Ladies and gentlemen, good day, and welcome to the IRIS Business Services H1 FY 2021 earnings conference call. We have with us today on the call Mr. S. Swaminathan, Whole-time Director and CEO. Ms. Deepta Rangarajan, Whole Time Director. Mr. Balachandran Krishnan, Whole-time Director and CFO. As a reminder, the lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentations concludes. Should you need assistance during the conference call, please signal an operator by pressing star and then zero on your touchtone phone. I would now like to hand the conference over to Mr. Swaminathan for his opening remarks. Thank you, and over to you, sir.
Thank you. Thank you for the introduction. I welcome you to this half-yearly conference call today. Just as a matter of housekeeping, the platform that we use technically does not support the simultaneous presentation. We have filed the presentation with the Bombay Stock Exchange website. If you would like to download that and follow that when we go through the opening remarks, that may be very useful. If you go to the BSE website and look for IRIS, you will see the presentation that we have uploaded today, which is the basic presentation. It's been a very interesting half year for us. We've tried to build on what we did the previous year. Traditionally, our first half is always not as good as the second half, and you will see that in the numbers as well.
Thanks to a significant surge in our SaaS revenues, we managed to improve our revenues from last year. We still ended up positive, I think we incurred losses for the last half year. To take you through the detailed numbers and take you through the whole thing, I'm pleased that we have the time to download the presentation. That gives you the extra two minutes while Balu gets ready to take you through the numbers in some detail. Happy to take any questions thereafter. Over to you, Balu.
Thank you, Swaminathan. Welcome, everyone, for this investor call. My name is Balachandran. I'm the CFO of this company. I could wait for a minute, maybe till you download the investor presentation, and then we could start. It's a brief presentation, and it'll give you the highlights of how we have done the previous six months. I'll just wait for 20, 30 seconds, then we can start.
Excuse me, members of the management, we are unable to hear you.
Okay. We can start now. I was waiting for people to maybe download the presentation and have it with them as we go through the highlights of the current half's performance of IRIS Business Services. Okay, let's start. Swaminathan, the CEO, has already given you a small overview of where we stand today. I will try to spend a little more time on the financial performance side of the presentation. Let me start by saying that we have mentioned this in the past as well, that our business is extremely seasonal. We have more revenues coming in the second half, primarily because some of the mandates are skewed towards the second half of the year. Plus regulators open the purse strings a little more in the second half of the year. This holds true for this reporting period as well.
The other very important point is that this reporting period bore pretty much the impact from the pandemic breakout, which we mentioned when we had a conference call in June saying that there could be some short-term issues because of the pandemic breakout. This could impact some of the regulatory business since it is particularly difficult for regulators to be in the office and do certain activity, which is linked to both revenue recognition as well as new orders. That has happened to some extent. I'll maybe elaborate a little more as we go forward. Let me go to the numbers per se. I have given two slides, which is the consolidated numbers for both income statement and balance sheet.
The consolidated numbers give you the true picture because some of the billings in Singapore and the U.S., we accrue that through our subsidiaries in those respective countries. The numbers to look at is the consolidated numbers. If you look at the consolidated figures, you would see that our top line growth has been quite modest at 2%. This is pretty much due to a slowdown in revenues from our regulatory customer segment that we call as our Collect segment. Having said that, we have been able to adjust our expenses to some extent, with the result that our EBITDA for the reporting six-month period, which is about INR 2.57 crores, a decline of slightly more than 10% compared to the corresponding period. My sense is that this decline is temporary and can be attributed to a postponement of revenues, primarily from the Collect segment.
If you look at the segment-wise revenues, you would see that the Collect segment has dropped by about 18%, while the highlight is that we have significantly increased our revenues from our SaaS platform. These are revenues from the enterprise segment of the market. This one we also call our Create segment. Actually, the Create segment grew by a significant 33% compared to the corresponding period. Even sequentially, it grew by 12%, if you look at the period ending in March 2020. Let me move to the balance sheet. You will notice that our debt is steadily coming down as we continue to repay our term loan. Having said that, we have availed the moratorium, which we mentioned in our June call as well.
The repayment installments have been deferred from March to August 2020 in line with the RBI relaxations. Still there has been a small reduction on the total debt. On the receivables side, there is a drop about INR 3 crores as we focused on improving our liquidity. The same focus has helped us to increase our net cash flow during the reporting six months, which is now at about INR 5.6 odd crores compared to about INR 1.6 crores for the previous six-month period. Our focus has been to make sure that this is an extraordinary period that we are going through. Let us make sure that liquidity-wise, we are okay, and then we build the business as things improve. In the reporting period, of course, we have also reduced the payables. We have been kind to our vendors, and we reduced the payables by as much as 50%.
Now let me look at the revenues bit more closely. You'll find that the share of recurring revenue has gone up quite sharply. There's a 23% growth in recurring revenues compared to the corresponding period. Recurring revenues accounted for as much as 77% of the revenue for this half, increasing substantially over the previous period. That might reduce a little bit going forward because the Collect segment will kick in, and one part of the Collect segment is, of course, implementation revenues, and that grows, so 77% could come down. The important thing is that there's growth in the SaaS business, and that is helping us to increase the recurring revenue portion of the overall pie. A bulk of these recurring revenues obviously come from the Create segment.
Of course, there is one part of our recurring revenue also coming from the Collect segment as well because we maintain, we manage the platforms for our regulators. The Create segment is the main contributor towards recurring revenue. Overall, the Create segment contributed as much as 50% of the revenues for the first half, which is quite an improvement compared to the previous or corresponding halves. Within the Create segment, if you look at, you will see IRIS CARBON, which is our flagship SaaS platform for enterprise reporting, has grown quite substantially, and we have been aided by increased revenues from our existing U.K. mandate, U.K. market, what we call the HMRC mandate.
We have made an inroad into the European market, where there is a mandate called the ESEF, European Single Electronic Format mandate in XBRL and iXBRL, where we have made inroads, and we have started accruing revenue, albeit at a small number, but it's poised very interestingly as well. The other important product line in the Create segment is our GST suite of applications, where the adoption of the e-invoicing mandate has helped us to increase the revenues as well. This e-invoicing mandate is actually unfolding as we speak. It started on October 1st. Of course, we did some onboarding of customers in September. That's why there has been some contribution of the GST revenues from the e-invoicing segment. This should accelerate in the second half of the year. Let me move to the expenses part.
Nothing very earth-shaking to report here except that we have been very prudent and as you should. We contain our costs. Employee expenses have moved up a little bit at 13% compared to the corresponding period. That is partly because we have invested in our marketing and sales and marketing resources as we focus more on SaaS revenues from overseas markets. Obviously, similar to many other companies, our overheads, which include rent, electricity, and travel, have reduced in this half. Overall, I think we have grown our expenses at about by 7%. Our mortgage also remains pretty much steady. As far as order book is concerned, we feel that order book as a number may not be that important going forward because the SaaS revenues is really going up, and that will dominate the revenue pie in the years to come.
Having said that, we have slightly improved our order book by about INR 2 crore compared to what we were at in March 2020. This is quite remarkable given that there's a sluggish regulatory segment that we had to confront in the last six months. Of course, we got some revenue accruals from the Collect segment as well. We have not got any new orders in the first six months yet because people were not really entertaining RFP process regulators as the pandemic was raging on. This is where we are. This is a quick update on our financial performance, and I can give back the floor to the moderator.
Sir, can we open the call for a Q and A session now? Members of the management, can we open the call for a Q and A session now?
Thank you.
Thank you. Ladies and gentlemen, we will now begin the question and answer session. Anyone who wishes to ask a question may press star and one on the attached telephone. If you wish to remove yourself from the question queue, you may press star and two. Participants are requested to use handset while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. Before we take the first question, a reminder to all participants present in this conference. If you wish to ask a question, please press star, then one. The first question is from the line of Sunil Binani, individual investor . Please go ahead.
Hi, I'm an independent analyst. I was going through your 2019-2020 annual report, and I came across an item where you said that you have more than 1,200 customers. That's a great thing. Congratulations on that. My question is, your revenue last year was INR 49 crore, and at 1,200 customers, that's up to a ticket size of around INR 4 lakh per customer. In the Collect business, you have your regulatory clients. Can you throw some light on the number of customers you serve and the revenue per customer, and what are the top customers? Thanks.
Sure. Swaminathan here. When you look at the numbers on the aggregate, very often, a lot of things get lost in aggregation. It's almost like one's head in the oven and food in the freezer on balance sheet, okay, kind of situation. When you look at our segments, I look at, say, for example, a Create segment, which is where we provide solutions to enterprises for filing with the regulator. On the ROC side, the ticket size can be as small as INR 10,000 per customer. When you look at ROC filings in India, that's the kind of pricing that's there for the lowest end of the customers, and there are high-end customers who pay a lot more. When you look at ROC filings in the U.K., it's close to around GBP 150-200. When you look at ROC filings in South Africa, it's roughly the same range.
When you look at ROC filings in other markets, it's again roughly in the same range. GBP 150-GBP 200 will again come down to between INR 10,000-INR 15,000 per customer, literally. That increases the number of customers, and there's many more things that one can sell to those customers, but the ticket size is very small. When it comes to GST filings, it's a lot more because it is linked to the volume of transactions of the companies, the volume of invoices and so on and so forth. Therefore, the per-customer realization will be much greater. When it comes to BSE filing, well, they currently use a free tool from the market. When it comes to U.S. SEC filing, the ticket size is much bigger. It's again negotiated. There are fixed prices, but then people do negotiate.
When it comes to Europe as well, the price is much higher. I think what brings it down, so the preponderance of ROC filing customers is what brings the per-unit cost down. Having said that's the nature of the business. We actually believe that selling additional products to these people will increase the share of each customer in the total revenue, and that's exactly what we are moving towards. When you look at the suite of products that we actually have, are there ROC customers we can sell our GST solutions to? Are there GST customers whom we sell our ROC solution to? That's the way we are actually approaching it. Our whole approach is to sell adjacent solutions, adjacent products to the same customer to increase our revenue, and that's something that we will be successful at going forward.
In the case of Collect, which is basically the enterprise where we basically sell our solutions to the regulator, the ticket size is much bigger. That it could be as high as $300,000-$500,000 very easily per customer. What brings the whole thing down in terms of the 1,200 companies you talk about is large number of companies, small ticket items.
Okay.
I hope I answered your question, Sunil.
Yeah, thanks.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Narendra Negandhi from Beehive Capital. Please go ahead.
Hi. Hi, Mr. Swaminathan and everyone on the team. I'm just looking for some problem statement. When are we coming to the positive? That's one. Second thing, I had asked a question last time that I was not responded, was that the PBT was INR 5.35 lakh, and still we ended up paying tax to the extent of INR 24 lakh. Why was it so?
Narendra, two questions. Swaminathan here. To answer your question, when we turn positive, I think if you see the numbers as of even last year's annual report, we did turn positive last year. The nature of our business is like this. ROC filings happen once a year. GST filings happen every month. Your ROC filing in every country happens just once a year. There's a seasonality to our revenues, which basically means that our first half is certainly on the lower side year- after- year. That's how it'll be. Unless we increase the number of customers we actually serve, or unless we increase the diversity of the customers that we serve in terms of having different calendar years and using the same solution for different applications, this will remain. We're trying to change that.
We've had some modest success, which is how we grew our revenue this past year. As far as on a year-to-year basis, if you take a look at our last year's numbers, we did turn positive already. As for the second question, I will pass it on to Balu.
One more. Just to question a counter- question.
Sir, I don't know.
I'm sorry to intervene.
Yeah.
If you knew about the COVID since March, okay, and we knew that things are not going so well, why is it that we ended up the marketing expenses?
The question was not audible. Can you just repeat the question, please?
Oh, sorry. I'll repeat. While answering the first question, we were told, rather, during the presentation that the marketing expenses, we have added some resources in marketing. Correct?
I understand.
Now, why was it so when we knew about the COVID and the consequent lockdown? That is what has increased our salary expenses, employee benefit expenses, and that is what has led to the negative.
Sir, it's a chicken and egg situation. If I don't add marketing people, if I don't add sales people, I will do much worse off than otherwise. Number one. That's something very important to bear in mind. The bulk of the growth in revenues that happened in the last six months has happened from selling our solutions in Europe. We don't have people on the ground in Europe. We need to have people here to be able to call those people in Europe to get some business. At the end of the day, the reason any shareholder comes into a company is because of the growth of the company on account of sales. The only way to grow sales is by getting more and more people to help contact more and more companies to grow it. We did not add people who were not productive.
We added people who brought in revenues into the company. That's the reason why we could even report the growth that we reported. For having those people on the ground, our SaaS revenue would not have gone up. For bringing those people into the company, our revenues would not have increased by 2% as it did. I think without these marketing and sales people, which I think is extremely important, every company that we admire in the world are companies that do well in sales and marketing. For us, the focus is on growth in revenues and growth in profitable revenues. Growth in profitable revenues requires people on the ground or people who can actually pick up the phone and call people and add more customers.
We also added people for the e-invoicing mandate for GST, where we've had some significant success in terms of bringing in new customers. I think at the end of the day, the sales people speak for themselves in terms of the performance we've actually delivered. Once again, I hand over the phone to Balu.
Sir, about your second question, I would revert separately. I don't have the answer right now. I remember there was a technical issue, and I remember this question, and we had collected the answer as well. Right now, I don't have it.
Right. No problem. I can wait. Can I get it on email then? Can I get it on my email?
Please, free to.
Yeah. Thank you.
Thank you.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one on your touchtone telephone. The next question is from the line of Tirupaj Kishor, individual investor. Please go ahead.
Hello, sir. I'm an individual investor, congratulations for a good set of numbers. I think I had attended the AGM and the previous con call post your March results. I just wanted to see that how has COVID impacted going forward over the next one year. Is it going to impact our business in the second half of this year and the early half of next year? Sorry.
Thank you for your question. COVID has impacted badly. I think it's a challenge to even stand in one place in the middle of this COVID. Let me tell you, explain to you how it's happened. When you look at the Collect segment of our business, RFPs have dried up completely. No regulator is currently preparing to implement a new disclosure platform. We've had no business from any new regulator in the last six months, and no regulator anywhere in the world has issued fresh RFPs for creating a new disclosure platform. How are we coping?
We are trying to move as many of them as possible into a SaaS model by basically telling them, "Don't pay any money upfront, but basically pay us over a 10-year period." Like what we've done in the case of Mauritius, where we get paid on a per filing basis, where the Mauritius regulator had to pay nothing upfront. We are now approaching countries in different parts of the world, basically saying, "How would you like to work with us where you take our platform, don't pay us anything upfront, but pay us on a software rental basis?" That's one approach we're actually taking. As far as the second business is concerned, Create business is concerned, there are two ways in which it's actually affecting us. The European regulator had announced an iXBRL mandate that was supposed to be effective from 1st of January 2021.
The European Parliament is currently seized of a new law postponing that mandate or giving the flexibility to individual countries to postpone the mandate. The big issue here is acquiring new customers. Acquiring new customers has been difficult. It's not been very easy at all. Even before this mandate postponement discussion happened, we've actually have been struggling to get people because we're not able to go to Europe and talk to companies. Ultimately, you need to be there physically in front of a customer very often to be able to give them the satisfaction that you will deliver. Compliance is such a sensitive subject, and compliance is something where you need to give them assurance. Fortunately, my colleagues have done some really good groundwork in the period before COVID.
In fact, one of my colleagues just left, one of the last people to leave Europe to come back to India just before the flights got suspended. Her hard work that she put in the three, four months preceding that ultimately ensured that we got a reasonable set of companies coming and signing up with us. What my colleague has also done was recruit somebody in Barcelona. We have one local person in Europe who's helping us acquire new customers. I think acquisition of new customers has been very, very slow and very, very painful. It's something that we need to do, and it's something we're trying to do. I think COVID-19 has affected us in terms of acquiring new customers in that area and also our inability to travel. That's, I hope, will answer your question.
Okay. Thanks for that. For the next one, one and a half years, we see our revenues getting a bit tapered down or degrowing a bit, or is it going to be at the same level, given that our existing customers will still stick around, but the new accounts might not be coming through as such?
I think that's a great question. There are two parts to the answer. One is we are going to sit on our backside and wait for six months. We'd actually try to see whether we can open up new markets. We try to see whether we can open new customers. Even in Europe, with the mandate getting postponed, we're still in touch with companies. We're still in touch with countries trying to figure out where it gets postponed, where it does not get postponed. I think Germany will probably not get postponed. Let me do one thing. In terms of the European mandate, what the current status is, I'll have my colleague, Deepta, come and share with you, sir, what's happening in Europe. Europe is extremely important part in our overall business hold.
Yeah. Hi. This is Deepta speaking. Just to add to what Swaminathan has already said.
Sorry, Deepta. This is call operator.
There is a move to postpone it. It's kind of pending Parliament approval. Different countries are making decisions differently. Some that have already enacted it in their individual countries' laws are deciding to go ahead and roll out with the mandate. Also, even if there is a postponement, companies still have the option to voluntarily transition to this new reporting format, XBRL, because anyway, they'll have to do it a year down the road. Many companies that we are in touch with or our sales engine is in touch with, they're saying that even if there is a postponement, we just decided we are too far down in the process and we want to proceed. We don't want to halt this now. Those kinds of things are happening as well, as far as the European region is concerned.
To specifically answer your question about sales progress status for going forward. Well, I think we've shared with you the order book for the current year, and these are items to ensure that as the order book is executed, some things are not in our hands, especially when our clients will come back to their respective offices to give a sign-off to be able to book the revenues. We have a very conservative way of booking our revenues, and it's almost like this joke that's told about a couple of newspapers in India saying they don't write an obituary without checking with the person. We're almost like that. We are very conservative when it comes to booking our revenues, but we believe that's the only way to do it.
We have every hope and every confidence that we should be able to maintain the numbers we have actually given so far. We're not in the business of making forward-looking statements subject to our sharing of information on the order book, which we have done.
Thanks. Just a follow-up question on that. From that, I think in our previous call, I think we had mentioned that there is a project that we are doing with the RBI in collaboration with TCS. Is that something we have already delivered and there's some traction on that front? Or is it still in the second half of the year?
That is a fixed price project where as we complete, we recognize revenues. I mentioned to you, our conservative approach meant that we could not take credit for all the revenues we could have booked otherwise. I believe that as we complete more and more, we will be able to book more revenue. It's a fixed price project where by doing more work, we don't get paid more. It's already factored into the numbers, into the order book that we actually talked about. There's no additionality on account of that beyond what we mentioned in the order book. It's already there in the order book.
Okay.
Thank you.
Thanks.
Thank you. Before we take the next question, a reminder to the participants again, if you wish to ask a question, please press star then one. The next question is from the line of Sunil Benani, individual investor. Please go ahead.
Yeah. I have a two-in-one question, this is based on your 2019/2020 annual report. Last year, the total debt was INR 8.7 crore. That's long-term and short-term debt on which you paid an interest of INR 1.3 crore. That works out to a 15% rate of interest, which seems a little bit high. Any steps by the company to renegotiate the rate? That is my first question. The second question is, out of the total turnover of INR 49 crore, debtors were INR 16.4 crore and they could not pay you because of COVID-19. What is the current status of the debtors and what are the current debtors as compared to the sales in the current six months? Can you throw some light on that? Thanks.
Thank you for the questions. Point number one, when it comes to the interest cost, actually our interest rate is at about 13% for our long-term loan and about 11.5% for working capital. I don't know how the 15% these are the numbers on which interest rate is calculated. I can go back and see how that kind of a thing came. Having said that, even these two numbers on the higher side, we are renegotiating and we should be having a much better interest rate going forward. Our credit rating also has improved compared to where we were a year back. I'm hoping that from January onwards, our interest rate, both on the term loan and the working capital loan, should come down. Point number two was on the debtor levels. Very important question. This six months we had reduced our debtors to some extent.
Of course, the revenues compared to the previous half year has been less as well. We are running at about 110 days, which we know it's on the highest side. It should come down when the contribution from the Create segment goes up. These six months, we have been also impacted this much in terms of cash flow from our regulatory segment, because some of the sign-offs could not happen. Because they were not 60%. That has impacted in the sense now we can book revenues when the UAT is completed. Since the go live hasn't happened because of the COVID issue, they're not able to release the payment. This has had some impact. We remained at 110 days in terms of receivables. Our target is to bring it down to about a level of 80 over a period of time.
Exactly what Balu said.
We believe with the change in the composition of revenues moving forward, that will come down dramatically.
Thank you.
Thank you. Before we take the next question, a reminder to the participants, if you wish to ask a question, please press star then one. The next question is from the line of Girish Kurup, individual investor. Please go ahead.
Good afternoon. Am I audible?
Yeah. Loud and clear.
Yeah. I have three questions. One is on the operating metrics and the other two on the product side. On the operating metrics, can you give me an idea of what is the customer concentration like? Maybe in the top five, top 10 for your annual, on a full year basis or maybe a quarterly basis. Staying on the operating metrics, what's your typical attrition rate in IRIS? With respect to the product, I would like to understand a little bit more about CARBON acceptance. How is it doing? I think I saw in your AGM that you did highlight that you have got really high ratings for the quality of the filing. In terms of customer acquisition, did it really turn out? The third and final question I have is on the Consume segment.
I see that you have invested quite a lot in the Consume segment. The turnover is not coming up. If you can give me some idea roughly, is it one to two, three years that we have to wait before the Consume segment starts kicking in? That's my question. That's all from my side. Thank you.
Let me start with the question on the Consume side. I think we have invested in creating both software as well as databases to launch a business in the Consume segment. I'm reasonably optimistic that by the end of the year, you will hear some announcements in terms of what we plan to do there. We have invested ahead of revenues coming in. We've invested ahead of launching things. There are a few things that we have done which are significant on the Consume side, which you might be aware of. For example, taking off from the GST product that we have, we have a unique product called IRIS Peridot. Girish, have I showed you the product?
Yeah, I have installed it and I've used it also.
Have you used the latest version?
Yeah, there's a latest version, but I need to check if my invested company, they are paying their tax or not, because that's usually a.
Take a look at the latest version. If you take a look at latest version, Girish, again, sharing with everybody in the call right now. IRIS Peridot is an app that you can download from the Google Play Store. It's also available for Apple phones. IRIS Peridot, if you go there and check for any company, you will know the current tax compliance status of the company. We're actually saying, before you invest in a company, be sure. I know of many people who currently use the solution. We've had over 8 lakh, 7 or 8 lakh downloads, if I recall right, about 4 lakh active users. I think Gautam's on the call. Gautam can actually share data on the current usage pattern of the product. That's part of the Consume segment.
A second thing in the Consume segment which is currently being used by many banks is, for example, CRILC is a solution that's used by banks to detect NPAs. Several banks are using our solution to detect NPAs within their own system. That's again part of the Consume segment. The Consume segment, there are two parts of the business. One is the software part of the business, one is the data part of the business. The bulk of the investments you talk about have gone to data part of the business, which we've not really launched in a significant manner.
Hello?
Well, sir, requesting you to please stay online. We just lost the line for the management. Requesting you to please stay connected. We are just trying to reconnect them back. Ladies and gentlemen, thank you for patiently holding the line. We have the management reconnected. Over to you all, sir. We have the question on line from Girish Kurup.
I'm sorry it got disconnected because I was out of the call. I was asking a question about Consume, and that's where we stand as far as Consume is concerned. In the case of Carbon acceptance, again, I'll let Deepta answer the question in terms of the level of Carbon acceptance. She will also mention a new product we launched along with Carbon for audit, which she will talk about once she comes on the call.
In terms of Carbon , it's essentially used for creation and submission of financial reports, including XBRL iXBRL reports. It's currently being used in South Africa, in the U.K., in India, in the U.S., and in Europe. Europe is, of course, the latest mandate that we spoke about a little while ago, which is the ESMA, ESEF mandate. There are also newer opportunities. For example, in the U.S., there is a mandate by another regulator, which is the energy regulator called the FERC, the Federal Energy Regulatory Commission. They are also moving to XBRL as a format. They require all energy companies to start filing various forms and reports in this format, in XBRL format. Carbon is gaining early traction in the FERC opportunity as well. In the case of Europe, like the fourth mandate I got before, we've already gained.
Ma'am, I'm sorry to mute you, but there's a lot of static coming from your audio. The audio is not audible.
There is kind of testimonials available on our website, so you'll be able to see some of the names of the clients or customers who have already bought into the product, large names, basically. I think there is certainly an acceptance. The product stands well-positioned. Now, it depends on how the mandate plays out as far as Europe is concerned. In Europe, there is also another product actually, which is gaining traction too, which is called xAudit. The unique thing in the European mandate is for the first time, the regulator has said that the iXBRL documents that are created not only have to be filed, but they also have to be audited. For the first time, the machine-readable layer also requires an audit. Auditors are looking for tools or solutions for auditing these XBRL documents. We launched a product called the xAudit.
That's also beginning to get.
Other than all this, I think the driver acceptance is the following. If somebody has to think about the COVID-19 pandemic. What has happened with the COVID-19 pandemic is people are working from home, people are working from anywhere. You have a distributed enterprise forced on the world by the virus, which means collaboration becomes very important. Of the several products in the market, we are one of the few purely collaborative, truly collaborative products available, and that's giving us some traction. Not as much as we would like because we're not there on the ground. We don't have feet on the ground as we should in Europe and the U.S., that, again, is a positive thing as far as Carbon acceptance is concerned. The question that you asked second was about attrition. I think attrition is well within our acceptable levels.
The big problem that companies like us have is the following. Attracting new people to the company is never a problem. Once people spend three, four, five years, that's when they start looking out for better opportunities, and I think that's where we start competing in terms of the market, in terms of pay structures, and so on and so forth. If you go to sort of standard platforms on the web where people talk about the quality of work and all that stuff, you'll actually find that people say wonderful things about IRIS as a great place to start your career, as a great place to have freedom in terms of working, and so on and so forth. I think the challenge for us is to retain people once they spend four, five years, because they'll even go, that's when the problem is.
As of now, it's well within the acceptable levels. We haven't lost too many people, and that's a great source of great comfort to us. One minute, Balu.
Customer concentration.
Customer concentration. It's inevitable that because the bulk of the revenues have historically come from the Collect segment of the business, there has been a customer concentration. What I will do is I will pass it on to Balu to give you more precise numbers on this.
As far as this is concerned, if you look at the FY 2020 numbers, which is ending on March 2020, the Collect segment is quite predominant there. We can say about slightly above 50% of the revenues are accounted by about 10 customers. It has some Create customers as well where we work with a partner, that also is coming here. Going forward, it should come down. For the first half, I don't have the precise numbers right now with me, my sense is it will be little less than 50% for the top 10 customers.
Okay.
Thank you. The next question is from the line of Manish Banani. Please go ahead. Individual investor.
Hello.
Manish Banani, you may please go ahead, sir.
Hello.
Yeah.
Yeah. Hi, Subramaniam.
Hi.
Really appreciate the presentation which was done. It feels good and aware of the things. Also, there are two nice things which I see and which I like to speak about is the Create segment which has gone up. Also there are marketing strategies as well which has been taken up in, because I think it's good to have a nice platform to showcase our talent or whatever you guys are doing in making software, et cetera. My question is towards the system details, where there is a decline of 5% for savings in rent. I was wondering how did we manage to save on rent, first of all? The next question is, where we have increased our current liabilities with the previous compared to previous year. Like almost 30% we are up on current liabilities.
I don't know what has been accounted into it. Please can you tell me those things?
I'm sorry. Can you just repeat these two questions? I could not understand it very well. It was on speaker phone. If you can say again, I have now to the receiver.
Yeah.
Which two points? One is rent, is it? Are we talking about rent?
Yeah, the rent part. Because the rent has gone down, and I don't know how we managed to save on the rent, which usually doesn't go down.
Actually, on the rent side, we had taken two rented spaces next to our office. It was not much, but we had taken maybe about 5,000 square feet. That we have given up now, because now the work from home paradigm is pretty much in place, and we are managing with the existing old office of ours. That full impact of that is not going to be felt next month. There is some impact, not complete impact. Impact will be more in the next six months.
Okay.
So that's-
We are able to work from home and save on rent, I guess.
Yeah. We are very much able to do that. We moved actually, somewhere in January itself, into a structure where we can do a very large part of activity from work from home. By the time the COVID-19 lockdown came, we pretty much moved the full team into a work from home situation. That is working out very well. We got our process in place. We have the platform, the security aspects. That has been good for us.
Okay. The other question was related to the other current liabilities which has gone up.
I was wondering what things have been accounted for.
The other current liabilities, there'll be something called unbilled revenues there. Sorry, it won't be unbilled there. In that case, let me just open one. Give me a minute, okay?
Sure.
I'll just check that. Just give me a minute. Just one minute. I'll just open. Just one minute. Okay. Other current liabilities, there is-
1,431.
Yeah. There is, as on September 20, there is one, the September salaries were paid in October first. That has come up. That's one reason why it has gone up from INR 11.1 to INR 14.3. That is one of the main items that has gone up. That was, of course, paid by October 1st.
Okay.
Okay. Otherwise, pretty much all other things are.
There.
Other things are stable there.
Okay. again, coming to that marketing part.
Yeah.
We are doing as an advertising tool. Have we thought more about analyzing those parts? Like how do we increase the presence of IRIS in competition?
Could you repeat the question? I didn't hear it very clearly.
Yeah. Since we have increased our expenses towards advertisement or marketing, we can say.
Okay.
Have you thought more about it? How do we do more such things like doing more marketings, et cetera, where we can get more clients, et cetera, apart from the cold calls, et cetera?
We don't do too much of advertising per se. What we do is we organize events. We organize events, we organize seminars, we organize workshops, and those are the build-related activities that actually helps us get customers. The nature of the compliance business is such that simply advertising won't get you business. You have to be knowledgeable, and you have to show that people can trust you. You have to show that you understand the XBRL space. For example, I'll tell you, we just finished a study, and this will make a lot of people very happy. We finished a study reviewing the financials of 710 European companies. You would be very intrigued to know that 10% of companies in Europe have mistakes in their financial statements.
By the way, when we did a similar study in India about a few years ago, it was only 5% of companies. Now, when we do things like this, we spend money on the study, which we do ourselves, and then we go and popularize the study among people to talk about how good we are at spotting mistakes, because compliance is a very important thing and all that stuff. We don't really advertise, but we do events. We produce videos, we produce other kinds of collateral materials to be able to get customers. We are using this to demonstrate how good we are. By demonstrating how good we are, we hope that people call us. We then send them a copy of the report. We then ask them to come for workshops with us.
It's a very intensive activity, where demonstrating how good we are is the first step to acquiring customers. Not necessarily advertising. We don't advertise as such.
Basically, maybe I put up the question wrong, but my idea was to target the GST clients, which you guys have, and where we have competitors where some brands are very famous towards that, like Zoho and there are a few others. They are very keen to put up their brand in the name of people in general. That's why I was asking. Don't take me wrong.
Sir, I'll tell you, I used to be in media myself many, many years ago. When you advertise, the only people who become rich are the media owners. You don't get the money. You don't get something for yourself. Honestly, if you take a look at the numbers generated by these companies
Who advertise in a very noisy manner, advertise very much in mass media. You look at our numbers, the numbers are not very different. We have a small sales and marketing team which goes and calls on customers. The compliance business is almost like a doctor's business at the end of the day. The best doctors don't advertise. Today, when you look at our client list, in terms of the people that we actually work with on the GST space, it's a who's who of Indian industry. The who's who basically come to us. We'll be very quiet about it. We don't advertise, and we're not noisy, and we deliver high-quality work. For every one of them, they judge us by how much tax, how much ITC issues we resolve for them. They judge us by how good the software is to use.
They judge us by things like this. I think the mass advertising thing in the mass media, it was always an exception. It was always an extraordinary company. Without a doubt, it's one of the greatest companies in the country, one of the greatest SaaS providers in the country. I think it's a company they emulate for all of us. They're in a slightly different space compared to us. They go for the mass market. We're not going for the mass market. When you're going after the top 50 companies in the country, when you're going after the top 100 companies in the country, the CFO does not get to know about you because you advertise. The CFO gets to know about you because you pick up the phone and call him and basically talk about how good you are, and therefore personal touch, personal contact.
It may be a SaaS offering, but the ticket size is sufficiently big enough for you to go and call the customer, work with him, work with the customer to ensure you deliver high quality. Our focus will not be on spending advertising money to acquire customers in the GST space. The GST space, by and large, if you take a look at the numbers here, it's not really grown to the extent that many of us thought it would. It has been fairly subdued because Government of India, one, kept changing the rules constantly, two, offered a free tool to a large number of people, then there are people who came in and knocked the price of the market by dropping it to lower and lower levels. Actually, we see some consolidation happening.
There has already been some consolidation in the GST space, so you'll see more consolidation happening. The way we look at the whole thing is, if I'm selling somebody a GST solution, can I also sell them an MCA solution? If I'm selling somebody an MCA solution, can I also sell them a GST solution? Those are all things we are looking at right now. Advertising is not going to be very important for us to acquire GST customers.
No, thank you.
Thank you for your question.
Really makes sense, yes.
Thank you for your question.
Thank you. The next question is from the line of Sunil Benani, individual investor. Please go ahead.
Yeah. My next question is about the stock liquidity. Roughly about 93% of the equity shares are held by the top 13 shareholders and the management. Just 101 shareholders hold something like 6 lakh shares. Suppose even if the stock gets on the main board of BSE, how will the liquidity increase? We just have six lakh floating stock. What are the management plans to increase the shareholder value in this?
I'm stumped. I can only say I'm stumped for an answer because I don't have an answer. The management takes an active interest in the fundamentals of the company. The management takes an active interest in the health of the company. The management does not take an active interest in the goings-on of the market. We are mindful of the price. We are mindful of the liquidity in the market or the lack of liquidity in the market. We are mindful of that. Having said that, as a company, I don't know what to do to improve liquidity. I don't have a trading account. None of us trade in the stock. You would know that. You would have seen that. None of us plan to start trading the stock. That's not the way we actually work.
I don't have an answer to your question in a manner that will satisfy you. It is true that there's a fair amount of concentration. I see this as a vote of confidence on the part of those people. Some of them who have taken big positions have also sold and gone and come back. For me, the concentration is more a sign of a vote of confidence among people who understand, and therefore are holding onto the stock in the hope that we will deliver spectacular results to them in the years ahead. I think the last three years after IPO have been excellent for us. I'm glad we did the IPO because that's what helped us get into a path of growth where we were stuck earlier otherwise. That's helped us grow to where we are today, where operating leverage has kicked in.
I think going forward, there are only two ways of increasing the floating stock, one, by holding a gun to people's heads and say, "Go sell or do whatever else." We also have very significant ownership by employees. We also believe that at the end of the day, significant employee ownership also contributes to liquidity. Another possibility is if we end up doing an additional fundraise. Even then, if we do a fundraise, it won't really increase the number of shareholders in a significant manner. Even going to the main board doesn't necessarily mean that my investors will actually sell. It comes back to the same thing I started with. I'm stumped for an answer. Sunil, if you have any suggestions to offer, we're very happy to listen.
Okay. Thanks for that. If I have suggestions, I will make it across. Thanks.
Thank you. The next question is from the line of Girish Kurup, individual investor. Please go ahead.
Thank you. I have a question to you. If we set aside this COVID issue and maybe look from the next three to five-year perspective, my first question is, do you have all the products ready or good to be ready so that you can continue to grow for the next three to five years without too much investment into product development? That's the first one. Second is, let's say five years down the line, what's your ambition or what's your strategy in terms of return of capital employed, where you want to reach a big aspirational value? I'm not insisting that you come down to a particular number, but I believe you have an aspirational number to reach. These are my broad questions to understand in which direction the company is evolving. Thank you.
Thank you, Girish. I'm going to rephrase your question slightly. Do we have the products in place to meet our aspirations for the next three to five years? I will answer the question slightly differently. We are a nimble enough company to be able to develop products for developing situations. For example, three years ago, GST didn't exist. Gautam took the lead and said we need to develop the product for GST. As I said, I was the first person to basically say, "No, I don't think we should do it." Gautam painted the bigger opportunity. Gautam and Balu came and said we need to do this. We have a robust system in place to figure out what products to develop and what products not to develop. I'm very happy to say that it's paid off for us as far as GST is concerned.
We have a thriving system within the company of people who are able to think through products and identify needs in the market. Do we have what it takes to stay relevant? Absolutely, yes. Do we think between the Carbons and the GSTs and others of the world, we can stay relevant? Absolutely, yes. Does it mean that if new product opportunities come, we will service them? Absolutely, yes. It's really a function of what we actually see happening going forward. I think the question that I would try to answer is not just whether we have the products in place, but whether we have the flexibility, the nimbleness, and the capacity to spot opportunities and go and take advantage of them. I'm reminded of a story that I tell people.
I used to play right full back for my football team when I was studying in America. I scored a goal in a certain match, and I use that example to basically say, just because I'm right full back doesn't mean I can't be in front of the goal to score a goal. That's not a same side goal. I scored a goal in the opposite team. When an opportunity comes, I think it doesn't matter where you are, you need to go and score the goal. I think literally that's what needs to happen. We have the nimbleness to be able to do that. In terms of aspiration, I think I have three aspirations. One, I hope the market realizes the value of what we are delivering.
I think a company with solutions being bought by customers in 36 countries, a company where in the middle of the COVID-19, we were able to acquire customers in Europe. A company which basically has moved SaaS revenues to 50% in the middle of all this. A company with referenceable customers across the world, I think needs to attract the attention of more investors and better investors. When I say better investors, I don't mean better as opposed to worse. I mean, it needs to attract investors who see the value of what we're actually trying to do. I think so one aspiration is to basically do that. That's one thing very important.
In terms of company itself is concerned, within these 36 countries, if I go deeper and sell more to the same customers, or if I sell to more customers, there is enough headroom for me to comfortably grow at a significantly reasonable clip going forward. Do I want to put a number to it? No, I don't want to put a number to it. As people keep telling me, it's people often end up overestimating the short run and underestimating the long run, and three to five years is a relatively longer run. We actually see some significant headroom there. We see different possibilities there. The big uncertainty is always the regulation. For example, if you'd asked me last year about the EU mandate, we were very optimistic about the EU mandate. Right now, in the middle of this COVID thing, who knew COVID would happen?
It's ended up postponing the mandate by a year in many countries. When you are to some extent, you're reacting to a regulatory mandate, there are limitations on what you can do. At the same time, if you are in the regulatory space, once you are in, I think it's a huge opportunity. It's a great opportunity. A lot of people stay with regulatory mandate because of the uncertainty, though we believe that once a mandate is in place, there is no uncertainty, only growth as far as the company is concerned. I basically believe these 36 countries will give us enough headroom to grow at whatever clip we want to, as long as we're generating cash, as long as we have the cash in the company.
I said even at the last AGM that the thing that we are missing right now in the company is adequate cash to basically grow the business from a marketing and sales point of view. Any cash that we generate will actually go into reinvesting in marketing and sales to grow at rates which you've not seen this company so far, and that's what we want to make it happen. I hope I've answered the question to the best of my ability.
Just wanted to compliment that. Good to see that even during this tough time, you have increased the payments to your employees. Good sign. Wish you all the best for the future.
Thank you.
Thank you. A reminder to the participants, if you wish to ask a question, please press star then one. The next question is from the line of Narendra Negandhi from Beehive Capital. Please go ahead.
Hello. Yeah, once again, Narendra here. When we are talking about the liquidity of the stock, I believe, a lot of 4,000 shares can it not be reduced? You will see the shares floating and maybe it will give you the right price. Otherwise, if you are really seeing that I am really getting confident on the company, no. Today, I'm in the process of dumping it at the right price. That's all. Just get out. I'm in those balanced, non-promoting, non-employee shareholder. Do you think that am I happy as a shareholder? No. That share, this particular equity is required to dumped because it has not performed for last so many years. It's as simple as that. I'm a business analyst, okay? We have our own analytics company.
Sir, sorry, Narendra, repeat the question.
It need to be reduced from 4,000 to, let's say, 2,000 or 1,000. The lot size can be reduced. There can be floating stock. That floating stock will help really people to get out.
Sir, the market lot is fixed by SEBI and BSE. I have no role as far as the market lot is concerned. The market lot is also fixed on the basis of the movement of the price in the market. There I have no control over it. It's not something I have any comment over. I thank you for your vote of confidence. I thank you for being a shareholder.
It's not. My view is it's not. Instead of confidence, I am just stuck, I am sorry to say but I am stuck.
I do not think I have any answer to that question, sir, beyond saying that.
I hear you, I am expressing my feeling. Okay. Please do not be under the impression that people are holding on because of their trust in the company. No. It's because they have not been able to dump it.
I hear you, sir.
Okay. Thank you.
Thank you. Ladies and gentlemen, that was the last question for today. I would now like to hand the conference over to Mr. Balachandran Krishnan for closing comments.
Mr. Balu, I'll take over. I think a little while ago, you asked a question about my aspiration. My aspiration at the end of the day is also to find a class of investors who don't want to dump the stock. I really think, at the end of the day, we are a stock changing the way this world works today. We have implemented an extraordinary filing platform at RBI, which is in the face of Indian banking. We're doing some extraordinary work, and we therefore need patient investors. I don't think we need investors who would basically need to be there for five years and 10 years. That's stupid on my part to expect that. At the end of the day, I think what we need are investors who understand the business and are patient enough to stay with us through our growth path.
I'm sorry, Mr. Negandhi, for saying this, but I think it has to be said. On that note, thank you very much for being on the call, and I can only commit to you that we will keep working on the fundamentals and try and improve the fundamentals of the company for your benefit so that we don't come to a situation where people want to dump the stock. I don't have a problem if people want to sell the stock because they think it's overpriced. I have no problem if people want to buy stock because it's underpriced.