Protean eGov Technologies Limited
Company
| Website 🔗 |  |
| Business Activity | Service |
| Division | Information and Technology |
| Sub-class | E-governance Solutions |
| Location | Mumbai, Maharashtra |
| Establishment Year | 1995 |
Management
| Managing Director | Suresh Kumar Sethi |
| Educational Qualifications | BE (Electronics and Electrical) from Panjab University, Chandigarh MBA from the University of Delhi |
| Experience | 30 years of experience in the financial services industry. Former MD and CEO of India Post Payments Bank |
| Annual Salary | ₹2.23 Crore |
| Total Number of Employees | 635 |
About
Protean eGov Technologies Limited, is a prominent player in the Indian IT-enabled solutions sector, specializing in the conceptualization, development, and execution of large-scale, technology-driven solutions that have a nationwide impact.
The company works in close collaboration with the Indian government, boasting a rich history of over 29 years in spearheading e-governance initiatives and contributing to the establishment of a robust digital public infrastructure.
Business Structure:
Tax Services:
Protean plays a crucial role in modernizing India’s direct tax infrastructure. It is responsible for processing PAN card applications, managing the Tax Information Network (TIN), and providing online PAN verification services. The company has a vast network of PAN/TIN facilitation centres across India, enabling it to reach a wide range of taxpayers.
Social Security and Welfare:
The company serves as the Central Recordkeeping Agency (CRA) for the National Pension System (NPS) and the Atal Pension Yojana (APY). Protean manages the IT infrastructure, administration, and customer service functions for these pension schemes.
Digital Identity Services:
Protean is the sole provider in India offering all four facets of digital identity verification: e-KYC, e-Sign, Aadhaar authentication, and online PAN verification. The company’s digital identity services are widely used by various entities, including government institutions, banks, and insurance companies, to streamline their onboarding and verification processes.
Open Digital Ecosystems (ODEs):
The company is actively involved in building and contributing to open digital ecosystems across various sectors, including e-commerce, mobility, agriculture, healthcare, and education. Protean leverages its expertise in technology infrastructure to create inclusive and interoperable platforms that enable seamless data exchange and collaboration between different stakeholders.
Products and Services
Tax Modernization Services: PAN card issuance, Tax Information Network (TIN), Online Tax Accounting Systems (OLTAS), and online PAN verification.
Social Security and Welfare: Central Recordkeeping Agency (CRA) for the National Pension System (NPS) and Atal Pension Yojana (APY).
Digital Identity Services: Aadhaar-based identity authentication, e-KYC, e-Sign services, and online PAN verification.
Education and Skill Financing Solutions: Vidya Lakshmi portal for education loans and Vidyasaarathi portal for scholarships.
Data Stack Solutions: Account Aggregator services, AI-powered CKYC solution, and the RISE with Protean API marketplace.
Cloud and Infosec Services: Protean Cloud services and cybersecurity advisory services.
Open Digital Ecosystems: Contributing to the development of open digital ecosystems like the Open Network for Digital Commerce (ONDC).
Clients:
Government Ministries and Departments (seven ministries across various sectors like finance, education, information technology, communications, and broadcasting), Public Sector Undertakings (PSUs), Banks and Financial Institutions, Educational Institutions and Corporates
Suppliers:
Protean relies on third-party suppliers for certain aspects of its operations:
Empaneled Partners and OEMs: For hardware implementation, software delivery, and digital transformation projects.
Suppliers of Network Equipment: For fibre optic cables, IT software, and other products.
Service Providers: For operating and maintaining its platforms and delivering services to clients.
Network Distribution:
The company operates a vast network of over 167,000 centres across India, including:
79,000 PAN and TIN facilitation centres.
88,000 points of presence for NPS (National Pension System).
26,000 nodal offices for NPS at the Central Government level.
263,000 nodal offices for NPS at the State Government level.
Business Flow Chart
Revenue – Category
Audit and Legal
Related Party Transactions:
The percentage of related party transactions relative to total revenue is not significant at less than 1%.
Auditor’s Remarks:
The Statutory Auditors have issued an Unqualified Opinion.
Matter of Emphasis:
The company has a material amount of long-outstanding trade receivables from a government customer and the Auditors highlight the inherent uncertainty and judgment involved in this process of assessment of expected credit loss.
Penalties:
The company also confirms in its BRSR (Business Responsibility and Sustainability Report) that there were no instances of penalties or fines related to any of the NGRBC (National Guidelines on Responsible Business Conduct) principles
Contingent Liabilities:
The total amount of these contingent liabilities is ₹23.65 Crores, mostly comprised of the below sales tax demand.
Demand raised by the sales tax officer for MVAT and CST of ₹22.63 Crores. This relates to a dispute over the applicability of sales tax on services provided by the company. The company has filed an appeal and made a deposit under protest.
Legal Cases:
Commercial Arbitration Petition by Alankit Limited:
Alankit Limited, a former TIN facilitation centre service provider, has filed a commercial arbitration petition against the company, claiming ₹685.11 million plus interest for alleged wrongful deactivation, non-payment of invoices, loss of profit and reputation, and wrongful penalties. The company has denied these claims and filed a counterclaim for ₹285.44 million plus interest.
Application by South Indian Bank Limited:
South Indian Bank Limited has filed an application before the Debts Recovery Tribunal, Hyderabad, against Karvy Data Management Services Limited and others for recovery of ₹334.90 million. The bank has also alleged that ₹136.50 million is due from Protean eGov Technologies Limited to Karvy Data Management Services Limited and has sought a garnishee order.
Outstanding litigations and material developments:
There are a total of 71 tax proceedings and few material civil litigations with an aggregate amount of ₹179.2 Crore involved.
Unauthorized Construction:
The company received a show cause notice alleging a violation of the Mumbai Municipal Corporation Act, 1888, related to unauthorized construction. The company is in the process of submitting a revised proposal for the regularization of the structure, and the matter is pending.
SWOT Analysis
Strengths
| Pioneering Presence and Market Leadership: The company is recognized as a pioneer and leader in providing large-scale, citizen-centric e-governance solutions in India. It has a proven track record of successfully implementing 19 projects across 7 ministries. |
| Robust and Secure Technology Infrastructure: The company boasts a secure, scalable, and technologically advanced infrastructure. It employs a range of cutting-edge technologies and security protocols to ensure the reliability and safety of its services. |
| Extensive Pan-India Network: The company’s expansive physical infrastructure, encompassing over 167,000 centers across India, enables it to provide assisted services to citizens who may have limited access to digital platforms. |
| Diverse and Sustainable Service Offerings: The company offers a wide array of services across various sectors, including tax administration, pension record keeping, national identity solutions, education and skill financing, and more. The annuity-based nature of many of these offerings contributes to a stable and predictable revenue stream. |
| Proven Financial Performance and Stability: The company has demonstrated a consistent track record of financial success, characterized by profitability, positive cash flows, and regular dividend payments. Its debt-free status and reliance on internal accruals for funding further highlight its financial strength. |
Weaknesses
| Client Concentration: The company’s revenue is concentrated among a limited number of clients, primarily government ministries and agencies. The loss of any of these major clients or changes in government policies, budgetary allocations, and potential payment delays could have a significant adverse impact on the company’s financial performance. |
| Lengthy Sales Cycle: The sales cycle for the company’s products and services tends to be lengthy and unpredictable, often involving multiple decision-makers and complex procurement processes. This can lead to delays in revenue recognition. |
Opportunities
| Expansion into New Sectors: The company has identified opportunities to leverage its expertise and expand its offerings into new sectors such as healthcare, education, and agriculture. The increasing demand for digital solutions in these sectors, coupled with government initiatives like the National Digital Health Mission (NDHM) and the India Digital Ecosystem of Agriculture (IDEA), presents significant growth potential for the company. |
| Data Analytics and Digital Verification: The increasing demand for data-driven solutions and digital verification services presents an opportunity for the company to capitalize on its data management capabilities and develop innovative offerings in these areas |
| Cybersecurity Services: With the rising number of cyber threats and data breaches, the company’s subsidiary, Protean InfoSec Services Limited, can leverage this opportunity to provide a range of cybersecurity consulting and advisory services to both government and private sector clients. |
| Cloud Services: The growing adoption of cloud-based services in India, fueled by digitalization and the proliferation of data, offers a promising market for the company to expand its cloud service portfolio and cater to the evolving needs of businesses and government organizations. |
| International Expansion: The company’s expertise in implementing large-scale IT infrastructure projects and its recognition by the Ministry of External Affairs present opportunities for selective expansion into international markets, particularly in countries with similar e-governance needs |
Threats
| Intense Competition: The e-governance and IT services market in India is highly competitive, with the presence of both global and domestic players. The company faces competition from established companies with greater resources and brand recognition |
| Rapid Technological Advancements: The technology landscape is constantly evolving, and the company needs to stay abreast of the latest technological developments to remain competitive. |
| Regulatory and Policy Changes: The company operates in a regulated environment, and any changes in laws, regulations, or government policies could impact its operations and financial performance. |
| Economic and Political Factors: Economic downturns, political instability, or geopolitical tensions could adversely affect the company’s business and financial performance. The COVID-19 pandemic has already demonstrated the potential impact of such external factors on the company’s operations and client engagements. |
Porter’s Five Forces1
| Threat of New Entrants | MODERATE |
| There are significant barriers to entry including the need for substantial investments in technology infrastructure, specialized domain knowledge, and established relationships with government entities. The company’s strong track record and experience in executing large-scale projects further create a competitive advantage that deters new entrants. |
| Bargaining Power of Suppliers | LOW |
| The company relies on third-party suppliers for certain services, equipment, and software. The availability of alternative suppliers and the company’s ability to leverage its scale and bargaining power limit the suppliers’ influence. |
| Bargaining Power of Buyers | HIGH |
| The company’s primary clients are government entities and agencies, which have significant bargaining power due to their ability to influence project specifications, pricing, and contract terms. |
| Threat of Substitute Products or Services | LOW |
| The company’s core offerings, such as PAN card issuance, TIN services, and NPS central recordkeeping, are essential components of India’s digital public infrastructure. There are limited substitutes available for these services, particularly in terms of their scale and reach. |
| Rivalry Among Existing Competitors | MODERATE |
| The e-governance sector in India is characterized by a limited number of established players, including the company and a few other major IT service providers. |
Peer Comparison
There are no listed companies in India that engage in a business similar to that of Protean eGov Technologies Limited.
Key competitors among unlisted companies:
CDSL Ventures Limited, CMS Computer Limited, Computer Age Management Services Limited, CSC E-Governance Services Limited, Karvy Data Management Services Limited, Kfin Technologies Private Limited, Sify Technologies Limited and UTI Infrastructure Technology and Services Limited.
Green Box
Strong Government Relationships:
The company’s extensive work with various government ministries and agencies indicates well-established relationships and a deep understanding of the government’s needs and processes.
Investment in Emerging Technologies:
The company is actively investing in emerging technologies like AI, machine learning, blockchain, and IoT. These investments aim to enhance the company’s capabilities and enable it to develop innovative solutions for its clients.
Digital Transformation and Digitization:
The broader trend of digital transformation across industries and the increasing digitization of various processes and services are expected to create a sustained demand for IT-enabled solutions, further contributing to the industry’s growth.
Rising Smartphone Penetration and Favourable Demographics:
The rapid expansion of internet and smartphone penetration in India, particularly in rural areas coupled with India’s young and tech-savvy population is expected to create a larger market for digital services and e-governance solutions, thereby fueling industry growth.
Debt:
Protean eGov Technologies Limited is a debt-free company.
Amber Box
Dependence on Government Projects:
A significant portion of Protean’s revenue comes from projects awarded by government entities and agencies. Any adverse changes in government policies or budgetary allocations could impact the company’s financial performance and its ability to secure future projects.
Client Concentration:
The company’s revenue is concentrated among a limited number of clients, mainly government entities.
Lack of Direct Comparables:
The absence of directly comparable listed peers in India makes it difficult to assess the company’s competitive positioning in terms of financial and operational metrics. This could create uncertainty when evaluating the company’s valuation and growth potential.
The company has generally maintained a positive operating cash flow over the past few years but the company had a negative operating cash flow of ₹8 Crore for the FY 2023.
Red Box
Data Privacy and Protection:
The company handles sensitive personal and financial data, making it subject to various data privacy regulations. The evolving nature of these regulations, including the recent enactment of the Digital Personal Data Protection Act, 2023, poses compliance challenges and potential risks. Non-compliance could result in penalties, legal action, and reputational damage.
Technological Risks:
The company’s business is heavily reliant on technology, and any disruptions or failures in its systems, networks, or third-party infrastructure could impact its ability to deliver services and adversely affect its reputation and financial performance.
Stagnant PAT(Profit After Tax):
While the revenues have been growing, in the last 4 years PAT is more or less stagnant due to lowered OPM (Operating Profit Margin).
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- For Porter’s Five Forces, the force value of “LOW” is considered good. ↩︎
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