NIIT Limited (500304) Earnings Call Transcript & Summary

Good day, and welcome to the NIIT quarterly results for the period ended September 30, 2020. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Vijay Thadani, Managing Director and Vice Chairman of NIIT Limited. Thank you, and over to you, sir.

Thank you. First of all, thanks, everyone. I know this is a busy results season for you to spend your time with us. We really appreciate that. And we do hope we will have an interesting conversation. I also hope all of you and your families are staying safe and healthy. So the agenda for today's call is to discuss the NIIT Limited second quarter ending September 30 FY '21 business performance. I just want to start with the headline of the fact that the management team, as you would notice in the results, has demonstrated tremendous resilience by demonstrating strong execution capability, has improved its market position by the significant wins, demonstrated operating efficiencies, strong operating efficiencies as visible in the margin and a stronger balance sheet as is visible in the way the working capital has been managed. So I'm sure there will be more about this as we go forward. But we -- in this call, we would also discuss future directions and opportunities based on your questions and answers. As usual, we have the full management team with us, the whole leadership team. We have the Chairman, Mr. Rajendra Singh Pawar; the CEO, Sapnesh Lalla; the CFO, Mr. Sanjay Mal; our Head of Investor Relations, Mr. Kapil Saurabh, as well as our other colleagues from finance, including Mr. Gaurav Relhan. We'll all be very happy to answer your questions on any of the subjects that you have. And if there are any questions that remain unanswered, we'll be happy to follow them up with the mails and update of the transcript based on the questions that need to get answered. So with that, without further ado, I will hand you over to Sapnesh Lalla to carry this conversation forward.

Thanks, Vijay, and thanks, everyone, for joining this call. Please note, the results of previous year have been restated for a like-to-like comparison in accordance with accounting standards. The net result, revenue minus expenses of assets held for sale as well as discontinued operations reported as a separate line below the operating results includes the net results of the Schools business housed in our wholly owned subsidiary MindChampion Learning Systems, which has been classified as asset held for sale. With that out of the way, I wanted to make a few prepared comments on our business highlights. In an environment that continues to be very uncertain, NIIT's response has been agile, decisive and the results are visible. Given the impact of COVID-19, we are emphasizing quarter-on-quarter performance, as that, I believe, is more relevant to show that there is continuing recovery in business as well as the changing mix of revenue in favor of Corporate Learning Group. The revenue stood at INR 2,189 million, up 8% quarter-on-quarter. While the revenue was down 6% year-on-year, we have bucked the COVID-induced trend of decline that we noticed in the previous quarter. Meanwhile, EBITDA has started to improve sequentially in Q1, and the momentum continued in Q2. EBITDA stood at INR 344 million, up 41% quarter-on-quarter and is up 18% Y-o-Y. EBITDA margin stood at 16%, up 367 basis points from 12% in Q1 FY '21 and up 322 basis points from 13% in Q2 last year. As far as our Corporate Learning Group is concerned, the sequential growth was led by the corporate group, which constituted 89% of our revenue in the second quarter. The revenue for the corporate business was INR 1,941 million, up 9% Q-on-Q, both in INR terms as well as in constant currency terms; and up 12% year-on-year, up 5% year-on-year in constant currency terms. The EBITDA profit of the Corporate Learning Group stood at INR 398 million, up 28% Q-o-Q versus INR 312 million in the first quarter, and up 47% year-on-year versus INR 271 million same period last year. The EBITDA margin stood at 20.4% versus 17% in Q1 FY '21, an improvement of 303 basis points quarter-on-quarter and versus 16% in Q2 of FY '20, that's same quarter last year, an improvement of almost 500 basis points of Q2 last year. We're continuing to see momentum in new customer wins. In addition, some of our project customers have -- who have experienced our services in the past, have upgraded now to become managed training services customers. It is -- these new customers we acquired over the last 4 to 5 quarters that are enabling us to achieve growth. The Corporate business saw continued traction in Q2 with new wins, expansions and renewals. The Corporate business won 2 new managed training services customers in Q2: one, a large telecom company, which was a project customer in the past, but now has upgraded to a managed training services customer; and one customer in the FMCG segment. In addition, the Corporate business had 2 expansions of business with customers and 2 customers renewed their contracts with us on a multiyear basis. This activity resulted in our visibility going to $259 million, up 4% on a Y-o-Y basis. While the volume from our top customers in the Corporate business continues to be challenged as our customers deal with the uncertainty in business environment, we continue to get applauded by our customers on our service delivery quality and our ability to adapt with the environment. In their partnership with us, they see NIIT as an organization that can help them become an adaptive learning organization, an organization that can help them pivot and respond to fast-changing business needs. This service delivery ethos and our DNA of innovation and that of keeping our customers at the center of all our efforts is inspiring our new customer acquisition efforts. This quarter also witnessed the digital transformation of the service delivery model for our large contract in Canada to enable continued access to high-quality real estate education and potential second career opportunities. We transitioned the service delivery model to a fully digital model. This enabled us to scale access to high-quality education to meet the increased demand for our courses in our second quarter, and that saw the second quarter revenue, in this specific instance, scale up in a substantial way. Overall, the margin for the Corporate Learning Group was driven by growth, improvement in business mix to digital as well as strong actions on cost. Our Skills & Careers business in India has been transformed to a fully digital business. As India Inc. starts its efforts to service the acceleration in digital transformation globally, NIIT's StackRoute team is at the forefront in being a key enabler for this transformation. We are putting to use educational technologies that we have perfected for our global customers to use in India to accelerate the digital transformation of our Skills & Careers business. Our key initiatives in India, including StackRoute and Talent Pipeline as a Service have seen 77% sequential growth in Q2. We expect StackRoute and Talent Pipeline as a Service business to remain on a positive Q-o-Q growth trajectory. Digital also is at the core of our career education business in India. We pivoted to a predominantly digital delivery model in April and have spent the last several months ensuring that we are able to deliver the outcomes our students and their employers expect from NIIT. I'm happy to report that we have seen positive endorsements from our placement partners as well as our students offer mastery learning pedagogy when delivered digitally. Achieving this significant milestone has enabled us to start bootstrapping our career education business into a fast growth digital and tech business. We are on an accelerated learning curve for scaling our digital business, especially on efficiencies pertaining to digital student acquisition. Revenue for Q2 was INR 247 million, up 6% quarter-on-quarter, whilst EBITDA stood at negative INR 54 million as compared to negative INR 68 million in Q1 this year. Overall, we have continued to focus on driving higher efficiencies and improved resource utilization. With adoption of digital, we've been able to significantly lower expenses, including requirement of real estate. This is also visible in reduction in depreciation, which declined quarter-on-quarter to INR 136 million versus INR 161 million in the previous quarter. This creates space for scaling up investments in NIIT Digital going forward. We continue to believe that the demand for deep skilling and hiring of skilled professionals just in time is likely to remain an important criteria, especially as it pertains to digital skills. As companies transform, they need employees that are not only better trained but more confident in their learning to maintain high productivity. Our other income, including interest and treasury income for Q2, was $171 million. In terms of balance sheet, as Vijay pointed out, we lowered our working capital requirement. Our DSO has improved further to 41 -- 49 days, excuse me, at the end of Q2 versus 51 at the end of Q1. In terms of headcount, as I mentioned earlier, we are becoming more efficient. At the end of Q2, our headcount across NIIT stood at 2,386 NIITians as compared with 2,533 at the end of Q1. Going forward, we will continue to pursue growth across the key dimensions that we have focused on: first, continued geo and capability expansion of our Corporate business, both organically and inorganically; achieving leadership in our career education business in India; and expanding access for our StackRoute and TPaaS programs. Those are the key growth drivers for us, and we will continue to focus on them. Overall, as we continue to navigate the uncertainty of the business environment, I would like to put on record the great appreciation I have for each and every NIITian who has gone above and beyond their call of duty to keep our customers first and innovate to convert this adversity into an opportunity. Thanks. Those were my prepared comments. I would now hand you back to Vijay to walk you through the utilization of proceeds from the divestment of NIIT Technologies.

Okay. Thanks, Sapnesh. We'll open it for Q&A very quickly. I just want to respond to what Sapnesh wanted me to complete the briefing with. So over and above the numbers that I gave every quarter of how we have used this transaction proceeds, the only number that I would like to add is that we did pay a dividend of INR 2 per share in September of 2020, which amounted to INR 283 million. With this, the award -- the amount that has been distributed in terms of rewarding shareholders, including applicable taxes, is INR 677.8 crores, which represents 47.3% of the net cash available from the transaction after payment of taxes and retiring debt, et cetera, et cetera. The balance amount of INR 755 crores, excluding, of course, the indemnity reserve, which is being kept for fulfilling obligations, if any, against the NTL divestment transaction, I think that is the amount which is being kept for deployment, of which a certain number of actions have already started. We had a 2-part plan, one, of rationalizing the loss-making businesses, and in that, we -- the decision to divest the schools has already been taken. Of course, we would be advising you as soon as a transaction is concluded. Similarly, the transition or the digital transformation of NIIT B2C business and its transition to a full -- fully or predominantly digital format has also happened, though, accelerated to a bit by the pandemic. And there again, the investments have already begun. The company is also examining inorganic opportunities very carefully, given many of the companies are also at this point of time challenged and, therefore, it will be extremely important to make judicious choices. And we would keep our shareholders informed of the progress in these matters as and when a transaction occurs. So I will stop the briefing here right now and open the floor for Q&A, and we'll all be very happy to participate in any discussions. Thank you.

[Operator Instructions] The first question is from the line of Shradha from Asian Markets Securities.

Congratulations on a good set of numbers. Sir, please, firstly, on the Corporate Learning segment, any quantitative comments would you want to make on how do you see the growth trajectory in this business for the next 2 quarters and going into next year as well?

Can you say your question one more time? I missed the first couple of words.

On the Corporate Learning segment, how do you see the growth trajectory panning out for the next 2 quarters and going into FY '22 as well?

I think that's a great question. The way I would say it is, like I mentioned earlier, there is continued business uncertainly. And because -- and that business uncertainty is not limited to just us, it carries forward to our customers as well. And that's the reason why I mentioned that a number of our existing customers have lowered their consumption of training because their HR organizations are distracted with many things related to COVID. So our existing customers, their volumes are down. However, the significant acceleration we've seen and velocity we have seen in our new business development activity specifically over the last 4, 5 quarters and as we've seen that activity continued into this past quarter and continuing into this quarter, and given the strong pipeline of deals we have, I feel we will continue to see reasonable growth. And I think the Corporate business is on a good standing and will continue to be so.

Earlier, we used to guide to growth rate of 12%, 14% in CLG? Sir, do you think that's a reasonable expectation, given the current uncertain environment? But given reasonable client addition for us in the last few quarters, is that the number which you can work with for next year?

Yes. I think what I can say is, if I look at our Q3, I feel our Q3 is likely to be similar to Q2. And as we continue to move with our business development actions, Q4 might be similar to Q3 as well. So I feel that we will be at the rate at which we currently are, which will result into some amount of growth for the year.So going forward -- the question was, going forward is next year...

Sure. And sir, please, on the -- going forward...

Okay. My apologies. I think, again, there are 2 dimensions of growth possible as we look at next year. And really, when we look at next year, my focus would be on a post-COVID time frame, assuming that a vaccine would have done whatever it's supposed to do. But as we come out of the COVID time, I feel our growth will get accelerated on 2 dimensions: one, our existing customers, who've had subdued volumes, will start consuming more training as they start focusing on growing their businesses; and second, the ramp-up we have seen in the new customers that we have acquired will also show into growth. So we are likely to have growth on 2 dimensions. When exactly post-COVID era starts is uncertain. But as soon as it does, I think our business will start growing on these 2 dimensions.

That's useful. Sir, just one for me. Sapnesh, how do you see this margin of 20%? I mean, these are the record margins you have done. So do you think this is sustainable? And when this work-from-home situation normalizes, how much of it would be pulled back. Sir, any comment on the margins?

I think as you guess, there are parts of this margin that might not be sustainable, specifically as work-from-home situation changes or the travel situation changes. But I think one of the key drivers for margin improvement is the adoption of digital. We don't have to send trainers on planes to different cities and countries to deliver training. We are now doing all of that digitally. And it is very convenient for our customers because our customers don't have to send their people to different cities or different places for training. So as the digital behavior sets in, I feel that some of that digital behavior will turn into convenience and will stick. Whether 100% of it will stick or not is -- the jury is out for that. But I think some of it will stick because, indeed, if you were to ask anyone, do they miss commuting, I don't think you'll get anyone who says they miss commuting. So I think some of it will stay, and some of it might go away. Exactly how much of it will stay, I think, depends on 2 things: one, how much we are able to innovate and make the digital experience as good, if not better, than the physical experience. And that's something that we are investing in. And I feel fairly confident that over the next few quarters, our digital experience will actually end up beating our physical experience in terms of how a student consumes training. In terms of people going back to their old habits, I think some of them will because they just feel more comfortable that way. So long answer to your short question, I think some of the savings are sustainable.

The next question is from the line of Rahul Jain from Dolat Capital.

Yes. I mean I have a similar question to ask on the profitability. Of course, you have given some clue. But what we need to understand is how -- what is your view on some of this behavior? One interesting point that you raised out here is that what if we make the experience equally good or even superior in terms of how we are delivering this and how consumer is consuming this? If that changes, then probably a good part of it can still stay the way it is, right, as some of the other things will. So what is your guesstimate to the situation where it may end? Because it's a convenient option for everyone, as you said.

I would hate to make guesses on this call. But like I pointed out, I think some of the savings, maybe a large percentage of savings will stick. Some of it will go away because from an overall perspective, at some point in time, travel will start; at some point in time, people will get sick of Zoom calls and would want to meet each other. So I think it's normal to expect some of the physical contact to start. What's exactly in store for us, my guess is as good as yours.

Yes. Yes. Right. And on the CLG customers who could not scale up yet, what are the challenges out there? What are their reasons for not going? Is it their own priorities are still at some other point right now compared to training? Or is it lack of adoption to digital medium is the barrier right now? And how [ we try ] what we are doing and what can happen here for this to change?

No, like I said, the uncertainty in the business environment is not limited to us. It pervades to our customers. Several of our customers initially were trying to figure out how to get their large employee base to get to a work-from-home situation and then now they're starting to think about how to get them back to work. And in all of this as well as the uncertainty caused by business, sometimes training falls on the wayside. What I would point out here, and that's something that's unique about our customers, is that a large percentage of our customers are in the regulated business, for example, customers in energy or in banks, insurance companies and such, where they have to do training. They cannot avoid to do training, whether COVID or no COVID. So that's the reason why we are able to see some continued consumption of training. And while consumption is lower, there is consumption of training. As the situation gets better, I do expect the consumption of training to become substantially higher than what it is today.

Okay. As you say, some of them are regulated and need to go for this, but are still behind their quota of probably the number of hours they need to log in. So does that mean it will have a pent-up reaction in the near future?

I thought to tell, like I mentioned, regulatory training you have to do. You cannot avoid that. You might be able to get a waiver for a month or so, but you cannot avoid doing regulatory training. So that is currently going on. It is the special initiative, the new initiatives that sometimes are prioritized over other pressing issues that the HR organization might have. And I think to some sense, that may lead to a little bit of a pent-up demand, but a lot of it also depends on how much money an organization is able to spend on training. There are a number of our customers who are very progressive from the point of view of training, they look at training as an investment and are able to continue to spend even though the business environment is tough. But that's, I would say, about 25%, 30%.

Right. And if I can ask one more. On the -- still from career side, what is the status of some of the rationalization we might be undergoing in the B2C path? What more is left, when we are done with and when do you think we will sort of break even to profit situation in this business?

So like I pointed out, we have pivoted to a fully digital model in our Skills & Careers business. We have achieved significant rationalization, and that's the commentary I provided with respect to our real estate. I think this business, both from a consumer perspective as well as B2B perspective, is now a digital business and should see growth as such.

Yes. So you mean to say whatever is left up now should continue to grow and what was to be so-called disrupted is already disrupted. Is that the conclusion?

Predominantly, yes.

And so from a revenue to cost basis, how much of these costs are still overlapping because some of the things we may be still kind of exiting and are incurring right now that may not happen in the future?

Well, like I pointed out, what had to be rationalized has been rationalized, and going forward, what you will see is investments. There are some costs where we have to maintain some of the old software, given the long-term nature of some of our programs. But predominantly what needed to be rationalized has been rationalized. And what you will see going forward is, to a fair extent, the investments we make in product development as well as the digital platform and the digital customer acquisition side of things.

[Operator Instructions] The next question is from the line of [ Suhas Naik ] from [ Kridan Capital ].

Congratulations to the team on good set of numbers. I have got a couple of questions. One is on the Corporate Learning Group. Can you give us some perspective about how large is the opportunity and the potential of this business? If I want to say, say, 3 years down the line, where we can see ourselves? And second question is on the inorganic side. You made a mention of that. Do we think this is the right time to go for that as the environment is still subdued and you might get a good opportunity? And what is our strategy on the inorganic growth side?

Sure. I think your first question, if I understood right, was what's the headroom that's available for the Corporate Learning Group.

Is there a ceiling here somewhere? Or do see the ceiling is still far off?

There is probably a ceiling, but at least I can't see it. It is way into the stratosphere. I mean I say this not in jest, but the overall spend just in the United States on training is over $100 billion. Overall, based on different sets of numbers, companies, corporates who are in our prospect base spend between $200 million and $400 million each year. So the ceiling is, like I said, way beyond where we are. And the second thing I would say is less than 25% of the Fortune 1000 companies have outsourced learning and development in any significant way. So there is a significant road to travel. I think the second thing I would say is that from a competition perspective, we compete predominantly with the large outsourcers like IBM, Accenture, Conduent, Raytheon and so on and so forth, for whom learning and development is not the prime business. If they lost a learning and development deal, heaven is not going to fall down. But that's the only thing we do. And if there was any innovation we do, that's what we do it for. So I think we have a great opportunity to have a continued growth run for a fair period of time. I think your second question...

Sorry, what kind of growth rate -- in a normalized scenario, not forgetting COVID for the time being, what kind of organic growth scenario one can look at, 25% to 30%, if possible?

I think while you said forgetting COVID, but that's something that's hard to forget, especially now.

Yes. Hoping that you will get a vaccine some time early next year, assuming that.

Once we are -- I mean if you look back, we were doing mid-teens to slightly above teens. I think we can go beyond that as we get towards normal times.

Okay. Great. And how -- what kind of investments are we making on the sales front, actually, to get into newer clients and/or mining the existing clients? What kind of investments we are making there? And what are the plans there?

We continue to over-invest in sales and marketing and business development. That's really what has kept us in good stead. Like I pointed out, our existing customers have reduced the consumption of training. But it's the new customers that we acquired over the last 4 quarters who have helped us achieve some level of growth in the corporate business. And we will continue to that -- to overinvest in sales. That's a strategy that has paid us well, and we will continue to execute on that.

Great. About the second question, sir?

Yes, your second question, I think, was on our inorganic strategy. I think Vijay alluded to it in his opening comments. We are continuing to look at opportunities. The uncertainty is not limited to us. Like I pointed out earlier, it pervades to them as well. So it's hard at times to value companies given this uncertainty. But like you pointed out, there might be good deals also. So we are continuing to do an outreach, and we are continuing to talk to organizations, and that will complement us both from a capability as well as geography perspective. And once we have something to talk about that is material, we will, of course, come back to you.

The next question is from the line of [ Jay Daniel ] from [ Entropy Advisors ].

Yes. Sir, I just wanted to clarify. You said the trend in corporate training revenues for the third quarter and fourth quarter will be similar to second quarter. So that is in terms of growth rate or absolute value?

That is in terms of absolute value.

Okay. So what we have done in Q2 will get replicated in Q3 and Q4. That's what you're saying?

To a great extent. We might see a little bit of bump-up given the new customers that we have acquired. So we'll see some amount of quarter-on-quarter bump-up. In terms -- I think your question was with respect to revenue, correct?

Right, right, in terms of revenue. Because margins I don't think you will be able to improve from here on. Would it be possible? I mean you're already at 20%...

It will be hard enough to keep them there. I'm not sure we will be able to keep them where they are today. But I think we will be -- it's really a product mix question in terms of margin. I think this past quarter, we saw a very favorable product mix. I can't foresee that returning in the current quarter, but it's -- so we'll see margins somewhere move up and down a little bit, more down than up compared to this current quarter.

Okay. And a little bit of a few bookkeeping questions. Amortization of course material included in depreciation. How has this trended in this quarter? I mean your depreciation is down, but what part of it is amortization of...

A large part of depreciation that's down is because of giving up of leased real estate rather than the capitalization of...

That's the impact of AS 116.

Yes. Right. Right. Okay. And StackRoute and TPaaS is roundabout 40% of Skills & Careers, right?

Yes. Approximately.

And this has grown?

Yes, it has grown significantly quarter-on-quarter, I think, greater than 70% quarter-on-quarter.

So that means the other part of the business has completely collapsed.

Yes. I mean think about it, our education centers are not admitting students.

Okay. So now what percentage of revenues is it? Because last quarter, it was 40%, StackRoute and Talent Pipeline as a Service. What percentage is it?

So it is about 47%.

It's about 47%, and it's growing at around 70%, right?

Jay, let me explain. Last quarter, there was a deep impact of the lockdown that we had talked about. The recruitment had also come to a standstill. And both these initiatives work on new employees hired by our partner organizations. So therefore, there was a sharp decline. But this quarter, since some recruitments have resumed and have picked up, you seeing a sharp recovery from where it was in quarter 1, we expect further improvement, and we are seeing a good pipeline of work and requirements coming up from our partners as well.

Okay. And if I were to look at your current cost structure in Skills & Careers, what would be the breakeven for sales?

Again, there are many parts to this business. I think we'll have to look at breakevens individually. I think as Sapnesh pointed out earlier, Jay, that there are moving parts within this. There is a cost run rate for the existing physical capacity that is coming down, which is a fixed cost getting going out and you've seen some impact this quarter and some -- I think there's a tail remaining. Then there are investments in building up our online -- our digital business. So I think we'll have to create a balance between the 2. So it's not a -- I mean these questions on breakeven point, et cetera, are more relevant for a business which is stable in terms of mix, et cetera, right? And given the volatility, I think, this business has high gross margin. So -- and we are reducing fixed costs. But there is a business that has just started out and would need investments. So I hope that gives you some color on this.

Okay. And you said net cash is INR 755 crores now?

No. We didn't say that net cash of INR 755 crores. That was just Vijay explaining that out of the transaction proceeds, after paying off the debt, the cost of the transaction and the tax applicable on the transaction. And net of the indemnity reserve that we have created or the Board advised us to create, as a measure of prudence, we have that cash on our books, and we don't expect material indemnity payout. But again, as we said, that's prudent measure. There is indemnity for a certain period that we have to -- so we have ring-fenced that. Out of that cash which is available, which is about INR 1,400-odd crores, INR 755 crores is what is remaining after paying for dividend and buyback that we have already completed since the closing of the transaction. The cash on the book or net cash on the book is INR 1,200 crore and some change, INR 1,211.7 million.

INR 1,217 million?

INR 1,211.7 million.

Okay. And your Schools business, any development there? I mean have you received any offers? Or where are we on...

We will discuss that with you when we have something to announce.

The next question is from the line of Rahul Jain from Dolat Capital.

Yes. On the CLG business, during the quarter, our revenue visibility has gone down and relatively our client additions, the way we've been adding in the past relatively has been a little softer. I call it softer because there is renewal and extension. But -- so basically, some color in terms of what exactly could take us to the next level or this is more we are on a path where it would be a gradual thing? Or there is a significant step for -- step to be taken, given that you talk about the much bigger opportunity versus where we are today. So what are those requirements and how you could move this number to a different trajectory? It has already happened over the last 4, 5 quarters wherein our numbers have moved meaningfully. But what -- if you have to take it to next level.

So first thing I would do is let you know that this past quarter has not been a soft quarter. It's actually been a significant quarter from a point of view of new customers acquisitions. Like I pointed out, we added 2 new MTS customers. We renewed 2 contracts, and we expanded our business with 2 customers. So it's among -- it's been among our strong quarters. I do see the point that you made where you said that sequentially, our visibility has gone down a fraction. That's really because, like I pointed out earlier, volumes of training consumed by several of our large customers have come down temporarily. And that has resulted into a markdown in visibility with respect to several of our customers. I feel this is a temporary phenomena, and as soon as we get out of the [ specter ] of COVID, we will see our existing customers performing or consuming a lot more training than they are today, and we'll see a markup or reversal of this markdown. So the fractional amount by which the visibility has gone down by is predominantly because of the markdown, because of the consumption by some of our existing customers. Again, I would reiterate that the new business acquisition performance has been strong. With respect to what could we do to make it better, I think, like I pointed out, we are continuing to overinvest in sales and business development, and we will continue to do that.

Right. Sorry for prodding too much into that, but as you said, there is some markdown because probably the way they would have signed earlier, they are not following on that path and that's why probably this markdown. But we also expect some pent-up. So is it that a fresh contract would have that element and that's why we have to mark down these for now and then the newly signed ones would have those extra markup? Is that how it works?

No. It is purely run rate oriented. Like I pointed out, when some of the run rate customers, they start consuming less, being prudent in how we project our numbers, we take a markdown. And as the run rate starts going back up, we will bring it back to where it was.

[Operator Instructions] The next question is from the line of [ Suhas Naik ] from [ Kridan Capital ].

I want to ask about the Schools business. We are losing significant amount there at an operating level. So when you think -- even if you start [indiscernible] it could add substantially to your operating profitability. So when you think you are likely to sell that part of the business?

So I would say 2 things. One, in our numbers, you see that business as a separate line item, which is below the EBITDA line, which shows the business -- asset held for sale or discontinued business. So that's a business that shows up as a different line item under all the line items. In terms of timing, we -- like I said to the earlier person, we will let you know as soon as we have something material to report.

That business is also a seasonal business. That business, again, given that it's an asset held for sale, so I don't want to spend too much time on it, but that's a seasonal business, and we can discuss offline as to what's on it.

[Operator Instructions] The next question is from the line of Rahul Jain from Dolat Capital.

Either on the CapEx or investment side on the organic front, if you could give us any estimate in terms of what is the CapEx expectation on the CLG business. And do we see the need of investing some meaningful amount in the S&C business? Since the business has shifted from a different model to a digital model, does that entail a different level of investment to bring it back to a scale where it was over maybe coming couple of years?

So we are looking at making investments in the digital business. Overall, our CapEx is likely to be in the INR 50 crore range for the year.

Okay. This is for current fiscal. And this is -- how much of this would be towards content creation, towards CLG? Or any split you can give there?

We don't split it out. We provide overall CapEx number.

And this run rate should moreover be the steady state run rate for us for the current set of business you have?

That's right. It may go up a little bit as we go into next year, depending on the number of products we want to build.

Right. So outside of some RECO kind of a proposition, this should be more or less in this range?

That is correct.

So next question [ Suhas Naik ] from [ Kridan Capital ].

You made a mention of India corporate learning side where you are starting to invest in. Can you give us some idea about how -- is it a different market than the one outside India. Or what kind of opportunity we are seeing here? Is it a profitable one?

I don't think I talked about India corporate business and any investments related to the India corporate business. We have a corporate business...

Okay. But I heard it's India corporate...

Sorry about that.

Ladies and gentlemen, that was the last question. I now hand the conference over to the management for closing comments.

Well, thank you very much for giving us your time one more time. Your questions, as usual, make us go back and think and refine our strategy. And once again, today, it was a very lively discussion. Thank you very much for all the questions you asked and for very thought-provoking suggestions some of those questions had built in. I'm sure there will be follow-up questions each of you may have. You can always reach talk to us through Mr. Kapil Saurabh, who heads Investor Relations or write us an e-mail, and we'll be happy to respond to that. So with that, I thank you, once again, for joining this session and look forward to your continued guidance and cooperation. All the best.

Thank you very much, sir. Ladies and gentlemen, on behalf of NIIT Limited, that concludes this conference. We thank you all for joining us, and you may now disconnect your lines.