Network People Services Technologies Limited — Call Transcript 2024

Jul 29, 2024

SYMBOL: NPST ISIN: INE0FFK01017

Date: July 29, 2024

To,

The Manager-Listing Department, The National Stock Exchange of India Limited, Exchange Plaza, NSE Building, Bandra Kurla Complex, Bandra East, Mumbai-400 0513 Fax: 022-26598237, 022-26598238

Subject: Transcript of the Earnings Conference Call for quarter ended June 30, 2024.

Respected Sir/Madam,

Pursuant to the provision of Regulation 30 of the SEBI (Listing Obligations and Disclosure Requirements) Regulations 2015, please find enclosed herewith the transcript of the earnings conference call for quarter ended June 30, 2024.

The same will also be available on the website of the Company.

Kindly take the same on your record.

Thanking You, Yours Faithfully, For Network People Services Technologies Limited

Digitally signed by CHETNA CHETNA AVINASH AVINASH CHAWLA CHAWLA Date: 2024.07.29 17:34:02 +05'30'

Chetna Chawla Company Secretary and Compliance Officer

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“Network People Services Technologies Limited Q1 FY25 Earnings Conference Call”

July 24, 2024

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– MANAGEMENT: MR. DEEPAK CHAND THAKUR CHAIRMAN &

– MANAGING DIRECTOR NETWORK PEOPLE SERVICES TECHNOLOGIES LIMITED – MR. ASHISH AGGARWAL JOINT MANAGING – DIRECTOR NETWORK PEOPLE SERVICES TECHNOLOGIES LIMITED – MODERATOR: MR. JAINAM SAVLA KIRIN ADVISORS

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Network People Services Technologies Limited July 24, 2024

Moderator:

Ladies and gentlemen, good day, and welcome to Network People Services Technologies Limited Q1 FY ‘25 Conference Call hosted by Kirin Advisors.

As a reminder, all participant lines will be in the listen-only mode and there will be an opportunity for you to ask questions after the presentation concludes. Should you need assistance during the conference call, please signal an operator by pressing “*” then “0” on your touchtone phone. Please note that this conference is being recorded.

I now hand the conference over to Mr. Jainam Savla from Kirin Advisors. Thank you, and over to you, sir.

Jainam Savla:

Thank you. On behalf of Kirin Advisors, I welcome you all to the NPST Limited Quarter 1 FY '25 Conference Call.

From the management team, we have Mr. Deepak Chand Thakur – Chairman and Managing Director and Mr. Ashish Aggarwal – Joint Managing Director.

Now I hand over the call to Mr. Deepak Chand Thakur. Over to you, sir.

Deepak Chand Thakur:

Thanks, Jainam. Welcome everyone. This is Deepak. I represent my 350 crazy guys sitting in NPST, working day in and out and delivering the results. This is that time when exactly we get time to spend constructive time with shareholders where we take feedback, we understand what exactly to be done next and how well aligned we are with the industry. Thank you so much for joining guys. Really looking forward to have a great conversation.

What I will do, I will quickly give you a small background about the Company, what exactly we are doing, what we have done in the last quarter, give you a breakup of the results and then we can go into FAQ. Ashish is with me, he will also assist me on all the numbers and all the questions around the P&L, balance sheet, whatever you want to understand around the quarterly results.

So, guys, like you are well aware now, it is what seventh or eighth quarter we are doing this quarterly call. We have been consistently trying to educate our people because the intent was to give more and more clarity around payment technology. We being one of the first in the industry to get listed, we always knew that it would have been a difficult task for people to understand how the payment works, what kind of technology we are working on and how exactly the organization would grow.

So, over the quarters, I believe with this consistent effort, all our shareholders and analysts are well aware what exactly we are doing. But for everyone who has joined for right now, I mean, for the first time, we have two major verticals on which we are working.

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One is where we bridge the central engine with the bank where the interoperable payments can be connected like UPI, IMPS, mobile banking, online dispute resolution, merchant acquiring. Wherever you need a technology partner to upgrade your digital payment solution and market and also go aggressive in the industry, this is about banks and the regulated entities, NPST intends to be one of the top most service providers in the segment. Here we provide the technology. We own the IP. We provide the solution. We provide the product and services over the UPI, IMPS and all the products which I mentioned.

On the other hand, one of the reasons why we went to IPO was to set up a payment platform wherein how do we take the solution to market and how do we empower fintech and the other entities who would require payment as a service. So, we developed two platforms. One was Evok, which is payment platform as a service for the online payments. Second is Qynx payment platform as a service. This is a solution which today fintech and the payment aggregators, payment gateway, they can ride on and utilize it with much higher capacity to deliver and integrated services right from digital onboarding to reconciliation to dispute resolution, customer management, everything as a single stack. Now this is what bridges the fintech and the banking world. Now that's where we divide our vertical into two.

Over last quarter what we have done is thanks to all your blessings. Now NPST is one of the 1,000 top listed companies in India. But along, like it is always said, with greater power comes greater responsibility, we have to now get into compliances around risk management, business responsibility and sustainability reports.

So, there are a lot of efforts around how this organization would behave as one of the top 1,000 companies. The Company is geared. I think we have already taken up this in our Board meeting and we have committed to ensure that new efforts around being there is what we are working on and as you know that the Company is already gearing up for the main board. So, this is something that's very important for us.

Secondly, there were new products lined up for this quarter. We have been able to successfully complete our BBPS, which is bill aggregation product. We have been able to successfully complete the certification. We are going live. Q4 is when we got the order. Q1 is when we actually completed the certification. This quarter we will be going live with one of the big products that we were targeting.

At the same time, we got two more orders around Super App from two of the RRBs, which is KGB and KaGB. Here it allows us to get into semi-urban and rural India and see how we can create a super app for this segment of population. It's a different challenge altogether, but that again creates a bigger opportunity for NPST.

Then at the same time, we have ensured that we are entering into embedded payment as one of the first movers. At the same time, we have committed to invest and we have already started

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doing that around infrastructure, which should be having one of the best success rate, best TPS, which is transaction processing capability. It should also have the best possible compliances, regtech, and at the same time, the security should be at the best.

So, that's what we have been doing. We have picked this up in Q1. I always insist that NPST needs great leaders, and that is what we have been doing. Q4, we added leaders around marketing and HR, and Q1, as committed, we have two senior leaders who have joined for sales, and we expect this to continue in Q3 as well.

You are already aware, we have, like I always say, if you have gone through the quarterly calls earlier, we don't plan only one year, but we also plan what's in it for the next three years. That's why we have already declared, and we are already working around the QIP so that we have much larger stake in payment ecosystem and at the same time, we have first mover advantage in several solutions right from how the payment terminal is evolving, how credit line is evolving, how digital rupee or international landscape is evolving. So, there's a lot in line right now for the next three years, so that this organization is planned for next five, six, seven years of very strong fundamental values.

Well, that's about us. It's about getting into the numbers now. Great efforts by my entire team. Again, a lot of credit to those 350 people sitting in my organization. Like at the beginning of the call I said they are crazy, working day in and out and this number is only going to increase. We already have more leadership positions lined up. We have more better department plan. We have culture upliftment in the organization.

We also have a lot of value driven approach taken right now. This year is all about those transformations. So, we believe that the organization, of course, has a great capability around what business can be picked up, but it is very important how we establish a very strong culture and how we create a value driven organization.

With that in intent, let me tell you the numbers although you have seen, we have seen a year-onyear growth of 141% from about 44 crore last quarter, which is Q4 FY '24 to about 60 crore this quarter. Trust me, probably I think we underestimated the overall number that could be achieved, but yes, that's really a great number.

EBITDA has again risen by about 180% from, Ashish, just correct me, it is about 22 crore as against 15 crore quarter-on-quarter. Oh, I am so sorry. I think I mixed the number. So, from 24 crore to about 60 crore from Q1 FY '24 to Q1 FY '25 year-on-year growth has been about 141%, but at the same time EBITDA has risen from about 7.8 crore to about 22 crore, which is again year-on-year growth of 180%, but when you see quarter-on-quarter, still we see 34% growth from Q4 last year to Q1 this year from about 44 crore to about 60 crore and which is again an increase of about 503 bps in the EBITDA percentage growth year-on-year as against Q-o-Q growth of about 255 bps.

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Net profit has risen from 5 crore last year quarter 1 to about 15 crore quarter 1 this year and if you compare quarter-on-quarter growth, it has grown from 10 to 15 crore. Again, I see a great jump.

At the same time, when it comes to EPS, which, of course, everyone are interested in, we have grown from about Rs. 5.17 to about Rs. 8.06 is quarter-on-quarter, but quarter 1 last year, it was Rs. 7.98. When we apply the effect of bonus issue resulting into increase in share capital, the EPS is diluted to 2.67 per share. So, I see a great jump when it comes to 8.06, which is right now.

So, that's the number, guys, that as you know I would like to spend more time answering questions. So, that's all from my side. Let's see what's in from the shareholders.

Moderator:

Thank you very much. We will now begin the question-and-answer session. Our first question is from the line of CA Garvit Goyal from Nvest Analyst Advisor LLP. Please go ahead, sir.

CA Garvit Goyal:

Good afternoon sir and congrats for a good set of numbers. I am actually new to the Company. So, I wish to understand from you a little bit more about the opportunities here for our existing segments like Super App, Qynx, Evok that you mentioned in your opening commentary. So, who are the typical adopters of these? And how big this market is? And who are our direct competitors in these segments?

Deepak Chand Thakur:

See, try and understand that BFSI segment payment technology, so we are a part of a fintech ecosystem within which there is wealth tech, there is PayTech and there are several other subsets. In payment technology is like a horizontal across ecosystem. So, you have banking where you need core solution, and they are the regulated entities who deliver various services on which fintech ride.

In this particular ecosystem, we play a role of a technology partner to bank to give them the digital payment platform. Majorly we work on the interoperable payments. So, we work on the processing engine, which is core to the processing of transactions. So, banks are the ones who usually are eligible. In fact, we develop the solution for banks and PPI and those who are the regulated entities in the list of RBI.

Second, when it comes to Qynx, Evok, the question you asked, what we see that although you have the payment in bank, but at the same time there are a lot of business cases in market which is solved by Fintech and when it comes to understanding how the Fintech operates, how the business is required, let's say the best example is payment aggregator. So, when you want to empower a payment aggregator, simply giving a bank API may not solve the problem.

You need to have a very strong ecosystem right from what is the performance, what is the success rate, how do you take the ownership around it, what kind of compliance is to be followed in

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order to do that, and then comes the post transaction effort, which is around the digital onboarding process, automation around it so that the cost can be saved, then at the same time the reconciliation, at the same time dispute resolution all of this taken together becomes a single package which goes to the payment aggregator.

So, these are our target audience, and the solution is divided based on the requirement of banks and the Fintech. Our competitor, of course, you can take the list from the site as well. You have Mindgate and you have Olive, you have Sarvatra. I mean, you don't have a Fintech, I mean, you don't have a Company who is listed heavily. I think majorly top five, six, these are the companies you can find out. Kia is also one when it comes to being a technology partner to bank.

When it comes to payment platform-as-a-service, which I mentioned, we don't see a direct competition as such, but for sure in bits and pieces because we have built a complete integrated ecosystem. You don't need multiple vendors. You don't need multiple service providers. You just need one single entity who can deliver everything to you and that's us. So, I see in a breakup you will have multiple players, but as an integrated product, I don't see the competitor as such.

CA Garvit Goyal:

So, what is exactly happening in the end industry, like what is driving this significant growth for our Company, like for last two to three years? Like, what is making a different from the name of the company that you mentioned?

Deepak Chand Thakur:

You just look at the industry stats. I mean, digital payments, just two years back, what was the volume of UPI in this India versus what is it right now? We are currently sitting at a 14 billion transactions a month. When that's the volume, there is a need for technology, there is a need for better solutions. There are multiple new use cases which gets launched. There are new and new products demand from the industry. So, I see that India is at such a cusp wherein when you apply the payment requirement of this country, you will come to know it is well aligned with the India story. So, digital payment industry itself is a great push.

Secondly, last four years, we anticipated something. We started working on this platform, which probably others didn't do. So, we are the one who is cross available in the ecosystem. So, for us, our dependency is not just into one vertical. We have diversified that into multiple and the next step is to diversify this further so that the fundamental growth is much stronger.

Now when it comes to the growth factor, I think you just pull out the reports around UPI growth, you pull out the growth around how India is being looked at from the international perspective around payments. I think it's there and at the same time, when I say 14 billion transactions a month, that's not where it is going to stop.

The number around 30 billion, a billion transactions a day is already planned. It's already worked out. There are strategies around it. And then beyond 30 billion transactions a month, it's not going to stop. It will further continue. How do we go to 100 billion transactions a month? And

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when that happens, the demand increases, the ecosystem improves. All of this gives us an opportunity in various products and services that we are delivering.

CA Garvit Goyal: And sir, can you please also highlight a bit on like new initiatives that you also mentioned in the opening commentary as well that we are taking on. So, what are the adopters of these new initiatives and how big the opportunities do you look at?

Deepak Chand Thakur: So, we have already taken a step of so we have committed that we should be continuously investing into newer processing engines and newer segments. We are not an app-based Company. We are not a web-based Company. We are not into a simple interface product. We believe in creating an IP and we believe in creating solution that becomes a core to the processing of the payments and that's where we launched BBPS. So, what will happen is the biller aggregation will happen over our platform. So, there are several companies who have been with us. We ventured into it. That's something new that we got into certified. It's going live.

When it comes to super app, the shape was majorly for a specific audience. But the moment we take it to RRB, the shape of super app will change. It will create new opportunities. Then at the same time, when it comes to API, we have API around payment collection.

But at the same time, we are also looking at how do we deliver the pay out? How do we as a technology on which banks can ride? Then at the same time, how do we deliver the autopay, wherein you have something like e-NACH? AutoPay can bring in more solution for subscription-based business and use cases in market. So, these are all an opportunity around what we are already doing. So, that's how we look at it.

CA Garvit Goyal: And just last question on your growth guidance, sir, for FY '25. Deepak Chand Thakur: I have already given that. There is no change in growth guidance. CA Garvit Goyal: Is it for this year only or is it for next few years? Deepak Chand Thakur: No, I have given one year. Moderator: Thank you. Our next question is from the line of Parikshit Kabra from PKD Advisors LLP. Please go ahead, sir. Parikshit Kabra: So, first, just a couple of housekeeping questions that I ask every time. What was the GMV and the TSP versus TPAP split? Deepak Chand Thakur: This time the split has changed. So, TSP is about 20% and PPAS is about 80%. GMV, Ashish, can you share that number?

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Ashish Aggarwal:

It's somewhere about the, congratulations, guys. We have touched, we have closed the GMV of somewhere about 10,000 crores in a quarter.

Parikshit Kabra:

Great to hear. So, one of the things that over the last two quarters that is clear to see is that our rate of GMV and market share of, in fact, market share, not just the market growing, but market share of ours is growing in the UPI transaction volumes. So, wanting to understand what has clicked? How is this happening? Is it certain of our customers have started expanding really quickly or have we added a lot more new customers? What is working for us?

Deepak Chand Thakur:

Parikshit, it's all cumulative impact of last one year, in fact. You see, if I told, if you remember what I said earlier also that as and when you keep on, so we believe in last annual report also we shared, we believe in horizontal and vertical strategy, both. So, you keep on adding new products and services so that your revenue per customer increases and then at the same time, you keep on adding new clients and that is what has been the approach forever.

So, what has happened is it is now giving a cumulative impact over quarters. So, this quarter, obviously, whatever customers we added, maybe in Q3 or Q4, maybe last six months, the confidence level, the service addition, all that has boosted them to do more transactions. And at the same time, like I said, when it comes to banks, last financial year, we ended with just about seven banks, last to last. This financial year, we ended with 14 banks.

Now, as and when it goes further, it only increases the potential of revenue that we are adding from banks as well. Now, the opportunity from the same bank also increases. Like Kerala Gramin Bank and Karnataka Gramin Bank, they were purely on UPI. Then we added IMPS, mobile banking. From the same bank now, we have the super app also coming up. Then we have BBPS also coming up. This is further increasing our ability to target bigger business in market.

So, even when it comes to tendering process, you see we having about 100 crore P&L allows us to go stronger in the process and present that we are a much stronger and capable organization right now to deliver the service to the larger entities. So, all of this has an impact. So, it's not the rocket science. It's just that the strategy probably we adopted March 2023, has a cumulative impact.

Parikshit Kabra:

So I was actually thinking and maybe that was part of your answer, that the new payout and AutoPay APIs that we have launched, I think they are commercialized now, right?

Deepak Chand Thakur:

Not yet.

Parikshit Kabra: Not yet. Okay.

Deepak Chand Thakur: Not yet. Not yet. So, that the transition has been done, okay. We have completed. But what we want to do is, like I said last time also, we are going slightly slow in setting up very strong operational and compliance process. So, although it is there, we have transacted, but we are not

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pushing heavy to our customers that you have to we also have payout, why don't you start using it?

We have multiple merchants who have transacted, but we have not put this on a very strong production effort and the target around payout and AutoPay to our sales team is also for Q2, although to initiate monetization, but for sure Q3 and these are all part of our launches in Global Fintech Fest. So, it will go heavy post GFF.

Parikshit Kabra:

In terms of you said that you ended FY '24 with 14 banks. In this quarter, have you added any more banks, accounts, I mean?

Deepak Chand Thakur:

I think we should wait for the Q2 calls.

Parikshit Kabra:

No worries. Fair enough. I just wanted to check now two last questions. One is your guidance. I know you have given a 75% guidance and I know you have given it to under promise over deliver, but if I assume that even now quarter-on-quarter, your growth is zero, you will still overshoot your guidance. Any comment on that?

Deepak Chand Thakur: So, the thing is now we are actually questioning certain numbers in Board meetings, and we are actually trying to, at the CXO meeting also, we are continuously discussing on what further, what next, because Q1 has been amazing for the Company and the pressure of guidance is also now going down, but this does not mean that we have to sit idle. So, I don't think I will change any guidance right now, but for sure, whatever you have calculated, it's there. I mean, it's right there and it's not going to be zero for sure. So, we are yet to arrive at it, but we don't want to revise anything at least until we have the half yearly numbers. So, it's going good. We are going strong, but we don't want to overcome it right now.

Parikshit Kabra:

The last question that I had was on credit line, and I know we are nowhere there, but that's one of the opportunities that you mentioned. I was reading upon it, and it seems like it's been there for a while, but the uptake has not happened. The ecosystem or basically, the players have not really pushed this product. Do you see that changing? How do you see this space evolving right now?

Deepak Chand Thakur: See, credit line always existed. However, credit lines adoption in UPI never started, but it has lot of policy level impacts. The moment there is credit, then you know how NPCI foresees the interoperability in the ecosystem. That is something that is still coming out. So, credit line is part of our product portfolio and it's very right up there along with digital currency. However, we need to see stronger use cases. We need to see how banks pursue this and how many banks are opening up to this idea, how well they are taking it up.

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So, I believe that it's not the technology challenge. The challenge is about how it will be executed. So, it is still, I mean, journey is still far. It's not adopted, and it will still take time. According to me another six months is what we should be looking up to it.

Parikshit Kabra:

Last thing, I just want to leave a comment. The latest NPCI data has removed Cosmos Bank. I would request you to get them to correct that as soon as possible. That's a very good indicator for us investors sitting on the sidelines.

Deepak Chand Thakur: Absolutely. I will cross check because I think two days back Ashish called me and he said that I can't see it. I also saw. I said, frankly, I have no idea how this works internally, but I also saw another change wherein when you go to PSP, you will see that the star was highlighted around all, certain PSPs and when you go there, you will realize that they have bifurcated it into TPAP and bank PSP. Now, that wasn't there in the earlier month. So, probably there has been some change and around that they are keeping this number. So, we will go back, and we will see what is it, but for sure I am seeing change in multiple data.

Moderator:

Thank you. Our next question is from the line of Prateek Chaudhary from Saamarthya Capital. Please go ahead, sir.

Prateek Chaudhary: So, you mentioned about in today's call as well as in the EGM, which happened a few weeks back, one, you mentioned about embedded payments and second, you mentioned about AI, some AI product for the financial sector. Can you please talk about these two products in more detail?

Deepak Chand Thakur: So, it's, I hope you can link this to the budget which has come now. There is a good mention of 5G and when there is 5G, for sure it amplifies the impact on the IoT use cases, okay. And when that happens, for sure there is an infra now, there is a platform now on which payments can ride.

So, earlier the payments was just a software driven approach. Now that we have great boost coming in around the infra being available, see, it's like that era when India was moving from 3G to 4G, it paved the way for faster internet, better performance, building new applications, and great demand coming in from the apps and ultimately boosting the demand for payment because payment is a horizontal across all.

I see that 5G, IoT further creates a use case for embedded payments. So, that's in our radar, and that's part of our core strategy. So, it's there along with digital rupee, along with credit line. That's more of a product stack, but when it comes to embedded payment, it's more about technology stacks.

So, for sure the use cases will multiply, but it's way too early to talk about it, but the moment you start learning about IoT, let's say today you have a watch, okay. How do we bring UPI payment in a watch? So, that kind of question can be answered in the embedded payment. That's one. Which was the second question you asked me? So, sorry.

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Prateek Chaudhary:

AI product. Artificial intelligence.

Deepak Chand Thakur: So, now we also need to understand that if the Company or I would say that those who are forward-looking, in order to solve the problem around fraud, around suspicion, around business, around growth, around whatever business cases we have, AI is not something that is just an addon flavor. AI is something that will go deep down inside and ensure that all these requirements are solved. So, we are adopting AI as part of our product stack. So, over a period of two years, three years down the line, every single product that we have, it will have an AI tech inside it.

So, whenever we talk about data, we talk about business intelligence. A step beyond business intelligence is artificial intelligence. So, can we get into predictive analytics? Can we give that stack to banks, wherein the focus around the data that has been generated, the system which has been created, they can actually start working around it? So, AI is going to be, I would say, a module or a component as part of all our products, and not just future, but even the current one. That's how we foresee.

Prateek Chaudhary:

And the tie-up with the SMB bank, that is also slated to happen with the GFF, right?

Deepak Chand Thakur:

SBM.

Prateek Chaudhary: Sorry, SBM.

Deepak Chand Thakur: Yes, so we have completed the certification. We are in the last stage of go live right now. This is just those parts where the tech, ops, everything is established. Those audits and all, those are the points which are left. So, for sure, we are good for GFF.

Prateek Chaudhary: And how's our international foray progressing as of now?

Deepak Chand Thakur: So, I always say it's at least one year down the line. FY '25 is when you should start looking at it. We are working very closely with our partners. We have identified partners. We have started working with them. We have started presenting what kind of capability Indian Company has. So, that has started. So, I see, whatever I have said earlier, no change. It will be FY '25 and you can see the Company transforming into international. Yes.

Prateek Chaudhary: We are already in FY '25, sir.

Deepak Chand Thakur: So, sorry. Change it to FY '26.

Prateek Chaudhary: And in the EGM remarks, you mentioned that we have bidded for a couple of tenders where the size is larger than our current Company, something like that.

Deepak Chand Thakur: Yes. We are doing that. It is part and parcel of my sales team regular. It will take time. I mean, to have that win, to have that break, it will take some time.

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Prateek Chaudhary: Any vision statements, sir, for the three years that you have been speaking about, the next three years?

Deepak Chand Thakur: Yes, so there was this value driven, which I was talking about earlier. Basically, what we have done is, we have brought all our leaders, all our senior guys and the managers into one session and we conducted this session to how do we create that value and the culture in the organization so that we become one of the most respected payment technology coming out of India. I think you can take it from there.

Prateek Chaudhary: And sir, one last question, again, coming from the EGM remarks. You said that your market share will potentially increase from 0.5% to 5%. That's what you are targeting. Deepak Chand Thakur: That remains. Prateek Chaudhary: So, can this happen over the next four to five years? Deepak Chand Thakur: That's our three years' vision. Prateek Chaudhary: Oh! wow. Deepak Chand Thakur: That's part of our vision statement, yes.

Moderator: Thank you. Our next question is from the line of Rupesh from Intelsense Capital. Please go ahead, sir. Rupesh: My first question actually is related to budget. Yesterday, I think in the past, the government used to allocate this incentive for promoting digital payments, and I think that number used to be something like 3,500 crores. And yesterday, I mean, I am still figuring out, but my understanding is that budget was either significantly slashed or it's not there from this year. So, does that impact our business in any way?

Deepak Chand Thakur: I don't think so. But see, it has come out yesterday. We need to get into much more detailing into it. For sure, there is, I don't see the impact because the demand is very high. The fundamentals of India's digital payment and when it comes to, so link it to all the growth, which is associated across various segments, the apps those are getting launched in India, the solutions which are getting launched in India, more and more products, more and more ideas getting online, everything has a demand on payments.

So, that's where I don't see the impact coming in. And at the same time, the moment we say going from 14 billion to 30 billion transaction kind of load that a processing engine has, it demands the upscale in technology. There again, the funds are required. There again, investments are required.

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We being a technology Company, we have the advantage of investments in technology, which ultimately everyone will have to do to scale the performance and the number and the demand which is coming from the industry and at the same time, the platform demand coming from the businesses which are setting, getting either scale the existing one or the new one coming in. So, there I see fundamentally it still remains as is. When it comes to the number which has come out in that budget, we are yet to get into it. We have not dwelled into it.

Rupesh:

So, one clarification. So, I am not clear if there is a MDR on UPI transaction above Rs. 2,000. I don't know if that's in force, but assuming that it is not, at least my thinking is that whatever this budget outlay is for digital incentives, that is a significant part of how the banks and technology players in the industry make money. So, is that not a correct understanding?

Deepak Chand Thakur: That is one of the...

Rupesh:

And there is no MDR, right? There is no MDR.

Deepak Chand Thakur: Absolutely. There is no MDR.

Rupesh: So, then how, I thought that was the primary money from where the players in the ecosystem make money.

Deepak Chand Thakur: No. See, you just understand this thought process very clearly. In order to operate your business around and you need a payment, what do you need? See, we are not an aggregator, right? We are not a payment aggregator. In order for someone to deliver payment solution, they need multiple vendors in the ecosystem.

Right from digital onboarding, there is one who is an expert around it. The other one is purely an expert in recon. The third one has the operation capability. The fourth one has the capability around customer service, where there are several ecosystems. What we have done is we are binding all the ecosystem and there is a cost associated with it. You can't do away with that cost.

So, for sure, what you mentioned is one of the component of income in this particular piece. But the cost of the platform and the cost of technology, the cost of services, that you cannot take away. There will definitely be something associated with the incentives so that MDR can be kept zero. That we cannot take away. That will definitely be there. But the services delivered in the platform made available, there is something we generate revenue. And yes, we provide software on a license model. We provide software on a SaaS model. We have revenue coming in right from change requests to AMCs. So, all that adds to the revenue source.

Rupesh:

Sorry to hop on this, but one final question then, if assuming that there is no outlay for digital incentives, do you see any pressure on your realization in the payment-as-a-service piece?

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Deepak Chand Thakur: I don't see demand going down for this because you can't survive without the platform. That's the requirement.

Rupesh:

I am asking per transaction realization.

Deepak Chand Thakur: Per transaction realization? Yes, there will be the per transaction revenue that we have right now, that will definitely get impacted if at all there is no outlay.

Moderator:

Thank you. Our next question is from the line of Srinivasu from TIA. Please go ahead, sir.

Srinivasu:

Sir, my question is about, can you give me a little light on the product that you are developing, UPI offline that is small payment without any internet connection? And also, are you working on UPI tap and pay that is contactless payment at NSP to enable PoE solutions?

Deepak Chand Thakur: So, offline payment is something which is a combination of software and hardware together. So, it requires a very different mindset than a simple API that we deliver. So, one, we just cannot give a software to generate a QR. That's again, like I always say, you have to focus on the entire value chain and have the integrated piece. So, that's why we have separate approach for Evok and separate approach for Qynx.

In offline payment, we have software where the QR can be generated and at the same time, the software has to be compliant as per the banking policy. There should be a complete process right from maker, checker, officer, and approval, all of that basis which the account can be linked, the QR can be generated. But next what? What about the static QR, dynamic QR, the standee, the digital QR, print, Soundbox? When it comes to Soundbox , the SDK inside the Soundbox .

Soundbox is nothing but it operates like a mobile phone. So, then it requires a SIM card. Then this has to be connected to a certain system so that the text can be sent, and it can be converted to voice and the merchant comes to know that payment has been done. And when that happens the reconciliation around the mobile app, sorry, around the transactions which is delivered over the mobile app to the customer. So, once that is done and the dispute is raised, then how that dispute can be solved by between the merchant and the customer and how bank is empowered to do so.

So, there is a whole gamut of service involved in delivering this offline payment. So, that is what we have achieved so far. And interestingly, we have about you know five, six banks right now where we have the solution going in. That's why we see a great potential coming in from the terminal business in payments. So, that's one.

Second is your tap and pay. So, tap and pay is part of our Go Live for GFF. So, we have almost achieved it. We are at the closure. So, that will be delivered to our customers.

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Srinivasu:

The next question I have is internationally our UPI payment architecture got recognition and there is an increasingly looking for transition, basically transition from card-based payments to account-based payments using the real-time payments. So, there is a demand for modernizing the central architecture. So, I know NPST is working on TSP and payment. Are we also looking into this central infrastructure opportunity?

Deepak Chand Thakur:

We are looking at it very strongly, but it's more than technology, it is the ecosystem that we need to solve, we need to understand. Let us understand, 2016 when UPI came, and we are in '24 and then we have a tremendously evolved ecosystem. When you go to multiple countries, each country has their own challenges. They have their own solution, which is already live. The banks have already invested into certain technology, certain platform. So, how that piece will be taken care? How deep the solution will be integrated? And how well it will be adopted?

So, we see UPI as a great platform which has brought in transformation. But is it the case in those countries where it is going? So, that is why I am saying it is way too immature to right now talk about the numbers or I know you have not asked the number, but I keep getting this question. So, it is way too early for us to right now talk about how quickly international business will contribute to NPST or the industry which is delivering this kind of solution for India and abroad.

What we are supposed to see is closely keep looking at the opportunity coming in from multiple countries, see what kind of technology help or technology support is required. How do we become the proponent of this particular platform in those countries? How do we establish ourselves as a thought leader in this segment so that when you go, you talk, you deliver, people actually take that importance.

So, that is something that needs to be created and I think India is in that phase right now. So, once this is done, the ecosystem is well established. Every country's challenges and every country's requirement is understood. Then it is simply taking technology and the product and increasing the P&U.

Srinivasu:

And my last question is your initial remarks, you mentioned about the new product called Embedded Finance, right? When you say embedded finance, is it a lending product like buy now, pay later, BNPL kind of thing or are you saying insurance or InsurTech or B2B lending?

Deepak Chand Thakur:

I think I touched the topic way too early. So, yes, it is nothing like that. So, what you are referring to is various segments like when you say BNPL, it's a credit segment. When you are talking about some other products, these are various segments. What we are talking about is how do we embed payment into various platforms? This platform is not just mobile app. It can be various other devices. Then this device has the ability to communicate over the Internet. Then is there a possibility to bring payment over it?

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The best example right now for everyone to understand is a watch. So, can I just tap my watch and travel in a metro? So, that's called embedded payment. So, we have embedded the payment in the watch. So, that's what I mean. So, there are certain use cases, which will keep coming.

Moderator: Thank you. Our next question is from the line of Rujuta from ARG Securities. Please go ahead, ma'am. Rujuta: I just wanted to understand what the current TAM is? And also, are there any plans of going from retail-based business to wholesale? Deepak Chand Thakur: There are a lot of discussion around B2B payments in UPI and there has been a discussion around B2B service driven approach in BBPS. So, I believe the industry itself will take us to the wholesale segment. So, as and when this progresses, we will keep investing into building the stack around it, and when that happens so, because we have always believed that our capability is to build a greater technology and better platform and support this kind of solution. So, for that obviously is a very easy decision for us to get into when it comes to wholesale payment. What was your other question? Rujuta: What is your current addressable TAM and where do you see that growing? Deepak Chand Thakur: If I restrict it to certain product, I think, see, I don't have very specific number right now. But I can actually guide you on that. UPI growth is about 300% is what we see in coming 24 months. So, that's the industry growth we expect. At the same time, when it comes to adding new use cases in the merchant payments P2M, I believe that we can add another 100 odd. So, we see that the growth can be 3x to 4x in next 3 years odd. So, that's what I see right now. Moderator: Thank you. Our next question is from the line of Anurag Agrawal, Agrawal Analyst Investment. Please go ahead. Anurag Agrawal: I had a follow-up question on a previous participant's question. Like, if there is no incentives by the government on digital payment in this budget, you mentioned that the realization per transaction will go down. Deepak Chand Thakur: Yes. Anurag Agrawal: And I just wanted to understand what the quantum of could be that? Deepak Chand Thakur: What could be the quantum of that? Anurag Agrawal: Yes. If the incentives are not there, how much could the realization be affected? Deepak Chand Thakur: See, Anurag, I will be very careful in again breaking this up because I know there are people who wrongly compute it. As and when the volume increases, it adds up to the revenue associated

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with the SaaS platform. So, if we take as a whole, I wouldn't say that we have the right number right now. But if you take it as one of the components, then for only one specific component, then for sure it will have an impact maybe, I don't know, maybe 10%, 15% approximately. But what is the volume that gets added to take away this impact? That is something that we need to go back and see.

Anurag Agrawal:

Also sir, I just wanted to understand on the fundraising side, we are raising aggressively to expand, and could you just throw our roadmap to expanding to different products or internationally?

Deepak Chand Thakur:

You are asking specifically to internationally or the overall roadmap?

Anurag Agrawal:

First of all, internationally, and then overall?

Deepak Chand Thakur:

See, internationally, again, I think, I am trying to explain this again and again. Whatever size, shape or ecosystem that exists in multiple countries, like if you go to GCC, you may find all the companies almost having a similar requirement. When you go to Africa, the requirement will be similar. But when you go to Southeast Asia, it will differ.

So, very first thing we need to understand is that we need to reshape our products. We need to reshape the way the solution is being anticipated and accepted by others. So, we need to understand that piece very well. So, that's where we need to invest, one.

Secondly, how strong we are keeping the footprint in those country, what kind of partner relations we have, what are the local compliances basis which the Company will have to go and invest into it? So, those are areas where we will have to invest.

So, we will have to invest into technology, reshaping the solution, identifying the market well and creating a stronger footprint in these areas. So, that's something I believe the organization will have to do and that's where we need to have an investment.

And at the same time, when it comes to the total roadmap beyond international, we see, what we have been doing is every quarter-on-quarter, we are redoing the entire work of calculating what is my resource requirement versus what is the demand. So, from 180, we have gone to 300 plus this time, and if you see '23 to '24, we have gone from 85 odd to 180. So, even if you are scaling twice, we are still seeing the existing demand completely consuming the organization's ability to deliver.

Now, that's where we realize that if we have to have more diversified portfolio, if we need to have much stronger use cases in market, we need to also have an inorganic approach. The inorganic approach can be product driven; it can be business driven, it can be account driven, it can be geography driven. So, for all of that we are raising the fund.

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Moderator:

Thank you. Our next question is from the line of Rahul from 36one Wealth. Please go ahead.

Rahul:

My first question is in terms of your revenue, what percentage of the revenue is ARR and what percentage of the revenue is more transaction driven kind of? That's my first question.

Second question considering the scalability of the business and the scalability of the people in the organization, what do you see, where do you see yourself moving from SME segments to main segment? So, sorry, just to interrupt, the third question is, do you have any ESOPs plan in your mind for the employees as such?

Deepak Chand Thakur: Deepak here. So, three questions. I will pick up the smaller one first. ESOP is already there. We have already declared, I think last financial year, we have already announced it. It is already there. However, what we are trying to do further is, we are trying to further reshape it and make it more demographic so that whatever commitments we had earlier for those people who were associated with us since day one, they were brought into ESOP. So, there is an incentive which was given around it.

Now here onwards, as and when we are bringing leaders and when we are bringing in more people in the organization, we want to make it more rewarding. And that's why the ESOP policy needs to be redone in such a way that without any intervention, it should be a free-flowing reward for everyone.

So, to answer you, short, ESOP exists. It is just that we are redoing it again for the next three, four, five years, as long as possible. So, that's a part of our core policy. Can you question me on the other one?

Rahul:

The second question was, what's the break-up in terms of revenue between ARR and transaction driven?

Deepak Chand Thakur: Ashish, can you take that up? Can you bring it up?

Ashish Aggarwal:

It's somewhere about 20% to 80%. 80% per transaction and 20% is other.

Rahul: So, 80% is ARR and 20% is transaction driven.

Deepak Chand Thakur: So, 80% is transaction. Rahul: 80% is transaction.

Deepak Chand Thakur: Yes.

Rahul: So, just a follow-up question on that line. Do you think so the ARR revenue will bring more stability to the revenue composition?

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Deepak Chand Thakur: Absolutely. Rahul: Do you have any focus in that term? Deepak Chand Thakur: Absolutely. That's the reason why Ashish, you are saying something? Ashish Aggarwal: Nothing.

Deepak Chand Thakur: Sorry, I thought someone said. Yes, see, that's why two of the verticals strongly co-exist in the organization. And when we are bringing leaders, we have VP for the TSP domain, and then we have VP for the platform business also. At the same time, we have started creating a very structured team around where we have a service delivery team separate, we have product team separate, and then we have a platform team separate when it comes to product and technology as well. So, that's how we are focused into it.

So, for us, both are very important. Apart from stability, we also need to understand today, my entire platform is because we were able to build the IP over the technology that we own, we do not have to pay anyone for this. Now that adds to my margin. So, whatever I invest into the processing engine we are building, that creates an IP, and that reduces my dependency on anyone else, and it allows me to build the newer use cases and the platform whatever we see is required in the industry. That's our belief.

Rahul:

My last question. Any plans to move to main segments from SME?

Deepak Chand Thakur: So, we have already declared. We are working for the main board right now. See, there were certain criteria basis which we were to qualify, although we were expecting last year, but then the new rule came in to complete three years as SME. August 10th we will be completing that and then there was I think paid-up capital criteria and then shareholder count. So, our shareholder count has increased substantially. Paid-up capital once the QIB and everything is done, that will also be done and then we are ready to go for main board. We are already prepped up for that.

Moderator: Thank you. Our next question is from the line of CA Garvit Goyal from Nvest Analyst Advisor LLP. Please go ahead. CA Garvit Goyal: Sir, just a clarification on you mentioned about 3x to 4x growth in next three to four years. So, are you talking about the industry or the Company?

Deepak Chand Thakur: I was expecting the question. Industry growth.

CA Garvit Goyal: Industry growth is 3x to 4x, right? Deepak Chand Thakur: That's our anticipation based on the product that we have built.

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Moderator:

Thank you. Our next question is from the line of Aditya, an individual investor. Please go ahead.

Aditya:

So, I just want to know what exactly are triggers for NPST in next one or two years. That's it. Because there are so many buzzwords going on. CBDC on the last call, E-Rupee on the last call and embedded finance in the GM, then BBPS. Although we have started working on BBPS and ODR, but what exactly could be the revenue contributing streams in next one to two years?

Deepak Chand Thakur:

We need to understand, Aditya, that there is always a peak for a particular product or solution, and then there is always a growth and then there is always a maturity curve. So, that is standard for everything that we build, if we apply that how we have learnt in our MBA school. We believe that we cannot stop anywhere when we start building a solution.

So, far if you ask me triggers right now, every single product that we are building and every segment that we are trying to enter, we believe it will give a trigger and at the same time, it will allow us to diversify into new segment. As and when we move to a maturity curve for a particular product or a solution, the other product will take us to the growth stage. So, that's how it will start stabilizing or I would say fundamentally which just start picking the organization every now and then.

So, BBPS we see is something that is going to be very basic. As soon as RBI announced that credit card transactions over BBPS, imagine the volume it brings in. We did not anticipate this trigger to come in BBPS, but being there, building that product , it allows us to be there whenever such opportunity comes in.

Credit line, I think there was a discussion around what kind of MDR can be brought into credit line and the moment we start building it up, as soon as there is an interoperability in this, for sure it creates a great opportunity for the merchants and the aggregators with whom we are working right now. It's important to stay there.

So far I see that trigger is present across all the products and solutions that we are working on. There is a possibility that certain products we may work on may not give us an ROI or may not give us a return. That's why we want to split our investments into multiple areas. Where it does not work, we need to have something else to do so. So, for right now, I think, in fact, this segment - is so disruptive that every quarter on-quarter, you need to re-look at what triggers will come into your business.

Aditya:

So, that is the main thing which is creating confusion more in my head. So, I will reframe my question. What I am trying to ask is which of the APIs are the first one to get commercialized? The APIs which are ready by NPST and are floated in market and revenue can come any time in next one quarter, two quarter, one year or one-and-a-half year, two years, whatever.

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Deepak Chand Thakur:	There are three focus areas. One is, how do we attract the subscription-based business? So,
	AutoPay is there. That's the trigger. Second is your…
Aditya:	API for AutoPay is ready, sir?
Deepak Chand Thakur:	It's tested already. We are looking more on the operationalizing it. It is part of our GFF launch.
Aditya:	First one is API, AutoPay, yes.
Deepak Chand Thakur:	So, when it comes to technology, I will always say it's there. And last quarterly call, I rectified.
	I said that we did a mistake of declaring the date way too early because we realized that tech can
	be taken care, but when it comes to ops and compliances, we now need to give more time to that
	rather than just tech. So, I believe that the operation piece will be taken care in next by August
	10th and probably Q3, we are seeing the numbers. It's already tested. It's done. Second is our
	payout API. And third is our third-party verification API over API. So, these are the products.
Aditya:	Payout API and third-party verification.
Deepak Chand Thakur:	Yes.
Aditya:	So,what exactly we are doing in third-party verification?
Deepak Chand Thakur:	It allows you to validate before making a payment that this is the right customer.
Aditya:	And next, and one area of commercialization could be the State Bank of Mauritius partnership
	also, right?
Deepak Chand Thakur:	That's more from the diversification perspective and strengthening the engine further. Yes, that's
	one.
Aditya:	So, three focus area and one State Bank of Mauritius. That's it from my side.
Moderator:	Thank you. Ladies and gentlemen, that was the last question for the day. I now hand the
	conference over to Jainam Savla for closing comments.
Jainam Savla:	Thank you everyone for joining the conference call of NPST Limited. If you have any query,
	you can write us at info@kirinadvisors.com. And once more, thank you to the management team
	and participants for joining the conference call. Thank you.
Moderator:	Thank you. On behalf of Kirin Advisors, that concludes this conference. Thank you for joining
	us, and you may now disconnect your lines.

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