Kellton Tech Solutions Limited (519602) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Kellton Tech Solutions Limited Q3 and FY '23 Earnings Conference Call. And there will be an opportunity for you to ask questions after the presentation concludes. [Operator Instructions] I would like to thank you all for participating in the company's earnings call for the third quarter of the financial year 2023. Before we begin, I would like to mention a short cautionary statement. Some of the statements made in today's con call may be forward-looking in nature, and such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made from the information currently available to the management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings conference call is purely to educate and bring awareness about the company's fundamental business and the financial quarter under review. Now I would like to introduce you to the management participating with us in today's earnings call. We have with us Mr. Niranjan Chintam, Chairman and Whole-time Director; Mr. Karanjit Singh, Chief Executive Officer, India; and Mr. Srinivas Potluri, Chief Executive Officer, U.S. I now hand over the conference to Mr. Niranjan Chintam. Thank you, and over to you, sir.

Good evening, everyone. Thank you for joining our Q3 earnings call. I want to start off with the highlights of the financial highlights, and then we'll talk about operational highlights, and then we'll be happy to take any questions that you might have. So I'll start off with the financial highlights. For the Q3 FY '23, the consolidated revenue was INR 231 crores with an EBITDA of INR 26 crores and a profit of INR 16 crores. The earnings per share is INR 1.79 or INR 1.8. This revenue was a 5.3% year-on-year growth and about 2% quarter-on-quarter growth. For the 9 months in review, we have a revenue of INR 676 crores, which is about now close to 6.8% year-on-year growth with an EBITDA of INR 77 crores and net profit of INR 49 crores. And earnings per share is INR 5.39 per share. Coming to the operational highlights. Last quarter, Kellton was rated in Zinnov Zones ER&D Services Ratings. This is the first foray into ratings-related activity that Kellton has taken. And we are happy to inform you that we've been rated very well as a leading digital transformation company. On the other operational highlights, we have hired Vividh Baru to head our digital practice, and I'll let Karanjit and Srini give you more details on this, what's the hire means. And also Zinnov Zones to know what it means to us as well as to the customers. The third highlight that we want to bring up is we launched Elite. It's a new learning initiative for the internal company employees. So this is again, I'll let Karanjit explain to you in detail on what is -- what that means to our company as well as our employees. With that, I want to first hand over to Srini to talk about Vividh. Vividh Baru is based out of California. So I'll let Srini give a little bit color to what it means to the organization and what he brings to the table. Srini?

Yes. Great. Thanks, Niranjan. Good evening, everyone. My name is Srinivas Potluri, and I'm joining the call from the U.S. Like Niranjan mentioned, Vividh Baru. Vividh has joined us in November of last year as the SVP and Global Head of the Digital Practice. So he will be managing the digital factors as a Head of Global Level. He comes to us from Harman, a division of Samsung. He comes with over 20 years of industry experience and is a technology business leader with an exceptional track record of delivering results and transformation. And his focus is on customer centricity, top line and bottom line growth, client acquisition and operations. So at Kellton, we will fully leverage his industry experience, his network, to focus on large accounts and large deals. We have had planning sessions here in the U.S. as well as in India with him and the rest of our teams to figure out our go-to-market strategy in 2023. So we will be working very closely to make sure that we do some large account acquisitions and land some large deals this year. That will be the focus on our activities with Vividh Baru. Thanks, Niranjan. You want me to add anything else on that?

No, that's for now unless we have some questions that come about we will be -- We'll answer that Srini. Thank you, Srini. Karanjit, can you talk about what Zinnov Zones and what LEAP does to our organization and as well as our customers' space.

Yes, sure. Thank you, Niranjan. This is Karanjit, I'm the CEO for Asia Pacific based out of Gurgaon. Zinnov, as you all know, is respected industry analysts, and they assess a lot of IT services -- IT companies and the various categories. And we participated for the first time in Zinnov Zones ER&D survey and report under the small and medium service providers. And we were directly featured in the leadership zone. It's very typical that organizations will participate and then move from their nurture zone to break out to execution, but we have directly featured in the leadership zone along with the likes of all the big companies like Cognizant, Infosys, or Persistent, everyone is there. Others basically reflects our kind of track record and maturity that we have developed over these years. And this is the first time we participated, and we directly were listed in the report and the leadership zone. What this does is it gives a good validation and the comfort to the customers on our capabilities where a leading analyst, kind of rates us, that works. So that will help in our group journey kind of and the digital growth that we are targeting that we talked about. On the LEAP initiative, now this is what we call this an internal initiative that we created. It's a fast-sealing world in the digital side. So we have created a learning experience and peers. That's kind of what it stands for. And if I were to give a simple tableau, we have modeled it on something like I call it an internal TEDx for Kellton. So what we have is our various experts across the globe, there's a particular format, so they kind of come speak about certain topics -- hot topics. And then there is a Q&A format as well. So this is our LEAP as a mission kind of that enables our employees to leverage collaborative learning and knowledge sharing amongst the peers. So yes, those are the 2 things. Over to you, Niranjan.

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

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

Sir, my 2 questions are there. Firstly, why the promoter reducing the stake from last 2 years continuously? And second, why not giving any dividend?

So Ankur, I think there was a onetime reduction. I think that is something that happened last year during the time of COVID. And I did explain at that time that this was more towards having some liquidity for the family as well as for the corporation. That's the reason why we did that. We have not been reducing. Any share reduction that you're seeing is an impact of employee stock options that have been giving. So when the employee stock options have been rolled out, proportionately, our shares have come down, but not because of valuation. Okay. It was a onetime valuation, and we did talk about this extensively just around the COVID and after the COVID timeframe on that. Talking about dividend. We did give our dividend once, and then we wanted to conserve cash. Given the uncertainty that is going on within the industry, as well as the economy and our growth strategy, we have decided that we want to conserve cash and use the cash within the organization for growth of the organization versus giving out where the largest share of dividend is going to go for the promoters, which we felt it did not make sense. We will revisit this thing as and when the economy and the world over the uncertainty stabilizes and when we are able to feel that the cash cushion that we have is enough we would be happy to relook at this and provide dividends again. But at this point, I think last year, we didn't do that, the prior we did. And this year also, I don't -- we do not have any plans to give out dividends and will be wait and watch mode as to how the economy worldover stabilizes, and then we'll decide.

We have our next question from the line of Purushotham Savlani, an individual investor. .

Am I audible?

Yes, You are Purushotham. Go ahead.

Okay. Great. I have couple of questions. One is I wanted to understand, see, I keep track of other mid-cap and small-cap IT organizations also which are operating in the geographies where we also operate. So I wanted to understand, while there is a discussion about slowdown recession, et cetera. But in fact, if you look at all the peer level competitors of ours, we have delivered 25% odd sales growth. At the same time, OM also hover around on 25%-odd. Now we operate in the domains of digital transformation, enterprise solution, consulting and all, which should fetch nothing less than 25% to 30% OM, which is what the industry norm is. What we are delivering is generally what the infra services or staffing players or for that matter, BPS players would deliver. So one, I wanted to understand where are we struggling and what is the path to improve this OM to industry level. And second, I wanted to particularly understand the newest technologies like blockchain, AI, et cetera, what is the demand outlook we are seeing per se in India and India particularly, I wanted to understand.

Okay. Let me -- I'll take the first question and let Karanjit the second -- could answer the second part of your question, Purushotham. The growth -- you're right, our growth has not been as great compared to the peers, you can argue that if you look at from an absolute number perspective. Now what you're not looking at is along the way we've divested some of our companies that we had, we did a major consolidation reorg and how we do business. And that has also required us to pause last year to come up with what we call the 1,000 initiative. And that initiative is now complete. We are in the fag end of change in brand strategies. All that, we are probably 1 quarter away from finishing off the OneKellton initiative. So we believe that given, let's say, a steady state of the economy because there are headwinds that you probably have heard about. Well, there were other than India, where for example, Europe, right? Europe is struggling when it comes to growth. U.S., there are some headwinds we have seen such as economy as well as inflation related to that, so the growth numbers for next projected year it's just uncertain at this point. But we believe that we are now currently geared towards after all this restructuring, having off some of the businesses for [indiscernible] and getting to that 20%, 25% growth that we wanted to get to. And we will be getting to that probably starting 2024 calendar year, we should see growth. Again, like I said, with the caveat that the economy world over stabilizes and we are on a steady state back before what we were in COVID times. Okay. Now coming to the second question on the blockchain. Karanjit, can you answer the new age technologies and what we are seeing with the customers?

Pardon me, my other part of the first question was with regard to struggling OM. See, the domain, what we operate in digital transformation, Enterprise Solutions Consulting should fetch nothing less than 25%, 30% OM, which is what we see. I mean the kind of OM what we are delivering is generally delivered by staffing companies or for that matter infra services or BPS kind of organizations. So why are we standing in the OM while one can understand demerger and because of that sales growth has not happened and other stuff. But as far as the OM percentage is concerned, why are we operating so low...

I'm sorry. Okay. Okay. Operating margin. So I missed that. You're right. See, you're right, compared to the peers, right? For us, if you look at on-site, off-site delivery method, right? We do a lot of on-site delivery. What you see with other companies is that offshore is where most of the delivery happens. For us, it's skewed the other way around. We have -- when I'm done purely from a dollar terms, probably about 80% of our delivery from a dollar term happens in the U.S. and Europe. That is the reason why you see the operating margin level, which is lower for us. We are trying to change that given the size of the organization that we have, it has become a little bit of a challenge, but we are gearing towards that, too, which is what I call the OneKellton initiative, where earlier we had pockets of delivery, pocket of excellence of delivery happening from different geos. And that is now a global delivery arm we are formed. And that which should leverage the benefit of, I'm going to call the low-cost centers like India and out of Poland. We are better geared towards that than what we were earlier. So that's why it said 2023, even the revenue as well operating margin would see a jump. .

Okay. So are we saying that once we have these offshore centers, we'll be able to get our margins to around 25-odd percent?

We already have those sites. It's just that we were not leveraging the way that we were now are doing. That is something that we have changed that model completely. So we should be getting better margins. We would get to that 25% incrementally, but we will get there, yes. Karanjit, do you want to answer the second part of the question where the blockchain, the new wage, AI-related stuff that what we're doing and what -- how many customers kind of related stuff.

Sure. So I mean if you've been with -- on our previous calls, we would have spoken about -- we have actually developed a complete platform, NFT-based platform, which is based on blockchain and crypto and a crypto wallet. We created that about a year back. And so we have deep capabilities there. In fact, we have a sizable team as well that was trained on various blockchains and cryptos. And we had a couple of customers, which are kind of levering that capability. And developing further on from there, actually, we even created our own platform for people which leveraged blockchain and NFT so that they can have rapid deployment and of course, much more economical in terms of depriving to them. That's where [indiscernible] continue to work in that area. Of course, that is a little low...

I'm sorry sir, your voice was muffled. Can you repeat, please?

Yes. So right now, the sentiment on the startups which really use a lot of these technologies is a little low in terms of funding. So we're kind of going along with whatever the market demand is. Coming to your earlier question on AI. Obviously, AI can be leveraged in various areas, but one used case that we find frequently is basically application of AI to basically data -- data engineering. So that is something that keeps in the case, and we kind of have been working with various customers on applying AI for insights. All of them have captured a lot of data and everybody wants to now use leverage AI to develop insights and then personalize products or personalized issue or things for the customer. The other thing that was onshore, if you track that is creating a lot of right now excitement in the market is ChatGPT. I mean, obviously, this is just about came here in the last 2 months. We also have -- we have put things to kind of look and examine that in fact, we are doing a lot of internal initiatives, including Hackathon, which is like we are dignifying some idea generation and application of ChatGPT in solving real life...

You're voice is breaking, sir.

Karanjit, I think your voice is breaking. Let me answer that Purushotham. Let me add to what Karanjit has said. So we work with a number of start-ups unlike Karanjit was pointing out, we have built blockchain platforms for NFT. And NFT was a wave then, now it is not anymore. But that platform can be leveraged to provide other blockchain solutions to our customers. And the AI part, yes, AI is a new buzzword that is happening all over the world, especially with ChatGPT. AI is like people are talking about is a specific task-related AI is doing extremely well, and we are working with our customers. And like Karanjit was mentioning, our niche area that we are focusing on is on the data side of it, extracting meaningful, I guess, intelligence out of the tons and tons of data that is being generated. Every day, every year, I think it's going at a expansion rate. So that is something that we are extensively working on. There are a few platforms that we have built internally, that we are leveraging to provide faster solutions to our customers. so that they can get meaningful informations very quickly, what is you're not taking a normal software development cycle without that we're able to leverage that. Those are the solutions that we are providing. Now ChatGPT -- coming to ChatGPT is probably a lot of curiosity on ChatGPT. There are a lot of used cases specifically the language related and activities around it. We have formed Hackathon, like Karanjit has mentioned. And we are trying to come up with use cases. Some use cases we already have, a few additional use cases that we are coming up with so that we can talk to our customers about these use cases. While Internet is -- has a few use cases that they already have published about, but we are trying to get to industry-specific use cases within our customer base so that we can talk meaningfully to them and say, okay, hey, this is something that we can do today. This is something that would require ChatGPT plus something else to get you to what we want to get to. So those are the different things initiatives that we are working on.

In fact, I'm a new investor. So all that helps me understand what exactly we are doing. My question specific was with regard to India, are we seeing the demand outlook for blockchain AI in India? How is the demand pipeline from India opportunity looking like? Because I'm aware, I mean, blockchain demand in Dubai or U.S. et cetera is there.

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

Yes. I hope it's clear now.

Yes. Yes, go ahead.

You're right. Yes. So specifically to that question, we have not had, if I were to ask you, the demand that we have seen for blockchain in India has not been the kind that we see, let's say, in the U.S. or Dubai, as you mentioned. So it's been -- here, it still continues to be people focusing on their -- customers focusing on building their digital product, which is essentially the whole digital side, mobility and all that things. But blockchain, no, not too much demand in India per se.

We have our next question from the line of Bhowmick Shah, an Individual Investor. .

This is Bhowmick here, actually. My question is actually, you talked about -- I think I was there on last con call as well. I think there you spoke about this OneKellton initiative actually. And today's con call, you mentioned that, actually, I think it's a finishing line and we are 1 quarter away to just get it completely rolled out. So just wanted to understand from you, actually, 1 quarter, I mean, you are talking about this quarter ending this March or first quarter of next financial year?

This quarter ending is what we are talking about. .

This March quarter, right?

Correct. Yes.

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

So I think we talked about this, Bhowmick before -- in the previous call. So I'll let Karanjit and Srini also jump in where they can add more value than I can on this. The initiative is meant for earlier like we talked about, right? We were selling in specific, what we call verticals in technology as a separate business unit is what we've been doing. So what that was doing was they were only selling their bid and not the complete Kellton capabilities that are available to our teams. So that walls have been broken. Now everybody is on the same page as well as they understand all the capabilities that Kellton brings to the table in stuff that particular vertical that earlier that people were selling. So we are now able to provide a complete end-to-end solution seamlessly to an enterprise compared to what we were earlier. That is one, from a customer point of view. The second point is from the employee. The employees are now able to grow in the Kellton organization versus the BU that they were growing. So there's a renewed effort of the employee retention perspective, career growth perspective. People are seeing, hey, I can grow from, let's say, I'm just making stuff up, from India to Europe to U.S. or in other way around where people are coming from U.S. who want to relocate to India. They're saying, okay, hey, this is great. We can do similar work wherever you are in the global organization or new roles that they can get, okay, within the organization. And customer is getting a complete end-to-end solution, which was -- yes, we were saying that, but we were not doing it. Now we are saying and they're doing it is what the OneKellton initiative is. Karanjit, Srini, anything you want to add to that?

Yes. Niranjan, I think you covered it pretty adequately. I think the OneKellton initiative is threefold. Like Niranjan mentioned, one is customer centricity. It improves end-to-end solution possible to the customer from a perspective of portfolio of services. And from a growth perspective, it removes all the barriers, whether it be geo-based or [ BU ] based. And then thirdly, the employees, right? It makes a lot of sense for the employees to be part of an organization that is consolidated and that has opportunities at a global level. I think those are the 3 main points that we started off on the OneKellton journey basically to remove any barriers that might be there from a growth perspective.

We have our next question from the line of Rajesh Mundra from [ Anubhav ].

What is timeline for company to achieve revenue of INR 1,500 crores?

So I don't want to be in that game of giving you some timelines there, Rajesh. I appreciate you asking that question. We do want to get to that INR 1,500 crores sooner than later. Currently, we are working on smaller targets, just like what they call in cricket, right? So let's work on the next 10 [indiscernible] or something like that, right? So we are working on the next [ 100 ] million. And our target for [ 100 ] million is within the next 3 years or less is what we are targeting for getting there. This is pure organic. Along the way, if there's something inorganic, we'll definitely look at that, but we're not actively looking for inorganic growth. So our current goal is to get to the 200 million, 300 million is what we have put the targets on, and then we'll start working and building on that. As we are building more and more muscle like we would be more and more confident into taking larger customer revenues. Today, we are working on 10 million-plus revenues but now we want to get to a stage where we can get probably 20 million, 30 million plus revenue per customer. And we need to build up scale for that. And building up that scale not only requires a lot of capital, muscle power when it comes to leadership level as well as the staff that is able to deliver to that kind of capability. So yes, we are building to get to the next 1 billion company, but we do are mindful of having smaller targets to achieve them and then work on a larger one. Otherwise, we might lose focus and might be doing something that we should probably shy away from or resist that temptation.

Mr. Mundra, you're through with your questions, right?

Yes.

[Operator Instructions] We have our next question from the line of Shah Nawaz, an individual investor.

First of all, I feel like the sweet 16 is your favorite number. I can see the quarter number PAT is always 16.

I don't know why it came on the [indiscernible] we don't have that.

Actually, yes. So I think people have asked this question, many of us. I have 2 basically questions because I will not ask when we are going to increase the bottom line. Because the bottom line, I don't know. I'm not sure how it's going to happen because last 4, 5 quarters, it is flat. And my question is, like, as of now in December, as on December, how is our healthiness of cash flow? How much cash in hand is there? And my second question, what is the order book we have as on 31st December now as I spoke to you, backlog.

So I'm going to take the second question first because I'm going to -- I need to pull up the cash because we don't -- I don't have it handy. I'll pull it up, I'll get my team to pull up the cash position to you shortly. But to answer your order book side. So typically, we have 8 to 9 months of order book, revenue-wise. So if you're looking at, let's say, I'm just making numbers roughly INR 800 crores is what -- over INR 800 crores is what we would achieve or close to INR 900 crores is what we would achieve for this year. So of that 8 to 9 months of this is what we have or 3 quarters of a year revenue is what we would have an order book. So that is a thing. But I'll answer a question because our team is showing up the cash number. As we go on, I'll answer that question here. I think from a perspective of cash...

Can I ask 1 more question, sir. Ratio of employees, like I was listening to you. You said the employee, we have on-field more and off-field less. That's why the PAT is always we are seeing the pressure. So now sir, from previous year to this year, how is the ratio changed? And what is the total strength of manpower we have? And what is the future like you are looking at? Any forward guidance you're looking -- you want to hire because there is slowdown. I was reading always in newspaper, there is a -- people are -- facebook is sacking people, then, I mean, Google is sacking, Amazon is sacking people. So whether in your case also you're going to, I mean, we hire people or it's like if you want to increase? And what is the strength? And how is the ratio now what is in the U.S. and what is in India? And how you see like future, like where you want to plot that. So that as an investor, I would also -- I always will wish my share price would go up. Kellton as a whole, whoever is available here and across will bought, they will be happy if the share price goes up. And you know that share price goes up only when the bottom price that bottom line goes up. So -- and everybody in the call, I feel like eagerly want to understand and want to know how -- because one of the other company Axiscades I was attending their call yesterday, so they have given a guidance the 400 to 500 basis points of EBITDA margin they want to improve. They have the intent to improve. They have this intent to improve in next 2 to 3 years. So is there any kind of commitment or I mean, like any kind of target? I mean at least wish list that you want to have it, sir?

Okay, sure. Let me first answer the question related to the number. Today, we are over 1,800 employees. And of them, 1,400 are in India. Rest of the 400 are spread all over the world. Of that, 400 is in the U.S. and then Europe and then some in Asia Pacific. To answer your question about hires. We are very selective while we have probably, I would say, about 200 open positions that we have today. We are looking and listening to what the, not the street, but what the industries are saying. While there is no slowdown in some of the initiatives that we see in U.S. and India, but we are seeing hedgings, right, where the customers are saying, hey, 2023, we would like to talk to you about possibly looking at probably be engaging or slowing down on the initiatives that we have. So we are being very careful, selective in hiring. With that said, right, our recruitment team is actively hiring people. What the number is, I don't want to say today, probably a quarter from now, I would have -- probably when we have our call in May, I would be able to give you a better assessment because by that time, we will get some indicator of what is going on in U.S. While Europe probably is going to be a difficult story, we -- and India is on the hiring and revenue-wise, India is growing for us. We're also seeing that the margins wise, right, employee costs have gone up dramatically. And that is something that also is putting a pressure on our margins for some of the questions that the earlier callers have asked. So that is something that we are very careful. So coming to the margin side, right, at this point, I don't want to predict and say, okay, this is what it is. Our ambition is to get to an EBITDA of closer to 20% by probably 2024 is what we are thinking. I'm talking calendar year 2024, I'm sorry, financial year 2024, we would like to be closer to the 20% than what we are today. We were at 1 point in our hire numbers, but we have lately pulled back. That is a reflection of increase in our labor cost. Yes, we are hiring also for the projects in anticipation, and that is continuing on. We do see some slowdowns in some pockets. But not as a general rule everywhere. Okay. I hope I've answered your question, but beyond that, right, I cannot give you specifics because I'm still on a wait and watch mode of what is happening in the industry.

Yes, yes. And how is quarter 4 you are looking sir? Is it like at least now we are in mid of February. So I mean half of the quarter has gone 45 days, so how is the...

I cannot give that information out. I would be in trouble If I give that information now, Shah Nawaz. So I just can't do that. .

Yes, sir?

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

We all wish that our collective wish and your great effort, leadership would bring the best of the result.

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

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

Let me first answer the Europe one. Europe, in our last calendar year, has been a challenge for us. We have recently made some leadership changes there that would improve our margins in Europe as well as we're looking at to continue to grow there. While 2023, like I said earlier, is going to be a challenge. 2024 onwards, we are anticipating that it will be on the growth momentum than what it was. And this was a change in strategy because some of the initiatives that we did not work out for last year. But hopefully, for 2024 calendar year. 2023 is going to be challenging. 2024 onwards, we should start seeing the implementation of the plan that we had earlier. To answer your question about the balance sheet shrinkage. This is something that we struggle with every year where we say, okay, hey, what do we do with the goodwill. Goodwill is sitting heavy on the balance sheet? And also, our balance sheet has bloated a little bit. So we have hired a consultant to help us come up with a strategy. So we are in active discussions to see if we can do a onetime write-off of goodwill. And any other things that are on the balance sheet that are causing this bloatedness of the balance sheet. We are actively talking to our CPAs all over the world to get their feel for what we can do without causing major problems to the existing banking relationships and our comments that we have. So we are actively talking to them. So we would be in a better position by probably 1 month or 2 from now to make a decision. So -- but to answer your question, yes, we're leaning very heavily towards taking a onetime hit on the balance sheet to clean it up and not clean it up, more than clean up in order to reduce or shrink the balance sheet side so that some of the ratios and the questions that all of you have asked me many, many times, on why not just take a hit one-time hit and write-off the goodwill. So that we are looking at. What we are looking at is probably is more from taking a below the line kind of a hit versus above the line hit. So those are some of the things that our consultants have been talking to us. And we will definitely make addition this time and shrink the balance sheet as much as possible so that the coming years, we will have a better ratios when it comes to ROE and ROCE. So those are the things that we are looking at. So just wait and watch is what I would say, but we are definitely leaning towards taking a hit. Thank you, Nikita.

We have our next question from the line of Sanjay, an individual investor.

Yes. I'm saying that the quarter 3 was, again, because I want to hear that OneKellton initiative is fag end now, almost it is at the end as well as it was, again, the quarter where revenue [indiscernible], I mean, slower quarter for the IT company. Still I'm seeing that there is a 2% increase in revenue for Q3. And yes, bottom line is almost same. But yes, I understand. So -- and so I want to just know that how you see. I mean I know you cannot give exact number, that's what you just said, you cannot give a number. But are you saying that quarter 4 and quarter 1 of next year, are that going to be better than Q3? Are you saying that it is going to be better than Q3 from the growth perspective to upper and bottom line perspective.

So Sanjay, you're right. Generally, Q3 for us is cyclically not a great quarter when it comes to customer relationships and our revenue because of the slowdown in U.S. and Europe and also a number of holidays that are there in the end of the year time frame in the U.S. side. So to answer your question on the margins, right? We just did an appraisal in January of this year. This is a standard cycle for the calendar that we do for our employees. Yes, our salaries have increased. So there will be some effect for this quarter too when it comes to the margin side of it. From a revenue perspective, I just can't give you some guidance at this point without getting into trouble. So I just don't want to do that. But the numbers wise, probably, I would say the margins would be around the same that is what I can predict at this point because of the increase in labor costs again. But what we have tasked, Srini and Karanjit have tasked sales people all over the world is while our labor cost is going up, our bill rate has not gone up proportionately. So they have taken that challenge of increasing the bill rate and they are in active discussions with customers and are saying no to customers where in our margin is not what our requirement is. But that is a work in progress. It will not be 1 quarter we're going to get all of it. But starting probably Q1 next year is when we would start seeing margin improvement when it comes to that. And it's nothing to do with OneKellton Initiative. It's just that the cycle of salary appraisals as well as the customer willingness to pay more given the headwinds that we're facing in the economy all over the world.

Sure, sure. And 1 more question about -- you just mentioned about you'll be having annual appraisals which should be for this quarter. But are you hiring freshers or how many freshers generally you hire in a year, I mean now...

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

Yes. Last year, as Niranjan said, we hired almost much more than what we usually do. So that was about 150, and we're still sort of absorbing them in the projects. And for this year, our plan is to be doing about somewhere between 50 to 75 as we see the -- as we progress during the year. .

Sure, sure. Because last quarter, every quarter you released the PR, which has some information about what different wins and maybe highlight of the quarter. I haven't seen early the PR for last quarter on that. So generally -- so the number of wins or order wins in last quarter. Are they now better than the last Q2? I mean Q2, how you are seeing the business going in right now on that?

Let me answer that, Sanjay. I think that was an oversight from our team to put that number is. We had 7 new customers that were added last quarter. It's just that we have not included that. And generally, right, like I said, right, this quarter or last quarter is not a great time to add new customers. Again, activity slows down starting November, and it will go back -- it will go back to, again, back to normal starting February when the customer starts opening up. So we would anticipate that it will start picking up this quarter again compared to what it was last quarter.

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

Okay. So we have done a lot of analyst meetings in pre-COVID time. We have not done post-COVID. We do want to do that. That is one of the reasons why [indiscernible] as we're trying to get some external validation, Zinnov is one initiative. We are [indiscernible] with another rating or analyst companies like Zinnov to get us. So there's a lot of -- we're going to start because -- it's now post-COVID time, travel has opened up, we would be actively getting involved back in the analyst/waiting/other activity, marketing related, PR agencies. There's a lot of initiatives for this calendar year that we have restarted that we have stopped over the last 2, 3 years. So yes, we would start -- you'll start to see those taking place soon.

[Operator Instructions] We have a question from the line of [ DB Datta Gouda], an individual investor.

So even then I read your annual report back you mentioned that we will soon reach to INR 200 million color of revenue. But the way we are going, I think we take more time to hit there, right? Because the revenue, even though we are -- every quarter, we are -- our deal like increase in it. Last quarter, you told 10 clients. This quarter also 7 clients. So how many don't be the repetitive customers or they are moving from here and there, that is why our revenue is stand still, right? It's flat, I would say, 3, 4 years....

I think your voice is pretty bad. Can you mute yourself? I'll answer your question. I think I've got your question. Let me answer your question. So [indiscernible], our strategy has always been twofold, right? For us, 80% of our revenue comes from existing customers. So what Vividh and [ teams ] have now been tasked is to get or increase the per customer revenue from X to Y or 2x is what we're talking about, right? So the 2x revenue from existing customers is where we are going to leverage and get more out of existing customers. While these new customers that we acquire is for the long-term part of it. For the short-term to increase revenue, we are working with the existing customers to get 2x revenue from the existing customers. In some cases, what we call the named account our customer-based marketing initiatives, right, that we have started off. We have identified categorized the customers into multiple buckets where we believe we can get more revenue. We are doing aggressive client or customer based marketing to get more revenue out of there. So we are actively and aggressively pushing to increase the revenue from the customers. We are also looking at new customers because we do want to get additional customers. It will take anywhere from 6 months to a year to get significant revenue out of new customers while it's easier to sell to our existing customers. So that initiative has already started and there is renewed emphasis and focus this year from Srini, Vividh and Karanjit to get -- increase per customer revenue from X to 2x.

As there are no further questions, I hand over the call to the management for closing comments. Over to you, sir.

Thank you. Thank you, everyone, for joining our Q3 earnings call. We'd love to meet and talk to you more. Looking forward to seeing you on the next call and all if your path takes anywhere to Hyderabad and Gurugram please do look at us, and we'll be happy to give you more information and also for you to come and meet our employees and understand us more. Really appreciate all of you for your continued interest in Kellton. We would be doing much better. Just bear with us. Thank you for your patience, and now we will be doing much better starting Q1 of next year. Thank you, everyone.

On behalf of Kellton Tech Solutions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.