Ladies and gentlemen, good day and welcome to the Q3 and nine months FY25 earnings conference call of eMudhra Limited. As a reminder, all participant lines will be in the listen-only mode, and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing star, then zero on your touch-tone phone. Please note that this conference is being recorded. I now hand the conference over to Mr. Venkatraman Srinivasan, Executive Chairman, eMudhra Limited. Thank you, and over to you, sir.
Thank you. Good afternoon, everyone, and thank you for joining us today. It is my pleasure to share eMudhra's performance for the third quarter of FY 2025 and provide insights into the progress we have made during this quarter. For Q3 FY25, total income was INR 140.89 crore, reflecting a year-to-year growth of 41.6%. Our EBITDA was INR 31.94 crore, with an EBITDA margin of 22.7%, and our PAT for the quarter was INR 22.4 crore, resulting in a net margin of 15.9%. This quarter's growth was driven by strong performance in our overseas markets, particularly in the Americas, Middle East, and Africa, and Asia-Pacific regions, supported by significant deal closures. Our global engagements reflect the growing demand for identity-backed digital signatures and the adoption of automation in public key infrastructure for enhancing user and device security.
In India, we achieved strong traction for the identity and access management solutions, highlighted by key deal wins. Additionally, our trust services, including eSIM, continued to perform well, with volumes increasing on the back of new deals in capital markets and banking. Our investments in research and development remain at the core of our strategy. This quarter, we advanced our efforts in post-quantum cryptography and mobile PKI. The timeline recommended by NIST for transitioning to post-quantum algorithms has encouraged large organizations, especially in regulated sectors, to prepare for this shift. Furthermore, recent regulatory developments in the European Union now mandate the use of mobile PKI for issuing Digital IDs and signatures, creating additional opportunities for our solutions. The rapid advancements in generative AI have opened new avenues for us to innovate.
We are integrating GenAI into our product suite to address critical use cases such as deepfake detection during identity verification, document summarization, risk assessment, and security analytics. These capabilities also extend to automating internal processes, ensuring efficiency and scalability in operations. Now, I would like to walk you through some of the key project wins for the quarter, which includes managed PKI for an intergovernmental organization in the European Union, support for delivering secure cloud workloads in North America for a large ERP platform, certificate lifecycle management for a large bank in the Middle East, e-signature-enabled paperless transformation for a large bank in Qatar, and paperless transformation for a telecom company in Asia-Pacific, integration of eSIM e-stamping for solar power purchase agreements with the State Power Distribution Company in India.
We are also proud to have been recognized by Frost & Sullivan as the 2024 Competitive Strategy Leader in the Global PKI as a Service Industry. This recognition reaffirms our commitment to innovation and excellence in delivering secure digital solutions. Looking ahead, we remain optimistic about the opportunities in global markets and will continue investing in R&D as public key infrastructure remains a critical element in the convergence of user and device identity, and we are well positioned to drive growth in this evolving landscape. Thank you, and now I invite Mr. Ritesh Raj Pariyani, our CFO, to provide a detailed overview of the financial performance for the quarter.
Thank you, Chairman. Good afternoon, everyone. I'm pleased to share the highlights of our Q3 and 9-month financial year 2025 financial performance. Our total income for Q3 financial year 2025 was INR 1,409 million, marking a 41.6% year-over-year growth. Gross profit for the quarter grew at 11% year-over-year to INR 714 million, with a margin of 50.7%. EBITDA for the quarter was INR 319 million, registering a 19.4% year-on-year growth with a margin of 22.7%. PAT grew at 11.9% year-over-year to INR 224 million, with a margin of 15.9%. Now turning to 9-month financial year 2025 performance, total income for the 9-month financial year 2025 reached INR 3,785 million, representing year-over-year growth of 36.7%. The enterprise solution segment generated a revenue of INR 2,928 million, while the trust service revenue was INR 797 million.
EBITDA for nine-month financial year 2025 reached INR 952 million, representing a year-over-year growth of 18.8%, with a margin of 25.2%, and PAT grew at 14% year-over-year to INR 629 million, with a margin of 16.6%. Thank you, and we may now open the floor for questions and answer session.
Thank you very much, sir. We will now begin with the question and answer session. Anyone who wishes to ask questions may press star and one on their touch-tone phone. If you wish to withdraw yourself from the question queue, you may press star and two. Participants are requested to use only handsets while asking a question. Ladies and gentlemen, we will wait for a moment while the question queue assembles. You may please press star and one to ask questions. The first question is from the line of Rishi Maheshwari from Aksa Capital. Please go ahead.
Hi, thanks for taking my question. Just like some clarification on we've seen some exciting revenue growth, and especially from enterprise services as well. However, this does not commensurate on the gross margins. So how do we reconcile the two? Last quarter, you had explained that there have been some offsets in terms of the trust services. I believe that's not necessarily the case this quarter if I had to compare quarter to quarter. So why is that the gross profit has not increased commensurate to the top line? And when do you think both will converge? Thanks.
No, that point continues in this quarter also because that arises due to the change in the CCA guidelines. So earlier, we were selling at a net price to a partner. So in the top line, net price only will come. Nowadays, we are by the guideline, we are forced to sell at the retail price and then pay a commission to the partner. So that way, and the commission varies from 40%-50%. So to that extent of trust services, if let us say trust services sale is INR 25 crore, almost anywhere between INR 10-1 2 and a half crore will increase the top line, and that will also reduce the gross margin as a percentage. Gross margin as an amount will not change, but gross margin as a percentage will change.
That is a reverse situation, and that situation will continue in the next few quarters also because the CCA guideline may remain the same until if it is changed at a future point of time. That is what we explained in the last quarter. That situation continues also. If you look at last quarter growth, one more thing is also there that we have to repurchase because the stock model which was earlier there, we were selling the stock to these distributors and dealers and everyone. A lot of stock was there in the market. In the new model, stock cannot be sold. Every digital signature has to be sold one by one. Whatever stock was available in the market on July 15, that has to be repurchased.
What we are doing, agreed with the partners, is to the extent they sell in a particular quarter, we will repurchase their old stock. That also almost comes to some around INR 2.5 crore-INR 3 crore per quarter. These are the two contributing factors which reduce the gross margin as a percentage, not the gross margin as an amount, but as a percentage it is like that.
Even as an amount at the EBITDA level, if you look at, we've actually declined from INR 33 crore. We've actually from about INR 32 crore last quarter, we've done INR 30 crore this quarter. So it clearly shows that there has been some deceleration despite that.
Definitely. No, no. This quarter, if you see, last quarter is the season for the digital signature. So at that time, only maximum sale of digital signature take place. In the digital signature, once the data center and processes are put in place on the incremental sale of digital signature, almost 98%-99% gross margin is there, except the commission. So even if your commission goes, 50% gross margin is there. So almost what happened, INR 5 crore, if you see the India revenue, there is a INR 5 crore reduction in the digital signature sale, which is substituted by the almost substituted by INR 3.5 crore of the enterprise sale. So that resulted in a reduction in also resulted in a reduction in gross margin and reduction in the EBITDA margin to that extent. So that it will contribute to about INR 2 crores-INR 2.5 crores.
How should we look at growth going ahead, sir, especially in ERP services?
Yeah, no, we are not in ERP business. Enterprise solution.
No, no, I'm sorry, enterprise solution businesses. How should we look at growth?
Growth should be consistent. Even fourth quarter generally will be better than third quarter, so that is our general thing, then the next year also, so if you see year beginning, we gave a guidance of 25%-30% growth, and last year, we had achieved INR 375 crore, so this year, we thought maybe INR 475-500 crore we can achieve, but definitely we may cross INR 500 crore. We may reach somewhere between INR 510 - 520 crore also, then similarly, on the net profit side, because the earlier we were reaching 20% PAT, but then we gave a guidance of 18%, which on a INR 500 crore should have been INR 90 crore, so now already we have reached a PAT of INR 63 crore, so with additional PAT next quarter, we may reach somewhere around INR 90 crore, but this 63 are what, 87, 88, or 90, what I'm saying? This is after two, three factors.
One factor is the repurchase of stock. That repurchase of stock itself will go to almost INR 9 crore in the current year. That is one factor. Then the next factor is we are providing the stock option expense. Actually, really, it is not an expense, but only by India's accounting standard, it becomes an expense. Where what we are doing is already the shares are in the trust from the trust we are allotting to the employee, but we have to debit the profit and loss account and credit the reserve directly. So that impact again comes to INR 7-8 crore there. Then the other thing, we did one acquisition. In that acquisition, we made certain payment as a deferred payment after one year and two years. So there was no interest component, but as per India, some portion need to be treated as an interest component.
These are all not really; it's not affecting the business, but from a profit and loss account perspective, this affects. And then the one-time acquisition cost. Generally, any capital-related cost, it should go to the capitalization, but that also some INR 1.5, INR 1.8 crore; it has to come to the revenue as per Ind AS. So all these put together, it is almost INR 16-17 crore. But though we told INR 90 crore, after the INR 17 crore, we may achieve INR 87-90 crore. So that way, in my opinion, there is no decline or anything like that. It is really doing well only. And if these effects go maybe in nine months, 10 months, then again we can that level of profit will again come.
Should we therefore assume that FY26 will continue to be about close to 30% revenue growth year-over-year over FY25?
At least 25%-30%, on which maybe because this year itself, if you see the 41% growth, on that 25% is organic growth. So next year, if we say 25%-30%, maybe 15%. Conservatively, 15%-20% can be organic growth. Balance 10% can be acquisitive growth.
What should we assume now at the reorg margin at the current status in the way you report? What should we look at as an expected margin, EBITDA margin for next year?
Expected EBITDA margin, we can see around same 24%-25%. Then the PAT based on the current way, if you take all this adjustment, adjusted EBITDA definitely can be 25%. If non-adjusted EBITDA can be 23%. And then the PAT 15.5%-16%.
15.5%-16%?
Yes, yes.
Which will be lower than the 18% that you guided this year?
No, no. 18% originally guided without these factors. No, without the top line increase and all that. After that, it is coming. So that way, if you see on a INR 590 crore, maybe on a INR 600-650 crore, it could be on that. It may be definitely more than that. Not 15%, maybe 17%-18%. So more than INR 100 crore can be there definitely.
Got it. So just last question on the advent of the AI that has happened, either from the Chinese AI or generally, how is that helping you in terms of the business? Is there any correlation to the growth of AI versus the security services and digital trust growth?
We have not introduced those AI into the business side. So that way, a lot of R&D, now only our technical team has started next year. We may have to do some R&D to introduce those into the AI side. But on the operation side, we have introduced. So that way, in spite of increasing the revenues, the corresponding except the manpower has not increased so much. We are able to maintain the manpower at the same level or maybe a little lower level. Today, we are increasing the manpower only for the salespeople abroad. But otherwise, in the technology team, then the customer service team, operations team, everybody operate at the same level or even at a reduced level by usage of a little bit of AI.
But at the business side, how it will, we are almost thinking of two, three things that Kaushik may be able to answer better than some other colleagues who could not be here today, but we are thinking about that, how to use the AI in the business side.
Got it. Got it. Thank you so much. Thanks for the candid answers.
Thank you.
Yeah. Thank you.
Thank you.
Thank you.
Participants, you may press star and one to ask questions. The next question is from the line of Surbhi from B&K Securities. Please go ahead.
Hi. Thank you for the opportunity. So my question is regarding post-quantum cryptography. Could you spend some time helping us understand how is the product integration happening and the entire transition from legacy encryption algos to PQC? What kind of opportunity do we see there? And I think we were running some POCs there. So are we seeing any materialization of that happening?
No, still nobody has converted to post-quantum, but large organizations have started asking for POC. Particularly, some two, three U.S. organizations have asked, some Indian organizations have asked for the POC. Those things we have started demonstrating, and some others, another point which has come is how the dual current methodology and the PQC put together can be used. That is another thing we are doing so that they need not replace everything. The current RSA algorithm and elliptical algorithm will also be there. Along with that, the PQC algorithm will also be used. So it will be, it is combined and bundled into our emCA product already. So it will not be separately sold. But in the emCA product, that feature is also helping in bidding for the RFP and bidding for the large customers and all that.
Because the large customer don't want this as a separate piece. They want it as an integrated piece. So that whatever way it can be done, it will be possible to do. And that is the kind of model even our Controller of Certifying Authorities is advocating. So.
Fair enough. Which will be the sectors which are expected to move first here?
What is that?
Which sectors are you expecting to get impacted first and be the first ones to move to PQC?
Which are the sector which is going to impact? Who will be?
PQC. PQC, mainly large banks and defense.
Okay. Okay.
Yeah.
Second question is so.
Because these kind of thing, first they will trade the defense generally and then the large companies.
Okay. So second question on the operating cost. Is this cost entirely linked to the service entities or there is any hardware component as well in it? And if so, can you please quantify that?
Hardware is very less. It is not significant. Only on the trust services, this 40%-50% gross margin is there. Then on the service component, whatever service we are providing on that service, whatever that manpower cost is also going into the operating cost. Hardware, not much. Because this year, even token sales, we are reducing because the margin is very less. Other hardware sales also we are reducing. So that way, on the cost of revenue, these are the main cost.
Okay. Okay. And sir, lastly, if you could call out what was the cash balance at the end of this quarter?
Cash balance, the last quarter end was INR 167 crore. This quarter end also around INR 166 crore or INR 167 crore is there.
Okay. And any new products in the pipeline?
Separately, fully new product is not in the pipeline, but in the existing product, additional feature, feature enhancement, and some new functionality enhancement, all those are happening. So that is how it is going. Completely new product is still not in the pipeline. Maybe next year, something we may have to plan. Once these PQC, mobile, PKI, FHE, everything stabilizes, then we'll plan them.
Okay. Fair enough, sir. Thank you very much.
Yeah. Thank you.
Thank you. The next question is from the line of Siddharth Mishra from Creaegis. Please go ahead.
Hi, sir. Thank you so much for taking my question. So first question is, if you can separate out the one-off expenses of INR 22 million this quarter, what were the components? How much was the notional interest on acquisition liability? How much was the provision? And if there is any other expense?
Yeah, these one-off expenses, three, four expenses are there. Exactly that 22 million, I'm not able to calculate, but I will explain one by one. Then later on, our CFO can send you the full list of what are the one-off expenses. One is the stock option. So generally, this quarter, I think INR 2.2 crore or something was the stock option expenditure. Actually, no expenditure takes place. It is only debiting profit and loss account and crediting the reserve. Because the shares are already purchased long back by the stock option trust, and there is no new purchase in that. So it is not going anywhere. So this is one thing. Then the second thing is this acquisition of Two95 International, what we made, there were two components in that. One was the acquisition finder fee.
So that finder fee, again, as per in general, earlier days, this finder fee was also added to the acquisition cost and accordingly treated. But now, our auditors told that finder fee has to be debited to the profit and loss account. But that didn't come in this quarter. That was in the last quarter, around, I think, INR 1.5 crore or something. Then one more component in that was the when we did the acquisition, we made a payment of around 85-86%, and the 14% we deferred for two years just to ensure that the commitment is there and they are with us and all these things. So that what happened was the as per Ind AS, whatever we deferred, that also had to be segregated at a notional interest rate into interest component and principal component, and that goes to interest.
That may be some INR 25-30 lakhs.
30 lakhs.
30 lakhs for that.
Then one more thing, what is affecting the P&L account is the repurchase of stock. So that repurchase of stock, again, was, I think, this quarter, INR 2.2 crore or INR 2.5 crore, something like that. So totally, all these some INR 5-6 crore are affecting the current year profit and loss account.
Understood. Thank you so much. How long do you think the repurchase of stocks will continue? Any indication?
It may go up to September of next year. Because otherwise, if we commit to repurchase everything together, then suddenly we have to shell out all the money. And the partner also will not be focused on selling our stock. Because today, too many competitors from 13, 14 people have come. So that's where we are saying we will not fully repurchase you. To the extent, every quarter, what you sell, that much only we repurchase. So that is where it may go up to next September. That is my view. But gradually, the amount could be around 3, 3 crore, 3, 4 crore like that. Or sometime it can come to 2.5 crore also.
Got it. Very good. And then, sir, if it is possible for us to break down the services revenue like we did last quarter as well and further into Ikon and Two95, rough numbers would also be helpful.
The service revenue this quarter was around INR 43 crore or roughly around that. On the INR 43 crore, I think roughly our own service revenue is INR 5-6 crore and others, Ikon and Two95 maybe around INR 37-38 crore.
Understood. And equally divided into Ikon and Two95?
Yeah. Maybe one, two crore here and there. I don't remember, but.
Sure, sure. Yeah. Very helpful, sir. And I see, I think Ikon has been doing decently well. So is there any plan to maybe because we own, I think, 51% there, right? Maybe any plan to own full Ikon in the future?
No. As of now, there is no plan. There is no discussion with them also. So it is continuing and doing well. So because if we pay this 51% also, then we have to sell out the cash we are preserving. As long as this works well, this is okay. Otherwise, we may have to buy.
Understood. Is there any limitations that you see from just 51% share? I mean, it's still majority, but in forming deals, going after customers. Is there any limitation that you see?
No, no, there is no limitation. They are also professional people. And because of us being this company, also additional revenue is coming because of our products. So they sold our product in universities and other things. For that, all services have come into the Ikon itself. So on that, they are also 49% owner. So that way, they are okay, no problem.
Got it. Thank you. And sir, the AWS partnership that we had announced last quarter, any update there would be very helpful?
Which partnership?
This AWS.
AWS, that is progressing. Yeah, that is progressing, but still, I would not say that it is progressing the way we wanted. A little bit progressing. So we are having constant meeting with them and seeing how they can push more sales through their channel. But they are expecting us to push their Amazon Trust Services through our channel. So this is where it is.
Got it. Got it. And maybe last one, just on the eSign product that we have, under trust services, I think is where we report it. I mean, I couldn't find it, but is there a mix of trust services revenue by channel and by this new segment that we used to report? If you can provide that?
I didn't get the question properly. Can you repeat?
So this revenue breakdown in trust services, we used to earlier report trust services by channel, trust services by retail, and then new products which include eSign and SSL/TLS certificate. Can we provide that mix or is it not relevant anymore?
No, that retail and channel has become irrelevant. Because what has happened? Earlier, retail, we were selling at INR 2,000-INR 3,000. Channel, we were selling at 300 like that, INR 300-INR 400. Now, the Controller of Certifying Authorities has told that you have to always sell the end customer. And at a single price which is published in the website. We cannot differentiate the price also. So because of that, that bifurcation became irrelevant because on everything, same realization is there. So this is one. Then the second thing is the eSign and new product. What is happening now? The eSign is combined with the solution, emSigner, and then eSign and eStamping, all these things. So now, eSign, we are classifying along with the emSigner and also the eStamping. So that is where that also we have started putting in the enterprise solution.
But alone, if you see, eSign itself could be in nine months, it could be a INR 10 crore or INR 11 crore revenue. Yeah.
Understood. Very helpful. I think those were my questions. Thank you.
Yes.
Thank you. The next question is from the line of Rohan Vora from Envision Capital. Please go ahead.
Hello. Hello. Am I audible?
Yes, Rohan.
Yes, yes.
Yes, yes. Thank you for the opportunity. So, sir, the first question was on the two acquisitions that we had made, Ikon and Two95. So what we had said was that in the first year of acquisition, we would like to reach four or five clients and target revenue that we had in mind. So are we on track to do that? Was the first question.
Yeah, yeah, yeah. Maybe some four or five universities we have reached, and they have also reached other clients to whom we have sold. So almost, if you see, last year, our own product sales in the U.S. market was around $5-$6 million. So those were mainly because we didn't have any base in the U.S. So these are all clients introduced through them. So that was good. And similarly, the second acquisition, now four big customers they have introduced. So in that, we have started working with them. So one or two may materialize now in another one or two quarters. So that way, it has been good.
Okay. So, sir, for the customers that we have already booking revenue, so what would be the ticket size of these customers on average?
Some are $3,400,000, and one is $500,000, and one is some $150,000 also. So different range is there, but nothing is more than $1 million. Everything is in this $4,500,000 range.
Got it. Got it. Sir, another question was on our trust services business. So while you explained last time as well that we are now booking at a higher price, the revenue is being booked at a higher price because it's a single price for both retail and the wholesale channel. However, we see that Q1, Q2 trust service revenue has come down. So what could be the reason for that? Are the volumes going down?
Volume decline. As I told last time, almost 40%-50% volume decline is there. One volume decline is due to the income tax. In income tax, what was happening? Earlier, other than corporate, even the non-corporate like partnership firm, HUF, individual, whoever is doing tax audit, both the tax auditor and them both have to be signed using the digital signature. Now, what has happened is only for companies, limited company, digital signature required. All other can do through other sign. So with the result, almost the tax audit cases are 36 lakh cases in the country on which only 6-7 lakh cases DSC is required, 30 lakh cases not required. So that itself result in almost 30% decline in the overall market. So then another thing is some 10-12 competitors have come.
So some of the business has gone to those competitors, and they are selling at a much lower price. For example, we are selling at INR 1,500. They are all selling at anywhere from INR 600-INR 800 kind of thing, on which itself they give some 50%-60% commission. And we don't want to get into that price war. So due to these reasons, the total volume has declined. So otherwise, if old volume was there, trust service would have been much higher.
Got it. Got it. And sir, the last question was, so for our two businesses under enterprise, one is cybersecurity and one is the paperless business, so the markets that we are prominent today, how fast are those markets growing or expected to grow over the next five years? Any growth rate on the market?
Now, what has happened more than paperless for us, the cybersecurity business is growing well because here the number of competition is very less. And only three, four players are there. That also American players. So we are able to penetrate many markets. So that's why if you see our composition between earlier, we thought the paperless transformation will be a much higher percentage. Today, that is maybe 25% only or 23%, balance 75% is the cybersecurity business. And the cybersecurity business, we are creating a one-stop shop kind of model with a deep. We are comparing with the DigiCert product. We are comparing with the Nexus product, Entrust product, all combination. We are building so that we can penetrate deep into the market. And the paperless transformation market, we have to compete with the DocuSign, Adobe, and also several small.
During the last two, three years, several smaller players have come across various parts of the world. So that's where, in my opinion, the cybersecurity and related product will have a much higher growth. And the paperless transformation product may have a smaller growth.
Understood, sir. And sir, one thing was that we were open to acquisitions, and we said that we are looking at acquisition in the European Union if the opportunity arises. Are we looking at options there? And what is the status on that? Thank you.
Yeah, yeah. We are looking at it. We have appointed a European CEO, one person by name Carmine Auletta. And he earlier worked as a COO in InfoCert. InfoCert is a $150 million company based out of Italy. And they operate throughout Europe. So now he has a number of contacts with these companies engaged in this business. So through him, we are trying to get the deals and then do it. So we are evaluating all that, but nothing has come to a closure or anything like that. If it comes to a closure, then we will immediately inform.
Sure, sir. Sure. So I actually wanted to understand how big would be the size? I mean, are we looking at a particular size?
We are not looking at very big size because then it will be a very high share dilution, and then the other thing will be otherwise we have to again go to QAP and those kind of thing or swap or those kind of things. So we are looking at anywhere up to EUR 10 million, EUR 12 million size only, not beyond that. And another important factor is most of the European companies, if you see, they are zero EBITDA company or sometimes negative EBITDA company. So unless we have a firm conviction that by acquiring it, we can transfer the technology matter to India and then save cost and arising out of that, we may be able to ramp up the EBITDA to at least 15%. Then there may not be much say it may affect these overall numbers only.
So that's where whatever we are evaluating, within these parameters, we are evaluating.
Okay. And 10-12 million EUR would be the consideration. And what would be the revenue size?
Not consideration. Revenue itself. Consideration that depends on the, we are generally negotiating 10 times EBITDA only. But if there is a small EBITDA, itself is very small or zero, then they may ask based on the revenue also. So based on revenue, it could be one-time revenue or 10-time EBITDA or with some upside and those kind of things. Something has to be structured.
Okay. Okay. Got it. I'll get back in the queue. Thank you, sir.
Yeah.
Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Srinath V from Bellwether Capital. Please go ahead.
Hi, sir. Wanted to quickly find out what would be our U.S. top line for the quarter and likely for the year, sir, just to get a feel of how big we are now in the U.S.?
U.S. top line for the quarter may be around between INR 40 crore-INR 45 crore.
So out of the INR 92 crore out-of-India revenue, what INR 40-45 crore would be from U.S.?
What is it? INR 92 crore?
INR 92 crore enterprise revenue that comes from global markets. Out of that INR 92 crore, INR 40- 45 crore would be from U.S., right, sir?
Okay. Yes.
Got it. Perfect. Perfect. And wanted to understand what is the size of the CLM business, sir, right now? And wanted to understand how do you see the growth in this business over like a 12-18 months window?
Oh, there is CLM. It is sold to a lot of large organizations. So for example, India, State Bank of India, LIC, these kind of organizations, and globally also a lot of Commercial Bank of Qatar. So like this, each organization where it is sold is all large organizations. So we expect good traction and good growth on that business.
Okay. How large could that business get, sir, over a two, three-year window?
or three years, it depends because you see everything, how much marketing and how much people we can spend, it depends on that. So suddenly, we don't want to put also. That's why another model what we are trying is how to strengthen global partnership model. And then whether we will be able to enroll some thousand partners across the world. So our 2,000 partners across the world. So trust for last six months, that kind of stress we have started getting. We're doing. But it will take instead of putting our own salespeople because we put our own salespeople in the foreign geography, they are very costly. So already we have put almost some $600,000-$700,000 or $1 million people in the US are more than that. So similarly, we have to put in every geography.
In Europe, we have to put each person will cost EUR 300,000-EUR 400,000. So these kind of things. That's why how to enroll more partners and put number of partners and give more commission and get the deal. This is another thing we are thinking. So that way, we can penetrate more.
Got it. And these partners are largely SIs or resellers or what were the kind of partners are we tying up with, sir?
Both are there. SIs are one side, but more than SIs, a lot of resellers are there. We are analyzing them into various buckets, which kind of partner, what kind of thing they are doing, what is their contact, whether that contact will be helpful to us in penetration, whether they are working with the CTO, CAO, or they are working with the business users. If they are working with business users, we can push emSigner. If they are working with CTO, CAO, we can push the CLM solution. That way, classifying everybody, and the system integrators predominantly will be on the CLM solution, wherever they are bidding large bids. From both sides of how many bids are happening in various geographies, in each bid, who are the system integrator? Can we go through that system integrator? That is one approach.
Another approach is, who are all the partners dealing with the IT departments of large companies and large banks? Through that partner, can we reach the bank or the large company, so all the approach, classifying the partner in a different way, making a partnership program, enrolling them, and working out a commission structure? All this has been done in the last six months, and it has started working, and also, we are classifying the partners into strategic partner, growth partner, other partners, so that way, without much fixed cost, we may be able to reach the global reach.
Got it. And sir, what would be the gross margin in this product for us so that to understand how much we could reinvest sharing economics with partners broadly to get a feel, sir?
Gross margin on the product, if you see, any product license, you say you are not making anything. So if, let us say, INR 100, you are selling a product, including implementation. On the INR 20, maybe you have INR 30 implementation. The INR 70 or INR 80, it will be a full margin to us because upfront, all the other cost is already spent. On this INR 20, INR 25, maybe you may spend 60%-70% on the services component where you put people and all that. So that is where on the product alone, even 30%-40% gross margin of the sale value, generally 25%-30% can be paid to partners. But on the services component, it may be better to pay 7%-10% only and not so much. So that is how we are negotiating.
Got it. So the service component in these deals will be done by our service entities in the U.S., or you would let the partner do it through their service entities? How would all of this work, sir?
Up to now, that kind of partner still has not evolved. Partner who understands this cybersecurity business and able to implement by themselves. So that's where we have to implement now, as of now. But over time, we want some of the strategic partner, we want to train them also. And then, for example, now Tech Mahindra, we have signed the partnership agreement. So there, because they are interested in selling the product and getting the service revenue for themselves. So then how do we train them very deep so that they are able to go and implement? But all the partner will not mature to that extent. Only some big partner will mature to that extent.
Got it. Given we are putting all of this together, sir, in the form of partnership and a physical presence there, wouldn't it ideally mean accelerate going forward, especially in cybersecurity? Would that be a fair assessment, sir?
Yes, yes. Yes. Because that is where the good profit will come.
Got it. Perfect. Last one, sir, on acquisition. Given now that we have service entities, so would it be fair to assume that US, we may not need any more capability addition or people addition, and largely acquisitions would be outside of the US? Or how do you look at it, sir?
Mainly, we are trying Europe. If that materializes, it is okay. But if the Europe doesn't materialize or the companies are all loss-making company and we are not able to come to a conclusion on that, then maybe some more in the US. Maybe we will also look at some more in the US also. May not be necessarily service industry. Maybe some product or some certain authority kind of company and those kind of things.
Got it, sir. Just last one, sir. Wanted to understand this quarter, emSigner has done very well in the enterprise business. Significant quarter on quarter and year-on-year growth. What were the key wins in the paperless business this quarter? What was driving it? One would felt that the growth in that business may not be as good as what you're reporting. So wanted to understand what's driving growth in paperless business.
Driving growth in India, a lot of deals are driving the growth because in emSigner, we have made it capable of a combination of e-signature plus e-stamping plus workflow. Because of that, during the last seven, eight months, a lot of banks, a lot of brokerages, and also a lot of fintech companies have come to us. That is where in India, it is developing. We are also redefining the product to go into the retail. That retail, any rental agreement, any agreement, so even all the lawyers and chartered accountants can become partners. Through that partner, even transaction-wise, it can be sold. Only even one transaction, they can come through emSigner. Five transactions, they can come through. That model, we are also reworking the product. Once that is there, it can also get good growth.
So this is broadly for loan documents, sir, and e-stamping?
Yeah. eStamping plus e-signature with workflow.
Got it. Got it. Cool, sir. Thank you. Thanks for your time, sir. I'll get back into the questions here.
Yeah, yeah, yeah. No problem.
Thank you. Participants, you may please press star and one to ask questions. The next question is from the line of Prem Luniya from Astute Investment Management. Please go ahead.
Hello, sir. Thank you for taking my question. So, sir, I wanted to understand the eSign business and the emSigner business. So the number you said that there was around INR 9-10 crore of business in the nine months. This was for the eSign, or there is some part of emSigner as well in this?
This is only for eSign, which is a part of emSigner. When we sell the emSigner, there are three components. One component is the eSign component on that. eSign itself, if you see today, we are almost giving eSign of 150,000 eSign per day. And that fetches some INR 5 kind of thing. So that level of eSign itself will take around INR 10 crore. Then the emSigner has the other component, which is the workflow component. And also where we are integrating the eStamping into that, that eStamping is going through the NeSL. So per document, there we are also charging some INR 30. Only some portion is to be paid to NeSL. But the stamp paper, that is not coming in top line. Stamp paper money also we are collecting, but that directly goes into the stamp paper. So that doesn't come into the top line.
But these two portions come into the top line.
emSigner revenue as a whole would be how much? eSign is a part of it, that I understand. emSigner was in the U.S., but how much would be the volume till now?
emSigner revenue separately, maybe Ritesh will give you later. Maybe you can note down his number. What is your phone number?
My phone number?
Yeah. Because Ritesh can telephone you and give it to you.
Okay. 866?
966, 866.
866.
Okay.
86. 18543.
Yeah. After the call, he will get the number and telephone you.
Sure. Sure. Also, I wanted to understand the e-sign landscape as a whole. As you told that many competitors are coming in, and also in the MSigner, similar products are coming in by competitors. How do you see it evolving? And what would be the margins here on the EBITDA front?
First, I will explain the eSign, and then we'll go to the emSigner. The eSign, the volumes are considerably increased, but all the Certifying Authorities are not giving the eSign. So the predominantly people giving eSign are the one is that earlier what was called the NSDL e-Governance, which is currently called the Protean. Then the other is the C-DAC, which is government departmental itself. Then some amount CDSL is doing and eMudhra. On that, because of the historically, for some three, four years, because of the doubt of whether eSign can be given to private people or not like that, we were not having the other connection. At that time, the Protean, which was earlier NSDL e-Governance, developed a lot of business and almost became a virtual monopoly. So then we started entering later and competing.
But still today, we have some 30%-35% market share in the e-signature. But it is not highly productive because though we realize a gross of ₹5, almost ₹3 goes into the other charges. So net net, we are realizing ₹2 out of that. So ₹2, even if you do some crores of signature, INR 4 crores signature, INR 3 crores signature, that way, it may be only INR 10 crore revenue per year on this basis. So this is one thing. Then two things are. One is the C-DAC is also giving it free of cost to all the government department. So government department doesn't want to pay this ₹1 to be ₹20 also. Mainly, it is coming from the private people. So this is on the e-sign thing. So e-sign, we have to be there because it is very important for the country as a whole.
We have to develop everything. We have to provide to everybody. But this selling, because it started at INR 70 and then INR 37.5 net realization and come down now to INR 1 to INR 20 up to INR 2. So this is where it is. So once that position, at some point, some major people will leave this business, then we can come back and price at a higher price. So this is where it is. emSigner is doing very well in the Middle East. In India, it is not doing what we originally intended. We originally intended it has to become a full workflow solution for the entire bank or for the entire large company and all that. But today, what is happening, banks and other people are using for some partial purpose, not for the whole digital transformation. Partial purpose.
And so that is where we are providing as a gateway to e-sign also. So that gateway services, number of people are using through API. And the gateway to e-sign plus e-stamping plus small, small workflow like that. So that business is also improving. That's where we want to retail offer it for retail also in India. But if you see the Middle East, in Middle East, all the banks are started using emSigner as a complete workflow transformation. And same thing now is happening a little bit in South America. And North America also, some three, four customers are using for complete transformation. So then we are able to sell anywhere from $400,000-$500,000 kind of deals.
No, I couldn't get the number. 500?
Yes.
Hello?
Hello?
Yeah. I couldn't get the number in the end part. How much are we doing?
$400,000-$500,000 per deal in the Middle East and also in the U.S. and all that.
Right. And like we did for Qatar, Commercial Bank of Qatar right now. Got it. So we see this evolving. And how much would be the margins in the emSigner?
emSigner also, like any other product margin, almost if hardware is not included, it will be 87%-88%. Depending on partner margin only will be there. Otherwise, there is no other direct cost involved.
Okay. Sure. Thank you. That's it.
Thank you. Ladies and gentlemen, as there are no further questions, I would now like to hand the conference over to Mr. Venkatraman Srinivasan for closing comments. Over to you, sir.
I would like to thank everyone for joining the call today. We remain focused on delivering consistent performance and innovative solutions that enable secure digital transformation for our clients across the globe. For any additional information or queries, please get in touch with our investor relations advisors, who are Churchgate Partners, and thank you once again. Thanks.
Thank you, members of the management. On behalf of eMudhra Limited, that concludes this conference. We thank you for joining us, and you may now disconnect your lines. Thank you.