Please note that this conference is being recorded. I now hand the conference over to Mr. Siddhesh Chavan from Ernst & Young. Thank you, and over to you, sir.
Thank you, William. Good evening to all the participants on this call. Before we proceed with the call, let me remind you that the discussion may contain forward-looking statements that may involve known or unknown risks, uncertainties, and other factors. They must be viewed in conjunction with our business risks that could cause future results to differ significantly from what we express or imply by such forward-looking statements. Please note that we have mailed the results, and the same are available on the company's website. In case if you have not received the same, you can write to us, and we will be happy to send the same over to you. To take us through the results and answer your questions today, we have our top management of IRIS Business Services Limited represented by Mr. Swaminathan, CEO and Founder, Balachandran, Founder and CFO, and Deepta Rangarajan, Co-Founder.
We will start the call with a brief overview of the quarter gone past and then conduct the Q&A session. With that said, I will now hand over the call to Mr. Swaminathan. Over to you, sir.
Thank you, Sidhesh. Grateful to everyone who has joined the call today. I'm actually in a country called Gabon, which is in West Africa. I'm here with a delegation led by India's Vice President, Venkaiah Naidu. I'm leading the business delegation. We're about 12 people here as part of our efforts to grow overseas. If in the middle of the whole thing my call drops, you know why. As far as. last year goes, I'm thrilled. I'm thrilled with the performance. You can say I'm being very perverse. What is this? You know, profits have dropped. EBITDA has dropped. Sales has dropped. How can you be happy? If there's one thing I've learned in the last five years interacting with shareholders, is that there are different kinds of shareholders.
There are some people for whom a dividend plays the right company to invest in, and there are people for whom a growth plays the kind of company to invest in. There are people who are short-term. There are people who are long-term. There are people who are holding forever. There are people who are trading through the day. I think a company cannot please all kinds of investors. These earnings calls are also opportunity for us to discover the right kind of investor for companies like us. There are two reasons why the company's revenues drop or do not increase as much compared to previous year. One, because of reasons outside our control, and one because of reasons within our control.
If you take a look at the kind of business we are in, we are, to a large extent, prisoners of regulatory overhang, regulatory, inter-regulatory initiatives. The fact that there haven't been too many regulatory initiatives, actually none at all, in the last few years, has affected us badly, reducing, shrinking our collect business. As far as the create business is concerned, we have done extremely well based on our own. We basically actually exceeded our own expectations. I mean, trebling our business in the U.S. Many of you will understand that, you know, the early days when you get success, to get success is very difficult. Once you have established something, getting success is very, very easy.
I think the fact that we've trebled from a very small base and done really, really well is a source of great satisfaction. The same thing in Europe, where we have quadrupled our revenues. We've lost customers in South Africa because the regulator gave them extra time to file. That's not within our hands. We've also lost customers in the U.K., where we learned the hard way the problems of being concentrated with one customer. We used to work with one firm which gives a lot of U.K. customers, and they suddenly decided to take a lot of these things in-house and use a different tool instead. We lost a few customers there. Welcome to reality. Having said that, we've used the year extremely well. We've come out financially very, very, very strong. We have cleared off
You know, you've heard me say in every call about the dues to employees and my debt of gratitude to employees for having put up with us for so long. I'm happy to report that except for about INR 15-20 lakhs of employee dues where we cannot find my old colleagues who have gone to other countries and who are not traceable, every rupee owed to every employee has been cleared. I, except of course the founders. We, the three of us are still owed some money. It's not a lot of money, but it's owed to us. This, because of that, I'm now finally able to take a salary. This is the high point as far as I'm concerned for a year that just passed.
You know, when you look at the company, you look for indicators in terms of whether the company is getting stronger or getting weaker. I think from our point of view, from my point of view, and you're welcome to agree to disagree, from my point of view, the fact that I'm taking salary is the most powerful signal I can send to the world outside about the health of the company. It's not a huge amount of money that I take as salary, which you will know if you read the annual report. Having said that, even that was difficult to pay for some time. The fact that I'm now finally taking it is the clearest indication as to where we are going and what we think the company is up to.
That for me is a leading indicator. You know, when I provide data, people use data in different ways, and people look at the data very differently depending on the perspective they come from. You know, some people look at something and say it's half full. Some people look at something and say it's half empty. It's up to you to decide what you wanna look at. Our job is to present the data to you and then see what do you wanna do with it and help you navigate it the way and look at it the way we look at it. I mean, it doesn't mean the way you look at it is the way you wanna look at it. That's where we are. I think we're financially much stronger than before.
Salaries are being paid on time. Everything is happening on time. You know, the fact that we at current performance, we'll draw INR 45 crores of cash next year. At current performance, current level of performance. Fortunately, the COVID overhang is going away for us. Regulators are back in action. There are tenders that we are bidding on in different parts of the country. This is my first trip overseas in the last five or four years ever since COVID started, and it's not that Gabon is waiting to jump into the XBRL fray. In the first phase we need to explore, there are leads which we had in the past which have gone cold. We need to get back and get those leads back and try and cultivate them.
That's exactly what we are trying to do right now. In terms of numbers and financials, I will let Balu take over from now. If I drop out in the middle, please bear with me. I'm in a different country altogether, where the connectivity, while it's decent, can still be slightly erratic. Over to you, Balu.
Thank you very much, Swaminathan. I hope all of you can hear me. Siddhesh , you can hear me?
By the way, for those of you who don't know this is the only time Balu actually calls me Swaminathan. I mean, usually he has a different name for me. Thank you, Balu. Go ahead.
Okay. Where was I? All of you can hear me. Good evening, and good to meet you all after a gap of six odd months. I hope many of you would have seen our investor presentation, which we just uploaded a few hours ago on the exchange websites. I hope a few of you have seen that. Let me you know now quickly run through the highlights of the financial performance for this last year ending in March 2022. Like in the previous meetings where I have you know labeled this file, I'll dwell more on the movement of our annual numbers since our line of business you know tends to give a clearer picture when seen through the prism of a longer time period.
Now, if I look at the numbers per se, you'll see that, you know, we moved pretty much in tandem or pretty much in line with our nine-month trend, and this was, you know, maintained for the twelve-month period as well. Our top line has moved little slowly by around 8% compared to the corresponding year. While the revenue moved up by 8%, all expenses, other than of course depreciation and interest costs, increased by a higher, you know, proportion by as much as 18%, within which employee costs moved up by about 12%. Now you could see, you know, that this increase looks high especially compared to the corresponding period.
One should keep in mind that this was also onset of the COVID pandemic the previous year, and we are very parsimonious in terms of spending and all that. When it came to, you know, preserving liquidity, we are very bothered about that. You had a low base and on which expenses did move. I should maybe point out one aspect of our, you know, our overall trajectory as a publicly traded company. We were, you know, we IPO'd somewhere in 2018.
If I look at the last five-year time frame, you'll find that our revenues have moved at a CAGR of about 18% over the last five years, while expenses, you know, have moved up at a much lower rate, at around 11%. This has been accomplished with a very modest resource base, and we did the pivot into a product-based business during this period, I would say, quite effectively. Let me come to the revenue analysis. On a particular segment of revenues, you know, you can see that Collect segment, which it is one of our, you know, flagship segments.
Revenues grew by about 12%, while the, you know, emerging and more, I would say more durable, enduring Create segment continued its robust growth by posting a 26% growth rate. Our annual recurring revenue, which is a very important metric, has moved up by about 19% as we have a higher, actually higher than 19% if you look at from a gross basis. On a net basis, let me say it has moved up by 19%. The share of recurring revenues has also moved up, you know, quite significantly. It's now at 78%, up from 70%.
The other thing which I want to point out is that if you look at our revenues geographically, you'll find that our revenue share from the U.S. and European markets, these are sophisticated demanding markets, have moved up smartly. This particular growth has come primarily because of traction gained by our IRIS CARBON SaaS platform. Let me dwell on a bit on the Collect segment. We did mention the Collect segment is slowly coming out of a freeze in RFP activity that we foresaw and, you know, we experienced during the last two years.
I would say that, you know, this, you know, of course, was very much there during the whole of 2018 and even to a very large extent in effect in the U.S. There have been, you know, some emerging activity as far as public sector money is concerned, as well as, you know, regulatory RFPs are concerned over the last few months. We are cautiously optimistic to, you know, to expect an improvement in our new RFP pipeline going forward. In the recent months, having said that, we have been awarded work on enhancement of our own platforms, one in Malaysia and one in Kuwait. Of course, we had announced this through exchange filings as well.
Before I wind up, let me mention from a balance sheet perspective, we have been consistent in making it tighter. We have seen a further improvement in receivables. Receivables as a number of days. Liabilities have been paid as well. You know, Swami did mention that, you know, we paid promotion employees employee dues as well. From a cash point of view, we are at the point where we were last month, and we expect better days ahead. That's a short summary of, you know, what we have done in the last one year. Back to you, Madhuri. Thank you.
Balu, I take it back from here. I'm gonna anticipate a few questions that will definitely come up and answer them first. The rights issue. We made an announcement on the rights issue. Why did we not do a rights issue just yet? Simple reason. About three, four months ago, we saw the trend in the revenues. We basically said we would like the market to price in our performance before we do the rights issue. Is the rights issue on? Absolutely, yes. You know, when you look at the numbers that Balu just shared with you, he talked about 8% growth in revenues. I've always been saying constantly that if I don't raise any money, we will grow between 10%-15%. Now, if you factor out the fact that South Africa deferred their filings.
If you take a look at our difference in gross revenue and net revenue, that's about INR 3, INR 3.25 crores or INR 3.5 crores. Of which the bulk of it, an overwhelming percentage of it is actually on account of deferment of our filing in Africa, where the revenues did not accrue this year. It'll happen next year. Of course, hoping that we retain that clients. We've not lost the clients. It's more a deferral of revenue which we did not recognize. Since it happens once a year, it was not quite a thing either. If you factor that in, our growth would be between 11%-12% in terms of revenues. We've actually said we grow 10% or 10%-15% without fundraise, and that stands.
Why did we have to postpone it, right? What about the pricing in? You know, as promoters, we don't have the money to subscribe the right issue. We've always said this. Now, if I had done the right issue and we've not subscribed, somebody would have actually screamed saying, "What sort of nonsense is this? Promoters knew in advance and therefore they did the right issue and they pulled the wool over our eyes," and all that stuff. I don't wanna get into that. We take great pride in our governance. We take great pride in our transparency, which often comes to hurt us. We are willing to put up with it because transparency for us is not because the market wants it or because shareholders want it, because transparency is because we want to create a great company going forward.
We want to create a great company that has continued to survive only because of the transparency we have internally and externally. That's exactly what we want to do. The rights issue will happen. I hope people support the rights issue. The rights issue is not a means of giving largesse to our shareholders. It will not be priced at significant discount to market. It may even be premium to market, we don't know. It could be premium, it could be discount. No discount at all. It could be at market. Basically, please be aware that the rights issue will happen. We will now start working on it now that the market's hopefully by the end of the day, markets are priced, we have performance already. The idea is to basically raise money that will put us on a bigger growth path.
Now, why do we need the money? We need the money because we wanna grow in certain markets with revenue initiatives. You might have seen one of my tweets a couple of days ago, where the U.S. government, the U.S. SEC, the U.S. government actually, the U.S. Congress and Senate, are now expanding the scope of XBRL reporting in the U.S. Now, in the SEC world, the filing started way back in 2008. Snatching away existing customers from other vendors is more difficult than charting a fresh course in a new opportunity. The reason why the U.S. revenue has doubled is because we went after a new opportunity last year, the energy market opportunity, where we did extremely well. The reason why Europe's revenues doubled is because we actually went after a new opportunity with the ESEF mandate.
These are iXBRL filings to the capital market regulator. We've always done well in new mandates because it's also much less expensive to catch customers in new mandates, and it's much more expensive to catch, to swing customers away from existing vendors in old mandates. There are several new mandates coming in different parts of the world. You might have seen a filing, some filings by us, which talks about how even Government of India is looking at moving to standards-based reporting across the country. In fact, several tenders have been issued in that context. We've lost some for reasons that don't make us very happy because very often regulators do not understand the significance of XBRL filings and they tend to use a ground-up solution as opposed to buying a ready-made solution.
That's fine. We live with it. The right issue is still on. I want to mention this because it's a question that will actually come up. Second point I wanna make is many shareholders keep writing to us asking for information that we cannot share, and we will not share. Now, very often, if these questions come which require detailed information, if there's an earnings call close by, we will address the questions at the earnings call and not do individual answers. Please bear with us. With that, over to you, moderator.
Thank you, sir. Ladies and gentlemen, we will now begin the question and answer session. Participants who wish to ask a question may kindly press star one on your touchtone telephone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use handsets while asking a question. Please press star one to ask a question. We will wait for a moment while the question queue assembles. We have the first question from the line of Rohit Koti from Marshmallow Capital. Kindly proceed.
Thank you for the opportunity, and thank you for the detailed commentary as always. My first question is on U.K. First, if you could give us an idea of what was the quantum of revenues that was lost because of our customer moving everything in-house. A follow-up there is, I mean, if you could also detail how, I mean, why did we lose the deal. Because, I mean, as is discussed in the presentation, we consistently rank near the top in terms of quality, and we have been a bootstrap operation, so we should be among the lowest cost providers of the software as well. Swaminathan did mention that they are using a new tool.
How, what, I mean, what made us lose or what cost us this particular deal that source of revenue that we had historically? Does it also call into question the partnership model that we have been using heavily across other markets? Is there a risk of something similar happening in Europe and U.S. or any other locations where we have done really well in the past?
Rohit, first of all, it's good to know that you now have a company name associated with your name, which I did not know about, so congratulations. It looks like you found the company. Or have you joined somebody? I don't know. We'll come to that question later. Before I pass on the question to you, a couple of things.
I think the biggest lesson is don't put all your eggs in one basket. In the U.K., we had one partner. We didn't lose customers. The partner decided to take most of the work in-house, a lot of the work in-house. I think the impact on the revenue is about INR 1 crore. Val will confirm this. It's not very, very significant. Having said that, we also made up elsewhere in the U.S., not U.K., not that much. The quality thing you talk about is in the U.S. SEC market. In the U.K. unlisted company market, there are no quality reports of any kind. Yes, we are a low-cost provider, but we are not the lowest cost provider. There are people offering at even lower costs.
As somebody said, in the U.K. currently, iXBRL filings are available for free with a breakfast coupon for cereals, which you always buy some cereals from Kellogg's. You actually end up getting a breakfast coupon saying this. I'm just joking, but that's really how low the cost has become in the U.K. I don't know why we lost them. But there are opportunities coming up. The lesson that we learned from this, don't put all your eggs in one basket. In the U.K., we had one customer passing on significant number of companies to us. This has been a rude jolt for us. I mean, as I said, over the next. The good thing is the customer obviously has said that he's not gonna exit immediately with all the companies. They're gonna exit over a course of two-three years.
We will gradually see a lowering of the revenues. The impact in terms of the companies on the net impact will not be very significant. Now, since Deepta handles this directly, I'll let Deepta take the question and answer the way she wants to. Deepta.
Thank you. Hi, Rohit. Just to give you a little bit of background on this U.K. business loss. The U.K. mandate, the UK iXBRL mandate, the business registry mandate, which went live in 2011. It's been about a decade, over a decade. At that time, we signed up with one large customer, you know, who's a large consulting firm, and they had a whole clutch of companies for whom they were offering these iXBRL solutions, basically. Right? You know, as a policy, this large consulting firm never actually concentrated all of their business with any one partner.
They had two, three different partners through whom they were working and processing these files, basically. We were one of them. Amongst the partners, we were told that we actually were the best in terms of quality. I think this large consulting firm decided to start taking some of the business in-house. Actually, very honestly, they never expected that this kind of, you know, iXBRL solutions or services would last this long. You know, they thought it would all become integrated as a part of perhaps an accounting package and it would become all very routine. They themselves didn't expect it to last this long. At the end of the decade, they decided that they wanted to start pulling some of the business in-house.
Apparently what we learned is that they already dropped all the other solution providers and other partners, vendors that they had, and we were the only one in the fray. They also said that given that the relationship was this strong, so it is not that they switched in favor of another solution. They were also processing some internally themselves anyhow, because they always wanted that as kind of a backup. But I think they got like a kind of a mandate or a requirement internally saying that let's now consolidate all of this internally. They came back to us and they said that given our relationship is very strong and, you know, they said we'd like to do this in a phased manner.
We would like to reduce the number of files of our customers that we pass on to you. At steady state they expect it to drop down to about a third of where it was at current levels. We see that playing out over the next, you know, three years or so. This mandate is an old mandate. We are, of course, the lesson learned for us is, you know, never concentrate risk with one partner in one geography. The more diversified one can get with multiple partners and, you know, the more direct any company one can have, the better for us. When we contracted this of course we were way smaller. We didn't have the ability to go direct and we had just this one partner.
We are now focusing our energies on the UK market. There are two mandates over there. There is a new mandate which is the ESEF mandate as you know. There is this one as well, which is the old what we call the HMRC mandate, the tax and the revenue mandate. We are looking to see whether we can kind of get business in. We are getting in a small way as well. Like Swaminathan already explained, for the U.S. market when you're in a replacement market after such a long time, it's probably likely to be hard unless we're able to bring in a couple of bigger partners at this point in time. That's the long story and that's the lesson in the learning.
Rohit, on the overall thing it's about, it's two. Rohit, one more thing. Rohit, it's what the total revenues from the UK market from HMRC filings was never more than INR 2-3 crore anyway. In the larger scheme of things it's insignificant, but in the larger scheme of things it's a slap on the face and lesson for us to learn. The good thing is that we have enough partners in every other market to be able to withstand jolts and we're sufficiently diversified in a sense. In a market you can't go direct and also go with partners. It creates channel conflict. With a partner always looks at you and says, "What if you go behind my back?" And so on and so forth. It's been a challenge.
You have to walk on literally eggshells to get there. We are doing that. I mean, we seriously are trying to, you know, it's a fear that we always have and the fear has come true.
Fair enough. I mean, this is very helpful and detailed answer from all of you. Just a follow-up there. One of the things that was mentioned was that the expectation that over time such an iXBRL solution is integrated into accounting package or something along those lines. How serious is that specific risk for let's say Europe and the US market that we are extremely excited about today?
Sure. Let me,
One sec. Please one second. Deepta one second. Deepta also said that over the last 12 years it's not happened and that's the reason why they're taking it in-house. I think there's an answer in it somewhere as well. Keep that in mind.
Very true. Yeah, there are two parts to the answer. One is, obviously it has not happened the way people had anticipated. They thought it would become so seamless that it would just go into accounting packages. Like this partner of ours said, it has not happened in the last 12 years, and they don't foresee that happening, right? They themselves are taking this in-house, so they're setting up a practice for this. That's one part. The second part is the difference between this, you know, HMRC mandate and the European and the US mandate that we are so excited about, for example, is that the HMRC mandate works on a simple taxonomy and is a fixed taxonomy which theoretically could have been kind of automated, which was not, by the way, you know.
Again, the more complex mandate is far more of a challenge. In a more complex mandate, it's not only numbers that theoretically can be out of an accounting package, but there is also a lot of narrative and texts and reports, et cetera. It's if it was difficult in this one, it's close to impossible in the other one. I should not say close to impossible. We take a heck of a long time, I think.
Rohit, the other thing is that, you know, the cost of doing it in-house using an integrated tool, the cost of integrating it internally is much greater than the GBP 150-GBP 200 pounds you actually pay for using a third-party tool, to do the whole thing. Would you buy a road roller to break a pistachio nut? Absolutely not. A hammer would actually do. It's cheaper to buy a hammer than to buy a road roller. Integrating internally is like buying a road roller. Using a hammer is what solutions like us are all about. That's what I think our partners realized. Partners basically said, "I will have my own tool. I'll have my own way of doing things. I don't need you. Thank you very much.
Understood. Okay, perfect. This is very helpful. Next, if you could elaborate a little more on how you see things with the existing and implemented mandates in Europe and U.S. With the ESEF ESMA mandate, I believe. I mean, am I right in assuming that the You had, let's say, 30, 40 clients coming free for the first year. I mean, am I right assuming that the entire client base that we have right now-
They've all converted now. They've all converted to paying clients. Everybody.
Oh, okay. I mean, going forward, it will be equivalent to what, going forward, it will be like how the U.S. SEC has, you know, the something 2000 in the sense ki you have a fixed client base, and it will be very difficult to grow them as far as the current ESEF mandate is concerned. Am I right?
That's a fair statement, but I will let you finish your full question before I answer. That's a very fair statement.
Yes. Okay. That was number one. Second is, when is the ESG gonna be implemented as part of the ESMA mandate in the U.S. and, I think, Europe? I was also curious to know because I'm talking about ESG, so how much of a difference per filing in pricing is there for ESG filing? Because as you've mentioned, that GAAP has used you for ESG filing, the first ESG filing they've ever done. How was the experience? How was the realization differences compared to a normal filing that you've been doing in the U.S. and Europe?
I'll let Balu take the ESG question. As far as, you know, harvesting our existing clients more, I'll come back to the question later. First, let Balu take the ESG question. Balu?
I will maybe, you know, request Deepta to take this question as far as GAAP is concerned and, you know, experience that we have working with GAAP.
Sure, Balu.
Balu, the question was about ESG and not about GAAP, Balu.
Okay. No, the experience of working with GAAP. Oh, okay. On the ESG side, maybe I can, you know, answer them on two parts. One is the European mandate for ESG filing. It is expected to start in, you know, 2024. The exact calendar is yet to be out. It is going to cover companies, you know, both private and public. Right now, the IFRS Foundation, which is looking at the entire ESG or climate financing area, is in the process of creating the standard. We expect the XBRL taxonomy, which will be an integral part of it, to come out by end of this year or early next year.
That's when the mandate could start, you know, rolling out on a voluntary basis. As far as the GAAP situation is concerned, the GAAP activity is concerned. The GAAP activity, you know, happened because they want to do a ESG report in XBRL on a voluntary basis, and that's where we stepped in, and we worked with them to create that. Maybe, Deepta, you want to expand a little bit on that particular process.
Sure. As Balu has already said, GAAP wanted to voluntarily create its ESG report in a digital machine-readable format. They were looking to do that. They were looking for a tool that could help them do that as well. There was a SASB taxonomy which was already available from the U.S. SASB actually connected GAAP with us because the existing tool that GAAP was using for its SEC filings and the other filings wasn't ready with the ESG taxonomy or the SASB taxonomy, while Carbon was already ready. They decided to do this on a voluntary basis and create the report.
They were very, very happy with the experience, actually, both, so they are obviously providing kind of, you know, testimonials and references. It's still early days because it's not mandated yet. They, however, are kind of, you know, putting out a small case study. They're also happy about the fact that their reports in a digital format, so it's benefiting us as well.
The essence of what Deepta basically said is the following, that when you have multiple mandates for the same company, it's advantageous to have a tool that covers everything. If you can be quick off the ground, then there are possibilities that people will actually switch to you. While GAAP may have been using somebody else for their SEC filings, the fact that they've now used ESG gives us an in into GAAP. When you talk about the first question that you asked about the limitations in terms of what we can grow, how we can grow in the U.S. or Europe in these situations, I think as more and more mandates happen, and I think.
I don't know if you've seen my tweet on the U.S. Congress and Senate passing a new law expanding the scope of XBRL filings. When those things happen, I think we are in a very good spot. We are actually in a very good spot, basically because we are usually very quick off the ground with our R&D team, integrating newer and newer filings into it, like we did with the ESG filing, which got us this GAAP mandate. I think you should call it something else. People confuse GAAP for general accounting principles. GAAP, the company in this case. Your question, I hope the question got answered. The fact that we have other possibilities from Carbon brings in customers into us. Secondly, also keep in mind the size of our company.
We're still very, very small. Adding, you know, INR 5 crores, adding $100,000 is exactly what? You were saying INR 75 lakhs. Adding half a million dollars is what? Three and a half crores. Given the size of our company, the growth that we seek is not daunting. Even switching is possible and adding new filings is also possible.
Perfect. One part of the question which was what is it? What would be, let's say, the rough realization difference when it is just a normal XBRL filing for a listed company versus when an ESG package is also included as part of it. Could you share that number if possible?
Balu?
No, we haven't at this point of time, like, given a number to any of our customers who are working with us on a voluntary basis. My expectation is, you know, it won't be dramatically different. That's my expectation. We need to discover this in the market.
Sure. That's helpful. I mean, Swami touched upon growth. I mean, I ask this last and get back into the queue. In the past, we've mentioned that we can grow at much higher rates with adequate funding. Would it be fair to assume that the statement still holds very much true, and we're waiting for the cash flow from this year as well as the rights issue to accelerate our focus on the growth path. Would it be a fair statement to say that?
Totally. Also one more thing I wanna add to this is, it's the interesting thing here is a couple of adjacent products. For example, let me step a little. Rohit, you're an investor in the capital markets for a long time?
Yes.
Have you ever used XBRL data?
No, I have not yet.
Is there an opportunity for us?
Sure. That is true. Yeah.
If every listed company you invest in teaches you how to use XBRL data in your investing behavior, would that help?
Sure. Yeah, it would help. Yes.
Would every investing company, sensible investment company, would therefore now that they're filing in XBRL, want to do that?
I agree.
There's your answer. That's our hook.
Okay. This is probably the consumer section that you're talking about here, right?
Absolutely right. On which we've invested tremendously, which is what brought it down to losses. That's where we need to focus to acquire new customers. Apart from adjacent filings, learning to use XBRL data is also a huge possibility.
Perfect. Perfect. I'm sorry. One last question before I go back into the queue. In the past also, Swami, you've mentioned that you've lost tenders in India. You mentioned IRDA, which I think Wipro won in the past. Even in this call, you mentioned that you've lost a few. Historically, we've always maintained that in Collect segment globally we have only three, four competition and we generally win 45%-50% of the tenders. Other than RBI,
55.
What? Yeah. Fifty-five. Okay.
55.1%.
55%. Okay. But what's happening in India though? Is it? Why is it difficult for us to win tenders other than the RBI one? We are consistently been there, I think, for more than 10, 15 years now.
The ignorance of the regulator is the biggest problem, and the tendency to want to develop bespoke solutions. Very often people don't understand the importance of data standards. They think electronic filing is enough. They think electronic filing is all that they need to do.
That myth has now been busted with the CAG report, which says it's not enough to collect electronic data, it's important to have common data standards. That's a very significant report. The CAG report, if you don't have it, I will have it sent across to you. It's gonna become law, very soon. When that happens, in fact, already MEITY has issued us some report two days ago about governance and data standards. The ignorance of the regulator and the unwillingness to recognize the benefits that RBI has gave us, RBI knows all about and talks about all the time. That's where the problem lies. I think when that changes, and therefore they all think it's some very big software project that needs to be implemented and we lose out in the big four.
They set conditions which ultimately ensure that only the big IT companies can actually bid for it. The IT services companies. We still have an IT services mentality in this country. That needs to change, and that hopefully will change. We are confident then. One thing is very clear, Rohit, this is something I must say. During the COVID period, the biggest lesson that we also learnt is that we can't ignore the domestic market. We have some creative ideas in terms of what to do. You will actually see some significant initiatives that we actually take in the domestic Indian market to grow our revenues here. Don't be surprised if you see us coming out of the woodwork in a few areas, and not just in GST, but a few other areas as well.
Thank you so much. I'll get back into the queue.
Thank you. Participants, if you wish to ask a question, please press star one. To ask a question, you may press star followed by one on your touchtone phone. Participants are requested to please press star one to ask a question. Swami, sir, presently there are no questions in the queue. We have got a follow-up question, sir, from Rohit Koti himself.
Okay.
Please go ahead, sir.
Rohit, can we pause for one second? Rohit, can you pause for a second? I want to say something else.
Sure. Sure, Swami. Sure.
Balu, you would have seen that those mails from shareholders asking various questions which we did not reply to for a variety of reasons. Can we take some of those questions so that at least the shareholders are happy?
Yeah, sure. We can do that.
Balu, you have the findings, you know? Maybe, you can read out the questions and we can decide who will take it.
Thank you, Pal. Balu sir.
Okay. Maybe you can read out the question one by one, and then we can decide who will take it.
There's a question from Vineet Khandelwal, and that says, "I would like to know the progress of subsidiary made by the company in the GST space. How many clients are added, and how many more ERP partners is the company collaborating with?
Gautam, are you there? Gautam?
Yes. Yes, Swami.
Gautam, will you take the question? Gautam, not only will you take the question, I also want you to talk about the IRP because many people might want to know about the IRP, but they don't really know yet.
Okay. The question is, how many, what is the progress made on the subsidiary made by a company? This is Iris Logix, which is a subsidiary which focuses on an app for the transporter segment. Currently, we have 165 subscribed users, subscribed transporter companies who are actually using the app. These are regular subscribers. They either take a quarterly or an annual subscription. In terms of number of ERP partners, we've got four partners with whom we have tied up. A bulk of our, you know, subscriptions are direct subscriptions. ERP would be making up for about 15% of the total subscriptions. That's on the Iris Logix, which is our subsidiary.
To talk about IRP. IRP stands for Invoice Registration Portal. As you must be aware, e-invoicing is now mandatory for issuing of invoices, all B2B invoices. The mandate was rolled out in 2020. It started with 500 crore companies, and it's subsequently the threshold has been reduced. Now it's 20 crore companies. About 3 lakh GSTINs currently come under the e-invoicing mandate. The government has actually seen the benefits of e-invoicing by plugging up the revenue leakage. We see these in the monthly tax collection figures, which have been constantly going up. There's an intent and there's a need to make e-invoicing pervasive across for all B2B transactions. Government is also talking about making e-invoicing for certain B2C category of invoices.
That's where the long tail of taxpayers come in. Almost 95% taxpayers who are currently not covered. This would require having substantial infrastructure or IRP system in place which is able to handle the load and the request which is coming in. Currently, NIC is the only registered e-invoicing service provider in the country. In the 42nd GST council meeting, it was decided to appoint private IRPs who would actually perform the same role as what currently NIC is doing. A process for selection of the IRPs started about eight months back. About 100 companies had applied, 30 were shortlisted, finally 17 presented, and a full-fledged demo of the IRP application was made.
Finally, four companies have been awarded with a license to become an IRP. Currently it's a provisional license. Once the agreement is signed, you get the final license. IRIS is one of the four which has been selected. Once we become an IRP, we actually move a notch up from being just a DSP which is connecting to a NIC or a GSTN system. We come at par with the NIC system and become one of the five IRPs which can actually generate e-invoice on our own. Next time, if an e-invoice has been generated and signed by IRIS, one can actually sign, you know, scan the QR code and see that it's signed by IRIS. What does it mean from an overall opportunity perspective? There is e-invoice.
The generation of e-invoicing is a government mandate, so it has to be offered for free at zero cost, which is what NIC is doing, and the private IRPs will also need to do the same. Private IRPs are allowed to provide VAS on top of the basic e-invoicing data. That is where we see an opportunity because there are lots of gaps and needs in the industry from an overall automation of the entire AP cycle and the AR cycle, as well as the value of an e-invoicing data for flow-based lending.
This is all going to be, you know, once a supplier is giving a consent to take a VAS and the data can be stored by the IRP, and these services can be offered on top of it. That's where we see some, a big opportunity and an opportunity to play a role in actually digitizing the entire commerce chain of the country.
The real story here is not just the fact that we got it, but when you look at the list of companies who bid for it, which is who's who of India and who did not get it, only four of us got it. The fact that only four of us got it tells you something about how good we are or what people think about us. To convert it into an opportunity is where the challenge lies. It comes back to the same thing. I'm like a stuck record. The amount of money that we have in the bank will drive how successful we are.
At the presentation, one of the companies, which is a loss-making company, one of the new age companies, they basically mentioned that if you have any doubts about us, look at the balance sheet, we've got INR 500 crore. The same question was asked of us. You know, they have INR 500 crore. How much do you have? We have not even INR 5 crore. For us to be successful, we need to have a war chest. I'm not saying we have a INR 500 crore war chest, but we need to have a war chest. I hope, therefore, that when the rights issue happens, we will get subscription from the shareholders in a manner which allows us the comfort that we can fight the battle.
You know, to have to fight with somebody who's got INR 500 crores, you don't require INR 500 crores. You basically need to be smart about what you spend and how you spend it. You have a great product, and it has the trust of your customers. That's exactly how we go about doing things. We've learned how to do things in the cheapest possible way and in the most inexpensive possible way, and that's what we'll continue to do. This again goes back to what I told you, Rohit, about adjacent possibilities that come up, which allows us to snatch customers. In fact, not only the IRP, recently MCA launched. MCA basically said some time ago about some possible vanishing companies.
Gautam, we also spent something about vanishing companies, the product that we have, and also the legal system. You talk about both, Gautam.
Correct.
Each of these things, shareholders, for each of these things, you might want to look at, we have acquired new customers to whom we can actually go with existing suite of products. These are both very important products which have been launched. Both of which are getting some traction in the market. It's slow, but it's happening. Gautam.
Correct. MCA has come out with a regulation that if a company is dealing with any counterparty which is struck off, it needs to be reported in their annual report filing. If you look at the current MCA website, there is no common source or there's no place which actually lists all the strike-off companies. The list of strike-off companies get uploaded in a PDF file by independent RoCs. There were 25 RoCs in the country. What we did was we actually downloaded all the list of struck off companies and have put it to a database and run a smart search.
Where any company can actually come and just upload an Excel file with the company which they are dealing with, and we give you a name match whether the company is actually struck off or not. It just makes it easier for secretarial or the finance team, which is actually working on it. We call it as IRIS LookUp. This is the first feature we have looked at in IRIS LookUp, which is searching for struck off companies. Now that we see, you know, there's a good demand and there's a good interest, we have about 65+ companies which have taken subscriptions. It's a completely DIY mode. Once a product is made, there's nothing, you know, it runs on its own.
There is just absolutely no team or, you know, involved in it. This gives us an opportunity to actually cross-sell, upsell. Out of the 65, more than 50% are first-time customers for IRIS. This gives us an opportunity to actually start selling our GST solutions, our MCA filing solutions. We'll be also looking at adding more features within Lookup through GST search, through GST compliance scoring and returns filing and PAN search and things like that. All public information where any enterprise needs a utility to do a bulk search and get returns or reports immediately. This is what Lookup is gonna do. That's our first product, which is IRIS LookUp. The second one is IRIS Litigation Management System.
Post GST, a lot of things changed for companies to actually manage their litigation, especially one is a services company. One has to now take GST registrations across all states. Earlier, there were different laws for VAT, excise, service tax, central, you know, and then state specific taxes. The GST regime completely changed the whole thing with going to a faceless audit and a faceless assessment mechanism. We have built this tool, which is a SaaS-based platform, in collaboration with one of the leading firms which specializes in GST litigation.
It's a tool which actually manages, tracks your entire litigation cycle, you know, starting from an audit stage, to you know, show cause notice and goes all the way till the time the case is closed or a settlement is made, leading all the way up to Supreme Court order. This is a very detailed and this is again a tool which is targeted for large enterprises, which is managing lot of litigation, lot of show cause notices now. This is phase one. It has modules for litigation management, pre-GST litigation management, as well as handling audits. We've been getting some good feedback. We've had a couple of large companies which have expressed an interest to sign up.
We've also started getting feedback for, you know, building an AI/ML based features in it where similar cases can get tagged, and you can actually refer back to similar case laws or advanced rulings.
Auto drafting of responses and emails and things like that, which will be taken up in phase two. There is also requests that, you know, if a similar tool can be actually looked at for direct tax litigation management as well as license management. Those are things that's there on the roadmap. We see this playing a bigger, you know, a very important role as GST now, you know, gets you know starts moving into more of a litigation phase.
Basically the way to look at it is in a digital reporting framework, there are many adjacent opportunities, each of which we are trying to get into in some way or the other, depending on whether the fit is there or the fit is not there. Rohit, over to you.
Okay. Let me, yeah.
Sorry, Balu. You wanted to say about IRP, right?
No. There were a couple of more questions from Vineet. Let me just run through it very fast. Okay?
Okay.
One was the company recently disclosed that a large investor, Subhkam Ventures, acquired shares of the company. Is the acquired promoter shareholding or shares from the open market?
Please read the filings that we make. I have one request for shareholders. Please read the filings that the company makes. Subhkam is an investor in the company. What they do is their business. What they do with the stock is their business. This is all public information, so please read the filings carefully before asking such questions. It's all there. Go ahead.
Subhkam did not acquire shares. They disposed of shares in the market. That's what happened.
No, no, Balu. What Subhkam did, we don't know. There was some change of share acquisition, but it is not up to us to answer what Subhkam did or did not do. It's up to Subhkam to talk about it. We are not Subhkam.
Absolutely. They have disposed it because, you know, the numbers were very low. We are done.
No, but the filing was made by Subhkam in the market.
No, we also had to make a filing, because there was a requirement.
No, that's true. That's okay. The point is the promoter shareholding has not changed.
Absolutely. That is the basic part. Okay.
Go on.
Yeah. The other question was about the disclosure management. What are the benefits, you know, with respect to disclosure management? How many clients have it been sold to? Deepta, you want to-
Okay. Deepta, can you give a short answer please? Deepta, short answer because we don't have much time now.
Sure. The short answer is that the disclosure management solution will be released now in the coming month. We don't have any clients at this point in time. We'll get a better sense on this entirety after the next few months. That's it.
Thank you. Next question, Balu.
No, that's from Vineet. There are a couple of others also who had asked questions.
Okay. Just ask.
Okay.
Please ask.
Suppose this have been answered in the previous, you know, the explanation that we have given.
Let's mention it anyway, so that at least for the record we know the shareholder has answered.
Yeah. There's a question from Saurabh Jain. What is the range of order value for the Kuwait project, whether we assigned with the UAE as a partner? We don't disclose, you know, numbers with specific projects. I can say that it is a lower range of a typical, you know, capital market individual issues. Because this is an enhancement process. That is one question. The second question is, what is the value of business that can be expressed from the launch of new product, IRIS LookUp, which doesn't give touchpoint. And what is the value of business that can be expressed from acting as an IRP for GST? That also doesn't give touchpoint what we are trying to do.
What is the indicative timeline for the rights issue? That's other question from Saurabh Jain.
The answer is very simple. The moment this call is over, the moment we feel the market's priced it, whatever manner they want to, we will then call a meeting of the Rights Issue Committee and we'll take a decision very fast. We will not linger any longer.
Okay. Now we move to Mithun Muraleedharan. He had, he made a few questions as well. What are the current order details? We have given the order book in our presentation. You can take a look at that. He's talking about company entering the IaaS segment and know more about your future outlook.
What is IaaS?
Presume it, presume could be the IRP segment, Infrastructure as a Service, perhaps. It doesn't give-
That's been answered. That's been answered.
Yeah, that answered.
Yeah.
Any new geographical expansion of business has been done in Q4. Can be continued to. Geography-wise, slow but deeper we are going. Steps taken to improve the financials of the company. That is.
Balu, actually geography-wise, yes, because we have Balu, we have actually sold a couple of licenses for SEC filings to companies in Chile, for example, which I discovered completely by chance in the course of a call. Some Chilean company has taken our SaaS product for SEC filings. The answer is yes, we add more geographies. Go on.
All right. Steps taken to improve the financials of the company. Again, presume this could be related to our balance sheet numbers. I already mentioned that our receivables as number of days of sales have come down. We have paid off employee dues. Interest cost has come down significantly this year compared to the previous year because we have moved to a lower cost, you know, credit arrangement. Our ARR of course has increased, so the stability of our business has increased as well. Our ARR has increased from INR 40-odd crores to INR 47 crores in this point of time. These are questions and we have to get this through on this call.
There was also some question about ATS and all that by somebody.
Yeah. There's an ATS question from Vineet. There's a question from Vineet again.
Let's not miss any question, Bal. Let's ask the questions anyway.
Yeah.
I'll answer it. Follow your question.
In the investor presentation, it was mentioned that ATS Maharashtra was a client. Can you talk about the nature of the project and can there be similar projects with other police forces in the country?
Absolutely. That came to us because of NASSCOM. It was a free pilot that we did for the ATS Maharashtra. In fact, Maharashtra would be happy to know that we played a small role in ensuring that the ATS Maharashtra has a reasonable data system within their organization. ATS stands for Anti-Terror Squad. It was done about five years ago. It was a pro bono project at the request of NASSCOM. Can it be done elsewhere across the country? Yes, but everybody wants it free. We will not do it for free. Balu.
Okay. In the US, a lot of municipalities are adopting GDPR because of municipal laws. Can we see the same story playing out in India as well?
Not in the next five years, because first the GDPR law has to be passed, after which the company has to take note, and then things have to happen. I don't see this happening in the next five years.
Okay.
Anyone else?
I think we are pretty much through with this. Thank you.
Okay. One request. You know, I respect the right of every shareholder to ask questions, and I answer every question. At the same time, I have only one request for them. When you send in a request for answers in the middle of whatever, you know, there's a lot of management resources spent on getting the right answer or getting the answers out. So my request to you, where the information is publicly available through our filings, please look at them. Please recognize that we are actually expending money and resources in answering each of your questions. So please, please, I respect your right to ask questions, but please keep them to areas which have not been covered. Rohit, the floor is yours.
Thank you, sir. Rohit, sir, you are unmuted.
Okay. Thank you so much for answering all those questions which were asked on email. Much appreciated. Quick two, three questions. One, the order book that you mentioned of INR 67 crore, is it to be executed over the next financial year? Is it, is that how it's indicated?
Not really. We said INR 34 crores, if I'm right. Not really. It has an ARR component which is for the year and other component which is, you know, contractual. It could be, you know, spilling over next year, absolutely.
Understood. The ARR component would be roughly INR 50 crore, right? Including the deferred South Africa component, it should be around INR 50 crore. Am I right?
Yeah, 40, 48, 49.
Okay, understood. That was number one. Second question is, in the past, we've discussed in detail on how the market share has evolved in Europe with ESMA coming in, right? Could we have a similar discussion on ESEF mandate? I believe, we had in the first phase 800 companies that came out. Has the entire filing been done by all those 800 companies under ESEF? And the second question is, we also mentioned that once the first phase of ESEF companies are done with filing, in the next phase, I think the number was in large thousands or something which are expected to file in the next couple of years or so. Could you elaborate on that market, please?
Not all 800 filed. I think the number of companies actually filed was closer to 600, if I'm not mistaken. The second phase has not actually started. The date has not been announced. We think it'll happen next year, but I think I'll leave it to Deepta to answer the question. Deepta, we've got two minutes to the end of the call. We'll go overtime, but just keep it in mind.
Sure. In iXBRL it was close to about 700 companies, I think, that filed in the first phase. We got roughly 20% market share over there. Phase two is not yet announced. I think it's likely to be pushed back a little bit, perhaps a year down the road, but we don't know yet. We're waiting to hear actually.
One more thing I must add is it's likely that we will not work with our existing partner as far as phase two is concerned, and we will be on our own, but that's okay. We are as strong as we have a marketing muscle to be able to do that, to be able to go after the market, we will do that. We have differences with our customer in terms of approaching, with our partner in terms of how to approach the market. We are very happy for them. They want to go out on their own. They basically have a different model that they wanna follow, which doesn't work for us. We basically said we'll part ways.
In phase two we will not be working with them.
Will this put at risk the existing clients that we've won there over the next few years of filing that will happen there?
No, it won't.
It won't.
It won't.
Okay.
The existing customers are already bound by contract with both of us, and we have revenue share which they will respect and we will respect.
Perfect. 10% market share is great to know. That's a great achievement. Congratulations on that. I was curious to know if we have roughly around 70-odd companies as customers. Has the entire revenues been recognized in the last financial year, or is there something to be recognized in this financial year?
It's an annual filing, so it's recognized as annual filing. Answer is yes, it's been recognized.
The entire thing has been recognized as in the marked numbers.
Well, let me say that, you know, as far as IRIS Carbon revenue is concerned, it is spread over 12 months, because the license to use the Carbon platform for
Oh, okay.
One minute. I don't know. I think.
I understand.
Five minutes. It is spread over 12 months, right? The FCRB filings.
Yes. Yes, Balu. Correct. That is correct.
Okay.
The revenue will be recognized over the next 12 months. It's not that whatever we have won there, we've recognized it entirely in the last financial year. Is that the right understanding?
Yeah. It starts from the date of you know us signing the agreement with the customer, then it's spread over 12 months.
Just, I mean, just to ensure that I understood correctly. Let's say the customer file it in January, and he paid us, let's say INR 100, that's being spread over 12 months. You don't recognize the entire 100 in the January or February. You recognize it, let's say INR 12.5 over the next 12 months. Is that correct?
For the FCRB mandate, that's right.
Okay. There is a natural increase in ARR in the next year because this will be recognized in the current coming year. Is that right?
No, I'm saying, the ARR of 47 that we talked about, which is refreshed in Q3, it incorporates this piece of information as well.
Okay, perfect. That's helpful. That's the last question from my end is, I mean, you talked about attrition of 20.1%. In the context of what I see in other companies, I think that's a great number, and kudos to you guys for managing it so well. How is the scenario right now? Because with the startup funding drying up, my understanding is that the talent war is not as heavy, as severe as it was a few months back. Could you guys discuss that a little bit please?
You know, human beings are very simple. They are actually complicated. Once they lock themselves into a high salary, they're not going to take a lower salary to be able to move to at least find a job for at least a long time. They don't see that writing on the wall. I think the startup funding has actually destroyed the whole talent acquisition process for a large number of companies. Honestly, it's quite disappointing how the whole thing has actually panned out. Competing for resources is one thing, but competing in a meaningless way has actually destroyed the market and the whole process. There are people in my company who are getting paid INR 15-20 lakh who've gone off with a salary of INR 55-60 lakh in other companies. It's just not tenable. It is not maintainable.
It's just not gonna happen. Have the things improved to an extent where we're able to find people? No, not yet. I think it's getting there, but I think it's a bit too late. Once this funding actually happens, we will actually be able. We're also strengthening the technology team in a very big way. You will soon see us make an announcement about a very senior technology person joining us. It'll happen soon. We're not in a position to talk about it right now. I just mention that we are strengthening the technology team in a very big way. Hopefully, when that happens, you will see some significant step-ups in the way we look at technology. Has it improved in terms of finding people? No, it hasn't. We are in Bangalore, we're in Bombay. Bombay is different from Bangalore.
Bangalore is much worse.
Understood. On this people thing again. I noticed that we are very focused on improving our marketing and sales focus. I don't think we have a chief sales or chief marketing officer. Anything on that front as well?
We have greatly strengthened the marketing team. Deepta, you wanna talk about that? We do have some fantastic sales people on the ground. Deepta will talk about the marketing team.
Sure. Rohit's point is valid. We don't at this point have a chief marketing officer or a CSO. But on the individual product marketing side, we have strengthened the team. You know, at the product marketing level, the engine is beginning to kind of crank up and come together much better, both for Carbon as well as for GST, which are on the Create side, the two big business on the Create side. But we will be looking to strengthen it further, both marketing and sales, and there are positions that still need to be filled in. Including at the-
Rohit, please recommend people. We give you a finder's fee.
Sorry, I didn't hear you, sir. Could you repeat that?
I said, Rohit, if you recommend people and we recruit them, we will pay you a finder's fee. Applies to all shareholders, everybody on the call. We're open to recommendations.
Sure. Sure, sir. We'll keep that in mind. Thank you so much. That's all from my end as well. I don't have any more questions. Thank you so much for answering all the questions so patiently.
Thank you.
Thank you, Rohit.
Swami sir, there are no further questions in the queue. Over to you for closing comments.
Thank you very much for being on the call. I think the year ahead should be much better than the year that went past, largely because as I said, COVID is over. One last thing I wanted to talk to you about that I think is very significant. You know, many people look at the SaaS opportunity as a very huge opportunity, and they look at, okay, 5% market share, 10% market share, 20% market share. Our SaaS opportunity is a very segmented opportunity. When you look at the US SEC market, there are 5,000 companies. When you look at the European ESEF market, there are 2,500 companies or 3,000 companies.
The number of companies in each market is very small, and no single company can ever hope to dominate the market to an extent where it gets more than 15%-20% market share, quite literally. One factor that worries us slightly is recently Workiva took over a company called ParsePort. When I say it worries us, it's partly for the reason that they now have a product that is basically priced around where we probably price it, and they're also able to fix a few things that they could not have done earlier. I think it's a great source of great. It also means that we need to buckle up and literally stay on our toes to be able to compete in that market.
We have not done too badly against ParsePort in the last year in Europe, and we believe that we are well-positioned to do a lot more. It will cut both ways. I think while it will certainly strengthen Workiva's portfolio, I think it'll also create problems of a different kind for them. Just because you acquire a company which is in a certain segment doesn't mean you'll get all their customers. There are people talking to us. We're very happy for that. That's where we are. All in all, the year that's gone past, we can really do better than this. On that note, thank you very, very much for the call, and we'll meet again in six months' time. We will not do quarterly calls. We will only do half-yearly calls.
Thank you very much again. Bye-bye.
Thank you. On behalf of IRIS Business Services, that concludes this conference. Thank you for joining us. You may now disconnect your phones.