Ladies and gentlemen, good day and welcome to Quess Corp Limited Q4 FY 2024 earnings conference call hosted by IIFL Securities Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star then zero on a touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Balaji Subramanian from IIFL Securities Limited. Thank you, and over to you, sir.
Ladies and gentlemen, good morning, and thank you for joining us on the post-results conference call for Quess Corp. It is my pleasure to introduce the senior management team of Quess, who are here with us today to discuss the results. We have Mr. Guruprasad Srinivasan, ED and Group CEO, Mr. Kamal Pal Hoda, Group CFO, Mr. Kushal Maheshwari, Head Investor Relations and Strategic Finance, Mr. Lohit Bhatia, President, Workforce Management, Mr. Pinaki Kar, President, Global Technology Solutions, Mr. Anand Sundar Raj, President, OAM, and Mr. Sekhar Garisa, President, Product-led Businesses. We will begin the call with opening remarks by the management team, and thereafter, we will open the call for a Q&A session. I would like to now hand over the call to Mr. Kushal Maheshwari to take proceedings forward. Thank you, and over to you, Kushal.
Thank you, Balaji. Good morning, everyone, and thank you for joining our Q4 FY 2024 and full year FY 2024 earnings call. The information, data, and outlook shared by the management during the call is forward-looking but subject to prevailing business conditions and government policies. All forward-looking statements are subject to economic growth or other risks faced by the company. Please refer to slide number two of investor presentation for the safe harbor clause. With that safe harbor clause, I will now hand over the call to our Group CEO, Guruprasad Srinivasan, for his opening call. Over to you, Guru.
Thank you, Kushal. Good morning, everyone, and thank you for joining us today. During FY 2024, we focused on profitable growth, and our year-long initiatives have resulted in our best operating results, leading us to achieve the highest ever quarterly and annual EBITDA. We had a number of projects throughout the year that have helped us to achieve our results. This is our seventh consecutive quarter of sequential increase in EBITDA, reflected in predictable and nonlinear growth of 46% in EBITDA versus revenue growth of 15% during the same time. Also, EBITDA margin have expanded by 80 basis points since Q2 FY 2023, enabling us to close the quarter at an EBITDA margin of 4%. Our initiatives in cost reduction and productivity improvements resulted in a reduction of FTE headcount from 5,500 in Q1 to 5,300 in Q4.
Our investment in technology and process automation have complemented the productivity improvement project that we ran in association with BCG. We added 149 new contracts with an ACV of INR 232 crore during the quarter, bringing the total number of new contracts signed during FY 2024 to 737. We declared a final dividend of INR 6 per share, aggregating to INR 10 per share for full year.
Our prudent capital allocation policy has resulted in a cumulative debt repayment of INR 700+ crore and dividend payout of INR 488 crore in last five years. We added over 10,400 associates and closed the quarter with a total employee strength of 567,000 by headcount. Key financial highlights for the quarter are as follows. We recorded a revenue growth of INR 4,910 crore, a revenue of 11% year-on-year growth. We delivered highest ever quarterly EBITDA at INR 195 crore with 28% year-on-year growth.
The improvement in margin is mainly driven by three following parameters. Consistent margin improvement in GTS platform driven by focus on international geographies and high margin segments, reduction in foundit burn, operating leverage in OAM platform. Coming to annual financials, FY 2024 stood at INR 19,100 crore, 11% up against FY 2023. Annual EBITDA increased by 18% year-on-year, INR 694 crore, and PAT grew up by 26% year-on-year to INR 280 crore. OCF to operating EBITDA ratio stood at 67%.
We achieved a gross debt reduction of INR 162 crore, and the net cash position improved by INR 150 crore during the year, along with a DSO day reduction by four days down to 53 days. Few business updates across platforms, starting from workforce management. The headcount of the platform reached 452,000, including F&F of 32,000 processed during the period, adding 65,000 associates during the year, driving the revenue growth of 14% year-on-year.
Despite competitive pricing pressure and a significant flat fee business model, our EBITDA margin has stabilized at 2.6%. Contracts during the quarter with overall ACV of INR 150 crore and overall new contract addition for the year of 398 by count. Moving on to specific to General staffing. The business added 10,000 associates in headcount during the quarter, led by retail and manufacturing and telecom segment. The business added 16,000 associates in headcount, excluding full and final associates who are in full and final process. During the year, we have crossed 400,000 milestone. We are now among the top five global staffing companies by headcount and aspiring to become the largest staffing company globally. Business added 78 new logos in Q4, taking the financial year total to over 274.
Among the clients added during the year, 30% have used outsourcing staffing for the first time, evidence that the long-term trend towards outsourcing and formalization is becoming the industry norm. Our vertical focused strategy has continued to yield dividends. Four of our verticals, that is BFSI, retail, telecom, and manufacturing, have ended the year with 50,000 headcount of associates, with BFSI crossing 120,000 associates.
Our manufacturing vertical has been a key growth driver in FY 2024, adding 22,000 headcount, up by 47% during the year. In FY 2024, we sourced 28% of our new hiring and 64% of all associates onboarded were deployed in tier two and tier three cities, reflecting our strength in extensive sourcing deployment across geographies. Coming to IT staffing, the softness in overall IT industry is reflected in the fact that aggregate headcount of top five IT companies declined by 11,200 in Q4 and 69,000 in FY 2024.
Addition to the IT workforce in India has been mostly through GCCs, who now employ about 1.6 million. We expect this trend to continue, along with stabilization in hiring in IT services companies. Open mandate has seen a very marginal increase to 1,100 positions against 1,000 positions in December 2023. As we advance, our focus continues to be on capturing a larger market share in GCC. Moving on to GTS platform. GTS continues its trajectory, delivering an EBITDA growth of 19% year-on-year and 5% quarter-on-quarter. Shift in business mix through increased share of higher value services and favorable geographic mix has supported EBITDA margin expansion, increasing by 208 basis points year-on-year and 46 basis points quarter-on-quarter. The highlight of the platform are as follows. Conneqt, our BPM business, continues to maintain its momentum, crossing a milestone of INR 400 crores revenue in Q4.
The business closed the order book over an ACV of INR 64 crores. During the quarter, adding nine new logos in the process. The key drivers were BFSI, manufacturing, and retail segment. Non-voice BPM process continues to grow significantly with a growth rate of 4% quarter-on-quarter and 22% year-on-year. This is largely driven by our collection business, which clocked 24% growth year-on-year. The growth momentum in CXM business of Allsec continues with a healthy growth rate of 29% year-on-year and 10% sequential growth. High margin international business outperformed with a growth rate of 39% year-on-year and 13% quarter-on-quarter. International business now accounts for 74% of overall CXM revenue in Q4 against 69% in the same period last year. In platform-based services, CXM vertical in Allsec added 11 new logos in Q4 with total ACV of INR 7 crore.
International business accounted for 59% of total ACV added versus 31% for the same period last year. This vertical processed 155 million pay slips in Q4, a growth of 13%. Similar to CXM vertical, international business share increased to 23% in Q4 FY 2024 from 21% in the same period last year. Moving on to Operating Asset Management. Our focused initiative on margin expansion and productivity improvement led to an increase of 18% in EBITDA margins against the revenue increase of 7%. The platform has recorded a margin improvement of 106 basis points year-on-year. I would like to give you some highlights specific to OAM business. IFM added 14 new customers with ACV of INR 30 crore during the quarter. Healthcare, public utility, and BFSI are being the key drivers. Food and beverage business saw a gross margin improvement of 19% on an annualized basis.
In security services, our sales pipeline remains robust with 26 new contracts with an ACV of INR 23 crores between Q4 and Q1. Industrial and IT services are being the key drivers for security business. Telecom active infra business closed the year with best ever revenue, and FY 2024 revenue and EBITDA has shown a growth of 30% and 32% respectively. Moving on to product-led business, foundit has achieved its operational breakeven during the year in Q4 quarter with a reduction in burn. The sales grew by 9% year-on-year and 13% quarter-on-quarter, driven by enterprise sales and B2C sales. We successfully launched our disruptive AI product, foundit 2.0, for SEA market , South Asia, East Asia market, and migrated 100% of our single geography user customer to 2.0, enabling our customer to experience the new product.
Our operational metrics on both candidate and recruiter aspect remain positive, with consumption up by 18%, NRR above 100%, profile update up by 31% quarter on quarter, and highest ever indexed profile added in Q4. CSAT continues to remain healthy at 91%. Other corporate updates. In Quess, our associate are most effective brand ambassadors to our customers. I am happy to announce that in a recent conducted survey between Q3 and Q4, our pulse survey covering 156,000 associates, 88% have rated themselves as very satisfied or satisfied, up by 85% compared to the previous year. 78% of our associates are definitely likely or very likely to recommend Quess to their peers. This means a lot to us, and we will continue to work towards further improving the associate experience.
During the quarter, we announced three-way demerger of Quess Corp into three different independently set entities, with each one capable of executing its individual business strategies. We are confident that it will significantly augment the value creation journey going forward, with each business getting enhanced management focus and pursuing an optimal capital allocation strategy. We applied the scheme of demerger with stock exchange in February 2024 and moving on track. I will now hand over call to Kamal to give you more insights on financial updates. Thank you.
Thank you, Guru. Good morning, everyone, and thank you for joining us today. I am pleased to share with all of you that we are exiting the financial year on a high note, backed by our strong financial performance with highest ever quarterly and annual EBITDA. Our ability to maximize market opportunity is evident in our results, and we are seeing a solid momentum picking up in last four sequential quarters. Our FY 2024 revenues stand at INR 19,100 crores, a growth of 11% year on year. Such increase came across all platforms, with contributing sectors being BFSI, manufacturing and retail primarily. EBITDA grew at 18% in FY 2024 to INR 694 crores, a sequential year-on-year expansion in margin by 22 basis points. Such nonlinear growth came from margin expansion and cost initiatives taken across platforms, including reductions in foundit losses year on year.
PAT delivered for the year was INR 280 crores, a growth of 26%. EPS has grown by 24% year on year. This is backed by strong EBITDA growth across platforms, aided by lower effective tax rates from the merger of subsidiaries during the year. Our cash conversion continues to be strong, with operating cash to EBITDA at a healthy 67%, aided by a reduction of four days in DSO, which now stands at 53 days.
Our gross debt is at its lowest level in last five years, ending the year with INR 369 crores of gross debt, a reduction of INR 162 crores during this fiscal. With our board recommended final dividend of INR 6 per share during the quarter, our total dividend for the year clocks to INR 10 per share. With this, the return to shareholders in the last four years has been INR 488 crores in form of dividends.
Let me now walk you through the quarter's financial performance by platform, starting with workforce management. Revenue stands at INR 3,476 crores, registering a growth of 14% year-on-year and 1% quarter-on-quarter. Growth is predominantly in General Staffing business, with key sectors being manufacturing, BFSI, and retail. EBITDA has seen a growth of 2% quarter-on-quarter and 6% year-on-year at INR 91 crores. EBITDA margin percentage has been flat at 2.6% throughout the year. The cost pressure on account of wage inflation with flat margins in General Staffing businesses have been offset by increase in wallet share of value-added services in that platform. Coming to GTS, INR 588 crores revenue clocked for the quarter, an increase of 6% year-on-year and 3% quarter-on-quarter. Allsec continues its growth momentum in CXM business with 10% growth quarter-on-quarter.
Our domestic BPM business in Conneqt also showed a revenue growth of 4% quarter-on-quarter. EBITDA stands at INR 113 crores, a growth of 19% year-on-year, and 5% quarter-on-quarter. Such nonlinear increase in profitability is as a result of change in geographical mix with bias towards international revenues coupled with high margin businesses. Moving on to Operating Asset Management, INR 695 crores revenue drop for the quarter, a growth of 4% year-over-year and 2% quarter-on-quarter. Investment in sales in previous years in this quarter have resulted into good sales funnel and conversion for the quarter. Security management, including food services and telecom, have seen good growth during the quarter. EBITDA stands at INR 39 crores for the quarter, a growth of 29% year-over-year and 6% quarter-on-quarter.
Margin improvement is aided by change in business mix led by food and telecom businesses, coupled with operating leverage. Product-led business. Revenue drop for the quarter is INR 119 crore, a degrowth of 8% quarter-on-quarter. While foundit sales has grown by 13% quarter-on-quarter and 9% year-on-year, achieving highest ever quarterly sales of INR 50 crores. foundit treatment during the quarter has led to EBITDA losses, excluding non-cash ESOPs, reduced to negative INR 3 crores, helping us meet our commitment to investors. Our Break-fix business has seen some degrowth in spare services revenue during this quarter. As part of our strategy to focus and nurture our core businesses, we completed our divestment of our Break-fix business Qdigi, effective 31st March 2024, with an IRR of 15%. Moving on to tax updates.
There are no material updates from the last quarter as the hearings for the respective assessment years in ITAT and DRP have not yet commenced. For financial year 2017-2018 and 2018-2019, our appeal is at ITAT and the next hearing is expected in July 2024. For the year 2019-2020 and 2020-2021, the company has filed objections before DRP against the adjustments proposed by the tax office and the hearing for 2019-2020 is scheduled in the current month. Few corporate updates for the year. In line with our leader structure simplification strategy, implementation of amalgamation of our fully owned subsidiaries, Conneqt, MFX, Greenpiece post-NCLT was completed during the year. You are aware that our board approved a proposal to demerge the business into three independent listed entities, each one capable of executing its individual business strategies.
We believe that this will enable value unlock to our shareholders in medium and long term, scale the businesses to new height with enhanced management focus, follow an optimal capital allocation strategy, and attract separate investor base. We filed our scheme of demerger with stock exchange in February 2024 and we are progressing well on our plan. With this, I conclude on financial results and pass it back to the moderator for taking your questions. Thank you.
Thank you very much. We will now begin the question- and- answer session. Anyone who wishes to ask a question may press star and one on the telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use answers while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Balaji Subramanian from IIFL Securities Limited. Please go ahead.
Okay, so congrats on a great quarter. I have a couple of questions. You did mention the drivers behind the margin expansion OAM and GTS segments. Going forward, how should one look at the margin profiles and especially, the balance which you intend to strike between revenue growth and margins? The second question would be on the four-day reduction in DSO, which you talked about, which nearly adds INR 200 crores to OCF. So, what exactly drove this and is this the new normal going forward or do you see a room for further improvement?
Thank you, Balaji. For your first question on margin expansion in GTS, I would request Pinaki to give his inputs, followed by Anand. For the question on DSO, Kamal will give his inputs. Over to you, Pinaki.
Thank you. Good morning, Balaji. Hope I am audible.
Yeah, you are. Good morning.
Yes. As per the margin expansion, Balaji, let me just step back a bit. If you go back even 16 quarters back, 2020 March to be precise, we had given a kind of a driver that because we are at 16% margin that time and around that time we told that we will be at 16%-18% kind of a range based on certain factors. I think we are mostly at 18% range this quarter. We have just gone a bit on that side. Just to step back on that, the reasons, the drivers for that are three and they are not seasonal, they are structural. One is the geography mix. Obviously international business in GTS gives us better margins than the domestic business.
And if you see structurally over quarter-on-quarter, for example if you take Allsec, we are at 74% in terms of international business in CXM against 69% at this point last year. So there is a 500 basis points improvement there. And the growth in international business year-on-year has been 39% against an offset overall growth of 20%. So the ratio is skewed more towards that business. Number two, from a business mix perspective. Even in the CXM business which was mostly domestic earlier, the new bookings just to show you that it is a lead indicator for the future. New bookings 69% has been international in this quarter, against 37% at this stage last year. So the new bookings is potent for the future. It also shows that from a geographic risk perspective, hopefully that trend will continue.
Next, we shall get into the service risk in terms of the more higher value services. You will find the transaction processing BPO, the collections BPO in common. That growth is 24% in collection business, which is higher than the overall growth of the business on a weighted average basis. Similarly, the digitally driven businesses, the digi-Conneqt platform or the virtual philosophic kind of interactive outbound businesses, the growth pace on that has been more than the vanilla kind of businesses. From a mix perspective also, it is getting more towards the software-as-a-service, platform-as-a-service kind of businesses. This clear structural thing. The third is obviously right-sizing the cost structure, which we do on a regular basis. There it is the IBP and the SG&A has been pretty steady at a stable base over the last four quarters.
Hopefully the combination of these three, business growth of the right geographies, more disproportionate share from the higher value services, and rationalizing the cost base, especially the SG&A at a stable level, all three should contribute for the margin to be in the current range that we are seeing today from a sustainability perspective.
Thank you. I will pass on to Anand to give his input on the OAM platform.
Thank you, Kushal. Good morning, Balaji. This is Anand here from OAM. As Guru mentioned, in the last few quarters, the leverage point was focused on internal efficiency, and we worked on a few customer contracts. Consistently, in the last three quarters, we have seen the results on a sequential margin. Having said that, you also know some of our business within OAM has seasonality in play. But we are broadly confident on an annualized basis, we are on track.
Thank you, Anand. Kamal, if you can just give me inputs about the operating cash flows and the improvement in DSO days.
Sure. Thanks. So Balaji, as you know, we have a mix of businesses and the reason for reduction in DSO days and reporting the committed OCS is actually three. First and foremost is the disciplined working capital management policy that we have been running for last now more than 18 months, which Guru also alluded in his speech. Secondly, the mix. We have the advantage of two of our business, which is telecom staffing, where 70% of the business collect and pay and foundit where most of the collections are advanced before delivering the services. We service other businesses like GTS and Operating Asset Management, where the working capital cycle is a bit higher. As and when this mix changes a bit more towards collect entry and advance collection businesses, we are in an advantageous position to bring down our DSO and improve our OCS.
Third is the divestment that we did during the quarter of Qdigi which was a business with a higher DSO. The combination of all three that has led to this reduction in DSO. The second part of your question that whether it is a sustainable level, we do believe if we continue this disciplined working capital management across the group, we will be able to even further improve from the present DSO range.
Thank you. That is very helpful.
Thank you. The next question comes from the line of Deep Shah from B&K Securities. Please go ahead.
Yeah, hi. Good morning. Thanks for the opportunity. Sir, there has been a lot of substantive improvement on the manufacturing front, on the industrial front, and you have seen a lot of reports coming out. You also alluded a bit to one of the reasons for your growth in WFM. So two questions here. First, is there any scope for better economics here, given that there is massive demand coming in? Second, just in your thought, how do you see this segment? Today, it is 14% for us, it was 12% last year. Could this be 20%? Could this be next two, three years? So some color on that would be very useful.
Thanks for the question, Deep. The way to look at is, I think it is very clear that India is in an investment phase, and I am sure, I think it will reinforce as we come out of the elections. If you look at the segment where the investments are happening are pretty sharp in terms of the infrastructure, public utility, and the CapEx which is being invested into. All these segments definitely has a very intensified labor or employment-related, manpower-related activity that is going to gain traction. Manufacturing is one among them where it is attracting a lot of investments. There are few hubs where we are already actively working in manufacturing clusters. If you look at manufacturing by headcount, we are almost close to about 70,000 in terms of deployment, which also I called out very specifically in my speech.
We anticipate this investment and the trajectory would continue at least two to three times of GDP in terms of the GDP growth, the way it is going on. So t hat's the kind of growth what we would definitely see. Let me get Lohit to add more to this.
Good morning. I think that's a good question and an important question for India, like Guru rightly said. Obviously, manufacturing is being attracted from all over the world, and there are different segments of modern manufacturing that we are seeing every day, which is coming to India. One large change which is happening is that manufacturing, which traditionally remained in the MSME segment, barring a few large core investments in core sector, today, mega plants are coming up with 1,000, 5,000, 10,000 and even more people beyond that. In the last two years itself, we've doubled the business from 33,000 headcount to almost 70,000 headcount now. This is a business which is growing at almost 47%-49% CAGRs. You are right, it's the third largest segment for us. Do we see this becoming even bigger? Yes, absolutely.
One aspect in Guru's commentary also you would have heard is something called job spots. We've come out clearly by saying that we have to get closer to the hubs away from the cities where traditionally the staffing offices operated, to industrial hubs and industrial areas, where the industries exist, where the new investment is coming. That's exactly where we can do a matching between the job seeker from the hinterland of India or from the agricultural part of India to the industrial part of the movement. We've coupled this with a lot of technology investments in these centers, and we are obviously aiding and growing our sourcing capabilities and growth as well. This is a segment which we continue to very closely watch. Yes, to your point, that can it become even bigger than what it is, with a considerable market share for us? Yes, absolutely.
Sure, sir. Thanks so much for that comment. Sir, anything on unit economics here? Is it very different or could it be better than, say, the otherwise price taking mechanism that we are currently in?
Traditionally in manufacturing, unlike the services segment, you have to grow on the basis of not just your sales capability, but your sourcing capability. The customer expects 100% of the new talent to be brought in by the company. First and foremost, it's not everybody's game. It can only be done by firms which have very solid sourcing capabilities and technology which can aid such sourcing along with the human capital that we've deployed. We have almost 500 people in general staffing, who are field recruiters, and that's a massive number that we carry. Besides the technology that we've been creating for the last seven years, and we continue to invest in. In services, you're right. There's a lot of transition business also which comes along or a lot of migration business which comes along. Manufacturing doesn't come along with transition or migration business.
Over the life of manufacturing, the unit metric is slightly better, though initially it starts a little on the lower side because you don't get migrations and you have to do it with your own sourcing capability for which you have to put investments. Early days when you start, it would slightly aid lower, but as it catches up and at each of the plant you start to get heft in terms of numbers, the unit metric starts to improve and become better. Over time, it can definitely beat the services economies as well.
Understood, sir. Thank you so much for the detailed explanation. Very useful. Sir, the second question would be on foundit. Congrats on the near break-even that you stated on your presentation. How should we look ahead? Your recruitment is going through a difficult time. What should we think about, say, foundit for next two, three years? Would we run at break-even? Are we okay to make some losses in marketing if required? Whatever your thoughts are, just to better understand, given there are massive headwinds in this space.
There are some headwinds in the space, like you said, with hiring coming down in some sectors. But as the conversation in the last five minutes was, there are also sectors where hiring is happening at a very healthy pace. At foundit, our objective is to make sure that we have enough business and customers coming in from across the sectors, and therefore there's a concerted push to ensure that our volumes from non-IT also compensate for whatever limited reduction we will see in IT. That said, our starting point, which is we're just on our journey of growth.
Given our size and our new product coming into the market and our ability to gain market share with customers that we're already present in, while there are headwinds in the market, we are very confident that we are at a size and position in the market where it shouldn't impact us too much. For the last three years, despite the headwinds in the market, we've grew at a CAGR of upwards of 40% and we don't see any reason why we shouldn't aspire to grow at a similar pace. With respect to your question on profitability, yep, we've moved from about INR 95 crores that we lost in FY 2022 to about INR 73 to about INR 55 this year. And the objective clearly is to ensure that this number goes down to zero in FY 2025, which is going to be taken care of primarily coming from growth.
Most of the costs are stabilized in the system. As you know, in a subscription-led business driven by product, a lot of costs in terms of product development, et cetera, are front-loaded. We've gone through that phase, and from this point onwards, we don't expect our cost structure to vary significantly apart from cost of sale. Therefore, whatever growth comes in the business is going to be enough, sufficient for us to be able to maintain an operational breakeven for the year.
Understood, sir. This was very useful. Thank you so much, and all the best.
Thank you. The next question is from the line of Chintan Sheth with Girik Capital. Please go ahead.
Hello. Am I audible?
Sir, may I request you to use your handset, sir? Your audio is very low.
Sure. Am I audible now?
Yes, sir. Please go ahead.
Yeah. Sorry about that. Congratulations, team, for a great set of numbers. First, on the WFM side, if you look at last four quarters, we have been able to maintain our margin with 2.6%. We understand that the IT side of the business is not picking up well. There were losses in North America, which were likely to getting turned around by the end of this year, sorry, in the fourth quarter. How should one look at margins now going forward, given any color on the IT side and the North American operations? If you would like to give us some color on that part.
Thank you, Chintan, for your question. I request Lohit to give his input on this question, please.
Sure. So hi, good morning. Thanks for that question.
Good morning.
First and foremost, I will just take a minute to say that there have been key milestones already achieved this year by our WFM business, and we are proud of the platform that they have created today. We crossed the 400,000 mark in active headcount base. Overall, WFM has crossed the 450,000 mark. We are poised for a long-term growth in WFM, which we have already stated as part of our de-merger plan to become the world's number one staffing company by volume, by headcount, and eventually also to grow our profitability along with it. This year, there were challenges that we were facing. There are global headwinds and geopolitical scenarios which have obviously shrunk the business and margins coming out of the IT industry. Particularly within the IT industry also, it was the IT services.
How that impacts our business and portfolio and WFM is, we did two large businesses in Indian IT. One is the contract staffing business, as you know, and the second is the IT permanent recruitment business. IT permanent recruitment business itself on a year-on-year basis has lost around INR 17 crores from where we were one year ago in FY 2023, what we delivered as EBITDA, to what we eventually delivered in FY 2024. In spite of that, the core businesses, the staffing businesses with its focus towards niche digital and predominantly in GCC as a segment in India, has been able to offset some of those losses. To your point on margin pressures, yes, WFM, especially with general staffing, continues to remain a tight margin play.
We have been very proud that in spite of the fact that we have consistently grown our headcount and revenue, we have been able to now maintain the margin at about 2.6% as we speak. With no further burn anticipated in U.S. operations for WFM, we feel this would inch upwards by another 20 basis points, coming closer to about 2.8% going forward. Medium-term to long-term, we would like to take this to 3% or so.
Sure. Just on the bookkeeping side, the tax outflow because of the deferred item was negative this quarter and last quarter. How should we look at tax rate for FY 2025 as a whole?
Yeah. So Kamal this side . The tax rate, rightly pointed out, effective tax rate for FY 2024 is close to around 5% as compared to FY 2023 where it was 22%. Primarily because of the mergers that we did during the current year and some of the benefits that flew along with it.
The guidance for next year will be in a range of 10%-11% effective tax rate because of the business mix that we see at present .
Right. I will join back in. Thank you.
Thank you. The next question is from the line of Miraj from Arihant Capital. Please go ahead.
Thank you. Thank you for taking my question, and congratulations on a great set of results here. I had a couple of questions, but starting off with a clarification on to the previous question that you just answered. You mentioned the tax rate would be 5% or 10%? I missed that.
5% is what FY 2024 was. The next year guidance would be 10%-11%, I think.
Okay, understood. Sir, there is one point I wanted to understand, that we have a vision to reach a 5% consolidated EBITDA margin. To achieve this, I wanted to understand what are the legs that we need in our business. One would be the workforce management business reaching 3% EBITDA margins, and foundit is where we have already our cash burn has stopped. Are these the only two factors that will help us achieve the 5%, or is there anything else also that needs to be kept in mind?
Miraj, I think two big levers you already pointed out. foundit obviously is the biggest one, which from a year-on-year perspective, as we have clarified on the call that we will move from INR -56 to net INR 0 in FY 2025. Then with the volume growth going into FY 2026, foundit should contribute with good margins to the overall margins.
The other two platforms which we did not discuss is where actually we have been seeing good margin trajectory. The GTS business has almost reached an upwards of 18.5% EBITDA margin, which Pinaki explained the continuity of the same and the favorable geographic mix that we have got into. As far as the Operating Asset Management business, two businesses to point out there which have been doing very well for us and helping us in our margin trajectory upwards is the food business which has grown year-on-year. And the telecom business, which is in Vedang, with the 5G implementation across the country, that business is also contributing to the overall margin trajectory. These are some of the business-specific levers.
There are a lot of operational levers, productivity and the tech investments that we have done over last 12- 18 months, which we will continue to do and monitor the operational performance to move towards our trend of expansion of margins.
Understood. If I am not wrong, the international business in GTS , that would attract close to 30% margins, and currently we are doing 18.5%. So what kind of mix are we looking at over here, and what kind of elevated margins would we see at that mix?
Thanks, Miraj, for your question. Pinaki would be able to give you a better color or a better sense on the margins for this business. Pinaki, if you can give some inputs.
Yes, sir. On an overall level, what you expressed is correct. The 30% again, margin the international mix can get that. At the same time, that mix, if I take even in the EXM business, basically the payroll business, the HR outsourcing business in Allsec, also one can get that kind of margins. It is more of a business mix issue. Obviously, geographic mix is a percentage of that. Even in a core domestic business like Conneqt, which is almost 100% or 95% domestic, there also we are inching closer to this overall margin, that 18.5% that we are actually reporting at an overall level. Those are the drivers. If you see overall from an industry perspective, the margin prism of the bigger companies currently are between 13%-20%, that kind of a range. That is the range of possibility.
What more mature companies or bigger companies are delivering over a period of time. We try to drive on all parameters. That without committing a particular number, the range of possibilities are there.
Understood. Okay.
Just to add to that, Miraj, if you look at international business mix has moved from 45%- 57% compared to last year, specifically in Allsec. What happens is, while we have a push on sales focus on international business, there is also a domestic business which is aggressively being sold and pursued and the good order books and ACV. We have to balance between both. I think where we are today, we will be able to probably, I think, sustain anywhere between 17%-18% EBITDA margins to continue with both the mix coming into.
17%-18% would be sustainable ahead. Just to reiterate this, put it in a different manner, somewhere close to 5% would be achievable in FY 2026. Would that be a clear aim?
We do not give a guidance on that specifically. If you look at from 3.42% where we started our year, we ended about 3.9 and on an average basis. I think on a forward basis, maybe another 32, 35 basis points is where we would anticipate considering all the mix, but it will be tough to put a number here.
Okay, understood. Just one final question.
Miraj, what we can say is that there will be an absolute growth in EBITDA, but as you know, it's a combination of consolidated businesses with various different margin profiles for different businesses and different growth profiles. It's very difficult for the management to give you a guidance on EBITDA margins per se for the next two years. But obviously, as stated, we would be definitely growing the absolute EBITDA on a year-on-year basis.
Right. Absolutely. I understood that part now. Okay. And one more thing, sir, when is the tentative NCLT filing or is it already done?
Miraj, we did announce the scheme on February 16, 2024, and since then we have applied for SEBI, that's the first step. And we are on course. Once we receive the SEBI approval, then we can file the first motion to NCLT. We expect the overall process from start to end to be a 12-15 month process. And we just started, we are probably just two and a half months into the process, but as of now, we are on course.
Understood. Okay. All the best, sir, and congratulations. I'll get back in the queue.
Thank you.
Thank you. The next question is on the line of Yash from Stallion. Please go ahead.
Hi, thank you for the opportunity. I am sorry I joined the call late, so I do not know if I missed it.
May I request that you use your headset, sir? Your audio is slightly muffled, sir.
Hi. Am I audible now?
Yes, sir. Please go ahead.
Sorry. Sorry I've joined the call late, so I don't know if this is already being talked about. I just wanted to get a sense of the revenue guidance for the GTS and the OAM business going forward, like two years.
For the revenue guidance on GTS, I would ask Pinaki to give you some color on the business, how it's going forward. And for the OAM business, I would ask Anand to give his inputs. Anand, we can start with Anand for OAM business.
Anand?
Yeah. Okay. This is Anand here. In the current financial year, in FY 2024, we grew at 7%. This is on back of certain operational levers we worked on the crime profitability, as we discussed in the past quarters. I think we look for growth beyond this number. There are a few more activities we are doing in terms of bringing the profitability. As of now, the order book looks strong for this financial year, which we already in Guru's commentary, we explained.
Thank you. Thank you, Anand. Pinaki, if you can give us some inputs on the GTS plans for the next year.
Firstly, I will be careful not to use the term revenue guidance because I do not think we give revenue guidance for two years. If you just go by what happened in the past and in the last three to four years, consistently, internally, we have tried to go at 20%+ . Some years we have been successful, some years we have just fallen short. You will find, I think, CAGR is around 18% over the last three, four years. There are natural issues, there are many other issues, but as we try to grow into more profitable segments, more U.S. business, more international business and the center services. We always aspire to actually suit around that kind of a mark.
I will not call that guidance, but that is what we have tried and mostly we have been successful over the last three, four years.
Okay, sure. Thank you.
Thank you. The next question is from the line of Chintan Sheth with Girik Capital. Please go ahead.
Thank you for the follow-up. One question on the product-led business. The Qdigi business is excluded this quarter, but we still see INR 120 odd crores revenue reported. My question is basically whether the Qdigi revenue is part of revenue this quarter?
Yeah. Qdigi revenue is part of this quarter because March 31 is when we completed the transaction. Almost annualized revenue from Qdigi, for your information, was close to around INR 370 odd crores on a full year basis.
That will get knocked off in the INR 50 crore run rate in foundit will be largely the revenue for the segment going forward, plus the growth, whatever you deliver.
Yes, absolutely.
Right. Okay. On the working capital side, anything you want to highlight? The DSO you already mentioned. We also see a similar contraction in the payable side as well for the year. Anything you want to call out how the business is shaping given the mix, whether it will be favorable going forward or not, whether there is a scope for further improvements in DSO side?
Chintan, I explained all the three reasons as to why we were able to reduce the DSOs and bring it to the present levels.
Right.
I will repeat myself if you did not get it. Basically, it is a combination of business mix, effective working capital management that we did throughout the year, and also divestment of Qdigi, which was a higher DSO business for us as compared to the other businesses. We believe that these are sustainable levels, and obviously with such a large mix of businesses we have, there is always an opportunity to improve a certain percentage points from the present given numbers.
Mm-hmm. Okay. Got it. Thank you. Thank you. All the best. Very well.
Thank you. The next question is from the line of Miraj from Arihant Capital. Please go ahead.
Thank you for the follow-up opportunity. I just wanted to understand something on the foundit business model side. I believe in the commentary we just mentioned that the hiring through foundit has kind of slowed down in some sectors, but we have a subscription-based model. How exactly do we anticipate growth coming in over here? Because already if we have a subscription-based model, if an annual or a monthly model, that would automatically result in more revenues. But how does hiring factor in over here?
Thanks, Miraj, for the question. When we say we are a subscription model, the way it works is on the recruiter side, we charge them for the number of profile views that they buy from us. When hiring goes down and the activity of hiring goes down, typically people would not want to view as many candidates for their hiring cycle, and so they might buy lesser inventory. That is how usually the slowdown in hiring activity impacts subscription. They might buy less inventory from us when they come up for renewal.
However, the point I said earlier in my commentary was that at this point in time, we are still small enough to say, even if the overall hiring activity goes down, driven by our superior product at this point in time, once we launch 2.0, we still expect to grow our share of wallet with the customers that we are serving, as well as being able to acquire new customers. Overall, what the companies might be spending on hiring might go down, but given our size, scale, and the new product, we still expect us to grow healthily over the next one, two years. The second side to the coin is we also get revenues from candidates. Based on the demand supply metrics, when the jobs are higher, you get more revenue from recruiters. When the jobs are lower, you get more revenue from candidates.
Accordingly, this year, as the jobs went down, our revenues coming in from candidates have grown significantly. There are two ways we make money as a platform from recruiters as well as from candidates, and that is how the competitive dynamics play as the job market either goes up or goes down.
Understood. Could you also just give a small idea about which sectors are currently the largest contributors in foundit for hiring?
IT remains a very large sector for us from a revenue perspective, because historically we have been known for our strength in IT. However, we have a very stated and intentional plan to grow our business in non-IT, specifically the focus sectors that we have picked up in terms of BFSI, retail, and manufacturing. We have intentional activities and go-to-market plans around these industries. Everyone from the board is watching revenues in terms of what is the contribution coming in from non-IT. But if you take revenues at this time now, IT is the biggest contributor to the revenues.
Understood. Would that be a differential in the charge that we levy to different sectors? Is that different, or would that be equal for everyone?
There are multiple pricing plans available. These are by industries, by geographies, et cetera. I can get into the details of the pricing plans, but they are transparently available. But essentially, you can assume that the price that the companies or recruiters pay is dependent on whether it is IT or non-IT, or in cases, whether it is geography. People can buy plans for a particular state or a particular country because we also operate in Southeast Asia, et cetera.
Perfect. Understood. Okay, thank you so much, sir. That is all my time.
Thank you.
The next question is from the line of Balaji Subramanian with IIFL Securities. Please go ahead, sir. Mr. Balaji, may I request you to unmute your line from your side, sir?
Yeah. On your healthy OCF generation and gross debt also coming off, how should we see payouts going forward? Is there an intent to step up dividend payments or consider doing a buyback or something? That would be it.
Sure. Balaji, we have our stated capital allocation policy and the dividend policy out there. The first and foremost priority is to reduce the debt level, which we have done. You see, in last five years, cumulatively, we have reduced INR 700 crores of debt. In the last financial year, we have reduced INR 150 crores of debt. The gross debt right now is around INR 370 crores, which for our scale and size of our business is a comfortable level. On dividend, since last two years, we have paid INR 8 per share as dividend, and this year we have been proposed final dividends up to INR 10. We continue to do three things. Optimize our operating cash flows, retire as much debt as possible, and return the balance money to the shareholders in line with our stated dividend policy.
Thank you.
Moderator, if you can check if there are any further questions.
Ladies and gentlemen, a reminder to all participants, you may press star and one to ask a question. The next question is from the line of Raghuram N.S. with Eurindia Ventures . Please go ahead.
Yeah. Thanks for having my question. I just wanted to check on the GTS side only. One was about how you guys have mentioned about the ACV. In the EXM vertical of Allsec, that's a significant sales pipeline of INR 37 crores of ACV that's been mentioned. And CXM also, the ACV that seems to be in the pipeline is about INR 40 crores. Is that something that's sustainable going forward, or is it just a one-time kind of a thing that seems to be happening in that business?
Thanks, Raghu, for your question. I'll ask Pinaki if he can give you his inputs.
Thanks, Raghu, for the question. You know, consistently, Allsec, what we have done is that over the last few years, most of the sales pipeline that has been there were not one-timers. Those were generally long-term kind of programs. I will take both segments, the CXM and EXM, separately here. On CXM, the customer experience management, most of the pipeline are North America-centric, multi-year kind of cases. We have mentioned only the ACV figures. As and when we contractually start that, hopefully, it will play out the length of the contract in terms of the number of years that will be there for. Because you know the nature of that business in CXM, especially North America, is generally long-term.
On the EXM side, again, most of the business pipeline that has been there or the contracted revenue that is there, the ACV figure that we have given is for enterprises. Mostly those are enterprises where the payroll transition we are doing. Like absent any completely unforeseen circumstances, those also are supposed to be long-term contracts and as and when are all incoming to CXM. From a structural growth perspective, this is how we are actually driving the sales and you are seeing the mix getting more into international, even in EXM. Obviously with the dollar revenue coming in, when you translate it back to INR, that effect also we are getting in. That is the reason for that kind of a pipeline.
Thank you for that, Pinaki. My question was more from a, for the last three or four quarters that if you go back in Allsec, it was ACVs of normally about INR 7 crores- INR 10 crores in EXM on a quarterly kind of basis. When I see INR 37 crores, it is a very encouraging number, just keeping in mind what has happened in the last four quarters or something. That was the main reason why I asked. It was not-
You know that industry, actually. What happens is that we pursue deals for two, three quarters, especially on CXM, you will find that—
Correct.
—those are a bit long decision, right? Sometimes the fruition comes after two or three kind of quarters. If you want to translate, that is what I am saying. I can assure you more about the sustainability of that revenue going forward, but some quarterly pluses and minuses of ACV booking would be there because that is also a function of when a customer concludes their contract in terms of their booking date. Obviously, I will not say that we extrapolate INR 37 crore every quarter. At the same time, it will not be INR 5 crore- INR 7 crore also. But the revenue would be more in the range that you are seeing now in terms of growth.
Thank you. Ladies and gentlemen, that was the last question for the question and answer session. I now hand the conference over to Mr. Kushal Maheshwari for closing comments.
Thank you for the engaging discussions over the call. I would like to hand over to Mr. Guruprasad for his closing remarks.
Thanks again for joining us for Q4 earnings call. I would like to once again highlight that our consistent effort towards new logo addition, SG&A rationalization, and sharp operational execution will continue to be robust, and we will continue to scale new heights in coming quarters. Thanks for joining.
Thank you. On behalf of IIFL Securities Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.