WSFx Global Pay Limited (511147) Earnings Call Transcript & Summary

Ladies and gentlemen, good evening, and welcome to Q4 FY 2020 Investor Conference Call of Wall Street Finance Limited. [Operator Instructions] Please note this conference is being recorded. Material and information in this conference call is general background about the company's activity as at the date of this presentation. Information in this presentation should not be considered as advice or recommendation to investors or potential investors in relation to holding, purchasing or selling securities and does not take into account your particular investment objectives, financial situation or needs. This information is given in summary form and does not purport to be complete. I now hand the conference to Mr. N. Srikrishna, Executive Director and CEO; and Mr. Dipesh Dharod, Chief Financial Officer. Thank you, and over to you all.

Thank you. Good evening. This is Srikrishna here along with my CFO, Mr. Dipesh.

Good evening, everyone.

It's a pleasure to connect once again with our investors and present our audited financials for Q4 and the financial year 2020. I'll start with a small presentation on the company; the direction -- the strategic direction we are taking; an update on the digital initiatives which we have been talking about all along, where we are as of now; and along with the results. We have uploaded the presentation on the company's website as well as the BSE website. So now we'll go to the presentation part. So a brief about what the company's activity is. We are an RBI authorized AD Category II player. Wall Street has more than a 30 years history, heritage. And the last 2.5 years, we have been a pure-play foreign exchange player. So you can say that we sold our MTSS business in 2017. And now in the last 2.5 years, we have been literally focused on ForEx and transformation of our ForEx to a digital ForEx tech company. So today, what we are? We are AD II. We have a network of branches across India, but our growth has not been based on branch. It's more through the digital reach which we can have. So we have come out with digital solutions for corporates, agents and retail customers. We also provide travel insurance. Today, we have a network of 18 branches. We have reduced 2 branches because of the COVID situation. So for the card product, we partner with Yes Bank and Thomas Cook. We have our own Smart Currency Card, which is sponsorship arrangement with Yes Bank. For our AD II remittance and the referral part, we deal with IndusInd Bank, Yes Bank and Axis Bank. We have a large customer base. Today, we have added companies like E&Y, Mphasis, Novartis, L&T, Siemens. All these people deal with us for the foreign exchange requirements. And from a remittance perspective, we are tied up with major agent partners, education consultants. One of our key account is HDFC Credila. So now we go to the next slide, which talks of the key highlights. We talk about Q4, what has happened in Q4, what is the outlook on Q4. So Q4, we started well. January was good. Then we had a very upswing in our remittance business because we have always been focused on students' remittances, and we had a very good upswing. But from the last week of February we got hit because of the COVID-19 pandemic. It had a minor effect in February and a major effect from March onwards. So the key drivers for that quarter was also remittance. And we also signed up these large corporates, 3, 4 corporates as I had mentioned in the earlier slide. And slowly, we have also added a lot of clients in our corporate and agent platform, and that we are getting good turnover through these platforms. Now one of the big things which happened was the COVID-19 pandemic, which had a very direct impact. In fact, we had also given a note on this to the stock exchange. So from the last week of February, we could feel the impact of COVID-19. And from March mid, the impact was drastic with our country getting into lockdown by the -- by 22nd -- 24th. That is Bombay literally was closed till 15th. So essentially, we had a business continuity plan. So we -- luckily, since we are more a technology-enabled company, we were able to quickly ramp up the work-from-home support for our activity. Even though there was a major business impact in our activity, we were still able to do right from -- during all the lockdown period, we did student remittances, we did living expenses. We also supported our card reloads because since the international flights are not there, there is no fresh currency or card business. Parallelly, after March, for the Q1, we have also implemented a cost rationalization plan. From 17th May, we have also -- because since we are talking now, I wanted to update on what happened -- when we have started. From 17th May, in a phased manner, we have also started operating our branches. We feel that things are gradually improving, and we feel that once international flights start, there can be a situation which can improve. But as I said, the situation is an evolving situation. So we will not try to comment on it. We are geared up, both in terms of our digital path and to take advantage of the opportunity. But obviously, a lot depends on how the situation stabilizes. We also shared a note on the COVID-19 impact on our business to stock exchange. Now coming to other numbers part, performance part. We have given you the comparison between Q4 of this year and the Q4 of last year and also compared between Q4 and Q3 numbers. If you see, our revenue was higher at INR 949 lakhs from INR 688 lakhs for the previous year same quarter, 38% increase. Of course, other income was INR 49.25 lakhs. From a PBT level, we were at minus INR 1.84 crores. That is because we took some provisions also, and we also hit on the February end to March revenue numbers. From a quarter, Q4 versus Q3, our revenue was INR 949 lakhs against INR 873 lakhs, 9% increase. Other income was INR 49.25 lakhs against INR 50.77 lakhs. So we had a loss of around INR 1.85 crores for this quarter. Of course, the provision has been added there against our previous Q3 of INR 10.86 lakhs. So when you compare it from a year-on-year perspective, our revenue from operations moved from INR 2,387 lakhs to INR 3,632 lakhs, which is a 52% growth. At PBT level, we booked a loss of INR 73 lakhs as against a profit of INR 7.14 lakhs the previous year. PAT was minus INR 58.4 lakhs against INR 16.85 lakhs. So we actually, despite the COVID situation, we -- if you remove the provisions, we were still at a profit at the PBT level. But we had to take certain provisions because the COVID was also delaying the recovery -- was delaying -- there was a time factor which was coming into consideration. So we felt it is prudent to take certain provisions, and we've taken a provision of around INR 87.60 lakhs, because of which we ended up in a negative of minus INR 73.88 lakhs. Considering the situation that the company was on the growth path and only the last quarter we had an impact on the COVID. And also keeping in mind the shareholders' interest, we have proposed a dividend of 15%, which is INR 1.5 per share subject to the members approval at AGM. Now to take you on to -- dive deep into the numbers, I hand over the call to my CFO, Mr. Dipesh. Over to you, Dipesh.

Thank you, sir. Good evening, shareholders. Yes. With regards -- since we are talking about quarter 4 and the annual results, I will run through these numbers for you. It's part of our presentation, as Mr. Krishna mentioned, which we have uploaded on the BSE site and on our website, too. During the current quarter, we have done a revenue from operations of INR 949 lakhs, direct expense be majorly consisting of freight and commission of INR 471 lakhs, giving us a net revenue of INR 478 lakhs. Other income of about close to INR 50 lakhs, and total revenue amounting to INR 527 lakhs. Our selling and administrative expenses are INR 568 lakhs. Provisions, as Mr. Krishna mentioned, and certain this thing we have taken and due to the time factor is about INR 87 lakhs, giving an EBITDA of INR 128.54 lakhs, a finance cost of INR 27 lakhs -- INR 27.90 lakhs, depreciation of INR 28 lakhs for the quarter, giving a PBT of INR 185 lakhs for the current quarter. Taxes and other comprehensive income and compiling finally to profit after tax of INR 116.56 lakhs. If we compare the complete year, financial year '19-'20 vis-à-vis financial year '18-'19, we have done -- we have got revenue from operations INR 3,632 lakhs vis-à-vis INR 2,387 lakhs of the last year '18-'19. Total revenue, including other income, for the current year is INR 2,404 lakhs against INR 1,854 lakhs. Our selling and administrative expenses during the current year are INR 2,163 lakhs against INR 1,681 lakhs for the last year. Finance cost is INR 144.89 lakhs against INR 126.85 lakhs. Depreciation is INR 81.93 lakhs against INR 39.15 lakhs. And profit before tax, in this current year, it's a loss of INR 73.88 lakhs after providing for INR 87.60 lakhs as provision against INR 7.14 lakhs for financial year '18-'19. And the profit after tax is INR 58.46 lakhs negative against '18-'19 INR 16.85 lakhs as a positive number. We move on to the next slide, which shows that how our revenue from operations during the last 8 quarters have grown. We have represented in a graphical format, both revenue from operations at a gross level and at a net level. As you are aware, between the gross and the net is the direct expense, which is majorly comprising of commissions and freight and other charges. So we started the journey in Q1 '18-'19 at a gross revenue of INR 566 lakhs, grew to INR 590 lakhs to INR 544 lakhs to INR 688 lakhs in quarter 4 of '18-'19, subsequently to INR 820 lakhs, INR 989 las and INR 874 lakhs. And finally, in the current Q4 of '19-'20, we ended at INR 949 lakhs. Similarly, for net revenue, we started off with INR 389 lakhs in Q1 of '18-'19, grew to INR 412 lakhs, moved to INR 356 lakhs, again grew back to INR 419 lakhs in Q1 of '19-'20, back to INR 535 lakhs, INR 643 lakhs, then a decrease in the quarter 3 by INR 549 lakhs and finally ending at INR 478 lakhs in quarter 4 of '19-'20. Our selling and administrative expenses are more or less have remained constant from INR 448 lakhs to INR 568 lakhs in the current quarter over the last 8 quarters. With regard to our priority segments, where Mr. Krishna has already mentioned to us that our cards and the outward remittance have always been the priority for the company and has shown a growth, of course, the current quarter has shown a degrowth, as Mr. Krishna mentioned, that due to COVID we have lost the entire month of March and partially the last week of February. The 5 weeks have been lost due to that. So taking a base year of -- in Q3 when we were -- when we started the ForEx business as stand-alone, we are 35% from there upside. And with regard to outward remittance, we are at 279% from that quarter. The highest being at 320%, which is generally a student season. As you see, the 2 peaks, both in prepaid cards is due to the student season that prevails during the month of July and August, which the company has taken to its advantage. Now further, with regard to the digital portal, as Mr. Krishna mentioned, he will take you forward from here. Over to you, Mr. Krishna sir.

Thanks, Dipesh. So now coming back to our digital transformation journey. So we are happy to say during -- on the day of the Board meeting, we have launched our WSFx Smart ForEx app. So if you look at our digital journey, we started with a corporate platform and then we launched our agent platform and app. The major event last year was our launch of our own Smart Currency Card, sponsored card, with our app -- dedicated app. Now we are happy to say we have launched our WSFx Smart ForEx app, which we say the one app for all your ForEx needs because this COVID also has shown us that going digital is the only way forward. So the approach the company has taken is the right approach. We have also written to RBI to ensure the digital KYC part of it. Once that is added, we will see -- we have a solution which is beyond our branch network. We'll have a solution where we can take care of the requirements of anyone across India. So you can do your remittances; student remittance; sellers remittance; you can buy your ForEx card; link to an existing ForEx card, that's my Smart Currency Card; or by currency notes through this app. So we've integrated even the card part of it into this app. So you can manage your Smart Currency Card through this app itself. So our focus has always been the student segment. In fact, we have grown year-on-year. Dipesh had shown you the trend on how the outward remittance goes. And in outward remittance, 80% of our business comes from student segment, maybe 70% to 80% to be more accurate. So what we have done is in our app also we have a separate journey for students. It's a simple and intuitive app where sending money, buying ForEx is in 4 easy steps. So student can pay his university fees, GIC payments, living expenses, buy cars. We also have got promotion of a fee ISIC card for the student, which is a discount card for him. So it gives you an idea what exactly the company is. The company has always targeted to be a digital ForEx tech company. So we can now say that we have moved from a physical company to slowly -- that is why we are not bothered about having expansion through physical branch network, which I feel is the right approach. Today, technology companies are saying work from home. But since we are a licensed entity, we have to operate from an office. But through technology, we are ensuring that we don't rely on branch expansion as the only way of growth. So we have now Smart Corporate platform, which is live and running; Smart Agent, which is live and running; Smart ForEx B2C app, we have launched the app first, we'll also have a portal, but today everything happens in app, so app was our priority; and Smart Currency app, Smart Currency Card and app we have launched. So in a way, you can say that a major portion of our digital journey, the development part is done. Of course, the work remains now to make it acceptable, make it a choice for all our customers. So we are confident that we are on the right path. We have done one part of it. Now taking it to the market, making it a choice product of the customer is the next challenge for us, which we are going to do and create shareholder value. So with this, I will come to the end of my presentation. I would like to thank you -- thank everyone once again. I now hand over the conference to the moderator. Thank you.

[Operator Instructions] First question is from the line of name from [ Nimish Sheth from GT Advisory ].

Congratulations on the launch of your ForEx app, Smart app.

Thank you.

One second. Sir, can you hear me?

Yes. Yes. Yes.

Yes. Yes.

Okay. I have a bunch of questions. The first is actually relating to your P&L, that's the slide that you have, I think, that's 5. You are showing an increase in your SG&A from around INR 17 crores in FY '19 to around INR 22 crores in FY '20. That's a jump of about INR 5 crores, approximately INR 500 lakhs, approximately, INR 480 lakhs actually. What I'd like to know is what is the reason for the big jump? Is it to do with all the technology that you've been -- platforms that we've been investing in? And how much have we invested in these technology platforms? How much is written off? And how much is capitalized? That's the first question. I have a couple of other questions also.

Okay. So first part, in terms of growth, so there are 2 things which we -- so there are 2 parts to your first question. The cost part of it, I will allow Dipesh to handle. From a business perspective, right from the last 2.5 years, there were 2 focuses for the company. One is in terms of customer segmentation. In terms of customer segmentation, we are very clear we are focused on corporates, we are focused on student segment. We, in fact, are deemphasizing the wholesale operations. In fact, our revenue from wholesale has dropped from an X percentage to a thing because we felt that retail, especially digital retail and focus on students, which is a very, very key segment for us, and corporate was our focus. So -- and second focus was to transform into a digital company. So there were 2 parts to it. So in the traditional mode also, the entire organization was focused on a particular customer segment, which really worked for us because our corporate business also grew. Our remittance business, which is a very asset-light business where we don't have to invest our own money, that grew phenomenally. In fact, we have a record growth in our remittance where our -- in the last 8 quarters, if you saw, our remittance growth has been unprecedented. So our efforts in the traditional mode also paid off. We have one large customer called HDFC Credila also, which we signed up 1.5, 2 years back, which has come as a big customer for us. Besides that, we have signed up multiple students' consultants, agents, et cetera. So that part really worked well for us. Second is, from a technology perspective also, in a market which had become generic, we were one of the last guys to get into the corporate side. There are a lot of big players were there. There was nothing for you to go and differentiate. The technology really helped us to differentiate our offering and go back to the corporates and say, look, we have got a technology platform for you. That helped us, and the efforts got paid off where we were able to sign up a few big customers, by then this COVID issue happened. So essentially, we had an X turnover coming through our corporate platform also. From an agent perspective, in the last 1 year, we have shown a growth, as we have at least around 10% to 15% of our turnover coming through the agent platform also. But if you ask me, what worked for us was the growth was more driven through my remittance segment, which was concentrated in the traditional mode also. And slowly, the transformation to digital has started happening. Corporate, the digital only gave me the advantage to get into a corporate itself because otherwise, my offering generally was a generic money. So that part is where we transformed. Today, now we are in a situation where we feel that the coming few years, next 2, 3 years is where we are going to see a transformation and maybe a growth which will be much more than traditional growth in both these areas, both in terms of corporate platform, in terms of our agent platform, through which agent partners can refer business to me, both as a lead management or as an order processing system. So this ensures that this will be a lasting advantage. Digital will give us that extra mile of advantage to ensure that we are sustainable, okay? So that is where things have worked for us. As far as the cost part of it, Dipesh you can explain how much we have spent on the digital part.

Yes, sir. Yes. Mr. Nimish, thank you for your question. Yes. With regard to the cost that you have mentioned, from INR 1,681 crores -- INR 1,681 lakhs rather to INR 2,164 lakhs that we have spent, it's about INR 480 crores, INR 475 crores. So majorly in this, I can bifurcate it into 3 buckets for you. Last year which was the major year where we did a lot of improvement on the…

No. No. Dipesh, I think you're missing the point. The question is, I think, Mr. Nimish is asking how much we have spent on digital. So totally, 3 years, you would have spent around INR 6.4 crores.

Yes, INR 6.45 crores, sir.

Yes. So you give that breakup of that.

Yes. Yes. I'll give that breakup, sir. Yes. I got your point. So last year, we -- look, all the 3 years put together, we have spent INR 6.45 lakhs -- or INR 6.45 crores. And during the last year, that is financial year '18-'19, we have spent almost about INR 3 crores on the assets on the intangible assets which are capitalized. So they don't fall in the part of the P&L, which is for you. And in the current year, we have spent INR 135 lakhs, which has been capitalized. So the one major difference of about -- you can say about INR 1.7 crores is due to the less capitalization during the current financial year will take care of from the INR 480 lakhs piece. The other is because of the increase in the business there is a normal 10% to 12% increase in the overall structure of the salaries, incentives…

Dipesh.

Yes, sir?

Dipesh, I think, Nimish wants to know only on the software part. So I think you have completed that.

Yes.

So Nimish, what has happened is we have spent around INR 6.46 crores. The major bulk of the development happened in the '18-'19, where we were parallelly developing multiple platforms. Once we started launching that, we have reduced our capitalization. And last year, we have spent around INR 1.35 crores. So totally, amortization and capital work-in-progress will be equal to INR 6.46 crores.

Right. And what accounts for the huge jump in the SG&A?

Pardon?

Your SG&A has jumped by from INR 17 crores to INR 22 crores, right?

Correct.

So that's almost more than 25% jump.

Correct.

So I'm wondering what are the key components of -- why did it jump so much?

It's income from remittances.

No. No. This is your expenses, I'm saying, selling, general and admin expenses.

Selling expense. Okay. That I will explain. So what happens is, yes, if you look at it, we had -- as Dipesh was explaining to you the next part of it because first part was what we spent on the software. How did we spend it was, software development is more in terms of costs in terms of the resources, et cetera. So we had capitalized around INR 3 crores of our previous year, whereas subsequent year was only INR 1.3 crores. So that will explain that -- if you look at it, our amortization was less for last year. So our expenditure increase was -- if you look at it from an operating expenditure increase was only at around 10% to 12%. Rest was more because of the amortization. Earlier, we were doing a higher amortization. Last year, since we have developed all those things, we did a lesser amortization.

Okay. And so the bulk of this is now through? Current year, we can expect…

Absolutely, absolutely. We have reduced absolutely. In terms of amortization, we came down to INR 1.35 crores. And this month -- this year, it will be very marginal because we have launched our B2C also in the first quarter.

Right. And the second question on the P&L is actually on the provision of INR 87.6 lakhs during the quarter and for the full year. What is this INR 88 lakh provision? I think in the previous, was it quarter or 2 quarters ago, there was one INR 56 lakh doubtful debt, which you said, we were looking to recover it. Is it to do with that? Or is it a fresh one?

No, no. Last quarter and the previous quarter, we had a debt of INR 67.06 lakhs, which is a receivable for a bulk sale made to us to another money changer, which had got disputed. In fact, we had taken some civil and criminal action against them. We were confident of the recovery. But unfortunately, because of COVID issue, everything -- our entire process of recovery got derailed. Now only we were able to even file a civil suit against them. And the criminal stay which they had taken had also got delayed. So naturally, as a prudent practice, we have to provide for it, but all actions are being taken to recover the same.

Through recovery.

There is -- pardon?

No, no, go ahead, sir. Sorry.

Yes, and the second one is an old claim of insurance claim of INR 20 lakhs. That is actually a year -- several years old claim which has got delayed. So we are -- even that claim, we are confident of recovering. But since it's become very long and also -- now also the claim is not coming through because the insurance companies are closed. They are not processing claims. We felt that part of it also we will provide for because of the time -- huge time gap which has happened. These are the 2 provisions which we have made.

Yes. Right. The third question is actually -- I've got just 2 more questions. The third question is actually on the money that we received from the sale of the -- one of our divisions couple of years ago. Some of it was paid back as a special dividend and some of it was retained by the company. I think an amount of maybe INR 25 crores or something. Now that money, part of it has been put into fixed deposits. And on the flip side, we borrow money actually for our working capital. So it's the same question every quarter we ask this. Any relook at this that we're going to just…

No. No. No.

Not have fixed deposits and start moving all this money into working capital and borrow less from the bank?

Yes. So exactly. See, if you look at it because of the COVID situation, obviously, the operations have shrunk. And obviously, when operations shrinks, the working capital also comes down, which they -- [ CC ], which they give us. But if you look at it overall, our operations, if you look at our business has grown in the last 8 quarters. And in money changing, whatever said and done working capital is required and it's money. So earlier also, if you look at it, we used our fixed deposits. See, one portion of the fixed deposit we had earmarked for investment. In fact, today also when we gave the dividend, it was also, and our Board has considered that, okay, we didn't do any investment, we should give a dividend. So that was one perspective. Second is we kept the fixed deposit to borrow more from the bank. So 1:2 or 1:3. Because at some point, we had some INR 15 crores of limits from the card issuing bank. That was all based on FD or a bank guarantee for which I had to keep an FD. And second is we have various limits with various banks for which we needed to give an underlying some sort of a deposit. So it is not that the entire money we just kept it here and did. Sometimes we have taken. For one INR 10 crores, we have taken 2x of loan. But of course, a portion of the money was kept separately as a fixed deposit, which in the AGM also we said that we will look at investments. And obviously, when investment is not there, we will also dividend it out was the thing presented to the investors. I think the company is doing that. But as of today, if you look at it, we are not exactly trying to keep it in deposit and spend on interest. Today, it's a much judicious mix we have come across. This 3 months is a little different because business has shrunk. Otherwise, our business was taking up capital requirements of around INR 30 crores, INR 35 crores, INR 40 crores also, which we raised the debt from the banks.

Correct. Okay. Understood. And sir, the last question, and that's because typically, you said in the second quarter, specifically basically July, August is when your remittances for students who are leaving for the U.S. or Canada, Australia, those remittances spike. Now that you have a Smart Card, ForEx Card, you have a Smart ForEx Card linked with an app, et cetera, do you see this business reviving somewhat? I cannot expect 100% revival, but some revival in the coming quarter, Q2, in terms of students actually utilizing this?

So I will explain to you. We have built a product proposition, but unfortunately, flights are not taking off. So obviously, cards are dependent on flights taking off. No one is going to buy a card till the first international flight goes. Of course, a few transactions may happen because of this evacuation flights. But otherwise, we are today only having reloads going on. So card is a proposition. When things start opening up, card will pick up again. Till such time, card and currency sales are not going to be there. And we foresee that if flights are all -- today, everyone says by August, it will start. So we are also hoping for that. As far as remittances are concerned, we had seen people remitting money in the last 2 months also, April and May. There has been a slowdown because universities have extended the time for the students to pay their fees because of which there has been a slowdown. But if you look at it, COVID situation is something which is taking -- it's an evolving situation, like people fear there may be -- things will become all right. Some people say there will be a second wave. So it's an evolving situation where you cannot have a fixed plan. You can only be prepared to handle the situation. We are geared up. We are prepared. We are doing transactions every day, right from April. We were never at 0% at all. We were at 20%, 25% of our revenues in April also. So April, May, June, June also we have seen growth. So what we are saying is we are geared up. We have got a solution in place. We are going to take all efforts to reach the solution to the customer. But a lot depends on how the situation is going to evolve, but we are geared up. Now situation is evolving. We will be there to take advantage of it. That much I can guarantee.

[Operator Instructions] The next question is from the line of Imran Contractor from Quantum Investments.

Congratulations on the launch. Some housekeeping questions. Before the taxation, if you see in the fourth quarter, we have a write-back of about INR 67 lakhs credit. And in the consolidation, we have only INR 10 lakhs write-back. Though for the year, totally, we see the credit figure of INR 52 lakhs. Can you just -- why is this big difference?

Yes, I'll tell you. There are 2 effects to it. One is the depreciation effect because under income tax for the intangible assets it is just 25% across, whereas in the books we have taken at 7 years shelf life. So that is one of the effects that has been given. Further, the second effect is majorly due to the shifting of the -- or rather the advances moving to capital for my subsidiary. That is one of the other tax effect that is there. And the third is the provision that we have done which is not allowable under income tax, but your profit before tax comes down. So these are the 3 major factors because of which…

It is a digital business and subsidiary, that is why it has happened?

Sorry? No, no, the digital business is in Wall Street only. The subsidiary we are planning to strike off in the next 1 year. So we have…

S Global?

S Global sir, S Global Advisory. And besides that, we have still opted for the old tax regime. I think last quarter you had asked, we still have a MAT credit to it, and we still have a business loss. Because once we move from the old regime to the new regime, there is no coming back. But from old regime to new regime, we can move it any of the years. So probably, we are taking advises from our consultants, our tax auditors also on this, and they have been guiding us on this.

Right. Okay. Just coming to the operations. Basically, I understand we got disturbed by the COVID from end of February to March till now. But can you tell me for the first, say, 11 months, how were we running in terms of net income?

We have got it in the -- if you see, Dipesh, you had explained one chart where we talked of net revenue -- gross revenue and net revenue, the slide if you see…

No, I can see that, but I just wanted to -- because that slide is for the quarter and the year.

Okay.

So I was just wondering if COVID wouldn't have happened, so what will we -- you see what is happening in net income. After peaking in 2 quarters earlier, we are not reaching that same level of net…

No. No. You have to understand money changing, if you remember, every investor meet me, I tell one thing. Money changing Q1, Q2, Q3, Q4. Q3 is always the weakest quarter, okay?

Okay. Okay. Okay. Seasonality factor.

If you remember, Q3 will always dip, Q4 will again go up. For us what happened, Q3 dipped. Q4, we were going -- January was brilliant. We are going to the levels of -- if you look at my remittance business, it would have grown. You must have seen even in the last quarter. But unfortunately, February also we were there up to the 20th. March, unfortunately, we had a double whammy also. We had Yes Bank moratorium also and this COVID situation also. You must have understood. We were selling Yes Bank cards also. So we had a kind of a situation where March we had multiple situations which started and had an impact on us. Otherwise, we were on a growth trajectory, and we were, in fact, confident that we would have gone up to the Q2 level.

Okay. Okay. Okay. And regarding this, about INR 86 lakhs or whatever we provided, what do you sense? You will be able to recover? Or we'll write some off and we'll settle for somewhere in between?

Sir, actually, it's a court matter. So I cannot discuss in detail. But we are confident of recovery. We cannot see -- since it's a legal matter, I cannot even say confident. We are pursuing it in the best possible manner to recover the money. We feel we have a strong case.

Right. And this other expenses increase is primarily because of these amortizations.

Other expenses, which one?

Yes, sir, the F&D expense, what do we expend earlier.

Imran, if look at it, we have an X expenditure. We have a huge growth year-on-year. Correspondingly, there are variable costs which come in, salary increases, et cetera, that operational cost increase was well within 10%. It is because of the amortization difference you feel there is a huge increase in expenditure. Otherwise, if you don't -- if you discount the amortization, it is in acceptable levels.

Right. Okay. And going forward now, do you see changing or tweaking your business model somewhat of having less number of branches or less number of people or something like that? Is there any of these thoughts in your mind?

So if you look at it, we are a company which -- of course, in the last 2.5 years, we have rationalized our branches. From 37 branches, we are 18 branches. We have rationalized because we said digital is the way to go. So our major network is on main cities only. So our model has been -- if you look at it, there's been a movement from an omnitech ForEx company to a digital ForEx company. If you see, my last slide has changed. Now we want to be a digital ForEx company. So obviously, we are trying to integrate the entire backend operations also. We are trying to automate so that we can really become a true digital ForEx tech company.

Right. Sir, I'm just looking at whether we're looking at any less amount of space or whatever -- meaning there's a lot of talk about working from home and all those sorts of music going in all sorts of organizations. So are we going to be getting some benefit out of it? Or are we will have to cross the bridge when we come to it?

So essentially, if you look at my -- my biggest cost is only the head office and a few big branches. All the small branches are already in very small space. Our average strength in any branch is only 4 to 10 people. Okay. So my biggest cost is corporate office. Even during this Q1 period, we had got some rent reductions from the people. We are evaluating the work-from-home situation because today, everyone is working from home. Board meeting, I attended from the office. Today, I'm attending it from home. This call, I'm attending from home. So essentially, we are adapting to it. And we will -- we -- based on the situation, taking the necessary steps. If we feel it's a workable model, we will definitely reduce cost.

Sir, just to get a sense, now maybe in terms of turnover, we would be down by how much, 50%, 60% or…

Shortly, we'll get the result. Fourth quarter has been drastically affected. Everyone is aware of it. And our business is in the travel space. So you can understand there is an effect to that. But we have also reduced the cost based on some cost reduction strategies which include every area where we can reduce costs, right from rationalization to reduction of branches. Everything possible we have done, but we have also done it in such a way keeping in the human value into consideration, keeping into consideration that we should not cut to the bone where we don't recover. So we have to be also fit enough to run when things start improving. That is the objective in which we have handled it.

That's right. And Dipesh, one housekeeping question. Your trade payables are about consolidated level is INR 2.73 crores compared to INR 6.76 crores.

Yes. So if you see both debtors and creditors, since there was no much business in the last 1 month because of COVID, even if you see, the debtors have come down. The stocks have effectively come down. So both debtors, creditors and payables are -- it's like a bottom, which are recurring. As Mr. Krishna mentioned…

Right, right. Got it.

We still do some remittances of some card reloads. So those are the things that are lying in the payment.

And Dipesh, I'm just trying to be very cheeky, like do you think we need to keep these 2 things like gross fixed deposit which is high and the loan which remains? Or is it because your business requirements keep on changing that you need to keep these 2 buckets separately?

Yes, as Mr. Krishna did mention, the FDs that have kept are not pure FDs. We leverage funds out of them, maybe 2x or 3x. And you always see, there are peaks for us. So during these peaks, these are actually used. If you probably take a single day, there could be an outstanding of about INR 20 crores also on a particular day. It comes down the next day. So those peaks are always there when the business is at its peak. So we use it very judiciously and very calculatedly. And hence, these are there. It's not that they are purely free. They are -- maybe they can be free for part of the year, but part of the year they're occupied. You can see in that fashion.

Right. Now I'm just -- again, just asking a question. Instead of considering dividend, did we think of a buyback?

Sir, dividend and buyback are Board mandates. Probably at the management level, there is nothing to comment from our side. But your suggestion is taken in place. We'll definitely get back.

The taxation structures are changed very adversely for the dividend.

Sorry, I didn't get the last line.

The taxation structure for dividend has been very adverse, right?

Yes, it is adverse for the individual. It is better for the company now. So probably a 15% last time would have expelled about INR 2-and-odd crores. This time it would give me about INR 1.75 crores. I'll say on my cash flows, but I think the individual…

No, no, you say Dipesh on INR 12 crores we pay -- we'll pay 43% tax.

That is how the government is -- will pull from one end.

The next question from the line of [ Ashish ], an individual investor.

Mr. Krishna, my question is with regard to the fact that since we are a very small player in the business and we are competing with many large players in the market, do we see any synergy between the fintech business which we do in the group company, which is Spice Mobility and Wall Street Finance? And any thoughts ever on the integration of the synergistic businesses to give the company a scale and size so that we can maybe compete better in the market? Any thoughts on that?

Yes. So I'll tell you, there are 3 companies, right? One is DiGiSPICE, another is Spice Money, the third is Wall Street. Wall Street is looking at a particular niche of business, which is international travelers, where the customer segment is completely different. Spice Money looks more at Bharat. It is more into AePS, BBPS, et cetera. So essentially, they go on a distribution network methodology where they have 100,000 distributors where that machines are there, Aadhar-enabled payments and all the stuff. Third is the DiGiSPICE, which is into telecom and VAS and all those stuff, who are into specialized software products. Wall Street is a money changer, now migrating into a fintech. The reason why we wanted to become a ForEx tech company is, it's not a simple app we can do. We have to integrate it end-to-end. Today, I have -- my technology platforms are integrated to my back-end ERP. Some are talking through some more platforms to banks also. So I have to customize my platform for corporates. I also have to have deep-dive integration. I have to have compliance checks, et cetera. So that was the idea that we started working with a small development team. If you look at it, over 3 years, I have spent an X money. But if you look at my development cost, today, I have a small team of 10 development people only, through which I have built all these platforms. So from our perspective -- from a business perspective, we don't see any -- not too much of synergy between the 3 activities because each seems to be -- each caters to a different set of a segment.

Okay. Okay. So there could be advantages like, say, common developers for all these apps or maybe saving in terms of office space or other costs, the corporate cost. So have you ever thought about…

Yes. Yes. We thought about it. But if you look at it, we have a very small footprint. And our head office is in Bombay. Their head office is in Delhi. So head office is the only area where I have a higher cost. All other costs are very small because my average branch rent would be INR 30,000, INR 40,000. So that small branches we keep across India. We have reduced that to a major extent. From a development perspective, we specialize in certain technologies, like I use .NET, Java, I use Flutter. I use certain technologies. It's not essential the same technology will be used by them. So essentially, our technology is based on our requirements. So we have explored those synergies. Wherever possible, we have tried to see whether we can use their resources. But if it is not possible, we use it on our own. That is the logic we have used. Because since they have also technology, we always tried to see. Whenever there is a requirement in terms of evaluating any technology solutions, we see whether the group can provide that solution. If they cannot provide, we will go for an outside vendor.

[Operator Instructions] The next question is from the line of [ Nimish Sheth from GT Advisory ].

Just a follow-up question to the management. One is, when we launched our Smart Currency Card last year, it was with the tie-up with Yes Bank. So the 2 parts to this question is have the issues associated with Yes Bank had any spillover effect on our ForEx card because it's a Yes Bank branded card? Two, are we looking at -- and if there's been a problem, are we looking at other options? And one -- the second question is actually on your new Smart Currency app. So how does one -- can I just go and download it and start or do I have to get invited to download the Smart Currency app? So once I'm your customer only then I'm invited to use the app. How does this work?

Yes. So I'll answer it. The first question is about Yes Bank. Yes, Yes Bank moratorium had an impact during that 15 to 18 days, but customers understood that it was an unusual situation. Customers were very reasonable. They had cooperated with us. In fact, a lot of customers got -- the entire Yes Bank customer base of retail customers, it's not the ForEx card customers alone, even the guys who had SB account, all those people got affected. But since the communication from the Reserve Bank was very clear and the right noises were made by State Bank coming in, et cetera, people didn't become panicky. So that was a good thing in our favor. They also understood that it was an unusual situation. And luckily, the resolution happened in maybe around less than 15 days, 15, 16 days. So the customers put up with it. Obviously, there was a little bit of a frustration which normally happens. But after that, an unprecedented COVID event started. So now people are no longer thinking about Yes Bank issue. After that, subsequently, we have been doing reloads and all. There has been no problem with the product, and the team is also supporting us. So as of today, we are not seeing any hazards, and Yes Bank has also been very cooperative in terms of the kind of commercial we have with them. So that part is with Yes Bank. So we don't see a very long-term impact because today with the kind of investors who have come into Yes Bank, I think the fear on the public is not there that Yes Bank will now, again, have such a situation. But as I said, we are reviewing the situation and we will act accordingly. But at this juncture, it is not very, very burning issue for us also. And reloads are continuing. There's no issue. Point #2 is the question of -- what is the other question?

Sir, regarding any new -- other than Yes Bank, are you thinking of anything else in the card space?

Nimish, what was the other question?

The question actually is on your Smart app. How does one use it? Does one have to be your customer to use it, et cetera? How does it work?

No, no. Smart app is one which you can download and use.

Anyone can?

It's open to all the customers. We will be shortly communicating to all our customers. In fact, we launched it on the Board meeting day, and we will be reaching out to all our customers through mails, notifications, et cetera. You can register. And as I said, you can do the transaction. There may be a small amount of a physical check and all which we will do from a customer service aspect because of certain regulations. But at least 90% digital experience you will get. Shortly, once we get the necessary digital KYC things in place, which is the video KYC part, then it will become fully digital. So you can just now download the app and use it. There's no issues.

Ladies and gentlemen, that is the last question. I now hand the conference over to the management for your closing comments.

Yes. Thank you, everyone, for joining us. If you have any further queries, please visit our website or you can reach out to our company secretary. Once again, thank you. I now request the moderator to conclude this call.

Thank you. Ladies and gentlemen, on behalf of Wall Street Finance Limited, we thank you for joining us, and you may now disconnect your lines.