The past two years have been a period of uncertainty. With thesituation now getting substantially better from where we were I feel optimistic aboutopportunities and growth on the road ahead.
It gives me great pleasure to share that the Centrum Group completes 25years of successful operations this year. From small beginnings in 1997 we are today aleading provider of diverse financial services. Besides sustained growth in ourtraditional businesses this year marks our foray into the highly exciting Banking space.I am grateful to our Chairman Emeritus Chandir Gidwani for his unflinching supportand guidance our Board partners and the dedicated Centrum team for their contribution inour journey so far.
In the past decade we seeded and grew many businesses madeacquisitions expanded internationally and raised growth capital from reputedinternational funds. Changing market conditions also led us to divest some of ourbusinesses at opportune times. However a Big Win has been us acquiring a coveted Bankinglicense last year. I am grateful to the Reserve Bank of India and other regulatoryauthorities for giving us the opportunity to build a bank ground up and having faith inour capabilities to bring relief to the stakeholders of the beleaguered Punjab &Maharashtra Co-operative Bank (PMC
Bank). We aim to build a New Age Digital-first Bank driven throughstrong corporate governance technology and customer-centricity.
Dear Shareholders FY2022 has been challenging. Two lockdowns extendedwork from home along with a high infection rate had a very significant impact on liveslivelihoods and businesses. The second wave of Covid brought untold misery on many. Eventhough India is one of the fastest-growing global economies it faces headwinds. While theeconomy grew at 8.7% in FY 2022 a contraction is expected in the current year (2022-23)as the impact of the Russia Ukraine war weighs heavily on commodity prices anddisruption of supply chains. Even before the war began inflation in many countries hadbeen rising due to supply-demand imbalances during the pandemic prompting a tightening of
A Big Win has been us acquiring a coveted Banking license last year. Iam grateful to the Reserve Bank of India and other regulatory authorities for giving usthe opportunity to build a bank ground up and having faith in our capabilities.
monetary policy. The recent lockdowns in China restrictions on PalmOil exports by Indonesia and limited Gas supply from Russia could cause new bottlenecksin global supply chains and have led to record inflation in India.
The RBI announced a 40 bps rate hike in May 2022 and another 50 bps inJune 2022 to tackle inflation and further hikes are expected during FY2023. The recentexport duties levied on metals and select food grains should incentivise manufacturers tosell more domestically and lead to some cooling off in inflation. With India nowadministering booster shots the overhang of the pandemic has reduced considerably and weanticipate a pickup in demand albeit at a slow pace. The commitment and dedicated effortsof every Centrumite during the past months have helped our businesses overcomechallenges nurture strong relationships with clients while simultaneously building onnew opportunities.
I now share with you the highlights of your Company's performancein FY2022.
In the face of widespread change your company has shown strongresilience adaptability and emerged stronger.
Fee-Based Businesses Sustained growth driven by strongerindustry relationships widening product portfolio and increased trading volumes
Capital markets performed well driven by increased capital raising donethrough IPOs and investments by PE funds in emerging companies. Our Investment Bankingteams took advantage of improved sentiments worked aggressively and did well. The
Infrastructure Advisory and Debt Capital
Markets teams together closed several deals. All teams have a strongpipeline of transactions in FY2023.
The Wealth business had an action-packed year and saw a significantincrease in its revenue and profitability driven by diversifying income streams improvedproductivity and greater cost controls. Presently it handles Client Assets of about I35000 crores a significant increase over the last year. The business is working towardsincreased digitisation and improved analytics to drive superior customer engagementenhance scalability and customisation. A sharp focus on growth and improving operationalefficiencies through increased use of technology in servicing clients led to prestigiousrecognitions from respected
Industry platforms such as Asia Money and The Economic Times alongwith being recognised as a Great Place to Work! Our Insurance Broking business which hasgreat synergies with the Wealth business too fared well and delivered stellar growth inrevenue and business premium.
As the lockdown continued through most of the year our Institutional& Retail Broking teams maintained their outreach with corporates and investors withinthe country and abroad. With markets hitting fresh highs and a spurt in capital marketactivities the Institutional business saw a sizeable increase in trading volumes andempanelments. It also increased the number of stocks and sectors under coverage along withgreater traction in its international outreach to clients in South East Asia USA UK andEurope. Our teams played a key role in bringing corporates and investors together byhosting several sector-focused investor conferences which were well received. Our RetailBroking business revamped its online trading platforms to make them more customer-centricresulting in increased customer acquisitions.
The Alternative Investments vertical manages our Private Equity andStructured Credit portfolios. Owing to an increased demand for private capital CentrumCredit Opportunities fund made four new investments taking its total tally to twelveinvestments. Kalpavriksh our PE fund too is performing well as three out of its sixportfolio companies managed to raise fresh capital at higher valuations. Additionally weare in the process of introducing a new venture debt fund.
Affordable Housing Finance Well capitalised and widening itspresence
Our Affordable Housing Finance vertical had a slow start owing to thesecond wave of the pandemic and the subsequent slow down in real estate sales. However asthe situation eased the business ramped up its efforts significantly both in freshdisbursals and collections and recovered strongly. We established a presence in UttarPradesh and now operate in seven states. With the pandemic in check we see a bigopportunity in the low to middle-income segments in tier 2 & 3 cities driven byfavourable interest rates and support extended by the Government through its variousinitiatives.
MSME & Micro Finance
During the first half of the financial year our MSME and Micro Financelending businesses faced headwinds due to the pandemic as business activity slowed downand borrowers opted for moratoriums. However both businesses showed resilience and workedtowards maintaining asset quality while limiting fresh disbursals. We subsequently mergedboth businesses with Unity Small Finance Bank for greater synergies and access to theBank's deposit base for further growth.
Building a New Age Bank. Bringing Relief to a Beleaguered One.
Dear Shareholders as shared in my last message all of us at Centrumfeel a sense of pride that the RBI issued a Small Finance Bank License to our fast-growingand profitable NBFC - Centrum Financial Services Ltd demonstrating faith and confidencein our capabilities. Besides enabling us to reach out to a wider customer base andgeographic reach it helps in obtaining capital at a competitive cost thereby paving thepath for sustained growth.
Unity Small Finance Bank (Unity) endeavours to be a truly inclusivedigital bank. Our business model is one of collaboration and open architecture unitingall stakeholders to deliver a seamless digital experience. We have committed capital of RS3000 crores.
During the year our team worked hard to operationalise the bank inrecord time.
A quick turnaround from approval to commencing operations paved theway for the Amalgamation of PMC Bank with Unity rescuing it from liquidation whileproviding stability to its employees and protecting customer deposits. An existingdepositor base Centrum's profitable MSME and Microfinance businesses a strong Boardled by former CAG Vinod Rai and the highly capable management team have provided aformidable foundation to the Bank that will help scale up operations quickly.
Our consolidated income increased Y-o-Y by 37% to RS 703.64 croreswhereas standalone income grew Y-o-Y by 20% to RS 66.19 crores.
We have taken a strategic call of writing off the entire goodwill ofPMC Bank along with making substantial provisions against their loans. This along with thesignificant cost of amalgamating PMC Bank with Unity Bank impacted our profitability.
Centrum Foundation Health Nutrition & Well Being of theUnderserved
While we continue to grow our businesses with the utmost transparencyand high standards of corporate governance we believe in supporting the communitiesaround us through our CSR arm the Centrum Foundation whose activities are focused onimproving the health nutrition and well being of underserved fellow Indians.
The pandemic pushed the world into a long and challenging battle. Evenas the situation improved the less fortunate remained vulnerable and saddled with reducedincomes lack of groceries essentials and medical support. Besides providing financialassistance to many impacted we supported them with essentials and groceries that weredifficult to procure during the lockdown.
The Foundation also procured Oxygen Concentrators to address the acuteoxygen shortage during the second wave of the pandemic. This was available for use for allin need including our staff members and their families.
We sponsored Cochlear implants for hearing impaired underprivilegedchildren.
These children below 5 years of age belong to poor and marginalisedfamilies. Surgery at an early age helped restore their hearing and enabled them to startattending school helping them to lead a normal life. We also tied up with the Paediatric
Department of Sion Hospital in Mumbai to offer free OPD treatmentmedicines and medical devices to children with pulmonary complaints such as asthmarequiring long-term treatment.
The Foundation also assisted the Shanti
Shankalp Kalyankary Nyas a non-profit organization in Ballia UttarPradesh to set up a Vision Centre in Tutuwari a remote village in Ballia. This visioncentre will provide a range of eye care treatments to the catchment area.
Our support to old age homes and meals to families of cancer patientsbeing treated at the Tata Memorial Hospital continues.
We undertook several initiatives for the well-being and safety of ouremployees and their families. Well before the lockdowns were announced we put most of ourstaff on Work from Home. Only those in essential service functions attended office thattoo with strict guidelines. Regular checks were done on the mental and physical health ofteams. We arranged a vaccination camp at our corporate office in Mumbai for our staff andtheir families.
Additionally we tied up with an online medical services provider andarranged sessions on mental well being and dealing with fatigue and mental stress broughtby the lack of social interactions for staff working from home.
FY2023 An Exciting Journey Awaits Us
FY2022 tested us in many ways - the resilience of our businesses theagility of our operations and teams our ability to adapt and our financial strength. Withmuch of the uncertainty surrounding the pandemic now factored in along with a slim chanceof future lockdowns we look at FY2023 with renewed optimism. Each of our businesses hasspent considerable time and effort reviewing its growth strategy and streamliningoperations to be better prepared for the vagaries of a fast-changing world.
I look forward to sharing more milestones in our journey in the comingyears and on behalf of the Board take this opportunity to thank our clients investorsregulators and you dear shareholders for the continued trust and confidence in theCentrum Group.
With Best Wishes
Jaspal Singh Bindra