DELTA CORP LTD (DELTACORP) Q3 FY23 Earnings Concall Transcript

DELTA CORP LTD (NSE: DELTACORP) Q3 FY23 earnings concall dated Jan. 18, 2023

Corporate Participants:

Hardik Dhebar — Chief Financial Officer

Shivanandan Pare — Chief Executive Officer

Analysts:

Jiten Parmar — Aurum Capital — Analyst

Abhishek Singhal — Naredi Investment — Analyst

Pritesh Chheda — Lucky Investment Managers — Analyst

Niteen S. Dharmawat — Aurum Capital — Analyst

Nikhil Agarwal — VT Capital — Analyst

Pragnesh Shah — Delta Corp, Ltd. — Analyst

Dhwanil Desai — Turtle Capital — Analyst

Yash Dantewadia — Dantewadia Equity Research — Analyst

Sachin Kasera — Svan Investments — Analyst

Chintan Mehta — Prudent Broking — Analyst

Randeep Sen — MAS Capital — Analyst

Anupam Agarwal — Lucky Investment Managers — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Delta Corp Third Quarter FY23 Analyst Conference Call hosted by Antique Stock Broking Limited. [Operator Instructions]. Please note that this conference is being recorded. I now hand the conference over to Mr. Alpesh Thacker from Antique Stock Broking Limited.

Thank you and over to you, sir.

Operator

Thank you. Hello, everyone, and welcome to third quarter FY23 investor conference call of Delta Corp Limited. Today, we have with us, from management of Delta Corp, represented by Mr. Hardik Dhebar, Chief Financial Officer of the company. The format of the discussion will be a brief opening remarks by the management followed by Q&A session.

Without much ado, let me hand over the call to Mr. Dhebar. Over to you sir.

Hardik Dhebar — Chief Financial Officer

Hi, good afternoon, everyone, and thank you, Alpesh for hosting this call once again. So not wasting too much time, I’m sure everyone of you has gone through the results. While there have been certain conjectures and certain confusion in the minds of people with regards to the business and the margins and stuff like that when compared year on year. I have, during my interaction over the media as well — I have tried, clarified that December 21 was a base, which is not comparable as regards to the current period.

The fact of the matter is that it was only for part of the year that we were operational in that financial year, given the COVID second wave. And in the month — in the quarter of December 21, not all the expenses were at their pre-COVID level or the normal operating levels, whether it was the salaries, whether it was the license fees or for that matter, all other operational expenses as well, which obviously in the current period are back to the pre-COVID levels. In fact, you know, the regular increments, which had not happened for a period of two-three years have also kicked-in. The number of employees and the staff that had been reduced during the lockdown have also been brought up to speed. Rather, we are more than the number of people we were there then because we’ve had effectively two new operations that we have added.

So all those things when you consider and when you factor in for those increases, the margins are not at all compressed or subdued. And in fact, they are — they are in fact better because if I was to factor in the same kind of cost for the December ’21 period, the margins would have been much lower. So the question of a compressed margin that is being spoken about and the muted numbers that is being spoken about, I would not like to hold it entirely true.

Yes, with regards to the revenue sequentially, if you look at quarter on quarter, one may not see a substantial growth or a growth at all because it is expected that when you have broken out at a certain level in the second-quarter, continuously growing quarter-on-quarter may not be something that happens in any business for that matter. And especially in our business, we have seen that we have a step up growth kind of a format where we reach a certain number, stay there for a couple of quarters and then grow in from there with certain events and disruptions happening.

Now one of — one such disruption as far as Delta is concerned is obviously in the form of the new vessel that we are expecting to launch replacing our Kings Casino or Caravela as it was known earlier. We hope that in the new — in the coming financial year, towards the third-quarter or so, we should be able to bring in the new vessel, which obviously as has been seen in the past, whenever we have a new product, a better product, there is a disruption in the market, which basically shakes up the whole space. And we are able to penetrate better and deeper.

One of the reasons obviously with the new vessel is going to be the enhanced capacity, which will give us more space for accommodating larger number of guests, who we have to, from time-to-time, you know, turn down given that we run full to our capacities over long weekends and holiday seasons.

That said, the gaming business per se, otherwise, has demonstrated robust character and we believe that given the new vessel and everything coming in the near future, we should be on a very good growth trajectory given that we are maintaining a good sound run rate at this point of time.

With regards to the online business, again, we all know that unlike the offshore casinos where during the month of December or sometimes during long weekends you see more traffic, on the online gaming space, it’s a little bit different. You know, the holiday season — typically festivals like Diwali, Dussehra, etc., tend to be more a family time and family gatherings and people do not log into online gaming sites that much. And same is true during even the last week of December where it’s more of a holiday time with the families rather than logging on to the online gaming sites.

And therefore, we see lesser traffic that gets generated. However, to be able to maintain the run rates and to be able to retain and keep the traffic on, we tend to spend a little more during these periods on the marketing and sales promotion and related activities. Thereby, we are able to continue and maintain the run rate and as can be seen, as against about INR49 odd crores that we had done in the previous quarter of September 22, we have ended up with a INR51 crores. So, we would not call it growth, but still a strong and resilient kind of growth.

The investment that has gone in form of sales, sales portion, marketing, advertising and all the other activities that has happened in this quarter and over the last few quarters that the online business has embarked upon, we are very confident as is clearly visible that in December ’21, the online gaming business was at about INR35 crore for the quarter, which has gone up to INR51 crores now. And we believe that the current run rate is much better and we hope that we will be able to surpass even this INR50 crores number going forward, given the current run rate. That, coupled with the fact that we will continue to invest and, you know, focus on marketing sales promotion related activities, we hope to see better numbers and better growth going forward.

With regards to hospitality, it has always been our say that it’s a complementing business to our gaming business. And it’s only happy situation to be in, where despite not being the core activity or the core business of the company, we have been contributing at operating levels and we have been doing reasonably well and growing steadily in that space of hospitality as well. So by and large, I believe that we are on the right path and the right trajectory as far as the performance and operations of the company is concerned.

One has to look like I explained and I tried to, you know, analyze and decipher the numbers and the reasons for it. One has to look at it in a more pragmatic and practical way at the numbers rather than merely looking them as pure play set of numbers on a standalone basis.

With this, I would like to invite questions and I will try and answer them to the best of my ability. I have my colleagues, Shivanandan Pare and Pragnesh who are also on this call. If required, we would be bringing them in, to answer any specific or technical questions if there are any.

Questions and Answers:

Operator

Thank you very much. We will now begin the question and answer session. [Operator Instructions]. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question is from the line of Jiten Parmar from Aurum Capital. Please go-ahead.

Jiten Parmar — Aurum Capital — Analyst

Yeah. Good afternoon. See — we listened to what you said in the opening remarks, but if you can..

Hardik Dhebar — Chief Financial Officer

Your voice is echoing. Can you pick up the phone please?

Jiten Parmar — Aurum Capital — Analyst

One sec please.

Operator

Mr. Parmar, we request you to please use the handset when asking the question.

Jiten Parmar — Aurum Capital — Analyst

Yes, I am using handset. Hello, yeah, yea, regarding this [Technical Issues] in the previous year, December ’21 quarter, there was COVID impact and all that. So, I mean, what [Technical Issues].

Operator

Hello. Hello. Yes, sorry. We have lost the line for Mr. Parmar. We will move on to the next question from Mr. Abhishek Singhal from Naredi Investment. Please go-ahead.

Abhishek Singhal — Naredi Investment — Analyst

Good afternoon, sir. Congrats for the good set of numbers. My first question, what would be the effect on the company from the rules that government is opting on the online gaming and what is the update on the IPO debt subsidiary company was bringing.

Hardik Dhebar — Chief Financial Officer

Are these the only two questions, Abhishek?

Abhishek Singhal — Naredi Investment — Analyst

No, no, yeah, yeah.

Hardik Dhebar — Chief Financial Officer

With regards to the rules that the government is framing, we have gone through the rules and set of regulations that the government is planning to bring about as far as the online gaming is concerned. And we are very happy to note that most of the requirements that the government wants these companies or want companies like us to follow, we are already in compliance with more than 90% of what is required. In fact, I would want to say 100%, but you know, it’s a question of we following it at a certain stage and the government wanting us to follow it at a certain stage. Like say for example, they want some things to be done at the time of registration. They want something to be done at the time of deposit whereas we may be doing it at a certain time later in the cycle. It’s just those. Issues that are being ironed out between the industry and the government and we are very, very confident and hopeful that the final outcome of the discussion between the industry, the government and all the stakeholders and participants is going to be something, which is going to be a win-win for everybody.

More importantly, this is a step in the right direction as far as the industry is concerned, given the fact that this is not only giving the industry and interface in form of a Ministry, which it will be able to talk to and will be represented by. In addition to the self regulatory body, which will be like a watchdog who will keep a check and make a level-playing field, but most important part in the whole thing is that this basically gives a recognition to the industry at a much larger level.

And you know that would obviously have a lot of other questions, which were remaining unanswered at all points of time, being put to rest in forms of what is online gaming, whether it is gambling, betting, scale, non-scale, etc.,etc. All those things will now be taken care of and will be put to rest, which obviously will help the industry when it even comes to the GST standpoint.

And with regards to the IPO, we — I have already gone on record that the entire process and the steps that are required to be done to be ready and be prepared to launch the IPO. We have done all those activities. We have completed all those formalities. We are — we are very close to the budget, which is not a very good time from a market perspective to launch an IPO or for that matter do any fund-raising activity, given that the budget is a big financial event. So, we are waiting for that event to be behind us.

And we are hoping that by the time the budget is all done and dusted with and has been presented annualized over, issues which are the rules and regulations related issues or the GST related issues also will have gained a lot of clarity by then, which will make our path and road clearer and smoother for the IPO to be launched immediately thereafter.

Abhishek Singhal — Naredi Investment — Analyst

Okay and sir, what kind of margin are you expecting in Q4 and FY24 and what is capex plan and how much capex have you done in current year.

Hardik Dhebar — Chief Financial Officer

So margin for what business are we talking of?

Abhishek Singhal — Naredi Investment — Analyst

Sir, overall.

Hardik Dhebar — Chief Financial Officer

Yeah, so, we are already — we are already at about 34%, 35% kind of EBITDA margins. We will only better from here given the fact that, you know, there are operational leverages, which will obviously kick-in over a period of time. So, the margins are only going to improve from here. Also given the fact that on the online space, once we start doing better both on the topline, as well as on the contribution side, the margins will only improve from here. So. I will only would like to state that on the gaming side, we are currently at 34%, 35% kind of run rate. And we should only improve from here going towards the high 37%, 38%, because if you see the casino business or the gaming business per se, the average margin is about 38%, 39% and the blended margin is where we are looking at about 34%, which we believe can be much, much higher and much better.

With regards to the capex, you know, we are in the process of building the new vessel, which obviously will come into operation in the new — in the coming financial year by the third quarter or so. We have — the total cost is going to be about INR225 crores, INR250 crores, of which we have spent roughly about INR120 crore, INR150 crore kind of a thing. Another INR100 crores odd to go, so which I don’t think is a big number. But, that should take care of the capex.

With regards to the new project, the Deltin’s Entertainment City or the Deltin Town or whatever is the name that is being referred to, that I think is not a large set of expense has happened as yet. Like I mentioned earlier, we are in the final stages of getting the last bit of approvals. Once those approvals are in place, we will be breaking ground and once we break ground over the next four years is when we are going to be spending a large amount of money. But again, there we would be, as you know, we have generated about INR300 plus crores of cash flow in the nine months. And we hope to generate close to INR400 crores this year. So. I think we would be generating a similar amount year-on-year, if not more, which should take care of the capital expense required. And as you know, we are currently sitting on INR650 crores of cash.

Abhishek Singhal — Naredi Investment — Analyst

Yes. Okay, thank you so much. I will come back in the queue.

Operator

Thank you. The next question is from the line of Pritesh from Lucky. Please go ahead.

Pritesh Chheda — Lucky Investment Managers — Analyst

Sir, could you give some idea on the supply addition in the water-based casino in Goa, in the last one year and in the next one year?

Hardik Dhebar — Chief Financial Officer

In the last one year, there has been no addition. The last new vessel, which came in, which added capacity in terms of the industry as a whole was way back in May 2019 when Big Daddy brought in and replaced its vessel. Other than that, the capacities have remained more or less identical. They have not changed.

With regards to in the next one year, obviously, our new vessel is going to be coming in and we have gone on record to say that our own capacity would go up about 2.5 to 3 times from our existing capacity. So that’s the kind of addition we are looking at.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay. Is there any loss of market share in the last nine months in terms of the visitations by any chance for the store?

Hardik Dhebar — Chief Financial Officer

No, no.

Pritesh Chheda — Lucky Investment Managers — Analyst

One clarification from the comment, which you made, which I see only happening this quarter, is that you said, that largely on the weekends and longer weekends is where the capacity is full and we have to deny guests.

Hardik Dhebar — Chief Financial Officer

This is not a new comment, Pritesh. This has been my statement for quite some time and that is where I have — when we first spoke of capacity expansion and changing of the vessel, that’s when I had also said that this is going to take care of those days during the year when there are weekends, long weekends and holidays, etc., where we go beyond capacity and we have to deny entry to be.

Pritesh Chheda — Lucky Investment Managers — Analyst

Does it mean that the current vessels are basically running at optimum utilization and optimum visitation.

Hardik Dhebar — Chief Financial Officer

It’s very difficult — you know, it is not like a cement or steel plant where you have an installed capacity and you run at 100% or 110% capacity kind of a thing. The reason is very simple. It’s a 24-hour operation. Your peak time starts at around eight o’clock to nine o’clock in the night, goes up to three-four in the morning. There is capacity, which is completely unutilized or partially utilized or underutilized during balance time of the day. Now, if you go to Macau and Singapore, whether you were at 11 in the morning or 11 in the night, there is hardly any difference in terms of the visitation and the crowd. That is not the culture that has picked up as yet as far as India is concerned, which obviously will only happen once the market keeps maturing and the visitations keep growing.

So today, yes, while I would like to say that we are operating at a near optimum or near-full capacity when it comes to the peak hours and in the weekends — and now the weekends also extended have earlier — Earlier it was Friday, Saturday, Sunday. Now the weekend starts on Thursday itself as far as our business is concerned. So, I think, yes, we are going towards a more mature market and a more developed market. But I think. to be able to put a finger and say that, yeah, we are operating at full capacity or optimum capacity is a difficult question to answer in a business like ours.

Pritesh Chheda — Lucky Investment Managers — Analyst

Lastly, what is the quarter three visitation and spend number, if you could share that?

Hardik Dhebar — Chief Financial Officer

Quarter three, we have roughly about 150,000 guests who have come in. And the visitation, obviously, once your number of guests go up will obviously drop. So, we were at about 18,000 odd GGR per person; that’s come down to about 16,000 because my visitation has increased from 115,000 to 150,000.

Pritesh Chheda — Lucky Investment Managers — Analyst

Okay, okay. Thank you very much and all the best to you, sir.

Hardik Dhebar — Chief Financial Officer

Thank you.

Operator

Thank you. The next question is from the line of Jiten Parmar of Aurum Capital. Please go ahead.

Jiten Parmar — Aurum Capital — Analyst

Yeah. I think my line got disconnected previously. My question is regarding, you mentioned that in December ’21 quarter, that was affected by COVID. And December ’22 obviously is unaffected quarter. So what I want to understand is, how is that, you know, the hospitality business revenues are down? That is my first question.

Hardik Dhebar — Chief Financial Officer

So you are talking of gaming because what the comment that I mentioned.

Jiten Parmar — Aurum Capital — Analyst

Hospitality, hospitality business.

Hardik Dhebar — Chief Financial Officer

Yeah, so it’s a very relative term when you say they are down. It was INR16 odd crores. It’s INR14.5 crores. So you know one crore up and down can happen on multiple counts. And one of the biggest reason as far as our hospitality business is concerned, like I said, since one, it is not a core area for us. So, you know, the Goa hotel operations are more or less unaffected and the numbers are not very different. It is the Daman hotel operations where you would see this INR50 lakhs, INR1 crore up and down happening because we look at a lot of corporate MICE and weddings, that happen at our hotel. Now in a particular quarter, if there are no wedding dates. then obviously, you will not have weddings happening then. But you will have them happening in the current quarter because the dates are in January, February. So, you know, it’s a question of what shifts where. So, I would not look at it as a dip because it’s a marginal shift or a marginal change from where we were last last year similar period.

Jiten Parmar — Aurum Capital — Analyst

Okay and also revenues probably have not grown to the context of basically the jump in other expenses.

Hardik Dhebar — Chief Financial Officer

Which revenue are you talking of Jiten?

Jiten Parmar — Aurum Capital — Analyst

Overall revenues.

Hardik Dhebar — Chief Financial Officer

Why would you say that. Now if you, again if you want to compare it with December ’21 nine months, we have more or less grown by about 42%.

Jiten Parmar — Aurum Capital — Analyst

No, I am talkin about quarter-on-quarter.

Hardik Dhebar — Chief Financial Officer

Yeah, that I think I mentioned in my opening remarks that it’s the second quarter, which is always the pathbreaking quarter as far as gaming business is concerned. And the third quarter obviously will be a mirror image or a reflection of how the second-quarter has grown and where we are. So from first-quarter to second-quarter, you see there is a growth and then you — it’s not a business where I just have to press a button and things happen. It’s a question of how the overall industry has moved. It is the factor of how visitations have grown. It is a factor of how tourism has grown. It’s a factor of how a lot of things around us have panned out. So given that, I think — given that we grew to INR270 crores from the earlier quarters. To expect it to keep on growing quarter-on-quarter, I don’t think that’s going to happen and historically also has not happened.

So it is a step up growth pattern and format that Delta has always followed. So you have a step-up that has happened in form of INR270 crores. It takes a couple of quarters. We stabilize here and then grow again.

Jiten Parmar — Aurum Capital — Analyst

Okay, okay, that will be all. Thank you.

Operator

Thank you. The next question is from the line of Niteen S. Dharmawat from Aurum Capital. Please go ahead.

Niteen S. Dharmawat — Aurum Capital — Analyst

Thank you so much. Sorry, I joined little late so some of the questions can be repetitive also. So wanted to understand what is the growth — fourth quarter’s guidelines that you have right now?

Hardik Dhebar — Chief Financial Officer

We normally don’t give any guidance or guidelines for any forward-looking numbers, Niteen.

Niteen S. Dharmawat — Aurum Capital — Analyst

Okay, so instead of saying guideline or guidelines, how do you see this quarter shaping up compared to the previous quarter that has gone by?

Hardik Dhebar — Chief Financial Officer

So the second and the third quarters have always been the most robust and the most high-performance quarter as far as Delta is concerned. And the momentum of the third quarter carries on into the fourth quarter, at least for the first month or month and a quarter or so. So, January, February. currently the trend is quite strong and robust. However, this year, in this particular quarter, we will have a small I would not call it disruption or aberration of sorts because this was always planned in this financial year, is our dry dock. So one of our vessels is going to be out of operations for about two to three weeks in the month starting towards the end of February is what has been planned. It was initially planned for the month of October. And if you go back to my transcripts of the earlier calls, you would see that we had spoken about this dry dock in the month of October. However, because it’s high season of sorts and we are in the peak of our momentum, we tried discussing with the authorities and have pushed the dry dock back to the fourth quarter. But that the dry dock is now imminent and it’s going to happen, so which obviously will have some sort of an impact on the revenue. But, otherwise from a trajectory and a trend perspective, even given the fact that we are already into the first 15 days of January, I don’t think there is any change of momentum or change of trajectory.

Niteen S. Dharmawat — Aurum Capital — Analyst

Perfect. The second question is about the IPO. So, are we planning anything during the next financial year or will it take more time? Any sense.

Hardik Dhebar — Chief Financial Officer

I already answered that question, Niteen. Just for your benefit, I will answer. We have complete thing that is required from our side. We are in complete readiness. We are only waiting for the events like the budget to go, you know, to happen. And I the clarity around the rules, regulations that the [Indecipherable] has come out with and a little bit on the GST. Otherwise, we are in complete readiness and we have enough clarity and the market visibility is clearer. We should be able to launch the IPO soon.

Niteen S. Dharmawat — Aurum Capital — Analyst

Thank you so much and wishing you the best.

Operator

Thank you. We have the next question from Nikhil Agarwal from VT Capital. Please go ahead.

Nikhil Agarwal — VT Capital — Analyst

Good evening, sir and thank you for the opportunity. I just had one question — just wanted to know what your licensing fees for the Nepal and Sikkim casino?

Hardik Dhebar — Chief Financial Officer

So if I’m not mistaken, Sikkim, there has been — Pragnesh, you are there on the call? If you can just tell me the exact numbers that we have. I think it’s INRI crore or something for Sikkim. And Nepal, I think it’s a fixed-fee for longer tenor that we had paid in advance. Can you just — if you can bring in Pragnesh, he will have the numbers, please.

Operator

Sir, Pragnesh Shah is on the line. The line has been muted for him.

Pragnesh Shah — Delta Corp, Ltd. — Analyst

Hello.

Hardik Dhebar — Chief Financial Officer

Yeah, Pragnesh.

Pragnesh Shah — Delta Corp, Ltd. — Analyst

Yeah, Nepal, it’s around INR1 crore a year and Sikkim. it’s INR75 lakhs a quarter.

Nikhil Agarwal — VT Capital — Analyst

Okay, there has been no division in these licensing fees this year, right.

Pragnesh Shah — Delta Corp, Ltd. — Analyst

[Speech Overlap]. Sikkim, there is a revision. Sikkim, from October onwards, there is a revision. So, they have increased to INR2.5 crores now.

Nikhil Agarwal — VT Capital — Analyst

Okay.

Hardik Dhebar — Chief Financial Officer

That’s how — that’s how Pragnesh you said, no, INR75 lakhs a quarter.

Pragnesh Shah — Delta Corp, Ltd. — Analyst

Yeah, yeah, correct.

Hardik Dhebar — Chief Financial Officer

So, on 75 lakhs, there has been no change; INR75 lakhs is the revised number.

Pragnesh Shah — Delta Corp, Ltd. — Analyst

Correct.

Nikhil Agarwal — VT Capital — Analyst

Okay, okay, got it, Thank you so much, that’s it from me.

Operator

Thank you. The next question is from the line of Dhwanil Desai of Turtle Capital. Please go ahead.

Dhwanil Desai — Turtle Capital — Analyst

Hi, Hardik, good afternoon. Two questions. The first one is from the commentary that you’ve given, essentially until the next ship comes, it will be in a marginal growth phase and probably the ramp up will take couple of quarters. So, we can expect growth kind of going to again 15%, 20% from FY25, is that a right way to look at it?

Hardik Dhebar — Chief Financial Officer

Well, I would not want to put a number, but given the fact that we are going to be disrupting the market again with the new product, better product, larger capacity, etc., we could probably look at even a larger growth number.

Dhwanil Desai — Turtle Capital — Analyst

Okay, okay. And since you are almost more than doubling your existing capacity in the same location, do you — and the visitation to Goa will grow at a certain rate. So does it mean that we will have more conversion from visitation and more visitors coming for Casino or are you [Speech Overlap].

Hardik Dhebar — Chief Financial Officer

Just to give you a perspective — just to give you a perspective, there are about one crore people who visit Goa on an annual basis, okay. The casino industry, currently, given its current capacity doesn’t attract more than 10 lakh, 12 lakh people a year. So even from the current visitations that are already happening in to Goa, there is a huge untapped potential available. And most of us are not able to adhere to or service to these kind of numbers because of the constraint in the capacities that we have by virtue of the size of the boats that we have. Having said that, once we increase the capacity, obviously, we will be able to cater to larger number of visitors and we’ll be able to cater to large number of people and therefore, we believe that we are not expecting the Goa tourism market to grow dramatically, but since we already have a large unserved clientele available and with obviously the new airport coming in, larger number of flights coming in to Goa, and the road connectivity improving, we are bound to get larger number of visitors and larger number of people visiting Goa and that will obviously benefit us in the long run.

Dhwanil Desai — Turtle Capital — Analyst

Okay, understood. And the last question on the new project, the resorts project, any revision in the project cost or we are still looking at INR2,500 crores and INR3,000 crore kind of.

Hardik Dhebar — Chief Financial Officer

So, you know, it’s a dynamic thing, INR2,500 crore was the number that we spoke about last time. Obviously, that was a total project cost. Now whether we split it up into phases, whether we go one full hog, and how do we want to split it to ensure that we are never stretched or never leverage is something that is a process that we will — that is a process, which is a debate that we continuously have all the time. So like I’ve said all along that we will ensure that we are not stretched and we do not have a leveraged kind of a situation at any point of time is what we will ensure to the best of our ability.

But otherwise, the overall project obviously spread across the 100 acres will continue to remain at that number. But we are mindful of the fact and we’ll ensure that there is no stretch on the balance sheet and there is no stretch on the cash flows.

Dhwanil Desai — Turtle Capital — Analyst

Got it, Thanks a lot. All the best.

Operator

Thank you. The next question is from the line of Yash Yash Dantewadia of Dantewadia Equity Research. Please go ahead, sir.

Yash Dantewadia — Dantewadia Equity Research — Analyst

Hi, all. As I keep listening to you, I just have a couple of doubts. I want to understand the economics of the online gaming business. Could you throw some light on it? Just take two minutes.

Hardik Dhebar — Chief Financial Officer

So what is your question?

Yash Dantewadia — Dantewadia Equity Research — Analyst

I want to understand the economics of the business because it’s still not EBITDA-positive, right.

Hardik Dhebar — Chief Financial Officer

So I don’t know how long have you been following Delta as a company because online business till a couple of quarters back has always been positive. It was not only EBITDA positive, but also bottom-line positive business. It is because that we have chosen to grow and grow faster and grow bigger that we have started to spend our money on to marketing, sales promotion, advertising and other related activities.

Yash Dantewadia — Dantewadia Equity Research — Analyst

So, exactly what I meant by, I want to understand the economics. How much spending on advertisement.

Hardik Dhebar — Chief Financial Officer

So that’s what. And that is why you are seeing the growth — the profitability getting under pressure. Now, just to give you a perspective, in the quarter ended September, we had spent about INR22 odd crores on marketing, sales promotion activity. In the month — in the quarter ended December, that number has gone up to INR28 crores.

And given the fact that we are pursuing to grow and we are hoping to grow bigger, better, faster, this amount of spend is going to be there for the next few quarters till we reach an optimum size and the unit economics. What is more important in a business like ours is to ensure that the unit economics is positive. And by unit economics, what we mean is that when I acquire a customer by spending money on customer acquisition, within a certain timeframe which is reasonable, that customer should not only breakeven, but start contributing individually. So far as every customer that I acquire is unit economics positive, I should not be worried about in the short-term of the interim losses because eventually when you reach a certain size and stature and all the customers that you acquired are all unit economics positive, eventually, the business will start throwing large amount of cash.

Yash Dantewadia — Dantewadia Equity Research — Analyst

Main reason I asked this question — and thank you for explaining so beautifully — but the main reason I asked this question was because since you’re planning to go for an IPO in the next one or two years, I just wanted to understand how this is going to shape up in terms of profitability and what’s advertisements costs.

Hardik Dhebar — Chief Financial Officer

The IPO is not one or two years. Like I just now said, in the question just before this question of yours, we have completed all our legwork, formalities, all the procedure, processes that are required to be carried out from an IPO perspective. We are waiting for the right time and the right — conducive market conditions to launch the IPO.

Yash Dantewadia — Dantewadia Equity Research — Analyst

So from here onwards, are we going to be taking a more aggressive approach as far as online gaming business is concerned?

Hardik Dhebar — Chief Financial Officer

We are already aggressive than what we were before and we will be as much aggressive as we need to be to ensure that we do not bleed very heavily, but at the same time, we don’t compromise on growth as well.

Yash Dantewadia — Dantewadia Equity Research — Analyst

Okay sir, thank you. And also, is there any update on the Daman court case?

Hardik Dhebar — Chief Financial Officer

The matter — you know, the Daman Hospitality, the company, which was a subsidiary of Delta, we had a merger which got effected in this quarter. So, we had certain legal formalities to complete whereby the writ had to be transferred from Daman Hospitality to now Delta Corp. And those formalities are over. We are now on the daily Board unlike what we were on the weekly Board earlier. So we are hoping that from next week onwards, we will start seeing some traction and moment on the case as well.

Yash Dantewadia — Dantewadia Equity Research — Analyst

If there is a favorable outcome in the court case, how is it going to affect your operations? Could you give me an idea?

Hardik Dhebar — Chief Financial Officer

It’s all going to be very-very highly positive.

Yash Dantewadia — Dantewadia Equity Research — Analyst

What kind of impact? Could you throw a number or could you.

Hardik Dhebar — Chief Financial Officer

I would not want to — I would not want to double guess and try to deviate from our focus at this point of time. Let the court case and the outcome be announced. And, you know, there are international examples that are available for destinations like Daman and they have been thriving and have been thrummingly successful. So, we’ll wait. We genuinely believe that Daman is a very, very big opportunity. It can be as big or bigger than Goa, but why double guess and put a number at this point of time.

Yash Dantewadia — Dantewadia Equity Research — Analyst

Sure. Hope you get a favorable outcome and the next con-call and I actually ask you for a number and you give me a number. Thank you so much.

Operator

Thank you. [Operator Instructions]. We have the next question from Sachin Kasera from Svan Investments. Please go ahead, sir.

Sachin Kasera — Svan Investments — Analyst

Yeah, hi, Hardik. My question was on this new vessel where I think you mentioned your capacity [Technical Issues].

Hardik Dhebar — Chief Financial Officer

Sachin, can you be a bit louder. I’m unable to hear you, please.

Sachin Kasera — Svan Investments — Analyst

Sure, is it better now?

Hardik Dhebar — Chief Financial Officer

Yes, please.

Sachin Kasera — Svan Investments — Analyst

I am saying regarding the new vessel that you mentioned that is going to the capacity by 2.5 times. Two parts to that, one is that, how long do you think it will take before you can reach like sort of a good number there? And secondly, do we need to significantly increase our market share — because of — they’ve been sort of reports, that was the new airport that’s get opened, the overall traffic in Goa is going to grow significantly and hence it is just that the increased traffic itself will take care of the incremental supply that you’re bringing into the market. So, Sachin, as far as the traffic is concerned, I just explained to this gentlemen before you, that today there is one crore people coming into Goa. Today, what we are servicing is hardly 10 lakhs, 15 lakhs, 12 lakhs of the one crore visitations that are happening into Goa. So you already have a large amount of untapped potential market already visiting Goa. It makes sense, because 10%, 15% looks reasonable because we can’t expect every visitor to Goa to visit the Casino. Let’s say you have certain examples globally, how does it work. Because the Macau and all typically or Las Vegas typically, only casino only [Speech Overlap].

Hardik Dhebar — Chief Financial Officer

Today, typically what has happened is that every person going to Goa and when I say every person, I would say at least 90%, 95% of the people going to Goa, Casino visit has become a part of their itinerary. Now, if that is the case, we are still not able to service the entire one crore people. Now, ideally, we would want to do that and reach there. But obviously it is not something that we can do given the constraint we are going to be onboard. The vessels have a certain size restrictions, etc., etc.

So over a period of time, we will increase our capacity like we have been doing in past and now with this increase, we are trying to reach as much as larger number as possible. So and yes, obviously the new airport, the increased number of flights, the better road connectivity, the Bombay Goa Expressway, etc., etc., all is going to fuel to the inflow of people and tourism into Goa, and that’s obviously going to be a positive thing for the business as such.

Sachin Kasera — Svan Investments — Analyst

No, but.

Hardik Dhebar — Chief Financial Officer

I don’t believe — I don’t believe that we have been spending large amounts on our marketing, because in any case, marketing is a limited space that one can do as far as Casinos are concerned. So, you know, it’s restricted only to Goa. I cannot do open and shut marketing. It’s whatever little surrogate and direct marketing I do, I do so. There is no largest spend that we envisage or anticipate when it comes to marketing spends.

Sachin Kasera — Svan Investments — Analyst

So what is then our sense? Is it that we expect a very rapid and a steep improvement in terms of the overall traffic as this new vessel comes in.

Hardik Dhebar — Chief Financial Officer

It’s very simple — it’s very simple, Sachin, it is very simple. Today, I am the most expensive Casino in Goa to visit. I started INR3,500 rupees entry go up to INR8,000, INR10,000 depending upon which day of the week and what is the kind of visitation that I’m experiencing, right. Tomorrow I decide I do not want to charge anything and I make everything free. I will go full every day. I have the demand even today. So it’s a question of how you price yourself, how you position yourself and with the capacity increase, obviously, I will be able to enter much larger crowds. So whether I will — where it will be a [Indecipherable], whether it’ll be weaker, whether it’ll be a steep, let’s wait and see and then be happy for ourselves when it actually happens.

Sachin Kasera — Svan Investments — Analyst

Okay, let me reset my my question. When you reach optimal utilization, can we expect that the capacity will be 2.5 times. In the medium-term. your revenue from Goa should also go back to 2 to 2.5 times. Now, the time-frame is something that is obviously open for discussion. But is that direct interference?

Hardik Dhebar — Chief Financial Officer

It could be much more — it could be much more because it ultimately depends on what kind of a mix of customers. If it is only the walk-ins that are going to come, yes, maybe two times the revenue two-and-half times the revenue. But if I’m going to get more focused, more serious, my club Deltin members, etc., then the growth can be much more. But like I said, let’s wait and let the event happen and let’s all be happy together.

Sachin Kasera — Svan Investments — Analyst

And are we — look, in terms of sustaining the margins or is it because the capex growth two, two and half times, we would be happy with much higher revenue, but then [Indecipherable] because you mentioned that 37%, 38% has been the historical broad range for your Casino business.

Hardik Dhebar — Chief Financial Officer

Sorry, sorry, sorry, I’m not able to understand. What did you say?

Sachin Kasera — Svan Investments — Analyst

I think you mentioned that historically, the range of margins for our Casino business has been 37%, 38%, Something, [Speech Overlap].

Hardik Dhebar — Chief Financial Officer

It will only improve. I also said, Sachin, that they will only improve from here once the operational leverages kick-in, because once you reach an optimum cost level, every additional rupee, about 55% to 60% of that gets added to the EBITDA. So now obviously when I have a larger ship, salary cost and everything will go up. So we initially you will see a margin crunch happening because my number of employee cost will go up, my operating cost will go up, but once I start filling to that to the capacity, the revenue will be far higher than what why costs are. So, obviously the margins will only improve.

We’ve seen that happen in 2013 and 2014 when we launched Deltin Royale.

Sachin Kasera — Svan Investments — Analyst

Sure, and this new airport [Speech Overlap].

Hardik Dhebar — Chief Financial Officer

Sachin, I think there are people waiting. We can — you and I can meet up like we have done in the past and we can take all the questions that you have Sachin. I’m sorry to be cutting you like this.

Sachin Kasera — Svan Investments — Analyst

No problem.

Hardik Dhebar — Chief Financial Officer

But please appreciate.

Operator

Mr. Kasera, if you have any further questions, you may rejoin the queue sir. [Operator Instructions]. The next question is from the line of Chintan Mehta from Prudent Broking. Please go ahead.

Chintan Mehta — Prudent Broking — Analyst

Sir, majority of question get answered. I just have two questions. What is the margin profile difference between land-based Casino and live Casino?

Hardik Dhebar — Chief Financial Officer

Not — not too much of difference. In fact, land-based casino, if it is of a similar-size, the cost — the margins can be even better given the fact that a lot of marine related costs that we incur and lot of petrol and fuel related costs that we incur on a ship, that will not exist. But you have to compare it on a like-to-like basis. And effectively, the margins can be better on land Casino.

Chintan Mehta — Prudent Broking — Analyst

Okay and sir, if you can throw some light on land-based Casino competition.

Hardik Dhebar — Chief Financial Officer

Today, there is no competition because land-based Casinos, whatever they are existing existing, including ours are all 1000, 2000, 3000 square-foot small Casinos catering to mostly the house guest of the hotels. The real test will be when we — what we are looking at in our new project where we’re looking at about 100,000 to 150,000 square feet of Casino space. That would be the real big casino that will come into operation. And then we’ll see what happens.

But today, honestly speaking, the entire gaming market, 90% of the market would be the offshore Casino, 10% would be coming in from or 15% would be coming in from the land-based Casino. So there are no real competition as such.

Chintan Mehta — Prudent Broking — Analyst

Okay, okay and sir, last question from my side, on Deltatech Gaming side, if you can throw some light on in terms of strategy, growth for the next three, five years. I mean, what kind of new segment or new gaming we are trying to explore?

Hardik Dhebar — Chief Financial Officer

I have Shivanandan Pare, who is the Managing Director and CEO — who’s the CEO of Deltatech Gaming. Shiva, would you want to throw some light on his question, please? Can you please get in Shiva?

Operator

Sir, Shivanandan, your line has been unmuted, sir. You can go ahead and speak.

Shivanandan Pare — Chief Executive Officer

Yeah. Hello. am I audible?

Operator

Yes, you’re audible, sir. Go ahead please.

Shivanandan Pare — Chief Executive Officer

Yeah, I mean firstly, firstly in digital business, if I were to paint the five-year down the line picture is very, very difficult because we have — we’re living in a vey dynamic environment. Having said that, the idea is, Poker, we would like to continue to maintain and increase our leadership position in the online space. We believe Poker appeals to the younger audience in the country. And India has the youngest population as far as the world is concerned, and most of these eighteen plus [Indecipherable] are moving to Poker. So that’s just one spage.

The second stage is, the overall multi-gaming platform where multiple games come in and we basically look at a horizontal play there, have one door, one entry point and offer multiple games to the users. These two are going to be, which is continue to be the strategy. As and when the opportunity throws, as told in the beginning that [Indecipherable] is extremely dynamic and as a business as a team, we are chasing a moving target.

As and when the opportunities comes, we would not shy away from invest in that.

Chintan Mehta — Prudent Broking — Analyst

Okay, so sir, currently, we are not in multiple gaming, correct?

Shivanandan Pare — Chief Executive Officer

So, we have launched our Adda games. In fact, one of the reasons if you see that for last couple of quarters our margins look to be a little depressed is because we are investing in that platform. We are building team and we have already launched it. It is called adda.games. That is our multi gaming platform. We already have 14 games there where we are seeing encouraging signs from in terms of both the acquisition cost, user traction both in terms of monthly active users and daily active users.

Chintan Mehta — Prudent Broking — Analyst

Okay, got it, sir. Thank you so much, sir.

Shivanandan Pare — Chief Executive Officer

Thanks.

Operator

Thank you. The next question is from the line of Randeep Sen from MAS Capital. Please go ahead, sir.

Randeep Sen — MAS Capital — Analyst

Yeah, thank you for the opportunity. My first question was in terms of, can you share an update in terms of how many club Deltin members we have. If I recall, it was around 6,000 a year ago. Any update on that?

Hardik Dhebar — Chief Financial Officer

It’s a very dynamic number. It changes from day-to-day, but I think we should be in the similar range at this point of time, because you know. And when I say dynamic, a lot of people drop-out also. So if you are a member today and you don’t fulfill the criteria, you will no longer be a member, but somebody else will come in. So it’s a dynamic number. I don’t have the exact number at this point of time, but, I think we should be in the range of that 5,000, 6,000.

Randeep Sen — MAS Capital — Analyst

Okay, okay. Another update, I believe, we are exploring a real-estate project. land parcel, I think we were not able to sell that land and we are coming up with a real estate project. Any update on that?

Hardik Dhebar — Chief Financial Officer

No, it was not a land parcel that we were not able to sell. We had bought that land with a view to build a hotel. Eventually, we bought a ready-made hotel, and therefore that land became available of sorts and therefore the best way to monetize it was to try and do a development and get better valuation out of it. The project is well underway. And I think in the next 12 to 18 months, we should see the completion of that project and the cash flows starting in the next couple of quarters.

Randeep Sen — MAS Capital — Analyst

And like what kind of revenues are we expecting from that project overall?

Hardik Dhebar — Chief Financial Officer

It’s — the land cost in the books is about INR100 crores and the construction cost is about INR120 crores and 130 crores. So, that’s about INR250 crores, give and take plus whatever profits would come out of it. That’s the kind of cash-flow that we’re looking at.

Randeep Sen — MAS Capital — Analyst

All right, all right, Thank you. Thank you.

Operator

Thank you. We have Anupam Agarwal from Lucky Investment Managers with the next question. Please go ahead, sir.

Anupam Agarwal — Lucky Investment Managers — Analyst

Yeah, good afternoon sir. And thank you for the opportunity. Sir, my question is on the upcoming Casino, the bigger vessel. Can you help us understand the incremental fixed-cost that would come on our P&L, given the fact that we commissioned the vessel in Q4 this coming year.

Hardik Dhebar — Chief Financial Officer

For the new vessel you are talking of?

Anupam Agarwal — Lucky Investment Managers — Analyst

Yes, the fixed cost in particular.

Hardik Dhebar — Chief Financial Officer

Yeah, so you know, we have to look at the staffing. In addition to — so, basically the biggest cost would be the employee cost. So once we freeze on the exact number that we want to start recruiting from day one, we will be in a position, but we are looking at 1,200, 1,400, 1,500 additional people. So, you know, we will be able to give you a number closer to the operations date. It’s a little early in the day to say what is the fixed-cost because everything else is going to be variable.

Anupam Agarwal — Lucky Investment Managers — Analyst

Understood. And what about the license fees. I remember the last-time you mentioned was incremental INR10 crores, 12 crores per quarter on the bigger vessel.

Hardik Dhebar — Chief Financial Officer

No as of now, we haven’t put a number to it because currently the provision sales we are at, what we are with the 10% increase that has happened, but once we get our new vessel certified and approved and registered, depending upon what capacity registration we get and what size we finally get, the fees will be determined there on. So, we’ll be — we’ll know closer to that date again.

Anupam Agarwal — Lucky Investment Managers — Analyst

Got it, got it. Will you help us understand in quarter gone by, what was the contribution from Nepal and Sikkim.

Hardik Dhebar — Chief Financial Officer

Nepal — for the nine months, Nepal has contributed close to about INR35 crores, which is roughly about INR4 crores a month. And Sikkim has contributed about INR21 crores, which is roughly about give-and-take INR175 lakhs to INR2 crores a month.

Anupam Agarwal — Lucky Investment Managers — Analyst

I understood. Just sort of again coming back to the vessel, once we commission the vessel, do you see some sort of cannibalization from the existing vessel to the bigger one.

Hardik Dhebar — Chief Financial Officer

This is a doubt and fear every time a new vessel comes into the — in the river. We face this question. Like I was saying, way back in 2013 and 14 when we did Deltin Royale, but not only we have grown, but grown bigger and better than what we were then. And like I said, there is enough room for growth because there is enough untapped market existing. Forget the growth of the market itself happening, but there is enough untapped market available. So, I don’t think in the initial one month, two months, you may see some cannibalization here and there. But I think eventually the market has grown penetrated much bigger and better and we expect the same thing to follow once the new vessel comes in.

Anupam Agarwal — Lucky Investment Managers — Analyst

Right, right. Do you have a sense as to what the capacity of Big Daddy and Pride would be, if you can throw out a number.

Hardik Dhebar — Chief Financial Officer

No, I would not be able to give a comment on that please.

Anupam Agarwal — Lucky Investment Managers — Analyst

No issues, that’s all from my side and wish you all the best.

Operator

Thank you. That was the last question for today. I would now like to hand the conference over to the management for their closing comments. Over to you sir.

Hardik Dhebar — Chief Financial Officer

No, I think we had a discussion on almost all the topics that are material and sensitive as far as the business is concerned. We have been able to cover all areas. And I’m hopeful and hoping that I’ve been able to answer most of it to the best of everyone’s satisfaction. I think, like I said, we are on the right path, right trajectory and it’s only for the time to tell where we are going to be go growing. And like I said, it’s a step-up growth that we’ve always seen and we believe and hope that that will continue.

Operator

Thank you. [Operator Closing Remarks].

Hardik Dhebar — Chief Financial Officer

Thank you everybody. Thanks Alpesh.

Operator

Thank you.