Kfin Technologies Limited (NSE:KFINTECH) Q4 FY23 Earnings Concall dated May. 08, 2023.
Corporate Participants:
Sreekanth Nadella — Chief Executive Officer
Vivek Mathur — Chief Financial Officer
Analysts:
Abhijeet Sakhare — Kotak Securities Limited — Analyst
Pranav Shah — JPMorgan — Analyst
Prayesh Jain — Motilal Oswal — Analyst
Prithvish Uppal — Asian Markets Securities — Analyst
Anand — WhiteOak Capital — Analyst
Devansh Nigotia — SIMPL — Analyst
Presentation:
Operator
Ladies and gentlemen, good morning and welcome to the KFin Technologies Q4 FY23 Earnings Conference Call, hosted by Kotak Securities Limited. [Operator Instructions]
I now hand the conference over to Mr. Abhijeet Sakhare from Kotak Securities Limited. Thank you, and over to you.
Abhijeet Sakhare — Kotak Securities Limited — Analyst
Hi. Good morning, everyone. Welcome to earnings conference call of KFin Technologies Limited. To discuss the 4Q FY23 performance of the company and share industry and business updates, we have the senior management with us today, represented by Mr. Sreekanth Nadella, MD and CEO; Mr. Vivek Mathur, CFO; and Mr. Amit Murarka, Head, Investor Relations.
I would now like to hand over the call to Sreekanth for his opening comments, after which we will take the Q&A. Sreekanth, over to you.
Sreekanth Nadella — Chief Executive Officer
Thank you so much, Abhijeet. Very good morning to one and all. It’s a good Monday, we will start with a quick overview about KFintech. My sincere thanks for starting to this organization. This is our second analyst call. I would still want to reiterate, take this opportunity, and explain a little bit about our organization before I dive into the overall business performance.
We continue to be the largest investor solutions provider as a registrar and transfer agent in India, and one of the largest in the world, especially in terms of the number of folios we manage. Between mutual funds and equity, we manage close to 23 crore folios which is amongst the largest in the world. More specifically on the mutual funds, we manage about 26 out of the 45 fund houses equating to INR12.8 trillion of AUM about 32% of the overall AAUM, a number that has over the past three years have been continually increasing.
We have — also have had the privilege and honor of being chosen by most of the marquee fund houses who have launched their operations over the past wicket. We won 15 out of the large 20, 21 odd asset management companies that have launched their operations in the country. The equity mutual fund AUM market share too has been continually on the rise, in fact, has increased a little over 600 basis points from FY20 from 28.8% to close to 35% now.
Being in the industry of mutual funds and asset management, retail book SIP book is one of the most important parameters everyone talks to, again another metric our clients have been at the forefront of growth. We have added market share, moving from 39% to close to 41% in the past two years.
Issuer Solutions is the place where KFintech had originally started its business long back 35 years back to be precise, and we continue to be the market leader with about 47.3% market share. In terms of N measured in terms of the companies that are listed on the NSE 500 and our total client roster of little over 5,300 clients, including several unlisted analyst-rated companies becomes the backbone of this company’s growth in terms of having this spread out in terms of the — every single cooperate, every line of business that we deal with.
Whilst these two have been traditionally the growth engines of this organization over the past three to four years, we have carefully and purposefully orchestrated several new growth engines, given financial services, agriculture was listed. We have also, since then, found opportunities of higher growth in various areas that includes international expansion, as well as, asset class expansion into alternatives, pensions, private retirement schemes, and on the bond market as well.
We have been at the forefront of the technological innovation, launched over 20 new products, which are very relevant to the industry. We have also, since then, been extremely intentful in terms of having our organization to run in a manner which is fully compliant with the ESG standards, in fact, as per the previous assessment, we have got — conducted, we were rated A and amongst the second best country — in those companies, in the space that we operate in the capital markets.
I will quickly gravitate into the highlights of the business performance for the quarter, and also I will take this opportunity to quickly sum up the yearly performance as well.
For FY 2023, KFintech had registered a revenue growth at about 13% year-on-year. EBITDA margins were at 41.4%, PAT margin at 27.2%. Q4, specifically the revenue growth year-on-year had been about 1.3%, EBITDA margins were at 45.8% and PAT margins at 31.1%. We have seen opportunities of productivity-driven through large-scale technological transformation initiatives that have concluded in H1, which have resulted in terms of EBITDA expansion and PAT expansion into the second half of the year, which have, since then, compared to the H1, have improved the overall years numbers, both for EBITDA as well as the PAT numbers.
We have seen a growth in cross, it is a secular growth across all lines of businesses. Domestic mutual funds, which continues to be the largest line of business has the — AUM has grown 7% year-on-year, whereas the industry’s growth was at 5.5%. This helped us increase our market share from 31.2% to 31.6% in terms of the AUM itself. We have implemented the first of its kind of big data platform called Digix across several large asset management companies, and we have also been lucky to have several famous marquee asset management companies in fact, we now have a fourth client from KFintech who have entered the category of the top 10 asset management companies by size. If you recollect, we had two AMCs in the previous year — and it has now as well in Q4.
Whilst domestic mutual funds and issuer solutions, as I said, are the bellwethers for this business. We’re also very happy to inform you that our faster growth in the younger businesses has reduced the dependency on the larger business, which effectively translated into the revenue coming from non-mutual fund businesses to have increased from 26% to 29% in the fiscal year 2023. One of the primary contributor being the issuer solutions, which has crossed this major milestone of INR100 crore turnover in the previous year, which marked close to 30%-plus growth on the revenue including the OPET is over 32%. We have added 180 odd corporate clienteles during the Q4 itself, taking the total client base to 5,363. We have also been successful in effectuating transitions and transfers from other RTAs in this space, including that of Varun Beverages, Devyani International, Castrol India, and Union Bank of India and several others.
In total, we have added up over 1.4 million investor folios during the Q4 FY 2023 which brings our total folio count over 110 million. All of this will augur well into this year as there is a compounding effect in terms of the revenues because of folio expansion.
International Investor Solutions is one of the areas that we’ve been very, very intenful in terms of growing. We have, in FY 2023, a total client base of about 41 clients, which used to be 32 in the previous year. This has resulted in the overall revenue growth, which basically has a number of about close to 35% increase in the previous year of INR65 crores number compared to that of the INR48 crores in the previous year, which also includes the international business, and the alternatives and pensions within this. We have seen growth of north of 35% both in the case of pensions and in the alternatives, 46% impact in alternatives and 80%-plus in the National Pension System.
The [Indecipherable] station business on the other hand, given the markets have been reasonably tepid, we actually lost some amount of AUM. But despite that, we have managed to maintain the revenue impact for the previous year, as we expect to have much better years going into the FY24. We have added a little around 63 funds, fund managers to be precise, in Q4 2023, and total — taking the total number of funds to 411 with a market share of 37% for AIF. As we all know, given renders both transfer agency and fund administration services for alternatives, and today has the largest market share in all the Gift City funds and in fact is one of the few players in the country who has funds in Canada, Singapore, and other parts of the world as well and a business that we are very intentful of going into the coming months and years.
We have — in the case of National Pension System, have outgrown the industry substantially. We have grown our subscriber base by 28% year-on-year compared to 15.6% of the industry, which effectively translated it into the overall subscriber base swelling to close to 1 million, 9,50,000-plus number versus the 7 lakh number in the previous year. So that market a substantial growth and a continued expansion of our subscriber addition, both through the intermediary channels as well as the [Indecipherable] channels.
Company’s growth path, as we have already informed back in the day, KFintech looks at its growth strategy, both organically and inorganically. We continue to demonstrate our intent to add significant value to our clients and to our investors through identifying opportunities of buy versus build where it makes more sense for us to buy. Sp one for such thing was when we have invested a minority stake in the country’s first and the largest account aggregator called OneMoney. We are very bullish in terms of the overall prospects in the medium to long-term prospects of the account aggregation, what it could do even as there is a significant intent from the Government of India in order to expand a data-driven economy, which today not just includes financial services sector, but also GST data, and possibly medical records data, so on and so forth. We believe the opportunities will be enormous. At this point in time, we have definitive use cases to add value to our current clientelle, both in asset management and in the wealth management space. And as we, and OneMoney, of course, is a premier account aggregator when it comes to the lending space, which also helps us to add a substantial business case and the client case which hitherto was not a traditional client base to KFintech, which is on the lending side if I may. We have since then also acquired through a 100,000 buyout of Webile Company, WebileApps Company. It is a tech company based in Hyderabad, which specializes in UI AIML-driven platform creation. But the company in question was also instrumental in creating MFCentral as we know today in terms of its entire journey and the workforce associated with that. It was a very important acquisition for KFintech in the context of adding a substantial techbase with the relevant domain knowledge to enhance KFintech’s own overall tech and transformation capabilities to render unequivocal services to the entire asset management industry, including that of the newer acquisitions such as OneMoney, so to speak. Both the entities are based in Hyderabad and have seen a sharp growth in the recent years.
Broadly in terms of the industry performance itself, mutual funds itself had performance in terms of the year. I would probably call it in the context of a highly volatile market and a mark-to-market which ended flat from 31 March previous year to now at a — at an overall growth of 5.5% year-on-year. Our side, KFintech, in this context, have our grown over 7%. Equity AUM had grown over 10.5% during this particular period of time. There had been a continued inflows into equity through the SIP retail channel. This augurs well for the industry. This also reinforces the props in terms of the India’s equity and capital markets by the investors, who continue to invest through this route, which is both sticky as well as a very efficient investment structure for all the investments — all the investors.
The monthly SIP inflows have continued to grow from March 2020 to March 2023. In a matter of three years, the numbers have moved from roughly INR8,300 crores to INR14,000-plus crores as the run rate ending March. This provides the necessary stability that is required both for the MF and the stable for the capital markets. The folios, the total SIP count across AUM have been steadily on the rise, and as I said through this steady rise at the industry level, we have been fortunate enough to have clients who have been outgrowing the industry quite substantially helping overall market share to increase.
On the other asset classes, there has been a marked increase in the number of alternate investment funds, over 25%-plus new funds have been added in the fiscal year 2023 and the total number of demat accounts too have expanded substantially by over 27% compared to FY22, FY23. The pension subscriber base itself, as I had already called out, has increased by 13.6%. Given KFintech operates across the asset class of equity, bond, alternatives, mutual funds, India and abroad, our continued expansion and financialization of the capital markets I’d like to believe will augur very well for the organization and we are just trying to — along with it.
Our opportunity size for international business continues to excite us. As we all know, KFintech has an office in Kuala Lumpur with a clientele base in Malaysia, Philippines, Hong Kong, and now a first one to start in Singapore. We have also received in-principle regulatory approval from Thailand. And as we go through the next step in terms of the regulatory approvals within India, we are intentful of starting a talent operations in time to come subject to the regulatory approvals.
The overall market size is nearly 2 times that of India, and with a strong ability to have both transfer agency and fund administration to be provided together, the complex business environment out there that — one that we have been there for the last five to six years and we believe we have created successful modes for us to be able to now expand far faster than how we could for the past four years of our inception, which started from zero today to have over 41 clientele.
And as a summary for the year-end, I have also mentioned in the previous quarter that we have signed up with a Canadian fund administrator. We have gone and licensed it, and we have also added some alternative plans for Singapore and soon to start hopefully other geographies as well.
In terms of the KFintech’s performance in the domestic mutual funds are — a growth of 7% over 5.5% of the industry on the overall AUM level. Equity AUM has been about 8% — 8.7% year-on-year compared to a higher industry growth during this period. We have had pure NFOs compared to the overall industry, which I hope will change with this quarter ending subsequent which will auger well for us into this fiscal year, even how the previous year has concluded.
The overall market share continues to expand both on AUM or equity AUM, SIP life count as well as the values so to speak. In terms of, if you see a comparison, the highest growth in the AUM, 4 out of the top 7 AMCs in the country had been from KFintech in the previous year. In percentage terms, 6 out of the top 7 asset management companies who have registered the fastest growth in AUM had been with KFintech.
We are also very, very excited in terms of the launch of our premier financial services company in the country of [Indecipherable] Bajaj Finserv’s launch to happen this year. And to — throughout the FinTechs, we are very, very warmly welcome to Bajaj Finserv’s launch-official consent in this year, hopefully in the next quarter or so.
Issuer Solutions, we continue to expand the corporate clientele by a good margin. The IPO market had been a little tepid in the previous quarter. But we have seen that pickup. And we all know that the registry revenue is not just from IPO, but largely from the folio maintenance and the corporate actions which are largely dividend declarations, buyback of shares, life issue, so on and so forth, all of which have seen a pretty steady growth in the previous year and I’d expect a similar trend to continue into this year. And with any luck with more IPOs happening, we would love to believe that we can continue to expand far faster into this line of business as with the other.
We have also been privileged to be awarded as the Asia-Pacific Stevie award in the gold category for innovation in digital transformation for financial services. Digitally transforming the IPO subscription model. This is in the context of KFintech managing the country’s largest IPO ever LIC of India, and successfully creating several platinum-standard in terms of technological solutions that we’ll meter out during that process. We have won this award in Vietnam across Asia-Pac level, competing with some of the largest technology companies based in the world, including from that of India. So we take this opportunity to thank you all for putting your faith in us to — for continuous transformation.
Quickly moving on to the International Solutions, I briefly called out that we — today, we have about 41 clients. In the previous meeting, you would have heard a number of 32. The expansion is largely on the back of winning several large funds in Gift City, the newer alternative funds in Singapore and the Canadian funds that I had already spoken about. Our pipeline for the East Asia and, in general, beyond India borders continues to be pretty large and one I am hopeful we’ll see a faster traction in terms of conversion. Some of these geographies have longer and protracted procurement cycles, if I may. [Indecipherable] not be planning several deals — our plan for growing hopefully in the months to come.
Overall, we have seen a continued expansion in transaction volume and the clientele though the AUM itself has slipped compared to that of FY 2022, given the mark-to-market erosion in the stock markets in most parts of the Southeast Asian economies in the previous year and hopefully, the trend will change in this year.
In the case of alternatives, we have added close to 144 AIF schemes in the previous year, marking this as the single largest expansion of a business in a single year for us. You know, close to 46% increase in revenue and higher than that including in terms of alternatives. You know the funds are yet to launch and that launches, which helps us to further improve our revenue base in this case as well as drive a certain amount of optimization driven through AL that we will accomplish with more funds getting…
Fund administration is a very, very important area of business for us. We have a quad hexagram 1.5 years back successfully integrated. We have seen growth and expansion revenues up north of 30% in the previous year for this particular entity’s clients. And even our client base addition moving from 23 to 28, so five new clients we have added as of this previous year.
With that, I would hand over to Vivek to cover the financial performance of the company and we’ll leave the floor open for questions. Thank you.
Vivek Mathur — Chief Financial Officer
Thanks, Sreekanth. On the financial performance of the company, as you would see that overall revenue for the year has gone up by 12.6%. It was backed by moderate growth of about 7.7% in domestic mutual fund revenue, issuer solutions grew at 28%, international and other investor solutions, growth was about 35%. However, quarter-on-quarter, you would see a downfall of 2.7%, that’s largely driven by movement in equity AUM and the overall domestic mutual fund clients did not have much of NFOs during the quarter, as well as for the year, as compared to the industry. But we see that this is momentary as NFOs will continue to come out in the market from our clients in the current year.
Issuer Solutions had good corporate actions in Q3 as compared to Q4, so there is a marginal dip because of that as well. However, on the expense side, we witnessed a growth of about 20% year-on-year because of higher salaries for our IT folks, IT team in first two quarters and we quickly acted in terms of optimizing our expenses in the balance two quarters. And if you see quarter-on-quarter expenses for Q4 over Q3 has come down by about 6.8% and other expenses have come down by 9.2%. So overall EBITDA went up by 3.9% quarter-on-quarter. We ended the EBITDA margin at 41.4% for the year and for the quarter, it was 45.8%. So we believe that the trajectory in terms of our ability to optimize expenses, if there are headwinds on revenue, has demonstrated what we have done in the last two quarters and we’ll continue to do that in the coming year as well.
So EBITDA margins are well within the range of 40% to 45%, that we believe is sustainable, 41.4% is within that range. Last year was 45%. And PAT margin and overall profit after tax has gone up. There is a growth of — healthy growth of 31.8% year-on-year while on quarter-on-quarter, it is 6.8%. So overall return on equity is at 25.8% and we are sitting on cash and cash equivalents of about INR310 crores, which we believe is sufficient as we look for organic and inorganic growth. And diluted EPS has gone up by 23% year-on-year.
Happy to take questions now.
Questions and Answers:
Operator
Thank you. Ladies and gentlemen, we will now begin the question-and-answer session. [Operator Instructions] Our first question comes from the line of Pranav Shah from JPMorgan. Please go ahead.
Pranav Shah — JPMorgan — Analyst
Hello. Yeah, thank you for the opportunity, and congrats on the quarter. Three questions from my side. First is on the international AUM. I understand you mentioned that year-over-year, the impact was largely due to MTM. But even quarter-on-quarter, there has been some pressure. So is there anything that you’re seeing from a flow perspective that is impacting this, both on the AIF wealth management and international solutions?
And second, related to that is your take rate essentially for the international business has increased, so can we expect further such increases going ahead and what could be the trajectory here? I have another question, I will just come back on after these two.
Sreekanth Nadella — Chief Executive Officer
Thank you. This is Sreekanth, I’ll take this question. So on the international AUM, I had commented about an overall year-on-year dip in the mark-to-market of the AUM. So KFintech, the overall AUM that we were managing — let me just give you the specifics.
Vivek Mathur — Chief Financial Officer
We were managing an overall AUM of INR64,000 crores in the previous year, which had dipped to INR55,000 crores, INR56,000 crores in the current year. Bad debt was largely on account of mark-to-market is what I called out. However, that had not resulted in any revenue dip. So we continue to have flat revenue for the previous year. This is in the context of the way our commercial infrastructure for international are different from that of India. So why is the mark-to-market was the primary reason? We have started seeing green shoots in April already, so the overall AUM has the potential to grow, not just because of the current markets to move up, but also some of the transitions which have concluded in the previous year, we’ll start adding the AUM into this year.
The second question in terms of the take rate for the international and the alternatives, so we have added clientele across the back, whether it is the international business in Southeast Asia, even in progress in the form of Canada et cetera, and into alternatives. We believe the market in both these particular geographies, as well as the investment class is quite substantially large, and this potentially is the tip of the iceberg. So we — our pipeline currently give us the confidence to believe that we would be able to repeat the performance probably even better without the bank loans.
Pranav Shah — JPMorgan — Analyst
Okay. So do you think that this deal is currently at a cap rate at 5 basis points, but this can move up going ahead also?
Sreekanth Nadella — Chief Executive Officer
It is possible, yes.
Pranav Shah — JPMorgan — Analyst
Got it. Thanks a lot. My second question is on SEBI regulations which like as per news reports, they might charge AMCs to pay brokerages out of that tier. So do you see this as a headwind to jam potentially margins or the charge at — or the revenues that you charge to AMCs.
Sreekanth Nadella — Chief Executive Officer
See, the commissions that are paid to the brokers, as is the fee that is paid to the registrar such as ourselves, all goes out of the total expense ratio, right? So to that extent, what gets paid to the brokers has no correlation to what gets paid to a registrar or to a fund accountant or to any other entity like an asset management company. We have contracts with a lot of groups that get a certain set of services delivered to. It is early days in terms of the quantum and the nature of expense ratio cuts depending at all, but that’s still what happening in the industry. But I’d like to believe that the conversation has nothing to do with the discussion et cetera.
Pranav Shah — JPMorgan — Analyst
No, for it like the brokerage, I’m talking about brokers as in during transactions. So that you don’t see as an headwind currently? If it impacts the margins of AMCs, that could have a knock-on impact onto KFin’s numbers potentially?
Vivek Mathur — Chief Financial Officer
Yeah. So every time there is a market event, clearly, there is — there has been — there can be some stress at an overall asset management level, but we need to understand the nature of our engagement is very different, Today, we operate at a highly productive cost base providing some of the asset class services at a probably lowest price point. Today, in the cost portfolio, in the case of mutual fintechs, and industry is roughly about INR47 per year per folio. If you compare that to any other industry trends into hundreds of rupees, whether it is just opening a Demat account or bank account or any of those things at all. The cost reserve has already been optimized to a point where further optimization in terms of the pricing is going to be very [Indecipherable]
Sreekanth Nadella — Chief Executive Officer
Yeah. It’s been in the situation way back in 2018, kind of example when there was an expense ratio. It was noted that there was no direct correlation in terms of our revenues of [Indecipherable] basis points, I know [Indecipherable] by that type of elements, like there certain events that also work in the favor of asset management companies which may not necessarily kind of passed onto the registrars. Broadly our independent organization, which is entirely based on the value we add, and what we can do for the client to have their single largest piece of work which is the operations, right, for this particular industry to manage that.
Pranav Shah — JPMorgan — Analyst
Got it, got it. Thanks a lot, Sreekanth. That’s extremely helpful. I have another question but I’ll come back in the queue. Thank you.
Operator
Thank you. [Operator Instructions] Our next question comes from the line of Prayesh Jain from Motilal Oswal. Please go ahead.
Prayesh Jain — Motilal Oswal — Analyst
Yeah. Hi. Good morning, everyone. Firstly, just on the domestic mutual fund business. Could you throw some insight as to, you know, how do you, say for example, if you get INR1,000 crore AUM in existing scheme versus the NFO, how does your realization change between the two — are different between the two?
Vivek Mathur — Chief Financial Officer
Yeah. So I think it’s called more an academic question, and there is no difference in the revenue that KFintech generates if a INR1,000 crores were to come from NFO versus through business as usual operations, okay? It is our contract and commerce are largely based on the asset class, which is equity debt and liquid and ETFs. And for each of these, there is telescopic pricing, which means that up to a certain threshold of AUM, there is a certain rate. And as the AUM breaches that, there are certain volume discounts that are automatically baked into the contract. So in the example that you have cited, whether the INR1,000 crores come from NFO or through any other form of channels, say one-time investment or SIP, it makes no different in terms of the revenue that we generate. However, the revenue itself will be different between client to client, and between threshold of AUM to another threshold of AUM.
Prayesh Jain — Motilal Oswal — Analyst
Got that. And [Indecipherable] have spoken about the revenues of each of these segments. Could you just talk to the profitability of each of these segments in the sense that what would be the EBITDA margins in each of these businesses, domestic mutual fund, issuer solutions, international and that global business?
Sreekanth Nadella — Chief Executive Officer
Yeah. So, we don’t necessarily provide the business-level margins, but, it’s largely also because a significant amount of our cost cuts across the industry, especially on the technology and infrastructure side with a significant increase in the — both the regulatory requirements, as well as in general the requirements that are pertaining to cybersecurity, data privacy, resilience, so on and so forth. But broadly, most of our businesses at an entity level before allocating any overheads tend to be around 60-odd-percent.
Prayesh Jain — Motilal Oswal — Analyst
Okay. Sir, in a way, is it fair to assume that while the revenue contribution of domestic mutual fund is at the highest level and — the profitability will also be at the highest level, and what is the order of profitability share of EBITDA for each of these businesses, could share that? And if not in direct terms, but at least some indication as to which ranks where?
Sreekanth Nadella — Chief Executive Officer
I have already called that out in terms of broadly most of the businesses tend to gravitate between 50% to 60%, and all of them are in a cluster. The international business gives us the highest yield as was answered in the previous question, right? I mean, in India, it’s roughly about 3.8% or so. Our international operations at 2.05%. Businesses of corporate registry and mutual funds are of similar character. It provides us a hedge in terms of having businesses not all of which are directly related to the market. In the case of corporate registry, it’s more driven by the number of folios, corporate actions, so on and so forth.
In the case of our National Pension System, it is subscriber driven. Our value-added solutions and services of technology are purely tech solutions so to speak. So there are various different parameters each of the businesses thrive. And obviously, the margins associated with each of these would fluctuate based on which year that you were talking about. But broadly, the cluster would be between 50% to 60%, and the international business having the highest yield if I may compared together.
Prayesh Jain — Motilal Oswal — Analyst
Okay. Got that, got that. Yeah, that would be all for now. Thank you.
Operator
Our next question comes from the line of Abhijeet Sakhare from Kotak Securities Limited. Please go ahead.
Abhijeet Sakhare — Kotak Securities Limited — Analyst
Sir, the first question is again on the mutual fund RTA business. Are there any major contract renewals in the offing for this year that can pressure the realizations? Or if you can just directionally guide us on the yields on the MF RTA business?
Sreekanth Nadella — Chief Executive Officer
Sure, Abhijeet. Our overall yield — we continue to be around between 3.8 and 3.9 for the previous year ending 31st March, and as we all know the overall yield of the company is in sometimes a weighted average competition at an AMC level so to speak, right? Each asset management company has a different rate, different structure based on their focus on a specific asset class versus others, as well as the quantum and size of the fund itself, given the large function to enjoy a telescopic pricing driven lower yield in some form and shape.
We believe that over the last five years, if you see our trend, it had been — the variance of basis points had vastly been around the same number, between 3.8 to 4. We believe we’ll be able to maintain around the same yield curve this year as well. We have one contract that’s up for renewal in this year.
Prayesh Jain — Motilal Oswal — Analyst
Got it. And just from a understanding point of view, are you seeing any discussions around, let’s say, differentiated pricing whether be it a customer who’s coming through a direct channel versus an intermediated channel or maybe, let’s say, a unique first-time investor versus a repeat investor? Any of those discussions starting to come into the discussions with your clients.
Vivek Mathur — Chief Financial Officer
No Abhijeet, not yet. I think it’s just very early days and there’s just a lot of speculation. I think we should wait for some clarity. Expense ratios capped at size of the fund house to GST to new investor being treated as a new irrespective of whether you are from T30 or B30. There are a lot of discussions. There are — all of this will manifest itself in the form of a consultation paper at some point in time, which will further be discussed, debated and some changes may happen sometime during the year. But it’s very, very early days with our clients’ conversation is largely business as usual, how to drive the growth, how to expand the overall AUM and the market share by providing value-added solutions. Our conversations have been largely focused on business, and not overtly be worried about items that are beyond our control and of which timelines are not definitive at this point.
Prayesh Jain — Motilal Oswal — Analyst
Got it. Second one on your presentation, you made a couple of references around data lake projects. So just broadly, could you talk about revenue model here, one-time versus recurring? What’s the demand versus what’s being currently serviced? Any sort of broad numbers here?
Sreekanth Nadella — Chief Executive Officer
So Digix is a big data platform created — it’s first of its kind as well as its architecture with frugal engineering, and something that is fit for purpose for this industry, and something that is definitely scalable into the product BFSI circle itself, beyond just the asset management space.
The platform created in collaboration with AWS, who is also our strategic partner for all things big data. We have since then implemented it for one of our largest clients, and we have recently, in the month of March, signed up with one of the largest wealth managers in the country, who also happen to have an asset management.
Revenue model is two fold. A one-time implementation cost, which is largely dependent on the lineage and the legacy of the data in terms of architecture that the asset manager or the wealth manager pass, which is basically the continuum or the number of years. And the quantum of data itself as well as the use case that they would look at us for us to be developing it, so that is a bit truly a one-time fee and it may have recurring annual maintenance, which is largely rendered in our past model to the clientele which is to provide end of the day cutting edge analytics, both on the side of sales, marketing, and distribution on the compliance, as well as the delivery and operations side, so to speak.
We have since then also embedded the layer of account aggregation into this for the data and the new information to be far more useful than it ever was before. So it has already seen a lot. But we have implemented within KFintech first within ourselves in the previous year and after its proven success cutting across — lots of data that we put on ourselves, we have found a sweet spot for all asset managers and wealth managers in the country and beyond.
Abhijeet Sakhare — Kotak Securities Limited — Analyst
Got it. I have a couple of more, I will come back. Back to the operator.
Operator
Thank you. Our next question comes from the line of Prithvish Uppal from Asian Market Securities. Please go ahead.
Prithvish Uppal — Asian Markets Securities — Analyst
Yeah. Thank you for taking my question. Firstly, just wanted to understand what has been the contribution from value-added services, and especially you touched upon the Digitx platform as well. So just how the trend is shaping up over there and overall revenue, how much would VAS contribute?
Vivek Mathur — Chief Financial Officer
Yeah. I’ll take that question, Sreekanth. So VAS revenue — this is Vivek Mathur. VAS revenue contributes to 5% of our total revenue and currently, it ranges between 2.5% to 6%. But we expect that with the demand as Sreekanth mentioned about value-added services like Digitx and data lake ramping up, and there are more value-added services products that we are planning in the issuer solutions space as well, we expect this percentage to go up.
Sreekanth, you want to add on?
Sreekanth Nadella — Chief Executive Officer
No, that’s about it. Thank you. I think the quantum was asked and you have answered that. So as the overall revenue base expands, the percentage on that, of course, the value, value-added solutions increases. VAS, to be clear, cuts across every line of business. It is not specific to mutual fund alone. On the corporate registry side, we provide cutting edge platforms of insider trading, electronic gauging, and electronic voting, financial course in the case of mutual funds, it could be each, platforms such as Digix and extended CRM, ORM solutions for our clientele. Apart from taking care of the entire mobility track for them, that is building their mobile apps and websites, so on and so forth, it also cuts across alternate investment funds and into our global solutions as well. So it is broad-based and sits at across every single line of business. And we constantly find opportunities to create solutions, which have an impact across the industry and across the geographies. So this is a new line of business in some form and shape for us recently, and we have [Indecipherable] close to 5% to 6% of our total revenue pool to come from this business. And a good part of this business also compounds into annual revenue, especially on the AMC side, which provides an amount of facility to the clients.
Prithvish Uppal — Asian Markets Securities — Analyst
Okay. Sir, understood. My second question is with respect to your Global fund additional MF business. So despite a mark-to-market correction in the AUM, you mentioned that revenue was more or less — it has actually increased. So that would mean from a yield perspective, there are — the yield that we’re charging that could have gone up. And if you could just somewhat elaborate on in terms of how the pricing is maybe different from how we charge to domestic MS? Is it on a similar sort of pricing model or is it different across different geographies?
Sreekanth Nadella — Chief Executive Officer
Sure. We have created — in some sense, we have taken this model to these countries in some form and shape which hit and did not exit. And of course, some of the lessons that I have learned from the markets over here compared to overseas we didn’t want to replicate the same challenges. We have two things, one is, yes, we have provisions enough on tracking to increase the price and not necessarily discount the basis points as the AUM increases. So that is one definitive difference between the market here in India as well as compared to the other markets. So exactly a [Indecipherable] and an escalation that is possible, which we’ve been trying successfully to effectuate year after year.
Second, there is also a minimum price at a fund at a scheme level. Given we have a certain amount of efforts and our terms strong performance does not take away KFintech’s efforts in order to make it — in order for us to render our services. So even though the AUM has come down in the previous year, revenues remained flat for these two accounts, for these two reasons. One, primarily a basis point expansion. And two, and more importantly, the minimum fee per scheme that we charge irrespective of the [Technical Issues].
Prithvish Uppal — Asian Markets Securities — Analyst
Okay. Sir, on the pension side, so previously per disclosure, segmental results, especially on the pension side, we were — it was on the negative side. But now, with the change also in the segmental disclosure, we’ve reported a positive number for the entire international [Technical Issues] in the international and other Investor solutions. So just wanted to understand is, has the pension business turned profitable from this quarter or when do we expect that to happen?
Vivek Mathur — Chief Financial Officer
Yeah. This is Vivek Mathur, let me take that. See the pension business continues to grow in terms of market share, number of subscribers, revenue has been — has grown year-on-year by about 83%, but it has still not turned profitable. So at an EBITDA level, so we have yet to reach scale to become profitable. But we do expect that with the kind of growth that we are experiencing in terms of number of subscribers, we will be able to achieve that kind of breakeven in the current financial year.
Sreekanth Nadella — Chief Executive Officer
So just to add, there is [Indecipherable] this side. As we were saying, I mean as we reached — we take up on the scale in this particular business and all, we’ll see the operating leverage kicking in. On a year-on-year basis, while my revenue growth has been 83%, my losses have already reduced by half [Technical Issues] this year. But as we go along and we see more scale coming into the business and all, we’ll see this business to start contributing profits.
Prithvish Uppal — Asian Markets Securities — Analyst
Okay. So, sir, just one last question on the data-keeping side. If you could split the international and other investor solutions revenue into the Pension, AIF, and the Global Fund business that would be very useful.
Vivek Mathur — Chief Financial Officer
So largely — the revenue comes largely from Southeast Asia business in the international side, and that is about 80% of our total business revenue comes from that. Then we have other businesses which are related to Pension and AIF which is the balance 20%. But as you know, Pension is a very small business, so large part of the growth is coming from the AIF and PWM.
Prithvish Uppal — Asian Markets Securities — Analyst
Okay. Understood. Sir, thank you for taking my questions. That’s all.
Operator
Thank you. Our next question comes from the line of Annad from White Oak Capital. Please go ahead.
Anand — WhiteOak Capital — Analyst
Thank you for the opportunity. Couple of questions. First is from investment perspective, do you see any significant need, which can impact our operating excellence over next couple of years. And second, from international business perspective, or let’s say, next two, three years, where do we see this mix to be given our current standing, and from profitability perspective, what would be the mix expectation or let’s say in next two, three years.
Sreekanth Nadella — Chief Executive Officer
Thank you, Anand I think your first question was any sizable capital investments planned, is that the first question?
Anand — WhiteOak Capital — Analyst
Yeah. So, we have — you might have some inorganic growth plans. So that is one part and from investment perspective, regular look course of business, is there any major investments in any particular segment, which might lead to higher opex as well. So you can comment on both of that.
Sreekanth Nadella — Chief Executive Officer
Yeah. So, the year that had gone by, in fact, we have had substantial capital expenses that we have incurred in the context of creating the data structures that are required for our products and platforms as well as the entire infrastructure that was required for the scale that we are envisaging into the coming three to four years.
So, a good chunk of investments in the case of IT fracture has already taken place and we have some more to happen this year as we also modernize the end user computing, products to be able to successfully gravitate towards a hybrid work environment, which effectively translates in the form of mobility platforms, collaboration platforms, and laptops, so to speak. So there is some expense — capital expenses plan for that.
Beyond that, we do not have any large capex plan. M&A continues to be a very, very important focus area for us and as I have called out in the previous year, that we were looking to have a couple of acquisitions this year that we have concluded already. We are looking one of two this year as well and probably sizable — bigger than the current acquisitions we’ve had in the previous year.
So to that extent, yes, I think, expect some money on the M&A, hopefully, to be expended this year. Other than that, in terms of pure opex, I believe, we do not have any sizable or material deviation that is required. In the last two years, we have expanded our sales and marketing teams beyond India, which had been one of the reasons — contributing reasons for our possible expansion to our international overall client pool, as well as revenue, that has now become a business as usual. Expenditures, that is the sales teams that we have created within Thailand market, Philippines market, Malaysia, and now in Singapore. So to that extent, this will not get differentiated or variable cost that we will build into this year.
And you had another question, my apologies what was that on the…
Anand — WhiteOak Capital — Analyst
Yeah. It was on the international business, where do you see this mix of domestic versus international evolving, given our current standpoint and with the current visibility. And from profitability perspective also, what will be the revenue mix versus profitability mix, two to three years out for international business?
Sreekanth Nadella — Chief Executive Officer
In terms of revenue mix, three broad components in that right, international and other asset management solutions. The international itself truly, then the alternate investment funds and the wealth management, and then the National Pension System. Of these three, we believe the first to have the highest revenue potential, both in terms of the addressable market as well as the potential to have margin structures, which are more commensurate to our line of business. Pensions, in which there are some, I think we’ll have to wait and watch this space when — how the government is looking at National Pension System versus old Pension System.
But given our growth has largely been on the all citizen sector, we continue to be optimistic about it. In terms of the proportion of the revenue to come from each of these segments, I believe that there would be a similar growth trajectory, especially into this year, into the next year it may change more in favor of international business as the full year’s revenue for the deals that we’re winning and the transitions those will conclude will kick in, but for now the number of alternate investment funds we have won, signed up and yet to launch into this year, and the newer ones we’re signing up, it’s quite substantial.
So I’d like to believe that we will continue to maintain similar mix of revenue amongst these three categories into this year even as — into the medium and long-term perspective, I would expect the international business to be significantly higher than that of alternative plus National Pension System combined.
Anand — WhiteOak Capital — Analyst
And last question if I may, from international business perspective, fair to say that the runway of opportunity here might be much more beyond the next couple of years. And if you can give us some more structural sense of the business given that at this point, and you are kind of unique in that geography as an India original player. So what is the structural scope of opportunity there?
Sreekanth Nadella — Chief Executive Officer
Yeah. So, we are nearing the top of the hour, so, I would be brief and probably we can pick this up offline at length, but [Indecipherable] is a $6 billion industry, right, beyond India at the business that we’re in and that is a total addressable market. Split it between East and West, East is largely a transfer agency opportunity, which is where KFintech had been for the longest time. West is largely fund administration opportunity, which is where we have started making big moves after acquisition of Hexagram and having started delivering fund administration solutions for several alternative funds in India, in Singapore, in Canada, and other parts of the world.
So, together that’s the business opportunity we look at and we, aspirationally our intent is to be the first Indian company to be globally relevant in this space.
Anand — WhiteOak Capital — Analyst
Sure. Exactly. And I’ll reconnect more for greater than that. Thank you and all the best.
Sreekanth Nadella — Chief Executive Officer
Thank you so much.
Operator
Thank you. Our next question comes from the line of Devansh Nigotia from SIMPL. Please go ahead.
Devansh Nigotia — SIMPL — Analyst
Thanks for the opportunity. Sir in case of employee cost, if you can help us understand in terms of count, how the count has shaped and were there any one-off cost in the last quarter because, the 10% Q-o-Q degrowth seems quite significant. And what is the median increase of remuneration we are expecting for next year, FY ’24.
Sreekanth Nadella — Chief Executive Officer
Our employee payroll costs for the previous year have seen an overall 20% plus growth compared to the year before that. I think there are two broad reasons. One, of course, is I called out about our expansion of sales and marketing development teams, product and platform development teams. So, we have been adding certain functions, which were much smaller, back in breakeven, given that largely was in the domestic space and largely looking into the domestic mutual funds and into the issuer solutions.
Now, as we expand other asset classes and other geographies, it is obvious that we need to have the people on the street, on the ground in each of these parts of the world. So, the headcount for different skillset of employees was one of the contributing factors in terms of the payroll cost. The second one, of course, is the installation itself. Now, the previous year. India and across the globe, has seen inflation in the form of debt, salaries expanding quite substantially. We were not immune to that either, but as we moved into the H2, we have seen new opportunities. One was of course a normalization of the wages, which I’d like to believe has happened and this will happen even today.
And second, we have driven a very different [Indecipherable] company’s operating model in our IP, which effectively means that it operates in a pyramid model as against our BOD structure and product for a platform layer. So basically we brought the best practices of our IT services company to deliver IT to its clients, the similar way, our IT keeping [Indecipherable] to its internal customer, which is the domestic mutual funds, registry, so on and so forth.
So we have transformed our business more into a pyramid Vivint structure, which has helped us reduce the overall cost at an hour level in conjunction with the normalization of wages. So those put together will have helped us optimize our wage bill. Into the coming years, we are still deliberating, we have not yet closed out the numbers, but I’d like to believe, as always, we will continue to be an employer who will be market relevant and being the [Indecipherable]. It is very important for us to have the domain knowledge as we expand faster and do away [Indecipherable] to create thought leadership and expand beyond country to have best-in-class talent.
Devansh Nigotia — SIMPL — Analyst
And there has been a significant jump in international customer count q-o-q. So if you can just elaborate a bit more on that, which geographies it is related to, and also we have made inroads in Singapore recently. So, what do you think — how much business can scale up?
Vivek Mathur — Chief Financial Officer
Sreekanth, I’ll just take that question.
Sreekanth Nadella — Chief Executive Officer
Yeah.
Vivek Mathur — Chief Financial Officer
Devansh, I mean if you see on a sequential basis, the number has gone up because we have just repurposed the classifications and trying to consolidate our international operations. So, between the previous quarter and the current quarter numbers, if you see the gap is majorly because, I mean, we have included the Gift City client also in term — as part of the Q4 numbers.
But on a yearly basis, if you see March versus — March 2022 versus March 2023, the number has gone up from 32 to 41 purely because, I mean, those many number of clients have added into the international business because Gift City was — we just started in Feb, the Gift City operations and Hexagram also we have consolidated only in the last year.
So the more comparable number is March versus March, rather than looking at the numbers on December versus March, but as Sreekanth was mentioning, we have been adding the clients, both in Gift City as well as in the overseas market as well, so yeah — so that’s how the numbers are.
Devansh Nigotia — SIMPL — Analyst
And your recent acquisition in Singapore, we weren’t producing a but number [Speech Overlap]
Sreekanth Nadella — Chief Executive Officer
This is not an Hexagram client. So, we have added clients in Singapore, two funds to be specific. And so Hexagram’s acquisition as we all know is something that adds color and character of clients in India and beyond. So, the clients that we have added in international, Berkeley, RK Fintech, direct clients in the form of transfer agency work both for mutual funds and alternatives, that’s where Singapore comes into the picture. It also includes clients that Hexagram from a fund administration standpoint has won, which is again Asia and beyond. And also, of course, the Canadian funds that we spoke about in conjunction with Gift City funds. So it is a combination of Gift City plus the international funds and also combination of transfer agency and fund administration contracts that we have a got today.
Devansh Nigotia — SIMPL — Analyst
Got it. Thanks a lot.
Operator
Thank you. Ladies and gentlemen, we have reached the end of the question and answer session. And I now hand the conference over to Mr. Vivek Mathur for closing remarks.
Vivek Mathur — Chief Financial Officer
Thank you very much everyone for joining this call and we look forward to remain engaged quarter-on-quarter. Thank you very much.
Sreekanth Nadella — Chief Executive Officer
Thank you all.
Operator
[Operator Closing Remarks]