intellect design arena ltd share price Management discussions

MANAGEMENTS DISCUSSION AND ANALYSIS RWPORT

1. Overview

I. INTRODUCTION

Intellect is the worlds largest cloud-native, API-led microservices-based multi-product Financial Technology platform for Global leaders in Banking, Insurance, and Capital Markets. We offer a full spectrum of banking and insurance technology products through three lines of business - Global Consumer Banking, Global Transaction Banking and IntellectAI. We partner with institutions in these domains and help them in their Business and Operations transformation agenda. We have a deep understanding of these domains, working with global leaders for over three decades. Over this period of time we have significantly invested in developing differentiated Intellectual Property assets - architecturally superior Technologies, Products and Platforms with unparalleled depth and span of functional richness that helps banks and financial institutions accelerate their growth and transformation agenda. We have flexible Business models that suit the multiple investment and risk appetites of our customers.

Our algorithmic delivery methodology is robust to ensure defect free, on time deliveries while being agile and sensitive to the dynamics of our customers priorities. Over the years, we have won the trust of global brands across geographies and they trust they reposed in our ensure that they become our net promoters. Global analysts too have recognized the technology superiority that we bring to this space and have repeatedly awarded us for our products, platforms and architecture. Our instilled DNA in Design Thinking gives us the edge to create differentiated products and platforms.

Intellect has over 270 customers spanning 57 countries and with a diverse workforce of solution architects, domain and technology experts in major global financial hubs around the world.

II. OUR CUSTOMERS AND THEIR PRIORITIES

Our customers are Banks catering to the entire segment: be it Retail or Corporate customers, Central Banks, Wealth Managers, Private Bankers, Card issuers, Capital Market participants such as Brokers, Custodians, Asset Managers, Insurance Carriers, Government enterprises and Retail chains. We offer them Products and Platforms to drive their transformation agenda and in the process help them modernize their Technology, drive customer centricity, support their growth aspirations, deliver efficiencies and in the process enhance their profitability as well.

As consumers of banking and financial services, all of us have personally witnessed the pervasive impact of technology in this space. Technology has become the single biggest lever of competitive edge in this domain. While so, the diversity of our Customers - coming from different geographies, at different stages of technology journey, operating under different regimes of regulation / data protection, facing different textures of competition and finally catering to different customer sets- introduces multiple variants of priorities. Applying Design thinking to this problem statement, we observed the following patterns in the Industry:

1. Intense competition from incumbents and new challengers - Fintechs, digital entities, ecosystem players have steeply increased the need for innovation, speed and agility. Institutions wish to design, configure and customize offerings and take them to market quickly, fine tuning them as market needs evolve. COMPOSABILITY thus, is a key ask

2. To be responsive to Customer needs, Banks and FIs seek to know more - about the customers, competition, market trends and developments and the like- so that their decisions and actions are best tailored. Thus, CONTEXTUALITY becomes the second key ask. Needless to add, Decision grade data is the key to providing Contextuality

3. The advent of the digital era - had already brought in two facets of Digitization - EXPERIENCE and EFFICIENCY. Experience became a given ask at every touch point and channel. To deliver an end to end experience, seamless/ straight thru processing at the back end was required, taking care of related workflows, business rules, entitlements and exception handling. Thus EXPERIENCE and EFFICIENCY became two sides of the same coin - Digital In and Digital Out, as we put it

4. The mission critical nature of the applications - running real time across time zones, geographies, currencies and supporting peak volumes with a committed response time - demanded the ability to scale up to support business growth delivering high performance - HYPERSCALE , HIGH PERFORMANCE

5. With Platforms, Marketplaces and Ecosystems taking center stage, interoperability, seamless data exchange, and integration with other applications within and elsewhere - became a must.

This requirement was further accelerated by the Embedded Banking phenomenon, where a Banking interaction could be triggered from just about any engagement or User journey. This created the demand for Open, Cloud native architectures with Microservices that could function as independent applications by themselves and Application Programming Interfaces (APIs) that would help them communicate with each other. As Banks and FIs turned to technology to answer their business asks, they also had to catch up on their technology, depending on their current stage.

This meant the allocation of available dollars between maintaining current Lights on platforms and the Upgrade programme. Often, the rich information cache in their current systems and the switching costs made their transformation programmes near impossible. So, these institutions sought a way to keep the best of both worlds

III. HOW HAVE THE FIVE WAVES OF TECHNOLOGY REVOLUTIONISED THE FINANCIAL SECTOR?

Technological developments have resulted in significant transformation in the financial sector over the past few decades. Five distinct technological "waves" can be used to categorize this transformation. Financial technology products and services have grown more complex over time, with each wave building on the one before it. These developments have made it simpler to access financial markets, speed up transactions, and improve consumer experiences. There have also been challenges such as data privacy concerns and cybersecurity risks.

1. In the first wave, manual processes were replaced with mainframes and computers. This made it possible for banks to manage higher volumes of transactions effectively.

2. The second wave led to automation of Branches and introduction of individual systems such as Payments. This wave evolved to the adoption of databases and client/ server technologies that paved way for powerful desktop based Analytics.

3. In the third wave, Banks leveraged the internet to launch connected services, web applications eventually graduating to Mobile Apps with the launch of the smartphone - simplifying Banking, anytime, anywhere.

4. The fourth wave witnessed the advent of the Cloud that catalysed the growth of Cloud hosted applications laying the foundation for Platforms and Marketplaces, that could bring together multiple complementing applications and service providers and deliver greater value to customers.

5. The current wave - BankTech Wave 5 blends open architectures such as Microservices that could act as independent applications, APIs - Application Program interfaces - that help these services to communicate with each other with the scalability of Cloud platforms and the power of Data - Artificial Intelligence/ Machine Learning that lends contextuality to the Applications.

IV. HOW DOES INTELLECT ADDRESS THESE REQUIREMENTS-OUR TECHNOLOGY INVESTMENTS

Intellect has been consistently ahead of the curve, investing in platforms and technologies that would meet the above asks. Intellects products had a unified architecture that was MACH compliant - API-led, microservices- based and cloud-ready, with an option to adopt the headless engine and build the Experience layer on it. This enabled offering Packaged Business capabilities (PBCs) for each Bank vertical, which addressed the demands of Open architecture and Composability. Banks, Insurance companies and FIs could compose/assemble their own Product bundles, best suited for their customers and Markets rather than work with a Monolithic product.

Pre-published APIs ensured interoperability with other Applications within the organization or in the Ecosystem.

iTurmeric, Intellects MACH composable platform simplified Design of User Experience, Integration with the Ecosystem and Process orchestration, qualifying as a best-of-breed Cloud/ Digital acceleration platform, where legacy applications can co-exist while transitioning to the target end state. Intellects Data platforms - Fabric Data Services (FDS) and Intelligent Document Extraction (IDX) take care of the Data lifecycle - sourcing from multiple structured and unstructured sources including hard copies, cleaning them, validating them, enriching them and offering them for decisions.

Intellects Contextual Banking Operating system (CBOS) accelerates adoption with limitless configurability with ready PBCs and APIs/ connectors to back end product processors and channels, with the flexibility for Banks and FIs to design the Experience layer to their preferences - while offering the robustness for hyper-scale, high performance.

To cap all of these and to answer the demands of BankTech Wave5, Intellect launched eMACH.ai in FY23.

WHAT IS eMACH.ai?

eMACH.ai, the most innovative open finance platform that offers banks and financial institutions the ability to compose their own unique "My Signature Solution.". It converges and synthesizes all of the IP assets described above - 285 Microservices, 200+ Events, and 1200+ APIs, offering a plethora of possibilities to match the imagination of Financial Ecosystem Designers and their customers alike.

This powerful combination of MACH architecture and AI helps in

1. Enabling Composability of Applications by assembling Microservices, connecting them through APIs and integrating with other Applications/ Ecosystems using iTurmeric - Intellects MACH composable low code platform. This facilitates faster/ agile design of Products and faster time to market

2. Leveraging Embedded AI for delivering greater operational efficiencies, with more straight through processed transactions, reduced cycle times and greater data accuracy

3. Harnessing the power of Data to provide contextuality that could power hyperpersonalization and sharper decisions guided by decision grade information.

4. Progressive migration from earlier generations of Technology without losing the insightful data residing therein

5. These technologies and platforms equip our Products across Lines of Business with Composability and Contextuality apart from delivering high-quality Experience and Efficiency - now a given in the Digital journey. Through pre-published APIs, Packaged Business capabilities (PBCs) and Microservices and by collaborating with our Marketplace partners, we offer our Customers - who are contemplating a Business or an Operations transformation - the flexibility to choose from a repertoire of Products, Platforms, Technologies and Accelerators, all of which have won multiple accolades across the Globe, with an assured robust and agile delivery commitment from us.

V. HOW ARE WE ORGANISED AND WHAT PRODUCTS & PLATFORMS DO WE OFFER?

Intellect is organised along the lines of the verticals that it serves. There are two Banking verticals - iGCB (Intellect Global Consumer Banking) and iGTB (Intellect Global Transaction Banking) - addressing the requirements of the respective Banking verticals. Recently, iRTM (Intellect Risk, Treasury and Markets business) unit merged with iGCB. IntellectAI comprises Insurance and Wealth business. The insurance business was previously Intellect SEEC.

The key products and platforms offered by these Business Units are: iGCB - Intellect Global Consumer Banking:

• IDC - Intellect Digital Core suite built on eMACH.ai & hosted on the cloud is a Core and Retail Banking platform for contextual, real-time

Banking - integrating Retail Banking, Lending, Digital Banking and Channels with intuitive dashboards and analytics. Live in the UK and in Growth markets, this is sought after by New Bank Licensees, Digital Challenger Banks and Banks that seek to transform their Core platforms.

• iKredit360 - With the boundaries of ecosystems blurring, there is a huge opportunity for banks, eCommerce players, and NBFIs to think beyond traditional lending products and deliver an integrated experience across the credit ecosystem. iKredit360 is a comprehensive and composable technology platform, driven by eMACH.ai, that enables institutions to curate unique credit experiences to merchants, channels partners and end consumers.

With its ability to converge multiple elements such as internal and external systems, AI driven decision support, financial products such as Loans and Cards, credit lifecycle management, Collaterals and Dispute Management and fintechs, iKredit360 empowers financial institutions to expand and extend their credit experiences to become the primary engagement point for their customers. The platform has live installations in both Advanced and Growth markets, registering wins in non-traditional segments such as BNPL (Buy Now Pay Later) and Point of Sale credit origination

• Intellect Quantum Core, a Market leading Central Banking suite, is the contextual and composable open finance platform for meeting the unique requirements of Central Banks. Functions such as Currency Management, Treasury, Debt Management, Government Accounts, Payments, Citizens portal, General Ledger, FX Management are the highlights of this technology offering. A de facto category leader, Quantum drives the largest and most complex Central Banks across Growth Markets and Europe and is invited for every Central Banking transformation conversation

• Intellect Capital Cube, is a combination of Treasury and Asset Liability Management with high end capabilities for Risk Management, Liquidity Management, Treasury, Trading Analytics , Capital adequacy and Customer servicing. The product has a significant footprint in Growth Markets apart from powering the multi continent Treasury Operations of the Worlds Leading Bank in Treasury Operations. The Product also finds Markets in other Financial Institutions such as Central Banks, Insurance Cos and development finance institutions

iGTB - Intellect Global Transaction Banking:

• CTX - Corporate Treasury Exchange - driven by eMACH.ai supports Corporate Liquidity management with intelligent functionalities for Cash concentration, Sweeping, Investments and consolidation across geographies, currencies and categories. A Market leader supporting a- fourth of Global cross-border MNC sweeps, the Product has presence with the Market leaders in all key Geographies and supports Virtual Accounts Management and Escrows as well.

• Paycash CX, powered by eMACH.ai, enables payment processing and orchestration through pre-defined, intelligent workflows that aggregate across payment channels and address the payment cycle end to end, ensuring a very high level of straight-through processing, supporting Limits management and Remittance repositories as well. The Product has significant presence in North America and Asia.

• Digital Transaction Banking suite (DTB), driven by eMACH.ai, enables Banks to deliver a seamless experience across the Corporate Financial supply chain, enabling them maximise fee income, improve cross-sell and address the effectiveness of the Banks distribution channels. A category leader in Growth Markets.

• iColumbus.ai, the Next-gen Trade and Supply Chain digitalisation with AI, ML, NLP and Computer Vision, is built on the worlds largest platform eMACH.ai leveraging native artificial intelligence to harness the power of paperless trade, the openness of a digital marketplace, advanced contextual data analytics, and superior limits management and risk distribution. All available through superb omni-channel UX, for sustainable trade and supply chain finance.

IntellectAI:

• Magic Submission, fueled by eMACH.ai, is a sophisticated, purpose- built, AI solution that extracts only necessary information from any document normalises the information to the carriers target models, validates the information, enriches the document with relevant insights through triangulation from thousands of external sources and provides a simple human in the loop exception handling user experience. ML feedback loops ensure continuous learning. The tool is best in class and uses scientific techniques to make human-like judgement calls in real-time for business scenarios.

• Intellect Xponent and Risk Analyst build on the capabilities of Magic Submission and empower the Underwriters and Risk Managers with decision grade insights, predictive analytics and AI driven algorithms to deliver faster and more reliable quotes

• iESG - a global ESG solution designed for financial institutions. The AI- powered intelligent data sourcing solution, built on the worlds largest platform eMACH.ai, is designed for financial institutions seeking to embed ESG intelligence into their business processes and in evaluation of investment opportunities based on Industry standard ESG guidelines

• WealthForce.AI, powered by eMACH.ai, enables exponential growth with our embedded AI and data-driven, intelligent Relationship Manager platform, designed to supercharge revenue, customer experience and engagement. It is a BIAN-aligned, revolutionary offering designed to enhance the productivity of relationship managers, while ensuring hyper-personalization in each customers wealth journey.

• Intellects WealthQube, driven by eMACH.ai, is targeted at Wealth Managers, Private Bankers, Advisory firms and Independent Financial Advisors. Organized around Offices, desks and tools, the product addresses the priorities of the Relationship Managers of better engagement with and providing intelligent advise to their clients through a 360 deg view, apart from the ability to transact across Exchanges, currencies and asset classes. The Product has established a footprint with key clients in Growth Markets.

• Intellects Capital Alpha and Capital Sigma - support the Market operations of Brokerage and Custody, complementing the Wealth Management function with the ability to handle multi currency, multi Exchange settlements, integrating the Front, mid and back offices. These products have won approvals from Stock Exchanges in several countries in Growth markets

All of these products have won multiple accolades and ratings from leading Analysts and awards for customer implementations. These have been detailed earlier in this report.

OTHER PLATFORMS:

Government eMarketplace (GeM) Platform - Intellect operates the Government eMarketplace portal (GeM) as a Managed Service provider along with our consortium partners. This platform witnessed a GMV of more than Rs. 200,000 crores, reflecting a 100% growth when compared with FY22 and will continue to have a robust growth in subsequent years, as more State Governments, Departments and Public Sector Enterprises get onboarded and transact on the portal.

VI. WHO ARE OUR COMPETITORS?

Given the spread of our product portfolio as well as geographic reach, we do not have a single or a few competitors across the board. Competition varies with product / Line of Business and Geography. In Consumer Banking, our competitors are, Thought Machine, Temenos, nCino, Oracle Flexcube, Infosys Finacle and TCS BaNCS. In Corporate Banking, we have Finastra, Bottomline Technologies, ACI, Reval competing against us, while in Treasury, its Finastra, Guava and Finacle. In Insurance, we compete with Guidewire, Duck Creek and Carpe Data.

VII. WHY DO WE WIN?

We differentiate ourselves by applying Design Thinking in every facet of our Business process - development of products, adopting technology, deployment of frameworks that demystify understanding of domain and technology, building and adoption of low coding platforms that accelerate development of robust and yet agile products that the Market demands and in delivering them in full and ahead of schedule to our Customers. These have been dealt with in detail earlier in this Report.

By this differentiated approach, we deliver significantly higher value to our customers both in supporting their revenue growth and simplifying operational processes, increasing throughput, reducing turnaround times and costs.

In each of the waves of technology outlined earlier, we have invested ahead of the curve - be it Service Oriented Architecture in the mid 2000s, Complete Digital technologies to address both the User Experience as well as Internal architecture, Cloud native platforms and technologies , Data and AI/ML technologies - that has prepared us to address the opportunities that each Wave opens up.

Our unified MACH architecture eliminates several risks associated with assembling disparate systems, apart from delivering consistency and integrity of data across applications.

These have helped us qualify in detailed assessments of Technology / Architecture by Tier 1 Banks in Advanced Markets, competing with both established, traditional players as well as new age startups. In addition, the functional depth of our Product suites/ Platforms as well as the flexibility we offer our Customers in designing commercial engagements put us ahead of competition.

VIII. WHAT IS OUR BUSINESS MODEL?

We operate in three Business models

1. Traditional Product Sale Model: In this model, we License the Product to the customer for use on-premise. The customer also pays us for maintenance of the Product during the period of License. We also earn revenues in implementation of the Product and for any customization carried out for the customer. We also work with some customers in supporting the Product and the business over the period of License with on-site presence of personnel / remote support. Our License revenue stood at Rs. 3,303 million and Maintenance revenue stood at Rs. 3,818 million in FY23.

2. Customer Centric Partnership Model: We collaborate with the customers as their Strategic Technology partners and work with them on their Technology/ Business roadmap. As this blueprint is translated to action, we take on implementation / support roles for their Business or Operations transformation agenda. We are paid for our services apart from any Intellectual Property licenses that we may grant them for use in this transformation journey.

3. Cloud deployment/ Subscription based Revenues: For customers who do not wish to take on the investment in Technology Infrastructure and/or the complexity of managing them, we offer our Products and platforms on the Cloud deployment model - either in a unique hosting arrangement or through an independent Cloud Services provider. We receive revenues thru Product licensing, Cloud set up, Hosting, Subscription revenues - either fixed or linked to Customers Business metrics. Our subscription revenues stood at Rs. 4,610 million in FY23.

Together-License, Maintenance and Subscription revenues - are termed License linked revenues and is an important metric for a Software Product Co. Intellects License linked revenue in FY23 stood at Rs. 11,731 million compared with Rs. 10,570 million in FY22. Intellects License linked revenue grew at a compounded annual growth rate (CAGR) of 24% over a 5 years period.

Based on the customers investment appetite and Business plans, we draw up flexible arrangements to work with them to suit their priorities and resource profile.

IX. HOW ARE WE CONFIDENT OF THE FUTURE

Our calibrated journey to market leadership in Financial Technology continues to drive growth in Revenue, Licensed linked revenue and Recurring revenues that increased at a 5 year CAGR of 16%, 24% and 34%, respectively. All four levers-Product to platform journey, selected partnership strategy, large to mega Digital deal winning and enterprise-wide Digital Transformation implementations bring joy and fulfillment to all of us at Intellect.

The power of design thinking is driving better and faster deliveries resulting in maintaining a cash reserve of Rs. 5,477 million and a robust CAGR in Gross margins, EBITDA and PAT by 19%, 49% and 42%, respectively.

FY23 also marked completion of Intellect 2.0 - the second phase of Intellects journey where we focused on Industrialisation of Products and Platforms, Customer centric growth and Monetization of IP assets. The above results are an outcome of our investments in 2.0 journey. Our leadership team collectively engaged in Lakshya 2023, our visioning exercise for the next 3-5 years of our roadmap. We summarized our thoughts from this detailed exercise as below

1. Our current products and platforms are likely to witness accelerated growth over the next 3-5 years

2. The profitability from these would improve during this time frame leveraging on the investments already made, better referencing and the advantage of our Architecture

3. We will progressively expand our footprint into new geographies as opportunities unfold based on affinities from existing Customer installations

4. We will incubate more platforms as future bets for growth

5. We will build a strong Partner Ecosystem, for which we have laid the foundation in FY23, to expand our footprint as well as collaborate technologically for greater reach

6. We will build on our relationship with our rich Customer base to be their Technology partners in Migrating to Bank Tech Wave 5 from their current states

With the appropriate design of organization, talent, systems & processes, business models, technology & infrastructure, brand building and funding, we are confident that we will further accelerate our growth and profitability in Intellect 3.0

2. FACTORS IMPACTING OUR RESULTS OF OPERATIONS

Our Companys consolidated revenue from operations (including other income) for FY23 was Rs. 22,826 million and the consolidated profit after tax for FY23 was Rs. 2,686 million. Our Companys standalone revenue from operations (including other income) for FY23 was Rs. 15,145 million and the standalone profit after tax for FY23 was Rs. 1,340 million. A strong growth in revenue and consistent profitability was achieved on the back of robust deal wins, execution of new digital platforms and increase in business from existing customers, reflecting the Companys ability to consistently acquire new customers and execute more recurring business from existing customers.

Other factors

In addition to the above factors, the following factors could cause actual results to differ materially from our expectations:

1. Overall global economy;

2. Changes in fiscal, economic or political conditions in India;

3. Companys ability to successfully implement its strategy and its growth and expansion plans;

4. Increasing competition;

5. Changes in the value of the Indian rupee and other currencies; and

6. Regulatory changes pertaining to the BFSI industry in which our Company operates and our Companys ability to respond to them.

3. Principal components of our Consolidated Statement of profit and loss

Revenue

Our revenue consists of:

a. Revenue from operations

- Our revenue from operations comprises revenue from our three business verticals viz., Global Consumer Banking, Global Transaction Banking and IntellectAI.

b. Other income - Other income consists of interest received on deposits with banks, interest on other financial assets, dividends from investments in mutual funds, profit on sale of investments, provision for diminution in value of investments, miscellaneous income, net profit on sale of assets and net gain on foreign currency transactions and translation (other than those considered as finance cost).

As per the Consolidated Statement of Profit and Loss, our revenue from operations and other income for FY23 stood at Rs. 22,313 million and Rs. 513 million, while it was Rs. 18,782 million and Rs. 405 million, respectively for FY22.

Expenses

Our expenses comprise employee benefit expenses, other expenses and finance cost and depreciation and amortisation expenses. Our total expense, as per the Consolidated Statement of profit and loss, for FY23 stood at Rs. 19,208 million and Rs. 15,080 million for FY22.

Tax expense

The current tax expense is recognised at an effective tax rate as applicable to the entities in the Group in accordance with the relevant tax regulations in the jurisdictions such entities operate.

RESULTS OF OPERATIONS FOR FINANCIAL YEAR 2022-23 COMPARED TO FINANCIAL YEAR 2021-22

Revenue

Our total revenue comprises revenue from operations and other income as per the Consolidated Financial Statements, increased by 19% from Rs. 19,187 million in FY22 to Rs. 22,826 million in FY23.

Revenue from operations

Our revenue from operations increased by 19% from Rs.18,782 million in FY22 to Rs. 22,313 million in FY23. This increase is primarily due to a higher number of Go lives of Digital transformations executed in FY23 than FY22 and a consistent growth in license linked revenues.

Other income

Our other income increased by 27% from Rs. 405 million in FY22 to Rs. 513 million in FY23 primarily due to an increase in interest income from bonds by Rs. 104 million in FY23.

Expenses comprises the following:

Employee benefits expense

Our employee benefit expenses comprise salaries, wages and bonus, contribution to provident and other funds and post employment/ retirement benefits expenses like gratuity etc. During FY23, the Company incurred Rs. 11,444 million whereas we incurred Rs. 9,214 million in FY22 reflecting an increase in expense of 24%. Such an increase is due to higher number of employees in line with increase in operating activity, investments in Platforms and increase in compensation for Associates of the Company.

Depreciation and amortisation expenses

Our depreciation and amortisation expenses increased by 25% from Rs. 976 million in FY22 to Rs. 1,215 million in FY 23, the increase is on account of depreciation and amortisation on additions to tangible and intangibles assets, respectively.

Finance cost

Our finance cost decreased by 25% from Rs. 42 million in FY22 to Rs. 32 million in FY23. Finance cost primarily relates to notional interest on leases and advances from customers recognised in accordance with IND AS.

Other expenses

Our other expenses increased by 34% from Rs. 4,847 million in FY22 to Rs. 6,517 million in FY23. As operating activity increased and the Company made investments in Platforms, there was an increase in the cost of software packages, consumables and maintenance, technical subcontractors. Increase in business development and marketing activity led to an increase in travelling expenses.

Profit after tax

As a result of the foregoing factors, our total consolidated profit after tax has decreased from Rs. 3,504 million in FY22 to Rs. 2,686 million in FY23.

Dividend

The Board at its meeting held on May 11, 2023 has proposed a final dividend of Rs. 2.50 per share at face value of Rs 5 for the financial year ended March 31, 2023, subject to the approval of shareholders at the ensuing Annual General Meeting and if approved would result in the cash outgo of Rs. 339 million.

Cash position

Historically, our primary liquidity requirements have been to finance our working capital requirements for our operations and for capital expenditure. We have met these requirements through cash flows from operations. The Company continues to maintain liquidity through robust collection management. As on March 31, 2023, we had a cash position of Rs. 5,477 million, as against Rs. 5,589 million in FY22 as summarised below:

	Financial Year
	2022-23	2021-22
Investments - Refer note 10(a)	3,112	3,638
Non-current bank balances - Refer note 6(b)	1,394	363
Bank balances other than cash and cash equivalents - Refer note 10(d)	32	126
Cash and cash equivalents - Refer note 10(c)	939	1,462
Total	5,477	5,589

Table No. 6.1

Lease liabilities

As on March 31, 2023, the Company has no debt obligations, other than lease obligations and has only availed non-fund based credit facility in the form of various bank guarantees furnished on our behalf.

Trade payable and other financial liabilities

Our Company has trade payables that primarily include payables relating to GEM and other back-to-back payables against corresponding customer receivables. Other financial liabilities primarily include provision for annual performance driven pay for FY23.

Other current liabilities

Includes primarily customer advances (including advance billing to customers based on contractual terms) that enables the Company to manage its working capital efficiently.

Off-balance sheet arrangements

We do not have any off-balance sheet arrangements, derivative instruments or other relationships with any entities that would have been established for the purpose of facilitating off-balance sheet arrangements.

Related party transactions

We confirm that none of our debtors are related parties within the meaning of Accounting Standard IND AS-24, other than as disclosed in the financial statements.

Key financial ratio analysis

Below are some of the key ratios indicating the financial status (based on consolidated financials)

Key ratios	March 31,2023	March 31,2022	Management comments (only material variances)
Current ratio	1.75	1.85	-
Return on net worth	14%	22%	Decrease is due to increase in net worth and investments made in Platforms during the year.
Debtors turnover Ratio	5.90	7.79	-
Interest coverage ratio	115.01	97.74	Our Company has become debt free and increased its capacity to service interest obligations that comprises notional interest on lease and advance from customer in accordance with IND AS.
Debt equity ratio	0.01	0.01	-
Operating profit margin	16%	22%	Decrease is due to investments made in Platforms in FY23
Net profit margin	12%	19%	Decrease is due to investments made in Platforms and increase in tax expense in FY23.

Table No. 6.2

Qualitative disclosure about Intellect risk

The detailed overview regarding the risk and uncertainties which the Intellect is subject to along with the mitigation strategies is described in detail in the Directors Report under " Risk Management" Section.

Also, the systematic risks arising on account of Technology disruption is covered in detailed manner in Intellects sustainability report. Also, other material business conduct and sustainability issues pertaining to environmental and social matters that present a risk or opportunity to Intellects business, rationale for its identification and approach to mitigate those risks along with its financial implications are provided in the Business Responsibility and Sustainability Report.

Known trends or uncertainties

Other than as described in the Risk Management section of the Directors report to our knowledge, there are no known trends or uncertainties that are expected to have a material adverse impact on our revenues or income from continuing operations.

Seasonality of business

Our Companys business is not seasonal.

Significant developments after March 31, 2023 that may affect our future results of operations

No circumstances have arisen since the date of the last Financial Statements which materially and adversely affect or is likely to affect, our trading or profitability, or the value of our assets or our ability to pay our liabilities within the next 12 months of the date of the last Financial Statements as disclosed.

There is no development subsequent to March 31, 2023 that we believe is expected to have a material impact on the reserves, profits, earnings per share and book value of our Company.

Internal Financial Control and their Adequacy

The Company has designed and implemented a framework of internal controls and procedures, which enables the Company to identify risks and formulate an appropriate response in a timely manner. The Company has adequate internal controls commensurate with the size and nature of its operations, which have been designed to provide reasonable assurance regarding recording and providing reliable financial and operational information for accounting, consolidation, and management information purposes, in compliance with applicable statutes. Internal processes and procedures defined include controls that safeguard assets from unauthorised use, execute transactions with appropriate authorisation and ensure compliance with corporate policies.

The Chairman & Managing Director (CEO) and the Chief Financial Officer (CFO) have evaluated the effectiveness of the internal controls over financial reporting related to the preparation of financial statements included in this Annual report. The CEO and CFO certification has been provided as of March 31, 2023, in accordance with Regulation 17(8) of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 (SEBI LODR). A Certificate included in the Report on Corporate Governance section of this Annual report, discusses the adequacy of our internal controls over financial reporting.

S.R. Batliboi & Associates LLP, the statutory auditors of the Company have audited the financial statements included in this annual report and have issued an attestation report on the Companys internal control over financial reporting (as defined in section 143 of Companies Act, 2013).