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

Ladies and gentlemen, good day, and welcome to the Investors Conference Call of WSFx Global Pay Limited, formerly known as 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 activities as on the 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 situation 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, CEO and Whole Time Director; and Ms. Pooja Mishra, Chief Financial Officer. Thank you, and over to you.

Thank you. Good evening, everyone. This is Srikrishna here, along with Pooja. And it's a pleasure to connect once again with our investors after a long time and present to you the latest about the company, an update on what has been happening over the last 1 year. So as always we'll start with a small presentation of the company and then talk about what we have been doing, the strategic direction, digital initiatives, et cetera. We already uploaded the presentation on the company's website as well as the BSE website. Now I quickly run you through the presentation of the company. So we always start with a brief about WSFx Global Pay Limited. We are an RBI authorized AD category II dealer. And the company has got a vintage of 30-plus peers listed in BSE. We are also an ISO27001 certified company. Our main line of business is to provide foreign currencies, ForEx cards, outward remittances under LRS. And our key customers include Leisure, Corporate and Student Segment. So primarily, we contact these outward remittances for banking partnerships with banks -- leading banks like Yes Bank, Indusind Bank, HDFC Bank, IDFC Bank, RBL Bank, ICICI. We have a range of companies or banks which we deal with. We also offer our WSFx Smart Currency Card in partnership with Yes Bank. It's a Visa prepaid multi-currency card, which has both multicurrency wallet and INR wallet along with the companion app. We also have digital solutions for all customer segments in the ForEx ecosystem. We have a platform for corporate. We have a platform for agent partners. And also, we have a super app for our leisure and student segment. From a customer perspective, we have 1000 plus customers. We have key corporates like E&Y, Tech Mahindra, Siemens, L&T, Mphasis, Titan, Hexaware as some of the key corporates. We also deal with HDFC Credila, which is one of the largest student loan provider. We conduct this business through a network of 16 branches pan India, and we have a 290-plus strong team as of now in the company. Now we go to the business highlights part. So in the last 1 year, we can say that we have successfully navigated the pandemic impact on our business. Now obviously, the steps we have taken has also ensured that we are able to adapt to the new paradigm. One of the key focus for us has been retail remittances, ForEx cards with a key focus on corporates and student segments. So besides the digital platform to signify the company's intent and the strategic direction, we rebranded ourselves as WSFx Global Pay Limited last year. So that it signals to the market that we are a ForEx Fintech, specializing in cross-border payments. And we are happy to tell you that for the last 4 quarters, we have been profitable, starting from Q2 of last year and up to Q1 results which we declared 3 weeks back. We are in the profits, which is also gives an indication that now post the impact of -- prolonged impact of pandemic, we are now getting back into a kind of a stable mode and now the future is optimistic. We can say from a survival mode, we have now moved to a growth mode. So we feel we survive, we became profitable. Now it is growth for the company. So during this last 2, 3 years, what has changed is, of course, the company's focus has been consistently on students and corporate business. And we have seen a surge in student business. In fact, people who travel overseas for their education, we have seen a good improvement there. And the company has also been able to get into good partnerships there and cater to a sizable amount of student population for their ForEx and cross-border remittances. Corporate partnership is also one area where thanks to the platform, which we have and also the solutions we have. We have been able to onboard a lot of big corporates and service their business travel requirements. So coming to the next slide. In view of this resurgence, which we see in the market and the strategic position the company has both in terms of the omnichannel company with a network of 16 branches and digital platforms. The company, the Board has felt that the company has to look at raising growth capital, which was decided that we have to look for capital to in various forms. One, to take care of the working capital requirements of the company. Because of the growth in business, there is also a need for higher working capital. Second is geographical expansion, the need to open some key branches across India, where there is a good potential and the need for having a physical branch is also felt. So there will be some amount of geographical expansion. Technology is very important for the company because last year, say, it has been a strategic vision of the company to get into digital via ForEx Fintech. So investment into technology and building new platforms catering to newer segments is a constant endeavor for the company. When it comes to -- also -- we are also looking at new products like we have our own co-branded card with Yes Bank, but the company plans to also get into direct issuance of ForEx card and also is looking at PPI, so that we can unlock more value and drive the growth. So coming to the next slide. It's a brief about the digital transformation, which is something we have always talked about in the last couple of years that consciously, we want to be a digital company, transforming the ForEx ecosystem. So we can now say that we are innovative. We have had this vision for digital and also build our solutions with the core value of trust, transparency, convenience and compliance. So what we have understood is digital is the way to go. It also allows us to expand our reach because today, we have 16 branches tomorrow, we may open a handful of branches, but then to have a pan India presence, we need to have only expand through our digital solutions and ensure that our contactless solutions provide a much larger reach, which is scalable and is more cost effective. Also -- this also allows us to customize our products. Today, we have a corporate platform or multiple platforms. We have multiple workflows. We are able to customize our solutions as per our customer needs. So overall, today, we have a D2C solution, which we call as WSFx Global Pay App and Web portal, which is a kind of a ForEx super app for customers to manage their card, buy ForEx and also send cross-border remittances under various purposes, under LRS. We have a WSFx Smart Corporate platform with a lot of large corporates have been onboarded in this platform. This is a very, very effective solution for ForEx ordering tool for the corporates, which also provides them multiple workflows, rate audits, reconciliation, et cetera, and has been welcomed by the market. We also got one platform for a region partner called WSFx Smart Agent partner, which allows the agent to give us leads, also place an order for his customers. Quickly coming to the next slide, where we talk of our Smart Currency Card. We launched this card just before the pandemic. After 2 long years of the pandemic impact last one and half years, we've seen fantastic growth in the WSFx Smart Currency Card, which comes with the companion app. This card has 14 currencies, foreign currencies and one -- and also has got an INR wallet. It allows a wallet to wallet transfer. It's a Visa card, which ensures that there is a worldwide acceptance. It -- also you can encash your INR wallet. Through the smart app, you can manage your card. You can set limit. You can block the card. You can generate PIN, et cetera. This card has been a success story, and this has also given us the confidence to look at our direct card issuance. Coming to recent launches. There were 2 major launches in the last 6 months. One was the global WSFx Global Pay app. This is what we call is the next iteration of our WSFx Smart FX app. So this ensures that the customer can buy ForEx, sell ForEx. He can manage his card. Also he can get his travel insurance done. He can also apply for a GIC account, block account. So we are trying to have a lot of services inside the app, which will ensure that it meets the requirement of an international traveler or a student. So that is why we are, in fact, adding more and more solutions and products inside that, which ensures there is excitement for the student and the leisure customer. One more launch we talked about is the WSFx Global Pay platform for Agent Partners. So we have one platform called Smart Agent platform, which allows an offline agent to provide ForEx services. What amount agent who wants to provide online ForEx services. And that is what the Global Pay platform, WSFx Global Pay platform comes into picture. This allows the customers to offer foreign exchange and remittance services through his own online offering. It's a plug-and-pay solution completely powered by WSFx, wherein any travel aggregator or anyone who has a customer base wants to provide an online offering can integrate the solution and quickly offer foreign exchange solutions and relevant solutions. We feel this is a major solution. We see a lot of growth potential for this solution. Quickly coming back to the results. So we have talked about '21-'22, '22-'23 and first quarter. You can see '21-'22, we were at a PAT loss of around INR 4.5 crores. Last year, we became profitable. We were at a PAT of INR 1.23 crores and Q1 is profitable this year also. So if you see last 3 quarters, that Q2, Q3, Q4 of last year, we were profitable. In fact, from a GTO perspective, we were at INR 2,122 crores in '21-'22. We moved to INR 2,959 crores. So we saw a good growth in GTO. From a gross revenue perspective, last year, we were at INR 46 crores from the previous year of INR 28 crores. And you can also see Q1, there was a loss last year, but Q1 is profitable. Q1 is considered one of the weaker quarters for us. And all the other quarters, we are expected to better than Q1. So in the next slide, we show you a graph on the revenue from the base year and the selling and administrative expenses. You can see there is a growth in revenue. Obviously, the spike is on every Q2 is supposed to be a student season, and we always see a spike in Q2 and Q4. So -- but you can see our Q1 numbers have gone up. You can also see we have been able to keep our selling and admin expenses constant. So coming to Priority Customer segments. Again, it's being taken from the BSE and we started the ForEx business. After the slump in the -- during COVID, there has been gradual growth last year. Now in fact, that the growth has really spurred and we are expecting our prepaid card business, we will see substantial growth in the coming quarters. From an outward remittance perspective, you can see from last year's Q1, there has been a growth. And as I said, this outward remittance business, which is predominantly a students-driven business as its seasonality, and Q1 is generally not a high season, whereas Q2, Q3 and Q4, in fact, you'll see better numbers than Q1. Because of our business and our focus, there is a seasonality to it. Now coming quickly to the financial results as we have -- I already mentioned last year was profitable. We closed the year in profits. This year, we have started in profits, and we look forward to a good year ahead. And we also thought this was the right moment because during COVID, we had nothing much to report in terms of numbers of business. So last year, we stopped the investor call. But from this financial year, we want to start the practical investors call so that we can update the investors with what is happening in the company. And as I told you from survival to growth, that is the story. So we will be happy to come back every quarter and discuss about our results and our growth plans. Thank you for your support during this period, and we look forward to creating value for all of our investors. With this, I come to the end of the presentation. Now I'd like to hand over the conference to the moderator. Thank you.

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

Congratulations. Last couple of years, a lot of good work put in technology, I think, now starting to pay off. I have a couple of questions. One is a clarification. As per your annual report, we are having around -- I think INR 4-point-something crores of fixed deposits. And then we have another I think, INR 14-odd crores in fixed deposits, which are a maturity of less than 1 year. Is that correct? Approximately.

You can just ask the question then we will respond Nimish.

And yes, so we are sitting on INR 20-odd crores of fixed deposits. And then why are we looking to raise capital? We already have some money. So -- why do we need more capital? No, I think that's really what it is. I mean.

Yes. So coming back, as I said, see, there are 2 lines of business which we do right? One is the retail business, one is the corporate business correct? So what was happened is earlier than we used to do businesses, there was line of credit from the bank. Post-COVID, the banks have not given us any line of credit, it's a 1:1. So essentially, when we drive our corporate business, or when you want to, let's say, invest into a newer brand or invest into a new product, there is also one particular cost involved in building that asset. That is one part. Second is also we need working capital for our corporate business. Which -- because that is an area that we feel besides the student business, corporate business, the key business for the company. So that is where we would like to deploy our working capital to grow our corporate business. So that is where we need capital because as of today, when the pre-COVID times may, we used to get 2x limits, 3x limits from banks. But as of today, we don't get that sort of a limit with a 1:1 limit.

So we are looking to raise how much capital?

That is something which at this juncture, I would not want to disclose because we have not finalized, but there is an idea on what we would like to do. Maybe later, we will discuss with you on that.

Sure, sir. And the fixed deposits we hold?

Fixed deposit is there. The most of the fixed deposits are kept, and we have a line of credit from the bank for the same. So, it is like either we use the fixed deposit or create a line because we are also negotiating with them to -- see, once now the results have also become positive because as you said, as you see 2 years, this industry was suffering. Most of the companies are making losses. Banks, they're not taking an exposure on the industry. But now we feel confidence is down the line, that will also change. So we -- as of today, we need these limits because to fund the card 24/7, we need to have limits with the bank. So essentially, when you want to activate a card. Today, our cards gets activated 24/7. Like even at midnight, they can activate the card. There should be a line of credit available for me to fund the card because I cannot wait for next day morning to provide the bank with the money.

[Operator Instructions] We have the next question from the line Lalit Agarwal from Krishna Agency.

Sir, in your recent announcement, you have mentioned that you are going to open a new branch in Surat, in Gujarat. Can you update on that all these 3 branches has been started?

So actually, we have applied for the license with RBI. So our process is, one is obviously before applying for a license, we have to get it approved by the Board. And then we have to apply for a new branch license. In fact, the application has gone through. We are expecting -- once the RBI approves it, we will start the branch.

When you are expecting this license -- these branches could we start in 1, 2 months? Is a timeline?

Certainly because RBI generally take anywhere between 4 weeks to 6 weeks to approve.

And this property you have is taken on lease or it's owned by the company.

No, no. All branches we take on rental only.

The next question is from the line of Imran Contractor from Quantum Investments.

Sir, can you update what sort of upscaling we can do in our business once we get the right kind of funds which you are planning to raise -- so what sort of a size should we look? And what is our competitor size currently?

So if you look at the overall market landscape, of course, the banks are our major competitors. Obviously, they hold the major part of the business, whatever we are getting is part of the bank's business only. Because the cross-border remittance is a pure banking product. From an authorized dealer perspective, there are companies like Thomas Cook, Ebix, now WSFx Global Pay. There are a couple of more companies like TransCore, one or two more companies are there. So this AD2 is dominated by only very few players. So that is where the opportunity is, and it's a very highly regulated space. Now the mark -- as I told you in the presentation, COVID has also ensured that the business dynamics has changed today. The focus is more on retail and corporate business no longer on wholesale. WSFx took a call 2 years back to not concentrate on wholesale and focus on retail students, digital and that has paid off. So when we -- why do we want to scale up? We want to scale up. One is obviously students business, where it's constant, you can say, focus for us to become better. Every year, we have been showing growth. You can see for the last 5 years, we have really shown growth in this segment. Corporate segment, again, it is a little CapEx-driven business because there is a credit period involved in the corporate business. That is, again, but a business which is safe. Which is also, you can say, if you are able to handle it properly, it's a very good business to be in, both in retail and corporate. Retail doesn't have so much of a working capital requirement but corporate, again, there is a good market and a safe business to be in. And one of the things we want to be in corporate business also to ensure that we don't have too much of seasonality because if you look at it, student business is only 6 months in a year. Rest of the time, it's not -- it doesn't peak. So to mitigate the seasonality because now no longer wholesale is a bigger option. It is more about trying to balance between corporate, balance between students and also seeing how through our D2C solution, we are able to get more into the direct customers for the leisure side. So if you look at it where do we want to invest in, obviously, region is important because there are markets like Gujarat, there are markets like Andhra where good student business is there. If you know how students travel, right? U.S. -- people go to U.S. from -- more from Andhra Pradesh. Canada, say people travel for studies to Canada from Gujarat and Punjab. So that is what we felt that we need to expand our network a little more. And that is where as first step, we are opening 3 branches in Gujarat. That is one part. Second is -- this year, you will see us spending more on our marketing efforts. That is where we are focused on our Super app transaction. We see now remittance transactions coming through because earlier it was more a card-based transaction which used to come through. So we would be creating more visibility on our D2C offering also besides working capital for improving -- increase in our corporate base. So this is how we want to look at. And obviously, new product launch, which is very important, issuance of our own ForEx card, which can open up newer revenues of distribution for us and also PPI. These are all other areas where we want to focus on.

So if we issue our own ForEx cards, that means the float will remain with us. That means that the float will remain.

The float is a customer float, it won't remain as such. So what happens is, even in INR products, if you look at it, that will always be in an escrow. What happens is, this allows you -- see today, you are a distributor, right? -- for your bank, you are a distributor. For Yes bank program also, we are a co-branded arrangement. Our own card gives you a leverage to have -- today, we cannot do further distribution of the card. We can only sell. If I launch my own card, which is allowed in my AD2 license. It allows me to launch the own card with me having the bill. Okay. So that allows me -- today, besides banks, the only people who issue their own card is Tomas Cook, and I think Ebix has started now. So what -- we want to be in that space also where we become issuers because today, banks are not focused in this area.

Right. Okay. So sir, this will require a large capital requirement to be kept or something like that?

Certain amount of capital is required. That's what I told you, one of the reasons for capital raise is besides working capital, other areas also, this needs such an amount of capital. But we feel not very large capital, but a certain amount of capital is required. Depends on how quickly you want to scale up. We have got a decent plan and we feel x amount of capital is required. That's why we want to get into this fund raise also.

Sir, what would be the net cash now in the balance sheet. Net cash and bank balances?

Yes, we have a funding position of almost -- we have INR 19 crores as a FD. This is there, but in the balance sheet, you can see it separately in the current and noncurrent account. So -- and otherwise, we keep small stock positions. We don't keep very high stock.

As there are no further questions, I would now like to hand the conference over to Mr. N. Srikrishna and Ms. Pooja Mishra for the closing comments. Over to you.

Thank you. Thank you. Thank you, everyone, for joining us for this call. As I said, from this quarter, from this financial year onwards, we will be conducting quarterly calls to update our investors on what is happening in the company and the financial performance of the company. We thank you once more for all the support during this period. You can reach out to the company secretary in case of any specific queries. I now request the moderator to conclude this call.

On behalf of WSFx Global Pay Limited, that concludes this conference. Thank you for joining us. You may now disconnect your lines. Thank you.