FAQ (Frequently asked Questions)

Welcome to our investors, well-wishers. Since we are a newly listed firm, you could have many queries. Here is a list of FAQs that we thought might be of help. Feel free to reach out with any questions and we will continue to update this section.

Investor Queries added on Jan 27, 2026

Fidel Technologies KK (subsidiary of Fidel Softech Ltd) has taken a majority stake in IM Corporation Japan ltd. as of Jan 2026. Few questions that we felt that most investors might have – and hence answering it as the FAQ.

Exact shareholding percentage acquired.

Fidel has acquired majority shares (more than 75%) of IM Corpn Japan. The other 2 minor share holders are 2 large clients and hence strategic in nature.

1. What is the margin profile of the IM Corporation?

2. What is the rationale behind this acquisition ?

3. We are doing acquisitions at a very fast pace. Is the management confident that they will be able to build synergies between not only technology but culture and mindset?

4. How have you funded this engagement?

FAQ added on Dec 14, 2025

5. What is the AI impact on language and software business ?

6. Why there is a variation in PAT in recent quarters?

7. In your Inorganic growth strategy – what are you looking for?

8. Do you plan to diversify into new areas such as defense, data centers, gaming, fintech, etc.?

Below are the FAQ added on June 2022

9. What is LangTech? What is Localization? Is there a market for it? How big is it?

10. Where is LangTech applicable? Any use cases? What type of projects do you do?

11. How big is a typical project? What is the billing cycle?

12. What is your strength? Or what is your moat?

13. Who are your competitors?

14. How is the next tier team? What is your attrition? How do you retain or motivate staff?

15. As mandated by the exchange, an SME can declare half yearly results. Will you declare quarterly results or half yearly results?

16. Will you sustain next 20 years?

17. Is there a market for this in India?

Investor Queries added on Jan 27, 2026

1. What is the margin profile of the IM Corporation?

IM Corporation currently operates at an EBITDA margin of approx 4-5% which is typical for founder-led, privately held Japanese IT services firms that prioritize revenue stability, long-term client relationships and employment continuity over margins. Historically – profitability was not a primary focus area as the company emphasized: multi-year client engagements, workforce stability, conservative pricing driven by SI-led contracts

Margin Improvement Opportunity & Plan

One of the key strategic objectives post-acquisition is to improve IM’s margin profile to double-digit EBITDA levels over time. The opportunity exists without requiring disruptive changes to the business.

Key levers include:

• Offshore & Hybrid Delivery Introduction
  Gradual integration of offshore resources into suitable projects to improve blended margins while maintaining delivery quality.
• Cross-Selling Higher-Margin Services
  Introduction of enterprise platforms, cloud modernization and managed services with structurally higher margins.
• Shared Services & Operational Efficiencies
  Centralizing non-core functions (finance, HR, sales support etc) at the group level to reduce overhead.
  
• Delivery & Utilization Optimization
  Improving utilization and project governance using group-wide delivery metrics and best practices.
  IM provides stable, predictable revenue with low churn and the current margin profile reflects historical operating priorities rather than structural limitations. With targeted, non-disruptive interventions, we believe double-digit EBITDA margins are achievable while preserving culture, client trust and talent retention.

2. What is the rationale behind this acquisition ?

The acquisition of IM is a strategic move to strengthen Fidel’s long-term presence, delivery capability and revenue stability in Japan while creating mutual value for both organizations.

1. Strategic & Market Rationale (Fidel Perspective)

Established Japan Presence at Scale

IM is a well-established IT software development services firm in Japan with 150+ professionals, enabling Fidel to significantly enhance its local operational footprint in a market where hiring and retaining Japanese IT talent is structurally challenging.

Access to a High-Quality Client Base

IM services 40+ enterprise clients, primarily Tier-1 and Tier-2 SI firms with multi-year engagements. Approximately 70% of annual revenue is recurring, providing high revenue visibility and stability.

Assured & De-risked Revenue Stream

IM generates approx USD 8M in topline revenue with long-term projects ensuring predictable cash flows and reducing go-to-market risk in Japan.

Platform for Cross-Sell & Upsell

• The acquisition allows Fidel to:
• Introduce offshore delivery models to improve margins over time
• Cross-sell enterprise platforms and solutions (e.g., ServiceNow, cloud modernization, managed services)
• Expand existing accounts without customer acquisition costs

Proven Delivery Collaboration

Prior to the acquisition, Fidel and IM successfully collaborated on projects, including the smart meter system migration (approx. JPY 75M total project size) which generated ~JPY 35M in revenue over the last 1.5 years through combined onsite/offshore delivery. The next phase is currently awaited.

2. Operational & Capability Rationale

Immediate Talent Pool

IM brings: 150+ delivery professionals, 4 senior managers, 6 account managers, Multiple experienced team leads. This significantly strengthens Fidel’s Japan delivery and account management capability overnight.

Complementary Operating Model

IM’s delivery strength combined with Fidel’s offshore and enterprise solution capabilities creates a complementary and scalable operating model, rather than an overlapping one.

3. Seller Rationale (IM Perspective)

The founder & CEO of IM is 79 years old with no family successor. While a capable senior management team exists, none were willing to pursue a management buyout or assume financial liabilities.

Selling to a large SI firm posed risks of:

• Workforce restructuring
• Client rationalization (another big SI firm might not need other SI clients)
• Cultural misalignment

Fidel was seen as a natural successor, as:

• Fidel values both IM’s people and client relationships
• The acquisition preserves organizational continuity (continue legacy of the founder)
• There is no intent to disrupt existing teams or client engagements

4. Relationship & Trust Factor

There is a long-standing trust relationship between the two founders (Kikuchi-san and Sunil).

The teams have worked together successfully in the past, building delivery trust and cultural alignment. This significantly reduced integration risk and ensured a smooth transition.

Hence this acquisition is strategically sound, operationally complementary and financially de-risked. We do not have taken any additional debt nor diluted ourselves. It strengthens Fidel’s Japan strategy by combining:

• Stable recurring revenues
• Immediate talent scale
• Cross-selling opportunities
• Low integration risk
• Strong cultural and leadership alignment

3. We are doing acquisitions at a very fast pace. Is the management confident that they will be able to build synergies between not only technology but culture and mindset?

We understand the concern around managing multiple acquisitions in a relatively short period of time – particularly with respect to cultural alignment, mindset and operational integration. This is a question we actively and continuously ask ourselves as well.

While there is no single formula that guarantees success – our M&A approach is guided by a clear and disciplined set of principles designed to minimize integration risk and maximize synergy.

1. Focused M&A Scope

We pursue acquisitions only in domains where we already have strong operational understanding, including:
Business models / Delivery processes / Client engagement structures / Workforce expectations
This ensures we are not learning a new industry while integrating a new organization.
Further we also understand that we are engaging to acquire a new set of clients / new geography / skillsets and competencies etc.

2. Similar Size, Similar Mindset

We intentionally acquire companies of comparable scale, rather than very large or very small entities: Techvine: ~USD 3M revenue, IM: ~USD 8M revenue
This similarity in scale leads to:

• Comparable decision-making speed
• Similar management maturity
• Cultural compatibility and mutual respect

It makes collaboration more natural and avoids “parent–subsidiary” dynamics.

3. Complementary, Not Disruptive – Integration

Our M&A strategy is complementary rather than consolidative:

•  No replacement of leadership
• No forced restructuring
• No immediate role or reporting changes

A common fear during M&A is job insecurity or loss of autonomy – which often leads to resistance and cultural breakdown. Our message to acquired teams is consistent and explicit:
“We are not here to replace you – we are here because we need you. Show us how you operate; we will learn together and grow the business.”
This approach has helped reduce anxiety, preserve trust and maintain delivery continuity. (we have learnt this approach based on our long term working in Japan culture)

4. Proven Track Record Across Three Acquisitions

To date, we have completed three acquisitions:

• Fidel Technologies Japan (internal group company)
• Techvine
• IM

Across all three:

• The businesses are in similar domains
• Teams have been fully retained
• Client engagements have continued without disruption
• No cultural or delivery escalations have emerged so far

This gives us confidence that our integration approach is working at the current scale.

5. Acknowledged Next Step: Stronger Group-Level Management

That said, we are realistic and understand that as we continue to scale through acquisitions, we recognize the need to:

• Strengthen group-level governance
• Define common metrics and performance dashboards
• Build a central sales & marketing engine to support acquired entities
• Establish clearer post-merger integration playbooks

These are active focus areas and we see them as necessary investments to ensure sustainable growth rather than ad-hoc expansion.

So we don’t think that the integration is easy but our confidence comes from:

• A disciplined acquisition strategy
• Cultural empathy and respect for existing teams
• A proven early track record
• A clear recognition of what needs to be strengthened next

We believe this approach allows us to scale responsibly while preserving culture, talent and client trust.

4. How have you funded this engagement?

The acquisition was funded without taking on any new debt at the group level and without any equity dilution. Key points are as follows:

Acquisition of Shares

Fidel Technologies KK has acquired a majority stake in IM for cash consideration of approximately JPY 2.36 million, which has been recorded as an investment in its books of accounts Fidel Technology KK. In addition, the following points were considered while determining the total consideration:

No New Fidel-Level Debt

Fidel has not raised any new debt to fund this acquisition, nor has there been any dilution of existing shareholders.

Existing IM Bank Loans – Fidel Assurance, Not Immediate Cash Outflow

IM has existing bank loans of approximately USD 2.2 M, which remain on IM’s balance sheet. These loans are currently being serviced through IM’s own operating cash flows. Fidel has provided assurance that these loans will continue to be serviced and repaid over time, but there is no upfront refinancing or assumption of debt at the Fidel holding level.

Founder Consideration Structured Through Cash Flow

The founder CEO will receive a certain amount for the next six years, structured entirely through IM’s existing and future cash flows, rather than any large upfront payout.

Initial Payment

The initial acquisition payment was made using internal accruals of Fidel Technologies KK, without external financing.
So overall the transaction has been structured to be cash-flow aligned, non-dilutive and balance-sheet conservative, ensuring:

• No immediate financial strain on Fidel
• Continued servicing of existing obligations through operating cash flows
• Alignment of incentives with long-term performance

This approach preserves financial flexibility while enabling strategic expansion in Japan.

Hope this helps. Thanks for your continued support. We will continue to share our ideas and approach going forward.

FAQ added on Dec 14, 2025

5. What is the AI impact on language and software business ?

AI will certainly have an impact on the technology and language services industry, but not immediately and not in the simplistic way it is often perceived. More importantly, AI is creating new opportunities rather than eliminating demand.

In software development and enterprise implementations today, clients are actively talking about AI, but the primary objective is to augment and optimize existing teams and not to replace them entirely (unlike call centers). There is a growing demand for AI-assisted services, where AI improves productivity, quality and speed – while human teams continue to own the architecture, code quality, security and accountability. Clients still need a partner who takes end-to-end ownership and responsibility.

The same applies to localization. Machine translation and AI are already part of the workflow but post-editing, review, domain adaptation and quality validation remain critical especially for enterprise and regulated content. In fact, the localization industry is expanding into multilingual data services such as data collection, cleaning, annotation, modeling, analytics, and testing for AI systems.

So while AI is changing how we work, it has not replaced our teams. Instead, it is reshaping our service mix and improving margins over time, which we see as a structural positive for our business.

6. Why is there is a variation in PAT in recent quarters?

We are still an SME and very much in a growth phase. We have consciously planned for a 30–40% year-on-year growth trajectory and over the last 12 quarters we have delivered consistent growth while remaining PAT-positive. (eg. when we went public, our yearly revenue was 25 CR and in Q2 of FY25-26, our quarterly revenue now is around 23.5 CR INR. So what used to be our yearly revenue – now is our quarterly revenue in 3-3.5 years).

At this stage, our priority is to scale the business meaningfully and not to optimize for short-term margin volatility. As part of this growth strategy, we are also pursuing inorganic expansion through acquisitions in markets such as the US, Japan, and other overseas regions. These are mature markets with lower initial margins and our approach is to optimize operations post-acquisition and progressively improve the bottom line.

Our focus is to accelerate our journey to a ₹100–200 Cr topline while ensuring the business remains profitable and cash-generative. At our current scale, even a small strategic investment – such as adding a two-member senior team to build a new vertical like GCC services – can temporarily impact PAT. However, without investing in new capabilities, technologies and growth initiatives, long-term value creation is not possible.

In the first two years after listing, we tried to balance both aggressive growth and margin protection. We realized that this approach was limiting experimentation, slowing new logo acquisition and creating confusion in the sales motion. From 2024 onwards, we have simplified the strategy: prioritize growth, focus on quality clients, stay profitable and increase business velocity.

As we scale and move towards a ₹1,000 Cr+ market capitalization, we are confident that margins, operating leverage and capital efficiency will naturally align.

7. In your Inorganic growth strategy – what are you looking for?

While we have invested in building an internal sales team and a digital marketing engine, organic growth takes time, especially in international markets. If growth does not come to us fast enough, we are prepared to actively acquire growth through inorganic means.

Our M&A strategy is not just about increasing topline. We are selectively looking for acquisitions that help us:

• Build new competencies
• Enter new geographies
• Acquire strategic clients that Enables cross-selling and upselling
• Strengthen our position across the value chain

For example, our acquisition in the US was focused on an upstream consulting-led business with strong client relationships but no offshore delivery. On the other hand, we had deep downstream implementation and offshore execution capabilities. These two models were highly complementary.

As a result, the acquisition helped us scale our US revenues by approximately USD 3 million annually which would have otherwise taken at least two years to build organically. This is exactly the type of strategic, synergistic acquisition we are targeting going forward.

8. Do you plan to diversify into new areas such as defense, data centers, gaming, fintech, etc.?

Our approach to diversification is disciplined and selective. We do not diversify for the sake of it. Any new area we explore must be something we understand well or where we can bring in the right team, domain expertise or strategic partners to ensure strong execution.

Our primary filter for diversification is client value and strategic alignment. If a new area complements our existing capabilities or adds value to our current client base, we are open to explore it.

For example, while we are not formally in the travel business, we have observed a growing number of Indian companies, professionals and educational institutions engaging with Japan. (in fact one of our investors advised us to look into this area). As part of our Japan–India consulting practice we support such clients with market entry assistance, exhibitions, meetings, and coordination. In a small but meaningful way, this extends into travel-related services that align with our core consulting strengths.

Similarly, while we are not yet a full-fledged GCC service provider but we have recently assisted Japanese SMEs in setting up small teams in India. Building on this experience, we are now actively exploring GCC enablement opportunities which naturally align with our existing technology implementation, staffing and delivery capabilities.

Going forward, we will continue to evaluate new opportunities that align with our core business, leverage our existing strengths and create incremental value for our clients, while remaining cautious and execution-focused.

Additional context on our business

• Our business is mainly export-led – with approximately 80–85% of revenues coming from international markets and 10–15% from domestic business.
• From a geographic perspective, Asia (including India) contributes around 50% of our revenues while the US and Europe contribute roughly 25% each. This mix reflects our strong presence in Asia and steady growth across mature western markets.
• In terms of service lines – the Technology & Consulting business contributes about 50–60% of revenues while Language Localization accounts for approximately 40–50%. This ratio varies year-on-year depending on client mix and project nature but currently stands at around 60% technology and 40% localization.
• Our project portfolio spans a wide range of services, including:
  • Software internationalization
  • Software development, Enterprise solution implementations
  • Creation of multilingual datasets for training LLMs and AI engines
  • Data annotation, validation, and AI output testing
  • Cybersecurity, cloud, and network implementation services
• Our clients include system integrators, end-user enterprises, SMEs, and Fortune 500 companies, giving us a well-balanced and diversified client base.
• Operationally, we have a 20-member mid-level management team that oversees daily execution across functions. As a result, the business is professionally managed and not dependent on any single individual including the CEO or founders.

Below are the FAQ added on June 2022

9. What is LangTech business? What is Localization? Is there a market for it? How big is it?

Many times, customer problems or use cases are solved together while leveraging both the combination of Language (or Linguistics) + Technology. This is referred to as LangTech.

Likewise when brands launch products or services targeting a specific geography or locale, these are localized to suit the local language, culture and needs of the consumers. This could mean change in user interface (UI), user experience (UX), currency, date formats, language support and much more. This is referred to as “Localization”.

Globally this is a 40 billion USD plus market and growing at YoY 10% and above. Refer to the Google report on Indian market for Localization.

10. Where is LangTech applicable? Any use cases? What type of projects do you do?

Imagine few scenarios where the client has –

• An internet banking site in English and wants to localize it in Hindi to target domestic consumers
• To generate multi-lingual reports from their existing ERP software
• To translate their website in 3 Asian languages
• To do linguistic check of different channel marketing material (eg. sms, marketing pamphlet, web material)
• To implement chatbot on their website but it has to understand Hindi /Marathi questions from the consumers
• To translate CAD files from German to English to pass the manufacturing to some company in an English speaking country
• To develop an application that can store different language based data
• To support their users in different languages
• To localize their e-learning or training videos with multi-lingual subtitles or voiceover
• To showcase all e-commerce products in multi-languages on their website
• To develop software products or tools to support system with multi-lingual requirements

11. How big is a typical project ? What is the billing cycle?

Typically our projects are T&M (time and material) based or turnkey project based. The project size is around 20K USD – 80K USD to be delivered in 3-6 months of time.

We also have clients with whom we sign master contract where rates are mentioned. And then per month they give us work which gets invoiced at month end. Here we have clients who give us an annual business of 100-150K USD

12. What is your strength ? Or what is your moat?

• Deep relationships with clients in overseas markets – especially difficult markets such as Japan
• Tighter integration with clients through API connectivity and hence difficult to replace immediately
• Localize and support 100+ languages
• In-house linguistic + technical expertise for 8 core Indian languages and Japanese language thereby can assure fast turnaround time as well as quality
• Strong technical capabilities to handle multiple file formats, different CMS, different technologies (eg. python / php / .net / Java / mysql / NLP / Audio-video technologies) as well as capabilities to support enterprise products and digital transformation initiatives, AI-ML data analytics initiatives.
• Strong partnership with the ecosystem of partners & freelancers due to timely payment and fair treatment over years
• Ability to work with end-user firms as well as system integrator firms
• A team of 15+ mid-level managers who are with the company for 10+ years
• Can manage complex projects involving multiple languages, multiple file formats, stringent timelines, quality orientation
• Ability to upfront invest in a small team of say 20+ members for a single project
• Reputed brand and working in this field for 15+ years

13. Who are your competitors?

This space has product companies, vanilla translation companies, individual freelancers. Globally there are LSP (localization service providers) but this combination of Language + Technology + Consulting is where Fidel has a lead and differentiation.

14. How is the next tier team ? What is your attrition ? How do you retain or motivate staff?

Fidel has a pool of 15+ middle managers who are with Fidel for more than 10 years and capable of managing the operations and business. Last 3-4 years, Fidel asks its senior management to take a mandatory 3-5 day leave to ensure less individual dependency with proper process and workflow.

Fidel has an attrition of 10% which is quite less than other firms. It attracts people who have an affinity towards languages + technologies & consulting, has a good internal culture, motivates them by encouraging them to pursue higher studies, pursue teaching or publishing books or articles, pursue social community services etc. From time to time Fidel has also finetuned its policies while listening to its team members and fellow employees.

Fidel encourages values like humility, empathy, taking responsibility, customer centricity, risk taking and holistic individual as well as corporate growth. This personalized touch and experience has encouraged members to stay longer with Fidel.

15. As mandated by the exchange, an SME can declare half yearly results. Will you declare quarterly results or half yearly results?

As part of good Corporate Governance initiative, Fidel plans to declare its Unaudited Financial Results along with Limited review report of our statutory auditors on a quarterly basis. Initially
we will have to learn many new things but we see all these compliances and governance a positive welcome step to better ourselves further.

16. Will you sustain next 20 years?

Having seen the dot com bust, Lehman shock, Tsunami and now Covid pandemic, we thank our clients, employees and well-wishers who helped us sustain and grow these many years. Noted writer and thinker Taleb coins the term “Lindy Effect” while describing the longevity of the world’s greatest books: “If a book has been in print for forty years, I can expect it to be in print for another forty years.”

Simply put, the Lindy Effect states: The longer an idea has lasted, the greater likelihood it will continue to last.

With already 18+ years of working, we will surely continue & grow for next 20+ years. Offcourse we need the support of our shareholders, our clients, our employees.

17. Is there a market for localization, language technologies in India?

Yes definitely. There are multiple factors at play because of which there is a huge opportunity for next 10 years or so. Offcourse some government support will be helpful to expedite this growth but nevertheless the startups, the consumers will drive the demand.

Indian startups are hungry to go global. These SaaS firms are launching their solutions in different Asian / Latin American / European /Middle Eastern markets where local language UI / UX is mandatory for consumers to make the purchase decision.

At the same time, global companies are coming to Asia & India and want a pie of these markets. These companies need user support, consumer education, branding etc in local languages.

Trading platforms, real estate information, health related information, insurance related decision making all in localized web or mobile applications can also contribute to consumer education and awareness, prevent frauds and establish trust.

Government is keen to bridge the social digital divide by making E-Government services (eg. tax filing, passport application) available online in local languages using innovative technology solutions.

Further if government makes local language support (UI / UX /customer education) mandatory to private companies in the field of healthcare, finance, real estate that affects an individual citizen / consumer, this will open up an additional few billion USD market in India.

Government also recently announced that legal cases or legal information to be made available in local languages. There are 100+ portals such as tracking missing children portal, agriculture related portals which if localized in local languages, it will help in dissemination of information across the country.

Gone are the days where knowing English was the sign of literacy. With the proliferation of smartphones, lowering of data pack costs and growing aspirations amongst common person, there is a huge push and requirement for all services including ecommerce, food and delivery, healthcare, insurance, banking across urban, semi-urban and rural areas. All this if made available in local language UI /UX then it will help in growth of consumption of these services fueling growth.

Hence we are very positive and see that next 10-15 years, surely there is a need for Language+Technology+Consulting, localization services and solutions in India. Fidel is committed to grow and build the required ecosystem for India.