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Ladies and gentlemen, good day, and welcome to Updater Services Limited Q4 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 on 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. Raghunandana Tangirala, Promoter, Chairman and MD. Thank you, and over to you, sir.
Yes. Thank you, Manjala. Good afternoon to all of you. Warm welcome to everybody present on this call. I have with me Amitabh Jaipuria, Non-Executive Director; Radha Ramanujan, CFO; Snehashish Bhattacharjee, CEO of Denave, who is now also elevated as the CEO of the entire BSS Group of UDS. He will start taking ownership from 1st of June. So congratulations, Mr. Snehashish. Happy to have you as the CEO of the BSS Group.
I hope all of you have got the investor deck by now. And for those who have not got it, you could view them on the stock exchange or the company website.
To give you a brief in a nutshell, UDS operates in the B2B space, offering a spectrum of business services, which are broadly classified within our group as IFM segment and the BSS segment. When we say BSS, it is business support services.
Over the years, UDS stand-alone entity has evolved into an integrated business services platform, which has been present pan-India, servicing customers across industries and business lines. Also, you would all know acquisition of strong companies in BSS segment has taken the group globally and also made us more profitable.
We are led by a well-qualified experienced team, management team with a robust experience in all the sectors we operate, and that's how we have demonstrated the ability to manage and grow our operations across segments.
First, let me give you a brief on the BSS segment. In the BSS segment, we have witnessed a strong revenue growth of 32% over last year. Revenue stood at about INR 802 crores. This is primarily attributed to strong growth we are witnessing in the sales enablement business. We're also growing the digital and field marketing segment in the BSS segment. This segment grew in spite of setbacks in employee background verification, one of the business services because of a freeze on IT hiring or slowdown in IT hiring. We are seeing improved traction this year in the IT hiring, though it won't be like what it was a couple of years back, but we are seeing traction. We have also moved from IT-focused company. I'm talking just about the employee background verification. We've also moved from IT focused to other sectors like banking and manufacturing.
Another business in our BSS segment, which is the airport ground handling business, we have picked up traction. We are now operating or would be operating in 22 airports from this quarter. So out of the 22, 16 are already operating, about 6 will start getting operated anytime this month and next month.
Beyond ground handling, we're also picking up other related airport and aviation services. We've also started an aviation training school though for captive and also for people outside. This should definitely give us expert staff positively contributing from the next 2, 3 quarters. We've also got in these 22 airports, the marquee airports, which we expect actually the business to grow much more than what we planned. These are airports like Ayodhya, Tirupati, and Pune, which is already operational last 1 year. So we see this segment to grow in the coming years.
During Q4 full year, the BSS segment contributed 34% and 33% to revenues, respectively. Within BSS segment, we offer a diverse range of services tailored to meet the evolving needs of our customers across various industries. This also helps us to increase our wallet share within the existing clients while improving our margins on a consol level as business in BSS segment are highly margin accretive.
As of 31st March '24, we have about 1,026 customers in BSS segment across -- I mean, three marquee clients across segments like IT, BFSI, manufacturing, ITES, telecom and aviation. Going forward for the BSS segment, we have plans to grow this more aggressive in terms of inorganic growth. That would mean acquisition in the BSS space. This is what our strategy when we did the prospectus or when we went for the listing. So this would happen this year and the next year or going forward in this space because BSS will see a better value add, better margins.
We also want to -- we also plan to grow the BSS segment organically at around 18%, 20% and also further improving our margins. Our ability to successfully acquire and seamlessly integrate margin-accretive business is what we will be stepping -- what will be a stepping stone for us and what separates us from others or our peers. All businesses in BSS segment have been through acquisition, which we have successfully turned into a profitable business.
BSS market is expected to expand at a pace of about 15% per annum in the next 3, 4 years, reaching a size of about INR 15,000-odd crores. This is the biggest pie -- from this biggest pie would be attributed to sales enablement, employee background verification and audit and assurance.
All these BSS segment business are asset-light, capital efficient in nature and in which we are already market leaders, which should grow faster than the industry.
Now moving to IFM segment. During Q4 '24, our IFM segment contributed a significant contribution to our revenues, comprising approximately 66% of our total revenues and 67% for full year ended FY '24. Within the IFM segment, we offer a comprehensive range of services catering to diverse lines, which includes soft and hard services. When we say hard services, it is the back-end engineering services. Soft services include like housekeeping, cleaning, horticulture, pest control and support services. We also do a large portion of our IFM business in the manufacturing segment. So we also have a warehouse management piece within that segment.
At UDS, we continue to have a high focus on margins and capital efficiency. Given this backdrop, we have witnessed a growth of about 9% in IFM revenues, which stood at about INR 16,665 million -- I mean crores -- sorry, INR 1,665 crores. This is due to us rationalizing our low-margin contract business, wherever necessary, we have exited businesses not viable and concentrating now more on better margin businesses or higher-margin businesses.
As of March '24, in the IFM business [ space ] segment, we have about 1,500 customers. Again, like I said, we have customers marquee names, the Fortune 100, Fortune 500 names in manufacturing, in banking, in aviation, in health care, in hospitality, IT. Also, like earlier, I said, and this is what we've continued, if you take a 5-year window, we have a 95% customer retention rate.
Going forward, we see the industry funds continue to witness a shift of preference towards a fully integrated facilities management company with higher demand for solution-based offerings. We've always focused on offering a bouquet of services with higher technical capabilities, which has separated us from our peers. Our quality and passion to provide quick turnaround solutions keep us growing.
We expect to continue to gain market share while maintaining a high focus on the hard services, which are engineering services, which have better margins and margin accretive and also they are specialized in nature.
As you would all know, companies are increasingly outsourcing and outsourcing fully managed services and also outsourcing a complete integrated solution. So we will continue to capitalize on this and we continue to grow. The outsourced size of IFM market is currently around INR 40,000 crores. This is more the organized players. And it's about -- sorry, it includes both organized and the nonorganized players and is expected to grow at about INR 80,000 crores by FY '28, which is about roughly about 17% CAGR. The outsource split is also going to increase. Going forward, we are quite confident that our growth in numbers to stabilize at 3x of GDP -- 3x of GDP growth.
To summarize, there are particularly five levels of growth, which we will clearly see, which are we want to retain, strengthen and grow our customer base, emphasizing our deepening relationships with customers through long-term renewable contracts, creating a stable revenue model. Our strong brand and quality services enable customer retention and cross-selling.
Number two, we want to grow market share in the key segments, expanding in key segments like commercial real estate, industrial, manufacturing and more like infrastructure projects like we already handled in the IFM about seven airports. We would like to do this on this slide of large infrastructure projects.
We also will introduce new products, basically more on our technology where we will have a more technology-enabled service offering. We'll continue to improve our operating margin by two ways. One is our operational efficiencies and two is the scale and the blend and mix of businesses, businesses in the sense within IFM, the businesses. And also we'll continue to cross-sell between ISS and BSS -- IFM and BSS. Like I said earlier, we pursue inorganic growth in the BSS space. We would definitely have raised money for inorganic growth, and we will be doing it over the next 2, 3, 4 quarters.
We've also -- I'm happy to share that we've got the Great Place to Work certification, highlighting our ability not just hire, but also to foster strong dedicated dedication towards employee satisfaction.
Apart from this, one of our group companies in the BSS space, Denave received has been recognized as India's top 100 best workplaces for women.
Okay. I think that I'm done, and I would hand this over to Radha Ramanujan, who is our CFO, to give you details on the Q4 and the full year '24. So over to you, Radha.
Thanks, Raghu. Good afternoon, everyone. I'll first share the highlights of Q4 FY '24, and then I will talk through the full year financials. I think all of you must have seen the deck, which has been loaded as well. The total revenue from operations grew by 10% year-on-year to INR 6,326 million. IFM segment grew by 8% year-on-year to INR 4,272 million, and BSS segment revenues grew by 24% year-on-year to INR 2,174 million in Q4 of FY '24. The revenue split between IFM and BSS is at 66% for IFM and 34% for BSS compared to 69% and 31% same time last year. The share of BSS is continuously growing in the overall revenue.
EBITDA grew by 6% to INR 411 million, whereas if you see our presentation, we have also given the adjusted EBITDA. The adjusted EBITDA degrew by 23% year-on-year to INR 383 million. The adjusted EBITDA is primarily excluding the one-off expenses like fair value changes in liabilities that are payable or paid to the promoters during the year on account of acquisitions. The amortization-related expenses that also pertaining to the acquisition and the ESOP cost. The adjusted EBITDA margin stood at 6%. Adjusted PAT was flat and it was INR 217 million, whereas reported PAT witnessed a growth of 150% year-on-year and stood at INR 242 million. The cash PAT is at INR 336 million.
During Q4 FY '24, we added 18 logos in the IFM segment and 17 in the BSS segment.
Now coming to the FY '24 financials. The total revenue from operations grew by 16% year-on-year to INR 24,561 million. The EBITDA grew by 41% to INR 1,459 million, whereas the adjusted EBITDA grew by 12% year-on-year to INR 1,666 million. And the adjusted EBITDA margin stood at 6.8%.
Just to give you the breakup between the reported and adjusted EBITDA. In FY '24, the ESOP cost is INR 101 million. The fair value change in liability payable and paid to promoters of the acquired subsidiary is INR 106 million.
Denave, it's in the final stage of becoming fully owned. We have already provided for the [ NTF ] call. It's just regulatory activities going on, and then we will complete the promoter share acquisition. And by FY '27, Athena also would become 100% subsidiary of the company. During this year also, there is a 16.5% buyback of promoter share for which provision has been made. Hence, the effect of fair value expenses going ahead will keep decreasing as we keep increasing our ownership in the subsidiary company.
As mentioned earlier, if we take a hit on fair value, it means the business is outperforming our expectation, and that is the reason we have to pay out more. But it's a good sign to have it because that money will come back as a future benefit for us. If the business continue to perform, it's a future benefit. And by FY '27, Athena would also become 100% subsidiary and we will not have the adjustment on account of fair value or amortization going forward.
On the adjusted level, the EBITDA margin has come down by 0.2%. This is also primarily due to the last quarter impact. We have taken a few large value project business in IFM and new business in BSS. And once we stabilize the operations, this will start giving benefit in the subsequent quarters. Adjusted PAT grew by 9% year-on-year to INR 925 million, whereas reported PAT grew by 91% year-on-year to INR 663 million. And the cash PAT grew by 21% year-on-year to INR 1,409 million. Our adjusted ROCE stands at 24%. We are a net cash company and the net debt to equity stood at negative 0.9x as of 31st March '24.
During the financial year, we added 78 new logos in IFM segment. New logos, I mean the new customers and 51 logos in the BSS segment. The total headcount at the year-end stood at 51,876 for IFM segment, and it was 13,356 for BSS segment. You may also observe a little bit of inconsistency in the reported revenue in our presentation versus the P&L which is published. That is primarily on account of removing the interest income from other income. As you may be aware, for interest purpose, even the interest income gets reported as other income as a part of operating income. Since we have been removing the interest income from the operating EBITDA earlier to maintain consistency even in this quarter and this financial year for the investor deck, we have removed it. But going ahead, we will report or we'll make a presentation in line with the published P&L, audited P&L, and we'll only have the reported PAT and all other line items aligned with the published P&L.
With this, I will open the floor for question and answer. Thank you.
[Operator instructions] The first question is from the line of Balaji from IIFL Securities.
My first question would be on could you give the FY '24 revenue numbers for Athena and Denave. And also it would be helpful if we can have the segmental EBITDA, which is the EBITDA for both the segments, which is IFM and BSS for FY '24. So that would be my first set of housekeeping.
Okay. I will just read out the FY '24 top line of -- you wanted Denave and Athena.
That's right.
Okay. Just one second. Denave has reported a turnover of INR 455 crores, and Athena -- it's INR 4,550 million and Athena's turnover is INR 1,488 million.
You said INR 4,650 million for Denave, if I got you right?
INR 4,550 million.
INR 4,550 million, okay.
INR 1,489 million Athena.
Yes. Okay. So if I follow up on that, I can see that despite the revenue growth being quite healthy and around 25% for Denave, the EBITDA -- absolute EBITDA has come up from INR 336 million to INR 294 million. So that is a reasonable almost 270 basis points EBITDA margin contraction. So could you please throw some light on what exactly happened? And going forward, how should be the EBITDA margin for Denave?
Okay. With respect to EBITDA margin -- you're only specifically asking Denave or Denave and Athena together.
So more specifically on Denave, because Athena, I can see it is almost steady as in based on the numbers you just mentioned.
Yes. See, Denave, we had a little bit of a dip in the margin in the last quarter. Since Snehashish is on the call, if he can brief the business situation, I will also help on the financial numbers what we have reported in the last fiscal.
Sure, Radha. Thank you for pulling me. So a quick update on the Q4 drop that we see there. There are primarily two factors here. One, over the last 2 quarters, we had an increase in our overall revenue from some of our telecom customers where the margins are lower. And therefore, we have a significant jump in top line, but we've had a not equivalent increase in the bottom line, number one. But these projects when we execute them, they also come with their related costs, which in the first 1 quarter, 2 quarters sit on the P&L at a higher percentage versus the -- going forward once they stabilize. That is the first primary reason.
The second primary reason also is during this particular period, because a good chunk of our customers are also from the technology industry. And at that point of time, there was certain inconsistencies in their plans basis the cost optimization drives that were happening. There were temporary impacts that we also faced in the Q4, quarter 4, which in Q1, we should be able to take care of as it should be better in Q1. I hope that answers your question.
Got it. So is it fair to say that in FY '25, we will go back somewhere closer to the margin levels we had in FY '23?
That is the plan, yes.
Got it. And my second question again to around the segmental breakup for EBITDA between IFM and BSS.
Okay. We haven't shared it in the deck, the segmental breakup, BSS is about close to INR 100 million. You want for the Q4 or for the year?
Full year will be more useful.
Okay. Okay. The BSS segment has about INR 365 million and the IFM segment is around INR 440 million. And we have an elimination of around INR 13 million, which effectively goes into the IFM segment. So INR 36 million on BSS and INR 30 on IFM.
INR 36 on BSS and?
INR 30 crores on IFM.
No, this is for which period because I can say -- this is adjusted EBITDA or reported EBITDA?
This is reported EBITDA.
Okay. And how were these numbers last year? Because I do have a number from INR 77 crores for BSS for FY '23. So is that INR 77 crores apples-to-apples with this INR 36 crores for BSS?
BSS last year was around INR 63 crores. The apple-to-apple comparison is 63 versus 36. Like we mentioned in the previous three quarterly call, we also had some setback in the background verification business in Q1, Q2. That has resulted in some amount of margin erosion in the business, which has been picking up now.
Okay. Got it. And my next set of questions would be on this BSS segment, if I may. So you have classified something which used to be under sales enablement services revenue under other BSS revenue. So what is the rationale behind that? And I can also see that your 3Q PPT mentioned 1,700-plus customers for BSS, while this time around, you called out 1,026. So any reclassification there?
Yes. What we mentioned is any customer who is contributing to less than INR 5 lakhs as a revenue, we have eliminated. And we also eliminated customers who have been there like one-off projects and then exiting. So that's why we have made it only continuing customers and customers who are making significant impact.
Got it. And what about the other BSS service revenue -- the other BSS revenue, which you called out as an earlier sales enablement services used to be some 23%, 24% of your revenue. Now it is a little around 10.5%, 11%.
See, the sales enablement in Denave, we are also tracking the revenue in multiple segments like marketing services, digital marketing services, business analytical services, pure sales enablement services like that. So the rest also will be part of -- if you put it in the overall numbers then 19% which is missing in the chart is actually end of the game is driving towards sales enablement.
The next question is from the line of Dhvani from Investec.
Just wanted to understand one thing. In the stand-alone business that you report, the margins have come off from 2.4% to 1.7%. I believe this pertains to the IFM segment mainly. So if you can explain a little bit about the margins in IFM and how we should look at them going forward?
See, in IFM also earlier, like Raghu mentioned, during the year, we had margin eroding contracts, and we have taken a conscious call to come out of those business. That has like the people cost continued for some time while we exited the business. While saying so, we have also got into the high-value projects. We are getting more and more project business now. We are in the initial stage of setting up the project business. And once we stabilize, even that will come back as a higher throughput with a stable margin. So we have a bit of a setback in margin in Q3 on account of that. Q3 and a little extending into Q4, but will even out by Q2 of FY '25.
So this would be the last quarter for exiting these businesses. Now going forward for the next 2 quarters, it will just be due to ramp-up of these new projects. Is that understanding true?
We said a couple of quarters will settle down and hopefully, by the second quarter, we should start [indiscernible]
Understood. And in terms of the BSS business, quarter-on-quarter, there has been some decline. While you mentioned that did well in the quarter given that the revenues are sitting because you have some new telecom customers. So what is leading to the decline quarter-on-quarter? We believe Matrix had bottomed out in the last quarter. So if you can give some color?
Matrix profitability compared to the Q1 and Q2, the Q3, Q4 profitability has improved better. Denave...
I'm referring to the revenues, not the profit for the quarter.
The revenues dropping. Probably, Snehashish, you can throw some highlight on BSS revenue dropping?
Yes. Like I said, along with our increase in the low-margin business in the Q4, we had some market impacts from the technology sector because of the cost cuts that were happening there, which is why our Q4, there was a muted growth in terms of revenue. I hope that answers your query.
It's not substantially dropped also. There's a minor drop. If you see Q1, Q2, Q3, the revenues have been going up. Only in Q4, there is a drop in one particular company in the BSS segment. The rest of the companies are [indiscernible] to the revenue.
Understood. And also, could you explain the reason for the change in accounting policy for depreciation? Why exactly has there been a change from written down value to SLM?
Okay. See, as a company, all our subsidiaries, all of us are doing a straight-line method. We started investing in airport ground handling assets last year. So immediately when the assets came in, we just in order to prevent with the WDV method. But considering the assets have got a longer useful life and also the revenue -- the asset also earns revenue for the lease rental. So in line with the useful life of the 3-year and also the principle which all our subsidiaries followed, UDS also moved to a straight-line method of justification.
Understood. And just one last question. If you can just give the quantification of ground handling for this quarter. Did we breakeven in the quarter?
In the last quarter, we didn't breakeven because we have to do certain annual adjustments of rectification and fees and other things. But however, the traction in Q1 [indiscernible]
The next question is from the line of Aniket Kulkarni from MSPL Capital.
So I have a couple of questions on both the vertical. So starting with BFSI. So could you explain what the company's vision is with this vertical? And what was the thought process behind making acquisitions to grow this vertical? And how the vertical is any different from any other BPO business? And what type of ROCE can we generate from this vertical?
Raghu, shall I continue? Or would you want to take it up?
I will add if required. I will just give the rationale why BSS and why this space and the value and margin that you see in the BSS.
Okay. BSS primarily consists of Matrix, Avon, Global, Denave and Athena. These are the five subsidiaries, which we call it as a business support services. What we do in business support service is the sales enablement services, which primarily comes from Denave and Athena, audit assurance, employee background verification services, which comes from our Matrix Group company, the mailroom management, niche logistics solution and now they're extending to the warehouse management as well. This comes from our Avon.
And airport ground handling system is through our Global. [indiscernible] where we do the baggage, cargo handling, passenger movement and everything. And the reason why we focus on BSS as a strategy to acquire also, they add offerings that are definitely complementary and supplementary to the current existing portfolio.
So like we have engineering service, staffing service in the integrated facility management and mailroom management also combined together. We have engineering service, production support service, staffing service. So we add with the same thing, a complementary thing, employee background, field management. So the business support service primarily is aimed at complementing our existing IFM services.
If I can add here, Radha.
Raghu?
If I can add here, our strategy of this inorganic growth and acquisition in the BSS space is to be margin accretive. IFM happens to be single-digit margins and BSS is a double-digit margin. That was the strategy of this inorganic growth in the BSS space. And to add to that in the BSS space, what we do is we have been market leaders in both whatever in Athena and in Denave. That is also what would contribute like our strategy to why to get into that space. They do very specialized BPO services, if you want to call that. That's the reason we wanted to get into this space. And also in the future, we would add our acquisitions or add any new acquisition within this space, which would complement our existing businesses.
And it's also starting to capture higher revenue.
Understood. And on the ROCE part, if you can just tell me what kind of ROCE does the vertical generate for the company? I mean, only for that vertical?
Okay. I have the overall company ROCE, which is 15.2%. I can talk for individual company return on capital. Except for Global, every other company is very light on capital expenditure. In fact, almost -- except for a few technological developments, which they do. So I'll share that ROCE by segment separately.
If you want me to give you a very approximate number, it will not be very different between BSS and IFM, barring Global alone, which comes under BSS. So I think overall company ROCE was 25% or 24%, I don't remember. It should be around that range.
The reported number is 18.3%. And if I exclude Global assets from this, the ROCE will move to 24%. So yes, BSS and IFM has to be in the similar range.
Understood. Understood. And secondly, on the IFM business, does the IFM business have any residential real estate exposure? So is the company offering its IFM services in the growing real estate market in India right now because we stand to benefit a lot if that is the case?
Yes, I see that. That's a good question. We have not been majorly into the residential segment. We've always focused on B2B. I mean residential also, you could call it B2B now because they have a little large housing and all. We would definitely endeavor to do that. We will work towards it where the project size is bigger. But we don't want to go into the low end or mid-end residential sector, IFM. So this is something which we have on our card.
[Operator instructions] The next question is from the line of Roshni Galani ICICI Prudential.
So with respect to the fair value change in number in this quarter has been negative. There has been a reversal in the fair value changes for liability. So what would be the key reasons for the same?
During the -- Yes. During the quarter, there was an adjustment which we made initial projections, we thought the business will exceed. So we kept providing in the first 3 quarters. And the business did what was expected. There was no surprise on overachieving the numbers. Like we said in the last quarter, even in Denave, there was a little bit of drop in the profitability. So we had reversed the provision for that.
The provisioning reversal is because of Denave or Athena?
It's primarily for Denave.
Okay. And going forward, how are we expecting Denave performance to be?
Yes, you had a reassurances from Snehashish. So yes, Q1 will settle down and Q2 onwards, the BSS segment will grow.
Roshni, the BSS segment, including Denave, we expect to grow between 15% to 18% in the current year. However, the first quarter in Denave alone could be flat and just like the last quarter or a little improvement because of the investments done, they will start kicking in from second quarter. So overall, we'll expect between 15% to 18% in all the BSS segment companies together.
The next question is from the line of Naitik Mohata from Sequent Investments.
My first question would be what would be our ESOP guidance for FY '25?
Currently, we have ESOP. We have ESOP pool, which can be allocated to the employees. The Board is discussing on that probably by the next quarter Board meeting, we'll decide on how and what is the quantum and then we will share it with you.
Ma'am, just for the clarity, would it be somewhere around this year's number or it would be significantly different from this one?
Radha, I think what he's asking is the provisions you made for ESOP last year, this year and next year?
It may not be as much as this year. We expect it to be half of the current year provision. However, we cannot call it out in case if it is required because we do have ESOPs pools available. So if I have to share the numbers, it was INR 5 crores in the previous year -- it could be around INR 5 crores to INR 6 crores next year as well. It was INR 10 crores last year. We may get into INR 5 crores to INR 6 crores. But again, it is all subject to the Board discussion.
Ma'am. That was very helpful. My second question would be regarding the employee cost. So for the current quarter, our employee cost is almost 80% of our top line, which is slightly higher from our average of around 66%, 67%. So what would be the reason for that?
The way we explained earlier also, we are investing -- we are starting the project-based business. And also in Denave, we have started a new business where the employees are slightly more. As we stabilize the business and as we get on to that, the employees cost will remain same, but productivity will improve.
If you see overall also, as a company, we have not increased the employee count between the year beginning to year-end, but the productivity per employee has substantially gone up.
The overall employee cost as a percentage to top line also has come down by 0.2%. It was 8.08% and it's 8.28%, and it has come to 8.01%. So we have reduced the cost by 0.2%. While last quarter, because of slight dent in the top line, the absolute percentage looks higher. But if you see the productivity per employee in the last quarter, it is above the annual average.
Okay, ma'am. So can it be expected for these new businesses, the one in Denave as well to start contributing meaningfully to the top line from Q1?
We mentioned it will start from Q2.
[Operator instructions] The next question is from the line of Manoj Jaiswal from [ PSA ] Shares and Securities Private Limited.
Good set of numbers, which you have put. My couple of questions are there. First is related to the segmental revenue. In the audit report, in the BSS segment on FY '24 revenues and FY '23 revenue, there is a significant dip in the profit before tax. Could you please add some color on that, ma'am?
This is -- you're talking about BSS segment.
Yes, BSS segment, ma'am. Segmental revenue.
Okay. While the segmental revenue has slightly come down, there's no significant dip in the segmental revenue per se, there is a dip in the segmental profitability. For example, the segmental revenue is grown by 18%. So where do you find a significant dip in segmental revenue?
No, I'm not talking about a significant revenue in segment results. There is a profit before tax as compared to March 2023, it was INR 659 million, which has been reduced to INR 488 million.
Yes. In the profit, we had two issues. One, in our Matrix business, the profitable business, there was a setback. The employee background verification business, which used to be a high-margin business, there was a low volume in that business. So we had drop in profitability in that business. As in Denave, we had drop in profitability in the last quarter. These two contributed to the overall drop in the BSS segment profit.
Plus there is a slight increase in the loss of Global because we have been setting up all new airports. During last year, we have commissioned close to 15 airports operational. The initial setup costs has also added slightly to the operating loss of the company compared to last year.
Okay. Fair enough. And my second question would be about the fair value changes in liability payable to promoters of acquired subsidiaries. Is there the target of the subsidiary company has not been achieved. So that's why there is a dip in the payment which we have to make it to the subsidiary. Am I audible?
The voice is breaking in between.
Am I audible properly, ma'am?
Yes, now I could hear you.
Madam, my queries regarding the fair value changes in liabilities payable to promoters of acquired subsidiaries. You see the negative figure of INR 47 million. So just need to understand whether the subsidiary companies have missed the milestones for that -- any milestone has been missed for the payment relating to the payment which you were supposed to be made.
See, like I explained earlier to Roshni, there is -- we have provided in the books for a higher achievement. Last year, we had to pay substantial. If you see we have paid INR 9 crores more on account of overachievement of the numbers compared to what was set in the BSS. So this year also anticipating that the verticals will overachieve, we had done provisions. But Athena's numbers have been almost flat as we had a small dip in delay compared to what we estimated. So that has resulted in reversal of the provision.
To answer that question, sir, I'll tell you, we had expected them to overperform, but they've done exactly what -- as per the plan. So what we have provided that INR 4.5 crores or INR 5 crores, we have reversed it.
The next question is from the line of Rahil Shah from Crown Capital.
Just one question for business as a whole on a consolidated level, if you have any guidance or outlook in terms of top line and EBITDA margin, that would be helpful.
Yes. Can I take it? Radha, can I take it?
Yes, yes, please Raghu.
See, I would be constrained to give you exact real guidance, but I could tell you our business plan is -- this year, that is the current year FY '25, we plan to do between 15% to 18% both top line and bottom line growth. I'm talking of reported PAT. Sir, does that answer?
The next question is from the line of Nitin Padmanabhan from Investec.
Just wanted your thoughts on the project-based business in IFM. If you could just give this color -- some color on what this business is about, what's the nature of the business is? And you also mentioned some new business in Denave. If you can give some color on both will be helpful.
Should I take that, Radha?
Yes, yes, you can.
Yes. Sir, in the IFM business, I don't know. I think what Radha would have earlier mentioned is some project businesses in Denave or in the BSS space, they would have exited or something. But in the IFM business, there is no project-based business we do. They're all either a long-term contract or a medium-term contract business. That's what we do in the IFM space.
Raghu, what I meant is the recent one where we have spent more money like the, I mean, that I can put their name, the two, three companies there it is the reimbursement model. We have spent money ahead and also the one which we inaugurated today, the [ IICS ] spend got advanced in the last quarter. So we need to settle down and then ensure it gets reimbursed appropriately.
Right, right. So they are basically upfront spending on the overall project. So that is what would be called as project-based because that is something which is an annual recurring in nature, but the expense of some project would have been booked in the last quarter.
If I may add to that, Raghu?
Yes.
From the BSS perspective, the project-based businesses that Radha is talking about is primarily at the delay level where apart from the annuity contracts that we have for sales services, we also have marketing activation programs. We also have intelligent database services, which are all project-based. So there, we acquire customers. There is more of a strategy to get a foot in the door with customers and then over a period of time, create stickiness through our other recurring businesses. So Radha was referring to those project businesses.
Okay. Are the margins in this business lower than the average or higher than the average?
Are you referring to the project ones?
Yes.
So most of the project businesses are higher than average.
Some of them are average than higher.
So this reimbursement model, which Radha mentioned was in the IFM business, is it? Not in the BSS.
So, in the BSS.
We do have a staffing portion, which is the telecom business. It's not really staffing. It's what we call field sales and marketing, where we are focusing on activating the retail store sales. Where, yes, the volume of the revenue is higher and the margin is low.
Got it. And on the IFM side...?
IFM side, it will be slightly higher. There could be a timing difference between booking expenses and claiming the reimbursement.
Got it. So in which -- what kind of -- what do you call, which kind of an industry does this kind of a contract come up?
See currently, we are running one convention center end-to-end. Similarly, there is one customer we also manage their guests and everything. So it's not just the facility management. We also supply items for them and then recover it subsequently.
As there are no further questions from the participants, I would now like to hand the conference over to the management for closing comments.
Yes. Thank you all of your questions there, and thank you for all your support. We will definitely try to do better than what we have done last year. Like I can't give a guidance, but this is what we would plan to do in between of 15% to 18% growth, both bottom and top line. So thank you all of you.
Thanks. Thanks, everyone.
Thank you, everyone.
Thank you. On behalf of Updater Services Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines. Thank you.