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Earnings Call Analysis
Summary
Q3-2024
In the third quarter, CarTrade Tech Limited experienced a significant upswing, with revenue growing by 48% and profits of continuing operations soaring 56% to INR 22 crores. Their adjusted EBITDA stood at INR 43.2 crores, reflecting strong operating metrics with an increase in EBITDA margins to 19% from 16% in the last nine months. Despite challenges faced by the remarketing business with repossessed vehicle supply affecting revenue and profit, their brand strength remains high, reflected in CarWale's Google score of 78. CarTrade holds a strong position with 17 million monthly active users and maintains a robust cash balance of INR 720 crores, operating debt-free.
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Ladies and gentlemen, good day, and welcome to CarTrade Tech Limited Q3 FY'24 Earnings Conference Call. This conference call may contain forward-looking statements about the company, which are based on the beliefs, opinions and expectations of the company as of the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict.
[Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vinay Sanghi, Chairman and Managing Director, CarTrade Tech Limited. Thank you, and over to you, sir.
Thank you, and good afternoon to everybody, and thank you for joining the Q3 earnings call. I want to now present the Q3 earnings data and details today. We've uploaded a presentation and if we can go straight over to Slide 5 of the presentation itself, it talks about the key metrics. I want to first tell you that we're delighted that there were 48% growth in revenue and a 56% growth in profit of continuing businesses in the last quarter.
We are the #1 automotive platform in India. We are #1 used classified platform in India with OLX now, and the #1 vehicle auction platform in India with Shriram AutoMall, all our 3 businesses. As you know, we have almost 17 million monthly active users, unique users per month across our platforms, including OLX, CarWale, BikeWale, et cetera, et cetera. OLX itself has more than 100 million downloads on a mobile phone in India.
We have 350-plus physical locations include AutoMall outlets, abSure outlets and OLX outlets as well. 90% of our 17 million users come organically, which means we have very low marketing cost. In fact, in OLX a large part of the users are app-driven, almost about 80%, 85% of our users come through an app. We have Shriram AutoMall auction at a rate of almost 1.4 million vehicles a year. Our net revenue is -- for the quarter is INR 152 crores -- INR 151.9 crores. Adjusted EBITDA is INR 43.2 crores and profit from continuing operations after tax is INR 22 crores.
As you know, we're also around INR 720 crore cash balance and of course we are a debt free company. If you go to Slide 7, which talks about the consolidated financials of the company, as you can see here, we have a 48% growth in revenue and a 35% growth in net revenue, which is INR 151 crores, which is also -- and a growth of 32% growth of revenue from operations in the 9-month period. Our adjusted EBITDA is up 67% without excluding other income and the adjusted EBITDA with other income is INR 43 crores for the quarter, is also INR 115 crores for 9 months versus INR 85 crores last year, which is up by 36%.
The adjusted EBITDA, excluding other income, is up by 57%. So the operating metrics of the company has been very strong as a group. The profit without considering discontinuing operation, which is our transaction C2B business in OLX, but including our classified business is up 33% for the quarter, which is at INR 26.75 crores is before tax. And the profit before tax for 9 months is up 81% at INR 68 crores. The profit after tax for continuing businesses is up 56% to INR 22 crores and 156% for the year. I just want to highlight the continuing operations, operation which are continuing as of 31st December, got a INR 22 crores profit for the quarter -- profit after tax for the quarter October to December.
Of course, then there is the last pertaining to discontinuing businesses, which is the C2B transaction business which we acquired in August this year, which is total of INR 63 crores for the 9-month period ended 31st December.
I just want to again highlight that the health of the continuing businesses is strong at a 22% -- or INR 22 crores profit after tax. The other thing I want to highlight is on the EBITDA margin. If you look at the adjusted EBITDA margins without other income, it's up to 19% from 16% last year, 9 months.
So as I again said -- again say, the continuing business has been quite strong. When you look at the stand-alone results of the company of CarTrade Tech, as you can see here, the revenues up for 9 months is 22%. Revenue up for the quarter is 18% at INR 49.4 crores. If we include other income, it is flat because other income is slightly down because of the money used in acquiring OLX itself. But over the 9-month period, the net revenue is up by 19%. If you look at the adjusted EBITDA excluding other income, it's up by 35% for the 9 months, showing the strength of the CarWale business.
And if you look at the EBITDA margin, excluding other income, it's up to 23% from 14% last year. And for 9 months period, 15% versus 14%. So the October-December, the margins have gone up to 23%. The profit after tax is up to INR 9 crores. It's slightly down because of loss in other income due to the acquisition of OLX as a stand-alone basis. If you look at Slide #9, which is the remarketing results, the remarketing -- it's been a tough quarter for the remarketing business as has been for the year before. It continues to be primarily because of the sluggish nature of the repossessed vehicle supply, as we've talked earlier.
In fact, the repossessed business itself has gone down from a contribution to now totally from last year same time, it's gone down from 53% of our business to 49% of our business. And our retail business has gone from 34% last year to 39%. So the contributions to the business are changing. For this 9-month period, the revenue is down 6%, profit is down -- PAT is down 11% and the adjusted EBITDA is flat at INR 26 crores for the 9-month period. If we look at the Sobek Auto results, the results are -- if you look at the quarter itself, the revenue is about -- for continuing operations is INR 45 crores.
As you can see here, this is all the business we're continuing to the next quarter. So INR 45 crores continuing. The adjusted EBITDA is INR 12 crores and the profit for the business itself now is INR 11.46 crores for the quarter. Discontinued business last, which is INR 45 crores, which is a combination of the losses incurred in the business and a combination of the shutting down cost incurred in the business -- but as I said on January 1, what is going to continue is the INR 45 crore revenue line item.
And of course, in this quarter, we expect that business to be profitable as well. If you look at the brand scores, CarWale -- is Slide #11. CarWale Google score tend to be strong still at 78, much higher than competitors. As is BikeWale, if you look at Slide #12, which shows the strength of OLX versus any of its competition and the brand of OLX as well. This is what I wanted to highlight as part of the presentation. I'm happy now to answer any questions on the financials or any of the metrics of the company.
[Operator Instructions] The first question is from the line of Vijit Jain from Citi.
Good set of results, congratulations on that. I just wanted to quickly understand and I know you covered it a little in your opening remarks, but I'm not sure I got it. Where is the [PDD] costs currently sitting? And because when I look at what you reported in September versus now, it looks like some of these costs have maybe moved on the OLX side. So if you can just clarify where the [PDD] costs are sitting. And within this cost structure that you have in Slide 11, barring that loss from discontinued operations is everything else pretty much how one should expect this business to see numbers going forward?
I think very good question. We had indicated the [PDD] cost -- external [PDD] costs, which we incurred for transition of technology is about INR 60 crores for the period until December. In fact, and this has to be INR 60 crores until March. We've actually preponed the transaction of tech, and we did it 3 months early. And therefore, this tech transition is completely finished now on 31st December. As on 1st January, we are completely operating in our own environment. And some of these costs are being established still. Of course, part of that entire tech cost on the last quarter and the period prior to that were incurred in both businesses, the Transaction business and the Classified businesses. Both businesses carry their relevant tech costs, the Classified and the Tech. So the way the Tech costs are laid out in discontinuing operations and the Classified business, they carry the relevant cost pertaining to that business.
If you look at, I think next question, which is more pertinent to us, is the financials are [INR 44 crores] [Indiscernible] is it likely with cost baked in or not? I think that is the question, if I'm not mistaken. This is more or less a reflection of the classified business. There will be, in this quarter some additional investment in cost and technology, et cetera which we're doing. And it's possible that, that cost will be incurred in this quarter -- being incurred in this quarter. And also, it requires full normalization of tech cost, optimization of tech costs, it's still going on. But I don't answer about a short-term answer, but generally, this is going forward. I mean I would say, if not this quarter will be the next quarter, this would be the normal way to look at the finance of the company. As I said, it may take 1, 2 quarters, but this is where we're lined up. The reflection of October, December will be a reflection of the company's financials going forward. As I said, may take a quarter to normalize and get to here.
I see. So basically, if I understand that right, what you're saying is about -- if I remember this right, it was supposed to be INR 60 crores incurred over the course of 6 months, so INR 10 crores a month. And that is essentially INR 30 crores for the quarter of October to December that you might have incurred? Now those INR 30 crores are currently split between loss from discontinued operations costs and in your costs above that and you could see further reductions.
We could see -- there's no actually, I think in this quarter, slightly higher to be honest, slightly higher. But it will normalize -- I mean, this will be normalization which will come to eventually. There's some work we have done transitionally. So that cost of INR 30 crores is fixed. It is just fixed because it is outsourced to -- by us to -- in the transition process. Now it's internalized. So it is more variable. So it is possible that it may see little up now. But will normalize, it will come down and normalize then optimize.
And you would believe that this adjusted EBITDA number that you have, let's say, in 4Q on the INR 446 crores of net revenue, or rather INR 430 crores of revenue from operations -- sorry, INR 43 crores, my mistake, INR 12 crores, give or take a few depending on how much success you have in cutting those costs, you could go to maybe INR 10 crores or INR 8 crores or somewhere thereabout? So 20% margin.
It's hard to answer this quarter, but we will come to that definitely in a quarter or so -- definitely. That is the objective we have to optimize with that. That should be best -- that is correct.
Got it. And then just a follow-up question on the overall rest of the business. So if you can give your quick comments on both the retail and repo part of the remarketing business. And then on what you're seeing in the stand-alone CarWale, BikeWale business.
Really actually from the Shriram AutoMall repo and retail side, repo has been a real challenge for us Actually, this is a reflection. Indian NBFCs and banks NPAs are under control. It's a reflection on that. And what's been good for them has hurt the supply which we get, and that's been hurting for 1.5 years as all of you can see the economy, the way it's been functioning and the economy how well it has done, especially for banks and NBFC with respect to NPAs as a concern. It's a clear reflection of supply of repos you're getting. And it's hurt us, and I think over 1.5 years, we tried to mitigate that hurt by adding other segments and partly that has been in our retail supplier vehicles. Retail continues to grow.
In fact, it's up by 25%, 27% in this year, but it is -- the repo is still hurting. And just because Shriram AutoMall was very dependent on repos supply, it's been hurt because of that. The fact that we managed and maintained numbers over the last 1.5 years is just because we have built another segment. So when repossession does come back and as banks give out more loans. And then we will be in a better place because we are building an alternate supply channel, which is growing. And as that continues to grow and repo come back, I think Shriram AutoMall will be in far better position. But it's been a tough year, 1.5 years for them.
I think on the CarWale side, things have been, as you can see in the numbers in the growth, healthy, right? The used car side of CarWale has grown, the new car side has grown. the new vehicle side has grown. And actually, it's a reflection of partly further digitization of the automotive industry, but also the reflection of the robustness of the auto industry.
If you see new car sales, 2-wheeler sales, both have been up in 9 months and that volume increase plus further digitalization efforts of manufacturers and dealers, and I think the other part, which is actually little better than the industry, is supply constraints are not really there. So the demand is strong for cars and 2-wheelers, but also supply has not been a constraint for manufacturers. There are some manufacturers with shortages, but generally product and supply is available, which is a good thing for companies like us, which depend on transaction and advertising revenue from manufacturers and dealers.
Got it. And if you or Aneesha could just give me the housekeeping numbers for the quarter, the split between new and used, and dealer and OEM that will be great.
In CarWale, I mean, the CarWale [Indiscernible] 84% is new, 16 is used, dealers 60 to 38 -- OEM is 62 and 38 [Indiscernible] for the quarter -- actually for 9 months. But the quarter, 9 months has not changed much, they are not much changed.
The next question is from the line of Sachin Dixit from JM Financial.
Congrats on the result. Quickly coming to repossession basically on the remarketing piece, I understand you did talk about supply being slow and all. But if you look at the numbers that you have posted in Retail slides, it looks like the bankers listed for auctions have actually gone up recently over the quarter as well as Y-o-Y. It's just a conversion rate that seems to have dipped.
Yes, that's true. There is a significant supply from and that's what reported from a couple of sources which didn't convert. One was from the flood kind of vehicles, which are couple of floods in India and the supply from there, which conversion rates are very, very low. So it's a [Indiscernible] for the quarter. But there were a couple of sources of supply, which are not really high conversion sources -- new sources. One of them was this whole flood situation in the South.
Understood. So basically some of this onetime supply came that...
Exactly.
Coming to that same question that Vijit also asked like breakup of that INR 30-odd crores of product intake, so if I recall correctly, last quarter, you mentioned that onetime cost of discontinued operation, obviously, of the transition business is likely to be INR 25 crores to INR 30 crores. The number that we are seeing is roughly INR 46 crores. So does it imply that you have...
Number is? Sorry.
INR 46 crores? Loss from discontinued operations?
That's not onetime, Sachin, what the 45 and -- there was roughly INR 25 crores, INR 30 crores shutting cost. But the 45% is all costs related to that business. It's not the shutting cost. That's just a loss...
So basically onetime is the right, as you guided off roughly? Yes but you were saying that the other product and debt costs or any other costs that were involved for this business that are also passed in the INR 46 crore.
And even the carryforward losses of that business, right? So the business was when we acquired August 11, was a loss-making business. So there was a period of operations, which incurred a loss, which includes in that 45, there was also the onetime shutting cost in that and provisions related to that. So everything pertaining to discontinue that business -- and as cost pertaining to that as well. All of it is in that INR 45 crores.
Got it. Can you break down the tech costs, how much is here and how much is in the classified business [Indiscernible]?
Aneesha, would it be fair to say that about INR 15 crores is in [63, 71]? Is that correct? [PDD] cost in transaction will be 15 crores, right?
Yes.
That's it.
And going forward, this loss from discontinued operations should be 0, right? In the current quarter, 4Q. There should not be any of the credit forward.
No, no, not at all. Yes, the business is shut, so it's -- there are some transition, as I said, as I did tell to the other question that there are some costs -- or people management costs, which we retained because we believe the [Indiscernible] classified business, which have come on OLX Classified business, but the continuing -- even that business is shut. So there's nothing to limit from there.
Understood. And just one final question on basically the consumer business or the new auto business. So new auto, obviously, as we all know, the volume-wise, it's growing well, value wise it's growing even faster. I know our numbers at 18% Y-o-Y growth do look good in isolation. But the industry seems to be doing much better. And as far as my understanding is there's also some shift happening to digital advertising. So ideally, I would have hoped for a 20% to 25% odd growth in this business. What is happening -- is the new advertising that's coming to digital platform going to some other channels or some other methods that we are not a part of. I mean, our growth related to industry seems a bit low.
Well, 20%, 25% is normally what we feel and 22% for 9 months, 18% for the quarter, I wouldn't say it's gone to competition as such. It's just more -- I mean, I would say there's more quarter management and management from the previous quarter of this year, a quarter growth, but really the amounts or the numbers are pretty much in this range. Competition has not changed much, right? Honestly, because competition is still probably Google and Facebook. So not much has changed in this business to be honest.
So I was thinking from the perspective of like there is a decent trend of video advertising happening or short format advertising happening. Is that taking some market share? Not your direct competition maybe, but something that's chipping away from digital [Indiscernible] ?
You see, what is happening is that when you look at video, it's mostly on OTT platforms or digital platforms like I don't know, maybe like sports advertising, which is -- cricket matches or other advertising is taking place on like Jio , or Hotstar et cetera, et cetera, or Sony Liv. So you find that is happening, but that's not really a competition of us. For us, it's more about -- the competition is not so much on advertisements on video, but mostly television.
It's mostly around -- because they're very performance-driven. For manufacturer, dealer advertising with us, they tend to calculate return on investment by cars sold, right? So competition tends to be more Google, Facebook than video or advertisements in OTT 3 platforms.
[Operator Instructions] The next question is from the line of Siddhartha Bera from Nomura.
Sir, again on the OLX, I just wanted to understand how has been the integration process. And you had indicated that we can look for some more synergies on the growth side when the platforms that consolidated. So some thoughts how you are looking at the growth from the current numbers which we are doing in the coming year?
Yes. We've actually -- the whole last 5 months was about after the acquisition was about stabilizing the classified business. But I think the biggest risks were 2 risks, right? One was the loss-making business, which we had to shut so that we arrest the losses in the loss-making business and then the classified side are profitable. And then it was the technology transfer and traffic transfer from a global environment to our own control and our own environment, which took place in 31st December.
So really OLX the platform or the consumer platform or the back-end platform and the technology coming to our possession on January 1, which is about a month ago, and traffic stability happened, right? I mean, traffic is quite stable -- consumer traffic is quite stable on the new platform. So that are the first two risks and the first two tasks, which we had. Now from here, for us, it will be how do we go to the classified platform, the business which we are really excited about, and we continue to be excited about that, whether it's the automotive side or the nonautomotive side.
I think we are right now in the planning stage of execution so that we have a reasonable growth and definitely a margin growth in the OLX classified business. And the biggest synergies of costs are the automotive side, right? The used vehicle side, whether it's the buyer and sellers business, the dealers listing, consumers buying or consumer selling and dealers buying, that's where a synergy good for us, where we are trying to see that how along with CarWale, we can provide better value to our dealers and grow our revenues and of course, grow sales for dealers in India. That's the intent here. So that was going on. And I think we should see a reasonable growth in the automotive and nonautomotive side of OLX.
Got it. Some sort of outlook, like can we grow in the -- like the trajectory which we have for the standalone business, similar trajectory can we expect for the next year from the current levels? Or do you think that may take longer depending upon the execution about in the business?
No, is the question that can we see a similar growth in OLX as in stand-alone -- is that the question?
Yes, yes, correct.
It's hard to compare and say it will grow at the level of stand-alone business. But the intent is to, of course, grow the automotive and non-automotive side both. And the intent is to grow margins along with that. I did discuss in the last call that one of our main objectives was to make discontinue the loss making business and get OLX to a profitable high-margin business. And that effort is still on to be honest.
Got it. Sir, on the SAMIL side now, any color. I mean, we have now close to a year seeing decline in revenues for this business. Any thoughts or outlook about when can we start looking at growth according to your ground level understanding of this business?
We feel -- we actually thought the repossession fall has bottomed out, right? We actually thought that even 6 months ago. I want to say that it bottomed out now, the repossession fall. And therefore, all our growth in retail becomes growth, but the repo continues to fall. It shows the strength of the economy itself. It's hard to predict the repo side will fall, it's still 48% of our business. So it's hard to say it's completely stopped, right? I think -- but it's hard to predict to be honest. I would think that the volumes are now on the repo side should not fall further. And therefore, an increase in retail should be growth for us. But every time we think that the repossession models continue to fall. So it's hard to tell, but I would think it's probably bottomed out.
Okay. Okay. But will it be fair to say that this is a representative of the industry and not have...
No, absolutely representative -- you can see in the financial performance of the banks and NBFCs.
Okay. So no market share gain perspective from any players?
No. Not at all.
The next question is from the line of Ankit K, from Smart Sync.
Congratulation on good set of numbers. Sir, my first question is related to the remarketing business. In your opening commentary, you alluded to the point the repo is now down from 53 to 49, and the retail has gone up from 34 to 39. I just wanted to know what is the balance? So 49 in repo, 39 in retail what is the balance?
Repo is 48%. Retail is 39%.
Okay. But there is still 25%, 30% odd.
Yes, that's a long tail, the other corporates and other sellers. I mean, that's a long tail.
Okay. So you don't have any growth there from that side. You're focusing only on retail...
I think what I was trying to say the repo, the 48% has been falling over a period of 1.5 years. The retail is something which has rapidly grown. This is in percent-ish to our volume. It is not a growth percentage. This is really -- suppose we sold 100% or our revenue is 100%, 48% comes from repo, 39% comes from retail. And that adjustment is taking place is what we are saying.
Okay. And is it fair to say that probably only when the auto finance companies start showing up NPA, we will see repo volume go...
That's exactly the point.
Okay. One last question related to the mix, which you mentioned, the new is 84% and old is 16% and OEM 62% and dealers is 38%. I'm talking about a percentage of revenue. So how do you see this going forward given that we have now have [Indiscernible] scheme of things. So how do you see the percentage moving in the next 2, 3 years? I know you can't give an exact number, but directionally, how do you feel.
We feel, over time, it's logical that the dealer share should grow. The 62%, 38% should probably change and the dealer business should go faster is what we feel. I mean, that's just because if you see the history of digital advertising, it starts with the bigger manufacturers and then flows down to fragmented dealerships. So logically, over the next 2, 3 years, the share of dealers will grow faster than the share of OEMs.
And in terms of new and old? 84% is new today and old is 16%.
I think because we've now acquired OLX 100% used, it's possible this may -- CarWale will remain mostly new. I think that probably will get factored in OLX's results and may remain similar.
[Operator Instructions] The next question is from Pankaj from Affluent Assets.
Sir, this quarter, we have reported losses from the discontinued operations. So in the discontinued -- is the operation completely discontinued and closed down? Or do we have any negative loss or any negative news coming from that end?
No, the [CTP] transaction business is discontinued completely.
Closed down completely?
Yes.
So what are the growth mix for us going forward, do we expect to see this INR 20 crores per quarter, bottom line next year onwards? Or do we have any more room for growing for the bottom line.
I think there are two parts. One is that the profit for the last quarter after discounting operations is INR 21 crores to INR 22 crores. That is at the current level of revenue and the current level of performance. Obviously, if our revenue grows next year or as the revenue grows, we do expect the profitability to grow as well.
Sir, do we have any operating leverage playing out here?
We have a lot of operating leverage. Because see our two main costs are people costs and marketing costs. Our marketing costs are not growing with the revenues and our people cost go in proportion to our revenues. So as our revenues grow, and actually, our profitability grows at a much faster rate. As you can see in the last 3, 4 years, our margin are continuously improving.
So what are our internal targets? Where do we need -- where do you want to take this company to? What are targets for top line, bottom line in FY '25, '26 or so.
So we don't give guidance, but if you see our consolidated results, and you see our adjusted EBITDA -- or profit -- EBITDA without excluding all our interest of treasury income, it is 22% in the quarter, right? Last quarter. That is -- and for 9 months, it's 19% versus 16% the previous 9 month -- last year.
I got that. That is history.
Obviously, our intent is companies which are really good tech marketplace kind of companies, over a long period of time, you want to get about 30%, 35% margin, right? And we are in that direction and increase revenues to keep improving our margins. That's the intent. But I think that 30%, 35% will take us time. But eventually, our goal would be to keep improving our margins.
Any sales target for next year?
Of course, internally have made budgets and targets, but we don't go out and give guidance at this point. But we have, of course, internally have targets and objectives on profitability and revenues.
Next question is from the line of Vikas Kasturi from Focus Capital.
I had a couple of questions. So one is on -- in the presentation, I saw this brand Drive A Smile. Is this same as abSure?
No, it's not. Drive A Smile is our section or part of our CarTrade foundation, where we help people in medical education needs within the mobility ecosystem. So it's really our initiative -- CSR initiatives within the group, which helps out the needy within the automotive industry -- or the mobility industry.
Got it. My next question is, sir, I was just looking at the OLX acquisition and at that time, sometime in August, September, you had put out a presentation, and in it you have given the breakup of both OLX and at that time, they had that used car business. And I think you paid around [INR 560 crores] -- and when I look at the OLX, the profit number that you have shown, which is about INR 111 crores. So it comes to something like 5x earnings. Is that correct, sir?
What we have said is we had a acquired the company INR 520-odd crores. And the OLX classified business had a profit of INR 111 crores that time what we declared and the OLX transaction business had a loss of INR 100 crores, if you remember. This was before tech costs were factored in and what we had showed clearly there. And therefore, we added the tech costs, the profitability which was INR 11 crores net would come down. So we -- obviously, we've felt that the loss-making business, which does INR 100 crores a year, something we could not possibly turn around or manage the [indiscernible] so shut it down, and what was left with the classified business which was showing INR 111 crores, and there were tech costs allocated to that, which is what we've done now. And therefore, you see in this quarter, the continuing businesses with is INR 11 crore or INR 11.46 crore profit.
Yes. Yes. Okay. And sir, on this tech cost, you had also said that it is kind of -- it will taper down at the end of December and from January onwards it will not be there. So how much of that would reduce, sir? So you had shown INR 111 crores for OLX, and that is the only continue -- the Classified business. That is the only continuing piece. And from January onwards that tech cost is also not there. So what would...
The 111 was before any tech costs, we had indicated that the tech costs are likely to be INR 30 crores for the quarter with INR 10 crores per month. Over and above this, which is, of course, what is showing -- which is what is showing in the computing business as well as the discontinued business equally. What we are now saying is that the tech cost being born just by the classified piece is already born, and it may optimize over the next 1 or 2 quarters because it's moved to our own environment. And for that it requires a lot of optimization on [Indiscernible] side.
But INR 11 crores -- but what you see in the Classified business now, the continued business is a reflection of what is carried on post January.
Okay. Got it, sir. Sir, just changing gears a little bit. And is there any plan? I remember speaking to your management about 2 years ago, when you had just IPO'ed. And at that time, one of the thought processes was that at some point, you would want to integrate your online auction and your off-line auction business. You have a CarTrade exchange and you have SAMIL and there would be some sort of an integration between those 2 pieces. Is that still on the card, sir?
Yes. CarTrade exchange is 100% subsidiary of Shriram AutoMall. Methodology there is integrated, which is Shriram AutoMall provides physical facilities, which is the AutoMall -- 130 AutoMall across the country, et cetera, et cetera. And Shriram AutoMall does hybrid off physically keeping vehicle and doing online sale. So it is pretty much integrated, yes.
Okay. Okay. Got it, sir. And one last question, sir. Any -- is this kind of your model? I mean I think you own about 55% of Shriram AutoMall. I think the rest is with the Shriram Group. Is that going to be the end state? Or is that also likely to change with you acquiring more percentage?
That is the current state, there's no intent to do anything else. That's the current state. Shriram Finance added lot of value to the Shriram AutoMall. It is also a big supplier to Shriram AutoMall plus they've got a fantastic experience and foothold in the whole commercial vehicle market. And on top of that, they are one of India's leading automotive financials. So they add tremendous strategic value and a great partner to have, and intend is -- this is what the current state is, yes.
[Operator Instructions] The next question is from Sachin Dixit from JM Financial.
I just had one follow-up question. In OLX business, we don't see any tax expenses there. Are those likely to come in the coming quarters or...
It may not be split, but of course...
Sachin, is your question about tax expense?
Yes. There is no tax in OLX. So I'm just wondering, will it come in the future.
I think the carryforward losses, right? Aneesha? If I'm not mistaken.
Sachin, for this financial year as a legal entity, they do have losses, so there's no tax expense. And for whatever tax expense or for losses that will be recorded in this year, we will not land up paying tax in the next year. All brought forward taxes we have lost because of the change in shareholding on account of the acquisition. Is that clear Sachin? Or you would be...
So basically until we run out of the current losses, which is roughly INR 63 crores of losses, we don't end up paying any taxes. Is that right?
That's right.
Next question is from Ankit K from Smart Sync.
My question is related to the cash which you had on our books right now, which is close to INR 700 crores and as we have been seeing -- ever since we got listed ones, our businesses predominantly asset-light and doesn't require much cash. And we have also done a good acquisition where we [Indiscernible] INR 500 crores, but still we have INR 700 crores of cash left, so do we have more acquisition plan? Or do we -- are we thinking on buyback route? Because given the kind of growth which we are seeing over the next 1 year, 2 year probably the -- it is not [Indiscernible] into this market data. Any thoughts on that.
Yes. We do a INR 700-odd crores cash in the parent as well as a subsidiary. We intend and also we feel confident that we will -- with the company has been profitable and generating cash, we continue to generate cash over 1, 2, 3 years. The obvious answer would be that we are, of course, looking at related M&A and investments. We're a company which has been very strong with M&A and made successes on the M&A we have done and grown the company and its revenue and its profitability through M&A. So obviously, we are continuously on the look out for adjacencies or synergistic businesses that we can make a difference, which add value to our consumers and users. So that is obviously an exercise for the company. I mean of course, we don't find any use of this cash for M&A or investments, and we continue to generate cash, the idea would be at appropriate time to buy back, so [they would get return] back to the shareholders. That would be the intent.
Last question. This is a follow-up to the Vikas's question where you answered. If I got it correctly, so is it fair to assume that the OLX business now, which you have -- the business which you have that INR 111 crores profit, minus which [Indiscernible] cost, which is going to continue to reduce over a few of time, right?
No, what I told, Vikas was that the continuing business is absolutely correct. It's a business which is INR 45 crores revenue and INR 11.4 crores is profit. To get to INR 11.4 crores, already has some tech costs in it. In fact, I answered to say that the tech cost may slightly go up in this quarter, but will come down to these levels in a quarter or 2. So it is and make up not any further after that. But our intent is to keep optimizing tech costs because the infrastructure costs, server usage costs, multiple other costs, which we're still getting a hang off and it will move from a global environment to our own environment. So it is still a little bit of work in progress. But the continuing businesses is this INR 45 crores and INR 11.4 crores. It may, as I said, the cost might got slightly in this quarter, but they will eventually normalize to these levels is what I said.
The next question is from the line of Palak from MIV Investment Management.
So on one of the previous question regarding the tech cost in the classified business. So can you please explain the cost for the classified business? And in which line item it is included? Is it a part of other expense?
Sure. I'll explain the cost and Aneesha can explain the line items. But what I said earlier is that the tech costs in the last quarter has been factored in the continuing business in the classified business as well as divided in the discontinuing business. The total [Indiscernible] tech costs incurred in the entire period of 5 months has been divided equally between the classified business and transaction business. The classified business, which is the continuing business is got the tech costs already included pertaining to it. We think that these costs will continue from Jan to March onwards, they have a slight escalation in this quarter till they fully normalized, but eventually come back to this level. Aneesha, you want to explain where it is factored, these tech cost in financials?
As you rightly said it, for the [Indiscernible] business, it's included in the other expenses that we disclosed in the deck. And the [Indiscernible] of the INR 45 crores or INR 18 crores that they see as a single line item.
We'll take that as the last question. I would now like to hand the conference back to the management team for closing comments.
I want to thank all of you for joining in the call today. And we'll -- as time goes on, we continue to having conversations with all of you. Thank you once again for joining and take care and all the best. Thank you.
Thank you very much. On behalf of CarTrade Tech Limited that concludes the conference. Thank you for joining us. Ladies and gentlemen, you may now disconnect your lines.