NIIT Ltd

NSE:NIITLTD

Earnings Call Transcript 2024-Q1

[Operator]

Ladies and gentlemen, good day, and welcome to the NIIT Limited Q1 FY '24 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Thadani, Managing Director and Vice Chairman of NIIT Limited, thank you, and over to you, sir.

[Vijay Thadani, executive]

Thank you, and good afternoon gentlemen. Thank you very much for joining the call for briefing on quarter 1 as well as the status of the demerger. I do know it's a very busy time for you and for you have said this time for interaction with us, we fully appreciate and looking forward to a eating discussion. I'll just give a quick update on Gregers well, and I will say a little bit to give a quick read on the quarterly results, which have been available on the website. But I will go through a quick brief, and then I think we'll spend bulk of the time in answering questions that we may have. So first of all, -- this is the first quarter after NIIT demerged from Nelsen therefore, it is only an NIIT limited I am sharing in this call. I have with me Sapnesh Lalla, who was the CEO until 24th of May 23, after which he is the CEO of IP Learning Systems and continues to remain a very strong adviser and a member of Limited Board. So I will bank on this commentary in between whenever we -- while I also have Mr. Parappil one of the Phone and the Joint Managing Director or can I Limited. Joining us in a minute is Mr. Rajendra Pawar, who is now the Executive Chairman of NIIT Limited. So NIIT Limited on 28th of January 2022. Approved the reorganization of NIIT's 2 distinctive business lines, the Corporate Learning Group and the skills in series business into 2 independent companies, I will not go through the rationale, which we have discussed on a number of occasions, but I will just take you through a bunch of dates, which will be very necessary for those of you who are getting into NIIT Limited for first time or want a reminder of some of the states. So the plan was approved and announced on January 28, 2022, and idea was in 18 months' time, we should be able to list the company. The plan was that at the end of this demerger, NIIT shareholder of NIIC will get 1 share of LSL for every 1 share of and in that the poster appointed of splitting the balance sheet was 812022. And then we went through the process of NCLT and a bunch of permissions from MCA as well as sale male, et cetera, with and meeting operators and various things after which the order of NCLT the effective date of the merger was 24 from May 2023, on which they the assets of the 2 across the 2 balance sheets and people were assigned to the independent companies, and that is what I referred Mr. know is the CEO of the combined entity and became the CEO of NIP Learning Systems and an Executive Director of IT Learning Systems and continues to remain on our Executive Director on it Limited. The record date on Brich, every shareholder of Renato an extra share of LSL was 8th of June 2025, and the listing of analyses stock on Bombay and National Stock Exchange, a very interesting and immersion moment for all of us was on of August 2023. So at the end of big, an IT Learning Systems Limited, which is in the corporate learning business, which is in managed training services, learning outsourcing in Western markets, predominantly is running the business as NIIT -- while the skill and carrier business, which is focused on India as well as emerging around India is focused on talent transformation. We kept the workforce to cope with the rapidly singing environment and enlarge its ambit to our ease of industry sectors. So in NIIT Limited, right now, there is a lot of work happening in stepping up innovation in demerit and hybrid model for me. We did make some additions to our Board of Directors at the end of this reorganization. And while some of you are familiar with some of the dependent directors we have, I particularly wanted to bring to your notice, 3 important people. One is Avelina, who was also the funding CEO of Tata Star and currently a strategic adviser at Bain company. She has been as an Independent Director for a year last. Mr. Ramindra Babu, Garikai who was the xG Technology Officer of Slipkart and now Independent Director with Axis Asset Management amongst others. And he comes a rich background in using digital technology for conducting e-commerce as well as fintech businesses. And lately, we had Mr. Srikant Bellemare, Founder and Coral, which is India's first Unicorn in KI and a prominent provider of oral intelligence to 500 companies who joined the board during last quarter So excited with the new journey that NIIT Limited has taken on, undoubtedly, and IT Limited as is shrunk in size. That is because most of the legacy businesses that it glenoid have gone down during the board period and have our non-Limited in variety with new business models and new interesting sales of delivering and delivering training and getting students to join and IT courses. And that process has just started. So to make sure that this massive transformation exercise is handled appropriately while retaining the values and culture of the organization while retaining the core competencies that the organization projected it was felt that the founders who roll up their sleeves and give back in action. So while many of us had started moving into nonexecutive or certain noninteractive rules, we have right now all paraspace rolled on and into the company to ensure that in this transition and transition of transformation happens iron, so over the last 4 years, while anatihas played a very important role in the technology sector. So we are told where we have been pivotal in building talent of the IT industry for the nation. Today is accelerating transformation across industries, of which we noticed the transformation about 10, 15 years ago in banking, we are -- we have been very prominent and would say perhaps market leaders in BFS in. Today, we are going further marking further on that opportunity to recreate impacts that we created in technology and BSI and looking at multiple sectors beyond can BFSI industries. This is backdrop. We know that these times have been quite challenged in the country. And more specifically since the large percentage of our business came from technology training and getting early priories onboarded on to IT services companies. We were severely affected in Wandoo since the IT services companies, the global systems integers grows their hiring. And in fact, it's 1 quarter in which we have had negative headcount, negative impact on income across IT services sector, which has happened at this scale after a very, very long time. So the company went through that and hope the agility at the moment required by taking some collective actions, which have begun to bear results. And therefore, as we talk about quarter 1, some of the effects of what those actions that we took are baked in. The numbers at #1, revenue was at 62.5 INR 625 million, which was up 4% quarter-on-quarter. I'm buccally not doing the year-on-year comparison because the year-on-year comparison is not a very relevant in the current environment given the fact that we got reset in a different orbit in the fourth quarter -- third and fourth quarter of last financial year. So we are now looking at the recovery phase and therefore, looking at how the quarter-on-quarter growth is working and how it pans out as we go forward. Just to give you another on the kind of revenue, the revenue from early career and we have been talking about that we service 2 segments early careers and working professionals. And on the other hand, in terms of sectors, we look at technology and BFSI. BFSI now that there are some sales and service excellence, which are also brilliant, so revenue from early career was EUR 330 million, which grew up 8% quarter-on-quarter. Contribution was 53% versus 51% last quarter. And that is an indicator of the fact that what had gone down has perhaps bottomed out, and we are now beginning to see a little bit of hiring taking place in the coming -- in this quarter, we sell it through the end of the quarter and maybe it will increase as we go forward. In the workflow segment, while it contributed INR 295 million, which was flat quarter-on-quarter, but I think the mix of what we were doing has changed. The mix has been formally shifted to advanced technology programs where we make significant investments. And that's what allowed it to keep flat and IT future, you will see a benefit of growth coming out of the investment that we made. As a product -- sorry, at the sector mix level, revenue from technology programs grew 6% and contributed 77% of the overall revenue and DSSI and other programs, while we are remaining black quarter-on-quarter. What is not visible is the significant movement and mandates that we received end of the last quarter, which will benefit us in coming quarters, and I'll talk about that as we move forward. Despite this challenging environment that quarter 4 and quarter 3 we had, we think we have arrested the decline in quarter 1. And honestly, the decline that we witnessed in quarter 4, very steep decline. I think they have retina. And this quarter-on-quarter growth is a testament of the fact that we have been able to with that downturn in a fairly fast map. This was driven by 3 or 4 important actions that we took what was an increased outreach in a large GSI or not hiring, we decided we will go to Tier 2, Tier 3 systems -- global systems integrators and increase this outrage, which helped us get new logos, new orders at a lower volume, but a larger number of new logos were added. The second was BSFI Trust, which we saw the beginning of led us to collecting some very strong mandate, which give us a very strong revenue in the coming 3 quarters -- 3 to 4 quarters, these mandates will run for 5 to 15 to 18 months. The third was we went to our key customers and we said, how can we increase our wallet share, and we must be bite in a few cases and make significant mangrove there. And lastly, the strong traction that we saw in advanced technology programs in areas such as artificial intelligence, AI, generative AI, the digital architect program where we have kind of created a partner leadership position, engineering R&D, which is an emerging field and cost-growing phase in the country and cybersecurity among sir, which have been very testing programs for working professionals, During this quarter, Harpreet for a similar journey and has been on a recovery case. And we got in addition to everything else, but a strong recognition from 3 of our major OEM partners, Microsoft where we have been created as a month the top 5 partners in the world. AWS, again, for our customer obsession initiative and Red Hat, where we are one amongst the 3 premium markets in the country, our we also implemented some very strong cost control measures, which resulted in breaking down our negative EBITDA from $95 million to 16-odd million is not much said is that this business is undergoing transformation and is in an investment cycle. So in the investment cycle for us to have managed our cost structure, yet got for growth and have put ourselves on a trajectory of profitable growth as we go forward will be a useful thing to have. And in this, we -- through these initiatives, we expect a strong ramp up in quarter 2. We expect margins to get back to even in quarter 2, herein quarter 2. And from that onwards, we will be in positive margin space as we ramp up. Just to complete the P&L. So I talked about revenue, I talked about EBITDA. Our net other income $138 million, which includes the impact of a robust resale income of EUR 133 million, and that -- so another benefit that strong cash does that the company has come useful. So overall, our profit after tax was INR 22 million as compared to a loss of $65 million in quarter 1 last year and a loss of $94 million in last quarter. During the quarter, NIIT also completed the purchase of the balance 10% of equity in harder, which was in a phased buyout page. And now therefore, RPS is a 100% wholly owned subsidiary of NIIT Limited shareholders of RPS do have a small earn out and for the balance period, which has been disclosed before. Our CapEx for the quarter was $68 million, and this is for the strong investments that we are making, a, on our platform; b, on our content, in AI, in digital architects and the new programs that I talked to you about as well as many other programs, which are in the, and on the delivery infrastructure that we are using. We see a very great potential in using AI for training as well as trading in AI. And therefore, we are investing -- continuing to invest in products to give people with the ISL. We feel that the whole landscape of education will stand very radically transformed when AI is used in a mature balance and organization. And that experience will continue. Our balance sheet metrics remained strong. Our cash from operations was in positive territories. So after paying for the investment of our cash balance from 70 from... Coming to 1 Challenge no, no, Yes, from 7% last quarter, our balance is now at 705, which at first look, appears to be 100 million uses of cash. But if we take that $150 million are actually used to pay out for the potato RPS stake, then from operations, we actually had a $50 billion positive inflow of cash, and so that, I cover the balance sheet. I think looking beyond, right now, as I mentioned, we are looking at positive uptick in the first -- next 3 quarters. On the back of strong mandate that we have even the new advanced technology programs actually have created, the BSSI tailwind that we are noticing and the return of onboarding and advanced technology programs in our GCC and DSI customer segments. So with this, we will see that we could see robust quarter-on-quarter growth for the Malat part of the year so that we remain in a positive growth at jetpack in the last 2 quarters. We will be in a positive growth trajectory of 5% to 8% and also will have positive EBITDA margin at the end of the year. I'll stop here right now and open it for Q&A, and I'm sure we will discover more areas that we need to discuss as a bit. I'll stop here, Operator please open Q&A.

[Operator]

Sure. Thank you very much. We will now begin the question-and-answer session. [Operator Instructions] The first question is from the line of Kirin from Credit Suisse.

[Kirin, analyst]

Yes, thank you for that to me as my question. Could I please ask first about the backlog or the orders that you've announced that you've received, how does that compare to the same sale last quarter or a year ago? That will be my first question, please.

[Vijay Thadani, executive]

Yes. I think your question is how is our backlog of orders compared to the same time last year, so last year, we had a very solid... Sorry. Did I met something? Okay. So last year, in this quarter, it is one of our 3 quarters of performance last year, given that we had a full order book available from the orders that we had received in the previous 2 quarters, and that is the time when everybody had maximized on their internal training and onboarding activity. And I see it was one of the best quarters that we had last year. Compared to that, in this quarter, when we started, we nearly started with a very, very low order book. And therefore, we had guided also accordingly that it will take us time, though we were seeing a small pipeline. But when we have ended the quarter, I think we have added is a decent size order. So last year and quarter, we started with a high order book. We ended with the of our order book. This year, we started with a very low order book, but we have added. We have closed on a very high order intake. Now in our case, very much like in the outsourcing space, you have revenue visibility based on performance. In this case, we work on the basis of mandates -- and next quarter onwards, we will start declaring that as an important mandated revenue that we expect from our plan. But right now, to tell you in very simple words, I think we have mandates for training about 27,000 students, and that will result in revenue of nearly EUR 100 million, so about $100 million of 1 point INR 1 billion. So that's approximately the mandates that we have as we speak. The beginning of the world mandate is that this is what customers have said they would like to gain from us in writing at that at per student, which is based in that contract. I promised answers the question.

[Kirin, analyst]

In addition, we have run rate contracts, which continue to progress on a month-on-month and quarter-on-quarter basis. And then also, we have seen the fall uptick as our more share has gone up... Does that answer your question.

[Vijay Thadani, executive]

That is exactly what I will be Sorry...

[Kirin, analyst]

That's exactly what I was asking in terms of this 27,000 professionals and INR 1 billion revenue. How good is that in comparison, if you could give any comparison with respect to the past or perhaps how much revenue growth that would give you in the future.

[Vijay Thadani, executive]

I think the comparison is rather stock and Viewer pointing out when we entered Q1 last year, we had entered with a strong order book, but we ended with a very, very weak order book. As we enter this quarter, we entered with a very weak order book. It was negligible other than run rate business that we were doing. With these mandates, we have an order book that is significantly better and a stock contract as compared to the order book that we ended with in the same period last year. It is also significantly better than what we ended in the previous quarter...

[Kirin, analyst]

Okay. And maybe last -- my second and last question. If I may ask you to repeat the EBITDA guidance that you said. I understand you're saying you hold positive by the end of the year. Did you say something specifically about next quarter?

[Vijay Thadani, executive]

Okay. Next quarter, we would be at EBITDA breakeven. And in -- by end of the year on a cumulative basis between all 4 quarters put together, we would be in positive EBITDA region.

[Operator]

Thank you, reminder to participants that you press joint queue.

[Vijay Thadani, executive]

So while I think people are taking through their questions, we are very excited about the way AI is getting used and AI presents opportunities in cleaning workforces. So I'll request Satish to take us through that because the initiatives that we launched, and he is also very excited about it. So while you guys are picking up your questions, we can talk through this...

[Rahul Jain, analyst]

Thanks, Vijay. Actually, I'm really excited about how AI is going to significantly change the way we work, notwithstanding what we do, and that includes it is going to significantly in how trading has delivered. If you get significantly chain how software has developed. It is going to significantly seeing how customers get customer service. So it's going to disrupt or significantly change how people do their jobs. And I think that represents a very significant opportunity for us from 2 different dimensions. On one side, we can significantly do how cleaning gets done, and we can become significantly more ambitious in ensuring that we achieve outcomes at a pace that is faster than what we can achieve today and an expense that's significantly lower than what we are able to achieve. So from the point of view of efficiency and effectiveness, it has got the impact positively trading has delivered. It also impacted alive in terms of how efficient can you be or how experiential can you be in terms of delivery training. But on the other side, if you think of how people would do their jobs, it is going to be remarkably different. And what that is likely to do is it's likely to require people to be very significantly refilled and upskilled. It's almost like when horse carts went away and cars came on to the scene, people didn't need worsen any more people in need money attire, but they needed to learn how to drive motor cars to go from point A to point B. And if you did not know how to drive a monocot time getting from point a to b. And that's what's likely to happen over the next few years in pretty much any job. And I think that will create an opportunity for most want to reskill and upskill their employees so that they can take advantage of AI and become significantly more productive and can do the job at a much higher level of quality. That in turn will create an opportunity for NIIT as an organization that has spent several, several years, for decades, creating and developing talent for large organizations and at large scale, creates a great opportunity for NIIT to be the disruptor or to be the agent that will enable organizations to significantly upscale and we still the people. We have a number of pilots on at this time. Just to take an example of a few seminar in collaboration with Microsoft there almost 100 key learning officers across our enterprises in India attended. And most of them were very interested and keen to figure out how well learning and development change, how will their gross change, how will their organizations change? And how should they restructure their organization so that they can take advantage of AI. On a slightly dimension, demand are short programs that are designed to equip key folks in different parts of GSI and the GCC and help them figure out how they could take advantage of in how software gets developed or having patients get deployed. And again, of this area, we've got a very strong participant and a lot of traction and more and more organizations want than how they can put how they can embrace AI and how can they take advantage of these technologies and put it in practice. We expect that we will continue to see significant lives in our activity around AI in the second quarter with a material contribution from a commercial perspective as we get towards the end of in...

[Vijay Thadani, executive]

Thanks, Jain. Are there any questions now Out of this or whatever we discuss so far.

[Operator]

Sure. The next question is from the line of Sameer Dosani from ICI Retention Asset Management.

[Sameer Dosani, analyst]

Thanks for giving the opportunity. Just one thing, if you -- can you just beat what level -- what proportion of our business will be coming from captive because in maybe you can just give it on an overall level or in IT sector, which is 75% of our revenue. And is it fair to assume that capital hiring or the captive training demand is better than what we are seeing in IT services or the GSIs in some way. So can you just indicate that? And second is the booking question, what cash we would have on the balance sheet as of date after the acquisition of remaining stake in RP Thanks.

[Vijay Thadani, executive]

I can answer the second one first as the 3 questions. Aston, some correct me if I'm wrong.

[Sameer Dosani, analyst]

First one, you ask course wat proportion of revenue comes from DTC have you seen demand from GCCs -- and can you compare that to DSI? And third was, what is the cash balance after the purchase of stake in...

[Vijay Thadani, executive]

At the 7th of 56 million since still that number set by a go. And that was about 10 million less than the previous quarter, but we paid EUR 150 million for the balanced part of our year. Therefore, on an operational basis, we were cash positive last quarter with $50 million plus.

[Sameer Dosani, analyst]

Understood, the rough 1.5 crores.

[Vijay Thadani, executive]

That's correct... I can attempt to answer 2 questions. Typically, again, I use this for car typically in reasonable times when GSIs are hiring and so are GCCs or capital as you described them. The slides and GCCs for us is about 55.5% in favor of GSIs -- the nature of our business in GSI is highly weighted towards early careers where we do a lot of on booking or bootcamps for folks who are taking out of polio are joining GSIs and they want to make sure that they get monies that they can become productive very frequently. So the season of what we do with GSI GCC, the nature of work that we do is more geared towards upskilling and reskilling their existing employees, so predominantly of working professionals, again, predominant. Now GSIs have significantly lower than pressure hiring this year. A large part of what we are seeing for GSI is predominantly upskilling and reskilling. So the overall business with BSIs have gone down, and consequently, most of what we are doing for them is upskilling and reskilling. And we continue to do upskilling and reskilling for GCCs. Given this phenomenon, at this point in time, the split across GSIs and GCC have switched. So instead of 55 45, it's now closer to 55 for ECC and 45.

[Sameer Dosani, analyst]

Understood, and yes, it does. And is this 55, 45... Okay. Got it, is for only technology or overall level at the company level? Or is it only protect tech as a sector, which is like 7% of your revenue.

[Vijay Thadani, executive]

Sector in terms of what we do... And GCC. So reported what we did GSIs and CPCs and all that. Today, we are doing above and GSIs and the predominant amount of work or type of work we do for the GSIs and GCC's respectively.

[Sameer Dosani, analyst]

Understood, also one thing is a strategy level, are we thinking of replicating or diversifying away from tech as a sector, are we looking to enter new sectors in our business or replicating what we have done in NIIT here in this company as well, if you can share some lifetime...

[Vijay Thadani, executive]

Yes, the India and emerging markets, the typical method which companies adopt to use the services of NIIT are for iterating their new work which is joining, which would be experienced at could be pressured and make sure that they get on-boarded appropriately in the company. And it is typically in the home on wood caps. The idea is for them to be ready to be day 1 are 1 ready. In contrast to that, NIIT works predominantly to closer organizations who use technology can a technology organization also who uses rent for their internal as well as customer pain. But there, the focus is how does the spend that they make on learning and development, can that be deployed more efficiently can that be delivered with higher degree of effectiveness. So that is a learning outsourcing kind of a business model, whereas in India, with organizations and individuals, it is a project-based model. In the India Enterprise segment, which is what is the net limited services, lots work happens in sales enablement and improving customer service performance, this is dependent on the sectors that are growing right now, which are predominantly aligned towards consumer trends. So those organizations use us, whether it is in auto or whether it is in e-commerce or it is in telecom, those are on those are the sectors where we play a stronger growth. But there, the time is been form of a project, we have a 5G rollout just imagining. We have a 5G rollout coming up, and we have a mid-set customer. We want to make sure that our people are able to service our customers with their calls as well as support as well as whatever else. As they implement 5G, can you enable our 10,000 customer service people appropriately in our Indian enterprise on. From an Indian bank, the call can be, we have a huge wealth management tactic opportunity coming up. We want to make sure that we have professionals who are good relationship managers and who can advise our customers to build the wealth management solutions, which the bank offers. So can you ensure that you take this 5,000 meters and get them ready to roll out that so that they have an update knowledge of products, they are able to present it well. They are able to communicate the benefits... Yes. Can you hear me? I can hear you now... Yes. I just -- how many I want to say, I don't know you heard. The -- in the NIPS the business model is lean LNG outsourcing and organization also over a from opening in sales management programs happening. And our NIPS manages those programs, deliver those programs advance those programs ensure that programs deliver the end outcome. In contrast, in India, you can or mandate to change to have we gained with a particular skill or particular competencies over the next 6 months is that exercise and or to us that overall, their still inventory has improved by is one parameter.

[Sameer Dosani, analyst]

Understood, is there a room in Indian clients to convert it to manage training in some way? That is one thing Yes. So that's my last question.

[Vijay Thadani, executive]

Yes. So it is a role-based role based skill enhancement competency enhancement projects in contrast, handing out their whole R&D content to us to manage because I think in India, given the fact that many of our customers are outsourcing organization, they believe that they have that capability back in-house, and they should totally use specialists by us only for the areas where they feel that we can add tremendous value in terms of efficiency and a business...

[Sameer Dosani, analyst]

Understood.

[Vijay Thadani, executive]

Sorry for the model disruption, which took place, is there another question?

[Operator]

Okay. Yes. The next question is from the line of Kirin from Credit Suisse.

[Kirin, analyst]

Hello again. Thank you for allowing me to ask a few more. So if I can specifically ask about IT in at the moment? And what is the optimism for improving volume in futures based on -- and more specifically, whether you think generated AI is overall positive or negative or IT given that you can replace some of the core automated by the automated... That will be the question.

[Vijay Thadani, executive]

So, I'll take to repeat my understanding of your question me if I got it. I think your first question was what's our view point of view on the hiring scenario in India and how does that affect us. The second question was on AI come back to -- did I get the question right?

[Kirin, analyst]

That's correct.

[Vijay Thadani, executive]

Thank you, so on hiring, we saw net negative hiring in the previous quarter across most major GSIs. A point of view is that over the period of this fiscal year, specifically in the second half, 2 of the hiring might start, but not at the same pace as it happened last year. I don't think that's new news to anyone. We do see a significant hiring at this point in time. BFS, net banks are in the rates to expand their retail banking networks, and we are starting to benefit from that. In terms of its impact to us, is outlook that we had provided. We have considered hiring to remain robust for banks, and we have significant mandates from them to pay people they hire. With respect to ESI specifically, we have not assumed any significant hiring to resume at GSI. What we do to this is that Tier 2 GSIs, who are -- who have now become our customers are of significant outreach in Q1 are hiring in spot numbers at this time, not at close to the 1 offer higher, but our had. The second question was on how AI in fact, high or and how it might impact us. In terms of its impact to us, I feel that we have a very significant opportunity because most companies will figure out how to embrace the AI and they will -- that will force them to very significantly change how they do that gets a significant opportunity for us, not withstanding what it does in... did I answer all your question?

[Kirin, analyst]

Yes, thank you. I guess what you're saying, overall, it will be positive for IT jobs, overall, the second part that AI.

[Vijay Thadani, executive]

It should be positive because applications will end up becoming significantly more ambitious. They will be able to achieve more pesos using an analogy of scarves stars. And when cars came in, we are afraid about what happened to rose, what happened to transportation and so on and so forth, but cars revolutionize how people could go from data to Phase 3 and very significantly change what people could achieve. I think the similar impact. People applications will be able to do significantly more than what they are able to today. That will open, we have the news for people to become more ambitious and that was a new space of hiring.

[Kirin, analyst]

Sure. But would you say there is some negative impact on the entry-level coding jobs given that the basic code and capability can be done by AI. So perhaps there is some difference in terms of how effects low end versus higher.

[Vijay Thadani, executive]

I doubt it very much. I think the job that an entry-level person is doing will not be needed, but they will be able to do jobs that are significantly more ambitious because they have tools that are significantly more powerful. I'll give you another example. I don't know if you ever work that home with the main one, I imagine that you're used to have retail with a hammer, whooshed it takes an hour to maybe hammer 12 nails -- now somebody gave us 5 minutes to nail all the 12 nails. Now as that feel we will be for people today, more people they'll do more roofing or houses will come up because it's become more efficient to build or to construct. So my point is that as the tools improve, the people who use tools become more ambitious in accomplished and the people when we use products have a higher expectation of what they want to expect from products. 30 years ago, what you were able to get in advocates on your phone, we didn't expect -- now that it's possible, we expect a lot more and that led to entry-level people not being able to create apps No. They are seaters, they're able to do things that are more ambitious than what they would have done 20 years ago or the... That it is, I think their skill level remains the same... They will be out of the They'll be out of... Then they won't... Yes. So it has to be first in Mustard, they need to have much more, but we are much, much more and policies not be impact, then that's an opportunity for NI in between the 2 and prepare them... Yes. I mean if you could drive horse cars and you stay with that skill, there are lean mortars to drive, so you're going to be soon out of business. But if you figure out how to drive motor cars and you came to NIIT to learn that, there will be a rate of...

[Kirin, analyst]

Thank you very much, Vijay.

[Vijay Thadani, executive]

Appreciate your question. I think very, very good. Are there other questions? Operator?

[Operator]

Yes. The next question is from the line of Nilesh Jethani use individual investor.

[Nilesh Jethani, analyst]

Thank you for the opportunity, sir. Just one question, we are planning to getting into supply chain management and new manufacturing -- so what is our plan in this regard, whether we are doing it organically or through inorganic acquisition, any ground work is being done for this plant being implemented? Can you please throw some light on this, sir?

[Vijay Thadani, executive]

Yes. This is Nilesh. You have been close to us that you can read our mind. So yes, there is -- it's work in progress. We are looking at both the options. We have identified the opportunity in a gross trend, but we have to get down to specific products and specific outcomes and specific employers and specific segments that we'll work on. And that is work in progress. I think we should be able to tell you more every time we met, we will have something more to talk about. And it will be safe to assume that I think in the next 1 or 2 quarters, we will get a very high degree of clarity on how we want to...

[Nilesh Jethani, analyst]

Okay,

[Vijay Thadani, executive]

And I should mention that we have an award is available. So it will be a make versus buy decision. And whatever gives us the ability to move faster in the market is what we would to work with...

[Operator]

Thank you -- the next question is from the line of Samarth from AMSEC.

[Samarth Singh, analyst]

So sir, just one question, of the 27,000 employees that you're looking to train, so the money will be given out by the corporate and the employee will be selling off money from his pocket for this trailing?

[Vijay Thadani, executive]

So these are direct mandates, which are corporate will do us for people that they are hiring whom they would like us to play, whether internally already hired or the fresh has that die.

[Samarth Singh, analyst]

Okay. So...

[Vijay Thadani, executive]

It is not a tax base more.

[Samarth Singh, analyst]

And sir, the other question is would you like to throw some light on where do you see now this India business from a 5-year perspective, given that you are now talking of some acceleration in growth rates in the second half. So any directional sense from a medium-term perspective, what is our stance on this business growth...

[Vijay Thadani, executive]

So I missed this part of the question, but I wanted to correct that. I would say about 80% of what I mentioned the 7,000 a to set the numbers again. They are direct corporate lending, 20% are kind of rent. There we are also -- your next question was on the high year perspective that...

[Samarth Singh, analyst]

Yes, your voice is getting muscle in but that is what I had asked it.

[Vijay Thadani, executive]

I have a problem Yes. So maybe we can talk to you offline, but let me give you -- I think your answer your question was a 5-year perspective, we do believe that we have we have this stuff that we went through that we have to recover from. And if this recovery has to take and we have to get back on the same part on and if the recovery happens at the rate at which we are expecting, we will still be on time for what we wanted to achieve in FY '27. But on a more realistic basis, it does appear -- and that's a long shot. So it's FY '27, FY '28 time frame, we were aiming to reach INR 1,200 crores of revenue, which we had discussed this work plan. We have not gone through this stuff. Actually, we were in a good shape. Thank you. Peter, I think we have a problem with the audio quality today, and we are also out of time.

[Operator]

Yes. Actually, that was the last question in queue. Okay. Actually, one just came up -- it's from Ashish Kacholia from exporting trial.

[Ashish Kacholia, analyst]

Yes. Excellent, thank you, for the opportunity, can you help us understand that you see the economics of the business, how should they look like overtime as the business comes to a more universe.

[Vijay Thadani, executive]

Business economics over time, if that is your question. We do want to make it a 15% to 20% margin business. We are used to a better margin. But since we are on an upward line, we do believe that that is where it will stabilize when we at the level that I just talked about. And in order for us to do that, we need a CAGR of about 30% last every year. So I think the business economics at this point of time, we do have a fixed cost structure, which we need to bring down which will come down, sorry, which will come down as a percentage as the growth picks up. And as I just mentioned to Singh, you are well on that track, barring the stuff that we have gone through and recovery from this is a 2-, 3-quarter issue. And after that, we will be back on...

[Ashish Kacholia, analyst]

Sure. Sir, as a follow-up, just if you could break it down, because some outside, it seems like more of a product offering to customers and the delivery is digital, so I would have imagined that we have very high gross margins and the large part of cost use would be in sales and marketing. Is that a correct understanding? And maybe if you could sort of double-click on how the 15% to 20% EBITDA margins kind of come...

[Vijay Thadani, executive]

We will be happy to explain that, but maybe we'll have to choose another time. So next week, we are in Mumbai or some conferences. I'm not sure about my program, but my colleagues at and I think they can help us walk you through on our view and want to just set up a meeting and explain. And once we have discussed that, we can then leave it to every one year as well.

[Ashish Kacholia, analyst]

Certain... I start with the Investor Relations and set up for the basin. Thank you very much.

[Operator]

Thank you... That was the last question in queue. I would now like to hand the conference back to the management team for closing comments.

[Vijay Thadani, executive]

Okay. So thank you very much, everyone, for joining us. I apologize on the quality of audio today, that was definitely distraction, and we did have difficulty sending you and I'm sure the same happens on your side, but we will definitely make sure we have a better quality all next time we speak, you normally don't have these issues I look forward to further interactions with you because the questions were becoming interesting. We did start sluggish in a second manner. But over a period of time, I think we interesting discussion. This is the time in the transformation phase where every it has a very strong value. So we truly appreciate your contributing today Idean your question. You refer to our further conversations with you. With that, I would like to bring this call to our close and thank you.

[Operator]

Thank you very much. On behalf of NIIT Limited, that concludes the conference. Thank you for joining us. You may now disconnect your lines.