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

Ladies and gentlemen, good evening, and welcome to the Q1 FY '21 Investor Conference Call of Wall Street Finance Limited. [Operator Instructions] Please note that this conference is being recorded. Material and information in this conference call is general background about the company's activity as at date of this presentation. Information in this presentation should not be considered as advice or a 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 situations or needs. This information is given in summary form and does not purport to be complete. I now hand the conference over to Mr. N. Srikrishna, Executive Director and CEO; and Mr. Dipesh Dharod, Chief Financial Officer. Thank you, and over to you, sir.

Good evening. This is Srikrishna here, along with Dipesh. And it's a pleasure to connect once again with our investors and present our financials for the quarter 1 of the financial year 2021. So I'll start with a small presentation of the company, where we are at present, the strategic direction, the digital initiatives and how the company has been faring under the pandemic. We have uploaded a small presentation on the company's website as well as the BSE website. Now over to the presentation. A brief about Wall Street. We have given you a timeline of Wall Street, its journey over the last 30 years, where it started its ForEx operations in 1990, and today where we stand. In between we were into MTSS business. Now in the last 2, 2.5 years, we are into stand-alone ForEx business and transforming into a digital ForEx tech company. In fact, one of the key launch that we have done, which we feel will be a key driver for the future, is our Smart ForEx app, which we have launched in June 2020. Now what do we do? As the business, we provide foreign exchange currencies, ForEx cards. We have our own Smart Currency Card, which has been a sponsor card with Yes Bank. We also process outward remittances under LRS. We have a network of around 18 branches across India. And we are tied up with Yes Bank and Thomas Cook for the cards. We process remittances through arrangements with banks like IndusInd Bank, Yes Bank, Axis Bank. So some of the key segments we cater to are the corporate segments and the student segment. We have customers like E&Y, Mphasis, Novartis, L&T, Infotech, Siemens as our key corporate customers. HDFC Credila, a leading education loan provider, is our key customer, and we cater the ForEx requirements of their students. Now coming to the key highlights of quarter 1. So as you're all aware, COVID-19 pandemic has had a major impact on all businesses. Being in the travel and ForEx domain, international travel has come to a complete standstill. So there were lockdowns. If you look at it, throughout April and May, there were lockdowns. We were able to handle, support our business through work-from-home. So we had ensured that our team was empowered to handle business whatever business was available. Because with travel coming and with flight operations being stopped, we were predominantly doing remittances business. So there was a significant impact on our revenue because, literally, travel was not there. So we had a revenue level drop of 61% over the previous quarter. The major impact was in April and May, and we had a small recovery in June. Currently, the business is mainly for students because there is still university fee payments because people are expecting to travel in the next couple of months, and also living expenses. We have a referral arrangement with banks where we process family maintenance also. For people who are already overseas, we handle that remittance part. In June, thanks to Vande Bharat flights operating, there was some movement with flights opening up in the domestic side. There was some movement on the currency front. So we -- after a long time, we could initiate export of foreign currencies. Major impact was on corporate and leisure because it was totally dependent on travel resuming. So parallelly, because of the drastic impact on our business, we also embarked on cost-reduction measures. There were salary revisions, across-the-board revisions in fees, office rents, et cetera, wherein we were able to achieve a 44% reduction in cost over the previous quarter. So in a nutshell, our Q1 financials is, we did a GTO of around INR 161 crores, predominantly driven by remittances, with a net revenue of INR 1.84 crores. Expense was around INR 3.64 crores. PBT was a negative INR 1.88 crores. PAT, after provision for taxes, is INR 1.31 crores -- negative INR 1.31 crores. So one major thing which we were able to do despite the lockdown was, we were able to work on our digital proposition. And one of the key development which -- and we were able to launch our WSFx Smart ForEx app. So this is in a way what we were able to do in Q1. In terms of numbers, I will now hand over to Mr. Dipesh, who will run you through the numbers for the quarter.

Hello, everyone. Good afternoon. As Mr. Krishna mentioned, predominantly, this is a COVID quarter where impacts have been because of COVID, no international flights, no travel across. With regard to the numbers, revenue that we did from operations for the quarter 1 is INR 312 lakhs against INR 820 lakhs in the previous year same quarter and against INR 949 lakhs in the last quarter, that is March ending 2020. So this is about almost 60% plus we are reduced from the previous quarters. With regard to the profit before tax, we had a loss during the current quarter, which is INR 188 lakhs against INR 185 lakhs from the previous quarter and against INR 32 lakhs from the previous year same quarter -- profit of INR 32 lakhs. As Mr. Krishna did mention, revenues have dropped 60% and expenses have come down by 40% because of the cost measures that we have taken this -- in this current quarter. We have given a detailed trend to you for the last 9 quarters, how business has grown over the quarters and how business has been impacted during quarter 1 because of COVID. Majorly, quarter would -- if you see both, income has come down, expenses also come down, but all in all because we do have certain fixed expenses. So quarter has been negative due to the COVID impact. I'll now -- with regards to revenue from operations, if you see the flow of the chart, we have started our base journey at INR 566 lakhs, grown maximum to about INR 989 lakhs and right now at INR 312 lakhs for the current quarter with regard to the gross revenue. And with regard to the net revenue, when we started we were at INR 389 lakhs as a pure ForEx company. We reached a peak of INR 643 lakhs. Right now, we are at INR 184 lakhs. Even if you talk about the expenses that we were there, as a ForEx based company, we started our expenses almost at INR 448 lakhs, peaked at INR 568 lakhs. And now we have come down to about INR 365 lakhs during the current quarter because of the cost measures taken across. With regards to our priority segments, considering the base as when we started quarter 1 in '18/'19, where we had the base, right now because of COVID and no international travel, there is absolutely zero, you can say, issuance of cards, but there are certain reloads still happening across. So that's why that we are negative 85% over the base year. With regard to outward remittance, the negativity is 39% right now, though there are certain remittances but not full-fledged as people are not flying. This impact of COVID probably has hit us from February last week onwards and still continues to impact us. Handing over to Mr. Krishna, who would talk of the digital promotions that we have done during the current quarter. Over to you, sir.

Yes. So one -- what we would like to -- I would like to talk about our digital journey. One key development was our launch of WSFx Smart ForEx app, a single app where you can order your foreign exchange, foreign currency cards and remittances. We launched it in June. If you look at it, we have a corporate platform. We have onboarded big customers on that. We have a Smart Agent platform. One of our key components was our B2C proposition. Today, with the Smart ForEx app, we have completed the journey also. We also have our Smart Currency Card. So the COVID pandemic has also taught us that how we need to reach out to the customer digitally. We need to figure out a way how we can address these requirements because we are seeing that slowly travel is resuming. We have good remittances coming in June and July. Things have improved from April and May. And we also feel with the bubble flights and also a gradual resumption of international operations. The requirements for ForEx will be there, but how the market is going to change because the pandemic has taught us how remotely you can operate. Similarly, the need to go digital and reach the customer is very important. I think our digital transformation journey was bang on, and we are in a rightly positioned when things revive to take advantage of how the things are going to move in the ForEx industry. So with this, I will come to the end of my presentation. Thank you, everyone. And I would now like to hand over the conference to the moderator. Thank you.

[Operator Instructions] Our first question is from the line of [ Nimish Sheth ] from [ GT Advisory ].

Tough quarter. Can you just give us a sense of when you think travel will return in a couple of quarters? How things are shaping up? And second is, you have a tie-up with Yes Bank. Yes Bank is now -- actually State Bank of India has taken a stake in it. Do you think there's any opportunity to sell the product via SBI -- our products through SBI? Do you think there is an opportunity there?

Yes. So first, answering the first part. So April and May, there was tremendous impact. In fact, literally, we were only thriving on some amount of remittances, which was happening, which was tranche payment or people paying for the first term with -- not having a clarity on when they will be traveling. So April and May was something which was very worrisome. But June, things had picked up in the remittance and the export front. Now things are positive because with domestic travel starting in, we were able to revive our exports. So our outlook is like this. We feel student segment, there has been a blip because there was some uncertainty with travel to U.S., because there was some regulations, which created some confusion in the minds of people, whether they will be having visa or not, if there is online classes, all those stuff, which created some amount of uncertainty, but now those uncertainties are getting removed. So what we feel is students travel -- of course, I anticipate it has come down by around 70%. Roughly, it's a guestimate, you can say. I don't have statistics at this juncture, but we see the impact was around 60% to 70%. But now we feel people have started going. In fact, this week, I got some inquiries where people are -- students are going in the bubble flights also. So what we feel is there will be -- students travel will pick up very fast. Whatever we lost in July and August, we expect that, that business or that travel will happen in January -- December, January, where people will -- they will go into that offtake. The students will go there. So it will be a movement. Now when it comes to that part, as far as wholesale comes, as and whenever international travel -- now itself with domestic travel, some amount of wholesale activity is happening because of the export of foreign currencies. Once travel starts, wholesale will resume. Corporate travel will resume gradually. So corporate travel we feel step-by-step will resume. There was some uncertainty on H-1B, which also caused concern. But luckily, there was no travel, but now that uncertainty is also reducing. So we feel a gradual resumption in corporate travel, which may take over a period of 6 to 9 months. Leisure is the one which we don't see much happening until March because that is one segment where the season is lost. People may again try to travel by March because there is talk of vaccine and all those stuff. And since India also has COVID cases. Now people have started traveling. If you look at overseas, people have started traveling. We feel leisure is the one, which may take some time to revive. But because -- but that also will revive because many people who canceled their trips today are left with vouchers only. At some point when things become better, we expect them also to travel again. So the leisure part of it is what we feel will be the last one. Before that will be corporate. We feel reasonably confident that one of our key focus area, which is the student segment, which contributes nearly 60% to 70% of our revenue, will be something which will revive much faster. This is our outlook at this juncture based on trends which we are getting. As regards the other question which you are asking, see, Yes Bank, we have a relationship with Yes Bank for 2 major activities. One is our outward remittances, which continues on a very strong basis; and our [ Smart Currency ] card is through Yes Bank only because they were the people who were ready to come forward and integrate digitally. So that relationship still continues. Post the moratorium when, of course, Yes Bank came in, there has been good support from Yes Bank also for the program, despite not being -- not much sales happening. So we feel confident about our relationship with Yes Bank. As related to tie-up from SBI perspective, that's a different ball game. Now SBI also has a card. Whether we want to tie up on a distribution arrangement, that is a separate thing. But our relationship with Yes Bank is pretty strong in 2 of the key areas which we are focused on.

[Operator Instructions] The next question is from the line of [ Ayush Tandon ], an individual investor.

Yes. So this question is bit basic, but I'm new to reviewing this company. I -- what I wanted to understand is what is the differentiator that Wall Street brings on to the table in terms of whenever say a student wants to go abroad for studies in terms of buying his ForEx or transferring money? So where is it that the bank cannot fill in the gap or say a BookMyForex.com or any other player doesn't fill in the gap, and where does Wall Street come into the picture?

Okay. So I will give you a short brief about the business. So we are a category called Authorized Dealer Category II. So above us is the banks, next is the AD II, third is an FFMC. Now so banks have been traditionally trying to fill -- banks were there. If you look at everything, every need of -- in the financial side could be met by a bank. But since the banks were not able to meet the need, maybe in terms of service, in terms of pricing or in terms of their dealings with noncustomers, they were -- the fintech has evolved. If you look at it, many fintechs are there because there were gaps that bank could not provide that service. So money changing as an activity became prominent in '90s, with a goal that money exchange services should be available across India. RBI came out with this money exchange license. Even though the activity is prevalent from 1920s onwards, what -- during liberalization time, the money changing as an activity was given a thrust with a lot of people coming in to provide the exchange facility for travelers, both in terms of who travel overseas or in terms of traveler who comes to India and needs encashment facility. So if you look at '90s, people had to stand in a queue to get foreign exchange. In fact, you have to stand in front of Thomas Cook or a bank and your ForEx -- acquisition of ForEx be a one day exercise for you. That had all transformed over the last 20 years with money changers coming in and filling the fundamental gap of service. Now in 2006, RBI came out saying that besides foreign exchange, you can do remittances also under certain categories of LRS. Earlier we were only selling traveler checks and cards or currencies. 2006 money changers could upgrade to become AD II player, where besides currencies, cards, we could also do remittances. This ensured that we now got into a space, which was a growing space like overseas education, travel, immigration, et cetera. So what do we do fundamentally is we bridge that gap where banks are not able to provide -- banks don't provide you doorstep service. They many times don't hold you. We provide all these things at a very competitive rate. We handhold you through the transactions. That is why even a living -- family maintenance expenditure, which is not a AD II transaction sometimes comes to us, and we do it as a referral with the bank because they feel that they need to be guided. So one of the things we do is we provide service, we provide the best pricing. Today, we also have provided them with digital platform. Now what we are trying to do is we are trying to make it as intuitive as possible. Coming to the question, then what difference are we from BookMyForex? Today, BookMyForex has acted as an aggregator. We -- as of today, Wall Street has been a traditional AD II player now trying to transform into a digital player. BookMyForex was a digital aggregator who has now got FFMC license and who has to tie up with a bank and refer a remittance or education transaction. It's not its own transaction. So whereas this is my own transaction. So today, BookMyForex technically cannot take the payment. He routes it to the bank. Whereas here, I take the payment. It's my transaction, which I do, which I then finally execute it to the bank. So today, BookMyForex has the digital interface. But it's an FFMC. We are an AD II player. Now we are all catering to similar segments. Finally, what is important is the service we provide, the convenience and the pricing at which we do that makes us different. And that is what we have tried. Traditionally, we have tried to create -- we have a base because we are a 30-year-old company. Now we are also saying that, okay, we are -- in the last 2 years, that was our foray. That okay, now let's go digital. And first, we concentrated on B2B, where we launched a corporate, then agent platform. Now we are concentrated on the B2C, where if you see, we have launched our app. And we are trying to build in all the KYC also into that, so that it becomes a very, very kind of an intuitive experience to the customer.

Okay. One just follow-up question on that. Assuming a normalized quarter, not in a COVID scenario, what was the revenue mix between say a student money transfer versus a prepaid card, sir, which somebody is taking to for leisure travel or the corporate book that you spoke about?

So it depends on the company. So company to company, the focus differs, right? So if you look at it, we have always concentrated on 2 priority segments, corporate and student remittances. There are companies which concentrate on travel remittance, which is a low-margin business. There are companies which concentrate only on wholesale business. So Wall Street [Foreign Language] focus has been always in terms of our remittances, in which student remittances, I think, comes to around 80% of our overall remittances. And then we have corporate travel, which is a key for our card sales. We have never been very -- because we didn't have a B2C platform. So we were only tied up with a few agents to do the retail part. So as a company, we had focused more on corporate. We are focused on strategic tie-ups for our remittance. HDFC Credila is one of -- one such tie-up. And wholesale is something which we do as a specific -- as an activity where we don't concentrate too much on that because we feel it's not very strategic for us, because we identified strategically student business and corporate business was the big thing for us. And in this, if you look at it, remittance business of student is the big one. Because if you look at it from a market size perspective, also, it's $3 billion to $4 billion. So that is why we have concentrated on, it's a niche segment, and we have tried to identify ourselves as a niche moneychanger for students and corporates. So I cannot literally -- apple-to-apple, I cannot compare myself with Thomas Cook. Their priority may be different. Or Ebix, as their priority may be different. Ebix is a physical company with 300 branches. I have tried to be a digital tech company with 18 branches.

[Operator Instructions] As there are no further questions from the participants, I would now like to hand the conference over to Mr. N. Srikrishna for closing comments.

Yes. I would like to thank, everyone, for joining us on this call. If you have any queries, please visit our website or you can reach out to our Company Secretary. I now request the moderator to conclude this call. Thank you.

Thank you very much, sir. Ladies and gentlemen, on behalf of Wall Street Finance Limited, we conclude this conference. Thank you all for joining us, and you may now disconnect your lines.

Thank you.