Allsec Technologies Limited (NSE:ALLSEC) Q4 FY23 Earnings Concall dated May. 09, 2023.
Corporate Participants:
Naozer Dalal — Chief Executive Officer
Gaurav Mehra — Chief Financial Officer
Analysts:
Aasim Bharde — DAM Capital Advisors Ltd — Analyst
Swechha — A&S Wealth — Analyst
Arjun Shah — K C Enterprises — Analyst
Sugandhi Sud — Ingrid Asset Management — Analyst
Shreya Lonkar — — Analyst
Harsh Kundnan — Aionios Alpha — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the Allsec Technologies Q4 FY’23 Earnings Conference Call hosted by DAM Capital Advisors Limited. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Aasim Bharde from DAM Capital. Thank you and over to you, sir.
Aasim Bharde — DAM Capital Advisors Ltd — Analyst
Thank you, Tanvi. On behalf of DAM Capital Advisors, its my pleasure to have you all on the Allsec Technologies Q4 FY’23 earnings call. Management side, we have with us Mr. Naozer Dalal, CEO; and Mr. Gaurav Mehra, CFO.
I would now hand over the call to Mr. Dalal for his initial comments. Thank you and over to you, sir.
Naozer Dalal — Chief Executive Officer
Thank you, Aasim. Good evening, everyone, and thank you for joining our earnings call today. Having been appointed as the CEO, effective 16th of February, this is my first interactions with all you. And to that effect, would by briefly introducing myself. I have been a part of the banking and the process outsourcing industry with a collaborative experience of except for 33 years, leading names like Standard Chartered Bank, the Prudential back-office in India, The Tata Group, with my immediate prior role being our true company Connect Business Solutions as its Deputy CEO.
It is a privilege for me to now deal with a respected name like Allsec and I’m excited about the journey ahead for the company and also excited about interacting with all of you today.
The results and the presentation have already been updated on our website, that’s vary of standard disclaimers anything we say which refers to our outlook for the future is a forward-looking statements and must be read in conjunction with the risks that the company may face. I have with me Mr. Gaurav Mehra, Chief Financial Officer, who has joined the company early in January ’23 and will twin with me in interacting with yourselves. We’ll hand over to Gaurav for a brief minute to introduce himself. Gaurav, please.
Gaurav Mehra — Chief Financial Officer
Thank you so much, Naozer. Hi, good afternoon, everyone. So as Naozer said, I joined the company about a quarter before and very glad and happy to connect with all of you as my first earning call. Just a bit of background about myself. I came from a technology background and I remain associated with the companies like the XPO, that’s a [Indecipherable] global technological company. It’s a public listed company with close to INR800 crore turnover. I remain associated from larger part with the technology companies, names like HCL, ST and very glad to become the part of Allsec. And it’s been a fantastic journey for the first-quarter and look-forward for more upcoming interaction and sharing more information with the [Indecipherable] Thank you.
Naozer Dalal — Chief Executive Officer
We will start with a brief business overview and update discovering both our lines, the digital business services what we as DBS and the human resources outsourcing which we call HRO and then follow it up with the detailed financial performance. Post that, we’ll be happy to take your questions.
So we’ll start with the matter headlines. We are pleased to share with you yet another set of robust results. For full-year;23 revenue from operations is at INR91 crores, up 23% year-on year, driven by growth in both verticals, DBS by 26% and HRO by 18%. Our PAT at INR49 crores is up 37% compared to financial year ’22. Both our businesses as mentioned continue to perform exceedingly well with the HRO business clearly emerging as a market leader this year’s. Our business process reached a high of 1.2 million per month and this number being 20% to 30% higher than the competition.
We have added new clients in three digits across the business compared to March ’22, with our total track in these service being now just under 600. We got clocked 100% occupancy in our Manila center this year with additional seats being taken in April ’23. We were named amongst the 10 most promising HR technology service providers for 2022 and 10 contact center companies to watch in 2023 by leading industry publication. Our staff attrition at 8% were dealt at the same levels as last year, being near best-in class in the domestic outsourcing industry. Our cash position and collections continue to be strong. Our collections for March at INR42 crores were the highest-ever monthly collection ever achieved.
I will now provide a progress update on the two tech projects, SmartPay version 4 and and the new HR Management System which we are building. These being key strategic initiatives. We have used the tech since the last earnings calls over the last half year to enhance this core basis informal market feedback from our customers. And therefore the timelines which my predecessors had mentioned in the last call have slipped marginally at best by our [Indecipherable] That said, we are already running two customers in a parallel mode for SmartPay version 4 and the initial results have been encouraging. We will also commence the Parallel transfer for one of our largest customers in June. The outcome of the same will determine the detailed migration plan for all our customers. The new HRMS tool too is in the final stages of user acceptance testing with client migration and further trends to follow from later in quarter two.
We will now move to our new sales achievements for the last financial year. We are planning sales with annual contract values of approximately INR45 crores in FY ’23, which is about a third higher compared to FY’22. This is across HRO and DBS. We have added marque logos, including targeted closures of competitor logos. With this acquisition, we are able to enter similar to untapped vertical segments. For example, Pharma, domestic HRO business and healthcare for the international business as part of our sales efforts for the current year. We will continue to look at new domestic geographies, western India particularly, cross set between our payroll, compliance and Domestic BBS customers and enhance efforts on inside sales and digital marketing for international DBS.
We now move on and share two key trends which we saw in FY’23 and I would like I said that, which has had a reasonable impact on the cost of running our HRO business and in turn led to margin compression, which you will hear in the latter part of the session too. FY’22 new sales saw significant lowering of the average EPV, which in turn led to some brisk economy whey they were transitioned into VAU in FY’23.
The second trend you’ll will also recollect, my predecessor mentioned this in the last earnings call which I will highlight it that while hiring was done in advance of the timing of revenue realization, the transition timeline, the results got elongated at times up to three to six months. We have reverted both these trends. And I have already seen higher increments in the new sales completed in FY’23. We have also made operational and systemic improvements to considerably shorten the transition timeline and have seen some good progress made in that, starting March, including into April.
I now move to our operations performance. Our meeting of the operational KPIs remained strong for both DBS and HRO, including improvements over what we did in FY’22. In many cases we have been named best partner in many of our customers league tables in terms of the outsourcing, which they do. We continue to provide value-added and digital services to our customers, including but not limited to, point automation, bundling RPA in our solutions, etc. We continue to receive high and increasing feedback on social media, Glassdoor, Ambition Box, etc. A direct outcome of our continued focus on employee engagement, this being a key asset for us.
With this, I hand you over to Gaurav, who will take us through the detailed financial performance. Thank you, and I will act for the question-and-answer session. Over to you, Gaurav.
Gaurav Mehra — Chief Financial Officer
Thank you so much, Naozer. I will read out the financial results first and then we’re going to go for the query thereafter. So I will be reading out the positive with first and then we will see the year-over-year results. So, as Naozer mentioned that this year growth is the year of robust growth both in the terms of the headcount growth as well as into the terms of the revenue.
We had a headcount growth of 17% year-over-year, which is translating into the revenue growth of the 23%. Revenue for the quarter clocked at INR108 crores, except for INR100 crores of the last quarter, a growth of 7.9%. On year-over-year basis, we have a growth of 23% for the full-year. Our EBITDA margin stand at INR23.7 crores and the EBITDA percentage of 22%, against the last quarter of INR21 crores and 21%. PBT for the quarter stand at INR15.2 crores with a PBT margin of 14.1%. PAT for the quarter is at INR12 crore with a PAT margin of 11.2%.
In terms of the revenue, the growth for the quarter-to-quarter — current quarter and the last quarter, the growth for operational revenue stands at 7.9%. The growth for the EBITDA stands at 13.1% in terms of values. In terms of the engine, the growth for the quarter stands 102 bps. In terms of the PBT, the growth for quarter-to-quarter 8.3%. We have a growth in both the sector DBS as well as into the HRO as Naozer touched upon. We have a growth of 18.2% for the DBS business, digital business services and we have a growth of 23.6% for the HRO business for operations On a year-on year basis, revenue from operation stands at INR390.5 crores, against the INR317.2 crore for last financial year ’21-’22, a growth of 23.1%.
Financial year-over-year basis, the EBITDA for financial year ’22-’23 stand at INR88.4 crore versus the last financial year EBITDA of INR80.2 crores, a growth of 10.2%. In terms of the EBITDA margin percentages, the EBITDA margins seen some pressure on year-over-year as Naozer touched upon that when we compare year-over-year, there is some cost increase happening into the C2R ratios, into the employee cost which has led to some dip into the margins when we compare year-to-year basis.
PBT or the financial year stand at INR64.5 crores versus INR61.2 crores for the last financial year, a growth of 5.5%. In terms of the PAT, PAT stand at INR48.9 crore versus INR35.6 crores for the last financial year, a growth of 37.1%. In terms of the PAT margin, margin for the current financial year stand at 12.5% versus 11.2% for the last financial year, a growth of 128 bps. That covers all the financial results for the period. So we can move over to Naozer.
Naozer Dalal — Chief Executive Officer
So we are happy to now commence the question-and-answer session. Thank you.
Questions and Answers:
Operator
Thank you. We will now begin the question-and-answer session. [Operator Instructions] First question is from the line of Swechha from A&S Wealth. Please go ahead.
Swechha — A&S Wealth — Analyst
Hi, Sir. Thank you for giving this opportunity. Sir, am I audible?
Naozer Dalal — Chief Executive Officer
Yes, please. Go ahead.
Swechha — A&S Wealth — Analyst
So my first question was, Our HRO business is a higher-margin business as compared to DBS. So wanted to understand what is our strategy for this vertical for next two to three years because I think currently it accounts for 36% of our revenue. So do we expect this increase going-forward, sir?
Naozer Dalal — Chief Executive Officer
No, completely agree with you. So, HRO is the higher of the two businesses in terms of margins. We continue to make relevant investments in people and technology to ensure that we could maintain and improve the growth percentage which we have seen in the recent past. And a key metric, which I’ve already clearly mentioned is that this year with a targeted approach of going after customer accounts and just the shear presence in our market, we are now clearly number-one in the HERO business in the managed services space. We are ahead of competition, like 20% to 30%.
We do tech upgrades, which we have been working on — I finally see significant traction over the last six months. We are ready to go to the market with them over the next quarter. Our customers are excited that we are making those investments. We have customers — currently, as I said on parallel runs on user acceptance testing for the HRMS platform. So once that comes in, what I can confirm is that will definitely see for us our ability to sort of grow the revenues of the HRO business.
As for the margins of that business are concerned, that the jury is still out because there are a number of moving parts. While we are trying to improve operational efficiencies, there are the costs which are coming in for the new platform. And so we’ll evaluate in terms of how that comes about. But yes, I would also look at and see — definitely, I mean margin uptake over the medium-term, but difficult to quantify that number at this point in time.
Swechha — A&S Wealth — Analyst
So, so would this mean that today it is of 36% of our revenues. So do we see it becoming, close to 50% or something like — or a major portion of our revenue over the next two or three years?
Naozer Dalal — Chief Executive Officer
Unfortunately, as I just mentioned, we don’t give forward-looking statements. And there are too many moving parts at this stage to even assume that. Sorry for that.
Swechha — A&S Wealth — Analyst
Understood. Okay, sir then. I also wanted to understand what type of service agreements we have with our clients. Are these annual contracts and you know-how is the billing done? Is it a fixed-rate billing or an hourly basis? And if you bring them on an hourly basis, if you could share us the billing rates for each verticals.
Naozer Dalal — Chief Executive Officer
I’ll give you an overall view in terms of how it works. So typically on an average, or predominant number of contracts are anywhere between two to three years. So to that extent we don’t have to spread effort and sort of, I mean trying to renew those contracts every year and deliver As far as the billing is concerned, the billings is again distinct in both our businesses. HRO business — within the HRO business again there are two segments. We are not protecting anti HRMS business. It is the per FTE per month range, which we sort of charge our customers. For the second part of the HRO business which is the compliance business, we have largely a fixed-fee per month in terms of linked to the number of locations we handle. So that takes care of the HRO business. On the DBS business, largely these are FTE-based contracts where we have a fixed rate for FTE per month. We have a small percentage of contracts which are outcome based in terms of either hourly or in terms of some outcome implement for us. So to answer your question, doth businesses are very distinct kind in terms of what we operate at.
Swechha — A&S Wealth — Analyst
Okay. So I was not clear, DBS how the billing is done. Sorry you voice is dipping. DBS there are — predominantly are billing is done per FTE sort of fixed rate per resource deployed per month. For a small portion of that business, it could be on a hourly or time and motion pay. Okay. Sir, I’ll just ask one last question and then I’ll rejoin the queue. So wanted to understand have we lost any key accounts in FY’23.
Naozer Dalal — Chief Executive Officer
No, none at all.
Swechha — A&S Wealth — Analyst
Okay, okay. Thank you. Sir, I’ll just join back the queue.
Naozer Dalal — Chief Executive Officer
Sure. Thank you so much.
Operator
The next question is from the line of Arjun Shah from K C Enterprises. Please go ahead.
Arjun Shah — K C Enterprises — Analyst
Thank you for the opportunity. Congratulations on good set of results and Naozer good to interact with you. My question is being number-one in the HRO business, what are a few digital that you’re planning to take to stay ahead of all competitions.
Naozer Dalal — Chief Executive Officer
Yes. I would answer it in two ways. I mean, I already mentioned about significant tech upgrade, which we have sort of have and marked couple of quarters of and which will see the light of day-in the next six months. These tech upgrades will ensure that these platforms return on new-age technologies, gives us multi-country, multi-currency capabilities. It gives us the ability to integrate the HRMS with the payroll engine which we run. So that will happen and reduce costs over a period of time in terms of running those engines. Even while that is happening, we continue to sort of ensure that we connect our customers, in that we remain best-in class. So the previous engine which was SP3, I mean to give that exact — we were I think one of the early ones in the industry who made it mobile enabled. So I think we had mobile enabled it as early FY’18, FY’19, to give you one example.
We continue to look at automation in terms of how we collect information from customers, how we processes and then how we distribute that information back to the customers including reporting and analytics. So I would like to summarize and say that, yes, the sales team, our operations teams remain very-very close to the customers, continue to get market feedback and we ensure that we remained [Indecipherable]
Arjun Shah — K C Enterprises — Analyst
Sure, this is helpful. I had one more question. So I just wanted to check how would the capital allocation policy for the next year look like, if you can just give us some colors on that?
Naozer Dalal — Chief Executive Officer
Can you repeat it? What you mean by that.
Arjun Shah — K C Enterprises — Analyst
I mean, the capital allocation policy for the company for the coming year, if at all there are some colors on that.
Naozer Dalal — Chief Executive Officer
The company is adequately capitalized. We continue to explore and see how do we sort of ensure that the sort of cash which we have in the balance sheet, we sort of ensure to bring the best of it. We continue to look at potential acquisition opportunity though none very significantly advanced at this point in time.
Arjun Shah — K C Enterprises — Analyst
Okay. Thank you so much and all the best.
Naozer Dalal — Chief Executive Officer
Yeah. And of course we would look at acquisitions which provide [Indecipherable] to our business, either give us access to new vertical, horizontal, margin accretive was a good start.
Arjun Shah — K C Enterprises — Analyst
Thank you so much and all the best.
Operator
Thank you. The next question is from the line of Sugandhi Sud from Ingrid Asset Management. Please go ahead.
Sugandhi Sud — Ingrid Asset Management — Analyst
Hi. Congratulations on the strong momentum and thanks for taking my question. I wanted to understand on margins a little bit. If I look at the head addition, this is largely in-line with your headline growth, one or two percentage points give or take. However, the margins for both HRO and DBS compared to last year and even on historical numbers are depressed. So what are the one-off factors there, as I’m sorry I could not hear you clearly when you were explaining this point.
Gaurav Mehra — Chief Financial Officer
Sure. I will take-up this question. So, this is Gaurav. So you see we have some pressure into the margin when we compare year-over-year which is primarily because of the reason that we in this particular year we have some one-timers to be called out. So like as we mentioned in our investor presentation and those documents, like we have some demand coming from the electricity department which is linked to very old period and not any recent one. So that’s what it is impacting the margin on the year-over-year basis. Yeah.
Naozer Dalal — Chief Executive Officer
As I also mentioned earlier introduction. There were two trends in the HRO business which has really impacted margins.
Sugandhi Sud — Ingrid Asset Management — Analyst
Could you repeat what those trends are?
Naozer Dalal — Chief Executive Officer
The two trends were that in FY’23 we seemed to have, I mean hired people on the basis of the contracts which we had won. But some of the transition timelines to onboard them got elongated between three to six months. And the second one was that is FY22 we had one new contract with a significantly lower average contract value — annual average contract value compared to early years. So therefore when that happened, when you actually start delivering the operation there are certain basic economies of scale which is coming and therefore we have to carry a slightly higher-cost.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure. And you expect these factors to reverse [Speech Overlap] Sure, that’s helpful. So in terms of that demand from the — where have you classified this? Is this is other expenses.
Gaurav Mehra — Chief Financial Officer
Yes, it’s part of the other expenses.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure. And also could you give a flavor of how much of that ACV booked in the last two quarters has been recognized and how much is expected to be recognized over the coming two quarters?
Naozer Dalal — Chief Executive Officer
We don’t have that data readily. But as I mentioned earlier, we have sort of taken — your book ACV in excess of INR25 crores. And most of it will start getting realized in the next two quarters.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure. And if I can just ask one more question. In a traditionally the HRO business has had a significant contributions from the IT services verticals on the client side. You mentioned that you are diversifying into new verticals in both businesses. And what are the trends that you’re seeing because as you know that headcount addition has not been very strong last year for the industry — IT industrial. So how is that impacting you and how much exposure is there and what you’re going to diversify?
Naozer Dalal — Chief Executive Officer
Sure. I can give you a bit of sense of course, being an industry-leader and also because some of the data which we see. So as far as the industry specialization is concerned in the domestic space, a very large customer and leading name in the Pharma space. The earlier comment which I made was that international customer and domestic customer which we got for our BPO business. As far as the other payroll dents which I see, we definitely saw a bit of pressure in the e-commerce industry, he e-commerce and the tech industry, whether it’s food tech, whether its any kind of B2C retail tech, we definitely saw some and then some headcount coming down.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure, okay, and how is it going with the [Indecipherable] in terms of being able to cross-sell our services to, let’s say, the insurance vertical or Industry
Presented by the press.
Naozer Dalal — Chief Executive Officer
That’s been our agenda for the last couple of years. We constantly review that both internally and with individuals in-place. As I again mentioned, the first thing we are trying to do is also we have very marque names. As I mentioned, we have well, you’re just domestic centered names. So the idea is also to will see how we can cross-sell within our existing customer-base, between DBU ad an HRO and you rightly pointe out. And definitely the tension of working with players can only be strengthened and we review that on a regular basis. So some of that which is coming is actually coming from there. So I’ll take that example. So as I mentioned before, was actually a cross sell under the company.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure, that’s helpful. I’ll hop back in the queue. Thank you.
Operator
The next question is from the line of Shreya Lonkar [Phonetic] from [Indecipherable]. Please go ahead.
Shreya Lonkar — — Analyst
Hello. Hi, good afternoon, everyone. So M.r Dalal, it’s nice to talk to you. Just if you can just maybe give us your outside-in view as you came into this role. How do you see the HRO space, how do you see the competitive landscape changing given the window that’s going on in the PEVC world. Are you seeing some competitive pressures receding on the ground?
The other part was that how should one think about it from basically growth perspective, how do you see the next year panning out. And maybe after that. I’ll follow-up with a few other questions.
Naozer Dalal — Chief Executive Officer
Likewise, I know that we are [Indecipherable] just after I joined. So I’ll put it this way. My outside-in view that the organized employment opportunity still remains significant headroom as far as India is concerned. So I think if I remember some statistics, right, I mean the total employment or people who are in some form of employment is about 50 crores in India, but significant number of that are in the unorganized sector. So the organized sector employment is fraction of that. Within that in terms of within that organized employment sector there are three trends which happened.
One is, there are a fair number of companies who keep their payroll processes in-house. Then almost 40% to 50% sort of outsourced market is with very-very small players in terms of Chartered Accountants or smaller HRO players. Then you have the third set of constituents as large E&P companies who provide services on a platform basis. So if I look at the potential opportunity and the fact that a certain amount of hit come as being the largest player in the market, I think there is enough of market opportunity for us to continue to capitalize over the next couple of years. A move from insource to sort of outsource, we are seeing examples with our new sales when companies who insource, I mean for us to do it on our managed services basis and otherwise, and of course moving, away from competition. That’s another important piece. So I don’t believe or I don’t see any serious concern in terms of what the market opportunity represents.
Shreya Lonkar — — Analyst
And if you could just help us think forward on what all this means from our perspective, assuming the the tech interventions that doing with the SmartPay and the HRMS product, excluding the impact from that, the base business growth, how should one think about it because this year I believe, the business has grown at 11%, but we understand is the environment is not as conducive as it was in the prior year’s. But if you could just give us some on-the-ground sense…
Naozer Dalal — Chief Executive Officer
As I said, regarding my inability to give a specific forward-looking number, but I would like to say that we would continue to be amongst the top quadrant in terms of companies in the HRO space and in terms of the growth numbers experienced. That’s you can be confident about the business and we would continue to be in the top quadrant of our organizations in this space and the growth rates and anything there.
Shreya Lonkar — — Analyst
Sure.
Gaurav Mehra — Chief Financial Officer
And in this I can add just one point in there. So, as Naozer touched upon, in the year we have about 121 new logos added for us into the HRO domain and we added ACV value of close to INR27 crores, which is about 25% of the total revenue for the HRO segment. So we are getting good growth. Adding the new logo apart from the existing customer which grow on their regular increase of their own employee. So that’s what we see the interaction coming in there and the growth opportunity for us in that particular domains.
Shreya Lonkar — — Analyst
That’s true, Gaurav. But Gaurav this ACV of 25 crore, one should reasonably thing this is itself revenue growth outlook for next year. Is that the way one should understand this number?
Naozer Dalal — Chief Executive Officer
To a large extent yes, because definitely I mean I would like to break this up into two-parts. So on the HRO business, I mean the actual revenue realization for a year, look reasonably close. I would say maybe 75% to 80% of what is n the report, there is a timing difference. So when I reported ACV for FY23, depending on when I can take the customer live. So there will be some impact there. But once the customer goes live, of course. I mean, because it is linked to the number of employees we sign up, so I think that comes close.
But on the DBA side, sometimes ACV not necessarily translating into revenue for the year and some of the factors which come in there could be, for example, if we sign up sales from it where are customers have to cross sell and upsell, now there could be an intent of the customer by signing the ACV, but there are many factors which came in a year, for examples of the marketing budget, the sales budget, the number of cross sell they themselves may have. So therefore we converted in terms of revenue versus ACV are lower in the DBO business, but higher in the HR business.
Shreya Lonkar — — Analyst
That gives good clarity. Thank you. But apart from that, just to think about it further that on the competitive landscape if there’s any comment for you to offer. Whatever are you sensing on the competitive pressure, pricing pressure that you were — what you see on-the-ground?
Naozer Dalal — Chief Executive Officer
So, nothing unusual or unreasonable. I think what we have provided over the last 20 years. So I mean I have no significant risks to call-out on that, but yes I mean, let’s say, but definitely, so I think it is a balance. When we go down the value chain in terms of the customers who have smaller number of head count and therefore a smaller ACV which comes, the ability to charge a slight premium there is higher than you know when you bought big names who may have 30,000 FTE, 40,000 FTEs to outsource. So as per the management team continues to sort of manage this out depending on the marque of the logo, the industry which we may want to actually sort of put ourselves in because as as I said earlier, the smaller the log, the operational intensity of delivering it continues to remain high. So it’s that value that we need to size between getting that extra revenue but getting 10 smaller logos, which is keeping our overall margins in perspective in terms of all time smaller logs will impact us. So we will continue to take a call. I mean that’s more a tactical cum strategic call which we will continue to take as we have been doing for the last several years. But I mean, don’t see any significant concern in terms of which is any different from what we have seen in the past.
Shreya Lonkar — — Analyst
Great. And, Gaurav, one question to you. Y-o-Y, we’ve seen a consistent drop in HRO margins. One, I could understand that it could be adverse revenue mix towards given the compliance outgrew your HRO. But the other argument that you’ve called out on the presentation is advance hiring and travel cost. Would appreciate if you can give us some break-up as to how do to kind of — how much is the real one-off, one-off as we should understand it because I believe travel cost is going to be par for the course. So if you can just help us comprehend the breakup of the margin fall and as a result, how much of the margin can actually claw back just by virtue of one-off that exist this year.
Gaurav Mehra — Chief Financial Officer
Certainly, maybe just to give you the flavor. So like that one-off the call so that represent about 20% to 30% of the GAAP reflected in there. And more than that, particularly for that the [Indecipherable] it’s more of the thoughts where we are expanding our Manila facility. So there have been some kind of, it might not be regularly to that much they will, but with the expansion of the facility there happens to be some kind of the travel where the people were traveling from here to there. And with the new expansion happening into that which has led to some kind of the incremental travel for the quarter particularly. Otherwise, we expect that travel to be normal to remain into the range of as a percentage of the revenue within the range in our regular trend. We don’t foresee anything going beyond that.
Naozer Dalal — Chief Executive Officer
The biggest even as I mentioned is that we are trying to see in terms of how do we sort of crunch the onboarding timelines and I cannot estimate in terms of how that would build-on, how that will contribute, but I think out of all factors which are depressed margin, that is something which is highest priority for us to address.
Shreya Lonkar — — Analyst
Sure, great. I will have more questions, I’ll hop back-in. Thank you.
Operator
The next question is from the line of Harsh Kundnan from Aionios Alpha. Please go ahead.
Harsh Kundnan — Aionios Alpha — Analyst
Hi. Thanks for the opportunity. I have just a couple of small accounting-related questions. First thing is that you mentioned in your PPT that there a one-off for revenue-related to tax vouching and ascending your licenses. Could you just quantify how much that will be. And the second question is that there is a sharp increase in depreciation on a Q-o-Q basis, any kind of reason that you would like to call out.
Gaurav Mehra — Chief Financial Officer
So to take up your first questions like the one-off that we have. I don’t have that number fully handy to call-out the exact percentage, but as we mentioned in our presentation. So particularly that one-off we have, that’s particularly from tax vouching and one-off kind of active one. Like one of the activities relating to that license renewals. So that’s one of the customer which is kind of once in a five-year activity. It’s not a kind of a regular activity, which was falling into this particular quarter. And there relatively the margins for that particular transactions are relatively thinner than the regular business. So that one part of the one-off which is impacting the margin when we compare Year-over-Year basis.
And apart from that, the other one we call-out that which is from the department, so I think that’s we have factored fully into the P&L. We don’t foresee more impact coming off from that in that year-over-year in the future. And particularly when we say that the depreciation and amortization which has increased. So we do have investment which has gone into the non-current assets where there are regular purchases happen, which is more of the machines and we increase the headcount, so which is increasing kind of the depreciation in there.
Naozer Dalal — Chief Executive Officer
We also have an annual refresh in terms of the older assets. So there is some kind of annual refresh also sitting there.
Gaurav Mehra — Chief Financial Officer
Yes, exactly.
Harsh Kundnan — Aionios Alpha — Analyst
So just on the first point you said that that has the tax vouching that has thin margins that I understand, but any impact on the top-line that you would like to call out, where this should help us understand what’s the adjusted revenue grew.
Naozer Dalal — Chief Executive Officer
So I think the tax vouching is its an annual future. And just to sort of put at what we mean by that. There is additional effort in terms of completing the tax computation for the year leading up to issuer competency at the end-of-the year. So that it come in every Q4 of every year. So that explains the difference between Q3 of this year And again, that is pretty much part for the cost and nothing out-of-the ordinary in that sense. The other one-off as I said in the demand which has been made by Tamil Nadu Electricity Board relating to certain electricity dispute in the 2005, 2008 range. So significantly older dispute, where we are taking leader opinion, exploring all options, as we have paid over some principles.
Gaurav Mehra — Chief Financial Officer
And maybe to add one more point as Naozer mentioned, so, but the renewal is that the shop and establishment renewal which is part of our compliance business. Tax vouching is a regular activity which falls into the fourth quarter of the financial year. So what I mean, the one-off was more of the license renewal which happens kind of depending upon the license renewal period, which is one of our largest customer which was falling into this particular quarter.
Harsh Kundnan — Aionios Alpha — Analyst
Fair, sir. Thank you so much.
Operator
Thank you. The next question is from Swechha from A&S Wealth. Please go ahead.
Swechha — A&S Wealth — Analyst
Hi, Sir. Sir I wanted to understand, could give a sense of the industry side for both our DBS and the HRO vertical. And some sense around who are our key competitors? And how big is our competition in terms of revenue and margins as compared to us.
Naozer Dalal — Chief Executive Officer
Maybe the date is not publicly available. And I can only give you a sense being in this industry for many-many years. If you look at an Nascom website, they would quantify the, IT, ITES space know 3 digit as billion dollars. So the fact that which also gives — I don’t think that we can come to any meaningful conclusions in terms of when you are seeing the overall industry side. As far as our competition in the international business is concerned, there are names like [Indecipherable] You know, the typical usual suspects of the outsourcing industry. There are smaller names like Fusion BPO for example who does work in the US. So that’s the part of the competition landscape as far as some of the US customers are concerned.
As far as HRO is concerned, I’ll go back again to sort of what I mentioned that besides — I mean the ability to grow that business I think is inherent in the way the employment is structured within the country. I mean, so you continue to shift movement from the informal sector to the formal sector, within the formal sector which we hopefully will see movement from smaller end players to the more organized players. So I think it’s a mix — its difficult for me to put a number in terms of what the market size is. But what I can definitely say is that at this stage of growth which we are in Allsec, I there is tremendous market opportunity and I don’t think we should worry about whether we are — whether it will be constrained by the availability of a market to sort of being built for both our business.
Swechha — A&S Wealth — Analyst
Okay, okay. And sir another thing I was — if I look at our quarterly run rate, leading companies are growing quarter-on-quarter our revenues. From June 2020 we were somewhere around INR50 crores, INR64 crores of revenue. So that we have stayed up to INR108 crores kind of a revenue in this quarter. So just wanted to understand what is the days that you can — would INR108 per quarter is the base run-rate quarterly that we should assume or do you think it’s going to go up every quarter sequentially. So I wanted to understand how should we look at it because they’ve been growing every quarter sequentially.
Naozer Dalal — Chief Executive Officer
Yeah, so again as I said, giving any number would be a forward looking statements, but what I would like to highlight is that in this another rate as Gaurav mentioned and I don’t have that number readily available, but there is a set of one-off there. But yes I think I can make an overall statement, you know that the management team will definitely endeavor to ensure that the growth momentum continues. We have made investments in people, technology in the recent past. And we’ll try to capitalize in terms of how do we ensure that those investments start paying off in the near-to-medium term. So difficult for me to put a number, but yes I think definitely the intent is to sort of continue to sort of ensure that we do revenues and we don’t disappoint our stakeholders in terms of the revenues we generate. Okay, okay. And sir, can I ask one more question. Sure, please go ahead. So I wanted to also understand if if you could help us know what kind of industry do we cater to in the DBS and HRO book? And which industry actually takes the biggest pie for us in each of this vertical? Yeah, so. I think in DBS, that is banking, financial services, insurance and industries like fintech, I mean these are this this industry vertical. As far as the DBS is concerned — as far as the HRO business is concerned, it’s a mix. So we have a good mix of IT, ITES, which is one of our largest vertical. We do a lot of work for retail, we do have some work for manufacturing, as I said, we have entered pharma. So the industry verticalization is more wider spread and balanced in the HRO business.
Swechha — A&S Wealth — Analyst
Okay, okay. Okay sir. Sir, I have few more questions. I’ll rejoin the queue. Thank you.
Operator
Thank you. The next question is from the line of Sugandhi Sud from InCred Asset Management. Please go ahead.
Sugandhi Sud — Ingrid Asset Management — Analyst
Yes, hi, thank you for the follow-up. So just referring to your historic margins in the payroll business that was before the duration of purchase, it used to range in the 40% to 43% range. And I [Indecipherable] numbers for the compliance business. I just try to reconcile the kind of margins you are reporting, Have we seen a significant, like 2% to 4% dip in our HRO margins or is just a quarterly blip both in terms of the quality of the nature of business done in compliance itself and the percentage of compliances in HRO.
Naozer Dalal — Chief Executive Officer
Again I’m referring to what I’ve been saying almost through the call, that yes in FY’23 we have seen you a blip in the in the HRO business margins. We are looking at it. We are pleased of it and we will see in terms of how we can get some of that back. As far as the split between HRO and compliance margins are concerned, I don’t have that readily available.
Sugandhi Sud — Ingrid Asset Management — Analyst
So apart from the — think about size of deals and operating leverage, is that something that we’ve experienced this year and is it significant difference from how the size of our customer-base was in the past and was it more fragmented this year and not so fragmented in the past.
Naozer Dalal — Chief Executive Officer
FY22 is not fragment taken in the past. I don’t have that readily available. I also mentioned that we have seen some of that again consolidating in FY23. So the FY23 upper range ACV are more than what we booked in FY22, and we’ll continue to explore in terms of how quickly we can onboard these customers over a period of time.
Sugandhi Sud — Ingrid Asset Management — Analyst
Sure. Thank you.
Naozer Dalal — Chief Executive Officer
Thank you.
Operator
Thank you. That was the last question for today. I now hand the conference over to management for closing comments.
Naozer Dalal — Chief Executive Officer
Sure. So thank you once again for the opportunity and for the sort of the time we went throughout and some of the very stimulating questions that were given to us. What I want to reassure — I mean everybody on this call is that these are obviously, very-very exciting times for Allsec. And you company is well poised to capitalize on the market opportunity which I sort of briefly described and also some of the investments that you’ve made in people, process and technology over the past few years. We’ll continue to make the right investments. We’ll continue to assess. We’ll consider to ensured that we don’t lose out on any emerging market opportunity, whether domestically or internationally for the BPO business. We’ll continue to make the right investments to ensure that we further accelerate our growth strategy in the near future. With this, we would like to close the call and look forward to interacting with all of you again in H2. Have a nice remained of the day and week. Thank you so much. Thank you.
Operator
[Operator Closing Remarks]