Ladies and gentlemen, good day, and welcome to the Infibeam Avenues Limited Q1 FY 2022 Earnings Call hosted by Incred Research. As a reminder, all participant lines will be in a listen only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Please note that this conference is being recorded. I now hand the conference over to Mr. Sreejankal from INGRED Research.
Thank you and over to you, sir.
Thank you, Mallika. Good afternoon, sir. Good evening, Vinod. We have with us Mr. Vishal Netra, Managing Director Mr.
Vishal Patel, Executive Director Mr. Sripanth Rajgopal, President Mr. Hiren Pateyam, CFO and Mr. Purvesh Panik, Head of Investor Relations from Inc. B.
Revenues in this call, their annual call for the Q1 FY 'twenty two results. Without much delay, let me hand over the call to Mr. Vishal Veda, MD and CEO, to give his opening remarks and the key highlights for the quarter. Thank you. Over to you, sir.
Thanks, Sri Shankar. Good afternoon to all of you. Good evening to all of you and welcome to the Q1 FY 2022 earnings call of Infibeam Avenues Limited. As we are all aware and we know that we are witnessing a series of pandemic events and their impact on the domestic as well as global economies. And as new virus strains are panning out, it seems that this pandemic is far from over.
COVID has posed a huge challenge to the humanity and currently touchless to 0 contact seems an inevitable solution that helps us keep the virus or COVID-nineteen at bay. My reason to ponder on this issue is mainly because the future economies that I see steering towards a complete digital domination is inevitable. The world economy is at a very crucial transition phase and I see an exponential growth in coming years for digital economy and Infibim avenues. As we all adapt to digitization as a whole and digital payments being a very vital and important part of it for keeping everyone secure from touchless transactions. The more society turns as a whole towards digitization and stores their data digitally, the more exponential growth I see for digital economy and Infillium avenues.
No doubt COVID-nineteen has pained the entire human race. But friends, whether we like it or not, this pandemic has created and been a catalyst for digitization. God has blessed us all humans with this intrinsic indomitable nature where he overcome sufferings and obstruction sooner or later. This nature of human beings has made every entrepreneur in business fight this invincible virus in its own way, paving the path to human race for safety and success. We at Infibeam Avenue believe in looking at the bright side of every adversity and challenges.
In this challenging time, we decided to look towards the bright side and outgrow in turn all adversities to the advantage. The advantage I see for humans is the permanent digital world or digital economy. It reminds me of the famous Roman philosopher Seneca's quote, Luck happens when preparation meets opportunity. I firmly believe that we at Infibean Avenue's at least fit this quote. We are an excellent example of preparation meets opportunity.
Infibeam Avenue for years have been prepared and created assets, building payment gateways with vast national and international clientele, data center infrastructure, processing payments at a run rate of $18,000,000,000 We have garnered over more than 3,000,000 merchants with full KYC. We have developed and provided SaaS based solutions for clients, including the likes of ISEPC, JEM, several of the Indian banks and others. Now over years of preparation will work wonders, we believe for years to come. Imagine the kind of data that we are sitting on top of and due to years of preparation of such high end fintech technologies and services that we have built over time, it has put us in a position to get the most out of this mass digitization of economies that has now begun in slow swing. The digitization of human rights for most of the work, especially the payments is irreversible.
Infineon will soon foray into the credit business, which we will be one of the biggest bets for our exponential growth. But at the same time, it will be the safest bet. Now of course, why safest? As I mentioned earlier, preparation meets opportunity. With the mass digitization and digitization of economies, data driven credit lending will be the way forward.
We are well poised to scale it within a few months of our entry as we're sitting on top of huge amounts of data, both users as well as merchants. And with an upsurge of digital payments and adoption by various organizations, our user data has practically doubled in the last 1 year. Scaling up Infibean avenues profitably by multiple times via neobanking and data driven lending poses an enormous opportunity for the company. Our neobanking and data driven lending will be asset light and digital only, almost a plug and play format for us. Our current payments platform already has millions of customer data to whom we will be providing credit financing via strategic tie ups with banks and MBSCs.
Merchant data on our platform is growing in leaps and bounds almost every month due to the pandemic as well as our reach. And we will soon reach more than 10,000,000 merchants using our platform. The course of collaboration meets opportunity also actually fits here because in the monsoon session, the government of India has passed amendments to the factoring law, which has now enabled as many as 9,000 non banking financial companies, NBFCs, to participate in the factoring market instead of just 7 NBFCs. The factoring or bill discounting market is worth $6,000,000,000 in India. The factoring market accounts for only 0.2% of India's GDP, way behind comparable developing economies such as Brazil, which is at 4.1 percent, China at 3.2 percent, according to a report of the parliamentary standing committee on finance, which endorsed the bill.
The factoring market worldwide is projected to reach $9,200,000,000 by 2025. Our credit business will be data driven lending, matrix derived from our existing business functioning, which will be deployed to tap this factoring market starting with Indian markets. Our CC Avenue payment gateway infrastructure is at a run rate of processing $18,000,000,000 worth of digital payments for FY 2022 and another $10,000,000,000 on GEM platform. In this, this trend continues that people, institutions or organizations are adopting digitization at such a fast pace, we may soon process more than $100,000,000,000 worth of digital transactions. Briefly, exponential growth in digitalization is transactions.
Briefly, exponential growth in digitalization has led to exponential growth in data creation and massive use of online payments, which will help our credit business. We won't set up our own MBSE at present as it is not our core business. But surely, we will have tie ups with several strategic banks and MBSs and other credit lending products, including business loan, working capital loan and other parts of factoring bill discounting. So we will not only experience a growth coming from transaction fees from payments, which we currently have, but also from high credit commission fees that we will receive by enabling such transactions. Why would an NBFC or a bank prefer us?
The reason is very straightforward. In a data driven lending, banks and NBFCs will get verified data on merchants, financial status, standings that have been created by merchants themselves with the years of transactions that have been passed through our payment gateway network infrastructure. This is an opportunity where merchants will be able to get collateral free, highly competitive rate loans. Thus, credentials and credit repayment capabilities are assured to a certain extent for such banks and NBFCs. That's it from me.
I would now pass it on to Vishwas. Vishwas, all yours.
Thank you, Vishal. Good afternoon to all of you. In the challenging times, technology has been at the forefront to strengthen the business activities, especially for millions of SMEs and small vendors who have been badly affected through the across the pandemic. Our fintech portfolio of digital payments and e commerce sales platforms has enabled more than 1,000,000 merchants since the start of the pandemic last year. Unlike what we saw in the same quarter last year, digital adoption and usage has been higher this quarter.
Last year in Q1, our TPE was around INR 18,765 crores, that is 28% lower than Q4 of FY 2020, that was a pre COVID quarter. This can be attributed to some downtime in Travel and Hospitality business from slowdown in many other businesses, but it was also because of the relatively lower this business. We say this because we achieved a record rather TPV of INR INR INR IN which is up almost INR 4.7x versus quarter 1 of last year. This is also higher significantly while our core like travel, hospitality business has stayed below the average, but many other traditional businesses adopt their digital means and new businesses with technology for businesses, models are coming online, including individual professionals. Utility, retail and education among the leading contributors to this growth.
As we have mentioned in the past and on several calls with analysts and investors, demonetization set the stage for digital adoption, while COVID has surely accelerated the digital adoption. Both our businesses, payments and platforms, have benefited massively during the period. Our CTV has increased from INR 12,600 crores that was just under INR 2,000,000,000 in FY 'seventeen, the year of demarcization to our current run rate now of INR 2,000,000 crores, that is almost INR 28,000,000,000 for FY 'twenty two. Also some new payment options have brought the informal economy into the formal economy, which will also boost digital transactions going forward. And digital business models there will eventually become a new normal.
We are also certain that many old and traditional and small and large businesses will adopt online platforms for growing businesses going forward. We are seeing a huge sector in India from conglomerates and other large enterprises extending into digital businesses, past facing their digital launches and their go to market strategy. Tech businesses are also raising funds to fasten their digital journeys and expand. More than 20 burn new unicorns have been created in the short period of 8, 9 months and many new new generation entrepreneurs will also start with a tech first business model. In all this, payments will be at the center of all digital transactions.
And our payments business, CC Avenue, as you all know, is one of the India's oldest and the most innovative retail payment gateway and among the most affected by the businesses and banks will surely benefit. Plus, the tailwinds are strong and supportive as there is ample headroom for growth. Consider this as on FY 2021, digital payment transactions per capita per annum in India was just 30% 30% transactions. Indonesia was 34% way back in 2017 and South Africa 79% and Singapore and Sweden were way higher at 7.82% and 4.98%. Also, over the last few years, assessment of online payment gateway industry showed that it has grown annually at 50% for the last 4, 5 years and is at currently at US175 billion dollars as of FY 'twenty one.
Top 5 players contributed around 70%, 75 percent of this TPE. We believe the industry will grow annually at a minimum rate of 75%, reaching about US550 1,000,000,000 yen in FY 'twenty six. And if this growth continues, it will reach US1.5 trillion dollars by FY 'thirty one. We will not be surprised to see a higher growth exceeding expectations. Various sources indicate that a number of digital payment users in the country are approx 175,000,000 in FY 'twenty one, which has increased to about 225,000,000 to 50,000,000 after the 2nd wave in just 3 months.
We expect the digital payment users in the country will reach 650,000,000 by FY 'thirty one by when the smartphone penetration could reach 900,000,000 to 1,000,000,000 and with all 250,000,000 plus 5 gs connections. Also, digitally contacting merchants will increase from RMB15 1,000,000 currently to over RMB50 1,000,000 by 2,031. With this, the overall monthly digital payment in India as defined by RBI could reach US10 1,000,000,000,000 yen in FY 31 from the US2.4 1,000,000,000,000 yen in March 2021. And our payment business is always on the automatic growth mode due to the explosion digital transactions of which we will be a bit beneficiary due to the full stack of portfolio that we offer. Our payment business CPE has increased 134% year on year and now averages over INR 10,000 crores every month, which was less than INR 5,000 crores in Q1 just last year.
And with a multi channel, multi tech, multi country portfolio, the payment business growth will accelerate. The payment business is a card and the platform business is the horse before the card. That's why we will elevate our growth. I will now request our CFO, Ciren, to talk about the financial and operational performance in Q1 FY 'twenty two. Ciren?
Good evening, everybody. Gross revenues were up vertically by 120% to ROI to RMB216 crores as total processing volume has jumped 170% year over year to INR 50,651 crore. India and UAE payments, JEM and Go payments have all increased sharply, which is contributing to the growth. Volumes have also increased very sharply to 55,000,000 in this quarter. We are also seeing a great traction from merchants.
Over 1500 plus merchants have been deactivated or on boarded daily in Q1. This helps build a strong future pipeline for growth. We have experienced this with a growth in total processing volume over the last 2, 3 quarters and this merchant pipeline continues to be very strong. Bill comments have shown a stellar performance. Gross revenue has increased over 1,000% in Q1 or over 10 times year over year.
Gross margin has increased 3 times year over year and we expect it to improve further in the next few quarters as transactions ramp up. Revenue in this business is transition based with a flat fee structure as per the guidelines of NCCI. Now coming to EBITDA, our payment business EBITDA as a percentage of net revenue is over 50%, which is among the best for any payment company. This margin is comparable with some of the top international payment companies in a similar business. Our UAE payments business generates even higher margin.
Majority of business that is through credit card platform business also generates very high EBITDA margin of nearly 60% as there is no pass through like payment business. The enterprise e commerce software is already built by us over the years, which ends in fitting the court progression mix opportunity. Now so far as PAG is concerned, it has grown 14% to INR 13 crores compared to INR 12 crores in the same quarter last year. This combination of platform and payments is a very successful model for us and globally also it is
well proven.
It consistently generates positive cash flow for us quarter after quarter and our cash conversion ratio that is cash flow from operations by EBITDA is consistently above 100%. With this, I hand over the floor back to Shankar to begin the Q and A.
Thank you. Thank you very much. We will now begin the question and answer session. Anyone who wishes The first question is from the line of Umakal from K. R.
Jokshi. Please go ahead.
Hello? Hello?
Yes, please
go ahead. Yes. Thanks for the opportunity. It's limited, Harissa. I have, like, let's say the news have grown at a 4.3% at 37%
The voice is not very clear to me at least. I'm not able to hear the questions properly.
Yes. I'll just repeat my question.
Yes.
Yes. So you have said that the net revenues have grown at a slower pace, although the gross revenue has grown at a much stronger level. So just wanted to understand, you've mentioned that your other operating revenues were the major reason behind the floor growth in the revenue year on year. So just wanted to understand that the subscription revenue from the e market software side has weakened and that is the reason why there has been a decrease in the net revenue growth year on year and whether it has the same set of reasons are attributable for the quarter on quarter decrease also in the net revenue?
I will take this question. So basically, on the net revenue takes, it was actually 8 bps in the previous quarter and the current quarter is actually 7 bps. Fundamental point is that on the overall, if you really see the blended take rates, it is 6.9 bps actually in Q4 and 6.8 bps actually in Q1. It is actually 0.1 bps drop in the net blended take rates on both platform business and the payment business. So for all practical purpose that as we have been publicly articulating, we have 2 hots engine actually to pull our cart.
1 is payments. As Vishwas was mentioning that INR 32,418 crore was our payment value for this quarter. And on the transaction based e commerce enterprise platform, it was INR 18,000 crores. So all put together, it is about INR 50,000 crores INR 50,651 crores. Now the basic point is that still as you know that we started our 2nd wave during this quarter under reference.
And still the hospitality sector, entertainment sector, to a larger extent, even aviation sectors, travel sectors and hotel sectors have not been fully opened actually on the entire Pan India basis. So that is our profitable sectors actually. This is our legacy and that is our one of our profitable sectors. And this has a huge business with double digit business vertical concentration actually. So despite that, our volumes have gone up primarily because of our bill revenue platforms, right with our utility bills and our energy bills and education sectors and so on.
That really compensated the growth. So once these sectors get actually fully reopened, we believe that there will be a not based moment actually on the net take rates actually.
Okay. Thank you. Thank you. The next question is from the line of Ravi Mehta from Deep Financial. Please go ahead.
Yes, hi. Thanks for the opportunity. Am I audible? Yes, Ravi. Yes, hi.
So I see the mention of getting into NeoBanking, the CPGS rollout globally. And so many initiatives being mentioned in the press now. Note. So I was just wondering whether the OpEx could be little bit on the higher side for 1 or 2 years to do all these rollouts. And then probably we can see the higher profitability coming in or how does it work?
Yes, Ravi. I think you hit the nail very, very correctly. I think there are actually if you ask me, there are 2 new initiatives. One is on the credits and lending space actually tied up with banks and NBFC for which we started investment actually during the current quarter end as reference towards our platforms, towards our frameworks, towards our credit algorithm and towards our overall credit solutions and so on. So that phases of investments have actually started during the current quarter end of April.
So this kind of an investments possibly may continue for a few more quarters to get into the full fledged lending partnership with banks and the NBFC and to make a difference actually in the lending market. And as you know that our potential net bps actually for our CG business is about 10 bps on an average and that is what the peak. Right now it's about 7 bps, 6.9 bps and so on. But on the lending, the margins are multifold higher. So therefore, lending is definitely the accelerated growth driver for the company and that is what we visualized.
And that is what actually as a vision statement Vishal had made actually as a road map in the beginning of this conversation that we are entering and putting into the credit space actually. So therefore, this is not the new road map and which we have publicly articulated in September 2020 that we are getting into the new banking. And for that, actually, we have a brief card insurances card issuances platform. And for that to start the lending, actually, we have started the Express settlement. Ravi, as you know that we talked about actually in Q4 and also Q3.
Fundamental point is that our run rate, we started in our bootstrap from 0 on the Express settlement to a start up our lending. And by the end of FY 2021, that is last year, our run rate was roughly INR 3.5 crores per day, which is about roughly $100,000,000 And now based on our Q1 run rate, we have actually almost doubled it. We have done we are doing now on an average INR 6 crores a day. So this would mean that we have already we have guided the market that we will double the run rate of our Express settlement from $100,000,000 to $200,000,000 And I think we have almost doubled actually even by the end of this Q1 actually, so based on the current trend rate. So now today, we are doing Express settlement of little over $50,000,000 on a quarterly basis.
So this is one of the profit driver. So therefore, neo banking in a way towards express settlement on a secured lending has already started. But this is not enough. Therefore, we see a bigger opportunity in Green Lending given the fact that we have a huge database of merchants and we are invested actually. We started investments in a case manner towards various credit algorithm, frameworks, solutions, technology frameworks and solutions.
And where did the merchant database, which is a data driven approach? We believe that we will be able to attract the top banks in the country towards partnership because banks are willing to really do that because they lack actually this kind of an onboarding process. So we believe that, that is going to be a good opportunity for us because the market size is 3 digits in $1,000,000,000 Even if we get actually 1% or 2% of that over a period of time, and that is going to be a huge loan book actually for us. Of course, the caution statement is that we are not exposing any credit risk. We are the enablers.
But however, we make a huge switch filling actually through our solutions. So that is basically the strategy. So that is we have started. And you will find a little bit effect actually on our margin percentage in the next few quarters because of this initiation. But this is going to be achieved capital which we are doing out of our internal accrual for the future growth activity, Ravi.
In that sense, you are absolutely correct.
And I believe nothing will be capitalized on the
balance sheet. Everything will be expensed. Yes. Sure. Any explanation of what kind of lending book will you aspire to reach once you're tapping this opportunity, kind of it in these segments?
Market opportunity is huge. It's very premature to really numbers. Any number is a good number actually. So the opportunity is really very, very huge. And the challenge is that to build the nice credit algorithm and programs and the technology solutions, Red River is huge database of our merchants.
In addition to that, we have existing relationship with the large players actually. So we believe that we will be able to leverage that relationship to boost this lending business actually.
Okay.
And the target market will be in February beyond the reach of banks
or do you prefer the NBFCs or who would you target? The target would be I mean, banks and the NBFCs are our credit exposures and win exposures actually partners. And for all practical purpose, the ultimate loan takers are, I would say, end merchants actually to a larger extent, could be SMEs and SMEs, even card fleet players. And a bit of the high end, low end and all those kind of combinations actually because the exposure is going to be taken by the banks and NBFC. Of course, we have some moral responsibility but not a legal responsibility.
But our role is basically an enabler role and to make sure that we get our end to end success accretive to risk lending model actually.
And we won't be giving any
kind of some credit guarantee or something like when we generate a loan. So is there some Yes. Under regulation, we cannot really neither take the credit exposure nor give any LOGs or guarantees and so on. This is under regulation because we being the PG players. But that is what we are partnering with banks and NBFC.
Okay. Thanks, sir.
Thank you. The next question is from the line of Santosh. Please go ahead.
Yes. Hello. Good evening, everybody. So my question is kind of a generic one, which is, I just want to inquire about the e commerce platform enterprise for Jio, Geomart specifically, whether it is for website as well as Android app. I mean, whether we are giving services for both?
And the second question would be,
I mean, whether the payment gateway
was active because the last time I checked, it was being directed to pay you money.
Basically that the mobile and app case is definitely in the roadmap and it will eventually come. And as soon as the payment processing is concerned, I think we completed the white labeling process actually with Jio and it has gone live. And we will as in the past, we will continue to compete with the other players to grab more PG business actually through our relationship. Okay. Thank you.
Thank you. The next question is from the line of Sreedeshankar from Ingrid Research. Please go ahead.
Yes. So I have a couple of questions. My first question is, see, the way we have moved into Middle Eastern markets and gaining traction over there and have been doing pretty well. What is your roadmap going forward to grow internationally? I mean, I'm asking this question despite knowing that there is a tremendous opportunity, domestic itself for us to grow.
But I would obviously understand that the takeaways are going to be much more higher than the international market than what it is locally because of the serious competition out here. Can you answer from both, Mark, please? Yes, I'll take it, Sridhar. Okay. I think the strategy for us is very clear.
So we have 2 different products. 1 is CCI Mini Premium JITRY, which is a direct to merchant strategy where we onboard the merchants and we have direct merchant relationships. And the second is the CPGS product, that is the CC Avenue payment gateway service product where we give this entire tech or CC Avenue payment gateway along with the switch and we can do an on prem deployment for any banks. Now our strategy in the Middle East is very clear. So where the markets which are used and potentially very well developed with smartphone penetration, we want to have a direct merchant relationship and we have to go there.
So that's the best strategy. We are already there if you look at the Middle East region and the GCC region, right. We are there in UAE and we have direct merchant relationships with 1,000 of merchants do around 2,750,000,000 AED processing every year. So all the top merchants there, be it MR, Nutshell, Bhuj Khalifa, Exel, all those are our merchants. Similarly, we have started that direct to merchant aggregator relationship in Saudi Arabia.
Then there is the other CPBS product, which we do in the smaller markets. It does not work well to have a direct merchant relationship. So CPBS is what we get. So in the market of Oman, small market, 3,400,000 population, we have deployed a CPBS product. So the biggest binder, bank must have declared almost 80% market share is using CCI revenue payment gateway for local merchants there.
The number 2 bank in Oman bank so far is also using our payment platform. We intend to have a similar strategy in smaller markets of Kuwait, Bahrain and Qatar, etcetera, and also some part of the North Africa market also. Right, while direct merchants relationship, we might will be launching soon in U. S, just delayed because of the COVID, but we've already done an acquisition there. So the strategy is 2 fold, as I said.
For bigger markets, we want to have direct to merchant relationship with the Citi Avenue. And then in a smaller market, we'll go with our CPGS product that we give the entire stack and we earn on every transaction, on every merchant ID opened and other things from the banks. Okay. If I take this forward further, does it also mean that when you are operating in the international markets, the backbone will be based out of India, more like an offshoring part of the business so that you will be able to manage your cost better? That's my first question.
2nd is we are more in a SaaS product at FQD. Unlike in the IT services, which is kind of material, our capability as our revenue scales up, our incremental employees that is required or the staff that is required, personnel required is going to be much on the lower. So can you please explain in terms of the scalability of this model? Now if you start the number of transactions start increasing, do you require to have more number of persons on board? Or is it that it could be the business development or the sales side of this business?
Right. So I'll address your first question first. Look, as far as growing the pie there in multiple markets that
is there, right? It is
not people centered whether how the transaction scale up. So good in a digital format, if you have seen our numbers, we have doubled the entire platform and this business from what we were last year to now INR 50,000 crores worth of the same transaction in this quarter and our team size is still around 650 all people across both the platform and gaming business. If you look at similar assembly in a U. S. Market that we do today at 2,750,000,000 AD processing yearly, there are less than 7 people there, right.
So it is not dependent on not dependent for the it's a tag, it's not like a normal taxi where you need to add that or an offshoring business like Infosys Pro where you get the contract and then you have to hire the people. So ours is very scalable technology where from last year to today around INR 50,000 crores in a quarter, what we are doing today is quite different. Quite different, it's like one of those can grow automatically without putting the requisite resources. Similarly, when you say when we put up in international countries, right, now the regulations are changing. As countries around the world try to mimic what RBI has done on data localization and local payment options, right, that strategy is changing.
But that also gives us put into the major existing providers who have been traditionally using solutions hosted in U. S. And other bases, right. So for us, even in banks, Muscat and others, we did an on prem deployment here from Mumbai, right? While all the other related people that are required, maybe the data might be hosted there within the bank premises with a bank data center or a private cloud within the bank.
The entire services is handled out of here. So our risk experts who set out the risk and compliance team, everything is built out in Mumbai. And even for UAE, Saudi and Oman and even now U. S, all will be handled from Mumbai. So it's a low cost center year and good money can be charged to these banks for these services on NANR.
So that's the strategy how we are going forward, Shankar. Shankar, in addition to Vishal Singh, basically a global delivery model. So basically, the delivery is happening from the Mumbai jurisdiction. And the local guys are all actually mostly, I would say, barring 1 or 2 who are taking each other and evangelist. And otherwise, they're all BD guys and so on and so forth, relationship and BD guys and so on and so forth.
And in terms of revenue model, it is broadly the 100 percent of our payments are all transaction based. And the fee could be actually fixed fee based and bit based and all that. But basically, these are transaction based. So therefore, it is not linked to any human resources in any manner. On the large e commerce platform side of our business, and it is exactly like actually a product business of any large IT players.
So we have a very large SMEs and MSMEs and medium enterprise and even for that matter actually retailers online platforms as if we have an ability to really license and so on. So we don't limit that. But nevertheless, that be it the large enterprise customer or the MSMEs or even retail customers for that matter on the large e commerce enterprise platform, our people are actually in common because they are all hardcore domain specialist people and platform specialist people and product specialist people and they are out of actually Bangalore. So from that perspective, it is not the numbers are not linear actually to any human resources. And as you could see that on the GEM processing volume and value, basically that there is a set of people actually working from the Bangalore team and Delhi team.
And revenues are flowing into the system actually based on the order processing value. So it is completely linked to the transaction. So that is the beauty of this business actually. Okay. Thank you.
The next question is from the line of Heit Chokshi from K. R. Chokshi. Please go ahead.
Yes. Good evening and congratulations to the entire team for a fantastic progress in the last one year. My question is a little bit strategic. In April around April 2020, we acquired a company called AI Fintech, which is into mainly digital payments and digital platforms and consumer lending across industry verticals. You acquired various companies like Instineti, iGPL and Cardway Technologies.
Now these companies have already been acquired since some time. But I want to like as an investor, I would like to understand how is the company trying to position this company and integrate across various services? And the second question would be, since you are talking of the data which you plan to monetize across consumer lending and maybe digitally credit lending, how is it that this attires with foreign payment banks and at the same time merchants would also facilitate lending? Because I understand every country doesn't allow the monetization of their data and clients. So what is the roadmap of the company?
And how do you plan to see how do you plan to mitigate some of the risks going forward? Okay. So looking from perspective, AI Fintech LLC was taken in U. S. Because we plan to launch U.
S. Since we were very complete there to launch a solution. But unfortunately, due to COVID and the flight cancellations, we've not done it. As far as 2 other companies that you mentioned, right, that is CardPay, which is now under a subsidiary of the other one, Go payments, right? That's the 90% that is there.
And since the whole effect, we have seen the result is already on a run rate, 4th are 4th is becoming a majority owned subsidy, it's already at 100 of $1,000,000,000 PPE growth, right? And the whole idea here is that, since we can aggregate what we do on platforms, platform and payments is one part and then power back end and part of the payment extension. But Go and Grit, that's one part. They do the assisted commerce business. So they have like 40,000 relationships across 1200 citizen towns where they have all the assisted commerce services.
Now within Carpay, they will do the entire issuance network. Within credit through an issuance network, that is the corporate cards and other parts, that's where Carpay comes in, the technology and other things that has been built out in Carpay. Will be launched to give out that corporate cards and lending for cards. So the entire issuance network while payments is acquiring, the entire issuing network along with assisted commerce will then within our majority owned subsidiary that is GoPayments, right. That is one strategy that is there.
The second investment strategy also, Yvonne mentioned, 2 other ones. 1 is the new NUE that we are setting up and partnered with Reliance and 2 other global leaders. That's to do the network business like a Mastercard or Visa. Visa, you all aware, is half a 1,000,000,000 market cap company present globally. So like Visa, Mastercard, this NUE will do that kind of a network business like Musa, Master and PCI and has global escalations.
And our other investment is in Gamitguru, which is now Payable Fintech, which is already doing around $11,000,000,000 of invoices. So international remittances and platforms will come within the Fable Fintech. So that's the investment thesis, the entire acquiring in the platform is what we are doing within Ios. Our investments in Go, which is a majority of such as Go and Sajust Singh, is on the Extreme side and on the Assisted Commerce side. And their international remittances is through Cable and F and the NUE business that is the network business will come under the new investment that we have made through our investment shown.
Yes, we got a certain event overall. We completed all aspects of our business. Yes, absolutely. I think this part is very clear. I think what I want to understand is that the NUA, the license which is scheduled for this year And most likely, the company should be able to pursue it given the strong technical support.
B. Balaji:] Thanks, Mr. Balaji. How do you see integration of these with this NUV platform? Because as I understand, you want to have a converged platform to do this lending going forward.
So if I'm can you help me understand? Because on one side, we are increasingly seeing So lending is very clearly a strategy for India within India within our platform and savings business. It is not through the remittance business where we are interested or through the go payments only that we limit the lending on the corporate card or to the NPE. And we have a different risk based business altogether, especially investing. But in the payment ecosystem, the card networks that's on top of it, having a national switch where all the banks connecting, that's very important to build our version of DTI, our version of this.
So network business is quite different. The lending piece that you are talking about, Hilti, is very clearly within the Indian avenues business, what we are doing within the platform and the premium business. It's not for international also. We have no plans right now looking at international where the interest rate is quite submerged right now and the same. But in India, it's a huge opportunity.
There's a huge credit offtake and there's a huge demand from SME and SME to kick start post this pandemic. So we are very focused on that. And with the kind of risk data and the new kind of listing that we are doing, the kind of algorithm intelligence and merchant learning that we are putting in on our merchant data across our various platforms and payment business, it gives us very refined knowledge, which is not available to traditional banks to do very secure, safe lending with very, very, very negligible NPAs that can be done on it. So, Vishal, such an rightly put you up for follow-up here. What I understand, looking at the global payment business and global consumer lending business and digital content, You said, Praveen, brands which have built more digital retail facing franchisee or brand recall, these are all extraordinarily well over time.
Now Infibeen is extremely very, very powerful as a company in the B2B space. So since you are, Elant, going to venture into P2P, eventually, direct consumer lending or P2P, I would like to understand how will you position your brand into the portfolio? So here, I am very, very clear that as there are 2 strategies. There are lending to consumers, which can be in multiple fold, consumer lending, instant loans, whatever. And then there is a lending to corporate SME and MSME, right?
We are very clearly focused to be on lending onto an SME, MSME or corporates where we know the default interest can be negligible and the data that we have of their multi processing and the different ways of recovering money is a very clear category. So for us, lending to SME, MSME will do that. As far as consumer lending is concerned, we are very clear that we are going to act as an aggregator of all consumer lending apps that are there in the market. So as you see here, any payment gateway where you see on the checkout whether you want to convert into buy now, pay later, we will include everything that is available in the market and make 1% or something of the transaction upfront without taking any risk on other things because we very clearly understand that if you want to recover, say, if you are consumer loan for INR 4,000, 2% increase in merchant or Mizuho merger or ISA merger, it's going to be very difficult to recover that INR4,000 to take it in case of default, right? So we don't want to be on the consumer lending space for small amounts and other things, right?
We want to be an aggregator. So if there's a Bajan scheme, EMI there on a pay now letter or a SIMPLE or any other, we are aggregating all those that are market and we are going to earn on a transaction upfront, which is equivalent to the interest what we would have any charge if we have given out the direct link, so without taking any of it. So consumer loan, we are acting as an aggregator, While SME and SME with the regulator that we have, we are going to do direct lending. I think great clarity. Probably we'll catch up some more time later.
But all the best to you for the rollout and good luck for the full year. Thank you. Thank you. Thank you.
Thank you. Thank you. The next question is from the line of Srinishankal from Incrediators. Please go ahead.
Yes, I have one last question. See, one of the reasons why you are managing the pricing squeeze just the areas where you get higher margins like aviation, travel, etcetera has been on the mobile front, right, education etcetera. What you are seeing the increases of the COF, the impact of the asset increases, we expect to see a better improvement in margins in the expense? Yes, yes. Shankar, that's what I said earlier.
There are two reasons why the margins have slightly contracted in this quarter, primarily because of the point which you mentioned. And once those sectors are completely reopened and the take net take rates will actually go towards not to us. That's one thing. Second thing is that since we have started investing in the credit algorithm investments and framework investments and technology solutions, investments and framework investments and technology solution investments leading towards lending our business as a facilitator to enable us actually to the banks and NBFC to capture a larger piece actually for our growth. So that also taken a bit of hit actually and that hit may likely to happen in the few more quarters also.
And that is basically a seed capital which we have to really invest. We thought that the lending growth will not really happen. And we would want to be a differentiating factor also that for the banks and NBFC because almost other TV players may also enter into a solution, maybe a different solution. But we want to be a value differentiator actually, technology value differentiator. Therefore, the investment into that kind of position is very important.
And that's also one of the reasons why it has taken a little bit of heat. And that is basically the broad reasons actually for our heat. But once the sectors will get reopened, I'm very, very sure that the net take rates will go actually upwards. And also once we start seeing more number of the merchants that we have onboarded, and in your presentation, it talks about closer to 1500 per day, etcetera, that starts yielding this sense also we should start to see improvement in margins, correct? Yes and no.
That is basically a forming part of our business actually because our growth actually of FY 2021 was JPY 19,000,000,000. And today we are talking about JPY 28,000,000, JPY 29,000,000,000. So JPY 50,000 crores means JPY 205,000 crores actually JPY 205,000 crores on an annualized basis, which means about, say, JPY 29,000,000,000. So that is actually bundled for our extra onboarding of customers, merchants, 1500 actually daily onboarding is not a global, it's a huge number actually. And that's a lot of bundle.
But that has maybe have an impact actually on the profit, but that is not the main reason. That is the main reason for the growth. And the profit driver would be actually contracted because of this one actually. Okay. Thank
you. Thank you. The next question is from the line of Shri Kartik from Investec. Please go ahead.
Yes. Hi. Thanks for the opportunity.
I have a couple of questions. Recently, RBI has allowed PPA
payment gateways and other TPI providers
to circumvent the acquiring bank and have a
current account with the RBI itself.
I wanted to understand what will be the effect impact of that and benefit
of that for us as a payment gateway? That is 1.
Secondly, whilst I understand that part of the reason why the take rate is going down is because of the discretionary spend associated with travel, etcetera, what is the impact of the increase in UPI transactions in the transaction mix which is affecting
the take rate? Those are the 2 questions. Okay. I will take the second question and maybe Vishwas may address the first question, Vishwas. By design, strategically, that we are staying away from the UK based actually.
So if you really see our UK based transactions quarter on quarter, this is by design, that our typical concentration of UPI is always in the range of 3.8% to 4%. It is actually less than 4%. So I think that is manageable. You cannot avoid, but that is manageable. But then going forward also, we will have real time mechanics and analytics to make sure that we are not exposed to UPI in a bigger manner.
The reason is that we don't get anything that's significantly better with the UPI. But how about we should be cross affected over there. That's the standard. Right. Right.
So we are not charging. No website says 2%. We are not charging anything for UPI. UPI and the debt with debit cards, whatever I discussed with the finance ministry, we are following that to a tee. Hence, the focus on getting non UPI merchants is not their strategy.
So overall base, Vikram just said that we are at around 4, 4.5 percent of our overall volume on UPI. On your second question on RBI allowing us direct access, yes, there is a good opportunity for us if artificial to directly do payouts using the RBGS on the payment into infrastructure. But we are still not we are still awaiting our CA licenses from the RBI for that. We will be able to do that. But more importantly, what it helps is on the card exchange side within our subsidiary company GoGrid, where we don't necessarily need issuing or an acquiring bank, issuing bank to issue a master visa.
It will be a direct network level access to us where we can work by passing and save on the fees that's currently being paid to an assumed bank a margin. So margin will be better in that card issuing business that we have. While NEXC RTGS and other access, some business models will evolve. Too early to predict what more we can do with that kind of an access directly without the bank policy.
So what is not very clear in the director or at least my understanding isn't so great is the confusion pertaining to NAST and RTG. Is it part of What we could make out is these are pertaining to would this particular account that you'll be opening with RDA will be helping out only in the NESP, RTGS transactions or even the credit card and other payments can be routed through this current account?
Just like you, we also have 101 questions on this, how it will fluctuate. Right now, as they've said, they've just done it through PPI. For PPI, it's very simple because the balances that are there in a wallet are very simple that they can use it and after it out. But how it will work out for a bigger ecosystem like the CAs or payment aggregators like us and specifically on the issuance side, it's not clear. I think coming back when this is personalized and work for the other guys, and then your business model will evolve.
Sure. And if it's okay,
I can squeeze in one more. Which is a payment switch provider that you use currently?
We have a payment switch of our own, but we use multiple. We are connected via 8 acquiring banks, including all the big banks like HDFC Bank, SBI, ICICI, Kotak Mahindra, Punjab National Bank, M and A and Bank of Baroda, Axis Bank. So there are various solutions and switches that they use. We also connected with a Lyra switch and many other switches that are there, certified with it for our deployments in international markets. And we have our own switch also, which will go with the capital for the certification process to make it live.
So that's very good. Okay. This is very useful, sir. Thank you so much.
Thank you. As there are no further questions, I would now like to hand the conference over to Mr. Sri Shankar from Inc. Research for closing comments.
I think you're financials that we need to call. Thank you.
Thank you. On behalf of InfraRed Research, that concludes this conference. Thank you for joining us and you may now disconnect your lines.