R K Swamy Limited (RKSWAMY) Q4 2026 Earnings Call Transcript

Ladies and gentlemen, good day and welcome to RK Swamy Ltd. Q4 and F526 earning conference call hosted by Go India Advisors, LLP. As a reminder, all participant line will be the lesson only mode and there will be an opportunity for you to ask question after the presentation conclude. 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. Rajat Gupta from Go India Advisor. Thank you, and over to you, Rajat.

Yeah, thank you, Danish. Good afternoon, everyone, and welcome to RK Swami Limited's earnings call to discuss the Q4 and FY26 results. We have on the call with us today Mr. Shekhar Swami, Managing Director and Group CEO, and Mr. Rajiv Neva, Group CFO. We must remind you that the discussion on today's call may include certain forward-looking statements and must be, therefore, viewed in conjunction with the risk that the company faces. I would now request Mr. Shekhar Swami to take us through the company's business outlook and financial highlights, subsequent to which we'll open the floor for Q&A. Thank you and over to you, sir.

Thank you, Rajat. Namaskar, ladies and gentlemen. Happy to talk to you today. Welcome you to the... Artyaswamy Limited earnings call. We listed two years ago, as some of you may know, and actually we have not done this in the last two years, so this is a fresh start from a communication perspective to all of you. Our journey towards a public company started actually much before Obviously, the date we listed. We have as a planned strategy created. An integrated marketing services business under a unified management, so you have communications, content, creative, media under one roof, add to that data analytics and marketing technology, and add to that consumer insights and full-service market research, and you put all of this together, and this is the basket of services that we offer to the market under integrated marketing services. Over the last two years, since we listed, and even before that, we have invested in capabilities and capacity. This is a planned strategy. We will continue to do so, and we will continue to invest ahead of client needs. We are focused on our clients, and we will remain relevant and add value to them. As we are all in this environment together, we all see the volatility in the world today. I think we should not worry about it too much. We should take that in our stride. And that's the way we see it. At the end of this all, we have to continue to build a robust business, which remains relevant to our clients, so that we can continue to engage with this marketplace meaningfully and profitably. There is no change in that overarching goal, no matter what the current... The company needs to stand on robust foundations, which we believe we are standing on because this has been built. This is a 53-year-old company. We know this game, and we have seen lots of changes and lots of... of events that have happened, and we have.

Thank you, Shekhar, and good afternoon, everyone. You know, Shekhar, it's been almost 53 years, and RK Swami has been guided by a simple conviction, staying close to clients and investing ahead of the curve. And this is the philosophy that has enabled the company to emerge as one of India's largest homegrown, integrated marketing services companies, and I must say, the only company in its space listed on both the NSE and the BSE. Now, when you look at these five decades that have gone by, the company has consciously built a differentiated And a difficult-to-replicate business model, one that kind of combines deep domain expertise, long-standing client relationships, technology-enabled capabilities, and a very diversified service portfolio, which is the communication, analytics, and the market service, market research. You know, with this team of over 3,000 people, A geographical footprint of over 14 locations and a repeat revenue profile that exceeds 75% YOY, we believe that at Arkeswamy, we are well positioned to benefit from the increasing demand across India's marketing, analytics, customer experience, and the digital transformation ecosystem. Let's move on to the financial performance. I'm presuming you would have all gone through our investor presentation. I will just share a few highlights here before I dwell into what led to that performance. The consolidated total income stood at 351.73 crores. I'm rounding off numbers for sake of convenience, and this was a growth of almost 15% YOY. EBITDA increased by 31.6% to almost 55 crores, and in terms of margins, it improved from almost 13.5%. Profit before exceptional item, the exceptional item being the impact of the labor cost, the profit increased by 30%. And similarly, you see a robust performance in Q4 also, where there was an increase in the top line, there were an increase in the bottom line, and there was an increase in the margin percentages. What few operational highlights during the year that led to this improved performance was that one of them was the digital content production at scale for some key clients. There was a strong traction in digital content production at scale for key clients. The second one was that we had expanded our infrastructure for the customer experience center. We increased by almost 50%, and the utilization levels, as it stood on 31st of March, was almost 83%, and based on the business and books that we see, it's expected to move beyond 91% by the time we end the quarter one. We had continued growth in international research engagement. More importantly, they were encouraging early validation. of a brand and marketing consulting group, which we initiated in the first quarter of FY26. Moreover, we are progressing well towards establishing our digital video studio, which is expected to be operational. For revenue growth. RG-enabled services. A photograph may capture the peak, but investors usually value the movie. So whilst FI26 is significantly ahead, Thank you. In U.S. dollar terms.

Thank you so much. Ladies and gentlemen, we will now begin with the question and answer session. Anyone who wishes to ask a question may press star and 1 on their touchtone telephone. If you wish to remove yourself from the question queue, you may press star and 2. Participants are requested to use handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. A first question comes from the line of Keshav Garg from Counter-Cyclical Investments. Please go ahead.

So, Mr. Swami, I firstly wanted to understand that why our revenues and margins fluctuate so much? Is there a seasonality in the business wherein the fourth quarter is the strongest? And now quarter and quarter, last quarter, our margin was 11%, and this quarter it became 22%. So, if you could just give some idea about this to your investors. And also, the CFO chose to start from FY21, and why not from FY23 and FY24, from which our revenues are down and EBITDA is down significantly, and so are the margins of halved. So, if you could just tell us that what exactly happened in FY23 and FY24, why there was a dip in FY25, and now there seems to be some recovery in FY26. So what kind of steady state EBITDA margin should we work with? And what is the ballpark revenue growth that your shareholders can expect going forward?

Can you just repeat your name? It's gone off the screen.

It's Keshav Garg.

Keshav, okay. Keshav, thank you. You ask several questions under one question, so let me try and disaggregate them. First is Q4 versus the rest of the year. This business is cyclical, my friend. So, we have seen this over the years. Typically, 40% of revenue is in the first half and 60% is in the second half. And the reason for that is they're not difficult to fathom. Budgets get, let's say, assembled or determined in Q1, and then we hit the monsoon. Then, as the festival season picks up, marketing spends open up. And then, of course, Q4 is when they want to exhaust budget. So this is a pattern we have seen for decades, and I think it will continue. Okay, so your short answer is Q4 is a very important quarter for us. So that's number one. The second thing is, why did we start in 21 and not 22 or 23? Yes, we can start at any level. All the numbers are in the public domain, and we can calibrate those numbers. What effects are... Our business revenues, okay? We have a steady state, and these are numbers in the public domain, of 75 to 85 percent of our revenue is steady state in terms of repeat business, okay? It varies a little bit by the type of discipline. In the communications business, it's 85, 90 percent. In the research business, it's a little less. In the analytics space, actually, it's over 90 percent. Broadly on an aggregate, you can take about 85% repeat business. What influences this a great deal is the additional significant projects that we are constantly chasing. It's not a one-off effort or a one-time affair. We have our eyes set on where additional, when I say significant, it is then material, okay, it can come in. At any time, actually. Marketing services business because we are dependent on client engagements. What are we doing to smoothen this? Many steps have been taken to smoothen these cycles. The CX center investment is one such. The consulting group is one such. The continuous new business focus is one such. So there are, while we continue to... Try and smoothen out these ups and downs in the revenue flows. Are we going to eliminate them fully? No, we are not going to eliminate it, because it is in the nature of the beast. So anybody looking at this company should look at this with some time perspective, and you will see, I think, I mean, if we get a large project and we execute it well and the EBITDA and margins go up, you know, we are all happy. It will continue to happen. However, you know, that's when actually the operating leverage kicks in big time because you have generated revenue and the fixed costs are fixed, and therefore the flow through will be much better. So this is how this inherently this game works. You asked another question about what can we expect in the future. I've always been told over the last couple of years that we can't make too much of future-ready or future predictions. Since giving you numbers, I think what you need to look at is the initiatives that are in play and what that might actually mean. So the CX Center, which Rajiv talked about, in this quarter, and this is not a forward-looking statement, this is a fact, so... When we hit 90% plus, that's a good number for us because that means that the investment that we made two years ago is being reasonably fully utilized. We are working on similar initiatives on the research front as well. I think this year we are fairly well focused on growing the consulting group. Why this consulting team is relevant and important for us is that this is a play at the, let's say, the front end of the engagement. It is very strategic. It is with the senior management of clients. It is actually solving and addressing problems. which are material for our clients and we are uniquely placed because we have the We have a brand management track record, we have a content track record, we have a data analytics track record, and we have the research piece. No consulting happens without us going into the field and working on that pretty hard. So when you put these disciplines under one roof, actually there are very few people in the brand and in the marketing space who can deliver this. So when we launched this last year, I think in a press conference in Mumbai, some of the press people said, oh, but you have been doing this for a long time. The answer is yes, we have been doing it. Now we are monetizing it better. And I think the capacity that we are building is an interesting capacity. And so that's where we are. I think these initiatives, and Rajiv mentioned to investment ahead of the curve, is what I think will help us.

So, Mr. Swami, yeah, any ballpark growth from here on, like 10%, 15%, 20% CAGR in the revenue, and what about operating margins? You think this, I think we did 8.5% EBITDA margin in FL26. Is it a sustainable number going forward?

Sorry, 8.5%, where is the 8.5% coming from?

Yeah, because I mean, I'm just referring to your cash flow statement, wherein the operating profit before working capital changes is 44 crore, and then there is a lease liability of 15 crore. So if you deduct 15 crore from 44 crore, so 29 crore is the real EBITDA.

I think we need to look at our businesses that we look at total income because it's all ultimately business funds. And at an EBITDA level, if you look at it on a comparison basis, we did about 15.5% in terms of EBITDA, vis-a-vis 13.5%. And therefore, there is a clear trajectory. And I think what you need to... I think these are the enablers that are going to take us to the next. If you do it effectively, then at the end of the call, you have to do it effectively.

I think we are set up. As an attitude, you know, obviously we want to grow, and I think we have set some benchmarks for the past. We will be unhappy if we don't. I think that's the statement I think I can safely make, that, you know, we understand the, I mean, I mentioned in my opening comments about the, let's say, the volatility and the environment that we are facing as we speak. We need to take a view on how that plays out as well, and what we are trying to do, not only trying, I think we are effectively doing it, is that look at our own portfolio, look at the disciplines, focus on the areas which are going to give us the growth, and not worry so much about, you know, clients and sectors which are obviously going to be affected by this. By the war and the current year, I think, is looking a little dicey for the overall environment in the country. Let's hope that it, for the sake of everyone, that these things get settled quickly and we get back to, collectively as a country, get back to doing, or even as a world, I guess, do what we need to do and straighten all these, I mean, it's, the volatility some of our clients are facing is quite significant, my friend. We understand that, and we are, I think, well-placed to deal with it. That's a comment I'm willing to make, and I've just made it.

Also, Mr. Swami, now this digital video studio that we are making in South Bombay, what is the capex that's required? And also on a broader question, like, is there any significant threat of AI displacing our business or making a large part of it redundant? Like now, for example, this digital video studio cannot in future the AI itself can make the videos for clients. And I mean, so basically this intermediation might happen and then where does it leave us?

No, it's a good question. The investment in the digital video studio is already in the public domain. It's 11 crores. And as far as AI is concerned, the digital video studio will use AI significantly. AI cannot disclose what we can do, my friend. AI requires intervention. I cannot put AI in front of a client. By the way, a lot of clients are trying it, and we welcome it actually, because... Even in that zone of AI, what we are able to do with AI as a tool is far ahead of the curve with respect to what a client is able to do. So, AI is a tool. We can't be afraid of a tool, and I don't believe it will displace us. That disintermediation that you talked about is not going to happen. And we have to play at a higher level of the value chain. AI may be a tool at some implementation level. The value is not created at the implementation level. It's created at the thinking level, and we must be aware and conscious and be prepared to deliver that. So, that's my answer to that.

Now, Mr. Rami, my last question.

Thank you, Gisho. I'm sorry to interrupt you, but please rejoin. We have a lot of participants. Thank you. Our next question comes from the line of Rohit from I Thought PMS. Please go ahead.

Yeah, hi. Good afternoon, sir. Sir, just a few questions. So, I mean, typically, most of these, most of your peers are multinational companies or global companies. So, I mean, in terms of us, I mean, of course, we have, as you mentioned in your opening statements that you were a five decade old company, so of course, we have a good standing. But from a size point of view, and also from getting, winning

business point of view, so if you can maybe talk a bit about low market share and also what is the right to win that we have Thank you. Thank you.

These MNCs.

Of course, you also had a partnership with one of these guys, and you sort of executed that, so I'm aware of that, but if you can just maybe give a perspective.

Yeah, sure. I'm glad you brought this up. I'll say this. We are in a quadrant of one. We are on our own trip. We have built capabilities. We believe in this market. I don't write a single email to New York or London or Tokyo to get approvals for anything. The freedom our people enjoy is very high. We can respond faster to any client requirement, much better than any of these multinationals can. We are investing. The news is in public domain. They are all doing mergers, acquisitions. And all of that going through a certain level of internal readjustments that they are going through. We are not facing any of it. We are not in any shape or form contemplating any layoffs. It's not required in our business. For us, I'm talking only about our company. And we believe that there will be new and better talent available because of the disruptions in the environment, which we are. All the time talking to new people, and we will add talent to our system as relevant talent becomes available. So our market share is low. By the way, I must tell you that India is unlike, say, Japan or China or Korea, which are three examples I often speak of. Where in these three countries, there is a very robust... Indigenous, non-MNC marketing services provider ecosystem. In India, unfortunately, or fortunately, whatever words you can choose, the business seems to have won the MNC way. But that's okay. The market is large. We understand this market. We invest in this market. We do original work in this market. We place a priority on this market. This is our most important engagement is in this market. I'm not governed by, you know, what a multinational, a multinational typically looks at the top multinational clients. And I know this because I sat in a multinational ecosystem for 37 years. We sit here and we place priority on Indian groups, Indian companies, Indian enterprises. And I think it's a fantastic place to be because the independence gives us speed, gives us engagement, gives us relevance, and that is something which is actually strategically very valuable for us. So we are in a very good position as far as that goes. And there's also kind of a view that somehow multinational is better. We challenge that all the time. We go up against them all the time. And we often win, and the rate of success that we have against these players is, we may be homegrown, but we are no less world-class than anybody else. So in this game, quality of professional services is what determines success, and this is something that, you know, this is not a financial statement, and I'll say it with standing on top of any roof. Come and challenge us professionally. We'll show the world what we can do. There's no problem in the quality of work we do, so that's a good thing. So we are in a good shape, so I hope that answers that.

Yes, thank you. Thank you very much.

Thank you. Our next question comes from the line of Bhavna Jain from Avogara Capital Advisors. Please go ahead.

Hello. Thank you for the opportunity. I'm pretty new to the business. So, pardon my ignorance if there is any small questions around. So, as I could see your presentation, there are a lot of revenue segments that you have mentioned. So, can we broadly have some segmental percentage as to which segment drives? The number, the highest or the lowest, and what do we plan to grow, or which segment do we plan to grow ahead? Anything on that segmental mix, please?

At a broad level, the segmental mix is in the public domain. Again, if you look at the reports, annual report also, we have broken out the business by, R.K. Swamy has an operating company, is in the communications domain. ANSA Research is in the research domain. That number is out there. ANSA Customer Equity is in the data analytics and marketing space. These are the three broad buckets under which we operate. This question keeps coming up now, and I'll quote something which my mother used to tell me, and she's no longer with us, but she always used to say, you know, which of my five fingers are important. And the answer is all fingers are important. And so we have disciplines, and by the way, we'll continue to add more disciplines. It's not that we have stopped it. I think we have, I think that's a point to note that all these have a long runway ahead of them. We are not the largest in each of these segments. I mean, our communications business, we have much larger independent. We have communication companies in the multinational portfolio, which are my earlier caller referred to. We have larger research companies in the game. We have, I think, in the Hansard security space, we are probably ahead of the game, because we started that 18 years ago. I mean, who thought of data 18 years ago? So we have a long runway ahead of us. Why would I stop growing any of them or focus less on any of them? I think the game is to play all of it. And it is being played because we have teams running each of them. It's not like... The analytics business and so is the communications business. So I'll be happy to have strong growth across all these sectors because the market opportunity is there and we are not going to give that up to focus on any one of them. I hope that answers your question.

Uh, thanks. So, uh, just to follow up on that again, that as you mentioned that our company is, we should be looking at as a cycle, right? The cyclical business or whatever. So, can we say that because of, though, as we have so many segments, in a down cycle, Or in an upcycle, what contributes better? Or it's always all in sync. If something like that, I can, see, I need to estimate a bit. That's the only reason these questions come up. Thank you.

Sure. See, I don't think there is, well, I don't know if I gave the impression our business is cyclical. I don't think so. What I said was that the. Through the year, there is a 40% revenue mix in first half and 60% in the second half. Now, that's not making the business itself cyclical. I think we are in a growth trajectory for the overall marketing services business. If you want global benchmarks, you can look at the percentage of money invested in marketing in India as the percentage of GDP will be among the lowest in the world. So we have, as the economy grows, The marketing spend will only grow, and lots of good things happening in this country, notwithstanding the instability, etc. States are competing with each other to develop the states. Investments are happening at scale. Consumption economy is robust. Media systems are very, very strong. And the media game is very well served, which means audiences are there. So, let me just say that we are not looking at cyclical, I mean, if a cycle is, I mean, if the market is growing at 6% or 8% or 12%, and then it drops to 7% or 8%, there is still growth. I don't think we are looking at commodity type of cycles in this game. I have not seen it. This is a growth business. And within that context, the disciplines, for us particularly, any of the three broad segments that I spoke about, all of them are growing here. And other pieces, our market share is still small. We can always, it's actually, if we can scale the supply side, which is very, very talent.

Okay. Thank you so much. I'll come back in the queue for sure. Thank you.

Thank you. Ladies and gentlemen, in order to ensure that the management will be able to address all the questions from the participant, we request you to kindly limit your question to two questions per participant. If you have a follow-up question, please rejoin the queue. Our next question comes from the line of Majid Ahmad from Pinpoint X Capital. Please go ahead.

Majid.

Yes, you are.

It's there in the reports or not?

So, see, we basically operate as an integrated marketing services player. Now, within the integrated marketing services, there are multiple segments and sub-segments practically. Now, they all complement each other. So, when we have client mandates, it is not necessarily a pure research or a pure analytics or a pure communication, right? So, therefore, Segmentation, segmental revenue for each of these streams therefore becomes a little challenging and not relevant.

At the full segment, at the company level.

Having said that, if you were to look at, since a large part of the research is housed under a company called Hansa Research Group, a large part of the analytics is housed under a company called Hansa Customer Equity, and a large part of the communication is housed under RK Swami Limited. If one was to go with that caveat, and if one was to go with those individual standalone financials, then I would say that almost 44 to 45% of the top line of the income comes from the communication piece, a one-fourth comes from the research piece, and almost 30% thereabouts comes from the analytics piece.

The second is for the, you have repeatedly highlighted that integrated model as a key differentiator. In practical terms, how does this translate into a higher wallet share, better retention, or improved pricing power? What's the traditional standard advertising of media agencies?

This is a good question, and I think you should understand this as follows. When we go in to any prospect, first of all, we talk a different language. And when you listen to the client, If there is a, you know, it's really you're going in with a set of tools, and we are trying to figure out which of those tools will be relevant for that particular client or engagement. So it helps us at the front end in terms of... Crafting solutions based on the tool set that we have. I think that's the first point where it helps. If I'm restricted only, if I'm only a media company and I go in and I'm looking only for a media game, then that's a different place. Okay, there is an opportunity for that, but we go in as an integrated player, and therefore the depth and width that we can offer is much better. Let me also say, this is a competitive sector, right? All of us understand that. And in a competitive marketplace, you need to have... Narratives and stories and capabilities expressed, which are relevant for the client. I think fundamentally it helps us there. Second piece is, let's say that I'm only bidding for a research project or a... Perception that the clients walk away from because we present ourselves as an integrated company with, let's say, We are always credited with, let's say, the scale that is attributed to us is much higher than, let's say, at an individual research level or an individual analytics level. So that helps as well. So these are ways in which we benefit. Look, this is the way the company has been put together, and it's all homegrown. These are not acquisitions. When I say that, why it helps us is because, you know, the teams have worked together for a very long time, and I think there is a certain homogeneity to what we offer, unlike, I mean, if we are just an aggregation of acquired companies, I think it's a different business. When you've grown it all together and the teams are together, it's a much more harmonious and seamless offering that we have. It helps very much in that space. Most of them are client perspective. And clients have... We will engage with you on other services as well. So, from that point of view, I think where we had maybe less than 5% of multi-service offerings to a particular client, I think we are at 25-30% now. So, it's growing. It's in a good space.

Thank you, Majid. I'm sorry to interrupt you, but you may please rejoin the queue for more questions. We have a lot of participants. Thank you. Ladies and gentlemen, due to the time constant, we request you to please limit the question to one question per participant. If you have a follow-up question, please rejoin the queue. Our next question comes from the line of Rohit Rathi from AB Fincock. Please go ahead.

Hello. Hello. Yeah, so I'm new to the company, so pardon me if there are basic questions. So, could you please help me understand the strategic and financial rationale behind the proposed digital video studio, and what kind of investments are in research, what revenue opportunities do you see emerging from this capability, and what time frame do you expect meaningful utilization and returns? That is my first question.

Strategically, I think we can answer this. I will only ask you to think about your own habits with your mobile phone. What are you consuming today? You are consuming, I would say, mostly videos. And the reality of today's world is that the more content there is, Which is swamping us as individuals. Forget about business. You know, we are all overwhelmed with the content surrounding us, right, all the time. If you look at it from a brand point of view, then they need to be in that content portion, as it were. And if they are not there, then they are not there. So it is a very odd situation, but it's a business reality that the more content there is, the more content is required. And even to break through. So that's the cycle that everybody is facing. That's the reality today. So what we need to do for our customers, which are large companies and enterprises, they are, you know, you cannot just do, some years ago we used to do one or two commercials a year and we were done. Today we produce dozens of content pieces. Which means the demand for capacity to think about it, create it, and turn it around and put it out there in double-quick time is very, very high. And this is just your own experience. I mean, anybody on this call will realize what I'm saying is what is happening. So, how do you do that? You can't do it if you don't have the infrastructure and capability. So, the first point is strategic requirement of a digital video studio is a must. This is something we decided some years ago. Actually, we are late in executing it, but that's okay. And the investment in this, I've already mentioned, it's in public domain, it's about 11 crores. How long will it take to pay out? Look, it's not something new. First of all, let me say this. It's not like we don't have the, they're not doing videos today. And we do hundreds, thousands actually. Sometimes we get a project which will require three, four, five hundred videos. For a single client, I mean. So, when... Another opportunity is to be able to go to market and tell clients at some large-scale enterprises. You need to be embedded now into large-scale enterprises as a content provider. And there are now opportunities coming up for that as well. So that's the game we want to play. I think this is conceptually. I can't see us not having it. We need the capacity. Otherwise, we will not be able to meet our client's requirements.

And so it's more about, you know, improving flexibility, improving the turnaround time. It helps us with scalability, and it helps us with production economics. And eventually, therefore, it supports business.

The other thing I want to say is that this business of content will be... We, you know, we are not, we will be producing content against firm work orders, as opposed to, let's say, You know, any other quote-unquote producer, I mean, I'm not an OTT platform where I create a content and put it out there and wait for people to come and then we monetize it over a period of time. Here it's all against, a client will say I need X amount of work to be done, and here there is a determined price point, there is a work order, we go and execute. So, it is the end-to-end game here. So that's the difference in what we... I say the sector as a whole brings to the table. We do it against...

And what kind of returns are we expecting from this? If you can give a ballpark figure.

Return on the investment of 11 crores. The investment you have to see as not just 11 crores, my friend. We are a company which, let's say on the content side we have, I don't know what the number is, but multiple hundred people running around chasing clients who are regular clients. So, this... This revenue stream will get, you know, it will flow into the overall communications revenue stream that we do. It is not going to be a standalone. Yeah, I don't think we view it like that. It's not to be made that way as well because it's an embedded service now for the overall business. It's like asking, you know. What company, you know, you invested in a sugar mill, how much are you going to get out of the sugar mill? I said, no, sir. But always there, I put it in my chocolate.

Understood. One more question I have. So, are you seeing any changes in advertising and marketing spends across key sectors such as BFSI, FMCG, automotive, and pharma? And which verticals are currently driving your incremental growth? That is my second question.

So, you know, we cater to almost all sectors. Did I understand your question right? Which other sectors we cater to? Is that your question? Which of them will grow, is what it is. I think there are four key sectors, and all of them are firing. One is the BFSI. One is the FMCG, consumer and the retail. One is the automotive. And one is the pharma and healthcare. The way we see is that all the sectors are expected to grow, and we have seen them consistently grow over the years. So it's not that one of them is outpacing the other disproportionately. All of them are investing. Having said that, our presence in BFSI, FMCG, and automotive is fairly good.

I'm sorry to interrupt, but please reach on the queue for more questions. Thank you. Our next question comes from the line of Ruben from Equity Intelligence. Please go ahead, Ruben, and make sure please ask only one question. Thank you.

Sure. Hi, I just want to know, you said the landscape is very competitive. So I wanted to understand when you're having interactions with clients, how do you differentiate yourself? You had mentioned you use AI, you welcome it as a tool, but maybe you can...

If we distinguish ourselves, I think the game is on relationships. First of all, I mean, the reality is that 80 to 85 percent, as I said earlier also, coming from existing clients. I think we need to stay close to them and continue to grow. As far as new clients are concerned, we actually do it significantly on invitation. There's somebody putting out an RFP, somebody's putting out a, you know, comes to us and says, here is the situation, can you bring it? The new client development is based on their... It's a constant pipeline, actually, and I've seen this. Teams are quite busy. When you are in a competitive mode, even there, let me tell you this, what relationship you are able to build. If you are able to convince the client that you are a more relevant partner for them is what wins you the game. And we try not to play the prize game too much. We do our best to hold pricing so that we are not just discounting it to nothing. And therefore, it is competence. Actually, you win clients before the RFP starts. Pull happens. They come to you. And yes, it is competitive. Sometimes, I mean, not every pitch that we go to is successful. But not every client out there is also a relevant client for us. I think we have a, because of the longevity in the game, we understand which one is more. You know, appropriate engagement for us and which ones that we need to avoid. I think that's a big, big requirement in the game. And I think one thing we don't try and do is to get desperate to search for new business. I think we need to be measured and get the right clients who can then be your client for the next 5, 10, 15 years. It's again, you need a long-term orientation in this.

And using AI as a tool, maybe, can you give us some explanation there?

AI is no tool. I mean, I have 15 in the communication piece only. I think there are 15 tools that are currently in use. I don't know how many are used in the research game. We have built our own AI tools in the customer equity space. AI is all over us. My friend. And I would not say all over us. It's all around us. We are not overwhelmed by it. Look, we do it all the time. Yesterday, we were talking to a lady from a media company, and they are facing the same thing. She was asking, you know, there's so much of AI now in media operations. There's so much of AI now in, I mean, you name it. It is basically, you know, it's embedded across our workflows. It's more of an enabler. By the way, the teams are ahead of the management in this matter. That's the reality. I mean, I go in and I talk to our guy who's doing the website, sir. He says, I've done this, that, A, B, C, D, and he's able to give it to me faster. You said, sir, I've used this tool, this tool, that tool. I said, very good. Let's go. It's good, man. AI is good. Actually, we shouldn't worry about it. Actually, we are not. We love it.

Thank you. Our next question comes from the line of Madhur Rati from Counter Cyclical Investments. Please go ahead.

Sir, thank you for the opportunity. Sir, I'm trying to understand on the employee experience front. Sir, we added close to 600 people on the customer experience side and I think 300, 340 on the telephone interview side last year, but our employee expenses has been on a declining trend. So, why is that? Is it because we have rationalized the employees because some of these functions can be done through AI and these tools? I'm trying to understand on that. And a sub-question would be, what would be the investments in employee or personnel for these new initiatives like consulting and the video studio that we are planning? And is the 11 crore investment into equipment or is the overall investment between employees and equipment? I'm just trying to understand the bifurcation of that.

Okay, thank you. Again, a couple of questions. So, let me answer one at a time. So, the fact is, sorry, can you repeat your first part of the question? Employee number.

Yeah, the employee addition that we were in.

So, see, we have added capacity, we have hired people, and many of these capacities, so there are a lot of feed on the street that we have also hired people at strategic level, but there are also... It exists because of retirement, superannuation, and so on and so forth. That's one. The second thing is, obviously, as I said, we have been involved in a lot of technology and AI initiatives, and therefore, obviously, those are also helping us. But the numbers have gone up year on year. If one were to take that exit number as on 31st of March 2025, and if I was to take 31st of March 2026, the number has gone up. But it is not that you add the numbers as on 31st of March 2025. In our business, I mentioned that we always invest ahead of the curve. And when you hire people, you hire them up front as the facilities are being done. So we have hired people not on 31st of March 25, but well before that. So when you compare a number from 31st of March 25 to 31st of March 26, it may not give the increase. We have hired over 600 people over the last 12.

This question is, if I understand you, Madhur, the numbers of employees have gone up, but you are overall...

Yeah, so that is also, correct, so that is also because when you, A, because we were muted in our increments in the current year. Out of these. Come in at a certain Thank you. In technology, we have also been hiring people, and there have been exits because of superannuation, so we have been mindful of how the cost grows. And we have also been hiring a lot of apprentices, et cetera, as a part of the National Apprentice Program. So that cost typically sits in the other expenses. So the entire expense doesn't sit in the payroll. Some part of the expense also sits in the other expenses.

Thank you.

I'm sorry to interrupt, but you may please leave me for more questions.

Sir, please limit to one question. Yeah, it's just, I'm just, so that was an address, I'm just asking on that. Sir, so what would be the investment in personal, in our consulting and the video editing segments?

It's very measured, Madhu. To answer your question, these are in single digit crores. They are not large numbers. 11 crore is in facilities and IT and real estate and so forth. That's what has been approved by SEBI.

Got it.

It's a total project cost. Yeah. So, we are talking about investments which have been approved and there is a monitoring agency, you know all that game. So, we follow all that.

Thank you. Our next question comes from the line of Sankar Narayan S. from iThought PMS. Please go ahead.

Good afternoon, sir. Am I audible?

Yes, Shankar. Yes, sir.

So, I have a few questions. Let me just quickly walk through it. First, I wanted to know our revenue from our customer experience centers in FY26, and I wanted to know more on the client concentration and contract structure for that business. Secondly, on our... Advertising spends for our top clients, so how are they looking into FI27, considering all the macro-level uncertainties, so how are they looking into their advertising spends, how affect our business? And thirdly, so we have a diversified competition across each services, starting from content to data analytics to research. So how do we cater to cross-sell to our clients? So what is our strategy in it? How are we planning to improve it? So, if I remember correctly, last year in our AGM, we used to say that 25% of our business is coming from clients who use more than one service. So, how does it improve in this FI26, and how do you see it improving in FI27? Thank you, sir.

So, I think there are multiple questions here again. So, you started with data analytics and customer experience centers. It is embedded in our Hansa's equity business. If you look at that, you will get a pretty good idea of what those numbers are. So, I don't want to break it out for this call, but it's available to you. Just look at the HCE numbers, okay?

And it's about 30-31% typically of our total income.

Yeah, about 30, as Rajiv says, 30-31% of our total income. The next question was on clients and how do we cross-sell, et cetera, and the budgets you're talking about. So it's actually gone up.

See, typically, almost a one-fourth, 25 to 30 percent is basically our clients which use two or more of our services. So the revenues that have come from where clients are used two or more.

I would not say that they are drastically going down. They are not. They seem to be holding. But everybody is watching. See, you may have a budget, but they always, before they commit to spending, they look at how they are doing through the year. So the budgets are not being cut. The commitments may be delayed. They want to measure, do it in a measured way, all they say is, okay, well, let's wait and see. Maybe we do it next month or next quarter. So that's how it plays out in reality. The budgets are not being cut.

Thank you. Our next question comes from the line of Rupain Masalia from RN Associates. Please go ahead.

See, my question is particularly towards data analytics and MarkTech vertical. So, can you throw some more light on this particular segment and how scalable is this particular vertical be as a part of integrated offerings or as a standalone solutions to customers? Yeah, thanks.

Yeah, we have scaled it. 0 to 100 crores over the last decade. So that's just a broad stroke. The challenge there, I'll tell you. I think you asked a good question. Like it is in any services game, right? We need to have, talent actually is the challenge. We can employ, we can double the talent if we can find it. It's like that. So, we are in a talent-driven business. Data scientists are, they almost have wheels in their legs. They're very good. They serve a purpose. And we have a core team. The call has been stable with us for a while, and we are continuously scaling that. So, it is highly scalable. I mean, will it... Let me put a measure on that as well. I don't want to over claim anything. In conjunction with the customer experience centers that we have, and I think that's the business distinction or difference that we are bringing, our customer experience center... In this regard, we are... That infrastructure is scalable. So if you want us to look ahead, and I said we are already at 90% capacity. If the client demand is there, then we have to scale it. So, that will happen. I'm going to show you a little bit more than that. Leave it there. It's a very scalable game.

Okay. Okay. Yeah. Thanks, and best wishes for the future.

Thank you. Our next question comes from the line of Diyah from Sapphire Capital. Please go ahead.

Hi, sir. Am I audible?

Yes, we are.

So what are the higher margin services that we are going to scale that is going to drive our revenue this year?

One of the lines we are scaling this year.

Is that the question?

Yes, the high margin services.

High margin. I love your question. We all like high margin services. You want me to actually spell it out? I think that would be competitively inappropriate, Diyah. We've already answered that question. Why are we investing in video content? Because it's high margin. Why are we investing in consulting? Because it's high margin. Why are we looking at international research projects? Because it's high margin. And I also mentioned to you, I think I mentioned to you or on this call, that we try not to play the price game. Price game puts you in the lower end of the bucket. So I think that's what we are chasing. Let's hope that for the benefit of all of us together, these high margin gains expand and, you know, we have a... Let's say, a smiling ear. So that's how I say it, yeah.

Thank you. Next question comes from the line of Manan Patil, an individual investor. Please go ahead.

Thank you for the opportunity. Am I audible?

Yes, Manan, you are. Please go ahead.

Thank you for the opportunity, sir. I have a bigger picture question in terms of capital allocation. So, we are a services company, and for a services company, our ROE seems pretty low. I understand we have huge cash component on our balance sheet, and some of it is earmarked for IPO purposes. So, I wanted to understand, is there a path for our company to reach ROE in terms of more than 20% or in terms of capital allocation, how do you think about your capital allocation strategy for the cash that you have on the balance sheet and you will generate over the next few years?

So, Manan, our return on capital employed is a little north of 9%, and if you were to look at pre-appearance, it was north of 20%. Now, obviously, the capital that we have generated is being invested, and there will always be lag between the returns and the investment, and we just explained that, you know, over the next cycle, we are investing ahead of the curve so that we are able to leverage that benefit. So, as these investments mature, which obviously will keep pushing up.

Anand, we focus less on ROCE, we focus more on performance and what margins we can get out of it. I think Rajiv is right, he says it's a derivative and it's a derivative.

And your thoughts on deployment of surplus cash that we have in terms of shareholder returns or in terms of... Because a lot of your investments in terms of employees will flow through your P&L, so I wanted to understand how do you plan to deploy the surplus cash that you already have and will generate over the next few years?

I think what we can say is that we will not deploy it foolishly. Just because there is cash doesn't mean we need to go out and spend it. It will be done in a measured way only. So, I think, uh, it's, it's, uh, Rajiv talked about asset light and all that. It's also that investments that we make, we are in a position particularly on people and so forth. And even to some measure on AI and tech and so forth, we write it off. So, if the cash generation is decent, we'll worry about it, but it's not currently a major worry for us.

So, currently, you see, whatever cash, so you're, in a way, you're right, Manan, that there will be cash generation, and at that point in time, we will deploy it, obviously, logically and appropriately and prudently. The fact is that what we are focused now is to invest in the company in a meaningful way.

The only point is because services and asset-light company would have, already have, because 44 crore is earmarked for the IPO purposes, and we have 136 crore on balance sheet already. Plus, we don't have to sort of invest in factories, and a lot of, as you mentioned, investments in AI employees flow through balance sheet. So, it would be great if you can, over next few quarters, maybe outline your strategy in terms of returns of capital to shareholders as well, to buy back dividends, whatever manner. So, just my thought on this.

Yeah, thank you. It's too early here. I think this company's journey is too early as a public company. Let's hope that we have this problem, and we will address it at the right time.

Sure, sir. Thanks a lot, and wish you all the time. Thank you so much.

Thank you. Ladies and gentlemen, that was the last question, Putri. I now hand the conference over to the management for the closing remarks. Thank you, and over to you, too.

Thank you all for participating and asking a lot of questions, which is good. You have given us, you know, every question has an intent behind it, so you have given us much to think about, and we appreciate that, and, you know, we are available if anybody wants to reach out. We are open for fundizations, and we do regard this. The investor community is very much a part of our overall family, so you're all welcome, and we'll be more than happy to engage with any of you at any time. So thanks a lot for coming and participating, and much appreciated. Thank you so much.

Thank you, sir. Thank you, team of the management and Rajas. Ladies and gentlemen, on behalf of CoIndia Advisors, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.