Infibeam Avenues Ltd

NSE:INFIBEAM

Earnings Call Transcript 2022-Q4

[Operator]

Ladies and gentlemen, good day and welcome to the Q4, FY '22 Earnings Conference Call of Infibeam Avenues Limited, hosted by Go India Advisors. [Operator Instructions] Please note that this conference is being recorded.

I now hand the conference over to Mr. Rajat Gupta from Go India Advisors. Thank you and over to you, Mr. Gupta.

[Unknown]

Yes. Thank you, Margaret. Good afternoon, everybody, and welcome to Infibeam Avenues Limited earnings call to discuss the Q4 FY '22 results. We have on the call with us, Mr. Vishal Mehta, Managing Director; Mr. Vishwas Patel, Executive Director; Mr. Sunil Bhagat, Chief Financial Officer; Mr. Purvesh Parekh, Head Investor Relations; and Mr. B. Ravi, Strategic Advisor.

We must remind you that the discussion on today's call may include certain forward-looking statements and must be therefore viewed in conjunction with the risks that the company faces.

May I now request Mr. Vishal Mehta to take us through the company's business outlook and financial highlights, subsequent to which we will open the floor for Q&A. Thank you, and over to you, sir.

[Vishal Mehta, executive]

Thank you, Rajat. Good evening, everybody and welcome to the call to discuss Infibeam Avenues Q4 FY '22 as well as the full year performance.

We are embarking on this call on a very sad note professionally. We have lost our colleague and our Group President, Mr. R. Srikanth and his wife yesterday, early Saturday morning -- Sunday, in a very unfortunate event. It's come as a very shocking incident to the entire Infibeam Avenues' family. Srikanth was a fantastic professional and he has made significant contributions, which had a very deep impact on our organization. He was very instrumental in leading some of our large mega business deals and was always at the forefront of dealing with market participants. Most of you on the call today must have frequently interacted with him. We stand by Srikanth and his wife's family in this time of immense grief. He will always be missed and fondly remembered. As a mark of respect, we'll take a 30-second pause.

Coming back to our earnings during the quarter gone by, I trust that all of you had the opportunity to run through the earnings presentation, which was shared earlier today. This has been a very landmark year for us and we are very happy to announce that we have achieved significant milestones this year.

Before I discuss the financial performance in detail, I would like to update you about a few business initiatives. In Q4 '22, we acquired a technology company called Uvik, which was into contact less payment space. The technology Uvik brings is transformative, which will enhance the payment experience both for merchants as well as consumers.

It will also convert any smartphone into a payment terminal. We are extremely excited about this acquisition as we believe it can change the digital payments as we know today, by making traditional CapEx-heavy and high service point-of-sale machines redundant by allowing merchants to simply download the app, do the digital KYC quickly and start accepting payments in various ways. Currently, we are the only company in Asia certified for PIN on Glass technology. We have successfully completed the integration of Uvik with Infibeam Avenues' payment gateway CCAvenue. We have now branded as CCAvenue TAPPay.

We launched TrustAvenue in the last quarter of '22, a very smart and intelligent marketplace platform with rich analytical data of our millions of merchants that can be used by lenders to expand the lending base. TrustAvenue will also enable merchants to discount bills and we get working capital loans, which would have been difficult for them earlier and lenders would have lesser credit history or visibility to underwrite such loans for merchants.

As we are all aware, despite significant growth in digital payments, the Indian market is hugely underpenetrated with more than 70% unbanked and underserved population. Looking at this huge opportunity, we along with our consortium partners have applied for the NUE license to set up a pan-India NUE focus on retail payment systems. This will help us to develop, own and operate a new cross-border retail payment network. We are awaiting RBI's not on the New Umbrella Entity license. RBI in February clarified that NUE plan is on and it is just delayed. We are also expecting RBI to give licenses to payment companies for running a digital payments business in India, made mandatory by RBI under the Payment and Settlement Systems Act. Licensing will ensure customer safety and ensure legal payment transactions.

The Government-e-Marketplace or GeM has achieved a significant milestone last year by crossing INR 1 lakh crore in GMV in FY '22 and targeting an even higher GMV in FY '23 with the integration of Indian Railways, public works and other initiatives to bring more business in GeM portal to enhance transparency, efficiency as well as savings.

On the international business front, I'm also very happy to report that our international business is doing extremely well and we are on a run rate of processing AED 8 billion annually from just AED 2.8 billion in FY '21 and we have been able to scale up this business with an extremely lean workforce.

We are extremely happy with the growth prospects in UAE. It is now meaningful meaningfully contributing to our PAT despite being 5% of our India payment size. Further, we are launching in Saudi Arabia and USA as well as in this financial year, we are evaluating other international locations for subsequent launch as well.

We have created a unique and differentiated payment business, one that we are very happy about and we have presented it in the opening slide under company Overview section, which I would request Vishwas to briefly discuss. Vishwas, over to you.

[Vishwas Patel, executive]

Hello, and thank you everyone for being on the call. I'll just take you quickly, if you can refer to the company Overview section in the earnings presentation, Infibeam Avenues Limited has been evolved as a payment infrastructure company. It's providing a seamless and a holistic digital payment solution to accelerate its growth.

[Operator]

Sorry to interrupt you, Mr. Patel. I would request you to come a bit closer to the phone. Your voice is slightly muffled.

[Vishwas Patel, executive]

Okay. Past investment in developing digital payment infrastructure has started fructifying and delivering growth for Infibeam Avenues Limited after the pandemic triggered digitalization of the economies. For decades, Infibeam Avenues Limited has built its digital infrastructure and currently the company is comfortably poised to capitalize on the digital infrastructure, be it payments, platform and finance.

The differential factor in our infrastructure, which we have embedded are digital infrastructure through our white-labeling of our digital products and have given it took the banks like HDFC Bank, ICICI Bank, Kotak Bank, Mashreq Bank, JPMorgan and others. Similarly JioMart and GeM, the Government-e-Marketplace are built on the Infibeam's digital infrastructure platforms.

The company has also given the lending infrastructure platform TrustAvenue, wherein banks, lenders and merchants can come together on the same platform and do the lending transactions. Infibeam Avenues is also expected to build a UPI-like infrastructure and the NUE licenses if it is awarded to a consortium. The digital infrastructures become an inseparable and indispensable part of any bank, finance institutions or commerce players once it gets embedded into their systems. Thus with a long-term perspective and the Infibeam Avenues has invested and developed digital infrastructure, which has now started for preparing and delivering continues growth quarter-on-quarter, especially after the advent of the pandemic and the aggressive adaptation of the digitization in the country and globally.

I will now ask Mr. Sunil Bhagat, our Chief Financial Officer to touch upon the financial and operational performance. Over to Sunil.

[Sunil Bhagat, executive]

Thank you, Vishwas sir. Good evening, everyone. I will quickly take you through the financial performance. FY '22 was the strongest year in Infibeam Avenues' history. We are now at an all-inclusive run rate of INR 3.7 lakh crore or we can see $49 million from a TPV of INR 1.4 lakh crore in FY '21.

For Q4'22, consolidated gross revenue that we reported were up by 84% year-on-year, down 7% quarter-over-quarter at an INR of 369 crores. Within this gross revenue, payment gross revenue is a function of business and payment method mix, which impacts the gross take rate, higher contribution from fixed fee or low take rate businesses like utility, education, insurance, et cetera and higher contribution from low take rate payment methods like debit options compared to credit options reduces the gross take rate and hence gross revenue. However, our net revenues were up 15% year-over-year and 9% quarter-over-quarter and has been growing across all the 4 quarters of FY '22. This is on account of gradual improvement in business front from COVID-impacted sectors and now improved payment mix also.

For FY '22, our payment method mix was approximately 45% credit cards, including BNPL, approximately 5% UPI and the remaining were debit cards, wallets, net banking, et cetera.

Lower UPI and the mix of bill payments, hospitality payments, express settlement and infrastructure services are contributing to this increase. Bill payments created a highest record ever. Bill payments TPV for full year was INR 10,170 crore up 4x year-over-year. Volumes touched 85 million, this is also up 3x year-over-year, and gross margin in this business is approximately 40%, which is indeed 2 years ago just before COVID.

Lending update. For FY '22, company did INR 4,240 crore of express settlement. We are at an annualized run rate of around $800 million based on Q4 '22 run-rate versus $100 million run rate in Q4 '21.

Separately, during the quarter in FY '22, the company has provided for the impact of changes in the fair value in case of investment in liquid instruments. The net impact of changes in fair value, gain of this loss clause is disclosed under the head Other Comprehensive Income. This is one of the -- has no bearing on the existing business and margins.

Also, the company has reversed the excess income tax provisions of earlier years and recognized the deferred tax liability on difference in tax base on goodwill and different -- different types of deferred tax assets on unabsorbed depreciation under the income tax law.

The impact of re-measurement of deferred tax on above is accounted in Q4 '22 and FY '22. Accordingly, previous periods tax expenses are not comparable. We are focused on creating superior shareholder value and our Q4 '22 based ROE on the standalone business excluding investments is more than 20%. We are now confident to generate good returns through new business initiatives.

With this, I will now hand over the call to Vishal sir.

[Vishal Mehta, executive]

Thank you. There is a huge headway to grow in our country in digital payments and there is also a huge opportunity with these kind of innovations that we are building upon. We are going to continue to innovate to grow and to increase our relevance to merchant and banks and continue to create value across digital payments.

As our business model has started stabilizing in delivering results, we are now confident of sharing outlook and guidance for the coming year. For FY '23, we are targeting to achieve the following: We expect to process INR 4 lakh crores in FY '23. We will be at a run rate at the end of FY '23 at INR 5 lakh crores. We are targeting 9% to 10% market share of digital payments, excluding UPI in India from current 8%. Gross revenue is expected to be in the range of INR 1,600 crores to INR 1,700 crores. The higher range of gross revenue considers faster than expected growth in new business initiatives like lending. We expect EBITDA in the ranges of INR 170 crores to INR 190 crores and a profit after tax in the ranges of INR 110 crores to INR 120 crores.

I will now hand over the floor to the moderator for questions and answers. Thank you.

[Operator]

[Operator Instructions] The first question is from the line of [ Srishti from Wellwin Consulting ].

[Unknown Analyst]

My first question would be, how do we see the payment processing companies losing out on the overall revenues by the shift in payment towards low-yielding form factors such as UPI and that is coupled with resulting competitive intensity across payment modes which is driving the overall payments increase lower across the ecosystem, first is that.

And second would be on the broader side of international business. Given that India is a massive opportunity in itself in terms of digital speed, so what's our rationale of going global and entering more geographies given that there might be competition as well and how much growth we can expect coming from those markets in medium to long term.

[Vishwas Patel, executive]

Okay. This Vishwas here. I'll take these questions. So first question was on the digital mix of the transactions, right. So UPI accounts for 5% of our overall payments that happen on our system. So 95% is through the other options that are there. So we have 200 plus payment options. There are credit cards, there are debit cards, there are net banking, there are wallets and there is a good MDR, and that reflects the overall gross revenue and the net revenue increases that we have.

Second thing is on the UPI and on RuPay debit card, there is a plow back from the government also coming in around INR 1,300 crores a year is a plow back that has been sanctioned by the finance ministry to plow back to the players, namely the banks and us. So those lines will continue. And if you see it on a very, very macro picture, if you see on a very, very macro picture, today digitization is only 21% of our economy. There is a huge headway of 79% which still needs to be digitized, right, and the market and the merchant growth that comes in.

So those kind of a digitization effort, today when we are looking at so many other premium mechanism, any type of commerce where payment has to be made, product or service delivered and payment made, we need to get in there. So be it where a student paying to his tuition teacher or a tuition teacher going to a kirana to buy something for that money, or the kirana paying that distributor for the goods. So the whole ecosystem needs to be digitized. There is a huge headway and I think only 4 or 5 focus players like us are looking at that trillion dollar opportunity here.

So there is money to be made on every transaction that is there and lots of payment options. India has the highest number of payment options. And with this overall ecosystem, you see that we are adding 8,000 new merchants every day, right. So there is going to be growth in the digital transactions. We are still fighting against the INR 29 lakh crores of cash that is there in the market and a huge scope for -- to go after this thing. So with this and adding more and more merchants, we are making them digital. We are making them credible and giving them a lot of access to other related service platforms and finance coming ahead. That's the whole ecosystem.

And as far as going international is concerned, now there is the newer, as you know, India leads the world in the payment technology that is there. So in multiple markets that are there, we've been 20 years focused -- sole focus has been the Indian market. But over the last couple of years, we have seen that the technology that we have evolved is much better even than say United States of America and many others, right.

So when we went and tried it out in a test market like the UAE with a population of around 8 million to 9 million people and still we can do in 2, 3 years around AED 8 billion worth of processing. So the kind of technologies that we have built here, those are easy pickings that is there and we needed to have a global market and it's good earnings, good this thing. So similarly, that's the whole effort of then going into our tech infrastructure to banks in Oman or now launching in Saudi and today in a Board approval, we have taken for a subsidiary in Australia. We already launched a subsidiary in U.S.

So with the new form factors like TAPPay and everything which is a very transformative technology in the payments, which will work across the world, right. So anybody right now instead of putting INR 12,000 point-of-sale terminal and then training the merchant, battery problems and giving them printer rolls to print those charge slips, here is a very simple system where you can just download the CCAvenue app on your Android phone, you might be in a village and somewhere in Mizoram or Orissa and as a kirana shop owner, you can just download the app in an Android phone and start accepting payments, cards from credit card, debit card, RuPay debit card from your customers across accounts.

So this transformative technology really inspires us to not only focus in India but go around the world where we can be a dominating force. So that is the whole proposition. I hope I was able to answer this.

[Operator]

[Operator Instructions] The next question is from the line of [ Sanjay Awatramani ] from Envision Capital.

[Unknown Analyst]

Sir, for FY '23, you mentioned that EBITDA to be in the range of INR 170 crores to INR 190 crores and PAT to be INR 110 crores to INR 120 crores. Is this understanding correct?

[Vishwas Patel, executive]

That is correct.

[Unknown Analyst]

Okay, sir. And next, sir, you said that you are adding 8,000 new merchants daily, which are signing up, and the transaction charges are per transaction basis. So what will be these per transaction charges? I mean, will this the vendor pay or the customer pay? How is this transaction going on exactly, if you can help me with this?

[Vishwas Patel, executive]

So this is Vishwas here. I'll take this part of the question. So basically, MDR is charged by us on the merchants who accept the payments. So, say tomorrow you go to a Shoppers Stop outlet and you are giving your Visa credit card and buying something for say INR 100 shirt or something like that, T-shirt. So what happens is that the next day, the settlement goes, for a credit card the charge average is around 1.8%. So what that means is that Shoppers Stop will receive 98.2%. The consumer is not charged anything. So you get -- you pay INR 100 through your credit card and you get INR 100 worth of value, be it at a kirana store or at a Shoppers Stop, right.

The MDR is borne by the merchant. We charge the merchant. Now there are, as I said earlier, in the earlier question, we have 200 different options with different price points. The most expensive are credit cards for a merchant, which is at around 1.8%, then comes net banking, net banking is something where on our checkout page in our website, you say I want to pay through my HDFC Bank net banking, so it goes to the HDFC Bank page and where you put your net banking login and do the transactions. Those are a little cheaper. Wallets have different price points. Different wallets have different price points. RuPay debit cards come under the RBI this thing, so they go from 0.45% to 0.5%, Master, Visa debit cards and others. So all have different price points. So no price is the same. In credit cards also, American Express is traditionally higher than the MasterCard or Visa. So these MDRs are borne by the merchants. Is it clear?

[Unknown Analyst]

Yes, sir. This is very helpful. And one more additional thing that you said that you're planning to expand in Australia and in the U.S. as well. So is there any major CapEx involved or you are going through the acquisitions or just an expansion phase? I mean, how is this -- I mean you're moving ahead?

[Vishwas Patel, executive]

Most of the technologies, as I said earlier, most of the technology is already built out, right. So when we go to UAE, let's take UAE as an example, as a smaller example, right, where we are doing AED 8 billion a year now. Even if you're going to UAE, if you go on Emirates Airlines you will find CCAvenue PG there. If you're booking a ticket to go to the top of Burj Khalifa, you will find CCAvenue there and so many digital in everything.

So the logic here is that if you see our business model, we have doubled our TPV year-on-year. Like in this year, we have reached almost like -- this year we have reached TPV to around INR 85,500 crores in Q4, right? And we have almost doubled from year-on-year. So last year -- this year our TPV is INR 2,80,000 crores, right? It is a 100% jump. But if you see the total number of resources, the trained people we have -- it is 600 people that we service the entire India platforms, payments, the business in UAE, in Oman and Saudi. So these kind of scalable, you will find only in this IT businesses that we are.

So our CCAvenue Payment Gateway is built-in, what we have to do is locally go into any country, tie-up with the local acquiring bank and start transacting, right? We just need to put up, today in UAE there only 8 people to look after our marketing and local language support. So that's the kind of business model which is so fast and there is good difference. That's the place where we are.

[Vishal Mehta, executive]

To add to this, what Vishwas said -- this is Vishal here. Our internal bias is always to build and not to buy. But we keep on evaluating opportunities. You had a question about M&A, we keep on evaluating opportunities from time to time. And if we find that it's accretive and it's helpful, then we would pursue them. So yes, I mean, there won't be any major CapEx. We will forward invest somewhat in each of these regions.

[Unknown Executive]

This is Ravi here. If I can come in for 30 seconds. This actually is because the entire infrastructure is already in place. It's only a little bit of local support and local employment that is needed, but the infrastructure works for itself and therefore, it's almost like, you know, additive kind of thing wherever we can go.

[Unknown Analyst]

Okay. This was very helpful, sir, and some more questions if I can squeeze in. So if you can share me the current market share you're holding, domestic and global, and who can be our exact competitors or if you say the players which are into the same business, if you can help me with that.

[Vishal Mehta, executive]

Sure. So this is Vishal here. Basically, if you look at the payment aggregation space, there are few companies who will compete with us. You may have heard of the name BillDesk, which has now been acquired by PayU, where we compete for merchants. You would have also heard of companies like Razorpay and they typically work in the payment aggregation space.

The one place where we are somewhat differentiated is that we work not just doing in aggregation, but we also provide payment infrastructure to banks. So in other words, if you go -- in our prior calls we have talked about working with the likes of say for example Kotak Bank. So Kotak Allpay, if you take a payment gateway, it will be through us. And same thing with many of the B2B solutions of HDFC Bank, Mashreq Bank and many others.

So if you look at the slides that we sent out, in specific, there is a slide on payment infrastructure, which I would recommend, which is Slide 6. And in Slide 6 and 7, you will find quite a bit about what we do, specifically, Slide 7, where we provide payment as an infrastructure solution.

Globally, if you look into companies, there is a company called Stripe, which is based in the U.S. Stripe offers payment infrastructure as a solution and not just aggregation. So you can imagine that we are somewhat modeled around those with our own nuances. So that is landscape in terms of the payment setup is concerned.

Earlier in the call, I also mentioned that in terms of the market share, excluding UPI, because UPI has a lot of transactions happening on P2P. So if you exclude UPI, currently, we believe our market segment share is about 8% and we will attempt to go this year, in FY '23, from 8% to 9% to 10%. So based on that projections, we have come up with our own estimates in terms of how we will look for budgeting this year.

[Vishwas Patel, executive]

And just to add on to this one what Vishal said, right, we have multiple platforms and multiple competition. So payment platform, if we exclude UPI, we are at around 8% going to 10% to 12%. But if you see BillAvenue, which is the utility payments platform, one of the platforms that is there, so on the biller side, we have a 90% market share. Even on the volumes, we do more than INR 10,170 crores on the bill payments part which has grown almost 4x from last year.

So there are multiple platform, there are multiple businesses. So platforms and businesses, we will have to deep dive in our presentation. And if you have more queries, then let us know.

[Unknown Analyst]

Okay. Sir, I mean as you mentioned that this is the share. I know that we are not a payment bank, but all these Google Pay and WhatsApp Pay will be into the payment banks, right? We are just merchants who provide an infra?

[Vishwas Patel, executive]

No, no. We are a payment aggregator. And if we look at the macros part, we are payment aggregators and we look -- on the top part that is there, we focus on the merchants and the banks. Google Pay and others are intermediaries of UPI, who provide services to consumers, right? It's a different line of business and cross-sell them other services, like insurance, brokerage, blah, blah, blah. All those other stuff that is there, their business model. So they look at the consumer side of giving that and then giving them consumer loans, giving them rail ticket, everything, all cross-sell other services. So that's their model.

We are focused on the merchants and the banks. Any FinTech earns from 3 players, one is the merchants, other is the banks, and third is the consumers. We are focused on the merchants and the banks. They are focused on the consumers.

[Operator]

The next question is from the line of Priya Harwani from Perpetuity Ventures LLP.

[Unknown]

Yes. So my first question is on Government-e-Marketplace license, which is about to expire soon. So sir, do you see any competitors bidding for the same or you expect to hold this position for the next term too?

[Vishal Mehta, executive]

So if you recollect, we had taken up this project in 2017, and we've been on this project for the last 4 to 4.5 half years. We have built out this system is very elaborate. So in other words, we know there is significant amount of work that has happened. Last year alone, Government-e-Marketplace, they clocked more than INR 1 lakh crore in terms of total transaction volume, and this year it's expected to even be higher.

So to give you a sense, I think in terms of technology and infrastructure, there is significant amount of complexities that are involved in terms of build out and we've been able to design, build, implement and manage it for the past several years. To answer your question about renewals, we expect that there is always a process that is followed in terms of the government RFPs. But given the scale and complexity, we are hopeful that we'd be able to continue with the build-up going forward.

I think there are provisions in that, that gives you extension before you again invite new bids. And as soon as we have more announcement on that, we will share with you.

[Unknown]

Okay. Next question on the NUE plan. So what's the current status of that and when do you think that RBI will announce the winner for that?

[Vishwas Patel, executive]

Okay. Vishwas here. So RBI has been pretty busy with lot of applications on different licenses. So I know for a fact that now the payment aggregator licenses are being rolled out, and there are other digital banks and NUE and all in the [ rebuilds ]. So right now we have no particular guidance as to the time lines in which RBI is. And since lot of consortium that put in a lot of effort to build it and the whole idea was well thought off, so we expect that this would pick up soon. The last -- the governor was asked, he said the word 'soon'. So let's see how and when the RBI comes in. We have no insights into that to comment on that.

[Operator]

The next question is from the line of Sri Karthik from Investec.

[Sri Velamakanni, analyst]

My first question is our net take for the quarter has shown an improvement on a Y-o-Y basis. I wanted to understand 2 things. One, is it largely because of the spend mix? And 2, are we starting to see any reduction in competitive intensity by some of the private equity funded players given what we're seeing in the funding market? So that's my first question.

Second, when we look at our market share of 8% and you are hoping it to improve to 10%, I'm trying to understand within the larger ecosystem, who are the players who've actually been losing market share within the payment space. So those are my 2 questions.

[Vishal Mehta, executive]

Thanks. So I'll take the question. The first question, in terms of competitive intensity and what you raised in terms of the take rates. So we don't expect the competitive intensity to reduce at all. In fact, the way we plan for things is to assume and be slightly paranoid about intensity actually increasing the funded players. So if you look at our past history also, there have been a lot of companies being funded. This is not a new phenomenon for us. We have lived in this world for the last 5 years, where there is humongous amounts of capital which has come in, in many of these companies and there is a lot of promotions and activities and marketing to try and see if they're able to capture and with whatever we have, we have focused in terms of ensuring that we are be able to keep on building up in spite of these kinds of intensities and continue to build out our relationships, have that discipline of being able to work on our plans and build out a very strong and defensible tech framework and infrastructure framework and continue to create more stickiness with other merchants.

So I think from that perspective, yes, we don't expect the intensity to reduce at all. In fact, we expect that it should continue and it may even get into more and more competitiveness. But for that we shall be prepared. So that is, hopefully and the question in terms of the take rates, yes, we have seen that many of the merchants who were slightly dry, after COVID they have picked up. So the mix is because some of the reasons why we've seen an improvement in terms of our quarter.

And we think that as and when we add the quality of merchants and continue to build up, we are not optimizing for the mix, we are more optimizing in terms of how do we actually create more stickiness and how do we add more and more merchants, and how do we create our payment infrastructure to become more defensible as we go forward. That is what they obsess on, not as much of a mix. But it's reasonable to assume that the mix will change and update as the volumes keep on building up.

In terms of payment gateway and you mentioned that who is losing versus who is not. I think that if you look at the Indian ecosystem, we think that we are in the top 3 for sure. Many of the companies in this payment gateway space and aggregation space in India are unlisted and so there are a lot of numbers out there. What we report in terms of other processing volume is the ones where we have successfully processed the transaction and not attempted a transaction.

And while there may be different practices out there across the industry in the unlisted space, it's very hard to compare apples to apples, given that the definition may have a different connotation when it comes to unlisted players, but in terms of market segment share, we believe that there is -- there has just recently been a horizontal acquisition whereby PayU has acquired BillDesk and the perspective that we carry is that the #3 guy in the industry bought the #1 guy. So we still maintain our position as 2.

But like I said, I think as different folks in terms of transaction volume, we expect that there's -- certainly, I would have exact answer for you on who would be losing market segment share. I am sure that there are other payment gateway aggregators also who are out there who may be in the business and -- but like I said, in terms of the profitable transaction volume and processing volume, we are definitely out there for sure.

[Operator]

The next question is from the line of Aayushi Shah, an Individual Analyst.

[Unknown Attendee]

Congratulations on a great set of numbers. My question was that according to me, the business model of Infibeam has been highly under-appreciated and most people have historically not understood it well. I believe this has been like a reason for the lack of stock price appreciation as well as that major investor interest in the company. Sir, so what could be done and like what is the management planning on introducing? Is the management planning on introducing any names which could mitigate this information gap and create value for the company? And sir, in the last earnings call you stated that the company was planning on aggressively marketing to reach its TPV target of $100 billion from the then $44 billion run rate. So sir, what kind of efforts has the company undertaken in order to achieve this target?

[Vishal Mehta, executive]

Sure. So in terms of your first question, you see the way we think of and even the second one, I think the second one, I'll take first. We are committed to achieving TPV of $100 billion. We are already at a $49 billion run rate and we expect that we will continue building up. So far, all our transactions have been online transactions, which means that you have either a web application or mobile app application and we take -- we have a take rate on each of these transactions and we are not in the offline point-of-sale world at all. We have always focused on online, while online has a huge growth potential and we will continue focusing on that. But in the offline world with this acquisition of Uvik that we have made and Vishwas talking about a potential app that converts a phone into a point-of-sale machine rather than you, as a merchant, spending tens of thousands of rupees and with a printer role and all the ink cartridges and all of that, to be able to support transactions, you can potentially just make any mobile phone a POS machine.

And so with that, not only can the large merchants accept point-of-sale digital transactions, but even the smallest merchant can do it, And the argument is that there is a QR code for small merchants. Well, guess what, the QR code doesn't have credit. So fundamentally, if you are able to build out an application with the technology that we have that accepts not just QR code alone, but also credit-debit card, all different card types and practically everyone -- every payment instrument which is potentially out there, then it becomes a very defensible preposition which we call TAPPay, which we are planning to launch.

And through those launches, we will expect to have a lot more merchants come down and download the application and utilize it. We have already done a pilot test run and it is there live right now across 5,900 locations. So we think that in the next few weeks, we will want to actually talk more about it, so that it becomes very attractive for merchants to be able to try this out. And through that, we will try to build out more and more visibility. And we will of course have certain events. We will try to reach out to more and more merchants as well as in some ways investors as well to talk about this model.

The first question about what -- I mean how do we actually bring more visibility of our business and business models. I think we will -- the best thing that we've realized is to work with the right set of agencies that talk about and that allow us opportunities where we discuss and talk about what we do and that is where we start. We've already made certain headwinds there and we are going to talk about what we do and not necessarily sell and convince, which has been our philosophy. So we expect that and we hope that we will be speaking to more and more potential investors and talking to them about what we do. And yes, the company has plans to try and see if we are able to get the right investors through execution, not optics. So we will continue to focus on execution as we go through.

[Unknown Attendee]

Sir, that does answer my question. Sir, just like a follow-up question on the QR code part of thing. Sir, are really concentrating on the rural market then, especially for like lending services and basically what was previously met by way informal credit?

[Vishwas Patel, executive]

So Vishwas here. Okay, I'll take this question. So we are not looking only QR code. Look, if you see, understand the technology of TAPPay, right, it is transformative and can be used by anyone, not only merchant, also by anyone to collect any kind of payment. So it is just not tapping a credit card or a debit card at the back of your phone, but it also had instantly when you're connecting a payment, you put in on a calculator, say I want to collect INR 125. So there are 3 options on top, either it is -- either it is just a TAPPay for credit card, debit card or there is a QR code specific to the merchant or transaction which you can just display to the other guy to scan the QR code like it is happening now, or it is payment link, where you can just send the link over WhatsApp and SMS to collect it.

So particular, all 200 plus options across multiple this thing. So this is a very transformative technology which bypasses entire POS terminal, the QR code and everything, right. And it's on a mobile phone of any merchant, any seller, like you are in a hotel and you're checking out, so the guy who comes to see whether you have taken anything from in room can just give you -- ask you this is the bill, please tap on my phone and close. You don't have to go to the reception counter and check out also. So it's very transformative. It bypasses every kind of a POS terminal or a QR code and everything, payment links everything.

[Operator]

[Operator Instructions] The next question is from the line of Amresh Kumar from Geosphere Capital.

[Unknown]

Sir. I want to ask a very basic question. When I go to websites to pay my utility bills or some other bills, I see your CCAvenue and I see other options like BillDesk and Razorpay, etc. So these merchants or these websites, how easy is it for them to integrate the other payment mechanisms like UPI et cetera along with yours?

[Vishwas Patel, executive]

Okay. Vishwas here. So basically, it's up to the utility to integrate how many PGs they want, right. So we can't control that. Ours is an offering based on certain functionalities that we can offer.

So having said, so if they -- you see CCAvenue and so many, then there is an alternative bill payments that is BillAvenue that we have, that works on the same concept where you don't need to go to the biller website. We are getting the entire piece in one thing of all utilities that we have onboarded or all utilities onboarded and can give it into any interface like you go to a bank interface or you go to say a Vakrangee outlet in any small shop across the station in any part of the country [Foreign Language] right. So those kinds of service is also there.

So it works on multiple ways. As far as -- it's up to the biller once they put it through our systems into the BPPS network or integrate multiple PGs on their own website. It is the biller's choice.

The integration, it all depends on their tech team. Our integration is very simple. When you say we onboard around 8,000 merchants a day, so our pretty much integration is just like a copy paste into a system and they can instantly go live on our payment system. So we do a 1 hour activation and the integration is pretty simple.

[Unknown]

Okay. So another question on this point only, nobody is asking this time that net take rates are going down. I mean actually, they have gone up in your case of quarter-on-quarter basis. So can we assume that this trend of declining in net take rate is over or will we still see that phase coming back?

[Vishwas Patel, executive]

No. Vishwas here. The net take rates will keep improving. Look, during this pandemic, most of those utilities and other transaction went through the education utility. Now those -- basically take rates are in the flat fee. So say if someone is paying INR 2 lakh, the rate for a typical this thing is only INR 5 or INR 6 per transaction. But in a credit card or something you are paying 1.8% or 1.9% of INR 2 lakhs right? So that's why the take rate keep going down during the pandemic because of the utility and education going through the roof and all the main other businesses, which are on credit, debit, accept friendly like the travel, hospitality, all those were down.

So now if you see why the take rates are increasing, except for the small blip of COVID again in January, February and March, all the transactions came back. So you see all these Indigo, we power 22 airlines, right? We power all these -- entertainment came back. We power almost like 2000 plus hotels. So all those transaction started coming in which is more credit card, debit card and more on a percentage based take rates, right? So that's why you're seeing that the take rates are coming back. That's the whole reason. So I think in the next quarter also, you see take rates improving further.

[Operator]

The next question is from the line of Gunmeen Kohli from KRChoksey Shares & Securities.

[Gunmeen Kohli;KRChoksey;Senior Buyside Analyst, analyst]

This offline tap through app system which you just spoke about, this will be offered exclusively to the current merchants and new merchants? Or would you be looking to monetize the same by offering it to other payment aggregators? That's the first question. And secondly, can you run unit economics of this and how similar will it be to the current POS ecosystem?

[Vishwas Patel, executive]

Okay. So I'll take this. Vishwas here. So basically, as I said, if you are a merchant in any village or town or in a city or anywhere, right, you just go to the app store, the Android app store or this thing and just download CCAvenue TAPPay, right? That is the app that is there. Once that's enabled, then you as a merchant just 2 to 3 minutes online onboarding with e-KYC and e-signing everything and then you become a merchant light.

Now it's a very easy, simple to use, what we say that we have made it a very idiot-proof kind of a solution that even the villager at a very -- at a ground level should be very easy to understand. So if you're putting in an amount, say, INR 500, it is like a calculator right and you just send all the options of TAPPay and everything.

What does the POS terminal do? The POS terminal also does the same thing, right? POS terminal, there you do swipe the card or do a contactless card and just do the transaction. QR code also is that the QR code is displayed on our sticker, instead it will be displayed on this TAPPay phone only, where any potential customer can just scan it and do the transaction. So the unit economics is almost 0 from an INR 12,000 POS terminal that are deployed by the likes of Pine Labs and many others, right, in the market that is there today.

This is a solution that can massively perpetrate. Today the acquiring side is suffering in India because that's why even if you go to villages and towns, you don't find POS terminals in this kirana shops and others, right, where it makes all the benefit for them to start accepting cards and other things, because there is 0 taxation for the level of business that is there in this thing, but the perpetration down to the ground level is not happening.

So you see many salaried guys at the end of the month going to an ATM, withdrawing cash and then trying to do a transaction in these villages and towns. So the thing is that, how do we grow the acquiring base. So this is the kind of the unit economics that you just download our app and start acquiring. Hope it is clear.

[Gunmeen Kohli;KRChoksey;Senior Buyside Analyst, analyst]

Pretty much, sir. So another part of your question was, what would be the percentage of every transaction Infibeam would be keeping and how is it different from the current POS ecosystem? And on my first question and again, if we are able to monetize it by offering it to other payment aggregators as well?

[Vishwas Patel, executive]

So look, as far as the monetization is concerned, look at the current take rates, whatever that is there in the offline world is the same. It is just the cost of the deployments and everything that comes down. So if you're paying say 1.8% on a POS terminal as a merchant, you're paying for a credit card or Master, Visa credit card, in the TAPPay also you will be paying something similar or a little less, right, because of the customer present scenario. But overall, said and done that is there, the unit economics and the earnings and the take rate will remain the -- the cost to the merchant will remain the same. Only thing is the cost of deployment, which is a major factor of putting an INR 12,000 Terminal servicing at -- India is a huge country. You want to service a small villager in Manipur, right, it becomes very difficult with local language and other support and other things. Here it is something which the phone lines are so well spread out, 1 billion plus SIM cards in a country, right, and every village and town with connectivity and data. So very simple, just download an app and you can start accepting.

So the unit economics, the cost is of the deployment bringing the charge slip cost and others which you are saving, the end percentage of charging remains the same for the merchants. So our profitability should improve in a TAPPay kind of a scenario.

[Vishal Mehta, executive]

To add to just Vishwas said, you need INR 4,000 Android phone. Anyone who has a smartphone, Android smartphone, which is INR 4,000 or higher will have all the functionality and features that are required for TAPPay to work.

[Gunmeen Kohli;KRChoksey;Senior Buyside Analyst, analyst]

Got it. And we will be exclusively offering this to our merchants. We don't have any plans to go after other payment aggregators and offer this as an API for their...

[Vishwas Patel, executive]

Vishwas here. So the idea here is to definitely we have a huge merchant network, sellers within CCAvenue, within GeM sellers, within many -- the whole ecosystem that is there, we add a new technology and you add a new system and that whole ecosystem of on the other side, all the banks relationship and other side and other side, all this 5 million plus merchants and the new merchants, we are able to tap instantly with all the KYC agreement done. So the first choice and yes, definitely we are going to explore it with this thing with our -- within our merchant base like say in hospitality, we have Taj Group of Hotels, Oberoi, ITC, Lemon Tree and 2,000 other hotels. How do we give this kind of a solution to them, where they can have, right now they have 3 or 4 terminals on their checkout counter, they can have 18 and 20 where they can collect it in a swimming pool or in your room or everywhere? So that's the kind of perpetration where this kind of cost because there is no POS device cost and other thing.

So first, definitely, we will be monetizing within our systems. Our bank partnerships also, we will be working with some of the banks on both modes, because ultimately even our CCAvenue merchant we are acquiring transaction in the back end through a bank. So working with that bank with their network and our network will also be on the plans. But as I said, this is a transformative revolutionary technology, which will transform the current way of offline business. So we are taking it international also. So multiple monetizing plans are there. You will see the results in the coming quarters.

[Operator]

The next question is from the line of [ Anil Nahata ], an Individual Investor.

[Unknown Attendee]

My first question is that I am seeing in Q4 as well as in the projections that the revenues are not being able to keep pace with the increase in the TPV and with the positive take rate basically. So is this something that is going southwards on the platform businesses that other than the payment business?

[Vishal Mehta, executive]

So as far as the payment business is concerned, Anil, the take rates have improved in Q4 compared to what Q3 was, right? And in terms of the platform business as well, there have actually given segmental results. So if you look at the segment-wise comparison in our results for Q4, you would see that in FY '22 in March 31, which is the last quarter, so out of the INR 369 crores, INR 327 crores came from our payment business in the last quarter. And through that -- and if you look at the processing charge, you would be able to come up with the take rate on that date, right? And there is a difference between what we would earn out of a GeM transaction and Gem transaction is built out as well, which we have communicated in the past, but you'd be able to get a perspective in terms of what the differential is between the 2.

[Unknown Attendee]

I appreciate that. I think maybe my question was not clear. See, I'm saying on one hand, like for example in the projection also that the TPV is going to be nearly 50% increment from this year to the next year, right? However, the gross margins or the gross revenue or the EBITDA kind of levels we are seeing an increase of 30%. So where is this delta of 20% coming in? Actually, I would think that if TPV is increasing at 50% and the net take rate is on a positive direction, the revenue actually and the EBITDA should be like or even bigger thing with operators -- operating leverage and everything else. So why is that not keeping pace with that?

[Vishal Mehta, executive]

It's a good question. So what we have looked at is, that when we want to get into the offline business that there will be some forward investment that we will make in terms of people costs as well. So if you look at the businesses that have evolved in the offline world, the likes of Just Dial and many others, they have essentially forward invested in terms of the penetration. Even if it sounds very easy, we do not want to assume that it is going to be easy for someone to just download an app and start working. So we will have set of people who will assist in terms of the initial, say 1 day training, if you will.

There is a chance that we may work through affiliate networks as well and incentivize them to be able to penetrate. Vishwas talked about working with banks and bank network. For all the banks who have terminals and terminals that are end of life, we are able to offer the opportunity time to them as well to be able to give it into their network and so we have accounted for and like I said, we've done a pilot with more than 5,000 different implementations.

So we've got a very good insight in terms of what that might potentially look like and how do we incentivize the entire channel. So based on that, yes, you're right that we have built in that as part of our projection and we think that that's a -- that's a fair we in a reasonable way to be able to think about what the next year for us would look like.

There is a chance that we are able to get a huge penetration from our own internal merchant base also for the same technology, but that would not be additional merchant that will be the same merchant base. So the pivot that we are working on is, how do we keep on increasing the merchant base and as we go through other channels, we will increase the merchant base for which merchants were already using us, we have our own merchant base and going after the additional merchant base is where we expect that there will be some spends.

We will also spend on marketing and being able to reach out. There was an earlier question around the visibility front, and we will spend that capital in terms of reaching out to the right set of audiences.

[Unknown Attendee]

Yes. The second question I had is in a couple of other things that we sort of announced last quarter and one of them was TrustAvenue and one of them was also the kind of launch into Qatar, I believe. So where are we on that and what kind of revenues do you believe we can see in the FY '22 -- '23 or what kind of traction we can see, revenues are different words, what kind of traction are we expecting on those 2 things?

[Vishal Mehta, executive]

TrustAvenue is the platform that allows any merchant to avail loans and whether it is a small size merchant or a large size merchant. And a company like us who processes payments for merchants have certain advantages, because we have real-time visibility in terms of how much they process, not just the CIBIL score and the GST returns, but we have a lot more data about the merchant in terms of what is happening on a real-time basis. And there is a version, which is called trade-through processing, which is called STP. So what that means is that if you are a merchant who has been processing with us for the last several months, then based on that, it is much easier to come up the credit score and a credit requirement for you and we are offering it as a platform for all the merchants who are there on CCAvenue and then potentially opening it up to merchants also where we are a platform provider.

And so to answer your question, we think that there are 2 avenues that we are focused on as far as lending or financing is concerned. One is where we say we are going to do express settlement. And in terms of express settlement, we had a run rate of $800 million, which means that when a merchant processes payment to us, we give them money after 2 days to 5 days as per RBI norms. But we opened up something called express settlement where we give the money the same day, it is the same. If you pay MakeMyTrip, for example, we give you the same day. We give the merchant the same day the money and we will discount that. And fundamentally what that means is that we settle it faster and that allows us to open up a channel because there is no cost of collection.

So that is one place that we think is an interesting one we built up upon. And given that the merchant base will keep on improving and increasing and as we process more transactions that our appetite to do that because it is in our opinion more 0-risk lending. So in that we will continue building up and the cost of capital is very low single digit bps and we are able to monetize on that.

So I think know right now, like I said, we are doing $800 million. We will end up doing more this year. So that's one place and that will scale up with the business, because you can understand the flywheel. As more merchants and more processing, more opportunity to do express settlement. So that's one place we will do. And the second place like I said is that we need to because we sit on platforms that have merchants and CCAvenue being one of them as well, we think of this is an opportunity to reach out to all of them and merchants across different platforms will have different requirements. Some will have requirements of SME loans and others will have requirements of bill discounting of orders as well as bill discounting of invoice, those are 2 different concepts.

And we think that if we are able to offer that, there is a good chance of a 50 to 100 bps margin for a company like us to be able to facilitate such transactions. So we think that we are in the business of making merchants. We use the acronym internally called DCB, it is making them digital, making them credible, because when you make them digital that's when they become credible and with credibility will open up bankability. So we are in the business of making merchants digital, credible and bankable that will summarize quite a bit of what we think we want to do with the TrustAvenue platform.

We have not segmented exactly what, out of our projections, what numbers we will deliver out of TrustAvenue in the financing business. But if you look at the earlier comment that I made, we gave a revenue expectation of INR 1,600 to INR 1,700 crores. The higher range of the gross revenue is expected because of the new businesses like lending -- facilitation of lending.

[Operator]

We'll take one last question, which is from the line of [ Hitesh Panara ], an Individual Investor.

[Unknown Attendee]

My question is to Mr. Sunil-ji, CFO of the company. In the consolidated financial statement, it is mentioned that net change in the fair value of investment and equity instrument. Can you just explain the nature of that entry or that, what kind of business? What is the meaning of that net change in the fair value of investment equity instrument because it's a large loss of INR 72 CR, so what is that?

[Sunil Bhagat, executive]

Sure. This is the -- see, the company has invested in certain companies, whether it is listed companies as well as private companies. And these are the companies in which as of March 31, we are supposed to provide the impact of mark-to-market. This is nothing but the mark-to-market impact of changes in the fair value of investment like Suvidhaa, major part consisting of the -- our investment in Suvidhaa Infoserve, but the cost, which was booked in the books of accounts, which is much lower than the that the realizable value in the books of accounts, that is the reason we have provided. This is nothing but the changes in the fair value estimate. It may be positive in the next quarter also.

[Unknown Attendee]

It's not a net loss for the shareholders of the company, because whatever INR 84 crores...

[Sunil Bhagat, executive]

It is not a net loss for the shareholders. It is a provision for the changes in the fair value of the investments.

[Unknown Attendee]

Okay. And one more question is that why our EBITDA growth is only 2% year-on-year, because net revenue is INR 1,293 crores and compared to last year, it was only INR 600 crores, but then also with this growth in EBITDA is only 2%. So can you just explain that whatever like the company is getting revenue more and more year-on-year, then also EBITDA is -- the growth in EBITDA is only 2%, why it is that?

[Vishal Mehta, executive]

It is Vishal here. I'll take that question only because it's slightly strategic. See, as a company, we've made a call that we are going to increase our market segment share and we are not going to take up transactions where we lose money, but wherever we are slightly positive, neutral and make money, we will continue building up from there. And I think that is part of our conscious call to be able to build up a larger base of merchants and a larger base of transactions in larger volumes.

So while we are optimizing our business, we also want to be conscious of the fact that we should keep on building out the base of the merchant and the transaction volume, as I talked to you about this earlier that financing is a very important portion of what you can monetize on and one can monetize on and we will continue building upon that. So it's a conscious strategic call. We are not just optimizing on EBITDA. We are optimizing on stickiness, on merchant growth; in terms of the number of merchants, we are optimizing on the transaction volume. But one thing I can tell you is that we are not going to add or keep on adding transactions anywhere we are losing money. We have not done that for so many years and we will not do it today and will not do it in the future.

[Unknown Attendee]

Just my only one small question. In the financial year 2021, our gross revenue was INR 676 crores, right and net revenue is INR 233 crores. But now in the FY '22, our gross revenue is INR 1,293 crore, but net revenue is only INR 259 crores. So that's why, EBITDA is only INR 145 crores and compared to last year in FY '21 it was INR 142 crores.

So now let's say in FY '23, as you say, like our present -- like our provision is for INR 190 crores EBITDA and compared to revenue of INR 1,700 crores or INR 1,800 crores. So now, is it possible that down the line 5 years or 4 years down the line, our EBITDA growth is around 15% to 20% in whatever kind of model we have in our company, instead of 2% or 3%?

[Vishal Mehta, executive]

Technology is evolving. We are investing, like I said, [indiscernible] is just one place where we have invested. But one thing we know is that it is going to be a competitive market. And in a competitive market, we will continue to build out our own differentiators. So to answer your question in terms of growth of EBITDA, it's really about optimizing for the long term. We want to continuously optimize by being very conscious about what we are building our today for the next 18 months. So we have to have 2 lenses while we are building out our future. One is, what are we projecting for the next 18 months to 24 months? And then what do we require as a business, so that we remain super competitive and work on some transformative technologies going forward?

So while I may not have an exact answer for you, but what I can tell you is that based on the initiatives that we have picked up, we feel very confident about what we are building out today for the future. I think that the growth, like I said, we're not just optimizing on a specific number, but we will continually update you in terms of any changes to the EBITDA margins that we expect to see going forward.

Right now, it looks fairly positive to us. We've budgeted for all the activities that we are planning for this year. And should there be any update and changes, we will definitely keep on communicating that to you.

[Unknown Attendee]

As far as revenue is concerned, what is the approximate revenue we earned from the Jio platform, particularly? Is it a profitable business? Because you know like the kind of e-commerce platform we have -- we can give this e-commerce platform software to any big company also, like GeM also, Jio platform also and there -- these 2 big projects are very successful. So what is the approximate revenue? I'm not looking for the perfect figure, but approximate revenue from this Jio platform?

[Vishal Mehta, executive]

We don't segment the revenue. We don't segment it by client. We report it as part of our software platform revenue. So we don't have a segmentation for you. But in the past, we had communicated where that we are in single digit bps, between 5 bps to 10 bps -- 10 basis points on transactions for the framework, and that's all I can tell you in terms of the direction. But you're right, it's a phenomenal platform, one that we feel very proud to be associated with and partner with, because it solves purpose for the government being removal of -- bringing a lot of transparency in the entire procurement cycle and being able to deliver on savings.

So I think that it's -- you will see that in the prior years, GeM has done very well, the last year compared to other years. And whatever is required, like I said, it's a platform with a purpose for us to actually build up upon. So we will look at it that way. I know I'm not answering your question, specifically on the revenues that we gain from a client, but directionally, I can tell you that we earn between 5 and 10 bps on each of the transactions of GeM. And GeM, you can see the transaction volume on the slide in terms of statistics.

[Operator]

Thank you. Ladies and gentlemen, due to time constraints, that was the last question for today. I now hand the conference over to the management for closing comments.

[Vishal Mehta, executive]

Thank you, everyone, for joining our Q4 and full year FY '22 conference call and we on behalf of management appreciate your participation and look forward to keeping in touch with you as we build out the business. Thank you all.

[Operator]

Thank you. On behalf of Go India Advisors, that concludes this conference. Thank you for joining us and you may now disconnect your lines.