Emudhra AR 2022-23 Notes
Chairman’s Message:
As organizations are becoming more aware and building preventive measures around management of vulnerabilities, computing capacities are constantly being enhanced, and the consumer demand for digitization that is ‘easy to use’ is on the rise, eMudhra’s portfolios are more relevant than ever in helping organizations survive and scale in this new business environment.
At the core of zero-trust principles lie the necessity to establish trusted digital identities, authenticate and manage identities and access, and the need for establishing accountability for legally binding actions taken by employees; all of which are areas where we are formidably well positioned.
We have simplified our Indian Digital Signature platform. Through eMudhra One, we have allowed for a user-friendly co-existence of personal and professional identities, digital signatures, and eSign services all in a single app and web interface. We recently launched our Certificate Lifecycle Management platform which already boasts some noteworthy clients.
On the eSignature Workflow side of things, emSigner continues to grow in more markets, with more marquee clients, and more functionalities as we evolve. From powering pharmaceutical use cases, to facilitating retail PoS, ‘Buy Now Pay Later’ schemes, emSigner has grown in maturity and relevance across industries. ‘emSigner for Banks’ is also further evolving as we continue to acquire leading Banks in the International markets. eMudhra is also now the only entity to support all forms of eSign in India. This, paired with our eStamping portfolio and easy integration and technical adoption methodologies give us tremendous competitive edge to compete locally and internationally.
International markets saw 141% growth YOY which contributes 35.8% to total revenue. We received our eCSP License to operate as a CA in Kenya. We implemented a large-scale retail lending use case with a popular retail chain in North America. We have acquired some marquee clients and key partners in Indonesia and continue to service more PKI use cases in Europe. Our Middle East & Africa Business prospects continue to grow.
Future Opportunities: Homomorphic encryption is a cryptographic technique that allows computations to be performed on encrypted data without the need for decryption. Identified by eMudhra as the future of privacy preserving cryptography, we are working on bring this encryption standard to the market to safeguard day-to-day operations in an increasingly digital world. The commercial potential behind this technology is immense! Considering the importance of data encryption in a world where breaches increase by the day, and security compliance is becoming core to large organizations, eMudhra believes this technology will be a game changer in how organizations work in the future.
Future Strategy: Maintain leadership in Indian Trust Services market and capitalize on industry opportunities. Leveraging existing data centre infrastructure and set up new data centres in India and overseas locations. The Company has also implemented data center project in Bangalore and disaster recovery center in Chennai. These centers are expected to cater to the growing needs of the customers for the next five years. The Company will be implementing its overseas data center in 2023. Enhance solution offerings to tap growing needs of digital transformation. Grow presence in overseas markets. Expand share of revenues among existing customers and broaden our partner network and customer base.
Enterprise Solutions: Closing Order book increased from 76.9 crores to 118 crores in FY23. There is significant repeat business from existing customers. Saw strong growth in international markets. More revenue comes from direct relationships with customers. Revenues come from 3 sectors: Government, Private Sector and BFSI. Cyber Security is a higher contributor to revenue than paperless solutions. During the year under review, we have added 156 new enterprise customers and added 50 enterprise partners.
Trust Services: Strong focus on “brand” positioning, retail customer acquisition, broad basing of partner network and issuance of eSign/SSL certificates to drive recurring revenue growth.
Ratios: D/E ratio is now 0 as all the debt has been repaid after IPO proceeds were received. There is an increase in Trade Receivables turnover ratio and decrease in Trade Payables Turnover ratio which means there is quicker business growth and quicker payment to hardware creditors. Efficient WC management has increased Net Capital Turnover from 1.37 to 4.05 times. Margins have reduced due to increased brand building, marketing and employee cost.
COGS: Cost of goods sold on a consolidated basis marginally increased from 22.7% in FY 2022 to 23.6% as a percentage in FY 2023 to the total income of the respective year.
Employee Cost: Our employee cost has marginally reduced as a percentage of total revenue from 25.9% to 25.3% in the fiscal 2023 on consolidated basis.
Depreciation/Amortization: Our depreciation/amortization expense as a percentage of total income has decreased from 7.1% to 6.2% on consolidated basis.
Cash and cash equivalents: Our cash and cash equivalents comprise of balance with current account, deposit accounts and overnight funds with mutual fund houses. The closing cash and cash equivalents are INR 1194.35 million and INR 663.70 million on consolidated and standalone basis respectively.
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