Niyogin Fintech Ltd (NIYOGIN) Q4 FY23 Earnings Concall Transcript

Niyogin Fintech Ltd (NSE:NIYOGIN) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Sonia Keswani — Investor Relations

Tashwinder Singh — Chief Executive Officer and Managing Director

Abhishek Thakkar — Chief Financial Officer

Analysts:

Vishrut Bubna — Private Investor — Analyst

Pawan Kaul — Compound 26 Capital — Analyst

Yash Modi — Ashika Group — Analyst

Deepak Poddar — Sapphire Capital — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to the Niyogin Fintech Limited Q4 and FY ’23 Earnings Conference Call. [Operator Instructions]

I now hand the conference over to Ms. Sonia Keswani from Ernst & Young. Thank you, and over to you, ma’am.

Sonia Keswani — Investor Relations

Thank you, Vikram. Good evening, everyone. On behalf of Niyogin Fintech Limited, I welcome all of you to the Company’s Q4 and FY ’23 Earnings Conference Call. You would have already received the Q4 and FY ’23 results and investor presentation, which is also available in our filings with the BSE.

To discuss the Company’s business performance, we have with us today Mr. Tashwinder Singh, the Chief Executive Officer and Managing Director; Mr Abhishek Thakkar, the Chief Financial Officer; and Ms. Trivenika Avasthi, the Investor Relations Officer of Niyogin Fintech.

Before we proceed with the call, a disclaimer, please do note that anything said on this call during the course of the interaction and in our collaterals, which reflects the outlook towards the future, which should be construed as of certain forward-looking statement must be viewed in conjunction with the risks the Company faces and may not be updated from time to time. More details are provided at the end of the investor presentation and other filings that can be found on our website, www.niyogin.com. Should you have any queries or need any further information at the end of this call, you can reach out to us at the email addresses mentioned in the Company collaterals.

With that, I would now like to hand it over to Mr. Tashwinder Singh. Thank you, and over to you, sir.

Tashwinder Singh — Chief Executive Officer and Managing Director

Thank you, Sonia. Let me start by thanking all of you for joining us this evening. I welcome you to the Niyogin Fintech’s earnings call. I sincerely hope that all of you are doing well.

Let me start by giving you a little brief about our Company. We operate a tech-centric platform-based model wherein we deliver banking-as-a-service with lending capability in both rural and urban India through our partnership-led strategy. Our partnership-led strategy allows us to tie-up with local MSMEs and other enterprise partners that have a large and deeply penetrated distribution structure — infrastructure. The banking-as-a-service platform is then employed by these partners in their customer-facing touch points that enable these touch points to provide banking payment and financial services to their local customers.

Moreover, our partner-led strategy helps us reach out to a large number of SMEs and MSMEs through every partner we onboard and that gives us a cost-efficient market access by reducing our customer acquisition cost. We can then incrementally add products for the end customers, all the while providing income augmentation for these partners and retailers. Our revenue model is primarily transaction-led, wherein we earn a fee or commission on every transaction that is routed through our platform.

I am pleased to report to you that we have concluded FY ’23 or what I call the year of our build, by making significant progress towards achieving our vision of creating a digital platform that serves as a one-stop solution to meet the needs of all the financially underserved. During the year, we continue to increase our partner network by onboarding our first PSU bank and enhancing our tech capabilities by launching products like agency banking solution, prepaid cards neobanking, insurance among others, an outcome of building on these fronts has been evident in our quarterly reported gross transaction value GTV figures, which have been on an increasing trend consistently since the past two years. In line with our guidance from last quarter, I am happy to share that the GTV growth rate trend has strengthened. We are demonstrating an inflection in our J-curve trajectory. The GTV grew 65% quarter-on-quarter in Q4 as we transacted more than INR5,800 crores worth of transactions on our network in this quarter compared to the INR3,500-odd crores in the previous quarter, that is Q3.

We touched the lives of millions as we transacted over 14 million transactions in this quarter from close to 9 million in Q3 FY ’23. This growth validates our API infrastructure strategy focused on the enterprise segment. While margins is usually a strong month in terms of business volume at GTV, given the last month of our financial year, I am pleased to share that we went on and exceeded the March business volume and crossed the INR3,000 crore GTV mark in April ’23. We anticipate that in the coming quarters, the volume of transactions and the GTV will grow to match our expanding product and partner footprint as our partnership strengthen and mature. By leveraging the strength of these relationships, we aim to position ourselves as a key player in the industry and continue to drive success.

Another key element of our growth trajectory is our lending business. Our outstanding loan book stood at approximately INR92 crores this quarter, as we focus on creating the right lending models to ensure appropriate monetization of our networks. We in partnerships with a few new age entities to assist in monetizing their network as well. The consolidated revenue for this quarter stood at INR36.3 crores, a 35% increase on a sequential basis. We reported an increase of 139% in GTV on a Y-o-Y basis and revenue ex-device sales grew 40% on a Y-o-Y basis. We expect this trend to continue as our API infrastructure product and lending starts contributing materially to our topline.

As we enter FY ’24, we feel confident and ready to embrace what we define as the year of scale for us. Having built the above-mentioned capabilities, we are now ready to demonstrate the material scaling of our business. Being a FinTech company, we have been able to pave a clear path to profitability by bagging some marquee partnerships and relationships, unlocking cross-sell opportunities to cater to multiple use cases and have been complementing this with a low-cost client acquisition cost partner-led model.

A great example of this transition from build to scale will be our soon-to-launch distribution platform NiyoBlue. This platform is designed to provide access to financial services, including credit to MSME and we believe it will be a game-changer as we monetize on network. We are hopeful that this platform will help enable us to reach more customers and generate newbies.

We expect the broader product capabilities to drive gross margins higher in the future, given our focus on unit economics and profitability. This strategy coupled with a strong cash balance sheet makes us well-equipped to thrive in an environment where capital is now at a significant premium. With this, we believe we are on track to achieve our FY ’25 guidance. The market opportunity for us and API infrastructure provider with letting capability continues to be immense and gives us the confidence to achieve our set targets.

I would now like to hand over to Abhishek, our CFO, to take us through the financials and other details of Q4 and FY ’23, post which we can open this up for questions. And we can address all your queries. Thank you. Over to Abhishek.

Abhishek Thakkar — Chief Financial Officer

Thank you, Tash. Good evening, everyone. I’m pleased to share that our operational metrics have performed well, both in quarter four and full year of FY ’23. As on 31st March ’23, our BC Partners grew by 20% year-on year and stood at 732, as we added 13 new partners in quarter four of FY ’23. Gross transaction value, that is GTV, including the payouts stood at approximately INR5,818 crores in quarter four of FY ’23, an increase of 139.4% year-on year. On a full-year basis, our GTV stands at INR14,994 crores, up by 72.8% year-on year. Our financial professional network increased by 3.7% year-on year and stood at 5,196 as on 31st March ’23 and we added 113 partners in Q4 of FY ’23. Our Wealth Tech platform continues to perform well and recorded 21.5% year-on year growth in the AUM, which stood at INR2,665 crores as on 31st March 2023.

Moving on to the financials for quarter four FY ’23. Our consolidated revenue for the quarter was INR36.3 crores, up 16.1% year-on-year and an increase of about 34.5% quarter-on-quarter. This growth was primarily transaction-led as explained by Tash in his commentary.

As explained in our past calls, FY ’23 was a year of build for us. But if one compares, our EBITDA and PAT versus reported over the past quarters, this is a downward trend that signifies our improving product mix. This is evident from our numbers, wherein EBITDA excluding ESOP charge, which is non-cash in nature for the current quarter was negative INR60 lakhs, as against negative INR6.2 crores in quarter three of FY ’23. ESOP charge for the current quarter was INR1.1 crores versus INR1.2 crores in the corresponding quarter last year. The non-GAAP PBT stood at negative INR2.3 crores in Q4 of this year as against a positive non-GAAP PBT of close to INR10 lakhs in the corresponding quarter last year.

Talking about our financials for FY ’23. Our consolidated revenue for the full year stood at INR117.2 crores, up 9.4% year-on year. However, our revenue excluding devices reported a significant growth of 44.6% year-on-year and stood at INR108.6 crores compared to INR75.1 crores in FY ’22. Adjusted EBITDA, excluding the ESOP charge, which is non-cash in nature for the year, was negative INR17.2 crores in FY ’23 as against a positive of INR3 crores last year. ESOP charges for the year was INR4.8 crore versus INR5.3 crores in FY ’22. The non-GAAP PBT stood at negative INR23.3 crores in FY ’23 as against a negative non-GAAP PBT of INR2.4 crores in FY ’22. Our gross loan book stood at INR91.8 crores, up 39.1% year-on year, driven by the significant scale up of our MSME partner focused lending book. We continue to remain a zero debt and net cash company. Our cash in hand stood at INR89.4 crores as of 31st March 2023.

With that, we can now open the floor for questions. Thank you so much.

Questions and Answers:

Operator

Thank you very much, sir. [Operator Instructions] We take our first question from the line of Vishrut Bubna, an investor. Please go ahead. Please ask your question.

Vishrut Bubna — Private Investor — Analyst

So, first question is around [Technical Issues]

Operator

I’m sorry to interrupt, Mr. Bubna. We cannot hear you very well. Please use the handset while asking the question. Thank you. Yes, please go ahead.

Vishrut Bubna — Private Investor — Analyst

Yeah. So, who were your top three largest customers and what percentage of the GTV do they contribute to?

Tashwinder Singh — Chief Executive Officer and Managing Director

So, I think, we have not given data about individual client level data. I think, the top three or four customers we have indicated multiple times on various calls, right. So, I think, when you start looking at some of the large enterprise clients that we have, as I explained earlier, we have morphed our business, which is focused more towards enterprise clients. So some of the large enterprise clients are obviously contributing larger volumes into our GTV. I think the contribution of the top 10 enterprise clients would be making up almost what 50%, 60% of the GTV. I don’t know about top three what their contribution would be, but that should give you an indication about some level of lumpiness towards the enterprise clients, which is expected, because they are larger volume providers.

Vishrut Bubna — Private Investor — Analyst

Okay. Great. And then just a follow-up question on that. Let’s say, for example, like in India Post or some of the other bigger clients that you mentioned before, what penetration do you feel you already have within the like addressable opportunity of distribution that they have?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. I think, the penetration on these networks, these large customers like India Post, as you mentioned, right, or any of the other players like Bharat Financial or some of the other [Technical Issues] taken in the past, I think the penetration needs to be looked at on two relevant points. One is the penetration from a network standpoint; and the second is the penetration from a product standpoint, because with each of these partners, we have ability to provide multiple solutions across the board, right. One could only take AEPS, API from us or a DMP API from us or they could take altogether they could also take a neobanking API.

So, I think, to me, the penetration, we are just at the start of the journey with a lot of our enterprise clients. We have spent the last year really creating the whole enterprise strategy we’ve got relationships built in, we’ve got programs done with multiple people, we have got deep integration done with some of the names you mentioned, right and a lot of them are either working on one or two products with us without having implemented it across the full network, because our strategy as I explained earlier is that we do deep integration with the enterprise partners, but the rollout of the proposition across the network of the enterprise partners is really the responsibility of the enterprise partner, right. We are providing the technology, we are providing the tech stack, we are providing the service infrastructure, but the rolling out across the network has to be done by them. And therefore, we are in some sense limited by the speed at which they operate in terms of expanding the network, right?

But when I look at the opportunity set that exists across the network — and don’t forget, they are also expanding the network beyond what we have. India Post is a classic case in point, we can talk about where we’ve implemented this agency banking solution plus some of the other product solutions, whereby they need to expand this and they want to get to a pretty significant footprint by adding incremental BC partners or BC agents in their network. Every BC agent that comes on their network will actually come on our platform all the transaction will be routed through us. So the scale that we can potentially get from here on is quite meaningful, which is why we have given a guidance on FY ’25, which is pretty significant compared to where we are today.

Vishrut Bubna — Private Investor — Analyst

Great. And then just one last question was around the NiyoBlue — sorry if I mispronouncing, the new product that you are planning to launch.

Tashwinder Singh — Chief Executive Officer and Managing Director

Yes.

Vishrut Bubna — Private Investor — Analyst

So, if I’m not mistaken, that’s more like a lending marketplace or sense where you’re doing both core lending and potentially also lending yourself. So just wanted to understand that, like what is the plan, like the go-to-market for that? Is it through this existing distribution from these clients on the GTV business or is it through the CA network that was earlier there?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. This is — the NiyoBlue platform is a ubiquitous platform, which we can use in either of the two platforms. Obviously, the initial launch is going to be with our CA network, which is more than 5,000 now at play and each of those CAs is dealing with anywhere between 200 to 300 MSMEs, right. So if you think about the footprint of the network that we have through the CA network is also pretty substantial.

Now, every time any of those MSMEs need some financial solution, they go to the CA, and we are now creating the platform where the CAs can just connect with us on a platform, which is like a marketplace, right. And yes, Niyogin can also potentially take on some of the roles on their books if we think that those fit what our credit terms are. Mind you, we would keep our credit norms quite tight. And then there is a large tail of lenders who work with us, right, on the distribution side, where we are able to provide those transactions to them digitally. And then we make a commission and fee on that separately. So that’s what we’re trying to do.

Vishrut Bubna — Private Investor — Analyst

And just on the co-lending side, is there any FLDG that you all have to provide or any risk-taking us there or is it purely a lead generation?

Tashwinder Singh — Chief Executive Officer and Managing Director

No, we don’t provide SLDG to anyone. We are not. We are an NBFC, we have not provided FLDG to anyone. And I think our strategy is not to do that. Our strategy is on the distribution side is floor distribution where we do not have any risk. And if we have to take risk, then we’ll take it and hold on a book, because we are comfortable with that credit.

Vishrut Bubna — Private Investor — Analyst

Okay. Thank you.

Operator

Thank you. [Operator Instructions] We take our next question from the line of Pawan from Compound 26 Capital. Please go ahead.

Pawan Kaul — Compound 26 Capital — Analyst

Hey, Tash. Congratulations on the volumes that you guys have done. Great job. Just digging up from the previous participant question on the NiyoBlue platform, how does that platform integrate or use the data on our payments business, because I think one of the benefits of having all of that data deciding the payments businesses that you can cross-sell the data. So how does that benefits the NiyoBlue platforms you talk about [Indecipherable].

Tashwinder Singh — Chief Executive Officer and Managing Director

So, end of the day, the way to think about it is that you have access to large networks, right? We have to find ways and means of continuously monetizing those networks, right? When you look at our payments business or our financial inclusion business or the iServeU business, that’s a large network that we’ve discussed, right, that large network has great footprint and then we have to the CA network on the side, which is also a great footprint, right? We are creating a platform which can then be used for originating loans for distribution, right? So we’re basically trying to figure out that through a digital mechanism is there a better way for us to be aggregating these loans, so which we can monetize and make some incremental money, because the network has been established. So they are not directly linked, right, but there is obviously a linkage, because you’re just trying to find a better way to monetize the network more incremental over what you currently do.

Pawan Kaul — Compound 26 Capital — Analyst

Okay. Got it. So, this would purely be a distribution platform, nothing else [Speech Overlap] fees and non-interest income. Okay. Got it. And for accounts that we kind of select we will use our balance sheet to lend to them would be raising any capital in this business to kind of boost the balance sheet to increase spending.

Tashwinder Singh — Chief Executive Officer and Managing Director

So, we already have about INR80 crores, INR90 crores of cash on the books, right, as Abhishek mentioned, and we have to leverage in any case, right. So we are a unlevered company we are an NBFC, but unlevered. So that’s a call we will take in the course of this year on how we want to think about that part of the business, because depending on what is the kind of stuff that we are able to originate and what comfort we feel on that we will take a call on how we want to move forward on that and what size of the lending book we are comfortable keeping with us. Right now, we are quite small, as you know, we are less than INR100 crores, about 100 crores give or take, right. So the strategy is not to be thought of as an entity, which you will just scale the lending book and that’s suddenly become a strategy for us. I think anything and everything we think that we do, we think about cross-sell, we think about opportunities for doing more with the network, all with the customer, where we can add more than just a lending revenue for ourselves. So, certainly lending capability helps, because in a lot of partnerships that we have, we need lending capability and we are able to then bundle everything together and make much more than you would otherwise do, if we were only giving lending or if we were only doing payments, right. By putting them together, we think it creates a very interesting pool factor for the clients that we are dealing with.

Pawan Kaul — Compound 26 Capital — Analyst

Understood. Switching to the payment side of the business. So you did INR5,800 crores this quarter, you’re saying that in April, you touched about INR3,000 crores. How sustainable do you think this volumes would be or you could expect growth from here onwards as well?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. I think we discussed this point and I think it’s a fair point, Pawan, because around October you had asked the same question. And because of Diwali, there were some up-and-down on the volumes. I think we now feel pretty confident, because this jump in volume that we’ve seen in Q4 is sustainable, because this is the customers that have gone live incremental customers, especially on the enterprise side, who have actually implemented our solution into their networks and therefore these volumes have come through that.

So if it was the existing customer set that was increasing volume, because of some event or some issue happening like a domestic benefit transfer or direct benefit transfer, one of those, then I would have said that there is some level of variability, but because this growth in volume has been supported by or has been driven by increase in both the footprint on the ground and by increase in partners and by new enterprise customers scaling up with us, we think this is sustainable and we think it will increase materially from hereon. And I think that is obviously already shown between March and April, which is why I put the April number out there to give confidence, because everyone assumes that March numbers are generally supposed to be high, because economic activity in the last month of the year is high and April tends to be a little bit of a slower month.

I think April for India overall has been great, right. You look at the GST collections, which the Government of India has come out with in terms of numbers, which is the largest-ever and from our point of view, just the enterprise partners coming onboard and these are partners that we’ve been speaking of, you heard names of all these guys, right, where we’ve done very, very deep integration with these partners across multiple locations and therefore now we are seeing the benefit of that coming in. We’ve still got a few more enterprise partners, that is still have to come onboard, those benefits will all start accruing from June-July onwards. So, I’m not even counting any of that. Therefore, we feel quite confident about being able to sustain this growth rate.

Pawan Kaul — Compound 26 Capital — Analyst

So if you could qualitatively at least talk about how much of this growth that you are witnessing is coming from existing partners, having an increased throughput versus new partners that you have kind of gotten onboard, say, this quarter versus last quarter?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. I think, out of the INR5,800 crore, you will probably have anywhere between INR500 crores to INR600 crores that would have come in from new partners, because it’s not that the benefit of the new partners have all scaled up, right. These are existing partners that is scaling up their footprint. So they are increasing their footprint. So, a partner like India Post, if they increase the number of touch points that are using our platform, the volumes go up, but it’s an existing partner with whom the volumes go up. So, I wouldn’t say it’s new partners alone, new partner number I just gave you, which is not material, but that number will become material in the following months and the following quarters, because they will also scale up across as we expand our product capability across their footprint, because the footprint is really owned by the partner, right. So I think we’ll see that and that’s what gives us confidence this will scale up quite materially.

Pawan Kaul — Compound 26 Capital — Analyst

So [Indecipherable] INR5,800 crores, INR500 crores to INR600 crores is from new partners and the rest is from existing partners, would that be fair?

Tashwinder Singh — Chief Executive Officer and Managing Director

I would say about INR5,000 crores to INR5,200 crores would be coming from existing partners scaling up and INR500 crores, INR600 crores would be coming from new partners that would have just got onboarded in this quarter.

Pawan Kaul — Compound 26 Capital — Analyst

Okay. Got it. Thank you so much.

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah.

Operator

Thank you. [Operator Instructions] We’ll take our next question from the line of Yash Modi from Ashika Group. Please go ahead.

Yash Modi — Ashika Group — Analyst

Good evening, Tash, and congratulations to the Niyogin team on a great set of numbers. My — hello, am I audible?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yes, Yash. Hi. How are you doing? Good to hear from you.

Yash Modi — Ashika Group — Analyst

I’m good, sir. Thank you so much. First question is two interesting observations from the commentary that you gave. One with respect to the prepaid card solution; and two, with respect to the PSU bank account that you’ve started. So, two big wins, I think. Could you just elaborate, because cards was one opportunity where one of our competitors was doing a phenomenal job. And it was something that was missing in our portfolio. So if you could just elaborate on this card opportunity that has opened up for us. And second, also on the PSU bank win, which again opens up the entire PSU bank space for us. First, these two questions, then I have follow-up questions.

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah, absolutely. So, I think, prepaid card, again, in line with our business strategy, right, we are a API infrastructure play, we are creating — we have created the entire stack which we can offer to any of the entities that want to offer a card solution in their network, right. So we have the capability, we have — it’s a plug-and-play approach. We have conversations going on with a bunch of players with whom we will start this. I think, I’m hoping that the first sort of client will start using our platform in the course of next month. But this is an interesting play, it’s a full solution for card issuance plus managing the entire card infrastructure for an entity that wants to provide the solution. We have tie-ups with banks. So you will have co-branded cards with whichever entity wants to issue this along with the co-branding with the bank that I think will be interesting. Number one.

Number two, I think this is another important product for us, because the margins in this product are significantly higher than what you’ve seen in the existing. GTV margins that we have right now. So hopefully, as this business scales up, as this product scales up, we should see material improvement in the margins for our business.

In terms of the PSU bank, again, very interesting — first PSU bank we broke in with a Aadhar pay solution, they wanted an Aadhar pay solution implemented along with switching capability, etc. So we were — we pitched and we got that business that implementation is done, right. The scale will come over a period of time, but incrementally, thanks to them, we’ve got two other inroads for two other big banks. I’m sorry, I can’t give the names of the bank unless I get permission from them to give the names. So I can’t share the names. But very interesting how this business could scale up for us, because we were, as you know, we were dealing with all private banks at the back-end also in solutioning, Now, we’ve suddenly got the PSU opportunity opened up.

And in the PSU opportunity, unless you work with one bank, the other banks don’t take you seriously, right. So now we are becoming an important player there as well. Partly it’s also being driven with a partnership with NPCI, National Payments Corporation of India. I think we’ve been working with them very closely, right, with all the switching capability that we’ve built through — iServeU has built all of that for us. That I think partnership has become quite strong, that relationship has become very strong. So I think at some point in time, we will become the go-to entity for switching capabilities, we will become the go-to entity wherever there is integration required. And I think that’s the motivation of how we want to be perceived in the market as well.

Yash Modi — Ashika Group — Analyst

Got it. Got it. Second question with respect to the margins that you were referring to. If I look at the take rate for this quarter, with the GTV growth of INR5,800 crores and our revenue is around INR36 crores. So take rate seems to have dropped slightly compared to nine-month FY ’23. So some comments with respect to the reason behind the drop in take rates. I understand now that you’ve said that the cards business will kick in and few other solutions, the take rate should again normalize to 40, 50 bps, because I think that was our assumption when we were building FY ’25 INR1,00,000 crore GTV and INR500 crore revenue.

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah, yeah, absolutely. I think the way to think about this, Yash, is that, I think the net take rate is what really matters to us, right, because the gross take rate and the gross take rate is defined as the overall gross where do you make net take rate is after the commissions have been paid out, right. So what’s happening is the COB enterprise customers, our agreements with them are that they will pay us commission, we don’t need to pay anybody else, right. So there is no commission to be paid to anybody else. They’ll pay us directly. So the gross take rate then starts looking a little on the lower side, but the net take rate continues to be steady. That’s point number one.

I think, incrementally, the net take rate is what really matters for us. Obviously the gross take rate is something we track as well, and both are important, but net take rate is what we take home as our net revenue. So what I think we should do is, we will start giving you more data around the net take rate as well on how that’s playing out. And I think that will show some increase. So enterprise clients, coming in with them giving us just the net revenue that we should get and we don’t pay the commission, they pay the commissions directly to the network will lead to some level of movement here. But the incremental products like I mentioned, whether it is — what we are doing for UPI or what we are doing for credit cards, I think, will — prepaid cards, will lead to anywhere increase in the net and the gross take rate in any case, right. So that’s how these numbers will play out. That’s point number one.

Point number two, I just want to complete this point, Yash, if you bear with me. The second point is that the take rate is, as you know, is a calculated number, right, because what happens in some of our products, the take rate is calculated because some products we get paid on a per transaction basis like an AEPS or a micro-ATM, our revenues, as you know, are on a per transaction basis. In a domestic money transfer proposition, our revenues are linked to the GTV. So what happens is that the take rate is actually a calculated number. And if you look at our average ticket size, that’s actually moved up a little, it’s gone up to about 4,200 give or take, right. The GTV divided by the 13.99 million transactions we’ve done, right, that gets to that number. So as as your average ticket size goes up, your revenues don’t go up, because your revenues are linked for these products. Revenues are only linked to the number of transactions, right, so the take rate will move a little up-and-down, but I still think that generally hover around the 40 basis-points, right, from a modeling standpoint, we think it will hover around that area.

Yash Modi — Ashika Group — Analyst

Got it. Got it. Thirdly, in the presentation, I can see that — firstly, congratulations on giving a much better and much larger level of disclosure in the presentation. I’ve seen a lot of new banking relationships, NBFC relationships that we’ve had, we’ve actually started. In that banking partner, I just wanted to understand the distribution that we do for these people, say, the distribution of loan that we are doing for, say, a bank, would that figure get included in our GTV or GTV is only that goes to our system?

Tashwinder Singh — Chief Executive Officer and Managing Director

No, no, only what goes through system. We don’t confuse what is being distributed out of GTV, because that’s not truly GTV — I mean, we could. It is a transaction we are making money on it, but we don’t include that. So this data is very clean and clear. Right now, we’re only giving you the GTV numbers of what goes through our system, right, through the iServeU network, right. So it’s a clean and clear thing. We can — I take your point. Maybe the data that [Indecipherable] done out there, maybe we should have a number that we should also probably get on that part, which we should take into account and maybe from next quarter we will try and give it.

Yash Modi — Ashika Group — Analyst

Yeah, because — yeah, distribution, just wanted to get an understanding of how big is probably our distribution book, given the large network that we’ve built, just wanted to understand how big was that. So, probably next presentation we can do that.

Next, on this loan book, I see on the BSE disclosure that you’ve given, there is a impairment — financial impairment charge that was INR80 lakhs last quarter, it is INR1.25 crores this quarter. Could you just elaborate what is this impairment charge, this financial impairment charge?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah, this is not linked to the loan book. This is linked to some of the old receivables that were there. We have just, as a matter of prudence, we have taken some provisioning on receivables and none of it is a write-off. We have just taken provisioning in the new Ind AS regulations, I think the provisioning also gets. recorded as impairment.

I don’t know, Abhishek, you can probably clarify.

Abhishek Thakkar — Chief Financial Officer

Hey, hi, Yash. Abhishek here.

Yash Modi — Ashika Group — Analyst

Yeah. Hi, Abhishek.

Abhishek Thakkar — Chief Financial Officer

Yes, as per the new Ind AS regime or whatever, the earlier we used to say provision for doubtful debt kind of thing, right? Now, all this provision, as well as the actual impairment is clubbed as impediment only in the financial. However, of this, all this entire INR4.6 crores that we have shown as a impairment, there’s no actual — for full-year, there is no actual write-off. It is only impediment. Only provision.

Yash Modi — Ashika Group — Analyst

Okay. Okay. Got it. Thank you so much. All the best for the coming two years.

Tashwinder Singh — Chief Executive Officer and Managing Director

Thanks, Yash.

Operator

Thank you. [Operator Instructions] Take our next question from the line of Deepak Poddar from Sapphire Capital. Please go ahead.

Deepak Poddar — Sapphire Capital — Analyst

Hello.

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. Hi, Deepak. How are you?

Yash Modi — Ashika Group — Analyst

Yeah, I’m good, sir. How are you?

Tashwinder Singh — Chief Executive Officer and Managing Director

Very good. Thank you.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Sir, just wanted to have three, four questions. Number one, on the take rate that we were discussing, is it — I mean, if I do plain revenue percentage to GTV, so that percentage has been declining for last three, four quarters. So is it because of only the — I mean, the average transaction value has gone up or the mix of transaction or is it because we are giving more commission to partners or something on those lines?

Tashwinder Singh — Chief Executive Officer and Managing Director

No, no, no, no, we are not changing commission, we’re not giving incremental commission. It is a multitude of things that lead to the calculation of the take rate, as I explained, right. It’s partly got to do with the point that you mentioned in terms of transaction size — average ticket size moving up or down, because again it’s simple math, right. The fact that we have larger transaction value per transaction value, but the commission that we earn on an AEPS or a micro-ATM transaction is still the same. So the take rate starts looking at lower if the transaction average ticket goes up. That’s number one.

Number two, like I said, enterprise customers are now contributing a larger volume. The usual economic arrangement with enterprise customers is a little different from retail customers, right, with a lot of the enterprise customers, we are just getting commission that should hopefully going through better net take rate, but the same net take is also showing up in the gross take rate with nothing being paid out. So, it’s lower than 40 basis points. And therefore, that pulls it down a little bit. But as we get the new margins up there, we think 40, 45 basis points is a sustainable number for us.

Deepak Poddar — Sapphire Capital — Analyst

40, 45 basis point is sustainable —

Tashwinder Singh — Chief Executive Officer and Managing Director

Yes.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Understood. And sir, my second question is we had a vision of, I mean, having 100% stake in iServeU, right. That eventually we are looking to acquire, right. So any thought process on that front?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. I think there is a thought process around that. There’s nothing to report, per se. There is nothing on the anvil just yet. But clearly, it’s something that I think we need to work on and try and figure out what’s the best way forward on that count. But right now, I don’t have anything to report on that.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Understood. Understood. And thirdly, on the lending business, I mean, if you have to see next two, three years, what’s the scale that we would like to reach in the lending business? And any parameters on the NPA side that you can provide in the lending business?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah, absolutely. So I think, the lending business is — we control it by Tiekey [Phonetic]. The growth of the business, we think — I mean, I don’t want to give you a specific number for next year, but FY ’24, if I have to give you an idea, I think INR100 crore book will probably go to about INR200 crore, INR250 crore that’s a kind of scale. I don’t think, yes, again, not focused on just building the lending book for the sake of lending by itself, right, because the way we built our business, because we’re not a one trick pony, we’ve tried to create multiple revenue streams for ourselves, because whenever you try and monetize the network, there are multiple ways to skin the cat. And we want to make sure that we are providing a full stack solution to customers. Lending is just one proposition, but you don’t want to only do lending as a single product, you want to make sure that you are able to use that to leverage our balance sheet to get more than what you would otherwise earn just from lending cat, but so I think the book will increase for sure, I think we will get to INR200 crores, INR250 crores at some point in time for the next year, year-and-a-half and then we’ll see where we go from there..

Deepak Poddar — Sapphire Capital — Analyst

Okay. And then the NPA side anything — I mean, any parameters that you provide on the NPA side?

Tashwinder Singh — Chief Executive Officer and Managing Director

I think on the NPA side, there is an ECL policy the Company has, which is expected to be required as per RBI. So that ECL policy is followed and you would — I mean — I know you would not be tracking us recently, but you would have noticed in the — if you go back to our history two or three years ago, we had taken some management overlay on some credit losses, which were older credit losses prior to 2020, right. We are still holding on to that provision. So that provision plus whatever the model shows up, I think more than covers up.

I think, Abhishek, you can probably [Technical Issues] on the exact numbers.

Deepak Poddar — Sapphire Capital — Analyst

Gross NPA, what would be the gross NPA percentage?

Abhishek Thakkar — Chief Financial Officer

Yeah. So gross NPA, we have almost — very negligible. And we are holding, as Tash rightly said, we are holding a very high management overlay also from whatever we are getting as per the model, which is required by the RBI running this. We are having a high management overlay for that also. So, I think, for a year or so, at least, we are very much covered.

Deepak Poddar — Sapphire Capital — Analyst

Okay. So I understood that. So I just have a question on the standalone numbers. I mean, because it’s not levered at all, right. I mean, it’s entirely own money that we’re lending. We are using it in the lending business. So, but then why we are not profitable at the standalone level?

Abhishek Thakkar — Chief Financial Officer

That also — so standalone level also, we have deployed the money into the subsidiary are capital employed is 50% was almost subsidiary and the other 50% we are using in the lending book. There also it was the year of build, now we have the entire team, and we got extended out in the coming year you will see comfort over there.

Deepak Poddar — Sapphire Capital — Analyst

Okay. Okay. Understood. And overall the breakeven, so we are very close to breakeven, right, at the consolidated level. So, any thought process that by when we are looking to breakeven at the PAT or at the EBITDA level.

Tashwinder Singh — Chief Executive Officer and Managing Director

So, I think, we obviously track EBITDA level more closely because that talks about cash flow generation for the Company, etc, right. And I think Q4 number you would have seen our EBITDA is on a consol level is about, I think, INR60 lakhs negative right, give or take. So yeah almost on the verge of that. We’ve already pretty much done with our investments that we’ve done. I want to take a step back in March ’22 we had invested INR50 crores into iServeU, which is then we announced that we are getting into the year of build, both institutions, Niyogin and iServeU got into the year of — got into a phase of build that we wanted to make sure that we are building all the products that’s required to be a whole scale player. So there were platforms we build at Niyogin level, there were platforms that were built at iServeU level. I think we’re pretty much done with all of that. We haven’t spent all the money. We have spent close to out of the INR50 crores, we have spent about INR30 crores to INR35 crores in that. We’ve got some expenses that are still to be — will come in terms of premises etc, right, which we have taken new premises etc, the people cost, etc. So those are a bit few moving targets, but otherwise, I think the business is pretty much as the numbers are telling you, right, it’s pretty much there. I don’t want to give you a EBITDA target for FY ’24, because I’ve given one for ’25 anyway. And we are really working towards trying to make sure we meet our FY ’25 target on the EBITDA side, on the revenue side of the GTV side, because to us, that is the first real milestone in the evolution of our Company.

Deepak Poddar — Sapphire Capital — Analyst

Understood. I got the point. Yeah. I think that’s about it from my side, sir.

Tashwinder Singh — Chief Executive Officer and Managing Director

Thank you.

Deepak Poddar — Sapphire Capital — Analyst

And just one last thing with the ESOP. So was the ESOP cost, we have done in fourth quarter?

Tashwinder Singh — Chief Executive Officer and Managing Director

ESOP cost I think INR1.1 crore was the ESOP cost in the fourth quarter. Overall for the year was about INR4.8 crores.

Yash Modi — Ashika Group — Analyst

FY ’23, and this we account in the standalone numbers?

Tashwinder Singh — Chief Executive Officer and Managing Director

This we account in the standalone numbers.

Deepak Poddar — Sapphire Capital — Analyst

Okay. That’s it from my side, sir. All the very best. Thank you so much.

Tashwinder Singh — Chief Executive Officer and Managing Director

Thank you. Thank you, Deepak.

Operator

Thank you. [Operator Instructions] We take our next question from the line of Vishrut Bubna, an investor. Please go ahead.

Vishrut Bubna — Private Investor — Analyst

Hello. Yeah, so just — hi. So just a few more additional questions on the NiyoBlue side. So I just remember seeing the debt that you had mentioned that FinTechs could also potentially be like one of the lead partners for who you are try to originate loans. So just wanted to clarify that. Are you going to begin only by leveraging the CA network and try to originate loans for lenders on this marketplace through them or what are the other plans to expand that?

Tashwinder Singh — Chief Executive Officer and Managing Director

Yeah. So like I said, we are launching this right now, we’ve already been working with the CA network, right. We had rudimentary platform, we’ve obviously scaled it up quite materially, which is what the NiyoBlue platform. We wanted to brand it and make sure there is some buzz in the market at least in the CA market for us, right, as a brand, etc. So that’s why we did all of that.

The opportunity set for origination is across the board, right. We could originate from the CA network, which is a homegrown network. So obviously you will always want to test everything that you build with the network that you are comfortable with, right, that we would do. Finally enough, we’ve now got inbounds from a bunch of FinTech companies that have large networks, because they have been providing solutions. You look at companies that are providing accounting solutions for their bookkeeping solutions for their platform, I taken into account, an entity like Khatabook, right, which has a very, very large network, right. We are working very closely with them to see how we can be of assistance in trying to make sure that we can use that network to be able to originate and obviously there’ll be economic sharing across the pipe like our general belief even in our payments business is that we share the economics through the entirety chain of everyone who is in the ecosystem.

Here again, we feel that we can create the ecosystem for aggregating the origination and it’s part only loans, right, there is loans, there’s insurance, there’s any financial product, which is required by the MSME, we should be in a position to fulfill that demand, not necessarily because of our balance sheet, but because of what is available in the market. So creating that marketplace, we think is an interesting play for us to keep monetizing our network and then to use it to help other people monetize their network.

Vishrut Bubna — Private Investor — Analyst

Great. And what is the sort of take rates you’re looking at out of these originations.

Tashwinder Singh — Chief Executive Officer and Managing Director

Typically unsecured loans operate anywhere between 2.5% to 3.5% as commission without any risk participation. Again, I want to reiterate, we don’t want to talk about risk participation here, right, because we don’t do risk participation on these originated loans. And then there could be a sharing anywhere between 30% to 50% of that income with the chain, and therefore 50% would go back to us. So anywhere between 1.5% to 2% is what I think we should try and see if we can reach, because pretty significant from a margin standpoint, and it’s all fee income.

Vishrut Bubna — Private Investor — Analyst

And do you all have any capabilities to also maybe assist in the underwriting process, because I’ve seen it with, I think, another NBFC you grow, which at least from what they say on the presentation, they’re both originating and then providing some sort of a software, some scoring type of solution, but they also do some underwriting. So is there scope already you’ve built-in capability for something like that?

Tashwinder Singh — Chief Executive Officer and Managing Director

Absolutely, absolutely. Because when we’re talking with FinTechs, I’ll just give you one example, we’ve got about seven, eight conversations going on with all of them we are analyzing the networks and we are figuring out what is the best model for — it’s not like a black-box that they’ve given them, okay, you can put in the data, but I think we are developing underwriting models which is suited for that specific network. And the information that is coming to us from that entity on how to create a lending proposition across. That’s very interesting, but you cannot just have one black-box that fits all. So [Ends Abruptly]