DELTACORPNSEQ4FY2022-23April 13, 2023

Delta Corp Limited

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179turns

19analyst exchanges

2executives

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Management on call

Hardik Dhebar

CHIEF FINANCIAL OFFICER – DELTA CORP LIMITED

Alpesh Thacker

ANTIQUE STOCK BROKING LIMITED

Key numbers — 40 extracted

INR1,000 crore

of Delta Corp Limited. First of all, I would like to congratulate the management for achieving INR1,000 crores of revenue milestone in their gaming business for the first time, despite two years of disruptiv

INR1,200 crore

INR1,000 crores mark. As a company, on a company as a whole, we've reported a number in excess of INR1,200 crores, which itself is a milestone. The online gaming business also, as a gross turnover basis, has

INR200 crore

ch itself is a milestone. The online gaming business also, as a gross turnover basis, has crossed INR200 crores. So, all in all, it's a year where we have touched multiple milestones. The EBITDA for the compa

50%

hed multiple milestones. The EBITDA for the company as a whole on an annual basis, we have seen a 50% jump in the EBITDA. And now let me take a minute to explain when I say 50% jump in EBITDA, beca

100%

TDA, because otherwise if you see on the face of the results, the absolute number is in excess of 100%. Now, the fact of the matter is last year, the operations were shut for about four months, four a

150%

it based on a regularization last year and compared it with the current year, we have jumped over 150% in net profit. So I think by any stretch of imagination or any stretch of analysis, this is a def

INR778 crore

ad 2021 and 2022, which were both COVID marred years. In that year, gaming had done INR778 crores or INR780 crores of revenue, which is currently standing at INR1,010 crores, which I think is an

INR780 crore

2, which were both COVID marred years. In that year, gaming had done INR778 crores or INR780 crores of revenue, which is currently standing at INR1,010 crores, which I think is an extremely, extre

INR1,010 crore

t year, gaming had done INR778 crores or INR780 crores of revenue, which is currently standing at INR1,010 crores, which I think is an extremely, extremely good and positive growth sign for the gaming business.

INR200 crore

growth sign for the gaming business. Similarly, if you look at online, while we have crossed the INR200 crores mark for the first time, we also would like to mention that in the month of March alone, we did

INR22.3 crore

e first time, we also would like to mention that in the month of March alone, we did a revenue of INR22.3 crores, INR22.5 crores to be precise, which is close to the highest ever revenue, which is done in a pa

INR22.5 crore

also would like to mention that in the month of March alone, we did a revenue of INR22.3 crores, INR22.5 crores to be precise, which is close to the highest ever revenue, which is done in a particular month.

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Guidance — 20 items

Alpesh Thacker

opening

“The format of the discussion will be brief opening remarks by the management, followed by Q&A.”

Hardik Dhebar

“So I think there will be status quo, no change as far as we believe and we hope, I'm saying hope because the finally, we want to see it happening in reality, hopefully in the month of May or June, whenever the next GST council meeting happens.”

Hardik Dhebar

“I think we should be fair to others, there will be others who would want to ask a question.”

Hardik Dhebar

“I think it will be, well, I can give you a broad breakup.”

Hardik Dhebar

“But I think it will be better if you can get in touch with my colleague, Pragnesh Shah.”

Hardik Dhebar

“He will be able to decipher the balance sheet line by line, item by item, if you so desire.”

Gunit Singh

“So with the new vessel coming in, what kind of expansion in the monthly revenues can we expect?”

Hardik Dhebar

“You know, it's very difficult to put a number, but we genuinely believe that in terms of capacity, we will be going up at least two and a half times, three times our existing capacity.”

Pritesh

“So I just wanted to understand what will be the net opex condition on the next fixed cost condition that you would see on the addition of ship?”

Hardik Dhebar

“So to that extent, you will be EBITDA negative for a few months, when you start operating that business.”

Risks & concerns — 6 flagged

As far as online is concerned, I think the risk is even lesser given the fact that there is a new section of 194 BA, which has been introduced specifically for the online gaming business, which is saying how the tax reduction has to happen.

— Hardik Dhebar

You know, it's very difficult to put a number, but we genuinely believe that in terms of capacity, we will be going up at least two and a half times, three times our existing capacity.

— Hardik Dhebar

Deltin Royale, when we had introduced, I think we haven't seen a weak opening at all.

— Hardik Dhebar

That is a business risk, which is there with every business.

— Hardik Dhebar

I don't know how can, any business mitigate that risk.

— Hardik Dhebar

So that is not something that's a big worry or concern.

— Hardik Dhebar

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Q&A — 19 exchanges

Hi, Hardik, can you give some timeline on when are we expecting the new ships to come on sea?

Hardik Dhebar

So, we have been always mentioning it around third quarter of this financial year, but there is likely to be a slight delay. But I think in the fourth quarter, we will have the vessel coming in as it appears. Second, if you were for two months, whenever Royale was working, if you were to just aggregate that for the third month, what is the likely loss of revenue that… I'm very happy you asked that question. One of the areas that people have been harping upon, you've de-grown on margins in the fourth quarter. You've de-grown on revenue in the fourth quarter. I think what is very-very important

I just have a couple of queries. So firstly, can you please provide breakup of revenue between the high-end that is the big-ticket size gamblers and the average ticket size gamblers?

Hardik Dhebar

We don't have any such breakup that we maintain or we have anything because, again, if you see the average GGR, that we generate per person is about anywhere between 14,000 to 16,000 or 14,000 to 17,000 ahead. So, and I don't know whether you have been on earlier calls as well or no, but we are a company which is wanting to be more like a family destination and a retail- attracting customers. There are the high-rolling business is not something that we rely upon, and it's very, very miniscule as far as our larger picture is concerned. So that's my answer to you. And just one more. So if you ca

Just a couple of questions. One, on the online piece side, INR23 crores. What growth is and how sustainable do you think, is there an element of seasonality or some added promotions?

Hardik Dhebar

No, I don't think there is a, Tarang, this is not a seasonal business at all. Honestly speaking, yes, there would be periods or weeks or maybe a month here and there, which may be a little slow. Like, say, for example, April is a little slow, given that a lot of focus is on IPL and a lot of focus is on fantasy leagues at this point of time. But I don't think otherwise this is a seasonal business. And I think, Tarang, you should, rather than saying, what, you should be happy that your company is working and you should congratulate the marketing team. And you should congratulate the business tea

So I'm saying most of my questions have been answered, but I have a couple of questions. One is regarding the new vessel that is coming up. So currently our vessel business does about INR50 crores to INR60 crores of business on a monthly basis.

Hardik Dhebar

So I think you're wrong there. INR90 crores, when I mentioned as a gaming business, almost about 90% to 95% of that business comes from Goa. And within Goa, it is within Goa, 95% of the business will come from the vessel. So I don't know where you're getting that 50% to 60%. So with the new vessel coming in, what kind of expansion in the monthly revenues can we expect? Well, it's anybody's guess. You know, it's very difficult to put a number, but we genuinely believe that in terms of capacity, we will be going up at least two and a half times, three times our existing capacity. And this is a b

So I just wanted to understand what will be the net opex condition on the next fixed cost condition that you would see on the addition of ship? Annual or quarterly basis, whichever you're comfortable with.

Hardik Dhebar

I will give those details separately to you, Pritesh. We can talk about it. And my second associate question is, whenever these new ships come on board, usually on the year one, what kind of utilizations have you experienced on these ships? Even let's say a competitor also had come up with a new ship some years back. So usually year one utilization is here… For the competitor, I will not be able to comment, but I can take it from my own example. Deltin Royale, when we had introduced, I think we haven't seen a weak opening at all. We've always been lucky or since the demand is so high, because

Hi, Hardik. I just wanted to understand what is the reason for delay in this new ship?

Hardik Dhebar

No, these are operational yard related issues. Sometimes, you know, the steel supply related issues, nothing else. And what will be the capex? I think, we have… And obviously, we started building the vessel just around the time when we thought the COVID wave has ended. But again, it resurfaced and there were constraints in labour availability and stuff like that. So it's all issues which are kind of uncontrollable to some extent. But otherwise, from no other angle, there is a delay. But yes, the fact of the matter is there is a slight delay. And what percentage of capex or absolute capex is ye

Hello Sir. Sir, my first question is, I wanted to understand what are the EBITDA margins on the online gaming business?

Hardik Dhebar

Online gaming business, I think we are just about breaking even currently the reason is very simple. We are investing everything that we earn from the poker business back into the rummy as well as the fantasy or the multi gaming platform, as we call it, which is in the kind of build stage. And therefore, at this point of time, online gaming, we are just about breaking even. Okay. And additionally, what... If you look at poker as a vertical, I think our EBITDAs would be in the range of 30% or there abouts. But everything that we generate on poker is ploughed back into the multi-gaming platform

Yes, just a couple of questions. Firstly, on the dry dock, so typically in how many months share vessel goes for a dry dock.

Hardik Dhebar

It has to go at least once in a period of three years and in some cases in five years. So I think we believe that for Deltin Royale, it will be now, the next will be in five years’ time. Okay. And in Q4, was there any one-off cost of dry dock also other than the revenue loss? No. The dry dock gets amortized over the period of the next dry dock. So there is no hit on account of the dry docking cost, which will get hit in the P&L in the month of the dry dock itself. And just one clarification. You mentioned that the next Daman case hearing is 8th June? That's correct.

Thanks for the opportunity. I would like to know, your views on the ban of online gaming in Tamil Nadu. And will that spread to other states? And how is it going to impact our business online gaming?

Hardik Dhebar

This was asked to me yesterday on ET Now as well. And like I said, unlike rummy, which is very focused and more concentrated in the southern states, poker is a game, which is more thinly spread and it's a pan-India game. Therefore, a particular state banning or otherwise is not something that impacts very heavily as far as we are concerned because like I said, we are more pan-India, more widely spread. But yes, there could be a knee-jerk reaction of sorts because immediately, what happens is that the users in that state kind of get impacted. But eventually, the business finds newer geographies

Yes. Good afternoon Hardik. I want to ask you if foreign tourists are allowed to play in casinos and repatriate their winnings in foreign currency?

Hardik Dhebar

First of all, I'm very happy, Ashish, you are on the call and you are asking a question. So Ashish, yes, foreign tourists are definitely allowed. We have always been having foreign tourists to come in once in a while, but as I have always mentioned, we are basically a domestic market, catering to domestic market. More than 99% of my visitations and revenue comes from Indian tourists. But the question is -- suppose a foreigner comes, he changes dollars into rupees? I will accept dollars. We have a conversion license, Ashish. We accept money and these Weizmann Forex and the other basically help

Yes. Can you hear me now?

Hardik Dhebar

Yes, yes. I can hear you, Ashish. So basically, the question is, if the person wins in rupees, he can't convert it back into dollars, is it? Not on my play -- not with me. He can go to an official conversion person and do whatever he has to. But any way it’s a small number. Thank you very much Sir. Thank you. Not even in consequential, Ashish. Got it. Thank you very much.

Good evening. My question is regarding the gaming IPO and regarding the real estate investment that the company has planned. I have listened to that on CNBC TV18. What is the update on that?

Hardik Dhebar

So what real estate investment are you talking of, Kanwaljeet? There was an interview on CNBC TV18, where it was mentioned that you're going to make some investment in real estate. I don't think you heard it right. It would have been an integrated casino resort that may be spoken of. Because there is no real estate investment that we have done, except for a small project that we are doing in Goa on a land, which historically we have held, which is now getting converted into some residential flats, and we are selling it off because we want to exit the land. That is the only -- yes, but that's a

Thank you Hardik for taking my question again. Just one last piece. I wanted to ask you about the non-core asset. The Goa one you are talking, you just alluded to. By what time do you think that will be completed?

Hardik Dhebar

I just said, 18 months to 24 months, we should be completely out of it. And what will be the cash on books as of year ending now? Year ending as on 31, March, it was INR535 crores. Including investments? When you say including investments, it's basically mutual funds and FDs. So that is what I consider as cash. Nobody keeps cash in their current account. Right. Right. Thank you so much.

Sir, just one bookkeeping question. What is the tax rate for us in FY '24? Last two quarters, tax rate is quite low, just trying to understand.

Hardik Dhebar

No. So we, basically there was a merger of Daman Hospitality into Delta Corp, and we had some carry forward losses in Daman Hospitality, which we were able to offset against the taxable income in Delta. Therefore, there has been no tax. Otherwise, we've always been at the 25% tax rate. So next year, we'll be at 25%, right? Yes, that should be right. Okay. Thanks.

Hi, sir. Firstly, congratulations for the good set of numbers. Sir, I have two questions. The first one is regarding the recent High Court order dated 6th of April 2023. Regarding the annual recurring fees of around INR320 crores or INR321 crores.

Hardik Dhebar

The INR321 crores is all casinos put together. Yes, I understand that. You should ask it more specifically because there are others on the call who may not know. And when you ask a question to me, it will be attributed as of the INR321 crores as mine. No, sir, I was about to complete the question. So, sir, my question is specifically that only. How much is our liability out of this? And have you provided enough for that? Our liabilities have already been provided in the books of accounts in the years when they were payable and due. So, there is no additional liability that will come on account

No, that is wrong, Tarang, 1st of April…

Tarang

31st March, '22? Yes. So, 1st April, I'm saying, we had INR535 crores, INR540 crores only. I don't know where you're getting the INR700 crores number from? It's actually from your balance sheet, but I'll take it off-line. No. So Tarang, if you include investment, my investments will include Advani shares also. Yes. I'm including those. I'm talking pure cash. When I say INR535 crores is pure cash, my friend. Mutual funds, fixed deposits and cash in the current account and the bank account. That's it. I'm not including my investments. If I include them, that number will be much higher even today

Hi, thank you for the opportunity, sir. Just update us on anything on Nepal and Sikkim, how they grown year-on-year basis? How is the business there?

Hardik Dhebar

So, Nepal is predominantly just one year, Mayur, because it started operations only post COVID after 18 months only in '22. So, it's first year. And we are doing about INR4 crores a month kind of a run rate. And I think there is potential to grow further from here because once the Kathmandu, as a destination and Nepal as a destination comes back full to its pre-COVID times, I think we can do better than this. As far as Sikkim is concerned, again, Sikkim is settled at around about INR2 crores, INR2.5 crores a month, which is, I think, double from what it was earlier and even pre-COVID. So, I th

Thank you for the opportunity, and Hardik and the entire team, congratulations on great set of results as well as performance. My question is around the new ship that we expect in the quarter of Q4 or around October, let's say, Q3 of this year…

Hardik Dhebar

No, I said that we were talking about Q3, and there is a slight delay, so it can go to Q4. You're right. So, your initial Q4 was correct. You can tell that. Go on, please. Okay. And associated with that, do we see a significant hike in the licensing because the capacity will be very high? And then will that impact our margins, Hardik? So, license fee is a cost, which is like a fixed cost. Whatever that fee is, we'll have to pay. But we have always seen even when the license fee for our casinos was increased multi-fold from INR5 crores to INR10 crores and INR10 crores to INR30 crores. You may f

Sure. So, thanks a lot, Hardik sir, and all the participants for being in this call with us. On behalf of Antique Stock Broking, that concludes this conference. Thank you once again, everyone, for joining this call. You may now disconnect.

Hardik Dhebar

Thank you, everybody. Thank you. And sorry for that little bit of a glitch. Thank you.

Speaking time

Hardik Dhebar

Moderator

Chirag Lodaya

Viraj Mehta

Tarang

Ashish Kacholia

Kanwaljeet Singh

Gunit Singh

Karan Mehta

Pritesh

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Opening remarks

Alpesh Thacker

Thank you, Darwin. Hello, everyone, and welcome to 4Q-FY ‘23 investor conference call of Delta Corp Limited. First of all, I would like to congratulate the management for achieving INR1,000 crores of revenue milestone in their gaming business for the first time, despite two years of disruptive business. So, congratulations for that. And then 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 will be brief opening remarks by the management, followed by Q&A. Without much ado, let me hand over the call to Mr. Dhebar. Over to you, sir.

Hardik Dhebar

Good afternoon, everyone, and thank you, Alpesh, for the milestone mention. Yes, I think it's been a very good year as far as Delta Corp is concerned. I know there has been a lot of confusing, I would say, and wrongly analysed messages, that are doing rounds on social media. So, I would, you know, take this opportunity to even clarify those. First of all, yes, this is the first year, first time ever that the casino gaming business of Delta Corp has crossed the INR1,000 crores mark. As a company, on a company as a whole, we've reported a number in excess of INR1,200 crores, which itself is a milestone. The online gaming business also, as a gross turnover basis, has crossed INR200 crores. So, all in all, it's a year where we have touched multiple milestones. The EBITDA for the company as a whole on an annual basis, we have seen a 50% jump in the EBITDA. And now let me take a minute to explain when I say 50% jump in EBITDA, because otherwise if you see on the face of the results, the abso

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