Quess Corp Ltd (NSE: QUESS) Q4 2025 Earnings Call dated May. 20, 2025
Corporate Participants:
Unidentified Speaker
Siddharth Zabak — Investor Relations
KushalMaheshwari — Investor Relations
Guruprasad Srinivasan — Executive Director and Group Chief Executive Officer
Sushanth Pai — Chief Financial Officer
Kamal Pal Hoda — Chief Financial Officer
Lohit Bhatia — India & Global Operations
Kapil Joshi — Chief Executive Officer IT Staffing
Analysts:
Unidentified Participant
Deep Shah — Analyst
Chintan Sheth — Analyst
Deep Modi — Analyst
Siddharth Zabak — Analyst
Dipesh — Analyst
Ria Mehta — Analyst
Presentation:
operator
Ladies and gentlemen, good day and welcome to the Q4FY25 earnings conference call of Quest Corp. Hosted by IIFL Capital Services Ltd. As a reminder, all participant lines will be in the listen only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing Star then zero on your touchstone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Siddharth Zabak from IIFL Capital Services Ltd. Thank you. And over to you sir.
Siddharth Zabak — Investor Relations
Thank you. Ladies and gentlemen. Good morning and thank you for joining us on the post Q4 and FY25 results conference call for Quest Corp. Ltd. It is my pleasure to introduce the. Senior management team of West Corp. Who are here with us today to discuss the Results. We have Mr. Guru Prakash Srinivasan, CEO Mr. Susan Pai, CFO Mr. Kushan Maheshwari, Head Investor Relations and Strategic Finance. Mr. Lohit Bhatia, President India and Global Operations. Mr. Kapil Joshi, CEO, Quest IT Staffing, Recruitment and Search. We will begin the call with opening remarks by the management team and thereafter we will open the call for a Q and A session. I would like to now hand over the call to Mr. Kushan Maheshwari to take the proceedings forward. Thank you. And over to you, Kushan.
KushalMaheshwari — Investor Relations
Thank you, Siddharth. Good morning everyone and thank you for. Joining Questcorp’s Q4 and FY25 earnings call. The information, data and output shared by the management during the call is forward looking and subject to prevailing business conditions and government policies. All forward looking statements are subject to economic growth or other risk factors faced by the company. The results and presentations have been uploaded on our website. Please refer to slide number two of this investor presentation for the safe harbor clause. With that safe harbor clause in place. I will now hand over the call.To our CEO Mr. Guru Prasad Srinivasan for his opening remarks. Over to you, Guru.
Guruprasad Srinivasan — Executive Director and Group Chief Executive Officer
Thank you, Kushal. Good morning everyone. Thank you for joining us today. I’m pleased to welcome you all to the Quest Corp’s first earning call as an independent entity. It is just right after following our successful completion of our three Way Demerger. This important milestone leads to a sharper focus and unlocking value, strategic transformation and delivering sustained growth. This financial year has been a milestone in many ways. We successfully completed three Way Demerger well ahead of stated timeline. We have ensured a seamless leadership transition with all key leadership hiring successfully completed.
Quest remains dedicated to building a great organization and has proudly earned great place to work recognition for the sixth consecutive year. Following our relentless pursuit of reducing our debt levels post Demerger, we are now a company with net cash of Rupees 255crores as of 31st March 2025 with gross debt of 12crore. Additionally, our DSO days have improved by 7 days standing at 37 currently. This is a testament to our industry leading operational efficiency. Our Board has recommended a final dividend of Rupees six per share subjected to shareholders approval bringing the total dividend for the year at Rupees 10 per share as a separate entity.
Now, the Board has adopted and approved a new dividend policy for Quest wherever. Starting this year, the Company expects to return up to 75% of free cash flow to shareholders in the form of dividend or share buyback over the block of three years. Cumulatively reflecting our continued confidence in financial strength and future growth prospects. As part of the deburture transformation, we revisited some of our businesses through a comprehensive review and we will be exiting certain non core projects in line with with the position taken by the management and the Board to discontinue such projects pursuant to scheme of Demerger.
This has impacted the reported pat numbers, however it does not involve any cash outflow and no impact on company’s operational liquidity or working capital or the cash resource. Importantly, this has no bearing on ongoing performance or or asset base of our continuing business. Moving forward with the streamlining of our business portfolios will enable us shopper focus on high margin high growth core segments. This strategic shift is expected to improve our overall profitability profile, enhance capital efficiency and better positioning of company for sustainable long term value creation for all our shareholders. Now we will take you through the quarterly performance and outline our priorities.
In Q4FY25 we reported a revenue of 3656 crore with EBITDA at 67 crore. EBITDA margins were flattish sequentially and stood at 1.8% PAT. PAT for the quarter stood at negative 95 crore. However when adjusted to exceptional item a pat reported pat adjusted to exceptional item was at 63 crore which Sushant will talk about in detail in his speech. Consolidated Financial Highlights for the Year Cumulative for the year our headcount reduced by 7,000 associates and currently stands at 4.59,000, a 2% degrowth from March 24 levels under the demerger implemented during the year. We had recalibrated our headcount due to the discontinued projects and ended with a slightly lower headcount.
We delivered a revenue of 14,967 crore with a growth of 9% year on year. However, more than 90% of our business which is general staffing and professional staffing delivered a double digit growth signaling encouraging demand trend and strong execution. We delivered an EBITDA of 262 crore, a growth of 12% year on year with margin of about 1.8% full year PAT is at 46 crore. However adjusting to exceptional item we closed the year at 210 crore, a healthy 52% growth year on year. Now we’ll take you through the segment information starting with general staffing. For full year the segment revenue stood at 12,995 crore with a growth of 11% year on year.
General Staffing reported quarterly revenue of 3,149 crore up by 3% year on year and down 10% sequentially for the quarter we brought in about 89,000 new associates into the system. However, a ramp down by an NBFC client of about 38,000 affected the growth sequentially. This is a client specific move and does not reflect any structural challenge in our sourcing or delivery capabilities across the client ecosystem. Adjusted to this we would have gained 40,000 net add during the full year. Majority of new addition this quarter came from consumer, retail and telecom followed by manufacturing and industries.
From a full year perspective there was marked divergence in two halves as of the total grand total gross adds was almost 2/3 came in in H1. There has been a significant uptick in past few months. We have been instrumental in accelerating India’s formalization wave. About 1,30,000 fresh UANs generated during the year. GS also added about 80 new contracts during the quarter with an ACV of 153 crores. During full year we added 323 contracts which is our best performance for full year. As of year end we have encouraged open we have encouraging open mandates of over 49,000 primarily from manufacturing, retail and logistics.
In summary, while we while Q4 saw a transitory volume impact, we will continue to demonstrate strong operational delivery and remain confident in regaining the momentum in coming quarters. Moving to professional staffing business for full year Segments Revenue stood at 825 crore with a growth of 11% year on year. Professional staffing reported quarterly revenue of 219 crores up by 26% year on year and nearly flat. Sequentially the business delivered its best ever EBITDA and operating margin this year. This performance was driven by strategic focus on partnering with gccs and targeting high margin niche technology roles. Over past five years this transformation was initiated, we have significantly improved our deployment mix with reducing low margin entry level roles from 51% to 24% and increasing niche and high margin deployments from 19% to 39%.
Our investment in niche skills, GCC verticalization and quality of mandate have yielded a better margin profile which is reflected in our improved realization per associate which is now more than 25x of the realization. Compared to general staffing, GCC contributed to 70% of revenue for the quarter and 45 new clients that we added. We have been steadfast in continuous investments specifically across vertical to deliver and to deliver and further grow in coming years. GCC sees a lot of potential growth in India with favorable cost advantage in talent, real estate and talent availability. We are also building our GCC as a service with our pilot getting commissioned recently.
We’ll be formally launching this service shortly. The open mandates are encouraging plus as we step into Q1 with majority of positions again coming in from GCC and specifically niche roles moving on to our overseas business for full year the segment revenue stood at 1142 crore with a decline of 5% year on year. Overseas business reported quarterly revenue of 287 crore down 5% year on year and 1% sequentially. Singapore, our largest geography, continues to face visa related headwinds. That said, our pivot towards general staffing helped mitigate some impact with nearly 300 associates added during the quarter, Middylist has emerged as a standout performer with more than 2,000 active associates that delivering its highest ever quarterly revenue and EBITDA in apac.
Malaysia has shown strong turnaround in IT staffing supported by government demand. In Philippines, we are expanding into IT staffing, permanent hiring and GIG platforms to build a diversified portfolio. With respect to our digital platform segments, we are actively investing in digital ecosystem for India’s blue collar GIG workforce. Our platform Hawara HR and Hawara Jobs, though in early stages, are showing encouraging adoption trends. We remain committed to scale them in the coming year. I’m very pleased to share with you that Quest has joined World Employment Confederation as regional corporate member, becoming the first Indian company to join the global HR industry body.
The World Employment Confederation represents the gold standard in global employment practices, policies and framework and sustainable workforce and workforce development and Quest aims to contribute to advanced ethical labor practices, skilling and formal employment both in India and globally. I want to reiterate that we have entered this new chapter with clarity, conviction and momentum. The successful demerger has given us sharper strategic identity and we are now better positioned than ever to unlock value across each of our business segments. While the external environment continues to evolve, we are focused on growth, execution and operational efficiency. As a pioneer in staffing solution for India, we are spearheading a transformative initiative that leverage AI and automation to accelerate job fulfillment and boost sourcing productivity.
I would now hand over to Sushant Pai who has joined us as Chief Financial Officer. But before that I want to take a moment to sincerely thank Kamal. As you all are aware, Kamal has taken new leadership role as CEO at Blue Spring which is one of the resulting company as part of the Demerger. I want to take this opportunity to acknowledge his outstanding leadership and invite him to share few words at Quest. He has not only steered us through complex and timely demerger but also fortified our financial help enabling this smooth transition. Come on over to you.
Kamal Pal Hoda — Chief Financial Officer
Thank you for your kind words Guru. It’s been a privilege to be part of Quest and engage with our investor community. I’m truly grateful for your trust and support especially through the pivotal phase of the Demerger. I have full confidence in the leadership team and I look forward to cheering for Quest in its next phase of growth and we continue to engage with all of you in my new role. Over to you Sushant for the financial highlights.
Sushanth Pai — Chief Financial Officer
Thank you Guru. Thank you Guru and Kamal Kamal for the smooth transition and for your support. And a very good morning to all of you on the call. I’ll first do the financial headline numbers before delving into segmental performance and other corporate updates. We reported revenues of 3656 crores for the quarter reflecting a 3% year on year growth though down 9% sequentially reported EBITDA came in at 67 crores marking 8% increase quarter on quarter and 13% growth year on year. Operating margin improved 1.8% with a sequential expansion of 29 basis points and a 15 basis points improvement over last year.
For the full year we delivered revenues of 14,967 crores, up 9% year on year. Full year EBITDA stood at 262 crores, registering a healthy 12% growth over the previous year. As part of the Demerger transformation, we have revisited some of our businesses through a comprehensive review and we will be exiting certain non core projects in line with the position taken by the management and the board to discontinue such projects pursuant to the scheme of Demerger. This has impacted the profit after tax in quarter four FY25 and the same is shown as exceptional items broadly characterized in three parts totaling to 158 crore.
Impact of discontinued projects is about 119 crores which is basically additional expected credit loss. These projects have long gestation periods and recovery cycles based on the nature of business given the demerger. We evaluated such businesses its future prospects and decided to exit such projects mainly in the areas of utilities and skilling. We have accelerated the flow rates for expected credit loss over and above the normal flow rates used for such businesses. However, we’ll continue the collection efforts in the process of winding down. The second part is impairment of goodwill totaling to 26 crores which is 7 crores in stellar slog and 19 crores in crest international Services.
The last part is demerger expenses of 13 crores mainly comprising stamp duty on demerger related expenses. This has impacted reported PAT by rupees 158 crores in the quarter. Adjusted for this PAT Q4FY25 has grown by 49% year on year and the full year PAT has grown by 54% year on year. Similarly adjusted EPS for the quarter and year is rupees 4.2 per share and 14.1 per share respectively. We are confident of our business fundamentals, strategic direction and market positioning to enhance momentum in the coming years and we will measure ourselves against the adjusted PAT while setting our profitability goals for the coming year.
This does not involve any cash outflows, has no impact on the company’s operational liquidity. One of our core capital allocation priorities has been the reduction of gross debt, underscoring our commitment to maintaining a healthy balance sheet and exercising disciplined cash management which has resulted in a Net Cash of Rupees 255 Crores as on 31st March 2025 we are pleased to announce that the Board has recommended a final dividend of 6 per share subject to shareholder approval, taking the total dividend for the year to 10 rupees per share. The Board has adopted and approved a new dividend policy for Quest whereby the company expects to return up to 75% of free cash flow to shareholders in the form of dividends or share buybacks over a block of three years.
Cumulatively, the decision to modify dividend policy this year onwards to further reward our shareholders reflects the strength of our cash position and our commitment to delivering consistent value to the shareholders while investing in growth. Moving on to segment wise updates starting with general staffing, we delivered a top line of 3,149 crores down 10% sequentially. The quarter on quarter decline is primarily due to a ramp down by an NBSD client. Segmental EBITDA stood at 43 crores, a decline of 5% quarter on quarter and 32% year on year. EBITDA margin for the segment came in at 1.4% showing a 7 basis point sequential expansion though it contracted by 137 basis points compared to the previous year.
For the full year revenue stood at 12,995 crore with a growth of 11% year on year while EBITDA came at 194 crores, a 5% growth year on moving to professional staffing. We are pleased with the segment’s performance despite a modest IT and its hiring. The segment delivered 219 crores of revenue flat sequentially but 26% up 26% on a year on year basis. The segment EBITDA came in at 20 crores delivering a healthy 34% growth on a year on year basis. Margins have expanded meaningfully now crossing the 9% mark on a sustainable basis. For the full year revenue stood at 825 crores with a growth of 11% year on year while EBITDA came at 77 crores, our best ever numbers with a 42% year on year growth.
Coming to overseas business, revenue stood at 287 crores which is broadly flat sequentially but down 5% year on year. Despite persistent visa restrictions for IT staffing in Singapore, the overseas business was able to offset much of this impact by delivering growth in new new business lines and other geographies. Segment EBITDA was 17 crores marking a robust 41% year on year growth and 9% sequential increase. Margins for the segment remained healthy at 6% for the year. Revenue stood at 1,142 crores with a decline of 5% year on year while EBITDA came at 63 crores, near flattish decline sequentially.
From a profitability standpoint, approximately 59% of our contribution comes from general staffing to 23% from professional staffing and around 19% from overseas business. Our digital platforms for blue collar workforce and gig workers currently in the incubation phase are being scaled up steadily. Moving on to corporate updates, we recorded 11 crores in other income this quarter. Large part of this which is attributable to the interest from income tax refunds of 145 crores in the quarter. As a newly demurred standalone entity, Quest is now fully focused on delivering double digit revenue growth and a nonlinear EBITDA Growth trajectory.
While we anticipate near term headwinds on top line growth due to ramp down in NBFC sector because of one client over the coming months, our underlying fundamentals remain strong to deliver double digit revenue growth with nonlinear growth in profitability. We are on track to becoming debt free in the coming quarters. Our adjusted ROE for the year stands in high teens and we are confident of crossing 20% mark from this year onwards. Reflective of a stronger balance sheet and sharper capital efficiency. With a simplified structure and focused strategic execution, we are well positioned to build long term value for all our stakeholders.
With that, I conclude the financial update. Thank you for your time and continued support. I now hand it back to the moderator to open the floor for questions.
Questions and Answers:
operator
Thank you sir. We will now begin with the question and answer session. Anyone who wishes to ask a question may press star and one on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star in two. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. The first question comes from the line of Deep Shah from BNK Securities. Please go ahead.
Deep Shah
Yeah, hi, good morning and congratulations on this demerger being done. Welcome Sushant, good to have you. And thanks Kamal for all the help that you did all these years. So first question was on this exception item itself. So I. I think I heard multiple times that some projects were discontinued because they had non gestation periods. But it would be useful if you could give some detail into what were these projects and how did the receivables. There was a very significant number in. In our understanding. So how did this receivable that build up over. Over how many years were these projects being tried? So some clarity here I think would really useful.
So that’s my first question. On the second question, we understand the NBFC circular had come out which led to insourcing and which is why we’ve seen sequential headcount decline. But if you could just help us understand how. How are the trends routine for this year and I understand this is a one time thing. But then do we feel confident that we can more than offset this loss and report double digit head down Road for FY20 since your initial thoughts on these funds will be very use. Thank you.
operator
Thank you Deep for the question. For the operational part of the exceptional item, I’ll ask Guru to give some insight and on the financial impact I will ask Sushant to give you details on that. Guru, over to you.
Guruprasad Srinivasan
Sure. If I take the first question so specific to the ACL on discontinued projects. See as we had also, you know, alluded to this couple of quarters ago, there are two specific segments which are long drawn contracts that we have been working on. The first is on the skill development and the second one specific to the utility segment where we do meter reading and build distribution kind of outcome based program.
One we had clearly signaled to the market that we will not get into any outcome based projects and we have been creating a flow rate for each of this. But considering the demerger and at the moment it is, I mean being more conservative and prudent in terms of getting it transitioning into the new 3.0 of Quest, we thought we, the board and everyone decided that it’s the right time for us to accelerate our provision. So the project are specifically to utilities and the skill development area where we’re working. So it is not something that while we are accelerating the provision, as Sushant said in his speech, we’ll still continue to drive the whatever the collections that are pending there.
And then as and when it comes in, of course it’s going to be upward as we move forward. Sushant, you want to add?
Sushanth Pai
No, I think just want to add, you know, this was part of the receivables and it was provided for as per our provisioning policy. Now since we looked at all the businesses together, we evaluated these businesses and we felt based on the long gestation periods and long recovery cycles and to focus only on a core, we thought it’s a good time to accelerate the ECL provision and then take this 119 crores of loss. But having said that, like Guru said, we will continue our collection efforts as we wind down such projects. Other two line items as part of this was impairment of goodwill. So when there was an entity, we had an entity, Golden Star, which we have now repurposed to do international staffing. We have just got our licenses in place and the carrying value there we have actually impaired because all the contracts of good will, I mean of Golden Star moves into. It’s a facility management business and it moves into Blue Spring. And this entity is repurposed as Quest International Services and the workforce. So that’s the second part of it. And third is demerger related expenses.
Specifically on stamp duty and. Yeah, specifically on stamp duty.
Deep Shah
Thanks Guru. And on the second question on the NBFC impact on the headcount and growth, can you give some insights on that? I would ask Guru and consequently Lohit can give some more insights on general staffing.
Guruprasad Srinivasan
So I would a little rollback on this long answer to this. So if you look at post Covid we exited the year we were about 2:32,000 and since then three years now if you look at we have almost doubled in terms of our headcount we are about 4 lakh. If I take overall 459 and specific to general staffing we are about 4 25,000.
So in a long tenure we have definitely we had almost about 80,000 people in a quarter two areas that we’ll have to work and that’s also a kind of of course there will be one odd cases like this will happen and that would we would recover and we would come out of it as we move forward. These are natural but in a long term horizon we continue to aggressively grow we continue to double our headcount. At the same time there’s one area that we’ll have to focus is further on how do we work on our attrition side as well.
So we are running a project on both productivity as I said on fulfillment as well as on the attrition control. But otherwise this is one odd case and I’m sure as we speak step into FY26 we will recover out of it. I’ll just get Lohit to thank you.
Lohit Bhatia
Guru Deep As Guru mentioned a little while back as well, this has been in many ways one of the best years from the sales team perspective. 323 new logos worth an ACV value of almost 720 crores have been signed by the general staffing team. If you also see the first half of the year the economy and both the business was trending at a very different run rate. 29,000 net adds were done in the Q1, almost 11,000 net adds was done in Q2. So just in the first half of the year itself we had almost as a company added more than 40,000 headcount and we were very bullish to end the year at one of our best evers.
This like you rightly mentioned in your question itself this is an NBFC circular which has had it has required the customer to do what is called insourcing and because of that insourcing that 38,000 numbers have been there. But when you look at our open mandate book Even today at 49,000 you look at our 323 new customers added over 1300 customers portfolio that we currently have. Telecom, retail, logistics and manufacturing are the four segments where we clearly seeing demand and with both our ability to source across the country in more than 700 locations, hundreds of our recruiters and mobilizers and the customer demand.
We are quite bullish that we should. Be able to in the next one to two quarters be able to offset from the kind of headcount loss that we’ve had in this very one time event.
Deep Shah
Understood? Understood. This is super useful. Thank you. Thank you so much guys and all the best.
Unidentified Speaker
Thank you, Deepu.
operator
Thank you. The next question comes from the line of Chintan Seth from Keric Capital. Please go ahead.
Chintan Sheth
Thank you for the opportunity and congrats for the demerger in the dividend policy. One type of question on the exception again, if you could highlight what kind of revenue loss we have seen for the quarter and the year by exiting these businesses. Even if you point out how much associate was employed on those projects which led to this contraction, that is one. And in terms of margin trajectory going forward, it would hurt me to see the professional staffing business coming up pretty strongly. If you can guide overall what you think about IT staffing growth going forward.
You alluded to general staffing a bit earlier but if you can highlight these two and I’ll be come back in with you. Thank you.
Siddharth Zabak
So thank you. Thank you for your question. For the first part of the exceptional item, I’ll ask Sushant to give you more details and for the IT staffing. And we have Kapil on the call. He’ll give you some insights on the growth guidance.
Chintan Sheth
Sure.
Sushanth Pai
Firstly, I want to clarify whatever we have taken as exception items has no bearing on our revenue growth for next year. Because like I told you, these are long gestational projects and we have not taken anything new in these projects. So there’s no revenue impact for next year. So that is one thing. Second, on the margin profile broadly, if you see our margins, 87% of our revenue comes from GS with a 1.5% margin profile. 6% comes from professional staffing with a 29.4% margin profile yielding 23 of our profits. So which means that we concentrate on higher margin business as we go forward.
And that is why we have said that while we are aiming at double digit revenue growth, our profitability will accelerate higher than that. So that’s the way we are seeing because higher margin business that we do, we will get into much better margin trajectory growth profile for next year.
Chintan Sheth
Okay. So just. Just follow up on on the exception, the utilities and the skill development given. You mentioned that you are not adding new business there and scaling down over time when the projects are over. So what is the current run rate and associate getting employed in those segments so that we can kind of, you know, look at numbers, acts of that and see the growth going forward. That is one. And on the margins earlier, prior to the demerger, beware of you that you know our goalpost is to take the margins pre corporate overhead margins of around 3%.
Now it will be some bit jinxed because of the corporate overhead. What, what is the goal post now on the reported basis if you can dive, you know, like to like going forward.
Guruprasad Srinivasan
So broadly at a quest level, yes, there are corporate overheads that has come in. And broadly, if you see our margins are at 1.8%. So the way forward for that is it will be broadly in that range. Our aim is to improve slightly from there because there is corporate oversight that are going to be there. So that’s the way to look at it. It will be in this range bound sort of scenario for going forward as well.
Unidentified Speaker
Again, in multiple events we have been signaling this as well. So we were, I mean if you look at the overall margin was hovering between 2.4 to 2.4%, 2.4% to 2.5% prior to demerger specifically for 1.4 as a division. And we had clearly called out because of the corporate cost that would come in post demerger. I mean we should be somewhere between. We are about 1.8% by exit of this year. We should be somewhere shared over 2%. So there I think again we have been consistent in terms of signaling giving this messaging to the market.
So that’s where stage one we want to get to from 1.8 to 02 point percent. And then we will accelerate as we move forward with regard to the exit.
Chintan Sheth
Will be for the next year. Right? Exit of 2% is next year. Correct?
Unidentified Speaker
Correct. Correct.
Chintan Sheth
Okay. Okay. Yeah, I’ll jump back in. Thank you.
Guruprasad Srinivasan
From the modeling perspective. Yeah, from a modeling perspective you should definitely look at that way. See, I mean as Sushant clearly articulated, if you look at 87% of our contribution comes from general staffing, which is high cash generating business, low EBITDA margin business. Right. Second, the balance 23% comes from the other two, international as well as professional staffing. And we’ll continue to grow aggressively this year depending upon the demand outlook. Kapil will talk about it. We will continue to grow. However, the mix would marginally change. But high margin businesses mix coming in will always help us to hold our bottom line better.
So I’m sure from that standpoint we should by exit of this Year we should look at being somewhere about 2%. Through your first question again, these two projects specific to Skilling and Utilities we have as Sushant articulated, we have already exited the these businesses in the sense we have no revenues that we are booking from these business. It is the handover and the closure of the project. So it is. It is not going to impact my revenue in the FY. FY 26.
Chintan Sheth
Thank you. But what was the impact if we were to continue that business? What would have been the revenue? I am trying to understand for the full.
Unidentified Speaker
Skilling always ran at a very high EBITDA margin and almost about 20% of EBITDA margin business. If you were to plug in then it would have been at least another at least about 300 crores of revenue. But however it does not really since we have discontinued the business completely. So I mean we can’t model it around because we already discontinued it. So. So as part of our demergent entities as guru and Sushant, I violated. We did not have any. The board as as well as the. Management took a decision that we do not want to continue in discontinued projects. So going forward, as you can see. The current revenue for the quarter, you. Can model your growth basis the business segments identified by the management. And for your second part of your. Question on IT staffing, I would ask Kapil to give you more insights on.The hiring trends and the growth that you do.
Kapil Joshi
IT staffing is definitely going through very interesting phase. One side in the market we have geopolitical and microeconomic issues. But at quest we have seen very different numbers result of our early focus on the GCC. If you remember FY20 we were roughly around 22 crore EBITDA operating on less than 4% EBITDA margin. In last five years this business has seen almost 27% CAGR and EBITDA margin. Is close to double digit. Now why that happened is definitely. You know, you would have seen. The GCC has moved from transition to transformation. And this is the journey which we have traveled through the gcc. We have been associated and closely working with GCC in GCC space for a decade now. And as GCC do high end work in innovation product development, so be us. And this resulted in better revenue per associate, better margin per associate. And operationally also we got the efficiency. We have focused on operational efficiency. Our gross margin versus EBITDA is far better now what it was five years back.
So. And our sales engine is running very well. You have seen our investor deck. We have acquired 45 new logo last year and headcount buildup is expected over the next one year in this account. So we are hopeful that we will. Continue to continue this journey.
Unidentified Speaker
I would just like to add one point here. We have been it is not just like that but we have been planning to this for last 8/4 to reach where we have reached in this segment specifically for IT staffing. So because it also means lot of change in inside the house in terms of the order. Right. So we love to get a better recruiter productivity. We’ll have to get the better structures. The hike also needs the change in terms of the recruit ability and capability in terms of hiring for them. The sales engine is extremely different than what we used to regularly have.
And plus in addition to that the vertical approach which we built every tower starting from products to you know enterprise. So there’s the tower heads under Kapil who are managing each of this vertical in itself. So from that standpoint I think there’s a lot of preparation that has gone behind where we have reached to this stage today. No, I think guru it’s welcome. Thank you.
Chintan Sheth
Thank you. Thank you. I’ll jump.
operator
Thank you. The next question comes from the line of deep Modi from Equerious securities. Please go ahead.
Deep Modi
Thank you for the opportunity. So my question will continue on margin side. So as per my understanding sir, we have the 1.8% EBITDA margin and we have the aspiration of 2% for FY26. So what will be the medium to longer term margin expiration? Because in the past we have seen that when we are chasing the growth the margin have declined. So in these demerge entity what we are doing strategic in a strategic way. And second question is on the government’s job creations because in the last year union budget government has announced that certain benefit related to job creation and there will clarification was awaited regarding to the fine print.
So is there any update in this regard as well?
Kamal Pal Hoda
Yes. So I’ll just give you a sense on how we are going to look at margins. So one if you see like we said, you know one we want to look at high margin accounts as we go along. So there will be some improvement because of that. The second part is we are closely looking at the costs in terms of the idcs and all of that and see how productively we can bring in operational efficiency in the IDC. Related third guru also alluded to saying that how do we bring productivity through AI in terms of sourcing, in terms of giving jobs etc.
So I think a combination of all these three will help us in getting there and how all this will translate into medium and long term. We need to see how all this progresses. So we have given something for the coming year. But as and when all these initiatives take shape, we can further update you on where these margins will go. But clearly the trajectory is to look upwards from here.
Deep Modi
Okay, thank you.
Unidentified Speaker
Deep on the other question that you have asked about the government’s employment linked benefits as they are called elsewhere. You are aware that the government launched it in the budget prior to the recent budget in the current financial year 2526. Also if you see the expenditure statement and the budgeting for all the allocations, you would notice an allocation of upwards of about 20,000 crores for the ELI scheme. As industry, all of us, including other larger federations as well have given their recommendations to the government already. We are told that it’s at the final stages of rule draft.
Having said that, as quest we continue to be the biggest enablers in the market of informality. Moving to formalization, Guru in his opening statement said that 131,000 people have been added to first time job creation which remains important for us. Eli as it gets impacted will have three benefits. One, it will reduce cost for us as well as for our employer customers. So there is a potential that more hiring would kick in and will happen. The second is that there is, as you are aware, one of the scheme is tailor made towards associates itself. There is an initial mobilization cost which associates go through when they move from rural India to urban or from informal to formal that will aid many more people coming into the formal industry.
And third, most important, these schemes can eventually help something which Guru again alluded towards, which is very high attrition in this industry. If stickiness and retention increases, it’s again a natural benefit for large staffing companies like us. So we keenly keep looking forward for the rules. Thank you.
Deep Modi
Thank you. If I can give one follow up question is on exceptional items. So whether we expect this kind of exceptional item or a small exceptional item in the coming quarter as well due to the demerger or one time expenditure etc.
Unidentified Speaker
Yeah, so as I said, these are one time and these are based on specific projects that the board and management has taken a call and therefore there are no such items in the coming quarters.
Deep Modi
Okay. Okay, noted. Thank you. Thank you very much and all the best.
operator
Thank you. The next question comes from the line of Siddharth Zabak from IIFL Capital. Please go ahead.
Siddharth Zabak
Thank you for taking My question, the margins in overseas staffing have improved significantly year on year. So how are the margins expected to move going ahead? Also, are there any new geographies which. You are looking to enter?
Unidentified Speaker
So can you repeat the last New geographies. New geographies.
Okay, New geographies, am I right? Yeah. Okay, thank you. Thank you for the question. I’ll ask Louis to give you a. Sense on the margins on general staffing. As well as new geographies. Of course.
Kapil Joshi
So on the overseas you write the margin is trend downwards in the last two plus years as Singapore has had challenges on the visa regulation which their government came out with, putting a cap on every nationality that automatically meant that there were less number of Asians or particularly in this case Indians who could be moved to these geographies for IT jobs. Our IT headcount has come down which has been slow, supplemented in some parts or in some measure by the general staffing headcount, which is the new business that we’ve started almost close to 300. Headcount guru eluded in his opening sentences as well.
However, you will always notice that it yields much higher per person gross margin papam in comparison to general staffing yielding lower gross margin papam. However, this is essential for us to make that change for the business itself and for the kind of headwind that we are seeing there. We feel that we reached a point where the biggest business which is Singapore or used to be the biggest business which used to be Singapore has now been beaten by other geographies like Middle east, which is a higher yielding, higher margin business and is doing well for us.
Philippines and Malaysia, which are slightly higher yielding in terms of EBITDA margin and gross margin are smaller businesses. Hence their growth currently is not able to fully offset the decline of the IT in Singapore. But we’ve reached a trough. If I can say from here onwards, depending on how the business scales and how the international mix changes for us, we should be able to see some upwards in the trajectory. But we first like to continue ourselves holding forth here and then building on top of that. Thank you.
Siddharth Zabak
My other question was on any new. Geographies which you are looking to end up?
Unidentified Speaker
Not at the moment, we’ve just gone through a demerger process. You know, there is a focus given to each one of us for deepening the kind of results and returns from every geography that we are already invested in. And that’s what our business leaders are focused on.
Guruprasad Srinivasan
See, as part of this demons, our focus is going to be on the core businesses and how much more we can do and bring in more efficiency and stay profitable. That’s the immediate goal that we have.
Siddharth Zabak
Thank you. Thank you Guru and thank you.
operator
Thank you. Thank you. The next question comes from the line of Dipesh from MK Global Financial Services. Please go ahead.
Dipesh
Yeah, thanks for the opportunity. Just want to get sense about the NBFC ramp down which we have seen in quarter four. Whether full impact was visible in quarter four and we should not expect any incremental effect or you expect incremental impact to be there in quarter one as well. And related question about growth rate, how one should look your growth trajectory in 26 we are exiting at 3 percentage yy growth rate. How you expect that growth project to play out in FY26? Second question on margin now because of the let’s say there is an industry mix changing which is partly reflect in your collect and pay mix also changing and I presume even on margin level.
So whether any implication you expect because of changing industry mix for us in FY26 case conversion as well as margin. Thank you.
Unidentified Speaker
So your first part of the question on the NBFC wrap down impact I will ask Louis to answer the question. Second on the second part I’ll ask. Sushant to answer the question on margins. Collection, pay and so on so forth.
Lohit Bhatia
For FY26 do over to you. So the NBFC like we said it in the initial few questions as well. This is a 12 for one of the NBSCs who were tasked to do this insourcing. This insourcing led to a decline of close to about 7% or about 38,000 headcount. The revenue of that has already impacted us in Q4 in terms of our numbers and trajectory. So headcount and revenue impact was roughly 7%. The margin impact of that on the entire book was roughly about 4%. This NBS in itself used to be a customer on collect and pay. So like for like when you are reading the numbers that sudden dip is reflective in that not in a change of mix of new businesses that we are signing.
323 new businesses that we’ve signed this year come with upwards of 85% as collect and pay. And for the last many quarters we’ve been saying that average 85% or more of the business comes from collect and pay. So we continue to remain focused on that trajectory. This one time shift has happened because of this 7% of revenue going away.
Unidentified Speaker
Thank you Lohit Sushant, if you can. Cover the second part of the question.
Sushanth Pai
On the margin Front what we have said is for the full year our margins will accelerate in terms of growth far ahead of the revenue growth. However, like we exchanged because of the one time impact of the NBFC client, it will take some time to recoup those revenues and it will come during the year. So the margin profile as we go along slowly will become from 1.8 and like Guru alluded to it will be close to 2% as we go along. So that’s the way to look at margin profile on cash flow. As you have seen this year we had a very robust cash flow conversion and if you exclude the income tax refund, we are at 70% or 75% plus levels already.
So that sort of operating cash flow will continue for the coming year as well. 76% of our business is in the collect and pay model and that will continue as well. So we have a very strong mechanism to generate cash flows for the coming year at 70% plus level.
Dipesh
Just on the first part of the question, I also expect your view on the outlook. Let’s say growth wise we exited at 3 percentage yui growth obviously because of a client specific impact. But whether that client specific effect, how much time it will take for us to return that to double digit growth.
Sushanth Pai
So from a like to like basis we would always look at double digits lower teens in terms of growth, whether that’s a headcount growth on our kind of size of the market as well as revenue growth. The other thing is also you have to see the larger Indian market potential. We continue to remain one of the youngest countries in the in the world at 2829 years, our movement of 350 million people from informal to formalization. Our staffing industry continues to remain way below the world averages at over 2 and a half percent staffing penetration we are at about 1.1 to 1.2%.
The industry grows at about 13 to 14%. I’m at least talking about the formal industry for which we have statistics. While there is a long tail of more than 10,000 staffing companies in the country but may not have data on those but the ones which we have data on. So I think we’ll continue to be in double digits growth rate as we navigate this one challenge of Q4 a. One time decision
Dipesh
that was the question.Because it is a one time impact and how much time it will take us to recover it fully. I understand medium term we can grow double digit within kind of growth rate but because of specific headwind, whether it take two quarter for us to recover it Takes four quarter if you can provide something.
Unidentified Speaker
That’s right. That’s right. Take about 2/4 to recover the patient.
Dipesh
Okay, thank you.
operator
Thank you. The next question comes from the line of Chintan Seth from Gary Capital. Please go ahead.
Chintan Sheth
Yes, thank you for the follow up. One question I had was on the dividend policy. You know, you mentioned the three year block. 75% payout of the free cash, if you can elaborate on it, will be linear annually. It will be kept 75% payout or you know, depending on the yearly requirement. How should one look at that? Second is on the Given that we have already decent cash on books, are we planning any acquisitions or to fuel the growth? And what is our investment policy going forward? There’s a two set of questions.
Unidentified Speaker
Sushant, to brief you on the new dividend policy.
Sushanth Pai
So firstly, let me talk about the rationale because we are now the demerger process is over and we are an independent company and like I said, we are generating strong cash flows in the coming year. The board has decided to look at a better dividend policy in terms of number, which is up to 75% of the free cash flows over a block of three years. So that’s the policy now year to year. What will happen? It depends on how the progress of the business is, what is the cash flows will generate. But broadly the thing is, over a period of three years, year to year, we will figure out as we go along and we will update you when the dividend proposal comes.
But this is the broad policy that the board has decided.
Chintan Sheth
And investment policy. Are we looking for more acquisitive LED growth or how are we placed given, you know, we are generating sizable cash flows.
Sushanth Pai
Earlier? I mean, absolutely. In India, as I said, you know, the headcount that we add and the growth that we have, definitely it does not really make sense to do any acquisition. So we are not exploring any. And as I said, we would be investing more time and effort on technology investments. And in fact I did allude to the kind of AI project that we are working to see. How do we get the requirements productivity. I think constantly one is area where we want to invest is to better our hiring engine from where we are and how do we take the recruiter productivity to from where we are through AI interventions and the data analytics intervention which we have already started a project internally which is already going on.
We want to reap benefits of these to support our acceleration on the productivity. So that is where we would actually put more time and effort as we move forward more than acquisition.
Chintan Sheth
And last question was on the receivable days. You know, given that large part of our business comes from the general staffing and within that also 75, 80% of the business is collect and pay which. Which I believe is more cash and carry still. The. Our receivable days are 37 days currently. So I mean to say that the residual business will ideally will carry a very high receivable days. I I was of believe that 30 to 60 days is the range where we are recovering our money in the IT staffing business or overseas staffing business. But it seems the other business acts of collect and pay will be.
Will be much higher than that. I’m just trying to reconsider number.
Kapil Joshi
So if you look at all the three profiles, general staffing at an average of 17 to 18 days. As you rightly said, 80% of our contracts are collect and pay. And IT staffing clocks around roughly about 70 to 75 days in terms of collections. And almost similar will be because of course high margin and IT has to go through its own process. Right. So we are working with all large GCCs and MNCs on the other side. So they have. There is an. I mean the commercial also commensurates in terms of, you know, working in that model.
So blended average. If you look at this FY25 itself, we have brought our overall consolidated DSO from 44 days to 37 days where we have come down. Right. And this I would say is the best and commendable where we have got our DSO levels where we are today. And we would want to definitely aim at getting it better. But would it further drastically come down from here? It may not be but if we can still better by one or two days as we move forward. So I think we are at a. We are at a.
We are at the highest efficient collection system that we have put in place where we are. Sushant, you want to add.
Sushanth Pai
I just want to add that receivable the number of days also includes unbilled revenues as well. So all put together it’s a. Days. Yeah.
Chintan Sheth
Right. Right. 17 days of unbuild 21 for build receipts. Got it. I think. Thank you. Thank you for. Thank you.
Unidentified Speaker
Thanks.
operator
Thank you. The next question comes from the line of Ria Mehta from Equitas Investments. Please go ahead.
Ria Mehta
Thank you for giving me the opportunity. My first question is in respect to the goodwill impairment which we have done. So what amount of goodwill is still. Left on the balance sheet and how much impairment or what are the basis of impairment.
Unidentified Speaker
Yeah. So the goodwill we have. So the goodwill we have impact is in two companies. One is Stellar Slot, which is 7 crores and Quest International Services which is 19 crores. What is remaining as goodwill is about 236 crores. They are more for our Magna and Cocktail businesses, which are doing well and there is no impairment on those businesses.
Ria Mehta
Okay, so the two entities that we’ve already write down, the goodwill that’s completed, right?
Unidentified Speaker
Yes, yes.
Ria Mehta
And in terms of the NBSP which. We let go, was that because of. That they’re now adopting to AI or something on that lines?
Unidentified Speaker
Yeah. So I’d like to clarify. We did not lose the account. The client had to insource a certain set of people because of a certain advisory which the NBFC received. We are still service providers to the customer. We carry another few thousand people, but much smaller than what we’ve lost for the current financial year and the financial year going by. We also are in active conversation with the NBFC on a new project that we’d be working on with them to ramp up some of the numbers again so there is no loss on account of services, technology, commercials or any other thing.
Ria Mehta
Got it. And in terms of the are we. Expecting any other NBSP reducing from our clientele list because of the regulation?
Unidentified Speaker
Not at the moment. We don’t see the signs of that. See, a staffing company plays very critical role to most organizations, which is why we’ve grown and the industry has grown. One is mobilization and sourcing, which is extremely important. Today majority of our workforce, nearly 39% works in tier 2 and below towns. So for companies to come to a staffing company, payroll and compliance used to be what was essential 10 years ago. But today payroll and compliance has become table stakes. Importantly, it has been become what technology and productivity you can help them with how you can help them with sourcing across the country in all of these thousands of towns and cities.
And more importantly, how can you do the compliance management at the end of life of the workforce? Quest also has created a technology called Hamara on which resides our benefits platform. And today we give benefit to lacks of our employees which is available to every customer’s associate employees. So there are many other things for which a staffing company plays a very integral role. And we continue to see that we keep playing that role for thousands of. Other companies as well in times to come.
Ria Mehta
Got it. Okay, thank you. That’s it from my side.
operator
Thank you, ladies and gentlemen. That was the last question for today. I would now like to hand the conference over to the management for the closing remarks.
Unidentified Speaker
Okay. I again take this opportunity to thank each one of you on this call for joining us for the Q4 and full year earnings call. Your questions and feedback has always been valuable. We appreciate your continued interest and support as we move forward with renewed purpose and strategic clarity. I sincerely look forward to catching up with you again. Thank you. Thank you. Thank you very much.
operator
Thank you, sir. Ladies and gentlemen, on behalf of II Capital Services limited that concludes this conference. Thank you for joining us. And you may now disconnect your lines.