Updater Services (NSE:UDS) Q1 2027 Earnings Call

0:01 Ladies and gentlemen, good day, and welcome to the q one FY twenty seven earnings conference call for Updater Services Limited. As a reminder, all participant lines will be in the listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Before we begin, a brief disclaimer. 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 guarantees of future performance, and it may involve risks and uncertainties that are difficult to predict. Should you need assistance during this conference call, please signal an operator by pressing star then 0 on your touch tone phone.

0:46 Please note that this conference is being recorded. I now hand the conference over to mister Raghunathan Tangyala, promoter and MD of Updater Services Limited. Thank you, and over to you, sir. Yes. Thank you. Good morning, all of you, and welcome to Updater Services Limited Q1 FY 'twenty seven Earnings Call. Joining me are Amitabh Jaypuria, our Senior Executive Director Ram Praveen, our CFO Elizabeth Jacob and Sunil Munshi, CEOs of Athena and NA and our IR advisers from FCA. I hope you've had a chance to review our investor presentation, and the results are also available on the exchanges and our website.

1:41 Before we get into the industry highlights and our performance for the quarter, I would like to share that the Board has approved an interim dividend of INR 1. This reflects our complete commitment to disciplined capital allocation, growth rate investment and long term value creation while maintaining a strong balance sheet. Turning to the IFM industry. Q1 FY 'twenty seven saw a healthy momentum driven by growth driven by strong commercial real estate activity, GCC expansion, rising enterprise outsourcing and continued industrial and manufacturing investment in India. India's office market stayed resilient with strong leasing from MSPs, tech firms and GCCs, seeking comprehensive workplace solutions across engineering, housekeeping, maintenance and energy management.

2:41 We also saw continued consolidation towards integrated technology enablement outsourcing and large enterprise famous single strategic partners for their efficiency and governance. I think being trend of benefiting of an organized players like us over the fragmented unorganized sector. Now let me get deeper into our ISM division. During the quarter, our ISM business continued to benefit from these long term industry tailwinds. We added six new significant logos during Q1 FY 'twenty seven.

3:29 For Q1 FY 'twenty seven, the IFN revenue from operations grew by 11%, accounting for $5.25 crores. The growth was driven by new client additions across diversified industries, higher volume from large scale contracts and continued focus on cost optimization. EBITDA for Q1 FY 'twenty seven stood at INR24 crores with a margin of about 4.5%. Our priorities within ISM for the quarter and for the year ahead remain unchanged. We continue to deepen relationships with existing customers, improving client level profitability, optimizing manpower deployment through our technology led interventions, deepening wallet share with existing marquee clients and continuing to shift our mix towards higher margin specialized technical services.

4:36 Yes. Technology continues to play a central role in enhancing our operational excellence. We are increasingly leveraging digital workflow platforms, AI enabled workforce management, predictive maintenance tools and automation to improve service quality, optimize manpower deployment and strength and productivity across client locations. Looking ahead, we remain confident of delivering healthy growth in IFN, supported by strong industry tailwinds, increasing outsourcing penetration and expanded opportunities across industrial manufacturing, infrastructure and commercial real estate. Turning to global flight handling, the aviation ecosystem stayed supportive this quarter with healthy domestic traffic and airlines improving fleet utilization and connectivity, supporting steady momentum for our airport services business.

5:41 Global continued Global is our flight handling ground handling company. Global continued strengthening its footprint across operational airports while expanding into higher value training and support services, including security training and regulatory certification that complements our core ground handling operations. We are proud to report global's highest ever profitability, EBITDA of 9%, up from 5% last year, driven by higher margin non scheduled flights and strong seasonal traffic. All 23 airports are now operational and are generating revenue. Moving on to Avon, the core mailroom management and integrated support service business continued to demonstrate resilience during the quarter, supported by long standing client relationship, consistent service delivery and improving operational excellence.

6:43 Before turning to performance, I would like to highlight that this legacy business is showing resilience and remains on a growth path even as the transport business has been completely shut off. Revenue from operations for the quarter grew 10% year on year, reflecting a steady demand across core service offering. During the quarter, Avon also continued to strengthen its portfolio by increasing the contributions of higher margin, value added services, particularly in enterprise transport and logistics solutions. This strategic shift is expected to enhance the overall quality of revenues, improve profitability and deepen customer engagement. As we move through the rest of FY 'twenty seven, we remain confident that this expanding mix of value added services will support our sustainable growth and margin improvement for the business.

7:41 I will now like to hand over the call to Mr. Amitabh for an update on our BSS segment. Thank you, Raghu. Thank you. Thank you, Raghu, and good morning, everyone. I'll quickly deep dive into what has happened in the BSS segment, and then I will hand over to Mr. Sunil Munshi, who is our CEO for Dine and then to Elizabeth Jacob, who is the founder and CEO of our other sales enablement business, which is Athena. Turning to business support services for q one FY 'twenty seven, this is the first full quarter where we operated under our BSS simplified structure with Dinev, Athena and Matrix all reporting directly into the senior leadership team. Over the last year, we have undertaken several structural initiatives to simplify our operating structure, strengthen leadership, improve governance, and enhance profitability across all our businesses.

8:36 I'm glad to say that these initiatives are beginning to show encouraging progress and early trends of consistent confidence as we look to the year. Across our PFS portfolio, the common strategic theme continues to be technology led transformation as well as organizational simplification. We have added four new significant logos during the first quarter. The BSS segment revenue from operations for Q1 FY 'twenty seven reached around INR253 crores and EBITDA for the division stood at INR19 crores with a margin of 7.5% as compared to 6.9% during the last similar quarter, q one of last year. This reflects improvement and shows good signs for the future. This is also because of our sustained cost optimization campaign that we have been running and which is a result of our simplified organization structure as well.

9:33 Our sales enablement business under Dinev reported a revenue of INR 161 crores, registering an 18% year on year growth with an EBITDA of INR 7 crores and an EBITDA margin of 4.3%. During the quarter, the company's strategic initiatives began translating into results with Intellibank, which is our AI forward product, but nothing increased client acceptance and also improved performance. The revenue of our sales enablement business under Athena, which is our PFSI focused b to b business, which we run for mainly for banks, insurance companies, etcetera, in FY twenty seven stood at 28 crores with an EBITDA of 5 crores and an EBITDA margin of 18%.

10:19 During the quarter, we secured and commenced execution of our first agentic AI engagement with implementation beginning in May and continuing through June. I would like to highlight that we are seeing green shoots and seeing increased inquiries for both our traditional services as well as agentic AI. So the growth pipeline looks good. Matrix delivered a stable operational performance during a challenging demand environment. Revenue for the quarter grew 2% and is stable quarter on quarter. However, EBITDA increased by around 76%, primarily due to cost saving initiatives, better processes and tighter vendor cost discipline, especially in our EBGC business.

11:05 The EBGC business continued to perform broadly in line with expectations. This quarter witnessed improvement in revenue growth of 9% year on year. You will remember that in the previous quarters, this revenue growth has not been strong because of the IT hiring scenario, but we are seeing green shoots there. And this was also supported by a pickup in hiring in some of our tech clients during the quarter. Within the audit and assurance business, revenue declined marginally by about 2% during the quarter. The primary reason was the postponement of several large client audits with projects originally scheduled for May getting deferred to June and July. With that brief overview, I will hand the call over to Mr. Sunil Munshi, CEO of our Dineve organization, to take you through the business highlights of Dineve in detail, and then he will hand it over to Elizabeth Jacob for Athena. So, Sunil, over to you.

12:02 Thanks, Amitav. Good afternoon, everyone. I'm pleased to provide you all an update on Denis' performance and the strategic progress that we made during the first quarter of FY 'twenty seven. The global sales enablement industry does continue to undergo one of its most significant transformation in recent years. While we see the enterprises still remaining disciplined in their discretionary spending, there's a clear shift towards investments that promise that improve sales productivity, customer engagement and obviously measurable revenue outcomes. Across industries, organization has been increasingly moving away from traditional linear sales models towards more of AI assisted insight driven revenue generation models.

12:51 So rather than simply expanding sales teams today, we see all the enterprises looking to make more salespersons significantly productive through automation, through intelligent analytics, through data driven decision making models, so on and so forth. And this structural transition aligns well with Janae's long term strategy. Over the few last few years, if we see we've been consciously transforming the name from a conventional demand gen organization to a technology enablement revenue execution partner, which combines our domain expertise with AI powered platforms and of course, intelligent sales workflows. Now coming to this quarter, during this particular quarter, Denae, we delivered a strong performance with revenues growing 18% year on year, Growth supported by our demand generation and fee marketing services businesses, both of which continue to gain traction and as we also keep on adding new logos.

13:55 On margins, we saw pressure during the quarter driven by two factors. First, a change in business mix, a greater skew towards fee marks and services, which operates at a low margin. Again, budget planning of one of our large customers in tech services also have been a factor. During this quarter, we drove a focused cost rationalization initiative also in the organization to improve operational efficiencies and EBITDA, and we remain quite confident that this will translate into continued improvement in profitability going forward on a long term basis also. On the demand side, we continue to witness healthy client engagement, especially across our enterprise customer base, while technology spending, we still see spending remaining selective in certain global markets.

14:44 Clients are increasingly prioritizing projects that demonstrate faster return on investment, improved pipeline conversion and higher sales productivity. And this is precisely where our AI led enablement enabled services portfolio continues to differentiate itself in the market. One of the key pillars of our transformation remains, of course, the Intellibank, our proprietary AI led sales intelligence platform. Over the past few quarters, we further enhanced Intellibank by expanding our intelligence capabilities, including buy intent identification, enriching decision making, maker mapping, and of course, sensing the analytics, predictive analytics that helps. Finally, the sales team to prioritize their high probability opportunity, thereby improving productivity and delivering high outcomes to the clients.

15:37 We also did continue to improve our CRM integrations, which means enabling our seamless synchronization across various client sales ecosystems and therefore delivering richer pipeline visibility with actionable insights. And our automation capabilities are definitely also helping us reduce manual intervention, which is helping in turn to improve time to market, improve campaign execution speed and delivery and high quality sales engagements for our clients. While the external environments continue to evolve, the long term demand drivers for AI enabled sales transformation remain exceptionally strong in the market. And we at Dinev remain committed to help our customers, therefore, revenue growth while continuing to build a stronger, more technology led enabled scenario.

16:28 Thank you, and I will now hand over to CEO and Founder member of Athena, Elzabachakar. Over to you, Elzabach. Thank you, Sunil. Good afternoon, everyone, and thank you for joining us today. I'm pleased to provide an update on Athena's performance and the progress we made during the first quarter of financial year twenty seven. The customer engagement industry continues to undergo a structural transformation. Across industries, enterprises are increasingly reimaging how they acquire, engage, and retain customers in an environment where customer expectations continue to evolve rapidly. Organizations today are no longer evaluating customer engagement purely based on service delivery costs.

17:17 Instead, they are increasingly prioritizing customer experience, personalization, faster response times, higher conversion rates, and measurable business outcomes. On the business development front, we secured two new client wins during this quarter. Both contracts commenced in July and carry an initial tenure of two years, providing healthy revenue visibility going forward. We secured and commenced execution of our first AgenTik AI engagement with implementation beginning in May and continuing through June. We are also pleased to share that another AgenTik AI project has received customer approval and is expected to go live in August.

18:04 Beyond these wins, we are actively engaging with several existing customers to expand the adoption of our AgenTik AI solution. While enterprise customers have shown strong interest, these engagements typically involve approval cycles of around two or three months. We remain confident that this is the pipeline will translate into meaningful business opportunities over the coming quarters. While the BFSI sector continues to remain an important part of our business, we have steadily progressed in diversifying our customer portfolio across industries such as real estate, retail, consumer products, and other emerging sectors. This diversification remains a strategic priority as it broadens our addressable market, reduces the concentration risk, and enhances the overall quality and the resilience of our revenue base.

19:00 Another important trend we continue to observe is the growing demand for omnichannel customer engagement. Customers today expect seamless interactions across voice, email, chat, messaging platform, and digital channels. Organizations are therefore looking for partners capable of delivering integrated customer engagement solutions, which are supported by analytics, automation, and AI driven decision making. Athena is well positioned to capitalize on this shift through our expanding digital capabilities and technology led delivery model. Innovation remain... Continues to remain at the core of our strategy. As enterprises continue their digital transformation journeys, we believe these capabilities will become increasingly important differentiators.

19:51 Looking ahead, we remain optimistic about the opportunities. We remain committed to continuously strengthening our capabilities, expanding into newer verticals and building Athena into one of the leading technology enabled customer engagement platforms in the region. Thank you, and I will now hand over the call to Amitabh to give an update on. Sorry to interrupt. We cannot hear.

20:37 Did you hear? I am so sorry. I am so sorry. I was on I was on mute. Sir, can you please... Yeah. Yeah. So thanks, Elizabeth. I'm happy to give a quick update on Matrix. As you know, our Matrix business has two subsegments. One is audit and assurance, and the other is EBGC. During the quarter, if you compare it with the previous quarter, we have grown about 2%, but profitability has rebounded quite sharply. And right now, our margins have also improved quite sharply. So from INR 2.4 crores in the same quarter last year, we are now at INR 4.2 crores and margins instead of 7.6% now are at 13.1%. So therefore, we are seeing a revival in this business, primarily driven by EBGC.

21:26 But let me start by giving a very quick piece on audit and assurance, and we'll then come to EBGC. In audit and assurance, the quarter's main challenge were timing related, as mentioned earlier, and a few large orders scheduled for May have been deferred to June and July. This is not generally a demand issue, but largely a timing issue. We continue to see a healthy pipeline from large multinational audits and in sectors like food and automobile. To support this, we have also built a dedicated sales team to strengthen customer acquisition and deepen client engagement. Results are expected in h two of twenty seven, and you will start seeing those trends. In EBGC, as mentioned earlier, the business has picked up quite nicely, but we continue to see subdued hiring in banking and the BPO segments along with mixed IT trends, which has been impacted...

22:17 Which has impacted our overall volumes. But IT has come back to some extent, and we have seen turnovers and a number of cases that are being referred to us on an upward trend. We have also been extremely cost focused, and we have... You know, like we we explained about, Dine, even here in this business, we have been very, very cost focused, simplification focused, and organization focused in terms of making us more agile. Those... All of those have started showing clear results. EBT is inherently tied to hiring cycles, as you know, and we are building a more agile technology enabled model. AI integration is also now beginning to pay dividends.

23:07 Over the medium term, we remain focused on improving profitability through revenue growth, of course, because it's a scale game as we have been talking about in e b g c, and, of course, a richer business mix, digitalization, and disciplined cost management. So all in all, we are seeing good progress in metrics, which had been a drag in our previous quarters, but beginning to look good. I'll hand it over back to Raghu for his concluding remarks. Thank you, Amitabh. Thank you, Sunil and Elizabeth for the updates. In summary, Q1 FY 'twenty seven has been a quarter of steady execution of Updater Services. We delivered a 9% year on year revenue growth to $7.64 crores, with a healthy momentum across both IFM and BSS, while continuing to invest in technology, talent and structural simplification to strengthen the business for the long term.

24:11 With strong industry tailwinds across our end markets, a diversified and resilient portfolio and a robust balance sheet, we remain confident in our ability to deliver sustainable profitable growth in the year section. Before I conclude, I would like to reiterate our continued commitment to strong corporate governance. Over the past year, we have taken deliberate steps to simplify our organization, strengthen leadership accountability and improve transparency across our businesses as reflected in the consolidation of BSS portfolio under a unified leadership team this quarter. Our disciplined capital allocation reflected in the Board's approval of an interim dividend offer to reward all our shareholders and our continued net cash position.

25:05 Along with our compliance cost culture across all business segments remains central to how we operate and create long term value for all our stakeholders. Now I'd like to hand over the call to Ram, our CFO, for give you an overview on the financials. Over to you, Ram. Thank you, Raghu, and good afternoon, everyone. I will take you through the financial highlights for the quarter FY 'twenty seven. The revenue from operations for the quarter FY 'twenty seven grew by 9% year over year to INR $7.64 crores as compared to INR 700 crores in comparative period Q1 FY 'twenty six.

25:51 The IAFM segment grew by 11% year over year to INR $5.25 crores, and the BSS segment grew by 7% year over year to INR $2.53 crores. The revenue split between these two segments stood in the same range of 67% to 33%, directionally similar to the same percentages compared to the earlier quarter. Consolidated EBITDA for Q1 FY 'twenty seven stood at 42 crores. EBITDA margin for the quarter is at 5.5%, that is INR 42 crores. At segment level, IFM segment EBITDA stood at 4.5%, that is approximately INR 24 crores, while the BSS segment is at INR 7.5%, that is approximately INR 19 crores.

26:46 The consolidated PAT for the quarter is at INR 30.3 crores for the Q1 FY 'twenty seven. Coming back to the return on employment is that as a return on capital employed is at 16.1% for the quarter. UDS remains to remain UDS continues to remain a net cash company with a good balance sheet and on a long term basis. Net debt to equity stood at negative 0.24 as of June 2026, reflecting our strong cash position and generation during the quarter. On headcount, we have crossed seventy six thousand nine ninety one with 20,000 on top coming from IFM segment and 16,700 odd from the BSS segment.

27:38 With that, I would like to open the floor for questions. Thanks, Ram. So back to the organizer of the call. We are open for questions. Thank you very much. We will now begin the question and answer session. Anyone who wishes to ask a question may press star and 1 on the touch tone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we'll wait for a moment while your question queue assembles. The first question is from the line of from Counter Cyclical Investment.

28:34 Go ahead. Sir, thank you for the opportunity. So firstly, I wanted to understand the margin improvements on the BSS side and matrix particularly. Is this sustainable going forward? And on the ISM side, you know, we've mentioned that, you know, we've had some had some moderation due to addition of employees. Is that now done and we can see some improvement going forward? So I'll take that. So in matrix, the improvement... See, if you look at the history of how this business has performed, and I'll... This this will just give you some confidence. So if you look at q one last year, we were at 11.4 crores. Q four last year, we were at 11.7.

29:26 And q one this year, we are at 12.5. So over the year, you can see that the volumes are picking up. Similarly, if you look at our gross margin percentage, in q one last year, we were at about 12%. Q four last year, we were at about 17%. And q one this year, we are at about 20%. So therefore, improvements in in margin as well as improvements in the revenue number. In the past, love, you'll remember that we have been always saying that EBGC is a business of volumes. And as you get more volumes, the cost structure largely remains flattish. And therefore, what happens is that the margins start improving quite nicely.

30:13 So we believe that this margin profile is sustainable also on the back of a lot of cost optimization that we are doing at our back end. So for this year, we do believe that these volumes and these margins are sustainable. As far as the overall IFM numbers are concerned, you're absolutely right. My IFM margins are have been slightly depressed. Overall margins for if you look at Q1 over Q1, we are at INR 23.6 crores EBITDA versus INR 23.1. So there is a marginal improvement in EBITDA. But on the PAT basis, of course, we are at 20 crores versus 20.7 in the same quarter last year. So margins have been stable, minor variations, also because of some front ending of costs and some front ending of contracts in some cases what tends to happen. So they are normal business, you know, variations.

31:11 At this margin level, we do believe that we will not decline any further. Alright, sir. And the second question would be, you know, how... What are our plans to utilize our cash? Like, what are... I believe it was above 200 crore cash balance that we hold. So how do we intend to utilize that in any acquisitions plan this year? Yeah. So we do have a cash balance of upwards of 300 crores. And the plans to utilize that, you know, we have briefly mentioned that in the last call as well, that there'll basically be three large buckets in which... Or three buckets in which this cash will get utilized. One remains inorganic.

31:56 The second bucket will be brownfield growth, which means organic growth. So whether it is in accelerating our product development, technology transformation, as well as building a sharper go to market team to actually develop some markets and business. So that will be the brown pool... Brownfield piece where where we'll be investing money. The third, of course, is to reward shareholders. We have made a small beginning with this board meeting and with this result, with this quarter, where we have declared a dividend of 1 rupee per share, which will take away about 7 crores of cash. So this is a small beginning. It's an interim dividend. But... So rewarding shareholders while continuing to use and deploy cash mainly to drive growth, both internal and organic growth as well as inorganic growth, that remains the use of our cash. That is the cash allocation strategy.

32:54 So on the third point of rewarding shareholders, are we planning or considering any buyback of shares? Right now, there is no proposal to buy back shares on... In front of the board, and there is not a discussion on this. But this is not to say that this is not to say that we will never do it. These are various mechanisms exist to reward shareholders. And at the appropriate time, all of these mechanisms and tools are being considered and will continue to be considered by the board. Alright, sir. Thank you. Thank you. The next question is from the line of Adina Chohan from JJ Investments.

33:46 Please go ahead. Hi, sir. Thanks for the opportunity. Sir, I have a couple of questions. Firstly, how do you expect current revenue mix between ISM versus BSS, which is currently 6733% going to evolve over the next two to three years? So our revenue mix at at roughly two thirds, one thirds has actually been quite steady over the past few years. Going forward, we expect this to continue because both our businesses are, we believe, can grow low low double digit numbers, which is in the region of around nine, 10, 11, 12%. So therefore, we do believe that this mix will probably continue.

34:35 Okay. So second question is on for Atena, can Agiltek AI become a meaningful revenue contributor over the next three years, and what margin profile should investors expect? So we do believe that AgenTik AI will become an important part of how we how we deliver to our customers. However, at this particular point in time, we are not seeing any wholesale replacement of human agents, especially in the VFSI sector, and we don't see this happening in the near term. That said, Athena is right now at the forefront of experimenting with agentic AI for various other segments. For example, incoming service calls, for example, things like customer satisfaction surveys, and other such areas where adoption will be faster.

35:25 So I will invite Elizabeth to just add a quick two, three lines to how she is seeing agentic AI evolve. Hi. Agentic AI today for the... For BSSI clients is primarily used for out calling the customers to qualify leads before... And getting consent to call. In the service area, what they do is... What we're doing is replacing human agents for answering repetitive queries. So, basically, both the tech... Sites, there is utilization. One, where the client is looking at, you know, adding the... You know, getting qualified data using outbound for the for the BSI sector and inbound where repetitive queries can be answered on the phone.

36:17 Thanks, Elvita. Got it. Yeah. That's Sorry. Yeah. No. Thank you, ma'am. That that answers. Yeah. Yeah. Yeah. Thank you, sir, and ma'am, for the detail and all the best. Thank you. Thank you. Thank you. The next question is from the line of Diksha Mutwani from Partners. Please go ahead. Hello? Yes. We can hear you, Diksha. Yes. Thank you for the opportunity. My question is, there is a reduction in EBITDA of VSS, EBITDA margin from 11.5% in March to 7.5% in June. Any specific reasons? And is this the going normal EBITDA for the BSS?

37:07 No. So where you are... What you are referring to... So there is if you look at the margin reduction, yes, it is. The answer really lies in what happened with Avon. So in Avon, in the last quarter, there was a restatement as you know. So what that has done is that that has actually added to last year's number, the q four number, and that is why the comparison looks skewed. If you take that impact out, then actuals last year, Q4 'twenty six BSS segment delivered an EBITDA of INR 19.1 crore. And this year, we have delivered INR 18.9 crore. So the margin profile is largely similar, and the EBITDA numbers are also largely similar.

37:59 So it's because of an exceptional unnatural item in last year's Q4, which is where you're seeing the skew. Okay. Another question is there is increase in the other expenses. So any one time expenses is there? In other expense? Hello? Yes. Give me... This is this is Ram here. This is largely due to some restructuring expenses as one of the the provisions that have been taken for the transport segment in last year FY twenty six versus this quarter FY twenty seven.

38:59 Okay. Any update on the acquisitions? Yeah. So the conversation that we we have been having at this particular point in time, that deal is on hold because there are differences in terms of valuation. As you know, we are a conservative acquirer, and we do not believe in overpaying any acquisition. And there is a there is a disagreement in terms of what the final value should look like. So therefore, right now, we have put the deal on hold. It may revive if there is a positive movement. At the same time, we continue to look at other acquisitions, and we do have a pipeline that we are looking at.

39:51 Okay. That's it so much. Thank you. Thank you. Thank you. The next question is from the line of Aryan Vijayan from RV Investments. Please go ahead. Hello, sir? Yes, Aryan. Go ahead. Sir, my question sir, my question is on the GCC. Have mentioned what do you think about this sector, and how do you think that this sector will go in the future? Aryan, you're asking about the EBGC sector? GCC, global events, EEG center. Oh, GCC. Sorry. Sorry. Okay. Yeah. I understand. So so GCCs, of course, are becoming quite a large consumer of office space in this country. In fact, there are reports that they now account for almost half of total a and a plus grade office leasing in this country.

40:44 Our exposure to GCCs is actually limited because as we have been explaining in the past, out of the five core segments of the IFM business, We are strong in industrials, in warehousing, as well as in infrastructure. In the commercial side, our exposure is low. And on the residential side, we don't operate. So that is the... So therefore, while it's growing, we are now rejigging our entire business development effort and team to focus on growth and emerging segments. The GCC focus will be also a part of that. So right now, it's, you know, it's not impacting us too much, but we are looking at it. We have put in place a team which will start looking at growth opportunities, including GCC.

41:37 And sir, can you just provide this year's guidance? Sorry? Guidance for this year. We normally don't give formal guidance. So, you know... And I think we'll continue with that. What we have said... I mean, you can take our q one number as an indication... As an indicator, and that is what you can, you know, you can sort of perhaps extrapolate, but we are not giving formal guidance. Okay, sir. Thank you. Yeah. Thank you. Ladies and gentlemen, if you wish to ask a question, you may press star and 1.

42:25 A reminder to all the participants to press star and 1 to ask a question. The next question is from the line of from SKS Capital and Research. Please go ahead. Hello. Am I audible? Yes. Yes. You are audible. Just one single question. So do you have any comments on the SIS acquisition? Is that requiring the statewide public marketing UDS? So I will, you know, open the comments, and then, Raghu, you know, can quickly add to that. So SIS has been has been acquiring our shares. That's public knowledge. And at this particular point in time, there is no conversation between us and them, which is spurring this acquisition.

43:19 What they have been talking about, as we understand it, is that this is a treasury operation and that they see great value in the UDS shares, especially at these kinds of beaten down values that right now we have on the market. So they are using it. They are seeing it as an investment is what we understand. We are not reading too much into it. There is no deal on the table. Also, mister, our founder and our chairperson, he and his family continue to own 59.1% of the equity. And therefore, there is no conversation about any kind of sale or a deal or any kind of M and A action.

44:04 Having said that, I will hand it over to Raghu to add. Yes. Thanks, Amitabh. No, I have got nothing to add over what Amitabh has said. What we understand is that, that is their treasury operation. That's all we know, there is nothing else to I mean, nothing to add anything to this. That's all we know about. Okay. Okay. Thank you. Thank you for the explanation. Okay. Thank you. The next question is from the line of Manojeetva from KSA Shares and Securities. Please go ahead. Good afternoon, and thank you for the good sent out numbers. So my question is on the use of agent AI in.

44:51 And what would be the prospects for for going back in in in new... In our service offering, sir? Can you share some thought process on it, sir? Yeah. So we are seeing agentic AI in two different ways. We are seeing agentic AI as a great opportunity for us to enter segments which earlier we were not playing in. For example, we are not really... We were not playing into the inbound segment. We were really not playing into the service segment or even the collection segments. Through agentic AI, it offers an opportunity for us to enter these segments without committing to large real estate and without committing to a large number of people, etcetera. So it's...

45:36 So we see it as an opportunity, as a business opportunity. The second way in which we are looking at agentic AI is really in terms of cost optimization, better quality calls, and faster closures and more productivity. For our outbound calling operation that we have for our existing customers. Because what IdentityAI does do at the background is that it enables you to monitor, for example Sorry. Was there some comment? Okay. Somebody's phone was probably on on on... Not on mute. Yeah. So on the other side, we see agent AI as an optimization tool, as a productivity tool, and which helps us to close faster in terms of our calls and to make our calls more productive. Because it gives more information, it gives conversational guides, and it basically allows us to also target better in terms of which customers to call first and which customers to call later. So those are the kinds of areas in which we are seeing agentic AI helping us. So at this particular point in time, we are not seeing it as a threat at all.

46:42 We see it as an opportunity, both on the cost side and on the revenue side. The next question is from the line of Abhinav Mandovara from Accuratisk Investments. Yeah. Just one question from my side. It was regarding... I was reading a lot of articles in the last few months that there is a of labor shortage and labor hikes, wage hikes across multiple states. So has that impacted any way in our Q1 considering most of our contracts are passed through? And how do you see the labor shortage and any outlook on that? So clearly, Abhinav, you're absolutely right. And, you know, you have clearly been staying updated.

47:33 So there is a labor shortage in many states. The... There are labor surplus states in this country, and there are labor short states in this country. So if you look at the Southern and the Western markets, also the NCR market, there is a clear shortage of labor. The other hand, there is a... There is still some surplus labor available in Eastern India, Northeast India in particular, as well as Bengal, and to some extent, Sarkhan, Bihar, Worissa. So we have recruitment teams in these states, which actually help us recruit there and redeploy in the labor shortage areas... In the labor shortage states. That said, labor shortages are real. And and there are many areas. For example, if you look at Gujarat, if you look at some areas of Tamil Nadu, if you look at some areas of Maharashtra, finding labor is an issue. So... But as you rightly pointed out, our model is a pass through model.

48:29 Customers are also beginning to understand that they have to cater to this migrant set of labor and therefore improve costs and be able to also offer other facilities, whether it is food, whether it is transport, or even in some cases, stay arrangements. So we are working with our customers to ensure that their requirements are met, but the but the shortage is real. Okay. Thank you. That's it from my side. Thank you. The next question is from the line of Dia Jain from Sapphire Capital. Please go ahead. Hi, sir. Thank you for the opportunity. I just wanted to understand if there is any seasonality in the business. For example, the hiring cycles or the audit season.

49:21 Can you please explain a bit? So, yeah, there is some seasonality in some parts of our business. So... And so there is seasonality, for example, in our catering business. Right? So in q one, catering usually is... You know, it does... It... It's low because it's also gone through some amount of, you know, campus closures, vacations, etcetera, etcetera. So that business does have seasonality. There is also seasonality in some of our IFM businesses as well as in some of our BSS businesses because q two, q three traditionally are the festive seasons and festive demand does peak. So many of our customers are exposed to the consumption side of the economy and there we do see increased demand. Increased demand for people, increased demand for services, increased demand for campaigns to be run-in our sales enablement businesses.

50:13 So there is some seasonality. I mean, it's not massive, but it's certainly there. The next follow-up question is from the line of Diksha Motwani from Siddharth Partners. Hello? Yes, Disha. Go ahead. Hi. From Sudan Partners. Ma'am. Sir, wanting to understand on this tax expense, if you look at it from Q4 versus Q1, there is a significant shift. So if you can throw some light on that. Yes, one moment. So the tax expense compared to the so if you see the stand alone financial statement, the tax expense is lower compared to the last quarter.

51:08 This is in continuation with the tax benefit that flows through for this service manpower intensive service industry. So our count of head count employees increases and we are trying to retain them, the benefit goes through gradually into the system. That's the major driver now for the improvement in the track expense. Okay, Rikhael. Okay. So that is on the stand alone. And how about Consol? So Consol, if you look at it, it's down from, I think, INR 88 crores net to INR 28 crores million, sorry. So you are seeing quarter over quarter, right? So if you see last quarter Quarter over quarter, yes. Yes. Quarter quarter, that is an increase because out of our entire eight or nine group companies within our UDS group, couple of entities only will go through this manpower benefit that comes through tax. The other are all all under the normal tax rate bucket. And it is the mix.

52:14 For example, Matrix, which is your clean driver for the current quarter profit is doesn't get any benefit from your manpower tax benefits. So your mix has also played a role in the moment in the tax expense where you see the consolidated position. Understood. So why if we look at it for a full year, there is no major change in the effective tax rate remains the same, right? Yes, yes. You're right. And as a follow-up on the previous question, wherein the A1 related expenses, which you mentioned and the revenue. So if you look at the expense, ideally, expense would have been higher in Q4, right, vis a vis Q1. So is there some spillover of A1 in current quarter as well? No. No, there is no spillover. The Avon, the transportation related Avon, either revenue or expenses, everything has been spread.

53:09 That's during the last financial year. Whatever you see in the current quarter is only from the 12 business of mailroom service and other business support services. Understood. So sir, what would be the reason then for this expense thing? Because in our previous question, you mentioned there is an impact of A1 in Q4 vis a vis Q1. But in Q4, I think it shows the other expense of 83 vis a vis in Q1. Yes, yes. I'll try to... Yes, I'll briefly touch upon that. If you see Q4 versus Q1, In Q4, what we did is that we restated the revenue that got booked in the transportation business of A1 in Q1 of FY 'twenty six.

53:56 In the so that on a full year basis, it has been nullified. So on a quarter on quarter basis, the reversal has to come in some quarter, which is your Q4. That's why we took the call and finalized the restated the individual A1 balance sheet. But on a consolidated basis, we just reversed revenue with the Q4 revenue. Again, if you see the quarter over quarter performance in sequential quarters, Q4 versus Q1, you see this glitch over there. Otherwise, on a full year basis, the a one transportation impact has been taken care of the last year. Whatever you see from current year onwards is only the existing business. There is 12 business of mailroom services and business support service. So what would be the, I would say, q four number excluding a one reversal?

54:47 So I have mentioned that if you look at the overall number in No. I see. Imagine, I mean, that's the... I'm referring to the expense number. What the answer is saying is that there was some reversal of in q four, resulting in a decline. So, ma'am, see, then it should be around 9.8 crores. I can... Yeah. Okay. So excluding your 9.8. Understood. The a one. Yeah. The a one push. Yes. Ladies and gentlemen, due to paucity of time, we take that as the last question. I would now like to hand the conference over to the management for the closing comments.

55:38 Prabhu, closing comments. Yes. Thank you, all of you. Thank you for participating in this Q1 earnings call. We continue to see your involvement in the business and because in U. S. So we would definitely hope to do better. Then every quarter, we'll look to better performance we have done. So thank you, that's it from me. Thank you. Thank you, everyone. Okay. Thank you, everyone. You. Thank you. On behalf of Strategy Group Advisors Private Limited, that concludes this conference.

56:23 Thank you for joining us, and you may now disconnect your line.