DELTACORPNSEQ1 FY2023July 13, 2022

Delta Corp Limited

6,975words
122turns
16analyst exchanges
1executives
Management on call
Alpesh Thacker
ANTIQUE STOCK BROKING LIMITED
Key numbers — 40 extracted
10%
r, nothing untoward and more importantly there has been escalation in the license fees by about 10% from the government of Goa, which effectively means at about 10 odd Crores of license fee over th
28%
f confusion because basis which even the media have been reporting that the GoM has inclined on a 28% GST for casinos and online gaming. Let me once again clarify that as far as Delta Corp is concern
18%
recommendations and if the GST council was to adopt that the chances are that the current rate of 18% GST that the online vertical is paying will get revised to 28%, other than that we do not see any
rs,
which we can utilize to augment growth in terms of retention, in terms of acquisition of new players, introduction of new vertical, in terms of new games, etc., and try and reach to as many people as
Rs.1000
was an element of tax called the entertainment tax which the Government of Goa was levying and a Rs.1000 per person as the entry tax that the government of Goa used to levy onto all the casinos, which su
Rs.100
y the casino that is suppose if somebody has come into the casino has bought or has exchanged say Rs.100 worth of chips and after one, two, three, four, five, seven, ten as whatever that maybe he comes b
Rs.80
nd after one, two, three, four, five, seven, ten as whatever that maybe he comes back and returns Rs.80 worth of chips what is retained by the casino is Rs.20 as far as casino is concerned that is the c
Rs.20
tever that maybe he comes back and returns Rs.80 worth of chips what is retained by the casino is Rs.20 as far as casino is concerned that is the consideration for the supply or service or good or whate
10 Crore
Ostwal: Thank you for the opportunity. I have only one question on the license fee which we told 10 Crores has increased so is there any way to recover from the casino business or that is the additional
5 Crore
d cash flows? Hardik Dhebar: Till the time the revenue starts growing, historically from a near 5 Crores of license fee per boat we have gone to all the way to 30 Crores of license fee and our margins
30 Crore
growing, historically from a near 5 Crores of license fee per boat we have gone to all the way to 30 Crores of license fee and our margins have not only remained intact but also grown from time-to-time, s
32%
u look at the EBITDA margins in the quarter ending March on a consolidated basis we were at about 32% which is now at 36%, 37% and if things all go well like I said with the margins will remain intac
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Guidance — 18 items
Hardik Dhebar
opening
“We believe as of now we are on track with all the timelines and approvals, obviously the issue per se will be subject to market conditions and how the markets are placed at that particular point of time, but other than that on that particular exercise we are on track.”
Hardik Dhebar
opening
“Like I said on the SEBI process and the DRHP process we are on track and we believe that we should be ready subject to market conditions we will be able to hopefully be ready in hold the right time and spirit that we were hoping to be.”
Hardik Dhebar
opening
“I will be happy to take questions or clarifications if anybody has anything in particular.”
Hardik Dhebar
qa
“So we have given them enough justification, explanation I think the GoM is now understanding it, let us wait for the GoM to submit the report by August 10, 2022, as we all know and hopefully in the forthcoming GST council this ambiguity also will be clarified.”
Manish Ostwal
qa
“Secondly on the Deltin city project what is the update on that, project how things progressing on that project?”
Hardik Dhebar
qa
“So today when we are doing 18% because we do GST kind of a rate my effective outflow is about 14%, 15% which will go up from 14%, 15% to about 21%, 22% because again the rate that I will collect will be including GST so that 4%, 5%, 7% kind of an impact is what we are looking at.”
Anupam Agarwal
qa
“Sir post Zuri commencement what will be the active gaming positions for ourselves Delta and what could be average utilization let us say people coming in?”
Anupam Agarwal
qa
“Sir on the new vessel when are we expecting that to commence is there is a timeline you mentioned by September next year is that still panning..”
Hardik Dhebar
qa
“I just gave an update that the project is underway it is a four-year gestation period project we have commenced our work and we are on track on timelines we have appointed all the necessary consultants and experts that are required for the project the work is on and it is work in progress.”
Hardik Dhebar
qa
“GST or VAT as the case maybe will be applied.”
Risks & concerns — 3 flagged
If you could just give us a sense that you have already clarified that you are at a 28% GST for the casino business, so that part you are indifferent to that, my question was that what is the difference between what GoM proposed initially and the GGR method that you have kind of proposed and which seems to be the logical way of doing it, just trying to understand the possible impact of the difference between the two approaches?
— Rahul
Historically, we have grown at about 10% to 15% and if you look at from the time that we have taken over we have more than trebled the turnover so it will be very difficult to give you a number because you cannot be trebling and quadrupling your turnover every three, four years but the endeavor is obviously to grow at a much faster pace than what we are doing today.
— Hardik Dhebar
Hardik first of all many congratulations on the great set of numbers and we have done very well in a difficult situation.
— Bhavesh Patel
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Q&A — 16 exchanges
Q
Thank you for taking my question and first of all congratulations on a great set of numbers. If you could just give us a sense that you have already clarified that you are at a 28% GST for the casino business, so that part you are indifferent to that, my question was that what is the difference between what GoM proposed initially and the GGR method that you have kind of proposed and which seems to be the logical way of doing it, just trying to understand the possible impact of the difference between the two approaches?
Hardik Dhebar
First of all we have not proposed anything we are only saying to maintain the status quo and the way tax was computed and calculated all along since the time casinos came into being as far as India and Goa is concerned. Before the GST came into effect that is prior to July 1, 2017, there was an element of tax called the entertainment tax which the Government of Goa was levying and a Rs.1000 per person as the entry tax that the government of Goa used to levy onto all the casinos, which subsequently once GST was introduced got subsumed into GST and that became one tax. So prior to GST coming in
Q
Thank you for the opportunity. I have only one question on the license fee which we told 10 Crores has increased so is there any way to recover from the casino business or that is the additional cashflow burden compared to FY2022 consolidated cash flows?
Hardik Dhebar
Till the time the revenue starts growing, historically from a near 5 Crores of license fee per boat we have gone to all the way to 30 Crores of license fee and our margins have not only remained intact but also grown from time-to-time, so we do not see this as a issue because over a period of time the revenue growth is going to be much more than the expense growth in terms of the license fee and all and in fact in this quarter itself we have recovered a lot of lost margin, if you look at the EBITDA margins in the quarter ending March on a consolidated basis we were at about 32% which is now at
Q
Thank you Hardik for the business update. What is the impact on online gaming you think the business volume if the peak GST tax is levied?
Hardik Dhebar
So straight it has a 10% impact in the basic rate per se. So today when we are doing 18% because we do GST kind of a rate my effective outflow is about 14%, 15% which will go up from 14%, 15% to about 21%, 22% because again the rate that I will collect will be including GST so that 4%, 5%, 7% kind of an impact is what we are looking at. No, besides the financial impact I want to know volume impact how much this will deter? Well I do not think major change in rate or increase in rate by this 5%, 6%, 7% will be a too dramatic impact on the volume per se the reason being as far as the customer is
Q
First of all thanks for the clarity on the GST as well as a brief on the status on the ongoing Daman matter in the High Court. My question is on the EBITDA margin if you look at the third quarter last year FY2022 where you had a turnover of 247 Crores you had a reported EBITDA of 107 Crores at 43.36% margin which first quarter this year FY2023 turnover has grown up by 3 Crores 250.27 Crores but the margin has fallen to 34.96 so there is actually a hit of about 9% in EBITDA margins and if I look at the employee expenses has grown by 10 Crores and your other expenses have also grown by about 10
Hardik Dhebar
Like I said employee expenses is very clear we have given increments to the entire group after about two-and-a-half, three years so that obviously is a straight increase in the cost as far as employee cost is concerned this includes online gaming, this includes all the casinos, hotels, etc. In addition to that I already explained on the other expense bit the other expense includes basically two, three major variances one like I said is on the legal and professional charges that has gone up by about 3.5 Crores for the quarter in addition to that the license fees like I explained has gone up abo
Q
Good afternoon and thank you for the opportunity. Sir my question was related to the visitations in a quarter if you compare it to the third quarter last year how much is the visitations in the current quarter?
Hardik Dhebar
I think we would be more or less at similar visitations as third quarter last year. Would it be around 130000, 140000? I do not have the number in front of me what was the number in third quarter last year but we should be in the ballpark of the same number because I know the number for the current quarter which is about 120000 odd people which is what we would have done in the third quarter of last year as well. Fair enough. Sir post Zuri commencement what will be the active gaming positions for ourselves Delta and what could be average utilization let us say people coming in? I do not know f
Q
Couple of questions. Firstly can you update on the land-based casino?
Hardik Dhebar
I just gave an update that the project is underway it is a four-year gestation period project we have commenced our work and we are on track on timelines we have appointed all the necessary consultants and experts that are required for the project the work is on and it is work in progress. Just one last small question you have given one example of Rs.100 chips is purchased by someone. It is not purchased it is exchanged that is what I said. If he return Rs.80 chips the Rs.20 is subject to the tech right, what if he gives back 120? That is okay as a business the GST is paid on a monthly basis t
Q
First question is purely based on your experience of so many years generally on a daily basis how many chips are returned as a percentage of total inflows just a ballpark number for understanding?
Hardik Dhebar
So typically the hold of the casino is about 20% anywhere between 17% and 20% so for every Rs.100 worth of chips that are taken out I retain about Rs.17 or Rs.20 worth of it. You people collect a cover charge as soon as the customer enters your casino so on that cover charge what amount of GST you pay? Each service there is a separate GST that is leviable so on alcohol there is no GST it is under the state it is a VAT which is paid on feeder boat there is a separate rate, on food there is a separate rate if I do not claim input credit then I can charge at 5% otherwise I can charge at a higher
Q
Sir, congratulations for the wonderful results that you posted from your end. I just want to have two questions the first one is as you said the second and third quarter will be robust than first quarter so is there any idea or any guidance like what kind of topline and bottomline can we expect?
Hardik Dhebar
No we do not give guidance. The second one is about this Deltatech Gaming can we know the current market share of Deltatech Gaming? In terms of poker I think we continue to remain the market leaders we would be roughly about 40% to 50% of the market in both in terms of users as well as in terms of revenue so if the market is 500 Crores we are about 200 Crores and the balance would be clocking up to the other 200, 300 Crores of the market as far as poker is concerned. On the multi- gaming platform we are a very, very new entrant there we are still not even scratching the surface so there is a l
Q
Hi! Hardik first of all many congratulations on the great set of numbers and we have done very well in a difficult situation. I have two questions number one noted the progress on Deltin city at Mopa airport, but this is at this point in time only as electronic gaming and not live gaming as you know because that is (inaudible) 38:15 policy confirmation on that?
Hardik Dhebar
That is correct. Thank you for that and we do expect that to come through in the course of time while we prepare for this four-year project right? One would hope. Fair enough and the second question is I am not sure maybe I joined a little later but any ETA for bigger ship commissioning? Somebody did ask a question and also gave the timeline which was quoted earlier we are looking at towards the end of the second quarter or beginning of third quarter of next financial year. Fantastic thank you very much and once again all the very best.
Q
Good evening Hardik Sir and thank you for the opportunity. Just couple of questions, any update on the provision that we had made for the license fee?
Hardik Dhebar
No decision as yet from the government. Anything that you can share on the Sikkim and Nepal operations? They are standard they are doing reasonably okay they are continuing to operate the way they were operating in normal circumstances like we all know Sikkim obviously the connectivity still remains an issue, the day the connectivity improves we believes that whatever improvements we have seen in the revenue we will see further improvements. With regards to Nepal it is just about six months that we have commenced operations six or eight months now so we should be in a better position to take a
Q
Just one question Sir. If you could provide the net run rate of gaming division how much revenue come from pure gaming and how much would come from F&B and other services and charge from the entry fee?
Hardik Dhebar
Get receipts for the quarter ending June 30, 2022, across all the properties put together would be close to 30 Crores. That includes F&B? Get receipts, includes everything it is a cover charge that we charge. But the F&B additionally also there would be… That is hardly anything nobody ends up buying if I give you free food what else are you going to buy there is nothing on the F&B side that we sell what we sell is alcohol so I am sure nobody wants to, everything else is gaming. Thank you.
Q
Just one clarification, as and when the land-based casino starts we can run both the operations?
Hardik Dhebar
Yes. So the current operation will remain… So far as the current role is concerned it is an electronic casino as somebody asked and I confirmed it is electronic so if the whole continues to be electronic casino on land then the ships will continue to operate. There was at one point of time way back in 2018-2019 when the government was proposing where they were thinking of asking the boats to move to land and give up their licenses if that happens we will have to see, but as of now there is nothing of that sort on the horizon, so as we stand today the boats will continue to operate even once th
Q
Good evening Sir thanks for the opportunity. My question is lately there has been news that Meghalaya government is also very keen on starting casinos and they have issued three licenses so I was just curious to know as Delta Corp picked up any license?
Hardik Dhebar
I am not very sure whether the licenses have been issued or no Vikas but there has been a serious talk of them considering the casinos I do not think any casinos have yet been issued any licenses or opened up in Meghalaya but they were contemplating they are continuing to contemplate. Okay Sir. Thank you so much. Appreciate your reply. Thank you.
Q
Sir I wanted to understand that we had plans to dispose of our noncore assets like our stake in Advani hotels and some lands that we are carrying in, in our inventory since the long time so what has been the progress over there?
Hardik Dhebar
We will continue to pursue the opportunity to sell our stake in Advani if we get a buyer we are still very keen to sell it, in fact when the prices were on the rise we did sell some in the market and liquidated the small stake but other than that we continue to remain looking for an opportunity to exit the Advani stake. With regards to the land there is a land parcel in Goa which we are developing and we hope to liquidate that in the next 18 to 24 months releasing close to about 100 odd Crores of cash. Also wanted to understand that how big in future can Nepal and Sikkim become like can it bec
Q
Sir sorry to ask a very hypothetical question. Suppose whatever this GoM has proposed has been agreed to do we have any means to offset the loss which will come up or are there any means to change the way you do the business so that the impact on the business is minimal?
Hardik Dhebar
Which business are you talking of? Casino. But I do not think the GoM suggested anything or accepted anything because whatever was suggested was governmentally opposed by the Goa government in the GST council and the Finance Minister said that this needs to be relooked because Goa the only state technically 95%, 97% of the GST collection from casinos is going to the state of Goa and the other 2%, 3%, 5% goes to Sikkim so no other state has any impact on it, so why unnecessarily try and make any imagination or any assumptions on that front. Okay Sir thank you.
Q
I think we had a decent interaction where most of the questions that all of you would have had seeking clarity for have been raised and I have tried to answer them to the best of my ability and I once again repeat and reiterate that we believe that the first quarter is only indicative of the fact that the business is resilient and strong on very good footing and going forward god willing with no interruptions and everything running smoothly we should be in for good quarter in the financial year. Thank you.
Management
Speaking time
Hardik Dhebar
45
Moderator
18
Anupam Agarwal
8
Dixit
7
Ankit Babel
7
Jayanth
6
Sadanand
4
Bhavesh Patel
4
Varun
4
Keshav Garg
4
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Opening remarks
Alpesh Thacker
Thank you Nirav. Hello everyone and welcome to First Quarter FY2023 investor conference call of Delta Corp Limited. Today we have with us the management of Delta Corp represented by Mr. Hardik Dhebar, Chief Financial Officer of the company. The format of the discussion would be brief opening remarks by the management followed by Q&A session. Without much delay let me hand over the call to Mr. Dhebar. Over to you, Sir!
Hardik Dhebar
Good afternoon Alpesh. Thank you very much for hosting the call once again this quarter and thank you everyone for participating and taking timeout. Quickly as most of you would have seen the numbers we have done a decent set of numbers for the first quarter ending June 2022 we have clocked roughly about 300 odd Crores of gross revenue, which is almost the highest revenue that we have ever done in a particular quarter. Why it is more reassuring to see is the fact that we had the preceding quarter which is Jan to March where we had the issue of Omicron hitting and we having to face about 30, 40 days of closure resulting into dipping in the revenue and dipping in profitability and everybody was a little concerned where if one would recollect I had reiterated in that call as well that if one was to regularize and look at normal operations we would do as much as we were doing in the December quarter prior to the Jan quarter. Having said that we have demonstrated that since we have got norm
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