Tanla Platforms Limited (TANLA) Earnings Call Transcript & Summary

[Audio Gap] The circulars issued by the regulators. The company has taken all feasible steps to ensure that the shareholders are provided with an opportunity to participate in the Annual General Meeting and vote. Adequate videoconferencing facility and live webcast of this meeting has also been provided. The register of directors and key managerial personnel and their shareholding and the register of contracts or arrangements in which the directors are interested will be available for inspection if the shareholders so desire. The members may please note that in accordance with the applicable provisions and the rules of Companies Act 2013 and SEBI Regulation, the company has provided remote e-voting facility to its members for casting the votes through electronic mean. The remote e-voting commenced at 9:00 a.m. on Sunday, September 3, 2023, and ended at 5:00 p.m. on Tuesday, September 5, 2023. The facility for e-voting is also made available during the AGM for members who have not cast their vote using remote e-voting. We take pleasure in announcing that we are joined by our directors, statutory auditor, secretarial auditor, internal auditor and other consultants. I now request the directors to please start with self-introduction. May we start with you, Mr. Deepak Goyal?

Good evening. I am Deepak Goyal, Executive Director and Chief Business Officer at Tanla Platforms. I'm also a member of Risk Management Committee. Thank you.

Sanjay Kapoor. I am a Non-Executive Director on the Board of Tanla since August 2019. I'm the Chairperson of the Stakeholder Relationship Committee, a member of the Nominations and Remuneration Committee, member of the CSR Committee, Risk Management Committee and a member of the ESG Council.

I'm Rahul Khanna, Independent Director on the Board of Tanla from July 2020, and I'm Chairperson of the Audit Committee and CSR Committee and member of the Stakeholder Relationship Committee, NRC and ESG Council.

Good evening, everyone. I'm Amrita Gangotra. I'm an Independent Director with Tanla since July 2019. I am the Chairperson for the Risk Management Committee and also the Member of the Audit Committee, NRC and the Stakeholder Relationship Committee. Thank you.

Good evening, everyone. I am Rohit Bhasin, the Lead Independent Director of the Tanla Board. I am the Chairperson of the Nomination and Remuneration Committee, and I'm also a member on all other committees that is the Audit Committee, the CSR Committee, the Shareholders' Relationship Committee, the Risk Management Committee and the ESG Council. Thank you.

Hi. Good afternoon, everyone. This is Aravind. I'm the CFO of Tanla Platforms. A warm welcome to all shareholders to our AGM.

Hi. Good afternoon, everybody. This is Amit Agarwal. I'm a partner with MSKA & Associates. We are the Statutory Auditors of Tanla Platforms Limited.

Good afternoon, this is Vishal Shah, partner with Deloitte, and we are employed by Tanla Platforms.

Good evening, everyone. This is Mahadev Tirunagari. I'm a Company Secretary by profession, and I'm acting as scrutineer for this Annual General Meeting of Tanla.

Hi. Good evening, everyone. I'm Amit Jain, partner with KPMG Assurance and Consulting Services. We have been associated with Tanla Platforms Limited as process consultants for over 5 years and driving multiple initiatives across process improvements, data analytics and KPI monitoring. Thank you.

Good evening, everyone. This is Varsha. I'm a Senior Manager with EY India. We are Secretarial and Governance Advisers with Tanla Platforms.

May we now request our CEO and Chairman to address the shareholders, please?

Welcome, everyone, to our AGM. Our teams have done a wonderful job last year, and we have many exciting years to come. Let us step back and reflect on our journey so far. I'm also excited to share some key updates across innovation, platform, enterprise business, talent and ESG. It is extremely hard to build a high-growth SaaS business with profitability and cash flows. But we have made this possible with high revenue growth, 70% EBIT levels and strong cash flows. We are accelerating our innovation engine. We launched 1 gigantic platform every year, and it is our ambition to accelerate to 4 platforms. I know it is extremely ambitious plan, but we are building the right infrastructure to scale our innovation. All of this innovation is going to happen from our 100,000 square feet innovation center, from where I'm addressing all of you. It is my prediction that Wisely ATP is going to be our most successful platform so far. The sandbox results have been tremendously encouraging. Enterprises are very happy with our results. I'm personally very impatient for not accelerating the go-to-market. Since AI and ML solution is complex, mobile carriers, and enterprises are getting into a lot of details on how to deploy the solution from the regulatory standpoint. We have seen this in most of our platforms, including our DLT platform, Trubloq, where commercialization took almost 18 months post launch, but the same platform is now the largest blockchain use case in the world. What really gives me satisfaction is that our platform help over a billion citizens get vaccinated, reduce spam for mobile users and protect users against fraud. We're extremely honored to be someone behind the scenes for the billions of people we serve, our customers' customers. On our enterprise business for the last 12 to 15 months, we have demonstrated our resilience and come out stronger. We committed to the market. We would exit FY '23 with a EBITDA of 20% despite industry disruption, and we delivered it. Kudos to the entire Karix team. Competition is quite intense. Tough times are not fun, but it helps industry leaders consolidate, and that is exactly what we did. Our acquisition of ValueFirst from Twilio further consolidated our leadership in CPaaS space in India with a 35% revenue market share. We are larger than the next 3 competitors combined. On our financial discipline, when the entire world has been raising capital, we have built our business through internal accruals to become probably among the top 2 pure-play CPaaS companies in the world. We are debt-free with a strong balance sheet. We are the only CPaaS company to have a dividend policy of 30% of PAT and executed 3 buybacks in a row. On ESG, we're not just building a great business, but a great institution with ESG at our very core. Over the past 3 months, we have come out with our sustainability and tax transparency report. Our disclosures on a quarterly basis is probably the best-in-class, and we are constantly improving. We encourage our employees to build a sustainable planet. We have schemes incentivizing employees to buy electric cars, source locally produced organic food. We have the best of the teams and our attrition is below the industry average. Our employee productivity is incredible. We generate close to INR 5 crores of revenues and INR 0.8 crores of PAT per employee per annum. This is probably the gold standard in the SaaS industry. This is how we create shareholders value. We have around 2 lakh shareholders with some marquee institutional holdings, both FIS and domestic mutual funds. We have generated significant value to our shareholders through different market cycles. Our financial discipline as well as ability to withstand disruptions and emerge stronger means that any long-term shareholders will win with Tanla. We are on a unique journey, and thank you for your unwavering support over the years. The best is yet to come. As I end, I would encourage all the shareholders to vote on the resolutions, and your voice is very important to us. Thank you.

We now proceed with the agenda of the AGM notice. The notice calling for the AGM dated August 4, 2023, convening the 27th Annual General Meeting with a copy of the annual report for the financial year ended March 31, 2023, has been electronically circulated to the eligible shareholders. With your permission, I shall take the notice and the board report as read. The statutory auditors report on the stand-alone and consolidated financial statements for the year ended on March 31, 2023, and secretarial audit report for the year ended March 31, 2023, does not contain any qualification, disclaimer, reservation or adverse remarks. Hence, are not required to be read as per the regulations of Companies Act, 2013. We now move to the items of business to be transacted in the AGM. The ordinary business has been to consider and adopt the audited stand-alone and consolidated financial statements of the company for the financial year ended 31st March 2023, together with the reports of the board of directors and auditors thereon. Second point, to declare a final dividend of INR 4 per equity share of INR 1 each for the financial year ended March 31, 2023. The third agenda item to appoint a director in place of Mr. D. Uday Kumar Reddy, who retires by rotation and being eligible seeks reappointment. We have 1 item under special business, which is to approve an increase in the aggregate limits of the loans and investments to be made by the company. We now move to the question-answer session, which will be taken over by our CEO, Mr. Uday Reddy; Mr. Deepak Goyal, our CBO; and Mr. Aravind Viswanathan, our CFO. May we now request the floor to be open for the Q&A session.

Thank you, Madam. I'm a moderator here. I will bring the pre-registered speakers, who are currently available one by one. The first registered speaker is Mr. Deepak Chokhani from Mumbai. I would request the speaker, Mr. Deepak to unmute your audio and switch on your camera to proceed further. Mr. Deepak?

Thank you. Good evening to everyone, and thanks for this opportunity. I have 3 quick questions. Given the industry consolidation over the past 1 year, where do you see Tanla in the next 2, 3 years? I mean what is our aspiration, and what is our vision for the next 2, 3 years? That's question number one. Question number 2 is post acquisition of ValueFirst, are we planning to go aggressively in some of the international geographies? And the last question is, when will Wisely ATP get commercialized?

Thank you, sir. We'll move to the next registered speaker. The next registered speaker is Mr. Anil Nahata from Navi, Mumbai. I will request the speaker, Mr. Anil to unmute your audio and switch on your camera to proceed further. Thank you. Mr. Anil, I would request you to unmute your audio, and switch on your camera to proceed further.

Yes, I'm just trying to get there. I don't know about the camera, but good evening to all of you.

We got your camera, but we are not able to get your vision, but your camera is on.

Okay. So please excuse me for that. I would like to start with the statement, and that is to congratulate Uday and his team for staging a smart recovery from the last year's headwinds that the industry found itself in, the NLD price war and the erosion in the ILD prices and the margins also. As we came out of FY '23 and going into FY '24, I mean, now I think we have certain industry tailwinds with the company in terms of both NLD and the ILD price rise. The price war is a thing of the past now. And I hope that the -- I mean, there will be more mature competition and that the digital push continues, so UPI, et cetera, et cetera, are giving a very nice push. So this is setting a very nice tailwind for the company and for the industry as well. And there is also an area of confusion, which is basically the -- due to the 3 quick M&As that has happened. And what will be the emerging industry structure, and how the industry is going to move forward from here? Today morning, also, I was very fortunate to see the demo of Wisely done by Mr. Sunil Bajpai and his team. And it is really a wonderful product. I mean, something that I believe will be useful to all the enterprises of India, not only that, I think it can be actually the spearhead for going international. I mean it is a completely product, which is amenable to going international also, it is equally applicable. With this Uday, I would like to congratulate you and your team. And I think I will echo what the earlier speaker said, what I am asking and requesting you is to present a sort of a formal road map from the management over the medium term with the following perspectives. One, along the product lines; second, along the geography; third is along the revenues and, if possible, around margins as well so that the shareholders can get a view after this industry consolidation as to what is the direction of CPaaS industry in general, and what is the specific direction of Tanla in particular?

Thank you, sir. We'll move to the next registered speaker. The next registered speaker is Mr. Milind Damodar Karmarkar from Mumbai. I would request the speaker, Mr. Milind Damodar to unmute your audio, and switch on your camera to proceed further. Thank you. Mr. Milind? Mr. Milind, I would request you to unmute your audio, and switch on your camera to proceed further. Mr. Milind, you continue to be on mute. I would request you to unmute. Since there is no response from this investor. We'll move to the next speaker. The next registered speaker is [ Aloysius Peter Mascarenhas ] from Mumbai. Mr. [ Mascarenhas ] is not available at this moment. We will move to the next registered speaker. The next registered speaker is Mr. ASPI Bhesania from Mumbai. Mr. ASPI is also not available at this moment. We will move to the next registered speaker. The next registered speaker is Mr. Gaurav Liladhar. I would request Mr. Gaurav to unmute your audio, and switch on your camera to proceed further. Mr. Gaurav is also not available at this moment. I would request the company officials to respond to the speakers' questions. Thank you.

Sure. Thanks to all shareholders right? So let me kind of curate the kind of questions that comes in and pass it along to Deepak and Uday as required, right? I think first question is just in terms of vision, maybe I will ask Uday to take that, right, as Deepak had asked, Deepak Chokhani, the industry consolidation, where do we see ourselves in 2, 3 years. And in some way, Anil also alluded to the same question to say that how do you -- can you give us a road map in terms of -- be it from a product and geography in terms of where do we see over the next 2, 3 years. So maybe Uday, can I request you to address that?

Yes. Thanks, Aravind. Deepak and Anil, I think good questions. Basically, as I mentioned in my opening speech, we're going to accelerate our innovation engine. So it'd be -- definitely one can expect the new products, new solutions from our innovation center. And in fact, we are investing a lot of money around recruitments, talent and mainly on the infrastructure side. So one can expect a lot of innovation going forward. As I mentioned in my speech, we always -- I mean, we have launched 3 gigantic platforms in the last 3 years, which one -- first one is the Trubloq, which everybody is aware. It has become one of the biggest blockchain use cases in the world. And the latest one is ATP. It is all set to go live. It got delayed. I'm equally frustrated. But the reason being it has to go through a lot of approvals. It has to be -- it has to get the blessings of a lot of regulators in India, mainly from -- right from TRAI to the RBI and so on and so forth because everybody knows that PDP Act was enforce now. So this is the right time for us to launch this product. So -- and the second one is in terms of the enterprise business, where Karix and ValueFirst are leading the space in India, they continue to lead, which we don't want to lose any of our market revenue share. I'll be very surprised if we don't strengthen ourselves in the coming quarters, that's number two. But in terms of our expansion plans, yes, in fact, I was in Saudi last week. We are -- we met a couple of large telcos on the -- enterprise there. We see the opportunity out there. We are probably -- we should be able to expand into Saudi in the next 1 quarter, if not before. So -- but we want to be very, very cautious and conscious about in terms of our international expansions. We don't want to open offices all over the place. And so we are very, very conscious and very, very cautious about our platforms deployments because we need to comply with local regulations. So we are closely watching the local regulation. We are trying to understand the regulations and the challenges around the languages and so on and so forth. So definitely, the Saudi is on the cards like now our teams are working -- opening the office and incorporating the company. It should happen in the next 1 quarter. So if not -- second reason in this financial year, definitely, we should be able to open our office and some activity in Riyadh in this financial year. So definitely, like as I told you, we are growing on both the fronts, both on platform side as well as on enterprise side. We have healthy margins, and we are here to maintain our financial discipline. We don't want to do any business at the cost of losing money. So we are very, very clear about it. I think, Aravind, I kind of addressed both the questions. Anything else?

So Uday, one more question. Maybe I will ask Deepak to address, which Anil had mentioned, is in terms of some of the macro trends like UPI and the digital proliferation that has come in, and how that means for an industry, especially the backdrop of a little bit of pricing stability. So maybe Deepak can give a perspective in terms of how we're seeing the industry and -- with the pricing environment in terms of how it has changed over a period of time?

Hello, everyone. So as far as the pricing goes, as we have mentioned earlier also that pricing is quite stable now. So from that part, we are good. In terms of overall industry, you must have -- you must be seeing how the UPI transactions are going through the roof, and they are growing on month-on-month and quarter-on-quarter basis, and that is going to help us and the overall industry as a whole. But other than that, there are a few other interesting things which are going on, which I would like to highlight. It is not just about sending notifications or sending SMS -- notification over SMS or over e-mail or so on. A lot of other work is going on. Let's say, for example, we have -- as you are aware, we have multiple channels. We have SMS, we have WhatsApp, we have RCS. We have Truecaller. We have e-mail and voice and so on. And what we are doing right now is that how we can work with the brands and not only -- and we can get their dollars, not only on their notification or the communication piece, but we can get -- can we do some branding also for them. Can we get their dollars where they are -- the budgets from their branding side of it. Let's say, for example, don't be surprised that tomorrow, if you get any notification on your WhatsApp. Let's say, if you ordered something from McDonald, and you get a message on your WhatsApp Inbox where a McDonald mascot is coming, and he is kind of saying, "Hey, your order is ready," or "Your burger is ready or whatever," right? So it is not just about a notification, but here, McDonald's has done the branding as well, okay? So we are continuously working on such solutions, and we are working with the different verticals, and a lot of interesting work is going on. And I'm sure that overall as our industry, it will evolve, and we will be able to expand the industry in the coming few quarters and years.

Thanks, Deepak. So I think we have addressed all the questions that the shareholders have asked. So maybe Anuradha, I will hand it over to you now to take the proceedings forward.

Yes. Thank you, Aravind. We now move on to thanking all the participants, the directors and the auditors, who have joined us in the AGM. This is also to announce that we have actually received a very good response on the shareholder registration, but for some reason, some of the shareholders have not been able to join us. We encourage all the shareholders to write to us if there are any queries that you feel are unanswered. Please go ahead and write to us at [email protected], and we will respond to our queries. The Insta poll will remain open for the shareholders, who have attended this AGM to cast your vote in case you've not voted on the resolutions. Please go ahead and cast your votes. The results of this e-voting will be informed to the stock exchanges once the scrutinizers submit the report within 48 hours after the AGM is concluded. We now conclude this Annual General Meeting with a good thank you to everybody who has participated. Thank you one and all.