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

[Foreign Language] I'm Vinod Agarwala, Chairman of this 22nd Annual General Meeting of IRIS Business Services Limited. So many shareholders are present, and I welcome them all to the meeting. The pandemic continues to rage across India and rest of the world causing us to affect unique changes in our lives, many of which are probably reflective of new normal. The fact that we are holding this virtual AGM online is one such. It is hosted on infrastructure provided by NSDL and compliance with the Companies Act 2013 direct with mini circulars issued by Ministry of Corporate Affairs Government of India. Mr. Santosh Sharma, Company Secretary informed me that requisite quorum is present, so let us start proceedings for the meeting. I welcome other directors on the Board of the company through this 22nd Annual General Meeting. Please allow me to introduce them to you. Firstly, Mr. Bhaswar Mukherjee who retired a few years ago as Director of Finance of the PSU Navratna Hindustan Petroleum Corporation, is Chairman of the Audit Committee and Stakeholder Relationship Committee of your company. His contribution to ensuring that your company continues to maintain the highest sustainable corporate governance with IRIS cannot be overstated. Mr. Bhaswar Mukherjee?

[Foreign Language] I am Bhaswar Mukherjee, an Independent Director on the Board of your company joining the AGM today from Navi Mumbai. Thank you.

Thank you, Bhaswar dada. What makes the company great is financial and commercial success it has to show. This comes from how strong the sense organization is. Mr. Ashok Venkatramani is a veteran marketeer, who has served companies like Hindustan Unilever, ABP News Network and ZEE Media Corporation in leadership positions. He is the Chairman of Nomination and Remuneration Committee and Corporate Social Responsibly Committee of your company. Mr. Ashok?

Good morning, everyone. I'm Ashok Venkatramani, an Independent Director on the Board of IRIS Business Services. I'm joining this AGM from my office in Mumbai today.

Thank you, Ashok. Over the past year, the company's Board has been greatly strengthened with the induction of Dr. Haseeb Drabu, a former chairman of J&K Bank and former Finance Minister of Jammu and Kashmir. Dr. Drabu is well-known economist, not only just in India but the world over. His contribution as a member of GST council is well known to all. With a keen ability to anticipate the future, he chairs the committee of risk of your company, Dr. Drabu? I think there's some technical problem. He is not able to introduce himself. So I now invite promoter directors to introduce themselves.

Good morning. This is Haseeb Drabu joining from Srinagar. I'm an Independent Managing Director of your company. Thanks for being here. Thank you.

I now invite promoter directors to introduce themselves.

Ma'am, please unmute yourselves.

Apologies. My apologies. Good morning, everyone. I'm Deepta Rangarajan, full-time director of IRIS and joining this AGM from Chennai today.

Good morning dear shareholders. I'm Balachandran, whole time Director and CFO of IRIS. I'm joining this AGM from the company's registered office in Vashi, Navi Mumbai. Thank you.

Good morning. My name is Swaminathan, the CEO of the company. I'm sorry for the latency in the images coming up because in the conference room, there seems to be a 10 to 15 second delay for the image to come up on your screen. So please bear with us. We are sorting this out. I'm joining the AGM from my office, from our office and from your office in Navi Mumbai. Thank you.

Okay. As I already said, I'm Vinod Agarwala, I'm lawyer by profession. Now apart from other directors, we have Mr. Santosh Sharma, Company Secretary and several members of leadership team joining from their respective locations. Representative of statutory auditors, KKC and Associates LLP and secretarial auditor, Parikh & Associate, too are present. The notice convening this meeting has been -- and the Board report has already been emailed to all shareholders and will be taken as well. The statutory auditors KKC and Associates and secretarial auditor, Parikh & Associate have both expressed unqualified opinion in the respective audit reports for the financial year '21, '22. There are no qualifications, observations or adverse comments on financial statements and matters which have any material bearing on functioning of the company. The statutory auditor's report on standalone financial statement and consolidated financial statement are available on Page #113 and 118 of the Annual Report. Secretarial Auditor Report is enclosed in Annexure 7 to the Board report at Page #83 of the annual report. Corporate Governance Report is enclosed at Annexure 8 to the Board's report on Page # 88 of the Annual Report. To transact the business, as mentioned in the notice, the members are provided with an opportunity to inspect all documents referred to in the notice and [indiscernible] statement by writing to the company on its e-mail ID till the date of AGM. I believe that all people would have taken help of this thing. The instruction for joining the AGM are provided in Notice of AGM under Note 21, link for joining AGM have been provided to all the company -- all by company secretary. We have received the request from members to speak at the AGM today. We will call out their names when the time comes. I request the speakers to introduce themselves and be brief and to the point. Members can also raise their hand by clicking on raise hand option on Zoom platform who have not yet given their name. The management will answer all questions received before the course of proceedings today. As you can appreciate this is an innovation by company to enhance the quality shareholder participation during this virtual AGM. I urge members to please take advantage of it. I would further like to inform you that all that today's meeting is streaming live on companies YouTube channel, IRIS Business Services Limited. Pursuant to provisions of Companies Act 2013 and SEBI's Listing Regulation, the company has provided facilities for voting by electronic means to all members to enable them to cast their votes electronically so that business may be transacted to such voting. For this purpose, the company has tied up with e-voting system of National Securities Depository Limited for felicitating voting through electronic means. The company provided remotely voting facilities to all person and Board members on Friday, August 19, 2022, being the cutoff date for voting on all 5 resolutions set out in the notice of AGM. Members attending the AGM today who have not cast their vote by remotely voting are entitled to exercise their right to vote by e-voting. M/S Priti J. Sheth and Associate company secretary has been appointed by the Board as a scrutinizer e-voting at this AGM. The result of voting will be declared in due course after considering the e-voting done today by members participating in this AGM and the remote e-voting already done by certain members. The result, along with the scrutinizer report shall be submitted to stock exchange that is BSE and NSE and it will also be placed on the website of the company as the meeting conveniently held today. The resolutions have already been put to work remotely voting and the requirement to propose and second is not relevant. The performance of companies included in directors' report and management discussions and analysis. Now allow me to say something to the shareholders. It seems that in this past pandemic world, the virtual AGM has become the new normal for a company with a large number of shareholders back all over the country and some even overseas. The virtual AGM offers great way more shareholders to engage with the company than in-person AGM would allow. Today, your company has over 3,500 shareholders and by holding this AGM through this structural platform, every one of them spread over more than 150 locations has an opportunity to participate. To each one of you who has joined this meeting today, thank you for taking the time, thank you for making the effort. We value the importance of face to face interaction with our shareholders, too. I'm happy to announce that starting this year, company will host a shareholder's meet to coincide with the World Investor Week observed globally from October 3 to 9, 2022. An initiative of the International Organizational Securities Commission. It is a week-long global campaign to raise awareness about importance of the investor's education and protection. I invite you to join in person or virtually. We will share details shortly. COVID refuses to go away. We're looking at what most businesses are doing or how people are behaving. One would think that life is back to normal and that COVID is history. Threat though is that it is not so. Today, I want to dwell on importance of organization and how it may have changed the workplace forever. Most of the organization have made adjustment in this post-COVID world, including IRIS. In this post-COVID world, employees are beginning to define the terms of their engagement with the employers. Today at IRIS, we are re-imagining HR because it is not just about the work from home, it is work from anywhere. It is work from -- on my terms - the employees term. You may have also seen the statement attributed to Google's CEO, Mr. Sundar Pichai, that Google has too many employees who do not work effectively or with focus. He is reported to have said that Google's productivity isn't where it needs to be. You may have also seen the tweet of Wipro's Rishad Premji, who has drawn attention to the increasing cases of moonlighting by industry staff. He calls this cheating. At Apple, reward seems to be going against 3 days in the office directive with employees urging management to view such decision to their line managers. Post-COVID employees behavior has changed and not all for the better. From the statement of which I administered Premji, one could conclude that many employees with freedom to work from anywhere has licensed to do what they please. Here at IRIS, many of our colleagues are simply reluctant to return to office and understandably so. During the pandemic, many of them had moved to their respective meeting places with their families. Their reluctance to return to Vashi is understandable, as a consequence on any given date, less than 20% of the office is occupied. I do not think we will enforce mandatory attendance in office so long as the work is getting done and the managers are satisfied with the work of their subordinates. So for this to work, we propose continuously train our managers to get better at monitoring the work from home, of those who seek the flexibility to work at time of their choosing. In this work at any time world an employee can take a break in the afternoon to watch a series on TV or catch matinee or run an errand. Traditionally, in most companies the metric used by HR to monitor employee was to keep track of our system in the office. This is obviously no longer meaningful. The timesheet culture has to be a way to monitoring if the expected outcome have been delivered. With the concept of work hour becoming redundant, we need to revisit the concept of results. Vacation and work-related parts in labor force disbursed, we are figuring out how to keep employees engaged. We are also asking ourselves fundamental questions about work-life balance in flexi-time world. The old 8-hour rule won't work any longer. Here at IRIS, we have always tried to be ahead of the curve. If employees can work for anywhere at any time of their choice, and we have the system to manage them, it gives us confidence to recruit from anywhere. In the battle for tail end, the world now becomes our catchment area where we recruit from the change, when we recruit will change, how we will recruit will change. We will recruit more women, especially stay-at-home mothers, a work from home, work at your convenience framework is a situation made for educated to stay-at-home mothers. According to a research study of the prestigious The Atlantic Magazine, in U.S.A., where opportunities abound as much as 43% of women and -- with children leave their job. A World Bank study says that between 2010 and 2020, the number of working women in India dropped from 26% to 19%. Following COVID, economist in Mumbai estimate that female employment plummeted to 9% by 2022. Says a Bloomberg Report. We will recruit outside the big towns and cities. What COVID has done is to force large part of a workforce to try and stay close to home where they may have support system. Many of our own [indiscernible] back to towns or even to villages, they [indiscernible], by building a referral system to spot [indiscernible]. Mumbai like compound system, no matter where they may be, we will be able to significantly improve the quality of technology tenant at IRIS. Bear in mind that your company does not need to recruit a large number of -- like the big IT services firm. We have confidence in our approach. Let me turn to year that has gone by during which much has happened. I want to draw your attention to a few of them. Tomorrow evening, I'm happy to say, we our company will receive an award from Union Finance Minister, Smt. Nirmala Sitharaman, recognizing IRIS as India's best fintech, institute by financial experts with award take note of the work we have done for Reserve Bank of India, which has helped transform the Indian banking system rendering it as former ICICI Bank Chairman, K. V. Kamath says, the strongest in 50 years. I wish to place on report your company's gratitude to RBI and the various officials of RBI who interacted with us over the years for the opportunity to serve the country in this manner. The award ceremony will be streamlined on live on the website of Financial Express. Your company made a new beginning in November last year when IRIS migrated from SME platform to the main Board of BSE, while getting listed on NSE as well. From having just under 400 shareholders. When on SME Board, your company now has over 3,500 shareholders after the minimum trading lot condition of 4,000 shares was removed. More than half of our shareholders invested shares -- shares, 100 shares each, which as many assume [indiscernible] earning just one share each. Earlier this year, we received one of our first major public recognition when we were awarded the silver medal in the category of tax technology providers. As you are aware, your company is hugely respected to either of GST compliance software, for the recognition came a couple of months later. This time from GST and itself when we became 1 of the 4 partners authorized to generate e-invoices. Your company has mount for the brand refresh, it may have caught your attention as well. We have very new colors, we have also come up with the tagline which captures the purpose of the company. All this year, we wish to describe IRIS as the place where information meets technology. Now with as many regulatory implementation as we do, we are building transparency and driving growth. It captures the mission of the company. It captures succinctly what we do. As I conclude, I wish to express our profound gratitude to each of our clients who support us with their business, helping us grow. I thank our incredible partners from different parts of the world who are working with us for our mutual benefit. The last must -- word must go to, however, to Rakesh Jhunjhunwala, who passed away recently. He is reported to have said, whatever you can do or dream, you can begin it. Boldness has a genius power and magic in it. He also said in a different context, we do not succeed without obsession. The entrepreneurs who founded this company started their journey with obsession with the dream to make this world better place by getting people to use data better. I thank you all for partnering us on this journey. Now I hand over to Balachandran Krishnan, the whole time Director and CFO, who will speak about the performance of the company during the year. Over to you, Balu.

Thank you very much, Vinod. Good morning, once again to all shareholders. I intend to give you a very quick operational review update. And this is short standard as well. Is it possible to connect the slide deck.

Abhijeet, can you just allow him to share the screen?

Will NSDL, please allow screen sharing.

Sorry for a small delay. So we have the slide deck on the screen. I hope all of you can see. So let me go to the next slide. The one after this, one more, okay. Here is a quick background about the company. I'm sure all of you know, IRIS well enough, but still a small description of what we do. Your company operates in the reg-tech segment and that too primarily with products in the Software as a Service space. Within this, our footprint is global, and we created to regulators and enterprises. We report our numbers to business segments, which are called Collect, Create and Consume respectively. Tax segment creators regulators, or it may creates the means to both operating solutions to enterprises, through mean to interact with regulators. And in the Consumer segment, which is nascent at this point of time, we do have a couple of industrial products in the making as well. Now on the next slide, please. Okay. Here is a quick review of our presence in multiple countries, about 45% of revenues come from India, by diversity distributed across all the 3 studies you see on the slide. Next slide. Okay. Now let me take a quick look at the company's financial performance for the year '21, '22. So this year was not an easier one for the company with headwinds still coming from the COVID pandemic which hampered the domestic and -- especially revenues from our regulator oriented business. Still, the overall revenues grew at about 8%, while expenses moved up at a higher rate, partly when they employ expense increases. We can assume that there was some impact on the EBITDA and net profit levels. Next slide, please. On the other hand, revenue mix improved significantly with the Create segment putting in a solid performance, growing by nearly 26%. Recurring revenues is a very important metric and now contribute, as good as 78% reported, up from 71% in the previous year. The annual recurring revenues, the other important metric also has moved up. And is in fact at about INR 48.5 crores as in June -- as in June 2022 guidance. Next slide, please. If you take a look at the actual ratios, you find that the profitability has impacted. But interesting thing is our working capital management has improved the debtors in the broad base coming down to 86% from 97%. Next one, please. Now this is a final slide, is all about our first quarter results, which was announced on August 12. Typically you would have seen that the first half of our performance in the past has been the little more subdued compared to the second half. But having said that in this first quarter, we have posted a 20% growth in top line compared to the corresponding period. Expenses also grew at relatively a low pace still fairly substantial, but a lot of it compared to revenues, we have a certain jump at the individual. From business perspective, I should say that we do see some bigger activities on the [indiscernible] regulators, which go -- which all go well for the company. So that's it from my side, quick update as I mentioned. Thank you. Over to the Chairman.

I now request Mr. Swaminathan to introduce the senior management team to the members. Meanwhile, thank you Balu for presenting.

Thank you. Now I think I'll talk to the senior management a little later. I'm going to say a couple of things I think are very important. I think the last year has been huge in terms of what we call vindication. So when we receive an award tomorrow from Government Finance Minister, it's the culmination -- it's not the end, you don't use to word, culmination as an end. It's a culmination of a journey that we started many years ago with a lot of sense belief or what [indiscernible] called obsession that what we do will change the world. And I think it goes back to what Gandhi ji said point purpose means will follow. We have been obsessed about the use of data standards that we are going to change the world. It shows in the way the Indian banking system has become so strong today. And today, we touch a large number of people across the country, every individual, every household in the country with a bank account. Because ultimately, if the banks in the country are safe or as Mr. Kamath says, the banks have the safest [indiscernible], I think we should be happy about it. This would not have happened without the support of RBI. So we have a huge set of gratitude, [indiscernible] mentioned, which is why as we turn over a new [indiscernible] as we from [indiscernible]. We also started going for a significant amount of rebranding, the basis that let -- let's look at the company afresh and look at wear new clothes. When you come on illness, what's the first thing you do is wash up and go wear new clothes. So we got us new clothes. So what did I'll do is I am going to request Gautam, our colleague who runs the GST business to share with us the thoughts that went into the rebranding. And -- after Gautam, I will request Ashok who was also involved in providing input on the rebranding side and who is a reckoned marketeer to offer his comments on the whole rebranding exercise. Gautam, do you want to go first at the framework project and then Ashok can offer comments. Gautam, over to you. There is a bit of latency in this whole thing. So we bear with us and [indiscernible] latency. Gautam, I don't know [indiscernible], can you please get yourself on screen. I don't know if you are on mute, I can't even see you. There is no video. So while Gautam comes up, maybe you want to take establishing you were helping us a lot to work on greatly in terms of the whole rebranding exercise. So can you please -- by the way, Abhijeet, I have just been told, Gautam is not the panelist. Can you please make Gautam a panelist. In the meanwhile, Ashok so can you please share your inputs on the rebranding exercise, please.

Can you hear me now? Yes. Thank you so much, Swami. I think I had the good fortune of being involved with the team on...

We had the good fortune. So thank you.

Okay. I think -- I would qualify the change of clothes analogy, which you gave saying that it's not just change of clothes, its change of clothes to convey a new purpose. And I think what was said by Vinod ji in his speech and which was also reiterated in all that the marketing team has put together is that, when they go back to their customers, it's not just a set of new look on the brand, but also a new sense of purpose on what the company endeavors to do and more importantly, how the company endeavors to add value to their customers going forward. And to me, somewhere linking the company's own purpose to ensuring that they deliver what the customer wants. I think that linkage has got strengthened. And to my mind, that is, I think the key aspect of this change. And I think the success of this whole change, to my mind, will be really reflected. When we go actually out into the market and start talking to the customer about the new change and what we try to do and what we will try to reiterate in our endeavor to bring value to our customers. So to me, that -- the implementation of this whole change is really the key. So I'm really looking forward to continued engagement with the team in making sure that we not just look new, but also are able to communicate to the customers the value which we bring to them in a more enhanced manner. Swami?

Thank you, Ashok. In fact, with our earliest tagline used to be where information meets technology, which can meet pretty much everything in the world. We can have this moving ground and drowning motion to create honey and even there this could have been applied. I think focusing directly on the business itself, those are the entire businesses about creating software for transparency for energy compliance, which in turn drives growth. I think a sharper missing that's coming with your support, with the support of various teams that are actually involved in it. So until Gautam comes, Gautam, are you there? Gautam?

Yes. I am here, Swami, can you hear me?

We can't see you, we can't see you. Yes, much better. So Gautam, share with us the thought that went into rebranding, please.

Sure. So I think continuing from what Mr. Ashok said, we needed -- it was time for us to look at refreshing our 25-year-old brand and needed to build something which is more contemporary and in line with what we do and what we value, in line with the changing times. So we actually -- we're not just looking at changing our brand, changing the color, but something which should be a reflection of what we truly value and what actually drives us to do what we actually build. The journey was actually recuperated in partnership with a leading brand consulting firm, which actually looks at building brands from the perspective of innovation as well as growth. So it was brand-driven growth exercise, and it involved actually -- involved talking to stakeholders, both external as well as internals. External stakeholders, we spoke to a lot of our customers, partners and even consultants who have actually worked with us in the past and present ex-employees. And internally, we spoke with a lot of employees, a lot of people who work with IRIS, actually what does IRIS mean, what are we doing right, what are we not doing right, how can we do. And this all culminated and actually coming down like peeling onions -- what was that one key underlying theme which defines what we do, and everything came down to building trust and transparency and how this trust and transparency. And what we do is using open standards like XBRL, we build reg-tech SaaS products. So that's all the what and the how part of it. But the why is all about -- we all dream about transparent tomorrow, and that's what is the common underlying theme of IRIS. And that's what's reflecting now in our tagline, which is building transparency -- and transparency, sometimes actually lead to growth of our customers, of our partners and their growth is actually eventually leading to the growth of IRIS. And from a brand color and look and feel perspective, we wanted to ensure that the legacy 25-year-old brand, which had built an identity and brought IRIS to where it is today. That familiarity was retained. At the same time, retaining the cross share, which actually is an indication of the sharp focus that we have and the eye is an indication of human figure, which is -- which [indiscernible] human touch, reliability and care and support, which is a very integral part of IRIS DNA. The colors, green and blue. Blue symbolizes technology, green is a color which symbolizes growth. It's also the color of our planet. We are looking at more environment-friendly initiative, we're looking at getting into ESG. So the blend of green and blue is actually bearing technology as well as growth and which is actually relating outwards. So that's what the new brand IRIS stands for, human touch with technology and growth.

Gautam, thank you. In fact, the most satisfying part of the whole exercise was, I was not involved in it. I completely loved what happened finally, I loved the final outcome. And the reason why that it's satisfying impact my not involve -- me not involved in it is because this is due the collective input from the colleagues and the collective input from the clients that we actually work with. So it's not -- while Deepta was involved in it. But I say that largely it was Deepta and Gautam, most Gautam than Deepta in one year, [indiscernible]. Balu was temporarily involved in it, but I think it shows a company coming of age, where there are people in the next level that we're able to not see and articulate what the company stands for. So I think between Deepta and Ashok [indiscernible] facilitating role. [indiscernible] facilitating role and I think huge source of confidence there are people in the company who make things happen. I think it could be a huge source of confidence for our shareholders as well as for youth holders of the company. So Gautam, thank you and to everybody who was involved in the rebranding exercise, thank you very, very much, mostly to you. The second person that I want to introduce you to is my colleague Shilpa. You might have met Shilpa in the past and Shilpa is sitting right next to Gautam there in the same room. So one of the big victories in the last one year is the vindication of our work in the GST front as a tax technology provider. It's one thing to get an award for a [indiscernible] to get the award, it is a due diligence by Supreme Court [indiscernible] and it's one of those really awards with great category. But subsequently, we managed to capture the margination of GSTN who have decided to give us 1 of appointed 4 partners to become the invoice -- invoice registry or [indiscernible] a lot. And I don't know what the language is, when new things happen, new language comes up. So I think Shilpa there probably help us with the new language. So Shilpa, the question is, what is significant about us becoming an IRP. What does it mean for the company?

Yes. So invoice registration portal, that is the IRP. So just like we -- you mentioned a brief about it so that I can explain the significance of it. So IRP is a registry, which has been appointed by the Government. What this means is every business who is covered under this mandate, they need to send their invoice first to this registry. The registry is going to verify the invoice, validate the invoice and then stamp the invoice with a unique number and only then the business can forward this invoice to the customer. So a new step of validation by an independent authority that is the registry is -- will be now affected for the businesses in India. So the way India has approached invoicing is they are going in a pace manner. So in 2020, it started for larger companies with turnover above INR 500 crores. And from 1st of October this year, it has this -- threshold has come down to INR 10 crores. So what it means is every company who is going to get covered under the invoice from will send to IRP and then it becomes a valid invoice. When we see the way things are moving here, as the threshold keeps on lowering, it is a larger market. The SME market that is fitting in a more digitalized in the whole operations. So they're all invoicing or any data that they're generating is now becoming standard and a digitally available format. So which IRIS becoming an IRP what -- so with IRIS becoming an IRP, all the SME, the larger market that is up out there, we are going to help them digitalize their operation, which in turn for them, it is going to help because the other opportunity is of cash, credit and commerce will open up. We also know that ONDC is also making a big way here. So because of these allied opportunities around it, the core thing that is the data you are becoming is very important. And being an IRP, I think we will be having [indiscernible] you are registered with us, all the data will be there with us and from there the opportunities around the data, the allied opportunities is where we will be seeing growth happening. And of course, MSME is being one of the major contributors to the GDP, we helping them is overall going to a help the economy is what we -- what we see.

But Shilpa, the questions that shareholders keep asking me is the generation of [indiscernible] free, you have to give it for free to users of it. How do you make money? If you're going to give it for free to companies to generate the invoice, and [indiscernible] pay a lot of money. How do you get money in this?

Yes, So there are 2 overall parts to it, if I can say one is compliance part of it that is just invoice get them e-invoice generated. So that is something being -- will be given by 3, 4 by all the IRPs. But the allied opportunities which I was just talking about, so when we are saying about say credit opportunity. So the minute you have an invoice available in digital format invoice discounting or getting funded for the supply chain financing, these things come up. So for these areas, what we are looking at is partnering with the experts or the providers in these particular spaces. And then from -- so the business module will work more on those lines, not targeting the MSMEs to pay us, but more from these allied opportunities, the growth and the financing will come from there. So does that address the question?

Partly it does. Because these are the questions we always ask. In fact, the most interesting part of our growth in GST is the application called Peridot which some of you might have actually seen. It has more than million download. But what's more fascinating is that then with just word of mouth, there are 4 lakh active users, which is a huge number by [indiscernible] -- active users as in using at least once a month. And from what Gautam said, these almost 80,000, 90,000 people who use us it on a daily basis. Gautam, is that right?

Yes. On a monthly basis, we have 200,000 users daily depends on the date of the month. At least 20,000 to 30,000 users.

And this is for a product which people don't need to come to daily because it's not like they change the vendor every day. So thank you, Gautam. Thank you Shilpa for the inputs on that. One feedback I got up to last AGM is the opportunity for shareholders to interact with our colleagues working on different products, which is why when Vinod ji announced our initiative during the World Shareholder Week, which is going to be from October 3 to 9, what we're actually going to have is our product teams available for presentations, we can do deep dives in every product and look at understanding every product. So that shareholder will be much better to see from the company. We are in a business which is likely complicated -- it's not very easy to understand. So we hope that we will use the opportunity of the World Shareholder Week, which will be observed in IRIS as well to basically figure out what we do, look at the hood and understand the business much better. We are unique. It's difficult to compete with our business, but I think [indiscernible], I think you will go forth and tell people what we do and why we are so significant for the Indian ecosystem. And that's the reason why we have pushed into World Shareholder Week and I hope we will definitely participate in that. Chairman, over to you.

Thank you Swami, that was a wonderful presentation. Now I take up item #1, 2, 3, 4 and 5 of the business as detailed in Notice convening meeting, the 22nd Annual General Meeting. Item #1, to receive, consider and adopt audited financial statement, stand-alone and consolidated of the company for the year ended 31 March 2022 and the reports of the Board of Directors and auditors report thereof. Item #2, to reappoint Mr. Balachandran Krishnan, who retires by rotation and being eligible has offered as offered himself for reappointment. Item #3, the reappointment of Mr. Bhaswar Mukherjee as an independent director of the company. In accordance with provisions of Companies Act, an independent director shall hold office for a term up to 5 years, on the Board of the company but shall be eligible for reappointment on passing a special resolution by the company. And disclosure of such reappointment is to be made in Board's report. Mr. Bhaswar Mukherjee was appointed as Independent Director of the company for the first term on 31 August 2018 for the tenure of 5 years, which expires on 8 October 2022. The resolution seeks to approval of members in term of provisions of Companies Act raised with schedules and rules of SEBI Listing and Disclosure Regulation, et cetera. For appointment of Mr. Bhaswar Mukherjee for final term of 5 years, Mr. Bhaswar Mukherjee once appointed, will not be liable to retire by rotation. Item #4, reappointments of Mr. Ashok Venkatramani, as an independent director of the company. Again, in accordance with provisions of Companies Act an independent director shall hold office for 5 years. And can be reappointed on reappointment on passing a special resolution by company and disclosure of such reappointments is to be made by Board's report. Mr. Ashok Venkatramani was appointed as Director by company on 31 August 2018 for the tenure of 5 years, and his tenure also expires on 8 October 2022. This resolution seeks his reappointment for the company for the second and final term of 5 years. Mr. Ashok Venkatramani once appointed will not be liable to retire by rotation. Being interested in Agenda Item #5 and with the consent of members present, I would like to step down as Chairman of this meeting, and request Mr. Ashok Venkatramani to take the chair for this session. On Item #5. Ashok, you are on mute.

Oh, sorry. Thank you, Vinod ji. I now take up Item #5 of the business as detailed in the notice convening the 22nd AGM. It is about reappointment of Mr. Vinod Agarwala as an Independent Director of the company. In accordance with the Companies Act 2013 an independent directors shall hold office for a term of up to 5 years on the Board of the company and is eligible for reappointment on passing of the special resolution by the company and disclosure of such the appointment to be made in the Board's report. Now Mr. Vinod Agarwala was appointed as Independent Director of the company for his first term with the shareholders' approval in the AGM, which was held on 31 August 2018 for a tenure of 5 years. Mr. -- the tenure of Mr. Agarwala expires on November 26, 2022, this resolution seeks the approval of the members in terms of Section 149 and all the other applicable provisions of the Act. For reappointment of Mr. Vinod Agarwala as a Non-Executive Independent Director of the company for a second and final term of 3 years, Mr. Agarwala, once appointed, will not be liable to retire by rotation. Further, pursuant to the Regulation 17(1A) of [ SEBI ] listing regulations, please take note that Mr. Agarwala shall attain the age of 75 years on 30 October 2024, which is during the course of his second term as a non-executive independent director. Now considering the vast experience, expertise and the valuable contribution of Mr. Agarwala on the recommendation made by the Nomination and Remuneration Committee, which was held and shared by me on 26 May 2022. As also the Board of Directors at their meeting held on 27 May 2022, it's been approved for the continuation of Mr. Agarwala as non-Executive Independent Director on the Board of the company. So accordingly, pursuant to the regulations of the SEBI Listing Regulations, this special resolution for continuation of his directorship with effect from 30 October 2024, up to 26 November 2025 being the date of expiry of his term of office is proposed to be passed. I would now request Mr. Vinod Agarwala to join back and take the chair of this meeting. I would like to hand over the proceedings to.

Thank you, Ashok. We have list of shareholders who have registered as a speaker shareholder with the company. And also, who would like to speak on the financial statement, ask question. And I now request Mr. Swaminathan, CEO of the company and the whole time Director to take over the further proceedings. Over to you, Swami.

Thank you, Vinod ji. I -- at the end of the day, it's a shareholder who goes through what we do, who keeps us on our toes. We have received extraordinary inputs from shareholders in the past. We are grateful to every one of them for their valuable selection, for the valuable inputs. There are shareholders who ask us questions to probe us and make us look at businesses like we've never done before. There is shareholder who is actually required people to watch for employment. Very good recommendations who we have continued with gain from association from shareholders like that. There are shareholders who've actually reinvolved in testing of products as I think it will be very useful. I mean, I think both on and on about the different ways in which our shareholders have actually added value to us. One special person who keeps us on our toes [indiscernible], who's our shareholder for a long time, who has sent us set of questions already, which we will answer after which he still have the right to ask more questions if he wants to. And I'll request Deepta to take these questions and answer them. I will read out questions and Deepta, since she's technically involved in some of the business will actually take the question.

So, Deepta the first question to you is, what's the average realization per FERC customer, net of partner fees? Assuming 140 customers as an incremental revenue in the U.S. of INR 2.17 crores in FY '22, one gets an average realization of around $2,000, which seems to be on the lower side, your comments. Deepta?

I'm audible, right?

Yes.

Thank you, Swami, and thank you, [ Robert ] for the questions. So I think you're talking about the average realization for per FERC customer. So just a couple of things to keep in mind. Firstly, a bulk of the customers have signed up in the second half of FY '22, and that's one part of it. Secondly, as per India's, the revenue recognition policy. Our FERC revenues are recognized evenly through the course of the year. So if you just seek the revenues and divide by the number of customers, you probably -- you will be getting a lower figure that we have than the actual at this contract value. So that math will be incorrect. Having said that, the realizations, the overall realization for the FERC finance market are definitely lower than those of SEC and [indiscernible] because of the filing requirements on FERC are much more structured. So I hope that answers your question.

And I think with your answer you also answered part of the next question, which is about revenue recognition policy in the case of work. He also wants to know about revenue in policy because [indiscernible] of very similar to work. It also has been done over the course of the year [indiscernible]. And so are all revenues generated for the filings under FY '22 already recognizing the profit and loss account, and even I can answer the question, no, because of the -- we [indiscernible] over a period of time. The third question that he has does the ARR participants include the entire ARR from U.S. and Europe, one by IRIS, what is expected to drive ARR growth going forward?

Sure. So yes, the ARR of INR 47 crore includes the entire ARR from U.S. and Europe, which is one by IRIS, so that's correct. The second part, which is what is expected to drive ARR growth. See there are like 2, 3 things. One is, whenever there are new mandates where our solutions find an opportunity, there are typically step terms sitting here, right? So that is one. The second is when there are no new mandates, then there are 2 factors. One is switch and replacements. So our ability to switch existing customers from other providers that can contribute to ARR growth to the replacement market. And the second is of course our ability to retain our own customers. And the second is the ability to upsell or cross-sell other solutions, not necessarily related to mandates. So for example, in the case of IRIS CARBON, we are just talking through a lot of disclosure management solution. So that is mandated -- not dependent on mandates. So [indiscernible], when we have new mandates and otherwise incrementally as we attract new customers or offer roll out new offerings, not related to mandates.

The fourth question where only assumes that we do at [indiscernible], so just give you an update on the rights issue. We have received approval from one exchange, but approval is not considered to be complete until both exchanges give their approval, it is a matter of time before it happens and that's when we made the disclosure. So if you want to propose use of the right issue, which products, which geographies, which expense items would be particularly targeted on our spend on. So that question, I will answer. It's very easy to answer. I think color doesn't require [indiscernible] in a significant way. It's clear [indiscernible] where we are running after customers, where the spend will go. And it will most basically be largely on marketing and sales in terms of putting feet on the street. Deepta, can you just focus a little bit on our recent hiring in America where we recruited somebody for on-the-ground sales and what we're trying to do there and any other markets where we are scaling up our sales and marketing team?

So we have recruited one additional resource in the U.S. markets because we see opportunities not only for CRC and SCC, but we also see upcoming opportunities in newer areas like government reporting, [ AgFirst ] and also in ESG. So having said that, if we have to successfully make a dent or kind of get our maximum returns in each of these -- for each of these opportunities, we need to ramp up our sales staff even higher in the U.S. market. Similarly, in the European market at this point in time, we have one resource who's kind of on the ground over there. And of course, we have resources over here. But again, we see opportunities coming up in the European markets, again ESG being another one, where we need to ramp up our sales presence for sure in that market as well.

The last question that [ Rohith ] had and he's sitting across to us was our India revenues of INR [ 42.5 ] crores, how much came from GST-related products. That's for Mr. Balachandran. Balu?

Yes, sure. I can do that.

How much came from GST-related products?

So I would say that in the previous year, which is FY '22, maybe as much as 40% of revenues come from the GST compliance products.

Thank you. And the next question, I think -- Gautam, is that -- and Gautam, are you listening there? What is the current competitive intensity in the area of GST? And what's the potential over the next 3 to 5 years? So Gautam, we've come up a blue sky [indiscernible] for me, which is like fairly large. We won't give you the numbers here. But Gautam, in terms where to land in terms of GST, what was actually happening broadly, the competitive landscape, and so probably the most important thing is the revenues won't necessarily come from [indiscernible]. There's a point that came from [indiscernible] a while ago about how [ much ] will come from adjacent offerings. But I think Gautam is maybe best positioned to expound on that. Gautam.

Sure. So actually, if you look at the overall size of the India market and we slice it into various categories, it's actually a pyramid. So we call it as category A, B, C. Category A is the top large corporates, 7,500 number, and category B is about 75 lakhs taxpayers who are currently in the GST -- who are GST registered. The category C is the long tail of MSME, about 7 crores in number, which are currently outside of the GST ambit but would be coming as more and more the economy that's formalized over a period of next 3 to 4 years. We see them moving into the GST ambit. Now our focus as IRIS GST has always been the top segment of customers, the 7,500 corporates we work with. We offer some kind of a solution to close to about 1,000-odd corporates. Now -- and solution offering has always been in the compliance space. So compliance as a book becomes the first thing. But then there's a lot of consolidation that is happening in the space now with the competition coming in and offering -- going upstream, offering AR/AP integration for basically [ cash ] solutions, and going downstream into credit offerings or analytics and related solution offerings. So IRIS, we also have a similar growth plan of going deeper with our existing customers, going upstream as well as downstream as well as reach out to the new customers with the entire thing. And in this whole space, there's consolidation that's happening and is bound to happen as we go in the coming years. And slowly, this actually percolates on because an anchor is always linked to a supplier or a customer or a dealer distributor on -- they buy and they sell to someone. And with the formalization of this entire chain, there's an opportunity to actually integrate right from the source until the last end consumer. And with an IRP license also coming in play, IRIS is well poised to actually look at completely digitizing the entire chain end to end. So that's what our plan is for the next 2 to 3 years.

I want to add to what Gautam said that new things happen. You can't really anticipate how the world will change.

Did I answer the question? Or...

Yes, you answered the question. Thank you. Thank you, Gautam. So what I was saying is that when things change, when a dramatic shift happens in the market, you can't always anticipate what new opportunities will actually come, because I have to think a pleasant surprise for us will actually happen. Of course, when the applications are [ sought ], we apply. I think almost about 30, 40 people applied for new [indiscernible] licenses. That's a huge investment on what we've actually done in the GST space. so I think you're going to be surprised by what's going to happen on the GST front not because we are not [ sharing ]. The -- we were a bit surprised with the company in terms of the opportunities coming up. So the idea is to be ready for it. Be ready for the solutions and be ready to be nimble and fast on one's foot to get ahead. Rohith did inform me that we will have -- we might have many more questions to follow up on what he had sent us. So please, Rohith, the floor is yours if you have any more questions. Can somebody take Rohith -- the panelist just in case Rohith wants to ask a question? Can you get the panelist named [ Van Hood ] [indiscernible] actually see? Rohith, are you there if you have still a question? Rohith Potti. Rohith, be the first one. Yes. Rohith, you've been promoted as a panelist from what I can see.

Rohith, sir, we now unmuted you.

Yes. Yes, yes. Thank you so much for the opportunity again. And, I mean, first, it's great to see the energy in the presentation -- in the initial presentation. And the rebranding is also a very interesting exercise. So thank you for sharing all the thought process behind it as well. I have a few more questions on the annual report. So I'll go through them one by one. So before that, first I want to -- some more clarification on Deepta ma'am's response to my written questions. So on one hand, we said that the revenue recognition of U.S. and Europe is over a period of a year because of Ind AS requirements. And then we said that the ARR of INR 47.5 crores includes the entire revenue that we generated from the FERC and the ESMA wins. So I'm not able to reconcile that because that would imply that -- so for example, we saw a 2 point -- so we saw the U.S. revenue go up from INR 1.1-odd crore to INR 3.3 crores. So it's around INR 2 crores, INR 2.1 crores. So it doesn't make sense that in an -- the FERC market of 800 customers, where we have the second largest market share, but the revenue that we generated from that market is roughly around INR 2 crores. So does that mean that there is no more revenue to be recognized from that? So I'm not able to reconcile both of them. I don't know if I'm able to convey my question properly.

Rohith, the point is the way you calculate ARR isn't the way we report on the financial books of accounts. In the books of accounts, you have the [indiscernible] in terms of Ind AS to report it in ARR. You'll report for the whole 12 months. So the two are calculated very differently. The treatment -- accounting treatment of the two are very different. And that's why the frequency is very important to be able to get the right number.

Okay. So when we -- so we -- would it be right to say that the ARR increase from INR 40-odd crores to INR 47 crores is entirely -- okay, so I'll rephrase the question again in a different way. So in August last year when we had the AGM presentation, we had an ARR of INR 44 crore. And at the end of the year, we had an ARR of INR 47 crore. But we also mentioned in the AGM last year that majority of the growth we expect in the second half, we are going to see a lot of growth coming from FERC and ESMA because that happens in the second half. So does that mean that in the second half -- I mean, after the AGM, we were able to win only INR 3-odd crore of ARR? Because that also doesn't seem to fit what the expectation would be from ESMA and FERC revenue growth that we could expect.

Rohith, you -- but we also mentioned that we lost some U.K. business. Therefore, the revenue has actually dropped on account of client loss in U.K. Therefore, the numbers that we added were more than the numbers you actually mentioned because it's more than -- and the increase happened in spite of the U.K. loss.

And U.K. loss was how much value-wise?

About INR 3-odd crores as I'd call it. About INR 3-odd crores.

Okay, INR 3-odd crores. And South Africa was pushed, you had also mentioned, right?

South Africa was delayed because people need additional time to file. And therefore, the revenue is -- we had incurred costs.

But that was included in the ARR, is it?

No. I don't have the answer to the question. So I need to get -- I need to get back with an answer to the question. Excellent question.

Okay. So what is the quantum there? And...

I don't know offhand. We will get back to you with an answer.

Perfect. Perfect, sir. And then I'll continue with the rest of my questions. If you could -- so the disclosure management suite was interesting to know about. So if you could detail more information on that. So what do you see the market -- geographical as well as the value market potential for the suite, that would be very interesting to hear.

So Deepta, can you take that? Deepta, want to take the question on disclosure management?

Sorry, I was not able to hear you clearly, Rohith. My apologies.

The opportunity of disclosure management. The opportunity from the disclosure management suite.

So actually, it's too early to say. We have rolled out our disclosure management model first in the European markets. And like we do with every new offering or every product, Rohith, we ensure that it stabilizes first with customers. The scheme, because we had two partners in Europe who were strongly asking for disclosure management solutions for all the customers, so it's kind of a backward integration from the final filing, one step in, well, which is the actual creation itself. We see kind of the good part of this is it's not being mandate driven. One of our partners is actually saying that once we stabilize this, they can take this to a lot of their unlisted customers as well. So having said that, we've kind of brought our early wins. So we got our first customer in the European market. We will be rolling out. Our partners are beginning to offer it to others as well. I think we'll be able to answer this with a little bit of clarity once the product is out there, once customers actually use it and once we're able to kind of push it down the channel further. Why we are optimistic about this is it's an adjacency we can go through all of the existing customer base and beyond, and it also takes us beyond mandates. So we also see the same requirement in the U.S. market. One of our partners in Canada is kind of asking for the same product and is already engaged with us on this. But a little too soon to kind of quantify it.

Also Rohith, you'll understand the disclosure management software can be sold only with feet on the street. It's a more -- it's a much deeper client engagement and sale that we need to do. And so part of the question that you asked, the question that you asked about what the money will be used for is basically getting more feet on the street to be able to move the product either in Europe or other markets -- and U.S. and other markets.

Perfect. So that was helpful.

But one second. Deepta, we only have our first approval in disclosure management, right?

Yes. we signed up our first customer for disclosure management in Europe. So that's -- you're correct, we signed up our first customer.

So we've done about -- with China, one customer. And how many demos have you done already?

I [ wouldn't ]...

[ Anuj ], are you out there? [ Anuj ],can you [ basically ] answer the question in terms of how many demos you've done in Europe for the disclosure management [ tool ]?

Sure. So we've kind of met about 8 to 10 customers who've expressed their interest. And we've done demos, and we've got about around 30 customers who expressed interest post August. So it's usually -- July and August is supposed to be vacation months. So post that, we've got about a substantial number of customers who've expressed interest. But demos would be around 8 to 10 that we've done.

So Rohith, basically [ Anuj ] and her colleagues [indiscernible] have got -- we're driving in Europe. We've met a number of companies. We work with the partners. And therefore, once certain things fall in place, you'll actually see them going back there and doing demos. Once a couple of more people, feet on the ground, feet on the street, have established, they'll all go and do demos because this is a high customer engagement and sale.

And what would be -- the realization would be higher than IRIS CARBON, ESMA realization? Or how would that whole thing look?

Deepta? Deepta, if you [ don't want to ] do this, [indiscernible], please.

Sure, Sure, sure. Sure. We are still discovering the unit. We have seen disclosure management solutions. For example, if you take Workiva, right, which is the one that we always look to, our kind of a guidance for it, and then try and think [ below ], their solution start at $30,000 upwards. We have seen certain, et cetera, at like $22,000, $23,000 upwards. So we had -- we are still in the discovery process in terms of understanding what are the [ version ] of disclosure management where we can take it.

[ Anuj ], when you met companies, did they [indiscernible]? [ Anuj ], can you please share with us what are the numbers you think might fly, adding to what Deepta said?

Yes. So overall, I won't put numbers at this point in time because I think -- like I said, we've got around like 30 companies who expressed interest in the disclosure management. And overall, if you see from a market perspective, the players which exist, their solutions are very, very expensive. So we also hear some news there in like Workiva as an example, who's supposed to be the #1 in the disclosure management space, they've been offering the solution at like EUR 100,000, like EUR 100,000, EUR 150,000. So that seems to be kind of a very, very expensive one. So -- and this number of 30, what we did was we rolled out a survey to our customers. After our filing was over, so we asked a bunch of questions. How happy are you? Are you [ happy ] with the overall product and stuff like that. And since we were rolling out the disclosure management, we also asked a couple of questions. How are we preparing your annual reports? And would you be interested? And the number 30 is derived from there. However, we do intend to reach out to the rest of the customers because a lot of them do not know what a disclosure management means. So we definitely do intend to reach out to the rest of the customers. But like how Deepta said, it's a little too early. But we're really hoping from September onwards, we can start connecting with customers in a more engaging manner.

Also, Rohith, you'll understand, in those countries, the first question is never [indiscernible]. Consumer data. Consumer data comes after the need is established. So I think that's the way likely we'll proceed. Rohith, over to you.

So thank you for the detailed answers. So coming to Collect. In the last AGM, there was excitement about this business with things opening up. But I think we've not probably closed any major deals so far. So when do you think a traction would come here?

Can you take that, Gautam?

Yes, Swaminathan.

So without getting into specifics of where we are bidding and whatever, can you broadly overlay what the current status is in terms of opening up of regulators, plans for implementing a Collect platform, [ Gautam ]?

Yes. We've started getting RFPs this year. And markets in [ Asia ] and in Africa are really active. Middle East is slightly active, but we've kind of responded to about four RFPs whose result will be coming out in the next quarter or so. So we are hopeful on that [ lines ].

So we are bidding in Latin America, we bid in Africa, we bid in Asia, right?

Correct.

Okay. Rohith, did that answer your question?

Yes. I look forward to that. So coming back to Europe and U.S., one thought or suggestion I have is that it will be great if you can sort of give -- like give a revenue division -- geographic division among different geographies. If you could do the same for ARR. If it is possible, that would be great because it would help map the growth in each of the geographies. Because otherwise, we're not able to get a sense of what the actual market size in terms of value is for each of the filings. So if that is possible, that would be helpful. And coming to ARR specifically, other than ESG implementation and switch and replace in Europe, are there any other growth opportunities? And in U.S., what's happening with the second half of -- second phase of both filings? That would be great to know. And what is the time line there? And what is the time line potentially for the muni filings as well? That would be great to know.

So let me address the ARR question first, is that personally, and this is my personal view, I'm in [indiscernible] thinking about the ARR numbers for a very simple reason. As earlier said, we got four [indiscernible] the [ strategic planning ]. There are many more that we expect to be able to bid on in the days ahead. Now the nature of our Collect business is such that it's very lumpy. So the moment you win two, say, Collect business opportunities, our percentage of recurring revenues actually come down dramatically, which may lead to misleading inferences by people. So the fact -- so beyond -- so one of the reasons why our overseas business actually went down as a percentage of total business is because RBI actually went up. So I think it will be misleading. I think -- but the more granular we get, the more misleading it could be. But having said that, we recognize what you said. We recognize the value of what you actually said. So let's discuss it internally and talk about whether it makes sense. We've been at hard situation that people have come to us and said, "Oh my God, this is falling." "No, it's not falling. RBI has gone up. The lumpy nature of RBI has actually gone up. So I think as well, to people -- if people understand this breakup, that's why we said it's a complicated business to understand. So -- but your point is well taken. We [indiscernible] to what we can actually do. In terms of municipal business, Balu, you want to take that? Where we stand? We've done a few pilots in a few states. But Balu, you take over and [indiscernible]. So Florida, Illinois are the couple of states where pilots have actually happened. Nothing concrete as to how [ we're doing ]. States at the said they're going to roll it out, but we do not see -- Balu [ is taking cover. ]

Well, I think very significant to add on whatever what [ Swaminathan ] spoke, right? It is true that in Florida and in the State of Michigan, they've made some good progress. For example, a couple of tax rulings have come out and...

Done by us.

Yes, done by us. Pilots are around the corner. And then collaborating with them by -- with the -- which we are used to participate in. And we are -- there are a [ couple of ] things in terms of [indiscernible] [ getting-to-know ] stage and looking at doing pilots. And our expectation is from a mandate point of view, maybe late next year or -- it's too early to say, but there would be some [ acts ]. But the whole area is [ breathtaking ] because there are thousands of state agencies. And one state comes in, other states should follow. Of course, there are some [ critical ] process involved because the states have the right to [ drive ] the taxonomy while the municipal, well, regulation is managed by the federal government. So they are sorting these things out at this point of time.

Rohith, does that answer the question?