Thanks Ram. So back to the organizer of the call. We are open for questions.

Thank you very much. The first question comes from the line of Love Gupta from Counter Cyclical Investments. Please go ahead.

So firstly, I wanted to understand the margin improvements on the BSS side in Matrix particularly. Is this sustainable going forward? And on the IFM side, we've mentioned that you 1 Stated as 20,000 during the Call, the actual figure is 60,277 2 Stated as 16,700 during the Call, the actual figure is 16,714

had some moderation due to addition of employees. Is that now done and we can see some trend going forward?

So I'll take that. So in Matrix, the improvement See, if you look at the history of how this business has performed, and this will just give you some confidence. So if you look at EBGC Revenue Q1 last year, we were at INR11.4 crores, Q4 last year, we were at 11.7 crores and Q1 this year, we are at INR12.5 crores. So over the years, you can see that the volumes are picking up. Similarly, if you look at our gross margin percentage, in Q1 last year, we were at about 12%. Q4 last year, we were about 17%. And Q1 this year, we are at about 21%.3 So therefore, improvements in margin as well as improvements in the revenue number. In the past, Love, you will remember that we have been always saying that EBGC is a business of volumes. And as you get more volumes, the cost structure largely remains flattish and therefore what happens is this margins are improving quite nicely. We believe that this margin profile is sustainable. Also on back of a lot of cost optimization that we are doing at our back end. So for this year, we do believe that these volumes and these margins are sustainable. As far as the overall IFM numbers are concerned, you are absolutely right. IFM margins are slightly depressed overall margins -- if you look at Q1 over Q1. We are at INR23.6 crores EBITDA versus INR23.1 crores. So there is a marginal improvement in EBITDA. But on the PAT basis, of course, we are at INR20.7 crores versus 19.9 crores4 in the same quarter last year. So margins have been stable, minor variations also because of some front -ending of costs and some front -ending of contracts, in some cases, what tends to happen. But these are normal business variations. At this margin level , we do believe that we will not decline any further.

All right, sir. And the second question would be how -- what are our plans to utilize our cash? Like what are -- I believe it was above INR200 crores cash balance that we hold. So how do we intend to utilize that? And any acquisitions planned this year? - Amitabh Jaipuria: Yes. So we do have a cash balance of upwards of INR300 crores. And the plans to utilize that, we have briefly mentioned that in the last call as well that they'll basically be 3 large buckets in which or 3 buckets in which this cash will get utilized. One remains inorganic, the second bucket will be brownf ield growth, which means organic growth. So whether it is in accelerating our product development, technology transformation as well as building a sharper go-to-market team to actually develop some markets and business. So that will be the brownfield piece where we'll be investing money. The third, of course, is to reward shareholders. We have made a small beginning with this Board meeting and with this result with this quarter. Where we have declared a dividend of INR1 per share, which will take away about INR7 crores of cash. 3 Stated as 20% during the Call, the actual figure is 21% 4 Stated as 20.7% during the Call, the actual figure is 19.9 crores

So this is a small beginning, it's an interim dividend. But rewarding shareholders, while continuing to use and deploy cash mainly to drive growth, both internal and organic growth as well as inorganic growth. That remains the use of our cash. That is the cash allocation strategy.

So on the third point of rewarding shareholders, are we planning considering any buyback of shares? Amitabh Jaipuria Right now, there is no proposal to buy back shares on -- in front of the board, and there is not a discussion on it. But this is not to say that we will never do it. These are various mechanisms exist to reward shareholders. And at the appropriate time, all of these mechanisms and tools are being considered and will continue to be considered by the Board.

The next question is from the line of Adinath Chauhan from J&J Investments.

Sir, I have a couple of questions. Firstly, how do you expect current revenue mix between IFM versus BSS, which is currently 67% and 33%, going to evolve over the next 2 to 3 years?

So our revenue mix at roughly 2/3, 1/3 has actually been quite steady over the past few years. Going forward, we expect this to continue, because both our businesses are, we believe, can grow low double -digit numbers, which is in the region of around 9%, 1 0%, 11%, 12%. So therefore, we do believe that this mix will probably continue.

Okay. Sir, second question is on for Athena, can agentic AI become a meaningful revenue contributor over the next 3 years. And what margin profile should your investors expect?

So we do believe that agentic AI will become an important part of how we deliver to our customers. However, at this particular point in time, we are not seeing any wholesale replacement of human agents, especially in the BFSI sector, and we don't see this happening in the near term. That said, Athena is right now at the forefront of experimenting with Agentic AI for various other segments. For example, incoming service calls, for example, things like customer satisfaction surveys and other such areas where adoption will be faster. So I will invite Elizabeth to just add a quick to 3 lines to how she is seeing agentic AI evolve?

Agentic AI today for BFSI clients is primarily used for outcalling customers to qualify leads before and getting consent to call. In the service area, what they do is what we're doing is replacing human agents for answering repetitive queries. So basically , both the exercise, there is utilization, one where the client is looking at adding -- getting qualified data using outbound for the BFSI sector and in-bound where repetitive queries can be answered on the phone.

The next question is from the line of Diksha Motwani from Siddhant Partners.

My question is there is a reduction in EBITDA of BSS. EBITDA margin from 11.5% in March to 7.5% in June. Any specific reason? And is this the normal EBITDA for BSS?

No. So what you're referring to, if you look at the margin reduction, yes, it is. The answer really lies in what happened with Avon. So in Avon in the last quarter, there was a restatement as you

know. So what that has done is that, that has actually added to last year's number, the Q4 number, and that is why the comparison looks skewed. If you take that impact out, then actual last year, Q4 '26 BSS segment delivered an EBITDA of INR19.1 crores. And this year, we have delivered INR18.9 crores. So the margin profile is largely similar, and the EBITDA numbers are also largely similar. So it's because of an exceptional unnatural item in last year Q4, which is where you're seeing the skew.

Okay. Another question is there is increase in the other expenses. So any onetime expenses is there?

In other expense?

Yes.

This is Ram here. This is largely due to some restructuring expenses as well as the provisions that have been taken for the transport segment in last year FY '26 versus this quarter FY '27.

Okay. Any update on the acquisition?

Yes. So the conversation that we have been having, at this particular point in time, that deal is on hold because there are differences in terms of valuation. As you know, we are a conservative acquirer, and we do not believe in overpaying for any acquisit ion. And there is a disagreement in terms of what the final value should look like. So therefore, right now, we have put the deal on hold. It may revive if there is a positive movement. At the same time, we continue to look at other acquisitions and we do have a pipeline that we are looking at.

The next question is from the line of Aryan Vijan from RV Investments.

Sir, my question is on the GCC you have mentioned what do you think about the sector? And do you see the sector will go in the future?

Aryan, you're asking about the EBGC sector?

GCC, Global Capacity Centres.

GCC. Sorry, sorry. Okay. Yes, I understand. So GCC, of course, are becoming quite a large consumer of office space in this country. In fact there are reports that they now account for almost half of total A and A+ great office leasing in this country. Our exposure to GCC is actually limited because as we have been explaining in the past, out of the 5 core segments of the IFM business, we are strong in industrials, in warehousing as well as in infrastructure. In the commercial side, our exposure is low. And on the residential side, we don't operate. So that is the -- so therefore, while it's growing, we are now rejigging our entire business development effort and team to focus on growth and emerging segments. T he GCC focus will be also a part of that. So right now, it's not impacting us too much, but we are looking at it. We have put in place a team which will start looking at growth opportunities, including GCC.

And sir, can you provide this year's guidance?

Sorry?

Guidance for this year.

We normally don't give formal guidance. So I think we will continue with that. What we have said, I mean, you can take our Q1 number as an indicator. And that is what you can sort of perhaps extrapolate, but we are not giving formal guidance.

The next question is from the line of Yash Mishra from SKS Capital and Research.

Just one single question. So do you have any comments on the SIS acquisition? Acquiring the stake we have public marketing in UDS?

So I will open the comments and then Raghu can quickly add to that. So SIS has been acquiring our shares, that's public knowledge. And at this particular point in time, there is no conversation between us and them, which is spurring this acquisition. What they have been talking about, as we understand it, is that this is a treasury operation and that they see great value in the UDS shares, especially at these kinds of beaten down values that right now we have on the market. So they are using it, they are seeing it as an investment as what we understand. We are not reading too much into it. There is no deal on the table. Also Mr. Tangirala, our Founder and our Chairperson continues -- he and his family continue to own 59.1% of the equity. And therefore, there is no conversation about any kind of sale or a deal or any kind of M&A action. Having said that, I will hand it over to Raghu to add.

Yes. Thanks, Amitabh. No, I've got nothing to add over what Amitabh said. What we understand is that, that is their treasury operation. That's all we know, and there is nothing else add anything to this. That's all we know about.

The next question is from the line of Manoj Jethwa from KSA Shares and Securities.

Good afternoon, and thank you for the good set of numbers. So my question is on the use of agentic AI in Denave and Athena. And what would be the prospects for going ahead in our service offerings, sir. Can you share some thought process on it?

Yes. So we are seeing agentic AI in 2 different ways. We are seeing agentic tech AI as a great opportunity. For us to enter segments which earlier we were not playing in. For example, we were not playing into the inbound segment. We were really not playing into the service segment or even the collection segments. Through agentic AI, it offers an opportunity for us to enter these segments without committing to large real estate and without committing to a large number of people, et cetera. So we see it as an opportunity as a business opportunity. The second way in which we are looking at agentic AI is really in terms of cost optimization, better quality costs and faster closures and more productivity for our outbound calling operation

that we have for our existing customers. Because what agentic AI does at the background, is that it enables you to monitor, for example. Sorry, was there some comment? Okay. Somebody's phone was probably not on mute. Yes. So on the other side, we see agentic AI as an optimization tool as a productivity tool and which helps us to close faster in terms of our calls and to make our costs more productive because it gives more information, it gives conversational guides and it basically allows us to also target better in terms of which customers to call first and which customers to call later. So those are the kinds of areas in which we are seeing agentic AI helping us. So at this particular point in time, we are not seeing it as a threat at all. We see it as an opportunity both on the cost side and on the revenue side.

The next question is from the line of Abhinav Mandowara from Aequitas Investments.

Yes. Just one question from my side. it is regarding reading a lot of articles in the last few months that there is a lot of labor shortage and labor hikes across multiple states. So has that impacted anywhere in our Q1 considering most of our contracts are passed through? And how do you see the labor shortage? And any outlook on that?

So clearly, Abhinav, you're absolutely right. And you have clearly been staying updated. So there is a labor shortage in many states. There are labor surplus states in this country, and there are labor short states in this country. So if you look at the southern and the western markets, also the NCR market, there is a clear shortage of labor. On the other hand, there is still some surplus labor available in Eastern India, Northeast India, in particular, as well as Bengal and to some extent, Jharkhand, Bihar, Odisha. So we have recruitment teams in these states, which actually help us recruit there and redeploy in the labor shortage area -- in the labor shortage states. That said, labor shortages are real. And there are many areas, for example, if you look at Gujarat, if you look at some areas of Tamil Nadu, if you look at some areas of Maharashtra, finding labor is an issue. So -- but as you rightly pointed out, our model is a pass-through model. Customers are also beginning to understand that they have to cater to this migrant set of labor and, therefore, improve costs and be able to also offer other facilities, whether it is food, whether it is transport or even in some cases, stay arrangements. So we are working with our customers to ensure that their requirements are met, but the shortage is real.

The next question is from the line of Deeya Jain from the line of Sapphire Capital.

I just wanted to understand if there is any seasonality in the business, for example, the hiring cycle or the audit seasons. So can you please explain a bit?

So yes, there is some seasonality in some parts of our business. So -- and so there is seasonality, for example, in our catering business, right? So in Q1, catering usually is -- it does -- it's low because it's also gone through some amount of campus closures, vacations, et cetera, et cetera. So that business does have seasonality. There is also seasonality in some of our IFM businesses

as well as in some of our BSS businesses because Q2, Q3 traditionally are the festive seasons and festive demand does peak. So many of our customers are exposed to the consumption side of the economy. And there, we do see increased demand for people, increased demand for services, increased demand for campaigns to be run in our sales enablement businesses. So there is some seasonality. I mean, it's not massive, but it's certainly there.

The next follow-up question is from the line of Diksha Motwani from Siddhant Partners.

Mehul this side from Siddhant Partners. I wanted to understand on this tax expense. If we look at it from Q4 versus Q1, there is a significant shift. So if you can throw some light on that.

Yes, one moment. So if you see the stand-alone financial statement on the tax expense is lower compared to the last quarter. This is in continuation with the tax benefit that flows through for this service -- manpower intense service industry. So as our account of head count employees increases, and we are trying to retain them, the benefit flows through gradually into the system. That's the major driver for the improvement in the tax expense . Hope this helps.

Okay. So that is only stand -alone. And how about consol? So consol, if you look at it down from, I think, INR88 crores net to INR28 crores -- million, sorry.

You are seeing quarter-over-quarter, right? So if you see last quarter quarter -on-quarter, that is an increase because out of our entire 9 group companies within our UDS group, couple of entities only will go through this manpower benefit that comes through tax. The other are all under the normal tax rate bucket. And again, the mix, for example, Matrix which is clear driver for current quarter profi t which doesn’t get any benefit in tax . So your mix has also played a role in the movement in the tax expense when you see the consolidated position quarter over quarter

Understood. So Y-o-Y, if they look at it for the full year, there is no major change in the effective tax rate. It remains the same, right?

Yes, yes. correct. You are right. You are right.

I just have follow -up on the previous which you mentioned and the revenue. So if you look at the expense, ideally, the expense would have been higher in Q4, right, vis -a-vis Q1. Is there some spillover of Avon in the current quarter as well?

No. No. There is no spillover for Avon. The transportation related Avon either revenue or expenses, everything has been squared in the last financial year. Whatever you see in the current quarter is only from the business of mail room service and other business support services.

Understood. So sir, what would be the reason then for this expense thing? Because in our previous question, you mentioned there is an impact of Avon in Q4 vis -a-vis Q1. in Q4, I think it shows the other expense of 83. Is that in Q1?

The business more or less remains the same?

I'll briefly touch up on that. If you see Q4 versus Q1. In Q4, what we did is that we restated the revenue that got booked in the transportation business of Avon in Q1 of FY '26. so that on a full year basis, it has been nullified. So on a quarter -on-quarter basis, the reversal has to come in some quarter, which is your Q4. That's why we took the call and finalized it. We restated the Avon individual balance sheet. But on a consolidated basis, we just reversed the Q1 revenue in the Q4 again. If you see the quarter- over-quarter performance in sequential quarters, Q4 versus Q1, you see this breach over there. Otherwise, on a full year basis, the Avon transportation impact has been taken care of the last year. Whatever you see from current year onwards is only the existing business. There is the core business of mailroom services and business support service.

So what could be the, I would say, Q4 number, excluding Avon reversal.

I had mentioned that if you look at the overall number in BSS.

Not margin, I'm referring to the expense number, what Ram sir is saying is that there was some reversal on in Q4, resulting in a decline?

So it should be revenue INR9.8 crores. I can. Yes.

Okay. INR9.8 crores. Understood.

The Avon postion.

Ladies and gentlemen. Due to paucity of time, we take that as the last question. I would now like to hand the conference over to the management for the closing comments.

Raghu, closing comments.

Yes. Yes. Thank you all of you. Thank you for participating in this Q1 earnings call. We continue to see your involvement in the business and the questions you asked. So we would definitely hope to do better than every quarter, we look to better what performance we have done. So thank you, that's all from me.

Thank you. Thank you, everyone.

Thank you, everyone.

Thank you.

Thank you.

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