Firstsource Solutions Ltd. — Investor Presentation 2024

Jul 30, 2024

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30[th] July 2024

To:

National Stock Exchange of BSE Limited (Scrip Code: India Limited (Scrip Code: FSL) 532809) Exchange Plaza, Phiroze Jeejeebhoy Towers, Plot no. C/1, G Block, Dalal Street, Bandra-Kurla Complex Mumbai - 400 001 Bandra (East), Mumbai - 400 051

Dear Madam/ Sir,

Sub: Earnings Presentation

We are enclosing herewith a copy of the Earnings presentation regarding conference call to be held on Tuesday, 30[th] July 2024 at 4.00 PM IST with the analysts and investors, on the financial results of the Company for the quarter ended 30[th] June 2024.

This is for your information and record.

Thanking you,

For Firstsource Solutions Limited

POOJA SURESH Digitally signed by POOJA SURESH NAMBIAR NAMBIAR Pooja Nambiar Company Secretary

Encl.: A/a

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EARNINGS PRESENTATION Q1FY25

Disclaimer

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Certain statements in this presentation concerning our future growth prospects are forward-looking statements, which involve a number of risks and uncertainties that could cause actual results to differ materially from those in such forwardlooking statements. The risks and uncertainties relating to these statements include, but are not limited to risks and uncertainties regarding fluctuations in earnings, our ability to manage growth, intense competition in BPS market including those factors which may affect our cost advantage, wage increases, our ability to attract and retain highly skilled professionals, time and cost overruns on client contracts, client concentration, our ability to manage ramp-ups and growth, our ability to manage our international operations, reduced demand in our key focus verticals, disruptions in telecom infrastructure and technology, our ability to successfully complete and integrate potential acquisitions, liability for damages on our service contracts, performance of our subsidiaries, withdrawal of government fiscal incentives, political instability, legal restrictions on raising capital and acquiring companies outside India, unauthorized use of our intellectual property and general economic conditions affecting our industry. Firstsource may, from time to time, make additional written and oral forward-looking statements, including our reports to shareholders. The company does not undertake to update any forward-looking statements that may be made from time to time by or on behalf of the company.

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About Us

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Specialized BPS partner

Established in 2001 Public listing in 2007

Hyper-focused, domain-centric teams with cutting-edge tech, data, and analytics

29,231* Firstsourcers

200+ global clients[#] including 19 Fortune 500 companies and 3 FTSE 100 companies

Across US, UK, India, Philippines, South Africa, Australia, & Mexico

Leaders in chosen segments

Part of RP-Sanjiv Goenka Group

Banking & Financial Services, Healthcare, Communications, Media & Technology and Diversified Industries

Since 2012

Revenues of INR 63.4 Billion (US$765 Million) in FY2024

Deep partnerships with clients Average tenure of top 5 clients is over 18 years

For clients with trailing 12-months revenue over US$0.25mn *As on 30[th] June 2024

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Part of RP-Sanjiv Goenka Group

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Committed to powering millions of Indian homes and
Group turnover of businesses with reliable electricity through its
~US$4.4 Bn []
EBITDA of Asset base of
A global player and a national leader with portfolio of
~US$855 Mn [] >US$7.3 Bn []
Over
1.1 Million Shareholders
Domain driven BPM services company leveraging a
approach to solve key
customer problems for 200+ global clients
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One of India’s new-age and fastest growing

Conglomerates

Diversified and innovative media company, with music catalogue that spans the gamut from the and a strong video play, spread across making Films, TV serials, OTT series and short video content catering to the youth

Strong workforce of 50,000+ employees, belonging to different nationalities

Presence in 50+ countries

100+ offices worldwide

Nature's Basket is India's with international food products Spencer is an experience led with varied assortments

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Too Yumm is a , captivating consumers with its Playing in the category with brands like Naturali and Within Beauty

Inspiring communities, unite fans, set new benchmarks, foster championship culture, contribute to the

Step into a world of unparalleled luxury. Quest, the first of its kind in Eastern India, curates

India’s producer of rubber & South India’s second largest cultivator of tea

dedicated to helping its readers succeed big in business through best-in-class storytelling

• All figures as on FY24

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Our Verticals

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5 of Top 15

Mortgage Servicers in the US

5 of Top 15

Banking & Financial Services

• Asset Finance

• Credit Cards

• Mortgages

• Retail & SME Banking

• FinTech

Communications Media & Technology

• Streaming Services, Cable TV

• Broadband & Telephony

• Consumer Tech

• Ed Tech

• E-Commerce

Mortgage Lenders in the US

6 of Top 10

Credit card issuers in the US

3 of Top 6

Retail Banks in the UK

1,000+

Hospitals in the US

11 of Top 15

Health insurance/managed care providers in the US

1 of Top 2

Healthcare

• Hospital Providers

• Physician Groups

• Health Plans

• Healthcare Services

• Medical Devices

Diversified Industries

▪ Utilities

• Government Entities

Broadcasting and media companies in the UK

2 of Top 5

Telecom and broadcasting companies in the US

3 of Top 5

Consumer-tech companies in the US

2 of Top 4

Utility companies in the UK

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Our Leadership Team

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Ritesh Idnani
MD & CEO
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Dinesh Jain

Chief Financial Officer

Sohit Brahmawar

Chief Operating Officer

Aftab Javed

Chief Human Resources Officer

Aniket Maindarkar

Chief Marketing Officer

Hasit Trivedi

Chief Digital & AI Officer

Vivek Sharma

Venkatgiri Vandali

Rajiv Malhotra

Arjun Mitra

Ashish Chawla

Akash Pugalia

Sundara Sukavanam

Head – CMT, BFS Head – Healthcare & and Emerging Geos Lifesciences

Head – Europe, Middle East & Africa

Head – Collections

Head – CX and Consulting

Head – Trust & Safety

Head – Enterprise Transformation Office

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Performance Highlights | Q1FY25

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Performance summary | Q1FY25

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REVENUE ₹

₹ 17,911 Million (US$ 215 Million) YoY growth of 17.1% YoY constant currency growth of 14.8% QoQ constant currency growth of 6.5%

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EBIT
₹
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₹ 1,970 Million (Margin 11.0%) YoY growth of 10.1% YoY margin contraction of 70bps QoQ margin flat

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PROFIT AFTER TAX EARNINGS PER SHARE
₹
(Diluted)
₹ 1,353 Million ₹ 1.92
(Margin 7.6%) per share
YoY growth of 7.4%
Q4FY24 at ₹ 1.90 per share
YoY margin contraction of 60bps
Q1FY24 at ₹ 1.80 per share
QoQ margin contraction of 40bps
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Key Deal Wins | Q1FY25

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• Won a large deal from a Fortune500 managed health care companies in the US, one of our existing clients, for member and provider services, and end-to-end claims processing services

• Expanded footprint and wallet share in one of the Top5 healthcare insurance companies in the US for providing digital intake, claims, and provider data management services

• Large deal from a premier SaaS platform provider for the Freight Industry in North America, a new logo for us, for providing customer service and back-office operations

• New logo addition with a scale deal from a leading pension administrator in the UK to improve their service coverage

• Strengthened the multi-decade relationship with one of the largest managed health care and insurance companies in the US with additional business for providing application support and onboarding support for their clearing house line of business

• Selected by a Top5 health insurance companies in the US for claims processing services for their Medicare Line of business

• Won a deal from one of the largest public health care delivery system in the US for providing collection and insurance discovery services

• Selected by one of the largest US newspaper publishers to run in-bound and out-bound subscribers support

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Employee Base | Q1FY25

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• Total headcount of 29,231 employees

• QoQ net headcount addition of 1,291

• TTM employee attrition at 32.0%*

• 45.1% of employees are women

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Total headcount Attrition
Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25 Q1FY24 Q2FY24 Q3FY24 Q4FY24 Q1FY25
27,940 29,231 41.7% 39.8% 37.7%
23,953 25,947 35.4% 32.0%
22,384
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• *For employees in employment for more than 180 days

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Awards & Recognitions | Q1FY25

Horizon 1 Ranked as a Disruptor in HFS Horizons HCP Service Providers, 2024

SBTi & Net Zero Our ESG commitment

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As part of our decarbonization strategy:

Submitted the commitment letter to SBTi which has been accepted

Indicating our commitment towards reducing carbon emissions as per set guidelines

2035 is our near-term target as per SBTi alignment

2050 is our long-term target for Net Zero

11

Business Outlook | FY25

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11.5-13.5% constant currency revenue growth (Earlier: 10-13%)

11-12% EBIT margin (Earlier: 11-12%)

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Factsheet

13

Cons. IndAS financials | Profit & Loss Statement

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In ₹ million	Q1FY24	Q2FY24	Q3FY24	Q4FY24	FY24	Q1FY25	QoQ	YoY
Income from services	15,267	15,417	15,948	16,693	63,325	17,839	6.9%	16.8%
Other operating Income	25	(17)	18	12	37	72	-	-
Revenue from operations	15,292	15,400	15,966	16,705	63,362	17,911	7.2%	17.1%
Revenue from operations (USD Mn)	$ 186	$ 186	$ 192	$ 201	$ 765	$ 215	6.7%	15.4%
QoQ Growth % - Constant Currency	(3.0%)	(0.1%)	3.4%	4.2%	-	6.5%	-	-
YoY Growth % - Constant Currency	(1.6%)	(1.9%)	2.8%	4.5%	1.1%	14.8%	-	-
Manpower Expenses	9,239	9,402	9,895	10,558	39,093	11,268	6.7%	22.0%
Operating Expenses	3,652	3,710*	3,700	3,643	14,705	3,944	8.3%	8.0%
EBITDA	2,402	2,288	2,371	2,503	9,564	2,699	7.8%	12.4%
EBITDA Margin	15.7%	14.9%	14.9%	15.0%	15.1%	15.1%	10bp	-60bp
Depreciation / amortization	613	654	663	673	2,602	729	8.2%	18.9%
EBIT	1,789	1,634*	1,709	1,830	6,962	1,970	7.7%	10.1%
EBIT Margin	11.7%	10.6%	10.7%	11.0%	11.0%	11.0%	NM	-70bp
Other Income / (expense)	6	153#	134#	3	296	(11)	-	-
Interest expense, net	(243)	(244)	(235)	(240)	(962)	(287)	19.4%	18.1%
Profit Before Taxes	1,553	1,543	1,608	1,593	6,296	1,673	5.0%	7.7%
Taxes and Minority Interest	293	278	321	258	1,150	320	24.1%	9.2%
Profit After Tax	1,260	1,265	1,287	1,335	5,147	1,353	1.3%	7.4%
Net Margin	8.2%	8.2%	8.1%	8.0%	8.1%	7.6%	-40bp	-60bp
Diluted EPS (₹ /Share)	1.80	1.80	1.84	1.90	7.34	1.92	1.1%	6.7%

including other income on account of changes in the fair value of the liabilities for purchase of non-controlling interest and contingent considerations

*Q2FY24: include one-time charges

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Cons. IndAS financials | Balance Sheet

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In ₹ million	As on 31-Mar-24	As on 30-Jun-24
ASSETS
Non-Current Assets
Fixed assets	2,461	3,164
Right-of-use assets	6,355	6,515
Goodwill on consolidation	29,885	32,464
Investment in associates	0	0
Financial Assets
Investments	115	114
Other financial assets	825	1,009
Deferred tax assets	2,921	2,813
Income tax assets (net)	809	831
Other non-current assets	2,086	2,187
Total Non-Current Assets	45,457	49,096
Current Assets
Financial assets
Current investments	300	385
Trade receivables	11,608	13,497
Cash and cash equivalents	1,748	1,731
Other balances with bank	137	130
Other financial assets	94	167
Other current assets	1,486	1,982
Total Current Assets	15,374	17,893
TOTAL ASSETS	60,830	66,989

In ₹ million	As on 31-Mar-24	As on 30-Jun-24
EQUITY AND LIABILITIES
Shareholder's Funds
Equity share capital	6,970	6,970
Reserve and surplus	30,034	31,444
Non - controlling interest	4	4
Total Equity	37,008	38,418
Non-Current Liabilities
Financial Liabilities
Long-term borrowings	42	2,132
Lease liabilities	5,714	5,937
Other Financial Liabilities	0	568
Provisions	188	230
Deferred tax liabilities	1,470	1,492
Total Non-Current Liabilities	7,414	10,358
Current Liabilities
Financial Liabilities
Short-term and other borrowings	8,081	9,702
Trade payables	3,056	3,106
Lease liabilities	1,496	1,463
Other financial liabilities	2,047	2,345
Other current liabilities	1,057	971
Provisions	467	490
Provision for tax (net)	205	136
Total Current Liabilities	16,409	18,213
TOTAL LIABILITIES	60,830	66,989

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Cons. IndAS financials | Cash Flow Statement

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In ₹ million	3 Month ended June 30, 2023	3 Month ended June 30, 2024
Cash Flow from Operating Activities
Netprofit before taxation and non controllinginterest	1,553	1,673
Depreciation and amortization	613	729
Finance costs(For borrowing& lease liabilities)	254	316
Adjustment: Non-Cash Expense /(Other Income)	(116)	187
Add: WorkingCapital Changes	(1,832)	(2,643)
Less: Income Taxes Paid	(90)	(321)
Net cashgenerated from /(used in) Operating Activities(A)	380	(60)
Cash Flow from Investing Activities
Capital Expenditure,net	(151)	(538)
Interest income received	0	2
(Increase)/Decrease in current investments	(604)	30
Acquisition of business	-	(2,005)
Earmarked balances with banks	7	6
Net cashgenerated from /(used in) Investing Activities(B)	(748)	(2,504)
Cash Flow from Financing Activities
Net Change in Borrowings	1,070	3,710
Net Interest Paid	(305)	(388)
Payment of Lease Liabilities	(349)	(375)
Purchase of TreasuryShares,net	17	(171)
Purchase of non controllinginterest in subsidiary	(583)	(225)
Net cashgenerated from /(used in) Financing Activities(C)	(150)	2,552
Net increase/(decrease) in Cash and Cash Equivalents(A+B+C)	(518)	(12)
Cash and cash equivalents at the beginningof theperiod	1,515	1,748
Foreign exchange(loss)/gain on translatingCash and cash equivalents	(1)	(5)
Closing Cash and Cash Equivalents	997	1,731
Current Investments	1,210	385
Short term fixed deposits	-	33
Cash and Cash Equivalents including Investments	2,207	2,149

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Operating Metrices | Q1FY25

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		Q1FY23	Q2FY23	Q3FY23	Q4FY23	Q1FY24	Q2FY24	Q3FY24	Q4FY24	Q1FY25
Revenue by Vertical	Banking & Financial Services	46.3%	43.4%	41.8%	40.3%	40.8%	40.8%	38.3%	37.3%	36.4%
	Healthcare	32.1%	34.5%	34.2%	33.2%	32.6%	32.7%	33.5%	32.9%	35.7%
	Communications, Media & Tech	20.2%	20.2%	21.6%	22.3%	21.8%	21.2%	22.5%	23.6%	22.3%
	Diverse Industries	1.4%	1.9%	2.4%	4.2%	4.8%	5.3%	5.7%	6.2%	5.6%
Revenue by Geography	North America	68.4%	67.2%	64.9%	63.3%	63.5%	65.1%	65.4%	65.0%	68.2%
	Europe, Middle East, and Africa	30.1%	31.3%	34.1%	36.3%	36.4%	34.8%	34.5%	34.9%	31.8%
	Rest of World	1.5%	1.5%	1.0%	0.4%	0.1%	0.1%	0.1%	0.1%	0.0%
Revenue by Delivery	Offshore	27.4%	25.9%	25.1%	24.6%	25.6%	26.7%	30.3%	31.4%	35.0%
	Onshore	72.6%	74.1%	74.9%	75.4%	74.4%	73.3%	69.7%	68.6%	65.0%
New Logos	New logos added (during the quarter)	8	25	12	9	10	12	10	8	10
Client Concentration	Top 5 clients (share of total revenues)	36.4%	36.6%	38.5%	37.4%	37.2%	35.0%	35.8%	36.7%	34.6%
	Top 10 clients (share of total revenues)	50.0%	50.6%	53.6%	53.6%	52.7%	51.3%	52.0%	52.6%	51.5%
Client Distribution	US$ 1m+ clients (nos.)	97	99	100	99	98	101	104	103	100
	US$ 5m+ clients (nos.)	31	29	29	28	24	24	25	25	25
	US$ 10m+ clients (nos.)	15	17	15	11	14	13	13	13	13
	US$ 20m+ clients (nos.)	8	9	7	7	9	8	8	8	9
	US$ 50m+ clients (nos.)	2	1	1	2	2	2	2	2	2
Revenue by Currency	USD	68.0%	65.4%	63.3%	62.2%	63.2%	65.0%	64.9%	64.8%	67.9%
	GBP	30.0%	32.6%	35.5%	37.0%	36.3%	34.3%	34.4%	34.4%	31.4%
	Others	2.1%	2.1%	1.1%	0.9%	0.5%	0.7%	0.7%	0.8%	0.7%
Employee Metrices	Total employees (period-end)	25,234	23,932	23,627	23,018	22,384	23,953	25,947	27,940	29,231
	Net addition	(1,323)	(1,302)	(305)	(609)	(634)	1,569	1,994	1,993	1,291
	Attrition (TTM)	48.6%	48.1%	45.5%	43.3%	41.7%	39.8%	37.7%	35.4%	32.0%

• For employees in employment for more than 180 days

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Annexure

18

Financial performance snapshot | Q1FY25

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Revenue

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(in $ million)
5.6% 18.5% 16.0% -5.7% 2.0% 15.4%
6.6% 17.9% 14.6% -1.1% 1.1% 14.8%
FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
YoY constant currency revenue growth YoY US$ revenue growth
EBIT and Margin (%) (in ₹ million)
10,000 14.0%
9,000 12.0% 11.8% 12.0%
10.8% 11.0% 11.0% 12.0%
8,000 9.4%
7,000 10.0%
6,000
8.0%
5,000
6.0%
4,000
3,000 4.0%
2,000
2.0%
1,000
- 0.0%
FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
EBIT EBIT Margin (%)
795 750 765
685 215
548 578
7,105 6,962 1,970
5,979 5,633
4,610 4,437
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Note: FY24 EBIT margin was 11.1%, adjusted for one-time charges related to leadership changes in Q2FY24

Revenue

(in ₹ million)

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7.1% 23.9% 16.6% 1.7% 5.2.% 17.1%
FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
YoY INR revenue growth
59,212 60,223 63,362 17,911
50,780
38,263 40,986
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PAT and Margin (%)

(in ₹ million)

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8,000 12.0%
9.9%
7,000
9.1% 10.0%
6,000 8.3% 8.5% 8.1% 7.6%
7.1% 8.0%
5,000
4,000 6.0%
3,000
4.0%
2,000
2.0%
1,000
- 0.0%
FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
PAT PAT Margin (%)
5,374 5,137 5,147 1,353
3,778 3,397 3,617
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Note: FY21 PAT was ₹ 4,499m excluding exceptional items

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Key performance indicators | Q1FY25

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Return on Equity (%)

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FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
17.7%
15.3%
13.9% 12.3% 12.9% 13.9% 14.1%
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Cash Flow

(in ₹ million)

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FY19 FY20 FY21 Adj FY22 Adj FY23 FY24 Q1FY25
Operating Cash Flow Free Cash Flow
8,921
7,225 7,870 7,141 7,634 7,119
6,448
5,597
4,000 4,104
2,913 3,156 (60) (597)
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Return on Capital Employed (%)

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FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
Debt Position (in ₹ million)
FY19 FY20 FY21 FY22 FY23 FY24 Q1FY25
Long term Debt Short term Debt Net Debt
including current maturities
17.6% 17.6%
15.4% 15.7%
14.1% 13.4%
12.3%
8,686
6,950
9,684
5,271
8,013
8,341 6,673
6,526 4,367 6,159 6,042
5,390
3,885 3,846
3,147 2,999 3,147
187 92 1,678 1,451
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*Annualised

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Total Shareholder Return | Trailing 5 years

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FSL | 445%
Nifty IT | 163%
Jul-19 Jan-20 Jul-20 Jan-21 Jul-21 Jan-22 Jul-22 Jan-23 Jul-23 Jan-24 Jul-24
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Total Shareholders Return (including dividends) of 478% in past 5 years

Based on closing prices as of 29[th] July 2024

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THANK YOU

Investor relations

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