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• Veefin Solutions is coming out with an initial public offering (IPO) of 56,99,200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 82 per equity share.
• The issue will open for subscription on June 22, 2023 and will close on June 26, 2023.
• The shares will be listed on SME Platform of BSE.
• The share is priced 8.20 times higher to its face value of Rs 10.
• Book running lead manager to the issue is Shreni Shares.
• Compliance Officer for the issue is Sarita Vijay Mahajan.

Profile of the company

The company is a Digital Lending and Supply Chain Finance (SCF) technology product Solutions Company based in Mumbai. Supply Chain finance is a financial tool that is used to help businesses manage their cash flow and improve their working capital. It provides its product solutions to wide range of clients globally, including Banks, Non-Banking Financial Institutions, FinTech, Marketplaces, and Corporates. Its technology product solutions are unique offering, which are designed with user-led approach, data and analytics, and built by experienced bankers for bankers.

Its SCF product and platform are highly flexible and can be promptly configured to meet the specific needs of its clients, without relying on third-party execution. Its cutting-edge technology products offer unmatched flexibility to its clients, facilitating quick and efficient configuration and implementation of its products. This empowers bankers and financial institutions to offer highly customised solutions to their clients, tailoring loan products both regular and transaction-based on their clients’ unique requirements. It is committed to deliver innovative and best-in-class Digital Lending and Supply Chain Finance technology solutions for its clients. It works with financial institutions globally to help them grow their business with its scalable technology solutions. The company offers a unique blend of technology, data analytics, and experienced bankers, making it the ideal partner for financial institutions looking to stay ahead of the curve.

Proceed is being used for:

• Global - sales and marketing expenditure.
• Developing new products or enhancement and maintenance, upgrading or updating existing products.
• General corporate purposes.

Industry overview

The IT & BPM sector has become one of the most significant growth catalysts for the Indian economy, contributing significantly to the country’s GDP and public welfare. The IT industry accounted for 7.4% of India’s GDP in FY22, and it is expected to contribute 10% to India’s GDP by 2025. As innovative digital applications permeate sector after sector, India is now prepared for the next phase of growth in its IT revolution. India is viewed by the rest of the world as having one of the largest Internet user bases and the cheapest Internet rates, with 76 crore citizens now having access to the internet.

The Indian Software-as-a-Service (SaaS) ecosystem continues to gather momentum despite prevailing market headwinds and has become a global leader behind only the US in scale and maturity. Whether measured in total annual recurring revenue (ARR) of $12 billion - $13 billion in 2022, up four times over the past 5 years; or investment (around $5 billion in 2022, up six times), Indian SaaS progress is irrefutable and its future trajectory promising. This momentum is driven by a mutually reinforcing flywheel of SaaS companies and investors, with a proliferation of new SaaS companies with proven growth models, supported by investors who are allocating increased capital to Indian SaaS across stages.

Indian SaaS companies are being founded in record numbers and are proving they have a right to win in the global market. Of the 1,600 Indian SaaS companies that have now been funded over the past five years, around 14 of them exceed $100 million in ARR (vs. around five in 2020) and are reaching this growth milestone as quickly as their US counterparts. Indian SaaS companies win using a variety of approaches, including product leadership, attractive pricing, and service quality and emerge as globally best-in-class across numerous categories. While software buyer sentiment has softened in the second half of 2022, Indian SaaS companies play in categories that benefit from long-term, secular-demand tailwinds.

Pros and strengths

Entrenched global sales network: The company boasts a well-established global sales network, which is a result of its strategic collaborations across various segments. This has allowed it to strengthen its position and differentiate ourselves in front of its customers. Its sales network is backed by a team of experienced professionals who are adept at understanding the diverse needs of its customers and providing them with customized solutions that cater to their specific requirements. Its wide-reaching sales network has also enabled it to expand its market presence and penetrate new geographies, providing it with a competitive advantage over its peers. 

Deployment agnostic: Its cutting-edge platform has been meticulously designed to cater to diverse client requirements, ensuring flexibility and agility at every stage. With a view to providing seamless integration and a superior user experience, it has ensured that its platform is highly deployable across a wide range of options, including cloud, on-premises and hybrid models. Its platform has been tailored to align with the regulatory and compliance requirements of central banks, offering a truly agnostic solution that can be easily adapted to local guidelines. Whether it is cloud-based, on-premises, or a hybrid deployment that its clients seek, ‘Veefin’ platform can seamlessly integrate, provide the flexibility and scalability its clients need to thrive in the digital era.

End to End stack for supply chain finance: It offers an unmatched end-to-end technology stack that caters to all aspects of the Supply Chain Finance (SCF) landscape. Its deep understanding of the SCF industry has enabled it to develop and productize every aspect of SCF across all products, including both the buy and sell side, pre and post shipment. It is able to provide a comprehensive and box product that is ready for use from Day 1 of subscription. Its ability to offer a complete and integrated solution for SCF gives it a competitive edge and ensures that its customers can easily and seamlessly access its products and services.

Risks and concerns

Dependent on key managerial personnel: Its success also depends on its key managerial personnel and senior management and its ability to attract and retain them. Any loss of its key person could adversely affect its business, operations and financial condition. The success of its business operations is attributable to its promoters, directors and the technical team. Its relation with its promoters, who have rich experience in the Digital Technology and BFSI Industry, markets, managing customers and handling overall businesses, has enabled it to experience growth and profitability. its promoters, directors, key managerial personnel and senior management have been actively involved in the day-to-day operations and management since the incorporation of the Company. 

Maximum revenues from limited number of clients: A significant portion of its revenues from a limited number of clients which may not be the same every year. For example, its top 10 clients contributed 93.26%, 96.71%, and 100.00% of its revenue from operations for the period ended January 31, 2023 and for the Fiscals 2022 and 2021 as per the Restated Standalone Financial Statements. Its ability to maintain close relationships with these and other major clients is essential to the growth and profitability of its business. The software products it provide to its clients, and the revenues and net income from those software products, may decline or vary as the type and quantity of software products the clients require changes over time. 

Face strong competition: The market for IT services that it operates in is highly competitive, and it expects competition to persist and intensify. It considers that the principal competitive factors in its markets are reputation and track record, industry expertise, breadth and depth of software products offerings, quality of the software products offered, language, marketing and selling skills, scalability of infrastructure, ability to address customers’ timing requirements and price. It face competition from offshore IT services providers in emerging outsourcing destinations with low wage costs or with a more favourable time zone for US customers as well as competition from large, global consulting and outsourcing firms and in-house IT departments of large corporations. Customers tend to engage multiple IT services providers instead of using an exclusive IT services provider, which could reduce its revenues to the extent that customers obtain services from other competing IT services providers. Customers may prefer IT services providers that have more locations or that are based in countries more cost-competitive or in a more favourable time zone than India.

Outlook

The company is a Digital Lending and Supply Chain Finance (SCF) technology product Solutions Company based in Mumbai. Supply Chain finance is a financial tool that is used to help businesses manage their cash flow and improve their working capital. On the concern side, it faces competition from offshore IT services providers in emerging outsourcing destinations with low wage costs or with a more favourable time zone for US customers as well as competition from large, global consulting and outsourcing firms and in-house IT departments of large corporations.

The company is coming out with an IPO of 56,99,200 equity shares of face value of Rs 10 each for cash at a fixed price of Rs 82  per equity share to mobilize Rs 46.73 crore. On performance front, the company’s total income from operations for the year ended on March 31, 2022 was Rs 654.95 lakh which is about 99.96% of the total revenue from sale of its Digital Lending and Supply Chain Finance technology product solutions. Profit after tax for the year ended on March 31, 2022 amounted to Rs 70.01 lakh which is 10.69% of total revenue. Meanwhile, its sales and marketing strategy is a critical aspect of its business operations as it allows it to tailor its product offerings to the specific needs of the geographies in which it operate. It understand that the digital needs of each country are different, based on their position on the technology curve and the size of their GDP and SME financing gap. For instance, advanced markets such as the US, UK, Japan, Singapore, Australia, and Canada have already adopted digital technologies and therefore, a greater focus of their technology spend is on areas such as risk, regulation, and compliance.