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Good evening, ladies and gentlemen. A very warm welcome to the Hinduja Global Solutions Limited Q2 and H1 FY '23 Earnings Conference Call. From the senior management, we have with us today Mr. Partha DeSarkar, Executive Director and Group CEO; Mr. Srinivas Palakodeti, Global CFO; and Mr. Vynsley Fernandes, Whole-Time Director. [Operator Instructions] Please note that this conference is being recorded.
I now hand the conference over to Mr. Rushabh Shah from Adfactors PR, Investor Relations team. Thank you. And over to you, sir.
Thank you, Faizan. Good evening, everyone, and very warm welcome to Q2 and H1 FY '23 results conference call of Hinduja Global Solutions Limited. We are joined with Mr. Partha DeSarkar, Executive Director and Group CEO; Mr. Srinivas Palakodeti, Global CFO; and Mr. Vynsley Fernandes, Whole-Time Director, to discuss our Q2 and H1 FY '23 results and key developments during the period.
Before we begin the conference call, I would like to mention that some of the statements made in today's conference call may be forward-looking in nature and may involve risks and uncertainties, including those related to the future financials and operating performances, benefits and synergies to the company's strategies, future opportunities and growth of the market of the company's services and solutions. I would further like to mention if there are any call drops during the course of conference call, please bear with us.
Thank you. And over to you, Pala, sir -- sorry, Partha, sir.
Thank you, Rushabh, and a very good evening to all of you who've taken the time to join us on the call. At the very outset, I would like to invite Vyns -- Vynsley Fernandes to this call, who is joining us in this call -- in the earnings call for the first time post our merger with NXTDIGITAL. So welcome, Vyns.
Thank you very much.
I will be referring to -- yes, I will be referring to our presentation which, I believe, has been uploaded on our website, which talks about our earnings call.
And if you go to Slide 1, that kind of laid down the future vision, future road map for HGS as a company -- a different kind of a company which is technology led, which is becoming a digital-led customer experience transformation company. It talks about a revolution over the last 2 decades from being a pure labor arbitrage provider to somebody who brings in technology and [ advertising]. So there are 5 distinct pillars that would lead our transformation. We will -- we would try -- we would be attempting -- we will be attempting our journey -- [indiscernible] our journey in the marketing -- digital marketing piece. We've always been strong in process management and technology. We are bringing in capabilities in data and analytics, e-commerce, payments and all of that. So all these 5 pillars will drive our journey into a digitally led customer experience transformation company. This is the future of HGS, and we are building components of it and strengthening other companies which were already traditionally there. If you go to the next slide, I want to give you a quick update on the NXTDIGITAL media business and the buyback plan. The [ Honorable ] NCLT order for demerger of the NXTDIGITAL Limited, NDL Media business into HGS was received on 11th of November, 2022. INR 1 crores -- 1.0689 crores of shares were allotted to Indian shareholders based on the swap ratio as on November 25, 2022. New share allotted are expected to be listed by December 6, 2022. The share capital of HGS has increased from INR 41.79 crores to INR 52.48 crores as a result of this exercise. The NDL shareholders would own 20.4% of the shares of HGS, and the promoters holding in HGS would drop from 67.13% to 66.63% after this. Another update on the eagerly awaited buyback plan, which we had announced in January of 2022. The update is that we are coming very close to it. It will be taken up after the completion of the listing of the shares to the NDL shareholders, and the amount earmarked for buyback is around INR 1,050 crores. And the reason I'm talking about this in approximate number is because this will be done post a complete audit of the combined balance sheet of the company. So that is a fairly important update to matters of interest to all of you on this call. Today, as I welcome Vyns into the call, we are a combined entity -- I am on Slide 5 -- HGS and NXTDIGITAL together, bringing in technology for the future, technology of connectivity, technology of process improvement, automation, analytics and artificial intelligence. Slide 6 talks about the key brands which become a part of HGS: INDigital, One iNTERTAINMENT, INE and NXTDIGITAL. The merger boosts HGS's presence in India, adding about 1,200 people of the NXTDIGITAL [ team ] and India originated revenue. We suddenly have a massive reach all over the country with 1,500 cities coming into the part of the network. As a franchisee base, we have 10,000 franchisees who are a part of the family now, and digital service partners delivering digital services to more than 5 million customers. So this is a transformative leap for AGS as a company. What are the synergies and what are the opportunities here? Huge opportunity to participate in the government Digital India initiative. As you all know, COVID has accelerated work from home, and there are changing trends in digital content consumption. The possibilities are really limitless. We have to make India digital, not just the Tier 1 cities which already have very good infrastructure, but we need to be able to connect the interland of India, Tier 2 and Tier 3 cities who are huge consumers, but do not really have the digital access that enables them, and that is what this aims to do. We will create a global telecom and media ecosystem to serve B2B and B2C segments. As you all know that, even before the merger, technology and telecom was a large part of our global footprint, and our attempt would be to take some of the things that we acquired as a part of this merger to our global clients going forward. I'm now going to hand over to Vyns to take you through the digital media business and it's quarter 2 highlights, before I come back again to give you the highlights of the combined business. Over to you, Vyns.
Thank you, Partha, and on behalf of all of us at NXTDIGITAL, a big thank you to the HGS family, team HGS for welcoming us into the [ fold ]. I think there's nothing but exciting times ahead, and we all look forward to that under the guidance of the team. So I won't -- without further ado, I'll go straight to -- I think Partha been able to talk about the brands.
But if you look at Slide 9, as -- I will just recap for the benefit of everyone, there are 4 key brands that are there in the business. We have India's only Headend-In-The-Sky platform called NXTDIGITAL HITS. That platform, in fact, is one of the few platforms in the country to be able to have a spread of over 4,500 pin codes today. I mean, we are in Andaman and Nicobar Islands, Lakshadweep. We're very proudly serving in Arunachal Pradesh, on the borders in Ladakh, Wagah Borders, Jammu & Kashmir. So there's a lot of pride in the brand as well. Our broadband business, OneOTT iNTERTAINMENT is India's -- one of India's top 4 private ISPs. We've crossed over 1 million customers. Today, our presence, in fact, has expanded to just under 200 actually cities and towns, and we provide speeds of about 1,000 Mbps, which is 1 Gbps fiber connectivity to our -- through our flagship brand, ONE Gigafibre. We also have a digital cable business that we have nurtured ever since several decades actually, and the reason why we continue to nurture it is that, there is a backbone of over 10,000 kilometers of hybrid fiber optic network. So we look to leverage that and continuously monetize that for rolling out a whole bunch of solutions under the digital Indian initiative. We also have IN Entertainment Limited. IN Entertainment effectively works a lot on content syndication and teleshopping. And if you look at the map to the right of it, that just gives you a sense of the incredible presence that NXTDIGITAL and the brands have been able to achieve. Rather than labor too much on NXTDIGITAL as a background, I thought it's important to share some developments in Q2. And one of the things on slide -- if you move to Slide 10, is that, we are -- very proudly we've launched India's first convergent product. Everyone talks about convergence. Everyone talks about how the importance of convergence going forward, especially about -- during work from home and after. We're the first people just in Diwali -- across Diwali actually to launch it. And it's an incredible product which has 6 products attached to the solution. Starting with digital television, about 650 television channels, 1,000 Mbps of broadband connectivity, access to the best international, national and regional OTT content of over 300,000 hours. We also have a voice over in IP solution linked to it, the Intercom solution. There's building WiFi, and of course, bespoke CCTV solutions. As you would understand and appreciate, all these digital products require a very, very strong customer experience and customer backbone as well as, obviously, analytics and a whole bunch of automation involved there, and that is what gives us the edge by virtue of being a part of team HGS. So we're very -- for us, the backbone is complete for us. We started this service in Mumbai as Phase 1, and we're looking to extend this to the other key cities in early 2023. It's important to note, it's not just a product or a solution that we've launched. We're also making every effort to improve the skill sets of the franchisees. We've got over 10,000 franchisees, as Partha pointed out, and totally about 40,000 feet on street. So the idea is to train them on products and solutions for the future, and we've launched this campaign called NXT Sangram where we are training operators across the country to metamorphosize into digital solutions -- the digital service providers to offer all these offerings. So that has already started. That was one aspect. But I think the best part about what we've just done is on Slide 11. We are the first broadband-over-satellite commercial operator. We launched our bundled solutions -- in terms of bundled solutions, of course, we partnered with TATA Studi for education and Jadooz for digital direct cinema. Now this is the future. If you look at the top 5 technology trends for the next decade, one of the top 3 is broadband-over-satellite. As you all know, there are so many companies globally, leaders who are looking to launch broadband-over-satellite. And clearly, India is a very, very important market. And as NXTDIGITAL, we're very, very delighted that we've been able to launch our product called NXTSkyFi. And it's not just a retail model, but also a very innovative enterprise model where, if you look at the photograph on your screen, it's incredible that we've started education -- a hybrid model of education using a cinema in the day time for classes, and then using the cinema, obviously, for direct digital cinema experience in the evening. So this is something that we're very proud about. And the best part is, given our franchisee network and our entire base, we're able to not just sell, but also service and support any kind of requirements across this vast country of ours. We've already launched in Tawang in Arunachal Pradesh, and in Pulwama in Jammu & Kashmir. We chose these 2 regions in these 2 locations specifically because they have poor connectivity and the solution is already working beautifully there. We're also very proud that, on the enterprise side, which is where there is significant growth that is -- obviously the industry will see -- we've already been able to sign up a solar farm in Ahmednagar recently, and we're providing 24/7 remote sensor management there. So this is something that we believe will be the future for the country. It's part -- as again, as Partha pointed out that part of the Digital India initiative of how to bring digitalization and digital inclusion to every single citizen across the country, and one of the key drivers is connectivity. And when you use broadband-over-satellite, there is no constraint on connectivity because irrespective of where you are, a satellite will always reach you. So we're very proud to have launched that. I'll move on to Slide 12. This is a reflection of the strength and the stability of the Media business. If you look at it -- and I know I'm sure that a lot of you will know the challenging trends that the industry has faced, in particular, the media and entertainment industry, and yet NXTDIGITAL and Media business has been able to kind of hold its pace strongly. In fact, we've seen a marginal growth against quarter of last year. So on Slide 12, if you look at it, the subscriber base of video has grown to about 4.18 million. But I think the most exciting thing for us has been the continuous push of broadband where we've been able to grow our broadband subscriber base to 1.15 million, making us the fourth largest private ISP in the country today. 90-day net churn, which we believe, is a very important barometer of the strength of the company, we've been able to control it much better than last year, which is reflected in the 1.9% 90-day net churn that we have. And the same month renewal again, which is when customers renew their subscription, whether it be video or broadband. This is, of course, in the case of video. We've been able to hold 90.16%. That means 9 customers out of every 10 renew their subscription in the same month and don't wait for any kind of lag time to renew. So this is a wonderful aspect. With that, thank you again on behalf of NXTDIGITAL for joining me out patiently. And thank you, Partha, for the opportunity for all of us to be a part of team HGS. With that, Partha, I'm going to hand back over to you. Thank you.
Thank you, Vyns. So with this exciting story that's been played out from us, you will be convinced that the future of HGS is all digital. And for the first time in quarter 2 -- I'm on Slide 14 -- we are going to report the combined results of BPM and Digital Media businesses. We had a strong consolidated revenue growth of 25% year-on-year, 34.4% revenue growth in the core BPM business. Our consolidated net profit was INR 238.9 crores, up 118.1%. We announced a second interim dividend of INR 5 per share to our shareholders. The dividend outgo would be to the tune of INR 26.2 crores.
The BPM business added 2 new delivery hubs, one in Mysuru in India and other one is in Belfast in the U.K. The Digital Media business launched 100th owned-and-operated NXTHUB and continues to be the growth driver for broadband digital television and OTT solutions. We'll move to Slide 15, key highlights of our financial performance. Q2 for the [ big ] BPM business only, INR 1,102.9 crores, EBITDA of INR 244 crores, and a PBT of INR 170.2 crores, increase in growth in all these 3 reporting numbers. The EBITDA here includes the other income part of the business as well. Now, if you were to look at the overall combined financials with the Digital Media business, then we've got 1 crore -- INR 1,369 crores of revenues, a 25% growth that I spoke about. And EBITDA of INR 276 crores, 135.6% growth, a PBT of INR 123.4 crores, and a PAT, which is reported in 2 formats -- PAT of our continuing operations of INR 192.3 crores and PAT overall of INR 239 crores, which has grown by 118.1%, which I mentioned in the headline numbers. We'll go to Slide 17. This is for the first half year, for the BPM business only, INR 2,147.4 crores in revenue, which is a 30.3% growth, INR 395.6 crores in EBITDA, which is 179% growth, and H1 FY '23 of INR 288.4 crores in PBT, which is a 1423.1% growth. So all these numbers are for the HGS's retail business comprising of digital enabled customer experience solutions and HRO payroll businesses. If I combine that with the Digital Media business, that's on Slide 18, INR 2,690 crores of revenues, 23% growth over last year's H1. INR 499.6 crores is EBITDA which is 104.2% growth over last year, PBT of INR 200.3 crores, PAT for continuing operations of INR 227 crores and overall PAT of INR 273.2 crores which is a 35.6% growth in numbers compared to last year H1. Overall, performance of HGS has been strong. Onshore U.S., Canada and U.K. saw a steady growth. We added about 854 employees in U.K. in Q2. India, Philippines and Jamaica showed very strong growth. And thankfully, this is our higher margin offshore businesses, especially from existing customers. I talked about 2 new centers. We are rationalizing a real estate footprint, closed down 4 centers in Canada which are not being used because most people are working from home. I'm also encouraged to share with you that we started up a small center in Colombia in a city called Barranquilla. That's going to be our ninth country we start operations in, and that is meant for near-shore operations for North American clients. Diversify, our Australian unit, continues to do well and has won 9 new logos since April 2022. Digital Solutions business continues its strong momentum. Its revenues grew by 63% year-on-year. Cloud, security and digital experience practices have expanded significantly. In September, we signed a 28 digital-led engagement across existing and new clients, and the pipeline looks healthy. The most exciting thing is, our proprietary CX transformation platform, Agent X has been rolled out. It's AI-powered, it's cloud contact software and its witnessing interest from several clients as we speak. Looking ahead, we've seen a good performance in H1, cautiously optimistic for H2. There are some headwinds in certain segments like the U.K. public sector. The demand for offshoring business is very, very strong, which is encouraging. We are continuing efforts to improve margin, focusing on winning new clients through an integrated strategy, which is digital and traditional brick-and-mortar businesses together. We continue to explore our acquisition system with digital capabilities and geographic expansion. The Digital Media business, our aim is to integrate and drive synergies: people, technology and domain, and we are scheduled to roll out NXTPLAY content aggregator app shortly, providing access to international regional lines. With this, I'm going to hand over to Pala for our -- financial update of our results for OTT. Over to you, Pala.
Thank you, Partha. Thank you, Vyns. I hope you are ready to hear me. I am on Slide 23. This is the performance of the HGS BPM plus Digital Media business. On a year-on-year growth in dollar terms, revenues are up by about 15.3%. Revenue from operations was up 9.5% and total revenue is up overall 25%. On a year-on-year basis, EBITDA is up 135.6%.
If you look at the depreciation and amortization line, those have sharply increased primarily because of IndAS as well as the addition of the business from NXTDIGITAL. Ind AS expense has been a reduction and there is a significant portion of interest equivalent to IndAS accounting. At a PBT level, for the quarter ended September 21, there was a loss of INR 32.4 crores, after [ packing ] into account exceptional item of INR 24.8 crores. In the current quarter ended September 22, that -- the profits which we have reported is INR 123.4 crores. Tax, there is a negative line of INR 68.9 crores. This is primarily because of the [ VSSC ] tax of the HGS plus NXTDIGITAL Media business. And we have reversed INR 92.76 crores pertaining to tax of the previous business, leaving us INR 192.3 crores as profit from the continuing operations as compared to a loss of INR 18.6 crores. In addition to that, we have the profit after tax from the discontinued operations. As you know, we sold off the health care business. There were some working capital adjustments. And -- so that crystallized during the quarter ended September '22. In addition to that, there were some excess tax provisions relating to the health care business, which have been through that, and -- so there was a tax reversal. So it's giving us a net INR 46.7 crores as profit from discontinued operations, leaving the total PAT, profit after tax of INR 239 crores. Moving to Slide 24. This is the view on the first half of the year, 6 months ending September '22. On a revenue basis, revenues are up by about 14.9% in dollar terms. And in rupee terms, revenues are up by about 23%. EBITDA is significantly higher at about 104%, so a little more than double. Depreciation and -- has seen an increase, whereas interest expense, there is a reduction of about INR 4 crores. At a PBT level, we have profit -- PBT of INR 200.3 crores compared to a loss of INR 54 crores in the first half of the previous financial year. PAT from continuing operations after taking into account the tax going up, comes to INR 227 crores as compared to a loss of INR 36.4 crores. And PAT from discontinued operations, what I covered earlier, that comes to INR 46.2 crores. INR 237.9 crores in the prior period pertains to the profits from the health care business, which we had in Jan of this -- Jan 5, 2022. So the overall level, profit after tax came in for the half of the year at INR 273.2 crores as compared to a profit after tax of INR 201.5 crores in H1 of the previous financial year. Moving on to Slide 25. This is on the balance sheet. It continues to be strong, and this includes the Digital Media business acquired. The shareholders’ funds stand at INR 8,600 crores. We have a book value of -- share of INR 1,639 per share. Current price is roughly about INR 1,253 per share. As mentioned earlier, we have declared an interim dividend -- second interim dividend of INR 5 per share. At the overall gross debt level, we have INR 638.5 crores. This has come primarily from the NDL India business. And we have total cash of about -- cash and cash equals of about INR 2,311 crores, yielding a net cash of INR 1,672 crores. Moving on to Slide 26. This is the position. We have debt of INR 639 crores. We have treasury surplus in the form of short-term loans given that comes to INR 2,575 crores. We have cash and cash equivalents, as I mentioned on the earlier slide, of INR 2,311 crores, and we have debt instruments of about -- debt investments of about INR 2,645 crores. Moving on to the CapEx numbers. The numbers for, first FY '22, that also includes the CapEx for the health care business, whereas the CapEx for the first half of the year FY '23 includes the CapEx of the -- incurred for the media business. So that has come down from -- terms of CapEx from INR 237 crores to INR 97 crores. In terms of DSO days, there is a small increase. FY '22, again is for the health -- overall business, and that has gone up slightly from 60 days to 64 days at the end of September. Moving on to Slide 28. It's basically the split of the revenues. About 67% or INR 92.3 crores comes from the BPM business. About INR 245 crores or 18% comes from the Digital Media business and 15% comes -- came in from the other income. Moving on to Slide 29. Here, you will see significant changes compared to the way we have reported numbers earlier. This includes revenues from the India business, where the origination and the delivery, all happens in India. So if you look at quarter 1, the India business would have been somewhere in the range of about 12% to 13%. That has gone to about 28% in terms of origination and about 31% in terms of delivery. In terms of other geographies, U.K. is about 18% by location and 22% by origination. Canada is in the range of 13% to 14% both by delivery and location. And U.S., we have 31% revenue by origination and about 24% in terms of delivery. Jamaica is about 5% in terms of our delivery location. Moving on to Slide 30. This is the revenue split by vertical. And again, this includes the revenues which have come from the Digital Media business. If you see that -- if you look at our Q1 numbers, the media and entertainment business was about 13%. Now with the NXTDIGITAL business, that comes to about 32%. So that's the big change you would see compared to what we have reported in the previous quarters. And if you add what Partha had mentioned in terms of technology and telecom, now, media, entertainment, technology, telecom, those would account for roughly about 43% of our revenue. Banking & Financials up 15%, Consumer Retail also 15%. Others include revenues from public sector clients, primarily U.K. and Canada. In -- as Vyns mentioned, the Digital Media business has 4 million plus of Digital Media customers, 1 million plus of broadband. So we are -- this start is primarily on the BPM business since we can't factor those kind of -- impacts of that into the revenue [ profile ]. So from our client concentration perspective, the top client accounts for about close to 10%, top 5 at 38% and top 10 at about 58%. And from a delivery channel mix perspective -- again, this is for the BPM business -- Voice accounts for about 73%. Digital, which has been growing rapidly is now at 14%, and is actually now, as far as -- marginally higher than the non-voice business at about 13%. Moving on to Slide 32. This is the stock price. Last stock price, Friday was about INR 1253. Compared to the CNX IT, which has dropped about 18%, the share price of HGS has dropped by [ 8.6% ]. This does factor into the 1:1 bonus when the share went ex-bonus in February of '22 -- 22nd February,'22. Whereas the NIFTY 50, the share price has gone up about 1.7% over the last 12 months. With this, I will conclude our presentation, and we will now open up the floor for question and answers. Thank you, everyone.
[Operator Instructions] The first question is from the line of Jyoti Singh from Arihant Capital Markets.
My question is -- I mean, I need some clarity on our BPM business organic growth side. And second question about the tax, that are those tax write-backs because of media business or because -- as for the results, it seems like acquisition was made to get the tax set off?
Sorry, what was the first part of the question?
First part of the question is, I think answered in Slide 15. So Jyoti, have you looked at Slide 15?
Yes, sir.
Yes. So there, the revenue growth is shown to be 34.4%. That's the pure BPM business for quarter 2. Does that answer your question?
Yes, sir.
The second part of your question was on tax write-back. So Pala -- if you could repeat the question, Pala can answer that, please.
Jyoti, could you repeat your question?
Are those tax write-back because of Media business? Because as per the result, it seems like acquisition was made to get the tax set off?
So we did cover in the earlier slides the rationale for the transaction, why we have now rolled up the Media business under the -- under HGS, the synergy, the ability to participate in the entire Digital Initiative and give a better customer experience to the media customers. So that was the primary reason for the transactions. They're always synergies which come out of a transaction on the cross operational efficiency.
So there has -- maybe have been some tax reversals, but some of the tax reversals have also come in because of the -- relating to the health care business, which we called off. But the focus for this transaction is to take part in the entire Digital India Initiative and also leverage on the customer experience that we bring to the table.
We'll take the next question from the line of [ Ritwik Rai ] from Star Invest Capital.
A couple of questions. Earlier in the previous quarters, HGS was -- there was certain uncertainty to guide with the future growth outlook. Now with this integration and with this acquisition, could you assist us with some guidances in terms of business growth and future outlook?
Yes. So I kind of tried to answer that. Let's go -- do you have the presentation in front of you?
Yes.
So if you go to Slide 17, you will see that our revenues have grown from last year -- half year from INR 1,648.4 crores to INR 2,147.4 crores, right? That is 15.3% growth in revenues. Part of it has been accomplished because also, last half year, we did not have the Diversify business. The Diversify business in Australia came in only the second half of the year. But this is the kind of revenue growth that has been plugged by the company in the first half of the year.
So when you ask me for growth outlook, we have, again, tried to answer that in Slide 21. Our first half of the year has been quite good, and we are cautiously optimistic for H2. But there is one headwind that I wanted to just highlight to people. The U.K. public sector which has been a big part of our growth story last year, we are facing some headwinds there. So these are the 2 qualifiers that I will have for our growth outlook. The offshore business is growing very, very strong and that's -- we are deliberately focused on that business because that is a business that comes in with improved margins. Our onshore footprint, even though it is growing, our onshore footprint we try to reduce because onshore everybody is working from home. We were stuck with a lot of real estate that we did not need. So we are being -- getting rid of those real estate to the extent that our leases allow us. And the digital business, if you look at Slide 20, that revenue grew by about 63% year-on-year. So this is the kind of outlook that I will be able to give you.
And the next question would be, which is the company -- or what kind of company is the management planning to acquire next? And how will NXTDIGITAL have overall -- with the plan of digitalization?
So the second part of the question I'll allow Vyns to answer. I think we've tried to answer that in the presentation, but he'll reiterate that. The first one of the question, what kind of M&A targets are we looking at, I don't think that we are trying to be a digital experience company, which is technology led. If you look at the history of revolution of the BPM business in India, it's primarily been labor-led, right? We were producing -- we were providing people support either for call center services or for back-office servitor. That's been the history of the evolution of the retail industry for the last 2 decades.
Now we have been increasingly bringing in technology. So some of some of our M&A targets this year, they are going to be led around increasing our digital capabilities in the data and analytics space. And even in the public sector space, we have looked at some targets. So yes, that's going to be the focus of our M&As. So that answers the first part of your question. The second part of the question is answered in Slide -- one minute. Sorry, just bear with me, I'm just looking for my slide. Yes. In Slide 7, we've tried to explain the synergies and opportunity that the Digital Media business brings in. But if you want Vyns to speak to it for -- to elucidate that, over to you, Vyns.
Yes. To add to what Partha just mentioned, if you look at the kind of digital space that we are in, there's a tremendous amount of data required, a tremendous amount of analytics, and all of this kind of boiling down to a very strong digital customer experience. So when you look at, for example, ONE Digital, which is a convergence product -- and I'll just take one example to that to give you a sense.
Imagine rolling out public WiFi where you need to build database of connectivity, usage pattern, customer experience, customer usage pattern, keeping on changing your package, you need a very strong digital customer experience back end to be able to support it as well as entire life cycle management. The same thing applies in the case of NXTSkyFi which is the broadband of a satellite, people in multiple places using different kind of connectivity. It is not all B2B -- sorry, not all B2C. It's also B2B2C, which therefore makes the process -- the back-end process and the CX process even more challenging, which then gets facilitated obviously by the significant expertise of HGS to be able to support that growth in those verticals. I hope that answers your question, sir.
Yes, it definitely does.
The next question is from the line of [ Ridam Desai ] from M Square Capital.
So I was just going to the balance sheet of finance to digital. I think they announced the [ regions ] in October. And if I look at the balance sheet, the debt part is around INR 800 crores, both short term and long term. And in the presentation that shows consolidated figures, it's around INR 639 crores. So just wanted to understand how the -- that part has been treated in the consolidated balance sheet?
So just to clarify, the debt -- what we have acquired from -- in the process is not the company NXTDIGITAL Limited. We have only acquired the business -- the Media business -- the Digital Media business of NXTDIGITAL Limited, right? So NXTDIGITAL Limited as an entity remains. They had some real estate, et cetera. So those assets remain with this. Rest of the business has moved on to HGS, right? And so the fixed -- we've discussed to do a fix comparison between the 2 because it's not a like-to-like case where we're just having 2 balance sheets together.
So you just said that you have just acquired the business part of it, digital and media business.
Business has become associated [ there ]. I'm saying we have acquired business assets, [ something ] there, but the number which is reported is a net number taking into account the BPM business and the Media business. All I'm telling you is it's difficult to add that balance sheet and this balance sheet together. And there would be some because now NDL Media business is part of HGS.
Second question was on the overall performance. Now though the NXTDIGITAL is EBITDA positive, you see, but the net -- there is a net loss which has been witnessed in the last few quarters. So now I just wanted to understand what kind of strategy is in place to convert this loss at the net level into the profit over the next few quarters?
So if you see the current business, we -- at an overall level, we are PBT positive if you take the INR 200.3 crores, right? So that's the PBT which we have achieved in the first half. And even if you take for the quarter, it is -- we are profitable at an overall level -- at the PBT level. So clearly, we will look for synergies as well as growth in customers or -- with a better customer experience. So that's what we are focusing on for, as we go through -- going forward.
And sir, last question on the overall -- the discontinued operations. So last year also, we had that -- that's around INR 240 crores. So this year also around INR 50 crores of [ PAT ] from the discontinued operations. So any particular reason behind are discontinuing the operations which are actually profit-making? Health care was a profit-making company, a profit-making vertical for you. What was the reason behind discontinuing such operations?
So unfortunately, we realized that the public markets in India were not valuing the business appropriately, even though it was very, very profitable, right? So the valuation of the business was very poor compared to what kind of valuation that business will [ attract ] in the hand of a private investor. So I think the difference was so stark, and everybody has seen how stark the difference was. So that was one of the primary reasons that we believe that you are not valuing for HGS shareholders, which, unfortunately, the public [ markets ] in India are unable to value the business at an appropriate level. We are better off by divesting the business and unlocking the value for the shareholders in a different kind of way.
Last question, sir, on the broadband-over-satellite part, that [ NXT Sangram ] launch. So we just wanted to understand if this is in direct competition with JioFiber and Airtel who have already presence in these [ rental ] markets.
Right. So Vyns, over to you?
We are the only provider who has launched on geostationary satellite. The only other player who is currently in the space -- this was [ Hughes Telecom ]. As far as we are concerned, our model is different, and we are on geostationary satellites. We will see a lot of entrants coming up. There is no question of that. India is a very big market. And given the kind of terrain, we see tremendous amount of use cases, both in the retail and enterprise levels. But the good thing is that we are off the blocks already. We launched on Diwali in Tawang. We launched after that a few weeks later in Pulwama with our partner TATA Studi and Jadooz. We've just signed on our commercial customer already, which is a solar farm in Ahmednagar.
So our focus is on continuing to grow. And we have one big strength, which Partha also mentioned, and that's very critical. One of the important things for broadband-over-satellite is to have a significant national footprint. Considering we have a presence in 4,500 pin codes and over 10,000 feet on street, there is a sales to service -- sorry, sales to supply to service chain already there. So for us, we've hit the ground running, and we're looking at leveraging that for growth going forward. I hope that answers your question, sir.
Yes, absolutely.
[Operator Instructions] The next question is from the line of Imran Contractor from Quantum Investments.
Can you elucidate more on what is the time line for getting the accounts audited for the last March and announcing a buyback and the Board meeting? And what would be the time line are you looking at?
Pala, do you want to take that question?
Yes. So just to clarify, the audit is for 30th September, and that should be done fairly quickly.
Because we announced the buyback last February, I presume. We're still -- about 8, 9 months have gone. And second thing, this NXTDIGITAL business which you have brought in, then -- is it likely to turn profitable on a bottom line basis?
I think there is a bit of misunderstanding. So let me clarify that in terms of the buyback. See, the health care business was sold in the month of January. And if we had done the buyback based on the earlier balance sheet, the buyback amount would have been subsequently small -- lower because you will have the [ drop ] from the sale of the [indiscernible].
No, let me just complete. So as the study guidelines, once you are doing a capital restructuring through a demerger, et cetera, that, you cannot do any buybacks.
So what we have indicated is -- the amount which has been earmarked based on the 31st March balance sheet and the estimated balance sheet of 30th September. So as we said, now that the shares have been issued, the buyback and the listing is expected to be shortly. It will [indiscernible] proportion for consideration [ to be put ] after this. That's why I just wanted to clarify. Sorry, can you just repeat your second question?
NXTDIGITAL business per se will become profit accretive. What is the time line are we looking at? Or it will require continuous investments?
So that business is already EBITDA positive. And there are costs arising out of interest. With a stronger balance sheet, we'll be able to negotiate better -- get better terms for the -- on things like interest, vendor payments, et cetera. But it's a business which requires more and more [ sector boxes ] for growth. So that's where it has an impact on depreciation. At overall level, we are confident. And as you can see, even at the PBT level, the combined businesses are profitable.
The next question is from the line of [ Preeti Sharma ] from Invest First Advisors.
Sir, my question was regarding the cash position that we have. So I was going through the presentation. We have around more than INR 2,300 crores cash on our books. So could you please let us know what will be the plan with this cash? Like would it be used for NXTDIGITAL business? Or is it used for something else? Could you please elaborate on that?
So today, we have -- if you look at Slide 26, we have surplus fund in the form of loans, cash as well as debt investments. So these will be used primarily in [indiscernible] 3 buckets. One is, of course, the buyback and the taxes payable on the buyback. Second part would be in terms of any acquisitions which we may make. Partha talked about it in the digital space, automation, those kind of services -- technology-led services. So we are -- so that's one potential use. And third, of course, is to grow the business both on the BPM side as well as on the Digital Media side.
As there are no further questions from the participants, I now hand the conference over to Mr. Srinivas Palakodeti for closing comments.
Hello, everyone. Thank you for taking time out for participating in the first time investor call of HGS including the Media business. Thank you for taking time out and for very interesting questions. We look forward to interacting with you when we come up with our results for quarter ended June of '22 in the month of February. Thank you once again.
Thank you, everyone.
Thank you.
Ladies and gentlemen, on behalf of Hinduja Global Solutions Limited, that concludes this conference call. Thank you for joining us, and you may now disconnect your lines.