Kellton Tech Solutions Limited (KELLTONTEC) Q3 FY23 Earnings Concall Transcript

Kellton Tech Solutions Limited (NSE:KELLTONTEC) Q3 FY23 Earnings Concall dated Feb. 15, 2023.

Corporate Participants:

Niranjan Chintam — Chairman and Whole-time Director

Srinivas Potluri — Chief Executive Officer, US

Karanjit Singh — Chief Executive Officer, India

Analysts:

Ankur Agrawal — RC Well Solutions — Analyst

Purushotam Savlani — Individual Investor — Analyst

Bhumit Shah — Individual Investor — Analyst

Rajesh Mundra — Anubhav — Analyst

Shahnawaz — Individual Investor — Analyst

Nikita Bansal — Individual Investor — Analyst

Sanjay — Individual Investor — Analyst

JP Dutta Gowda — Individual Investor — Analyst

Presentation:

Operator

Ladies and gentlemen, good day, and welcome to the Kellton Tech Solutions Limited Q3 and FY ’23 Earnings Conference Call. [Operator Instructions] I would like to thank you all for participating in the company’s earnings call for the third quarter of the financial year 2023.

Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today’s con call may be forward-looking in nature, and such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management’s beliefs as well as assumptions made from the information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today’s earnings conference call is purely to educate and bring awareness about the company’s fundamental business and the financial quarter under review.

Now, I would like to introduce you to the management participating with us in today’s earnings call. We have with us Mr. Niranjan Chintam, Chairman and Whole-time Director; Mr. Karanjit Singh, Chief Executive Officer, India; and Mr. Srinivas Potluri, Chief Executive Officer, US.

I now hand over the conference to Mr. Niranjan Chintam. Thank you, and over to you, sir.

Niranjan Chintam — Chairman and Whole-time Director

Good evening, everyone. Thank you for joining our Q3 earnings call. I want to start off with the highlights of the financial highlights, and then we’ll talk about operational highlights, and then we’ll be happy to take any questions that you might have. So I’ll start off with the financial highlights. For the Q3 FY ’23, the consolidated revenue was INR231 crores with an EBITDA of INR26 crores and a profit of INR16 crores. The earnings per share is INR1.79 or INR1.8. This revenue was a 5.3% year-on-year growth and about 2% quarter-on-quarter growth.

For the nine months in review, we have a revenue of INR676 crores, which is about now close to 6.8% year-on-year ago with an EBITDA of INR77 crores and net profit of INR49 crores. And earnings per share is INR5.39 per share. Coming to the operational highlights. Last quarter, Kellton was rated in Zinnov Zone ER&D services rating [Indecipherable] foray into ratings-related activity that Kellton has taken. And we are happy to inform you that we’ve been rated very well as a leading this transformation company.

On the other operational highlights, we have hired Vividh Baru to head our digital practice, and I’ll let Karanjit give you more details on this, what’s the hire means, and also Zinnov Zone to now what it means to us as well as to the customers. The third highlight that we want to bring up is we launched Elite. It’s a new learning initiative of the internal company employees. So this will again, let Karanjit explain to you in detail on what is that, what that means to our company as I realized our employee.

With that I want to first hand over to Srini to talk about Vividh Baru who has based of California. So I’ll let Srini give a little bit color to what he means to evolve in our region and what he brings to the table. Srini?

Srinivas Potluri — Chief Executive Officer, US

Yes. Great. Thanks Niranjan. Good evening everyone. My name is Srinivas Potluri and I’m joining the call from the US. Like Niranjan mentioned, Vividh Baru, Vividh has joined us in November of last year as the SVP and Global Head of the Digital Practice. So he will be managing the Digital Practice factors at a global level. He comes to us from HARMAN, a division of Samsung. He comes with over 20 years of industry experience and he is a Technology Business Leader with an exceptional track record of delivering results and transformation.

And his focus is on customer centricity, top line and bottom line growth, client acquisition and operations. So at Kellton, we will fully leverage his industry experiences network to focus on large accounts and large deals. We have had planning sessions here in the U.S. as well as in India with him and the rest of our team to figure out our global market strategy in 2023. So we will be working very closely to make sure that we do some large account acquisitions and demand from large fields. That will be the focus on our activities with Vividh Baru.

Thanks, Niranjan, and you want to me to add anything else Vividh on that.

Niranjan Chintam — Chairman and Whole-time Director

No, that understood. Let’s we have some questions I think where we’ll answer that too. Karanjit, can you talk about what Vividh [Phonetic] has launched and what leads that to our organization and as well as our customers too.

Karanjit Singh — Chief Executive Officer, India

Yeah, sure. Thank you Niranjan. This is Karanjit and [Indecipherable] city of Gurgaon. Vividh, as you all know is our respected industry analyst and they assessed a lot of IT services IT companies in the various category. And he participated for the first time. Good morning, Vividh R&D. So in report under the small and medium service providers and he had directly featured in the leadership zone. And so the typical that as mentioned he participate and move from the nurture zone to break out to institution. But we have directly been considering the leadership zone along with the likes of all the big companies like Cognizant or Infosys or Persistent, anyone is great.

Now, this basically reflects our kind of track record and maturity that we have developed over these years and this is the first time we participated. And we directly — we’re illustrating that report in the leadership zone. What we does is it gives a good validation with the contract with the customers on our capabilities. We’re a leading analyst and kind of rate that we talk about invite in our group, kind of individual group that we’re targeting that Srini talked about. On the Meet initiative, now, this is what we call there is an internal initiative that we created for crossing the world on the digital side.

So we have created a learning experience and peers. That’s kind of what it stands for. And if I were to give a simple problem, we have modeled it on something like I call it an internal products for Kellton. So what we have is our various experts across the globe, there’s a particular format, so they kind of come speak about certain topics or capex. And then there is Q&A format as well. So this is our lead emission kind of that enables our employees to leverage collaborative learning and knowledge sharing amongst the peers. So yes, those are the two things.

Over to you, Niranjan.

Niranjan Chintam — Chairman and Whole-time Director

Thank you, Karanjit. So operator, go ahead. We are ready for questions. So can you farm the queue, please.

Questions and Answers:

Operator

Certainly. We will now begin the question-and-answer session. [Operator Instructions] We have our first question from the line of Ankur Agrawal from RC Well Solutions.

Ankur Agrawal — RC Well Solutions — Analyst

Sir, my two questions are there. Firstly, why the promoter did you see stake from last two years continuously? And second, why not giving any dividend?

Niranjan Chintam — Chairman and Whole-time Director

So Ankur, I think there was a onetime reduction. I think that is something that happened last year during the time of COVID. And I did explain at that time that this was more towards having some — as well as for the corporation. That’s the reason why we did that. We have not been reducing. Any share reduction that you’re seeing is an impact of employee stock options that have been giving. So when the employee stock options have been rolled out, proportionately, our shares have come down, but not because of valuation. Okay. It was a onetime dilution, and we did talk about this extensively just around the COVID and after the COVID timeframe on that.

Talking about dividend. We did give our dividend once, and then we just wanted to conserve cash. Given the uncertainty that is going on within the industry, as well as the economy and our growth strategy, we have decided that we want to conserve cash and use the cash within the organization for growth of the organization versus giving out where the largest share of dividend is going to go for the promoters, which we felt it did not make sense.

We will revisit this thing as and when the economy and the world over the uncertainty stabilizes and when we are able to feel that the cash cushion that we have is enough we would be happy to relook at this and provide dividends again. But at this point, I think last year, we didn’t do that, the prior we did. And this year also, I don’t –we do not have any plans to give out dividends and will be wait and watch mode as to how the economy wherethere were stabilize, and then we’ll decide.

Ankur Agrawal — RC Well Solutions — Analyst

Thank you. That’s great.

Niranjan Chintam — Chairman and Whole-time Director

Thank you, Ankur.

Operator

Thank you. We have our next question from the line of Purushotam Savlani, an individual investor. Please go ahead.

Purushotam Savlani — Individual Investor — Analyst

Yeah. Thanks for the opportunity. Am I audible?

Niranjan Chintam — Chairman and Whole-time Director

Yes, your are Purushotam. Go ahead.

Purushotam Savlani — Individual Investor — Analyst

Okay. Great. I have couple of questions. One is I wanted to understand, see I keep track of other mid-cap and small-cap IT organizations also, which are operating in the geographies yearly we also operate. So wanted to understand, why there is a discussion about slowdown, recession, etc. But in fact, if you look at all the tier level competitors of ours, they have delivered 25% on sales growth at the same time Covan’s [Phonetic] also hover around say around 25 odd.

Now we operate in the domains of digital transformation, enterprise solution, consulting in all, which should stretch nothing less than 25% to 30% one, which is what the industry norm is. What we’re delivering is generally what the infra services are sharpening their or for that matter BPSPs [Phonetic] will deliver. So what I wanted to understand where strategies and what is the path to improve this OM to industry level? And second, I wanted to particularly understand the new ways technologies like blockchain, AI etc. What is the demand outlook we have seen percent in India and — India, particularly, I wanted understand? Thank you.

Niranjan Chintam — Chairman and Whole-time Director

Let me talk, I think, the first quarter I will ask Karanjit. The second question — I will answer the — the second part of your question, Purushotam. The growth, you’re right, our growth has been — not been as great compared to the peers, you argue that. If you look at from an absolute number also, not looking at is along the way, we’ve divested some of our companies that we had. We did a major consolidation wins org, and how we do business.

And that has also required us to pause last year to come up with that what we call the one cloud initiative, and that initiative is now complete. We are in the front end of change in brand strategy. All that, you know, we are probably one quarter away from finishing up one cloud initiative. So we believe that given, let’s say, I studied, set of the economy, but there are headwinds that you are probably have heard about while — other than India, where for example, Europe, right. Europe is struggling when it comes to growth. US there are some headwinds.

We have seen this is the economy as well as inflation related to that sort of growth numbers. For next [Indecipherable] year, it’s just uncertain at this point. But we believe that we are now currently geared toward after all this restructuring, carving out some of the businesses for leapfrogging and getting to the 20% to 25% growth that we wanted to get to. And we will be getting to that probably starting from the 2024 calendar year should see growth. Again, like I said, there’s this caveat that the economy will stabilizing.

We are on a steady state back before what we were in COVID times. Okay. Now coming to the second question on the blockchain, Karanjit, can you answer the leverage technology. And what we are seeing in the [Indecipherable]

Purushotam Savlani — Individual Investor — Analyst

Pardon me? My other part of the first question was with regard to struggling OM. See the domain what we operate in data transformation, enterprise solution, consulting, should nothing less than 25% to 30% OM which is what we see. I mean, kind of OM what we are delivering is generally delivered by staffing companies or for that matter infra services or DTS kind of organization. So why haven’t you started OM while one can understand demerge and because of that [Indecipherable] has not happened and other stuff. But as far as the OM percentage is concerned, why are we operating so low?

Niranjan Chintam — Chairman and Whole-time Director

Okay. Got it. Operating margin? So I missed that. You’re right. See you are right compared to the peers, right. For ours if you look on-site off-site delivery method, right? Now we do a lot of on-site deliveries. What you see that the other companies is that offshore is where most of the delivery happens. For us its few that are around We have one on one — purely from $1 firm, probably about 80% of our delivery from $1 term happens in the U.S. and Europe.

That is a reason why you see the operating margin level, which is low for us. Okay? We are trying to change that, given the size of the organization that we have. It will become a little bit of a challenge, but we are gearing towards that field which is the board recall the one counterintuitive, where earlier we had pockets of delivery, pocket of excellence of delivery happening from different fields.

And that is now a global delivery arms we are formed. And that we should leverage the benefits of as we call the low-cost centers like, India and also Poland, we are better geared towards that than what we were earlier. So that’s why its 2023 even the revenue as an operating margin will see adjust. Okay? So all the things that once we have this offshore center we’ll be able to get our margins to around 2.5%. We already have those sites Jeff that you’re not leveraging the way that we will work now what we are doing.

Okay? That is something that we have changed that model completely. So we should be getting better margins. We will get to the quantified incrementally, now we’ll get there. Yeah.

Purushotam Savlani — Individual Investor — Analyst

Okay.

Srinivas Potluri — Chief Executive Officer, US

Okay. Okay. Karanjit, do you want to answer the, second part of the question where the blockchain, the new API related stuff, like what we’re doing and what — how many customers kind of related to that?

Karanjit Singh — Chief Executive Officer, India

Sure. I think so, I mean, you have been on our previous call so we would have spoken about our key developed complete platform, NFT based platform, which is built on blockchain and crypto and a crypto wallet. And we talk about that a year back. And so we have the capability there. In fact, we have a sizable move again, because training on various blockchains and cryptos.

And we have a couple of customers, which are kind of leveraging their capability and developing further on from there, and actually we will create our own platform for people which leverages blockchain and NFT, so that different biographic, rapid deployment and of course, not more economical in terms of driving to them. And that’s why blockchains is continuously holds on in that area and that is developed. Hello? Your voice is little bit lower.

Purushotam Savlani — Individual Investor — Analyst

Sir, can you repeat, please?

Karanjit Singh — Chief Executive Officer, India

Sorry. Yeah. So, right now, the sentiment on the startups, which really use a lot of these technologies, is going to be lower than the funding. So kind of going along with whatever the market demand is. Coming to your AI question on arm, so obviously AI is in the various variants, but rather uses what we find frequently is basically application of AI basically is data, data engineering.

So that is something that keeps in the carriage of the new transaction. Having to deal with customers on the planet we are fall in terms. One of them had captured a lot of data and everybody wants to know use leverage to develop insights within personalize products are personalized to their customers. The other thing that was onshore, if you track that is creating a lot of right now excitement in the market is ChatGPT.

I mean, obviously, this is just about come in the last two months. We also have put this to sort of examine that in fact, we are doing a lot of internal initiatives including alkatone, which is like the real time some idea generation application of ChatGPT in solving real life that —

Operator

Mr. Savlani, your voice breaking, sir.

Purushotam Savlani — Individual Investor — Analyst

No, I’m not speaking.

Niranjan Chintam — Chairman and Whole-time Director

Karanjit, and I think your voice is breaking. Let me answer that for. Let me add to what Karanjit said. So we work with a number of start-ups unlike Karanjit was pointing out, we have built block-chain platforms for NFT. And NFT was away then now it is not anymore. But that platform can be leveraged to provide other block-chain solutions to our customers. And the AI part, yes, AI is a new buzzword that is happening all over the world, especially the ChatGPT. AI is like people are talking about is a specific task related AI is doing extremely well, and we are working with our customers.

And like Karanjit was mentioning, our new area that we are focusing on is on the data side of it, extracting meaningful, I guess, intelligence out of the tons and tons of data that is being generated. Every day, every year, I think it’s growing at an expansion rate. So that is something that we are currently working on. There are a few platforms that we have built internally, but we are leveraging to provide faster solutions to our customers. So that they can get meaningful information very quickly, what is — we’re not taking normal software development cycle, we thought back we’re able to leverage that. Those are the solutions that we are providing.

Now ChatGPT — coming to ChatGPT is probably a lot of curiosity on ChatGPT. There are a lot of use cases specifically the language related and activities around it. We have found Hackathon, like Karanjit has mentioned. And we are trying to come up with use cases. Some use cases we already have, a few additional use cases that we are coming up with so that we can talk to our customers about these use cases.

While Internet is — has a few use cases that they already have published about, but we are trying to get to industry-specific use cases within our customer base, so that we can talk real fully to them and say, okay, hey, this is something that we can do today. This is something that would require ChatGPT plus something else to get you to what we want to get to. So those are the different things initiatives that we are working on.

Purushotam Savlani — Individual Investor — Analyst

Okay. Thanks, Niranjan. In fact, I’m our new investors. So all that helps me understand what exactly we are doing. My question specific was with regard to India, are we seeing the demand outlook for block chain AI in India? How is the demand pipeline from India for you are looking like? Because I’m aware, I mean, block chain demand in Dubai or US etc, is there.

Niranjan Chintam — Chairman and Whole-time Director

Okay. So I guess, I misunderstood your question there. Karanjit, can you talk about that? Your Voice was breaking up, Karanjit India specific can you talk about block chain in India?

Karanjit Singh — Chief Executive Officer, India

Yes. I hope it’s clear now.

Niranjan Chintam — Chairman and Whole-time Director

Yes. Yes, go ahead.

Karanjit Singh — Chief Executive Officer, India

Yeah. So specifically to that question, we have not had if I were to ask you the demand that we have seen for block chain in India has not been the kind that we see let’s say in the US or Dubai, as you mentioned. So it’s been — here it still continues to be people focusing on their customers, focusing on building their digital product, which is essentially the whole digital side, mobility and all that thing. The blockchain, no, not too much demand in India per se.

Purushotam Savlani — Individual Investor — Analyst

Okay. Okay. Thanks for answering my question. Wonderful talking to you Karanjit and Niranjan. Thank you.

Karanjit Singh — Chief Executive Officer, India

Okay. Thank you for questions.

Operator

Thank you. We have our next question from the line of Bhumit Shah [Phonetic], an Individual Investor. Please go ahead.

Bhumit Shah — Individual Investor — Analyst

Hello.

Karanjit Singh — Chief Executive Officer, India

Yes. Hi, Bhumit. Go ahead.

Bhumit Shah — Individual Investor — Analyst

Hi. This is Bhumit here actually. My question is actually, you talked about — I think I was there on last con call as well. I think there you spoke about this One Kellton initiative actually. And today’s con call, you mentioned that actually, I think it’s a finishing line and we are one quarter away to just get it completely rolled out. So just wanted to understand from you, actually, one quarter, I mean, you are talking about this quarter ending this March or first quarter of next financial year?

Niranjan Chintam — Chairman and Whole-time Director

This quarter ending is what we are talking about.

Bhumit Shah — Individual Investor — Analyst

This March quarter, right?

Niranjan Chintam — Chairman and Whole-time Director

Correct. Yes.

Bhumit Shah — Individual Investor — Analyst

Okay. And how we — and once this initiative is rolled out actually fully, how we are planning to take the leverage on to our company’s overall performance and all actually. So can you just briefly elaborate on this?

Niranjan Chintam — Chairman and Whole-time Director

So I think we talked about this, Bhumit before in the previous call. So I’ll let Karanjit also jump in where they can add more value than I can on this. The initiative is meant for earlier like we talked about, right? We were selling in specific what we call verticals in technology as a separate business unit is what we’ve been doing. So what that was doing was they were only selling their bid and not the complete Kellton capabilities that are available to our teams. So that vows have been broken. Now everybody is on the same page as well as they understand all the capabilities that Kellton brings to the table in stuff that particular vertical that earlier that people were selling.

So we are now able to provide a complete end-to-end solution seamlessly to an enterprise compared to what we were earlier. That is one, from a customer point of view. The second point is from the employee. The employees are now able to grow in the Kellton organization versus the BU that they were growing. So there’s a renewed effort of the employee retention perspective, career growth perspective. People are seeing, hey, I can go from, let’s say, I’m just making stuff up, from India to Europe to U.S. or in other way around where people are coming from U.S. who want to locate to India.

They’re saying, okay, hey, this is great. We can do similar work wherever you are in the global organization or new roles that they can get, okay, within the organization. And customer is getting a complete end-to-end solution, which was — yes, we were saying that, but we were not doing it. Now we are saying and they’re doing it is what the One Kellton Initiative is. Karanjit, Srini, anything you want to add to that?

Srinivas Potluri — Chief Executive Officer, US

Yes. Niranjan, I think you covered it pretty adequately. I think the One Kellton initiative is threefold. Like Niranjan mentioned, one is customer centricity. It improves end-to-end solution possible to the customer from a perspective of portfolio of services. And from a growth perspective, it removes all the barriers, whether it be geo-based or BU based. And then thirdly, the employees, right. It makes a lot of sense for employees to be part of our organization that is consolidated and that has opportunities at a global level. Those are the three main points we started off on the [Indecipherable], basically to remove any barriers that might be there from a growth perspective.

Niranjan Chintam — Chairman and Whole-time Director

Thank you, Srini.

Srinivas Potluri — Chief Executive Officer, US

Thank you, Bhumit.

Bhumit Shah — Individual Investor — Analyst

Okay. Thank you so much, Thank you so much.

Operator

Thank you. We have our next question from the line of Rajesh Mundra from Anubhav, please go ahead.

Niranjan Chintam — Chairman and Whole-time Director

Hi, Rajesh.

Rajesh Mundra — Anubhav — Analyst

Good evening, sir.

Niranjan Chintam — Chairman and Whole-time Director

What can I do for you?

Rajesh Mundra — Anubhav — Analyst

What is timeline for company to achieve revenue of INR1,500 crore.

Niranjan Chintam — Chairman and Whole-time Director

I don’t want to be in that game of giving you some timelines there. We’ll always appreciate you asking that question. We do want to get to that INR1,500 crores sooner or later. Currently, we are working on smaller targets, looks like what they call in cricket, right? So let’s work on the next 10 runs or something like that. Right. So we are working on the next 100 million. And our targets for 100 million is enormous in the next three years or less, is what we’re targeting for getting there. This is pure organic.

Along the way, if there’s something inorganic, you know, we’ll definitely look at that. But we’re not actively looking for inorganic growth. So our current goal is to get it 200 million 300 million is what we have put the target for. And then we start working on building on that. As we are building more and more muscle like we will be more and more confident into taking larger customer revenues.

Today we are working on 10 million plus revenues but we now want to get to a stage where we can get probably 20 million — 30 million plus revenue per customer. And we need to build a scale for that and building up the scale and not requires a lot a lot of capital, muscle power when it comes to leadership level, as well as the staff that is able to deliver that kind of capability.

So yes, we are building to get to the next billion company, but we do — are mindful of having smaller targets, to achieve them, and then work on a larger one. Otherwise, we might lose focus, and might be doing something that we should probably shy away from or another to that temptation. Thank you, Rajesh.

Operator

Mr. Mundra, you have two different questions,right.

Niranjan Chintam — Chairman and Whole-time Director

Move on to the next call.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Shahnawaz [Phonetic], an Individual Investor. Please go ahead.

Shahnawaz — Individual Investor — Analyst

Hi, sir how are you.

Niranjan Chintam — Chairman and Whole-time Director

Good. How are you?

Shahnawaz — Individual Investor — Analyst

I’m fine. How are you, sir?

Niranjan Chintam — Chairman and Whole-time Director

Good, good. What can I answer for today, Shahnawaz?

Shahnawaz — Individual Investor — Analyst

Sir, so far — I feel like — the sweet 16 is now your favorite number. I can see the quarter number CAT [Phonetic] is always 16. So as well 16 is favorite.

Niranjan Chintam — Chairman and Whole-time Director

I don’t why came Shahnawaz we don’t have that…

Shahnawaz — Individual Investor — Analyst

So actually yes, so people have asked this question, many of us. I have two regulatory questions because I will not ask when we are going to increase the bottom line? Because bottom line, I don’t know, I’m not sure how it’s going to happen because last four, five quarters, it is flat. And my question is, like, as of now in December — as on December, how is our healthiness of cash flow? How much cash in hand is there? And my second question, what is the order book we have as on 31st December?

Niranjan Chintam — Chairman and Whole-time Director

So, I’m going to take the second question first because I’m going to — I need to pull up the cash because we don’t — I don’t have it handy. I’ll pull it up, I’ll get my team to pull up the stat portion shortly. But to answer your order book side. So, typically, we have eight to nine months of order book, revenue-wise. So, if you’re looking at, let’s say, I’m just making numbers roughly INR800 crores is what — over INR800 crores is what we would achieve or close to INR900 crores is what we would achieve for this year.

So, of that eight to nine months of thesis what we have or three quarters of a year revenue is what we would have an order book. So, that is a thing. But I’ll answer a question because our team is going up the cash number. As we go on, I’ll answer that question here. I think from a perspective of cash–

Shahnawaz — Individual Investor — Analyst

I will ask one more question sir. Ratio of employees, like I was listening to you. You said the employee, we have onshore more and offshore less. That’s why the PAT is always we are seeing the appraiser [Phonetic]. So, now sir, from previous year to this year, how is the ratio changed? And what is the total strength of manpower we have? And what is the future like you are looking at? Any forward guidance you’re looking — you want to hire because there is slowdown. I was reading always in newspaper, there is a — people are Facebook is tracking people, I mean, Google is tracking, Amazon is tracking people.

So, whether in your case also you’re going to, I mean, re-hire people or it’s like if you want to increase? And what is the strength? And how is the ratio now — what is in the US and what is in India? And how you see like future, like where you want to plot that. So, that as an investor, I would also — I always will wish here price would go up. As — Kellton as a whole, whoever is available here and across we bought, they will be happy if the share price — and you know that share price goes up only when the bottom price — bottom-line goes on.

So — and everybody in the call, I feel like eagerly want to understand and want to know how — because one of the fellow company Axis Care I was attending their call yesterday, so they have given a guidance — 400 to 500 basis points of EBITDA margin, they want to improve. They have the intent to improve. They have to improve in next two to three years. So, is there any kind of commitment or I mean, like any kind of target — I mean at least wishlist that you want to have it, sir?

Niranjan Chintam — Chairman and Whole-time Director

Okay, sure. Let me first answer the question related to the number. Today, we are over 1,800 employees. And of them, 1,400 are in India. Rest of the 400 are spread over the world. Of that, 400 is in the US and then European then some in Asia-Pacific. Okay, to answer your question about hires. We are very selective while we have probably, I would say, about 200 open positions that we have today. We are looking and listening to what the — not the street, but what the industries are saying. While there is no slowdown in some of the initiatives that we see in US and India but we are seeing hedgings right, where the customer are saying, hey, 2023, we would like to talk to you about possibly looking at public reengaging or slowing down on the initiatives that we have.

So, we are being very careful selective in hiring. With that said, right, our recruitment team is actively hiring people. What the number is, I don’t want to say today, probably a quarter from now, I would have — probably when we have our call in May, I would be able to give you a better assessment, because by that time, we will get some indicator of what is going on in US. While Europe probably is going to be a difficult story, we — and India is on the hiring revenue-wise, India is growing for us, we’re also seeing that the margins wise, employee costs have gone up dramatically and that is something that also is putting pressure on our margins for some of the questions that the earlier callers have asked.

So, that is something that we are very careful. So coming to the margin side, at this point, I don’t want to predict and say, okay, this is what it is. Our ambition is to get to an EBITDA of closer to 20% by probably 2024 is what we are thinking. I’m talking calendar year 2024 — I’m sorry, financial year 2024, we like to be closer to the 20% than what we are today. We were at one point in our highest numbers. But we have lately pulled back that is a reflection of increase in our labor cost. Yes, we are hiring also for the projects in anticipation, and that is continuing on.

We do see some slowdowns in some pockets. But not as a general rule everywhere. Okay. I hope, I’ve answered your question, but beyond that, right, I cannot give you a specific, because I’m still on a wait and watch mode of what is happening in the industry.

Shahnawaz — Individual Investor — Analyst

Yeah, yeah, sir. Thank you. And how is quarter four you are looking for? Is it like at least now we are in mid of February. So, I mean — the 45 days.

Niranjan Chintam — Chairman and Whole-time Director

I cannot give that information out, because just can’t do that.

Shahnawaz — Individual Investor — Analyst

Yes, sir?

Niranjan Chintam — Chairman and Whole-time Director

I said I cannot give that information out because I will be in trouble with the exchanges, if I give some information like that.

Shahnawaz — Individual Investor — Analyst

Okay. Okay. Okay. Perfect. Thank you.

Niranjan Chintam — Chairman and Whole-time Director

Thank you.

Operator

Thank you. Thank you, sir. We all wish that our collective wish and your great effort, leadership could bring the best of the resolution. Thank you.

Niranjan Chintam — Chairman and Whole-time Director

Thank you.

Operator

Thank you. [Operator Instructions] We have our next question from the line of Nikita Bansal, an individual investor. Please go ahead.

Nikita Bansal — Individual Investor — Analyst

Hi. Am I audible?

Niranjan Chintam — Chairman and Whole-time Director

Yes, yeah, Nikita, go ahead.

Nikita Bansal — Individual Investor — Analyst

Sir, I have two questions. The first one is, how is your Europe strategy going? And the second one is, earlier, you had talked about writing off goodwill and shrinking the balance sheet. So have you decided on the strategy for this?

Niranjan Chintam — Chairman and Whole-time Director

Thank you, Nikita for the question. Let me first answer the Europe one. Europe, in our last calendar year has been a challenge for us. We have recently made some leadership changes there that will improve our margins in Europe as well as you know, we’re looking at to continue to grow there. While 2023, like I said earlier is going to be a challenge. 2024 onwards, we are anticipating that it will be on the growth momentum then what is what. And this was a change in strategy because some of the initiatives that we did — did not work out for last year, but hopefully, by for 2024 calendar year. 2023 is going to be challenging. 2024 onwards, you know, we should start seeing the implementation of the plan that we had earlier.

Answering you question about the balance sheet shrinkage. This is something that, you know, we struggle with every year where we say, okay, hey, what do you do the goodwill? Goodwill is sitting very [Phonetic] under balance sheet, and also our balance sheet is bloated a little bit. So we have hired a consultant to help us with come up with a strategy. So we are in active discussion to see if we can do a one time right off of goodwill. And any other things that are on the balance sheet that are causing this bloated mess of the balance sheet.

We are actually talking to our CPAs all over the world to get their feel for you know what, what we can do without causing major problems to the existing banking, relationships and performance that we have. So we are actively talking to them. So we would be in a better position by probably a month or two from now to make a decision. So but to answer your question, yes, we are leaning very heavily towards — taking one time fit on the balance sheet to create — an uplift more than bringing up [Indecipherable shrink the balance sheet size. So that some of the ratio and the cost is that all of you have asked main main plan on why not just pick a hit — one time hit and right off goodwill.

So that we’re looking at. What we are looking at is probably is more from you know, creating a below the line, kind of, what is the other line hit? So those are some of the things that our consultants have been talking to us. And we will definitely make a decision this time and shrink the balance sheet as much as possible. So that the coming year you will have better ratios when it comes to ROE and ROCE. So those are the things that we are looking at. And so they — didn’t walk through what I will say, but you know, but we are definitely leaning towards taking the hit. Thank you, Nikita.

Nikita Bansal — Individual Investor — Analyst

Thank you.

Operator

Thank you. We have our next question from the line of Sanjay [Phonetic], an Individual Investor. Please go ahead.

Sanjay — Individual Investor — Analyst

Hello. Hope I am audible?

Niranjan Chintam — Chairman and Whole-time Director

Yes, Sanjay. Go ahead, Sanjay.

Sanjay — Individual Investor — Analyst

Yeah. Seeing I am seeing that you have — the quarter three was again because what I actually hear that one Kellton — one Kellton initiative is sagging [Phonetic] almost at the end. As well as it was again the quarter where really we — I mean, solid quarter for the IT company. Demand coming that there is a 3% increase in [Indecipherable] for Q2. And yeah, bottom-line is I’m not saying that, yeah, I understand that. And — so I wanted to call that how you see I mean, you have number that’s what we saying that can’t be number but are you saying that quarter four and quarter one of next year, are intending to be better than Q2? Because I see it be better than Q2 from the [Indecipherable] what I meant perfectly.

Niranjan Chintam — Chairman and Whole-time Director

So Sanjay, you are right. Generally, Q3 for us is technically not a great quarter when it comes to customers and our revenue because of the slowdown in US and Europe. And also number of holidays that are there in the end of the year timeframe in the US. So to answer your question on the margins, right, we just did an appraisal in January of this year. This is a standard cycle for the calendar that we do for our employees, as our salaries have increase. So there will be some effect for this quarter to when it comes to the margin side of it.

From a revenue perspective, I just can’t give you some guidance at this point in order to have getting into trouble. So I just don’t want to do that. But the numbers-wise probably, I would say the margins would be around the same that is all I can predict at this point, because of the increase in another cost again. But, what we have cast — Srini and Karanjit have cast sales our people all over the world is, while our labor cost is going up, our bill rate has gone up proportionately. So we’re taking the challenge of increasing the bill rate. And there are active discussions with customers.

And, saying no to customers were in our margin is not to what our requirement is. But that is a work in progress, so it will not be one quarter we’re going to get all of that. But starting probably Q1 next year is when you start seeing margin improvement when comes to that. And it’s nothing to do with one type of insurance, just that, the cycle of target service as well as customers willingness to pay more given the headwinds that we’re facing and economy all over the world.

Sanjay — Individual Investor — Analyst

Sure, sure. And one more question about — yes, you just mentioned about you’ll be having annual appraisal, which should be for this quarter, but are you hiring freshers or how many freshers or new hire in the year, I mean —

Niranjan Chintam — Chairman and Whole-time Director

To answer question on fresher hired, yes the salary appraisal has happened in January, month of January. So that is now past, we have done that, and it’s done. Coming to hiring a freshers, I’ll let Karanjit answer that. But last year, I think we were over 100 freshers what we hired. What is the plan for this year, I’ll let Karanjit answer? Karanjit, can you take that?

Karanjit Singh — Chief Executive Officer, India

Yes. Thank you. Yes, last year, as Niranjan said, we hired almost much more than what we usually do. So that is about 150 and we’re team sort of jobbing them into projects. And for this year our plan is to be doing about somewhere between 50 to 75, as we see the — as we progress during the year.

Sanjay — Individual Investor — Analyst

Sure. Thank you, Karanjit. Because last quarter, you sort of interview review that you’ve has some information about different rooms and maybe a highlight of the quarter. I haven’t since early the PR of the last quarter on that. So going to be a number of release or orders release in last quarter, are these now better than the last Q2, I mean — so how you’re seeing that business — now on that.

Niranjan Chintam — Chairman and Whole-time Director

Yes. So, let me answer that Sanjay. I think that was an oversight from our teams that number is. We’ve had seven new customers that we’ve added last quarter is just that we have not included that. And generally, you hadn’t expect this quarter or last quarter is not a great time to add new customers.

Again, activity slows down starting November, and it will go back to, again, back to normal starting February when the customer starts opening up. So we would anticipate that it will start picking up this quarter again compared to what it was last quarter.

Sanjay — Individual Investor — Analyst

Sure, sure. Thank you. And just I have a last question. I’m saying that definitely, I mean, growth has been consistent happening and it’s not going down. Only now, I know the share price is not in your control. That is something market decides. My question is about, are you having any discussions or any investor needs or analyst needs? I’m not seeing an even much of the meeting happening analyst meeting happening and recovering this company. So are you planning something already having it? Or what’s your plan to get more coverage from the investor analyst?

Niranjan Chintam — Chairman and Whole-time Director

Okay. So we have done a lot of analyst meetings in pre-COVID time. We have not done post-COVID. We do want to do that. That is one of the reasons why enough as we’re trying to get some external validation Zenova is one initiative, since we have another rating or analyst companies like Zenova to get us. So there’s a lot of — we’re going to start because now COVID — it’s now post-COVID time, travel has opened up, we would be actively getting involved back in the analyst/waiting/other activity, marketing related, PR agencies.

There’s a lot of initiatives for this calendar year that we have restarted that we have stopped over the last two, three years. So yes, we would start — you’ll start to see those taking place soon.

Sanjay — Individual Investor — Analyst

All right. Thank you. Thank you very much. Definitely we see you on the board.

Niranjan Chintam — Chairman and Whole-time Director

Thank you, Sanjay.

Operator

Thank you. [Operator Instructions] We have a question from the line of JP Dutta Gowda, an individual investor.

JP Dutta Gowda — Individual Investor — Analyst

Hi, there.

Operator

Your voice is coming muffled.

JP Dutta Gowda — Individual Investor — Analyst

Am I audible?

Operator

No, there is some issue.

Niranjan Chintam — Chairman and Whole-time Director

There’s some static. If you want to take me off speaker and just speak from the headphone itself.

JP Dutta Gowda — Individual Investor — Analyst

Am I audible now?

Niranjan Chintam — Chairman and Whole-time Director

Yes, you are. Go ahead.

JP Dutta Gowda — Individual Investor — Analyst

Hi. Thanks for giving me opportunity to ask a question. So even then I read your annual report back you mentioned that we will soon reach to INR200 million of revenue. But the way you are going, I think it will take more time to business, right? Because the revenue, even though we are — every quarter, we are — our deal like increase in it. Last quarter, you sold 10 clients. This quarter also same thing. So how many — don’t have repeating customers or they are moving from here and there per say, our revenue stands straight, right? It’s flat, I would say, three, four years [Indecipherable]?

Niranjan Chintam — Chairman and Whole-time Director

I think your voice is pretty bad. Can you mute yourself? I’ll answer your question. I think I’ve asked your question. Let me answer your question. So Dev, our strategy has always been twofold, right? For us, 80% of our revenue comes from existing customers. So what Vivid and [Indecipherable] have now been tasked is to get or increase the per customer revenue from X to Y or three times is what we’re just talking about, right? So the two times revenue from existing customers is where we are going to leverage and get more out of existing customers right, while these new customers that we acquired is for the long-term prospect, for the short-term to increase in revenue we are working with the existing customers to get two times revenue from the existing customers.

In some cases, what we call the main account, our customer base marketing initiatives right that we are started off. We have identified, categorize the customers into multiple buckets, where we believe we can get more revenue, getting addressed with client or customer base, marketing to get more revenue out of them. So we are inactively and aggressively pushing to increase the revenue from a customer. We are also looking at new customers, because we do want to get additional customers, it will take anywhere from six months from year to get significant revenue of new customers, but it’s easier to sell to our existing customers.

So that initiative has already started. And there is a renewed emphasis and focus this year from changing levers and currently to get increase our poor customer revenue from X to two times.

JP Dutta Gowda — Individual Investor — Analyst

Thank you, guys.

Operator

Thank you. [Operator Instructions] As there are no further questions so I hand over the call to the management for closing comments over to you sir.

Niranjan Chintam — Chairman and Whole-time Director

Thank you. Thank you everyone for joining our Q3 Earnings Call. We’d love to meet and talk to you more. Looking forward to seeing to you on the next call and all if you have any questions, please reach out to us and we’ll be happy to give you more information and also for you could come and meet our employees and understand that more.

I really appreciate all of you for the continued interest in Kellton, we good to see you later Thank you for your questions. And now, we will be doing most of this, as we will be starting it in Q1 of next year. Thank you everyone.

Operator

[Operator Closing Remarks]