CNBC-TV18 Exclusive | Delta Corp CFO Anil Malani discusses earnings, GST impact, IPO plans, and more

A: The October-November-December quarter, generally is a very strong quarter for us. But as you remember, this is the first quarter where the new GST tax regime kicks in. Paying GST on GGR we are now starting to collect 28% GST on chips sold to our various customers. Generally, the season for this quarter picks up post-Diwali, Diwali was also slightly delayed. So, we took an informed call that we will just wait it out and see what the customer response is going to be. As expected, before even playing the first bet, you are down 28%. This was something which a lot of customers didn't see much value. So, after getting into several discussions with them, and with the internal team, we pivoted our business model a bit, and started offering some promotional tips to our players. In the month of December, we saw our revenues practically come back to the same levels that we probably would have done in the month of December previous year. So just to give you a perspective, what we did in the quarter of October-November-December, 55% of our revenue came in the month of October-November. This was a conscious call and was expected. We wanted to see how this plays out. 55% of the quarter revenue came only in December. So, we believe the steps taken by us to retain our customers and give them full value has played out well. And this quarter, whilst I will not give you any guidance, but we are hopeful that we will be able to turn around and probably get back to the same revenues that we were doing earlier. Having said that, one of our ships also is going to dry dock this month. So, to that extent, revenue may be slightly impacted. But on a run rate basis yes, we would be back.

A: I think the total claim in terms of show cause notices issued to us is in the vicinity of about ₹23,000-24,000 crore. To give you a perspective, that is about nearly 5-6 times our market cap. At this point in time, it is not needed. We are being guided and advised by our lawyers who are fighting this, and they do believe that all cases now are going to be combined and be heard probably next month. And they do believe that this is a strong case for us. So, for the time being no provisions we make. Answering your second question with respect to the promotional we need to keep offering our guests Yes, that is the need of the hour and it's going to stay on, though it's not going to completely have too much of an impact on our bottom line. But yes, we will have to now consider that aspect, it is going to be an additional cost and to that extent we will have to grow our revenue. Currently, we are running full capacity, we have got three ships on the water and new capacities coming in and once new capacity comes in, which will double the existing capacity, we are hoping that our revenues will grow leaps and bounds.

A: No. The quarter four revenues, we are pretty confident, would be probably in the similar line that the quarter that just finished. I mentioned since we will be going into drydock, we will be out of commission for nearly a month. So, to that extent, our revenues are going to be impacted. Next quarter, which is new year quarter ‘24-25 (financial year). It's a lean quarter always, we expect that also to be slightly subdued. But July-August-September, I think that is also a good quarter. And by then everything would have played out, matters would have settled, and we believe that we will be back, and business should be as usual.

A: Obviously, with the new tax regime, most of the online companies have now started to absorb the GST costs and are offering some kind of bonuses and promotions to mitigate the impact. This obviously is hitting the bottom line straight away. So, for the online business of ours, we took a conscious call, we wanted to consolidate and ensure that as our players keep on playing, we should not be losing too much of revenue by too much of compensation and therefore, whilst our revenue has remained stagnant, we do believe that there is going to be consolidation taking place in this vertical. So, we are going to wait and watch and see how this plays out. Having said that, our revenues may not have grown but we managed to keep it stagnant and on an EBIT (earnings before interest and tax) level we have made some profits and that is actually going to be the DNA for us that we do not want to lose any more money and we completely focused on our poker vertical, which has always been a mainstay.

A: On the IPO plans, currently with this uncertainty overhang with respect to the GST especially the games of skills, games of chance and the entire online space where there are several judgments which have been given by various high courts, I believe now is all going to be clubbed and would probably come up for hearing sometime in the near future in the Supreme Court. And based on the outcome of that we probably will be able to take a decision. So, if it's going to be favourable yes, we will be back. If not, then we will have to see how it plays out.

A: That is right.

Also Read | Delta Corp speaks to CNBC-TV18: Here are the key takeaways from IPO plans to GST claims

A: Yes, this can be treated as a slight diversification. As far as real estate goes, it's in our DNA. In the past, we have done several projects and we exited profitably. In the tie-up with Peninsula, we have taken a small strategic stake. We believe that there are several proposals in the pipeline, and we are happy to join hands with them and do a quick in-quick-out with respect to projects. We are not going to be investing large sums of money and going to have large gestation periods. But there are several redevelopment opportunities which are coming in, the real estate vertical for corporates and reputed brands now seemingly seems to be in our favour. We have got a good amount of cash on our balance sheet. So, to get some more value into our business, we thought this would be an ideal fit for us and therefore the investment. We are going to be having a joint venture between both the companies of which Delta would probably hold a majority stake. And this would be our foray into this vertical and the whole purpose is to develop a reputed brand and play along with the large players also in this business.

A: Our businesses are fixed cost business. If our revenues are impacted that impacts our bottom line straight away, which is what happened last quarter. Our margins really fell because our casino revenues dropped for obvious reasons and that impacted the bottom line. Our real growth will come only after we increase capacity, which as you are aware, we have a new vessel probably coming into business around the second or third quarter of the next financial year. This will substantially add to our revenue and once our revenue goes up then we can afford to take the impact on the bottom line as far as our promotional expenses for the casino business goes. So, growth will come, topline will grow and our profits will also increase substantially.

A: Hospitality, typically, supplements our casino business and having remain 10-12-15% of our portfolio, we don't really see it increasing too much. Our Daman property, as we speak, we are waiting the casino licence, the matter is in the courts. As far as the real estate goes, that is an opportunity that we see currently, we don't plan to get completely defocused from our main line of business, which is the casino business, but though that opportunity will continue to exist till such time we see growth over there. And yes, there is a possibility that we may pivot into the real estate as required, because there are no great opportunities in the casino business in our country so far.

Also Read | Delta Corp says GST court cases to be heard next month, online gaming IPO plans on hold

A: I think there is something coming up next month. And, the matter actually was well heard last time, unfortunately, the bench changed so we are back on explaining the whole matter again. So, this will go on, and we have also been patiently waiting to get some resolution on it.

A: Yes, of course at the right price.

A: We have not put a number on that but as and when we see value in the sale price, we probably would be exiting out of that.

A: I would say yes to both your questions. I believe there can be some more value built-in over here. Hospitality, tourism is now doing really well. The cycle has just started. And we do not need any cash right now, we are pretty much well-funded for projects, we have got decent amount of cash on our balance sheet and whenever the need does arise, we would liquidate that for sure.

A: Actually, none of the above. We will probably just take the call when we feel the time is right.

For more details, watch the accompanying video