Aptech Limited (APTECHT) Q1 FY23 Earnings Concall Transcript

Aptech Limited (NSE:APTECHT) Q1 FY23 Earnings Concall dated Aug. 09, 2022

Corporate Participants:

Saurabh Gada — Investor Relations

Dr. Anil Pant — Managing Director & CEO

Dr. Anuj Kacker — Whole Time Director

Pravir Arora — Chief Marketing Officer

Analysts:

Unidentified Participant — — Analyst

Unidentified Speaker —

Unidentified Participant — — Analyst

Unidentified Participant — — Analyst

Unidentified Participant — — Analyst

Presentation:

Saurabh Gada — Investor Relations

Hello everyone. Good evening, everyone, and welcome to Aptec Limited’s Q1 FY23 quarterly earnings call. I have with me today, Dr. Anil Pant, our Managing Director and CEO. We also have with Dr. Anuj Kacker, he is the President and Whole Time Director of the company. We have Mr. T.K. Ravishankar, CFO of the company and Mr. Pravir Arora who is the Chief Marketing Officer. I would request you all to please mention your name and form in the chart, so that we have proper record of all the participants. Yeah, if you can please do that and I will now start sharing my screen and we will begin the presentation. Okay. Are you able to hear and see us very clearly? Are you able to see the screen sharing? if one of you can please confirm?

Unidentified Participant — — Analyst

Yeah, Saurabh.

Saurabh Gada — Investor Relations

Okay. Thanks Siddharth [Phonetic]. So we’ve had a really good quarter in Q1 and if I were to just summarize a few key highlights from the performance for the quarter, one key important point that we want to bring about is the fact that, if we look at our student elections and the revenue that we have generated from student collections, so we have surpassed the pre-COVID level, which is for Q1 FY20 right, in domestic as well as the international retail business and if we were to look at the profitability and profit metrics, those are also higher than the Q1 FY20 levels. If we adjust for the migration to student delivery model that we did in the previous financial year.

What we want to do today is actually first take you through some of the operating metrics of our global retail business, which will help you understand the movement in the financials much better and will bring out the underlying numbers and the story about our performance and here what we have done, we have looked at the Q1 FY23 metrics and juxtapose [Phonetic] them vis-a-vis the performance in the same quarter previous year as well as the performance in the first quarter of FY20.

Dr. Anil Pant — Managing Director & CEO

So Saurabh just stay here, for the benefit of all the investors, let me just explain active centers are basically centers which report any kind of student enrollment in a given quarter. Now when you look at a new center, this is — it is defined as a new center, which has been signed up and who has paid the technical know-how fee to the company and you will notice that in quarter one of FY23, the addition — new center addition is almost about 20 centers. The expectation is that this number will grow significantly in subsequent quarters and come to a level which is equal to, if not greater than FY20.

Now, you will see us phenomenally high same-store sales growth, I mean this is a number obviously we are proud of, but the fact is that this number is on a low days [Phonetic] of FY22 because Q1 of FY22 was a COVID quarter, but it again should be much, much higher than what is the average for even when we stabilize and then we start sharing this information with you three quarters, four quarters down the line. My belief is that this number will be extremely good and probably rating amongst the best in class.

In the last investor meet that we had two quarters back, there were suggestions that we should share more qualitative data and that’s the reason why we started sharing enrollment numbers, booking numbers and billing numbers. Now if you look at the booking, you would see that this is at about INR157 crores, and it’s [Phonetic] at about 87% of Q1 FY20. Here I want to explain very clearly that normally for us, the season begins sometime in May because the 12th standard results happen in the month of April. This year, the 12th standard results especially for the CBSE boards and all, have come only sometime in the month of July.

So unlike previous years, we have not lost the season, the season is delayed to July, August, September, from or rather than what it used to be from May, June, July as the prime season in previous years.

Also the month of July, for example, has been an incredibly good month compared to the previous, I mean FY20 July, I mean I can share this number with you and there’s nothing the secret about it. We’ve done almost INR70 crores booking in the month of July. So our belief is that when we look at H1, we should have easily surpassed the FY20 numbers, which is the base, sort of [Speech Overlap] which is the baseline for us when it comes to absolute recovery.

Collections are already higher than that of pre-COVID levels and I mean, we are happy to even take questions later on in terms of if you guys want some more information, we’d be more than happy to add it. Move on, Saurabh.

Saurabh Gada — Investor Relations

Yeah. So this if you — see — booking is the order book that we are generating every month, every quarter and as students enroll for our courses and that which then translates into the revenue as the delivery happens,in these new student delivery model. In the erstwhile [Phonetic] model, as we have the booking translate into invoicing done on the — done to the student and collection happening which then translates into our revenue as our share of the collection that the franchisee has. So these are the two ways in which the booking will translate into revenue and if we look at the segment financials for Q1 FY23, so the revenue for global retail was INR48.6 crores, which is almost 118% of the pre-COVID levels of INR41 crores and while there is substantial kind of addition to the number because of the shift to the student delivery model. but if we do a like-to-like comparison for the revenue that we generate from the student collection, so that is higher than Q1 FY20 in Q1 FY23 because what — if you remember the number of centers that we have added — new centers that we have added in this quarter is significantly lower than Q1 FY20 which has affected the sign-up fee or the technical know-how fee but if we discount that effect, then these — the revenue for global retail is higher in Q1 FY23.

Dr. Anil Pant — Managing Director & CEO

So effectively, the last time when we talked, the people had said that the student delivery model is leading to confusion because we are not able to relate it to the earlier performance. So if you look at the last slides, the ones with the star, those indicate the kind of comparable numbers with the old system of accounting. So against INR41.3 crore operating revenue in Q1 of FY20, the comparable number would be about INR38.8,crores [Phonetic] which is about 94% of where we used to be. In terms of the revenue, distribution, it’s again 33 versus 31 and the interesting thing is that if you look at the segment PBT, when you look at Q1 of FY20 for adjusted numbers, it is 710 versus 444, which shows you the shift that we’ve made in terms of our delivery model, the impact of all the innovations that we’ve brought in terms of delivery because this is more than a cost advantage, this is the benefit of the technology enhancements, the delivery model innovations that we made which is leading to this number.

Saurabh Gada — Investor Relations

Right. So this slide is basically explaining the shift in terms of Q1 FY20 to Q1 FY23. Why today the retail booking — domestic retain booking is still lower than Q1 FY20 and as Anil explained before, the major reason for that is the shift in enrollment season but if we look at it from an HY — the half year basis, we will surpass the FY20 numbers in the bookings and would be similar case in the domestic retail revenue and today in the international retail business, if I just go back and show you the booking and billing performance, you will see that as compared to Q1 FY 20, our booking was 141%, right, and in billing, we have done 146%. Now in terms of revenue, the number is more or less flat and the reason there is, again because of the lower number of centers that we have signed up and there is, I mean the income from some of the projects that we’re doing with our university partners and the renewal fees, those are lesser in this quarter, but the core franchise income in terms of what we are generating from the student collections is much higher as compared to FY20. So on an overall basis, you can safely conclude that we have surpassed the pre-COVID performance in our global retail business in the first quarter.

These are some of the key highlights of — the operational highlights that we have in our domestic and international retail business. So in…

Dr. Anil Pant — Managing Director & CEO

And I would actually request Anuj Kacker to take you through this, please.

Dr. Anuj Kacker — Whole Time Director

Good evening, everyone. Just to highlight to you what are some of the things, which we have been doing in Q1, which resulted or greatly helped the numbers to be where they were, one is of the Lakme Academy powered by Aptech front, we had signed up Ananya Pandey as our brand ambassador and in the month of April and the rollout of that campaign strategy sometime in the month of May — early May and that has been immensely successful and the target audiences relating very well to the — to Ms. Pandey and the various activities that are planned around that has given us a lot of leverage [Speech Overlap]

Yeah, as a result, the booking has gone up very substantially. Now on the media and entertainment side, or more specifically on the AVGC, the gaming as a domain is coming up in a very, very big wave as those of you who have been following us for some time are well aware that the two brands that we have in the field are gaming our Arena and MAAC and both brands essentially concentrate on the AVGC sector, which comprises of animation, visual effects, gaming and comics, now of course extended reality including augmented reality and virtual reality. Now within those areas what has happened over the history of Aptech is that at each stage when these — each one of these abbreviations — letters came in and let’s say animation wave came in, Aptech wrote that animation wave.

Then the next wave was the VFX which Aptech wrote the VFX wave. So the next big wave, which is a very, very visible, in fact already here is the gaming wave and Aptech through its two brands of Arena and MAAC has been concentrating on this segment in a very structured fashion and that has also helped our numbers, and we expect that going forward, this would be one of our mainstays of driving this business.

Now, as most of you may be aware as per our announcement, Aptech had entered into an alliance with HCL Technologies to market a new model which is branded as Aptech IT carriers powered by HCL under which we have collaboration to do certain courses, which are co-branded as well as co-hosted by Aptech as well as HCL. Now these courses are specifically designed in the IT new age areas for — which are very closely aligned to the main stay IT services market. We have of course increased prices by 8% to 10% and the last bullet point is the — mentions ProAlley which some of you may be knowing is a venture in the Edtech space, which is still in the investment phase and the experimental phase. Coming to the international side, the Vietnam and Nigeria, which have been a mainstay markets for a long time, they delivered above average booking and billing growth over this period. Both are doing extremely well.

And keeping in mind, we have been expanding not only in terms of geography, but also in terms of increasing the width of courses that we offer. And in these markets in this quarter in Vietnam, we launched the Aptech teen courses comprising both in the Arena as well as Aptech learning space. Essentially these concentrate on students of class 8 to class 12, who want to get into the IT spaces as well as the media and entertainment space. So catch them as young as it were. Like we did in the domestic space, we have also launched the gaming courses in the international countries that we operate.

Besides this, we have been operating many events and many student engagement programs, now which have — while they seem very ordinary or just a bullet point in a slide, but really are mainstay for student engagement and really it’s not a business that we are in, it is student engagement, which goes a long, long way in not only marketing or in student engagement, but actually in student retention and also enhancing their learning objective. Besides this, we have signed up one more additional university and some of you know, we have partnered programs to some universities in — mainly in our international countries that we operate, we added another university to our stable, which is the University of Bolton besides the existing ones which are listed there, the main one out of them being Lincoln University in Malaysia and Middlesex University in UK as well as VCEA in Canada. Yeah, that’s all from my side. Back to you Saurabh.

Saurabh Gada — Investor Relations

Thank you Anuj. To summarize the financial performance in terms of the P%L [Phonetic], so we have delivered 134% growth over the previous year same quarter at the operating revenue level which was translated into an operating EBITDA growth almost 2600% [Phonetic], so from INR14 lakhs, so the operating EBITDA has gone up to INR3.7 crores and if you look at the PBT level, so it’s almost 9000% [Phonetic]. So all these have happened in spite of us increasing. I mean, having seen the impact of increase in employment costs because we have brought the salaries back to pre-COVID levels and also given increment over and above that. In this quarter, we’ve also had some one-offs, which we will explain in the subsequent slide, and you are also seeing the impact of this shift towards student delivery model in the other expenses

Now, if you compare this performance to the Q1 of FY20, the key thing to note there is that the revenue what we have is higher, right? But the profitability is more or less the same, the reason being that there is an impact on the profitability — the negative impact on profitability because we have made the shift to the student delivery model. So I’ll come to the next slide and explain that part to you. So if you look at the first row below the header, this is where we have captured the net impact of the change due to movement to student delivery model. So if, if I compare Q1 FY23 to Q1 FY22, roughly INR3.1 crores of profits have reduced because of the shift, so if we would have had the old method prevailing, then our profitability would have been higher by INR3.1 crores. The other thing that we would like to highlight is that there is a one-time, I will say one-off impact of the variable expenses for the year. So now this obviously will not repeat in the next three quarters of the year, but may recur again in Q1 of FY24 but it was not there in Q1 of FY22 because of the COVID time set, right? And in Q1 of FY22, there was also net write-back of piece [Phonetic] of expenses. So that also has kind of added to the cost comparative basis in the current quarter. And as we are getting back to normal, we have increased our advertisement expenses as well. These are still lower than the pre-COVID levels but gradually they will keep increasing. In the [Indecipherable] business, there is a minor impact related to the gross margin of the projects that we delivered in this quarter, but for the year, it will average out and be more or less in line with what we have delivered in the past. So net-net, if you compare the profitability movement vis-a-vis Q1 of FY22, almost INR10 crores of loss profitability we’ve seen [Speech Overlap] yeah, correct. So we…

Dr. Anil Pant — Managing Director & CEO

So effectively, we have to look at what are the things, I mean you know that INR230 lakhs of employment cost will be there next year also but what will not probably be there or what is actually a good cost, let’s look at it. INR309 lakhs, yeah, it’s not got recognized in Q1. It will get recognized over the next few quarters. If you look at other expenses — advertisement expenses, it’s a good cost to have because it’s led to a much higher booking and that booking will translate into higher profits in the subsequent quarters.

So that’s a good cost to have. The net ESOP [Phonetic] expenses, I mean, that’s something that we use to motivate people, it’s again a good cost to have, unlike Saurabh explained in terms of the other expenses, the lower gross margin that you see in the enterprise business that will get adjusted once we start executing the larger projects that we have. I’ll start by reassuring you that we have almost about INR100 crores of business in hand for that particular business, which will get executed over Q2, Q3 and Q4. And our profitability on that should be on par or maybe slightly higher than last year. Move on Saurabh.

Saurabh Gada — Investor Relations

These are the business, these are some of the highlights of the balance sheet and the ratios, right? So we have almost INR97 [Phonetic] crores of cash and cash equivalents on the balance sheet as on June 30, which is lower than what we had as on March 31 because we paid almost INR21 crores of dividend in Q1.

So that was INR5 per share dividend that we had declared. Then if you look at the return ratios, so these are clearly better than what we delivered in Q1 of FY22, but if it is some bad [Phonetic] as COVID year, if you compare it with the Q1 of FY20, then as well, the numbers are much, much superior to what we did pre-COVID times.

So in the profitability ratios, while — if we were to look at these numbers on a like-to-like basis, we — the numbers for Q1 FY23 it will be much higher than Q1 FY20 but because of the migration to the student delivery model, you need to remember that the profitability numbers will keep coming down because our revenue base is going to keep increasing henceforth, right? So idea is that we would request you to look at the absolute numbers till the time we reach stable phase and that is like to like comparison possible in the numbers. So, now…

Dr. Anil Pant — Managing Director & CEO

Saurabh, just stay [Phonetic] here, So I mean I know you guys love numbers, but we’ve been slightly different all the time and I want you to actually understand what you would actually — what goes behind making these numbers happen and some of these things are extremely exciting, they keep happening, I mean different things keep happening every quarter. I’m going to ask our Chief Marketing Officer, Pravir Arora to take you behind all the action that happens behind these numbers to enable the sales team, to enable the franchisees, to enable the centers to achieve whatever they achieve.

Pravir Arora — Chief Marketing Officer

I agree with that Anil [Phonetic], this is Pravir here. Let me take you through all the activities that we’ve done through the quarter [Technical Issues] Some of these photographs are taken from a large event in the education space that we participated in and both Dr. Anuj Kacker and the company are felicitated with awards in terms of the contribution that Dr. Anuj made and the company made in the media and entertainment space considering that we have two large brands Arena and MAAC, which comprises almost significant market share in skill building space in [Indecipherable]

This is advertisement that we just launched with Ananya Pandey as a brand embassador in the Lakme Academy powered by Aptech. It’s a very interesting ad and we’ve been fortunate enough to have her on-board. Let me take you through that first and then we can have a discussion [Indecipherable]

Saurabh Gada — Investor Relations

Can I request the participants to please mute themselves?

Pravir Arora — Chief Marketing Officer

Okay, so, you saw that this means essentially the entire marketing activities with Ananya on-onboard started somewhere around mid-May. What we were averaging at around INR9 crores per month of booking post the series of activities including Ananya Pandey advertisements and the various other activities, as you will see air, we’ve actually seen a 30% to 40% increase in the bookings per month ever since the entire campaign started which is very much — which looks very promising and we’re very hopeful that as we progress into the year, these numbers will continue to grow at the same pace

These are some of the other campaigns that you will see which is outdoor campaigns, let me take some time and spend some time on this particular initiative. This is an initiative, which you’ve taken for our brand, MAAC, [Phonetic] PLAYGROUND is available on the OTT platform right now, as India’s first gaming reality show. We participated in this program and we are the principal sponsors in terms of getting the bank [Phonetic], getting to integrate our messaging through the community that was playing the contestants inside the house. This was very, very widely accepted. We had about four teams 28 days inside the entire room, they were locked, something similar to what you would have seen as a Big Boss, but in a different genre and there were a whole amount of games that they were playing and contesting with brand integrations of MAAC, which came in at every level and every episode. The programs kind of now finished, we’ve got close to about 40 million impressions and about 2.5 million unique viewers per video and per episode that was released. This is now being telecast on YouTube and we are expecting a similar amount of reach if not more with people who were earlier not watching it live on Amazon Prime TV will now be able to watch it on YouTube, as well

These are again the initiatives that we’ve taken in the space of arena, which is another brand that we have in the media and entertainment space. We launched Arena gaming at the recently concluded event in Bangalore where Arena gaming was brought available to the entire student community that we had. This — we’ve had very fairly good traction in terms of enrollments on admissions, which are happening both in Arena gaming and MAAC gaming at this point of time. On another news on the IT [Phonetic] side, we’ve as Saurabh and Anil mentioned to you, we’ve tied up with HCL [Phonetic] in the strategic alliance in terms of being able to bring out very high-end courses in the space of IT. This relationship is going to be something that we all look forward to in terms of being able to bring the module back in our IT segment.

Fundamentally, we believe that the courses that HCL has on board because the content is available from their side is something that the entire industry is looking forward to. And coming from a stable of HCL [Phonetic] which is already looking forward in terms of recruiting close to about 30,000 people today. There couldn’t be anybody better who could possibly introduce the kind of job-oriented programs in that space that India needs today. These are some of the other creatives and programs that we continue to do. I must specifically mention the terminology that you see on the right side, which is QUG and SEP, we very proudly call people who graduate with a specific skill from any of our academies as people who are skilled employed professionals whereas on the other side, there are a whole lot of people who are QUGs which we call as qualified unemployed graduates. Because at the end of the day, there are too many people who are pursuing degrees from colleges, which are obviously not that well recognized but even after getting a degree, they are continuing to be unemployed. So we’ve got into a campaign in a program, which we would like to convert almost every QUG to an SEP so that the person is able to get and earn a decent livelihood. This is a 24FPS international animation awards, we within Aptech call this as the Oscars of the animation industry.

This is something that we’ve been doing it for 18 continuous years. We’ve got close — last year was a COVID year and therefore we did this virtual. Every year, this is a physical event, we closed about 2000 students, which is the maximum we can accommodate in a single hall as now, but the last year was a COVID year and we had about 10,000 people who participated it across the country. In fact, they were about 1,000 entries, which came in from about 70 countries outside India in various categories. So this is a very, very proud moment for us and the entire industry is some — is — sits and judges the student walk — that the students do and submit. There is nobody in the entire industry who is not aware of the 24FPS animation awards and many of the jury members very often find it very difficult to understand and believe that some of the work that’s come in is actually students’ work to the extent that they would like to go back and see locked [Phonetic] files whether this is copied or a genuinely student work.

So we’re very, very proud to be associated with this and the fact that our students are creating work which is truly international in standard makes us believe that we are doing a great job for them in terms of building up their careers, right> So these are some of the creatives outside India in countries like Nigeria and Vietnam. Some of the cases that you see here are people who would like to pursue studies outside the country. We’ve got credit transfer programs with leading universities where a student can possibly do a two-year program at any of the Aptech centers, which is closer to their home and thereafter, they can move on to do a degree course with any of the university tie-ups that we have which is outside the country, the universities have evaluated our content and they kind of understand that what we teach in two year period that the student goes through with us is something that they teach as well in the two year period and therefore the credit transfer process becomes a seamless process. All right, thank you. That’s all I have.

Dr. Anil Pant — Managing Director & CEO

Thanks Pravir.

Questions and Answers:

 

Saurabh Gada — Investor Relations

Thanks Pravir. So we know we’re happy to take questions from the participants. You can please raise your hand and once I call out your name, you can unmute yourself and ask the questions. Yeah. Sunny [Phonetic]. Please go ahead.

Unidentified Participant — — Analyst

Yeah. Hi, thanks for taking my question. And also, thanks for the detailed disclosures on the presentation. One, on slide number 5, I think you mentioned about the impact of seasonality in terms of the admissions. So if you can give some color in terms of your student profile, what percentage or what is the typical student profile in terms of 12th pass-outs, graduates and employed professionals? And how does that impact the overall admissions and seasonality in the business?

Dr. Anil Pant — Managing Director & CEO

So Sunny [Phonetic], I’ll take that question. Typically about 60% of our numbers happened in H1 and 40% booking happens in H2, right? I mean, so if we do a 100 thing, 60 will happen in H1, 40 will happen in H2. Typically, in H1, you will have people joining for the career courses, which are higher value and in H2, it is more job oriented courses, which are slightly lower value and the — I mean the average booking per student in the media and entertainment is in the region of about INR1 lakh, in the beauty business, it is about close to about INR60000 odd [Phonetic] for the last two three months. And in the Aptech learning, which is our IT and hospitality business. It is somewhere in the region of about INR35,000. Does that answer your question, Sunny [Phonetic]?

Unidentified Participant — — Analyst

Yeah. And also if you can share something in terms of the student profile like mix of students who come in after 12th or who are graduates or who are our employees? So on an overall student base that you have, what is that profile likely?

Saurabh Gada — Investor Relations

Yeah. The overwhelming majority of the students that choose a career course would be, those who have passed out of 12th Standard and want to have an alternative carrier option available to them while they are pursuing degree or they may pursue our courses exclusively because they are very focused on what they want to do in terms of career. Anuj, you’d like to add to that?

Dr. Anil Pant — Managing Director & CEO

So, Sunny [Phonetic] I will also add something more to this. Frankly the — we’ve got about 2,700 recruiters, who hire from us in Media and Entertainment and I think about [Indecipherable] recruiters who hire from us in the beauty and wellness space. These people are not bothered about degrees. For them, it’s actually the skill that matters, okay? And frankly the quality of work that is done by the student, the portfolio that he or she has and the fact that they carry a certificate from Arena or MAAC has far-higher value than any degree that they exhibit to the recruiters. So typically a student who is going in for an animation job or VFX job or anything. I mean those recruiters don’t give a damn about degrees. For them, it’s just the quality of work that this kid is going to put out and the fact that he is certified by a premier organization like Arena, MAAC or Llama. Does that answer your question, Sunny [Phonetic]?

Unidentified Participant — — Analyst

Yeah, yeah. I was not asking in term — I — your answer is understood. I was more asking from a perspective of the impact on your booking numbers?

Dr. Anil Pant — Managing Director & CEO

Okay. So there has been an impact on the booking number. I mean Anju is going to add to that, because that’s primarily been because you know when a student passes out from 12, they wait for also the university admissions to happen to figure out what they want to do along with the university degree and that has completely got shifted to July, August, September instead of happening in May, June and July. So…

Unidentified Participant — — Analyst

Got it.

Dr. Anil Pant — Managing Director & CEO

That is a huge shift and I said this right at the beginning that the season, when you saw the numbers, it was about INR147 crores versus INR181 crores in Q1 of FY20, now, and I also said that when we look at the H1 in totality, we will probably cross that number fairly comfortably.

Unidentified Participant — — Analyst

Got it. Got it. And…

Dr. Anuj Kacker — Whole Time Director

Partly it’s answered by Anil, but just to elaborate on — if I read your mind correctly, you’re trying to assess what is the degree of impact of the change of seasonality of [Technical Issues]

Unidentified Participant — — Analyst

Yeah. Correct.

Dr. Anuj Kacker — Whole Time Director

Right? So to help you do that, roughly about in terms of value about half of our students come from — choose our courses post their 12,

Unidentified Participant — — Analyst

Okay.

Dr. Anuj Kacker — Whole Time Director

Okay. That would be a metric give or take, and this I am taking vote with Arena and MAAC, the same thing does not apply to [Indecipherable]

Unidentified Participant — — Analyst

Okay. Okay. Got it. Got it. Fair enough. That is more helpful. Yeah.

Dr. Anuj Kacker — Whole Time Director

Thank you.

Unidentified Participant — — Analyst

And one last question I have also, is there a similar seasonality in the international business? Or is the international business more linear across quarters?

Saurabh Gada — Investor Relations

Yeah. So Anuj will respond to your question.

Dr. Anuj Kacker — Whole Time Director

I’ll take. The seasonality does exist. The major — the Vietnam, which is our biggest international market by far, the season is normally August, September. So that, August and September is the season for the international market for Vietnam, Nigeria in turn has a different — each country has a different seasonal month, but if you’re talking about the main countries; for Vietnam, it is August, September; in Nigeria, it does roughly Q2 and it

Some spills into Q3 as well.

Unidentified Participant — — Analyst

Okay. So just to conclude on this from an international retail perspective Q2 and — since we continued to follow the royalty method, Q2 and Q3, typically will be the largest revenue.[Technical Issues]

Dr. Anil Pant — Managing Director & CEO

From view — book perspective, it will be more [Phonetic] Q2. Absolutely.

Unidentified Participant — — Analyst

Okay. Okay.

Dr. Anil Pant — Managing Director & CEO

Q2 and Q3 will be the big months — big quarters.

Unidentified Participant — — Analyst

Okay. Perfect. Thank you. Thank you for…

Unidentified Speaker —

For international.

Unidentified Participant — — Analyst

Yeah. Got it.

Dr. Anil Pant — Managing Director & CEO

And again, I want to clarify completely that this year, even for domestic, that will be true in terms of both booking and billing because of the shift in season.

Unidentified Participant — — Analyst

Got it.

Dr. Anil Pant — Managing Director & CEO

Like I shared with you, the month of July was an excellent month, it was way higher than the July of FY20, I mean if I remember correctly, can I quickly have the numbers for what is the booking number in July of FY20, July 2019?

Unidentified Participant — — Analyst

[Indecipherable] I mean I’m okay with

Dr. Anuj Kacker — Whole Time Director

Already the month is over.

Dr. Anil Pant — Managing Director & CEO

So anyway, we will share that number with you in the Q2 presentation

Unidentified Participant — — Analyst

Thank you.

Dr. Anil Pant — Managing Director & CEO

Thanks.

Saurabh Gada — Investor Relations

Yeah. Apurva [Phonetic], you may please unmute your line and will ask the question.

Unidentified Participant — — Analyst

Yeah. Hi, can you hear me?

Saurabh Gada — Investor Relations

Yeah. Apurva [Phonetic] please go ahead.

Unidentified Participant — — Analyst

Can you share any revenue guidance on Aptech IT careers?

Dr. Anil Pant — Managing Director & CEO

Sorry, I couldn’t…

Saurabh Gada — Investor Relations

Aptech IT careers revenue guidance, he is asking for

Dr. Anil Pant — Managing Director & CEO

Too early, Apurva [Phonetic], I mean we just launched it on August 1. So let’s give it three, four months. I mean one or two quarters before we are able to — I mean, we don’t want to suppress anything [Speech Overlap] honestly it is too early to

Unidentified Participant — — Analyst

Just a random figure that you are looking to target.

Dr. Anil Pant — Managing Director & CEO

Apurva [Phonetic], honestly, I mean it would be too premature on our part to give any guidance on something that we are doing, I mean we have just launched it on August 1.

Unidentified Participant — — Analyst

Okay.

Dr. Anil Pant — Managing Director & CEO

Yeah. We’ll be happy to share this. We have big expectations from this, let me tell you that, right?

Unidentified Participant — — Analyst

Okay.

Dr. Anil Pant — Managing Director & CEO

It would be unfair on my part to either raise your hopes too high or to be pessimistic without having some data points in place, right?

Unidentified Participant — — Analyst

Okay.

Dr. Anil Pant — Managing Director & CEO

I mean, everybody is aware that there is a massive crunch of professionals in the IT space and people are eager to hire. So we’re doing a lot of stuff in Q2 around this and we’ll be happy to share all the progress that we’ve made on this in Q3 and Q4, right, I mean when we have the investor calls in those quarters.

Unidentified Participant — — Analyst

Right, Right. And one more question, how does the company plans to spend the surplus cash since the cash equivalent is like all time high? Are we anywhere close to some acquisition adding new areas?

Dr. Anil Pant — Managing Director & CEO

So Apurva [Phonetic], we are — see firstly we have a very clear dividend policy and if you’ve seen our dividend policy even during COVID years, we actually paid a dividend, right.? So we use part of the profits that we made what part of the operating profits that we made for paying dividends. You rightly said, that we are in a very, very high kind of cash flow situation last year. [Indecipherable] what was the number?

Unidentified Participant — — Analyst

INR117 crores, March 31.

Dr. Anil Pant — Managing Director & CEO

Yeah. We had about INR117 crores of cash on March 31 and we will, again, I mean generate a lot of cash this year. Now, we are not in the space of acquisitions for the sake of acquisitions, we are always on the lookout for good opportunities and I think now with the sort of coming to towards the reality of what has been happening in the 48:24 Edtech space, there might be opportunities which will arise, we are in talks with people and we will use the money judiciously, I mean we’re not going to go after crazily overvalued companies. We’re going to look for value and wherever we find value we’ll will be happy to look at acquisitions

Unidentified Participant — — Analyst

Okay. And any upward take ProAlley?

Dr. Anil Pant — Managing Director & CEO

So Anuj did share work on ProAlley, we’ve been very clear right from day one when we launched it last year in September that unlike Edtech businesses which burn money — the burn is disproportionate. We are not in that game. We will grow this business with extremely high quality content and I’m happy to share with you. We have reached 19 courses, the feedback that we have on the courses is incredible from user perspective, we are already getting about 1,000 odd subscribers or people who pay to subscribe to these programs every month. The quality of feedback that we’re getting, about the quality of the programs is very high. We will build this business in a manner where we can afford big one [Phonetic] or we are committed to it.

Unidentified Participant — — Analyst

Okay. And by what quarter will this student delivery model last this figures?

Dr. Anil Pant — Managing Director & CEO

So I think it is a matter of about six to eight quarters because as we speak almost I think 60% of the — plus of the amount [Phonetic] of the revenue. No — because — yeah — so I think it will take about six to eight quarters for it to go into 100% accrual model, see because you have to understand the centers sign up on a particular date. So to till that particular date, whatever are the enrollments that they’ve made of students is recognized on the old royalty model and it is only from the date when the accrual model has been signed that the recognition of revenue moves into accrual for the newer students but a very large part of our business has already started coming under this and this is good for your organization simply because when it makes you completely compliant from a GST perspective, it gives you extremely high control over the network and most importantly, some of you have been reading about what’s been happening.

I mean that was not our objective of doing it, our objective was more to get into compliance and to get into absolute control on the network but it’s been a damn good thing that we did this because if you’ve been reading about some of the larger Edtech [Phonetic] players who’ve been recognizing revenue upfront, there are different views on that. So I think we have taken a very proactive and a very good measure for the organization.

Unidentified Participant — — Analyst

Okay. Thank you. That’s it from my side.

Dr. Anil Pant — Managing Director & CEO

Thank you. Apurva [Phonetic].

Saurabh Gada — Investor Relations

Yeah. Whosoever wants to ask a question, please raise your hand and call out your name.

Unidentified Participant — — Analyst

Sir, [Indecipherable]

Saurabh Gada — Investor Relations

We will just wait for two minutes.

Okay, I think — okay, there’s — okay, one question from Sunny [Phonetic] Yeah, Sunny, [Phonetic] you can…

Unidentified Participant — — Analyst

Yeah. Thanks for the follow-up. If you can basically give some color on the institutional business, we understand that there was lower revenue booking in this quarter, but how is the pipeline looking like and was there a similar impact even in the institutional business of the delay in 12th standard exams, is it…

Dr. Anil Pant — Managing Director & CEO

Absolutely, Sunny [Phonetic] I mean — see like I shared, we have a very good pipeline, forget of pipeline, I mean we got a very good order book of close to about INR100 crores already existing which has to be delivered in Q2, Q3, Q4. Now the delivery of this is dependent on many circumstances. So for example, our largest customer is the National Testing Agency for whom the priority in Q1 was to get the JEE — the JEE Advanced and the NIIT exam out of the way and it is going to now — all the other businesses. I mean, last year we did almost INR260 odd crores of business from one customer, and we are likely to repeat that this year again from the National Testing Agency and that this will get delivered over Q2, Q3 and Q4.

Unidentified Participant — — Analyst

Right. And so basically, can you help us understand what’s the mix of business between government and non-government? And also, how is that corporate training piece of this segment coming around?

Dr. Anil Pant — Managing Director & CEO

See, the corporate training piece is just work in progress, right now, okay? Because the margins in that business were very, very low and the directive we had given to the team is that if we can’t get the margins up, we should exit the business. Fortunately, the team has used very, very high degree of technology to up the margins even in the corporate training business but that is again very small numbers, nothing significant. It’s not — it doesn’t make any material impact. On the testing front, most of the business is from the government, but the good part is that when you look at government, there are two types, central and state government. State government. we are more or less de-focused [Phonetic] because the payment cycles are extremely long and I mean at times it takes two years, two and half years to collect your money. The central government contracts are much cleaner in nature and the realization of money happens typically between anywhere between six and nine months of execution and if you look at our — we had shared this even in our final this thing of when we had given the annual numbers against the INR97 crore delivery that is revenue, we have collected almost about INR94.5 crores of cash in the last year. We are hopeful of repeating similar or better numbers this year. Does that answer your question, Sunny [Phonetic]?

Unidentified Participant — — Analyst

Yeah, Yeah. And in terms of our receivables, as of March, ’22, we had about INR73 crores of receivables. Can you give us some color in terms of how much of this is on the global retail? And how much of this is institutional? and how…

Dr. Anil Pant — Managing Director & CEO

It’s predominantly institutional. It’s predominantly institutional [Speech Overlap]

Unidentified Speaker —

It’s predominantly institutional about clauses institutions. About INR50 crores is institutional, Sunny [Phonetic].

Unidentified Participant — — Analyst

Okay. And how have been the recoveries in the last four months — three, four months?

Dr. Anil Pant — Managing Director & CEO

Pretty decent. Pretty decent.

Unidentified Participant — — Analyst

Okay. Okay. Got it, Thanks. Thanks. That’s all.

Saurabh Gada — Investor Relations

Thank you, Sunny [Phonetic]

Siddharth [Phonetic], you can ask the question.

Unidentified Participant — — Analyst

Yeah. Good evening, good evening Dr. Anil Pant, it’s very nice to see you after a long time and thank you very much for a wonderful presentation to you and your entirety. Sir, just one question, maybe I’ve asked you before also and maybe you would not choose to answer it, but what’s your view of capex for the next five years? Where do we see we are headed? And what kind of scopes are in the institutional business primarily, sir? What kind of order book can we garner over the next five years over here?

Dr. Anil Pant — Managing Director & CEO

So more than the institutional business. I’m very excited about the retail business, Siddharth [Phonetic], and the reason I’m very excited about the retail businesses is driven by the — see I mean one is you will — you get excited based on the potential, but here more than the potential, the retail business is actually driven by jobs and if I look at the job scenario on media and entertainment, I mean, while our numbers have been growing in media and entertainment, so are the jobs and we are still in a situation where there are three jobs for every student. Now at some point of time because of all the work that we’re doing and a lot of work that is being done by the government in terms of increasing awareness at the parent’s level about career prospects for children in the AVGC industry

We expect that this number will actually start growing because like I said, we have 2,700 recruiters who want to hire from us. Frankly, we are able to satisfy not more than 350, 400 of them. Now for us to be able to, yeah, you come in and talk yaar, for us to be able to really grow this business, we need people to start looking at this as a carrier option and frankly, we don’t have the kind of advertising dollars to create a change in parents’ mindset about carrier option because the kind of money that cost is crazy and it’s not justifiable at this point of time for your company to be spending that money but I’m actually going to get it in Anuj Kacker who is now on the government task force for skill development in AVGC space who represents industry to give you more clarity on this Anuj, over to you.

Dr. Anuj Kacker — Whole Time Director

Yeah, I’m glad you asked that question, Siddharth [Phonetic], if you look at the five-year picture and don’t look at the five-year picture necessarily from an Aptech perspective, just look at it from the domain perspective that we are in and the domain, in which we are a market leader by far. So obviously as the market grows, the natural fallout, our gainers would be people like us. So what’s happening on the media and entertainment space? Now some of you may know that — may recall that in the last budget, the Finance Minister made a historic announcement in the budget speech where she focused on the AVGC sector by name and said that we want to set — the government proposes to set up a task force to give an impetus and derive the government’s policy towards AVGC sector. AVGC for — is an acronym for the uninitiated, animation, animation, visual effects, comics, and gaming. Now subsequent to that, a task force was set up under the agents of the Ministry of Information and Broadcasting in collaboration with Ministry of Skill Development and there is a body — this body of the task force is the mandated and we had the second meeting yesterday and I have the privilege of being part of the skilling committee of the task force and where a lot of deliberation has been happening over the last few months, also how to — what is the — it is not a typical committee which is, let’s say, committee by the committee sake but here we — bulk of the discussion centers around how to get more people aligned to this industry itself how they spread the awareness of this industry and some of the initiatives, which have been outlined very clearly in the policy which will get released very shortly, is that the impetus has to start from the middle school level onwards. So once a person 60:00 let children Class 8 and Class 9 discovers their potential for the creative industry, the natural fallout is of the person building carrier in that industry, just the way a person who is good in maths or physics, tends to choose engineering or a person who is good at biology tends to choose medicine, the government believes and we all believe that that is the likely fallout for the creative industry and then there is a — I’m very proud that and I’m happy that the government itself and all the industry bodies aligned to the government are working towards that direction. So the prospects of the domain extremely, extremely bright and as market leaders are — currently market leaders in that segment, obviously, we believe that we have the first right of refusal on any potential increase which come about. For the history — in short, this was the long answer, strong — short answers extremely bullish

Unidentified Participant — — Analyst

Right, sir. Right. Thank you.

Dr. Anuj Kacker — Whole Time Director

.Thank you very much.

Saurabh Gada — Investor Relations

Thank you. Siddharth. Apurva [Phonetic], you can please go ahead, and unmute yourself and ask the question.

Unidentified Participant — — Analyst

I have one last question. How does the company plan to increase engagement with shareholders? Because this quarter is just where — nowhere media, even though this — it was not even in [Indecipherable] non-business standard, only India Infoline and Money Control published it.

Dr. Anil Pant — Managing Director & CEO

So, Apurva [Phonetic], tomorrow we have interaction with CNBC.

Unidentified Participant — — Analyst

Okay.

Dr. Anil Pant — Managing Director & CEO

Okay and…

Unidentified Participant — — Analyst

Good to see you back there.

Dr. Anil Pant — Managing Director & CEO

Sorry.

Unidentified Participant — — Analyst

Good to see you back there.

Dr. Anil Pant — Managing Director & CEO

And tomorrow we have with CNBC and the fact that like I shared with you, we intend to do this every single quarter with shareholders and as we progress, it will become bigger and bigger in terms of number of people attending. And if you look at the quality of disclosures, a lot of this has come from some of you who have shared your expectations with us in terms of numbers. So if you look at the quality of disclosures that has gone into this investor presentation, I’m sure you’ll find many things that were not there in previous ones, right?

Unidentified Participant — — Analyst

Right. Right. There are….

Dr. Anil Pant — Managing Director & CEO

So I will continue to improve, it will continue to be hired and I mean happy to get more inputs from you, from any of you in this forum in terms of what would you like us to do

Unidentified Participant — — Analyst

Okay. Okay. Good. Because this student delivery model is also quite confusing. So it will be good…

Dr. Anil Pant — Managing Director & CEO

I’m happy [Phonetic] but it’s damn good for the company. It’s very good for the company and eventually Apurva [Phonetic], what will happen is that this will completely even out your seasonality in numbers, right, because you will only be recognizing revenue on the basis of delivery. So, you will not have those crazy quarterly swings.

Unidentified Participant — — Analyst

Okay.

Dr. Anil Pant — Managing Director & CEO

It’s extremely good for the — I mean, for any long-term investor or for any person who is trying to understand the company, it will be extremely good step.

Unidentified Participant — — Analyst

Yeah. Yeah. All right. Thank you.

Dr. Anil Pant — Managing Director & CEO

Yeah.

Saurabh Gada — Investor Relations

Thank you, Apurva [Phonetic]. We are waiting for any other questions that you may have. So if you want to ask a question, please raise your hand.

Since there are no further questions, we would like to end this call. Thank you everyone for participating in the call today and we look forward to seeing you for the next quarter — at the end of the next quarter.

Dr. Anil Pant — Managing Director & CEO

I mean after the next — after Q2 results. Thank you.

Saurabh Gada — Investor Relations

Thank you.

Dr. Anil Pant — Managing Director & CEO

Have a great day.

Saurabh Gada — Investor Relations

Thank you sir.

Dr. Anuj Kacker — Whole Time Director

Thank you.

Unidentified Speaker —

Thank you.