NIIT Limited (NSE:NIITLTD) Q3 FY23 Earnings Concall dated Jan. 31, 2023.
Corporate Participants:
Vijay Thadani — Managing Director and Vice Chairman
Sapnesh Lalla — Chief Executive Officer
Sanjay Mal — Chief Financial Officer
Analysts:
Baidik Sarkar — Unifi Capital — Analyst
Unidentified Participant — — Analyst
Shradha Agrawal — AMSEC — Analyst
Saurabh Sadhwani — Sahasrar Capital — Analyst
Siddharth Vasi — Individual Investor — Analyst
Rahul Jain — Dolat Capital — Analyst
Presentation:
Operator
Ladies and gentlemen, good day and welcome to the NIIT Limited Q3 FY 2023 Earnings Conference Call. [Operator Instructions]
I now hand the conference over to Mr. Vijay Thadani, Managing Director and Vice Chairman of NIIT Limited. Thank you and over to you sir.
Vijay Thadani — Managing Director and Vice Chairman
Thank you. Good afternoon and good morning and good evening to others who are not in the same time zone at what we are. And first of all, thank you very much for your interest in NIIT and for joining this call. This is a busy time for you to be attending many, many calls and I thank you for making the choice to attend the NIIT Limited call. The agenda today is to discuss the business performance for the third quarter of financial year ending in March 2023. While my colleague Sapnesh and supported by our CFO, Sanjay Mal; Kapil Saurabh of Investor Relations as well as our Chairman, Mr. Pawar, we will all together try to answer everything and will give you a more detailed brief.
I just wanted to make some opening comments, that first despite a turbulent macro environment that we see around us, the businesses have done well compared to what we thought we would be able to do in quarter three. The second is that during the quarter, NIIT made a significant acquisition. We now have St Charles Consulting Group from Illinois, US, who become a part of the NIIT family and we are very proud to have them as a part of us and their expertise as well as capability that they’ve built over a couple of decades, would be of immense use in charting the growth path and strategy for NIIT in times to come. As I mentioned, they are based in Illinois, US and they are a leading provider of strategic learning interventions to top-tier global professional services and management consulting firms. This has been a space both in terms of capability, as well as the customer segment which has been — which was a blank in our strategy and therefore their capability and the penetration in the attractive customer segment which by the way is many ways recession-proof because every time there is volatility in the environment, professional services and management consulting organizations tend to do well.
So we feel very proud to have them and including St Charles Financials, which have been consolidated with NIIT and CLG’s account from November 5th, 2022, the overall growth is 16% Q-o-Q and 18% year-on year. Due to the prevailing market environment globally including India, parts of SNC the other part of the business servicing, GSI that is global system integration firms and technology OEM customers, these trades have been and therefore reported muted growth. However, the solutions which are serving large BFSI firms and enterprises experienced growth — very impressive growth owing to increase consumption. That is more detail behind this and now I will invite Sapnesh to brief you on the quarterly results and the operating performance. And after that we will open it up for Q&A.
Over to you, Sapnesh.
Sapnesh Lalla — Chief Executive Officer
Thanks, Vijay and thanks everyone for joining this call. Like Vijay pointed out, we appreciate your time as we are, very aware how busy you are and with everything that’s going on and we really appreciate you taking the time to attend this call. Please note that the financials that I report include the numbers from St Charles from the day they joined NIIT that is November 5, 2022 onwards. I’ll provide breakup at relevant points in the call where I will separate the performance of different parts of NIIT with and without St Charles numbers.
From an overall perspective, let me start with the highlights at the NIIT level for the quarter, including the St Charles consulting groups’ numbers, which have been now consolidated with NIIT from November 5th, the revenue stood at INR4,546 million, it was up 18% year-on year and 16% quarter-on-quarter. The EBITDA stood at INR908 million, 62, up 62% Q-o-Q and 10% Y-o-Y. The EBITDA margin at 20%, up 570 basis points quarter-on-quarter.
Net other income was negative INR37 million and I’ll provide a breakup of this a little bit later in the call. The profit-after-tax was INR550 million, resulting in an EPS of INR4.1 per share. Let me now break this down by business for you. The Corporate Learning Group including St Charles Consulting Group, the revenue for the quarter was INR3,636 million, this was up 22% year-on year and 21% quarter-on-quarter. In constant currency terms, the revenue was up 15% year-on-year and 17% quarter-on-quarter. The EBITDA was at INR845 million, up 16% year-on-year and 58% quarter-on-quarter. The EBITDA margin was 23%, up by 544 basis points on a quarter-on-quarter perspective.
At an organic level, the CLG business had a revenue of INR3,298 million. This was up 11% year-on year and 10% quarter-on-quarter. In constant-currency terms, revenue increased 6% year-on year and 8% quarter-on-quarter. The EBITDA was at INR749 million, up 3% year-on year and 40% quarter-on-quarter. The EBITDA margins was at 18%, up 491 basis points quarter-on-quarter. The margin improvement was predominantly driven by cost optimization, as well as improved utilization of resources, as well as non occurrence of certain one-time expenses that were incurred in the previous quarter, predominantly around transition of new customers.
Our planned investments in sales and marketing are continuing and have driven strong customer additions. We signed one new Insurance Group as an MTS customer this previous quarter. This takes our customer tally to 71. CLG also continues to receive 100% renewals from existing customers. Quarter three saw renewal of all seven existing customers, customer contracts that came up for renewal. The business has also received a number of contract awards confirmations in the quarter and these contracts are in the contracting stage at this time and we expect them to close towards the end of Q4 and will be in operation as we enter the next fiscal year.
The revenue visibility at the end of the quarter was INR321 million. Please note that the customer count and visibility does not include the customers that St Charles brings to the NIIT family. We will watch the visibility and the operations over the next several quarters and then decide whether to include the visibility from St Charles customers into the CLG visibility.
From an overall perspective, I continue to see a healthy pipeline of new customers, as well as new opportunities that create both wallet share expansion opportunities, as well as potential to enter new market segments. While the organic growth was impacted in H1 due to the environment, the performance in Q3 has been a little bit ahead of the guided range on account of faster than expected ramp-up in a couple of quarters.
Q4 is typically a weak quarter for CLG. We see either or historically we see either a flat Q4 or a that lower than Q3. This year we are expecting similar growth or similar performance as compared to Q3 on an organic basis for the Corporate Learning Group. Of course, with addition of St Charles to the family we expect the overall performance to grow single digit sequentially.
As a result, we expect the full year growth to be in the early teens in constant-currency terms. INR growth is expected to be around 20% with approximately 20% EBITDA margin. Despite the near-term volatility in spends, I think it is prudent to continue to invest in the long-term growth trajectory of the company given the large potential that we see in front of us. We hope that these investments help us increase the share of wallet with existing customers and also enable us to penetrate new market segments, as well as new geographies.
Coming to the S&C business now. The revenue was at INR910 million, was up 4% year-on year and down marginally on a Q-o-Q basis. EBITDA was INR63 million as compared to INR25 million in the previous quarter. While Q3 is typically weaker as compared to Q2 for S&C, the growth in Q3 has been muted due to the impact of slowdown in hiring, as well as training expense. More specifically, as we look at our GSI, GCC and large tech customers, the consumption of training is seeing near term compression, as companies proactively prepare for the uncertain environment that they are starring at. This is leading to reduced hiring. This is impacting the demand for training from our customers, again more specifically in the GSI, GCC and large tech OEM segment.
On the other hand, we also address banks and a number of large Indian enterprises as customers and there we are seeing expansion owing to the growth strategy or the growth that Indian large enterprises are seeing. The part of the portfolio linked to global tech and services market is experiencing uncertainty, the net hiring is down. We are seeing a number of layoffs, reduce sequential growth and therefore this segment specifically. GCC, GSI and large tech OEMs are likely to see temporary compression and demanding the new hire training.
The remaining portfolio which is focused on domestic consumption is expected to continue to see growth. Despite the near-term uncertainty, we continue to see a multiyear acceleration in demand for skill talent as we look ahead. This wide range of offerings for deep skilling and digital skills, we are well-equipped to help our customers with their talent transformation needs as they look ahead.
StackRoute & TPaaS, the two key initiatives over the last few years have grown 11% year-on-year and contributed 35% to the S&C revenue in Q3. Our B2C programs are ramping-up and helping the learners achieve very strong career outcomes, learners who joined us have been getting offers that are almost twice the starting salaries of campus hires, so they’re seeing significant outcomes and significant improvements in the salary with the kind of education and training outcomes that we are providing.
Overall for the S&C business, we expect the growth percentage for the year to be in the range of low to mid 40s, with a single-digit EBITDA margin. We’ve talked in the past about the acquisition of St Charles, so I’m going to do a repeat primer so that anyone who has missed some of the previous calls has a little bit of context on St Charles. NIIT acquired 100% stake in St Charles Consulting Group, a company based out of Illinois in the United States on November 4, 2022. The company serves 12 out of 15 top global professional services and management consulting companies, has a long standing and it has long standing and trusted relationships with its customers many of them have been in relationship with St Charles for over 10 years.
Their solution set includes various LND [Phonetic] practices, including custom learning experiences, learning curation and managed services, but overall their solutions are targeted to creating strategic learning interventions for their customers. They’re focused from a customer segment perspective has been on top tier strategy and management consulting companies. St Charles has a network of over 500 expert L&D professionals and several of them are used on different projects depending on the skill-set and requirements of the projects. As I have mentioned to you in the past, NIIT’s inorganic strategy focuses on adding new capabilities, new markets and new jobs [Technical Issues] portfolio of offerings. The St Charles acquisition has a new and attractive customer segment to NIIT’s list of customer segments, the management and strategic strategy consulting companies spend approximately 2.5 times on L&D as compared to average Fortune 1,000 companies. So the segment is a very attractive segment for NIIT and with the the acquisition of St Charles, we are able to be a significant penetration into this segment.
The acquisition also creates a new capability for NIIT by way of which NIIT would get a seat at C-Level table when a need for strategic learning intervention shows up in an organization. As I’ve mentioned in the past, talent and talent transformation is on the top five agenda items of every CEO of a global corporation and this additional capability will give us significant strength and create distance between NIIT and competitors as we look at the large NVT relationship with our global customers and global process.
The transaction was closed with an upfront consideration of INR23.4 million, that the balance to be paid as earnout entrenches over the next four years, contingent on performance over this period. The top end of this consideration is capped at $65.1 million other than the cash and working capital. Overall, the financials for the quarter include an impact of 37 million in net other income. This includes treasury income of 137 million which was offset by 174 million in expenses primarily related to the transaction related expenses of St Charles, 164 million, including one-time finance, financing costs incurred through part of the transaction.
The balance sheet continues to remain strong with enough liquidity or investments. The net cash position is at INR11,089 million versus INR12,597 million previous quarter. This is down INR1,508 billion. This includes the impact of two significant transactions. First payment of upfront consideration of St Charles $23.4 million and transaction expenses as I pointed out earlier, as well as the second tranche of the purchase of an additional 20% stake in RPS Consulting, which we acquired more than a year ago.
With this addition of 20% stake, NIIT’s stake now stands at 90%. The DSO days were at 61 days marginally higher than 57 days at the end of Q3 last year, primarily due to calendar year end invoicing as a timing difference on collections. Tax was at INR145 million for the quarter. On a trailing 12 month basis, our ROC including cash on books is at 19.8. As of December 31st, we had 3,272 NIITeans on our roles, this is down 27 on a quarter-on-quarter basis.
To sum it up, we continue to see a large opportunity with multi year growth opportunity in front of both of our businesses. A strong competitive position and the right to win in the markets we serve, near-term uncertainty has had a short-term impact on consumption of training as I shared the last-time we met. However, the CLG business is seeing a recovery in growth and margins. And as expected this quarter, S&C business has experienced muted growth given the environment.
I know I spoke a lot, but hopefully I was able to provide due context for our discussion and Vijay if you could now provide a quick summary on the scheme and strategic initiatives.
Vijay Thadani — Managing Director and Vice Chairman
Thanks, Sapnesh. Quick update on strategic initiatives. I think in addition to the acquisition of St Charles which Sapnesh well talked about, NIIT also acquired additional 20% stock in RPS Consulting for a consideration of INR358 million as per the terms of the original share purchase agreement that we had signed in October of 2021. So with this, NIIT now owns 90% share in RPS Consulting. Also a quick update on the composite scheme of arrangement for demerging NIIT into NIIT Limited and NIIT Learning Solutions committed. So as shared earlier, the company had received necessary approval from stock exchange and SEBI and the scheme was filed with the NCLT. First motion hearing was completed on July 25 and we had received directions of convening meeting with various stakeholders. As per directions, shareholders meeting was held on November 15th, resolution saw a unanimous support from investors and has been approved. The results for the same have been in the public domain and we are now awaiting final statutory NOC before the final order. We expect at this point of time the whole scheme is on-track as per the original schedule that in at ought off and we do believe that by in we should achieve a logical conclusion in the first quarter of the coming financial year.
So with that I would now open the floor for Q&A and Operator please and may I request in the first round everybody gets a chance to ask one question and then in the follow-up rounds they can add many more.
Questions and Answers:
Operator
Thank you very much. [Operator Instructions] First question is from the line of Baidik Sarkar from Unifi Capital. Please go ahead.
Baidik Sarkar — Unifi Capital — Analyst
Gentlemen, good afternoon and nice pullback quarter more than one question. So in the domestic business, we’ve gone flat for three quarters now and we’ve given to understand that this is a hedge one heavy business and all the acquisitions we’ve done. Does that pieces still stand that is where Q1 of 2023 or 2024, I beg your pardon, Q1 of 2024 will that quarter see the next jump-up in revenues? And your comments around hiring weakness is well-received, but the fact is India is still a net hiring market, right? So does that get in the way of our earlier high-growth trajectory of 30% to 50% Y-o-Y and our margins that came in over 7% this quarter, do we see accretion from here on or do we go sideways for a while before the next leg-up?
Vijay Thadani — Managing Director and Vice Chairman
So, I think your question is on two-parts, one is to do with CLG and I didn’t quite understand that part, but maybe Sapnesh…
Baidik Sarkar — Unifi Capital — Analyst
My question was actually on the domestic business or the domestic S&C business, we’ve gone flat for three quarters on a top-level line. So let me repeat, I understand you’ve guided to be — this will guide to be a hedge one heavy business, so my question was, can we expect accretion significant accretion in Q1 2024? And I think Sapneshs’ comments around some kind of hiring weakness in India, the point I was trying to make is, we’re still a net hiring market. So does that comment get-in the way of our earlier 30% to 50% kind of growth trajectory, yeah?
Sapnesh Lalla — Chief Executive Officer
So let me clarify something that you mentioned, if I heard you right, you said that we’ve seen flat revenues over the last three quarters, you’re right, the revenues have been range-bound in the last three quarters, but the revenues that were achieved in the first two quarters of the year actually saw growth which was quite significant 145% in Q1 on a Y-o-Y basis, 119% in Q2 on a Y-o-Y basis and then as far as Q3 is considered 4% on a year-on year basis.
So you’re right in saying that we’ve seen range-bound revenues over the last three quarters. It is a seasonal market. We see significant upswing in training specifically in Q2 and we saw that this year. As compared to last year, this year has seen significantly higher growth, especially in Q1 and Q2. Q3 has been a different story while you pointed out that India is a net positive market with the largest GSI, if you look at them, they’ve had a net negative hiring scenario this past quarter. And what the leaders are doing permits down to the overall markets, market space.
Also why as I had earlier pointed out, while the large GSIs have had mainly a net zero or slightly negative hiring scenario, the large tech OEMs have actually done significant layoffs, which have also dampened the move. So the mood, so those things pull together had significant impact on the S&C business. However, I did want to point out that about 75% of NIIT’s domestic business is focused on technology, which includes customers who are GSIs, GCCs and the large tech OEMs.
On the other hand, the balance 25% or so focuses on large Indian enterprises, which are focused on the India consumption we’ve had and these include the large private banks as well large conglomerates in terms of India enterprises. And they have experienced growth and our business with them has also seen mid-teens growth. So I think having a balanced portfolio is a good thing. I do feel that there is a possibility of the hiring scenario rebounding as we get into H1, but the jury is still out. I want to see how the mood starts to change in Q4 and maybe early Q1 before we solidify those comments. I would say that our thesis that we’ll see mid early or mid 40s in terms of growth for this year continues to hold. Next year we will be able to comment on as we go through the next several weeks in Q4.
Baidik Sarkar — Unifi Capital — Analyst
Sure, sure. And my last question on margins at 7%, do we see accretion from here on or do we go sideways before the next leg-up?
Sapnesh Lalla — Chief Executive Officer
When you say margins from an overall perspective?
Baidik Sarkar — Unifi Capital — Analyst
No, just the domestic business. I’ll come back to the CLG later [Speech Overlap].
Sapnesh Lalla — Chief Executive Officer
Our margins as far as the S&C business is concerned, this is in-line with what I had mentioned, for the year the margins are likely to be single-digit margins for the year and we are continuing to be in an investment phase quite specifically for the B2C go-to-market for the domestic business. So we’ll see margins being range-bound in the single-digits or the next few quarters before they start ramping-up as we establish product marketing and operating [Technical Issues].
Baidik Sarkar — Unifi Capital — Analyst
Thanks. If I may just squeeze in one last question to Sapnesh, Sapnesh your commentary on the macro weakness in the West is very well-received and read upon, but given the opportunity spectrum, our ability to consolidate should still stand ground and that’s past reflected in our order book accretion of 321 million, 5% sequentially. So how do you see this or imagine this accelerating in the times to come, especially given the investments we’ve done in sales and go-to-market and it’s early days, but how should we imagine the quality of growth in the CLG business in 2024?
Sapnesh Lalla — Chief Executive Officer
See, like I’ve always said that we are very, very high on the offers in front of us, we have a very significant opportunity. We are among the top-five managed training services companies in the world. The companies we compete against are the likes of IBM, Accenture, Conduant and so on so forth. And I know for sure that they have bigger and better efficiency drive and focus on learning. So we have a great opportunity in front of us. We have been able to accelerate our ability to add new customers and with the acquisition of St Charles and in future more investments such as these, we will be able to expand our wallet share with our existing customers.
We are all acutely aware that several of our customers have compressed spends given the uncertainty in the market, but over a period of time as the uncertainty lifts, the spends will start going up and we see growth on the vector of our existing customers. But then like I pointed out, we are continuing to accelerate customer acquisition and that will actually accelerate growth. So I see strong growth opportunity in front of us. We have a strong ambition and ambition has only grown bigger. We have a strong balance sheet and I think that’s — that bodes well given the opportunity for our growth potential.
Baidik Sarkar — Unifi Capital — Analyst
Okay. Thanks, Sapnesh. That’s helpful. My best wishes. Thank you.
Sapnesh Lalla — Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Pooja Doshi [Phonetic from Praj Financials. Please go ahead.
Unidentified Participant — — Analyst
Yeah, thanks for the opportunity. So I wanted to understand what is your customer acquisition process in Corporate Learning segment? And what is the switching cost from NIIT to the competitors?
Sapnesh Lalla — Chief Executive Officer
That’s a great question, I could spend a day with you on that, but I’ll try to summarize it. Our customer acquisition process a number of steps, a large step is ensuring that our prospective customers gain awareness of what NIIT can do and we do a lot of work with respect to thought leadership, consulting, attending conferences, running events to ensure that our prospective customers have the ability to become aware of what they can achieve with NIIT.
A number of those customers once they are aware of what NIIT is capable of doing, engage into conversations with us, some of them at the point when they are ready to look at an initiative, but several are engaged with us as in the formative stages of their thought process, we are often able to consult with them to help them formulize what they want to do and then enable them to go to the next step which tends typically to be an RFP, most RFP tend to be competitive, though we’ve had some situations in which the customers have achieved strong confidence even in the formative stages and they choose to single source to NIIT without RFP, but that’s a minority.
So the typical process would be to do an RFP and then post RFP a selection process that’s typically done by a panel. That’s the process, it takes about six to nine months, sometimes depending on the need and comfort it gets accelerated. It is typically be to six months in duration. Does that answer your question?
Unidentified Participant — — Analyst
Yeah, yeah. Okay, thank you so much. And if you could comment on the switching cost from NIIT to the others? So like what is your right to win in the business? What stops customers from switching from NIIT to the competitors in terms of CLG training?
Sapnesh Lalla — Chief Executive Officer
Sure. I think the biggest switching cost to a customer, you know, if you think about it, I’ll try to use a very simple example to illustrate my point. If you are attending a class, they’re typically 20 students in a class and one instructor. So what an organization spends on training in direct terms tends to be a small fraction of what they actually spend. Their biggest spend is really in the time that their employee spend getting through the training. Now with NIIT what they have is an organization who is laser-focused on achieving outcomes from the training in the shortest period of time.
So what that means is that the student spend the shortest time getting trained and they achieve the skills that are needed for the most critical tasks that they have to do.
If they were to look at switching and what forbid they switch to an organization that ends up taking longer to train and still not achieve the objectives, while they might lower their cost of training or they may keep the cost of training the same, but the internal cost that they spend goes up many fold and that’s really the fear or the large switching cost that most of our customers face where if the supplier that they switch to is not able to create outcomes is not able to run a highly reliable system that they’ve come to get used to with NIIT, they end-up losing a lot more than what they are actually saving or spending on training.
The other thing I would point out is that, in the last customer survey we did which was just about a month and a half ago, we got an NPS score of 9.03 what that really says is that, a very large majority of our customers over 93% are promoters.
Unidentified Participant — — Analyst
Okay, understood, sir. And sir, lastly if you could give me revenue mix of mandatory versus non-mandatory trainings at CLG side of the business?
Sapnesh Lalla — Chief Executive Officer
It tends to be about fifty-fifty. Of course, customers for example those who are in the segments which are highly regulated like banking, financial services, insurance, pharma, life sciences, parts of telecom, energy, mining, they have a slightly higher percentage of regulatory training as compared to those who are technology segments.
Unidentified Participant — — Analyst
Okay, understood. Thanks for taking all my questions. I’ll get back in the queue.
Sapnesh Lalla — Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] The next question is from the line of Shradha from AMSEC. Please go ahead.
Shradha Agrawal — AMSEC — Analyst
Well, hi. Congratulations on a good quarter. Am I audible?
Vijay Thadani — Managing Director and Vice Chairman
[Speech Overlap].
Shradha Agrawal — AMSEC — Analyst
Yeah, yeah, hi. Congratulations on a good quarter. Two questions. Sapnesh, how do you define the demand environment now versus what it was, say, a quarter back in terms of how is the consumption of training in your existing large accounts, how has that budget changed in the last one quarter, has it incrementally deteriorated further? Has it been stagnant? So overall from your large existing accounts perspective, how do you see the consumption of training consumption of training spend here?
Sapnesh Lalla — Chief Executive Officer
I think this question is more pertaining to CLG or?
Shradha Agrawal — AMSEC — Analyst
CLG, yeah, this is representing to CLG.
Sapnesh Lalla — Chief Executive Officer
I think it’s a great question. In terms of consumption, we’ve done a lot of analysis on this. What I would say is, if you go back a few years, if you were to look at the year before COVID, if you took back the consumption in the year before COVID as say baseline or let’s say if you call that 100, in COVID year that consumption went down between 25% and 35%, so let’s say if it was 100 pre COVID, it went down to 65 to 70.
In the year after COVID it started edging up a little bit, it went up to, say, from 65 to about 75 or 77. This fiscal year, I’ve seen that dip a little bit back to maybe just that about the COVID level or a little bit about COVID levels I would say 65 to 70. So that’s been the change in the consumption pattern. Now this is contrary to our expectation because our expectation was that post COVID it had started, consumption had started going up and our expectation was that that consumption would accelerate, but the sudden soberness in the macroeconomic environment predominantly owing to the uncertainty the consumption has oppressed.
Shradha Agrawal — AMSEC — Analyst
Right. That’s very insightful. Yeah, but I mean despite significant compression that we saw in our large existing accounts in the COVID year, we could still manage very high growth rate because as you know acceleration in new client wins and faster ramp up on those themes. But this time around I think this negating aspect is not working as much in favor as we would have expected that to work, despite we being announcing a number of deal wins, but in terms of net-new addition to revenue that seems to be not as much as what we had seen in COVID year. So any thoughts out there?
Sapnesh Lalla — Chief Executive Officer
Yeah, you’re right about that. That’s at least what the numbers say, the only thing I would say if you look under the numbers is that while we gone through what appears like two different recessions over the last three, four years, the first one which was induced by COVID resulted into us identifying an interesting growth area. Real Estate became a very interesting second job for a lot of people and we were able to get a lot of growth in-spite of the financial uncertainty out of our real-estate business on which we had invested well-ahead of time.
And we saw significant growth coming out of that. And the current financial environment actually does not favor a lot of real-estate transactions given the mortgage rates, it is upon us to find avenues of growth, our investment in St Charles is one such avenue. It has required investment and it is my expectation that it will create a return for us and we continue to look for avenues that will create growth opportunities for us.
Now from an overall perspective, from an overall perspective, there are still 1,000 customers, prospects in Fortune 1,000 that has stayed the same over the last, at least since I was born Fortune 1,000 continues to have 1,000 prospects and customers. We have only 71 of those as our customers, each of them spends a lot more than what they spend with us. And what that says is, as we acquire new customers and as we start doing more with our existing customers by adding more capability to our portfolio, we have a multi vector growth opportunity and I think that’s really what excites us and gives us the ability to have the kind of ambition that we have articulated in front of our stakeholders.
Shradha Agrawal — AMSEC — Analyst
Right. And the other question, Sapnesh, is on the margin guidance in CLG. I think the nine month average we are pretty much running ahead of the 20% guidance. So why are we hesitating in upgrading the margin guidance for CLG or is it that we are expecting a dip in margins in 4Q?
Sapnesh Lalla — Chief Executive Officer
I mean, look, you read newspapers just as well as I do, maybe you read them a lot better than I do. There is uncertainty in the market and with uncertainty there is only so much we can tell, the margin has been good, we worked hard to ensure that and we are working hard to ensure that it stays that way. But there is uncertainty in the market. And on the other hand to get ahead of uncertainty, we are making disproportionate investments in sales and marketing as well as capability building. And that hopefully will not compress margins any further, but we want to make sure that we have, we are not staying shy of making investments to ensure that we achieve. I hope that answered the question, I didn’t mean it in a negative way?
Shradha Agrawal — AMSEC — Analyst
No, no, it tells nothing. And if I can squeeze in one more question. So on the domestic side of the business, you did indicate that global SI when global large tech OEMs are seeing layoffs and hiring freezes and which is why consumption of scaling is lower there. You also cater to large global SI in your CLG business and if I’m not wrong tech is almost 20%, 25% of your CLG overall revenue. So how do you see the prospects of tech in CLG overall given what we are hearing in news layoffs by the large tech companies?
Sapnesh Lalla — Chief Executive Officer
So that’s a great question, tech bonds the largest tech and telecom forms the largest segment for the CLG business. We have been able to continue to acquire new customers and actually grow them at a rapid rate. And while the training spends of tech and telecom customers have compressed some, but the rate of change of technology is so rapid that from a long-term perspective, even though we might see temporary reduction in consumption of tech training, we’re likely to see significant expansion, because across all the areas that you can think of, technology is changing at the most rapid pace and most organizations whether they are [Indecipherable] or they are insurance companies or commodities companies or oil and gas companies, most of them are using technology as part of their transformation strategy.
And so if they’re going to use technology as their transformation strategy, then to have skilled talent who is able to use the technology to deliver the business outcomes that they have bought the technology for becomes critical. Now we can say that okay for a little bit the training spend will go down, but the one thing that most enterprises are doing is disproportionately investing in technology and that would result into increased investment in training of technology professionals. It will see a little bit of hiccup in the near-term, but from a overall perspective technology is the one of the biggest drivers of change and improvement in productivity and therefore technology training will continue to have force.
Shradha Agrawal — AMSEC — Analyst
That’s great. That’s very helpful. Thanks, Sapnesh and all the best.
Sapnesh Lalla — Chief Executive Officer
Thank you.
Operator
Thank you. [Operator Instructions] So we’ll take the next question that is from the line of Saurabh Sadhwani from Sahasrar Capital. Please go ahead.
Saurabh Sadhwani — Sahasrar Capital — Analyst
Yeah, hi, thanks for the opportunity. Sir, my question was, in CLG we have done very well this quarter and I was wondering what led to this growth, was it new things or was it re-skilling of employees or was it more of regulatory and periodic training that customers need?
Sapnesh Lalla — Chief Executive Officer
I don’t — let me first say what I believe was the growth in training, it was predominantly ramp-up and faster than we expected of a couple of customers that we had acquired recently. So predominantly on account of new customer acquisition. Now from an overall perspective, the type of training that we are delivering whether it is upskilling or reskilling or new skilling, that has not changed a lot over the last four quarters, we seem to be doing similar training for most of the customers. Most customers allocate budgets towards regulatory or new initiatives or VAU like training and most customers have not significantly changed their allocation.
What they have changed is from an overall perspective reduce the size of the pot, but the divisions in the pot have remained more or less, there may have been some tweaks, but divisions have remained more or less. So to complete the answer to your question, most of the growth that we’ve seen has been on account of new customers. It is plausible that at times of compress cleaning spends a lot of what gets spent is regulated on regulatory training, but from an overall perspective we’ve not seen a lot of change in what the money is being spent on.
Saurabh Sadhwani — Sahasrar Capital — Analyst
Okay, okay. And you say that you didn’t really pace the ramp-up that customers did was better than you expected. So do you expect it to be similar going forward in the year?
Sapnesh Lalla — Chief Executive Officer
Sometimes it is a question of how soon a customer wants to ramp-up or move away from one of their incumbents. In this situation, let me see how I can say this, in this situation, our customer happen to be a large aerospace company. And they were seeing a lot of demand for manufacturing of airplanes and they wanted to ramp-up their training in a very significant way by way of first hiring a lot of people and then training them and the demand-side of their business was growing very rapidly and they chose to accelerate the training because they wanted to bring on more people.
Now the reason why I provide this detail is because, this is very, very specific to a customer and generalizing it is hard, some customers want to ramp-up ahead of what’s typical, others ramp-up in what is typical.
Saurabh Sadhwani — Sahasrar Capital — Analyst
Okay. Thank you. Those were my questions. Thank you very much.
Sapnesh Lalla — Chief Executive Officer
Thank you.
Operator
Thank you. The next question is from the line of Siddharth Vasi, Individual Investor. Please go ahead.
Siddharth Vasi — Individual Investor — Analyst
Thank you so much firstly to the opportunity. Firstly, congratulations to the management, I think today we’ve hit record EBITDA numbers, so I think it’s a day of celebration as well for the entire NIIT family, narrating a number of INR90 cr is a great going especially in this environment. Secondly, my compliments to the management in terms of how they’ve been waiting through such uncertainty and difficult times. I see CLG is doing really well and I think that as the environment looks to improve CLG will keep on getting better. So no questions on that front from me. I just had a couple of questions on the S&C side of the business and a couple of more feedbacks to give to the management which I am hoping that they will obviously use, so responses that you will take note of them. Firstly my question on S&C is since although not similar models, but we are kind of competing with Scalar, upGrad and these guys are running on private equity money and just basically burning money like anything in terms of trying to acquire market-share. Now that is where I am somewhere worried about the B2C segment, how are we planning to compete with these guys where they’re willing to acquire customers at significant losses and you have someone willing to fund losses as compared to our strategy of being conservative. So how do we ensure that we compete with those guys on an S&C level. I personally feel that a better strategy could be just to go B2B, train them there and sort of continue to brand ourselves over there and then have them shift to us. My second question again or rather a feedback is like I look at our social media platforms in terms of what NIIT is doing on Facebook, Twitter, Insta and I see that while we have a digital team our reviews on our Twitter we don’t even get one or two re-tweats, we don’t get views at all, similar for Facebook, Instagram. Now these could be organic ways to generate some sort of charter, I see the NIIT foundation getting more views on that Twitter feed than what NIIT does, on our website we have videos which are not present anywhere else on social media platform. So, while I see Scalar simply learn people putting up their video, I don’t see the same for NIIT S&C, so that’s one question. So how do we compete with the likes of upGrad, especially considering they are willing to burn a lot of money and we are not which is a great strategy I think, personally I feel. And second, so firstly, if you could answer this and I’ll come to my second question please.
Sapnesh Lalla — Chief Executive Officer
Sure. Thanks, great questions and great feedback. So I’m not going to respond to the feedback other than saying that we will do everything that we can to make sure that you don’t have to repeat your kind words, we will ensure that you will see difference that we meet next time over. In terms of why and how will we compete against the likes of course you mentioned, I think the part that makes me feel confident that it is a battle worth fighting and winning and we have a great chance to witness, the fact that our focus has been on creating outcomes and when a student spends six months with us, it’s among the most important choices that they make and those who make that choice in studying at NIIT are able to see the outcomes and the outcomes are way ahead of industry benchmarks, that gives us the feeling that we will be able to compete and actually win because we are winning on the right terms, we’re not winning on our ability to spend the money, but we are winning on our ability to create a transformation in a student that ends up changing their lives, I think that’s a battle worth fighting.
In terms of how will we ensure that we win some by taking your feedback to heart, but in addition to that continuing to focus on a) creating outcomes, but b) once we are able to have a critical mass, we know how to scale, we have scaled in the past and we have the playbook on how to scale. The key is to ensure that we prove the product market fit and then scale it, in simple terms, we call it nail it before you scale it rather than the other way around where you scale it and then at a later point in time when you burnt a lot of cash figure out, oh my god, we also had to nail it.
So nailing it before we scale it is really how we are hoping to win this battle, but I think it’s a great question. In terms of — I think you also mentioned that why the heck are we fighting this battle at all? I think the big strategic point here is that on one-side, we have great corporate customers that you alluded to in India who support us, who choose to by training from us. The interesting thing is that if you go onto LinkedIn, a lot of our GNIIT students actually are working for the corporates who end up trusting NIIT with their training because they themselves had great experience, so that’s a big differentiator for us. The fact that a number of our corporate customers continue to trust NIIT in creating outcomes.
So our view is that it is a lot better in long-term for us to have a balanced strategy where we have the ability to transform an individual’s life, as well as collectively help an organization achieve their digital transformation. Long answer to your short question, but I hope it makes sense.
Siddharth Vasi — Individual Investor — Analyst
Thank you so much sir. Sir, one last question. This is more in terms of the stock in terms of valuations. As a shareholder, obviously, you also like the numbers are great and we’re undervalued, I can clearly see that in terms of the market value. What step should we take within the CLG and the S&C to recap to investors to explain the value, like for example, S&C will become a smaller version, a smaller part of the company, do we — what plans do we have to go out to the larger investor community, the analyst community, talk to them, give them an idea about what we’re doing in the business so that we also get a similar sort of evaluation that what the private players are getting or if not the private at least there should be a valuation which should support the fundamental and similarly for CLG what analyst needs or what proactive steps are we planning to take in order to improve that because that also is a very important aspect for shareholder return and shareholder value, like it’s always great to see your stock at 500 rather than 300, right, even though I know the value could be even larger than 500.
Sapnesh Lalla — Chief Executive Officer
Absolutely great point. I think we have to continue to communicate our story and from what I hear you say, we haven’t done a very good job in doing that, but it is our goal to actually significantly improve the way we are telling our story and tell our story to many more.
Siddharth Vasi — Individual Investor — Analyst
Sir just one last point, not a criticism at all, I think your team has done a brilliant job. See I think the team at NIIT is extremely responsive especially investor revisions and I think you’re doing a fantastic job and I just add that, if you could focus on it a little more, that’s all. No, no, no bad points at all from my end. I think this is a fantastic company with a great management and I really thank you for the opportunity, you are also providing small individual shareholders like myself. Thank you so much and congratulations for a great day today.
Sapnesh Lalla — Chief Executive Officer
Thank you. Thanks for taking the time.
Operator
Thank you. The next question is from the line of Rahul Jain from Dolat Capital. Please go ahead.
Rahul Jain — Dolat Capital — Analyst
Yeah, hi, thanks for the…
Sapnesh Lalla — Chief Executive Officer
Start answering the last couple of question, go ahead.
Rahul Jain — Dolat Capital — Analyst
Yeah, sure. Yes, thanks for the opportunity. If I heard you right, you said CLG growth of late teens organic for this year and mid 40s for S&C. Is this the number right what I heard?
Sapnesh Lalla — Chief Executive Officer
Yeah, you heard it right.
Rahul Jain — Dolat Capital — Analyst
So sir, if I do my maths this would basically imply some Q-o-Q growth for Q4 or is it because of the CC that we see it slightly differently for CLG?
Sapnesh Lalla — Chief Executive Officer
For CLG Q4 typically tends to be a flat or a tad lower quarter as compared to Q3 and that’s just seasonal part of the business, most of our customers get done with their budgets in our Q3 or their December and then it takes them a little bit to restart with the New Year’s budget. So Q4 tends to be either in line with Q3 or a little bit lower typically lower, yeah, historically it’s been lower.
Rahul Jain — Dolat Capital — Analyst
Yeah, I mean, even if we have to achieve [Speech Overlap]. So…
Sapnesh Lalla — Chief Executive Officer
Addition of St Charles we’ll likely to see Q-o-Q.
Rahul Jain — Dolat Capital — Analyst
Right, right. So I mean St Charles just on number of days basis can become 4 to 7 million. So even if we add that 3 million assuming our number around 40 million to be flat then still the full-year will more look like slightly lower than 11%. So I am saying that difference of 1% or 2% if we have to do lead teens, is it coming more from a CC difference understanding looking at dollar growth versus CC?
Sapnesh Lalla — Chief Executive Officer
That’s correct, it’s in constant currency.
Rahul Jain — Dolat Capital — Analyst
Right, right. And for this Skills & Career, last time also we saw Q4 to be a decline of close to 9%, is that and the similar de-growth would make it 45%, is that kind of a seasonal impact we’re expecting in Q4?
Sapnesh Lalla — Chief Executive Officer
Yeah, yeah that’s typical.
Rahul Jain — Dolat Capital — Analyst
Right. And just lastly on the — on this one-time element that you mentioned on the other income, can you quantify that item and also mention what is the run-rate basis other income for us now?
Sapnesh Lalla — Chief Executive Officer
I’ll let my — Sanjay to answer your question, he is our CFO.
Sanjay Mal — Chief Financial Officer
All right, thank you for question. So we had one-time exceptional expenses relating to the transaction, which was about 174 million and the process of basically having purchase price [Indecipherable] hitting from the — we have first preliminary reasons. We had an impact of about 45 million, amortization of 11 and 34 of finance cost which is discounting.
Rahul Jain — Dolat Capital — Analyst
Sorry, you were giving the breakup of this 174?
Sanjay Mal — Chief Financial Officer
Yeah, 174 is what you want to look at it, these are exceptional expenses essentially relating to the transaction [Speech Overlap] power costs and stuff like that, [Speech Overlap] finance cost.
Rahul Jain — Dolat Capital — Analyst
Right, right. So essentially the runrate outside of this is close to 121, 130 which we should see in Q4 because this won’t represent in Q4, the net other income out of Q4?
Sanjay Mal — Chief Financial Officer
Yeah, yeah one time is 130, 140, I’m saying the balance is about 45 is what basically we had supported in this quarter and we believe that as we solidify through the next quarter [Indecipherable] we will get the right number which might be marginally more.
Rahul Jain — Dolat Capital — Analyst
Sure, sure. Got it. Thank you, that’s it from my side.
Sapnesh Lalla — Chief Executive Officer
Thank you. I think we should close the call now. Okay.
Operator
[Speech Overlap] Yes, sir. We’ll take the last question from the line of Surbhi Saraogi from SCMM, please go ahead.
Unidentified Participant — — Analyst
Hello, am I audible?Hello, am I audible? Sir, just one question, can you please repeat your guidance for S&C and CLG, the growth that guidance that you…
Sapnesh Lalla — Chief Executive Officer
CLG annually right?
Unidentified Participant — — Analyst
Right?
Sapnesh Lalla — Chief Executive Officer
For CLG from an annual guidance perspective including of St Charles, we are looking at mid-teens early-to-mid teens as in constant-currency as growth and upwards of 20% as profitability. With respect to S&C, we are looking at growth of early-to-mid 40s and single-digit margins for the year.
Operator
Thank you. Ladies and gentlemen, that would be our last question for today. I would now like to hand the conference over to the management for their closing comments. Thank you and over to you.
Vijay Thadani — Managing Director and Vice Chairman
Thank you very much. I think thank you for a very enthusiastic response to our results and I think your questions always open up more frontiers in our mind to explore further, as well as improve ourselves going forward. I think in today’s conversation, we got some very useful suggestions on how we might position our self in future. And I think these comments really add value to us and therefore please feel free to share whatever suggestions you would like to and whenever you would like to. It is possible we may not have addressed all the questions, but Kapil and Sanjay, as well as all of us are available for follow-up calls and we would be very happy to answer each and every question that you may have. So thank you once again for coming forward to attend this call amongst various other commitments you had, we truly appreciate it and we look forward to our future interactions. With that we close the call. Operator, you may kindly now close the call. Thank you.
Operator
[Operator Closing Remarks]