Aurionpro Solutions Limited Q4 & FY24 Earnings Conference Call PDF

May 21, 2024 BSE Limited National Stock Exchange of India Ltd, PJ. Towers, Dalal Street Exchange Plaza, Bandra Kurla Complex, Mumbai-400001...

May 21, 2024 BSE Limited National Stock Exchange of India Ltd, PJ. Towers, Dalal Street Exchange Plaza, Bandra Kurla Complex, Mumbai-400001 Bandra (East), Mumbai -400051 Script Code: 532668 Script Code: AURIONPRO Sub: Transcript of earning call held on May 15, 2024 for the Q4 & FY 24. Dear Sir/Madam, In accordance with Regulation 30 & 46 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, enclosed transcript of the earning call held on May 15, 2024 for the Q4 & of FY 2023-24. Kindly take the above information on record and confirm compliance. Thanking you, Yours faithfully For Aurionpro Solutions Limited Digitally signed by Ninad Prabhakar Ninad Prabhakar Kelkar Kelkar Date: 2024.05.21 12:10:31 +05'30' Ninad Kelkar Company Secretary Encl: as above Aurionpro Solutions Limited Synergia IT Park, Plot No. R-270 T.T.C. Phone +91 22 4040 7070 [email protected] Industrial Estate, Gautam Nagar, Near Fax +91 22 4040 7080 www.aurionpro.com Rabale Police Station, Rabale,Navi CIN: L99999MH1997PLC111637 Mumbai 400701. MH-India.  “Aurionpro Solutions Limited Q4 & FY24 Earnings Conference Call” May 15, 2024 MANAGEMENT: MR. ASHISH RAI – CEO & VICE CHAIRMAN MR. VIPUL PARMAR – CHIEF FINANCIAL OFFICER MR. NINAD KELKAR – COMPANY SECRETARY MODERATOR: MS. AASHVI SHAH – ADFACTORS PR – INVESTOR RELATIONS Page 1 of 15  Aurionpro Solutions Limited May 15, 2024 Aurionpro Solutions Limited Q4 FY24 Earnings Conference Call May 15, 2024 Moderator: Ladies and gentlemen, good day and welcome to the investor call of Aurionpro Solutions Limited to discuss the Q4 and FY24 Results. As a reminder, all participants’ line will be in 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 “*” then “0” on your touchtone phone. Please note, that this conference is being recorded. I now hand the conference over to Ms. Aashvi Shah from Adfactors PR, Investor Relations. Thank you and over to you, ma’am. Aashvi Shah: Thank you. Good afternoon everyone. On behalf of the company, I would like to welcome you all to the Earnings Conference Call for Q4 & FY24. Today, on this call we have with us from the Management Mr. Ashish Rai – Vice Chairman and CEO, Mr. Vipul Parmar – Chief Financial Officer, Mr. Ninad Kelkar – Company Secretary. We will begin the call with brief opening remarks from the Management followed by a Q&A session. Please note that certain statements made during this call may be forward-looking in nature. Such forward-looking statements are subject to certain risks and uncertainties that could cause the actual results or projections to differ materially from those statements. Aurionpro Solutions will not be in any way responsible for any actions taken based on such statements and undertakes no obligation to publicly update these forward-looking statements. I would like to now hand over the call to Mr. Ashish Rai for his opening remarks. Thank you and over to you, sir. Ashish Rai: Thanks Aashvi. Good afternoon everyone. And welcome to this Earnings Call for Q4 and Full Year 24. I’m sure by now you all have received the investor deck and I hope you had an opportunity to review it. Our full year performance came in at the high end of our growth guidance of 35% marking another milestone in our journey to build out significant global products and platforms player. It’s the third consecutive year that we grew the business in excess of 30% and this remarkable achievement really is the result of the dedication, the work, the resilience of the team that’s joined us in this journey as well as increasing effectiveness of our strategic game plan. The growth we have experienced was helped to a large extent by a Page 2 of 15  Aurionpro Solutions Limited May 15, 2024 secular uptick observed across most of our businesses, underscoring both the strength as well as the diversity of our portfolio. To recap the performance a bit FY24 full year revenue stood at Rs.887 crore, which is a 35% year-on-year growth, and EBITDA stood at Rs.193 crores which is 33% year-on-year growth. EBITDA margins for the full year stood at 21.8%. PAT stood at Rs.143 crore, which is a growth of 40% year-on-year, PAT margins for the full year came in at 16.1% so slightly above the guidance. Every number came in at or slightly ahead of the high end of our guidance range. I believe this will set us up very well to continue our growth trajectory into the new financial year. I’m happy to share that the Board authorized issuance of bonus shares at a ratio of 1:1 alongside the dividend payout of INR 2.5 per equity share, this is post bonus. So, this marks a significant milestone as we doubled our dividend payout this year, reflecting we believe our commitment to delivering value to our shareholders. We are quite pleased to amongst the businesses highlight the significant traction that we have observed across the offerings in banking and FinTech space. We have transitioned, as I have mentioned in the previous earnings call from the phase of rebuilding the portfolio into moving aggressively to capitalize on the strong demand for our offerings. The growth in this segment, especially in the second half of the year, is a direct result of the strategic investments that we have been making in building new products, in expanding the sales channel, imposing key partnerships with global FinTech vendors within the wider ecosystem. Some of the key wins in the banking and FinTech segment include the State Bank of India, which was highly sought of the India’s largest commercial bank for the license implementation and support of iCashpro+, our next generation cash management and transaction banking platform. This order was valued close to Rs.100 crore as we disclosed. Also, recently we signed a multi-million dollar partnership with a very prominent US FinTech giant, paving the way for significant growth in the US market as well as globally for us. We kicked off this relationship with initial work orders of about $5 million to be executed largely within this financial year. During the quarter, we also had a first successful deployment of our product at a large bank through the strategic partnership with Finastra. These are significant proof points of the effectiveness of our strategy to partner with other global FinTech majors that we have talked about in the previous earnings calls. And I strongly believe, we will start seeing the impact of our investments in these partnerships within this financial year. The growth in the TIG segment also remains strong with a transit payment segment demonstrating very promising trends. Our strategic partnerships with MasterCard, and with Vix are expected to increase quite significantly order book as well as pipeline, providing a further proof point of the uniqueness and success of our partnership strategy. The key wins in this segment includes some key strategic order wins in TCL hybrid cloud space that we have Page 3 of 15  Aurionpro Solutions Limited May 15, 2024 disclosed and a significant order win from Government of Haryana, which covers the issuance of 5 million open loop cards. That is quite significant and that transaction can establish Aurionpro as one of India’s leading provider’s open loop and NCMC cards. In addition to the organic growth initiatives, we have strategically pursued key acquisitions. To enhance our offerings, address specific gap diversity blueprint, our recent acquisition in the AI space allows us to combine Aurionpro portfolio of industry leading enterprise software, with probably one of the most mature enterprise AI platforms that are tailored to the needs of banks and insurers. This move will allow us to make a significant play in shaping the adoption of AI in banks and insurers globally, both directly as well as through our ecosystem partnerships that we have talked about. While we take a moment to acknowledge the team’s remarkable accomplishments, we will continue to remain sharply focused on driving the product building agenda, and focus on scaling every aspect of the organization to capitalize on these very significant opportunities in front of each of our businesses. Finally, we extend our sincere gratitude to employees, customers, partners and shareholders for their continued support and contribution to our success. We expect to continue our growth momentum in FY25, plan to deliver a planned revenue growth of between 30% and 35%. And we will keep EBITDA and PAT margins at similar levels EBITDA between 20% and 22% and PAT between 15% and 16%. So, those are the planned numbers for FY25. With that, I will close and I look forward to an engaging Q&A. Over to you Aashvi. Moderator: Thank you very much. We will now begin the question-and-answer session. The first question is from the line of Vimal Gohil from Alchemy Capital Management. Please go ahead. Vimal Gohil: Ashish my first question was on the latest acquisition that we have made, Arya.ai if you can just highlight something more on was this driven by some of our existing customers, do we have existing orders from our from customers that’s point number one there. The second point is, how should we think about the existing management at Arya.ai. Will they be with us once we have sort of bought the 100% stake or do we plan to buy by the entire 100% as and when we go forward and what is the management’s plan over there. And lastly on Arya.ai, what drove valuations, if we talk about Rs. 20 crore revenue But we paid around Rs. 135 crores to that. So, for the 67% stake, so what drove these valuations for us, if you can highlight that, thanks. Ashish Rai: Hi, Vimal thanks, great question. So, look it’s just the overall flavor on what we are trying to do with Arya.ai before I get into the specifics, I strongly believe and as many of us on the call probably believe, we are today going through probably one of the most fundamental platform shifts this industry has seen. So, of course, on one side you have all the investments and all the hype around gen AI and the LLMs and the foundation models and, and that’s the game that some will play an that will probably all of it converts to the same place or there are one or two Page 4 of 15  Aurionpro Solutions Limited May 15, 2024 large players or a few large players in the space. That is one end of the market, there’s obviously a lot of investments going into the infrastructure side of the market. But we have always been strong believers that any technology as it matures, the ultimate value creation happens on the application layer. That is the layer where large businesses, large enterprises are running their mission critical applications, to run their business processes where they actually make money. That is where the bulk of the value creation happens. That is where the bulk of the value capture happens as a technology provider. We have always been very strong. We have built out deep strength in terms of building of mission critical enterprise applications. Arya.ai has been sharply focused on building out, products, platform, extremely mature AI assets, for the last 10 years focused specifically on the banking and insurance space. And the effort we are on is to bring together a very mature offering around AI ML together with the enterprise workflows that our clients actually use, and make a play for every point on the workflow at some point has to be AI augmented, or run through fully autonomous agent, or have AI assisted human learning it whichever way we bring these trends together to create a very unique value adding enterprise AI offering that can go out to banks and insurers globally. We feel very strongly about the opportunity, we feel very strongly about the credentials that we carry into the space to build it out. So, that’s the whole sort of rationale behind the acquisition. Coming to your specific questions. Yes, we have been working with Arya.ai for the last several quarters again from existing customers. So, we were already into existing deals that we won over the last six months with them where Arya.ai had a component going into our offering overall. So, yes, it does go out to some existing customers. We believe once we are done with the building of the enterprise AI framework we will be able to take what we have to, one to our existing client base, as well as to the wider ecosystem of FinTech partnerships that we have built up over time, because the problem that we are trying to solve for Aurionpro is the same problem that every FinTech vendor in the world is trying to solve for themselves. So, we have some value to create there. So, that is one, existing management of Arya.ai at the moment, as you would have seen mostly we have bought out all the VC side investors in that transaction, the management continues to hold. We believe both Vinay and Dixit are probably amongst the, you can count on your fingers, the number of actual deep AI experts out there who have been focused on the financial industry for the last decade. So, they are very skilled, very rare and very committed to and the team that comes in very committed to continuing to build what we said so we have got a perfect alignment of vision, at least the way I see it between me and Vinay and our management team and their’s. So, that is very crucial for us to do that. The final point about valuations. Look, the business has been growing very strongly. Over the last three years, it went from Rs. 3 crore to Rs.8 crore to Rs.22 crore, and this year we have visibility into a very strong growth that was one, on the core business. Second is, we have been in two significant transactions with them where again, as I said, Arya.ai was already a partner. So, there is a value from having Arya being a part of Aurionpro family there because those are also quite material revenue numbers overall. So, from a Aurionpro shareholder standpoint, we Page 5 of 15  Aurionpro Solutions Limited May 15, 2024 believe the valuation is extremely compelling in terms of what it can deliver this financial year and the next. So, it’s actually, we got very comfortable around that valuation. And as I said, the management team hasn’t really diluted materially at all in the transaction. It’s mostly the investors who were quite pleased to pass the baton on to us. That probably more or less, gives you the. Vimal Gohil: Just one follow up, Ashish if I may, let us index your number of customers to 100. What is your plan to sort of integrate their products, any timeline that you can offer in terms of, how many customers can you readily sort of integrate Arya.ai products by, next two years or three years? Ashish Rai: To our products, I would say, we are anywhere between 50% and 90% right, so I can’t imagine, look we are not pivoting, but we are sort of forcing a very strong AI first strategy across our entire enterprise application stack. So, over the next couple of years, you will get to see pretty much every Aurionpro application with AIML models, either working alongside or embedded deep inside the application stack. So, we would basically go 100% on it, but the real impact is not just from that, that is obviously a significant upside. But we believe the real impact is the impact we can make on the industry. We don’t see mature FSI focused enterprise AI offerings globally today, there is a lot of toy applications, there’s a lot of peripheral apps going on. There’s a lot of people talking a lot about Gen AI and all the stuff, which is all useful stuff. But, the value will get created where businesses run their enterprise workflows and that is where the value gets created. We don’t see good answers to it, so we believe this can be a very significant play for a very significant price. Vimal Gohil: Understood. And just one question on the APAC performance, anything to read into it. APAC probably we did about Rs. 50 crore of revenue versus almost Rs.75 crore odd in Q3. Was there any one time project there in APAC last quarter, which is probably not there this quarter? How should we think about that performance, and also if you can comment on US as well. Thanks. Ashish Rai: So, look APAC, by and large, the way to look at the number is, we do have our lending business primarily based out of APAC, so even when it sells globally, the revenue gets represented as APAC revenue we had some material license transactions that happened in Q3. Overall, the business continues to grow fairly strongly, I don’t think there is a big sort of change, the number of existing accounts keeps on growing, the number the revenue streams are all constant, but you will see, there was this transaction with the large FinTech vendor that we talked about some part of it was licensing traveling from Singapore, into the US entity. So, that would create a little bit of a skew around the number but by and large, there is no material change to the structure of the APAC business or the growth. Moderator: Thank you. The next question is from the line of Deepak Poddar from Sapphire Capital. Please go ahead. Page 6 of 15  Aurionpro Solutions Limited May 15, 2024 Deepak Poddar: Sir just one quick question on this recent acquisition, so what sort of addition it can have in our top line and bottom line over the next two to three years? Ashish Rai: So, Deepak like I was telling the immediate impact, we expect the business to grow very strongly this year that’s probably a double-digit growth sort of addition to the top line. But I don’t think that and over the next couple of years, we do expect the business to keep growing. So, one side of the business is the AI framework, the second side of business is the pre trained model, where you sell out as API calls which are transaction driven and practically most of the insurance industry in India uses that, so as the volumes grow, that growth will come in as well. So, over the next couple of years, just organically we expect the business to be growing above the enterprise growth levels for Aurionpro, that is the business standalone. But the real sort of upside for the shareholders and for the enterprise will come in with our ability to launch new products in new markets, and that, honestly is not a planned number. I believe the current organic growth number justifies the acquisition, the real upside from the new market, new product strategy, we will probably take a couple of quarters to do the building that we need to do and then come back with a concrete number. Deepak Poddar: Okay. But just a ballpark number in terms of, will it be possible for you to give in terms of rupees, crores how much it can add, in terms of revenue will that be an easy thing for you to share basically at this point in time? Ashish Rai: It will continue to grow, I would say materially higher number than Aurionpro itself is growing, Aurionpro itself is growing at 35%. So, that is probably what I can tell you at this day. Deepak Poddar: Will continue to grow at a rate which is higher than Aurionpro? Ashish Rai: Yes, materially higher. Deepak Poddar: And what would be, I’m not aware of this number, what would be its last year revenue and bottom line? Ashish Rai: Rs. 22 crore. Deepak Poddar: And bottom line? Ashish Rai: Bottom line, it’s a very high EBITDA business. So, EBITDA levels are probably, I would say at least 8 to 10 points above Aurionpro. Deepak Poddar: 8 to 10 percentage points, so maybe in the range of 30%, 32%, somewhere? Ashish Rai: Yes, there about. Page 7 of 15  Aurionpro Solutions Limited May 15, 2024 Deepak Poddar: Okay, fair enough. And secondly, I just wanted to understand are we on lookout for more acquisitions that can meaningfully add to our revenue. So, what would be the thought process there? Ashish Rai: So, thought process there is fairly straightforward and I have totally explained this in the past. So, there are few things going on, we have clearly defined spaces in which we operate, which we have been very transparent about the segments that we are operating in, we have a strategic blueprint for each of those segments, whether it’s lending, transaction banking, payments, transit, so we have got a sort of strategic blueprint in that space which is sort of a product/market, overall map and we have got a number of gaps in that blueprint. So, where we find an opportunity to plug a gap in that blueprint, we will make an acquisition, I’m assuming it makes sense for us from a, the only lens that matters is, is it value adding to the Aurionpro shareholder or not. And at a certain level of value, it makes sense. We don’t have much FOMO when it comes to deal making. So, for all, we may not pull the trigger for a long time, but if we find the right opportunity to plug a blueprint, we will do the deal. We’ve done three acquisitions in the last six months. It’s not really an indicator of how prolific we intend to be, it just happens to be that we had a set of very good promoters walk in our door and say we want to join you, we want to build a global business, and we think Aurionpro is doing something good, so let’s join together and it made sense to us. So, that is broadly how we think about it, I do see us doing more of it, because every time you expand it’s a buy versus build. So, we don’t normally acquire, for revenue we get very interested in acquiring for tech because if there’s a clear gap, and someone has already done a good job of it, it does speed up the time to market for us. And we can load it up on the channel we have, on the partnerships we have and create value for everyone, including the business we acquire. So, that’s essentially how we are we looking at it. Moderator: Thank you sir. The next question is from the line of Ahan from Vimana Capital. Please go ahead. Ahan: Just had two questions. First one, how do you think the data center space is shaping up given that you all are catering to that industry? And the second question is just based on what type of opportunities do you see in the data center space to go after, whether it’s global over in India, any acquisitions that you are thinking of in that space that could further enhance sort of offerings, so if you could share some colors on those please? Ashish Rai: Yes. So, data center is one of those spaces where there is significantly more demand than there is supply at the moment. So, of course from a demand standpoint it is just extremely strong. The business has been growing, like I said in the past has been growing at higher than 50% levels for us now for three years in a row. So, it has obviously been strongly growing. For us, data center today is where, for example, transit was a few years back. It’s still largely a skill led, services led business. For us, we really extract value out of any segment when we start productizing and start driving the nonlinear economics that comes with products. So, we have been working on some of those areas in the data center side which you will see coming out Page 8 of 15  Aurionpro Solutions Limited May 15, 2024 over the next few quarters, we have already been piloting some products in a few places. And we will come and announce when we feel we are ready. That is what will drive non-linear economics, from a demand standpoint, we don’t see the demand slowing down over the next few years, there’s just a massive amount of investments going into the space. We keep blending the design and the program, managing the bill side of it to make sure that the business for us continues to deliver margins at the enterprise ask level or slightly below the enterprise ask level but not significantly below. So, that is essentially how it is, it will continue to grow well, we will keep working on some R&D to try and create some non-linear economic side of the business. We also are selectively exploring global opportunities, but really, there is only so much we can take on that business has been growing at a steering pace. And we really need to calibrate the growth to make sure we are spending enough time on R&D, we are doing a good job of the deliveries, et cetera. So, that’s where we are over the next few years, it will grow quite strongly. Ahan: Thank you for that. And just wanted to understand what are the services in the data center side that is the most in demand for Aurionpro sort of focus? Ashish Rai: So, for us what we specialize in is, we have got one of the strongest data center design teams in the country, we really specialize on a lot of complex work like, we would have announced over the last few months, the Tier IV data centers, that’s a very, very complex project that we were working on with RBI, the IIT Mumbai High Performance Computing Center, the IIT Guwahati High Performance Computing Center, etc. So, that really specialized complex work is sort of the sweet spot for us. And then we work very closely with a few strategic partners where Iron Mountain-Webwerks, the main one that we have disclosed in the past. So, for us that is where the sweet spot is doing the complex design work, and program managing the build where it makes sense for us to work together with a strategic partner like Iron Mountain and Webwerks. Moderator: Thank you. The next question is from the line of Anmol Garg from DAM Capital. Please go ahead. Anmol Garg: Actually, had a couple of things that I wanted to ask. Firstly, of the 30% to 35% growth guidance that you are stating, does it include any assumptions from the revenue that we might obtain on any future acquisitions? And if you can indicate how much should be the organic growth out of this 30% to 35%? Ashish Rai: Yes, so thanks Anmol it’s a good question. Look, we are not really planning any of the 30% to 35% growth coming from any new acquisitions into the enterprise. If new acquisitions happen, we will see what impact it has on model. Typically, we have not done very large acquisitions, with any materiality in terms of revenue growth. So, I can’t imagine we will, if we get into that sort of situation we will come back and message it back to the investors on what it means. So, right now, this is all organic. Because if you look at the previous set of acquisitions we did last Page 9 of 15  Aurionpro Solutions Limited May 15, 2024 year, just to answer your question about the impact, the overall full year impact is about 3% to 4% from those acquisitions so it’s helpful but it’s not like really material from our overall revenue growth standpoint anyways. So, we acquire for Tech, we acquire for complementarity of the product stack and then we acquire because with the sales channel that we built up, with the brand that we built up, with the existing account base that we built up and the partnership that we built up, we are able to grow that business many fold from what we have acquired, and that’s where the value gets created. So, that’s how we are doing. I hope that answers the question, but there’s nothing basically there’s zero plan from new acquisitions in the 30% to 35%. Anmol Garg: Sure Ashish thanks for the elaborate answer. Secondly, I have a book-keeping sort of question, so basically see this year, then our receivable days have gone up by 10 odd days so just wanted to understand that as we are signing more and more government contracts would this number keep on increasing or we are targeting that we want to keep our receivable days at a certain level? Ashish Rai: So, look the receivable days went up for some very specific reasons. So, we are not signing a lot more new government work that actually as a percentage of the business is gone down quite significantly. But we have some existing projects which have been running where, actually there are three specific ones, the combined impact is about 14 days, where we more or less addressed it, but because of elections, because of the temporary sort of situation there, the payments got held up for some reason which will hopefully get cleared out, if not this quarter by early next quarter. So, those are the three sort of ones cumulative impact about 14 odd days, 13 or 14 days. The rest of it, the DSO, the problem is when you are growing at 35%, 40%, and the banking side grew very strongly in Q4, then you are just sending a very large number of bills out the door. And at the end of Q4, there really is a lot that will happen. So, that just automatically pushes the DSO days up. We believe this year, there will be quite a material improvement on that whole situation, one, because the mix of the business is again skewing quite heavily towards banking, in terms of banking just growing a lot faster overall. And then those three specific projects, each of them we have a very specific path to resolving that over the next few months. So, that whole thing will come in that. And hopefully that explains the things, partly. I think the government side of the business has actually shrunk quite materially overall. Anmol Garg: Sure. And just one last thing going ahead in FY25, which are the segments that we will be keenly focused on. So, will it be product, services or data center. So, just wanted to understand that where our focus is right now and which segment should we expect to grow the fastest in FY25? Ashish Rai: Yes, look there is always a competition between the segment’s so like I said, we are making a few large bets, we are not really choosing our favorites between those bets. The transformation in the corporate banking space is a significant bet for us, digital lending is a significant bet for us. All the transaction banking deals that you saw with, State Bank of India Page 10 of 15  Aurionpro Solutions Limited May 15, 2024 and et cetera that we announced, that is a huge growth driver overall. Transit, we expect to continue to grow, the closed loop to open loop payment transformation is a global phenomenon. And, we just find partnerships with MasterCard, Vix, et cetera, which will still play out, the partnership with the FinTech vendors that we said will still play out this year. So, I would say, the transformation of corporate banking, corporate lending, transaction banking, the transit payments, smartification of mobility, the data center side, each of them will grow quite significantly, the only side of the business which will probably not grow as fast is the government side of the work that we sort of we were talking about earlier. So, I can’t imagine any of those segments not growing honestly. So, it would be hard for me to say that this is what would be at a segment level, we do feel banking will, so as you have seen in the last three years, sorry before FY24, in the last couple of years TIG was growing very strongly. And, I had been very clear that we had an intention of slowing down TIG, strategically to focus on margin economics and focus on productization there and banking was growing slowly, because we were focusing banking on the product building part. Now the roles have sort of switched banking, the product build outs are to a large extent done. So, banking will grow a lot more strongly, as you saw in Q3, and Q4 and you will see in FY25, and TIG side we will sort of focus more on driving the unit economics and, and sort of productizing a lot more, et cetera. So, that may be a little bit slower. But all segments, I can’t see any segment which doesn’t have a strong demand right now and ultimately, we just need to rise to fulfill that demand. Moderator: Thank you. The next question is from the line of Amarjeet from Kolumbus Capital. Please go ahead. Amarjeet: Just a small check, how did we measure the effectiveness of our investment in the R&D space, I remember you are quoting a figure for about Rs. 100 crore per annum which is being invested, which is more than about 14% to 16% of your cost. So, are there any measures that we are using to see the effectiveness, number of patents, number of products or anything else that you are using? Ashish Rai: Yes, okay good. Thanks, Amarjeet good question. Look for us, so just to get the small stuff out first, so patents and all are probably significant to a few of our businesses, but by and large, most of the value that we create is around building of products. There are some research oriented businesses where patents and all do matter to some extent but again, the sort of monetization there is something that we still need to figure out. So, the primary way we monetize our R&D is through the products and selling those products into the end client and for us. So, typically, we start with a business plan around the build at a 25% return on capital as the bar which we look at investments for and then over time, we will measure. The problem with the R&D spend is the returns actually come in over a period of time. So, there are two types of R&D we are doing, one is the incremental build on the product when you are adapting it to a new market or building a new module and that typically will pay for itself in 18 months, or maybe even less than that if it’s sort of incremental. But the big bills, it’s sort of like the big payments platform we are building out and all, the return comes in over a period of time. So, Page 11 of 15  Aurionpro Solutions Limited May 15, 2024 we hold ourselves to 25% and when we are approving a business plan, and then we progressively see that the business unit is delivering against it, but it takes five, six years sometimes for that return to probably play out overall. Does that answer your question? Amarjeet: Yes, it kind of explains how you are thinking about it and approaching it. I have no further questions or no further points to make at this stage. I just wanted to think through as to how we are processing, what is the thought process on guiding investments into specific areas of the business. So, I get it the business plan 25%, et cetera. Ashish Rai: Thank you for that. It’s a good question, maybe in the next call or something we will probably come up with a few, a little bit formal sort of update around it. Thank you for the question. Moderator: Thank you. The next question is from the line of Karthik Iyer who is an Individual Investor. Please go ahead. Karthik Iyer: Hi, Ashish congrats on a great set of numbers. I just had one question like, considering the remarkable growth and performance that we have had over the last couple of years, I was just wondering we are guiding also for about 30% growth next year do we have the bandwidth, human capital to push forward with these numbers or how are we thinking about, executing in the human capital aspect of the performance? Ashish Rai: Yes, Karthik that’s a brilliant question. It’s probably the one thing that is maybe the top of the priority list when we really look at our thinking or personally for me as well. So, look, that is the primary challenge, over the last three years we have grown at 34%, 35% three years back, it was Rs.375 crore business. Now, it’s a Rs.900 crore business clocking through the run rate of Rs. 1000Cr+ now. So, it is not straightforward to scale that quickly especially in a products business, because there’s just a lot of moving parts. We have been very deliberate around growing capability in terms of both the management team as well as the, smaller parts in terms of technical tooling and components and all to really see that we scale. The way we are looking at managing it and the way we are managing it is to not grow too fast. Purely from a demand standpoint, if you really press the pedal, I would say there is an opportunity to get other 10 points of growth or 15 points of growth. The problem is, it will come at an enormous risk to delivery, reputation and ability to scale. So, we feel 30% to 35% is the level at which we can scale safely. I do take your point, and we are not going to, if we do feel that even at that level, it’s going to get hard, then probably we will look at slowing down. Right now how we have managed slowing down is, because we have built out a portfolio for precisely this reason. Even three years back when we came out and articulated our vision 2030 and the strategy, we said we are building out a portfolio because we want to keep the ability to slow down parts of the portfolio while we retool and build out the parts. So, the way we are managing it right now is last two years banking was growing at 15% why, because we are readying banking for scale, we were building the products out, we are building the management team and we are getting ready, now banking is going at 40%, 50%. But we spent two years at 15% to get ready for that. Page 12 of 15  Aurionpro Solutions Limited May 15, 2024 TIG was growing at 50%+ for two years, this year it grew 33%. And, we may slow it down further if we need to. So, the way we are looking at managing it is, let’s play on the portfolio, let us look at it business-by-business and let’s see where we feel we need to slow down a bit to get to scale and where we want to press the pedal. So, I don’t know whether it’s that obvious, but we not pressing the pedal on all the businesses at the same time. So, that’s how we are managing it. I would not understate the risk that you are mentioning. Scaling up for our increased scale across all aspects of the organization is the number one agenda for us to manage this growth. We have also made huge investments in fixed assets, in capacity, in technology layer. Over the last 12 months built out a completely brand-new technology layer in the organization across ERP, CRM, HR systems, all that stuff as well, the operating framework as well. So, we are trying to be very deliberate in terms of choosing the growth rates we want to grow at. We are trying to be very deliberate in choosing which businesses to grow when, and at the same time attract a lot of talent from the global majors. We have people join us from a lot of global FinTech majors as you would have seen probably with some of the announcements and all and really build out a team. Over the last 12 months, we have added I would say probably 600 to 700 additional people, that’s almost 30%, 35% additional capacity as well. So, we will continue to be very cautious, we will continue to really put the delivery reputation of Aurionpro first always in this business that is everything. And we will continue to sort of play the portfolio to see that we scale safely. Moderator: Thank you. The next question is from the line of Vimal Jamnadas Gohil from Alchemy Capital Management Private Limited. Please go ahead. Vimal Gohil: So, Ashish a lot has been happening around Indian banks, Indian banking space around the regulatory pushback and a lot of these head of banks have come out in the open, talking of significant increase in the technology spending. Do we sense an opportunity here, maybe wallet share gains, better products for some of the CTOs of these banks, how should we see this particular trend playing out for us? Ashish Rai: Look, it’s playing out very well. So, even this year just the increase in the order book, if you look at it, banking side has increased quite significantly, for the first time in a long time it’s outpaced TIG, and a lot of it is coming from the Indian banking space. This is the first time we signed a Rs.100-crore+ deal with State Bank of India, for example we signed with other public sector banks, as well as the largest private sector bank. So, we see a massive momentum in terms of tech-spend in India. We see a very significant opportunity in terms of transformation at a bank level when it comes to the technology stack. So, there is a lot of transformation, so is the right word you will need on the overall tech layer within banks when it comes to not just the digital side of things, but being able to use the modern AI assets, being able to really meet the regulatory mandates, and make sure everything is integrated and working well. So, we sense a huge opportunity, we have had seen a significant uptick this year. Last year, in terms of the order book coming in from the Indian bank and this year, the size of the pipeline itself is just very significant. So, we expect it to grow very strongly for us. We are launching some new Page 13 of 15  Aurionpro Solutions Limited May 15, 2024 offerings as well in the Indian market, I don’t want to announce that ahead of the curve, but we will have some additional offerings coming out to the Indian banking space over the next, I would say quarter or so. Vimal Gohil: So, are you saying that this is business as usual for us this entire regulatory overhaul that is, the pushback that is happening for some of these large Indian banks, was the growth in spend already there for us. And this is nothing, this may not be incremental? Ashish Rai: No, it’s both. So, there was already an uptick in growth coming in. So, transaction banking for example we will close the number of deals, just the number of pipeline deals has tripled probably over the last 12 months. So, there was already growth in spend happening, part of it could be because of the need for technology upgrade and stuff. And we sense some newer opportunities, which we are launching some specific offering against over the next couple of quarters. So, it’s also incremental but we were seeing that growth from the Indian banking space anyways. Vimal Gohil: Understood. And just on your comment on, banking will now grow strong, TIG will probably grow at a slower pace, but will improve on margins, given the fact that a lot of our licenses are coming from BFSI. This, statement mathematically tells me that margins should see an uptick, but your guidance clearly suggests that margins should be in the range. What is the offset here? Ashish Rai: Offset largely is the R&D. The size of the opportunity in front of us Vimal is just so large. It’s just really each of the major segments we have are staring at, kind of the size of opportunities we have not seen before. But that combined with the fact that we are super competitive right now, from a product standpoint, we are probably one of the most cost efficient players around. And we have a very grown up sales channel now going out and competing for deals, all of that together really increases the size of opportunity and we really need to build against it. So, at the moment, this is not the time to optimize margins, this is the time to maximize how much we can capitalize on the opportunities in front of us. And probably in two years’ time or three years’ time we will start looking at optimizing margins. So yes the delta for the next two, three years, I would expect would be R&D. Moderator: Thank you. As there are no further questions, I now hand the conference over to Mr. Ashish Rai for closing comments. Ashish Rai: Hi, thank you. So, thanks, everyone for joining this call. We had, like we discussed the three consecutive years of +30% growth, I don’t believe there are many tech players in India or Asia or even globally who of our scale, who have been growing that fast. The focus that we would have is to continue that growth, we will put more capital to use as we have in terms of really maximizing that growth. And the only lens that we will use for it is whether or not that use of capital makes sense for the Aurionpro shareholder. The size of opportunity in front of us is large, the beam has been executing very well. We feel very good about where we are from a Page 14 of 15  Aurionpro Solutions Limited May 15, 2024 talent standpoint, from the management team standpoint, and we believe strongly in what we are building out. So, you will see more from us next quarter. Thank you for joining this call. Moderator: On behalf of Aurionpro Solutions Limited, that concludes this conference. Thank you for joining us and you may not disconnect your lines. This Transcript has been slightly edited at few places for clarity and accuracy and may contain transcription errors. The Company or the sender takes no responsibility for such errors, although an effort has been made to ensure high level of accuracy Page 15 of 15