Centrum Capital Ltd

With a large product portfolio, strategic partnerships, wider footprint and thrust on technology, we were able to grow significantly. Our core values of Integrity, Customer Centricity and Trust have helped us stay focused on customer delight.

DEAR SHAREHOLDERS,

In FY 2024, the Indian economy performed well, despite setbacks arising out of the Russia-Ukraine war, Israel – Palestine & Iran conflicts and a muted growth in consumption across sectors nationally. The favourable economic policies spurred growth and liquidity, resulting in healthy earnings growth across sectors. At Centrum, we focused on being nimble and agile, adapting our strategies to changing external and market needs for accelerated growth in our chosen segments. Against this background, I look forward with optimism and excitement to our journey ahead.

In the past decade, The Centrum Group has seeded and grown many businesses both institutional and retail, established a strong national presence and raised growth capital from reputed investors. More importantly in 2021, we took a significant leap by entering the coveted banking space with the setting up of Unity Small Finance Bank – a New-age, that has got off to a very good start. As a Group, we are well diversified across services and geographies to capitalize on opportunities that come our way. I express my gratitude to our Chairman Emeritus, Chandir Gidwani, for his unflinching support and guidance, our eminent Board, partners and the dedicated Centrum team for their invaluable contribution.

FY2024 was a year of considerable action at Centrum. With a large product portfolio, strategic partnerships, wider footprint and thrust on technology, we were able to grow significantly. Our core values of Integrity, Customer Centricity and Trust have helped us stay focused on customer delight. While each business in the Group operates as an independent entity, our teams worked together cross-functionally and leveraged each other's strengths to offer holistic financial solutions to clients.

ECONOMIC OVERVIEW

India as the world's fastest-growing major economy, is at a focal point in its growth journey, moving towards becoming a $ 5 trillion economy soon, on the back of ambitious reforms and a robust digital foundation. Without unforeseen shocks GDP growth for 2024-25 is expected to remain in a healthy 6.5%-7% range. In its interim budget prior to the general elections, the Government announced several measures that struck a balance between maintaining strong fiscal prudence and enhancing growth capex, while side lining populist measures. As always the infrastructure sector got a healthy share of the capex outlay, which will have a direct impact on boosting job creation, supporting start-ups, sunrise and core industries, MSMEs and rural development. A higher than expected capex outlay and a lower fiscal deficit, will aid the continued momentum of the India growth story. I now share with you the highlights of your Company's performance in FY2024.

I am confident that his rich and vast experience in managing High Net worth client segments in Private Banking will add immense value in shaping the business' long term strategy and taking it to greater heights.

STRONG GROWTH MOMENTUM

Optimism prevailed in the capital markets during the year, driven by India's macroeconomic stability, a shrinking fiscal deficit as a proportion of GDP and a stable rupee. Our Investment Banking teams assisted corporates in financial management and raised growth capital through primary and secondary markets. Our Equity Capital Markets (ECM) and Corporate Finance teams worked on multiple transactions with marquee clients including the IPOs of JG Chemicals Ltd. and Popular Vehicles & Services Ltd., both of which received significantly high subscriptions. It also advised multiple corporates across QIPs, Buybacks, Open Offers and Rights Issues including the open offer of ConAgra Brands sale of 51.77% stake in Agro Tech Foods Ltd. to a consortium of Samara Capital & Infinity Group. The Debt Capital Markets (DCM) team worked closely with Private and PSU Banks, NBFCs, AIFs and Credit funds to successfully close mandates on restructuring, growth financing, refinancing and special situations. The Infrastructure Advisory team had wins in Roads and EPC construction and continues to engage with corporates across ports, renewables and green energy. All teams have a strong pipeline of deals in FY2025.

NAVIGATING CHANGE. BUILDING FOR TOMORROW.

The Wealth business remained focused on building a larger revenue book, improving productivity and undertaking greater cost control measures. We welcomed industry veteran – Sandeep Das as the New MD & CEO. He comes with a proven track record of over 30 years with global private banks, introducing strategies for driving business growth in India and overseas. I am confident that his rich and vast experience in managing High Net worth client segments in Private Banking will add immense value in shaping the business' long term strategy and taking it to greater heights. Presently it handles client assets of over H 39,000 crores. A sharp focus on growth with improved operational efficiencies through better use of technology got the business prestigious recognitions from respected Industry platforms such as Euro Money and The Economic Times.

GREATER OUTREACH DRIVING TRACTION

Our Institutional & Retail Broking teams had an eventful year with initiatives for increased outreach to clients within India and abroad. The Institutional business increased the number of stocks under coverage to offer a wider and balanced mix of scrips. It strengthened its Research and Sales teams and increased investments to improve its backend technology. Its international outreach to clients in South East Asia, USA, UK and Europe also gained significant traction. Their flagship investor conference – Orion along with several regional focused dealer conferences, were well appreciated by investors. The Retail Broking team launched its well researched digital proposition - Centrum GalaxC, targeted at the Do-It-Yourself (DIY) savvy Gen Y and Gen Z population. It also launched a brand new version of its mobile trading app, Centrum GalaxC Invest offering equity trading, mutual funds and IPOs initially. Going forward the business will cross leverage synergies with Unity Bank to offer a 3-in-1 product combining trading, demat and bank accounts under a unified platform.

OPPORTUNITIES

The Private Credit business had an eventful year, with significant developments. Building on the success of its first fund, it launched its second fund – the India Credit Opportunities Fund II that achieved first close in August 2023. The Fund has made substantial progress in a short span with five investments aggregating to approx. H 600 crore. However the milestone moment for the business was welcoming industry veteran and former CFO of Reliance Industries Ltd – Alok Agarwal as an Equity Partner. Alok is a highly respected professional with an illustrious career spanning over four decades. His impeccable legacy, rich and vast experience and track record, will help us accelerate growth and create value for both investors and portfolio companies. Modulus Alternatives also welcomed three seasoned banking veterans from SBI as advisors - Raghavendra Rao, former Deputy MD; Narayanan Sadanandan, former MD & CEO, SBI Pension Funds; and Anoop Krishna, former CGM of the Corporate Group. With a highly respected and seasoned leadership team and investment philosophy in place, I am optimistic that this business will grow well in the years ahead.

WIDENING ITS PRESENCE

Following the acquisition of the business operations of South India-based NATRUST, the Housing Finance vertical focused on consolidating its operations in the region, while seamlessly integrating the team within the larger Centrum ecosystem. This concerted effort facilitated the streamlining of processes, resulting in greater productivity and a steady growth in Assets Under Management (AUM) and disbursals. The loan book stands at H 1,455 crore and is growing well. With our inherent strengths and the Governments continued efforts to promote affordable housing, we see strong growth in the coming year.

GROWTH IN PROFITABILITY, DEPOSITS AND ADVANCES

I am happy to share that, in the Bank's second full year of operations significant momentum was gained across core verticals of business banking, inclusive banking, and branch banking, with notable growth in both assets and liabilities. Noteworthy recoveries in Non-Performing Assets (NPAs), particularly from legacy assets inherited from erstwhile PMC Bank and the Inclusive Banking portfolio, contributed to profitability. We have built a strong digital banking team to efficiently manage business and operations. Additionally, we commissioned pilots on two credit card programs, the foundations of which are in place and will be launched in FY2025. We also expanded our footprint into new states of West Bengal, Telangana, Punjab, Kerala, and Tamil Nadu. FY2025, will see us rolling out our Banking App, with substantial marketing and promotional support, drawing untapped customers to Unity. Additionally, branches will be rolled out in existing and new geographies. We are confident that with our investments on strengthening technology, building brand awareness and creating a customer friendly banking app, we will further scale up operations.

FINANCIAL PERFORMANCE

During the year, we focused on building a granular loan book in our Banking and Affordable Housing finance businesses, while continuing with steady consolidation in our Advisory businesses. Unity Bank's Net Advances grew ~80% to H 7,961 crore, driven by addition of granular loans to MSMEs and Microfinance borrowers. It maintains a well-funded Balance Sheet with Shareholder's Funds at a healthy H 1,907 crore and tie ups for inter-bank credit lines from various leading banks and refinance lines from SIDBI and NABARD. Centrum Housing Finance and Centrum Wealth continued to remain profitable, whereas our Institutional Business (Investment Banking and Broking) too delivered operating profits. Our Consolidated Income for the year ending 31st March, 2024 was H 2,239 Crore up ~64% Y-o-Y.

SUPPORTING THE HEALTH, NUTRITION & WELL BEING OF THE UNDERSERVED

The Centrum Foundation, our CSR arm, has been helping improve the lives of the less fortunate in the areas of Health, Nutrition and Well being since 2017. It continues to grow the key initiatives of feeding the needy, support to cancer shelter homes, cochlear implants for hearing impaired children and more recently the donation of Orthotic devices to physically challenged children. I am happy to share some of the key milestones the Foundation has achieved till date.

100+ Orthotic devices provided to physically challenged children in association with Rise Bionics.

1000+ children supported under healthcare and education initiatives

10 Lac + meals distributed at cancer shelter homes and schools

JOURNEY AWAITS US

With renewed vigour, the government continues to pursue growth initiatives across sectors. The recent statements of Sanjay Nayar, the new president of ASSOCHAM, that India is in a ‘great spot' and could realise a growth rate of 7.6% or more in 2024 are truly inspiring. We feel confident that the initiatives undertaken by us in the recent years position us well to take advantage of the growing economy. I look forward to sharing more milestones in our journey in the coming years and on behalf of the Board, take this opportunity to thank our clients, investors, regulators, and you dear shareholders for the continued trust and confidence in the Centrum Group.