Digispice Technologies Ltd — Q3 FY26

Digispice Technologies Ltd Q3 FY2025-26 Earnings Conference Call https://www.youtube.com/watch?v=N77Ra76Cub4 Published: 2 months ago

0:00 Good afternoon everyone. A warm welcome to you all and thank you for joining us today for the Q3 and 9month FI26 0:07 7 seconds earnings webinar of DG Spice Technologies Limited. We are pleased to have with us today Mr. Dilip Modi the chairman of DG Spice Technologies 0:16 16 seconds Limited, Mr. Sunil Kapoor the wholetime director and chief financial officer of Spice Money Limited. Miss Art Gur head 0:23 23 seconds of investor relations Spice Money Limited. We will start the session with the management providing an overview of the operational and the financial 0:32 32 seconds performance for the quarter 9 month ended FI26 post which we will do have an interactive Q&A session. Before we 0:40 40 seconds begin, I would like to draw your attention to the fact that certain statements made during this call may be forward-looking in nature. These 0:48 48 seconds statements are subjected to risk and uncertainty that could cause actual results to defer materially. A statement 0:56 56 seconds in this regard has also been included in the result presentation sent to you earlier. With that, I would now like to invite Mr. Dilip Modi to commence the 1:04 1 minute, 4 seconds presentation. Thank you and over to you sir. 1:09 1 minute, 9 seconds Thank you Ashika. Uh good afternoon everyone. Thank you for taking out the time to join us today. 1:15 1 minute, 15 seconds uh you know we at uh spice money are continuing our journey of building a strong trusted financial services 1:24 1 minute, 24 seconds platform for bhat uh you know we are all committed to the goal of you know driving digital financial inclusion and 1:32 1 minute, 32 seconds at spice money we have been working quarter on quarter to make sure that we continue down this path. Uh today we are 1:40 1 minute, 40 seconds here to present to you how we have done in quarter three of this financial year and in the Q&A I would love to we would 1:47 1 minute, 47 seconds all love to talk to you guys about any any any points you may have about where we are heading as a business what is it that we are looking forward to and what continues to drive us on a daily basis. 1:58 1 minute, 58 seconds Uh so let me start with the presentation uh by talking about the spice bat stack which is what we are building uh you 2:06 2 minutes, 6 seconds know for at spice money. So effectively if I look at the three elements of the 2:13 2 minutes, 13 seconds bhat stack that we are building uh you know one is the agent platform second is the consumer platform and third is the 2:20 2 minutes, 20 seconds lending platform. So effectively today as an agent platform, this is our core business. We are one of the leading uh 2:29 2 minutes, 29 seconds agent platforms in small towns. We are now reaching over 2.6 lakh small towns with over 1.6 million agents who use our 2:38 2 minutes, 38 seconds app to deliver basic banking and financial services to over 170 million customers in small towns and villages of 2:46 2 minutes, 46 seconds India. In terms of transactions on basic banking, the Aadhaar enabled payment system uh which is which uh which is 2:54 2 minutes, 54 seconds people using Aadhaar to withdraw and deposit cash and do funds transfer. Uh we are the number one player. We have 3:01 3 minutes, 1 second closed quarter 3 at close to 18.64% uh market share in the office segment and we continue to consolidate our 3:10 3 minutes, 10 seconds market share in this segment. uh going forward there are lots of new products we are looking to launch for our agents 3:17 3 minutes, 17 seconds to deliver in their communities. Um in the GFF we had spoken about launching the UPI cash point. So today if you look 3:25 3 minutes, 25 seconds at customers at large when they go to their ATMs to withdraw cash they mainly use card. In our case customers are 3:32 3 minutes, 32 seconds using card plus Aadhaar. Now towards the close of this quarter 4, we are looking to enable customers to be able to 3:40 3 minutes, 40 seconds withdraw cash using UPI. Uh as we know that uh UPI is scaling up very fast. As a country, we are now significantly 3:49 3 minutes, 49 seconds penetrated on UPI users and therefore we are looking at our agent network doubling up as a UPI cash point network 3:57 3 minutes, 57 seconds where customers with UPI apps now can now come and withdraw cash at our agent points using UPI. So UPI is going to be 4:06 4 minutes, 6 seconds a big layer that's going to get added on onto our APS and this will be an accretive business u you know when it comes to cash withdrawal because now 4:14 4 minutes, 14 seconds more and more customers are coming in with smartphones uh with UPI apps. Our goal at Spice Money is to make sure that 4:22 4 minutes, 22 seconds we build a full stack financial services distribution plane uh for small merchants and consumers in Bhat. and uh 4:30 4 minutes, 30 seconds we will talk you through in terms of how far we have reached that in terms of uh just overall business I would say that 4:38 4 minutes, 38 seconds you know we have now reached a stage from a P&L point of view where we've we have we had a steady platform uh you 4:45 4 minutes, 45 seconds know we are beginning to see operating leverage kick in if you look at our entire cost we've managed to hold them year on year quarter on quarter while 4:53 4 minutes, 53 seconds we've tried to grow on gross margin which is our net income so if you really look at it for the 9 months This financial year we delivered close to 20 5:01 5 minutes, 1 second crores profit compared to you know 4 crores for the 9 months previous year. 5:06 5 minutes, 6 seconds So effectively this is all a function of operating leverage that's begun to kick in and we are hoping that as we add more products to our agent network we'll be 5:14 5 minutes, 14 seconds able to uh further strengthen on our operating leverage to drive uh profitable growth. Uh in terms of new 5:21 5 minutes, 21 seconds engines uh lending and spice pay are two new engines. uh on the lending business, you know, we are beginning to see good 5:30 5 minutes, 30 seconds traction uh you know, as we consolidate our market share in APS, we are seeing more agents transact and we are able to 5:37 5 minutes, 37 seconds now lend uh to enable lending to these agents and we've seen those lending numbers grow. So, uh you know, we work 5:46 5 minutes, 46 seconds here as a loan service provider with an FLG model. Uh we've seen the business here also scale. So, effectively, you'll go through the numbers. uh what we did 5:54 5 minutes, 54 seconds in the whole of last financial year uh you know we've done in a single quarter or close to in a single quarter in 6:01 6 minutes, 1 second quarter three so again the lending business is growing and we'll talk more about that on spice pay uh you know uh 6:09 6 minutes, 9 seconds as I mentioned here we have over 170 million customers who transact on our platform every month one of the things that we are looking at is to bring them 6:18 6 minutes, 18 seconds on to UPI uh so today with spice we have the ability to give them a UPI account with a UPI ID and they can use 6:27 6 minutes, 27 seconds uh this account to put in cash using our agent network and then transact with their UPI ID. So the whole idea is to 6:35 6 minutes, 35 seconds bring uh customers with a new UPI account to be able to do transactions. 6:40 6 minutes, 40 seconds Now more and more people are looking to do digital transactions and therefore our goal is to use uh you know our our 6:49 6 minutes, 49 seconds uh PPI account to be able to enable new to UPI users to come on board. So overall you know the agency business, 6:58 6 minutes, 58 seconds the lending business and the consumer business we are continuing to grow and our goal is to build a full stack 7:04 7 minutes, 4 seconds financial services play for small towns uh merchants and consumers. Moving on to the next page if I was to talk about 7:12 7 minutes, 12 seconds some of the key highlights. Uh quarter 3 has been a muted quarter for us in terms of GTV growth. uh this is really on the 7:20 7 minutes, 20 seconds back of the fact that we saw huge subsidy flows in the first half of the year and therefore you know just on a relative comparison quarteron quarter we 7:29 7 minutes, 29 seconds see a dip in in GDP uh because of the because of the nature of the subsidy flows in terms of seasonality also in 7:37 7 minutes, 37 seconds terms of our collections business uh you know there's been a whole restructuring of MFI and NPFCs where there's been a consolidation of books and therefore a 7:45 7 minutes, 45 seconds slowdown in lending and and that is reflected in our in our collections pie. So that is more I would say the 7:52 7 minutes, 52 seconds nature of seasonality the APS business and the the way the NVFC industry is consolidating. So that's got reflected 8:01 8 minutes, 1 second in our quarteronquarter numbers. The second highlight is of course the labor code has cut in. So that's had an impact on our P&L. You know we'll show you the 8:09 8 minutes, 9 seconds impact our credit like I spoke about you know what we did on the LDG model all of last year we've done in a single quarter close to that in a single quarter. So 8:18 8 minutes, 18 seconds now the credit business has begun to grow both in terms of dispersals as well as uh gross margins and we are trying to 8:25 8 minutes, 25 seconds make sure that we can contain our credit losses here. So this is an embedded credit business linked to our transactions on our platform. So we are 8:32 8 minutes, 32 seconds able to contain on risk here and whenever we report gross margins it's net of the risk and therefore we believe that you know amongst the two new 8:40 8 minutes, 40 seconds engines of credit and spice pay credit has already begun to move in a direction towards profitability and then overall I 8:48 8 minutes, 48 seconds spoke about operating leverage we are focusing on ensuring that month on month quarter on quarter we continue to focus on operational efficiency whether it's 8:56 8 minutes, 56 seconds in terms of cost optimization margin improvement in terms of uh product mix you know and making sure that we build 9:04 9 minutes, 4 seconds in efficiency in all our metrics. So this is something that we will continue to chase. Uh just in terms of innovation and growth uh you know we are now with 9:12 9 minutes, 12 seconds this agent platform we have the pipes and the idea is to distribute more products through the pipes. So we continue to look at launching new 9:20 9 minutes, 20 seconds products. We have entered the insurance category uh with two new products around shop insurance and mobile street protection. Most of our Adikaris run 9:28 9 minutes, 28 seconds shops and you know being able to give them cover for the business they run is something that we are excited about and we are now building more products for 9:36 9 minutes, 36 seconds insurance in the pipeline given the nature of the market we are in uh people uh you know are looking for credit cards 9:44 9 minutes, 44 seconds uh it's an aspirational product so but given the nature of our market rather than give unsecured cards we are working 9:51 9 minutes, 51 seconds with partners to give secured cards we again see a big opportunity in this space and we're looking to scale And then savings continues to be a big 9:59 9 minutes, 59 seconds area we are focused on. We're very excited with some uh new partnerships that we are looking to stitch in in the in the savings space and given the rural 10:07 10 minutes, 7 seconds nature of our business u you know we are also looking at uh agri commerce as one area to be able to drive income for our 10:16 10 minutes, 16 seconds agents. So overall you know innovation execution you know and and looking at our customer base and looking at what 10:23 10 minutes, 23 seconds all products we can build for them continues to be our focus to drive sustainable long-term growth. Now just looking at some key metrics on the next 10:32 10 minutes, 32 seconds slide uh you know if you look at you know each of the rows on the top like I spoke about 1.6 million agents so close 10:39 10 minutes, 39 seconds to 16.4 4 lakh now registered agents on our spice money platform over 2.55 lakh small towns covered on a monthly basis 10:48 10 minutes, 48 seconds we serve close to 27 million customers and we are thousand member team majority of whom are also on the ground uh just 10:55 10 minutes, 55 seconds in terms of numbers on a year-on-year basis we've seen growth in almost all the key product metrics except for collections which is the cash management 11:03 11 minutes, 3 seconds service business where we've degrown and I explained you as to what is the reason in terms of what's happening in the MFI and NBFC industry 11:10 11 minutes, 10 seconds So this is something that you know we are seeing some short-term uh pressures and maybe they'll continue for a quarter 11:18 11 minutes, 18 seconds or two till we are able to you know look at enhancing our product suite around digital collections and doing more for our partners. uh otherwise if you look 11:26 11 minutes, 26 seconds at a uh you know BBPS, CASA which is our current account saving account product and more importantly the float balance 11:33 11 minutes, 33 seconds associated with the products as well as our credit distribution metrics almost all of them have grown year on year you know and all of this data is available 11:42 11 minutes, 42 seconds to you online you could please consume it in your own time if you look at the financial indicators our focus is gross margin so we continue to focus on 11:50 11 minutes, 50 seconds growing gross margin quarter on quarter and year on year and that's what drives uh underlying profitability and growth. 11:58 11 minutes, 58 seconds Uh we are a zero debt business. So our focus is to stay asset light uh you know build our ROIs through ensuring that we 12:06 12 minutes, 6 seconds can drive more operating leverage in our business and overall we are excited with the future because we see that you know if India has to grow uh you know into a 12:15 12 minutes, 15 seconds multi- trillion dollar economy you know these small town economies have to deliver and we are building the underlying financial bedrock in terms of 12:24 12 minutes, 24 seconds uh you know last mile banking infrastructure layer between product manufacturers and small businesses And therefore we can provide for access 12:32 12 minutes, 32 seconds and unit economics to financial institutions to serve small businesses as well as small businesses being able to access financial products in a far 12:40 12 minutes, 40 seconds more economical way using the agent network that we have on the ground. Uh you know so I look forward to the Q&A 12:48 12 minutes, 48 seconds that we have later and uh I'll hand over now to Sunil to walk us through the numbers. Over to you. 13:00 13 minutes Thanks Philip. 13:04 13 minutes, 4 seconds So on the number side whether we can have it uh blown up. Yeah. 13:12 13 minutes, 12 seconds So on the number side uh as we see that uh our uh this quarter number uh has a 13:19 13 minutes, 19 seconds uh deg growth of 4% on the customer GTV uh and uh consequently 13:26 13 minutes, 26 seconds uh uh our revenue is also down but we are we are able to maintain the gross margin uh almost at the same level only 13:35 13 minutes, 35 seconds 1% uh down uh we have already called out that this was a muted quarter but we are 13:41 13 minutes, 41 seconds able to hold our gross margin and uh if you see on the indirect cost what Philip 13:47 13 minutes, 47 seconds has also called out that uh we are uh uh keeping the operating efficiency uh in 13:55 13 minutes, 55 seconds check uh always and uh from uh if we compare it from the previous year also 14:02 14 minutes, 2 seconds uh that's uh we have uh the same cost operating cost and whatever the gross margin improvement in the last 9 months 14:11 14 minutes, 11 seconds compared to the previous 9 months that is flowing uh straight to Abita uh and uh uh on the AIT side also consequently 14:21 14 minutes, 21 seconds from the AITA side that's uh we are able to uh kind of pulled uh uh the ABIT 14:29 14 minutes, 29 seconds margins a little bit down but uh hopefully in the next quarters uh quarter uh we will catch up uh uh on the 14:38 14 minutes, 38 seconds gross margin and beta also and we'll be able to post the growth uh instead and 14:45 14 minutes, 45 seconds uh uh if you see on the YTD numbers uh that's uh YTD numbers the BAT is a almost 21 cr against 4 crores uh in the 14:55 14 minutes, 55 seconds previous year uh 9 months and there is a considerable growth and improvement uh and that's uh primarily due to the uh 15:05 15 minutes, 5 seconds what the gross margin and heling the cost uh at the same And if you see on the pad discontinued 15:13 15 minutes, 13 seconds business there's a slight uh one-time additional expenses come in but that's 15:19 15 minutes, 19 seconds keep on uh u kind of we are trying to uh contain it and uh not more than uh 1.5 15:27 15 minutes, 27 seconds crores a year kind of will be hit uh for the pad discontinued business but we are 15:34 15 minutes, 34 seconds working on that uh hopefully in the next uh year first half we will be able to uh 15:40 15 minutes, 40 seconds take this um discontinued business uh to zero level so it's doesn't impact our uh 15:49 15 minutes, 49 seconds P&L and uh Pat there is also one uh point with respect to the labor code impact uh which has come as an 15:58 15 minutes, 58 seconds exceptional items which we have shown is as a net of tax uh purposes because it creates a deferred taxation uh asset on 16:06 16 minutes, 6 seconds the provisional amounts on the graduty and leave and cashment and consequently the profit pack after all national gain 16:14 16 minutes, 14 seconds and loss is 2.4 crores for this quarter and 16.5 for the 9 months uh all put 16:23 16 minutes, 23 seconds together. So uh this is uh all about numbers. Uh I'm handing over this uh 16:30 16 minutes, 30 seconds this PPT to be run to my Asta so she can take us uh through the uh other product metrics and numbers. 16:41 16 minutes, 41 seconds Thank you Sunsar. Good afternoon everyone. I'll be covering some of the key business updates for this quarter. 16:48 16 minutes, 48 seconds So starting with the agent base. Uh we are continuously working to expand on our agent base across India. Our focus 16:56 16 minutes, 56 seconds here remains on deepening our presence region by region and to ensure that we are trying we are trying to build build 17:05 17 minutes, 5 seconds optimal SMA density across regions so that we are present in every market that 17:11 17 minutes, 11 seconds we are we are operating in. This will allow us to effectively deliver last mile services to our customers and also 17:19 17 minutes, 19 seconds improve accessibility for them across bhat. 17:24 17 minutes, 24 seconds uh Dilipur and Sunar have already fairly covered about how our GMs and GTBs have fared this quarter. Moving to the next 17:30 17 minutes, 30 seconds slide, Mir looking at these uh in detail, we uh can see that the GTBs and GMs are fairly 17:39 17 minutes, 39 seconds muted as compared to the previous quarter. But if we see the year-on-year numbers, we have seen the APS GTBs 17:46 17 minutes, 46 seconds almost grow 13.2% as compared to the same quarter last year. And even though the CMS volumes 17:54 17 minutes, 54 seconds have not grown but we've been able to hold our gross margins on the CMS side also which has led to our overall gross 18:02 18 minutes, 2 seconds margin growth as compared to the last year same quarter and the new buckets also we see that have almost doubled as 18:10 18 minutes, 10 seconds compared to what we were doing in the last year same quarter. So overall if we see uh there's been improvement in our gross margins as compared to what we 18:18 18 minutes, 18 seconds were doing last year though this quarter is fairly muted considering seasonality that dips are al already talked about 18:26 18 minutes, 26 seconds but let's discuss on the product wise matrix in the slides ahead let's move to the next slide 18:33 18 minutes, 33 seconds so uh talking about kps where we enable cash withdrawal for our customers across India we have been continuously 18:42 18 minutes, 42 seconds consolidating and growing market share as we have already highlighted in the earlier quarters as well. Cash deposit 18:50 18 minutes, 50 seconds and UPI uh cash withdrawal are the next big opportunities for us in this space. 18:56 18 minutes, 56 seconds ABC in APS are the lifts are already mentioned our market share is now touching 18.364% in this quarter. So 19:04 19 minutes, 4 seconds there's growth there and as well as if we see that almost 400 crores we are touching on the cash deposit TTS also. 19:12 19 minutes, 12 seconds So on that front also we are seeing growth on top of uh the APS business. 19:19 19 minutes, 19 seconds The next big uh product that we've built is the collections product. So moving to the next slide. 19:28 19 minutes, 28 seconds So in collections uh we already talked about that the industry has seen fairly competit competitive pricing pressures 19:36 19 minutes, 36 seconds here. So uh we we are working in a fairly competitive industry and we're trying to hold our margins and to grow 19:45 19 minutes, 45 seconds overall in this uh margin competitive industry we are trying to strengthen our supply side by bringing in more lenders. 19:53 19 minutes, 53 seconds So there's growth in our lender segment and then we are wanting uh to build a 19:59 19 minutes, 59 seconds good product suite with our partnerships that we are working with so that we can serve them well and grow in this space. 20:07 20 minutes, 7 seconds Talking about the digital collection side which is the BB BBPS product. Let's move to the next slide. Here also we are 20:16 20 minutes, 16 seconds seeing a continuous growth. Though the growth is slow, we can see our GTV is improving both quarter on quarter as 20:23 20 minutes, 23 seconds well as year on year. And if we see the repeat engagement base on our uh platform also that's also fairly growing 20:30 20 minutes, 30 seconds every quarter. So that makes us believe that there's opportunity in this segment. As more and more digitization 20:37 20 minutes, 37 seconds happens, uh the GTVs in this space will also grow. 20:42 20 minutes, 42 seconds Coming to the financial product distribution where we started our uh our journey with Kasa. Let's move to the next slide. 20:51 20 minutes, 51 seconds So on Kasa also we have now touched opening close to 15 lakh plus accounts across India where almost 260 crores of 21:00 21 minutes float balances are lying and we have almost 35,000 plus SMAs who have opened more than five lakh five accounts till 21:08 21 minutes, 8 seconds date. So we we can say that there are healthy balances that are being maintained in these accounts an average 21:15 21 minutes, 15 seconds of almost 2,000. So that's a good growth that we've seen on this product. And the next uh thing that we're focusing here 21:23 21 minutes, 23 seconds is basically uh growing on the basis of cross-ell and upsell. 21:29 21 minutes, 29 seconds So now I'll come to discussing about the more important updates on the sides of credit uh that have happened in this 21:37 21 minutes, 37 seconds quarter. So the already mentioned that this is the uh business that we've been 21:44 21 minutes, 44 seconds building where we are building our own lending model based on transaction data 21:50 21 minutes, 50 seconds using a shared risk FLG structure. So this model is the foundation of our long-term plan for responsible and 21:58 21 minutes, 58 seconds scalable lending that we want to do for BAT. 22:02 22 minutes, 2 seconds Our focus here has been on two scalable engines. One is the transactionled lending for our own SMA base and the 22:11 22 minutes, 11 seconds other is MSME business loans. The efforts that have that we have been doing in the last one year now have 22:18 22 minutes, 18 seconds started showing traction and if we see the numbers in FY25 where we uh did a 22:25 22 minutes, 25 seconds GTV of almost 20.5 crores uh in this quarter alone we have delivered disbbursements of almost 19.2 2 crores. 22:35 22 minutes, 35 seconds So we can fairly say that we have successfully validated this model for our own SMA base. Now what's the next uh 22:43 22 minutes, 43 seconds step here is that we have to uh focus on the uh on the agents beyond our SMA base 22:51 22 minutes, 51 seconds to grow this product on the Vapar loan side which is the MSMA business loans. 22:56 22 minutes, 56 seconds We have already launched it in this quarter uh with uh our partnership in in partnership with mutin corp and um we 23:06 23 minutes, 6 seconds will be actively working to scale this further in the coming quarters. 23:12 23 minutes, 12 seconds Now talking about the other big growth engine for future which is the financial product distribution. Let's move to the next slide. 23:22 23 minutes, 22 seconds So talking about this uh if we see on the top uh we under financial product distribution we are currently 23:30 23 minutes, 30 seconds distributing loans including gold as well as other credit products for our partner lenders. Our focus 23:38 23 minutes, 38 seconds has been on strengthening the supply side in this product by bringing in more lenders as well as diversifying the 23:45 23 minutes, 45 seconds product fuite available for distribution. 23:49 23 minutes, 49 seconds So we have seen a fair buildup of this business in the last couple of years. 23:54 23 minutes, 54 seconds And if we see the numbers on the loan dispersement, we can see that we have grown almost 2.6x year on year on the 24:02 24 minutes, 2 seconds value of disbbursements against a volume growth of almost 2.1x year on year. So while there has been some decline that 24:10 24 minutes, 10 seconds we can see in numbers this quarter as compared to the previous quarter, this was primarily due to some realignment that happened with one of the major lenders that we do business with. 24:20 24 minutes, 20 seconds Beyond credit distribution, we've also started selling FDback credit cards in partnership with Zed. So we have sold 24:28 24 minutes, 28 seconds close to 25 2500 cars till date with an active SMA of almost 10,000 on this 24:34 24 minutes, 34 seconds product uh which is a tail date number on uh insurance side also which was one 24:41 24 minutes, 41 seconds of the key products that we were working to get on our platform. 24:46 24 minutes, 46 seconds uh we can say that we uh launched this product in Q2 on a couple of categories and till date we have sold almost 10,000 24:56 24 minutes, 56 seconds policies so far. So the next big thing that we'll be working on this product side will at least enabling 25:05 25 minutes, 5 seconds four to five more categories of products in both secured credit as well as insurance side. 25:12 25 minutes, 12 seconds I will say that we started the financial product distribution journey by opening kasa accounts and uh then we built up 25:20 25 minutes, 20 seconds loan distribution on top of that and now we've entered the insurance space as well. The next big opportunity for us in 25:27 25 minutes, 27 seconds this space lies on the sides of savings and investments and we'll be actively working actively working to launch them 25:35 25 minutes, 35 seconds next. Now I think I will hand over to sir to for the closing remarks. Thank you Aar. 25:44 25 minutes, 44 seconds Thank you. Can we move to the next slide please? So uh you know I have two slides to close. Uh effectively on this slide I 25:52 25 minutes, 52 seconds just want to bring out to all of you that our commitment is to drive deep penetration of formal financial services 26:01 26 minutes, 1 second in Bhat. You know out of the 1.4 billion people in our country nearly a billion people live in small towns in rural Bharat. and we want to be able to serve 26:10 26 minutes, 10 seconds them when it comes to formal financial services. As I said, we are already a leading uh you know APS-LE ATM network 26:18 26 minutes, 18 seconds for Bhat where we have close to 18.5% market share. Our commitment is to deepen this further and build BAT's 26:26 26 minutes, 26 seconds largest assisted ATM network. Uh just to give you a sense of numbers, ATM industry as on hold talk about about 2.2 26:34 26 minutes, 34 seconds lakh ATM machines. networks like ours have onboarded nearly 20 lakh you know human ATM points across small towns and villages of which we have about 16 lakh. 26:43 26 minutes, 43 seconds So for us the whole goal is to you know deepen because when you talk about ATM networks to build confidence and trust 26:51 26 minutes, 51 seconds in customers which is a cash first economy. The ability to move cash in and out of bank accounts actually gives them confidence to keep their money in the 26:59 26 minutes, 59 seconds bank account. So effectively for us the withdrawal and deposit nature of the withdrawal and deposit nature of the 27:04 27 minutes, 4 seconds network allows us to not only enable network allows us to not only enable 27:06 27 minutes, 6 seconds them to pull money out when they need it them to pull money out when they need it 27:08 27 minutes, 8 seconds uh with the guards but also be able to 27:16 27 minutes, 16 seconds make it easy for people to put money into their bank account. And today with APS uh seeding and we are looking forward to more and more banks coming 27:25 27 minutes, 25 seconds into this we can actually enable a very large penetration of network easy convenience for consumers to be able to put money into their account and do UPI. 27:35 27 minutes, 35 seconds So we are committed to building on the ATM side collections. Again we you know we are an economy where lots of loans 27:42 27 minutes, 42 seconds are given uh to small merchants and consumers in Bhat. But the main challenge is around collections. How do we make sure that the deep APM network 27:51 27 minutes, 51 seconds that we are building in Bhat also doubles up and serves as one of the largest rural cash collection networks 27:58 27 minutes, 58 seconds for BAT. And I think this is also something that we are already on this journey. We have both the uh bilateral relationships with our enterprise 28:07 28 minutes, 7 seconds partners and we are excited about the BBPS platform as well and we are committed to growing this. So it's not just ATM but also collections and then 28:15 28 minutes, 15 seconds finally just on the network our goal to build a deep financial distribution grid for Bhat. Can you just go back to the 28:21 28 minutes, 21 seconds previous slide please? Yeah. So our goal is uh you know like AA mentioned around credit savings investment insurance 28:30 28 minutes, 30 seconds making sure that we can build capability and capacity of our agents for them to be able to do more for their communities. So this last mile access 28:38 28 minutes, 38 seconds network is a huge opportunity for us uh you know to work with our work with our ecosystem partners to actually bring 28:45 28 minutes, 45 seconds formal financial products reduce cost of credit you know drive penetration of insurance savings and investments into 28:52 28 minutes, 52 seconds deep bat uh into deep rural India into small towns and that's something we're excited about on our own products we are 28:59 28 minutes, 59 seconds focusing on credit uh and and uh PPI uh you know we see our prepaid instrument 29:06 29 minutes, 6 seconds as a great opportunity to put a a very easy to use UPI account um in the hands 29:13 29 minutes, 13 seconds of our consumers and be able to do more with that account, right? We want to make it easy for them to move cash into 29:21 29 minutes, 21 seconds accounts and to be able to transact using the accounts. So, it is very easy to use app on their basic smartphone. 29:28 29 minutes, 28 seconds So, this is something that we are committed to, you know, to bring the next 100 plus million UPI users onto UPI. And as far as lending is concerned, 29:37 29 minutes, 37 seconds we already well on our journey where we built proprietary models for our own agents and we want to build on that for merchants sitting around the agents. So 29:45 29 minutes, 45 seconds if you look at it, we've got the agency business that we are scaling. We have operating leverage and on the back of this we are building our two two core businesses around spending, savings, 29:54 29 minutes, 54 seconds investments on the digital side and lending as well. So all of these are coming together for us to you know build 30:02 30 minutes, 2 seconds a very strong spice uh a very strong financial services stack for Bat. And let me close with our ecosystem 30:09 30 minutes, 9 seconds partnerships on the next slide. Uh you know we do this uh because of the blessings of the regulator uh you know 30:17 30 minutes, 17 seconds uh and and you know we have the requisite licenses which allow us to do what we do. uh we have partnerships with leading banks, partnerships with leading 30:25 30 minutes, 25 seconds lenders and partnerships with leading NBFCs and MFIs where you know we are looking to provide uh services to them 30:33 30 minutes, 33 seconds whether it comes to opening accounts uh driving origination driving collections also supporting them on risk and underwriting and like AA said we've 30:42 30 minutes, 42 seconds entered insurance it's a huge category we need to solve for it we need to drive micro insurance products into bhat and 30:49 30 minutes, 49 seconds we will make sure that we can work with our business partners to leverage our our network to be able to deliver it in a cost-effective way. So with that, I 30:58 30 minutes, 58 seconds thank you for giving us time and I'll hand it back to Hashika for the Q&A. Thank you. 31:04 31 minutes, 4 seconds Thank you so much Diper. We will now open the floor for Q&A session. Partsman who wish to ask a question are requested 31:11 31 minutes, 11 seconds to use the raise hand feature to ask the question. Alternatively, you may share your questions in the chat box and we 31:18 31 minutes, 18 seconds will take them up during the session. We would just request all the participants to kindly introduce themselves before stating by stating their name and their organization before asking the question. 31:30 31 minutes, 30 seconds Thank you. 31:45 31 minutes, 45 seconds Uh we'll take the first question from Mr. Gulchan Singh. Uh just wanted to start with the quarter overall GTV was a 31:53 31 minutes, 53 seconds bit soft sequentially. Should we think of this as largely normalization after elevated APS subsidize last quarter or 32:03 32 minutes, 3 seconds are you seeing some underlining slow down as well? 32:08 32 minutes, 8 seconds Uh thank you thank you Gshan for your question. I would say that u you know definitely in H1 this year uh we saw 32:15 32 minutes, 15 seconds significant subsidy flows even more than what we had expected. Uh so I would say that you know we would want to factor in 32:23 32 minutes, 23 seconds the seasonality or or or the fact that there was a significant shoot up uh in subsidies and therefore on a relative basis there's a dip in GD. I I 32:31 32 minutes, 31 seconds think the underlying slowdown gulch is more related to the lending book of MFIs and NBFCs. 32:39 32 minutes, 39 seconds I think as they've been consolidating on their NPAs and making sure that you know they're able to consolidate and and and and restructure their books, we've seen 32:46 32 minutes, 46 seconds a bit of slowdown in lending. uh we hope that uh you know that will come back as as the books become uh you know easy uh 32:55 32 minutes, 55 seconds you know lighter in terms of bad debt and uh I think directionally uh you know our goal is to uh you know deepen our 33:04 33 minutes, 4 seconds density which means increase the reach of our SMAs per household. Uh we continue to strengthen on our product suite which means that we want to drive 33:12 33 minutes, 12 seconds more transactions uh through our uh through our agent base. So uh we are hoping that you know a combination of 33:20 33 minutes, 20 seconds multiple things can help us to continue to grow on on on transactions and revenue. Uh so I would say that you know 33:28 33 minutes, 28 seconds it's a it's a combination of multiple factors but I think we'll know better as we move forward in the next few quarters. 33:38 33 minutes, 38 seconds Thank you sir. Uh I hope that answers your question. We have the next question from Agarval Family Office. gross margin 33:46 33 minutes, 46 seconds percentage on revenue improved to 47% this quarter. Is this sustainable or 33:52 33 minutes, 52 seconds partly driven by lower uh low margin CMS volumes? And where do you see steady 33:59 33 minutes, 59 seconds state gross margin setting settling over the next two to three years? 34:05 34 minutes, 5 seconds Yeah. Aa you want to just talk about the drivers of the growth in gross margin and then of course next two to three years we'll take separately. 34:13 34 minutes, 13 seconds Yeah. So uh so on the first uh part of the question where we're talking about uh gross margin improve imp improving to 34:21 34 minutes, 21 seconds almost 47% this quarter. So obviously one thing that is mentioned here in the question itself that the CMS volumes are 34:29 34 minutes, 29 seconds dropping which is a low margin business which you uh which is looking like uh as if the margins are coming from uh the low margin uh CMS volumes going away. 34:39 34 minutes, 39 seconds While that's not the actual case in CMS, uh the uh CMS that is decreased for us 34:46 34 minutes, 46 seconds is basically on the side of one major client that we working with where the margins were in itself very low. So when 34:54 34 minutes, 54 seconds the volumes with that one client has decreased, our overall CMS uh margins have u grown up. So that's uh in turn 35:04 35 minutes, 4 seconds helped us grow our overall margins on the CMS side. On APS side also I think we are pretty good on the margins. Uh 35:13 35 minutes, 13 seconds with our uh continuous subscription packs being in place uh we are able to provide values to the alikaris for the 35:21 35 minutes, 21 seconds transactions that they they're doing on our platform. Hence uh they're increasing uh the number of transactions they do with us and hence we are growing 35:29 35 minutes, 29 seconds both on our market share side consolidating the business and the margins are also in place. So if we talk about why the gross margins have in turn 35:38 35 minutes, 38 seconds grown so much in this quarter that's fairly because of uh the operational uh efficiencies that we've been we've been 35:47 35 minutes, 47 seconds working on especially on the sides of the direct cost. We have a lot of charges that we have to pay to banks or other third parties to do these business 35:55 35 minutes, 55 seconds and we have been optimizing on that and that has led to this improvement in our gross margins. If we say that what this 36:02 36 minutes, 2 seconds could look like uh as a trend in the coming quarters also we could say that this would somewhere look like somewhere 36:10 36 minutes, 10 seconds between 44 to 45% on a average for a quarter. 36:20 36 minutes, 20 seconds Yeah. 36:23 36 minutes, 23 seconds Hashika should I should we continue with the questions in the chat? 36:27 36 minutes, 27 seconds Yes. Uh the next question is from Rahul Kumar. With UPI cash withdrawals and a 36:34 36 minutes, 34 seconds cash deposits evolving, do you see assisted models becoming more infrastructure-like utili utilities over time? 36:43 36 minutes, 43 seconds Absolutely. Now I think uh absolutely because you know when as an industry we are talking about growth of UPI uh as I 36:51 36 minutes, 51 seconds mentioned uh you know this is literally building out an infrastructure at the last mile because at the end of the day 36:58 36 minutes, 58 seconds to do UPI to be able to do digital you have to have a a transacting bank account and to be having a transacting bank account you have to make it easy 37:06 37 minutes, 6 seconds for people to put money into the bank account. Now you know when you talk about things like APS cash deposit uh almost now almost all accounts are 37:14 37 minutes, 14 seconds seated with Aadhaar biometrics across all small towns and rural and this is a great opportunity in fact not just in small towns but in big towns as well 37:22 37 minutes, 22 seconds where it's easy for people to move cash you know and I think what we have observed in all our experience in building this platform over the last few 37:30 37 minutes, 30 seconds years is that you know this ease of putting money uh you know into and withdrawing an account we've seen situations where people have had to 37:38 37 minutes, 38 seconds travel a distance to withdraw cash and the reason they withdraw all the money and spend the money uh spend the money in cash is because it's not easy for 37:46 37 minutes, 46 seconds them to you know go back and deposit and then again withdraw. So if you make it convenient um you know for them to do it I I think 37:54 37 minutes, 54 seconds it becomes a great enabling infrastructure for digital financial inclusion. uh UPI cash withdrawal I think again is an infrastructure layer 38:02 38 minutes, 2 seconds at the end of the day people need uh you know uh small money sometimes in cash for spending purposes if it becomes easy 38:10 38 minutes, 10 seconds for them you know to be able to withdraw that money at UPI cash points uh that players like us will enable across MAT 38:17 38 minutes, 17 seconds um I I think it becomes uh you know uh they're able to move forward with their lives much easier and so I think uh uh 38:25 38 minutes, 25 seconds very clearly these are becoming like uh a last mile. We see ourselves as effectively a last mile banking 38:32 38 minutes, 32 seconds infrastructure connecting uh financial providers with small businesses and consumers. 38:40 38 minutes, 40 seconds Thank you sir. Uh we'll take the next question from Navitep Meta. Goals and other loan volumes is down. Can we see 38:50 38 minutes, 50 seconds improvement in coming quarters? And the second question by him is can we see overall revenue increasing in Q4? 39:00 39 minutes Yeah, I think credit distribution is something that we have definitely seen a big need for. Uh there are lots of 39:07 39 minutes, 7 seconds financial providers who want to distribute credit. Um when you look at secured credit distribution, that's what we are focusing on. Unsecured credit is 39:16 39 minutes, 16 seconds more linked to our FLG model where it's more embedded credit to our agents and going forward to merchants. uh but when 39:23 39 minutes, 23 seconds you look at secured credit distribution definitely it's an area which people are interested in and want to work with us 39:30 39 minutes, 30 seconds to grow. I I think we are trying to get our u kind of uh model in place in terms of how to work with partners and how to 39:38 39 minutes, 38 seconds scale this business. So I would say Nave that you know maybe you you need to give us a quarter or two more in terms of 39:46 39 minutes, 46 seconds kind of putting in place u the the the right product infrastructure where we have lots of lenders at one end and 39:55 39 minutes, 55 seconds borrowers at the other uh you know in a bit of an kind of a open API kind of stack. So we are in the process of 40:02 40 minutes, 2 seconds building that out u uh you know we have a lot of learnings uh because when it comes to secured credit we have to work closely with the branches of the lenders 40:10 40 minutes, 10 seconds and so how do we build that into the journeys and into the stack you know for our adikaris to work with is something 40:17 40 minutes, 17 seconds that we are working on. So I think you know we are we are seeing this as as as something that we think could scale up 40:25 40 minutes, 25 seconds more in H2 or financial year 2027. I I think the next couple of months will go more in terms of you know building the 40:33 40 minutes, 33 seconds stack uh for financial product distribution right what we have really been able to get our hands around in the 40:40 40 minutes, 40 seconds last two years is around embedded credit for our own agents and that's how you've seen the numbers scale uh but in terms 40:47 40 minutes, 47 seconds of pure credit distribution I think it's about getting the product the open API stack and the supply side in place and I 40:55 40 minutes, 55 seconds think H2 next year is where we can hopefully see that numbers scale Thank you sir. Uh the next question is a 41:04 41 minutes, 4 seconds followup from Gulchan Singh. Indirect costs seem fairly stable despite increments. Is this the steady cause 41:11 41 minutes, 11 seconds base now or should we expect reinvestment as growth accelerates? 41:18 41 minutes, 18 seconds Uh B we are calling out the new engine separately. uh Sunil can throw more light on it but we are wherever we are 41:25 41 minutes, 25 seconds looking at you know new investments we're calling it out separately maybe we can continue to add to it uh but definitely you know our goal is to build 41:34 41 minutes, 34 seconds a a leading financial services stack uh across the board we are we are literally unfunding various aspects of the bank uh 41:42 41 minutes, 42 seconds and making sure we can deliver it at population scale so for us you know looking at new areas like now we're beginning to look at lending savings 41:50 41 minutes, 50 seconds investment insurance I think we'll continue to invest in these areas but I think from a P&L perspective we are calling it out separately so you want to 41:57 41 minutes, 57 seconds add to that yeah so uh we are investing in the new engines and building up the capabilities 42:04 42 minutes, 4 seconds and uh capacity both uh in terms of new products uh distribution 42:10 42 minutes, 10 seconds uh and uh if you see our numbers uh also that new engines what we were investing or uh incurring as an investment almost 42:20 42 minutes, 20 seconds uh 11 crores we have done in last financial year on these uh these new engines which has now come down to kind 42:29 42 minutes, 29 seconds of uh 1 cr uh a quarter. So uh from that perspective we keep on uh investing and 42:38 42 minutes, 38 seconds uh whatever we have built then we take out for other uh initiatives. So from that perspective we are uh investing 42:46 42 minutes, 46 seconds also uh but we are very conscious about that uh we have we should have a operating efficiency in every uh department or uh activities what we do. 43:00 43 minutes Thank you sir. Uh the next question is from Shray Patel. Insurance and saving products are being pushed heavily in 43:08 43 minutes, 8 seconds rural markets. Are consumers generally adopting these or is adoption still agent-driven? 43:16 43 minutes, 16 seconds Uh sh uh you know uh we believe that uh uh you know both will continue to grow. 43:22 43 minutes, 22 seconds I think when it comes to products like insurance and savings uh we believe that uh you know agents definitely have a 43:31 43 minutes, 31 seconds role to play. uh we still believe that uh not just in small towns even in big towns uh uh you know agents continue to 43:39 43 minutes, 39 seconds play a role given the complexity of the products helping to handhold you what we call wealth managers when it comes to 43:46 43 minutes, 46 seconds investments uh you know so directionally I think you know just improving understanding what is an FD how do you 43:54 43 minutes, 54 seconds think about uh gold savings how do you look at this we believe that you know there is a trust factor that exists uh 44:02 44 minutes, 2 seconds you know when it comes to working with people in your communities um we've seen how the micro finance sector has grown on the back of that of course now there 44:10 44 minutes, 10 seconds are structural changes happening to that sector but I think when it comes to you know being able to build awareness uh 44:17 44 minutes, 17 seconds handhold uh people uh through complex financial products I think agents have a significant role to play what we are 44:24 44 minutes, 24 seconds trying to do is make sure that we can enable an agency model uh which is significantly techled 44:32 44 minutes, 32 seconds and very attractive on unit economics so that we can drive more and more products through our agent network. 44:42 44 minutes, 42 seconds Thank you sir. Uh there's a follow-up question by Rahul Kumar. Do you think the assisted fintech model becomes more 44:50 44 minutes, 50 seconds relevant and resilient during periods of liquidity tightening compared to phases of abundant liquidity? 45:01 45 minutes, 1 second So R I'm just trying to put my head around this question where you're basically saying that you know the kind of model we have which 45:09 45 minutes, 9 seconds is an assisted model right uh during times when you know there's a liquidity tightening right when there's less 45:18 45 minutes, 18 seconds liquidity in the market uh then do do they become more resilient I think for us round what we've seen is that uh you 45:26 45 minutes, 26 seconds know definitely our agents started off as being cash out points became cash collection points and now are also 45:34 45 minutes, 34 seconds enabling uh distribution of financial products but at large I think you know 45:41 45 minutes, 41 seconds we believe that both for cash and non-cash products u you know this network this model continues to have 45:49 45 minutes, 49 seconds relevance and and we believe that especially when we think about banking beyond payments um the need to uh you 45:57 45 minutes, 57 seconds know have uh you know agents who can play the role of what bank branches play on the ground uh is a huge opportunity. 46:07 46 minutes, 7 seconds So you know so I think u uh you know my sense is that the model continues to be relevant at all points. Uh but maybe Sel 46:16 46 minutes, 16 seconds want to attempt an answer to this question. 46:20 46 minutes, 20 seconds I think um that uh with the assisted fintech model I think uh because your question is with respect to assisted 46:28 46 minutes, 28 seconds fintech model and liquidity uh standpoint of view uh I don't think uh uh that uh uh liquidity mean for our 46:38 46 minutes, 38 seconds business is more on the uh kind of maybe the subsidy side of it but uh uh other than that I don't think uh that 46:46 46 minutes, 46 seconds liquidity will be uh tightening of the liquidity will be impacting us only with respect to the credit uh side and as the 46:56 46 minutes, 56 seconds liquidity gets tightening uh that's keep on on the basis of the cycle and credit 47:02 47 minutes, 2 seconds distribution may have their own cycle also and uh I think that's a part of the business uh uh from the perspective of 47:10 47 minutes, 10 seconds credit where liquidity uh tightening or liquidity ease uh uh help uh grow or uh 47:18 47 minutes, 18 seconds uh have a uh pause also. So that's a cyclical I will see uh it uh only with respect to credit. 47:30 47 minutes, 30 seconds Thank you. I hope that answers your question. Uh we have another question from Rahul Kumar. If you look at the 47:37 47 minutes, 37 seconds broader industry over the next 3 to 5 years, what do you think becomes the dominant profit pool? Payments, 47:44 47 minutes, 44 seconds collections, lending or financial distribution? 47:48 47 minutes, 48 seconds I think Rahul definitely lending is a is a big part of the profit pool going forward. Um you know that clearly is a 47:58 47 minutes, 58 seconds standout. Uh you know uh payments continue to be under stress where payments and collections when it comes to margins. So there it's more about 48:06 48 minutes, 6 seconds throughput uh that we tend to drive. So uh if I say it's lending followed by financial distribution followed by 48:14 48 minutes, 14 seconds payments and collections from a profit pool perspective right however for us payments and collections 48:21 48 minutes, 21 seconds continues to be the focus because when you're building a business of the nature that we are uh you know you need the throughput you need the data to drive uh 48:31 48 minutes, 31 seconds uh you know the higher profit pool products. So u that has to continue to be the underlying layer uh to enable us 48:38 48 minutes, 38 seconds to you know build more products to drive profitability. 48:44 48 minutes, 44 seconds Thank you sir. Um participants who wish to ask a question are requested to use the raise hand feature or you can 48:52 48 minutes, 52 seconds alternatively share your questions in the chat box. 49:09 49 minutes, 9 seconds Since there are no further questions, I would uh pass it on to Dilip sir to give his concluding remarks. 49:18 49 minutes, 18 seconds Well, uh you know, I would once again like to thank everyone uh for this opportunity. uh you know uh when I look 49:26 49 minutes, 26 seconds at things quarter on quarter it perhaps sometimes hides the overall direction in which we are moving uh you know we are 49:33 49 minutes, 33 seconds building this business for the next 25 30 40 50 years uh we're building uh a a kind of an infrastructure which will 49:41 49 minutes, 41 seconds enable uh you know penetration of formal financial services for small businesses and consumers uh you know living in 49:50 49 minutes, 50 seconds small towns u uh I think the technology tail wins are all there. Uh when we think about even the AI uh revolution 49:58 49 minutes, 58 seconds that's happening, we believe that it will serve people at large, it'll serve it'll have a population scale kind of a 50:05 50 minutes, 5 seconds use case. Um we at SPICE are also committed to you know kind of writing this revolution of AI to be able to do 50:13 50 minutes, 13 seconds more for uh you know more and I think um you know financial services as a sector is going to be deeply impacted and this will all be in the positive direction. 50:23 50 minutes, 23 seconds We know that India has this uh legacy of leaprogging technology. We know that you know how mobile phones grew, visa v 50:30 50 minutes, 30 seconds fixed line phones uh how mobile internet grew visa be fixed line internet and we know how banking influenced by digitization will grow compared to 50:39 50 minutes, 39 seconds traditional banking and we at spice money are committed to driving a digital banking revolution in Mat. So with that I thank you very much for your interest. 50:48 50 minutes, 48 seconds You can continue to reach out to us. Our team is always available to answer any questions. uh for us it's it's really 50:56 50 minutes, 56 seconds about you know growing this space of you know stakeholders who are excited about serving small merchants and consumers in 51:03 51 minutes, 3 seconds in Bhat and we'll be more than happy to you know engage with with with anyone who has interest to want to participate 51:10 51 minutes, 10 seconds in this journey thank you so much uh and I look forward to our next call thank you thank you Diper thank you everyone for 51:18 51 minutes, 18 seconds joining us today for the Q3 and 9month FI26 earnings call of DG spice technology Technologies limited. We truly appreciate your time and 51:26 51 minutes, 26 seconds participation. If you have any further questions, please feel free to reach out to us or at the email ids provided in 51:34 51 minutes, 34 seconds the invest presentation. We look forward to your continued engagement and to interacting with you again next quarter. 51:41 51 minutes, 41 seconds Thank you once again and have a pleasant evening.