MSTC Limited (MSTCLTD) Q3 FY23 Earnings Concall Transcript

MSTC Limited (NSE:MSTCLTD) Q3 FY23 Earnings Concall dated Feb. 13, 2023.

Corporate Participants:

Surinder Gupta — Chairman/Managing Director

Subrata Sarkar — Director Finance

Analysts:

Anish Manek —

Nikhil Chandak — JM Family Office — Analyst

Vikas Kasturi — Focus Capital — Analyst

Dixit Doshi — Whitestone Financial Advisors — Analyst

Keshav Garg — — Analyst

Harshal Jain — RAH Investments — Analyst

Rahil Shah — Individual Investor — Analyst

Unidentified Participant — — Analyst

Sunil Shah — Corporate Club — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the MSTC Limited Third Quarter FY ’23 Earnings Conference Call, hosted by Equirus Securities. As a reminder, all participants are in listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] Please note that this conference is being recorded.

I will now hand the conference over to Anish Manek from Equirus Securities. Please go ahead, sir.

Anish Manek —

Thank you. Hello, everyone. On behalf of Equirus Securities, I welcome you all to Q3 FY ’23 earnings conference call of MSTC Limited. From the management, we have with us today, Mr. Surinder Kumar Gupta, Chairman and MD; Mr. Subrata Sarkar, Director of Finance; and Mr. Ajay Kumar Rai, Company Secretary. We will begin the call with opening remarks from the management and then we can open the line for the question-and-answer.

Now, I’ll hand over the call to Mr. Surinder Kumar Gupta. Over to you, sir.

Surinder Gupta — Chairman/Managing Director

Yes. Good morning everybody. All our investors who are present in the investor call, your company is doing very good and the performance — overall performance for three quarters for current financial year is better than the last financial year. Our total revenues have grown from INR185 crores to INR202 crores. I’m talking about the stand-alone basis. And our profit also before tax has increased from INR142 crores to INR206 crores.

In e-commerce, the company is increasing its footprint and trying to add in more customers. One very good development that has taken place, which will benefit MSTC in two ways is about the recycling sector. Government of India has issued a notification that all vehicles, whether the central government, state government, panchayat, any public sector units, vehicles which are older than 15 years will be compulsory deregistered and those vehicles will be sold on MSTC portal only. So this will give us a good market for the MSTC for sale of EMV. Apart from that, our joint venture company, MMRPL, which was working below capacity because of the non-availability of end-of-life vehicles, those units will get sufficient feedstock per processing. So I’m sure this development will benefit MSTC directly in their e-commerce revenues, as well as it will benefit our joint venture company, MMRPL, who have more vehicles and not only breakeven, but even earn profits in the next financial year. So this is one very positive government for us.

Another thing that investor communities always and just to know about the S&L. So I want to inform all that this investment process, which is carried — being carried out by DIPAM is progressing well. And depending upon — now it is basically has this very definite level. A number of meetings have been held, and DIPAM is very — I mean DIPAM wants to close this deal as soon as possible. So it could be in next quarter or next two next quarter, you will need — you will get some news on that front. We are not still sure about the time line that the total process is being steered by DIPAM, and we are giving them all the spot that is required.

So with this, I’ll hand over to our Director of Finance, who will tell you more about the financial figures. Thank you.

Subrata Sarkar — Director Finance

So good afternoon to everybody. And just as you — as our CMD has briefed, it was a very robust nine months performance. So going by that volume part during nine months 2022 to ’23 company crossed a volume of — in the e commerce INR162.6 billion in terms of value of goods transacted through its marketing and e-commerce vertical, which is 52.16% increase over the value of goods during the same period in ’21, ’22. So far, consolidated revenue of the group is concerned, it is INR46.79 crores during nine months ’22/’23 vis-a-vis revenue of INR699.48 lakhs in nine months ’21/’22, the same trajectory. But the PBT is INR218 crores as compared to INR167.63 crores after last corresponding period, increased by 30%.

And PAT, it is INR165 crores as compared to INR103 crores increased by around 60%. So it is a robust growth in the group as well also — as well as in the stand-alone, driven mainly by our e-commerce growth. Now coming back to stand-alone financials, as you can see that this total revenue, although it has shown a dip from iNR409 crores to INR367 crores, but that EBITDA re-provisioning has gone up from INR169.79 crores to INR289 crores. And profit before tax has grown from INR142.51 crores to INR206 crores and profit after tax, PAT has grown from INR88 crores to INR163 crores and EPS from INR12.61 crores to of course INR23.18 crores and the cash profit INR113.49 crores to 245.48 crores, so it is a growth of around 50% — 50% plus.

If we go by the segment wise, we can see that the e-commerce revenue has grown by 19% from 205 to 244.85 and marketing revenue has shown a dip from INR185 crores to INR97 crores. So with this, the profit after tax has grown from INR88.74 crores to INR163.17 crores. Now that consolidated group-wise. Group-wise revenue almost driven on the charted trajectory, dip of around 7% from INR699.48 crores to INR646.79 crores and EBITDA, the quantum jump from INR210.99 crores to INR314 crores. And provisions write-off et cetera taken care of the profit before tax has gone from INR167.63 crores [Indecipherable] crores. Profit after tax INR103 crores to INR165 crores. So accordingly, the group earnings per share has grown from INR14.65 to iNR23.44. that is a jump of around 60%.

And so far PL is concerned, you can see that the total revenue has although has gone down in a stand-alone basis and in the consolidated basis, but our profit before tax on a stand-alone basis is up from INR142 to INR206.7, 45.05%; and PAT from INR88.74 to INR163.17. And in the group and the consolidated basis, it has — PBT has grown from INR167.63 crores to INR218.09 crores, up by 30%. And PAT INR103.15 crores to INR165 crores, up by around 60%.

So that is all from our side. Now we hand it over to you for your feedback, please sir.

Surinder Gupta — Chairman/Managing Director

Hello. Now we can go for questions-and-answer session.

Questions and Answers:

Operator

Ladies and gentleman, we will now begin the question-and-answer session. [Operator Instructions]

The first question we have is from Nikhil Chandak from JM Family Office. Please go ahead.

Nikhil Chandak — JM Family Office — Analyst

Yes, hi. My question was if you could share more details — granular details on the scrappage business, what exactly is the business plan — the company is investing roughly INR1.5 crores is what I read from the press release to the JV. Is that amount sufficient to gear up for the opportunity, which is coming up in scrappage over the next few years? Like how many centers you have to — how many centers do you target to go to the competitive intensity? What is the EBITDA you make per scrapped vehicles? I think if you can share some more granular details about this leg of the business, that will be very useful.

Surinder Gupta — Chairman/Managing Director

Okay. Right now, we have six plants in operation and few more plants are coming that will be — we are targeting for operations in the current financial year. What was — actually this iNR1.4 crores that we are basically investing more, so that will be basically whatever was the authorized share capital that will be fully subscribed, that is one reason. And as far as our company and MRPL is concerned, they have funds at their command because we have received INR30 crores. So they have already funds so that there is no constrained as far as the capacity addition is concerned.

Basically, we were very cautious in expansion because the number of vehicles were not coming from the public as well as the government also. And now government has realized that with the sort of incentives and the policy initiatives government has taken — when the policy was announced in September ’21. Since this is a basically state subject to a state subject, states were taking some time in understanding the implications of this policy. And there were certain incentives and which is far in terms of reduced road tax concessions. So what has happen is the states were initially not coming for — they were not so ready to come out with their own policy notifications to give effect to these guidelines in their states. But center has been very clear on this, that this is a basically benefit which will accrete to states in terms of more vehicles will be registered in the states.

Apart from that, center announced a grant of INR2,000 crores, total grant of INR2,000 crores with the state size, some states getting INR300 crores, some states getting INR50 crores. That kind of — all these states were categorized based on their prices. So the center laid down the guidelines that if you do these three things then this grant will be released. So there were three main points in that. One was that you issue your policy notification so that you can license the RBS. Second was you allowed the tax concession and waiver of the pending rules. And third was you take the decision about the scrapping of worn vehicles. So with that, states — now 16 states, 16 or 7 states have already announced the policy guideline. Number of states have announced the Rotex concessions, six states have announced as an date that they will basically issue not — they have issued notification for government vehicles scrapping beyond 15 years. So RVS [Indecipherable]

So now the cases are coming in a very weak way for implementation of policy in their states. So with this in mind, we are open to basically — we will be always looking for the opportunity to open more plants. Apart from that, because the vehicles were not coming, so we were doing — basically we’re setting up the plant on a very frugal budget. We were not spending too much because we were getting certain losses from the JV because we are not getting the adequate number of vehicles.

So we are working below the capacity. So now we hope with these developments we’ll be starting getting more vehicles. And as we see — and our period for setting up a new plant is not very large. So it’s three to four months. So as and when we see some traction up, we’ll be adding more plants. Apart from that, when it is not only the plant, we have had the collection centers also. So near a plant in 200, 300 kilometers range, we have basically tied up for the collection centers, where the vehicles are collected.

And when we were sufficient load is there, those are transported to these facilities. So wherever collection centers are there, and we see that there are record number of vehicles so that gives a good data point to set up a plant there only. So by the end of the financial year, we’ll have total eight or nine plants. And in next year, depending upon how the total things go, we can open many more plants and we are very open to infuse further equity also. So there is no ambiguity on that.

Nikhil Chandak — JM Family Office — Analyst

Understood. Sir, how much capex per plant do you need to put in for one scrappage plant?

Surinder Gupta — Chairman/Managing Director

I’m not — basically that figures cannot be given because every plant will need a different kind of facilities depending upon the number of vehicles we are getting. A plant may have a INR50 — INR70 crore, INR80 crore capex also, a plant may be with a very less capex. So that’s not the issue. What we’ll see is as and when we things become clear, we are ready to infuse more funds into the company. That’s what [Speech Overlap]

Nikhil Chandak — JM Family Office — Analyst

And sir, last question is, if you could even broadly share the revenue metrics or the P&L metrics for, say, if one car is scrapped at your facility, what is the revenue you earn out of that, just the act of scrapping? And what is the margin you really make on that? I’m leaving aside the sale of scrap. Just the scrappage — what revenue do you make and what margins do you make on scrapping, say, one car, for example?

Surinder Gupta — Chairman/Managing Director

It’s a very, very — not a very straightforward answer I can give you. It depends upon the kind of vehicle I get. Like if I get a vehicle in good conditions and I may able to sell certain spares also. It’s not that you melt whole thing and that’s not the purpose of any policy. You can always reuse certain spare parts. And whatever is not usable, that has to be basically recycle. So there are twin purpose of that. So it is a value a vehicle may give me 30% return, a vehicle may give me a 10% return. So its a very definite figure, it is very difficult. And of kind can give me even return of 50% also. So there is no basically definite — on the average, it’s a good business. On the average, if we get the sufficient capacity — it’s a very good business proposition. That is what I can —

Nikhil Chandak — JM Family Office — Analyst

Based on the cars you would have scrapped so far. I’m just looking for an average number, like what is the average revenue per car scrap you make, for example?

Surinder Gupta — Chairman/Managing Director

It’s not possible to say, definitely this season because there are a number of fixed costs, the labor cost that you ply whether we process the 40 cars in a month or you process 400 cars so that will be distributed over the basically, Similarly, my lease rent, my security charges, all these charges will be adding up to the vehicles I process, isn’t it? So the more vehicle size we get, the more profit are get in that. So very difficult to say a number — definite number on each vehicle or even an average figure on each result. Let us reached some capacity of, let say, 50%, 60%, 70%, then we’ll be able to say something with certainty.

Nikhil Chandak — JM Family Office — Analyst

Sure. Thank you.

Surinder Gupta — Chairman/Managing Director

Thanks.

Operator

Thank you. The next question is from Vikas Kasturi from Focus Capital. Please go ahead.

Vikas Kasturi — Focus Capital — Analyst

Hello. Good afternoon, sir. Am I audible?

Surinder Gupta — Chairman/Managing Director

Yes. Good afternoon.

Vikas Kasturi — Focus Capital — Analyst

Hello sir. So I had a couple of questions. The first one is, does our e-commerce business have a realistic chance of touching the INR300 crore mark this year, sir? I think we are at about INR240 crores, INR250 crores, so would be likely to touch INR300 crores or go beyond that this financial year, sir?

Surinder Gupta — Chairman/Managing Director

Another question, sir?

Vikas Kasturi — Focus Capital — Analyst

Yes, so the other question is on Slide 5 of the presentation. Under e-commerce, there is other income within e commerce on Slide 5 of the investor presentation. So could you please shed more light on what is this?

Subrata Sarkar — Director Finance

Yes. So first of all, I must answer you, like you have rightly pointed out it is 245 this time. So like it all depends upon what happens. We have seen in the past also, like in the year, if you can recall in the year 2020, everything was going very fine, all of a sudden in the month of March COVID came and everything was foil. So it all depends upon if the circumstances remain as it is. So of course, that altogether saying, right from the IPO in the last three years, we are keep on saying, keeping on saying like it is e-commerce-related growth and it will commerce and it has happened. E-commerce has grown by leaps and bounds. So it all happens, if the circumstances remains positive. So I think we’ll be able to end up in a very positive results so far when we meet you people after the final results for ’21, ’22.

And like — regarding your second question, so we — as a e-commerce operator, sometimes some — we derive some indirect revenue also like other fees, et cetera, et cetera. I think this is all about like that only. Nothing special. It is just — it is not directly because of the service charge, some other revenue fees, et cetera. So it is all about like that only.

Vikas Kasturi — Focus Capital — Analyst

Sure. Thank you, sir. I would just like to also place my request before the management. Sir, my humble request is that right now, the investor presentation is more or less the same as what you have in your quarterly filings. It’s pretty much the same numbers presented in presentation form. And I am sure myself and a lot of other investors would like to know more about the nature of the business. So for example, what are the growth drivers in each of the lines of business. So in the case of — so for example, the previous speaker, he asked the questions about the scrapping and I had made similar notes that these are the kind of things that we would like to know more about, say, the scrapping business.

In the e-commerce business, we would like to know what are the growth drivers, what are the different kind of auctions that we conduct — the number of auctions that we conduct. So we would like to know more details about the business. And the more you tell us, the more we would be educated. So my request to you is to please make the presentation more detailed and more granular. And so that I will place it before you, sir. Thank you.

Surinder Gupta — Chairman/Managing Director

Okay. I would understand your concern. We’ll see how we can address your concerns in the next presentation.

Vikas Kasturi — Focus Capital — Analyst

Thank you, sir.

Surinder Gupta — Chairman/Managing Director

Thank you. Yes, next question please.

Operator

Of course. The next question — [Operator Instruction] The next question we have is from Dixit Doshi from Whitestone Financial Advisors. Please go ahead.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Hello. Can you hear me?

Surinder Gupta — Chairman/Managing Director

Yes.

Subrata Sarkar — Director Finance

Yes.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yes, thanks for the opportunity. Sir, my first question is about this first in the opening remarks, you mentioned about the notification that all the old — 15-year old vehicles will be sold on MSTC platform of all the PSUs and government vehicle. So this above 15 years will be sold on your platform or it will be scrapped?

Surinder Gupta — Chairman/Managing Director

Please repeat your questions. Sold on platform or?

Dixit Doshi — Whitestone Financial Advisors — Analyst

Or it will be scrapped. All 15-year old vehicle will be scrapped or it will be sold in, let’s say, market on our platform?

Surinder Gupta — Chairman/Managing Director

Both Mr. Doshi, all will be scrapped and it will be sold on our platform. And one more thing, it will be sold to only RVSM. So the people who are authorized to process these vehicles under the central notification. So it will be sold to only those people. So there will be compulsory scrap, they will be sold through our portal and those will be sold only RVSM.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. So basically, let’s say, if our JV with Mahindra wants to scrap this vehicle, they will also participate on the — our platform’s auction, and they can win there and scrap.

Surinder Gupta — Chairman/Managing Director

Exactly.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. Understood. And is there any rough estimate that how many vehicles would be there right now above 15-year-old only the state government, government in PSU?

Surinder Gupta — Chairman/Managing Director

Yes, what the government figures, we are getting is around 15 — we are getting the estimate of around 15 lakh vehicle from both.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. And this auction, this will be like let’s say like whatever will be selling, it will be on a percentage of fee of the value or it will be like a coal auction where we get some fixed fee for making the portal?

Surinder Gupta — Chairman/Managing Director

It will be a percentage. What we have said is that up to March, we’ll not charge any percentage, we’ll be charging zero, so there will be sector [Indecipherable]. But beyond March, we’ll charge 3% on the whatever the value of transaction. Just a second. This information is available on our website also.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. So 3% of value from April 1, let say from FY ’24 onwards.

Surinder Gupta — Chairman/Managing Director

Yes.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. That’s very helpful. My second question is, you mentioned that our Mahindra JV is operating at a very low capacity utilization. So can you just broadly say at what capacity utilization it would be currently?

Surinder Gupta — Chairman/Managing Director

You see our plants have come in operation at different points of time. So these figures will be able to perhaps share during the investor — next investor con call. But that competition becomes slightly complex. It will be in a different part, different plan. So that figure ready then we don’t have, but we’ll try to address this in next call.

Dixit Doshi — Whitestone Financial Advisors — Analyst

And if you try to address that, then together, if you can broadly, let’s say, when you will post the March numbers, if you will be able to do, let’s say, revenue of the JV and the number of vehicles sold or scrapped for the FY ’23 that will also be helpful if you can get those numbers also in the next con call.

Surinder Gupta — Chairman/Managing Director

We’ll see how best we can give you more information on that.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. Now coming to our e-commerce business. So this quarter, the revenue has seen some drop from year-on-year also and the quarter-on-quarter also. So is it fair to assume that this entire drop is predominantly due to the reduction in the scrap prices? Or is there decrease in the revenue from any other business also?

Surinder Gupta — Chairman/Managing Director

You see, there are two things in that. And you are rightly said, one is the slight decrease in slight dip in scrap prices because there we get the percentage as our services charge. So definitely the price of commodity decrease, my revenue decrease. That is one factor. Second factor is in every quarter, there is some gain, which is like say, if I sell power plant, and if I say power plant for INR300 crores. So that INR7 crores, INR8 crores revenues might be — could be added there in my revenues of that quarter.

So in the last corresponding quarter last year, there were a few plants change, which gave good revenue last year, which were not there in this quarter, and we are especially next quarter. So it’s not basically something that the people have gone out of us and they are not going to be auctions. So it’s largely robust, but these are some — I’ll take a slightly exceptions because as we say, normal market basically normal market scenario, nothing unusual about this slide downward.

Operator

Thank you, sir. [Operator Instructions] The next question we have is from Keshav Garg from [Indecipherable]. Please go ahead.

Keshav Garg — — Analyst

Sir, just wanted to understand that we have been constantly mentioning that the provisions and marketing division are behind us. But sir, if we see for the nine months, then again, the provisioning has gone up year-on-year. So from around INR26 crores last year nine months to INR80 crores in first nine months of this financial year. Sir so going forward, sir, how confident are you that will — this is the last of the provisioning losses that we are seeing? And also is there any scope of a write-back in future?

Subrata Sarkar — Director Finance

Yes. So this is basically, let me clear you very early everything. It is a figure provision stope write-off. So this is INR80 crores. This is nothing, but it is appearing on both side. If you see the other income, you see it has gone up like anything you see. So we have got — let me clear very kind, it is only 95 lakhs of provisions has been made during this nine months period, I repeat only 95 lakhs. Balance is the both sides because we are writing up certain old provisions. So it is because of that. We have — it is appearing on the income as well as the expenses side, number one.

Number two, it is so far write-back is concerned, so this year, we have already written back around INR4.5 crores and INR5 crores, although very a meagre sum but there we have written back. So we hope that in the next results also, we’ll be able to tell you something positive about this. But again, I repeat this year, the press provision is only 95 lakhs [Speech Overlap] is concerned.

Surinder Gupta — Chairman/Managing Director

And I will add to it. You can be rest assured that there is no further provisioning in as far as the marketing is concerned, we have provided for everything. And this 95 lakhs is about for the e-commerce only. That’s a very meagre sum for a figure of around INR250 to INR235 crores so 95 lakh is a very meagre sum as far as the provision for e-commerce is concerned. So marketing provisions are behind us as of now.

Keshav Garg — — Analyst

Absolutely, sir. Well understood, sir. And thank you very much for that clarity. Sir, also sir, as far as this vehicle scrappage is concerned, sir, so you mentioned that the old government vehicles will be scrapped through your portal, and only the qualified bidders can bid in that and our JV with M&M is also one third party. Sir so who are the other prominent people, sir? Is Tata Steel also participating or they also have that kind of business? Are they present in the capex business? And sir, who are the other competitors in the same business?

Surinder Gupta — Chairman/Managing Director

You see, the RVSF are coming up and Basically, it’s a very, very vibrant market, and states are basically giving the essence for setting up the plant, approvals for setting up the plant. The complete information about this is available on the North website that how many RVSF are there. So any RVS who comes to — who is approved by more, who is approved by the state government, that information is available on the more [Phonetic] portal, and they are eligible to apply to us and get registered online registration we allow for that RVSF.

So as of now, the players are not very large, but I’m sure with the policy initiative and government sincerity more people will come. Right now, the competition is not that good. I’m not sure about the name of parties that because individual departments that will — we’ll never — we — in fact, we have such never in management turn to know who are the people. So that by e-commerce operation, which is basically a separate thing, and my JV is a separate thing. So we don’t basically gathered that kind of data although it may be our level with wide system, but that’s not really required by me.

Keshav Garg — — Analyst

Right sir. And sir, lastly, if you could just tell us something about the litigation with Standard Chartered, where are we currently and how much money we have already deposited? And in the worst case scenario, if we lose the litigation, then how much more money do we need to provide?

Subrata Sarkar — Director Finance

Sir, let me answer you one by one. First of all, as we have seen through our declaration in the stock exchange and our financial results the note has been given, so our appeal has been restored by honorable Bombay High Court and it is now lined with DRAT. So it will be the outcome of the appeal, of course, will decide the fate of this case number one.

Number two, we have already deposited INR90 crores with DRAT as a precondition to this appeal. Number three, so we do not envisage any further maturity at this moment, the condition that is there. And so far provisioning is concerned, so total amount that has been demanded by the Standard Chartered through this order has already been provided for in [Indecipherable] accounts. So nothing about the profitability. And so for litigation is concerned, it is subsidies. So it will all depend in the future, what happens afterwards.

Operator

Thank you, sir. The next question we have is from Harshal Jain from RAH Investments. Please go ahead.

Harshal Jain — RAH Investments — Analyst

Hello. Very good afternoon. My first question would be regarding that in this particular quarter, we had a dip of around 9% in our e-commerce segment. One is this lowest scrappage price. But the other thing that in this quarter, we have sold Hyderabad branch about INR500 crores and even the Hyderabad plots worth INR600 crores. So may I know the specific reason that why there was a dip in this current quarter on e-commerce segment?

Surinder Gupta — Chairman/Managing Director

Hyderabad plant last year — [Speech Overlap]

Subrata Sarkar — Director Finance

[Speech Overlap] HMD plot. You see what happens, it is a mixed bag of everything. So one single plant or one single big event cannot boost up fill it like big revenue. If it comes up a lot like a big structure, a lot of activities, a lot of the e-commerce is people is all about like the revenues are in parcels. So it is a combination of all the parcels that gives us [Indecipherable]. And whatever dip is there, it is very not that significant. As already explained by our CMB and the earlier patients, and to earlier questions also, it is a common phenomena, which keeps on fluctuating during quarter-to-quarter. And it all happens at the end of the year, we hope.

And you see the nine-month figures, nine months, we are already ahead of last year. So that is the trend, and we hope that we will be able to match at least last year’s figure. So one single that why want we precise one single event or a couple of events does not be that much of flip. It is a combination of a lot of things, sir. And we always will appreciate the fact. So that’s the point, sir.

Harshal Jain — RAH Investments — Analyst

And as for the past record — track record of last three years, our Q4 is predominantly very heavy, and considering the scrap prices has recovered, iron ore prices has recovered almost 35% from the lower end from three months. So can we expect a massive Q4 in terms of iron ore sales?

Subrata Sarkar — Director Finance

Yes. Again, I’m telling you, you see there are two things. One, like the price of the thing. So again, the person who wants to sell and you know that already, it was announced that iron ore is now not under the Supreme Court regime. It is now open. So people are having thinking of a lot of opportunities. So if at all, all the sales that used to happen through us, comes to us. Of course, there will be a good revenue out of that. So again, it is a matter to watch and see. Let us hope for the best, but we have to watch and see what happens next in the month of February or March. February is now ongoing and March. March is, of course, as we said, in a good month, but let us see what happens. If some unusual thing does not happen, so it will be of course a bold and robust things that will happen.

Operator

Thank you, sir. [Operator Instructions] The next question we have is from Rahil Shah, an Individual Investor. Please go ahead.

Rahil Shah — Individual Investor — Analyst

Yes. Hi. My question was on the similar lines to the previous one. Just any guidance going forward for the next financial year in terms of revenue and margins for the business on a consolidated level would be nice. Thank you.

Subrata Sarkar — Director Finance

Yes. You see, first of all, what we are selling like for the couple of years, of course, the focus is on the e commerce. And what we are trying to do is like to expand our horizons in the different fields of the e-commerce. So we will be mainly so far, if anything does not go unusual will be mainly guided by this e-commerce and driven by the e-commerce related revenue for the next financial year, number one.

Number two, if it all depends — these are all if’s and but because we are basically a service provider. If the industry does well, we have to — we follow the path, so it is all about that how the industry, if everything goes in the market. So accordingly, we do the — our results go ups and downs like that only. So but it is — the focus will be on the e-commerce-related revenue only so far current I mean, projections are concerned sir.

Surinder Gupta — Chairman/Managing Director

I’ll add to that, that apart from that, we are basically diversing [Phonetic] in e-commerce. Previously, scrap used to be major sectors, now scrap gives 50% revenue and 50% are coming from other commodities. So we are spreading our basket. And we are looking for more and more commodities. We are looking for more and more sectors where our e-commerce can be expanded. So if there is some downward cycle in one particular commodity. So we are sure that we’ll be tied it over without much of hiccups. It may be some downfall here and there. But overall, the growth trajectory, when we are working with such a focus that our growth remains intact.

Rahil Shah — Individual Investor — Analyst

Okay, sir. Sounds good and all the best.

Surinder Gupta — Chairman/Managing Director

Thank you.

Operator

Thank you. Next question we have is from [Indecipherable] an individual investor.

Unidentified Participant — — Analyst

Good afternoon, sir. Can you hear me?

Surinder Gupta — Chairman/Managing Director

Yes.

Unidentified Participant — — Analyst

Sir, I have a question regarding the GEM portal. Just want to know, as far as competition is concerned, the government has kind of passed the circular asking most of the government departments to auction their scrap vehicle, property land, et cetera, through the GEM portal. So how do you see this as — do you feel that a big competition to you?

Surinder Gupta — Chairman/Managing Director

As of now, a very few people are using GEM portal which are far superior to the GEM portal. They just give a portal services, and we are doing the complete end-to-end basically sale operation farther for their many products. So our sources are far superior than GEM. And some people who had gone to GEM, they are coming back to us because they are not in getting the kind of rates for their products there. So we are sure that we will be able to — we are working hard to tide over this as far as the sale part is concerned.

Unidentified Participant — — Analyst

So what if tomorrow the government mandate that all government departments have to do their auctions only through GEM?

Surinder Gupta — Chairman/Managing Director

You see, we cannot speculate on what government orders will be there. So as of now, we don’t see any possibility of that kind into that because that will decrease the — they will not be able to sell their products at the market rate by using GEM. And many of the people don’t have the organization to do all these kinds of work. So definitely. And another thing is that our business is not only government, central government departments. Our business is many PSCs, whoever businesses with state governments, our business is with many private houses, and not only scrap so many kind of things. So I don’t see really the kind of effect on our portal, even if something is mandated. Although I don’t think it is a possibility as of now. I don’t see. We don’t know what government does it — but as of now, we are not seeing any visibility of that. But we have not heard anything on that.

Operator

Thank you, sir. The next question we have is from Sunil Shah from Corporate Club. Please go ahead.

Sunil Shah — Corporate Club — Analyst

Yes. Thanks for the opportunity. Sir, I have one very basic question. I’m [Indecipherable] I just wanted to understand the business model. Sir, when you say the auction that we do, sir, how is our revenue model? So is it like in top booking, when a broker executed trade he gets a commission on the value of the trade. So is that that when we earn our revenue, is it connected to the value of the auction? That is one.

Or is it like somebody you gives in marriage hall where you get to fix rate irrespective of the type of wedding happened, he gets a fixed rent on the hall which he give. So for us, which is the revenue model? Is it like the broken link which is connected to the value of the auction, which happens, or is it like a fixed revenue which we earn when we provide our platform for auction? Could you please help me understand this better?

Subrata Sarkar — Director Finance

Yes. Sir, thank you very much. Your question is full of with the answer only. You have explained the answer in a very good manner that we have to tell you because it is a mixed bag of what we have told. It’s a mixed bag of our revenue model. One is the value base where we do the auction, we get a percentage of value. And another event that we do the event, we get up our event-based charges irrespective of the volume traded to that particular event, whether the auction is successful or not, we get our service charges. So like it is just a mixed bag of everything. So it depends upon the situation and depends upon the client, and the person who wants what type of revenue model. It’s both the revenue model that is invoked in our e-commerce business segment, sir.

Sunil Shah — Corporate Club — Analyst

Okay. Sir, when you say about scrapping of vehicles, I believe there is going to be 3% of the value of the vehicle, which is scrubbed so there has to be percentage linked. Is that correct understanding?

Subrata Sarkar — Director Finance

Yes, actually, our CMD in your previous question, we have told, like up to March, it increases available in the public domain also. Up to March there will be no service charges. Just to promote this kind of environmental friendly thing and other like to personalized the thing, which has been done. And from the April onward that is FY ’23, ’24, the service charge that we mentioned that will be applicable on the scrapping of the vehicle, which is being auctioned through our portal to RVSF means certain restricted population.

Operator

Thank you, sir. [Operator Instructions] The next question is follow-up from Dixit Doshi. Please go ahead sir.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Hello. Yes. My — two more questions. Firstly, if you see our other income was almost INR20 crores this quarter. And in this, if I go to the segment revenue of the stand-alone numbers, then there is some INR5 crores in the marketing revenue, INR8 crores in the results and maybe, let’s say, INR7 crores would be in e-commerce. So how — can you mention about the nature of this other income, INR20 crores?

Surinder Gupta — Chairman/Managing Director

Yes. Just now we — just now told about the e-commerce nature. Apart from getting our service charges, we derived certain fees, other fees, registration fees and et cetera, et cetera. So that is booked in the other income from this e-commerce business. And certain so far, other is concerned, we have got the dividend from our subsidiary that is there in miscellaneous. And in the marketing, we derive certain interest out of that amount, overdue amount that is there in the marketing that is part of their thing. So that is broadly the nature. It covers a lot of miscellaneous items also. And of course, certain interest amount also is there in the other income also. That is there in the part of that business which is [Indecipherable].

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. And my last question is on the — in the last couple of years, we did partnership with, let’s say, Reliance, L&T, Bharti Airtel, many more in the private sector, but I think the volumes have not picked up. So what are the difficulties we are facing and, let’s say, out of the current total revenue of e-commerce, how much would be from the private sector?

Surinder Gupta — Chairman/Managing Director

We don’t maintain these kind of data that how much is home prices or government. You see, scrap is one thing which continuously rising is from the principal and be rising unless an — that depends upon their business operations. So whatever the volumes are arising, they give it to us only. That is what only we can assure. So what is there basically generation, we are not very sure about that.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Okay. And if I could ask just one more question?

Surinder Gupta — Chairman/Managing Director

Yes.

Dixit Doshi — Whitestone Financial Advisors — Analyst

Yes. So in terms of the e-auction of the properties held by the banks through their NPAs, how is this traction there? Are we getting the volumes there also?

Surinder Gupta — Chairman/Managing Director

Yes. There we are getting good volumes and now the success ARPU increase.

Dixit Doshi — Whitestone Financial Advisors — Analyst

And it’s on the value, right? Percentage of?

Surinder Gupta — Chairman/Managing Director

No, there we don’t get in terms of percentage. There will get the number. I mean the revenue per property sold. So that’s the kind of model. And I think that is a quite good amount of properties now we are selling there. I don’t have the figure, but the amount of properties sold are sufficiently good could give us a robust revenue on that.

Operator

Thank you, sir. The next question we have is follow up Keshav Garg. Please go ahead.

Keshav Garg — — Analyst

Sir, wanted to understand that, sir, sometime back last year, there was a news item that the public sector banks are making their own portal for this auction of these properties instead of using MSCC. And also Coal India was also planning in-house scrap disposal portal, sir so have you seen any movement on any of these funds? And has our business from Coal India or from public sector bank decreased?

Subrata Sarkar — Director Finance

First thing about the public sector banks, there is no progress on that and we are selling their properties as usual, and there is no news on that front. As far as the Coal India is concerned, we are doing the robust business with Coal India. In fact, Coal India has recently bought a new portal developed from us. So the Coal India let say there is a basically policy change by the government as far as the coal auctions is concerned. And as per the new policy, we have already developed the portal for Coal India. So Coal India doing the auctions from their own portal, we don’t think a real possibility in a very near term.

Keshav Garg — — Analyst

Great. Sir, also, sir, what is the net cash that we are having on our books as of now?

Subrata Sarkar — Director Finance

Pardon?

Keshav Garg — — Analyst

Sir, what is the net cash on our books?

Subrata Sarkar — Director Finance

I could not get your question, sir. Could you please illustrate?

Keshav Garg — — Analyst

Sir, what is the cash balance that we are holding?

Subrata Sarkar — Director Finance

Sir, please wait for certain time. September 30, we have already declared our balance sheet and everything. So please just wait for a couple of months. We will be ready with all the balances and how this continues. But I can assure you, like with that provisioning things are gone and we are realizing almost a very good data — so it will be a good position so far. Our earnings are coming there. They are converted into cash in a very good ratio. So that much we can say, sir. Please wait for months when our March figure will be ready, and we’ll be ready with you sir. Nothing to hide from you, sir. You have every right to get these figures.

Surinder Gupta — Chairman/Managing Director

Hello, next question please.

Operator

The next question we have is from Harshit Jain as a follow up. Please go ahead.

Harshal Jain — RAH Investments — Analyst

Yes. Hi. Considering our last quarter balance sheet as on September 30, we were holding around cash balance of around INR1000 crores. So any plans to distribute the same via special dividend or through buyback or through a bonus option or to something else that is — [Speech Overlap]

Subrata Sarkar — Director Finance

We have already given a good dividend, sir, we will appreciate that 63% dividend — so we are already on the level of last year already. So we are always thinking so far shareholders are concerned to appreciate their values as well as to make them those who have [Indecipherable] thing. So it is there only, sir. So we are thinking not sitting on the balance sheet we will utilize this in proper way. We have certain liabilities that have to be also made. So that is there, sir. We have to think in totality not on the directing on FX part.

Harshal Jain — RAH Investments — Analyst

Sure. And my last question would be regarding the scrappers front. As Mr. Surinder Kumar ji mentioned that we would be having almost eight to nine plants by end of this financial year. So from Q1 FY ’24 onwards, can we expect 100% capacity utilization of all the plants?

Surinder Gupta — Chairman/Managing Director

Very difficult to give so definite figure, but you see there are two parts for it. Let us understand it. One is, the government vehicles. And then the second is the private vehicle. So the private vehicles also have to come in a big number so that the capacity is fully utilized. But I can say whatever vehicles [Indecipherable] seriousness of the government will have the sufficient record so that will not only break even. We earn some profit. If we get a 100%, definitely we’ll never like to reach that we reach 100% before we reach 100%, we will expand the capacity. So it is our intention to always be above the market so that we are not being lacking in this capacity when they become come to. So that is what our total strategy has been there. And we want to encash on the first mover advantage. We want to maintain that advantage so that we are ahead of our competitors whenever they come up with their plans. So we want to have the footprint, which covers both parts of the country. That is what our strategy is.

Harshal Jain — RAH Investments — Analyst

Okay. And my last suggestion would be one very good thing started by you not on stock exchange side, but on Twitter side that you provided a monthly update on January front. So can we do it on a regular basis, a monthly update on stock exchange update?

Surinder Gupta — Chairman/Managing Director

Okay. We’ll note the suggestion.

Harshal Jain — RAH Investments — Analyst

Yes, because investors would come to know that what exactly our company is doing, what is the growth road map.

Surinder Gupta — Chairman/Managing Director

Okay. We’ll see more in detail and we’ll try to do — address the interest shown to you will incorporate it suitably.

Harshal Jain — RAH Investments — Analyst

Sure. Thank you so much.

Surinder Gupta — Chairman/Managing Director

Thank you.

Operator

Thank you, sir. The last question we have is from [Indecipherable]. Please go ahead.

Unidentified Participant — — Analyst

Gupta Ji, this question is again regarding the scrappage policy. You mentioned that government vehicles have to be sold through the MSTC portal through RVSF. Does this also hold true for state government vehicles?

Surinder Gupta — Chairman/Managing Director

Yes, this holds good for state government vehicles. This hold good for all the public sector vehicles, this whole good for even the vehicles up to the panchayat level. So all where the government has ownership, so all those vehicles are included in the estimate of this 15 lakhs vehicle.

Unidentified Participant — — Analyst

Okay. And all of these have to be auctioned only through the MSTC portal?

Surinder Gupta — Chairman/Managing Director

Yes.

Unidentified Participant — — Analyst

And sir, one last question. What is the current capacity for dismantling that MMRCL has over the six centers put together?

Surinder Gupta — Chairman/Managing Director

I think this is information something which normally we don’t make it public because we are not — just — it’s basically business confidentiality, basically as so that the competition concerned so that business information normally we are not diverging. So please excuse us for this.

Unidentified Participant — — Analyst

Okay, sir. Thank you.

Surinder Gupta — Chairman/Managing Director

Thank you.

Operator

Thank you, sir. Ladies and gentlemen, that concludes our question-and-answer session. I will now hand over back to management for any closing remarks. Please go ahead, sir.

Surinder Gupta — Chairman/Managing Director

So before I hand over to our Director, Financial to sum up, I can only say that the e-commerce market is a very promising market, and we are sure that we will be able to achieve good results and we’ll be able to fulfill the aspirations of our investor community. Second thing is the kind of emphasis that government has put on the circular economy because of this G20 summit, so we are seeing more traction in this scrappage policy. So having the first mover advantage in the vehicles scrappage, so definitely, our company will be beneficiary in the total government scheme for that.

Subrata, you want to say something?

Subrata Sarkar — Director Finance

Yes, just going by our CMD sir’s closing remarks, so it will be an e-commerce-driven growth in the coming quarter. And of course, we will keep on so far provisioning is concerned, so we will keep it at the bare minimum. Thank you very much for your cooperation and continuous support to the company that we have made. Thank you again.

Operator

[Operator Closing Remarks]