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Bls International Services Ltd
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Ladies and gentlemen, good day, and welcome to Q2 FY '19 Earnings Conference Call of BS -- BLS International, hosted by Asian Market Securities Limited. [Operator Instructions] Please note that this conference is being recorded. I'll now hand the conference over to Mr. Vinay Pandit from Asian Market Securities. Thank you. And over to you, Mr. Pandit.
Thanks, Kish. I welcome you all on behalf of AMSEC to the BLS International conference call [indiscernible]. On the call, we have with us Mr. Nikhil Gupta, Managing Director; Mr. Shikhar Aggarwal, Joint Managing Director; Mr. Karan Aggarwal, Executive Director; and Mr. Ajay Milhotra, Chief Financial Officer. I would now like to invite the management to give the opening remarks, post which we can get into Q&A. Over to you, sir.
Good afternoon, everyone. Welcome to the Second Quarter Earning Quarter of BLS International Services Limited. And you are all aware, BLS International is a specialist service provider of visa, passport, attestation and citizen services developmental, diplomatic missions across the world. [ I'd like to give you a quick highlight ] of the second quarter ended 30th September 2018. And then open the session for question and answers. Consolidated results for quarter ended 30th September, 2018, which was Q2 FY '19 vis-à-vis Q2 FY '18, the total income stood at INR 191.2 crores, which is a quarter-on-quarter growth of 2%. EBITDA of INR 45.4 crores, which is a Q-on-Q growth of 2.8%. Net profit stood at INR 32.9 crores, which is a Q-on-Q growth of 33.1%. And EPS for Q2 FY '19 stood at INR 3.22 as compared to [ INR 3.62 ] in Q2 FY '18 for the corresponding period. The second half year comparative from April to September of '19 vis-à-vis '18, total income stood at INR 393.4 crores in H1 FY '19, up 2.7% from INR 383.2 crores in H1 FY '18. EBITDA of INR 95.9 crores in H1 FY '19 is up by 8.8% from INR 88.2 crores in H1 FY '18 for the corresponding period. That's an increase of [ INR 57 ] crores in H1 FY '19, is up by 20% from INR 55.85 crores in H1 FY '18. Earnings per share for half 1 '19 stood at INR 6.54 as compared to INR 5.45 for half year FY '18. The company has ended this quarter with excellent results that are a testimony to our performance in Q2 FY '19, which has been remarkable for us, owing to the timely and quality deliverables of our contracts in both the domestic and international markets. In the face of the government across the globe and providing best-in-class service, coupled with outstanding results, is a reflection of the pace at which the company is growing and which is likely to continue for the coming years as well. We continue to aspire to be the quintessential service provider for all governments and diplomatic missions in India and overseas with a specialized domain expertise and have set newer benchmarks and service delivery with quick rollouts and excellent [ execution ] of all our contracts across the world. We've been able to do several times various [ back counters ] repeating it by almost 30% to 40%. In just FY '18, we processed close to 11 million applications as compared to 20 million applications processed until the end of FY '17. Furthermore, by the end of H1 FY '19, BLS International processed more than 5 million applications globally. In this quarter, the company is also pleased [indiscernible] in the Forbes Asia's Best Under A Billion list of top 200 publicly listed company in the Asia-Pacific region out of 24,000 companies that were selected on sale, the revenue and earnings growth. The company received [ the spin BLS national security [indiscernible] during the quarter.BLS International was first visa outsourcing [ ESP ] who has confirmed -- conformed to the [ ALS ] compliance. And then one of the only 69 organizations in the world who are both [ ALS ] certified, sharing with [indiscernible] companies like Google, Microsoft, Oracle, to name a few. This green global contract at BLS International back in December 2016 also yielded strong result and for another quarter in a row. Due to rollout of the project, the visa application center has really been fortified with life-changing, value-added services for the applicant's convenience, such as Internet, photocopy, photo booth, form filling, courier, premium lounge, [indiscernible], et cetera. The company also commenced operation of its new contract of visa services by the Punjab Government in this quarter. The first contract is for a period of 5 years, and BLS International is operating 352 facilitation centers for providing 159 citizen centric services, serving 16 districts of Punjab and working with 32 departments. BLS International marks the second quarter of FY '19 with a number of contracts and awards, such as we commenced servicing the French Embassy in Jordan from August 2018. Under this project, BLS International will provide key deliverables which will compose of [indiscernible] approximately 25,000 France visa application in Jordan in strategic alliance of its partner. The strategic association linked [indiscernible] strengthened our presence in Europe and Middle East. BLS International Services also signed an agreement with Vision Box in this quarter in -- to cooperate in connection with specific project or opportunities in the territory of Portugal. Another agreement was signed with premium security printing company, [ BLT ], a company existing under the laws of Hungary as we engage them the providing of [ contingency ] support in further operations to collaborate and pursue the tender of Ministry of Foreign Affairs, Hungary globally. The company also signed an agreement with Speed Identity AB to cooperate in connection with a specific project or opportunity for the Ministry of Foreign Affairs of Sweden, Denmark, Finland and Norway. Speed Identity is a company existing under the laws of Sweden, which is expert service provider of biometric hardware and software products and services. As previously announced, we have commenced the UKVI operation, its effect from November 12, '18, which was yesterday, and we have already witnessed a good response on day 1. During this quarter, BLS were also conferred with 2 prestigious awards. First, of Excellence in the Travel Sector award at the CMO Asia [ Best ] CSR Practices award. And Mr. Shikhar Aggarwal, our Joint Managing Director, won the Young Achiever Award of the year at the Times Network's National Award for marketing excellence in travel and tourism industry. In conclusion, I would like to comment that BLS insures robust highly efficient project management practices and has signed dedicated teams of skilled and experienced professionals with relevant project experience for each project. The company today employs approximately 9,000 employees, and at the same time, heavily invests time and money in upgradation of technology platform and IT software, which includes providing high-tech security systems ranging from visa [ processing ] to passport verification. It also provides our company and our client government a better control and view on day-to-day operations of various centers around the world. This has helped us to meet various service level agreements and is further helping us in getting an edge over the current norm in the industry. With this, ladies and gentlemen, thank you for your patience, and we now invite questions relating to the results of this quarter. Thank you.
[Operator Instructions] We have our first question from the line of [ Siddharth Mehta ] from India Advisory.
I'm [ Siddharth Mehta ]. I'm an individual investor. I think our company is always performing very well and better than expectations of shareholders. So I had a few points to make. One is that, does it make a lot of strategic sense to go after the government, local government business, like Punjab Government, when the margins there are limited the number of people we have to employ, very large, the payments are in a question and so on. There are a lot of problems. Compare that with working with countries abroad, it's a huge wide world out there. There's a lot of expansion that can be done there. So I'd like to have your comment on that. And second is that, despite a lot of good performance from the company, we find that the earnings per share figure is not been moving up to the satisfaction that one would expect. So if you could throw a little light on that and how you see that number going forward.
Okay. Thank you, [ Siddharth ], for initial comment. Regarding the Punjab Government and other contracts which employ a lot of people, [indiscernible] it's been a huge learning for us and mainly, positive learning. It has helped us to be able to expand our business, both in India and overseas. So on -- in hindsight, I would still see [indiscernible]. The things that we have learned from there we are implementing very vigorously, including the fact that the money that we invest in projects, we need to be able to make sure that we get them on a timely basis. And return, if you may and if you talk about, return has been good. But yes, something they have realized fully [indiscernible]. The overall experience, I think the EPS here because of Punjab contract was -- we kind of issued, in a different format, the EBITDA and EPS margins, still signs of dropping this quarter. But deals in third quarter will go up because of the EPS here, which is upward. EPS has gone up [indiscernible].
Seeing that the government's working -- looking at the Punjab government, given that singular margins to what we get when working abroad, is it more or less in line?
That is correct.
All right. Okay.
Or let me correct myself. In the past contract, and the old contract, it's been in line. In the new contract, also, we believe as we come close to other numbers.
Got it. So in that case -- so EPS hit is only because of the delay in receiving the money from the government.
That is correct. No, but EPS has increased. I don't know if there's some confusion on your end. [indiscernible] our EPS, it stood at INR 6.54 compared to INR 5.45 last H1. So EPS has improved...
[indiscernible] quarter..
Quarter-on-quarter places as well as well as H1-to-H1 places.It has increased 20% this quarter.
Last quarter to this quarter?
Okay. That obviously...
It's a portion of the profits, for sure.
Yes. I mean, for a company that's going at 30%, 40% every year, one would expect that, quarter-wise, also, there would be significant EPS growth.
We've explained that [ Siddharth ]. So I would hope it's clear.
[Operator Instructions] The next question comes from the line of [ Samarth Singh ], individual investor.
My [ next ] question is regarding the revenue, can you provide us a break up of the revenue for the quarter as well as for the half year-end?
Break up between?
Break up of the quarters, that is, Q2 and for the half year, how much revenue that you have received from the Punjab Government in this. Total revenue for this '19.
[indiscernible]
For the quarter, it would be about INR 29 crores [indiscernible] Punjab Government. And for the half year, it's about INR 25 crores.
And can you throw some light on the meaning of a certain contract that you -- like, with the Punjab Government? Can you throw some light on that contract?
Basically, I think, until July, we were running on a fixed price model, so we were assured a certain fixed price. So every month, we expected a number of applicants to come in to give the available total sales. Okay. Now the revised contract is on a cost plus basis. So we earned certain amount of margins on top of our cost.
But the majority of [indiscernible] that there is no revenue that we have to [indiscernible].
So remember the risk in the government-revised contract has come down dramatically. Because [indiscernible] depends on the government for collecting the money. In the new contract, we get the money up front from the citizen like in the international business. For the rest of the business, it's reduced dramatically.
Also, the CapEx, it so happens, is reduced because the government provides such [ facility ] and because of collection from the customer, the requirement for working capital is also contract.
Okay. [indiscernible] CapEx that you have already done in that, in the contract? Like you have done to the Punjab Government or not?
No, that is right. As for the contract, we are -- we're collecting the money, which are due to us. Again, [ we provide ] to them.
Okay. And how much that money is, sir?
Total money you're seeing or total for the assets?
Total for the assets that you are going to receive from the Punjab Government for the CapEx that you have already done.
So the total money that is due from the Punjab Government to the company is INR 127 crores as of 30th September.
The next question comes from the line of Amit Chandra of HDFC Securities.
So my first question would be, can you please provide the break up between the visa in the Punjab? So how much -- the conclusion has been from Punjab in this quarter?
[indiscernible] As we said earlier, INR 29 crore is the revenue this quarter from Punjab, and the balance is on other OpEx.
162, yes.
Revenue from scale of assets that we have.
So INR 6.5 crores of total assets, which is reflected in the other income.
Does INR 29 crores include the sale of assets?
Yes.
Right, that's true.
Okay. So excluding that, it's around INR 23 crores. Okay. And in that -- there had been a contribution of 1 month from the overall contract and the contribution of 2 month from the newer contract, right?
That is correct.
That is right.
Okay. So in the newer contract, how you're seeing the application [ thing ] flow? And what has been the run rate of the application that you're seeing? So has there been any change in the inflow in the earlier contract versus the newer contract, firstly? And what is the cost breakeven level for the number of applications [ as a percent of your sales ]? So what is the kind of, roughly, breakeven in terms of more application that you -- is received in each center for achieving the cost breakeven, sir?
Yes. So to answer your first question, we have seen an increase in the -- sorry, there has been some reduction in the number of application in the first quarter. And that's probably because the number of centers that the government has put up or asked us to run is much more than the previous contract. So here we have something like 2,000 centers. Now we have something like 350 centers. For government services, which people are [ waiting of ] type of repayments and for prepayments, et cetera, there is no -- there are [indiscernible]. But we're seeing a breakeven situation already in the first 3 months. And as we get more experience and working also with traffic and new services increase, we are still targeting the same kind of EBITDA received all in our rest of our business.
So as of now, the Punjab contract is not at a breakeven run rate?
It has [ gone sort of ] breakeven level, I would say. [indiscernible] breakeven.
Okay. And then in terms of the CapEx requirement, so in the new contract, what offering do you have to invest in [ RH ] only and occasionally, OpEx model where you are [ donating ] the salary and everything comes from salaries, maybe be funded by the government?
If it tallies in the third quarter, there is no CapEx involved [indiscernible].
Okay. Okay, sir. And I know as you mentioned that the UKVI contract has started from 12th of November. So what kind of applications are you expecting from UKVI? And for the full year, if you could give that -- what the -- either vendor or how it happened earlier in terms of number of applications and the relations. If you would provide some [ color on that ].
[indiscernible], right?
So yes. Yes. Actually, as we mentioned before in the press release also, these contracts, we have aligned with our strategic alliance partners with [indiscernible]. We're expecting around 200,000 to 500,000 applications annually in this contract. So those are the numbers that we have said.
So the number that you mentioned earlier has not changed, right?
Yes. Yes. It's not changed.
And in terms of relations, the relations for application, it's GBP 80 average?
Yes. As we mentioned before, I think that you -- [ depend on the contract ], the number of application, that is the actual average price that you can achieve. But in this contract, there's a big variation. So sometimes it's accelerated for GBP 1,000, sometimes it is for GBP 100.So average, what we calculate came out to that number, yes, correct.
Okay. Okay. And sort of how has been the value-added services being handled in the Spain contract? So as you mentioned earlier, that the various functions will be a major contributor to the revenues, so how has it been doing?
I think that the value adds on the Spain contract are being in line with our prediction than [ grade's ] performance. We had experienced a big sell in the amount of value adds that are being bought by the applicants now. That is also one of the reasons of increase in appropriate margins compared to last quarter because the acceptability of value adds has increased. Our software is more trained. We have launched new value-added services like ForEx cards, like insurance. So which have been taken very well, like SIM cards, that we are selling in some countries. So the value-added service component of the Spain contract, I would say, has lead to industrial level. And it will increase further.
So the value-added services also there in the UKVI contract, value-added services?
That is a major contributor there.
Yes. So basically, like we're providing mobile biometric services, premium lounges, so it's a very unique endeavor. We are -- value-added services has seen even a bit importance.
Okay. And for this quarter, has there been any...
Amit, can we request you to come back after others also ask questions, if you don't mind?
Okay. Okay. So I'll just ask the last question and -- so in this quarter, has there been any contribution from the Starfin acquisition that we get? And if you could -- like, if you could disclose the amount that you paid for Starfin and...
So [indiscernible]. Yes. We've applied 74% of Starfin, for which we paid approximately INR 9 crores. Okay. And as for the agreement, we've acquired the balance for 36% by March for another INR 3 crores.Okay. And we are looking at a payback of about 3 years probably from investment.
Okay. And have they started to contribute [ on this performance ]?
Yes. Yes. Revenue is already...
It's already [ working better ].
[ It's a running company when we bought a profitable company. ]
The next question come from the line of Deepak Agrawal of Impetus Capital.
Yes. In the Punjab area, of the INR 23 crore, how much from [ their own ] contract?
So in the -- INR 23 crores after the [indiscernible], so it'll be about between INR 16 and INR 17 crores.
Okay. So that's INR 6 crores, INR 7 crores of the new contracts?
Right. [indiscernible]
[indiscernible] is around [ 45, 50 ]. [indiscernible]
[indiscernible] Deepak?
Yes. Why have the EBITDA margins come down this quarter compared to the quarter 1? It was 25% in quarter 1, now it's around 20%.
Quarter 1, generally, is a better quarter for us. It's the best quarter, and we have the best sales and the best VACs. And VACs has a high component of operating margin. And therefore, you will see that while second quarter has come down slightly by about 1%, it will pick up in the third and fourth quarter.
I think there's some impact from the Punjab also. So Punjab, there is only revenues for only one quarter. And the Punjab [indiscernible] higher margin business slightly. So [indiscernible].
But your model going to have a higher margin, right, because their entire [indiscernible]. So competitive to other margin.
You have to understand one more thing, that we are talking about EBITDA margins, first of all. And the...
So entire -- so the entire team [indiscernible] EBITDA, then that have -- you will come to EBITDA. There you have a [indiscernible].
No, no. See, I'm trying to explain it to you. In Punjab, we had a higher capital deployed, right? There was -- the margin was also high. It over -- in our other businesses, the margin is slightly lower what was in Punjab and in a couple of the margin. So that is the reason why EBITDA margin has come down. I think the PAT margin has only increased if I'm not mistaken. PAT margin has increased.
Yes. PAT margin has increased by a percentage, [ 1%, 2%, 3% ], yes.
So -- Yes.
When did you start the U.K. operation?
UK operation was started yesterday. And it started -- you'll start seeing the effect on the revenue and bottom line for Q2.
Right. What...
Moving up a couple of bps this quarter and until quarter -- next quarter.
And have you selected [ anything ] out of this [ 127 ] in these 2 months?
In this [ 127 ], [ most trials previously ] INR 212 crores, [ INR 207, 11-odd crores ], so we have built another INR 89 crores, and we have collected INR 113 crores in the second quarter.
And as of 30th September, how much are you reaching?
We are talking about only 30th September until now. You've seen the results are for 30th September.
The next question comes from the line of Mr. [ Shah ] of Emkay Global.
I'd like to know what kind of opportunity do you see coming from Vision Box in the ID. So what kind of [ vibe ] are we seeing and what kind of margins on the EBIT?
Shikhar, can I request?
Yes. Sorry?
[ The other contracts ].
Yes. So basically, all the suppliers [indiscernible]. Companies are the market leaders in their segments in certain geographies. So our strategy there in terms [indiscernible] large companies of their respective governments. So we have been able [indiscernible] doesn't have long yesterday that we'll be working on the loan tenders to these companies we've been working in respective geographies, so we will see Punjab in the results maybe within 1 year or 2 years.
And what [ further opportunity do you see here ]?
Basically, as you know in our industry, there is not one government that gives all same type of tenders. Some governments come out with global tenders. Some governments come out with [indiscernible] tenders. So [indiscernible] will be differentiated ranging from medium to large contracts.
Okay. And I -- in your commentary regarding this UKVI conversation [ that you did today ], so you guys mentioned a new participant. Can you please repeat it?
As I mentioned, in these few contracts, we're expecting to process around 400,000 to 500,000 applications, and we commenced the contract yesterday.
400,000 to 5,000 (sic) [ 500,000 ] applications [indiscernible]?
500,000.
400,000 to 500,000 applications [ for a number ], right?
Yes.
The next question comes from the line of Mr. [ Ravi Narahari ] of [ Narahari Investments ].
What is the [indiscernible] this year -- this quarter when you compare to last 2 year quarter, 30th September to 30th of September '18?
Mr. [ Ravi ], what was your question, again?
Why that line has not been wide, really, this quarter when in comparison to September '17 quarter?
As we explained earlier, the Punjab contract is being changed slightly where instead of a fixed price model, it's going on a revenue sharing model. This substantially reduces the revenue in the past 2 months of the quarter.
Okay. And what is the lookout for this next one half year?
As we -- the other business picks up UKVI, et cetera, we expect to do better -- much better in that sort of previous guideline, still working on the revenue.
And so you had mentioned that [ 30th September], what was the [indiscernible] for Punjab Government, right?
Right. That's correct.
And after 30th September, are you announcing a [ new deal ]?
We are expecting some substantial amount in this month [ instead ].
The next question comes from the line of [indiscernible] from [indiscernible] Finance.
Can you hear me?
Yes, [ Chirag ]. Go ahead.
[indiscernible] if I strip off the Punjab business from quarter 2 and quarter 1, roughly, the visa application business comes at around INR 150-odd crore. I wanted to get a feeling from you, is this INR 150 crore run rate stable? Or you should see some improvement there?
I think it's going to be much higher than that. I think that if you take out the Punjab Government, the revenue should be right around INR 320 crores, INR 350 crores also -- INR 320 crores, INR 350 crores for half year, and yes, that is sustainable. And going forward, it will only increase with the U.K. Government project commencing. So you'll see an increase -- a jump in that number in H2.
My question is more from the application process perspective, so we see around a 5% to 10% kind of a volume growth in application process?
Generally, our application process in existing businesses, beginning 7%, 8%; 5% to 7%; and then whatever new businesses we get, the revenue -- or the application growth comes from there.
Okay. Sure. And second thing on the Punjab business, our run rate now would be around [ INR 84 ] crore per annum. Even on this -- per month, I'm sorry. This is the amount that we collect net from the government, or we have to share something with the government?
No. Right now, we are [indiscernible] money which is collected not from the government but from the citizens themselves.
Correct. And this is net that we collect, or we have to share this too, again, with the government?
Sorry?
For example, say we collect INR 3-odd crores from the citizens. From this INR 3 crores, do we have to do give away some part of it to the Punjab Government? Or this remains with us?
No. This is entirely for us right now. There is a certain minimum cost which the government has to pay us, beyond which, there is a revenue sharing.
Okay. So broadly, this should be a very high EBITDA business because here, you just have to incur OpEx, right?
That is correct.
The next question comes from the line of Mr. [indiscernible] of [indiscernible]
[indiscernible] grow 20% to 30% in revenue and 30% to 40% in profit. This is for the Punjab contract. Do you still believe that we are on track? Or we need some adjustment there?
I think we are most definitely on track on the bottom line. And the top line will also be able to match in this range of between 20% to 25%.[indiscernible] with the new UK government coming into play. There'll be a surge in the top line also.
Okay. And in terms of -- my second question and last question, in terms of the cash generation, are you looking for help or any kind of a dividend policy set out by [indiscernible]...
We have a dividend policy where we said that up to 15% of our profits...
Consolidated.
Consolidated profits shall be distributed [indiscernible]. And we've been consistently paying dividends for the past 2 years. And you can expect the same to happen in the future so...
The next question comes from the line of Mr. [ Ricard Chen ]. He's an individual investor.
I have 2 questions. One is that how the Starfin business acquisition that we've done [indiscernible] impact the contribution to the EBITDA? And second is how are you digital and once I can get more information about the recent tie-ups that have been done with Any Security, Vision Box and [indiscernible] Speed Identity?
Okay. Starting that we attempt to answer the call. We -- basically, we are looking at, as I said, EBITDA margin of around 20%, even from tuck-in business. On the contracts, Shikhar, would you like to comment on this?
.What is the question on the other contract?
I think the...
About the Starfin acquisition that has been made recently, how the management can give the guidance on the EBITDA margin contribution from this business you expected?
When I responded to [ Ricard ], what was your second question?
The second question is about how do we get more information about the tie up -- the recent tie-ups that have been done with Any Security, Speed Identity and Vision Box?
[indiscernible] Yes. So basically, the reason is that we have tied up with this company for strategic purposes. As you know, in U.K., we tied up with the Sopra Steria, and we are one of them that are in line with them. So we have strict general requirements [indiscernible] what kind of service they would provide in the contract and what kind [ of services they provide together, how we should close the ] market to win the contract. So our chance of success will definitely improve by tying up with these companies.
Yes, that I understand. But as an individual investor, I would seem to understand that whether that's strategic [indiscernible] partnerships that are underline in term of the competencies that [indiscernible]?
Yes, there is. They're already in the -- we have not mentioned in the website the names of all the company, but we have done press releases for all the tie-ups that we have done. So if you check out the press releases on the exchanges, you can find out the tariffs that we have done.
[Operator Instructions] We have next question from the line of Mr. [ Siddharth Mehta ]. He's also an individual investor.
I wanted to ask you a question relating to comment that was made, I think, by Mr. Nikhil Gupta or Shikhar Aggarwal, and that relates to a number of applications that has gone up in Spain by approximately 50% since you started doing the processing. So since you started doing the processing...
50%.
Pardon?
I don't think 50% of...
I've seen one of your documents on the website and forwarded [indiscernible] by union, so that was a [ minor mistake ]? Okay. [indiscernible] What would be the correct number?
So the application count in Spain, that has gone up by 10% to 15%.
Oh, 10% to 15%. Okay. It says 15% here. Okay. So this question is irrelevant. And [ I guess, then ] I just looked up the numbers again, it seems that in the September 30, 2017 quarter, we had a run rate of about INR 186 crores. And in this similar quarter this year, we got INR 182 crores, which I take it is a little lower because of the Punjab Government issues?
That is correct.
Okay. So that is what is -- okay. So that is also the difference between the previous quarter ending June 30 and now from INR 200 crores or INR 201 crores, [ INR 282 crores ].
That is correct.
So if just theoretically or in an abstract way, if we assume that we had been running on the previous contract with the Punjab government, instead of INR 182 crore, [indiscernible] as to what the revenue would have looked like?
[indiscernible] at about INR 18 crores to INR 20 crores [indiscernible] It would look like close to INR 200 crores, INR 202 crores.
All right. So between June -- I guess then that means June 30 has been seasonally a better quarter for us than maybe the September quarter in terms of visa applications and so on.
That is correct.
All right. Okay. So that explains to me then the difference in the EPS figures between the previous quarter and this quarter. But going forward, now you also mentioned that Punjab Government contracts give you a good margin, and I forgot you were talking of the EBITDA margin, the EBITDA margin, [ I expected ], includes the operations cost of manning that particular center that you have there to include salary and everything, correct?
Yes. That is correct.
All right. So what would you say is not included -- is everything pretty much included and only the corporate overhead, depreciation and [indiscernible] cost...
EBITDA sales that we discussed between the 2, okay, but those are just the kind of targeted margin [indiscernible].
All right. Okay. And in the meantime, we only have the salary obligation and your expenses obligation kind of sitting on our head, right?
That is correct.
All right. Okay. So I think like, from what you're saying, you are making a correct projection, the coming 3 months and 6 months, it should result in a very big move up in terms of our profitability.
Yes. That should certainly improve with the KPI, et cetera, [indiscernible].
I'll give you a profitability update. On the last H1, what has been H1, our profitability is already up 20%, and we are targeting 30%, 35%. So it's not that greater number that we look at achieving. For [ H2 ]...
I mean, you're expecting it anyway to happen in new cost, correct?
Yes, yes. Most definitely. With the new project coming online, see, our growth comes from new projects. This new project already starting yesterday.
There are a number of U.K. projects, yes. Yes.
Yes. Also on the Punjab Government, as the numbers start to come in, they should also, I guess, make an impact.
Yes. Exactly. We're getting an -- what I'm trying to say is they probably have a positive impact from both the U.K. project as well as the Punjab [ contract ], both the projects will kick in so profitability should change dramatically. That's what I'm saying.
Yes. Yes.
The next question comes from the line of Mr. [indiscernible] of [indiscernible] He's an individual investor.
Sir, I wanted to understand for your visa services business, is it like a fixed price contract? Or is it based on the number of applications of revenue?
Based on the number of applications.
Okay. All right. And like now I wanted to understand like how do we compete with now, let's say, some country wants to outsource a visa, like Spain or any other country. So how do we compete with a player like VFS? On what basis do we [indiscernible] that? What's our edge?
I think if you understand how the vendors are [indiscernible] technical and financial independence, so we've been on this for technical [indiscernible].
So we have the next question from the line of Mr. Nirmal Bari of Sameeksha Capital.
Actually, I joined a bit late so this question might be a repetition [indiscernible] the EBITDA margins should be better in the new Punjab project. You're talking about on margin in the new Punjab projects versus margin in the older Punjab [ projects ]?
The margins in the newer contract has been lower than the margin in the previous contract, but we're targeting approximately the same kind of margins that we had earned in the business as a whole.
Okay. So similar margins are resurfacing?
[ Yes ].
Okay. And the second question is on the U.K. contract. We -- the average revenue per customer there would be around GBP 80. So if revenue -- our net revenue [ figure ], that is, after deducting the part that we will be giving out to our partner and to the government, or is it the growth revenue figure and then from this, we'll have to part with certain revenues?
No. I think [indiscernible]
Sorry?
This is our [indiscernible]
GBP 80 is part of the revenue?
Yes.
And on this, would the margin be similar or in line with other visa projects like [indiscernible] of that type? Or would they be lower?
No. It would be similar.
And there are no further questions. This concludes this conference. Over to the management for the closing remarks.
Yes. I'd like to thank all the participants in this conference. We appreciate your time that you spent and effort to make to organize the results. And [indiscernible] in the next quarter. Thank you.
Yes. And on behalf of AMSEC, I would like to thank the management of BLS International and all the participants for joining on this call. Thank you, everyone.
Thank you. On behalf of Asian Markets Securities Limited, that concludes this conference. Thank you for joining us. And you may now disconnect your lines.
Thank you.
[ Thank you ].
Thanks.