IRIS RegTech Solutions Limited (540735) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the IRIS Business Services Q4 FY '22 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. [ Sudesh Javan ] from Ernst & Young. Thank you, and over to you, sir.

Thank you, Vigen. Good evening to all of our participants on this call. Before we proceed to the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties and other factors. It must be viewed in conjunction with our business risks that could cause future result performance or achievements to differ significantly from what we expect or implied by these forward-looking statements. Please note that we have mailed the results and the same are available on the company's website. In case if you are not receiving the same, you can write to us and we will be happy to send the same over to you. To take us through the results and answer your questions today, we have the top management of IRIS Business Services Limited, represented by Mr. Swaminathan, CEO and Founder; K. Balachandran, Founder and CFO; and Deepta Rangarajan, Co-Founder. We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that said, I will now hand over the call to Mr. Swaminathan. Over to you, sir.

Thanks, Sudesh. Good day to everyone who actually joined the call today. I'm actually in a country called Gabon, which is in Western Africa. I'm here with the delegation led by India's Vice President, Venkaiah Naidu. And I'm leading the delegation for about 12 people here as part of our efforts to grow overseas. So in the middle of the whole thing, my call drops, you know why. And so please bear with me. And so as far as last year goes, I'm thrilled, I'm thrilled with the performance. [indiscernible] the profits have dropped, EBITDA has dropped, sales has dropped. How can I be happy? If there's one thing I've learned in the last 5 years impacting the shareholders is that there a different kind of shareholders. There are some people for whom a dividend play is the right company to invest in. And there are people for whom growth plays is the kind of company to invest in. There are people who are short term, there are people who are long term. There are people who are holding forever, there are people who are trading during the day. So I think the company cannot please all kinds of investors. And these earnings calls are also opportunity for us to discover the right kind of investor for companies like us. So there are 2 reasons why a company's revenues drop or do not increase as much compared to previous year. One, because of reasons outside our control, and one, because of reasons within our control. Particularly for the kind of business we're in, we are to a large extent, business of regulatory overhang, regulatory initiatives. So the fact that there haven't been too many regulatory initiatives, actually none at all, in the last few years, have affected us badly, reducing, shrinking our Collect business. As far as the Create business is concerned, we have done extremely well based on our own -- the base business actually achieved our own expectations. I mean, clearly, revenues in the U.S., and many people understand that, the early days, when you get success -- to get success is very difficult. Once you have established something, getting success is very, very easy. So I think the fact that we started from a very small base and done really well is a source of great satisfaction. And the same thing in Europe, where we have doubled our revenues. We have lost customers in South Africa because the regulatory gave them extra time to file. That's not within our hands. We've also lost customers in the U.K. where we learned the hard way the problems of being concentrated with one customer. We used to work at one firm which gives a lot of U.K. customers and they suddenly decided to take a lot of this things in-house and use a different tool instead. So we lost a few customers there. Welcome to reality. But having said that, we've used the year extremely well. We've looked out financially very, very, very strong. We have cleared off -- you've heard me say every call about the dues to employees and what -- and my debt of gratitude to employees for having put up with us so long. I'm happy to report that, except for about INR 15 lakh, 20 lakhs of employees dues, where we cannot find my old colleagues who have gone to other countries and who are not reachable, every rupee owed to every employee has been paid. And except, of course, the founders. The 3 of us are still owed some money. It's not a lot of money, but still owed to us. And because of that, I'm now finally able to take a salary. And this is the high point as far as I'm concerned for the year that just passed. When you look at the company, you look for indicators in terms of whether a company is getting stronger or getting weaker. And I think from our point of view, from my point of view -- and you're welcome to agree or disagree. From my point of view, the fact that I'm taking salary is the most powerful signal I can send to world outside about the health of the company. It's not a huge amount of money when you take a salary, which you will notice in the annual report, but having said that, even that was difficult to pay for some time. And the fact I'm now finally taking it is the clearest indication as to where -- what we -- where we are going and what we think the company is up to. So that for me is a lead indicator. When I provide data, people use this in different ways and people look at the data very differently, depending on the perspective they come from. Some people look at something and say it's half full. Some people look at something and say it's half empty. So it's appearance depends on what you want to look at. Our job is to present the data to you and then see whatever you want to do with it and help you navigate it and look at it in the way we look at it. I mean, it doesn't mean the way we look at it is the way you want to look at it. So that's where we are. I think the financials is much, much stronger than before. Salaries have been paid on time, everything happened on time. And the fact that we -- so our current performance will throw up INR 45 crores of cash next year at current performance, current revenue performance. But fortunately, the COVID overhang is going away for us. The regulators are back in action. There are tenders that we are bidding on in different parts of the country. This is my first trip overseas in the last 5, 4 years, since COVID started. And it's not that government is waiting to jump into the clear of way. In the first phase, you need to explore. So there are leads that we had in the past, which -- one part. So we need to get back and get those leads back and try and cultivate them. So that's exactly what we're going do right now. So in terms of numbers and financials, I believe Balu will take over now. But if I drop out in the middle, please bear with me. I'm in a different country altogether, where the connectivity, while it's decent, can still be slightly erratic. Over to you, Balu.

Thank you very much, Swaminathan. I hope all of you can hear me. With this, you can hear me?

By the way, this is only -- just one thing. By the way, for those who don't know this, this is only the only time Bal has called me Swaminathan. He really have a different name for me. So thank you, Balu, go ahead.

So bear with me so that we can hear you. So good evening, and welcome to you all of you after a gap of 6-odd months. I hope many of you would have seen our investor presentation which we just uploaded a few hours ago on the exchange websites. I hope a few of you have seen that. So let me now quickly run to the highlights of the financial performance for the financial year ending in March 2022, like in the previous meetings where I have belabored this point, I'll deal more on the momentum of our annual numbers. Things out in a business tends to give a clear picture when seen through the prism of a longer time table. Now if I look at the numbers per se, you'll see that we move pretty much in tandem or pretty much in line with our 9-month sense, and this was maintained through the 12-month period as well. Our top line has moved a little slowly, by around 8% compared to the corresponding year. While the revenue moved up by 8%, all expenses then are all there. Of course, depreciation and interest cost increased by higher proportion, by as much as 18%. Within, mixed employee costs moved up by about 12%. Now you could see that this increase looks high, especially compared to the corresponding period. But one should keep in mind that this was also going through the COVID pandemic the previous year. And we are very parsimonious in terms of spending, and always have. And when it came to preserving liquidity, we are very bothered about that. So you had a low base, and on which, your expenses could be more. I should maybe point out one aspect of our overall trajectory as a publicly traded company. We were -- we IPO-ed somewhere in 2018. If I look at the last 5-year time frame, you will find that our revenues are more or less year-over-year of about 18% over the last 5 years, while expenses have moved up at a much lower rate at around 11%. And we currently accomplished, with a very modest resource base, and we have leaded the pivot into product base business during this figure, I would say, quite effectively. Let me come to the revenue analysis. I will begin with segment revenues. We can see the Collect segment, which is 1 of our flagship segments. Revenues are big by about 12%. While the emerging and more, I would say, more durable in the Create segment continued its robust growth by posting a 16% growth rate. Our annual recurring revenue is a very important metric. This moved up by about 19% as we have higher [ services ] on a gross basis. But on a net basis, I must say that moved up by 19%. While the share of recurring revenues has also moved up, by significantly slower 7%, 8% upfronts and businesses. The other thing which I want to point out is that if you look at our revenues geographically, you will find that our revenue share from the U.S. and European markets, because some sticky and demanding markets, have moved up smartly. And this particular growth has come primarily because of traction gained by our IRIS CARBON SaaS pack. A bit on the first segment. So we did mention that Collect segment is slowly coming out of a freeze in our pre-activities that we foresaw and we experienced during the past 2 years. And I would say that this, of course, was very much during the whole of [ the ] agreement, and even to a very large extent in effective investment. So there have been some emerging activity as far as public sector money is concerned as well as regulatory. Our fees are have been safe over the last few months. And we are cautiously optimistic to expect an improvement in our new RFP pipeline going forward. In the recent months, having said that, we have been awarded work on advancement of our own platforms, one in Malaysia and one in Kuwait. And of course, we had announced with you a case study [ last year ]. Before I wind up, let me mention on balance sheet. Specifically, we are being consistent in making it tighter. We have seen a positive improvement in receivables, receivables as number of days. Liabilities have been pared as well. And there's now, Swami had mentioned that we paid almost all employees on time. On cash point of view, we are at the point where we were last month and we expect better days ahead. So that's a short summary of what we have done in the last period. And back to you, moderator. Thank you.

Balu, I'll take it back from here. So I'm going to anticipate a few questions that will definitely come up and answer them first. So the rights issue. We made an announcement about the rights issue. Why did we not do a right issue just yet? Simple reason. About 3, 4 months ago, we saw the trend in the revenues. And we basically said we would like the market to price in our performance before we do the rights issue. Is the rights issue on? Absolutely yes. When you look at the numbers that Balu just shared with you, he talked about 8% growth in revenues. I've obviously been saying constantly that if I don't raise any money, we will grow between 10% to 15%. Now if you factor in -- if you factor out the fact that South Africa deferred their filings. So if you take a look at our difference between gross revenue and net revenue, that's about INR 3.25 crores to INR 3.5 crores, of which the bulk of it our own earning percentage is actually on account of deferment of filing in South Africa. Where the revenues did not accrue this year, it will happen next year. Of course, hoping that we retain the clients. We've not lost the clients. So it's more a deferral of revenue that we did not recognize. And since it happens once a year, it was not [ recognized in the year ]. So if you factor that in, our growth would be between 11%, 12% in the revenues. So we've actually said we grow 10% -- or 10% to 15% without fund raise, and that stands. And why did we have to postpone it, right? What about the pricing in? As promoters, we don't have the money to subscribe to rights issue. We always said this. Now if I had done the rights issue and we've not subscribed, somebody would have actually screamed, saying "What nonsense is this? Promotion is new in advance, and therefore, they did the right issue and they pull the wool over our eyes," and all that stuff. I don't want to get to that. We take great pride in our governance, we take great pride in our transparency, which often comes to hurt us. We're willing to put up with it because transparency for us is not because the market wants it or shareholder wants it, but this transparency is because we want to create a great company going forward. We want to create a great company that has continued to survive only because of the transparency that we have internally and externally, and that's exactly what we want to do. So the rights issue will happen. I hope people support the rights issue. The rights issue is not a means of giving largesse to our shareholders. So it will not be priced at significant discount to market. It will even be premium to market, we don't know. It could be premium, it could be discount -- no, discount is ruled out. It could be at market. So basically please be aware that the rights issue will happen. We will now start working on it now that the markets -- hopefully by the end of the year, market have priced the performance already. And the idea is to basically raise money that will put us on a bigger growth path. Now why is there need for money? We need the money because we want to grow in certain markets where there are new initiatives. You might have seen one of my tweets a couple of days ago, where the U.S. government, the U.S. SEC -- the U.S. government, actually, the U.S. Congress and Senate are now expanding the scope of XBRL reporting in the U.S. Now in the SEC world, the filing started way back in 2008. Snatching away existing customers from other vendors is more difficult than charging a core fixed cost in a new opportunity. So the reason why the U.S. revenue has doubled is because we went after a new opportunity last year, the energy market opportunity, where we did extremely well. The reason why the Europe revenue has doubled is because we actually went after a new opportunity with the ESEF mandate. This is XBRL filing to the capital market in data. We've always done well in new mandates because it's also much less expensive to catch customers in new mandates, and it's much more expensive to swing customers away from existing vendors in old mandates. There are several new mandates coming in different parts of the world. You might have seen a filing -- some filing by us which talks about how even government of India is looking at moving to a standard-based reporting across the country. In fact, several tenders have been issued in that context. We've lost some for reasons that don't make us really happy because they really often do not understand significance of XBRL filings and decide to use a ground-up solution as opposed to buying a ready-made solution. Fine, we live with it. So the rights issue is still on. I want to mention because this is a [ question addressed in part ]. Second point I want to make is many shareholders been writing to us asking for information that we cannot share and we will not share. Now very often, if questions come which require detailed information, if there's an earnings call close by, we will address the questions at the earnings call and not do individual answers. So please bear with us. With that, over to you, moderator.

[Operator Instructions] We have the first question from the line of Rohith Potti from Marshmallow Capital.

Thank you for the detailed commentary, as always. My first question is on U.K. So first, if you could give us an idea of what was the quantum of revenue that was lost because of this -- because of the -- our customer moving everything in-house? And a follow-up there is -- I mean, so if you could also detail how -- I mean, why did we lose the deal? Because -- I mean, as we discussed in the presentation, we consistently rank near the top in terms of quality. And we have been a bootstrap operation, so we should be among the lowest-cost providers of the software as well. Swaminathan did mention that they are using the new tools. So how -- what was the -- what made us lose or what caused us this particular deal, that sort of revenue that we had historically? And does it also call into question the partnership model that we have been using heavily across other markets? So is there a risk of something similar happening in Europe and U.S. or any of the locations where we have done really well in the past?

Rohith, first of all, it's good to know that you now have a company name associated with your name that we did not know about, so congratulations. It looks like you formed a company or have joined somebody. I don't know, we'll come to the question later. So before I pass on the question to Deepta, a couple of things. I think the biggest lesson is don't put all your eggs in one basket. In the U.K., we had one partner. We didn't lose customers. The partner decided to take most of the work in-house, a lot of the work in-house. I think the impact on revenue is about INR 1 crore, Balu will confirm this. So it's not very, very significant. But having said that, we've also made up elsewhere in the U.S., not U.K., not that much. The quality thing you talk about in the U.S. SEC market; in the U.K., unlisted company market, there are no quality reports of any kind. Yes, we are a low-cost provider, but we don't -- we are not the lowest-cost provider. There are people offering at even lower costs. As somebody said in the U.K., currently, our XBRL filings are available for free with breakfast coupons with cereals. If you buy some cereals from Kellogg's, you actually [ had getting microscope ] saying this. I'm just joking. But that's really how low the cost has become in the U.K. So I don't know why we lost them. But there are opportunities coming up. The lesson that we learned from this, don't put all your eggs in one basket. In the U.K., we had one customer passing on significant number of companies to us. That -- this has been a good journey for us. And I mean, as I said, over the next -- the good thing is the customer has said that he's not going to exit immediately with all the companies. They're going to exit over a course of 2, 3 years. So we will gradually see a lowering of the revenues. But the impact in terms of the company's -- the net impact will not be very significant. Now since Deepta handles this directly, I'll let Deepta take the question and answer the way she wants to. Deepta?

Thank you. Rohith, so just to give you a little bit of background on this U.K. business cost -- business loss. The U.K. mandate, the U.K. iXBRL mandate, the business registry mandate, which was -- which went effective, which went live in 2011. So it's been about a decade -- over a decade. So at that time, we signed up with one large customer who's a large consulting firm. And they had a whole clutch of company for whom they were offering these iXBRL solutions, basically, right? So converting the documents into iXBRL. Now as a policy, this large consulting firm never actually concentrated all of their business with any 1 partner. So they had 2, 3 different partners through whom they were working and processing these files. Basically, we were one of them. Amongst the partners, we were told that we actually were the best in terms of quality. I think this large consulting firm decided to start taking some of the business in-house. Actually, very honestly, they never expected that this kind of iXBRL solutions or services would last this long. They thought it would always become integrated as a part of perhaps an accounting package and will become all very routine. So they first, didn't expect it to last this long. At the end of the decade, they decided that they wanted to start pulling that part of the business in-house. Apparently, what we learned is that they already dropped all the other solution providers and other partners, vendors that they have, and we were the only 1 in the 3. And they also said that, given that the relationship was strong, so it is not that they switched in favor of another solution. They were also processing some internally themselves anyhow because they always wanted that as kind of a backup. But I think they got like a kind of a mandate or a requirement internally saying that let's now consolidate all of this internally. So they came back to us and they said that given our relationship is very strong, and they said we'd like to do this in a safe manner, we would like to reduce the number of files of our customers that we pass on to you. And as said, they expect it to drop down to about 1/3 of where it was at current level. So we see that playing out over the next 3 years or so. This mandate is an old mandate. So we are -- of course, the lesson of a learning for us is never concentrate risk with one partner in one geography. So the more diversified one can get with multiple partners and the more direct end companies one can have, the better for us. But when we contracted this, of course, we were really smaller. We didn't have the ability to go direct and we had just this one partner. We are now focusing our energies on the U.K. market. There are 2 mandates over there. There is a new mandate, which is the ESEF mandate, as you know. And there is this one as well, which is the old, what we call the HMRC mandate, the tax and the revenue mandate. So we are looking to see whether we can kind of get business in. We are getting in a small way as well. But like Swaminathan already explained, for the U.S. market, to enter a replacement market after such a long time, it's probably likely to be hard, unless we're able to swing in a couple of bigger partners at this point in time. So that's the long story and that's the lesson and the learning.

And overall thing -- there's 2 -- there is 1 more thing. It's what the total revenues from the U.K. market from HMRC filings was never more than INR 2 crores to INR 3 crores, anyway. So in the larger scheme of things, it's insignificant. But in the larger scheme of things, it's a slap on the face and a lesson for us to learn. And so we are -- so the good thing is that we have enough partners in every other market to be able to withstand jolts and so diversified in the sense. We don't see -- if you don't -- in a market, you can't go direct and also go with partners. It creates a channel conflict. With a partner always will go to you and say, "What if you go behind my back?" And so on and so forth. So it's been a challenge to work on elementary actions to get there, and we are doing that. I mean as I can -- [ serious upfront ]. It's a fear that we always have and the fear come true.

Fair enough. I mean, this is very helpful and detailed answer from all of you. So just a follow-up here. So one of the things that was mentioned was that the expectation is that over time, an XBRL solution is integrated into an accounting package or something along those lines. So how serious is that specific risk for, let's say, the Europe and the U.S. market that we are extremely excited about today?

Sure. So let me -- Swami, if you want...

So this is Swaminathan. But Deepta also said -- Deepta [indiscernible]. But Deepta also said that over the last 12 years, it's not happened, and that's the reason why they're taking it in-house. I think there's an answer in it somewhere as well. So keep that in mind. Deepta, go on.

So yes, there are 2 parts to the answer. One is, obviously, it has not happened the way people had anticipated. They thought it would become so -- foreseen that stuff would just go into accounting packages. And like this, a partner of ours said it has not happened in the last 12 years and they don't foresee that happening, right? I think, they themselves are taking this in-house, so they are setting up a practice for this. That's one part. The second part is the difference between this HMRC mandate and the Europe and the U.S. mandate that we are so excited about, for example, is -- but the HMRC mandate works on simple taxonomy and there's a fixed taxonomy which theoretically could have been kind of automated, which was not, by the way. So in the more complex mandates, it's far more of a challenge. And in the more complex mandates, it's not only numbers that theoretically can [ split ] out on an accounting package, but there is also a lot of narrative and text and reports, et cetera. So if it was difficult in this one, it's close to impossible in the other one. Or I should not say close to impossible, will take a heck of a long, long time, I think.

Rohith, the other thing is that the cost of doing it in-house using an integrated tool, the cost of integrating it internally is much greater than the GBP 100 to GBP 150 to GBP 200 pounds you actually pay for using a third-party tool to do the whole thing. So would you buy a road roller to break up a [ mat ]? Absolutely not, a hammer would actually do. So it's cheaper to buy a hammer than to buy a road roller. So integrating internally is like buying a road roller. Using a hammer is what solutions like us are all about. That's what I think our partners realized. So partners basically said, "I will have my own tool. I'll have my own way of doing things. I don't need you. Thank you very much."

Understood. Okay. Perfect. So this is very helpful. Swami, if you could elaborate a little more on how you see things with the existing and implemented mandates in Europe and U.S. So with the ESEF/ESMA mandate, I believe -- I mean, am I right in assuming that the -- so you had, let's say, 30, 40 clients coming free for the first year. I mean, am I assuming that the entire client base that we have...

They're all converted now. They all converted to paying client. They were all converted to paying clients. Everybody.

Okay. So I mean, so going forward, there is -- I mean, it will be equivalent to -- going forward, it would be like the -- how the U.S. SEC, as we know, [ something in the sense ], you have a fixed client base and it will be very difficult to grow them as far as the current ESMA mandate is concerned. Am I right?

That's a fair statement, but I will let you finish your full question before I answer. But that's a very fair statement.

Okay. So that was number one. And second is, when is the ESG going to be implemented as part of the ESMA mandate in U.S., and I think in Europe? And I was also curious now because I'm talking about ESG. So how much of a difference per filing in pricing is there for ESG filing? Because as you mentioned, the Gap has used you for ESG filing, the first ESG filing they've ever done. So how was the experience? How is the realization different as compared to a normal filing that we've been doing in U.S. and Europe?

I'll let Balu take the ESG question. And as far as harvesting our existing clients more, I'll come back to the question later. First, let Balu take the easy question. Balu?

Yes, I will maybe request Deepta to take this question as far as Gap is concerned and the experience that we had, what we looked at.

Sure, Balu. So...

Balu, the question was about ESG and not about Gap, Balu.

No, the experience of working with Gap. Okay. On the ESG side, maybe I can expand on 2 parts. One is the European mandate for ESG filing, it is expected to start in 2024, the exact language is to be out and it is going to cover companies, both private and public. Right now, the IFRS [ twin ] foundation which is looking at the ESG or climate financing area is in the process of creating the standard. And we expect the XBRL taxonomic, which will be an invariable part of it, would come out by end of this year or early next year. So that's when the mandate could start rolling out on a voluntary base. As far as Gap the situation is concerned, the Gap activity is concerned. The Gap activity happened because they want to do ESG report in XBRL on a voluntary basis, and that's where we stepped in and we worked with them to create that. Maybe Deepta, you want to expand a little bit on that particular topic.

Sure. So as Balu has already said, Gap wanted to voluntarily create its ESG report in a digital machine-readable format. And after they were looking to do that, they were looking for a tool that could help them do that as well. And there was a FASB taxonomy which was already available from the U.S. So in fact, we actually connected Gap with us because the existing tool that Gap was using -- is using for the SEC filings and the other filing wasn't ready with the ESG taxonomy, with the FASB taxonomy, but CARBON was already ready. So we decided to do this on a voluntary basis and create the report. They were very, very happy with the experience, actually, both -- so they are obviously providing kind of testimonials and references. But it's early days because it's not a mandate as yet. They however are kind of putting up -- we're putting up a small case study, and they're also coming. They're also happy about the fact that their report's in a digital format, so it's benefiting us as well.

Rohith, so let me repeat what Deepta basically said, [ the relation of our detail ] explanation is the following. That when you have multiple mandates for the same company, it's advantageous to have a tool that covers everything. And if you can be quick off the ground, then there are possibilities that we will actually switch to you. So while Gap may have been using somebody else for their SEC filings, the fact that they've now used ESG gives us an in into Gap. So when you talk about the first question that you asked about the limitations in terms of what we can grow, how we can grow in the U.S. or Europe in these situations, I think as more and more mandates happen, and I think -- I don't know if you've seen my Tweet on the U.S. Congress and Senate passing a new law, expanding the scope of XBRL filings, when those things happen, I think we are in a very good spot. We are actually in a very good spot basically because we are usually very quick off the ground with our R&D team, integrating newer and newer filings into it, like we did with the ESG filing, which got us this Gap mandate. I think you call it something [ as people will confuse ] GAAP for the general accounting principles, Gap the company, in this case. So your question -- I hope your question got answered. The fact that we have other possibilities from CARBON brings in customers into us. And secondly, also keep in mind, the size of our company. We are still very, very small. So adding INR 5 crores, adding $100,000, is exactly what? Balu was saying something it INR 75 lakhs. Adding $0.5 million is what? INR 3.5 crores. So given the size of our company, the growth that we seek is not [ bounty ]. So even switching is possible and adding new filings is also possible.

Perfect. So one part of the question which was, so what would be, let's say, the rough realization difference when it is just a normal XBRL filing for a listed company versus when an ESG package is also included as part of it. So could you share that number, if possible?

Balu?

So we haven't at this point of time given a number really for customers who are working with us on a voluntary business. But my expectation is it won't be dramatically different. That's an expectation, but we will disclose this in the market.

Sure. That's helpful. So I mean, Swami touched about growth. So I mean, I'll ask this lastly and get back into the queue. So in the past, as you mentioned, that we can even grow at a much higher rate with adequate funding. So -- would it be fair to assume that, that statement still holds very much true? And we're waiting for the cash flow from this year as well as the rights issue to accelerate us on the growth path. Would it be a fair statement to say that?

Totally, totally. And also one more thing I want to add to this, is it's -- the interesting thing is a couple of adjacent products. For example, let me stop a little. Rohith, you are an investor in the capital markets for a long time?

Yes.

Have you ever used XBRL data?

No, I have not yet.

Is that an opportunity for us?

Sure. That is true. Yes.

If every listed company you invest in teaches you how to use XBRL data in your investing behavior, would that help?

Sure. Yes, it would help. Yes.

Would every investing company -- sensible investment company would therefore, now that they are filing XBRL, want to do that?

Agree.

That's your answer. That's our hook.

Okay. So this is probably the convince section that you're talking about here, right?

Absolutely right, on which, we've invested tremendously which is what brought into losses. And that's where we need to focus to acquire new customers. Apart from adjacent filings, learning to use XBRL data is also a huge possibility.

Perfect. Perfect. I'm sorry, so one last question before I go back into the queue. So in the past also, Swami, so you mentioned that we've lost tenders in India. You mentioned IRB, which I think we've proven in the past. And even in this call, you mentioned that you've locked a few. So historically, we've always maintained that in Collect segment globally, we have only 3 for competition and we generally win 45% to 50% of the tender. So other than IRB, what...

55% actually won.

55%. Okay. So what's happening in India also -- is it -- why is it difficult for us to win tenders other than the obvious ones where we have consistently been there, I think, for more than 10, 15 years now?

The ignorance of the regulator is the biggest problem and the tendency to want to develop bespoke solutions. So very often, people don't understand the importance of data standards. They think electronic filing is enough, being electronic filing is all that they need to do. That myth has now been busted with the CAG report which says it's not enough to collect electronic data, it's important to have common data standards. That's a very significant report, the CAG report. If you don't have it, I will have it sent it across to you. It's going to become law very soon. And when that happens -- in fact, [ already making ] has issued some report 2 days ago about governance and data standards. So the ignorance of the regulator and the unwillingness to recognize the benefits that RBI has gave, which RBI knows all about and [ Thompson World Online ], that's where the problem lies. I think when that changes -- and therefore, they all think it's a very big software project that needs to be implemented. And we lose out little bit for. So they set conditions which ultimately ensure that only the big IT companies can actually bid for it, the IT services company. We still have an IT services mentality in this country. That needs to change and that hopefully will change. So we are confident. But one thing is very clear, this is something I must say. During the COVID period, the biggest lesson that we also learned is that we can't ignore the domestic market. So we have some creative ideas in terms of what to do. So you will actually see some significant initiatives that we actually take in the domestic Indian market to grow our revenues here. So don't be surprised if you see us coming out of the woodwork in few areas, and not just in GST, but a few other areas as well.

[Operator Instructions] Swami, sir, presently, there are no questions in the queue. We have a follow-up question, sir, from Rohith Potti himself.

Rohith, can we pause for 1 second? Rohith, can you pause for a second? I want say something else.

Sure. Sure. Sure, Swami.

So by now, you would have seen that those mails from shareholders asking me these questions, which we did not reply to for a variety of reasons. Can we take some of those questions, so that at least the shareholders are happy?

Yes, sure. We can do that.

Balu, you have the files. Maybe you can read out the questions and we decide who will take it.

I beg your pardon. What did you say?

I said maybe you can read out the question one by one, and then we can decide who will take it.

Okay. Okay. So there's a question from [ Rikash Sama ]. And writes, says, I would like to know the progress of subsidiary made by the company in the GST space. How many clients are added? How many more ERP partners did the company collaborate in?

Gautam, are you there? Gautam?

Yes, Swami. Yes, yes, Swami.

Gautam, will you take the question? Gautam, not only will you take the question, I also want you to talk about the IRP because many people might want to know what the IRP, but they don't really know yet.

Okay. So the question is how many -- what is the progress made on the subsidiary made by our company? So this is IRIS Logix, which is a subsidiary, which is -- which focuses on the app for the transporter segment. So currently, we have 165 subscribed users, subscribed transporter companies who are actually using the app. So these are regular subscribers. They either take a quarterly or an annual subscription. And in terms of number of ERP partners, you've got 4 partners with whom we have tied up. But a bulk of our subscriptions are direct subscriptions. ERP would be making for about 15% of the total subscriptions. That's on the Logix, which is our subsidiary. To talk about IRP. So IRP stands for Invoice Registry Portal (sic) [ Invoice Registration Portal ]. As you must be aware, e-invoicing is now mandatory for issuing of invoices of all B2B invoices. The mandate was rolled out in 2020. It started with INR 500 crore companies and then subsequently, the threshold has been reduced. Now it's INR 20 crore companies, about 3 lakh GST and currently come under the -- under the invoicing mandate. And the government has actually seen the benefits of e-invoicing by plugging of the revenue leakage. And we see this in the monthly tax collection figures, which have been constantly going up. So there's an intent and there's a need to make e-invoicing pervasive across for all B2B transactions. Government is also talking about making e-invoicing for certain B2C category of invoices. And that's where the long tail of tax payers come in, almost about 95% taxpayers who are currently not covered. This would require having substantial infrastructure or IRP system in place, which is able to handle the load and the request which is coming in. Currently, NIC is the only registered e-invoicing service provider in the country. And in the 42nd GST council meeting, it was decided to appoint private IRPs who would actually perform the same role as what currently NIC is doing. A process for selection of the IRPs began -- started about 8 months back. About 100 companies had applied, 30 were shortlisted. Finally, 17 presented and the full fledged demo of the IRP application was made. And finally, 4 companies, we have been awarded with a license to become an IRP. Currently, it's a provisional license. Once the agreement is signed, we'll get the final license. So -- and IRIS is 1 of the 4, which has been selected. So once we become an IRP, we actually move a notch up from being just an GSP which is connecting to an NIC or a DSM system. We come at par with the NIC system and become one of the 5 IRPs which can actually generate invoice on our own. So next time, if an invoice has been generated and signed by IRIS, one can actually sign -- scan the QR code and see that it's signed by IRIS. What does it mean from an overall opportunity perspective? There is e-invoice -- the generation of e-invoicing is a government mandate, so it has to be offered for free at 0 cost, which is what NIC is doing. And the private IRPs will also need to do the same. But private IRPs are allowed to provide VAS on top of the basic invoicing data, and that is where we see an opportunity. Because there are lots of gaps and needs in the industry from an overall automation of the entire AP cycle and the AR cycle as well as the value of an e-invoicing data for flow-based lending. This is all going to be -- once supplier is giving a consent to take a VAS, the data can be stored by the IRP, and these services can be offered on top of it. So that's where we see big opportunity and an opportunity to play a role in actually digitizing the entire conversion of the country.

The real story here is not just the fact that we got it. But when you look at the list of companies who bid for it, which is who is who of India and who did not get it, only 4 of us got it. And the fact that only 4 of us got it tells you something about how good we are or what people think about us. To convert it into an opportunity is where the current lies. It comes back to the same thing. I'm like a stuck record. The amount of money that we have in the bank will drive how successful we are. So at the presentation, one of the companies, which is a loss-making company or a new age companies, I'm told they basically mentioned that if you have any doubts about us, look at our balance sheet. We've got INR 500 crores. So the same question is asked of us. They have INR 500 crores. How much do you have? Well, not even INR 5 crores. So if -- for us to be successful, we need to have a war chest. I'm not saying we should have a INR 500 crore war chest, but we need to have a war chest. And I hope, therefore, that when the right issue happens, we will get subscription from the shareholders in a manner which allows us the comfort that we can fight the battle -- to fight with somebody who's got INR 500 crores, you don't require INR 550 crores. You basically can be smart about what you spend and how you spend it. We have a great product, and it has the trust of the customers. And that's exactly how we go about doing. So we've learned how to do things in the cheapest possible way and in the most efficient possible way, and that's what we'll continue to do. And this again goes back to what I told you, Rohith, about adjacent possibilities that come up, which allows us snatch customers. In fact, we also have -- so for not only the IRP. Recently, MCA launched -- MCA basically said some time ago about -- and possibility of managing companies. So Gautam, he also said something about banking companies, the products that we have and also the legal system. You talk about both, Gautam.

Correct. So...

And so we should be think -- shareholders, we should be thinking we might want to [indiscernible] acquire new customers to whom we can actually go with the existing suite of products. So these are both very important products that have been launched, both of it are getting some traction in the market. It's slow, but it's happening. Gautam?

Correct. So MCA has come up with a regulation that if a company is dealing with any counterparty, which is struck off, it needs to be reported in their annual report filing. If you look at the current MCA website, there is no common source about -- there's no place where -- which actually lists all the strike-off companies. The list of strike-off companies get uploaded in a PDF file by independent ROCs, about 25 ROCs in the country. So what we did was we actually downloaded all the list of struck off companies and put it to a database and run a smart search. So that any company can actually come and just upload an Excel file with the company, which they are dealing with. And we give you a name back whether that company is actually struck off or not. It just makes it easier for secretarial or for the financing which is actually working on it. We call it as IRIS LookUp. So this is the first feature we have looked at in IRIS LookUp, which is searching for struck-off companies. Now that we see there's a good demand, that there's a good interest, we have about 65-plus companies, which have taken subscriptions, it's a completely DIY mode. Once the product is made, there is this thing -- it runs on its own. So there is absolutely no team involved in it. And this gives us an opportunity to actually cross-sell, upsell. We have been -- out of the 65, more than 50% are first-time customers for IRIS, so this gives us an opportunity to actually start selling our GST solutions, our MCA filing solutions. And we'll be also looking at adding more features within LookUp through GST search, through GST Compliance scoring and returns filing and PAN search and things like that. All public information where any enterprise needs utility to do a bulk search and get returns or reports immediately, this is what LookUp is going to do. So that's our first product, which is IRIS LookUp. The second one is IRIS Litigation Management System. Once -- post GST, a lot of things changed for companies to actually manage their litigation, especially if one is a services company. One has to now take GST registrations across all states. Earlier, there were different laws for VAT, excise, service tax and then state-specific taxes. The GST regime completely changed the whole thing, going to a faceless audit and a faceless assessment mechanism. So we have built this tool, which is a SaaS-based platform, in collaboration with one of the leading firms which exercises itself in GST litigation. It's a tool which actually manages, tracks your entire litigation cycle, starting from an audit stage-focused notice and goes all the way until the time the case is closed or a settlement is made leading all the way to Supreme Court level. So this is a very detailed -- and this is again a tool which is targeted for large enterprises, which is managing a lot of litigation, a lot of focus notices now. This is phase 1. It has modelings for litigation management, pre-GST litigation management as well as handling audits. We've been getting some good feedback. We've had a couple of large companies which are -- which have expressed an interest to sign up. And we've also started getting feedback for building an AI/ML-based features in it where similar cases can get tied then you can actually refer back to similar case laws or advanced rulings, auto drafting of responses and e-mails and things like that which will be taken up in phase 2. There is also a request that -- if a similar tool can be actually looked at for direct tax litigation management as well as license management. So those are things that we -- that's there on the road map. And we see this play a bigger -- a very important role as GST now gets -- starts moving into more of a litigation phase.

So basically, the way we look at it is in a digital reporting framework, there are many adjacent opportunities, each of which we're trying to get into in some way or the other, depending on whether the fit is there or the fit is not there. Rohith, over to you.

Maybe...

Sorry, Balu. [indiscernible] here.

Well, there were a couple of more questions and regards. Let me just run through it very fast, okay?

Okay.

So one was, the company recently disclosed that a large investor should come and just acquire shares of the company. Is that clear promoter shareholding or shares in the open market?

Please read the filings that we make. So I require one request for shareholders. Please read the filings that the company makes. The company -- there's no new body who -- no, there's no -- [ Shukam ] is an investor in the company. What they do is their business, what they do with their stock is their business. These are all public information. So please read the filings carefully before asking such questions. It's all there. Go ahead.

And [indiscernible] did not acquire shares. They disposed of shares in the market. That's what happened.

No, no, Balu, what [ Shukam ] did, we don't know. There was some change of share that was shared, but it is not up to us to answer what [ Shukam ] did and did not do. It's up to [ Shukam ] to talk about it, and we're not [ Shukam ].

Absolutely. We have to disclose it because that was required by law. But we are done.

No. But the filing was made by [ Shukam ] in the market. The filing was made by [ Shukam ] in the market.

But we also had to make a filing because there is a requirement.

No, that's true. That's true but it's okay. But the point is the promoter shareholding did not change.

Absolutely, absolutely. That is the basic point. Okay.

Go on.

Yes. And the other question was the disclosure management. What are the benefits on -- with disclosure management.

Deepta, give a short answer please. Deepta, short answer. We do not have much time now.

Sure, sure. So the short answer is that the disclosure management solution will be released now in the coming months. So we don't have any clients at this point in time. We get a better sense on this entirety after the next few months. That's it.

Thank you. Next question, Balu.

No, that's all with us. There were a couple others also as overseas.

Ask, ask. Just ask, ask.

Okay. So some of this have been answered in the previous question that they've given.

But just mention it so that we know the trail of the answer.

Yes, there's a question with [indiscernible]. What is the range of order value for the Kuwait project where you have signed with the EY as a partner? So we don't disclose numbers with specific projects. I can say that it is a lower range of a typical capital market in [ Middle East ] because this is [indiscernible] process. That is one question. The second question is -- what is the value of business I can expect from the launch of new product, IRIS LookUp, which [indiscernible]? And what is the value of business I can expect from acting as a ERP for GST? But also [ does discuss ] at all what we are trying to do? What is the indicated time line for the rights issue [ sovereignty ].

The answer is very simple. The moment this call is over, the moment we feel the markets priced it what -- in some -- whatever manner they want to, we will then call a meeting of the rights issue committee and we'll take a decision very fast. We will not linger any longer.

Okay. And now we move to [ Mishin Moniz ] then. He has -- he had made a few questions as well. What are the current order details? We have given the order book in our presentation. You can take a look at that. He is talking about the company entering the [ IES ] segment and now what about if it's outlet. That I presume could be the IRP segment e-invoicing service perhaps? Gautam did talk about that.

That's been answered. That's been answered.

Yes, been answered. Yes, renewed geographical expansion of business can be done in Q4 2022. Do we see why it's slow, but based on [ the go ]. Steps taken to improve the financials of the company. [indiscernible]

Balu, actually, geography-wise, yes, because we have -- Balu, we have actually sold a couple of licenses for SEC filings to companies in Chile, for example, which I discovered completely by chance over -- in the course of a call, some Chilean companies taking our SaaS product for SEC filings. So the answer is yes, we add more geographies. Go on.

All right. Steps taken to improve the financials of the company. I, again, presume this could be related to our balance sheet numbers. So did I mentioned that our receivables as number of days of sales have come down. We have paid off employee dues. Interest cost has come down significantly this year compared to the previous year because we have moved to a lower cost credit arrangement. And our ARR also have increased, so the signature revenues have decreased as well. Our ARR has increased from INR 40-odd crores to INR 47 crores at this point of time. At this point, [indiscernible] true on discounts.

There was also some question about [ ATS ] and all that by somebody.

Yes. So a great question from the EBITDA point -- so there's question from the EBITDA...

Let's not miss any question, Balu. Just ask the question anyway. I'll answer it. Balu, question.

Yes, understood. The Indian [ risk speculation was mentioned ] [indiscernible]. Can you talk about the nature of the project? And can there be similar projects with other poly sources in the country?

Absolutely. That came to us because of [ NASCOM ]. It was a free pilot that we did for the [ HS Maharashtra ]. In fact, those of you in Bombay will be happy to -- much will be happy to know that there is -- that we played a small role in ensuring that the [ HS Maharashtra ] has a reasonable data system businesses within their organization. It is in sense for antitrust. It was done about 5 years ago, it was a pro bono project that was done because of [ NASCOM ]. Can it be done elsewhere across the country? Yes, but everybody wants it free. We will not do it for free. Balu, go on.

In the U.S., a lot of municipalities are adopting [ HTR ] dosing because of the municipal laws. Can we see the same story playing out in India as well?

Not in the next 5 years because, first, the [ CAG ] law has to be passed, after which government really has to take note and then things have to happen. But I don't see this happening in the next 5 years. Anything else?

I think we happen to be through with this. Thank you.

Okay. One request. I respect the right of every shareholder to ask questions, and I answer every question. At the same time, I have one request so that when you send in a request for answers in the middle of whatever, there's a lot of management resources spent on getting the right answer or getting the answers out. So my request to you, where the information is publicly available through our filings, please look at them and please recognize that we are actually spending money and resources in answering each of your questions. So please, please, please, I respect your right to ask questions, but please keep them to areas which have not been covered. Rohith, the floor is yours.

Thank you so much for answering all those questions which were asked on email. Much appreciate it. Quick 2, 3 questions. So one, the order book that you mentioned of INR 67 crores, is it to be executed over the next financial year? Is that how it's indicated?

Not really. We said [ INR 40 crores ], if I'm right. So not really, because it does have ARR component which is for the year. And other component, which is contractual, it could be spilling over the next year as well.

Understood. So the ARR component would be roughly INR 50 crores, right, including the [indiscernible] South Africa component, it would be around INR 50 crores. Am I right?

Yes, INR 48 crores, INR 49 crores.

Okay. Understood. So that was number one. So second question is, so in the past, you've we've discussed in detail on how the market share has evolved in Europe with the smart coming in, right? So could we have a similar discussion on FERC mandate? I believe we had in the first phase 800 companies that came out. Has the entire filing been done by all the regular companies under FERC? And the second question is, we also mentioned that once the first phase of FERC filing, first phase at FERC company once they are done with filing, then the next phase, I think the number was in a large thousands or something which are expected to file in the next couple of years or so. So could you elaborate on that market, please?

So not all 800 filed. I think number of companies that actually filed was closer to 600, if I'm not mistaken. And the second phase has not yet started. The date has not been announced. We think it will happen next year, but I think I'll leave it to Deepta to answer the question. Deepta, you've got 2 minutes to finish the call. We'll go overtime, but you have to keep in mind.

Sure. So in FERC, it was close to about 700 companies, I think, that filed in the first phase. And we got roughly a 20% market share over there. And phase 2 is not yet announced. So I think it's likely to be pushed back a little bit, perhaps a year down the road, but we don't know yet. We're waiting to hear actually.

So one more thing I will tell you is -- Rohith, one more thing I must add is it's likely that we will not work with our existing partner as far as phase 2 is concerned. And we will be on our own, but that's okay. We are strong. We have a marketing muscle to be able to do that, to be able to go to the market, we will do that. We have differences with our customer in terms of approaching in terms -- of our partner in terms of how we go to market. We are very happy for them. They want to go out overall. They basically have a different model that they want to follow, which doesn't work for us. And so we basically said we'd part ways. So in phase 2, we will not be working with them.

But will this [ affect ] the existing clients that we have won there over the next few years, the filing that will happen there?

No, it won't. It won't. The existing customers are already bound by contract with both of us, and we have revenue share, which they would respect and we will respect.

Perfect. So the 10% market share is great to know -- a great achievement. So congratulations on that. And curious to know if the -- so we have roughly around [ 70-odd ] company as customers. Is the entire revenues being recognized in the last financial year? Or is there something to be recognized in this financial year?

It's an annual filing. So it's actually annual filing. So answer is yes, it's been recognized.

So the entire benefit, recognized in the March numbers.

Let me say that as far as, yes, the CRC revenues are concerned, it is spread over 12 months because the license to use the CARBON platform is for 12 months. Right, [ Vinish ]? Right, [ Vinish ], this is spread over 12 months, CRC filings.

Yes, yes, Balu, correct. That is correct.

So the revenues would recognize over the next 12 months. It's not that whatever you have won there, we're recognizing entirely in the last financial year. Is it the right understanding?

Yes, it starts from the date of signing the agreement with the customer then it's spread over 12 months.

So just to ensure that I understood correctly. So let's say the customer filed it in January, and he paid us, let's say, INR 100. That's been spread over 12 months. You don't recognize the entire INR 100 in January or February. You recognize it let's say over the next 12 months. Is that correct?

For the for CRC mandate, that's right.

Okay. Okay. So there could be a actual increase in ARR in the next year because this will recognize in the current -- coming years. Is that right?

No, what I'm saying they -- for the 70 odd that we talked about [indiscernible], it incorporates this [indiscernible].

Okay. Perfect. Perfect. That's helpful. And then my last question from my end is, I mean, you talked about attrition of 2021 [indiscernible]. So in the context of what I see in other companies, I think that's a great number, and kudos to you guys for managing it so well. How was the -- I mean, how is the scenario right now? Because with the start-up funding drying up the -- my understanding is that the talent war is not as heavy, as severe as it was a few months back. So could you guys discuss that a little bit, please?

Human beings are very simple, they at the same, complicated. Once they lock themselves into a high salary, they're not being able to take a lower salary to be able to move to at least find a job for at least for a long time. They don't see the writing on the wall. And I think the start-up funding has actually destroyed the whole talent acquisition process for a large number of companies. And honestly, it's quite disappointing how the whole thing has actually panned out. And competing for resources is one thing, but competing in a meaningless way has actually destroyed the market in the whole process. So there are people in my company who are getting paid INR 15 lakh, INR 20 lakh, who have gone off with a salary of INR 55 lakh, INR 60 lakh in other companies. So it's just not tenable. It's not maintainable. It's just not going to happen. So have the things improved to an extent where we're able to find people? No, not yet. I think it's getting there, but I think it's way too late. So once this funding actually happens, we will actually be able -- we're also strengthening the technology team in a very big way. You will soon see us make an announcement about a very senior technology person joining us. It will happen soon. We're not in a position to talk about it right now. But I just mentioned that we are strengthening the technology team in a very big way. Hopefully, when that happens, you will see some significant step-ups in the way we look at technology. But has it improved in terms of finding people? No, it hasn't. And we are in Bangalore, different from Bombay. Bombay is very different from Bangalore. Bangalore is much worse.

Understood. So on this people theme again. So I noticed that we are very focused on improving our marketing and sales focus. But I don't think we have a Chief Sales or Chief Marketing Officer. So anything on that front as well?

So we have greatly strengthened our marketing team. Deepta, do you want to talk about that? We really have some fantastic salespeople on the ground, but Deepta will talk about the marketing team.

Sure. So Rohith, your point is valid. We don't, at this point, have a Chief Marketing Officer or the CSO. But on the individual product marketing side, we have strengthened the team. So at the product marketing level, the engine is beginning to crank up and come together much better both for CARBON as well as for GST, which are on the create side, the 2 big business on the credit side. But we will be looking to strengthen it for both marketing and sales and there are positions that will need to be filled in, including a [indiscernible]

So if you want to recommend people, Rohith, you're welcome to. Rohith, please recommend people. I'll give you a finders fee.

Sorry, I couldn't -- I didn't hear you, sir. Could you repeat that?

I said, Rohith, if you recommend people and we recruit them, we will pay you a finders fee. Applies to all shareholders, everybody on the call. We're open to recommendations.

Swami, sir, there are no further questions in the queue. Over to you for closing comments.

So thank you very much for being on the call. I think the year ahead should be much better than the year that went past largely because, as I said, COVID is over. One last thing I wanted to talk to you about which I think is very significant. Many people look at the SaaS opportunity as a very huge opportunity, and they look at okay, 5% market share, 10% market share, 20% market share. Our SaaS opportunity is a very segmented opportunity. So when you look at the U.S. SCC market, there are 5,000 companies. When you look at the European ECF market, there are 2,500 companies or 3,000 companies. So the number of companies in each market is very small. And no single company can ever hope to dominate the market to an extent where it gets more than 15%, 20% market share quite literally. One factor that worries us slightly, is recently [ watiwa ] took over a company called [ pass report ]. When we say it worries us, it's partly the reason that they now will now have a product that is basically priced around where we probably price it. And they're also able to fix a few things that we could not have done earlier. But I think it's a great source of -- it also means that we need to buckle up and literally stay on our toes to be able to compete in that market. We have not done too badly against [ pass report ] in the last year in Europe, and we believe that we are well positioned to do a lot more. So it will cut both ways. I think while it will certainly strengthen [ watiwa's ] portfolio, I think it will also create problems of a different kind for them. So just because you acquired a company, which is in a certain segment, it doesn't mean you get all the customers, so there are people talking to us. We're very happy for that. So that's where we are. So given -- all in all, the year that's gone past, we can really do better than this. On that note, thank you very, very much for the call. And we'll meet again in 6 months' time. We will not do quarterly calls. We will do half yearly calls. Thank you very much again. Bye-bye.

On behalf of IRIS Business Services, that concludes this conference. Thank you for joining us. You may now disconnect your lines.