© 2024 Alpha Spread Limited. All Rights Reserved.
www.alphaspread.com is not operated by a broker, a dealer, or a registered investment adviser. Under no circumstances does any information posted on www.alphaspread.com represent a recommendation to buy or sell a security. The information on this site, and in its related newsletters, is not intended to be, nor does it constitute, investment advice or recommendations. The information on this site is in no way guaranteed for completeness, accuracy or in any other way. In no event shall Alpha Spread Limited be liable to any member, guest or third party for any damages of any kind arising out of the use of any content or other material published or available on www.alphaspread.com, or relating to the use of, or inability to use, www.alphaspread.com or any content, including, without limitation, any investment losses, lost profits, lost opportunity, special, incidental, indirect, consequential or punitive damages. Past performance is a poor indicator of future performance.
You don't have any saved screeners yet
Intrinsic Value is all-important and is the only logical way to evaluate the relative attractiveness of investments and businesses.
Ladies and gentlemen, good day, and welcome to the Expleo Solutions Limited Q3 FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded.I now hand the conference over to Ms. Asha Gupta. Thank you, and over to you.
Thank you, Mike. Good afternoon to all participants in the call. Welcome to the Q3 FY '23 earnings call of Expleo Solutions. The results, press release and investor presentation have been already mailed to you and they are also available on the company's website. In case, anyone does not have the copy of press release and presentation, please do write to us and we will be happy to send you on the mail.Presenting the management today, we have Mr. Ralph Gillessen, Chairman and Non-Executive Director; Mr. Balaji Viswanathan, Managing Director and CEO; Mr. Desikan Narayanan, Chief Financial Officer. Mr. Balaji will start the call with a brief overview of the quarter gone by, which will be then followed by Mr. Desikan who will be getting into detailed financials. And after that, we will open the floor for Q&A sessionAs usual, I would like to remind you that anything that is mentioned in this call, which gives any outlook for the future, or which can be construed as forward-looking statement must be viewed in conjunction with the risks and uncertainties that we face. These risks and uncertainties are included, but not limited to what we have mentioned in the prospectus filed with the SEBI and subsequent annual report, which you can find it on our website.Having said that, I will now hand over the call to Mr. Balaji. Over to you, Balaji.
Sure. Thanks, Asha, and thanks once again for everybody who has joined the call and the interest shown in Expleo Solutions. We've had a reasonably good quarter year-on-year. We had a 27%, 28% growth quarter-on-quarter even though it's marginal. Given the kind of macroeconomic conditions, I think we still had a reasonably good quarter. Our investments on what we wanted to do in the digital transformation space is still showing good traction. We have added new customers, we have also added new engagements, different type of engagements. And the contribution from U.S. is actually tracking well. This is what one of our challenges was in the past.And apart from that, we have also done some tweaking in terms of how we wanted to manage our costs. We have been able to reduce some of our subcontractors and contractual employees, [Technical Difficulty] of volatility in the demand. And that's actually helped us in improving our margin profile also. So overall a good quarter, and we still have -- we are very positive in terms of where the market is headed and what kind of demands are coming in. But, given the macroeconomic conditions and the kind of uncertainties that are there, so we are being very cautious in terms of where we want to invest and how much we want to invest and how much we want to leverage.So that's [Technical Difficulty]
Sorry to interrupt, sir. Your voice is slightly breaking, if you could repeat the last sentence once again.
Yeah. So what I was saying is that we will continue to be hawkish in terms of how we manage our costs for the next couple of quarters and be cautious on where we want to invest. And we are focusing on the margin profiles. And all the focus for this quarter, that is the Q1 -- calendar Q1 of 2023 or the Q4 of this financial year is going to be on the merger, which we're on the final leg, hopefully should happen in the next 2 to 4 weeks kind of a timeframe is what we are expecting this to get closed and all our focus is on making sure that, that gets completed as per the schedule [Technical Difficulty]. So that's -- that briefly was the overview.So I'll hand it over to Desikan to cover the numbers in a greater detail.
Thanks, Balaji. Good afternoon to all. I'll take you through the quarter-on-quarter and also 9 months performance. Quarter-on-quarter, revenue for the quarter improved by 3%, ending at INR135 crores against INR131 crores previous quarter. EBITDA percentage was around 23% and PAT increased by 610 basis points compared to previous quarter, ending at 20%. Major contributor to increase into everything is forex gains. We had a INR9.5 crores forex gain compared to -- in last quarter we had a INR1.9 crore loss -- forex loss, majorly it is unrealized loss because of the revaluation of the assets is the one major reason. Of course, this is because of rupee peaking against euro and pound and U.S. dollar which are all the major currencies which we deal with. We have improvement in our DSO. DSO dropped to 74 days compared to 80 days in the previous quarter, and the cash balance have increased from INR108 crores to INR159 crores.Now looking at the nine month comparison against the previous quarter, the growth was around 35% in revenue. EBITDA grew by 66%. Major contributor is increase in revenue and also the -- we guys are doing a lot of cost management activity that we try to [indiscernible] contributed to the cost, which has led to this increase and also our earnings per share improved [ 32% ] and with INR52.58 amount.On the update on merger proceedings, we expect this -- actually, we -- it's the last quarter when we were talking related to the expected [indiscernible] by December. But due to the reconstitution of NCLT ventures and the court vacations, the matter finally came for hearing in January for all the 3 states. So, the jurisdiction, NCLTs [indiscernible] in 3 places, and Bangalore, Chennai and Mumbai have heard the matter and they have reserved the matter for orders. So what it means is that they have had all the hearings and we don't expect to have another hearing. We are following up with the NCLT registry for pronouncement of the order so that we can obtain the certificate, which we expect it to complete in the coming weeks. So overall, the current expectation, hopefully there is no backlog from the NCLT side which will end before -- around March is the current expectation. So this is the update on NCLT.And we can open up for question-and-answer.
[Operator Instructions] We have the first question from the line of Pooja Ahuja from Monarch Networth Capital.
Congrats for the quarter. Firstly, if you could specify the revenue, PAT and EBITDA of the unlisted companies?
Okay. I'll [ give you ] the PBT, revenue for the 9 months ending for other 2 companies is around INR273 crores. And the PBT, it's around INR41 crores, that is the [ unnotified ]...
INR31 crores?
INR41 crores, 4-1, PBT, profit before tax.
Sure. And could you specify the EBITDA number?
EBITDA is around INR47 crores.
Right. Sir, secondly, wanted to understand, the digital revenue as a percentage of the overall revenue has been coming down. So just wanted to have some sense on that, if you could just elaborate on that. What's the trend? What's the deal pipeline that we're seeing here?
No, actually digital revenue as a percentage [ of total revenue ] has come down only in this particular quarter, Pooja, because if I were to compare it with last year, the absolute numbers have been growing. So as a percentage, as shown, I wouldn't say it's going down as a percentage because the denominator is higher. It's -- like, the percentage is lesser. But we're actually looking to have close to around 38% of our revenue in digital for the full financial year. And we are well on track. Last quarter, we had some customer who had ramped down and also lower number of working days for some of the geographies because of which it look like actually it's gone down a little but it's not a significant drop, from INR45 crores it went to INR44 crores. And we don't see that slowing down in any way. Some seasonal ramp downs, which normally happens in the Q4 of the calendar year, that's the reason why you saw some impacts.
Sure, understood. And on the attrition side, what was the attrition percentage this quarter? And do you think that's kind of normalized now? What -- are you seeing any supply side challenges?
We do see -- I wouldn't say it has normalized because we still see -- for us to see -- for us to say it's normalized, we need to see at least a 3 months to 4 months of continuous trend of decline. Of course, the last couple of months has been on the downward trend, but still much higher compared to what we would like to see it at. It's still in the range of around 28% -- 27%, 28% on the [ volume of ] attrition. And our expectation is that we need to get it down to 20-odd-percent, but we're still keep keeping a close watch on that. We still see challenges in attracting or getting the highly technical talent. So which is why we are investing on the learning and development phase and the upscaling piece for our talent. So to answer your question in short, yes, attrition is showing a slightly lower trend, but it's too early to call whether that particular issue has been sorted or not.
[Operator Instructions] We have the next question from the line of Deval Shah from RBSA Investment Managers.
Sir, my question is with regards to the loans and advances to the related party. So what is the outstanding as on the quarter ending 31 December?
As of 31 December, we had a loan of almost -- INR it is around INR63 crores.
INR63 crores. Okay, so follow-on question on that only, sir. Sir, I just wanted to understand your thought process, because I understand our OpEx and CapEx mainly are in INR and if we don't have any mid-term or near-term plan for overseas acquisition, so wouldn't it be more sensible to have a treasury in India and earn the higher yield and be not exposed to forex risk and have a lower yield while having that treasury outside of India?
See, the way I look at it is on the cash management is that currently, if I look at my subsidiary account, subsidiary companies, I have some cash basically in the bank, which is not earning much. So that, if I park it in the group cash pool, they have a cash pool and they do a -- the interest rate of -- overnight interest rate plus [ 3% ]. So I feel that keeping it in the bank, I can park it there and for me, it's like instead of keeping it, I can keep it there and also I get back within 3 days. So that's a very short kind of a thing which I can get it from them. So, I feel that, that is more prudent way of getting and also the risk factor is comparatively better for me to get it. That is the whole point that we are making this kind of arrangement, where the group cash flow is being used by us. So it gives a good interest rate for us and over the period if you look at last quarter to this quarter, we have seen the interest is increasing. And so the term deposits, we are trying to use the maximum cash what we have in India into the term deposits so that, that also [ mint ] the higher interest rate which we currently have. So that way we are utilizing both sides, both from the overseas subsidiary cash -- it's like surplus cash and also the India surplus cash. That's the way we have adopted this in India.
My limited submission was on this -- was that, who we are managing our cash and treasury in a way with OpEx line CapEx is -- and looking at the near-term or whatever acquisition we have in the pipeline, so we are managing, keeping all these variables intact, right?
Yes, absolutely, absolutely. The way we are looking at it, anytime if we need a generate-cash-for-us sort of an acquisition, we have that. We can generate whatever the balance is here, we can take it and also we can get the loan back and use it for that purpose.
And the average yield would be only -- that treasury lying outside of India would be?
That's overnight plus -- the overnight rate plus they have a 3.75%. And overnight goes up and down. Actually, it is going up, so that way we're earning better interest rates on that.
It's in the range of 5%-plus. And what Desikan mentioned, instead of getting -- if you get the money into India, then taking it out is not going to be easy. You need a significant amount of approvals, and all our future investments, whether it is in terms of acquisition, and whatever we want to do, it's better to try and keep it as much as possible, except for our normal working capital requirements in the subsidiaries.
Okay. And my second question is more on the global outlook. So probably, since we already have a presence in [ our parent ] in Europe, so just wanted to get sense on overall outlook on the demand side, specifically in the sentiments.
So, if you ask me whether the demand has tapered down, I wouldn't say that it has tapered down. But there is certainly a slowdown in terms of the [Technical Difficulty]. The digital transformation [Technical Difficulty] are going on, but the larger investments are being reviewed more minutely rather than people going on, the investment fees or changing over the older platforms into new one and those stuff. But it is not something which is in the same pace as what it used to be earlier. But that doesn't mean that those projects are stopped or people are not [Audio Gap], but we need to be a little more cautious in terms of how this is going to go. It depends on whether it's U.S. or Europe, what kind of recession and if it is really going to go into a recession or if it goes into a recession, what level of impact it's going to have. So that's the reason why we are also cautious and customers are also cautious in making the investments. So, Ralph, do you want to add anything more?
Yes. Probably from a -- even from a global perspective, I think we certainly see across all the industry, strong demand whenever it comes to digitization initiatives, digital transformation initiatives, what will even require highly technical skills and to make this from our side. And customers are little bit cautious even to make big commitment, but trying maybe even to -- to even bring it into a sequence of even different steps so that they even keep their investment and [Technical Difficulty] and there is even good [ developments ] even in some of the more engineering, like practices and capabilities around manufacturing, like in the chemical engineering. But these are areas where the customers, I even see that they're really trying to [ compile ] all the efforts that they have taken and this is even then also very competitive for price and this is even, especially in our existing customers base are really choosing even our -- carefully our own initiatives, where we can continue to [indiscernible] to the customer success. But as it is, we're very price competitive, we are very selective of this area.
We have the next question from the line of Ravi Naredi from Naredi Investments.
My question is, is this top line, can you describe which top line has increases our margin, either from existing customer or new customers?
Sorry, I didn't understand. So what you're asking is that, whether it's a new contract which is actually improving our margin or is it the existing...
Whatever our top line has increases, it comes from new customer or old customers, primarily?
No, it's a combination of both always, and always the new-new or that is the fresh logo revenue is for a full year because obviously, we don't track the fresh logo revenues on a quarter-on-quarter basis, because none of the contracts really start big when you're starting out. So we only look at what are the new customer revenue during the full year per se. And normally, our new customer revenue is in the range of around 10% to 12%, and our existing customers' revenue is in the range of [ 85% to 88% ]. So that's been in the last year or so. Earlier, it used to be much lesser, the new customer revenue used to be much lesser, but we've been trending at that 10% to 12% of new customer revenue over the last couple of years, at least.
Secondly, this net profit -- higher net profit margin, it will be maintainable in quarter 4?
So we have mentioned, what we have done is we have rationalized our costs, we have reduced the number of contractors, particularly some of the [ new skills ] and others because we didn't want to keep too much of bench awaiting opportunities. So we will probably have to keep a close watch on that. So if there is any big demand, then obviously we'll have to make that investment. But as of now, it looks like we will continue to be in that the range, which we had mentioned earlier, the closer to the -- till the merger, it will be closer to the 19%, 20% range, and post the merger, it will be closer to the 16% to 18% range.
Okay, Okay. And then what about new hiring in quarter 3 -- quarter 4, sorry?
Calendar year quarter 4, that is you're talking about the...
No. Calendar year quarter 4 has gone. I'm asking for financial year '23, what is the planning for March -- up to March '23?
So net of attrition we have -- so we have been hiring close to around 180 to 200 people on a month-on-month basis over the last 12 months, and that's going to continue. And net of attrition, the addition would be in the range of around 40 to 50 people.
40 to 50 people. And any utilization of the funds lying with us, organic or inorganic, because the -- usually, my -- I'm the shareholder since long, Expleo Solution never hold the money with them. They always distributed the dividend or whatever they have in mind. But this year, few years, they are not doing so. So what is in mind of management that I would like to know.
So I think this is a question which we've heard consistently. The way we are looking at it is that what is the best way to utilize the cash. What we were looking at was some kind of an investment that we could do to enhance our capability, which will actually add value to the company and to the shareholders as well. And if we're not able to make any of those before end of the financial year, then we will look at redistributing it -- at least distributing a part of it as part of dividend as well. So it's not that the dividend has shut down. But we wanted to wait and see if there is any opportunity for us to better utilize the cash. If we're not able to do it, then in the next session, which is the end of financial year, we will take a call on how the cash would be distributed or utilized.
[Operator Instructions] We have the next question from the line of Aman Shah from Jeetay Investments.
Sir, a question on revenue for the unlisted entity is INR273 crores. Can you give us details of the DSOs there in the unlisted entity?
DSO if you look at for the unlisted entity, it'll be in the range of around 95 to 100 because there are some contracts which is more of an engineering side of things, which has a longer DSO. So that will be around 90 to 95.
I also just wanted to highlight here, the -- in the unlisted company, more than 50% of the revenues between both the Pune and the Bangalore entities is only from the group and that's not at 90 or 100. It's only [ for the third ], which are at that 90 [Technical Difficulty].
Sure, sure. So then, once we get listed, will this -- even the business that's coming from group and as we see offshoring will increase, will these DSOs come down even in these unlisted entities and get converged to our listed entities' numbers of DSO?
Yes. So our target there'll be in the range of 65 to 70 and once the merger happens, then that's the same target that we will have for all the entities as well.
Okay. Okay. And can you give me the headcount number for December, sir? And how much were we planning in September for ending the year? Like, for March, how much were we planning and where are we for March '23?
So for the listed company, we were not really -- there is really not much of headcount increase in this quarter, that is the quarter ended December. Currently, the billable headcount is around 1,700 for the listed company, and we have close to 1,450, close to 1,500 for the unlisted companies. And the total headcount for the company is at around 3,850 in the round about. So, we should -- we are expecting that as a company we'll be at around 4,000 -- close to around 4,000, excluding the contractors. And including the contractors, we'll be at around 4,300.
Okay. And how do we see this to ramp up next year, FY '24, for the group consolidated entities?
We will cross -- our target is to cross the 5,000 employee numbers for next year.
Okay. Okay. If our -- like, I'm just seeing our net addition is 50 a month, and that would take like -- so that you are saying is only for listed entity? Would that increase?
Yes. As of now, the net addition is around 18 to 20 in the listed company alone, and overall, all the 3 entities put together is around 50 to 60. And we also have plans in 2023 to start the graduate hiring, which we reduced a little bit in 2022. So including the trainees, we'll probably be in around 5,200 or so for -- by the end of the '23-'24 financial year.
Okay. Okay. And, sir, the last, group share of revenue, if you can share, for 9 months for both listed and unlisted entities?
Listed entity, it's around 18%. And for the unlisted entity, overall, if you look at it for both [ Pune and Bangalore ], it'll be in the range of -- actually in Pune it is around 80%, 85% of the revenue comes from the group company and [ engineering ] comes -- around 15% to 20% comes from the group company.
We have the next question from line of Rohit Balakrishnan from ithought PMS.
So just wanted to understand, so Balaji, I think, you mentioned that a large portion of the unlisted business is from the group. And I remember in the merger call that happened almost a year or so back, we had a very strong outlook on increasing the overall offshoring for the group itself. So can you share a bit around that, how are you progressing there? And even I think the parent also had a very strong year and also expecting to have a strong year next year. So if you can share a bit around how does that -- I mean, how is that strategy shaping up for us and what can it lead to in terms of growth for the next 2, 3 years, if you can maybe spell that out also.
Yes, so Rohit, we have not really changed any outlook on these. But if you recollect what we talked about around a year back when we made the announcement, for the combined entity, that is the current listed or unlisted, or when the merger happens, the overall revenue contribution from the group would be in the range of around 30% to 32%. And in 2 years time, that is by 2025 -- that is March 2025, we expect that the group contribution of the revenue would be in the range of around 40% to 45%. And the direct revenue contribution would be in the range of around 55% to 60%. And that has not really changed much. And if you look at even -- overall, if you look at the number for the listed company, while Desikan mentioned that it's at 18%, that is also primarily because the direct markets, particularly the inorganic growth that we had last year increased the direct market shares. And that's why the group revenue is at 18%, even though the total number has increased significantly. It's seen almost a 35% to 40% growth from what it was in the previous year. So we continue to be upbeat. And that's what the focus area is, so all of us are focused on -- both Rajesh Krishnamurthy at the group level and Ralph, everybody is pushing the base-shoring or the offshoring, of course, not only for India, but overall as a contribution. And this year, there is a renewed focus, even though it will reduce the top line to some extent, the focus is on bottom line and to make sure that we get -- we try and achieve our offshoring or base-shoring targets per se. So there isn't really too much of a difference in terms of the strategies, just the rigor is getting more.
Right. And -- so like in terms of -- I mean, we've been around INR94 crores, INR95 crores in the unlisted entity. So just wanted to understand, how do you see this -- given what you mentioned, how do you see this panning out like, 3, 4 quarter out or maybe 1 year or 2 out? I mean, can we see whatever we are seeing -- I mean, what you mentioned in terms of outlook, what we hear in terms of slowdown, et cetera, but notwithstanding that, can we sort of see a quarter-on-quarter growth of about 4%, 5%, 6%? Is that possible? Or do you think that we may have to sort of be more realistic and see how the external environment is? Just wanted to understand on this part, because this has -- I mean, the unlisted portion has sort of stuck -- got me stuck at around INR90 crores, INR95 crores per quarter over the last 3 quarters. I know unlisted entity had a fillip because of an acquisition, but just wanted to understand this part of how are you thinking.
So, when we look at the numbers for the last 3, 4 quarters, we look at it overall as one India, including unlisted companies, and some part of the business have grown, some part of the business had some sluggishness. But overall, as a country, we still expect that year-on-year, our growth will be in the range of 15% to 20%, even after the merger as well. So, after the merger, obviously, we're not going to look at whether it's unlisted, listed [Technical Difficulty] per se. And we still think that we will be able to grow the 15% to 20% range year-on-year. And there is enough potential in the market to do that as well. And including the base-shoring, if we are able to make sure that we are able to grab more business from the group, that's going to -- it's going to only [ ink ] that particular contribution. So, we are really not tapering down any of our ambitions that way, Rohit. But in this quarter or next quarter, we may have to be a little more cautious, but an overall outlook for the next 3 years, we are not tapering down any of our ambitions.
Sure. And what would be the cash on the unlisted side, Desikan?
Sorry, I don't have that number, I only have the cash balance on this. Maybe I can find it out [ and give to you ].
Sure. Sure. But our overall cash balance is about INR159 crores on the listed side, plus about INR63 crores that you've given to our parent, correct? Is that right?
Correct, correct, correct.
Sure. And, while, Balaji you did talk a bit about our overall thought process around sharing -- I mean, passing the cash there, also -- I mean, because of this merger, maybe we have not been able to finalize the dividend policy as such, but would be really -- would really appreciate if you can probably, post the merger, articulate how we are thinking as a group. That would be really helpful for us as shareholders.
Yes, absolutely, Rohit, that's firstly there on the card. Like what I mentioned, we will take it up in -- during our next Board meeting for sure. I quite can't predict the outcome, but we'll probably take it up.
Thank you. We have the next question from the line of V.P. Rajesh from Banyan Capital Advisors. Please go-ahead.
So one question for Ralph. If I recall correctly, in the last con call, you were expecting the Group to grow at 20% in the current financial year or the current calendar year, I should say. Given the comment you made about customers being cautious, has that changed at all?
It has not changed probably I think you've seen the recent publication that we have released yesterday or the day before about the performance of the Group. We have concerns that we were able to grow organically by 32% last year. You can see that we had good growth during the year. What is even in [indiscernible] contribute with our growth strategy in 2023. So the guidance that I've even given there for the Group is what has even confirmed in the press release that we have communicated and what we were able to achieve in 2022 and what actually as good growth through the year, but we expect now to continue even in 2023. And I think I believe and then give additional and even more opportunities from a global perspective, but actually even then, and that is the key part of the strategy in more work to our different centers that we have in order to get our hands in the heart of the strategy in addition to December that we are adding in the -- main in America region. But I can confirm the 32% for the Group.
Okay. So Balaji said, I'm wondering, your guidance for your revenue growth expectation is 20%, and your share from Group is supposed to be going up on a combined basis, then doesn't that seem a little conservative? Or are you seeing something that we are not looking at, which is making you give this kind of guidance?
Yes, we are -- and I wouldn't say conservative rather because it's still last quarter, if you heard me attesting 20% plus.
Correct. I think 15% to 20% primarily because of what -- I'm not saying that it is going down, but what are the cautiousness we're seeing in the market?
At least for this quarter, that is the 2024 Jan to March quarter and the next quarter, we are just being a little cautious, but still our ambitions are under 20% plus.
Okay. Okay. Understood. And then Desikan on the cash that you're passing with the growth, are you guys thinking of a limit to that? Or if you can just give some color as to -- I understand what you're saying that is based on M&A opportunity abroad, it will be easier for you to execute with the cash that's sitting at the Group level. But as you guys are thinking about the policies, if you can decide that there is a upper limit to that? And if there is one, then if you can share that with us?
See, generally, the way we look at it is, we try to ensure that we have almost 2x to 2.5x of the working capital to be kept in there. So anything above that, we see that we will be using it for the kind of cash flow activity. So however, asking a thing like that. So that is the way we are putting the cap numbers. It is around 2.5x of the operating expenses of what we have, we don't want to take it outside it. Now we will take it to 3x of operating expenses which goes on. Beyond that, we will do this [ release], but anything going less than that will be the cap for us. Currently, that is the cap clearance we are looking at, remember we have not given that much of room, like maximum loan is something which we are looking at. And also, if you look at whatever the approval which we got from the shareholder, I don't say we will even exceed it for now that amount.
[Operator Instructions] We have the next question from the line of Hiten Jain from Invesco. Please go-ahead.
My first question is that, in this current --
Mr. Jain, your audio is not very clear. If you could come closer to the microphone, please?
Is it better now?
Yes.
Yes. So in the current quarter and even in the previous quarter and what you're seeing on ground, we're seeing some kind of cautiousness given macroeconomic challenges. I was just trying to understand that the offering of offshoring effectively, it plays -- it takes center stage in time -- in difficult times where clients want to save cost optimization deals, kind of take center stage. So I was just wondering that why can't we -- why can't this environment be used to our favor and actually increase offshoring to the clients and where we can actually benefit. So what is the thought process on this Balaji?
So the focus on offshoring has always been, but obviously it can't be a short-term solution, but that -- because there is a requirement for cost optimization, BP will start offshoring immediately because of that. It has to be a strategic decision because when they talk about offshoring, it's not something which is a reversible strategy. So -- and everybody has our own commitment as well. So -- but we all have asset strategy, what the Group has been progressing and what we have also been supporting this. Any new opportunities that we are running, by default, we look at what kind of offshoring can be done and where it can be done.And for any existing opportunities it has to be a full fledged transition phase and the accepted for the customer, how -- because it's not that they can just ramp down the local countries and move there, because they all have their commitments locally as well. So it can't be a short-term strategy, it has to be something which has to be a long-term plan. And that's something which we are executing, and that's something which is showing in the result as well in terms of absolute numbers in the listed company, the percentage doesn't show because we had a larger growth in the direct market.Ralph, do you want to anything more?
Obviously from a Group perspective that even the amount of delivery of the contribution is going up even quarter-by-quarter. On the other side, as we're even focusing a lot on even the go to market where there typically has been more on the transformation part of our customer portfolio. They're not all on those part, we have adjusted and trying to achieve some costs, some short term cost reductions. As discussed, Balaji will certainly continue to do this. We are including, but not only for the cost, especially even from a competent scale capability perspective, all the knowledge and expertise that we had to deliver that we had to do in other places into our offering.And where we even then see that we are increasing the contribution, especially from the field team India, the delivery expertise and competence in all this, and now the customer is experiencing both new engagement and even existing engagement, but it's definitely not our short-term strategy, we are looking to our market consolidation and try to approach the market purely based on the cost or on cost reduction, but we will see this as a very short term approach, not supporting even the mid and long-term strategy of the company.
Thank you. We have the next question from the line of Sugandhi Sud from InCred Asset Management. Please go-ahead.
Hi, am I audible?
Ma'am, you're sounding very low on the call. If you could kindly come closer to the microphone?
I'm sorry, I might have missed already, I joined the call 10 minutes late, but my understanding is that your -- our listed business has done INR273 crores of revenue for the first 9 months. Is that correct?
Yes. For the 9 months period, I noted this.
Sure. So I just wanted to understand how is the direct business doing here? Because if 20% is what you are doing from the parent? And if I kind of apply the similar run rate for the next quarter as well. It's not a very strong growth compared to the base here. And given that you have a significant exposure to strong growth markets, like even aero is picking up now and auto. So I wanted to understand and some of the other companies that we track with exposure to the sector has done pretty well. So firstly, how is the ex-Group business performing?
So in terms of the -- I'm assuming that what you're asking for, because the 20% is only for the listed companies, and not for the unlisted company. The unlisted companies, with the Group's contribution it's little over 50% on that. So in the listed company, the Group's contribution went down from the 20% to 18%, primarily because the direct markets grew faster. And also added to that is the small acquisition that we did because of which, overall, even though the number was lower, the percentage was lower, the overall number is certainly much higher. And -- so it's not that the Aero business or the engineering business is not growing. It is growing, but most of the growth is actually coming in from the larger Group's customers as well. And we still think that the 2023 is that one business will grow faster, like what we mentioned, primarily in the Aero and defense and on the state segment, we expect significant growth. And if you are not -- if you're tracking, we also participate in the Aero, so in India as well and there's a significant upbeat momentum on a particular business.Ralf, do you want to add anything more?
Yes, In addition to Balaji, what we have seen in 2022 and what we even have projected for 2023 is [indiscernible] segment for us, followed on all what we are doing in our promotions and around the embedded [indiscernible] that have really even accelerated our growth and even then followed by other industries, including even the banking and financial services and insurance market. What we continue to see at the Group level that the fastest-growing segments in 2022 and under this [indiscernible] for this year or for this fiscal or calendar year for us, from an exclusive perspective, again, especially the other segments, different segments where we are seeing very strong demand and we do see that we are very well positioned. I think even after the merger we feel that we will see some additional demand even then coming, especially for this segment.
Sure. Sure. And just to understand, I'm trying to reconcile again the guidance that you gave as a Group and also the clear strategy of increasing offshoring to the India business and compared to the guidance that -- for growth that you have as a Group. So with both the drivers inching up in terms of our contribution to our growth and the growth guidance being strong itself. Are you able to reconcile the 20% growth guidance that you have -- is that the conservative vision for the next 2 quarters? I mean is that -- do we have to wait for 1 or 2 quarters before we can reconcile those 2? Or is it like you're building that same picture for the entire year?
So what we meant as 20% growth is for the entire one India as an organization. And if I look at where we were to where we are as a combined entity, it is the merged entity, we will still be in the range of around 80% to 20% from last year, even though the listed company has grown by close to the 37% to 40% range in the last 1 year. And I mentioned this even earlier as well. So when we -- when the numbers are small, when we were in the INR200 crores and INR270 crores and INR280 crores in revenue numbers, what we talked about is 40%. This is not the same when you are actually at INR500 crores plus. That's the reason why you kept talking about how do we -- in percentage terms, it can't be the same. But in real terms, it would still be in the range of INR100 crores to INR120 crores year-on-year. So that's what I meant with the 20% range.
It is just, Balaji, given the guidance and that we have given and there is [ no credit ], probably and even looking at the press release from yesterday. So this will be EUR1.27 billion in revenue in 2022. We are aiming to cross the EUR1.5 billion mark in 2023, that we are having the number close of having 250 million. That is the amount that we are able to achieve in 2022. The big percentage-wise, it could come slightly down, but we even take it into consideration as we see that we are shifting more work probably even that into our deliveries and that could then deliver a little bit of softer and the revenue contribution from the [indiscernible] which should protect them probably even to increase the profitability of the company. But with the absolutely figures [indiscernible] 250 million growth in 2022, you see good prospective for the -- what we are even aiming for '23.
Thank you. We have the next question from the line of from HG Hawa & Company. Please go-ahead.
So sir, a key rationale of any investor investing with Expleo Solutions India is the strong parent that is there, which almost like a $1.5 billion revenue Group now. So do you feel that we at -- in the Indian subsidiary could also demonstrate a very large sale in 4 to 5 years, simply just building upon the learnings of the parent and be ambitious enough and getting a lot of business from the parent once the merger is through. So are we thinking the right way on that rationale? Or is it a bit of too much of a extrapolation? That's one.And secondly, sir, on a previous con call, you were on record saying that by 2025 calendar year, we would be reaching 10,000 employees. So is that still on or that will be deferred by a year or so?
Okay. So if you were to track the ambitious plan, of course we are ambitious on that's how -- that's what actually you would see in the number as well in the last 3 years, now it's moved from INR280 crores to INR500-plus crores of [ December ], if you look at the calendar year of December. And that ambitious plans have not tapered down and it's in line with what the Group wants to achieve as well in terms of the growth plans overall as a company. And as a combined entity, we simply are tracking it as a combined entity, even though we are not a combined entity as such. India is actually 100 million plus, will be 100 million plus when we actually combine the numbers at this March 31st, 2023.And your question -- the second question on the 10,000 number. We still have the ambition of going to the 10,000 members. And once the combined entity starts selling some of these services in the direct markets and with the focus on the Group business coming into India. We still have the ambition of getting to the 10,000 by December 2025. Ralph?
And sir, how soon you feel that you could be having this $5 million contracts or one contract of more than $10 million, do you feel that once the merger proceeding have gone through, there could be more business flowing from the parent? Because finally, there is this shortage of manpower in Europe and even Eastern Europe countries?
So I'm not sure if this is the shortage of manpower thing, because the unemployment rates are once again going up, so I'm not sure about the shortage of manpower. We have our [ skill gaps ] from India as well. So I don't want to get down to that discussing about the manpower situation, but scale and size, India is the one which can actually deliver the scale and size. We still have some supply side challenges in India. But hopefully, 2023 should give the better of it, that's what our expectation is.And as far as your $10 million-plus contracts, if you look at what we had shared in our investor deck as well. So the number of customers where we have more than 1 million, the number of customers where we have more than 5 million has significantly increased over the last 3 years. And once the group business comes in, the Group, where we are not going to have customers of 10 and $5 million or $20 million, because the largest contracts which is signed by the Group, and we will only be an execution partner there. And that way, if I look at Group as a customer, we are already having Group as a customer. And overall, across India, the Group alone is contributing to close to $25 million [indiscernible] or close to 30% of our revenue as well. So I don't think the larger contracts, which the Group will sign will certainly have a benefit for us in India as well.Ralph, do you want to add anything more?
Yes, probably and I think definitely looking at it on the employment or capacity restrictions in Europe and in India and especially [indiscernible] with all the plans to scale and to accelerate, those are not coming from probably a more negative observation and understanding, that's something that we need to [indiscernible] in India that we can scale and we can accelerate. But even by maintaining even though the Street is expecting the [ dividend ] in the European market. And I think the combination is giving us quite a good opportunity even then to do this, then we leverage both the competency that we have in our existing [Audio Gap] and especially in India.In terms of the size of the customer, the Group portfolio where we have the large corporate where we are doing even not only 10 million or 20 million in revenue, I think there are customers in the portfolio ranging in 10x, 16x or 20x of the revenue on what you have mentioned or even larger that even though and probably even in the customer in this range is at 100 million plus, 200 million plus, I think it is even then more likely that when we accelerate and include even India, is it more into the service delivery that we even then see it as the share of revenues from this customer, leading them to the loans that we have mentioned.
Thank you. We have the next question from the line of Jagdishwar Toppo from Japa Investment Advisers.
I was going through the press release of the Group statement, where our Group CEO had made a few statements guiding for the 2023 number, and he sounds very bullish and the statement is bullish, says EUR1.5 billion revenue, 20% growth and also he adds that there will be addition of 7,800 workforce for the next few years. So from that point of view, our CEO has turned in a bit cautious. So there is a dichotomy there, but you have explained quite a bit there. So my specific question would be how much of that 7,800 will come in India, I mean, I mean how much will be added in India, if you can answer a very specific number. I mean, you would have done all the calculus on a bottoms up approach. So how much would be added in India as a whole, all the 3 entities?
Okay. So I'll probably try and answer the question in 2 parts. One is I'm not trying to get to the 7,800 and how much of that 7,800 is going to come to us. Our objective is to try and look at both from a direct market, how much people will need and how much of the business from the Group, which we are going to get. So with that in mind, we had set a target of saying that we will probably be in the range of around INR5,500 by end of 2023, calendar year 2023, and we'll get to close to 10,000 by calendar year 2025 end. So the 2023, the end of 2023 number of INR5,500 crores, we may be closer to that, but may not currently fit that, we will be in the range of around INR5,000 to INR5,200 is what we expect. However, we are still not scaling down our ambition of getting to 10,000 headcount by 2025. And the 2025 headcount would be both organic and organic. And we still hope that we should be able to get to that 10,000 headcount by 2025.And if you were to look at the numbers that Rajesh has talked about in the Group's result and how much of that would come to India. As of now, if you look at all the best shoring, which the Group does more than 50% or close to 60% of all the best shoring, what the Group does or even in some cases, it's even more than that is actually coming to India. So I don't want to put a number there, but that's the kind of share -- the sharing that India we be getting, right.Ralph, closer to the segment, so if you want to add anything more?
As I just said, [indiscernible] on some of the numbers of what we see. And then certainly, even one of the objectives for 2023 is that, we see that India will become the country with the largest number of employees in the Group, I think most of you know that this trend to be played over the largest country in terms of employees as planned. And I think even then [indiscernible] so that India will -- even then be the country with the highest number of employees in our portfolio. And I think we will probably even see this going forward. And I think this will be -- all what we said before, the reason then being accelerated.And the 1.5 million invested, I think we know the Group had already set the 1.3 billion market guidance, but it's definitely what we want to achieve and where we even believe that we are on a good track as we even though want to communicate figures that we then later on will be achieved, but it's been since the guidance is that we are having good growth during the year, less -- higher capacity for a net close of EUR250 million last year that we are confident even to actually do this again in 2023. And that is, I think, as always, an increase in head count, what we need, we even see due to some of the inflation, whether in some of the European countries even an increase in feed prices. And overall, as a combination of all of this, we even see that we are -- that's why we have even communicated in terms of 5 billion and why we are confident to achieve.
Okay. Okay. Fair enough. My second question is a very quick for one. Your U.S. business is now almost 14% of the total revenue and which is quite reassuring. So what's the target you have for the next few years? How much of a U.S. business would contribute to your overall revenue? I mean ballpark number would be quite helpful. And what did you do to -- to break that shilling, U.S. has been very tough for you. I mean it was a remarkable achievement. So I mean, if you can elaborate a bit on that one?
So I think we have talked about the U.S track and what we wanted to do. So at this particular point of time, we see continue to be focusing on U.S. more from the listed entity perspective rather than a an organizational pool and the strategy for U.S. is going to be determined based on when the Group is going to make a more aggressive push in U.S., which is -- which would probably be end of 2023 or early '24, when the Group could actually make a significant acquisition in this market, which will drive the growth for all the entities put together, including investor entity well, till then it's going to be more of what we could do with an additional EUR5 million, EUR10 million there, that's -- and the U.S. growth in 2022 also is primarily driven based on the smaller acquisition that we did and also having more salespeople where now we have approved dedicated sales people in peers, focusing on the particular market from the second half of last year. So that's what is actually helping us in growing, but still at this particular point of time, it's more focus based on what the listed company is doing, that's what the push is, not at the group level. And the group level push will come hopefully by end of 2023 or early 2024.
Thank you.
Mike, I think we are overshot the time to really [indiscernible].
Sure, sir, would that be the last question then?
Yes.
Sir. You can -- over to you, sir, for the closing comments.
Okay. Thanks, thanks so much, I didn't even realize we have overshot the time and interesting questions, and really appreciate the level of interest and on what we are doing and how we are doing. Thanks so much for joining the call and hope you continue to pay interest in the company and its focus. Nothing more to add from my side. Thank you Jagdish.
Thank you.
Thank you. On behalf of Expleo Solutions Limited, that concludes this conference. Thank you for joining us, and you may now disconnect your lines.
Thanks, I appreciate. Bye-bye.