Ladies and gentlemen, good day, and welcome to the NIIT earnings conference call. As a reminder, all participant lines will be in listen-only mode. There will be an opportunity for you to ask questions after the presentation concludes. Should you wish to current conference call, please press star then zero on your touchtone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Thadani, Managing Director and Vice Chairman of NIIT. Thank you, and over to you, sir.
Thank you very much, good afternoon, everyone, for joining us on this conference call. We are here to discuss two important issues. One is the demerger of NIIT Limited, which just got completed, to brought it to the next milestone, started with some time in the little details. After that, we also have the results of the two entities that have emerged, NIIT Limited, which is listed as of now, NIIT Learning Systems Limited, which is not yet listed, but we will go through both the results first, followed by NIIT Limited results, which is the current business is still NIIT Limited and has its own local limited. We'll also be discussing revisiting the strategic rationale, as well as the plan that we have for both the companies in a larger perspective.
With me, I have here, Mr. Rajendra S. Pawar, who's the Chairman and Founder of the company, myself, Sapnesh Lalla, who is the CEO, Sanjay Mal, the CFO, who is now the CFO of NIIT Learning Systems Limited. Sanjeev Bansal, who is now the CFO of NIIT Limited after the demerger of the NIIT Learning Systems Limited. Vikram Kankal, the Company Secretary of NIIT Limited before the demerger, and now he's the Company Secretary of NIIT Learning Systems Limited. Another note, the Company Secretary of NIIT Limited is not here because at this time, but she is running the call. Then I have another colleague, Gaurav, who will help us with the detailed numbers.
The sequence we will follow is, I will start by giving a rationale of the demerger, after which I will hand over to Rajendra Pawar to give us the strategic direction as well as rationale, and followed by Sapnesh, who will take us through the NIIT Learning Systems, that is the L&D, to the business results. I will cover the Skills and Careers part, erstwhile Skills and Careers part, now NIIT Limited results, and then we open it for Q&A. Is that okay, everybody? We keep our comments about all the data that we are sharing with you is already been on the internet, and we are posting it. I'm sure there'll be a lot of questions.
We have provided for extra time in today's meeting, given the demerger-related questions, which may be beyond the questions covering the performance of the organization. Let me start with the demerger. Way back in January 2022, the board of directors had approved a momentous development relating to the reorganization of NIIT's two distinctive business lines, the Skills and Career systems and the corporate training business, into independent companies. We shared this earlier, I'm delighted to inform you that the strategic action, which was initiated early last year, has now been completed with the demerger of NIIT into NIIT Limited and NIIT Learning Systems Limited. This is after receipt of the customary approvals from all stakeholders and regulatory bodies.
With filing of necessary forms with NCLT and adoption by the board, the demerger has created two independent entities, like I mentioned before, NIIT Limited and NIIT Learning Systems Limited, with effect from May 24, 2023. The effective date of the merger is May 24, 2023. The appointed date, that is the date from which it is, the rights have to be passed is April 1, 2023. Just to remind everybody that this is a mirror demerger, that means every shareholder of NIIT gets 1 share of NIIT Learning Systems Limited distributed to their already existing shares. This will be done for all shareholders on record, as on the record date, which the board has fixed as June 8, 2023.
After the record date and issue of these shares, NLSL will go for a listing, which has to be completed in the next 30-45 days of different time. This will then finally complete the demerger process in totality. While I did mention the term completed the demerger or completed in key listing milestone. The listing milestone, when you do our shares and listing milestone is the balance mark there left, and that is what will happen in the coming months. I will pause here right now, and I will ask Rajendra Pawar to take us through the strategic rationale one more time, as well as the direction we have before we get into the results.
Thank you, Vijay, and good afternoon to everybody. Vijay has laid out the overall process and the steps we've been through.
Let me step back a minute to get a few points. You all know we have the two businesses, you know that we demerged the corporate learning business into NIIT Learning Systems Limited, NLS. NLS has, over the many years, perfected a value proposition for the Fortune 1000 companies that we call Managed Training Services, which is offered to these companies and their operations in over 50 countries. The learning outsourcing business, which is what we have created, the market is underpenetrated, there's a significant headroom for growth. The demerger empowers this newly created entity to sharply focus the management team, as well as the capital allocation, on significant opportunities that are emerging in the learning outsourcing space.
NLS has over 80 global customers. It has won over 400 awards for the quality of work and is ranked today among the top 5 learning outsourcing companies worldwide. Sapnesh Lalla, who has led the transformation of the CLG business from custom content to managed services and brought it to the top 5, will lead the business and has been appointed as the CEO and Executive Director of NLS. He's focused on accelerating growth of the company, creating more value for the customers, employees, and shareholders. Given their track record, given the momentum they have, given the excellent team that Sapnesh Lalla has built and the strong balance sheet, we see an opportunity to accelerate the business and move towards global leadership. That's NLS. NIIT Limited, on the other hand, as Jim, as you know, we do talent transformation to equip the workforce.
We did that in the 80s and 90s, giving talent for the IT sector, and in the next decade, we started working to build talent for the banking sector. This moment we look at as a watershed moment, and NIIT Limited is getting ready to deal with the many, many opportunities that are coming for new talent in the emerging sectors which are in front of us. This is, by the way, happening in a period, it is a turbulent period, which is driven by 3 factors. First is that the accelerating growth of digital technology, telecom, and data is causing digital transformation in more and more sectors of industry and society. This is causing very big changes to how we work and how new skills are demanded. The second is the discontinuity which was caused by COVID.
That made many fundamental changes to how we live our lives, how we get educated, how we work from anywhere. In fact, it's making a difference to the employer-employee contract, as is evident in hybrid work, and a very big change in everybody's perception of the work-life balance. Third, and I think we've all watched this, is that during COVID time, we saw online taking a big, big growth and then facing some difficulties. All of these actually constitute changes in the environment and bringing it into a period of uncertainty. All of us have found that see this as a time of great opportunity. Over our 40 years, there have been at least three instances of very dramatic changes in the sector, and in each of these, we seized the opportunity and came back in a much stronger competitive position.
That is what we are trying to do this time as well, and planning to do this time. During this period of the last couple of years, the board of NIIT Limited has been strengthened through the appointment of three very competent new directors, that's equipping us to move forward. If you're looking at growth going forward, we see two vectors of growth. The first is the broad base into many, many sectors of the economy, there's a need for new talent as well as for the talent transformation is becoming evident. Between an overriding % of our beneficiaries come out of the IT sector, then a smaller % in banking and much smaller % in other domains. The initiative under examination cover a wide range of emerging areas, including new manufacturing, engineering, R&D, supply chain management, design, and so on.
That's the first vector. The second is to invest more in the mode of delivery, pedagogy, and now with the emergence of AI as an important change agent, you see that there will be different things change the way we deliver work. The third chapter we are building is to look at organizing transformation of the country. This current year, this year we are in, we'll see many, many changes in the way we manage the organization. True, let me just say this: The 1980s and 1990s saw NIIT create talent for the IT sector. The next decade and a half for the banking sector. Now, this decade will see the country contribution to talent in the data and digital government sector.
It's for this reason that NIIT, which started with the mission of bringing teachers and computers together successfully in 1981, is now creating a new vision of becoming talent builders to the nation. That's what we're looking at as our mission. It's a huge ambition. It's fueled by a massive opportunity being created by this budget in India, driven by four decades of leadership in global talent development. I think also significantly affected by the promise of a country man, Sanjay Mal. These are some comments I want to make about how we see ourselves going forward. Back to you, Vijay.
While we open that, I'm sure there are a lot of questions you will have, but while we will do that, I will take 1 at 1 time, Rajendra. Let me now hand you over to Sapnesh to talk to us about HLSFL our business, right?
Thanks, Vijay, and thanks, Rajendra. It indeed is a good moment for both NIIT and HLSF and NIIT Learning Systems. I'm sure I'd like to point it out, it will empower us to create new avenues of growth for NIIT Learning Systems, that we get given the independence and ability to deploy both human as well as both capacities on a daily. We have, as I've mentioned in the past, continued to over-invest in sales and marketing as well as new capabilities. These capabilities have enabled us to continue to win new customers and expand the business group as we do existing customers over the last 1 year.
The last one year, from an overall perspective, has been a year that has been interesting on two counts. One, NIIT acquired St. Charles Consulting Group Limited, as you know. We've added new capability as well as a new set of customers. We've also seen the uncertainty and challenges that uncertainty brings from an economic perspective, and I wanted to provide the results for this last year in that context. For the full year, revenue stood at INR 30,680 million. It was up 20% year-over-year. In constant currency terms, the revenue grew at 14% year-over-year. NIIT, as I mentioned earlier, acquired St. Charles Consulting Group during the year. Excluding the contribution of St. Charles Consulting Group, the revenue was up 11% year-over-year. The EBITDA stood at INR 3,154 million.
It was up 6% year-over-year. The operating margin of 23% was down 210 basis points year-over-year. Profit after tax stood at INR 1,122 million. The EPS stands at INR 14.3.
Please. Just answer the next over to you, Sapnesh.
Sorry about that. At the end of the year, cash and cash equivalents are at INR 5,722 million, net cash at INR 4,563 million. The days of sales outstanding are at 52, and the NIIT marks becoming a part of NIIT Learning Systems Limited stand at 2,339. For the fourth quarter, the revenue stood at INR 3,856 million. This was up 30% year-over-year and 6% quarter-over-quarter. The constant currency revenue growth was 15% year-over-year and 4% quarter-over-quarter. Excluding the St. Charles contribution, the revenue was up 6% year-over-year for the quarter, reflecting reduced consumption due to macro uncertainties. The EBITDA was at INR 948 million, up 30% year-over-year.
The EBITDA margin was at 25%, up 40 basis points quarter-on-quarter. The margin improvement was driven by optimization and improved utilization of resources. Profit after tax was at INR 539 million. EPS was 4.5. You know, Q4 is a seasonally weak quarter for the business as several of our customer budgets are just opening up. The uncertainty in the environment continues to affect the business as we had guided. While trends are impacted, our new customer admissions, additions remain strong. We are seeing an increasing propensity to outsource by customers, driven by the need to control costs, and we are seeing a very strong pipeline of deals. During Q4, we added 4 new contracts, Managed Training Services contracts.
One, a technology enabler, one, another, a healthcare insurance company, another global payment company, and a renewable energy conglomerate. As of March 31st, the revenue visibility stood at INR 363 million, and the number of MTS contracts stood at 80. With the 80 contracts, we have also added significant customers of 10,000. As I look ahead, I believe that the uncertainty will start to lift around the second half of the year. We expect the first quarter to stay challenged and be flat or marginally up as compared to fourth quarter. We are likely to start seeing sequential growth or material sequential growth from the second quarter, and we should see most of our year-on-year growth towards the end of the year.
Overall, we expect to continue to grow at approximately 20% on a year-on-year basis and maintain a margin of 30% or 20%. The CapEx for the year is expected to be around INR 45 crores. Because that was summed up of numbers from FY 2023 and Q4 for an investment. Thank you.
Okay, just to complete the briefing, let us take you through the NIIT Limited revenue, which is the skills and career segment, skills and career segment, which so far we have been sharing as a revised segment at a level. This time, given the fact that the two companies have merged, I will be taking you right through the P&L page. So NIIT's revenue for the year was at INR 331.3 crores. It was up 36% year-on-year.
NIIT's work on the NIIT services can be split into 2 broad customer segments. 1 is early career professionals, where we either provide end-to-end pre-hire or junior onboarding. This training helps our learners get graduated jobs and set them up for success in their careers. This segment has been an area of strength for NIIT and continues to be so. When I say that has been an area of strength, I'm referring to the last 42 years. Additional to that, working professionals now, where NIIT provides training to working professionals, helping them advance their careers. This category is developing a service through the enterprise go-to-market and was recently strengthened with the acquisition of RPS Consulting. NIIT's training programs are broadly for early career and working professionals, are broadly covering 2 sectors: technology and the other is BFSI.
There is a small segment of other sectors, broadly, which I have tucked under BFSI only. There are two go-to-market sector, one, direct to consumer, and second, through enterprise. The customer base for FY 2023 in early career segment was at 83.8 crores, which contributed 54% of the total revenue and grew 15% year-over-year. as this growth dropped rapidly for quite early in Q4, and I'll share with you the results or the run rate that we had in Q3 of 18. Work proficiency, on the other hand, contributed 46% and grew 73% year-over-year, and was at 157.4 crores. In programs, technology sector programs contributed 50% of corporate revenue, and the balance was with BFSI and other.
This technology sector programs were up 40% year-over-year. StackRoute and GClass, which is a number that we have been sharing in the past, up 17% year-over-year and contributed 32% of the Skills & Careers revenue. FY 2023 was the full year of RPS Consulting. As everybody, we acquired RPS Consulting on 1st of October 2021. If you exclude RPS and I think even then the organic revenue was up 13% year-over-year, despite the impact of slowdown in hiring in the second half of FY 2023. The FSL profit here was at INR 10 billion and what is INR 35 million in FY 2022. We have to look at these annual results in the light of the fact that some parts of the business, especially enterprise go-to-market, are in profit, are making profits.
That profit is getting reinvested in the transformation of the business, which is taking place from the consumer go-to-market side. This is one factor which is not very clear in this, right? Second, the kids and higher business has seen strong growth in the last few years after switching to digital learning in FY 2021. Q4 was a blip due to seasonality as well as the tailwinds due coming from the environment. Despite this shift, the business achieved a CAGR of 66% over FY 2021, with organic revenues growing at 31% CAGR. This part is not coming out clearly in our results since over the last few years on our discussion, it is in the overall NIIT Limited.
The smaller part of the business, which is may have gone unnoticed in terms of the growth that we have experienced. The transformation of the business is underway, and we expect the growth to become more sustainable, consistent, and profitable over a period of time. The volume is expected to pick gradually during the year, with growth in second half of FY 2024, and we expect double-digit growth for FY 2024, with margin improvement to mid-single digits for the full year. I call here and now open the floor for questions.
Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star 2. Participants are expected to use star to ask more questions. Please hold for a moment while the questions are being placed. First question is from the line of Jyoti Singh from Arihant Capital Markets. Please go ahead.
Yeah, thanks for the opportunity. My only, what are the expectations going forward for FY 2024 and 2025, as macroeconomic uncertainty?
Can you talk a little louder? The voice is breaking. Can you please repeat the question?
Now.
That's better now.
I view on the champion going forward. Is there expectation on the growth side and on the margin side, for FY 2024-2025, that we are seeing macroeconomic uncertainty? What's your overall view?
Given the macroeconomic uncertainty, what is the view on growth and margin for FY 2024, for both the businesses?
I'll start with the ITL business. For the NLSL business, we're set to grow at approximately 20% for the fiscal year 2024, at a margin of upwards of 20%. For NIIT Limited, the kids and careers business, as I explained to you earlier, we are seeing a stabilization happening during the year. Growth, while we will see sequential growth quarter on quarter, but I think there will be an acceleration in the second half of the year. Therefore, for the overall year, we see a 3%-10% growth. I did mention double digits earlier on, I would say we aim for double-digit growth for the year and a mid-single digit margin, because the investment in customer experience will continue.
Just to say that the enterprise go-to-market part has quite a healthy margin, and we are reinvesting that margin back into the business to make sure that the consumer go-to-market gets strengthened. Unless the two are working together, we will not be able to clock a sustainable growth over the period.
Okay, thank you, sir.
If you want to ask a question, maybe press star 1 at this time. The next question is from the line of Ganesh Shetty as an Individual Investor. Please go ahead.
Am I audible, sir?
Yes.
Yeah. Congratulations to the entire management team for the completion of the merger, and also I'm very happy for the team taken by the management to increase the shareholder value. I've been a investor of NIIT Limited since before the demerger of NIIT into NIIT Technologies Limited, and NIIT has created immense value for all the investor community, and I wish you all the best and all the information given by the management is and point of that. Thank you very much, management team.
Thank you for your comments, Mr. Ganesh Shetty. Yes, I remember, we've been on this call for now nearly a quarter of a century, and I think that is very, very. We are very proud of having you as a part of our shareholder family, and we hope we continue to live up to your expectations.
Thank you very much, sir.
Thank you. The next question is from Pooja Doshi, from Federal Management Advisors. Please go ahead.
Yeah, thank you for taking my question. Firstly, I wanted to ask if you could give me your onshore and offshore employment breakdown for this CIG business.
The total number of employees in MLSL on 31st of March 2023, stood at 2,330, approximately. Out of those, about 600 are employed outside of India.
Got it. Thank you.
Approximately, maybe a couple of few here than that.
Yeah, fair enough. I believe within CIG, almost all your training is proprietary training. Just wanted to understand, what sort of trainers or suppliers do you hire? Are they old industry experts or are they ex-company employees? What are the contract terms with NIIT? The reason I'm asking this is because, for example, say, in oil and gas, it could be an extremely technical training. Would you want to need an expert to train the employees? Is essentially why I'm asking this.
You actually answered the question quite well. You are right. We employ trainers, some of them on our rolls and several on contract. We do that to ensure that we have reliability in our system. Like you pointed out, these folks have proprietary expertise in the domain that they serve. Folks in oil and gas will have the oil and gas expertise. People in pharma, likewise, will have pharma expertise and so on, so forth. Like I pointed out, we employ some of them on as full-time employees on the payroll, but a large number of them as contractors. We don't disclose contract terms, neither of our contractors or employees, but I'm happy to say that the terms are those of independent contractors.
Okay, got that.
Pooja, let me complete the example for you. We need to touch the group of people who are on rolls of NIIT Learning Systems Limited. In addition to that, on NIIT Limited, payroll, we have 959 employees as on 31st March, at the end of the merger, who would have moved into NIIT.
Okay. Thanks so much for that information. Within CIG again, if you could give me maybe some mandatory and non-mandatory training. By mandatory, what I mean is that, like that's going to happen irrespective of the market scenario, whether we are into recession or inflation or whatever. If you could help me with that, please.
Sure. Let me clarify something. All training is discretionary in nature. However, like you pointed out, mandatory training has higher amount of specialty as compared to non-mandatory training. Mandatory training often is regulatory in nature or license to operate in nature. About 50%-60% of our training wants to be regulatory or mandatory.
Okay. Okay. Sir, just one last question. If you could help me with the other active participation of that INR 120 crores in the balance sheet for NIIT?
Of NIIT Limited?
Correct. Correct.
Okay. I'll request my colleague, Sanjeev Bansal, to take you through.... discussion pick up or?
Other assets, INR 122.
Other assets. Okay. We'll just take this question after a few minutes while I, my colleagues will get the answer. Let them handle the next question.
No, sir. Thank you so much, and thank you for answering all my questions, and good luck to you.
Okay, Pooja, I will just revert back with answer to this question about asset pickup. Okay?
Yeah, sure. Sure.
Thank you. The next question is from the line of Subha from Bank of America.
Yeah, hi. Congratulations to the team on completing this milestone. A few questions on NIIT Limited first. The guidance you said, will it grow, or is it 8%-10% growth that you're guiding to?
Right. Yeah. I did mention 8%-10%. However, I also said double digits, so right now you can assume 10%.
Okay, got it. Another thing is, I mean, have you hired any CEO for NIIT Limited, or how are we looking at the top leadership for this business?
Yeah. As of now, given the strong transformation which has to take place, and in an accelerated manner, given the current environment, we decided to opt for the founders rolling up their sleeves and jumping into the play and making this transformation happen, while the individual business leaders directly work with the board. The purpose of this is to ensure that we use the experience of the founders, who have done this kind of a rapid transformation, without allowing and therefore making sure that there is a direct connect with the market, and therefore the response time of the organization will be much faster if we had a leader through whom this transformation took place at this point of time. That's a completed definition, but in the next four- six quarters, definitely there will be a transition to a leader.
That can be in the early part of the 4-6 period or maybe around that time.
Got it. Got it. Another thing is, we were of the opinion that the NIIT Limited business was a negative working capital business. When I look at the DSO, even this business shows a 30-35 days DSO. Just want some clarity on this one.
Yeah. Two parts, the populace business which we acquired, which is predominantly an enterprise go-to-market, does have a working capital need. The consumer part of the business, is a negative working capital business, but at this point of time, the enterprise business is in excess. At this point, the enterprise go-to-market part of the business is in excess.
Okay. Okay. If I can squeeze in some questions for the CLG business. Could you give the split between organic and inorganic growth guidance?
The organic growth is likely to be mid-teens. For FY 2024.
For FY 2024.
Of organic growth, yeah, you mean excluding sales charge? Is that what you're asking?
Yeah, yeah, yeah, excluding sales charge.
Shubha, I want to also complete for you that now our PS is a 100% subsidiary. We bought the last 10%, and that also on this model now. In April, in May, early May, we completed the last 10%, and there is an earn-out attached to it, which will be over in the next 18 months.
Yeah. Just to clarify, on the NLSL guidance, organic guidance is of mid-teens, is that what you are referring to?
As you can see.
NLSL, guidance for FY 2024, 9%.
No, organic. Organic is mid-teens or low. For the full business, it is 20%.
Okay, okay. for this-
Business as including same charge, full year numbers, and it's inorganic, because last year they were included only for about a quarter and a half.
Okay, got it, sir. This revenue recognition number, which increased to $362 million in this quarter, how much of it is allocated to addition of SCC, and how much is it because of full, organic business growth?
Very good question. Approximately $30 million is associated with St. Charles. $33 million is associated with St. Charles. Just to complete the picture, since last quarter, we added 4 new MTS clients, and 2 clients from the earlier list got reduced because those contracts got completed, and therefore we now have 73. 73 MTS customers from an organic point of view, and we added 7 St. Charles for whom we added a visibility of 33. 73 at 330 and 33, 7 more at 23 were added. We have said, Ajit, that we've watched the performance for about a quarter and a half before we bring their numbers into this.
Okay. If you, if you check the top clients concentration for MLSL, top five clients contribution increased quite significantly. Was it related to some particular client that did well in this quarter, or how should we read this?
Let me see where you are. Okay. Top 5 client concentration, there is little increase, because this way as well as any other time. The client concentration increased because, one of 10 customers has a revenue that's greater than average, so, large customer, so they entered the top 5 list, as well as, one of the organic or CLG customers did that.
Okay, sure. That's okay. Thank you so much.
Thank you. Next question is from Siddharth at Individual Investor. Please go ahead.
Hi, good evening. Congratulations on the results in the demerger process. Actually, quite a few questions from my side. My first question would be regarding the demerger that we have a smaller business. Now we have been giving guidance from even in the last phone call, that we'll be growing at around 40%-50% year. Why this sudden sharp cut saying that you're now talking about single-digits? One of the rationales for the demerger would have been to accelerate the growth and, you know, to capitalize on 40%, 50% growth numbers. As you mentioned, even this year it showed a 66% growth. I mean, we're targeting something like a small company, INR 100 crore, INR 200 crore revenue, INR 300 crore revenue companies, which will be growing much faster. Are we looking at significant deviation in terms of growth?
Can we, within this NIIT, we are looking at cash equivalents of INR 700 crores. Even if I put a 4% bank interest, that comes to about INR 58 crores as interest, and we're saying our EBITDA should be early single digits. That's consuming on a revenue base of maybe INR 500 crores. Essentially, what we're saying is we're going to consume all the money we earn, and essentially, the interest cost is all that is what we're going to earn from this business. Could you please clarify, and then I'll ask more questions, please. Thank you.
Yeah, certainly. I must compliment you on seeking this route, but I would like to give you some perspective. First of all, we are looking at the business when it is work in progress in terms of transformation, and we are not expecting that this transformation will last for the next 3 years or 4 years, that we have till we said we would reach INR 1,200 crores. That transformation, unfortunately, got interrupted very sharply in the 4th quarter of this year. I had mentioned some time back that I will share with you the growth that we were clocking before that. I want to share with you some statistics. If you look at our growth till CYQ3, enrollment growth in earlier years was 78% year-on-year.
Now, at the end of fourth quarter, it has come down to 38%, which is fourth quarter of the previous year, was phenomenally large, because at that time, if you remember, there was a euphoria with huge recruitment in progress. In contrast to that, there has been a sudden freeze in recruitment, fresher recruitment or headcount addition, and I'm sure we have both read the same newspaper, is that in quarter four, the headcount addition has been made. The second is the freeze on the spend. The freeze on spend has also come very rapidly because obviously people are saying there are massive layoffs. You know, see it from the results and the way they have dropped numbers on one to take or the other. Each one of them have a backlog of fulfilling recruitment promises which they made last year.
In that environment, in the next two quarters, we don't see the situation improving. In fact, I went on to say that we will have a sequential growth quarter-on-quarter. That is coming from the fact that our organic growth in enrollment will help us achieve that growth despite a very massive unpredictability in the environment in the field. This is a very unique situation, coupled with one more fact. Startups which were falling over each other, trying to recruit people, and the salaries were going through the roof, they are laying off people because their funding discipline has dried up. I think we don't think this situation will continue. We have actually fallen in a trough, and I believe that the recovery, as soon as the backlog gets over, will also come sharply.
Now the consumer go-to-market part of our business also, I think the experiments that we were doing over the last three or four quarters have now shown us the way forward. We do see that there is a possibility of a V-shaped recovery from the current situation, and we should be back on track. Now, we went down from INR 900 million run rate in quarter three to INR 600 million, and this is despite the fact that the enterprise part of the business has been stable but declining in terms of margin, so declining in revenue.
When we come back for recovery, I think you will see sequential growth, but it will take us better part of this year to come back and make up for what has got lost in quarter four. This is my answer to that. Are we committed to that? Technically, indeed, we are. Will this happen purely through organic means? It was not meant to, and it will not happen that way. Most probably, there still has to be inorganic activity. The bright side of the picture is that inorganic activities will be more usable now, given the fact that, like us, many of our competitors, if I dare say, are in worse shape than we are and have been much worse affected. We have a strong balance sheet.
We are working the bank, and I think it's a great opportunity for us to add up and get back on the road. I don't know whether I answered your question or not.
No, absolutely. So thank you for that answer. Just a few more questions. Secondly, we've been doing the, again, this is also related to NIIT, I'll come to NIIT later. We've also been doing the NIIT boot camps at the NIIT University. There were certain startups that you yourself mentioned and Mr. Pawar in his speeches has mentioned, and I'm getting training from the NIIT team as well. Any things that we are looking to acquire over there? Since you mentioned the acquisitions, is there any monthly target we can set in terms of certain companies we're looking at at the moment? Or any new kind of agency space we're looking to enter, maybe a level below the K-12, or we're very clear we're not going into that space at all?
We are not going into that K-12 space. That is a definitive answer.
Mm-hmm.
We are definitely looking at the startup roadmap that you mentioned about, those are very early stage startups. What we are looking at is how can partnerships with those, whether they are financial or strategic, can help us move forward on other sectors. K-12 and test prep are not the areas that are of interest to us, and we are not going to be there because the decision has been made some time ago.
Right.
On the other acquisition targets that we are considering, yes.
Yes.
We are in active discussion on a few possibilities, but as you know, these things happen only when they happen.
Absolutely.
I can't tell you when, whether we have a monthly or a quarterly target.
Right. One more question. The other day, this is about a month or so back, CNBC-TV18 in the U.S. was discussing the impact of AI on learning companies. For example, on that day, it was very disturbing to see Chegg down 20% and other companies down 15%, 16% odd percent in the market. My question was: How do you see AI impacting the learning trajectory? Because a lot of students would now say, "Hey, for example, if I want to learn something on marketing, why take a course? Why not just ask ChatGPT to help me create a marketing framework or something of that sort?" Or, for example, if I want to create code, why not use AI in some manner rather than trying to go to an NIIT or an upGrad, whoever, to actually learn?
Isn't this a significant risk to the business? How are we planning to mitigate it in our learning as well as our CLG side of the business?
... This is one of the favorite subjects around this table. We actually spent 2 days in the board meetings before we came here, and this was a very active part of the discussion. Before that, 2 of our board members and I, we spent time in U.S. with some of our, our, strong partners as well as teachers, and here is our considered view. I will say my part, and I'm sure Raji and Pramesh will add to that. First of all, AI presents a phenomenal opportunity for us to scale up very, very fast. 1, it's regardless, we have AI as a subject in which large number of people will need to be trained, and large corporations will need this in figuring out what they should do with AI. Second, that is AI as a subject.
The second is AI in learning. AI in learning is a great opportunity as well, because in very simple words, it will contribute substantially to the efficiency of learning as well as the effectiveness of learning. Efficiency of learning, what used to take 10 number of hours to create and 10 number of hours to deliver, can now be done in a fraction of time, which can be teach more and delivered in the same time with same resources. Effectiveness, because we can actually personalize the learning experience to a class of 1, something what seems like we have before. If we do both this, it represents a huge, wondrous opportunity. How is this materializing in real time? I will request Sapnesh to say, because he's coming right from the battleground.
Thanks, Vijay. It gives the NIIT great opportunity to leverage AI.
In fact, we have where our chief learning scientist from that college, who actually got his PhD in AI from Yale almost 35 years ago. Under him, we have a team of about 30 to 40 engineers working to see how we can how they can enable us to embrace AI. Like Vijay pointed out, we have a number of experiments going at this time, both on the dimension of efficiency as well as on effectiveness. I will make a comment on the point that you made about Coursera or Chegg. We just like what calculators or Google did, remembering tables by rote became irrelevant. Remembering information or having Encyclopedia Britannica on your bookshelf became irrelevant because of Google. Knowing a lot of information will become irrelevant as far as AI is concerned.
Training that was masquerading as information has become irrelevant. It was irrelevant in the past, it has now become irrelevant. What is relevant is training that creates outcomes, that enables people how to do the task. For example, if you wanted to learn how to swim and swimming was important to you, AI is not going to replace your ability to swim. AI could, instead of you watching a video of my friends swimming or teaching you how to swim, you could get AI to show you another video. You still have to go out into the pool and in the process, learn how to swim, and then you'll be able to swim.
In nutshell, I think AI will help us make the process more efficient and more effective, and it will lower the value of training that was actually not outcome-oriented. It will, on the other hand, significantly increase the value of training that was outcome-oriented. For one thing that I know about NIIT over the last 40, it's focused only on outcome-oriented training.
My next question is again related to NIIT, the smaller company. Today Mr. Pawar mentioned on television on CNBC TV Pro, the hybrid model of training. Are we by any chance looking now to set up physical centers or that's also a no-go area for us, considering, you know, we are taking a drive on profitability?
I think hybrid can be understood in many, many formats. We have a number of experiments underway on that. In the future of learning, there are enough schools of thought which believe that without a face-to-face intervention at specific parts of time, learning effectiveness can remain challenged. Having said that, we have mastered the learning delivery online, completely, but there are other portions of the learning cycle from acquisition right up to careers and careers, which are being completed in other parts. More about this as we discover the third company.
Right. My next question would be for NLSL. Two questions on this one. Firstly, you mentioned that there was one company whose contract did not renew. Now we've credited because of the fact that we've had a 100% renewal rate. Why is it that at this point in time, one company did not, even after its contract get over, renew our MTS services? Number one. Secondly, am I right in assuming that we will have INR 500 crores cash available to us, and if so, do you think that's a provision for future inorganic growth for NLSL? Thirdly, would the founders, Mr. Darius and Mr. Pawar, also be spending some time on NLSL, or they will be totally focused on NIIT? One last question would be regarding dividend. Why not reward shareholders for the time they've spent with the company?
Given the dividend between the demerger has now happened, and we do have significant cash on the books.
Very, very relevant. Very relevant questions. Let's start 1 by 1. Let me work backwards from dividend. We do believe that NIIT has been a dividend-paying company, and we had mentioned in January of 2022, when we shared the interim dividend, not interim, special dividend, because we had said that till the demerger process is complete. Sorry, after the demerger process is complete, both companies will take their individual decisions on dividend. The demerger process is complete to an extent, but not fully, as I mentioned in my opening comments also. Indeed, it is the board meetings which take place after listing of NLSL, that is the place at which the group will take a call and on declaring dividend whatsoever required.
Given the time that it takes for the listing process, you can expect, and the board will consider, declaring a dividend. I think by end of this quarter two results, quite certainly, and it seems several times, and even quarter one results is a possibility. Quarter two results, interim dividend is perhaps more in line on which the project is working. That's one. Your second question was?
INR 500 crores.
Any time. Oh, whether authors will spend time. Rajiv will also answer this part, but sufficient to say that both of us are on both the boards, and I am a vice chairman and a director on both sides. Rajendra will add more to this.
As I think, as I mentioned in the outset, the NLSL strategic direction and updates created a while ago, and then the whole strengthening of the team and the improvement of the process and more use of science and technology in learning, all of that is got on a very good roll. Strategic inputs of the type we need in NIIT Limited at this time are not necessary on the other side. However, we do see many more drivers of growth and in which we all get involved, and continue to get involved.
NIIT Limited, on the other hand, is sitting on an opportunity where there is many turbulent factors in the environment. Also, we want to broad base many things about how we do things. There's a need to do many more things on the drawing board, including, of course, dealing with the headwinds of IT sector not high. As you said, that's fine. Those are moments where you need to roll up your sleeves and get into taking certain operational and tactical decisions, certain talent and different decisions which are very direct. Therefore, that will take time for Vijay, me, Raje, to work on more than what we have done in the recent past. It's not that there'll be no time left for NLSL.
That needs our time in a certain fashion, because potentially, as I said, NIIT, and with an excellent strategic direction and with excellent competitive mix, which we are working upon. There the support is much more to give a shoulder once in a while and, of course, the whole governance area. I hope that answers this part, Vijay?
Yes.
Yes. Okay. The question you are not quite. Five minutes ago. No. There was a number of questions. There was one more? All right. Let me complete the INR 500 crores. First of all, we NLSL, as is opening its account with nearly INR 570 crores, five hundred reach, right? From opening in 2000 and then even after the St. Charles acquisition, we now have INR 570 crores. There is INR 200+ crores of tax generation every year if you add to that. Our typical sweet spot for acquisitions is a INR 25 billion- INR 50 billion company, and therefore, I think there is sufficient headroom available for us to add a few more in our journey towards half a billion dollars, or thereabout, as we had mentioned.
Lastly, you had a question about the 2 contracts that we declassified from MTS contracts. Every quarter we take a look at all our contracts. I do want to confirm that all contracts that have come up for renewal over the last 3 years have been renewed. The 2 contracts that we have declassified from being MTS customers, those customers continue to be our customers. It's just that given the shrinkage in volume, we have not classified them in this quarter as MTS customers, and we have not taken visibility on them. Thank you. Hello, are you able to hear it?
Yeah, I cannot hear the question.
I think one more question.
One last question. One last question.
One more question, and can we have this is the last one because I have other calls to take.
Actually, we have only one last question. This is more with respect to, again, creation of shareholder value. With all due respect to everyone else on this call, you know, one is not hearing the names of large institutional holdings like Mirae Asset or ICICI people on this call, it's more smaller houses or Individual Investors like myself. Why we're not able to attract these large institutions into our stock, into our company, considering we're doing such a phenomenal job? Secondly, when people ask founder as CEO, when I hear other con calls, they use words like cautiously optimistic, or they give a big tone. They kind of fire up the business rather than turn things down. We talk about uncertainty, turbulence, because some level is discouraging institutions and institutional activity in our share and therefore impacting shareholder value for smaller retailers like myself.
I think there is a larger discussion involved here. First of all, I think if you look at our, we are very proud of our shareholders, first of all, you are one of them. I'm saying you left, you referred to large fund houses. I think wherever there are large fund houses who have exposure to stock and market cap of our size, I think we enjoy a solid position there, and we have absolutely no hesitation in saying that we are very proud of their association. Shareholders have been with us for longest periods of time. When for certain considerations of their own, they decide to get out of certain values of a certain level of stock, obviously they have to go by the norms that they set.
Typically, in the market that we enjoy at this point of time, I think we have different shareholders. Our inclusion in the MSCI has also helped us get a large number of investors who back us. And I would not like to get into individual details or individual names of our shareholders, because I think they are supposed to keep some under the wraps to the extent that they can. Our FIIs own MSCI. I think we have a take of 21%, which is a fairly decent percentage compared to our contemporaries, as well as contemporaries in the IT services, which again, sometimes get compared quite often. I don't think we have a dearth of the quantity of shareholders.
I think we have very good shareholders, and we are very proud of them, and they have had long associations with us. Should we be able to attract more? Of course, we should be able to attract more, and we are making all efforts to do that. When you have committed and passionate shareholders such as yourself, I'm sure you will help us in that journey as we go forward. This is a win-win.
Thank you.
All right, next one.
Yes. The next question is on the line of Anika from Unit Industrial. Please go ahead.
Hi. most of my questions have been answered, thank you. You know, since the question and ask, you know, your comment on delivered growth for FY 2024, you know, how much of this is really dependent on the environment really getting better or period? I asked this because, you know, recent past or consolidates on the market share era of what the maxes are.
I can answer the question on behalf of MLSL. You're very right. When demand is complex or constricted, opportunity is in growing market share and also increasing new customer acquisition. That's really where our focus is. However, demand contraction does result into lower growth, but that is a short-term phenomenon. The new customers you acquire and the gain that you get in market share lives for a much longer period of time, and that's really where our focus is at this time.
On the international business, you know, what were the one-off costs we put in Q4? I think there is disclosure on the full year numbers, but I'm just curious about what were the one-off costs on Q4 in that acquisition?
One-off costs in the acquisition.
No, in Q4, I believe acquisition was already Q3, if I'm not wrong. My question is specific to Q4, please.
Can you just identify it? I think we also have a slight audio issue, so I'm asking again and again. Can you refer to the line item of interest and printing?
No, I'm referring to the international business. I think there's an adequate disclosure on your CCP, but talk about the one-off costs for FY 2024 as a whole, right? For instance, your acquisition costs for.
One-off costs are to do with acquisition. There would be costs relating. Yeah, you said it, FY 2023. Whether that happened, what came on to FY 2023.
Let me repeat my question: What are the one-off booking in FY 2024? It's a very simple question. In Q4 of FY 2024.
In FY 2024, there is no one-off booking.
Are we on Q4 or FY 2023? Just for 1 quarter, Q4.
Q4, FY 2023. Can we take it offline from you? Because I think just I need to understand. Either way, I still have to understand. I think let me revert back to you in a short while.
Yeah, sure, no worry. Thank you.
Thank you. Next question is from the line of Anesu from Abhinav Investment. Please go ahead.
Hi. First of all, congratulations for completion of Q4. I have two broad, every question. One is, how good business just pan out in the next four to five years, including the revenue and margin growth? What are the factors which will contribute to this growth? The second is, on the competition side, how is the competition for both the businesses and what is our cutting edge?
Let me repeat. You know, the first question was, how do you see the next four or five years of business, and how do you see them panning out?
The factors contributing to the growth.
Factors contributing to growth, plus growth drivers that is related to competition in the areas. Okay. Can you talk about NLSN? You asked about how the business is positioned for the next 4 years-5 years and how are we looking at competition. From the point of view of NLSN, like we said, our goal is to enter $400 million-$500 million. It is a large part of that movement will happen organically, and part of that movement will happen in more organic. This is something that I've said in the past: Whenever economies experience recession and are coming out of recession, organizations start focusing on what is core to them, and look at outsourcing as a means of doing what is not core to them.
We've all this happened, and financially, we are starting to see that now. With the continued disproportionate investment in sales and marketing, as well as gaining of capability, that we will be able to acquire a higher share of deals that come up. We do think that the propensity to outsource will increase, and there will be an acceleration in deals. I think we will be very well positioned to capture the larger percentage of the deals that come up for outsourcing. In terms of competition, the largest competitors we have are the large GSIs, like Accenture, IBM, Infosys. There is one competitor called Genpact, who is a specialist learning outsourcing company. We are in the group of top five at this point in time, and our goal is to achieve market leadership over the next 5 years- 6 years.
Okay. Two questions from the bookkeeping side. In FY 2023, in the CIG business, why insist different grown in CBC becomes, sorry, CBD compared to the revenue growth? The second is, could you elaborate on the next expenses?
The next other expenses or the expense, exceptional expenses are predominantly on account of the acquisition of St. Charles, as well as the scheme of arrangement that we just completed for the merger of the CLG business into NIIT Learning Systems Limited. A part of other expenses would also have the, so for example, there are employees of any one company will get their options converted into options of both the companies. The options of the second company are not expenses of this company, and to that extent, I think there is a below the line special, other expense. These are all scheme related expenses. Okay. In terms of operating expenses? Sorry, I think first question was, why have operating expenses grown faster than revenue in NLSL? Which is why margins have come down. Yeah.
Actually, that's not our Operating Expenses having gone up. It is a product mix from a revenue point of view, of lower volume of a price, a higher margin contract. We talked about, this realization would happen, and this is well within. It's actually better than what we had assumed it would or. Just to recap, the margin for FY 2022 was 26%. The exit margin for before FY 2023 is 25%. The reason why the margin for FY 2023 is 23%, because we saw a lot of headroom to raise the margin by 20%. Thank you. If we were to answer of Pooja, in terms of what are other assets in NIIT challenging?
I just want you to clarify to her that those consist of back selective as sourced by customer, which is revenue, which is a work in progress for which the billing deadline has not remained. Input credit of GST and travel expenses, as well as some interest recoverable or receivables of FPs, which will be paid on due date. I hope it answers all your questions.
Thank you. Ladies and gentlemen, this will be our last question for today. I now hand the conference back to the management for their closing remarks. Thank you, and over to you.
Okay, all that I want to say is thank you very much for a very interesting set of questions by you guys. Thank you for sharing our numbers as well as all our announcements. Thank you for keeping a track of the progress of NIIT. We truly support, truly support through these times of disintermediation. Thank you very much for your compliments. The deal that has been made, I think it's a very encouraging comment to know, and this was an appreciated by our shareholder base. We are all available to you to answer any questions. We do know we are in the midst of disintermediation as well as transition, and therefore, in that, in that position, the least we can do is make ourselves available and answer all your questions.
Do reach out to Kapil Saurabh, who will continue to represent both the companies as the middle link, and therefore, to that extent, we'll be able to answer your questions, not only relating to any one of them, but also relating to the combined system rather than the two of them. With that, I would like to leave this call and wish you all the best, and looking forward to interact with you in person at the earliest possible opportunity. Thank you.
Thank you very much.
Thank you very much.
Thank you. Ladies and gentlemen, on behalf of NIIT, I thank you for this conference, and thank you all for joining us, and we'll now disconnect the line.
Yeah, we're closed.
Thank you, sir.