Info Edge (India) Ltd Management Discussions

introduction

As economic activity gained traction post the COVID-related disruptions, Financial Year 2023 (FY23) brought with it a new round of challenges and opportunities. The only positive spin off from the last few years, is the accelerated absorption of digitisation across the globe. Internet penetration has got a fillip and the world is now much more connected over the web, in terms of actual ways of working and living. Disruptive technologies, like the deployment of Generative Artificial Intelligence (AI) and Machine Learning (ML), are ushering in a lot of change. Global economies are on revival track however, there are pockets of recession and severe slowdown in some advanced economies.

Info Edges strong legacy of pioneering digital penetration in the country is well established over the last 2 decades. As a Company, it continues to focus on creating and leveraging market leadership in its operating businesses and makes investments into businesses that have significant potential in the industry. With a focused approach that constantly drives at enhancing efficiencies and servicing new opportunities, Info Edge has emerged as a leader in all the business domains where it operates. Essentially, the Company is entering into a new realm of transformation, with the effective adoption of modern technology tools like AI and ML to create state of the art digital support platforms in the markets where it operates. To execute this vision, the Company is also enhancing its resource pool with appropriate skill sets that can deliver on the vision.

Info Edge maintained its strong growth momentum in FY23. While each of the independent businesses are dealing with different emerging opportunities and challenges, the Company remains committed to its objective of continuous value creation and maintaining/establishing market leadership in its operating businesses.

the

business

structure

As the Companys business grows and evolves, Info Edge has worked on reorganising itself to develop an effective organisational structure that supports its business ethos and objectives in the long term.

The business has two specific arms - an operational business and an investment business.

Capital allocation across the different lines of business is well-defined and sufficient assets are maintained in cash and cash equivalents, to cater to any financial risks associated with the core business operations. It is important to note that much of todays business performance and cash generation is from the Companys operational business, while the investments are in different stages of development with the objective of long-term value creation.

The core business verticals, namely recruitment, real estate, matrimonial and education are also entering into a new phase of development, with a much higher level of digital absorption across the markets. While each of the businesses has attained market leadership, they are in different stages of their maturity and development cycle-in line with the domain where they operate. Within each domain as well, there is concerted effort to enlarge the bouquet of services and create greater revenue streams, while continuously striving to maintain market leadership.

The core activities are supported by a series of Strategic Investments in the Operating Business. The investments range from 100% ownership to majority ownership and even minority investments, depending on the relevance, longterm vision and operating partners goals. These investments are primarily made into services and products, that complement and form an integral part of the developmental roadmap of the four

core business platforms. Consequently, they are an essential element of the overall value proposition being offered by each of the operating businesses. They provide specific market segmentation for focused business development or act as a critical backend function that supports/ enhances the servicing capability of the core brands.

Each business in the portfolio - core and strategic investments - are managed and operated by independent teams with well-defined management leadership. The business organisation provides independence for innovative thinking and business growth within the contours of well-defined operational controls. Consequently, each of the businesses develops independently and executes its respective plans within a structured system of corporate controls.

The different businesses are supported by shared, centralised corporate functions that primarily include finance, legal, treasury,

facilities management, IT Infrastructure and human resource development. Not only do the centralised corporate functions assist in execution of the independent businesses but also play a critical role as a supervisory command centre. Centralisation of these functions important to be able to set up teams with the right level of expertise and domain knowledge, that only a certain scale of operations can support.

Given the strong cash generation in the core business and maintenance of financially prudent cash reserves, Info Edge has invested into businesses in the online space with the objective of getting returns from long-term value creation. Today, the financial investment business is de facto vertical in the Companys business portfolio. The Investment Business includes a series of fund infusions into diversified entities, that have significant value creation potential over a period. Each of these entities are managed independently. The successful investments in this portfolio translate into significant value creation over a medium-to long-term period.

This segment of the Companys business has been evolving in a structured manner over the last few years. Today, there are three kinds of such investments:

• Direct investments, through wholly-owned subsidiaries or through majority-held subsidiaries, into entities that have been listed in public capital markets.

• Direct investments, through wholly-owned subsidiaries or through majority-held subsidiaries, into entities that are in an early stage of development and are being pursued for long-term value creation.

• Investments into new businesses through investment vehicles like Alternate Investment Funds (AIFs).

In FY22, market value realisation was witnessed for two investee companies - Zomato Limited (Zomato) and PB Fintech Limited (Policybazaar) - that had successful Initial Public Offerings (IPO). While the exercise was the first case of effective nurturing and market-based value determination of our investee companies, the strategic road ahead for the investments made into these businesses is being internally evaluated.

To further streamline this high value-creating business investment portfolio, the Company has worked on creating a structured investment vehicle through specific investment funds in the last couple of years. There are three AIFs with

around 50:50 partnership with MacRitchie Investments Pte. Limited, an indirect wholly-owned subsidiary of Temasek Holdings (Private) Limited. These funds are:

• Info Edge Venture Fund with primary focus on Consumer Tech Companies:

? First Scheme - $100 Million.

? Follow-on Scheme- $100 Million that focuses on the second round of funding, for companies progressing successfully with the first round of funding.

• Info Edge Capital-Corpus $150 Million with primary focus on Consumer Tech companies.

• Capital 2B-Corpus $75 Million with primary focus on companies leveraging deep tech and patents.

Through this fund-based vehicle of value investments, the Company has a more structured system of external investments with robust risk management processes. The funds business has a focused management team, that has specific skill sets to deal with the investments, to make the process of value creation more consistent and sustainable. There is a well-defined capital commitment from Info Edge into these funds over the next three-year horizon.