Protean eGov Technologies Limited (544021) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Protean eGovernance Technologies Limited Q1 FY '25 Earnings Conference Call. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Ms. Pushpa Mani, Head Investor Relations of Protean e-Governance Technologies Limited. Thank you, and over to you, ma'am.

Thanks, Sejal. Good evening, everyone. We welcome you all to the quarter 1 FY '25 results discussion. You must have received the results and investor presentation of the company, which is available on BSE as well as on the company's website. As usual, we will start the forum with the opening remarks by our leadership team. We will then open the floor for your questions. Should you have any queries that remain unanswered during this conference call, please feel free to reach out to us. Management on this call would be represented by Mr. Suresh Sethi, Managing Director and Chief Executive Officer; Mr. Jayesh Sule, Whole Time Director; and myself, Ms. Pushpa Mani, Head, Investor Relations. Before we begin, I would like to mention that some of the statements in today's discussion may be forward looking in nature, and we believe that the expectations contained in these statements are reasonable. However, these statements involve a number of risks and uncertainties that may lead to different results. With this, I would now invite our MD, Mr. Suresh Sethi to give opening remarks. Thank you, and over to you, sir.

Thank you, Pushpa. Good evening, everyone, for joining us for the Q1 FY '25 Earnings Call of Protean eGov Technologies Limited. We are grateful for your continued support and interest. I'll start by talking about the financial performance during the first quarter of this fiscal year. The revenue from operations has decreased by 11% year-on-year. This is largely due to the fact that there was a degrowth on the overall issuance of PAN cards across the industry. And this, in turn, is attributable to the election activity during the first quarter of this year. Despite that, the company witnessed significant gain in market share. Within the PAN business, our market share improved from 50% in quarter 1 FY '24 to 54% in quarter 1 FY '25. This largely arrested the degrowth impact coming out of the overall industry slowdown. The total number of PAN cards issued by Protean in quarter 1 FY '25 stood at 1 crore, and this was equally split between online and off-line PAN card issuance. The segment, we believe will continue to see momentum in the coming quarters on account of strong central and state government focus on introduction and saturation of various government initiatives and welfare schemes. Further, India's young demographic continues to add nearly 12 million new workforce entrants every year. which will further lead to continued demand for new PAN issuances. Along with the tax business, our other businesses, the pension services business posted a healthy double-digit growth of 13% year-on-year. During the quarter, 2.25 million new subscribers were onboarded for Atal Pension Yojana, registering a growth of almost 25% year-on-year. We also added 0.29 million new subscribers for NPS. This was a growth of 21% year-on-year. Also during the quarter, 760 new corporates were onboarded. The pension sector thrust was also received from the current financial budget. As we saw in the budget, there was a proposal to include minors into the NPS scheme. This significantly widened the NPS coverage and expanded the market to approximately 40 crores minors coming into the ecosystem. This makes NPS a more inclusive life-cycle instrument, promoting savings from an early stage. There was another initiative called out during the budget wherein the NPS contribution by employers for private sector employ [Audio Gap] 40% from 10% to 14%, thus making it a much more lucrative instrument for saving. These developments again clearly show the strong intent of the government in driving the pension penetration in the country. As stated earlier, we continue to maintain 100% market share under the Atal Pension Yojana, the flagship scheme of the government for the economically weaker section of the society. Given the nascent stage of the pension industry in India and the strong support provided by the government, we remain very optimistic about the future growth in this line of business. In terms of our Identity Services business. Again, there was a significant thrust from the finance budget as we could clearly see that this business is more aligned with our entire digitization thrust across the country. And it's towards making digital payments and enabling digital lending a big opportunity. As a result, we saw a significant double-digit growth also in this line of business. There was a year-on-year growth of almost 27% coming for this business. And we see, again, along with India's digitization story, this continues to become a very strong vector of growth for us going forward. Coming to the new businesses. Aligned with India's visionary DPI framework built on open standards and protocols, protean continues to expand its multi-sectoral reach towards e-commerce and transport coming under the vertical of ONDC; education and skilling coming under ONEST, which is online network for education, skill and transformation; agriculture and health. Over the last few years, the company has accelerated investments in people, products and technology and built centers of excellence in open source and open standards tech stacks contributing to multi-sector, ODEs at infrastructure and innovation level. During the quarter, we delivered several groundbreaking projects of national importance and launched a series of new products committed to drive economic empowerment. Let me start by first talking about the agri stack. The agri stack establishes a robust framework for seamless data exchange between farmers, government bodies and private entities. This stack is being created as a DPI, a digital public infrastructure, which is designed to revolutionize the data management and information sharing within the agri sector, leading to enablement of multiple use cases starting from agri lending to agri marketplaces to insurance and advisory. Agri being the primarily a state subject in India, this also means that data will reside in states in disparate formats and structures. By providing a DPI approach to it, it will empower stakeholders across the agricultural ecosystem to make informed decisions and optimize agricultural practices. Again, as we saw the finance budget reflected a very strong government intent and continued support for creation of DPIs. There was a clear call out on multiple sectors of the economy, ranging from e-commerce, agri, education and skilling health, law and justice and logistics. There was equally strong focus on creation of DPI apps and enablement of various MSME services, including credit leveraging the data DPI. With regard to agriculture callouts on land record digitization, creation of crop registries and issuance of Bhu-Aadhaar identity linked to land holding. So all these initiatives, therefore, become very convergent with the thrust that the company has in the area of building and providing and contributing for digital public infrastructure. Along with agri stack, during the course of the last quarter, we also launched Protean X, which is supporting digitally-verifiable credentials. Just like we have verifiable identity, we are talking about now verifiable credentials, which takes it to the next level. This is a future-ready solution, enabling individuals and organizations to create, verify and store credentials using blockchain-based technology. Clearly, over here, we are looking at use cases, whether it is with regard to sharing your information in the form of certificates, sharing your information in terms of your land records in the agri stack. As long as you have verifiable data, you are able to secure and consume services using the digital public infrastructure. So Protean X provides a very important linkage in creating a verifiable credential DPI, which will work across multiple sectors of the economy. Along with Protean X, we also launched eSign Pro. The aim was again to strengthen and enhance one of the most critical DPIs, which supported digital signature and stamping products. It is again designed to cater to multiple sectors of the economy. This looks at sectors like BFSI, real estate, health care, education and enables you to digitize documents like customer onboarding, legal agreements, student certificates and records at a fraction of the cost. It will enable creation of paperless journeys, and we anticipate a widespread adoption of eSign Pro. Our other new business verticals in the space of cloud and info sec, data stack and international business, while at a nascent stage, are also demonstrating early wins and promising growth. Our balance sheet continues to remain strong with cash and cash equivalents, including marketable securities of more than INR 700 crores as on quarter 1 -- end of quarter 1 FY '25 and the company continues to maintain a zero debt status. To better utilize the cash on books and to maximize returns to our shareholders, we continue to also actively seek inorganic growth opportunities and specifically interested in businesses, which provide us the faster go-to-market and provide us with access to cutting-edge technologies and enable us to create more enabled and tech-ready stack for the various lines of businesses that we are in. We remain strongly optimistic on the digital India story and will continue to add value to enterprises, consumers and governments through our unique combination of tech and expertise in e-governance. With this, I would like to hand over to my colleague, Jayesh Sule, Whole Time Director and Chief Operating Officer of the company, for a detailed discussion on our operational performance. Jayesh, over to you.

Thank you, Suresh, and good evening, everybody, and thanks again, we welcome all of you to this earnings call. As highlighted by Suresh, highly-favorable tailwinds have emerged for us from the Union Budget '24-'25, and we are in the best position to embrace these developments and make the best use of our expertise into this space to support the digital transformation of India and develop digital public infrastructure across sectors. Moving on to our quarterly financial performance, consolidated revenue from operations for Q1 FY '25 stood at INR 197 crores, down 11% year-on-year mainly due to degrowth in tax services vertical by 28% on a year-on-year basis, while both pension services and identity services continue to grow by double digits with growth of 13% and 27%, respectively. PAN issuances degrew mainly due to election activity. However, the segment will continue to see momentum in the coming quarters on account of strong central and state government focus on introduction and implementation of various government initiatives and welfare schemes. Moreover, Protean also gained overall market share from 50% in Q1 of FY '24 to 54% in Q1 of FY '25. Our pension services and identity services are expected to see strong growth led by favorable government support and strong growth in overall digital economy of the country. Additionally, our new businesses continue to see early momentum with Protean delivering several groundbreaking projects of national importance, including multi-sector digital public infrastructure. Coming to our profitability. Adjusted EBITDA for Q1 FY '25 stood at INR 45 crores, with EBITDA margin of 21.1% versus 20.4% in Q1 of FY '24. PAT for the quarter stood at INR 21 crores with PAT margin of 9.8% versus 13.8% in Q1 of FY '24, a reduction of 404 basis points year-on-year, mainly due to INR 11 crores of provision for doubtful debt. Adjusting for the provisioning, PAT margin stood at 14.9% in Q1 FY '25, an improvement of 76 basis points year-on-year. As we have highlighted during our past quarterly calls, we are maintaining a provision for doubtful debts against our sovereign receivable from the tax department in line with our financial prudence policy. Post taking out this provision, the remaining exposure on account of this design are INR 17 crores, which if remains outstanding, would be due for provisioning in FY '26 as per our ECL policy. I'm happy to state that our balance sheet position continues to remain strong with cash and cash equivalents of more than INR 700 crores. We continue to maintain our debt-free status and are looking to accelerate our internal cost levers at a sustainable rate. We continue to maintain strong cash flows while I invest in people and tech to build highly-skilled team of full-stack engineers. Moving ahead, I am proud to state that we stand on a solid foundation to help drive the development of India's digital public infrastructure and pair that with a robust regulatory framework. Times ahead are really exciting for the company, and I thank each one of you for being a partner in India journey towards digital transformation. With that, I now open the floor for question-and-answer session. Thank you very much.

[Operator Instructions]. The first question is from the line of CA Garvit Goyal from Nvest Analytics Advisory LLP.

My first question is on the ONDC side. So just to understand the revenue model on ONDC in a better way, right now, we are doing approx 9 million transactions a month. and which is expected to grow at 20% to 30% CAGR, as you mentioned in the presentation, that means by next year, our annualized number should be around 50 crores transactions a year. So right now, we are not charging anything. But let's say, average transaction value will be INR 50 and we charge transaction charge of 0.5%, which means the total charges comes out to be INR 7.5 crores. So I have 2 questions on it. One is out of this INR 7.5 crores how much share will Protean get? And secondly, apart from these transaction charges, what is the stream of revenue from ONDC for Protean, sir? That's my first question, sir.

Sure. Thanks, Garvit. I know ONDC is a big area of interest for all of us. So I'll just give you a sense on the ONDC revenue model. So currently, we are providing the base technology at the DPI level, which is at the infrastructure level, where today, as a technology service provider, we power the entire ONDC network by providing the gateway services. This is basically the network on which all buy and sell transactions run or rather the discovery of the transactions happen. And we also provide the registry services which hold the records of the buyers and the sellers and the logistic players. So at an infrastructure level there is one revenue model. At this stage, our cost of infrastructure and whatever tech development we are doing, that is reimbursed by ONDC. But as we've been saying earlier also in line with any DPI, this will become self-sustaining. And over a period of time, it will move into a market model where it will be charged on a per transaction basis. So while I know that you've done an assumption of, say, a 50 basis point might be a sort of a network fee, we are assuming that around 8 to 10 basis points is something we can see coming from the network as a transactional charge moving forward. And we are benchmarking it with some of the other DPIs which are out there, but we'll naturally reach that point when there's a certain inflection point at which the market pricing will come into play. Currently, the same is being reimbursed by ONDC as an organization for our provision of services as a technology service provider. Other than that, comes the innovation layer, which again, falls into 2 categories: One, is at an extension service level where you are providing various adapter services, connect services, reconciliation and settlement platform, catalog as a service; The other side, is where you're providing buyer and supplier technology. These are applications provided to both the demand and the supply side. Now these are applications which are being provided underlying -- there's an underlying SaaS model in play. So you are largely looking at charging for a onetime fee for creation of the tech or the app and then you are looking at a transactional model for earning based on that. Now depending on whatever is the ecosystem charge being paid by the seller or the buyer application, a part of that will flow to the provider of the technology, which is again a SaaS model. So these are the 3 elements of monetization that we see in ONDC. At the infrastructure level, which is again transactional in nature and at the innovation level, split into extension services and demand and supply technology.

Understood, sir. And sir, any time line like when this scheme will start kicking into our top line?

So see, we are already being -- at the infrastructure level, as I said, we are already being reimbursed by ONDC for the services we provide. It is more about the model moving from being paid by the network facilitator to being paid by the network participants for usage of the network. On the other side, we've had a few customers who we have onboarded both on the demand side and the supply side. And likewise, we are also working to provide other extension services to the market. So those revenue streams are coming in. But naturally, at this stage, we are again looking at the adoption of the network and whatever we are doing in the -- to contribute towards that adoption. This is early stage at this stage, but we are already getting revenue on these lines of business.

Understood, sir. Sir, secondly, on our other verticals like government of India has also passed INR 1.5 lakh crores next year for employment skilling, and we are also working on one of the platforms called ONEST. So I want to understand what is the update on this decentralized network, where we are standing today? And what about the other key initiatives, like agri stack, et cetera. So when do you think these will come meaningfully to our top line?

So see, all these are today contributing elements for us into our revenues, and I'll just give you more a sense of the stage where we are in these verticals or in these sectors. When we look at education and skilling, as we've spoken earlier, the company has already invested and working in the space of education finance. We've been running -- for the last 7 to 8 years, we've been running education financing portals, one at the behest of the government, which is called Vidyalakshmi, where we provide education loans. And second is more scholarship ecosystem being created under the product offering of Vidyasaarathi. Now when we look at a DPI approach to it, that is where ONEST came in, when we decided to move these assets into discovery on an open network, just like ONDC. So you can come in through multiple apps, not just on our website, and you can likewise discover offers of loans or scholarships on an open network. So some of our assets, as such, we've already, in a way, made them discoverable on an open network, and we've had some early distribution of scholarships and all happening on the ONEST ecosystem. The other area, again, to add just like ONDC, we are also for ONEST, providing the infrastructure technology at the gateway and the registry level. And that is, again, something as you are aware, the ONEST ecosystem is now running on the ONDC rails only. So we again get reimbursed by the network facilitator over here. So we are already getting revenues coming at the infrastructure level for the education and skilling ecosystem. And we also have some revenues coming from the scholarship disbursement on the same. With regard to agri, as we've been saying earlier, we got the mandate from the central government to build the core agri stack largely the work done by us was in terms of building the protocols of data exchange between center and state, building the consent framework for sharing of data. And that is a work, which we were working and continue to work on. Now the agri stack is in a stage where almost 13 state governments are in the process of doing POC, the data exchange will be enabled and the multiple use cases, as we called out earlier, related to lending or related to insurance or advisory will start flowing through the agri stack. Again, for the agri stack, we have been reimbursed for the work we've done on the core agri stack, and we continue to see -- look forward to multiple use cases coming us -- for us to create more revenue pools coming out of the innovation layer on top.

[Operator Instructions] The next question is from the line of Apurva Sharma from BugleRock.

I just want -- I have a few questions and just one by one. Can you throw some light or color on the opportunity size for eSign Pro? And I'll add the next questions.

Yes. So, Apurva, eSign Pro is all about enabling a paperless journey. Your ability to sign a document digitally. And we are also under the eSign Pro documentation suite we are also offering e-stamping services. Now the market opportunity is that it can basically be playing a role in each and every account opening. Today, when you are opening an account and you have to submit a Form 60, 61, it can be digitally signed, so you can enable an end-to-end digital journey. Similarly, for any sort of loans, especially when you're talking about business loans for MSMEs or -- MSME again, is a focus area for the government, as called out during the budget also. So all these loans, which will get created where you have to do any sort of contract signing, the loan contract and you have to e-stamp it. So eSign Pro, will again be looking at that as a market opportunity. So in my mind, the entire ecosystem of digital onboarding, digital lending, account opening, both for the individual and the business sector is the complete ecosystem out there that is available to us with a product like eSign Pro. eSign Pro is something which, again, for us, is a vertical integration. As you are aware, we have a very strong focus on provision of foundational identity. We are the only company in the country today, which provides all 4 facets of it, from e-sign to e-KYC to e-authentication to online PAN validation, eSign Pro just comes atop that as a digital signature service, and we see a huge market opportunity in that.

So basically, because we provide the entire stack, you see traction on this eSign Pro maturing in some time? Or I mean, how do you see -- what is the time frame that we are looking at? I mean I'm not asking quarter-by-quarter, but just when do you see that?

So if I give you a sense at the foundational level, when we are providing eSign as a service to enable other entities to run, say, an application like eSign Pro, there we almost have a 70% market share. eSign Pro is an app layer built on top of eSign services. So which basically means any corporate can adopt it and they can digitally start signing their documentation. A bank can adopt it and make sure that the consumers can do an eSignPro-based signature on the loans or the account opening documentation they are submitting. So to us, it's a business which is already we have some customers, and it's going to be an immediate -- sort of immediate consumption, if you may. So it's not a time line in which we will be sort of looking at the market getting created. It is happening day in and day out. And as entities like especially the BFSI entities, they are looking at making paperless processes, this becomes a very core component of that.

The next question is from the line of Rohan Mandora from Equirus Securities.

Sir, just wanted to understand the DPI announcements that came in the budget, what would the potential revenue opportunity? And what kind of -- like you briefly touched upon the kind of project, but if you were to map into the potential revenue of certain incrementally, how should one look at that?

To put a number to it, Rohan, would be difficult. Largely see, what we are seeing is that as a thrust and intent from a government support point of view, the government in a manner almost called out quite a few lines of the business we are in. So there was a clear call out on digital commerce, on health, agriculture and education and skilling, 4 areas in which we are already contributing either at an innovation level or at an infrastructure level. The market size opportunity remains the same as we spoke about in each of the areas. When we look at ONDC, it is the digital commerce opportunity, the open finance opportunity. And today, retail penetration of digital commerce is somewhere in single digits, around 6% to 7%. If we look at some of the market data, it is a $55 billion market in the country today, which by projection is looking at building 5x up to almost $300 billion by 2030. So that is the sort of the opportunity. And with the strong government thrust also coming in supporting an open DPI like ONDC, it clearly means that we would see acceleration of support coming in that space. Agri again, as we all know, is a national subject, where clearly, the government is looking at enabling agri marketplaces, agri lending insurance. So that entire ecosystem, which is out there today as a market opportunity, but putting the revenue number to it would be difficult at this stage. So I think a lot of the statements by the government, but there might be some support coming in from the government either through policy or through central mandates or in the form of monetary support is going to accelerate the adoption in this space. That is the way we see it, but we are difficult -- we are not able to put a number to it as of now as we speak.

The next question is from the line of [ NGN Puranik ] from Enam Holdings.

I think the pension and the identity looks to be great opportunities. I want to understand which are your solutions and platforms, which can over the period of, say, 2, 3 years, be a 100 million transaction potential? And also if we can articulate the identity management solutions you have, which are the solutions there which can take you to the larger cycle scale?

So, [ Puranik ] from a pure numbers perspective, we are already into doing millions of transactions. Let me talk about pension. So annually, if we look at it, we have a good growth rate. So the numbers, if we look at it annually, quarter-on-quarter or year-on-year during the quarter of FY -- first quarter FY '25, we added 2.25 million new subscribers on Atal Pension Yojana and almost 0.29 million subscribers on NPS. So there are multiple number of transactions which happened in this space. And annually, if we look at it, these numbers clearly are strong numbers. So we almost add 1 crore plus new subscribers year-on-year, and it has been growing as we move from every year. This business, clearly, we see a huge headroom because the pension penetration in our country is hardly 6%, which compared to developed economies like the U.S. and all, where it stands anywhere above 70% to 80%. So there's a huge headroom over there. And if we again look at our economically-weaker section flagship scheme of the government in Atal Pension Yojana, today the total number of subscribers is somewhere around 5.5 crores. And if I look at a comparison, the Jan Dhan accounts in the country today are almost over 50 crores. So you see almost a 10x headroom to be able to grow and penetrate in that sector. Now the annual growth has been in -- sort of has been growing, which definitely year-on-year growth is there to talk about. Last year, again, from FY '23 to '24, there was a 24% growth and we already saw that in the first quarter of this year, within the quarter, there was a 25% growth year-on-year. So we see this as a strong area for growth. Coming to identity services, as I mentioned, our core businesses at the foundational identity levels are running on 4 verticals, which is online PAN validation. This is a line of business in which we, at times, do almost 1 crore transactions a day at peak times. Then we are e-KYC and e-Auth, which is account opening using Aadhaar and any transaction authentication using Aadhaar. And similarly, eSign. The numbers, again, in this space are running into crores when we look at even quarterly numbers. So our online PAN validation, which we did almost 76 crores transactions in the first quarter. Again, e-Sign, e-KYC between all of them, but again, another 20 crores, 25 crores transactions. So these numbers are already pretty large. And what we find is that there is significant quarter-on-quarter and year-on-year growth. Online PAN validation in the first quarter grew almost 11%, e-KYC grew a very strong 67% quarter-on-quarter -- year-on-year, and our Aadhaar authentication grew at almost 18%. So these are, again, areas which are growing very strongly. And on top of it, since you mentioned products. So at the foundational level, it is these 4 facets of identity. On top of it is where we have built our multiple products, which we call out under our data stack. So first for us was the launch of the API marketplace, which enables digital onboarding and lending which we call as rise with Protean, which we launched somewhere in third quarter last year. We spoke about Protean X is an attempt to provide verifiable credentials. So if you are taking a loan and you want to submit some document, can it be digitally verified, so you are again enabling a digital and a paperless journey. eSign Pro, again, we spoke about earlier is something where we are offering a complete end-to-end digitization of paperwork and workflow management in terms of movement of that paper during the process of maybe a loan provision or insurance or any of the other things we spoke about earlier. So that is the data stack or the product stack, which we are building on top of the foundational identity services, which is going to be having a B2B focus for us.

The next question is from the line of Dhruv Shah from Dalal & Broacha.

Sir, my first question is on international markets. So we've been quite hopeful for receiving at least one bid from the international market, but -- so what is taking so long? And is there any kind of delays from the respective government or is it from our end? So if you can throw some light over there.

So international, the areas that we have focused and we've been talking about it earlier also, our international focus is largely driven by taking India's DPI approach to enabling foundational identity, taxation, social security and welfare, the areas which we play in, in the country. That is what we are taking into international markets. So it's, in a way, a replication of the product capability that we've built over here and how do we take it to other countries. Over a period of time, we've naturally -- since we spoke last quarter, we've expanded our engagement with more countries. We are now engaged actively with 12 countries. And as far as opportunities are concerned, we are now in 18 active opportunities. And we've also been happy to report shortlisted in 2 bids. So most of these projects being at a national scale are in the form of government RFPs. They either are multilateral funding or they are being supported by the respective country governments and therefore, they follow an RFP process. So it is a long cycle time to an extent but we are hopeful of making some inroads in this shortly.

The next question is from the line of [ Mahek ] from Emkay Global.

So recently, you launched this new product eSign Pro. So I just wanted to know in terms of the customer acceptance. And secondly, could you give some color on the competition in this market? And my second question would be like the government has given a kind of a thrust with the introduction of new welfare schemes. So how do you see the PAN card issuance shaping up in terms of the channel mix? So currently, it is at 50-50 contributed by the online and off-line channels. So just wanted to understand how is the channel mix expected to shape up in the coming quarters.

Sure. So in terms of -- Okay. In terms of eSign Pro. Now eSign Pro, if you look at it, as I mentioned earlier, we are building on top of our foundational services. And that is where we are today as an ESP, which is an e-sign service provider, which is certified by the central certifying authority. We provide the service as an ASP. And that is where we are launching the product called eSign Pro. But as an ESP today, we have a 70% market share. So that is where we provide the foundational point on which other fintechs build their application layer. So eSign Pro is an attempt for us to get into the app layer of it. So to give you an example, if I'm today going to a bank and pitching an eSign Pro suite of services, then that is where we are clearly giving them the ability to embed the journey into their application. So if somebody is applying for a loan, and they want to digitally sign the document, then eSign Pro as a documentation suite gets built into the application journey of the bank. But likewise, if we look at the underlying service, we already enable a lot of the market and the fintech players. And if you look at it from an application provider, that is where we are now entering into the market. And we've also, in our eSign Pro suite of services brought in the e-stamping service. It is, again, a unique combination because when you combine eSign with the ability to e-stamp, you are actually able to then create a capability where you are bringing both of them together. And any loan documentation, for example, will always have a stamping requirement and a signature requirement. Other than that, naturally, we are providing a strong ability for people to use it to manage dashboards, so corporate and admin dashboards, your ability to document -- sign the documents in a secured manner remotely, geotagging your signatures. So a lot of new features and a complete suite of services is being offered over there, which in some way are differentiators for us vis-a-vis the competition in the market, and we expect the market to grow well from there.

The next question is from the line of [ Bhavik Shah ] from Emkay Ventures.

I have 2 questions. First is the remaining INR 17 crores, which you have, when will it be written off? And my second question is, do we -- do you want to provide any guidance for the FY '25 and FY '26?

So the remaining INR 17 crores, if it remains outstanding, even in the current year -- in the next year, it will be provided for in the books in FY '26. Whereas per our ECL policy term, anything remaining outstanding for more than 3 years, we provide for in the books. That's what it is.

Okay, sir. And sir, any guidance for FY '25 and '26?

Yes, the INR 17 crores is the final one.

No. No sir, I'm asking about revenue or EBITDA guidance?

Sorry, your voice is not clear. Can you please repeat yourself?

I'm asking for some revenue or EBITDA guidance for FY '25 and '26.

Yes, having some mute problems over here, yes. Carry on.

So it's a forward-looking statement, so we won't be able to comment on this at this stage.

And I think I just missed answering the second part of the question earlier. This was the online and offline PAN issuance. So just adding to that, as we've been mentioning all along that when we are doing an online issuance, it is, from a margin perspective far better for us because a lot of the paperwork, storage and the work involved with it, that goes away. And therefore, it becomes more lucrative to that extent. So there has been a steady growth in terms of online issuances. And as a split, if we look at it over the last 2, 3 years, from FY '22 to FY '24, it has moved from 30% to 39% to 48%. And in the first quarter FY '25, we were at 50% online versus off-line. So that definitely adds to our EBITDA margins because then the product becomes a better margin product.

The next question is from the line of Trusha from Boring AMC.

My first question was on Protean -- Protean X, which is newly launched, is it is similar to DigiLocker?

No. So Trusha, it's not similar to DigiLocker. Let me give you a different example to put some context. It is similar to, for example, what India did when we issued the CoWIN certificate, right? So we were issuing a certificate, which had an embedded QR code. Now you could go anywhere and the code could be scanned and you could verify to say that this is an authentic certificate. So the whole idea is that what we are trying to address over here, for example, when you get an education certificate, right? Today, when you take it to any entity, let's say, you have to get a scholarship, and you have to show your education certificate. Today, it's a very broken process because when you submit a physical certificate, the receiving entity is not able to digitally verify if the certificate is authentic. Protean X in a way solves for that. So we've created a complete suite of services where to the issuer, this could be an educational institution, we provide a Protean Studio on which they can start issuing digitally verifiable certificates. We are also provisioning for a wallet to the consumer. So people like you and me, we can actually store our digital credentials in a wallet and if somewhere we have to give these credentials for sharing for consuming any sort of service, then the same can be verified. So Protean X is today built on blockchain technology. So it's a ledger-based trust, which is created in the system. And you can remotely and digitally verify that the underlying credentials are valid. So that is what it does. Now I agree with you that DigiLocker has some aspects out of it because when you are looking at your document in the DigiLocker, it is indicated over there that -- by DigiLocker that is an e-signed or verified document. But if you have to share that document, then Protean X gives you the additional ability to get a document which has an embedded verification credential in it. Does that clarify it?

Okay, understood. Sir, your other revenue potential will not be B2C, it will be a B2B revenue potential, yes?

So it actually becomes a B2B2C because at one end, you are looking at a corporate push, goes without saying, so we'll be looking at educational institutions, hospitals. So it goes to any sector, right, whichever is today issuing any sort of certificates or invoices or anything which can be digitally verifiable. At the consumer end, it becomes more of consumption. So if there's a consumer wallet in which identity can be stored and the same identity can then be shared in a manner that it is verifiable. So there will be a consumer app also. So that is where the B2B2C part comes in. But on the other side, it's the B2B part where we are going to the issuers of various certificates.

The next question is from the line of Sumangal from RaRe Enterprise.

So I have a question on the new business. So can you just explain the current revenue run rate that we have, a sequential decline. I mean we would understand that with the data segment picking up and further more ODEs revenue kicking in, it would see a traction. So any comment you can share on the new business. And even in the near term, what are the most visible revenue opportunities in the new business segment?

So in the new business, you're right, there's a decline from a year-on-year perspective -- it is largely due to the rather a quarter-on-quarter perspective because in the last quarter of last year, there was some carryover revenue from the previous quarter, and that's why the numbers got bunched up. It is a small number, and that's why you are seeing the difference. So as I mentioned earlier, so naturally for us, there are 4 lines of business which we are putting under our new businesses. The first business is on the data stack, which is where you heard us talk about the products like eSign Pro, Protean X, rise with Protean. And this, for us, is something where we are already in the market. We are providing foundational IT services. We are building the entire stack on top of it. So we have already access to these customers in a way because we deal with these corporates, and we are just providing a more value-added and comprehensive suite of services. So it's an immediate go-to-market as far as the company is concerned. Second comes to the area of ODEs or the open digital ecosystems. Over the last -- we have been in this space invested with open source technologies over the last 3 years or so. One of the more mature ODEs as we see is ONDC. The work being done in the space of education and skilling, agri, health is still more nascent compared to ONDC. So, naturally, the growth that ONDC is showing with almost compounded quarterly growth rate of 60% over the last 4 quarters in terms of number of transactions, there is huge traction in the market and that is one area we feel will kick in earlier than others. The others continue to remain large opportunities because of the scale and size of the need out there. The third area for us is Cloud & Infosec services. Now cloud, again, is a huge demand because year-on-year, we are seeing that cloud adoption is moving into new sectors. And clearly, looking at the benefits it brings in terms of scalability, resilience and security, it is something which each and every corporate entity is evaluating. Now in this particular space, we've got our own identification of target markets and niche. Clearly, one part is that it's made in India cloud. which, again, the government is looking at positively because they want to bring indigenous tech stacks into the cloud technology. And it is a green cloud. We definitely have energy conservation parameters built into it. And we are targeting both our own thrust into DPIs and work with that we do with the government. And also at the start-up industry over there as 2 specific segments in which we want to push the cloud services business. But again, over here, while we have revenues clocked in, it is early for us, and we will see during the course of this year how this business picks up. And last but not least, is the international business, where again, as I mentioned, we have now engagement running with multiple countries. We've expanded our country engagement base and the number of bids that we have qualified -- participated in, which 2 shortlisted bids now in hand, we expect we'll be able to show some results on that international front pretty soon.

The next question is from the line of Grishma Shah from Envision Capital.

Can you give some color as to...

Sorry to interrupt you, ma'am. May I request you to please use your handset.

So could you give us some sense on the tax services vertical? I mean, we understand that the last year first half was very strong for us. Failing to understand why should the market be a degrowth in quarter 1? And what are the efforts which led... [Audio Gap]

Ladies and gentlemen, we have lost the connection of the current participant. We will move on to the next participant. The next question is from the line of Srinivas from Avendus Spark.

Just have a couple of questions. One, is it possible to give the bridge between what is adjusted EBITDA and EBITDA? Because it seems to be -- the gap you see more than ECL loss.

Just give us a second. We're just looking at the numbers, please. It was -- largely the difference is the ECL loss, but just a second.

So it's only the provisioning component, which is the exceptional item. There's no other item. I don't know how you have computed that. So it's only the provisioning which is done for doubtful debt.

Then I'm assuming other income is included in the EBITDA. That's only the explanation that works out.

That's correct.

Yes, that is...

Other income is included in the EBITDA number.

Yes.

Fair enough and then that adds up. Just wanted to get a sense on the tax revenues. Any broad breakup you can give between what proportion of revenues comes from fresh issuance and what will be as a maintenance work on that?

So, fresh issuance is almost around 70%. And other than that, the remaining revenue would come for reissuance or any change request in terms of the PAN data itself or any reprint of PAN cards and all. So that's the way it's split.

Sure. And my last question is you've taken about INR 38 crores or almost INR 50 crores of write-offs in the last 5 quarters, or maybe about INR 85 crores, INR 88 crores over the last 4 years. Just wanted to get a sense, most of the ECL losses are all pertaining to the specific issue we had in income tax or we've had issues in other aspects also from an ECL point of view?

Yes, these are largely receivables for the tax-related things and normal business income.

The next question is from the line of Madhu Gupta from Quantum AMC.

My first question is same as previous participant's question. So in terms of fresh issuances and in terms changes, are their fees which are earned totally or isn't it? And secondly, I would like to know in the first quarter results, other expenses have grown very sharply. So what has led to that big rise in the other expenses? Can you just click on that?

Yes. The other expenses is largely the professional fees related to advisory thing. And others are broadly normal business expenses. So it's only one exceptional item in that sense in the other expenses.

And how do we see that going ahead?

Yes, some of them are kind of one-time expenses largely. And that's it, we don't see any substantial increases.

And on the PAN front, just to answer, the charge in terms of fresh issuance is higher and when you're doing some of the changes in terms of reprint and all that's lower charge. But any change request is at the same rate as the fresh issuance. So there is no change in that. So you're earning the same revenue as you would do with the new PAN card issuance.

The next question is from the line of Amit Chandra from HDFC Securities.

So my question is on the eSign Pro. Now if you can throw some more light in terms of what will the pricing model here? Is it going to be license implementation AMC model? Or is it going to be a SaaS kind of a model? And also, can we see some cannibalization of revenues from eSign Pro to our existing revenues of identity services. And also, on the ONDC side, if you can -- just one clarification, are we already charging this 10 bps in terms of transaction? Or are we going to shift to that? And if not, then when we are planning to shift to the -- transition this model in ONDC as well?

Sure. So Amit, in terms of eSign Pro, it is likely going to be a transactional model of revenue coming over there. So we are basically providing the app, and it's a SaaS model, technically, you look at per-transaction charge. As far as cannibalization is concerned, I don't think so. I'll tell you where we are coming from because one is a foundational service. So it is, in my mind, very similar to an ASA and AUA model, where at one level, you are providing the certified -- center certifying authority-based certification of the eSign service with which we power other fintechs to provide their applications. Here, we are actually going with our own application to the market. So for us, it becomes an additional line of revenue. So we are not just providing services to others as a certifying authority -- or as a certified authority, we are also directly now competing by providing application at the last mile. So it just becomes a plus over there from that point of view. As far as ONDC is concerned, as I mentioned earlier, the 10 basis points was more sort of a projected assumption in the sense that when we look at other DPIs, that is what the network providers or the network TSP earns. But that model is currently not there in place. As of now, considering that the network while is going very strong, still at this stage, ONDC as a network facilitator, believes that they would like to not have the friction of charge coming to the network participants. And therefore, currently, they reimburse us for the technology services that we are providing. There will be an inflection point where, again, it will be largely determined by ONDC as the governing organization, at which stage we will look at moving to a different model at that stage.

The last question is from the line of Shubham Sehgal from SiMPL.

So my first question is that, could you please just explain the pricing structure of your different business segments like your PAN card issuance, Pension and Identity services? So what kind of pricing structure do we have in these segment? And how sticky are the prices? Like are we like forced to like lower our prices? Or like kind of how will the prices move forward? So, like please give a light on that.

Yes. So largely, the pricing is transaction based. We have 3 main sectors. We have Tax, Pension, Identity. If you take tax, we have the PAN services where the charge is per application fee, for even for either new issuance or a reissuance of a PAN card. So it's for a per application. Similarly, we have TDS returns which gets filed that's based on number of records in the returns. Pension services are -- we have again 3 types of charges. You have the account opening charge, annual maintenance charge and the transaction charge. So transaction charge is for every contribution, which is made by subscriber into the account. So there are typically for a government subscriber 12 contributions in a year, and then there could be 1 additional for arrears. So for every transaction, contribution transaction is done, there is a charge which we levy on them. So annual fee is at the time of the entry and then there is AMC every quarter, which is charged on a quarterly basis. These are the 3 types of charges for AMC. Then there is within NPS, we have pension services, there is Atal Pension Yojana. So we have an account opening fee to that, there's no transaction charge in Atal Pension Yojana. As far as Identity services are concerned, we have the online PAN verification service, there is again a transaction charge based on number of records, there's a per record charge and then there is a volume-based tariff. Then we have Aadhaar authentication and eKYC. Similarly, there is various charges which are based on per transaction. And these are largely B2B transactions. We have a number of corporates using these services and the billing is done to this corporate based on the volumes, which get recorded during the period of their usage often, right. And then, lastly, there are government contracts where it is kind of a -- which are RFP-based and the pricing there is as determined in the contract, which could be initial implementation of the development cost which is charged and then there's an annual maintenance fee for the tenure of the contract. It could be for 3 years or 5 years. So these are largely 2 types of charging structure which we have, one is transaction-based and one is a kind of a project tenure cost.

Thank you. Ladies and gentlemen, we will take that as the last question. I would now like to hand the conference over to the management for closing comments.

Sure. Thank you very much. As closing comments, we would just like to summarize saying that we currently see our set of businesses being split on 7 verticals. As far as our traditional or legacy businesses are concerned, we have 3 strong businesses, which continue to provide strong momentum to the company. These are businesses which traditionally, we've been running, and there is strong headroom over there and the company has a dominant position. And we've shown year-on-year good growth in these businesses and these are consolidating cash cows for the company. As far as new businesses are concerned, there is early traction. Again, these are areas which are also very strongly supported by tailwinds especially coming from the government thrust both on the fronts of digitalization and financialization and with the budget calling out, again, a lot of support for areas in the space of DPIs. So strong budgetary support for the new lines of business. And as an organization, we run a very asset-light model, and there are strong cash inflows into the company. The company continues to maintain its debt-free status with a huge amount of investable funds almost to the tune of INR 700 crores, which we, in a way, have available for us to make any inorganic decisions for faster go-to-market or investment and cutting-edge technology, and we remain very positive about the times ahead from here. Thank you.

On behalf of Protean eGovernance Technologies Limited that concludes this conference. Thank you for joining us, and you may now disconnect your lines.