Tanla Platforms Ltd Management Discussions

Business Overview

The landscape of digital communication and interactions is continually evolving, driven by both macroeconomic forces and dynamic shifts in consumer behavior. As enterprise recognize the pivotal role of digital customer experience in maintaining competitiveness, they are increasingly investing in innovative solutions to bolster their marketing, delivery, and customer service strategies.

While our global market is inevitably influenced by overarching macroeconomic trends, it is also shaped by evolving shifts in how enterprises, their end-users, and individuals at large communicate with each other over time. The digital communication and interaction market is large, global, and growing. Enterprises universally acknowledge that their competitive edge relies on delivering an outstanding digital customer experience. This awareness drives them to prioritize customer engagement and actively seek solutions to enhance their marketing, delivery, and customer service strategies.

Structural Growth Drivers

Demand is influenced by several structural trends and shifts in the ways businesses, customers, and people interact and communicate. We see a few notable trends across the world shaping the world of digital interactions. These trends will be led by different stakeholders of our world.

Users	Channel Preferences	Enterprises	Regulators
Users expect rich, real time, and immersive interactions across multiple channels, with a heightened emphasis on enhanced privacy. There has been an explosion in digital interactions, evidenced by a 10X growth over past five years. Personalization, coupled with end-to-end encryption, is becoming crucial for capturing user attention securely and effectively.	The explosion of channels vying for user attention is driving the need for robust omnichannel platforms.	Cloud-based models with no capital expenditure (capex) and pay-as-you- go pricing are rapidly gaining traction, fueling the expansion of services like Customer Data Platforms (CDPs) that utilize blockchain and AI/ ML technologies. There is a growing demand for a single platform with one API to ensure seamless engagement across channels. As businesses adopt new communication channels and integrate cross-channel marketing automation, the need for end-to-end (E2E) solutions becomes crucial.	The importance of consent, transparency, protection, and user control is intensifying, with data privacy and security becoming paramount on a global scale. Businesses are increasingly required to adhere to stricter regulations and ensure that user data is handled with the utmost care, safeguarding against breaches and maintaining trust.
	There is an increasing focus on solutions such as conversational commerce on WhatsApp, which leverage the enhanced richness and scope of communication made possible by RCS (Rich Communication Services).
	These advancements are not only improving the quality of interactions but also expanding the ways in which businesses can engage with their customers.

 

Result of Operations

At a glance

Revenue grew by 17.1% YoY to INR 3,928 Crore

Gross profit grew by 26.2% YoY to INR 1,056 Crore. The gross margin was at 26.9%, increased by 194 basis points

EBITDA grew by 24.5% YoY toINR 732 Crore. EBITDA margin was at 18.6%, increased by 111 basis points

Profit after tax grew by 22.5% YoY to INR 548 Crore. PAT margin was 14.0%, increased by 62 basis points

Earnings per share was INR 40.79

Free cash flow was at INR 431 Crore

The Consolidated financial statements of the Group have been prepared in accordance with Indian Accounting

Standards (‘Ind AS) as notified under Section 133 of the Companies Act, 2013 (the ‘Act) read with Rule 3 of the Companies (Indian Accounting Standards) Rules 2015 as amended, issued by Ministry of Corporate Affairs (‘MCA).Accounting policies have been consistently applied to all the years presented 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.

Consolidated Profit & Loss Account

	Year ended March 31
In INR Crores unless otherwise stated			Change %
	FY24	FY23
Revenue from operations	3,928	3,355	17.1
Cost of services	(2,872)	(2,518)	14.1
Gross profit	1,056	837	26.2
Gross Margin	26.9%	24.9%	194 bps
Operating expenses
Sales and Marketing	(83)	(42)	97.6
General and administrative	(241)	(207)	16.4
Total operating expenses	(324)	(249)	30.1
EBITDA	732	588	24.5
EBITDA margin	18.6%	17.5%	111 bps
Depreciation and Amortization	(85)	(46)	84.7
EBIT	647	542	19
EBIT margin	16.5%	16.1%	32 bps
Finance cost	(6)	(1)	353.9
Other income	42	26	63
Profit before tax	683	567	20.6
Tax expenses	(135)	(119)	13.6
Profit after tax	548	448	22.5
PAT Margin	14.0%	13.3%	62 bps
Earnings per share	40.79	33.05	23.4

Revenue

Revenues are derived from our Digital Platforms and Enterprise Communications businesses.

Revenue grew by 17.1% YoY to INR 3,928 Crore. The revenue growth was led by strategic acquisition of ValueFirst, and exponential growth of our OTT business.

Particulars (In INR Crores)	FY24	FY23	Change %
Digital Platforms	369	303	21.8
Enterprise Communications	3,559	3,052	16.6
Total Revenue	3,928	3,355	17.1

Digital platforms revenue grew by 21.8% YoY to INR 369 Crore, led by Trubloq and Wisely OTT. We had our first commercial success on Wisely ATP, our greenfield anti-phishing platform. We exited our relationship with Vi on Wisely Network by the end of March 2024.

Enterprise communications revenue grew by 16.6% YoY to INR 3,559 Crore. The growth in enterprise communications was led by ValueFirst acquisition and exponential growth in OTT channels led by WhatsApp. WhatsApp revenue grew by 3.4x times in FY24. Our International Long Distance (ILD) messaging was impacted due to the shift to OTT channels by some tech majors during the year.

We had heathy additions to our customer base in FY24, adding 404 new customers, which contributed INR 143 Crore. 33% of these new additions were on WhatsApp. Our product penetration improved to 2.32 from 2.17 in FY24 on a larger customer base, reflecting growing adoption of WhatsApp and other newer channels.

Customers with annual revenue greater than INR 1 Crore grew by 16% YoY to INR 3,736 Crore. In FY23, ValueFirst was one of our top customers and post acquisition we have only considered direct enterprise customers of ValueFirst for this analysis, which has resulted in reduction in revenue from greater than INR 50 Crore segment and increase in other segments. Customer concentration from top twenty customers reduced from 58% in FY23 to 42% in FY24. In FY23, ValueFirst was of one of our top customers and post acquisition it no longer remains our top customer and its impact can be seen in customer concentration mix.

		FY24		FY23	Growth
Customer Segment (In INR Crores)	Count	Revenue	Count	Revenue	Count %	Revenue %
>50 Crore	21	1,707	19	1,904	10.5	(10.3)
>10 Crore - <50 Crore	61	1,263	33	746	84.8	69.0
>1 Crore - <10 Crore	241	767	171	584	40.9	31.3
Total	323	3,736	223	3,234	44.8	15.5

Cost of Services

The cost of services consists of a service transaction fee paid to mobile carriers and other suppliers.

Particulars (In INR Crores)	FY24	FY23	Change %
Cost of services	2,872	2,518	14.1

Cost of services grew by 14.1% YoY to INR 2,872 Crore, led by volume growth. The cost of services is primarily associated with the enterprise communications.

Gross Profit

Gross Profit is Revenue less cost of Services.

Particulars (In INR Crores)	FY24	Gross Margin	FY23	Gross Margin	Change %
Platform Business	360	97.6%	291	96.0%	23.7
Enterprise Business	696	19.6%	546	17.9%	27.5
Total	1,056	26.9%	837	24.9%	26.2

Gross profit grew by 26.2% YoY to INR 1,056 Crore in FY24, driven by gross profit expansion across Digital Platforms and Enterprise Communications, resulting in gross margin improvement of 194 bps to 26.9%.

Digital platforms business gross profit grew by 23.8% YoY to INR 360 Crore driven by Trubloq and Wisely. Gross profit margin increased by 153 bps to 97.6%. Digital business gross margin contribution to total at 34.1%. Enterprise communications gross profit grew by 27.4% to INR 696 Crore, driven by strong performance on WhatsApp and acquisition of ValueFirst.

EBITDA

Earnings before interest, taxes, depreciation, and amortization (EBITDA) is a measure that represents the profit generated by the operating business, obtained by deducting operating expenses from revenue. It serves as a reflection of the operating business profitability.

EBITDA grew by 24.5% YoY to INR 732 Crore. The EBITDA margin increased by 111 basis points YoY to 18.6%. The Gross profit to EBITDA conversion stood at 69% in FY24. We successfully integrated the ValueFirst acquisition and created shareholder value by driving EBITDA from single digits to mid-teens.

Our indirect expenses included a one-time expense of INR 27 Crore relating to MWC 2024, if normalized our adjusted EBITDA grew by 28.4% to INR 760 Crore and adjusted EBITDA margin was at 19.3% in FY24.

Particulars (In INR Crores)	FY24	FY23	Change %
Gross profit	1,056	837	26.2
Sales & Marketing expenses (S&M)	(83)	(42)	97.6
General & Administrative expenses (G&A)	(241)	(207)	16.4
Operating profit- EBITDA	732	588	24.5
EBITDA/Gross Profit conversion	69%	70%	(93 bps)

In FY24, our indirect expenses increased by 30.1% post consolidation of ValueFirst for the nine-month period. Additionally, indirect expenses included a one-time expense of INR 27 Crore for MWC 2024. Adjusting for ValueFirst expenses and MWC, our indirect expenses decreased by INR 6 Crore driven by lower forex cost and decrease in employee restricted stock option costs.

Operating Expenses Breakup

Particulars (In INR Crores)	Category	FY24	FY23	Change %
Employee cost	S&M and G&A	169	134	26.3
Professional charges	G&A	22	34	(34.1)
Cloud and data center hosting charges	G&A	25	14	72.2
Foreign exchange fluctuation	G&A	6	13	(52.8)
Other expenses	G&A	25	13	78.5
Travelling expenses	S&M	16	11	49.2
Marketing expenses	S&M	31	8	277.0
Allowance for doubtful debts	G&A	4	5	(14.5)
Rent, rates, & taxes	G&A	7	5	34.8
Office maintenance	G&A	8	5	57.7
Corporate Social Responsibility	G&A	10	4	166.7
Advertisement expense	S&M	1	3	(70.6)
Total		324	249	30.1

Sales and marketing expenses consist of employee costs and other expenditures directly related to sales, marketing, and promotional activities.

General and administrative expenses encompass various costs, including employee expenses (excluding the salary costs mentioned earlier), charges for cloud and data center hosting, as well as expenses associated with day-to-day operations. These day-to-day operational expenses include rent for facilities, professional fees, office maintenance, and other general expenditures.

Detailed variance analysis is explained below

Employee Cost

Particulars (In INR Crores)	FY24	FY23	Change %
Salaries and wages	148	108	38.0
Employee stock option cost	8	17	(51.3)
Contribution to provident and other funds	8	6	26.0
Staff welfare expenses	5	3	45.4
Total	169	134	26.3

Employee cost remains constant at 4% of revenue in FY24, as compared to FY23. The increase in employee costs is primarily attributed to increase in employee cost through ValueFirst acquisition and salary increments.

We have adopted a compensation policy aimed at attracting, retaining, and rewarding talented individuals while aligning their long-term interests with our objectives. As part of this policy, high-performing employees are granted performance-based restricted stock units. These awards vest upon the achievement of specific goals over designated performance periods.

Our Employee Stock Option cost has decreased because we have issued multi-year grants. According to our accounting policy, we have accelerated the expensing of these options, resulting in the highest expense in the first year, which then decreases in the following years.

A summary of the restricted stock unit (RSU) activity and related information for the year ending March 31, 2024:

Particulars	No of RSUs
Opening balance as on April 01, 2023	3,20,500
RSUs granted	0
RSUs vested	51,503
RSUs exercised	59,503
RSUs lapsed	13,500
Balance as on March 31, 2024	2,47,497

RSU Vesting Schedule

Particulars	No of RSUs
RSUs vested yet to be exercised for FY24	0
FY25	1,59,999
FY26	74,998
FY27	12,500
FY28	0
Balance as on March 31, 2024	2,47,947

Cloud and Data Center Hosting

Particulars (In INR Crores)	FY24	FY23	Change %
Data center and hosting charges	16	9	77.1
Internet and cloud computing charges	9	5	64.3
Total	25	14	72.2

Cloud and data center hosting charges grew by 72.2% YoY to INR 25 Crore. The Increase in hosting charges is primarily attributed to increased spending on data center and other cloud hosting charges.

Other Sales and Marketing expenses

Particulars (In INR Crores)	FY24	FY23	Change %
Travelling expenses	16	11	49.2
Marketing expenses	31	8	277.0
Advertisement expense	1	3	(70.6)
Total	48	22	118.1

Other sales and marketing expense grew by 118.1% YoY to INR48 Crore. S&M expense includes a one-time expense of INR27 Crore relating to MWC 2024, if adjusted our S&M expenses remains constant in comparison to FY23.

Other General and Administrative expenses

Particulars (In INR Crores)	Category	FY24	FY23	Change %
Professional charges	G&A	22	34	(34.1)
Foreign exchange fluctuation	G&A	6	13	(52.8)
Other expenses	G&A	25	13	78.5
Allowance for doubtful debts	G&A	4	5	(14.5)
Rent, rates & taxes	G&A	7	5	34.8
Office maintenance	G&A	8	5	57.4
Corporate social responsibility (CSR)	G&A	10	4	150.0
Total		82	79	3.8

Other General and Administrative (G&A) expenses grew by 3.8% YoY to INR 82 Crore. This increase can be primarily attributed to increase on Corporate Social Responsibility (CSR) spends and other expenses.

Depreciation and Amortization

Fixed assets including IT assets are depreciated over their estimated useful lives using the straight-line method.

Intangible assets, created at the time of acquisition based on the purchase price allocation methodology are amortized over their estimated useful lives using the straight-line method. The right-of-use asset represents leased assets such as leased office space and is depreciated over its useful life.

On fair valuation of net assets on acquisition of ValueFirst India, we added INR 52 Crore as intangible assets. The impact of amortization for such intangible assets was INR 8 Crore. Refer note no 9 of the consolidated financial statements for more details.

Particulars (In INR Crores)	FY24	FY23
Amortization on platforms	21	17
Amortization on customer relationship	17	12
Amortization on trade name	1	0
Amortization on technology	2	1
Amortization on non-compete	1	1
Amortization on software	11	0
Depreciation on right-of-use assets	11	4
Depreciation on tangible assets	30	11
Total depreciation	85	46

Depreciation and Amortization increased by 84.8% YoY to INR 85 Crore. The increase in amortization can be primarily attributed to the capitalization of the platform and additions arising due to the acquisition. During the year, INR 29 Crore was capitalized towards Wisely ATP.

Other Income

Investments can include liquid funds such as fixed deposits or term deposits with banks, housing finance companies, and savings schemes. Additionally, we may invest in securities and bonds issued by the central government, provided they have a minimum rating of ‘AAA.

Our cash, cash equivalents, and current investments, in the form of fixed deposits, are predominantly held in both Indian Rupees (INR) and U.S. dollars (USD).

Particulars (In INR Crores)	FY24	FY23
Interest income on deposits	18	19
Interest on income tax refunds	1	6
Miscellaneous income	24	1
Total	43	26

We generated an average interest yield of 5.1% in FY24. Other income also includes interest received on income tax refund of INR 0.80 Crore. Miscellaneous income includes a gain of INR 21 Crore pertaining to write back of pending old liabilities no longer required to be paid due to service issues.

Cash balance held in current (USD accounts) generates no interest. Refer to cash, cash equivalent section for more details.

Profit after Tax (PAT)

Particulars (In INR Crores)	FY24	FY23
Profit before tax	683	567
Tax expense	(135)	(119)
Profit after tax	548	448
Profit after tax margin	14.0%	13.3%
Effective tax rate	19.8%	21.0%

Profit after tax grew by 22.3% YoY to INR 548 Crore. Profit after tax margin increased by 70 basis points YoY to 14.0%. The adjusted PAT grew by 22.8% YoY to INR 554 Crore.The adjusted PAT is normalized for the post tax impact of two items as mentioned below: (i) A one-time expenditure of INR 27 Crore incurred for Mobile World Congress (MWC) 2024 and (ii) Gain of INR 21 Crore in other income pertaining to write back of liability.

In FY24, our total tax and social contribution to the exchequer amounted to INR 949 Crore. This contribution includes corporate income taxes, withholding taxes payments, indirect taxes like GST in India and Singapore, VAT in UAE along with other social security contributions.

Earnings per Share

Earnings per share grew by 23.4% to INR 40.79. The growth in EPS is led by increase in absolute profitability.

Particulars (In INR Crores)	FY24	FY23
Profit after tax	548	448
Weighted-average basic shares outstanding	13,44,35,225	13,44,33,437
Effect of dilutive shares	2,47,250	68,018
Weighted-average diluted shares outstanding	13,46,82,475	13,45,01,455
Basic earnings per share	40.79	33.05
Diluted earnings per share	40.71	33.04

Consolidated Balance Sheet

In INR Crores, unless otherwise stated	As at March 31, 2024	As at March 31, 2023
I. ASSETS
Non-current assets
Property, plant and equipment	206	166
Platforms	99	88
Customer relationships	31	13
Trade	3	-
Technology	31	-
Non-compete	2	2
Intangible assets underdevelopment	78	57
Goodwill	265	135
Capital work in progress	23	8
Right-of-use-lease assets	67	80
Financial assets	33	15
Deferred tax assets (net)	39	36
Other non-current assets	94	79
Total non-current assets	971	678
Trade receivables	842	570
Cash and bank balances	667	712
Other financial assets	503	420
Other current assets	26	33
Total current assets	2,038	1,735
TOTAL ASSETS	3,009	2,413
Equity and liabilities
Equity share capital	13	13
Other equity	1,929	1,504
Total equity	1,942	1,517
Financial liabilities
Lease liabilities	59	73
Other financial liabilities	-	1
Provisions	2	2
Other non-current liabilities	1	1
Total non-current liabilities	62	76
Current liabilities
Trade payables	551	539
Lease liabilities	16	9
Other financial liabilities	405	244
Other current liabilities	17	20
Short term provisions	8	1
Liabilities for current tax (net)	8	5
Total current liabilities	1,005	819
Total equity and liabilities	3,009	2,413

Equity and Liabilities

We have only one class of shares – equity shares with a par value of INR 1/- each. The authorized share capital is 20,00,00,000 equity shares. As on March 31, 2024, paid-up share capital at INR 13.45 Crore, compared to INR 13.44 Crore as of March 31, 2023.

Equity share movement is detailed below:

	FY24		FY23
Particulars	No. of Shares	(In INR Crores)	No. of Shares	(In INR Crores)
Shares outstanding at the beginning of the year	13,44,00,357	13.44	13,57,45,523	13.57
Add: Issued and allotted during the year	59,503	0.01	71,500	0.01
Less: Shares bought back during the year	860	-	(14,16,666)	(0.14)
Shares outstanding at the end of the year	13,44,59,857	13.45	13,44,00,357	13.44

Reserve & Surplus

Particulars (In INR Crores)	March 31, 2024	March 31, 2023
Capital reserve	7	7
Capital redemption reserve	2	2
General reserve	25	25
Securities premium reserve	222	215
Employee stock options outstanding account	28	26
Retained earnings	1,605	1,191
Foreign currency translation reserve	40	38
Other items of other comprehensive income	(1)	(1)
Total	1,928	1,504

The movement in retained earnings is on account of profit generated of INR 548 Crore, and payment of dividend of INR 134 Crore to the shareholders.

Lease Liabilities

As per Ind-AS 116 on lease accounting, leased assets recognition as assets and liabilities is mandated in the lessees financial records. Accordingly, the asset and liability associated with leased office premises of the group companies have been determined and presented within non-current and current assets/liabilities. This classification pertains to values anticipated to occur after one year and within one year, respectively.

Long-Term Provisions

Provisions represent liabilities accrued for leave encashment (INR 4 Crore) and gratuity (INR 6 Crore) payable to employees on retirement, resignation, or superannuation, quantified and charged to expenses at the end of each reporting period.

Gratuity liability is managed through a policy held with Life Insurance Corporation of India, to cover the liability as and when the claim arises. Leave encashment represents the accrued liability in accordance with our leave policy, which becomes payable to employees upon retirement, resignation, or superannuation. Both gratuity and leave encashment are accrued based on independent actuarial valuation reports.

Other Non-Current Liabilities

Other non-current liabilities consists of security deposits received from customers.

Trade Payables

Trade payables consist of payables towards cost of services (mobile carriers) and other supplier and stood at INR 551 Crore as of March 31, 2024 (INR 539 Crore as of March 31, 2023).

Other Financial Liabilities

Other financial liabilities consists of cost of services not yet billed, payable to capital creditors, unclaimed dividend and other financial liabilities. As on date of reporting, 1.4% of unbilled cost remains to be billed by mobile carriers.

An amount of INR 0.85 Crore is held in the unclaimed dividend account, reflecting unpaid dividends to shareholders over the years due to various reasons.

We have has established oversight for this liability through its register and secretarial team. Upon the lapse of a seven-year period from the date of dividend declaration, this amount is transferred to the Central Governments Investor Education and Protection Fund (IEPF) account.

Other Current Liabilities

Other current liabilities consist of statutory liabilities, payable towards GST and TDS. These liabilities are settled with government authorities on a monthly schedule, adhering to specified due dates.

Liabilities for Current Tax

Liabilities for current tax represents tax payable in our Singapore subsidiary and domestic subsidiary operating out of SEZ facility in Hyderabad.

Property, Plant and Equipment

(In INR Crores, unless otherwise stated)	Opening PPE	Closing PPE
Land	8	21
Buildings	2	11
Leasehold Improvements	61	56
Furniture	20	32
Computers	73	79
Office Equipment	2	6
Vehicles	0	1
Total	166	206

The increase in the carrying cost of PPE can be primarily attributed towards additions from ValueFirst acquisition, leasehold improvements, and other office equipment.

Intangible Assets and Intangible Assets Under Development

The increase in the net carrying cost of Intangible assets can be primarily attributed towards additions of Intangible on ValueFirst acquisition and capitalization of Wisely ATP.

Intangible assets under development represent platforms and software under development being internally developed, whose cost includes salaries and wages and professional consultancy charges attributable to development.

(In INR Crores, unless otherwise stated)	Opening Assets	Closing Assets
Platforms	88	99
Customer relationships	13	31
Trade name	-	3
Technology	-	11
Non-compete	2	2
Software	-	20
Total	103	166

Goodwill

Goodwill represents an excess of purchase consideration over the net book value of assets acquired from the subsidiary companies at the time of investment. Goodwill on consolidation and acquisition is not amortized but is tested for impairment on an annual basis and impairment losses are recognized where applicable.

Goodwill
(In INR Crores, unless	Karix	Gamooga	ValueFirst	Total	Useful life	Impairment/ Amortization	Net Carrying Value
otherwise stated)
Goodwill	159	25	129	313	-	49	264

Capital Work in Progress

Capital work in progress represent on-going work towards leased offices.

Other Financial Assets

Particulars (In INR Crores)	March 31, 2024	March 31, 2023
EMD deposits	6	5
Rental deposits	6	6
Other deposits	7	4
Bank deposits with more than twelve months maturity	14	0
Total	33	15

EMD deposits represent security deposits submitted to customers as part of the bidding process for tenders. These deposits are primarily associated with contracts involving PSU and government agencies.

Deferred Tax Asset

Deferred tax arises on account of the timing differences in depreciation charge between the Income Tax Act and Companies Act and is subsequently reversed in future periods. During the year, deferred tax assets increased by INR 3 Crore due to the reversal of timing differences on depreciation of assets.

Other Non-Current Assets
Particulars (In INR Crores)	March 31, 2024	March 31, 2023
Income tax asset	93	86
Capital advances	1	0
Total	94	86

Income tax assets increased by INR 8 Crore due to an increase in TDS receivable, which will be offset against subsequent years income tax payable.

Trade Receivables

Trade receivables stood at INR 842 Crore as of March 31, 2024. Day Sales Outstanding (DSO) increased by eight days to 73 days in FY24.

Cash & Cash Equivalents

Cash, cash Equivalents stood at INR 681 Crore for the year ended March 31, 2024. Cash, cash equivalents composition is given below:

Particulars (In INR Crores)	March 31, 2024	March 31, 2023
Restricted cash	54	26
Current account - INR	12	42
Current account - USD	95	175
Fixed deposits	506	469
Fixed deposits with maturity period greater than 12 months classified under non-current assets	14	-
Total	681	712

Restricted cash are held as margin money deposits given for bank guarantees and cash credit limits. The increase in restricted cash is attributed to the issuance of bank guarantees for new contracts and participation in request of proposal. Cash balance in overseas accounts decreased due to working capital investments made towards strategic partnership. Investments in fixed deposits is in line with our investment policy. Independent bank balance confirmation for 100% of our cash and investments were obtained by our statutory auditors.

Cash & Cash Equivalents

Particulars (In INR Crores)	Current Accounts- INR	Current Accounts- USD	Fixed 1 Deposits	Restricted Cash	Total
HDFC Bank	5	12	439	53	509
State Bank of India	1	-	31	-	32
Axis Bank	2	-	18	0	20
Kotak Mahindra Bank	2	-	7		9
Citibank (Dubai)	-	34	-	1	35
DBS Bank (Singapore)	-	49	-	3	52
ICICI Bank	1	-	22	-	23
Others	1	-	3	-	4
Total	12	95	520	54	681

1 - Includes fixed deposits with maturity period greater than 12 months classified under non-current assets.

Other Current Financial Assets

Particulars (In INR Crores)	March 31, 2024	March 31, 2023
Accrued income	478	412
Interest receivable	11	7
Other receivable	14	1
Total	503	420

Accrued income represents revenue that has been accrued but not yet billed at the end of each month. This is a common industry practice where invoicing occurs in the following month post reconciliation. Accrued income for FY24 is at 12% of revenue. As on reporting date, 14.1% of unbilled revenue is yet to be billed to customers.

Interest receivable represents the interest that has been accrued on fixed deposits but has not yet been credited to the deposit account by the banks and are recognized under other financial assets.

As on date of reporting, 14.1% of unbilled revenue is yet to be billed to customers. This data is not comparable to previous year due to early reporting date (August 13, 2024).

Other Current Assets

Particulars (In INR Crores)	March 31, 2024	March 31, 2023
Advances recoverable in cash or kind	26	22
GST Input credit	-	3
Total	26	25

The balances with revenue authorities represents tax deducted at source (TDS), which is adjusted against subsequent tax dues or refunded with interest on completion of tax assessments.

Liquidity Management

The primary source of our cash, cash equivalents and current investments are funds generated from our operational activities. Over the past few years, the principal use of cash has been to support operations, facilitate capital expenditure stemming from growth, and to distribute cash to shareholders through dividends and buybacks. On March 31, 2024, our cash, cash equivalents, and current investments (in form of fixed deposits) were primarily held in INR, and U.S. dollars. We generally invest only in the financial assets of issuers or funds with a minimum credit rating of ‘AAA.

We are debt-free, and our working capital is sufficient to fulfil operational needs. We have access to additional liquidity through various credit facilities, when the need arise.

Analysis of Consolidated Statement of Cash Flow

Particulars (In INR Crores)	March 31, 2024	March 31, 2023	Change %
Net cash flow from operating activities	590	247	139.1
Net cash flow from investing activities	(528)	(70)	658.7
Net cash flow from financing activities	(151)	(328)	(54.0)
Net increase in cash, cash equivalents	(89)	(151)	(41.1)
Cash, cash equivalents at the beginning of the year	712	865	-
Cash acquired on ValueFirst Acquisition	51	-	-
Forex fluctuations	(7)	-	-
Cash, cash equivalents at the end of the year	667	712	-
Fixed deposits with maturity period greater than 12 months classified under non-current assets	14	-	-
Cash, cash equivalents	681	712	-

Cash from flow from operating activities for the year ended March 31, 2024, was at INR 590 Crore. Our operating cash flows have increased in FY24 as compared to FY23 mainly on account of increase in profit after tax coupled with changes in working capital and tax payouts.

Cash used in investing activities for the year ended March 31, 2024, was at INR 528 Crore. We generated INR 431 Crore as free cash flow during the year. The cash was primarily utilized for acquisition of ValueFirst, and capital investments related to platforms and infrastructure.

Particulars (In INR Crores)	March 31, 2024	March 31, 2023	Change %
Operating cash flow	590	247	139.1
Capital expenditure	(159)	156	(1.9)
Free cash flow	431	91	373.6

Cash used in financing activities for the year ended March 31, 2024, was at INR 151 Crore. The cash was primarily utilized for dividend payouts to shareholders.

Cash flow movement from FY23 to FY24 is depicted below:

Distribution of cash to shareholders and utilized for investments

Financial Ratios

Following are ratios for the current financial year and their comparison with the preceding financial year, along with explanations where the change has been 25% or more.

Ratio Description	March 31, 2024	March 31, 2023	Change %	Explanation
Current ratio	2.03	2.11	(3.9)	NA
Return on equity ratio	31.7%	31.2%	(1.7)	NA
Trade receivables turnover ratio	5.56	5.94	(6.3)	NA
Trade payable turnover ratio	3.83	3.25	17.8	NA
Net capital turnover ratio	3.80	3.69	3.0	NA
Net profit ratio	14.0%	13.3%	4.6	NA
Return on capital employed	37.7%	38.7%	(2.7)	NA

Internal Controls and Adequacy

The primary objective of the internal control system over financial reporting is to provide reasonable assurance that the financial statements are reliable and aligned with generally accepted principles and regulations.

The framework of internal financial controls meets the requirement of the Companies Act, 2013. The Internal Control – Integrated Framework (2013) is intended to increase transparency and accountability in an organizations process of designing and implementing a system of internal control. The framework requires identification and analysis of risks and management of appropriate responses.

Internal financial control systems include design, implementation and maintenance of adequate internal financial controls that operate effectively for ensuring the orderly and efficient conduct of its business, including adherence to our policies, safeguarding of its assets, prevention and detection of frauds and errors, accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

We have defined and implemented internal controls across the entire value chain with a focus on addressing individual processes and subprocesses. This concerted effort is undertaken to ensure that internal controls are aligned with the strategic, operational, financial and compliance objectives.

An external consultant conducted an independent evaluation of the efficacy of internal controls pertaining to financial reporting. This assessment was deliberated by the management and subsequently presented to the Audit Committee.

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

Since FY20, M/s Deloitte Touche Tohmastu India LLP has been serving as the internal auditor and will continue to remain internal auditors for FY25. The internal audit is carried out in accordance with the internal audit plan, which is subject to annual evaluation in consultation with the statutory auditor and approved by the Audit Committee. The internal audit process is designed to review the adequacy of internal controls with significant coverage of all areas of our operations.

The Audit Committee reviews internal audit reports submitted by the internal auditors. The progress of implementing suggested corrective actions is monitored through the review of the action taken tracker. The Audit Committee also engages in discussions with the statutory auditors to obtain their assessments of the adequacy of the internal control systems.

Based on its evaluation (as defined in section 177 of Companies Act, 2013 and Regulation 18 of SEBI LODR Regulations, 2015), the Audit Committee has concluded that, as of March 31, 2024, our internal financial controls were adequate and operating effectively.

Risk Management

Our approach to risk management involves identifying, assessing, and addressing risks to safeguard operations and strategic goals. Our framework covers market dynamics, technological shifts, regulatory changes, and cybersecurity threats. Our innovative risk-based action matrix prioritizes high-risk areas for focused attention. For more details refer Risk Management section of the Integrated Report.

People

Our long-term goals are to cultivate a workforce that mirrors the diverse markets we serve and setting the standard of an inclusive workplace that celebrates uniqueness. Investment in talent is crucial for achieving our goals. We follow 3Cs Model – Capacity, Competency and Culture for talent investment. This model helps us review our current talent pool, pinpoint areas of focus, and devise strategies to not only enhance but also ensure our employees our fully aligned and engaged. We focus on giving our team the tools and skills they need to provide customized products and services to our customers. We create a work environment built on mutual trust, offering great working conditions where employees can develop their individual skills and potential.

We have also embraced a Garage approach to working and collaborate with garage owners to promote continuous learning and drive innovation. By partnering with garage owners, we aim to create a mutually beneficial environment that supports skill development and encourages the creation of innovative workspaces. We also ensure a comprehensive compensation and benefits package that promotes a healthy balance between personal and professional life. For more details refer Human Capital section of the Integrated Report.

Sustainability

Our commitment to Environmental, Social, and Governance (ESG) practices are all pervasive across our policies, people, and communities supported. Our endeavor towards ESG is well reflected in the Sustainability Yearbook 2024 released by S&P Global, where Tanla was recognized as an ‘Industry Mover for having doubled our ESG score in FY24 and making space for ourselves in the top 1% of companies in software industry to hold ESG in a high regard. For more details refer Natural and Social Capital section of the Integrated Report.

Risk Management

At Tanla, we prioritize high standards of risk management to ensure long-term value creation. As a leading CPaaS provider in India, we safeguard our stakeholders, including customers, employees, investors, and partners.

We face strategic, financial, operational, and compliance risks globally. In the development of our products and services, we incorporate risk criteria to ensure that we identify, assess, and mitigate potential risks. This proactive approach to risk management enables us to enhance the safety, reliability, and quality of our offerings. Our comprehensive risk management framework addresses market fluctuations, technological advancements, regulatory changes, cybersecurity threats, and operational challenges. This framework helps manage existing risks, identify emerging ones, design mitigation solutions, and establish governance, monitoring, and measurement mechanisms.

Our risk management principles are embedded across all strategic endeavors to protect our company, people, and assets, comply with evolving regulations, and deepen stakeholder trust. A systematic approach to risk management is crucial for sustainable growth and long-term success. The following sections detail our frameworks, procedures, key risks, and mitigation measures, reinforcing our commitment to operational excellence and value creation.

Risk Management Methodology

Our teams have deployed a robust risk management framework that enables us to manage existing risks through a structured process. This includes identifying emerging risks, designing mitigation solutions, and establishing stringent governance, monitoring, and measurement mechanisms.

Enterprise Risk Management (ERM) Framework

Our comprehensive Enterprise Risk Management (ERM) framework drives our risk management activities and underpins our strategic intent and execution approach. It outlines the key risk areas specific to our operations, compliance requirements, and industry standards. The ERM framework aligns with the provisions of the Committee of Sponsoring Organizations (COSO) 2017 framework and the ISO 31000 Risk Management standard. This framework serves as the foundation for fostering risk awareness among employees and enabling their effective contribution.

Our enterprise risk management framework is built on the following principles:

The Risk Management Committee and Internal Risk Committee at the board level provide oversight of the Risk Management function. The Risk Management Committee at the Board level meets at least twice a year. The internal committee meets thrice to review and monitor key risks and their mitigation measures, providing updates to the Board based on the companys risk registers.

Upon joining the company, non-executive directors receive a training module focused on risk management, mitigation, and benchmarking. The ultimate responsibility for risk management lies with the Chairperson of the Risk Management Committee, an independent director, ensuring the committee operates independently of business functions.

A dedicated Risk Management function, equipped with adequate budget and resources, is responsible and accountable for effectively implementing recommended solution. Led by our designated Chief Risk Officer (CRO), the Risk Management team, including risk champions/owners identified in each department, integrates risk management principles into the operational framework to ensure organizational goals are met. The committee reviews and assures the risk management and compliance process.

Our Risk Management function operates independently of business lines, allowing it to effectively identify, assess, and mitigate potential risks that could impact the company. Additionally, we leverage external risk management specialists to support our designated CRO and the Risk Management team when needed.

Risk Management Committee	Amrita Gangotra – Chairperson (Independent Director)
Composition	Sanjay Kapoor - Member(Non-Executive Non-Independent Director)
	Deepak Goyal- Member(Executive Director)
	Rohit Bhasin - Member(Independent Director)
	Sunil Bajpai- Member & Chief Risk Officer

Aligning Employees to the Risk Management Process

The Risk Management team organizes training sessions and workshops to educate employees about various risks, their potential impacts, and ways to mitigate them. A structured feedback mechanism encourages employees to actively participate in risk identification, assessment, and improvement initiatives through garage discussions, project steering committee meetings, and more.

Periodic risk assessment surveys and dedicated communication channels enable employees to report potential risks or share suggestions for improvements with the Risk Management team. The Internal Risk Committee hosts regular review meetings, chaired by our designated CRO, to discuss collected feedback, analyze emerging risk patterns, and collaboratively develop strategies to address them. By involving employees and risk owners in this process, we tap into their diverse perspectives and insights, fostering a culture of collective responsibility for risk management and driving continuous improvement in our practices.

In our relentless pursuit to instil a culture of prudent risk management, we have pioneered the integration of innovative financial incentives that incorporate Key Performance Indicators (KPIs) with elements of risk management metrics. These incentives are meticulously managed by our leadership team, based on performance against these KPIs. This novel approach harmonizes individual and collective achievements with the adept identification, assessment, and mitigation of risks.

Maintaining Strong	Participative Management	Accountability for Actions	Risk-Aware Performance	Embedding Risk in Decisions	Open Forum Discussions
Leadership	Style	Policies promote	Alignment	Risks considered	An effective
Emphasis on risk awareness and setting the right tone throughtout the company.	Active participation of teams in decision-making and strategic risks discussions.	accountabiltiy, rewarding responsible behavior, and discouraging lack of accountability.	Incentives aligned with core values, behaviors, and codes of conduct to promote risk- aware decisions.	in key business decisions for better understanding of risk and impact assessment.	whistleblower mechanisms to report unethical behavior and raise risk awareness.

Tax Compliance and Risk Management

As a business with operations and customers across India and globally, we continuously focus on evolving tax regulations and requirements to ensure compliance and maintain seamless operations. Our tax function is responsible for identifying, managing, and monitoring tax risks relevant to our business. They perform regular reviews of existing provisions and activities in all the geographies where we operate. When faced with significant uncertainties or complexities related to taxation, we consult with external experts to obtain clarity before undertaking any major transactions.

Monitoring of Risk Management Activities

Effective review and evaluation mechanisms integrated within our ERM framework guide our efforts to monitor progress on risk management activities. We believe in the integrity of our people and rely on self-assessments to evaluate the effectiveness of risk management procedures. The effectiveness of the risk management framework and the impact of mitigation activities are reviewed semi-annually by the Risk Management Committee and the Internal Risk Committee. Any required changes or enhancements are recommended by the committees and promptly addressed by the Risk Management function. Additionally, we draw on external risk management specialists to assess and further strengthen the effectiveness of our risk management framework and initiatives. We ensure the risk management processes are subject to regular audits by the internal audit team.

The Risk Monitoring and Reporting function is responsible for:

Reviewing the effectiveness of risk mitigation for the Risks That Matter, including:

• Reviewing the Risk MIS and results of self-assessments on risk mitigation by the Risk Owners.

• Determining and operationalizing corrective action were applicable; and

• Providing an overall risk management rating for the RTMs in the Risk Reporting.

Providing risk reports to the Risk Committee, including:

• Preparing and approving the risk reporting pack for the Risk Committee.

• Presenting the results of Risk Management to the Risk Committee/Board of Directors on such frequency as may be directed by the Risk Committee/Board of Directors.

Emerging Risks

The top two emerging risks identified by Tanla is described in the table below:

Name of the Risk	Regulatory Risk	Customer Relationship
Description	Regulatory changes might impact the platform efficacy. Regulations keep evolving all the time and pose significant business risk for the Company.	The platform on customer site can go down which can directly impact business due to natural calamities. This contingency is external to the company and is often not predicted. Having a single data center sometimes makes it risky in the times of outage as sensitive customer data is lost.
Impact	This risk directly impacts revenue and can indirectly affect the platforms goodwill and brand value.	This risk significantly affects the customers business, potentially leading to customer churn and a subsequent loss of revenue for the company.
Mitigation Actions	We follow a rigorous process for obtaining regulatory approval once the product concept note is signed off. The Chief Trust Officer and his team are provided with detailed information about the envisioned platform capabilities. After conducting thorough audits and presenting external demonstrations, we secure the necessary sign-off to proceed with the build phase.	Platforms services are deployed across multiple geographies, both in India and globally, to ensure adherence to a redundancy architecture. This approach provides a reliable fallback in the event of natural disasters or external contingencies, safeguarding critical and sensitive customer data hosted on our servers.

Major Key Risks and Mitigation Plans

Risk	Description	Likelihood	Magnitude	Mitigation
Geography Concentration	Exploring new geographies can lead to significant growth, the absence of a strategy can result in resource misalignment and missed opportunities.	Likely	Major	To mitigate geographic concentration risks, we diversify our customer base and focus on global expansion.
Cyber Security	IT cyber-attacks can compromise data integrity, operational resilience, financial stability, and reputation.	Likely	Major	We adhere to leading security standards, conduct regular audits for security compliance (including ISO 27001, ISO 22301, SOC2, and GDPR certifications) and implement advanced security tools and training programs.
Technical Debt	Accumulated technical debt can increase system fragility and maintenance costs.	Unlikely	Moderate	Infrastructure improvements, periodic system architecture reviews, and the use of state- of-the-art tools ensure a stable IT environment.

Risk Management Activities undertaken during FY24:

Four necessary shifts in mindsets were undertaken by us to elevate our risk management approach from traditional methodologies to a NextGen paradigm.

Integration	ERM Governance	Risk Exposure	Risk Reporting
Embed risk management in strategic decisions and daily operations.	Enhance governance with a tech-enabled framework for managing and monitoring risks.	Quantify financial risk exposures for top risks.	Introduce action- based risk matrix alongside traditional heat maps.
Enable sustainable strategic alignment, proactive risk identification,	Track risk events, implement controls, and design effective	Facilitate objective risk tolerance, discussions, and informed cost-benefit decisions.	Highlight risks needing C-suite focus.
resilience, and continous improvement.	mitigation strategies.		Support actionable decisions and resource allocation. Provide insights into the risk portfolio.

Risk-Based Action Matrix

We introduced a strategic matrix to enhance our risk management framework by identifying high-priority risks, emphasizing those needing focused attention from executives, and establishing clear thresholds for risk tolerance. This initiative reflects our commitment to robust risk management practices.

Below is the summarized version of our risk profile. 42% of risks require management/testing, 39% need monitoring, 16% need improvement, and 3% needs to be optimized. Dominant operational risks indicate critical areas for targeted mitigation efforts.