SIS Ltd

NSE:SIS

Earnings Call Transcript

[Operator]

Ladies and gentlemen, good day, and welcome to the SIS Limited Q4 and FY '23 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Bharat Bakhshi, President, M&A, Investor Relations and Ventures from SIS Limited. Thank you, and over to you, Mr. Bakhshi.

[Bharat Bakhshi, executive]

Good afternoon, everyone, and welcome to our Q4 and FY '23 earnings call. Along with me, I have our Group Managing Director, Rituraj Sinha; and our Group CFO, Devesh Desai. I hope everyone has had a chance to look at our results and the earnings note, which has been uploaded on the stock exchanges and our company's website. We are very happy to report that the business continued to show strong revenue growth with the growth rates now heading back towards peak overage levels. On a consolidated basis, as you've probably seen, we grew revenues by almost 13% in FY '23. India Security grew almost 20%. Facility Management grew by 36% and our cash logistics JV, which we do not consolidate, grew by 38% over last year. So very strong growth across all segments in India. The international business was pretty much flat over last year, but this was in spite of a lot of the onetime core-related contracts falling off. So basically, international was able to pick up other business to compensate for the onetime contract falling off. And even with these international numbers included, as I mentioned, on a consolidated basis, the overall revenue still grew almost 13% over last year, which we feel is a very good outcome, showing very strong business growth across all segments. On the margin front, also, as guided by us earlier, margins are now steadily increasing. Over the course of the last 2 quarters, our EBITDA margins have increased by 50 basis points. Earnings per share for FY '23 are 7.1% higher than in FY '22. The other good news is that this quarter also saw strong cash generation with consolidated OCF to EBITDA for the quarter at 44%, allowing us to repay approximately INR 83 crores of debt subsequent to the quarter end. Our net debt-to-EBITDA from 2.06x in the previous quarter is now down to 1.75%, which is, again, a good outcome given interest rates have been going up. So overall, we are very happy with the business momentum. We will now turn it over for Q&A.

[Operator]

Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Koushik Mohan from Ashika Stock Broking.

[Kaushik Mohan, analyst]

Sir, congratulations for the great set of numbers. So sir, I just want some clarity on your operating margins and what is your guiding for the future operating margin as well as how is your growth in the other part of the business where -- which is not related to employees on the automation part of it.

[Devesh Desai, executive]

So as you can see from the results we published, we've had good growth in all segments, both in revenue and on the operating margins. As we had guided earlier, we will be -- we are slowly steadily going back to the pre covered levels of margin. And this is another quarter of EBITDA growth, which we have delivered. On your second question was on guidance. At this point, we're not giving any guidance, but so that -- I view it as that. But I'd only like to say that we will continue working on improving the margins and revenue growth hopefully will be at similar levels of this year. But at this point, we're not giving any guidance.

[Bharat Bakhshi, executive]

If I may just add one center to that is that, as Devesh said, the focus continues to be on increasing the margins. And as we've mentioned on our call a couple of quarters ago that we thought we had at the lowest and things would keep moving up. And as I mentioned in the initial commentary that margins have moved up last 2 quarters. I think at a high level, we can say we expect the trend broadly to continue because we are focusing quite a bit on the margin front. But as Devesh said, we don't have any exact guidance that we normally give up. But yes, we do see the improvement, hoping continue. So I hope that answers your question.

[Kaushik Mohan, analyst]

Yes, I had another question. Sir, how about the sales? How are you looking at your sales? Is there any promise of orders that you have in your hand currently? Because once -- any one bank gets in tie up with you, they actually stay for a very, very longer time. So I just wanted to understand what is the average duration that the client is staying with you as well as what is the expectation that with these existing clients and what you expect for them come in future?

[Bharat Bakhshi, executive]

So actually on clients, yes, we are seeing very good client additions, both in new clients as well as existing clients who are increasing their business with us across all segments. Again, whether it's security, whether it's facilities or cash. We don't have much client concentration. As you're probably aware, we have many thousands, almost 10,000 clients in the security side itself. So there is very low client concentration. In terms of contracts, again, it varies a lot. Some of these are get automated [Technical Difficulty]. Some of the ad automatically updated some come up for renewal on a basis. But on average, you can say typically about 3 or so is-- again, on average, how long we have these contracts. But as I said, I think the bottom line is that we have very strong client concentration, a very less client concentration, and we are seeing good traction across all segments of the sectors we cover.

[Devesh Desai, executive]

So while a typical contract length or average contract length would be 3 years, we've had a number of clients who've been with us for a number of years with several extensions. So some clients have been there for 15 years or 20 years, 10 years. So there's a large spread of clients who've been sticky with us, and they give us a strong base for our business on a year-to-year basis.

[Kaushik Mohan, analyst]

Sir, in the history, you have guided that you wanted to become a 10% market share in this business. And according to my understanding, the entire security system is growing by 25% CAGR. So in that case, if you wanted to be the 10% of the market and if the market is growing at only at 25 percentage levels. So what is your actual points that you're putting forward that you'll be achieving them? What are your growth drivers that you're expecting this will be achieved for you?

[Bharat Bakhshi, executive]

I think that we correct you. I don't think the security market has grown by 25%. I don't follow when you about that data point from -- the security industry growth ballpark during the last 2 years after [Indiscernible] was subdued, it has grown definitely close to 12%, 14% this year. And against that, SIS has grown 20% this year, which basically means that we pick up market share in the process. We believe that in this exercise is repeated over a cycle of next few years, our market share, which is currently sub-5%, can move up. And then with a few strategic acquisitions, our ambition is to lock ourselves into a 10% market share in India, but that is a function of both organic development over a few years, not 1, 2 but several as well as some strategic M&A.

[Kaushik Mohan, analyst]

I have a last and final question, sir. It's on the taxes. You have a lot of benefits on the taxes side. Sir, if you can put 2, 3 benefits that majorly contributes to your tax benefits?

[Bharat Bakhshi, executive]

So if you look at the earnings note, you've given a note on the major tax benefit we have, which is under 60 changes of the income backpack fairly well explained it in a bit of detail. So I would request you to kindly close with that. And if you have any questions after that, we will be happy to answer.

[Operator]

Our next question comes from the line of Harish Kumar from [Indiscernible].

[Harish Kumar, analyst]

So I just wanted to ask you about the cash management business, which is now close to 17% of our EBITDA. And in the press release, it's a that it's driven by dose banking and cash in transit. So I just want to know what are the things which are driving this growth? And going forward in the future, are we targeting -- will the growth come from the same areas? Or are we targeting other segments of cash management?

[Bharat Bakhshi, executive]

See, let me first correct you. Our cash business is not a typical cash company. And I say that because less than 20% of our revenue comes from EPS. 80% our revenue is [ non-AV ]. So first thing you need to understand is that it's a business that is more into bag outsourcing than typical cash management. I mean, if you -- if you just opposed with the other listed company in the space, you will see 80% of the revenue is ATM linked, there is in market, 20% of revenue rating. So that's the level of contrast. Now that also sort of gives you a broad sense that because we're going back outsourcing services, there are so many things like not counting, currency management, taking operations, invoice collection work for electricity companies. There is so many some other service lines that we have, which are attractive for us, value cargo, cash deposit. So all of this is what is driving the growth, not the ATM side.

[Harish Kumar, analyst]

And could you just throw some more color on the dose banking part of it? And what's driving the growth there?

[Bharat Bakhshi, executive]

Well, I think more and more people are opting for agencies like us to collect money at the doorstep and deliver cash under roster. There is also a function of organized retail as the penetration of organized retail in India goes up. There are more changes whether they are [Indiscernible] change or jewelry store chains or McDonald's can or to whatever type of chain, they generally outsource the cash pickup and delivery operations. So people like us actually go and collect money at fixed time and deliver instrument, not just cash, but also other instruments and those steps. So this must be seen as a sort of a -- something that's very closely linked to the organized retail fee. So as online retail boosts costar banking will continue to grow.

[Harish Kumar, analyst]

And I just had one last question on the margins on the cash management. So I think year-on-year, just for Q4, it has declined. So I just wanted to understand what the reason is. And for the full year, it has actually improved by more than 100 basis points. So is this a sustainable margin rate? Or I just want to understand some about that.

[Bharat Bakhshi, executive]

So margins for -- if I understand, Harish, you're talking about margins for cash logistics side?

[Harish Kumar, analyst]

Yes.

[Bharat Bakhshi, executive]

So our gas logistics business already is delivering 14%, 15% EBITDA margin. And I believe that as the business gains further market share the big thing, the decisions that we took around 4, 5 years back was to stay away from the ATM side of business, and that's helped us significantly. And the other call we took is not to make a cash company that is a market leader across India. We focus on North and East India, and we go to like extreme territories like Northeast parts [Indiscernible] such pockets or even be hard for that matter, Visa. So we go into territories where the competition is low. Our market share, therefore, is higher, higher market share means greater density or each cash-bang-up, higher density on the cash burn group means more margins per route per day -- and we've implemented a tremendous amount of technology today. We are the only business in India, which is able to give you profitability post stop. So if my cash and swaps for 30 minutes at [Indiscernible] shop to collect money, I can actually compute the cost of that stock. And whether I make margin on that or not, that's the content of all the technology we implemented in the last 4, 5 years.

[Harish Kumar, analyst]

I just had one last question. I just wanted to know, do we compete in this lost banking with certain payment banks because we are seeing that they are also active in this space.

[Bharat Bakhshi, executive]

Sorry, I didn't follow that. Can you repeat that?

[Harish Kumar, analyst]

Are payment banks also providing the service of dose banking, like cash management.

[Bharat Bakhshi, executive]

As far as I know, the top 10 banks in India do not operate a single cash line. I mean you can search for yourself. But my understanding of this industry is that post demonetization, whoever was running cash flow also dosed at banking on their own, they are branded to do so.

[Operator]

[Operator Instructions] Our next question comes from the line of Amit Chandra from HDFC Securities.

[Amit Chandra, analyst]

My first question is on the International Security Services business. So we have been seeing that the margins for this business has been coming off. So can you please explain the reason behind it? And where you see -- where actually you see it to stabilize? And also another aspect to it is that the salaried employee, what I see here is almost like double the minimum wages that is there in Australia. So what is driving these higher realizations in the international business?

[Bharat Bakhshi, executive]

So I'm very happy that you're taking a deep interest in the international business, and I welcome you to visit our Australian operations directly. I understand that that's already been set up for you. In fact, encourage more and more analysts, our investors, whoever wants to visit any of these countries or you're visiting already and you want to stop over at our office and meet our management. We'll be very happy to facilitate that. But coming back to the question, our international business margins are down. That's a statement of fact. But I repeatedly said that I please compare international margins to pre-going -- even prior to Kuwait, the international business was hovering around 4%, 4.5% EBITDA margin. Even now, it has settled back at 4%, 4.5% EBITDA margin. What you saw in FY '21 and FY '22 with the international business reporting 5, 5.5, 6 even 6.5% margin in some quarters was completely exceptional, and that was on account of over $100 million of temporary COVID work that came at super over profits. All of that revenue has exited the system now, just in the last financial year FY '23, $84 million worth of COVID-related contracts came to a stop. And obviously, those contracts are more profitable than our standard routine contracts that we got to replace them. So that you will have to understand that the international business is a 4%, 4.5% business, and we are working to treat it. It might go to 5%, but that's the pre-COVID for many, many years, try to go it, and that will continue to be what it is. It is not certainly going to be 6% margin business. What will happen is that the share of international business in our overall revenues and EBITDA is now up 35% more 40% than 35%, but it is going down. As the share of international business slides from the 40% -- 30%, 40% share of EBITDA and revenue to a lower number, the blended margin of SIS Group will hopefully go up. And I have maintained and I repeat that the India Security business, India facility management business are both capable of delivering 6% plus EBITDA margin. They were delivering 6% plus EBITDA margin prior to COVID, and I don't see any reason why these businesses should not go back at 6% costs.

[Amit Chandra, analyst]

So I know you mentioned that the margins are back to pre-COVID levels. But if I see the realizations of the international business, it's still around 50% higher than what we used to do pre-COVID. So are you saying that the realization is also going to not normalize over the next 2 years for the international business?

[Bharat Bakhshi, executive]

What do you mean the realization? I did didn't--

[Amit Chandra, analyst]

[Indiscernible]. So if I just calculate the revenue by the total international employees.

[Bharat Bakhshi, executive]

So the margin -- the gross margin remains the same. The EBITDA margin remains the same. So the salary, whatever percentage we were gaining of employee monthly salary. We remain to realize the same modelized, that doesn't change. Let me be more explicit. If your question is, is gross margin in Australia going down, the answer is, no.

[Amit Chandra, analyst]

So now like more from a product perspective. So any overall both as the security services, India, Australia and the facility management. If you can broadly explain what part of your revenue is from like basic services, which is the services segment and from solutions, right? So if I understand that services is typically the cost plus cost of service fee model plus solutions as basic services plus some amount of tech in it, right? So what part of the revenue is from services and solutions if you can break it up like within segment, it will be helpful. And also in terms of your current contracts, what part of the contracts we have as fixed service fee model and what is on in variable servicing model.

[Bharat Bakhshi, executive]

There are 4 lines in the outsourced services market, right? As I've said this multiple times, let me repeat it. The first plan what you call the [ staffing led ], which was on fixed fee per head for one. In that layer, we don't operate. We are not starting open. Then the layer 2, in led to his services sector, where we are responsible for outcomes, not for thus providing [Indiscernible]. In such contracts where we are responsible for security of a building or maintaining registers or upkeep or cleaning of equipment or HVAC services or whatever not. These are service level agreements, SLA-based contracts where we are responsible for outcomes. And that layer 2 is basically a 5% to 7% EBITDA margin business, and that is 5% to 7% EBITDA margin business because we charge a percentage-based service fee, not fixed INR based obviously. 85% of SIS, maybe even higher is in this box. There is a third boss. Box #3 or late #3 what it was to evicted, where we do everything that is involved in the service here, but want we had a lot of technology. It could be mechanized cleaning. It could be CCTV cameras on OpEx basis. It could be basically things like we protect on our monetary dispose. Now these businesses have an EBITDA margin range of even up to 15%. And our Product business currently, which is it's a very small business. It's still INR 5 crores, INR 7 crores monthly invoice value. MOH is still delivering close to 15% plus EBITDA margin. So we have proof of concept. It's just that the Alarm business is fairly small right now. Over the next few years, we hope to build that up. We have 15,000 connections right now. We hope to build it up to 50,000 connections in the near term. And should that happen, obviously, you will see that more evidently the impact of solutions. We also -- the guarding business also does a lot of late, like we just picked up a large contract from Vedanta, which has not just manpower but drones and mobile app and CCTV based video surveillance, AI-based actually video analytics. And that's again a contract which will deliver an EBITDA margin of 10%. The last and the intimate layer in our industry is what we call route-based solutions. This is the cash industry or the best control industry. Now what happens here is that the gross margin is high. The gross margin could be 35%, 45% in pest control and in cash logistics type business because it's route-based. You will also get the benefit of route-based efficiencies and resultantly, these businesses delivered 20% plus EBITDA margin. Our cash business is in that pocket, which is now roughly 17%. If you look at this great cash, almost 17% of our revenues are there, factor is another 1% to 2%. So you can say. So next time, when you see our earnings report, I have asked my team to put out what share of our revenues is in what bracket maybe segment-wise or overall, they will see what they can do, but we'll try and give you a more clearer picture because I think for the longer side. Last 5 years, at least since we got listed, we have been constantly compared to the wrong peer set. We are not a staffing company. We are not a 2%, 3% EBITDA margin business. Structurally, -- we went down to 4% or 4.5% because of COVID. We have, in the past, demonstrated ability to deliver 6% plus, and we have every intent to go back 6% plus.

[Amit Chandra, analyst]

Sir, you mentioned that services is 85% of the overall revenue. So in the services model, what part of the contracts would be on a fixed service fee model and available service model, if you can give some number around that.

[Bharat Bakhshi, executive]

Like I said, the fixed IRR based -- I mean, there could be 5%, 7%, but I don't think it's going to be more than that. I mean, that would also be in case of like some large banks, which has [Indiscernible] of power or maybe INR 5 crores of revenue and they have put an RFP like that. But generally, by and large, it's not the case.

[Amit Chandra, analyst]

And sir, my last question is on the ATG benefits that we're taking. So what's the view on the ATG benefit until how long can it continue -- and also in terms of the income tax refunds that we have to get from the income base department because still we are paying the taxes, which we have to take the refund back from the department. But until which financial year we have got the refund.

[Devesh Desai, executive]

First on the [Indiscernible] as long as it continues, we will take the benefit. There is no notification or information from the government that it is going to stop. So as long as it today continues. If you look at the Q4 cash flow statement, you will see that the tax number is positive and not negative, and that shows that we are getting our refunds from the comeback department. The last question has to talk to which year we have got it. I'm sorry that's not something I can disclose.

[Operator]

Our next question comes from the line of Amit at Initial Investor.

[Amit Chandra, analyst]

Sir, my first question is regarding that our receivable part. Our revenues have grown by 13%, but our receivables have grown by 20%. So what's the reason for that.

[Bharat Bakhshi, executive]

So there are 2 things. When we compare the revenue and the describes, the receivables also include a GSC component. So that goes up by around another 18% or 20%, depending on the geographies which it covers. And we have also reported in our earnings store, if you look at the succession of [Indiscernible], we also report how the DSO is going up and down. So unfortunately, in this year, because I think we have clients who normally pay the year-end, they did not pay up at the year-end they said in April. So constantly, our DSO has gone up in March, which has come back down in April. And that is why you will see that there are the presence between the 2 numbers.

[Amit Chandra, analyst]

Sir, my second question is regarding this cross-selling opportunity between our security and FM business. I guess, currently only 6% clients are using both the services. So as these verticals there some vertical and the service -- the security verticals, these are managed separately. So how do we approach these cross-selling opportunities internally? And what is our strategy to capture this cross-selling opportunity because I think we have a significant headroom to grow this 6% into something like 20, 25 something. And do we have any internal targets for cross-selling within the organization?

[Bharat Bakhshi, executive]

I think cross-selling is something that we do on a way that we don't end up confusing the customers, whether we are a security company [Indiscernible] assessment or company or electronic security company. So what we call it is cross referencing. What it means is that the guy who sort security to, let's say, your building is not going to suddenly go there and start talking about [Indiscernible] the next year. In such cases, what happened is that customers get confused whether you're talking to a security company or what type of service company [Indiscernible]. So what we do is what we call cross referencing. In top 14 cities in the country, which constitute roughly 65% of it in revenues. We have created what we call the city coordinator group, which has representatives of all group companies operating in that to state who are members of that council. They meet once every month to exchange references and pass to each other contact and updates. And then, let's say, for example, I would happen to the [indiscernible] in the city of Chennai, for example, in a cross-assigning says that I've got 10 new contracts. Other people in the FM business or its best control electronic security, is that I said, "Oh, look, I also want to get to lose this customer to you give you a reference.†We simply passes on the reference and right to the customer an e-mail saying, here's my colleague, he wants to go and meet you to share about [Indiscernible] service maybe and please give an appointment. That's it. That's where the referencing stops. That's the model we have adopted. We do not push cross sales target for our team. We believe each of our businesses is capable of delivering its own growth. And so far, that's also been demonstrated. For example, the 20% growth in security is not hinged upon how much cross-selling average.

[Amit Chandra, analyst]

Sir, is there any target something like where you feel the 6% to grow to?

[Bharat Bakhshi, executive]

Can you repeat that question, please?

[Amit Chandra, analyst]

Are there any internal targets like any ballpark figure where this 6% can grow to? Like most of our clients are using both the facility from some other service providers. So isn't it like...

[Bharat Bakhshi, executive]

This is a function -- this is a macro strategy of the company. There is no internal target. Cross-selling is not our biggest growth engine. We don't have an internal target. I'm sorry to disappoint you, but that's the way I operate.

[Operator]

Our next question comes from the line of Dharma Venkatesan, Investor.

[Dharma Venkatesan K. B.]

My first question is regarding our international business. So in our previous call, you had mentioned that due to the COVID contract our aim for us is to make sure that we don't have a depot in revenue and will see whatever the drop off comes from the core revenue? We will mention that the growth covers that up. So I just wanted to know how much we have -- how much revenue we had due to COVID last year so that we could get a sense of how much growth we have done on the international business this year.

[Bharat Bakhshi, executive]

I just said a few minutes back. It stood more than $80 million of contracts of COVID [Indiscernible] compared to the previous year. So I hope that gives you the answer.

[Dharma Venkatesan K. B.]

And second one is regarding our subsidiary [Indiscernible]. So how would peak looking there? Because the last few quarters, we had some issues there through like in terms of revenues and EBITDA. So how are then looking there? And what's the outlook for the next year?

[Bharat Bakhshi, executive]

So as we have mentioned in the last few quarters, the turnaround strategy is there. I input in place the actions are their action has been started. It's showing some improvement, but it could take a few more quarters to come back to profitable still. But tax shows are there, the improvements are there. On a quarter-to-quarter basis, there is improvement in the bottom line.

[Dharma Venkatesan K. B.]

Can we expect it to be EBITDA breakeven by the end of next year, like some sort of EBITDA level breakeven because currently, we're losing money there.

[Bharat Bakhshi, executive]

So yes, the target definitely is to achieve it no later by that time.

[Dharma Venkatesan K. B.]

And in the previous call, you mentioned that like 1.6% of our customers, who our security services pretty management services also. So we are working towards a higher number. So is there any change in the number? I know it's just one quarter, but just wanted to get an update on.

[Bharat Bakhshi, executive]

So can you repeat that? I didn't understand the last part.

[Dharma Venkatesan K. B.]

Sir, like in the previous calls, you had mentioned that 1.6% of the customers who use security solutions also use facility management customers. And you have mentioned that we are working towards getting to a higher number. I know it's just 1 quarter, like one quarter before you said this. So I just wanted to know, is there any change? And what seems to be low.

[Bharat Bakhshi, executive]

I would note, we just had a 5- or 6-minute conversation exchange on the stock selling subsidy management, security, et cetera. I think you would have got your answers from there. But is there anything on that, that you want to know.

[Dharma Venkatesan K. B.]

If anything on that, I will write to the company around this so that's fine. And regarding the fixed escalations which we had in our overseas companies, all our all our contracts renewed on the new HPCs there still some large industry?

[Bharat Bakhshi, executive]

So all the wage increases have been passed on in Q3. So the full impact has come in Q4 as we had reported earlier.

[Dharma Venkatesan K. B.]

And just one small request in the press like first of all, the presentation was pretty clear, and it has all the details, which anyone wanted to know about this company. Just one thing. In the debt portion, the comparison was net between quarter-on-quarter. So if there was a comparison between year-on-year, how the net debt and the gross debt has moved. It will be even more clearer for us just a small question. That’s all.

[Bharat Bakhshi, executive]

[Indiscernible] and we will see how it fits into the overall structure of the note.

[Dharma Venkatesan K. B.]

And finally, regarding our cash business, our execution continues to be tamed you're actually going and faster in most of the places or industry. So I just wanted to get the [Indiscernible].

[Operator]

[Operator Instructions] As there are no further questions from the participants, I now hand the conference over to Mr. Rituraj Sinha for closing remarks.

[Rituraj Sinha, executive]

Thank you, everyone, for joining this call. As I look back and summarize FY '23, I think it's been a year of more wins and gains for SIS than the previous 2 years, which is FY '21 and FY '22. And I said so because SIS has always measured itself on 3 metrics, 20% year-on-year growth, 20% return on equity and greater than 50% OCF EBITDA. If I look at FY '23, I see a year where after a gap of more than 2, almost 3 years, growth came back, that's the biggest takeaway for me for FY '23. Growth has come back and it's come back to the bank. The India security business grew 20%, the FM business, 36% and the cash business, 38% year-on-year. And more importantly, international business -- while the numbers show only 0.7%, the reality of the macro is that the international business lost $84 million of COVID work, which is exactly 10% of revenue. So the revenue [Indiscernible] by 10% and still they grew by few.7%, which for me is almost a 10% growth, which did not get captured because of the way we account for things. So I think growth is back, all 4 engines are finding on growth and that fantastic news because everything else is a function of growth and market share. So I'm glad that we are back on that. The second track cash is the ultimate reality of business. I'm glad that we've had a super year-end cash position -- in a year when interest rates are going through the roof in Australia, Singapore, India, we've had record collections. We have brought our DSO down by almost 1 or 2 days in several segments. But on an overall basis, it sort of doesn't add up that part, but a lot of segments have done a fantastic common collections. In fact, we have repaid $15 million of debt in Australia after 31st March, which has not been captured in the earnings node for obvious reasons, which happened 2 days back. But we've repaid debt to bring our interest cost within control, and that is possible because we have a strong cash position. So I think our cash generation is fantastic. I'm very happy about that second aspect. Third thing is that our debt position was taking 2x EV EBITDA profit. And that is a red line for me, I personally [Indiscernible] a red flag clearly. And I'm happy that what's happened in the last 3 months, we are back at 1.7x net debt EBITDA, and we will continue to work to keep that in check. Anything around 1.5 or comfort on below 1 is underutilization of balance sheet, more than 2 is crossing the rest threshold. So I think on all those 3 levers, I think FY '23 has been a great result and the team [Indiscernible]. Fourth lever margins, I know we are lower here, 6%. I won't bother everybody. It's as a concern for us as it is a top, the reality of things is that for the last 3 quarters back-to-back, our margin is improving. The incremental improvement is not that significant. I understand that, but it is steadily moving in the right direction. I'm hoping that if the growth momentum continues and if we continue to have a disruption 3 years like FY '23, April to April through to March, there was no VI-related or any other kind of disruption in business. And in the coming 12 months are similar I'm pretty sure that the growth continues operating leverage will kick in. SG&A has started to stabilize and it will start to show up on the EBITDA margin as well. Thank you very much for your patience, and I hope to see you again sometime soon. Thank you very much.

[Operator]

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