• Notification Date: 17-01-2024
  • Notification No: N/A

Delta Corp: Management explains GST Calculations, Pre and Post October 1, 2023

Delta Corp Ltd, which recently announced its December quarter results, on Monday shared its earnings call transcript with stock exchanges, where the management suggested how things changed for it as far as the GST calculations are concerned post October 1. 

In the earnings call, chief operating officer Manoj Jain said the GST was absorbed by Delta Corp pre-October 1, and that it used to pay 28 per cent on its gross gaming revenue, which was basically Delta Corp's table revenue. The company was paying 28 per cent on an inclusive basis, which used to effectively cost 21.875 per cent to the company on its gross gaming revenue (GGR)."If we made hypothetically, let's say Rs 200 crore GGR which is the table revenue, we were paying 21 per cent which is around Rs 43 crore," Jain said. 

Jain said post October 1, 2023, his company is supposed to pay 28 per cent GST, not on the GGR which it was paying but on the sale of chips which it is selling. 

"Just to take an example, if we are now selling, let's say Rs 1 lakh chips, then we are now liable to pay 28 per cent GST, again on an inclusive basis, on Rs 1 lakh. That again works out to Rs 21,000. What is happening is now our GST is payable on the sale of chips, not on the gross gaming revenue. Our gross gaming revenue to sale of chips is around 70 per cent," Jain said. 

Jain added that Delta Corp's cost has gone up on that 30 per cent additional, which is basically the chips that were encashed by the players. "On that 21 per cent is our cost which has gone up. Effectively, it works out to around 6 per cent extra on our GGR, basically the GST cost," he said. 

To recall, the Central Board of Indirect Taxes and Customs had last year notified the effective date for the levy of 28 per cent Central and Integrated GST on online money gaming and casinos from October 1. Delta Corp shares are down 18 per cent in the last six months. 

"We realize that the GST cost, obviously the player is not going to take because we did a lot of experiments in the months of October and November and what we did is that now we are basically giving full value of chips in which there are some promotional chips and there are full cash chips as well. Those promotional chips are given in lieu of GST, and players who are basically coming into our casino are getting actually the full value, but they have to compulsorily lose those chips on the table. That's how we are kind of recovering our GST costs," Delta Corp said. 

Delta Corp reported a 59.34 per cent year-on-year (YoY) drop in consolidated net profit at Rs 34.48 crore for the December quarter compared with a net profit of Rs 84.82 crore in the same quarter last year. Net sales fell to Rs 231.74 crore for the December quarter from Rs 273.37 crore YoY. 

"There were 2-3 things which actually one has to look at in Q3 compared to Q2 or maybe Q3 last year that this year there was an impact of GST in the months of October and November. What happened is, because of that, a lot of people were reluctant to come, and we were initially deducting 20 per cent. 21 per cent was not possible to deduct. So, we were deducting 20 per cent and giving only 80 per cent of the chips. That was initially in the months of October and November we were doing," Jain said. 

Jain said there was also the World Cup, which was going on, which has always had an impact on Delta Corp's visitations. 

"And apart from that, there's Diwali which always has been a lull period of almost a week to 10 days. That's the reason why we had an impact on our revenues. That's why our revenues were lower. But the interesting part which I can sort of tell everyone on this call is that December had a very good run rate, and it had the same run rate what we used to do in the previous quarters. We were back to our normal operation in the month of December," Jain said.