BUSINESS REVIEW
GENERAL ECONOMIC OUTLOOK
Tentative signs in early 2023 that the world economy could achieve a soft
landing—with inflation coming down and growth steady—have receded amid
stubbornly high inflation and recent financial sector turmoil. Although inflation has
declined as central banks have raised interest rates and food and energy prices have come
down, underlying price pressures are proving sticky, with labour markets tight in a number
of economies. Side effects from the fast rise in policy rates are becoming apparent, as
banking sector vulnerabilities have come into focus and fears of contagion have risen
across the broader financial sector, including nonbank financial institutions.
In a plausible alternative scenario with further financial sector stress, global growth
declines to about 2.5 percent in 2023––the weakest growth since the global
downturn of 2001, barring the initial COVID-19 crisis in 2020 and during the global
financial crisis in 2009––with advanced economy growth falling below 1 percent.
The anaemic outlook reflects the tight policy stances needed to bring down inflation, the
fallout from the recent deterioration in financial conditions, the ongoing war in Ukraine,
and growing geo-economic fragmentation. Global headline inflation is set to fall from 8.7
percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices, but
underlying (core) inflation is likely to decline more slowly. Inflations return to target
is unlikely before 2025 in most cases. Once inflation rates are back to targets, deeper
structural drivers will likely reduce interest rates toward their pre-pandemic levels
(Chapter 2). Risks to the outlook are heavily skewed to the downside, with the chances of
a hard landing having risen sharply. Financial sector stress could amplify and contagion
could take hold, weakening the real economy through a sharp deterioration in financing
conditions and compelling central banks to reconsider their policy paths. Pockets of
sovereign debt distress could, in the context of higher borrowing costs and lower growth,
spread and become more systemic. The war in Ukraine could intensify and lead to more food
and energy price spikes, pushing inflation up. Core inflation could turn out more
persistent than anticipated, requiring even more monetary tightening to tame.
Fragmentation into geopolitical blocs has the scope to generate large output losses,
including through its effects on foreign direct investment
COMPANY BUSINESS
During the year under review, there has been no change in control and management of the
company with Ebix Group holding the entire stake at 89.55%. Ebix is a multinational entity
having presence in all the continents and listed in NASDAQ. Ebix Group is predominantly
into supply of on-demand software and e-commerce solutions to the insurance, financial,
and healthcare industries. Ebix operates data exchanges in the areas of finance, travel,
life insurance, annuities, employee health benefits, risk management, workers
compensation, insurance underwriting. Ebix financial and travel exchanges currently
operate primarily in India and certain ASEAN countries. Ebix Group has acquired a number
of money transfer businesses and money changing businesses apart from travel and software
related entities in India in the last couple of years and expects through proper
restructuring and reorganizing a perfect economies of scale. The Company now has the
privilege of international expertise to further its interests as well as strengthen its
existing network.
The Company continues to focus in strengthening its core businesses of Money Changing
and Money Transfer. The company has over 60,000 network locations and has tie up with all
the leading overseas money transfer players like Western Union, MoneyGram, Ria Financial
Services, UAE Exchange and Transfast.
OUTLOOK, OPPORTUNITIES AND THREATS
Global international tourist arrivals more than doubled (+130%) in January 2022
compared to 2021 - the 18 million more visitors recorded worldwide in the first month of
this year equals the total increase for the whole of 2021.
While these figures confirm the positive trend already underway last year, the pace of
recovery in January was impacted by the emergences of the Omicron variant and the
re-introduction of travel restrictions in several destinations. Following the 71% decline
of 2021, international arrivals in January 2022 remained 67% below pre-pandemic levels.
After the unprecedented drop of 2020 and 2021, international tourism is expected to
continue its gradual recovery in 2022. As of 24 March, 12 destinations had no COVID-19
related restrictions in place and an increasing number of destinations were easing or
lifting travel restrictions, which contributes to unleashing pent-up demand. The war in
Ukraine poses new challenges to the global economic environment and risks hampering the
return of confidence in global travel. The US and the Asian source markets, which have
started to open up, could be particularly impacted especially regarding travel to Europe,
as these markets are historically more risk averse.
The shutdown of Ukrainian and Russian airspace, as well as the ban on Russian carriers
by many European countries is affecting intra-European travel. It is also causing detours
in long-haul flights between Europe and East Asia, which translates into longer flights
and higher costs. Russia and Ukraine accounted for a combined 3% of global spending on
international tourism in 2020 and at least US$ 14 billion in global tourism receipts could
be lost if the conflict is prolonged. The importance of both markets is significant for
neighbouring countries, but also for European sun and sea destinations. The Russian market
also gained significant weight during the pandemic for long haul destinations such as
Maldives, Seychelles or Sri Lanka. As destinations Russia and Ukraine accounted for 4% of
all international arrivals in Europe but only 1% of Europes international tourism
receipts in 2020.
India retained its top spot in remittances with $ 83 BN in 2020 as per World Bank
Report. India is followed by China ($ 59 billion), Mexico ($42.8 billion) and the
Philippines ($ 34 billion each) and Egypt ($ 29 billion). Global remittances stood at USD
540 $ Billion. The Companys wide network reach across India, built up over the years
helps to increase its business prospects in the remittance business.
The Company has been working towards strategy of reviving the growth with resumption of
travel and tourism sector after pandemic by enabling digital customer journey. India being
the most sought after destination for Global Investor community and the Government of
Indias initiative of MAKE IN INDIA, has to translate into good business prospects for the
Company.
With gradual increase in recovery for foreign exchange and remittance sector is paving
way for driving higher growth as most countries have opened the borders for International
travel and increased leisure, corporate and student travel.
The Companys Management does not for see any immediate threat to its core business
activities. However, its efforts are being channelized to seize the newer methodologies to
counter the challenges faced from the newer technologies being introduced in its line of
Business.
RISKS AND CONCERNS
Company has laid down a detailed risk management policy, customer identification and
acceptance procedure. Credit procedure envisaged by the Companys credit policy ensures
identification of the operational and business risk while entering into any transactions
with the prospective customers. The financial risks involved are evaluated through a well
laid down procedure. However, all the inherent business risks are adequately insured by
the Company.
Exchange rate volatility faced is not only faced by the Company but is attuned to the
forex industry globally. To mitigate the said risks Company closely monitors the exchange
rate movement and hedges its liability on this account in the Forwards Forex market.
The inward remittances due to the Company in its Money Transfer business acts a natural
hedge for its Money Exchange business. The companys business is also subjected to a
regulatory framework established by RBI & FIU, which calls for periodical reporting to
guard the inherent risks associated with the Money Exchange & Money Transfer business
activities.
Hence, there is a regulatory control also in addition to the self-control on the
operations of the Company warrants continuous upgrading of its controls systems to
mitigate different forms of risks.
INTERNAL CONTROL SYSTEM
The Company has already put in place an elaborate Internal Control and Internal Audit
systems. The system ensures adequate periodical checks and balances are exercised.
Continuous monitoring by the Internal Audit team of these checks and balances due to
the inherent risks associated with the nature of Companys activities, ensures compliance
of the regulatory framework of RBI & FIU.
The Audit team is suitably guided and updated by the Audit Committee of the various
regulatory requirements from time to time. The Company has put in place a strict credit
policy for extending credit to its corporate customers. The same is continuously monitored
and reviewed periodically for any updating to ensure funds at Companys disposal are being
judiciously utilised and efficiently managed vis a vis the business requirements.
The Management Discussion and Analysis explaining the objectives of the Company, the
opportunities and threats, the outlook for the future, the risks and concerns have to be
read with the meaning of relevant applicable laws and regulations. The actual performance
may differ materially from those explained herein above. As in any other business the
performance of the Company is totally dependent on the market conditions of demand and
supply, the volatility in exchange rate, the Government policy & regulations, the
economy of the country and other factors.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES
Your Company being part of the Banking and Financial Services sector, human resources
has always been the main pillar for all the activities of the Company. Customer
Satisfaction being the ultimate objective of the Company, to ensure sustained business
growth. Companys focus has been to improve the staffs contribution towards the various
services offered. To achieve this objective Company has ensured that all its employees
receive continuous update on the Companys policies as well as the regulatory framework,
by conducting continuous programs for learning and development on functional and
behavioural training.
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS
| Particulars |
FIN. YEAR 2022-23 |
FIN. YEAR 2021-22 |
% change |
| Current Ratio |
4.64 |
3.67 |
26.28% |
| Debt-Equity Ratio |
0.00 |
0.16 |
-100% |
| Debt Service Coverage ratio |
50.60 |
0.61 |
8258.88% |
| Inventory Turnover ratio |
NA# |
NA# |
NA# |
| Trade Receivable Turnover Ratio |
NA# |
NA# |
NA# |
| Trade Payable Turnover Ratio |
NA# |
NA# |
NA# |
| Net Capital Turnover Ratio |
0.38 |
0.31 |
21.46% |
| Net Profit ratio |
17% |
13% |
38.50% |
| Return on Equity ratio |
135% |
71% |
89.89% |
| Return on Capital Employed |
11% |
8% |
46.70% |
| Return on Investment |
7% |
4% |
76.39% |
# Not applicable in our business as we are engaged in Service industry and trade of
Foreign Currency.
Reasons for more than 25% increase/ (decrease) in above ratios:
| Particulars |
% change from March 31, 2022 to March 31, 2023 |
| Current Ratio |
Current ratio increased from 3.67 times to 4.61 times due to increase in the value of
Loans and advances and fixed deposits and overall decrease in current liabilities. |
| Debt-Equity Ratio |
The company has repaid all the its borrowings as a result Debt-Equity ratio comes 0 in
current financial year. |
| Debt Service Coverage ratio |
The change in the ratio has been positive due to an increase in earnings and a
reduction in Debt by the way of repayment of Term Loans and Loans from Related Parties and
Lower utilization of CC Limit as compared to the previous year. |
| Net Capital Turnover Ratio |
The change in the ratio has been positive due to a significant increase in Revenue
from Operations. |
| Net Profit ratio |
The change in ratio is positive because of an increase in the revenue and a decrease
in certain costs such as Finance Cost. Further, the employee benefit expenses have not
increased in proportion to Revenue. |
| Return on Equity ratio |
The change in the ratio has been positive due to a significant increase in Net Profit
on account of an increase in Margins. |
| Return on Capital Employed |
The change in the ratio has been positive due to a significant increase in Net Profit
on account of an increase in Margins. |
| Return on Net Worth/ Investment |
The change in the ratio has been positive due to a significant increase in Net Profit
on account of an increase in Margins. |
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