Suvidhaa Infoserve Ltd Management Discussions

1. Overview

• Economy & Industry Overview

The global fintech market remains a hotbed of innovation and growth, despite a sobering few years in funding and valuation terms. And there is so much more room for growth. With the advent of game-changing technologies such as GenAI and with still billions of unbanked and underbanked individuals worldwide, fintech has vast potential. It is estimated that fintech will reach a market size of $1.5 trillion in revenue by 2030—growth of roughly five times from today.

However, the rules of the game are changing. Growth at all costs is no longer the watchword. The evolution of fintech has led to a moment in which prudence—the ability to avoid adding risk to the financial system—will be as important as the ability to generate profitable growth. The prize, and the rewards for customers, will be as significant as ever, but the path to success will be more difficult.

As per report published in Jun24 as a joint initiative by Boston Consulting Group and QED Investors on Global Fintech. The last couple of years have brought the high-flying fintech sector back to earth. However, a streamlined and newly focused set of companies will now emerge, and they—and incumbents—will confront four major themes.

1. Embedded finance - Which will be a $320 billion market by 2030.

2. Connected commerce will be poised for liftoff.

3. Open banking will have a modest impact on banking but a greater one on advertising.

4. GenAI will be a game-changer now for productivity, with product innovation to follow.

New feather in the cap of Fintech is Loyalty & Reward programs, which are a proven way to build a positive brand identity, boost engagement, increase sales, and improve customer satisfaction levels. Growing competition, combined with the rise of digital commerce, has led to an acceleration of rewards platform innovation over the last decade. As a result, with both rising consumer expectations and reward costs, funding for the programs has become acutely challenging. This puts Merchants and FIs in a quandary about how to assemble the pieces of the loyalty puzzle to make the economics work for all participants.

The reality is that many loyalty programs are struggling to keep pace. This raises the question: How can loyalty program economics become more self-sustaining? One potential answer is to find additional funding sources to increase the loyalty margin by driving incremental revenue, which creates an economic win-win-win for all parties.

• Business Overview

Suvidhaa Infoserve Limited (NSE: Suvidhaa) one of Indias largest Rural Fintech company, was formed in 2007 with a vision to build a robust & easily accessible platform that will offer every household, access to a world of services within their own neighbourhood. Customers pain point moves us to deliver pioneering solutions.

In a cash dominant economy like India, where millions are still excluded from the formal banking system, Suvidhaa works with Banks to empower these unbanked people by giving them the capability to access digital financial services for the very first time.

By providing a multitude of digital financial services, Suvidhaa is an one- stop shop for Enterprises & SMEs in their quest of serving the end customer. Thus, the Suvidhaa platform acts as a bridge and creates value for both, the Banks as well as the end users and merchants.

We aim to create an organized digital network and capturing the entire Retail Commerce ecosystem of Indias unorganized retail sector through a retail tech platform that provides retailers with digital financial and business solutions to enable business expansion and scaling.

Suvidhaas functional technology platform is an agile, robust system - on one end integrated with service providers and on other the franchisee network with advanced capability to process settlement on real-time basis. Over 300 Service Providers ride on Suvidhaas robust S-Commerce? Platform to reach their last mile with a focus on bottom-of-the- pyramid i.e. one billion Indians.

Suvidhaa also provides an all-in-one solution for Loyalty, rewards, incentives and recognition to empower brands to maximize their customer acquisition efforts and turn transactional sales into passionate brand advocates. We offer fully customizable programs to match the brand, a wide product catalog and multi-language capabilities. Suvidhaa builds omni-channel (website, mobile App or In-store POS machines) CRM tech solutions for its partners to build a strong brand community.

2. Opportunities and Threats.

With more than $9Bn in investments in digital lending in the last 5 years the market is expected to grow to $515 Bn in book size by 2030, results in increase consumer spend in digital world. Regulators are actively encouraging innovation through regulatory sandboxes, new distribution models, and the launch of innovative products. India stack and innovation by FinTech companies have powered the financial inclusion revolution being witnessed across the country. Innovative solutions are being deployed to serve Tier 3 onward market. 5X growth in digital tech talent creates an opportunity for India to address the global digital skill gap and establish itself as the destination of digital and tech talent.

With new opportunities there comes a threat and for FinTech sector in India cyber security and online fraud has been a big threat. But with innovative technology solutions and assisted service commerce Suvidhaa has been better poised to tackle the same in digital environment.

3. Risks and concerns

• Risk related to Information Technology and Networks:

Our business is technology driven, and we rely on information technology and networks and related infrastructure. As such, our business operations and quality of our service depend significantly on the efficient and uninterrupted operation and reliability of our information technology systems and networks and related infrastructure, both internal and external. Further, any slowdown or negative deviation in the anticipated increase in internet penetration in India will affect our ability to attract and add new merchants and customers.

Our Company operates in the technology industry which is constantly changing and is significantly governed and affected by scientific breakthroughs, developments, innovation, government policy and laws pertaining to information technology as well as intellectual property. These factors can affect the demand, pricing and value of our products and services which have already been developed and which are in the course of being developed. Our continued growth will depend upon our ability to sustain cutting edge technology solutions, adapt to the updated/ superior/ modified technology which we may be required to use with time and to train our executives in order to utilize the technology and the talents of our human resource to their maximum potential.

• Risk related to the services provided by the Company:

Secure transmission of confidential information, such as details of customers credit card, net banking passwords etc. over public networks is one of the significant barriers to online commerce and communication. We rely on encryption and authentication technology licensed from third parties to provide security and authentication which is necessary to effect secure transmission of confidential information. We accept payments using a variety of methods, including credit card, debit card and net banking. As we continue to offer newer payment options to users and customers, we may be subject to additional regulations, compliance requirements and fraud. There can be no assurances that advances in computer technology, new discoveries in the field of cryptography, or other developments will not result in breach or compromise of the algorithms which are currently used by us for protecting the transaction data of our customers. If any such breach or compromise occurs, it could have a material adverse effect on our reputation, business, prospects, financial condition and results of operations.

4. Internal control systems and their adequacy

The internal control systems are commensurate with the size, scale and complexity of the operations of the Company. These have been designed to provide reasonable assurance with regard to recording and providing reliable financial and operational information, complying with the applicable statutes, safeguarding assets from unauthorized use, executing transactions with proper authorization, and ensuring compliance with corporate policies. The Company has continued its efforts to align all its processes and controls with best practices.

The Audit Committee of the Board of Directors, comprising of Independent Directors reviews the effectiveness of the internal control system across the Company including annual plan significant audit findings, adequacy of internal controls and compliance with accounting, policies and regulations.

5. Discussion on financial performance with respect to operational performance

These financial statements are prepared in accordance with Indian Accounting Standards (Ind AS) under the historical cost convention on the accrual basis except for certain financial instruments which are measured at fair values, the provisions of the Companies Act, 2013 (Act) (to the extent notified). The Ind AS are prescribed under Section 133 of the Act read with Rule 3 of the Companies (Indian Accounting Standards) Rules, 2015 and Companies (Indian Accounting Standards) Amendment Rules, 2016.

Accounting policies have been consistently applied except where a newly issued accounting standard is initially adopted or a revision to an existing accounting standard requires a change in the accounting policy hitherto in use.

(Amount in million)

Particulars	2023-24	2022-23
Revenue from Operations	76.09	312.87
Other Income	32.23	98.12
Total Income	108.31	411.00
Cost of Services	42.71	149.74
Employee benefits expense	38.06	17.60
Finance costs	3.41	3.66
Depreciation and Amortisation expense	124.58	138.81
Other Expenses	60.82	118.71
Total Expenses	269.58	428.51
Exceptional items	-	-

In fiscal year 2023-24, the Company experienced fluctuations in its financial performance, at standalone basis, gross revenue decreased from ?373.17 Mn to ?83.06 Mn, whereas substantial increased in loss after tax, which increased to ?145.23 Mn, as opposed to ?7.54 Mn in the previous year

• Further, at consolidated level, the Companys turnover dropped in the current fiscal to ?108.31 Mn from the previous fiscal of 2022-23 at ?411 Mn. Nonetheless, a significant increase in post-tax losses was notable, with the loss increasing to ?161.27 Mn against the loss of ?17.51 Mn for previous year.

• The company makes contributions, determined as a specified percentage of employee salaries, in respect of qualifying employees towards provident fund and employee state insurance which is a defined contribution plan. The Company has no other obligation other than to make the specified contributions. The contribution is charged to the Statement of profit and loss as they accrue.

6. Details of significant changes in key financial ratios are as given below:

Particular	2023-24	2022-23
Debtors Turnover (in times)	0.60	2.89
Inventory Turnover (in times)	-	-
Interest Coverage Ratio (in times)	(5.32)	36.84
Current Ratio (in times)	1.59	1.59
Debt Equity Ratio	0.03	0.05
Operating Profit Margin (%)	-32.39%	48.51%
Net Profit Margin (%)	-174.75%	-1.75%
Net worth	?1071.47 Million	?1149.00 Million

Above changes are mainly due to the cash loss incurred by the Company during current financial year.

Further, change in return on net worth is due to increase in net loss.

7. Material developments in Human Resources / Industrial Relations front, including number of people employed.

We have in place a well-defined Code of Conduct and ensure that ethical business practices are followed at all levels of the organisation. To maintain a constant connect between the organizational goals and employee performance, we have put in place a fair and objective performance management system. As on 31^st March, 2024, we had employee strength of 22 people.

8. Cautionary Statement

Statements in this document/ discussion relating to future status, events, or circumstances, including but not limited to statements describing the Companys objectives, projections, estimates and expectations maybe forward looking statements within the meaning of applicable laws and regulations. Such statements are subject to numerous risks and uncertainties and are not necessarily predictive of future results. Actual results could differ materially from those expressed or implied. Important factors that coul<d make a difference to the Companys operations include economic developments, improvements in Fintech ecosystem, changes in the Government regulations in India & other incidental factors.

For and on behalf of the Board of Directors Suvidhaa Infoserve Ltd.

	Sd/-	Sd/-
	Tanuj Rajde	Naresh Sharma
Place: Mumbai	Chairman	Managing Director
Date: August 14, 2024	DIN:09066867	DIN:09071085