KFin Technologies Ltd Management Discussions

Global Economy Overview

The world economy over last year remained buoyant with steadily growing economic activity and descending inflation from its peak of mid-2022, defying the warnings yearof stagflation as the world recovered from the aftermath of the pandemic but also suffered supply-side disruption led by geopolitical conflictstriggering global energy and food crisis, and a surge in inflation leading to monetary tightening by the global central banks. The economic resilience amidst significant interest rate hikes with steady growth in employment and income reflected surge in consumption demand including rise in government spending and household consumption. Despite several gloomy predictions, the world avoided recession, the global banking system showed robust performance, and most of the emerging economies too had decent growth. According to the International Monetary Fund (IMF) April 2024 report, global economic growth, which dropped to 2.3% by the end of 2022, is estimated to have rebounded to 3.2% in 2023. The IMF has forecasted that this growth rate will remain stable at 3.2% for both 2024 and 2025. With expectation of soft landing of the global headline inflation, global capital markets too reacted positively to the prospect of central banks exiting from tight monetary policies. Reversal of interest rate hike cycle shall ease the financial conditions, drive consumption, and capitalflowsto most of the emerging economies shall continue to remain buoyant providing boost to the overall capital market.

Indian Economy Overview

India continues to remain as the fastest-growing economy in the world with robust 8.2% GDP growth in FY 2023-24. It has been a key growth engine, contributing 16% to global growth in 2023 and is expected to rise to 18% by 2027. Strong domestic demand for consumption and investment, combined with governments continued emphasis on capital expenditure are seen as the strong driver of growth in FY 2023-24. This has been further supported by significant growth in crucial sectors, including the financial, real estate, and professional services industry, which has been estimated to have grown by 8.4% in FY 2023-24. Despite a challenging global environment and protracted geopolitical tensions, India showed resilience and solidified its position to become the fifth-largest economy in the world. The IMF has raised its growth forecast for FY 2024-25 to 6.8% from 6.5% led by strong domestic demand and rising working age population. As per CRISIL estimates, the next seven fiscals (2025-2031) will see Indian economy crossing fivetrillion dollars mark and then inching closer to seven trillion dollars economy. A projected average growth of 6.7% per annum during this period will make India the third-largest economy in the world and lift the per capita income of the upper middle-income category by 2031 boosting demand for consumption of goods and services including financial services.

Industry Overview

Global Asset Management Outlook

The global total assets under management showed an impressive growth in 2023, rising by 11.67% y-o-y to USD 118.7 trillion, reverting from a decline of 8.83% the year before, as per the research done by a leading global consulting firm However, in contrast, the growth in assets masks the underlying vulnerability being faced by the global asset managers. Industry revenue grew by a modest 0.2% y-o-y in 2023, while costs increased by 4.3%, resulting in an 8.1% decline in profitability.

Asset managers continue to face revenue and profitability pressures, as fee compression is accelerating, and costs are rising. The industry is on the brink of a transformative shift in competitive dynamics due to five major changing trends: digitization, diminishing investment returns, heightened regulations, intense pressure on growth and margins of the active fund managers, and as a result increasing demand for alternative assets as well as demand for fund services providers to manage cost and service delivery. The most viable way forward to manage this would be to focus on three key areas: productivity, personalization, and expansion into private or alternative markets.

Growth in Global AIF (Alternate Investment Funds) segment

The alternative assets (AIF) industry has continued to grow and become the mainstay of the global asset management landscape. The industry AUM was at record high at over USD 17.69 trillion by the end of 2023 and expected to reach to USD 26.00 trillion by 2028, registering a CAGR of 8.0% as per Preqin estimates. The share of AIFs in the total asset universe stands at nearly 15% by the end of 2023. Fund raising for AIF in 2023 was very much in line with pre-pandemic levels and remained elevated by historical standards, indicating a continuous resilient demand for AIF as an asset class. Amid challenging market conditions in recent times, including high inflation, rising interest rates, and increased geopolitical instability, interest in AIFs have grown substantially. AIFs have long been a key portfolio allocation for institutional investors as well as ultra-high-net-worth individuals. However, retail investors have had limited access due to strict regulatory qualifications and high minimum criteria. Individual investors control over half of global wealth but allocated merely 5% of their wealth to AIFs as of 2023. Currently more than 85% of the US

companies with USD 100+ million in revenue are privately owned with access to capital only through AIFs for equity financing. Besides, number of public companies in the US has declined by about one-third over the last two and half decade triggering the demand for new asset classes in the form of AIFs. Given rising demand in the current macroeconomic landscape, the global policy makers and asset managers are working to ease out the accessibility criteria to attract a wide range of investors. Institutional investors have historically held high average allocations to

AIFs at ~23% in comparison to the retail HNIs at 5%. AIF managers are increasingly targeting individual investors given many institutional investors are fully allocated or reaching their target allocations. A greater number of individual investors are seeking access to AIFs as an alternative to insulate their portfolios from wide market swings while enhancing return on their investments. Easing criteria of qualifications and minimum, limited opportunity in the public market, rise of fintech platforms and better return on investments could fuel the growth for global AIFs led by more retail participation.

Opportunities for Global Fund Administrators

Global AIF fund administration market is as large as over USD 10 billion in terms of revenue significantroom forpool with growth, given lower level of outsourcing and fund operations becoming increasingly complex and costly for the asset managers. The current outsourcing level in large markets like the US and Europe are just 40% and 55% respectively. The role of fund administrators will play a pivotal role in shaping the global asset management industry with their innovative solutions, cutting-edge technology, and economies of scale for the asset managers. Heightened level of scrutiny with a plethora of complex regulations (UCITS IV, SEC Custody Rule, AIFMD, FATCA, MIFIDII, etc.) are expected to increase the complexity and cost of compliance demanding robust systems and processes to avoid failure and support transparency. Pressure on margins and control over costs could restrict the flexibility of asset managers to invest in automation, new technologies, and product innovation, seeking real-time information. Use of artificialintelligence (AI) technological revolution is gathering momentum and generative AI (GenAI) could offer for global asset managers and fund administrators to work in an integrated manner for innovative use cases and cost-effective solutions. As fund managers look to grow through diversified asset classes across global markets, the choice of right service providers to manage their operations (investor onboarding, order management, transfer agency, fund accounting, compliance, analytics etc.) would be crucial for their ability to deliver desired return on the investment to their investors. Outsourcing may become instrumental in offering around-the-clock services with scalable and innovative technology at a much lower costs, particularly if asset management fees come under pressure.

Key trends in the global fund administration market

Increase in product complexity and globalization

Regulatory pressure and political uncertainty Increasing automation and outsourcing processes

Emergence for technology-focused service provider

Role of specialists

M&A led consolidation in the industry

Demand for data and analytics

India Investment Management Industry Overview

Indians style of investment has evolved significantly over the last decade as digitization of economy has enabled ease of investment and increased the allocation of savings to financial assets led by rise in financial literacy, evolution of innovative financial products, better equity returns, and financial services disintermediation. This has attracted larger number of Indians into the fold of savings and investments. As per the recent research done on asset returns in India (SSRN-id4641106), in 5-and-10 year rolling periods, Indian equities have delivered nominal returns of 12.5-13.5% per annum compared to 7.8% per annum returns by the bank deposits. Moreover, in the last decade, there has been a distinctive shift in households savings with higher allocation to equity which has doubled from 2.2% in FY 2012-13 to 4.7% in FY 2022-23, albeit against 35% in the USA. The number of demat accounts increased by over seven folds to 151 million by the end of March 31, 2024. Equity mutual fund inflows touched a near two-year high in January 2024. The investors confidence in mutual fund continues, which was reflected by the monthly systematic investment plan (SIP) account hitting a record high of 192.71 billion in March 2024. The National Stock Exchange of India (NSE) recently overtook Hong Kong as the fourth-largest exchange in the world and has doubled in value in four years, surpassing a market capitalization of USD 4 trillion in 2023. India is also witnessing buoyancy in the primary equity capital market and has surpassed China in terms of the initial public offers (IPOs). This trend will further opportunities pick up pace as Indians monetize on the long-term benefits of equity investing while becoming more active about risk mitigation. As per the recent research done by one of the largest asset management companies of India, over the next decade, equity as a percentage of total household assets in India could potentially increase to 10% which could trigger higherdomesticflowsinto the Indian capital market via direct equity as well as through mutual funds.

Mutual Fund Industry Overview

In FY 2023-24, the mutual fund industry surpassed 50 trillion in assets under management, with net assets totaling 54.13 trillion, reflecting a substantial 35.5% increase from the previous year. The sectors growth was promoted by the strong performance of the equity market. Individual investors played a key role in this growth, especially in equity, hybrid, and solution-oriented schemes.

Mutual Fund to GDP ratio in India at 18.3% in FY 24 is still lower than the worlds average at over 70%

Rising affluency and financial literacy will drive financialization of savings in India

Better return on investment will increase allocation to equity mutual funds in India

As per AMFI, overall MF AAUM to touch 100 trillion by 2030

Equity AAUM to take lions share

Monthly SIP inflows making new highs led by large retail participation leading to rise in number of investor accounts

Cost of operations on the rise for the asset management companies amidst higher spend on people, technology, and compliance

Pressing need for digitization of workflows, advance analytics, and service innovation within the mutual fund industry to drive better investor experience, adhere to changing compliance, control costs, and drive faster growth

Fund administrators and RTAs to play bigger role in driving digital transformation, innovation, better control over operations and support faster growth for the asset management companies

Capital Market Industry Overview

The market capitalization of the Indian stock market has risen by 151.1% between January 1, 2020 (just before the COVID led disruption) and March 31, 2024. During the same period, participation of retail investors in the Indian equity market has also risen considerably. The number of demat accounts has gone up by nearly 4x times from 40.9 million, as on March 31, 2020, to 151.4 million, as on March 31, 2024, and by nearly 7x times since March 31, 2014. The net flow of household savings into shares has seen a large increase in the last one decade, notably since FY 2016-17 onwards, implying continued rising participation by the retail investors, in a period of strong market returns. Equity ownership by retail investors has increased from 8.0% in FY 2013-14 to 9.5% in FY 2023-24. Better return on investments and ease of investing led by rise in number of fintech platforms could continue to drive large number of retail participants to direct equity investment leading to rise in number of demat accounts and shareholder folios.

Alternative Investment Funds (AIF), Portfolio Management Funds (PMF), and Wealth Management (PWM) Industry Overview

Indias affluent consumer class is growing at a rapid pace which could fuel the demand for AIFs, PMF, and broader wealth management services. According to recent research the by Goldman Sachs in its report "Rise of Affluent in consumer cohort of affluent Indians (with per capita of more than USD10,000) has grown at CAGR of 12.6% compared to 1.4% CAGR in Indias population between 2019-2023. At current pace, the affluent class consumers would grow to 100 million in 2027, up from 60 million in 2023 and 24 million in 2015. A big part of this trend is attributed to the strong wealth effectin India led by rise in the value of equity and gold as an asset class, over the last four years. The ability of asset managers to offer customized strategies, generate higher returns and investors growing risk appetite continue to attract private capital in this segment from wealthy Indians as well as global investors. As a result, AIFs and PMS continue to grow at a very strong pace in India.

As of March 31, 2024, the number of AIFs, registered with SEBI, has increased to 1,302, registering 19.7% growth over the last year, overseeing over 11.35 trillion in investor commitments, grew by 36.1% y-o-y. As per CRISIL MI&A estimates, the industry is expected to grow at a CAGR of 27% 29% till FY 2026-27. The AUM of PMS in India grew by 19.4% y-o-y in FY 2023-24 to 33.20 trillion. The underlying growth in the AIF and PMS sectors would continue to drive demand for the allied fund administration and investor services to empower these asset managers to focus on their core job of fund mobilization and investment management.

Indias wealth management industry is heavily underpenetrated in comparison to the other developed . The economies and thus offers significant growing affluent class population and financialization of savings would drive the demand for wealth managers in India who can offer customized financial planning solutions as per the investor need.

Indias current wealth management industry AUM stands at 34.5 trillion as on March 31, 2024, grew by 15.0% y-o-y. As per CRISIL MI&A estimates, Indias wealth management industry AUM is expected to grow at a CAGR of 12-14% upto FY 2026-27. As the industry grows, the wealth managers would need a scalable and state-of-the-art technology platform to offer differentiated and customized offerings amidst increasing complexity of financial products, rising competition, and demanding investors.

National Pension Scheme (NPS) Industry Overview

The formalization of Indian economy and underlying tax benefits under the NPS continue to be the significant growth drivers for the NPS industry. The total number of subscribers base increased to 18.04 million, registering a y-o-y growth of 4.25% and the industry AUM grew by 30.4% y-o-y to 11.37 trillion, as on March 31, 2024. The industry AUM is expected to grow at a CAGR of 18%-19% until FY 2026-27, driven by large number of subscribers opting for the scheme. The role of CRAs will continue to act as catalyst to offer and affordable technology platform and best-in-class subscribers experience.

Company Overview Company Background

KFin Technologies Limited (hereafter referred to as ‘Our Company or ‘KFintech) is a globally reputed and an industry-leading technology-driven financial services platform that offers comprehensive solutions and services to the capital markets ecosystem in India as well as abroad. KFintech is the largest investor solutions provider to asset management firms and issuer solutions provider to both listed and unlisted corporations in India, in terms of thenumber offers clientsserved.OurCompanyalso various investor solutions and fund administration to asset managers in GIFT City (India), Malaysia, the Philippines, Singapore, Hong Kong, Thailand, and Canada. We are the largest investor solutions provider as well as fund administrators to alternate investment funds in India, based on the number of funds registered with SEBI. We are also the second-largest central record keeping agency for the national pension scheme in India. Our clientele consists of corporate issuers and asset managers, spanning various asset classes across the world. Over the past few years, we have consistently progressed and excelled in acquiring new clients and gaining market share across our business segments in a profitable across various asset classes, encompassing mutual funds, insurance, pensions, banks, private equity, hedge funds, and other alternate assets. KFintech has been promoted by General Atlantic Singapore Fund Pte. Ltd. ("GASF"), a well-known worldwide private equity investment firm.

Our company offers Platform-as-a-Service (PaaS) and Software-as-a-Service (SaaS) based comprehensive solutions which comprise digital onboarding for investors, transfer agency, fund accounting, fund administration, transaction management, order management, channel management, compliance solutions, data analytics, mobility solutions, and other diverse digital services to global asset managers spanning across various segments. KFintech stands out as a unique digital platform, demonstrating excellence in hyperscale transaction management, big data solutioning, transformative platform development, and specialized financial and technical services. This is all underpinned by a strong foundation of nearly four decades of proven technological expertise in the asset management industry.

We aspire to become the trusted technology partner for global financial service providers. With our business expanding into new geographies and asset classes, our goal is to offer comprehensive end-to-end technology services to diverse financial institutions. Most of our offerings are pioneering within the industry and are designed to be versatile across sectors, enhancing customer experiences and optimizing operational efficiency clients growth.

Products and Services

Our Company functions under the following segments: manner. Our reach has extended

• Domestic Mutual Fund Investor Solutions: We are the largest investor solutions provider to domestic mutual funds companies in India. We operate as a registrar and transfer agent to the mutual fund companies in India. In addition, we also offer value-added services to our clients using our state-of-the-art technology stack. We serve 25 of the 47 asset management companies in India. We have the best winning track record in the industry, winning 15 of the last 25 new asset management companies in India.

Our clients are focused on equity and are among the fastest growing asset management companies in India. In terms of the assets under management, our clients capture 32.1% market share of the overall AAUM and 33.4% market share of the equity AAUM for the quarter ended March 2024. The equity mix in the overall AAUM for our clients was at 57.8% during the quarter ended March 2024. In terms of monthly SIP inflows, our clients market share was at 39.6% in March 2024.

• Issuer Solutions: We are the largest issuer solutions provider to listed and unlisted corporates in India. Our services include registrar to issue of new securities, post-issue services like folio creation and maintenance, and processing of corporate actions. Besides, we also offer platform-based value-added-services like e-AGM, e-Voting, e-Vault, AML / PML screening, insider trading compliance, services for unclaimed shares, and others. As on March 31, 2024, we have 6,071 corporate clients including 649 listed companies in India. In terms of folios, we are managing 124 million investor folios as on March 31, 2024. We continue to maintain our leadership position within the NSE 500 companies based on the number of investor folios, market capitalization, and number of clients.

• International and Other Investor Solutions: This is the youngest and fastest growing segment for KFintech. This segment represents our services to global asset managers, domestic alternate asset managers, pension subscribers, and UI/UX solutions for broader financial services players.

a. International Investor Solutions: KFintech operate as a fund administrator (FA) and registrar and transfer agent (RTA) to global asset managers including mutual funds, alternate investment funds, and costs, thereby private retirement schemes, institutional unit trust facilitating our advisors (IUTAs), insurance, banks, and others. Our fund accounting platform is the only platform from India to offer multi-asset, multi-currency, multi-geography, and multi-currency service capability. As on March 31, 2024, we service 57 clients spanning across Malaysia, Hong Kong, Singapore, Thailand, Canada, the Philippines, and GIFT City (India), of which 43 clients are availing RTA services and 27 clients are availing FA services. several b. Domestic AIF Investor Solutions: KFintech is the largest investor solutions provider to alternate investment funds in India, based on the number of funds registered with SEBI. We also provide services to portfolio managers and wealth managers through our technology platform. We are among the very few companies in India to offer alternate asset managers ranging from digital onboarding, transaction and order management platform, channel management, transfer agency, fund accounting, compliance and regulatory reporting, attribution analysis, data analytics, and others. As on March 31, 2024, we have 472 AIFs clients representing a market share of 36.3% and managing 987 billion AUM. In addition, we also have 24 clients in India to whom we have licensed our fund accounting platform including six of the ten pension fund managers and eight asset management companies in India, including five AMCs where KFintech is not the RTA.

c. National Pension Scheme: KFintech is one of the three and the second-largest CRAs of India. We deliver end-to-end services for permanent retirement account number issuance, record keeping, administration, and investor support. We also offer differentiated, and technologically integrated offerings to points of presence (POPs) to drive subscribers acquisition. Our technology platform integrates the pension ecosystem participants on a single operational interface. We provide solutions for the all-India citizen model, corporates, the central government, and the state governments. We have specific and targeted solutions for corporate employees, state governments, and POPs. We are continuously gaining market share through the acquisition of new subscribers. As on March 31, 2024, we manage 1.22 million pension subscribers on our platform which represents 8.3% market share based on the overall subscribers base.

• Global Business Services: We operate a center of excellence in India for a large global asset manager offering outsourcing services such as mortgages, transfer agency, legal services, finance and accounting, and wealth management solutions. Our expertise lies in the mortgage space led by domain experts. We are the preferred outsourcing partner for our clients due to our technology excellence, execution expertise, and affordable costs.

Our Products and Services

		Investor solutions			Issuer solutions	Global
	Domestic mutual fund	International asset managers	Pension services	Global Alternatives, Wealth management, and Portfolio management solutions		business services
Front-End	Account Setup, Transaction Origination, Channel Management, Customer Communication Management	Account Setup, Transaction Origination Digital Onboarding	Account Setup Transaction Origination	Account Setup Digital Onboarding	Folio Creation and Maintenance
Middle Office	Fund Administration Fund Accounting Transaction Processing Unit, Allocation KYC, Redemption Brokerage, Calculations Payment Processing, Fund Accounting Reconciliation	Fund Administration Fund Accounting Transaction Processing Unit, Allocation KYC Redemption Brokerage Calculations Payment Processing	Transaction Processing Unit, Allocation Redemption Reconciliation	Fund Administration, Fund Accounting, Order Management, Transaction Processing, Unit Allocation, Redemption, Brokerage Calculations, Reconciliation	Transaction Processing for IPO, FPO, etc. Corporate Action Processing Folio updates Dividend / Interest Processing
Back End	Compliance / Regulatory Reporting Recordkeeping MIS / Decision Support	Compliance / Regulatory Reporting Recordkeeping MIS / Decision Support	Compliance / Regulatory Reporting Recordkeeping	Compliance / Regulatory Reporting Recordkeeping	Compliance / Regulatory Reporting Recordkeeping MIS / Decision Support	Mortgage Services Legal Services Transfer Agency Finance and Accounting
VAS	Virtual Branch, Distributor Platform, Investor Platform, IT Infra and Web Hosting, Data Analytics, Data Lake, AML / PML Check	Online Tx Platforms, Website and Apps, Other Platform Solutions, Data Analytics, Data Lake, AML / PML Check	-	Digital Onboarding, Revenue Assurance, Data Analytics, Data Lake, AML / PML Check	e-AGM, e-Voting, e-Vault, Guardian Insider Trading Platform, InPro AML / PML check, Other Platform Solutions	-

Our Revenue Model

Business	Revenue Model
Domestic Mutual Fund Investor Solutions and International Investor	% of AUM
Solutions	Fee for value-added services
Issuer Solutions	No. of folios Fee for processing corporate actions Fee for value-added services
AlF, PMS, and PWM	% of AUM for TA and FA Platform fee for licensed sales Fee for value-added services
Pension Services	Fixed account opening charges Annual maintenance fees Fee per transaction
Global business services	Per full-time employee (FTE)

Financial Performance

The financial year 2023-24 has been a pivotal year in KFintechs journey towards growth, excellence and transformation. Most of our strategies, laid down at the beginning of the year, have been put into motion and we are observing very encouraging results. We continue to consolidate our position across our diversified business segments, early signs of operating leverage are contributing to profitability growth and there were several maiden moments of success in each of the segments during the year which have potential to change our growth trajectory.

Revenue Highlights

( in million)

Consolidated Revenue Break-up	FY 2023-24	FY 2022-23	% Y-o-Y
Domestic Mutual Fund Investor Solutions	5,864.97	4,972.25	17.95%
Issuer Solutions	1,274.12	1,132.96	12.46%
International & Other Investor Solutions	887.94	657.35	35.08%
International Investor Solutions	362.15	332.55	8.90%
AIF, PMS, PWM Solutions	394.15	257.88	52.84%
NPS Solutions	81.90	66.92	22.40%
WebileApp	49.74	-	Na
Global Business Solutions	348.30	437.71	-20.43%
Total	8,375.33	7,200.27	16.32%

During FY 2023-24, our revenue from operations grew by 16.32% y-o-y to 8,375.33 million, in comparison to 7,200.27 million in the previous year led by strong growth across all our business segments.

Domestic mutual fund investor solutions revenue grew by 17.95% y-o-y to 5,864.97 million, led by growth in AAUM and value-added-services. This is the largest business segment for KFintech. Within this, pure AAUM-linked fee was 63.63% of the total revenue from operations, grew by 18.26% y-o-y to 5,392.40 million, and revenue from mutual fund value-added-services was 3.38% of the total revenue from operations, grew by 26.96% y-o-y to 283.20 million. Given the expectation of structural growth in economic drivers, rising retail participation through SIP route, and growing risk appetite for equity as an asset-class led by rising income levels and financial literacy, we expect the investors buoyancy for the domestic mutual funds would continue to drive the industry AAUM growth followed by growth in the RTA industry.

Issuer solutions revenue grew by 12.46% y-o-y to 1,274.12 million led by growth in the folio-based fee which grew by 5.79% y-o-y to 535.10 million, increase in the corporate actions fee by 19.29% y-o-y to 443.40 million, and increase in the revenue from issuers value-added-services by 20.27% y-o-y to 126.40 million. The overall buoyancy in the Indian capital market led by financialization of savings, better returns from equity against the other asset classes, and ease of investing owing to digitization would continue to attract large number of retail investors which would add the number of folios. Also, we expect the primary market to continue to remain strong in the long run as more private companies access the capital market for fundraising or an offer-for-sale and add to the folio growth.

International & other investor solutions revenue grew by 35.08% y-o-y to 887.94 million, led by strong growth in our AIF, PMS, PWM solutions business, whose revenue grew by 52.84% y-o-y to 394.15 million on account of new client acquisitions. Our sales efforts, comprehensive products and solutions, and strong growth in the AIF sector would continue to drive robust growth for this segment. Our International investor solutions revenue grew by 8.90% y-o-y to 362.15 million driven by contribution from the new clients added during the early part of FY 2023-24. We are very excited about the growth in our international business. During the year, we won 16 new clients across Malaysia, Singapore, Thailand, and GIFT City (India) which will start contributing to the revenue from FY 2024-25 onwards. In addition, currently we are pursuing a very strong pipeline of large deals across geographies and the conversion of such deals would continue to add to our current run-rate over the next 3 - 5 years. We are in the process of securing approvals from the RBI to setup wholly-owned subsidiaries in Thailand and Singapore followed by the UAE and obtain regulatory licenses to pursue fund administration business which would allow us to strengthen our market presence in these geographies. Also, we are actively scouting for inorganic opportunities in the global fund administration space to grow our international footprints. The NPS solutions revenue grew by 22.40% y-o-y to 81.90 million, led by new subscribers addition, added 0.26 million subscribers in FY 2023-24. We continue to gain market share in the overall subscribers base, grew to 8.3% as on March 31, 2024, from 7.3% as on March 31, 2023.

In April 2023, we strengthened our customer experience capability with 100% acquisition of WebileApp India Private Limited. During the year, we have successfully completed the integration of WebileApp with KFintech and turned it into a profitable business on a standalone basis. WebileApp has contributed 49.74 million to our revenue from operation by serving clients across different industries.

Global business services revenue declined by 20.43% y-o-y to 348.30 million impacted by slowdown in the US mortgage market. It is a single client business for KFintech and requires limited management bandwidth. Going forward, we expect to maintain the current run-rate in this segment.

Operating Expenses Highlights

( in million)

Consolidated Operating Expenses	Year Ended March 31, 2024 Audited	Year Ended March 31, 2023 Audited	Y-o-Y %
Employee Benefit Expenses	3,196.64	2,894.27	10.45% business in
Other Operating Expenses	1,512.75	1,325.64	14.11%
Total Operating Expenses	4,709.39	4,219.91	11.60%

During the year, the operating expenses grew by 11.60% y-o-y to 4,709.38 million. The increase in the employee benefit expenses was mainly attributed to the annual pay hike given by the Company, the increase in headcount primarily in IT and audit & surveillance team, and the addition of Webile team. Our end of period headcount increased to 5,818 staff as on March 31, 2024, in comparison to 5,529 staff as on March 31, 2023. The average headcount for FY 2023-24 was 5,494 staff vs. 5,268stafffor the corresponding period of last year. The other operating expenses grew on account of increase in the professional charges led by higher IT spends towards cloud charges and other IT ancillary costs owing to increase in the transaction volumes across our business segments, increase in ECL (expected credit loss) provisions owing to increase in revenue, increase in travel and promotional spends led by sales efforts, and rise in occupancy costs primarily led by addition of six new branches. During the year, we also saw the benefits of optimization efforts we took in FY 2022-23 to remove the external IT consultants and insource the entire development work.

EBITDA Margins and PAT Margins Highlights

( in million)

Consolidated Profitability and Margins	FY 2023-24	FY 2022-23	% Y-o-Y
EBITDA	3,665.94	2,980.36	23.00%
EBITDA margins	43.77%	41.39%	238 bps
PAT	2,460.48	1,957.36	25.70%
PAT margins	29.38%	27.18%	219 bps

Our EBITDA grew by 23.00% y-o-y and margins expanded by 238 basis points during FY 2023-24 led by revenue growth outpacing growth in the operating expenses. The depreciation expenses increased by 13.61% to 530.20 million during the year, led by full year impact of capital expenditure incurred during FY 2022-23 as well as impact of new capital expenditure worth 850.92 million incurred during the current financial year. The finance costs declined by 20.75% y-o-y to 84.35 million on account of a 100% buyback of redeemable preference shares worth 1,340.20 million. The other income grew by 40.91% in FY 2023-24 to 246.51 million led by increase in treasury income. The tax expenses increased by 30.17% y-o-y to 813.34 million driven by 27.72% y-o-y growth in profit before tax. Our standard taxation rate is 25.17%. However, the conclusion of previous periods income tax assessment has reduced the effective tax rate to 24.84% for FY 2023-24 and 24.20% for FY 2022-23.

Significant Standalone Financial Ratios that registered more than 25% change during FY 2023-24

Ratios*	FY 2023-24	FY 2022-23	YoY Change	Reason
Debt service coverage ratio (x)	2.00	11.97	-83.28%	There are no borrowings in the Company as on March 31, 2024. We completed the buyback of all redeemable preference shares on November 30, 2023.
Current Ratio (x)	4.90	1.98	146.73%	The increase in current ratio was on account of reduction in current liabilities owing to buyback of the redeemable preference shares during the year.
Debt Equity Ratio (x)	0.04	0.18	-77.03%	Debt as on March 31, 2024, represents lease liabilities and there are no outstanding borrowings.

*For additional ratios, please refer schedule 47 of the standalone financial statements

Business Outlook

KFintech is committed to running a scalable and profitable manner.globally diversified We will continue to consolidate our leadership position under the domestic mutual fund investor solutions and issuer solutions segments driven by strong industry tailwinds, our innovative offerings for clients, focus on delivery excellence, and strong sales efforts to win new clients. Our international and other investor solutions segment comprises young and sunrise businesses which are growing at a much faster pace and will continue to outpace the growth we see in our mature businesses. Our aspiration to become a global fund administrator will help us to reduce our dependency on the domestic capital market. Over the next five years, the non-domestic mutual fund businesses would account for 45% 50% of our overall revenue from operation led by faster growth in the International investor solutions and AIF, PMS, and PWM solutions businesses. Our VAS revenue would grow at a faster pace and is likely to increase from the current 6.0% of the overall revenue from operation to 12% 15% over the next five for our unique and wide range of products and solutions for the broader financial services industry and our ability to cross-sell and up-sell to increase our wallet share from the existing clients. We will continue to invest in people, technology, process excellence, and sales efforts to foster existing client relationships, acquire new clients, drive strong governance and user experience, and strengthen our risk management skill to improve contractual and regulatory compliance. KFintech is uniquely placed to leverage the growing opportunity within the Indian financial asset market as well as well poised to establish its global footprints, which will lead to a sustainable trajectory of growth and profitability.

Risk and Mitigation

KFintech believes that risk is inherent in all business activities, and that good risk management is critical to its immediate and long-term success. Our Company has identified important responsibilities for identifying, assessing, managing, monitoring, and reporting on major risk areas across the organization. We have implemented a thorough risk management policy to ensure that we have procedures and systems in place to effectively monitor, control, and respond to risks. However, if our risk management efforts are inadequate, we may suffer losses that have an adverse effect financial performance. Continuous development of our risk management policy and internal controls will be required for any future expansion and diversification of our services. Please refer to page no 42-45 on our risk management and mitigation practices at KFintech.

Human Resources

KFintech has implemented a variety of benefits, policies, and practices that prioritize the well-being and concerns of our employees to foster and sustain a collaborative environment. These include Equal Employment Opportunity; Long-Term Incentive Plan; Employee Stock Ownership Plan (ESOPs); and Grievance Redress Policy. Moreover, we have implemented a hybrid working years.Thiswillbedrivenbythegrowingdemand model and an annual appraisal system; health and well-being initiatives such as PoSH (Prevention of Sexual Harassment); and creche facilities; In addition to offering benefits and incentives that are contingent on employee performance, we also implement regular employee engagement initiatives. Our workforce exhibits diversity and inclusivity through the inclusion of individuals across all age groups and with a wide range of professional experiences gained from industry experts as well as multinational corporations. As of March 31, 2024, our Company has 5,818 full time employees. Please refer to page no 52-56 on our people policy at KFintech.

Internal Controls

KFintech implements and maintains appropriate internal control measures that are adequate given the size and complexity of our activities. Our internal audit operations continually evaluate the adequacy and performance of internal systems to verify that business units follow our policies, compliance standards, and internal guidelines. Our Company has developed an effective internal financial reporting and control system that records financial and operational data in line with all applicable internal controls and regulatory compliance requirements. Our Companys internal and statutory auditors conduct periodic assessments to make sure that day-to-day activities are carried out with the least risk of fraud or other irregularities. The Audit Committee oversees assessing the findings of both the Internal Auditor and the Statutory Auditor. It ensures that internal controls remain adequate and effective throughout time. Furthermore, the Board monitors the Audit Committees investigation and ensures that timely and aggressive steps are taken to reduce risk while solving the issue at hand.

Cautionary Statement

Certain statements that may be made or discussed in this release may be forward-looking statements and/or based on managements current expectations and beliefs concerning future developments and their potential effects upon KFin Technologies Limited. The forward-looking statements are not a guarantee of future performance and involve risks and uncertainties and there are important factors that could cause actual results to differ, possibly materially, from expectations reflected in such forward-looking statements. KFin Technologies Limited does not intend, and is under no obligation, to update any forward-looking statement made in this release.