an operator by pressing star then zero on your touchtone phone. Please note that

this conference is being recorded. I would now like to hand the conference over to Mr. Nibod Shetty from Blue

Spring Enterprises. Thank you and over to you sir. Good morning everyone. Thank you for

joining Blue Spring Enterprise Limited's Q3 FY26 earnings call. At this point, I 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 changes and macroeconomic conditions. We do not guarantee these statements or

results and are not obliged to update them at any given point of time. These statements should be read in conjunction

with the safe hog clause outlined in on slide number two of our investor presentation. With that backdrop, I hand

the call over to our CEO Mr. Kamal Balhuda followed by Mr. Papulidar a CFO for the opening remarks.

>> Thank you Nibbo. Good morning everyone and thank you for joining the call today. Let me begin by sharing some

brief context on Blue Springs operating environment during the quarter. In the continued push towards formalization of

employment, the government notified the new labor codes in November after announcing employment linked incentive

schemes in August. These codes significantly simplify the earlier framework of labor laws and remove

ambiguities around the calculation and payment of statutory dues. We believe the implementation of these codes will

act as a tailwind for fully compliant formal employers as it will become increasingly difficult for principal

employers to work with non-compliant vendors. As mentioned in our Q3 disclosures, we have provided for a

onetime cost related to higher graduity and leave-in cachements. These costs are onetime in nature and going forward we

expect both revenue and margin tailwinds from the implementation of both the labor codes as well as the ELI schemes.

Now let's discuss Q3 and 9 months performance. Bluepring recorded Q3 revenue of 844

crores excluding the investments vertical. This represents an increase of 10% yearon-year and 1% quarteron

quarter. The 10% year-on-year revenue growth was driven by new sales additions in the facility management and security

verticles. Quarteronquarter growth remained flattish due to the industrial vertical as weakness in telecom network

rollouts persisted throughout the quarter. For 9 months, the revenue stood at 2458 crores, an increase of 12%

yearonear with all the three verticals clocking doubledigit growth year on year. Our revenue base

continues to be well diversified across customers and sectors with the top 30 customers contributing only 49% of

revenue and eight different sectors each contributing more than 5% of overall revenue enhancing the robustness of our

business. Q3 AITA stood at 32 crores, an increase of 12% year-on-year and 12% quarteron quarter while 9 months AITA

remained flat at 85 crores. As discussed in the earlier calls, flat AITA on a 9mon basis is due to investments in

leadership and sales team enhancements. 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. The sales engine continues to

perform strongly. In 9 months, we have secured contracts worth 278 crores across facility management, food and

industrial verticals. The security vertical deployed over 2,000 guards during the year from new sales only. The

sales pipeline remains strong and will continue to drive growth in the coming quarters. Moving on to segment wise

updates, starting with facility and food services. This segment had a solid

quarter with Q3 revenue of 521 crores growing by 11% yearonear. The year-on-year growth was driven by new

contract mobilizations. 9 months revenue stood at 1511 crores, a growth of 13% yearon year. New sales

continue to be strong in Q3 with business winning contracts worth 79 crores of ACV. Industrial and healthcare

were the major drivers for new sales. with strong Q3. The total ACV won for the year stood at 189 crores for this

vertical. In housekeeping focus on quality deals have seen the new deals being won at 150 to 200 basis points

higher margins versus last year with growth drivers in place. The business is now focusing on margin improvement

initiatives through efficiency gains, accelerating dig digital adoption across processes and vendor consolidations.

Moving on to telecom and industrials. Starting with safety updates, I'm happy to report that our industrial vertical

once again logged zero fatalities and lost time injuries in quarter C. The industrial vertical has now logged over

19,000 health and safety training hours in 9 months itself. Q3 revenue remains flattish at 151

crores as delayed rollouts by telecom majors continue to hamper the telecom business growth. However, timely cost

optimization efforts around resources, tools, and vendor optimization ensured profitability growth with business

delivering double-digit AITA margins during the quarter. We expect telecom rollouts to pick up in quarter 4,

driving high singledigit quarteron quarter revenue growth. This segment reported 9 months revenue

of 458 crores, growing 10% year-on-year on the back of new sales done earlier quarters. In the industrial sub segment,

our focus on transitioning from a manpower provider to a strategic operational partner continue to yield

results as we won a 20 cr ACV contract for consolidated electrical and instrument maintenance for a large

manufacturing client. This contract will be mobilizing quarter 4 excluding this industrial vertical has won 51 crores of

ACV for the 9 months uh in the current financial year. As I mentioned during Q2 earnings call, our telecom active infra

business is focusing on 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.

Moving on to security business, the business continued its upward trajectory in Q3 with revenue of 173 crores, a 15%

year-on-year increase. Similarly, the business clocked 9 months revenue of 489 crores, an increase of 14% yearonear.

This is powered by headcount addition of around 2,500 over last 12 months, a growth of 12% yearon year. 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. 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 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. With

both sales and sourcing team in place, we are confident of achieving similar growth trend in the coming quarters.

Moving on to founded our AI powered job search platform which delivered a revenue of 18 crores in quarter 3 with

45% sales productivity increase in quarter 3 over quarter 1. For Q3 our key focus levers for sales were driving new

productivity improving renewal rates and optimizing our channel mix on platform product revamp is completed with better

UI UX for both seekers and recruiters while positioning founded as a skill first platform. Focus for Q4 would be on

strategic sales and marketing spends to accelerate growth. I will now hand over to our CFO Proful Shridar for the

financial deep dive. Over to you Raful. >> Thank you Kamill 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 code. As you are aware the government

has now implemented a major reform that has been in progress for several years. 29 separate labor laws have been

consolidated into books. These reforms are aimed at strengthening compliance, ensuring timely wage payments,

formalizing employer employee relationships, and addressing the long-standing issue of labor

exploitation in unorganized sectors. In the immediate term, these changes do have an impact on operating cost. We

have assessed an incremental liability of 29.8 and relating to past service cost in graduity and leave liabilities.

We expect that these cost will largely be 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. We have already initiated discussions

with clients on revised revision of wages to comply with the new labor code. 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

as a balance sheet date. Given its regulatorydriven nature, materiality and non-recurring

characteristics, this impact has been classified as an exceptional item in our financials. Now, I will take you through

the consolidated financial performance excluding founded for quarter before discussing segment wise results and

other corporate updates. We reported a consolidated revenue of 844 crores for the quarter. It's a 10% yearon-year and%

sequential growth. Year-on-year growth was driven ac and security solution verticles. While

we saw some headwinds in telecom vertical due to slowdown in rollouts of new projects. During the quarter we have

mobilized close to around 39 new contracts contributing to a ACV of 89 crores. We continue to have a well

diversified sector base with top three sectors that is industrials, commercial spaces and government and public infra

continue to contribute to close to around 50% of our revenue base. EITA for the quarter stood at 32 crores

which is up 12% yearonear and sequentially. EITA margins have improved by 37 basis points over the last quarter

to 3.8% 8% in line with our margin guidance as given in the previous quarters. The strong growth in EITA and

expansion of margins was aided by volume growth in food facility and security space with new contracts being mobilized

mobilized at better margins. Margin expansion in food was seen as generally in Q3 is a strong quarter for the

education sector. Second, we saw some efficiencies across businesses arising out of shared

services teams consolidations. Our for the quarter stood at 19 crores. The part was upon

14. EPS for the quarter stood at 1.2 per share.

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

acquisition of Ved's remaining 1% equity. We continue on our previously stated trajectory of reducing DSOs and

net debt levels. As of 31st December, our net debt level is 107 crores, a reduction of 29 crores quarteron

quarter. While our DSO stands as against 105 days reported in the last quarter with innovation activity largely

behind us, we are on course to bring net dead levels to serve 100 levels as guided earlier.

Moving now towards segment performance, our facilities and food verticals continues to be our largest segment

contributing to 60% of our revenues. This vertical grew 11% yearonear and 1% sequentially to 521

growth driven by continued client additions during the quarter with an annual contract value of 79 as

reiterated in previous quarters. Focus remains firmly on profit. We added new across

sir could you please come a little closer to the microphone your voice is a little distorted every now and then.

Is it better now? >> Yes sir. Please go ahead. Thank you. >> Hello.

>> Yes sir. Please go ahead. >> 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 60% of our total revenues. This vertical

grew 11% yearonear and 1% sequentially to 521 crores. This growth was driven by 20 new client additions during the

quarter with an annual contract value of 79 crores. As reiterated in the previous quarters, our focus remains firmly on

profitable growth. We added new clients across education, commercial, BFSI and healthcare sectors. Evita for this

segment stands at 4.5% a 50% bas 50 basis points jump from the previous quarter. This was aided due to our food

performance gaining momentum in education sector and new contracts coming at higher margins during the

quarter. Commencement of our new central kitchen in Whitefield area remains on track and we expect the same to be

operational starting next quarter. Our telecom and industrial segment reported a revenue of 151 crores a

growth of 2% yearonear and down sequentially by 3%. Telecom business performance was muted

as network operators have briefly slowed down new network rollouts as mentioned earlier. In our industrial vertical we

have began to reposition ourselves as an end toend O&M player in line with our long-term strategy to move away from

traditional manpower supplies and labor arbitrage businesses to SLA based. EITA for this vertical stands at 9.9% for the

quarter a 160 basis points jump. The strong AITA growth was aided by one-time shutdown activities, ECL improvement on

account of medical elections. A security services business delivered another strong quarter with revenues up 15%

yearonear and 3% sequentially to 173 crores. In 9 months, we have mobilized close to around 2,500 plus headcounts.

However, the evita for the business was muted for the quarter due to certain one-offs on bonus billings and

provisioning towards receivables. Investments in founded uh coming to founded u revenues for the quarter were

18 crores. We continue to maintain our EVITA losses at similar levels as last quarter. We are confident that our new

initiatives and revamp product will start seeing some traction soon and it would reflect in the numbers.

To conclude, we are a company that has consistently delivered strong results since our listing. We remain confident

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 forward. Thank you again. Now the floor is open for Q&A session.

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. 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. Ladies and gentlemen, we will wait for a

moment while the question Q assembles. Our first question comes from the line of Kushi Kapoor from Nen Capital. Please

go ahead. Uh hello this is Kushi Jane from mini cap. Uh so my first question is that uh

the founded revenue has decreased almost 27% yearon-year basis. So but the core business of digital

has been increasing by 15%. So what kind of point does the board consider that uh we are going to divest our assets or

save of the asset is like a specific uh deadline for the to round because it is impacting the consolidated

margins. Uh is that the only question Kushi? You said this is the first question.

>> Kushi, do you have >> We'll be recording. >> Hello.

>> Yes, Kushi. Please go ahead. Any more questions? Yes, please go ahead. >> Yeah, one more question.

>> So, you write it out. the revenues have dropped. Uh you know, >> I'm sorry to interrupt, sir. Your voice

is your voice is distorted again. Uh if you could come a little closer to the microphone.

>> Uh our apologies for not having a uh you know clear line. Am I audible now? >> Yes sir, much better. Thank you.

>> Okay. So uh as mentioned in the present earnings call uh you know most of the product related work and investment is

complete uh you know the product uh revamp is now completed with a better UIUX for both seeker and recruiter. uh

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 runup to this we've also been bringing down our uh uh cost base to levels that you know

we have uh visibility of break even uh in next three quarters. So uh it has probably taken you know three to four

quarters more than what we had originally anticipated. Uh but uh like I said you know with with a revamp product

and the strategic u sales and marketing expense that we are doing uh presently we expect the revenues to significantly

go up starting with the current quarter itself. >> Okay. Got it. So you're saying that uh

the break even given which is going to happen by next quarter uh which it will take like three to four more quarters

correct and Okay. Okay. Thank you.

>> Thank you. Our next question comes from the line of Adena from Nan Capital. Please go ahead.

>> Hello. Am I audible? Yes. Yes. So my question was uh regarding the the company that you have founded

itself. So my question was you have guided for founded break even by the end of FI26

but with revenue shrinking is break even being achieved through cost cutting it might hurt future growth or do you see a

genuine revival in recruitment demand? If not, what is your plan B if you lost being in FI27?

>> Sure. Uh thanks for your question others. Uh so see we've used this year to do two three different things with

foundate. One is on the product itself. uh we've revamped the product and you know uh the product obviously is now

with much better UIUX much much better such capabilities and we have some uh fantastic feedback from a lot of clients

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 should now help us uh go back to the uh regular revenue trajectory of you know

25 plus crores a quarter which we used 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. Uh and you know in in in a runup to the

product revamp we had actually reduced our spend base and brought down Founded to uh you know a year back when founded

used to be at almost a 45 crores a quarter kind of spend base to a present yearly 30 crores quarter kind of a spend

base. So we've right sized the company made it a very agile company and also got the product up now with some

strategic uh strategic component of uh reviving uh the P&L and uh like I said uh you know

we look forward probably another three quarters for a break even uh and uh I think we start seeing uptake in the

revenue starting this quarter itself. Okay, thank you sir. >> Thank you. Our next question comes from

the line of Kausto Babna from BMSPL Capital. Please go ahead. >> Yeah. Hi, thanks for taking my question.

So wanted to understand exactly how you feel margins will expand due to the new labor code. also wanted to understand

uh you know what's the update and correct me if I'm wrong uh wasn't the government supposed to notify on a

universal bas minimum wage which they still haven't or have or have you all got some communication

uh could you please speak a little bit about this >> sure thank you kos this is pul here uh

on this labor code uh it was a notification uh given by government of India on 21st November. Certain

clarifications on other aspects of uh national floor wages is still not announced but there are many laws that

is already uh effective immediately. Uh so based on those uh clarifications or already law we have taken a liability uh

based on the assessment of our graduity and leave components. Now uh to your question as to what will happen to the

margin profile post implementation of uh labor code. Uh so this is an exercise 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 once in every year. So basically it will

be a discussion between us and the customer. uh this time the additional 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

and our contract allows us majority of any changes towards the statute be passed back to the customer we don't see

any margin uh profile coming down because of labor code >> yeah if I may add cost uh while

obviously the downside is not there but there is a huge potential upside As these codes have obviously stringent

compliance uh requirements and we believe that it's going to become increasingly difficult for people to

work with non-compliant wonders and with you know nationally scaled safety first and high compliant environment in which

we operate. We believe that this could be a tailwind opportunity for players formalized players like blueprint. So

basically you're saying your bargaining power should increase with your customer but but if you could please elaborate a

little bit on the codes that are already passed and will the codes that are already passed will they already start

impacting unorganized competition and why so and isn't the what the the announcement of

the national minimum wage. One of the most important aspects of this code of the of this labor code and we can't

really have the labor code to its full effect until that's announced because obviously every state has different

minimum wages right now and it's all very scattered. >> Yeah, sure. So, let me attempt it's a

very elaborate subject to be covered on an IR call but let me attempt that kov. uh there were 29 codes as mentioned by

Prul and the 29 codes have been replaced by four codes now and the four 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

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 uh called the code of wages. uh you know there were almost 13 legislations on health and

working conditions which has been replaced by a single code called the OSH code. Uh there were almost nine existing

legislations on social security which has been replaced by a single code on social security and then there were

three separate legislations on the industrial relations which has been again consolidated into one industrial

relations code and all of them are already effective. uh what we meant by 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

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 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 excluded and what will become let's say

base for calculation of gratuitity what tenurs to be considered what will be the uh definition of a fixedterm employment

and you know related obligations on employers towards graduity and leave encment. 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

taken significant provisions. In our case we've taken a 29 crores provision which is a one-time effect which we

believe uh since most of our contracts have clauses where these statuto changes are passed through. We should be able to

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. >> Okay. Okay. Thank you so much. Thank you.

>> Thank you. The next question comes from the line of Anand Mundra from my temple capital. Please go ahead.

>> Hello. Uh thank you for the opportunity sir. Uh so I had a few questions. uh one was uh the labor court charge that we've

uh put as an exceptional item that you charge on the on the PN is this recoverable from the client that was

question number one uh the second question was as you mentioned that over 6 months you'll probably sit down with

your client and you know uh revise 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 as things stabilize And uh number three

was that there was also a CLI scheme that the government had announced which has now been notified I think of 1st

August uh 2025. So have you worked around any numbers of how much that could benefit us uh on the bottom line.

So these are the three questions mainly around labor codes and thank you for that question. So let me

cover the first aspect on the recoverability of whatever is the cost that we have already provisioned for. So

this 29 crores that you can see has two splits in this one is the core employees of,400 people that we are having that is

not possible back to the customer that is close to around 9 crores. So the remaining uh 20 odd crores is what we

have taken for what we call it as associate population who are our revenue generators. So these cost on graduity

and uh leave and catchment as iterated earlier we have to go back to the customer uh and actually get uh we have

a legal u framework already agreed with the customer which allows us to go back and recover these cost. However, we have

to have such discussions with the customer before uh changing any of the structure of wages and enhancing the

cost. So that's why we have not recognized any unbuild revenue towards these cost inflations during the quarter

which we believe that we uh should be predominantly uh a revenue accurative in the future

quarters to come. So that's answer number one on the margin profile for your second question. We as iterated

earlier we don't see any margin uh profile tailing down because of labor code changes. In fact, we have some

tailwinds coming through because uh this will put everybody into a framework of all statutories and retires to be taken

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. Number two, uh what was your last question?

>> That was on the uh ELI schemes. Ei schemes are effective from 1st of August. There are two parts of the

incentivization. One is towards the employer and one is towards the employees. Uh both these incentives are

only going to become due end of February after completion of the first 6 monthly cycle of the scheme. So we from 1 August

we've been doing our workings and uh you know calculating the impacts. But you know being a government scheme we would

want to uh recognize this only on received basis because this will be a uh first time that you know such a scheme

is announced. So we will wait for the money to be credited which may take a couple of months post it becoming due.

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 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 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

year and we'll come back to the uh investor community to share the impact as and when we receive this amount.

>> Got it. Got it. So just one more follow up on the labor court answer that you mentioned. Uh so just want to understand

so this this quarter our revenue growth has been slightly weak as compared to the previous quarter. So are there any

headwinds because of this labor code where clients are trying to understand what the impact is and then take a call

on new contracts or new hiring. Some more question as a follow and the other question was also like just want

to understand do you also get benefits of ATD on the tax side? 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 I mean do we have

any carry forward losses or we've recognized DTA for those carry power losses.

>> 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 uh sequentially grown by 1%. wherein you can see this uh telecom has telecom

industrial verticals degrow by 3%. So what we see is uh starting from September onwards uh the new rollouts

and the network rollouts uh that we had 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 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 grown 3% uh quarteron quarter which is

on course. Our facilities and food business uh saw some uh revamp in terms 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

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 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 the Q3 that that is the net effect that

you are seeing in facilities and food net on net except telecom vertical all our operating businesses have grown

close to around uh 2 to 3% quarteron quarter so that's one Uh with respect to your tax question uh our bluepring

enterprise limited the entire operating profile uh uh effective tax rate is close to around 17 to 20%. But however

you see a different aspect because of the deferred tax asset that is being created for the differential on the

retires that we actually provide for versus what is the payout. So that's the difference that you you can see um in

our uh uh ETR uh quarteron quarter. >> 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 increase that happened. So I think it's

about 75% now. Do we plan to get to 100% of this? >> Yeah. So uh basically in our security

vertical uh even 20 30 lakhs uh quarter movement in terms of the absolute makes a lot of difference in terms of the

percentages. So uh while the revenue has grown by 3% we would have expected ITA 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 taken on certain receivables which post

confirmation from the client. We have seen that there are certain uh leeways and penalties. While we have provided

for it uh we are also um um you know going back to the customer in terms of reconciling these receivables back into

our P&L. This is a prudent method that we follow here uh which is called estimated credit loss uh which uh which

actually uh follows a flow rate of provisioning u based on the aging of a receivable that's the reason you see a

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 tra trajectory of the growth of revenue >> in terms of stake sale the stake sale

actually stake purchase rather was in Vang uh wherein uh you know we were already holding close to around 97% of

the company and we increased our stake by further 2%age points uh as far as terrier is concerned uh you know uh 25%

of the company is with the employee trust and the balance 75% is with the blue screen

>> okay understood uh thank you for the detailed answer I have two more question I'll get back to you thank

Thank you. The next question comes from the line of Aryan Shukla from Prudent Corporate. Please go ahead.

>> Uh yeah. Uh so it's AM from Prudent actually. Uh sir, I basically had two questions. uh one founded actually I

understand that we are going through a recovery phase right now but uh what can be the expected burn in the next three

quarters uh till we break even uh that you guided and then uh number two was on and on telecom so I think you've seen u

a decent slowdown here uh so I mean uh should are you should there be a revision in the guidance for uh for the

telecom segment and how should this impact our margin guidance because uh they they they give a decent chunk

margin to our overall company. So yeah, these two questions. Yeah, thank you. >> Yeah, thank you Arian. So let me start

with telecom. We've not changed our guidance. We believe that uh while there has been a bit of a slowdown in the

rollouts but we've also been working on u how do we diversify our revenue streams in the telecom business and one

of them I have called out in my speech that we've been able to go international and uh you know the first overseas

project where we have deployed 50 plus resources 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 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 believe on on a sustained basis this business should grow 12 to 15% yearonear.

uh coming back to founded as 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 2 three quarters and on the back of that I'm

confident that in another 3 quarters from now we looking at break even uh in terms of burn over next three 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 start looking positive Uh, thanks a lot.

>> Thank you. The next question comes from the line of Priyank Shrevastav from KC Capital. Please go ahead.

>> Um, hello. Uh, hi. So, thank you so much for the opportunity. Uh, so I want to ask what is your tank? It's written on

capital at project level in facility management business like do you have a threshold?

Uh are you asking about the capital or of facility management? I'm sorry. Can you elaborate your question please?

>> The target return on capital. The target return on capital. >> Okay. Got it. So our ROC currently is a

double digit ROC at a blended level. Uh 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 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

uh 300 odd crores uh uh in terms of facilities and uh food verticals to be where we are uh this was mostly

inorganic uh that we have done earlier um so we see that ROC trajectory uh should only improve going forward uh

right now I can only give you answer at a overall operating bluepring level 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.

>> Okay sure thank you so much that was helpful and the second would you consider pursuing a buyback instead of

allocating capital towards acquisitions? See buyback is uh uh is is not an option as of now. Uh so basically uh we are not

thinking about any of such uh corporate restructuring as of now for the very reason that first we want to stabilize

the entire operating business of ours. 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 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 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 of growing this business organically and

inorganically which requires capital. >> Okay. Got it. So thank you so much. Thank you.

>> Thank you. The next question comes from the line of Shukla from Prudent. Please go ahead.

Yeah, thanks for the followup. I just quickly book your questions. Uh can you please call out the uh cash and debt on

balance sheet currently and then what what do our DS look like uh this quarter? Sorry I missed that.

>> Yeah. So our operating businesses if you 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 in my speech is close to around 98 days for our operating businesses which was

around 105 days uh last quarter. Our debt has reduced by 29 crores quarteron quarter and as I mentioned earlier that

we believe that uh our cash generation is usually robust in Q4 and uh we have guided the markets that we will be a OCF

to EVITA ratio of around 50%. Uh so having said that u uh we should actually see a subund debt levels uh by March end

and our DSO levels from 98 days also should improve further. >> Thank you.

>> Thank you. Thank you. The next question comes from the line of KTO BNA from BMSPL Capital. Please go

ahead. Yeah, please help me understand better because I'm not really so so this cash burn how is it being funded because

for the last few years you have been OCF negative. So I'm just trying to understand how have we been funding uh

this this rise in short-term borrowings over the last many quarters from March I'm just looking at the disclosed

figures March 25 was 79 crores September was 194 crores you're saying right now it's 107 crores in December uh so why

was this debt can you exactly list the purpose of the rise in debt and how is founded being funded and if we are going

to do acquisitions and keep funding the founded losses uh with uh how are we doing that with if

cash approvals aren't coming in as of the moment yeah so cost of there are two three

aspects around cash flows I think uh this year for 6 months we had uh not some great operating uh KPIs on cash

flows on the back of novations that we had to do. So the entire thousand plus clients we had to go and novate our

contracts from quest to bluepring and that was one of the reasons why we had a higher DSO days or poor cash flows in

the 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 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 fullear year basis we believe that we

will be able to do 40 uh 50% of operating cash flows uh with service the operating which would help us manage our

working capital levels. The second questions on uh acquisition and funding the 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.

We'll definitely share how are we going to fund those acquisitions. In general we have said that in long run we want to

grow 3x of GDP both organically and inorganically put together and hence we we would be looking at adjacencies to

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 businesses coming back to found it. Found it also as I said we probably are

looking at only another 30 35 crores of investment uh other than whatever we have so far invested. We had done a fund

raise for founded back in 2022 and we had also taken borrowings at founded level to the extent of close to around

50 odd crores. So found it has been funded basis the previous fund raise and the uh uh the uh debt levels that have

been raised at foundate level and uh I think we are very close to you know seeing a turnaround in this business and

would want to continue to uh push the revenue trajectory in this business which like I said is visible from the Q4

onwards. Okay, just one last thing. You said 35 crores more investment in founded. How

much investment has been made till date? Not including the 35 crores. Uh we would have uh invested

close to around uh 250 odd crores. Uh but that's not just our investment. This also includes the fund raise uh for

which the money was also raised from the uh investors outside of Blueprint. >> Okay. So 250 crores and plus 35.

>> Yeah. >> Okay. Thank you so much. 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. >> Thank you. Uh before I conclude, I'd like to once again emphasize that over

the last three quarters, we've taken all round efforts to drive profitable growth and this has resulted in doubledigit

revenue growth in all verticals and 78 basis points improvements in our AITA 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.

Looking ahead, our focus for quarter 4 will be on sustaining healthy doubledigit revenue growth while

expanding EITA margins further to our stated guidance of 4%. To everybody for joining this call,

thank you sir. Ladies and gentlemen, on behalf of IFL Capital Services Limited, that concludes this conference call.

Thank you for joining us and you may now disconnect your lines. If you found this video helpful, please like, share and

subscribe to Con Call India for latest upcoming con