Winro Commercial (India) Limited (WCIL or the Company) is a systemically important
Non-Banking Financial Company registered with the Reserve Bank of India (RBI). As on 31st
March, 2023, the asset size of the Company on standalone basis is more than rupees 1,000
crores. The Company is following Prudential norms as per Non-Banking Financial Company -
Systemically Important Non Deposit-taking Company (Reserve Bank) Directions, 2016. The
Company has been identified for categorisation as NBFC-Middle Layer under Scale Based
Regulation (SBR), a Revised Regulatory Framework for NBFCs as per the list issued by RBI
in its Press Release 2022-2023/975 dated September 30, 2022. The Company is engaged in
business of Investment/Trading in shares and securities, lending activities and generation
of renewable energy.
Economy and Markets
(a) Economic review:
• Global economy
Financial year 2022- 2023 began with uncertainties while steering through challenges.
On the positive side, after inflicting chaos for almost two years, the impact of the
COVID-19 pandemic on lives and livelihoods started retreating. This was assisted by a mass
immunization programme and the arrival of a less infectious variant called omicron.
However, the flip side was the escalation of Russia-Ukraine war, continuous disruption in
global supply chain leading to inflation globally due to closing down of China were
amongst the major events that provided maximum volatility to the markets. Since then, the
different world economies are struggling to combat inflationary pressures, causing them to
constantly hike rates, causing in a slowdown in growth. IMF too lowered its growth
forecast for 2022 and 2023. In January 2023, the World Economic Outlook Update projects
that global growth slowdown will be more pronounced for Advanced economies than Emerging
and Developing economies. Advanced economies Real GDP growth is projected at 1.3% in 2023
vis-a-vis 3.9% for Emerging and Developing economies.
• Indian Economy
As stated by the World Bank in its India Development Update, Indias growth continues
to be resilient despite some signs of moderation in growth. Although significant
challenges remain in the global environment, India was one of the fastest growing
economies in the world. The overall growth remains robust and is estimated to be 6.9
percent for the full year with real GDP growing 7.7 percent year-on-year during the first
three quarters of fiscal year 2022-2023. There were some signs of moderation in the second
half of financial year 2022-2023. Growth was underpinned by strong investment activity
bolstered by the governments capex push and buoyant private consumption, particularly
among higher income earners. Inflation remained high, averaging around 6.7 percent in
financial year 2022-2023 but the current-account deficit narrowed in Q3 on the back of
strong growth in service exports and easing global commodity prices.
The Reserve Bank of Indias has withdrawn accommodative measures to rein in inflation
by hiking the policy interest rate. Indias financial sector also remains strong, buoyed
by improvements in asset quality and robust private-sector credit growth. As per the
projections by the World Bank - India to remain the fastest growing major economy in the
world during 2021-24.
(b) Outlook:
The global economy is currently bracing itself for slower growth, primarily due to the
unsettling impact of the Russia Ukraine conflict and the tightening of monetary policy.
These factors have led to significant supply-side disruptions, creating challenges for
economies around the world. However, amidst this uncertain outlook, certain economies are
expected to exhibit resilience and drive global growth. The widening of the Current
Account Deficits (CAD) in net importing economies, agencies worldwide continue to project
India as the fastest-growing major economy at 6.5-7.0 per cent in financial year
2022-2023.
Given the crisis and despite concerns surrounding the sector, NBFCs with robust
business models, strong liquidity mechanisms, governance and risk management standards are
well positioned to take benefit of the market opportunity.
India is further expected to witness a growth of 6.0% in FY 2023-24. RBI projects CPI
inflation for Q1 - financial year 2023-24 at 5.0% and for Q2 - financial year 2023-24 at
5.4% on the assumption of a normal monsoon. Whereas on the inflationary front, it is
anticipated that the rates would remain moderate somewhere between 5-6%, due to the
Governments adherence to calibrated monetary policies.
The Company is mainly into the business of investment in shares and securities. The
revenue of Company is generated from Trading in Shares and Securities, Lending activities,
Sale of Electricity from the windmill owned by Company. Considering the above positive
factors, if there is a better performance in the equity market, then the Company is
expected to accomplish better performance compared to the previous year.
(c) Industry structure and developments:
India has a diversified financial sector undergoing rapid expansion with many new
entities entering the market along with the existing financial services firms. The sector
comprises commercial banks, insurance companies, NBFCs, housing finance companies,
co-operatives, pension funds, mutual funds and other smaller financial entities. After the
COVID-19 impact gradually tapers off, the financial services sector is poised to grow
eventually on the back of strong fundamentals, adequate liquidity in the economy,
significant government and regulatory support, and the increasing pace of digital
adoption. In fact, digital transactions will play a larger role in the financial
eco-system than hitherto witnessed.
• Non-Banking Financial Companies:
Indias financial services sector comprises of commercial banks/co-operative banks,
non-banking financial companies, insurance companies, pension / mutual funds and other
various entities. India is expected to be fourth largest private wealth market globally by
2028.
NBFCs have become increasingly important in recent years as they have played a critical
role in providing credit to individuals and businesses that are underserved by traditional
banks. This is especially true in rural and semi-urban areas, where NBFCs have been able
to fill the gap left by banks. One of the key advantages of NBFCs is their ability to be
flexible in their lending practices. Unlike banks, which have a rigid set of guidelines
for lending, NBFCs can tailor their lending practices to meet the specific needs of their
clients. This has made them an attractive option for those who are looking for more
personalised financial services. They are financial institutions that provide a wide range
of banking services like loans, credit facilities, investments, and other financial
products. NBFCs have played a significant role in the Indian economys growth story,
especially in the rural and semi-urban areas. They cater to the financial needs of small
and medium-sized businesses, entrepreneurs, farmers, and individuals who do not have
access to traditional banking services. In this article, we will explore the future of
NBFCs in India.
After the pandemic decline, 2023 has brought growth for the NBFCs. It has demonstrated
an innovative and resilient streak over the years which includes adapting efficiently even
during the COVID-19 pandemic to avoid the revolving credit landscape. The market share of
NBFCs has increased in the last few years with Asset Under Management (AUM) accounting for
as much as 18% of the overall credit on March 2019, up from 12% in March 2008. A few
challenges over the past three years lowered their share to 16% in fiscal 2022, with banks
making bigger growth strides. The increase in NBFCs AUM from US$ 44.02 billion (Rs. 3.6
lakh crore) in March 2008 to almost US$ 330.21 billion (Rs. 27 lakh crore) in March 2022,
and is expected to increase further, indicates the importance of the sector to overall
credit delivery in the economy.
NBFCs have become important components of Indias financial sector and have been
recording higher credit growth than scheduled commercial banks (SCBs) over the past few
years. Non-Banking Financial (NBFC) sector has played a crucial role in bridging the
credit gap and supporting the growth of various sectors such as micro, small and medium
enterprises (MSMEs), agriculture and affordable housing, among others. NBFCs continue to
leverage their superior understanding of regional dynamics and customised products and
services to expedite financial inclusion in India. NBFCs have emerged as the principal
institutions providing credit financing to the unorganised and underserved sectors. NBFCs
have revolutionised the lending system in India by providing financial inclusion for those
who lack easy access to credit. Lower transaction costs, innovative products, quick
decision making, customer orientation and prompt service standards have typically
differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, these are
well-suited to bridge the financing gap in a large country like India. Systemically
important NBFCs have demonstrated agility, innovation and frugality to provide formal
financial services to millions of Indians. The growing importance of NBFCs is reflected in
the consistent rise of their credit as a proportion to GDP as well as in relation to
credit extended by SCBs to the NBFC sector.
• Equity Markets:
In 2021-2022, equity investors reaped handsome rewards as their wealth grew nearly ^78
lakh crore while Sensex gained 10,502 points or 22%. However, the financial year 2022-2023
saw the outperformance of the Indian markets. In a year in which S&P 500 is down by
20% and most markets are down between 10 to 20 %, Nifty is up by 4.8%. This outperformance
is the result of mainly two factors: One, Indias superior economic growth; two, domestic
investors support the market by buying every dip caused by FII selling.
On the flipside, elevated inflation levels triggered by the Russia-Ukraine war was the
biggest negative catalyst for the equity market. Moreover, the COVID-19 lockdown in China
caused supply chain constraints globally, which impacted economic activities in certain
sectors. To tame the elevated inflation levels, central banks across the globe, including
RBI, hiked interest rates. The higher prices and borrowing costs have raised recession
fears in the U.S. and other major economies. This, in turn, has darkened the outlook for
global growth as it could have a spillover effect on the Indian economy and other parts of
the world.
FPIs turned net sellers to the tune of Rs 38,334 crore during the financial year, being
wary of expensive valuations. However, strong domestic participation cushioned some losses
as investors showed confidence in Indias long-term growth story backed by the resilience
shown by the Indian economy and India Inc.
The Company believes that given the volatile nature of the equity markets, it is
advisable to maintain a diversified portfolio at all times by taking into account your
risk profile, financial goals, and investment horizon.
(d) Opportunities and threats:
Indian Economy provides excellent growth opportunities as the increased thrust to
power, road, ports, telecom and other infrastructure projects will create a positive
environment for the Investment and Financial Services Industry in India. Further, growth
of service sector also presents new opportunities for Investment and Financial Services
Industry in India.
With increasing globalization, integration of world markets, it not only provides new
avenues for earning opportunities for our investment business but is also impacted /
threatened by domestic and global events. The Company believes that it has to adopt robust
risk management practices and continuously monitor and adapt to changing dynamics to not
only take advantage of the earnings opportunities but also mitigate the risks and threats
posed by the local and global events.
The most significant threat for any lending activity is to constantly exhibit
operational excellence and contain the loss given defaults within the acceptable limits.
The Company believes that this task is to be worked upon continuously through a very sharp
learning and unlearning in order to achieve operational excellence. NBFCs rely on external
funding to fulfill the financing needs of their customers. A liquidity crunch arising from
reduced loan recovery, external funding or other unforeseen events could adversely impact
the loan disbursement cycle of the NBFCs leading to subdued performance.
India being an emerging global economy, faces notable risks due to global relations. A
shift in developed and emerging countries interest rates, policies and protectionism
along with trade and capital market conditions may hamper businesses locally. Geopolitical
and trade tensions in the global market post further risk to the Indian NBFC industry.
There also exists Risk of investment or Market risk which arising from the adverse
movements in market price of various securities and it similarly depends on the global
markets, which may impact value of portfolio of investment in securities.
External Risks associated with liquidity stress, political uncertainties, fiscal
slippage concerns, etc. Regulatory and compliance-related changes in the sector affecting
NBFCs
Any stringent regulatory change or unfavorable policy change can pose a threat to the
industry players in the short run.
(e) Risks and Concerns:
The Financial services industry is subject to continuously evolving regulatory
requirements due to increasing globalization, integration of world markets. Risk is an
integral part of the business and almost every business decision requires the management
to balance risk and reward. The Company is exposed to the market risk, liquidity risk,
operational risk, compliance risk, cyber security risk and credit risk. It is further
exposed to risk of economic cycle. The company manages these risks by remaining very
conservative and following requisite risk management practices.
(f) Internal Control Systems and their adequacy:
As a part of the effort to evaluate the effectiveness of the internal control systems,
your Companys internal audit system reviews all the control measures on a periodic basis
and recommends improvements, wherever appropriate. The Company has in place adequate
internal control systems and procedures commensurate with the size, scale, complexity and
nature of its business. These systems and procedures provide reasonable assurance of
adherence to the accounting procedures and policies, maintenance of proper accounting
records, reliability of financial information, compliance with regulatory directives,
efficacy of its operating systems, protection of resources and safeguarding of assets
against unauthorized use. The management regularly reviews the internal control systems
and procedures, undertake corrective actions, in their respective areas and thereby
strengthen the controls.
(g) Segment-wise or product-wise performance:
The Company is engaged in the business of investment, trading in shares and securities,
Lending Activities and generation of renewable energy. As per Ind AS 108 "Operating
Segments", specified under Section 133 of the Companies Act, 2013, there are no
reportable operating or geographical segments applicable to the Company.
The gross revenue from Financing and Investment activities considered in profit &
loss account (including unrealised gain) for the financial year 2022-2023 is Rs 13,372.11
Lakhs and considered in other comprehensive income (including unrealised gain) is Rs.
(2,102.05) Lakhs.
The gross revenue from generation of renewable energy for the financial year 2022-2023
is Rs. 54.68 lakhs.
(h) Discussions on Consolidated Financial Performance with respect to Operational
Performance:
(Rs. in Lakhs)
| Particulars |
31.03.2023 |
31.03.2022 |
% changes |
| Total Income(I) |
13,426.79 |
17,856.71 |
(24.81) |
| Total Expenses (II) |
1,600.21 |
686.69 |
133.03 |
| Profit before share in profit/(loss) of associates and tax (I-II= III) |
11,826.58 |
17,170.02 |
(31.12) |
| Share in profit/(loss) of associates (IV) |
(1,084.61) |
3,152.43 |
(134.41) |
| Profit/ (loss) before tax (III+IV= V) |
10,741.97 |
20,322.45 |
(47.14) |
| Less: Tax expenses (VI) |
2,504.18 |
2,349.38 |
6.59 |
| Profit/ (loss) for the year (V-VI=VII) |
8,237.79 |
17,973.07 |
(54.17) |
| Other Comprehensive Income before share in profit/(loss) of associates and tax (VIII) |
(2,794.27) |
14,834.19 |
(118.84) |
| Share in profit/(loss) of associates (IX) |
933.41 |
6,041.79 |
(84.55) |
| Other Comprehensive Income before tax (VIII+IX= X) |
(1,860.86) |
20,875.98 |
(108.91) |
| Less: Tax expenses on Other Comprehensive Income (XI) |
(299.78) |
1,786.87 |
(116.78) |
| Other Comprehensive Income for the year (X-XI= XII) |
(1,561.08) |
19,089.11 |
(108.18) |
| Total Comprehensive Income (VII+XII= XIII) |
6,676.71 |
37,062.18 |
(81.99) |
| Earnings per share (EPS) |
|
|
|
| Basic |
657.69 |
1,434.93 |
(54.17) |
| Diluted |
657.69 |
1,434.93 |
(54.17) |
(i) Key Financial Ratios:
| Ratios |
Standalone |
Consolidation |
|
2022-2023 |
2021-2022 |
2022-2023 |
2021-2022 |
| Debtors Turnover |
4.29 |
2.53 |
4.29 |
2.53 |
| Interest Coverage Ratio |
13.85 |
102.13 |
13.85 |
102.13 |
| Current Ratio |
0.84 |
1.18 |
0.84 |
1.18 |
| Debt Equity Ratio |
0.07 |
0.16 |
0.08 |
0.17 |
| Net Profit Margin |
71.22% |
84.74% |
63.89% |
97.11% |
| Return on Net Worth |
15.33% |
37.11% |
11.08% |
32.67% |
| CRAR (capital-to-risk weighted assets ratio) (%) |
61.71% |
81.30% |
- |
- |
The Parent Company & its group is mainly engaged in the business of investment and
trading in shares and securities hence its profitability is directly link to and impacted
by equity market volatility.
Ratios where there has been significant change (i.e. change of 25% or more as compared
to the immediately previous financial year): All the figures mentioned hereunder are Rs.
in Lakhs.
Debtors Turnover
On a standalone basis and consolidated basis, debtors turnover ratio as on 31st
March, 2023 stood at 4.29 vis a vis 2.53 as on 31st March, 2022. The Debtors turnover
ratio have increase because the debtors have increased more than the sales turnover as
compared to previous year. Debtors balance stood at 20.10 as on 3rt March, 2023 vis a vis
5.40 as on 31st March, 2022.
Interest Coverage Ratio
On a standalone basis and consolidated basis, interest coverage ratio as on 31st March,
2023 stood at 13.85 as against 102.13 as on 31st March, 2022. The reduction in Interest
Coverage ratio is primary due to the decrease in Earnings before interest and taxes (EBIT)
and increase in the finance cost as compared to previous year. The Earning before interest
and taxes stood at after tax stood at Rs. 14,226.23 lakhs as on 31st March, 2023 vis a vis
Rs. 25,097.01 lakhs as on 31st March, 2022. Interest expenses stood at Rs. 1,026.82 lakhs
as on 31st March, 2023 vis a vis Rs. 245.73 lakhs as on 31st March, 2022.
Current Ratio:
On a standalone basis and consolidated basis, the current ratio stood at 0.84 as on
31st March, 2023 vis a vis 1.18 as on 31st March, 2022. The decrease in current
ratio is primarily due to utilization of Cash and Bank balance for long term Investments.
Debt Equity Ratio:
On a standalone basis, Debt equity ratio stood as on 31st March, 2023 stood at 0.07 as
against 0.16 as on 31st March, 2022. The decrease in Debt Equity ratio is primarily on
account of reduction in the borrowings.
On a Consolidated basis, Debt equity stood as on 31st March, 2023 stood at 0.08 as
against 0.17 as on 31st March, 2022. The decrease is primarily on account of reduction in
the borrowings.
Net Profit Margin
On a consolidated basis, Net profit Margin ratio as on 31st March, 2023 stood at 63.89%
as against 97.11% as on 31st March, 2022. The decrease in Net profit Margin ratio is
primary due to the decrease in net profit after tax and its share of profit in associates.
Return on Net Worth
On a standalone basis, Return on Net worth stood as on 31st March, 2023 stood at 15.33%
as against 37.11% as on 31st March, 2022. The decrease is primarily on account
of decrease in net profit after tax.
On a Consolidated basis, Return on Net worth stood as on 31st March, 2023 stood at
11.08% as against 32.67% as on 31st March, 2022. The decrease is primarily on account of
decrease in the net profit after tax.
(j) Human Resource Development:
The Company believes that the human resources are vital resource in giving the Company
a competitive edge in the current business environment. The Companys philosophy is to
provide congenial work environment, performance oriented work culture, knowledge
acquisition/dissemination, creativity and responsibility. As in the past, the Company
enjoyed cordial relations with the employees at all levels. Training plans for employees
are developed based on needs identified in consultation with the employees and their
departmental heads.
(k) Cautionary Statements:
Statements in this report on Management Discussion and Analysis describing the
Companys objectives, projections, estimates and expectations may be "forward looking
statements" within the meaning of applicable laws and regulations. Actual results
might differ substantially or materially from those expressed or implied due to risk and
uncertainties. These risks and uncertainties include significant changes in political and
economic conditions in India and internationally, volatility in interest rates and in the
securities market, new regulations and Government policies that may impact the companys
business as well as the ability to implement strategies. The Company assumes no
responsibility nor is under any obligation to publicly amend, modify or revise any forward
looking statements on the basis of any subsequent developments, information or events.
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