Pelatro Ltd Management Discussions

Managements Discussion and Analysis

Our Business

Pelatro provides a comprehensive customer engagement platform that empowers customer- centric interactions between consumers and brands. Our platform empowers brands to understand the behaviour and needs of their customers deeply with a view to improve the engagement thereby delighting their customer. This improved experience will then translate into sustained relationship between the brands and the customers while increasing the revenue of the brands materially. Our platform mViva collects and processes tens of billions of data for each enterprise or brand on a daily basis across more than 1.3 billion consumers in over 35 countries. This processing of data, which uses both patented and other techniques in the domain of AI/ML, generates deep insights with respect to the following key aspects of the engagement between the enterprises and their customers:

- Product to be positioned

* Audience selection

Communication channel identification

* Selection of engagement time

Selection of engagement language

* Real time engagement

This deep engagement, which happens over a fully digital ecosystem, is conducted with total compliance with privacy norms, data protection and other regulatory aspects in various countries, including full compliance with GDPR regulations. The holistic experience that is delivered to customers leaves them quite satisfied with the engagement with their chosen brands while increasing the revenue of the brands or enterprises thereby resulting in a symbiotic relationship between the enterprises and the customers.

Apart from providing the platform, Pelatro offers a wide range of managed services covering business consulting, business operations and IT operations. These services enable better and more efficient utilization of the platform by our customers so that their return on investment increases materially while improving the quality of customer engagement considerably.

Industry

Customer engagement is the ongoing cultivation of a relationship between an enterprise and its consumers that goes far beyond mere transactions. The objective of this activity, which is conducted by design, is to provide value to the customers at each interaction thereby increasing their loyalty. While customer satisfaction is only about making customers happy or otherwise called as delighting customers, the practice of customer engagement is the process through which customer satisfaction is delivered. During this process, valuable data is collected at all possible points of interaction and insights are constantly generated. These insights are then used to improve the engagement and a feedback loop is implemented to measure the consequences. This process moves forward in an iterative manner leading to increasing customer satisfaction over a period of time. A recent study revealed that almost 90% of customers say the experience provided by a company is as important as their products and services. Hence the critical nature of customer engagement. A study by Gallup found that successful customer engagement resulted in 63% lower customer attrition, 55% higher wallet share leading to such enterprises performing 23% better that competition.

The concept of customer engagement has evolved in recent years as more companies seek innovative ways to attract and retain loyal customers. In the past, simply providing a quality product or service was enough. The world has moved a significant distance from that position. It is increasingly becoming obvious that engagement, at a very deep level, is a critical influencer in the purchasing decision of almost all customers. That has focused the spot light on customer engagement. Despite this state of affairs, many organisations and decision makers fail to understand the concept and do not choose the appropriate path. That makes this a nascent industry with considerable potential.

Personalisation is no longer a nice-to-have but a must-have for brandsto win. Prioritising personalisation can lift revenue by 10-15%. (McKinsey) 38% customers will stop doing business with a company if they find personalization efforts to be "Creepy". (Gartner)

Market size

Customer engagement impacts all industries across the world. That means the market size of this industry is quite huge and is growing consistently. The graph given below gives an indication of the market size and growth.

Customer Engagement Market 2021- 31 ($bn)

CAGR10.21%

As can be seen from the graph, the market for Customer Engagement across all sectors like telecom, BFSI, retail, consumer etc. is quite large. At this juncture, Pelatro is focused on two sectors only i.e. telecom and banking (a sub-sector with BFSI). So, the potential market size or those two sectors is what is relevant for Pelatro and those details are given below. The potential market size has been arrived at in a ground up manner to ensure that the figures are as accurate as possible.

Customer engagement market size telecom sector

Potential customers	460
Potential Rev.per customer	Rs. 4Cr
Market size	Rs 1,840 Cr

Customer engagement market size banking sector

Potential customers	4,000
Potential Rev. per customer	Rs.l Cr
Market size	Rs 4,000 Cr

The Potential Revenue Per Customer (PRPC) is based on actual contract details of Pelatro and hence is based on real data. Current market share enjoyed by Pelatro in the telecom sector is given below.

We are steadily increasing our market share both By Customers and By Revenue. Our Recurring Revenue Per Customer (RRPC) has seen consistent growth over the past several years recording a CAGR of 56% over the past 3 years. In the telecom sector, RRPC is now at 60% of the PRPC which means there is considerable scope for expansion of RRPC.

Our platform

After decades of unprecedented growth, sectors like telecommunications and banking are starting to mature as a business in various markets. In the former sector, the old days of guaranteed growth are gone and network coverage has become ubiquitous, leading to commoditization and thus differentiation becoming more and more of a challenge. Customers tend to look at telecommunications service as a utility and this is driving up commoditization and a corresponding decrease in margins for telcos. To add to this trouble, the emergence of Over-The-Top (OTT) players has accelerated the pace of commoditization and customer dis-intermediation. Further, the industry has almost reached saturation with respect to customer base with penetration more than 100% in most markets.

In the banking sector, apart from several traditional banks, fintech players have swamped the market leading to intense competition. These tech savvy enterprises are overwhelming the traditional players in the market and making it increasingly difficult for the latter to sustain customer relationships and attract customers from the current generation at the same time.Hence the need of the hour is to grow revenue from existing customers. The lever for managing revenue growth has changed from customer acquisition to maximizing value from existing customers. To derive increased value from customers, it is also important to deliver increased value. Interactions with customers should be based on this new paradigm and this means individualized and personalized attention.

It is very evident that this is a new paradigm and a new strategy and hence this calls for a different approach from what has thus far been followed. There is a clear need to engage customers in a personalized manner and have a continuous dialogue, which can then help the enterprise to realize the actual needs of the customer and act accordingly.

Contextual marketing

The above-mentioned scenario has necessitated the introduction of one-to-one, Contextual Marketing.

Mass Marketing involved sending campaigns and offers to all customers without any differentiation. This, as is obvious now, did not produce much results and enterprises moved on to the approach of segmenting their customer base and then sending different offers to different segments. In this scenario, the method used for segmentation becomes important. First, classical segmentation methods, like those based on revenue, purchase of certain products etc. were used.

Subsequently, with the arrival of data warehouses and business intelligence tools, segmentation based on actual behavior of the customers became a possibility and some of the advanced enterprises are practicing this. The segments derived thus are then sent generic campaigns designed by the marketing team.

However, even with the most sophisticated of data warehouses or BI tools, it has been observed that the offer-acceptance ratio is hovering around low single digits. This means that the majority of those to whom these offers have been sent found the offers irrelevant thereby creating serious disintermediation between them and the enterprise. Thus, the key is to be relevant and that is where Contextual Marketing steps in and mViva, the platform from Pelatro, plays a key role.

Contextual Marketing is founded on the principle of using data-driven insights to deliver the right message, to the right person, at the right time. Since this captures the context of the customer, the relevance would be high.

Contextual marketing requires full knowledge of the needs and behavior of each customer in their individual context. The approach is to be more customer-centric and not product or campaign-centric. This is the next evolution that is needed to meet the new paradigm as described above and as the term implies, it demands deep insight into the customers behavior and context. This is what a Contextual Marketing Solution achieves using a twopronged strategy based on increasing the lifetime value of the customer and on reducing the churn of existing customers.

mViva is such a next generation solution focused on using contextual data coupled with relevant microsegmentation to facilitate Contextual Marketing. The idea is to use contextual data to come up with offers and actions that would be relevant and interesting to a pin-pointed segment, or even one individual.

mViva Customer Engagement Hub

As explained earlier, for any solution to be effective, it should be able to analyze large volumes of data in real time and enable designing of relevant campaigns in a contextual manner. mViva gleans out relevant information from transaction records of the customer-such as calls, recharges, messages, downloads, complaints, credit card usage, deposits, online purchases etc. Intelligent algorithms are then applied to crunch through these large volumes of data to identify patterns and the context of each customer. Each customer is then provided with a relevant offer, if applicable.

The engagement with each customer happens on multiple levels for various objectives and end results and that is achieved through various solutions and services that form part of the hub. Given below are the components that come together seamlessly to form the hub.

Products and Service overview

"A platform conceptualised and designed for marketers by experts with decade of industry and domain experience employing AI/ML"

Contextual Campaign Management

Launch and manage the entire campaign lifecycle for both customers and retailers

Contextual Loyalty Management

Deliver loyalty programs to reward and retain customers

Customer Data Platform

A data powerhouses to enable Customer 360? view for data- driven decision making

Data Monetization Solutions

Easily extend campaign management services to enterprise customers and monetize customer data

Unified Communication Solutions

A highly scalable and reliable solution for all yout A2P/P2A communication needs

Managed Services (Eco - system enablement)

Comprehensive business consulting, business operations and IT operation support with a dedicated and skilled workforce

mViva gains its superiority over competing products from its well integrated architecture which delivers a wide variety of features and functionalities in a seamless and well orchestrated manner. Our platform provides end-to-end capability and experience starting with collection of data. Subsequent steps include analysis, intelligence gathering, audience selection, configuration, execution and reporting.

The entire approach of our platform is customer-centric in nature. This approach, coupled with advanced technology and unique features make our platform stand out. In addition to that, mViva is a very user friendly platform that has been built for marketers who may not be tech savvy. It empowers the marketers to innovate and constantly push the envelope on customer engagement.

mVivas extensive capabilities enable marketers to orchestrate elaborate journeys over the entire life cycle of the customers. A segment-of-one approach enables personalised engagement at the level of each customer instead of painting a large group of people with the same brush. The platform is capable of weaving micro journeys into long term journeys thereby leveraging the intelligence gleaned on specific consumer behaviour along the way.

Our cutting edge technology is based on several inventions that have been patented by us. We continue to innovate and patent as time goes by. These patents act as a strong differentiator and a moat when we compete with others.

Strengths

Pelatros strength stems from various key aspects which include the following.

Deep domain expertise Patented technology End-to-end platform

Highly referenceable customers

Deep domain expertise

Developing a software solution which is focused on any specific industry calls for a deep understanding of that industry. Pelatro has a large team of experienced professionals who have extensive knowledge about the sectors that we operate in, namely telecom and baking. This is evident from the reliance of most of our customers on our team for both business consulting and business operations.

It is pertinent to note here that even if the end use of a product is similar across industries - for example, campaigning activity in telecom and banking - there are various nuances which result in significant differences at the operational level. These differences lead to business requirements and product features which will be unique for each sector. Appreciating these nuances can only happen through a strong grasp of the way in which each sector functions and operates. Pelatros experts have considerable experience on this front and bring that to bear on the design of our platform and on how it is put to use.

Patented technology

Pelatro currently has nine patents and several more are in various stages of approval. these patents and the ones that are progressing represent advanced technology which help us to differentiate our platform from those provided by our competition and deliver superior value to our customers.

Data explosion has become the norm with technological progression from 3G to 4G to 5G. With that comes the huge challenge of collecting, processing, storing, accessing and acting upon humongous amounts of data in real time. Most conventional technologies fail leading to an inability for the customers to leverage the wealth of data that they have access to. Pelatro has stepped into this void by developing patented technology to help our customers improve their experience to the desired level.

End to end platform

Armed with deep domain expertise and advanced technology, Pelatro has developed an extensive platform which is able to cater effectively to the multiple requirements of our customers. For example, in the telco sector, we cover pre paid, post paid; consumers, enterprises, retailers; mobile, home broadband, fixed line; scheduled campaigns, trigger campaigns, real time campaigns and various other permutations and combinations. Our platform further addresses customer engagement from multiple angles like campaigning, royalty programs, lead management etc. The same is applicable to banking as well albeit with its own sectoral variations.

Highly referenceable customers

Pelatro has a very large number of customers spread across very diverse geographies.

These customers have experienced consistent quality from the company and have become brand ambassadors for us and our products. We successfully leverage this base of highly referenceable customers. Given below is a mapping of our current customer base.

Growth Strategy

Three Pillar

Strategy

Pelatro is pursuing a "three pillar" strategy which is detailed below.

• Geographical expansion

Our two fold approach is to target specific geographies and specific telecos and banks within those geographies. The business is set to replicate its land- and then expanding into strategy of entering a group through one OpCo and then expanding into "sister " OpCos.

• Expansion of recurring revenue per customer

After winning on account with any possible revenue model, the endevour is to either add a new recuring a revenue stream and then to increase it or to increase the existing recurring revenue stream. Our recurring revenue includes both licenses and managed services covering business and technology.

• Acquisition

The objectives are extension of the product line, expansion into new geographies, widening of the customer base and deepening the engagement within each customer thereby strengthening the relationship.

Geographical Expansion

This is the first pillar of our strategy and it has two arms - one is Land and Expand strategy and the other is entering new territories. Our products have tremendous opportunity in all geographies and the plan is to slowly expand into various territories. Thus, the two fold approach is to target specific geographies and specific telcos within those geographies. The atter is achieved through Land and Expand strategy.

Pelatro has pursued a Land and Expand strategy since the very beginning. A very large number of telcos, globally, are part of specific groups. Thus, these groups like Vodafone, America, Moviles, Telenor, SingTel etc. have operations in various countries. In Land and Expand strategy, the plan is to enter the group in one country. Then, Pelatro will establish its credentials in that operation paving the way to enter the sister telecom operating companies in other countries. This strategy has been extremely effective for the Company. By employing this strategy, Pelatro has successfully penetrated seven telco groups in the past eight years.

Expansion of Recurring Revenue per Customer

The next pillar of our strategy is to expand our revenue base within each customer. After winning the account with any possible revenue model, the endeavour is to either add a new recurring revenue stream and then to increase it or to increase the existing recurring revenue stream. As stated in the Business Model section, our recurring revenue per customer and recurring revenue as a proportion of the total revenue have both been growing steadily. We intend to stay the course on these two fronts which will enhance visibility, predictability and profitability in the coming years. Cross selling products and services to the same customer is also part of this strategy. While all customers have our flag ship product Campaign Management Solution, some of them have Loyalty Management Solution and Managed Services. That mapping is given below.

Acquisitions

Inorganic growth is a key strategy. The objective is to search and locate products or businesses that are of strategic importance to us and to then build them as a new core adjacent to the current one. In this process, products related to the new core will contribute to further growth thus leading to multiple paths for growth. Every step taken in this direction will increase the relevance of Pelatro within each telco thereby creating a virtuous cycle resulting in the partnership between us and the telcos broadening and deepening.

In keeping with this strategy, Pelatro has been engaged with a very large number of companies globally.

The common thread among all those is that they all deliver software products to the telecom industry and are an important part of the overall telecom ecosystem. During FY24-25, one of the discussions forged ahead, the one with Estel Technologies, and we entered into definitive agreements to acquire their business. Estel offers eTopUp, Sales & Distribution Solution, Voucher Management Solution and Mobile Money Solution to telcos. These products will be housed in a new business unit within Pelatro called Estel Division and will form a new core for us to build on.

Financials

1. Equity share capital:

We have one class of equity shares having face value of Rs. 10 each. During the year, the movement in share capital was due to issue of shares on Right basis as well as a Bonus issue.

2. Other equity:

The movement in Retained earnings was due to both profits earned during the year as well as the issue of bonus equity shares. The movement in Securities Premium was due to issue of equity shares on Rights basis. During the reporting period, we did not transfer any monies to any special reserves.

3. Property, plant and equipment:

Additions to gross block were mainly computer equipment and vehicles. Deletions were due to write off of computer equipment that were not in usable condition anymore as well as disposal of furniture and other office equipment upon shifting of office space.

4. Financial Assets:

a. Investments:

On a standalone level, we invested in further equity shares in our subsidiary in Singapore.

b. Trade receivables:

Our standalone days sales outstanding (DSO) was 154 for FY 2024-25 as against 224 for FY 2023-24. The DSO on the consolidated level stood at 85 days for FY 2024-25 as against 145 days for FY 2023-24.

c. Cash and cash equivalents:

Our cash and cash equivalents represent balances with banks which can we withdrawn on demand at any point of time.

5. Other assets:

Other non-current and current assets represent security deposits towards the leased office premises, loans to advances to employees, advances to suppliers and prepaid expenses.

6. Financial liabilities:

Borrowings consist of secured term loans, auto loans and an unsecured loan.

7. Provisions:

Provisions are towards gratuity and leave encashments in line with actuarial valuations.

Operations

1. Revenue:

Pelatro has the following revenue streams:

• License and Implementation

• Support and Maintenance

• Business Planning Business Operations

• IT Operations

• Revenue Gain Share Change Requests

These revenue streams can be broadly grouped as below:

• Platform usage

• Platform operationalization.

These revenue track record is provided below

				(Amount in INR - Lakhs)
Particulars	Year ended March 31, 2025 (consolidated)	Year ended March 31, 2024 (consolidated)	Year ended March 31, 2025 (Standalone)	Year ended March 31, 2024 (Standalone)
Revenue from Operations	8,576.87	5,499.22	6,149.79	5,880.82

2. Other Income:

Consists of exchange gains, profit on disposal of assets and interest income.

3. Expenditure:

Employee expenses, travel and rent form the majority part of the expenditure incurred, among other things.

Key Financial indicators

Metrics	FY 2024-25 (Consolidated)	FY 2023-24* (Consolidated)	FY 2024-25 (Standalone)	FY 2023-24 (Standalone)
Revenue from operations	8,576.87	5,499.22	6,149.79	5,880.82
Total Income	8,932.70	5,536.54	6,352.98	5,915.34
EBITDA	1,982.03	348.46	1,245.48	1,079.73
EBITDA margin	23.11%	6.34%	17.78%	17.90%
Profit after tax	1,189.35	(195.62)	510.22	541.46
Profit after tax margin	13.87%	(3.56)%	8.30%	9.21%
Return on Net Worth	14.97%	(15.48)%	6.30%	33.14%
Return on Capital Employed	18.00%	3.85%	10.18%	22.81%
Debt-Equity Ratio	17.54%	1.55	17.25%	0.96

Consolidation for FY 2023-24 being for a part period from January 08, 2024, the date of acquisition of the subsidiary.

Events after this reporting date

There have been no significant events to be reported other than those disclosed in the Directors Report.