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

Ladies and gentlemen, good day, and welcome to the earnings call of IRIS Business Services Limited for the quarter and half year ended September 30, 2023. [Operator Instructions] Please note that this conference is being recorded. We have Mr. S. Swaminathan, CEO; Mr. K. Balachandran, CFO; Ms. Deepta Rangarajan, Whole-Time Director; Mr. P K X Thomas, CTO of the company. I will now hand the call over to Mr. S. Swaminathan. Thank you, and over to you, sir.

Thank you. Thank you. Thank you all for joining the call. And as usual, we seem to have been having a fairly large turnout of people in this call, which sometimes scares me. Not all are our shareholders; some of them are analysts, some AIFs, I can see them. I think it's a nice group of people we have here. I think it's been a good half year. I think it's been a good quarter as well, and it's been on expected lines. I think the big highlight of the last quarter and last half year is how we stepped up our marketing expenditure. So whatever cash we drew up, we spent it on marketing to increase our footprint. Whatever cash we drew up, we spent money on acquiring -- on being present at more conferences and more trips to customers. So customer outreach and marketing is where a lot of money actually went -- not a whole lot of money by any large segment, but significant increase in the marketing outreach. And that's the one highlight that I want to emphasize. I mean, the revenue numbers are in front of you, the cost numbers are in front you. And we also had to do some significant course correction, which is the reason why the expenses went up as much as they did. So we still are -- I mean you keep hearing about how people are losing their jobs and so on and so forth and how people are available in the marketplace. They are, but good talent is still hard to find. Good talent is still very expensive. And I think that's where the challenge lies for companies like us. So we've had do some course corrections so that we get people. We also had to pay more to get more people -- get the right kind of people. Majority of people that you see in the IT space have actually come from the services background. So to find somebody with the product orientation is not very easy. They are again hard to find, and you need to pay a lot more. So you will see the trend continuing. So the trade-off that people have going forward is balancing revenues and expenditure, which I think is very, very critical. Balancing revenues -- well balancing the revenue objective with the profitability objective, and that's going to be an important trade-off for us going forward. Sometimes you will see one being more important, sometimes you'll see the other one being more important, but that's where we are. So for his opening remarks, I'll hand over to Balu, our CFO and Co-Founder, who will then take you forward. And after that, we'll address your questions. Balu, over to you.

Thank you very much, Swaminathan, and a very good afternoon to all of you. Also wish you a very happy Diwali. So good to meet all of you after 6 months for this conference call. So let me quickly delve into the numbers. I'm happy to report that we have clocked all-time high turnover numbers for both the quarter as well as for the half year. So that is very gratifying. And as Swaminathan also mentioned, this was expected as well because we have been doing well in our create -- Collect segment, which is the segment where we offer solutions to regulators. So let me quickly run through the highlights of financial performance, and I'll delve more on the movement of our H1 numbers. In the quarterly print, it doesn't really fully reflect the business dynamics. So let me say -- let me look at the H1 numbers, and you would see that for H1, our top line is up by 30%, while the profit after tax jumps by about 47%. The EBITDA margin compared to the corresponding half in the previous year is maintained at 13%. And some of these numbers, we have already uploaded in our investor presentation and maybe about a couple of hours ago on the exchange website. Some of you might have seen that as well. So I'm not going into the other ratios, but you will see that commensurate with our increase in revenues and EBITDA, our other ratios also have improved, especially our return on [ equity ]. And happily, we also reduced our debtors as days of sales to a small degree as well. So if we look at -- quick look at our expenses, as Swami also mentioned, our costs have kept with the pace of top line, even then we could spend on new recruits along with higher sales and marketing [ outreach ]. This is expected because we are also ramping up our presence across markets. If I look at the segment revenues, you will see the Collect segment revenues are up sharply by close to 70%. On the other hand, revenues from the Create segment, which has IRIS CARBON, IRIS GST and automated data flow product called IRIS iDeal, is a little more modest at about 10%. Or our nonrecurring revenues, because our Collect revenues have gone up, especially the implementation part, it's also -- that was about 36% compared to our previous period where it was lower. Well, that was expected, and we did mention that in the previous conference call. If I look at the revenue geographically, you will see that our revenues from abroad, our export revenues have gone up. Indian revenues have come down to about 30% of the overall pie. So before I wind up, that's pretty much from my side. Before I wind up, I just want to mention that every dimension of order book has improved compared to where we were. We didn't mention that in May 2023. So that situation continues. We do have an improved order book position compared to where were the previous year. So we are looking at executing that well, at the same time, give that much-needed push to the market on the Create side. Thank you so much.

I hope this gets me a few laughs. I keep telling Balu that as long as we keep standing [indiscernible] if you live long enough, you will keep hitting new highs every day. So as long as we keep performing -- as long as we're there in the company, I think we'll keep hitting new highs in terms of revenues every year. And as I've kept saying all the time, without resources, I think a 20% growth every year is possible. And that's really -- it's not -- so I would say it's a no-brainer. We still need to work -- we just need to work hard. And I think if there are mandates available, I think we can always grow a little bit faster. If there aren't mandates available, that basically takes a toll on how fast we grow because the replacement market is very difficult to get. But going forward, the strategy that we're actually taking is to go beyond the replacement market and go to non-mandate-led activities. And that entire thing is being led by Deepta. She's been working on it for quite some time now. So I'll hand over to Deepta for her to make a few comments about it, and then you can take off with questions [indiscernible]. So over to you, Deepta.

Thank you. So I think we've spoken in the past as well about our disclosure management market opportunity, which takes us beyond mandates. So that's essentially just targeting the office of the CFO around process efficiencies and improvements. So we're happy to say that we have actually just rolled out the new improved disclosure management solution in the marketplace. We've also tied up with a couple of early partners, including -- we have a partner in Canada, which is looking at taking the solution out to the North American as well as the European market starting from the beginning of next year, starting January. And we have also signed up with other partners across Europe and also directly with end companies. So we believe that once this actually gains a kind of traction or momentum or just like we've done with all our other products, once it sets or settles in the marketplace, then we can start seeing the ramp-up in this area of the business, which is going to be non-mandated-driven. We're looking forward to that. So that should kind of even out our business dependence on mandate-driven opportunity. Thank you.

The other big thing that we worked on this past year, various GST cases, various data-enabled lending. And I have with me Gautam who will share with us what will happen with GST front. As you know, we became an IRP last year, 1 of 4 IRPs. I mean we had hopes from it. We still are doing okay, but as I said, these are all areas that are very, very competitive. There are 4 IRPs in the country. And -- but again, the market that we're chasing -- the replacement market, the market we are chasing, there is a market for applications with GST data. So Gautam, over to you. He is going to share with us what's happening on the GST front.

Sure. So on similar lines, we are looking at the -- because the GST mandate is all in place, the e-invoicing mandate is now applicable for all companies in India, which have a turnover of more than INR 5 crores, e-way bill, e-invoicing, GST mandate. So now we are looking at, in the replacement market, looking at additional process efficiencies and improvements for the CFO -- for the office of the CFO and looking at building some new initiatives and new products. One of them is in the area of accounts payable automation because the whole process in India has changed post implementation of GST, and we have had some early wins in that space. And now that we are also an IRP, which means that we are 1 of the 4 private entities who are allowed to generate an e-invoice, the current mandate is for taxpayers over INR 5 crore turnover. And we are hoping that once this takes off and the mandate is lowered, the threshold is lowered to INR 1 crore or INR 1.5 crores, which is a very long tail of taxpayers, it is actually going to connect the entire vendor-supplier ecosystem with the large anchor base. It is going to automate the accounts payable as well as the receivable cycle, both in terms of compliance as well as collections and payouts. We are looking at offering some value-added services through the IRP platform. And there is a need for automation. There's a need for auto payouts, collections, invoice archival, storage for the small taxpayers that we'll be focusing on. So these are some of the initiatives that we are working on. There is also news about some of the exempt categories such as the BFSI space, which is outside of e-invoice because of the huge volumes. But with now private IRPs coming unfold, they are expected to also come under this mandate. So that will be a new market opportunity for us to really target because the volumes are going to be huge from that segment.

Thanks, Gautam. I think also this whole e-invoicing takes us into a new area. And while traditionally, we focus mostly on the larger companies, we're also trying to see how in a cost-effective manner we would also go to smaller companies and offer solutions and see what partnerships we can strive to make this happen. The last person I have for you on the call who is perhaps the most important person in the company today, who is basically making our products scalable, our products steadier and leading the entire technology, will actually transform how technology works as an IRIS, is P K X Thomas. And so Thomas, over to you. Tell us where we are on the technology side, what the challenges are and what the priorities are going forward.

On the technology, like any of our -- any of the companies which is in this space, in compliance space and in the [ ledger ] technologies, we focus mostly on securities and security compliance. We give importance to high level of security. While doing that, we also have to have a challenge actually to ensure that the kind of technologies which we use and kind of applications which we do has the latest of the latest technology trends, which is actually being used across the world. So we want to ensure that our -- the quality of our products are actually world standard, made in India and also the quality -- that security standards are also pretty high, compatible with any of the packing solutions or other solutions in such spaces. So both are big challenges which we face, and we have a set of like hardcore people who can track it and actually ensure that, that level of technology standard is maintained with the level of securities which we need.

You want to talk about the Surat center?

We also have started one more development center in Surat, actually, like Surat being a place where there is lots of good talent, very good, quality talent available. And that has actually given us a lot of boost in actually, like coming quarter, more products and product lines. And one is actually like now the leadership quality of people there. And second is actually the commitment of those people to actually, like, to work. Both are actually equally very, very high. So that center is actually like kicking hard and right now like giving us a lot of support and like a lot of product improvements from that space.

Thank you, Thomas. So Rocco, I think we should throw open the floor for questions. I will now hand over to Rocco, who's moderating the session here.

[Operator Instructions] The first question comes from Ankit Minocha with MRLR Capital.

It's good to kind of connect with the management at least for us for the first time. Congratulations on a great set of numbers, and we've started out with the journey ahead. My first question is with regard to the sales and marketing setup of the company currently. So I wanted to understand what is -- how are the teams aligned? What are the kind of professionals we have on board to kind of lead the business development and the simple marketing function currently? And considering that the businesses are slightly different customer bases, how do you manage that in the company? And how do you kind of see that evolving over the next [ quarter ]?

So should I take the question now, Rocco? Or should we have questions come together and we aggregate them and answer later? Rocco, what's your call?

Yes, sir, you can answer that individual question, and then we'll move to the next one.

Mr. Minocha, thank you very much for your question. And as you rightly said, the business is slightly complicated. There are different divisions of the business and the dynamics are very, very different. So the business of iFile, which is the Collect segment, is driven by RFPs. So the challenge is to get in front of regulators and tell them that we are there and we will ensure that the RFPs come to us. So we build an RFP. So the whole challenge is get in front of regulators, as many regulators as we can and get to know where the regulators are at any point in time and then bid on their RFPs. We win some, we lose some, that's how it is. There, the sales process is basically about going to conferences, about knowing these people, catching more of them and presenting our credentials if they are willing to listen and take it forward. In the case of the Create segment of the business, in the case of GST, I will let Gautam answer the question. In the case of CARBON, I'll hand over the question to Deepta. Gautam, GST. So you have to tackle iDeal that we mentioned. So Gautam will handle iDeal as well as GST, and Deepta will handle CARBON.

So okay, so iDeal, again, is a mandate-driven opportunity where there's a mandate for banks to file to the Reserve Bank of India. So it's more of an inbound thing, automatically which comes in, and we have a near monopoly with iDeal with more than 855-odd financial institutions actually using the product. So it's more of an inbound thing, and there's little of sales and marketing that needs to be done. But on the GST business, it's a highly competitive market, the India, the SaaS landscape, the tax check landscape. So we have a sales team headed by our India sales head and regional sales managers in North, South, West, and they are aided by a marketing team and an inside sales, which is a part of the marketing, which actually helps generate leads. We participate in a lot of events, CFO evets, tax check events, seminars that's on the off-line mode. Online, we help build the whole mind share by conducting webinars on a fortnightly basis. There is the usual digital marketing, which is done by the team, ensuring a CEO, we rank amongst the top and we do some little bit amount of Google ad spend also. So that's the traditional sales and marketing approach that's being followed. And we -- the entire process is tracked through our CRM process. The whole 6-stage sales cycle of the moment a prospect is identified until the time closure is obtained, ensuring that a funnel is -- the funnel keeps going at every point of time. Anything specific which I've not covered? Then otherwise, I'm passing it on to Deepta.

Before Deepta comes on, one small thing that I must mention, Gautam seemed to indicate that iDeal thing is a monopoly and there is inbound. I want you to know that we don't get business because we are handling the RBI compliance platform. They are completely 2 different things. I want you to know that when iDeal was first launched, there was need for iDeal in the market. The first year, we had only 4 customers. Over time, the quality of our product has stood out. And people call us today not because we are working with RBI and compliance, but because we have a viable product. We have a great product, and we have the best product in the market. Even so, we do lose customers. Out of 120 customers in the country, we have 85. That's a good number, which is -- I mean I still keep asking the iDeal team as to why we don't have all the customers? Somewhere along the way, L1 and L2 works, and that's not really the procurement rules come in the way of us being able to sell to them. But I want you to know, even the iDeal is hard work. The inbound query comes in because people know that we handle RBI, but that's not why they give it to us. We still have to go out and make an effort and work hard to get the customer. So if Gautam, by mistake, gave you the impression that it comes on its own, it does not. It's still hard work. Over to Deepta for CARBON.

Sure. Thank you. So CARBON as well is enterprise SaaS. It's targeted at the international markets. So it is -- sales and marketing is always a challenge. And as we ramp up, of course, it's even more of a challenge. But the way we handle it is multiple prongs. One is we work with partners. So partners and channel partners is a big part of it. We also have direct customers. And the way we acquire is digital, digital acquisition outbound, inbound, lead generation. We participate in events. One of the big things for CARBON, which is targeted at the office of CFO, is references testimonials because it's all about trust and building the brand in markets like Europe and the U.S. So we work very hard on ensuring that we get customer testimonials on public platforms like Gartner, G2, Capterra, et cetera, and we build a lot through that public voice basically. We also got back case studies. We now do references. Now with this disclosure management, one of the things, of course, is since we have a set of existing customers, it becomes a natural target to go back to them to see whether we can upsell new modules, such as the disclosure management module. And we continue to look to acquire customers through a combination of on-site and digital. So as we speak right now, we have colleagues of ours in the U.S. participating in a host of events we have in Europe as well. So that's the way it is. That said, we are definitely looking to strengthen the sales and marketing infrastructure because we believe that's going to be key to scaling a property like CARBON in the markets, in the international markets over the coming years.

So if you see the items in the financial statement that we put out, 2 things will stand out. One is, of course, the marketing expenditure going through some INR 44 lakhs to INR 88 lakhs. And you will also see some increase in the traveling cost. The traveling cost is basically feet on the street, going and getting new kind of customers. So since -- of the 6,000-plus customers, we actually have all but 1,000 were acquired one at a time. The 1,000 that came, came through a partner who basically came with a huge bulk -- quite number of customers. So what we're now trying to do is to be able to get in front of every customer directly and be visible to every customer. For large numbers, then we are; for a few, we are not. So we're trying to do that. iDeal customers are not so many. So you can -- so even if you cut out 100-odd customers for iDeal, still you have 5,000-odd customers who are positioned customers of iDeal. So the challenge is to basically get them to experience other components of DM and leverage the relationship that we have, where we use CARBON for compliance filings to take them beyond that. And that's what Deepta was saying that customer's testimonial is a huge -- I mean, nothing like a happy customer to be able to convince people. And when I say happy customer, these are customers who we -- so one of the key metrics for which we -- where we evaluate the marketing team is whether they can get the customer to come and be vocal out it, can the customer go out and say things about us? It doesn't matter whether the customer says great things or not so great things. There are customers who've not said great things. You will see it there. So I strongly recommend that you go to G2 and take a look at it. But when the customers -- even if the customer doesn't say anything great about us, at the end of the day, that gets us noticed. So our entire strategy has been being positioned in the market with a great product so that you are in the consideration set of everybody who wants to buy. Now just because you're in the consideration set, it doesn't mean it gives you automatic conversion. It basically means that you are in the consideration set. Some will convert, some will not convert. And one tremendous thing that actually happened recently with one company that came to us who converted to us, one of the big company, a multibillion-dollar company, and that basically told us that when it comes to a competitively priced product, even big companies do take up -- take notice as long as the other product boxes in terms of quality and reliability and integrity around ticked. So our approach is get the product out there, be as good as you can be, and that's actually helped us. Thank you, Mr. Minocha. I hope I have answered the question for you.

Yes. I mean that's really, really helpful. And my second question is on growth outlook. So I mean I just wanted to understand that, I mean, what you've delivered in H1, we had already indicated a higher order book and that has kind of [indiscernible]. But kind of do we see, on a short-term outlook, a very similar trajectory for H2 as well in terms of growth, especially because of mainly from the Collect division? Secondly, in the long term, in terms of growth drivers, just as top management, what are your thoughts in terms of what can be achieved maybe in the next 3 to 5 years going forward? Yes, that's the second question.

Usually, we don't answer these questions, but I'll give you a broad sense of where we're heading. We all live in optimism. We all live in the hope that something good will actually happen. But at the same time, we have to cut the cloth according to size. We have to look at how much money we have and act accordingly. I think we've done really well within the limited resources we actually have. We're able to attract people, but still not enough. We still need to assemble the team significantly. So I would be able to give you a much better answer to this if we had a budget to work with, the marketing budget to work with to grow. That has not happened. And once that happens, I think it will be -- the people -- there are only 2 kinds of people who's actually walking to an Armani showroom to shop: people without money knowing that they have no money and people with money who know they're going to buy something. We belong to the second -- to the first category. We have no money, so we're window shoppers. So we have plans, we keep drawing up plans, we keep thinking of what to do. We keep playing games with each other literally with imaginary money. We know that given that we have 6,000-plus customers and of which about 5,000 are potential customers of DM, given that we have this company that we've now partnered with in Canada, which is basically has a footprint over U.S. and Europe with almost 2,000 customers, I think if we have a good product, a product for which there is a demand in the market and a product that's benchmarked against the best, we should do well. Does it necessarily mean that we can grow faster than the 20%, 25%? Absolutely, if we had the money. But we don't have the money at this point in time. So we have to be very careful in terms of how we spend the money. We still live on literally physical outreach with a little bit of marketing support to get our names out there, but that's where we are. So that's what where we are in the long run. And if you have any creative ideas in terms of how we can get the money in to be able to do the marketing, I think that will really help us significantly. I'll let Balu take this question. I hope I've taken the easier part. Balu, you'll have the more difficult part.

I don't have much to add. I think you had said it all. I just want to say that the short-term trajectory is not looking bad. I'll leave it at that.

See, the newspaper called The Hindu in Tamil Nadu, where the joke is that they check that the person is dead before they write an obituary and they check the obituary with him. So Balu belongs to that category. So please bear with him. I'm the sales guy in the company, Balu is the finance guy in the company. So you can imagine what profile we come with. Mr. Minocha, sorry, I can't be more precise, but that's how we run the company.

And our next question today comes from Rohith Potti who is an individual investor.

And when Rohith comes, we all tremble at our knees.

Congrats on the very nice set of numbers. It's nice to see Collect cleaning up. So I mean, before the numbers, sir, could you elaborate on the Board meeting yesterday? So there was -- in the agenda, we had the authorized share capital increase as well as ESOP. Could we speak about that?

Sure, we can. The Board meeting served biscuits and tea. And no, what happened was very simple. See, the last time we had ESOP was before the IPO. Now at that time, the considerations were very different. And the considerations this time are very, very different. So why did we want an ESOP scheme in place? We want an ESOP scheme in place because we are trying to attract new people. And one thing that happened is that most people that we want to hire have priced themselves beyond our range on a cash basis. Unless we do a combination of cash and ESOP, we will not be able to attract people. And we've had significant resistance from people who want to join -- who are willing to join us for the business that we are in. But again, reluctance on account of our inability to pay the compensation [ in an instant ]. So we were looking at the ESOP for 2 things: one is for the existing people; and one for the people that we're going to bring in. So when we took the matter to the Board, the Board asked us a lot of questions and wanted a lot more information than what we had at the Board meeting. So they basically said, why don't you think -- so we have an ESOP scheme, everything was there. But we also wanted to know how the allocation is going to happen, on what metrics it's going to happen. And since this is the first time we're actually doing ESOP after going IPO, those factors actually came in. And more importantly, the ESOP was going to happen at market price, no discount, mind you. So they basically asked very, very fundamental questions on that and wanted more information. So at that point in time, we basically said, why don't we defer a discussion on the ESOP for now on the understanding that we will come back to the Board very soon with the scheme so that we can actually make it happen. The authorized capital increase was also linked to the ESOP for the simple reason that since we are in the market raising money, if we add the money raise and the ESOP, we would be above the operating capital. So we basically said, let's use this opportunity. So when -- if and when we get investors to come and we would have to come to the Board, come to the shareholders anyway to get their approval. But until such time as it happened, we said let's save the authorized capital to be ready for a situation where investors come to invest in the company. So that was the whole thing. So the authorized capital increase and the ESOP are linked together. Since ESOP was deferred, that also got deferred because we also -- we have connected the 2 things. We are increasing the authorized capital to also allow for the ESOP. Technically, we didn't need to do that because the current situation is ESOP would have allowed it, but that was not the case. We've connected with -- we've linked the ESOP with this thing, and that's how the 2 got jumbled up, if you want to call it that.

Understood. Sir, I mean, since you spoke about the capital, could you speak about that? I mean, what are we thinking there?

I think the more appropriate question is, what are investors thinking? Because what I'm thinking -- I mean what I'm thinking is less relevant than what investors are thinking. It comes back to the same thing. Yes, I'm mindful of the fact that the market has re-rated the company and there's been some movement upwards in terms of price. You also know that the promoters don't have the money to do a rights issue. We've also had chats in the past in these meetings where people have said the promoters don't put money into rights issues. It's a bad signal. They don't have money for that, which is why the rights issue is a nonstarter. Now if we have to raise money, we will not raise money at these valuations. I think the valuation is significantly better than what -- than when I said this about 6 months ago or 1 year ago. I think if the market realizes the value in the company and re-rates it, I think we would be ready to go ahead. Investors, we've been talking to, we've been knocking on doors. People are interested [Foreign Language] everybody wants the company, but we're not going to see [Foreign Language]. That's the most important thing. So given that we are in a situation where 20% growth is more or less guaranteed quarter after quarter after quarter, if you have to be resigned to that, we have to be resigned to that. But at the same time, it's not being resigned to that, we're still trying to go out and make it happen. So if -- Rohith, if you want to write out a check for INR 100 crores, I'll be outside your door tomorrow.

That's a very nice picture, sir.

No, I'm not laughing. Rohith, I'm not laughing.

No, I'm just imagining me writing out a check for INR 100 crores. I think I'll be in the jail if I do that.

No, don't be in the jail because all your money is legit and basically you will share with Ankit Minocha because he is also very interested in coming, I hope.

So I just wanted to touch on Collect a little more. Like last quarter, in the AGM, you spoke -- and in the annual report, we spoke about having a INR 120 crore order book. Could we speak about over what -- I mean, I'm guessing this order book is not to be executed within 1 year. So what is the tenure of this order book?

That's over to Balu. Balu will answer the question. All the easy questions, I take. The difficult questions, Balu takes.

So this INR 120 crore order book, of course, it splits over a couple of years. So this is also linked to one large implementation order that we have, which is from the South African Reserve Bank, which we mentioned in the previous call as well. So we expect some more orders to come from them, maybe not of this magnitude, but there is overall envelope of work, which we're executing there. So my sense is this particular INR 120 crore, which we currently talked about in the AGM, I think it has been expanded. And even after executing some amount of work, we still are at about INR 120 crores plus at this point of time. And we would feel that this could be executed over a period of 18 to 24 months.

Okay. So just to clarify, Balu sir, we have begun the execution there already, and that is contributing to the Collect growth. And we expect the remaining implementation of INR 120-odd crores to happen over a span of -- so today, it's November 2023, we expect to complete it by December 2025, is that right?

Yes, let me just clarify this. When we say INR 120 crores, it is just not the Collect part alone, it is a combination of what is there in Collect, of course, of which a good quality has come from the new orders, and plus what is currently there from our recurring revenues, which is anyway coming year after year, which is now, I would say, between INR 55 crores to INR 60 crores.

Sir, I understand, sir. So it's a mix of both revenues that -- the recurring revenue of INR 55 crore, INR 56 crores, which we'll execute on an annual basis plus whatever. So it's very -- I mean, so there is a little bit of a confusion there, Balu sir. The reason I'm asking is, you have this Collect segment revenue, which is going to be executed over 2 years. And then we have the Create segment, which is an annual recurring of INR 55 crores of every year. So I mean you have...

Collect also is a recurring revenue element. Collect, we have customers who give us revenues on it. So Collect also a recurring element. And when there's a new implementation, new orders coming in, the Collect nonrecurring part really goes up. So Rohith, the Collect has the AMC and the new orders.

Understood. Fair enough, sir. Fair enough. And just a follow-up. I mean, so I just want -- just a suggestion on this order book because, see, the recurring revenue that we've had overall within the company is INR 55 crores, INR 56 crores. Now if I take that time period of 2 years from here, technically the order book further from the recurring revenues is INR 110 crores, INR 120 crores by itself, right, because we are expecting that revenue to repeat every year. And then we have this implementation, which is a onetime revenue, which is to be done over a [ 2-year ] period. So this -- I mean, it creates a little bit of a confusion because I'm guessing the order book that they're referring to has a recurring revenue for this year and then the implementation revenue for the next 2 years. So just a thought there if you can bifurcate it a little better, that might help to understand the order book better.

I understand. The order book has 2 components: one is which is recurring; and one which is onetime. So we haven't segregated in that manner. We could do that, but that is giving too much information.

No, I understand, but it creates confusion because the recurring part is only for this financial year, while the nonrecurring part is for the next 2 years. So if the whole order book is given for the same time frame, then I would guess the number would be higher by INR 50 crores, INR 60 crores, INR 80 crores, probably.

I agree. So Rohith, one of the motivations when it comes to sharing information is also confuse the competition. So very often, what we need to say, Rohith, when there is -- there are people taking notice of what we're actually doing. And one of the big struggles that we have as managers of the company is to figure out how much information can actually end up compromising us with the competition. See, it's one thing to give the information to investors, that's fine. But there are also people who come on the call who basically are representing the competition who basically want the information for their own ends. And that hurts us at times.

Okay. I understand, sir. So I hope -- I mean, please continue giving more confusing information in that case. The next question I have, on Collect, again, sir, I believe the COVID has sort of created a delay in a lot of the mandates and the government is focusing on recovering from COVID. We had talked about this in the past. Since then, I guess, we have won 2, 3 deals, the South Africa deal is the big one. Sorry, on South Africa, Balu sir, one confirmation is that in addition to the INR 120 crores mentioned, you said you have -- is there more that is potentially to be added or all the adding has already been done? Or do you think more implementation component or some other components can come online here?

Okay. Now this INR 120 crores, it's not South Africa. The INR 120 crores is the companies which we have put up. Okay, let me just make sure that we understood that. But compared to where we were in the last conference call, contractually, we have progressed in the South African deal. So I would say some further elements of execution requirements are coming.

Okay. So that would mean we'll be adding to this order book in that, is that, right?

Correct, if you look at that particular bucket.

Okay. Perfect. And on Collect, could you speak about that a little more because in the -- have more RFP started coming? Are countries opening up to implement more of the -- if you have implementation?

The answer is yes, there are countries which are actually coming in that are more on the path of moving towards a bigger XBRL implementation. At the same time, some of them are not necessarily wanting to work with us for a number of reasons. There's a language barrier. So French Africa, Morocco had an RFP some time ago where, I think, we may end up losing it the way it looks at this point in time. And so there are markets where there are more and more RFPs coming out. What has also happened, Rohith, and this is an important thing, I think somewhere along, Rohith, global recession has also affected the abilities of companies to spend. So while we point out to them that moving towards the electronic disclosure platform and improved regulatory oversight can actually help them save money, in the short run, it actually cost them money. So many countries are actually looking for funding to be able to do this. So we know a couple of cases where the World Bank has stepped in, we know a couple of cases where [ D-Phil ] have stepped in.

ADB.

Sorry?

ADB.

We've also found a couple of cases where ADB has stepped in. So for example, ADB is willing to fund the Philippines, but Philippines has a bigger priority in terms of implementation. Today, for example, Egypt wants to go in the direction in certain areas, but Egypt, given that they are currently negotiating an IMF loan, that's top priority for them. So there are -- I think the global recession is actually also affecting countries' ability or willingness to actually move towards electronic disclosure among the regulators. I mean I never thought a day would come when a [Foreign Language] company like IRIS would actually be affected by global issues, but we are affected by global issues and we see this every day. So I mean -- so I think while COVID certainly has -- after COVID, people have actually woken up and started doing new things, the fact also remains that COVID has taken a toll on countries' finances. So for example, Bangladesh took 2 steps forward and 1 step backward -- 3 steps backwards. So there are green shoots, but at the same time, they are not necessarily sufficiently long for us to get hugely excited. We are comfortable. It's okay. I mean itself works well. So what we are also trying to do in the same context is to try and revisit old customers and see whether they can do upgrade, they can do new stuff, they can move to incorporate new technology. Ultimately, what's the objective? The objective is given where we are today, can we keep growing at 20-plus percent every year going forward? And that will continue.

Understood. On the -- following up from the previous participant on sales. So we have appointed Mr. Thomas as a CTO for the company. So does it make sense for us -- or how do you think of having a sales officer? Is it difficult because we have different segments catering to different institutions?

Absolutely. I think having one common sales officer is difficult, very, very different. But we are trying our level best to get the right set of people. That's why the ESOP was very, very critical, but it will happen soon. So we're not terribly concerned about it. It will happen soon. And we are not going away, the world is not going way, until the world -- unless, of course, the world comes to an end, but which is unlikely the way it looks right now. So we are looking at having a sales team where we're recruiting people, but recruitment has not stopped. Our marketing team is significantly strengthened. So I'll ask Deepta to share with you the nature of the work being done by the marketing team and how they're actually working out. Deepta, about CARBON -- because CARBON is a big driver of growth, and that's where the marketing team is doing a huge amount of work, CARBON as well as GST.

Sure. So Rohith, as we mentioned -- like we mentioned kind of even earlier, I think both CARBON and GST enterprise SaaS, there's a lot of like digital in the marketing side, right? So there's kind of webinars that is outbound, inbound. We keep trying to strengthen the way we work, kind of organically as well, trying to grow our presence. So that's kind of one part of it. The other part is physical, which is events. So we try to participate in kind of more and more events. So there's definitely an increased spend on that front. Since CARBON is very international-oriented, let's put it like that, there's a lot of conferences or events that we go for in Europe and the U.S. And then around that, we try to do kind of like a whole series of meetings as well. And like I already mentioned, we also try to do consciously kind of customer success stories, customer testimonials as much as customer publicity and customer references as possible, makes a huge difference. I think it's probably the same theme that we try both across CARBON and GST. That said, like Swaminathan already said, we are certainly looking to see how to strengthen the sales infrastructure as well because we do believe that, that can really help us unlock far more on the base that we have built.

Absolutely. I'll also add to that, Rohith. For example recently, SEBI said that you have to report related party transactions, and that becomes an add-on to what we're already doing. So there are adjacent opportunities in terms of products, which also -- where again there are customers inside. So the people working with customers and delivery are also taking ownership for revenues. So I think that's a very, very powerful sign. So there are people who will be working with the customer or working with a bunch of customers in MCA filings or other filings who are actually now engaging with customers and saying, you know what, we now have a related party transaction module, so do you want start using that? So there are adjacent opportunities that are actually coming. And I think the growth in digital reporting is what we are driving. And the fact that we have so many customers already on board, whether it's GST or MCA, gives us huge confidence in India that things will actually improve and go further. So that's really what the growth driver is currently. If we had the money, we will be even more aggressive, and we'll do much, much more.

And following up on the great customer feedback that we received for the first filing we did with the energy company in U.S. How difficult or easy we could transition such a company? Like since we are doing FERC for them, so how easy is it to convince them to do an SEC filing with us assuming they are working with the competitor?

See, the thing to understand is that the energy compliance actually happens through a different department of the company, and the SEC filing is from the CFO's office. They are 2 different sets people. So is it possible to take the linkage from -- take a link from one and go to the other? I think there's an audience. Will it necessarily translate into something where they tie up pretty well for SEC? I think it's quite possible, but it's not as easy as it seems. That's one. But ultimately, I think it's a lot easier than Maxwell scoring all those runs today, so -- the other day. So I think it's still much easier than that. So -- but I'll let Deepta take the question. I know Deepta [ is for Manchester ].

So pretty much, yes, I do. So Rohith, it is -- I mean it's not like a cinch. It's not that just because we've got an FERC customer, we can just automatically pull them into SEC because the reporting themes are different and the -- and sometimes they find that, like, let's say, CARBON for FERC has turned out really, really well for them compared with what they were using earlier. And so they have consciously decided to come with us only for the FERC part. Having said that, there are 2 things that we are seeing kind of play out. One is because we already have access to those customers and because we are already empaneled with them, so to say, so many of these are large energy companies that have these contracting processes. Since they are part of that and we've started showing some of them our, obviously, our disclosure management solution as well, some of them seem to be interested in evaluating and taking a look at that. So the entry is there. It's like we've got a foot in the door, let's put it like that. It's not that the deal is done, but we have a foot in the door. So that's obviously a space that we're trying to kind of let it and see how we can get in to test us -- test about -- test up or do test drives, et cetera. We've got some good -- among the testimonials, we've got one large energy company, for example, that has named one of our largest competitor and basically said, he found IRIS CARBON was far better, far more intuitive. So we try to use that in our conversations basically. But it doesn't mean that people just switch to us simply because they're a FERC customer.

So Deepta, just to look at things, it also doesn't mean that we have them in the clinch.

Sir, next is, I just wanted to get a follow-up on the other mandates that we were excited about, like the [ building ] opportunity, the expanded FERC customer base and the ESG mandate in ESMA. So is there any development here? And sort of an add-on here is we -- so when the Collect segment is firing well, I believe the Create segment is dependent on mandate, at least until the disclosure mandate has been filed. So how do we see growth in Create, which over the last 2, 3 quarters has been relatively subdued as compared to its really strong past?

I think the ability to get non-mandate-related customers will be hampered by the money, probably will give money, number one. Number two, on the ESG front, I think the mandate has been going quite slowly. I don't see any great urgency on the part of either regulators in most countries to basically implement it right away. So there are indicators that it might pick up pace soon. I don't know to what extent the global slowdown has an impact on these regulators and their behavior. And I'll let Balu take the question. Balu, you want to...

ESG opportunity is there for sure, but there are talks going from the market that it might get postponed by perhaps 1 year or so. Of course, the final word is still not out. That's what we hear. But the January '24 starting when you need to submit ESG returns in Europe, people might get some further leeway, and that's what we hear. Having said that, there are companies who are our customers who are looking at what should they be doing with the ESG reports. So we are planning to get -- start having a dialogue with these customers from the next year -- early next year onwards. So that is certainly there. Outside that, where you're seeing -- in the U.S., there was a lot of expectation that the ESG reporting requirement from the SEC, and that is the big elephant in the room because almost all the large market cap companies from the U.S., that has been pushed back maybe by another 6 months or so. So that is another development that has happened in the ESG area. Outside that, from U.S. state reporting, which is supposed to go to national -- I mean, supposed to go to machine language ready format, there are -- I think there is surely some movement. FDTA, that is the Act. So that is something which we expect to gather some pace in the next couple of years.

Also iDeal will be kicking off in a few months.

iDeal right now, India and one more country where we are talking, excluding South Africa.

Sure. So one more thing that we're trying to do, Rohith, is trying to see whether we can monetize the data side, which -- so can we create a significant traction on the consumer side? That's also something we're pursuing where we have been talking to various people and trying to see -- trying to push the products. I think the monetization is still some time away, but we are optimistic that something can happen next year.

And our next question comes from Milan Shah with Urmil Research Consultancy.

Sir, my very great congratulation for a great set of numbers, and happy Diwali. Sir, my question is company is going to develop a development center in Surat. So it is for a tactical point of view or customer point of view?

There are no customers in Surat, though I'm hoping that my colleagues will actually present me with a diamond, which they have not done so far. It's more -- see, we have a bunch of colleagues who are based in Bombay, who are from Surat. During COVID time, they wanted to go back to Surat. And therefore, we used that opportunity to basically give them the freedom to develop a center in Surat. They could get some really good people. So it's -- so the word you used is tactical, yes, I would call that's tactical, but it's long-term tactical. It's not a short-term opportunistic thing. We now have -- so I'll let Thomas take you through the plant in Surat. Thomas, how many people do we have? And what...

See, currently -- Milan, currently in Surat, we have around 35-plus people. All of them are actually -- they're from development. They are actually developing the product. There are 2 of the products which actually gets developed there: one is the CARBON and the GST product. Having said that, that's kind of certified, they are well engaged with the newer technologies and the newer things which actually is happening there. Also we have found that there are a lot of colleges in and around of Surat, where we can get very good talent, which is actually untapped. So we are actually tapping into that area, and that's really now getting the cream from those colleges and that way they're now developing the tool. We should actually get around like now 50 people by end of this year actually. So that center would have a much larger set of people. And this -- that center will take a lot of responsibilities on developing and creating the product lines and the functionalities over there.

Okay. And sir, I'm attending many conf calls. But Swaminathan sir, in your key explanation for companies and products is very detailed and satisfactory. And my question, what is the percentage of exports and domestic, just to be certain?

So 70-30: 70% export, 30% domestic.

Okay. Sir, can you plan any fundraising for UIC or rights issues? Any planning since you are talking about shortfall of money for marketing guys. And our company is doing excellent because of your credentials. And we are thinking that it has a good platform for us.

[Foreign Language] we will take the money. The point is we are in the market for money. But at the same time, [Foreign Language] we need a fair valuation of the company in the marketplace. [Foreign Language] we are very confident of the growth of the company. We are very confident as to where we are headed. So we are trying -- in terms of rights issue, today, for example, the promoters don't have the money to subscribe to rights. I mean I've not taken salary for so long. Finally, my salary, they're all cleared. But the salary which we get is not so big that we will subscribe to rights. So we don't have the money for subscribing to rights. So rights is ruled out. So it has to be something where we can do some kind of a private placement, preferential placement [Foreign Language]. We are talking to people...

And you people are very competent. So you -- when venture capitals are investing so much money in neglected companies and right now when your company is doing excellent in all the fronts, so you may get more money than your valuation.

[Foreign Language]

[Foreign Language] I didn't see in any other companies.

Sure. Sir, people come to us and basically say, why don't you trade in the market? We don't trade in the market. We're not going to trade in the market. [Foreign Language] So some of these things don't go down well with investors. [Foreign Language].

[Foreign Language] in future like Infosys. Infosys, they are a small company in the past; but in 25 years, Infosys is big. So I wish our company are going also to be a big thing.

[Foreign Language]

Surat, because I'm living in Surat. So I will participate -- ask for Surat center development.

[Foreign Language]

Sure, sure, sir. Can you send me our office address?

[Foreign Language]. Rocco, over to you.

That concludes our question-and-answer session. I'd like to hand it back over to the management team for closing remarks.

Thank you very much. And I think I'll kick back to the question. Ankit Minocha.

This concludes the question-and-answer session...

One sec, Rocco, we have Ankit Minocha who wants to ask a question.

I see that. I will join them up now. Apologies. Please proceed with your question, Ankit.

My question was linked to the disclosure management tool that you're working on. Any indications on what are the kind of -- what's the kind of sales potential that we're looking at and what's the kind of business potential we're looking at presently?

Ankit, I couldn't hear the question at all. There's a lot of static on the call. And there was also -- it's almost like you are in a wind tunnel. So can you just repeat it, please?

Sorry, is this better?

Hugely, like 5,000% better than the previous one.

About the disclosure management software, I mean, how far along are we in terms of business for that in terms of are we just starting? And where do you see this -- like, is this like a very small percentage of our business, say, in the next 2 or 3 years? Or do you see the significant scaling up?

I think you hit the nail on the head. Disclosure management is going to be the mainstay of our business going forward. This is where our biggest growth is going to come from. Ultimately, companies want to benefit from digital reporting. Companies want to find an integrated filing platform. Companies want to go digital, regulators want to go digital. And what we will be able to do by combining Collect and Create will actually come home to roost in a very positive sense, going forward, the DM solutions we actually have. And as you rightly said, I mean, now that we have about 6,000-plus customers, of whom at least 5,000 could be potential customers. And then we have partners that we now have who have 2,000 customers in the bag. We're now being approached by partners who are saying, can you do exclusive deal with us for disclosure management? And we said no. There are partners who come and said, will you do a white label agreement for disclosure management? We said no. It's going to be -- initially, the fact that we have about 5,000, 6,000 people beginning to use it, I think it's the biggest sign for us, it's a hugely increasing sign. So we would actually -- which is why if you notice one thing, the DM product is also for IRIS CARBON because it actually sits on the disclosure platform that we have for XBRL reporting. So we're starting with a nice customer base. It's a question of how many more modules we can sell them, how many more things we can sell them on top of that. So very, very optimistic. But -- and that strategy really works well because since customers have experienced it, they will be able to appreciate the ease of using the solution for all the other reporting requirements. And that's the foundation of our strategy for growing the DM market.

Right, right. And if I look at disclosure management, that's the SaaS piece of it. There's obviously the other part, Creator also, which is a SaaS piece of it. What percentage of your revenues would you say come from SaaS?

What's the number, Balu? Somebody is furiously punching on the calculator to get the number out.

Yes, I think it will be about 55% to 60%.

Ankit, you heard that? 55% to 60%.

55% to 60% is SaaS revenue, is it, of the total revenue?

Correct. So the repeat revenue is much higher, but this is pure software-as-a-service revenues. Rocco, take it away.

This concludes the question-and-answer session. So I'd like to turn it back over to you for closing remarks.

Well, I think we have nothing much to say. I want to thank everybody who actually joined the call. Thank you very, very much. I think we had a record turnout, huge. I -- as I started by saying that when you see such a huge turn, it actually scares you. We -- I think we're on a good wicket. I think we have the foundation that's been laid. The challenges are predominantly to get the right people in. We will come back to you with the ESOP proposal very soon, and that will again catapult the company into the next round, which will be able to attract much, much more experienced talent than we have now. Much of the senior talent that we have here in the company have grown with the company. Sometimes it's important to get people from outside for a different perspective, and we are in the process of doing that. I will continue to count on your support at all times, and we will continue to be transparent to the fullest extent. Please note I did not say to the fullest extent possible, to the fullest extent, and let the word go out that we are a transparent company. We are a well-governed company, where the directors of the company stand up and do what is right for the shareholders and do their job. So 3 cheers to our independent directors for what they did yesterday by asking us to defer it, which we did. And that's the kind of company we want to be part of because ultimately, all of us also are -- while we may be managers, we're also shareholders, and we want to ensure that value accrues to all of us as well just as it accrues to you. On that note, thank you very much for joining. And until we have the next call that's going to happen in 6 months' time, thank you very much. Bye-bye now.

Thank you. This concludes today's conference call. On behalf of IRIS Business Services Limited, we thank you for joining us, and you may now disconnect your lines.