Veefin Solutions Limited (VEEFIN.BO) Earnings Call Transcript & Summary

Ladies and gentlemen, good day, and welcome to the Veefin Solutions Limited H1 FY '26 Earnings Conference Call hosted by Valorem Advisors. [Operator Instructions] Please note that this conference is being recorded. I now hand the conference over to Mr. Anuj Sonpal from Valorem Advisors. Thank you, and over to you, sir.

Thank you. Good afternoon, everyone, and a very warm welcome to you all. My name is Anuj Sonpal from Valorem Advisors. We represent the Investor Relations of Veefin Solutions Limited. On behalf of the company and Valorem Advisors, I would like to thank you all for participating in the company's earnings call for the first half of financial year 2026. Before we begin, let me mention a short cautionary statement. Some of the statements made in today's earnings call may be forward-looking in nature. Such forward-looking statements are subject to risks and uncertainties, which could cause actual results to differ from those anticipated. Such statements are based on management's beliefs as well as assumptions made by and information currently available to management. Audiences are cautioned not to place any undue reliance on these forward-looking statements in making any investment decisions. The purpose of today's earnings call is purely to educate and bring awareness about the company's fundamental business and financial quarter under review. Before we start, I would also like to inform all participants that a link to view the presentation was provided in the conference call invitation, which the management would be presenting in their opening remarks. So we would request you if you would like to follow the presentation, while the management is talking. If you would like to view the same, please click on the link. Alternatively, this presentation has also been uploaded on the exchanges that you can access yourself as well. Now let me introduce you to the management participating with us in today's earnings call and hand it over to them for opening remarks. We firstly have with us Mr. Raja Debnath, Managing Director and Co-Founder; Mr. Gautam Udani, Chief Operating Officer and Co-Founder; and Mrs. Payal Maisheri, Chief Financial Officer. Without any further delay, I request Mr. Raja to start with his opening presentation. Thank you, and over to you, Raj.

Good afternoon, everyone, and thank you all for joining us. I'm speaking to you today from the Singapore FinTech Festival. And trust me, the conversations that we are seeing here with most of the global banks is just aligned perfectly with what Veefin has been building. As a founder, I've always believed that Veefin should be built on fundamentals of a profitable scope, disciplined execution and a product road map that's years ahead of the competition. So today, I'll walk you through 3 things: what we have delivered, what we are currently building and how is the market responding to what we are doing. As a summary, so how has the last 6 months been for us, okay? The first thing that you will see is that our core, core of Veefin is our supply chain finance business. And that core is working extremely well. We are showing 54% EBITDA profitability in the supply chain finance business, okay? And this is taking into account whether it's capitalized or not capitalized, there's a 54% EBITDA in the supply chain finance business. So this business is what is funding the IP creation offer the businesses also. The second aspect that we'll talk about and what we have seen over the last 6 months is that we have now embarked on a journey of building 6 enterprise-grade products simultaneously, okay? And all of this are being built on the Veefin 4.0 shared architecture. The third thing we will speak about, and we'll see is the disciplined execution and the financial strength of what we are building. The last is that there is a very sustained growth story that we are able to see here. We have grown our revenues year-on-year by 108%, and we have very strong $47 million pipeline, which is a qualified pipeline with strong cross-sell traction. So we speak about all of these and our future plans. What we will see is if you combine all of these things together, what we do with a disciplined IP investment, a disciplined execution and a global expansion plan, Veefin is well set to be India's first multiproduct, I mean not services, a multiproduct [indiscernible] technology product company. That's what we're trying to build. For people who would like to see at a glance what is Veefin? It is a global software provider to banks and NBFCs and this is since 2020. That's what we are. And many of you will think of Veefin only as supply chain financing. However, if you look at the product lineup here, Veefin is no longer just supply chain finance. It goes beyond that into the entire transaction banking suite, whether it's supply chain, trade finance, cash management, corporate, retail Internet banking, LMS, collection, fraud risk, with multiple products. So Veefin is now a all-banking product factory, okay? And we now have clients across 24 countries. So Veefin is no longer just an India-based thing. Veefin very clearly is a global phenomenon. We have 80-plus FIs, 300-plus corporates who are on the Veefin Group platform. And we have last year -- last 6 months, the numbers that we are seeing, our run rate is $40 billion worth of annual disbursements. And a very key thing here is we have our attrition levels on the voluntary side are next to nil. We come more on this later. And the last thing I'll leave you with here is that we have won numerous awards. And what I am talking in terms of Veefin being a supply chain finance landmark. It is not something that we are seeing. The industry is recognizing that. Just yesterday night in London, we won the Euromoney Transaction Banking Award for the most innovative supply chain finance solution globally just yesterday night. And while we are at what we are -- I get this question a lot in terms of why is it that Veefin is able to do what Veefin is doing? And what is it that differentiates us, the core differentiation. And I think the most important thing that we have [Audio Gap] just take a moment here and just look at the leaders that we have here. This14 member team, each one of them with minimum 15, 16 years of experience, many years 25-plus years of experience. Each one of these players, each one of these people could have gone ahead and started their own startup and all of you would have invested in them, but each one could have gone and built their own start-up. But all of them have come together to build Veefin as a global powerhouse in the BFSI space. Our latest addition to the team, Sorabh Dhawan. Still recently, he was a CEO of NBFC, he just joined up recently for being the CEO for public sector bank exchange. Our PSBXchange project is a jewel in Veefin crown. That's where he comes in. So if you look at this, the 300-plus years of experience looking at here. And if you see the number of companies and the kinds of companies that all of this experience is coming from that is heart are companies which are in the BFSI technology space who are trying to build products. And what differentiates us is the wealth of banking experience here. We have people here from the top banks, both in India and outside India. This is the experience, which is actually delivering. And because of this, we are able to build so many products simultaneously. I keep getting asked this question, and we were asked this question even in Singapore last month even in Germany, where we know that how is it that a company which is so young is able to build so many products simultaneously. And that goes back to this leadership that we have here. Moving on to what are the highlights since the last earnings call that we had 6 months back. So the key points here are the major thing. We will have multiple subsidiaries. It was a complex structure. So we are amalgamating our subsidiaries and the amalgamation has already been announced and the PSB filings have also been done. The other core thing that we have done over the last 6 months is around the public sector bank exchange service, wherein we have continued rollout of PSBXchange. We have gone ahead and done live transactions plus not just that we have hired a CEO, we are hiring a team and offers have gone out for this team to join us by December, January this year, where we have now presence across the country in multiple states. We've spoken about the awards. Most important thing is from a sales pipeline perspective, that's where the rubber hits the road, we have now got a strong pipeline in trade finance, cash management, in corporate banking, corporate Internet banking, retail Internet banking. And finally, you all know we've also raised a preferential now. BSE approval is pending, should be coming in the next few days, we are assuming for INR 94.3 crores. This sets us up very well for fueling our continued IP investments as we speak. Now why did we go around amalgamating. People spoke with us last time as to why did we have subsidiaries. Now the question becomes why are we amalgamating. Amalgamation, the expectation that you as investors should have from this is that this is an EPS accretive move from next year onwards, very few EPS accretive. So a lot of synergies that you will see on the R&D sales and the corporate governance, it makes it easier for you as investors to see one P&L, one balance sheet, very clear visibility. And it strengthens the balance sheet from a future IP investment perspective. What does the simplified structure look like? So as you see right at the top, people who have the slide in front of them is the Veefin solutions, the mother company, which now houses all the product companies. All the products that we spoke about, they will all be housed right at the top. Below we have 2 acquired businesses. One is the acquired entities on the product side, which has Epik and Regime, where we own 26% stake. On the services business, which is going in for amalgamation and we are planning how they will be consolidated. There we end up with a 20% stake in the service business. And finally, we have decent capital where we've not started doing any business till now. And for people who want to know where we are on the amalgamation time line, so we see this as something which should end in Q2, Q3 of FY '27. So in the 6 step process, we are in the first step approval. So we will see SEBI approvals. We are awaiting those approvals. As we speak, we have submitted this last month itself. And this is where the journey. We have completed 2 steps. We have completed the Board approval. We have done the filing last month. We are now awaiting for the approvals. So once this is done, our expectation is the merger scheme has also been finalized, has been filed. So from April 26, this should all be one standard entity from P&L perspective. We get a lot of this question in terms of how to look at our reporting framework. Take a minute here. So we had multiple subsidiaries. So you have PSBX submission for right at the top. People who are seeing the slide, you can see GlobeTF Solutions are in the top. Estorifi then has 2 companies under it, which is Epik and Regime. Then you have Infini Systems, which Veefin has a direct holding in Infini has taken a 100% ownership of Nityo Tech and White Rivers Media, which is our latest acquisition, which is held jointly by Infini. Now from a revenue consolidation, all the revenues, 100% of the revenues of all of these companies that we spoke about are consolidated. That is 100% of the revenues are consolidated, but if you look from the profit perspective, 100% of the profit does not come in consolidation. The profit comes in only what is the stake of Veefin either directly or through Estorifi and Infini. Take an example, for Regime the profit amalgamation is the only 10.85%, though Veefin holds a 26% stake through Estorifi because Veefin holds a 41% stake in Estorifi. So that's the way to look at this very clearly, okay? So if you look at GlobeTF, Estorifi, they are now being amalgamated into Veefin 100%. We will own -- Veefin will own 20% stake across the other companies, which are Infini, Nityo and White Rivers. And that company, this entire entity, we have planned a listing of this post the integration. So it's a listing -- a main board listing is what we are planning for. So this is in line with 100% of the revenue here is consolidated and the profits are recognized, as I said, only in proportion of the shareholders that we have, okay? So entities, you will see some of the entities here which do not have revenue, these are the entities in which we are building our IP. We have trade finance, cash management, some Internet banking projects out there. That's why we're building our IP. So -- moving on to the financials, okay? So let's look at the stand-alone. So now you've understood that stand-alone and reporting. So this is just Veefin stand-alone. So the Veefin stand-alone level, if you look at year-on-year comparisons, and these are all post capitalization, okay? So that means what is the investment that we have done in our IP business post that. We'll have something more to talk about the IP investments over the next 2 slides. But right now, let's look at the financial highlights. And very pleased to inform you that our revenues have grown by over 100%. And as you can see, our EBITDA have jumped over 300%, Same on the PAT, okay? Our net debt has gone up. We'll talk more on that later, and I'm sure you'll have questions around it. But even on the earnings per share, they have all shown good numbers out here. So if you contrast this with consolidated the mergers that we have done and amalgamation just started come into effect. So our revenue that was jumped up by over [ 450% ] and our PAT has grown by close to 100% on this, okay? So these are the numbers on the stand-alone and consol basis. And if you look at them side by side, again, another version, it just shows you that these are all doing extremely well in terms of the revenues and the EBITDA. Revenues have gone up by 4x because of consolidation here. So what are we doing here in terms of -- if you look at this balancing of profitability and IP, because how should you read our numbers? It's complex for people here to understand our numbers, so we have tried this time to be as clear as possible. So all the numbers that we do -- all the numbers that we do, we report our numbers after capitalizing our development costs, okay, as per IGAAP and AS 26. And capitalization is a consistent policy. It is amortized over 10 years, okay? Our capitalization is amortized over 10 years. And in this, what we do is somebody may say, why don't we expense everything all immediately? Yes, we could do that. But then this is very, very intentional. So if you were to do that, then yes, we would report lower margins, but we would not have been investing so heavily on the IP. What we have done here is, if you look at the Veefin story, we started with supply chain financing, one product over the last 5, 6 years, and that is all that we focus on. If you did the same thing again with all of these products, we would have missed the bus because the world is moving extremely fast because the competition that we're having with all the global banks, it is no longer about product because the global banks are all talking about not buying point-based solutions. Global banks are now talking of buying tech architecture. And talking of tech architecture, they want a 3-year strategy in which all of the products that we are building. That's what we are talking about. They don't want to talk about trade finance, supply chain, cash separately. They all want to talk about working capital. And to do that and talk about that, that's what we invested in before the curve. And we have always been like that. Veefin always invested before the curve, and that is the reason why we started building 6 products, enterprise products simultaneously. And that's what we see why our IP investments are so heavy. On IP investments we'll continue being heavy for the next year and then start tapering down. So from a financial structure, how do you understand the Veefin, okay? And let's take a pause here because till now you have seen what Veefin has done over the last 6 months, not been moving into what is it that we are building. So think of Veefin as a 3-layer structure. Right at the bottom is the core product, the core supply chain business that we have done. And the key thing here is, it's a 54% EBITDA business. So people ask us that what is the EBITDA that we can assume this to be a steady-state business. So Veefin supply chain finance is a steady-state business. It's a leadership business globally very well known. So think of this as a 50%, 55% EBITDA business. On top of this, see as the stand-alone multiproduct API type of build report. The Veefin stand-alone financials when you look there, you are adding the supply chain finance business plus we are now building 6 different IPs out there. Therefore, that business now when you look at Veefin stand-alone, it's an operation loss-making precapitalization. But if you were to capitalize it, which we have done and the numbers that you see, it becomes profitable post capitalization. So understand very clearly. Veefin Stand-alone comprises of Veefin supply chain, which is a core profitable business, but it also includes the 6 IPs that we are building because of which when we do our capitalization, it becomes profitable and precapitalization it's loss making. And finally, we have the subsidiaries on the acquired entities, some of which are profitable and some of which are loss making. And some of these have revenue [indiscernible]. So that's where we are building our IP. In summary, if you look at this from a segment perspective, supply chain finance, revenue contribution high, very good EBITDA and profitable, Veefin stand-alone, moderate revenue contribution, but negative EBITDA precapitalization, because a lot of IP have been built, IP that is incubated here. Subsidiaries, negligible, contribution, negative EBITDA. Again, why? Because these are -- IPs are being built here. I find that we acquired companies with moderate revenue contribution, mix EBITDA here some are profitable, some are not. But that's the story that we have of how to read Veefin. I'll take a moment to explain the Veefin supply chain finance core a little better because that's of course. So stand-alone SCF profitable, EBITDA margins very strong 50% plus. If you look at this graph here, you will see we have captured this graph in half year, okay? So on a half yearly basis, you will see every half year, we are growing and we are showing strong strength here, both in the revenues and in EBITDA. And as you know, our second year -- the second half of the year is usually stronger, and that's what you will see this year also. We will be sharing our outlook right at the end. But rest assured that the second half of the year is always stronger, as you can see from this graph also, second half of the year is always stronger than the first half. 40 plus banks are using this across 15 countries. We are talking now only of supply chain financing. 40 plus banks are using this. Our renewal rates are high. Most of these are SaaS plus, 70% of our revenue just from supply finance are recurring and profits from here are partially being used to invest in the other IP that we are building. Moving on, how do you look at the Veefin product suite, the multiple products. So best way to divide it into 3 specific categories. The first is products where we are very strong, like the supply chain financing, LOS, these are proven -- proven for, proven profit center, and they are funding our IP creation moving ahead. The strategic IP investments, which we have done, and which are bearing fruits are on the trade finance, cash, the corporate, retail Internet banking and the LMS. LMS here is for retail SME and corporate. And finally, we have our differentiated strategies on our Gen AI solutions, fraud and risk analytics, our LMS solutions, our guaranteed management solutions. So most of these products, remember, they are all working on the Veefin 4.0 architecture. And this Veefin 4.0 architecture is really what differentiates us in the market because we are the only company globally. Mind you, we are the only company globally with the entire transaction banking working capital products on one single chassis, all with microservice architecture. Any bank can actually pick up any small piece of the architecture and use it to enhance the existing systems that they're using. They do not have to rip out and replace the entire product suite that they already have in place. So that's a very, very important point for us. We spoke about why we are doing this multiple product IP investment and what's been our philosophy, okay? We said we want to build all of these simultaneously and not sequentially because that's the learning that we have from having done this in the past with supply chain finance. And when we are building on this simultaneously, there's a lot of microservices which are shared. So when we're building microservices, we do not build one product at a time. A lot of these microservices are being used across all the products that we are building out. And our capital ratio continues to be a 10-year useful life period. And we are doing all of the investments today so that our future is a multiproduct revenue, which is again going to be predominantly SaaS. Moving on to the last part that how is the market responding to what we are doing, okay? The market is looking at this very, very favorably. We have -- I've shown this in crores, but we have close to $45 million or close to INR 400 crores worth of pipeline -- in qualified pipeline. Qualified pipeline across 85 deals in 24 countries, okay? Because these numbers is very, very important because this is where the market is responding to what we are doing. And these are large deals that we're talking about because out of this 85, 35 are active deals right now where proposals have gone in. 10 of these are large with over $2 million value for each of these deals. 15% of these deals are in very, very advanced stage right now as we speak. From a product pipeline perspective, till last year, 1 or I would say 90% of our business, our pipeline used to be only supply chain financing. But this way, you will see our supply chain finance has come down to less than 50% in terms of pipeline, a very large 30% plus pipeline now is trade, cash, corporate Internet banking, retail Internet banking. These are our new products. The IP that we are generating, that's where now we have a very, very strong pipeline. And the remaining 20% remains in the lending side. On the geographic mix also, you'll see India continues to be -- continue to be strong in India, 40% is India, but we are now hedging ourselves, and we have a large part, over 50% of our pipeline now is across the world, across Africa, Asia and the MENA. The new -- the change that you see next time is you start seeing pipeline across Europe, across America. So those are the next frontier that we will be going into. And big thing we are seeing when we're talking with customers is once 1 product goes in, they are now talking with us aggressively across other products that we have. So we must have sold supply chain finance in the past, but they're now talking to us for other products also. A good way to look at what we are building is break up all our products into 2 clusters. One the transaction banking cluster, one is the lending lifecycle cluster. So at the top, you see what Veefin is playing in. Veefin is playing in a $35 billion to $65 billion total addressable market and this total addressable software spend that we can be going after because we are widening. And an interesting thing, if you see supply chain finance in the transaction banking cluster is the smallest. So our strategy which we had of going after the niche and expanding is playing out exactly the way we had planned that we went into a niche that people were not focusing on supply chain finance. We became global leaders in that. We showed ourselves as somebody who can build products for a complex product like supply chain finance, build a reputation out there of not just building a product, but being able to deliver the product, [indiscernible] the product and therefore, now when we come in with trade finance, cash, corporate Internet banking, which are much larger as you see, they are much larger markets. The banks are able to talk with us because of the pedigree that we built in supply chain financing. So this is a multiyear strategy that we have been building on, and that is now giving fruits to what we have been doing. So transaction banking will continue to be 60% of our focus with 40% being on the nontransaction banking cluster. This is a very, very important takeaway I will leave all of you with that is where we are playing is now with the big boys. India does not have such kind of players. In the last 15 years globally, there has been no new trade finance or cash management system software vendor who has come in. Mind it, in the last 15 years, nobody has come in, nobody is dared to come in because these are all large businesses, complex businesses, which people have been afraid to get into. We have now come into this segment and our assumption is that we will be going after your business, your Temenos, your FIs, Fiserv because India deserves to have a player of that status coming out of India. And these are all multi, multibillion dollar companies. Something which we also need to understand what are the economics of enterprise sales. You will see a lot of companies be happy to go into the B2C business, okay? But people don't enter the enterprise business because this is a business which takes time. So how do the economics of enterprise sales work? First thing to remember, high cost of acquisition, a very long sales cycle. People get bold, people get scared, and they leave this business. It takes time, it takes patience. And one big differentiator going back to the leadership team, going back to our sales team that we have is the ability to talk the language of bankers. This business is a business where if you are able to talk to bankers like bankers and not like technology guys, we will do much better. That's something which we understand with bankers. So the high cost of acquisition is the first thing. Second, these are very sticky businesses. Once you go live with a customer, generally, your customers will be with you for long. We have seen that customers will be with you for more than 7 years, sometimes 10 years. That -- it's a very low churn business. The cross-sell upsell is the main thing. Look at the large players. Look at the large global players that we are competing with, the FIs, the Fiserv, the Temenos of the world, these product companies, they all have multiple products, and they all rely on taking one product to the bank and then cross-selling and upselling them multiple products. That's what we are doing, and that's what we are seeing. And every time you sell a new product to the same client, your margins -- your incremental margins are much higher. So we envisage 70% plus margin whenever we cross-sell to a customer because our objective has been very clear when we started investing in these various IPs that is grow revenue per customer, grow share of wallet. That's the mantra. Our investment and capitalization policy, just to bring it all together is, yes, we capitalize as per strict IGAAP and AS standards. It's a consistent policy. This is exactly the way global SaaS technology companies are reporting, whether it's a Salesforce, whether it's a Temenos, they all report their numbers exactly this way. India does not have any SaaS or too many SaaS players. So the Indian market doesn't understand it as well. However, these are all global reporting standards when it comes to technology companies. Only reusable IP is capitalized, remember that reusable IP is capitalized, and all the maintenance expenses are expensed out immediately. And the reason you do this is that you want to match the revenue, which you will receive over years with the expense that you are incurring right now over a year. That's the idea. And that is the reason why we also amortize over 10 years. So you -- the IP that you're creating will be IP in which you will be able to generate revenue from that over the years. And therefore, we do a matching concept of matching the revenues with expenses, again, in line with how global SaaS technology companies do reporting. Something on the DSO. So we put stand-alone and consol right -- next to it. And we are very happy to say that our DSOs are improving. So on an annualized basis, our DSOs are improving year-on-year. So from the year before from our 149 days, we have now come down to 130 days DSOs, okay? And this is not just on a stand-alone basis, even on a consol basis, our DSOs are improving. Last year, we had 138 and we have come down to 105. And even our receivables, as you see, our trade receivables are also improving year-on-year. This is that the final couple of slides. So what would I want you to take away. Our drivers of growth. What are the drivers of decent growth and what is the durability of the earnings that we see. Yes, we have grown by 108% in our growth, but 90% of the revenue that we are seeing, we have a very clear visibility on that, okay? We're very clearly transitioning, and we are in the throes of this transition from a single segment product company into a multiproduct platform. And it's a platform play as you see. Put in a product and then go back to it and cross-sell and upsell. And our IP moat, which is there is nobody does this better than us, when it comes to working capital financing and everything on a single chassis. And this is something which we continue to hear from banks, both in Singapore and in Germany where we were last month at signed up. Everyone wants a single chassis. Nobody has been able to deliver it because all other companies are old companies all with legacy infrastructure, legacy tech stack, they may say microservices, but it's only at the top left. Our recurring SaaS revenues and cross-sell engine that provides a durability. And most important, where I started from, our leadership team, which is so, so, so experienced, that's what we are doing again and again that the leadership team that we have, that is what is creating this huge differentiation. And these are leaders who have done businesses at scale, whether in banks or whether in tech companies, building products. What is the outlook that I would like to leave you with? And the outlook is over the next 6 months, again, on a stand-alone basis, we will grow our revenues year-on-year between 75% to 85%. So full year basis -- on a full year basis, our revenue on a stand-alone basis it should be 75% to 85% over last year. On a consol basis, it should be close to 300% between 290% to 300%. That's number one to leave with you. Second, our margins will continue expanding as our IP investments start bearing fruits and IP investments start flattening out. We'll continue to do global expansion. We have been talking of global expansion. We are seeing our expansion both on the pipeline side as well as our investments that we are doing in new geographies. We'll continue doing that. We'll be entering as I -- in my last call, I said we'll soon be entering the U.S. market also. And we target to do 15% closure of the $45 million pipeline that we spoke about within this year. So that -- these are clear benchmark that we can hold up to. We are seeing a lot of traction when it comes to the jewel in the crown is PSBXchange. We have been signing deals on PSBXchange. We have a very strong pipeline. We expect to have between INR 3,000 crores to INR 3,500 crores worth of transactions or approvals on the pipeline by end of the year. That's something which everyone has been looking forward to, and we are happy to say we have a very strong pipeline out there on PSBXchange. On the efficiencies at the internal level, we are looking at our manpower, very, very closely, where we are seeing opportunities of enhancing our productivity. We are letting go. We are restructuring our people. We are making do with lesser manpower to deliver the same work that we have been delivering. So we are seeing efficiencies on the manpower side also. So revenue growth is -- very, very strong revenue growth, that's what I will leave you with. And I'm now happy to take any questions that you all have. Looking forward to a lot of questions. We have enough time, lot of questions. Anuj, over to you.

[Operator Instructions] Our first question comes from the line of Akash Jain from MoneyCurves Analytics.

Yes. I have -- I just want to understand basic stuff, I don't know whether it's quite basic, but when I look at our half yearly number ending March and when I look at our half yearly number ending September, there is a significant increase in revenues and an even more significant increase in costs. So is there a difference in accounting treatment between the 2 halves? Or it is same accounting treatment, but clearly much more revenue generation in the same accounting treatment. And obviously, we are incurring more cost because of all the IP development we are doing. So I'm just trying to understand how should I reconcile the 2 halves? Is it same accounting treatment or there is a change because of shareholding or accounting treatment.

There is no change in the accounting treatment. What's happened is you have seen the effect of the amalgamation and the acquisition that we have done. And that's what is playing out. Last year half year -- the half year of last year, we did not have the benefit of the revenues of the company that we have acquired. So that's what you have seen. And the increase in expenses are also because now we have consolidated all of those companies also. That's the reason.

Sorry. So this amalgamation is basically not the scheme we have filed. Is this now based on the scheme we have filed? Or this is still based on the acquisitions we have done, but we are obviously taking the full revenues of the acquisitions that we have done over the past months and years?

These are only of the acquisitions. These are not of the amalgamation. Amalgamation is still are pending. These are only acquisitions.

You used the word amalgamation. That's why I was a little confused.

Yes.

So this is basically the acquisition that we have done in the last 6 months. That cost is obviously that revenue and cost is getting added. And we have obviously pushed the paddle on cost on IP development. That's why the cost base has gone up even further.

Correct.

[Operator Instructions] Our next question comes from the line of Anuj Daftery from Amrut Bharat Opportunities Fund.

Great explanation. Just wanted to understand when we say that from the PSBXchange, we are going to syndicate debt or financial credit for INR 3,500 crores. What is the sort of earnings that we envision to make in terms of gross revenue?

I can give broad numbers and these are public figures. The revenue that we generate from them net revenues will be 10 bps on the sourcing. There will be a net 20 bps on the technology usage with some of the banks, the PSB and the non-PSB [indiscernible] and another 15 basis points on the onboarding. So in effect, close to 45 basis points is what one can look at coming from the -- these are not just the opportunity to explain to people that when we say PSBXchange, it is not just the public sector banks who will be participating. This is open for private sector banks and NBFCs in the country also. And this is not just -- we have started the supply chain financing, but it will be extended to supply chain finance, trade finance and any form of working capital finance for the SMEs or the corporates.

Our next question comes from the line of Hitaindra Pradhan from Maximal Capital.

My first question is related to, again, the PSBXchange. Can you elaborate a little more like what we are doing there and that and also on the IP that we are building on the cash management system, if you can elaborate like what exactly you are doing and what is the right to win over there?

If I got the question right, first question is around PSBXchange and second is on cash management, what we are building.

Yes.

So on PSB -- so PSBXchange is a platform where banks can through one single API connection or one set of APIs connecting to the platform, get access to the entire ecosystem on the other side of corporates, fintechs, various B2B marketplaces, so that they are able to -- so that they do not need to connect to the various platforms individually. So that is what the PSBXchange is all about. So it's a tech come management play that Veefin is playing out there. It's a 7-year exclusive deal that we have, which gives us the opportunity of creating a supreme mode because we will be connected to all these banks and corporates for the next 7 years. It becomes very, very difficult to dislodge us from this space across the working capital cycle. Going to what we're building on the cash management piece is banks require software for running the cash management business. Cash management comprises the liquidity, the receivables, the virtual account management, all of these are modules which are needed. When you do salary purchasing or when you're collecting payments from your dealers, all of these when you're working with a bank, the back end is the cash management system. That is what we are building. And that is what the world has not seen in the last 20 years. No new platform. That is what we have built. And we are finding brilliant traction out here because we have the latest no legacy architect, no legacy systems, latest systems, latest tech. That's the reason why banks are loving us. Thank you.

What is the statistic on the cash management side, like -- what are the -- who are the existing players and...

The existing players on cash management, if I give you a couple of names would be Finastra at a global level, you will have Intellect India [indiscernible]that you know of.

Our next question comes from the line of Paras Chheda from Purpleone Vertex Ventures LLP.

I just wanted to understand a little bit on the consol thing. So our stand-alone numbers, the EBITDA margins are powerful, the PAT margin is also powerful. But for the entities that have been acquired, the EBITDA margin seems to be in the 10% range, if I'm broadly working. And the PAT margin is also quite low, about 2.5% all. So I mean just trying to understand, how do you look at the EBITDA and the PAT margin on a consol basis for the full year FY '26, if I'm missing something on that? And how do you look at the potential projections for FY '27 as well on the growth -- revenue growth and the margin front? So that's question one.

Okay. So to answer the EBITDA, when we acquired these companies, as you know, one of the companies or one of the set of companies that we have are the services base. So product company and a service company have very different EBITDA margins and multiples. So service companies will have much lower EBITDA. And that is the reason what you see is because of the amalgamation and consolidation of our financials, our EBITDA percentage drops, and that will continue because as long as our services business has a larger share in the revenue of the consolidated financials, you will see a lower margin outlook there. However, with our IP that we have built on the product side, you will soon start seeing a difference in the proportion of the product revenue and the service revenue at a consol level that we start seeing a higher EBITDA because it's a market [indiscernible] that the product companies will do the much [indiscernible] and this [indiscernible] product companies [indiscernible] service companies will continue giving you lower EBITDA. That is surely.

Yes. I just want to add one point. Parasji, there is some calculation error. Our consol PAT margin before NCI is 7% and post NCI 6.5% and our EBITDA margins are 18% on consol. Just clarifying.

Yes. [indiscernible]...

He was not talking about the consolidated, he's talking of the other acquired businesses.

Yes. I was talking on the acquired entities specifically on the [indiscernible].

You're right, Parasji.

Yes. So on a full year basis, what kind of blended EBITDA margins can we expect on a stabilized basis, let's say, in FY '26 or '27 when your product margins or revenue also continue to add here?

I will leave that question to Payal. Payal if your able to answer that.

You have some expectation of your product revenues also, I'm saying. So broadly, what kind of EBITDA margins can we expect?

If you can just take this question in terms of next year's EBITDA margins at consol level?

At a consolidated level next year, we expect an EBITDA margin of [ 25 bps ].

Okay. So the contribution of the product improves quite a bit significantly.

Yes. Yes. yes.

Yes.

There are 2 things which are happening Parasji. The product one, the IP that we have built on the product side both go up. And the PSBXchange impact kicking in from next year in a big way.

Right, right, right. And just last one if I may. So what kind of -- so you've given a guidance for FY '26. For FY '27, I mean, broad brush, any range guidance that can be sort of...

I could give you for the next 5 years, Parasji. I'm not supposed to.

I mean, but any expectation that you [indiscernible]...

The market should have for us is that if you see our growth here on a stand-alone basis that you see 75%, 80% year-on-year growth, we should be looking at somewhere similar numbers.

Our next question comes from the line of Nishita Shanklesha from Sapphire Capital.

So again, my question is on EBITDA margin only. I just need some clarification. You mentioned that as the IP that we have built on the product side comes in, we should see higher EBITDA margins. So when do we see that happening? And what would be the sustainable EBITDA margin? Because currently in H1 FY '26, we saw that the EBITDA margin was at 18% compared to 31% in H2 FY '25. So just wanted to understand that.

2 different points here. So when you're looking at H1 EBITDA margin of 18% versus last year, you remember that the revenues were much lower. The absolute EBITDA is higher. However, the absolute EBITDA is higher because we have also -- we have amalgamated the -- or we have consolidated the numbers from our service businesses also, which were not there last year. So therefore, it's not a like-to-like comparison of margin. The second point is, yes, our EBITDA margins will continue improving because of the product. And on a steady-state basis, which we will hit, we should be expecting a 50% EBITDA margin on the product side of the business. So when you -- others if you can please go on mute. People should -- people who are not talking, please go on mute. Okay. When you add the product margins and the service margin on a blended basis, we should be looking at 2035 on a long-term basis.

Nishita ma'am, there is a lot of background noise coming from your line. So if you can self-mute the line when the management is answering the question, please.

Yes. Sure. So just confirmation on a long-term basis, on a blended basis, we'll have 20% to 25% of EBITDA margin, right?

30%, 35%.

Okay. 30%, 35%. Okay, understood. And you mentioned that 25% margin we are expecting in FY '27. So when do we see us reaching the 30%, 35% level?

Right. [indiscernible] you're asking for a long-term view. But I would say over the next 3 years, 3 to 4 years is when we should be expecting that.

Our next question comes from the line of Mahaveer from Zenflow.

To a certain extent, I understood the products that we have at Veefin. But in terms of, say, a layman looking at Veefin, what kind of problem does Veefin solve? And what is the TAM base? If you can just elaborate on that, it will give me more clarity, sir.

I pull my slide deck back to the TAM slide, okay? So this TAM slide, by the way, does not include PSBXchange and the work or the response that we are finding from various countries. We have 6 countries which have reached out to us for them to build the same PSBXchange in those countries. And again, we are the only ones globally with the tech and the know-how for building that PSBXchange kind of a platform in those countries. So it becomes -- we become an obvious choice. The problem that we are solving...

My question is more about use cases, sir. Can you elaborate on the...

I was just saying that. The problem that we are solving for banks is whenever a bank wants to do a supply chain finance, they are corporates, they are suppliers, they are dealers, they require financing, they require payments, they require LCs, they require DCs, all of us who are in the business require that. They require to access the bank to request for financing, request for services. SMEs require to go to the bank for requesting for financing across various products. These are all things which SMEs and corporates and retail, these are some customers go with the bank. What powers this? There is technology in the bank which is powering it. So somebody has to provide that technology. That is what Veefin is solving for. The use case is very simple. Banks have to run. So till the time banks remain. We are not doing anything rocket science. We are not going and building something new and trying to go and find a new customer and explain to them why they need to take us. Banks are using these kind of products right now. The products may be substandard, may be decent, maybe extent. Wherever the first 2 are there, banks are looking for replacement, and that is where we are going in to replace products which do not work the way banks are expecting them to work or those players are getting into the business, new age digital banks are coming in or banks are getting into the trade finance business, supply trade finance business, they need a new system. That's why they come for Veefin.

Okay. Okay, sir. Got it. Sir, when are we expecting the demerger to happen, like the structure to finalize? And when are we expecting the consolidated revenue and PAT to be shown on our balance sheet?

We have already seen, consol, but I think your question is when are we seeing the amalgamation and then we'll be able to receive it on a tender. So the amalgamation slide, if you remember, we are expecting by Q2, Q3 of FY '27. We have already started the work. We've already done -- we have already filed it with the BSE and SEBI. We're awaiting the approval. Once the approval comes in, then the shareholder approval as a process, then the next thing we apply to NCLT and wait for the approval. The moment NCLT gives us the approval, we are then ready.

Our next question comes from the line of Anshul Saigal from Saigal Capital Advisors.

Am I audible?

Yes.

Okay. My question is, what is the benefit that we've got from the capital that we raised? How has that opened opportunities for us? One is quite obvious that we've been able to acquire companies. But on our core business, how does capital help?

Okay, big time. The IP investment that we are doing would not have been possible if we had not raised capital. The fact, as I said, why the people not been in the enterprise business because these are long decision period businesses. It takes years to build a product. But our expertise, our execution has been spot on. Because of this experienced team that we have, because of the fact that we have next premium attrition, voluntary attrition in our team, we have been able to build products in a very, very short period of time. When people see us, even in Singapore, when I met customers, we have bank, they were surprised that how is it that a company which is so young, has built such a large platform of various products. And this was only possible because our investors along the lines helped us both in the subsidiaries by bringing in capital in the subsidiaries for us to build these various products as well as in the parent company to allow us to continue building these products and invest in the self-sustaining IP.

Right. There are many -- as you yourself mentioned, that there are many companies which provide products to banking and finance companies. And some are excellent, some are average, some are below average, and we are catering to the latter 2. Now for a company which is so nascent in a business that is so critical for banks, why would they come to you itself? Why would they not go to the established players who are excellent and large? Is it because you have -- you can reach them better? What is the reason?

I think it's a million-dollar question. And the answer to that is, we did not become -- most of you have seen us today from point that, okay, you guys do so much. But we were not like this always. If you would have seen in our infancy, it was difficult even for us to go in and sell to banks because banks would always say, where have you done this before? Who are your reference clients, which is a large bank, which is going to stand and bounce for you. But because we have done -- we are not a 1-year-old company because we have been in the business long enough, because we have delivered on supply chain finance. As you remember, I said, we picked up a niche that's even strategy. We could have gone -- if our strategy would have been pick up a trade finance or cash manage when we started, we would not have been here. We would have failed. I'd say, because they have a much larger, better entrance [indiscernible] at that point in time because we pick the supply chain finance, which was a very complex product. Nobody was looking at it. And then we made a name for ourselves out there. Along the line, we built a very, very strong sales engine. Companies saying in the enterprise tech business not because they just can't build a product, but also because they can't sell. Many players will build a product and can sell only in their own geography. But our experience and our track record of being able to open new geographies time and again, not just one country, time and again going into multiple countries, being able to convince customers out there, convince, thrilled, picking up one market at a time, landing out there, having a land and spread strategy. These are all strategic calls that we have taken, and we have been able to stick to it through thick and thin. That is the reason why these banks are now looking at us and saying, okay, we have not done cash, not done trade. But I have clients where I have delivered similar stature product, which is supply chain financing and those banks are ready to come in and bounce for us to say what a great team we have, which can not only give a robust product, but can also service the product post-delivery. That's what's helping us, our track record.

And the sales engine that you speak of are the sales team? Or is that an online or some sort of a differentiated model?

No, it is -- it goes back to culture. But as a company, we have a very, very different culture than most other organizations. And I've spoken about culture multiple times. People may think that I'm an HR guy, but culture is the most important thing in our company. We invest a lot in that. Because of that and the strategy that we have, our sales engine is also very different. We pick up a market, go after the market for years together. We do not shy away from investing in the market. This year itself, we must have done 40 events globally. 40 events globally, we have spent that money, built the credibility out there, engage customers. Our sales team is very, very well conversant with our products. They are able to talk the language of bankers. So these are differentiated teams, which we have built over time.

How many employees do we have in all and how many sales employees do we have?

See, we -- on the product side, we have close to 600 across the group. We have another around 900 people on the services side of the business. And on the sales team only on the product side, we have close between 35 and 40 people.

And those are in local geographies, or they are stations at the head office?

It's a mix. It's a mix that we have in local geographies in -- and head office, multiple, and we travel a lot.

All right. And these new lines of business that we've entered outside of supply chain and finance, have we sold to existing customers only or we've added new customers in these lines?

New. Pipeline, which you see, there is a fair mix of the pipeline between existing customers and new customers. And the new customers are much larger in size, much, much larger.

Our next question comes from the line of Arunav Bhattacharjee an investor.

Raja, sir, am I audible?

Yes, you are.

Yes. I wanted to understand one thing. So first of all, just a sort of statement, if -- tell me if I'm right or wrong. If I look at the intangible assets and the goodwill is that they have gone up. Is that the reason? Is that behind that IP and amortization of that IP? Is that the reason why we see higher cost? Or is there something more I'm missing?

On the intangible, it's because of that. You're right. Intangibles are because of the IP investment, but the goodwill is because of the acquisition.

Okay. And this will be a recurring cost for quite some time, right? Because we'll be amortizing this IP expense for quite some time.

IP expenses are going to be amortized in line with the revenues. So it's a weighted average method that we do and it's a friendly amortization changes. So as we continue earning from the IP, we continue amortizing accordingly.

Okay. Okay. My next question on the business. So in one of the interviews, I wanted to understand. So initially, when I started off, I thought you're for the platform business. But what I understood from an interview that it is not. In fact, I believe you have multiple deployments in multiple clouds because especially like for PSB Alliance, I think you are -- it's their own cloud, right? Is that understanding, correct? Or am I wrong?

So it's a platform business that continues. So it doesn't matter whether it's on our managed cloud, it's a client managed cloud or it's on-prem. It doesn't matter. At the end of the day, we are a product company. And the key difference the way you look at a product company is whether the product that we have built, is it something that we can built and ship, or do I have to go to the next client and then do a bunch of customization. So that's the lens that you should look at the company from rather than just being a platform or a product.

Okay. So my question is that even if -- okay, I understand. Product development, it's fine. But what about DevOps, your DevOps size will keep increasing as and when you keep deploying more, right, because someone would have to look after the cloud, right? Or am I wrong?

Where we manage the infrastructure assets, yes, the DevOps will increase. However, the DevOps from an overall cost structure is a very, very small percentage compared to the overall cost that you see.

Okay. Got it. And where are we with respect to that core banking piece, the missing piece of our puzzle. What do you think about that? When are we getting there on this thing?

That's a large piece of the puzzle, and I hold on. I won't say anything more on that, but let's wait and watch. I wouldn't comment anything on the specific core banking thing.

And PSB Alliance, congratulations on getting that platform started. But I believe that still that volume, it's about to get traction yet, right? Like that was just the beginning, right?

[indiscernible]...

I think we were wrong side from -- yes, okay. Okay. Next [indiscernible] of numbers, [indiscernible] this is phenomenal performance looking forward. I'll keep asking more business questions, but that's it from my side. All the best.

[Operator Instructions] Our next question comes from the line of Uday Chandak, an investor.

Audible?

Yes.

Yes. Congratulations on -- for the great numbers. Amazing presentation. Actually, I have 2 questions. First one is related to pricing like because now we have multiple product lines, multiple platforms like trade finance, cash management, then we are also exploring Internet banking, loan management and existing PSBXchange. So how does our SaaS pricing was across all the product lines? So if you can share what would be the metrics to evaluate all the different segment, it would be better. And my second question would be like because now -- so when I see this, like Veefin started EBITDA vision [indiscernible] in servicing. Then last year, it was think working capital think different. Now you have -- now we have [indiscernible] digital banking is different. So we are exploring -- we are expanding our TAM. But at this point, now I want to highlight like because the new product which we are exploring, it has multiple -- like it has a severe competition, Finastra, Intellect and all big companies. And so what is your answer, like what typically till the new core banking entrants, right? What comes to my mind like higher customization cost, long sales cycle, implementation failure, income fund lock-in or talent aggression. So if I have to ask you like how does [indiscernible] will invert each to [indiscernible] its moat, what will be your answer? Because it's a new product line we are exploring. And I see -- I know we have been [indiscernible] leader for 2 years, and that's why we are having this moat in supplies and finance. But in terms of new product line, we are nowhere near to the other players, as I said. So looking forward for your review.

Long question. Let me try to -- what was the first -- let me take the second one because if I remember the first question, I'll answer that. What is the moat? We are a new player. Completely agree. But the fact that we are a new player can be seen as a positive also. And the positive is we have no -- the technology that we are using right now is the latest technology. The architecture that we're using is the latest architecture. The functionality that we're building is the latest functionality. We are bridging the gap between the usage of personal usage of all our clients, what they are using, for example, using Gen AI, how they're using in the personal [indiscernible] you're bringing that into your usage on the corporate side also, which none of the platforms have. So that is the reason why banks want to talk with us. We are much lighter in that sense. We are ready out of the box. Our time is going to be lower. That is what is exciting the bank. And as I go back to this, banks are looking at -- banks are fed up with the old legacy players, yes, they are the big. They are very, very big. But because they are big, they do not have the ability of pivoting and moving at the pace that we can move. So they're being large, there is little bit actually we. That is the reason why they cannot move at the pace that we can move. And that is the reason why banks who are doing more architecture first. So global top banks and the banks that we are talking with, right, both in Singapore and what we're talking in Germany, they're all talking in terms of architecture. And that is where we score much beyond what these other incumbent players have. So that's the story on why these players will look at us, not just because we have better functionality, not just because we'll be able to deliver things better, faster for them, but because we are no -- we are a 0 legacy system. That's a [indiscernible] 0 legacy system for these guys. If I now let me try to think it's a memory game. What was the first question that you had asked?

It was related to SaaS pricing, sir.

Related to?

SaaS pricing, like because we have multiple product lines. So...

Yes. Pricing model.

Pricing model.

Yes. So the pricing model that we have in our [indiscernible] is all around SaaS-based pricing, recurring pricing. It could be pricing based on transactions. It could be pricing based on AUM. But what we are seeing a lot now is annual recurring. So the market also is moving away from the old school of upfront big licenses and the AMCs. Even the large banks that we're talking with right now, we're all talking about that what can be a recurring fee, they are very fine that we can grow with them as they grow. So grow with the bank pay as you grow model. I say pay as you grow rather pay with the grow model is what we are seeing I think out there in the market.

Uday, sir. Does that answer your question?

Sir, it will be applicable on -- like more on core banking products also.

Sorry to interrupt.

No, no. All products. All products.

Our next question comes from the line of Ashu Raj, an investor.

Congratulations, and great to see a progress in the growth. So I have -- the question is even if it's possible to declare the results quarterly. It would me really great for investors, if we can have some update from your company [indiscernible] documents show in the quarterly progress, that will really help and all. And the second question is on this, SaaS is it possible to do that on a quarterly basis? And second is, is there any plan to increase the stake in the acquisition slightly increase the stake in Epik or is there any plan on that line in short term, medium or long-term?

So the first thing in terms of quarterly, yes, from December onwards, we'll start showing our quarterly results and start doing that because as you know, next year by July, July '26, we'll be eligible to move to the main board. So from a compliance perspective, the aim is to start doing that, and we have geared ourselves in to move towards that direction. That's point number one. And second, in terms of taking over a higher stake in the acquired company, yes, that's a part of the plan that we have. So those was the agreement that we had in place when we acquired these companies.

Our next question comes from the line of Mahesh, an investor.

I just want to understand that Veefin is a product company, and we have done a lot of service say from the acquisition. What is the strategy behind it? And whatever the IPO fund was raised for the Veefin, was it used to acquire those service companies or how it is?

So taking the first -- second question, we have not used any IPO funds or [indiscernible] funds till date on acquiring any companies. So all the acquisitions which have happened, they have happened through raising that we had done in the subsidiary point to be noted. No issued money was used to acquire the company, no equity raise that we have done. That's the question. What was the other question that you asked for?

What was the -- Veefin is a product company, what was the strategy behind to acquire a services company?

So the reason that we had acquired the services company is we have a lot of requirements from our clients on the services side also. And we are letting that lay on the table. Plus, the service side of the business also then becomes a way of opening doors into multiple corporates. So now when you look at the PSBXchange, where we are also connecting corporate website, that's where you will see the strategy in place. So earlier, the strategy was not clearly visible in the market. But now when you see that on one side, we are going after the bank, on the other side, we have corporates also coming in. That becomes a great engine for us of getting corporates also on the side. So the woman corporates as well as they are able to provide services to our banking partners who need the services.

So is it fair to say that it is more of a strategic acquisition to support your clientele on a service requirement. And also at the same time, all the acquisition has happened where money has been used from the Veefin fund raise, but all the Veefin investors will get the benefit of the service-based acquired company?

Absolutely right. Absolutely. That's exactly.

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

Thanks all of you for joining. So I would just leave you with the closing thoughts that Veefin is geared towards building India's global BFSI product powerhouse. And this leadership team that you see here, the leadership team that I showed you right up front, that is the team which will deliver this for you. Thank you. Thanks for joining onwards for the next call. Thank you.

Thank you. On behalf of Veefin Solutions Limited, that concludes this conference. Thank you all for joining us, and you may now disconnect your lines. Thank you.