CARE Ratings Limited (CARERATING) Q4 FY23 Earnings Concall Transcript

CARE Ratings Limited (NSE:CARERATING) Q4 FY23 Earnings Concall dated May. 12, 2023.

Corporate Participants:

Mehul Pandya — Managing Director & Chief Executive Officer

Revati Kasture — Executive Director

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

Jinesh Shah — Chief Financial Officer

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

Sachin Gupta — Executive Director & Chief Rating Officer

Analysts:

Rajiv Mehta — YES Securities — Analyst

Varun Bang — Bryanston Investments — Analyst

Deep Sankara Narayanan — TrustLine PMS — Analyst

Hitesh Agarwal — Fair Value Capital — Analyst

Keshav Garg — Counter Cyclical PMS — Analyst

Vikram Kotak — Ace Lansdowne Investment Services — Analyst

Sanjay Kumar — ithought Financial Consulting — Analyst

Devansh Nigotia — SIMPL — Analyst

Himanshu Upadhyay — o3 PMS — Analyst

Presentation:

Operator

Ladies and gentlemen, good day and welcome to CARE Ratings Limited Q4 and FY ’23 earnings conference call. This conference call may contain forward-looking statements about the company which are based on the beliefs, opinions and expectations of the company as on the date of this call. These statements are not the guarantees of future performance and involve risks and uncertainties that are difficult to predict. [Operator Instructions]I now hand the conference over to Mr. Mehul Pandya, Managing Director and CEO. Thank you and over to you sir.

Mehul Pandya — Managing Director & Chief Executive Officer

Thank you. Good afternoon, everyone. I hope all of you are doing well. I extend a warm welcome on behalf of the entire CareEdge family to the Q4 FY ’23 and FY ’23 Investor Call. I trust that each of you has had the opportunity to thoroughly review our quarterly results. Today, alongside the valued senior management of CARE Ratings, I’m interacting with you to provide an in-depth analysis of our company’s performance over the past quarter and to address any queries you may have following my initial remarks. I will also take this opportunity to offer a brief overview of our strategic roadmap for the future. Together, we will navigate through our plans and outline the path forward CareEdge. Thank you for joining us today and I look-forward to engaging in a productive and insightful discussion.

Last year, the world economy was faced with challenges from the geopolitical conflict, high commodity prices, a surge in inflation level, tightening of monetary policy by central banks and slowing growth. This year, the challenges have been amplified by the recent turmoil in the global financial sector. In the midst of such turbulent global conditions, the Indian economy has had a relatively stable footing compared to emerging and advanced economics. The domestic economy is estimated to have grown by 7% in FY ’23 at per the second advanced estimate. While the manufacturing sector faced challenges from high commodity prices and uneven consumption demand, the rebound in services sector supported the growth in FY ’23. Several high-frequency indicators such as GST collections, eWay bill generation, manufacturing and services PMIs have been recording a healthy performance. Consumption demand in the economy has been uneven due to let late rural demand recovery. The recovery in the rural demand is expected to be aided by moderating inflationary pressures and then a bit from the harvest. However, weather-related uncertainties posed some downside risks. Investment in the economy has been steered by the center with a strong capex growth budgeted for FY ’24 while private sector investment has been lackluster overall. However, the ground is set for a pickup in the private capex, it improving capacity utilization level and the private sector showing intent to invest. Given the uncertain economic environment, we expect the pickup in the private capex cycle to be gradual. Retail inflation at 5.7% in March was back within RBI’s tolerance band after staying above the 6% mark for most of FY ’23. A favorable bid, some waning of the pent-up demand and a robust Rabi harvest are supportive of further moderation in retail inflation. However, the stubbornly elevated core inflation above the 6% mark remains concerning. With the full pass-through of the policy rate hike which have been impending, the RBI decided to keep the policy repo rate unchanged at 6.5% after hiking by cumulative 250 basis-points in FY ’23.

The gross bank credit grew by a healthy 15% in FY ’23 as against 9.6% in FY ’22. That includes both period mainly by the retail segment recording 20.6% growth followed by services, with 19.8% growth. Industrial credit grew by subdued 5.7% in FY ’23 as against 7.5% last year. Credit goes to large industries accounting for nearly 75% of the total industrial credit witnessed a marginal pick-up to 3% when compared with 2% last year. Fundraising by businesses showed a mixed trend in FY ’23 with upbeat corporate bond issuances while CP issuances were subdued. Corporate bond issuances crossed a growth of 32%, rising to INR8.5 lakh crore in FY ’23. The higher bond issuances were driven by financial institutions to meet the growing credit demand amid tight liquidity conditions. Commercial paper issuances was subdued on account of sharp increase in short-term interest-rate. CP issuances were at INR13.7 lakh crore in FY ’23, 32% lower as compared to the previous year. On the external front, spillovers from the challenging global scenario continue to pressure merchandise export. However, lower imports on account of easing commodity prices have translated into a moderation in the merchandise trade deficit. The upbeat trend in India services sector and remittances has supported a moderation in India’s current account deficit, thereby reducing our external vulnerabilities. Overall, the Indian economy remains resilient despite several global headwinds. However, the domestic economy will have to tie to the challenges emerging from an uncertain global scenario and some lingering domestic challenges.

Let me assure you CareEdge is prepared to take these challenges head-on. And we have been going the extra mile in further cementing our position in the market. To enhance our brand value, CareEdge has significantly bolstered its outreach activities. Our dedicated teams in economic creating and industry research have diligently produced an impressive number of 155 reports through the quarter. These reports ranging from timely updates to specialized analysis have been widely acclaimed and featured across renown publications. In addition, our senior management, economic experts, sector specialists, industry research team and the business development leaders actively participated in 35 knowledge sharing forums during the review period. This commitment to sharing knowledge and expertise reflect our dedication to fostering growth and progress within our industry. Furthermore, our presence across media platforms has witnessed a remarkable surge in the past year and continues to expand in the current quarter. From our power packed monthly addition of Foresights to engaging blogs and thought provoking podcasts, we are actively disseminating valuable insights to our audience. Continuing the tradition of hosting permanent and insightful event, I am happy to announce that in our 30th anniversary year, we will be hosting our flagship event at major metros in quarter one. The COVID-19 pandemic had prevented us from conducting this in the past few years but we got back on-track in FY ’23 and we’ll continue to provide platform for inspiring discussions and meaningful exchanges, thereby further solidifying our commitment to driving positive changes in our industry. As the late President, Dr. S. Radhakrishnan had said, knowledge is power and the implementation of knowledge is wisdom. And we at CareEdge have been putting into action the growth strategies devised in the past few years. From fresh talent to technological advancement, we are committed to unlocking the immense potential that lies ahead. Over the past few months, I have been personally engaging in regular interactions with the general clerks at the organization to get a thorough understanding of what the future leaders of CarEdge want from the organization and how best we can all grow together. We are also focusing heavily on the human resources front to ensure your company is one of the best places to work at. To support this plan, we have come up with multiple training and incentive programs that have been well-received by the staff.

Now I would like to quickly take you through the CareEdge Group’s performance. Referring to the published standalone results for the full-year FY ’23, CareEdge reported revenue from operations at INR248.8 crores. This shows the growth of 13% as compared to last year where CareEdge reported the revenue from operations of around INR219.3 crores. The growth in ratings income was largely attributed to the robust income generated in the initial ratings business during the year. We hope to sustain this momentum going-forward. Net profit has been higher by 23% at INR103.8 crore in FY ’23. On the profitability front, CARE Ratings has reported a stable operating profit margin of around 46% on a standalone basis. On a quarterly basis, income from operations has increased from INR60 crores in quarter four FY ’22 to INR68 crores in quarter four FY ’23, while EBITDA and PBT reported an increase, PAT has moderated due to impairment of assets and the resulted tax ex-impact in quarter four FY ’23 as compared to quarter four FY ’22. Let us move to the consolidated results. On an annual basis, CARE Ratings reported revenue from operations of INR279 crores which is 13% growth from the last year which was at INR248 crores. Net profit has been higher by 11% at INR85.5 crores in FY ’23. Both the domestic subsidiaries CARE Advisory Research and Training as well as CARE Risk Solutions have been witnessing traction. Under CARE Advisory Research and Training, which we call as CART, we have built robust advisory and research teams that cover over 50 industries with research report. On the ESG front, CART has developed a tech enabled platform, which we call as [Indecipherable] which is an on-demand comprehensive data platform that brings together company, industry and ESG insights. The company has completed the ESG assessments of over 900 listed companies in India across various sectors and subsectors. It’s also been empanelled with the acquisition of mutual funds in India as it is the rating provider for the AMCs.In CARE Risk Solutions, we had improved capital to cater to the demand from the BFSI segment addressing their ALM management and regulatory reporting need. We are in the process of upgrading the existing products in this company and venturing into new business lines like data analytics, banking pollution etc. And further investing in sales franchisees to foray into the global market. Our Mauritian subsidiary, CARE Ratings Africa Private Limited continued its impressive performance during the financial year under review. The company expanded ratings to more than 50 corporate to Mauritius. There has been an increase in awareness about the concept of credit rating among banks and corporate and a clear understanding of the benefits of such trading. Our subsidiary in Nepal, CARE Ratings Nepal Limited also reported growth with 100 new rating assignment executed during FY ’23. The transformative journey of CareEdge has been remarkable progress in an impressively short timeframe. As we move ahead, our unwavering focus remains on enhancing knowledge and productivity, thereby reinforcing the analytical rigor in our rating and diversifying our revenue stream. These strategic commitment will serve as the foundation for our continued growth and success. We understand the importance of continuous improvement and adaptability in an ever-evolving landscape. By prioritizing these key areas, we aim to stay at the forefront of our industry, thereby delivering value to our stakeholders and exceeding their expectation. I must once again thank you all for your continued support and appreciate my colleagues and the team at CareEdge for their unwavering hardwork. Together, let us post ahead with determination and resilience as we unlock the full potential of our organization. Thank you.

Questions and Answers:

Operator

[Operator Instructions]

We’ll take our first question from the line of Rajiv Mehta from YES Securities, please go-ahead.

Rajiv Mehta — YES Securities — Analyst

Yeah, hi. Sir, congratulations on strong results and thank you for giving me the opportunity to ask questions. So, sir, firstly, could you share the volume of debt rated in FY ’23 and FY ’22 and if you can just explain the growth of 14% that we have seen in ratings revenue, which segments of the business drove this, as in between bank loans, bonds, CP securitization, what drove this and which sectors drove this?

Mehul Pandya — Managing Director & Chief Executive Officer

Okay, thanks Rajiv. My colleague Revati would give you the figures on the debt rated. But in terms of the segments I would say the bank loan segment has given us greater growth during the year. As you would know that during the period of higher inflation, generally the bank credit is the preferred route as compared to the capital market issuances. So from that angle, we had seen a good growth on the bank debt side and this is something that we have been disclosing in our earlier quarter results as well. The fact that the higher working capital requirements of the corporates and the other entities, they necessitate a funding and considering the fact that the bank debt continues to remain the principal source of funding for this segment had provided us a better growth for the full-year. Revati, if you can give the figures in terms of the debt rated.

Revati Kasture — Executive Director

Yeah, the debt rated showed an increase of about 78% as compared to FY ’22. So in FY ’23, we rated about INR3.8 lakh crores of debt as compared to INR2.2 lakh crores of debt in FY ’22.

Rajiv Mehta — YES Securities — Analyst

Okay, thank you. [Speech Overlap]. Sure, yeah, yeah I mean, that is for the initial rating side, okay. So sir, looking to looking at this 14% revenue growth in rating revenue this year, which is a significant improvement over the preceding year, would it be safe to assume that we have stabilized our market position and stabilized our market-share and if that is the case, how do you plan to grow and further strengthen the market position going ahead?

Mehul Pandya — Managing Director & Chief Executive Officer

I think, see the trajectory that we are witnessing for us and something of a trend that we have worked out almost since the quarter four of FY ’22 had been on a quarter-on-quarter on quarter, we have been posting good traction as far as the initial rating business is concerned. And that is something we like to sustain for the future. In terms of demand in this thing, and going ahead as far as the future quarters are concerned, this business is principally driven by the credibility that you are posing before the users of the rating, as also the fact that how much of a knowledge domain expertise that you’re able to disseminate which can create the kind of the traction in the market for the users and the issuers who could be coming to you for the rating. So from that angle I think our entire focus, which has been on the quality-led growth, that is serving us pretty much well and we’ll like to sustain this strategy, I’ll not be in a position in terms of forecasting, how much of the growth, which could be there because that is an outcome of so many variables but per-sale but at the end-of-the day what sustains for us in terms of continuing to solidify our position are the key focus areas that we have identified for ourselves related to our overall theme of quality led growth. And once again, I’d like to emphasize that the normal dissemination and the expertise that we are developing in various sectors that is serving us quite well combined with the kind of an focused outreach that we have been having, all through the year and which we will keep on having for the future as well.

Rajiv Mehta — YES Securities — Analyst

Okay and just last couple of things I wanted to check on. One is the employee count as at the end of year. And second is, have we taken any pricing increases through the last year since we have said in our rating process, has there been any pricing increases?

Mehul Pandya — Managing Director & Chief Executive Officer

Yeah, see, as far as the pricing increases are concerned, how we measure it is in terms of that all — every year we continue to map in terms of the number of mandates that we tend to get as against that, what’s the kind of revenue that we are having on a per mandate business and that is showing a consistently improving trend. So we’d like to sustain that for the future as well. As far as the employee count is concerned on a standalone basis, we are slightly more than 500 and on a completed basis we are slightly upwards of 700.

Operator

We’ll take our next question from the line of Varun Bang from Bryanston Investments.

Varun Bang — Bryanston Investments — Analyst

Yeah, congratulations on the steady progress during the year and appreciate the steps that we’re taking to drive the cultural transition. So just two-three questions. First one is on ESG. So what are your thoughts on the guidelines that have come on ESG rating side and what opportunities do you — do we sense for care since it is made part of DRSR. Is there enough scope to add value? Can you share your thoughts?

Mehul Pandya — Managing Director & Chief Executive Officer

Surely. Thanks Varun. See as far as the ESG domain is concerned, and currently the entire activities in this domain, they are being offered from our subsidiary card. Over a period of time, we have developed good insight into this domain and our offerings have been quite well-received in the market. What we see from the guidelines — the full guidelines are likely to come over the next two weeks or a quarter, right. But the overall thing that we are witnessing is in terms of a regulatory requirement emanating in this regard, that should augur well as far as the offerings from our side is concerned because we have been I would say quite proactive in terms of developing an expertise in this domain right from the coverage of almost like 900 plus entities as far as our coverage over platform is concerned going the right up to serving the needs of the BRSR reporting requirements of the various entities as had been outlined by the regulator. Going much beyond that in terms of handholding them to reach our targeted level of BRSR reporting as well as the fact that in terms of identification of any gaps in this regard, helping them and handholding them to make that BRSR reporting quite competitive. So from that angle I think on an overall basis the ESG practices have been coming out quite well. And I’ll refer to Swati, who is the CEO of our subsidiary, where these services are being offered to give further comment on this. Swati?

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

Yeah. So on the ESG front like Mehul mentioned, the final print of the guidelines are yet to come out. The role of the regulator and the intent is very clear that, the corporates and there is going to be a whole lot of regulatory push and in the right manner and in the right direction, because if you really look at the sense of the guidelines, it’s talking about assurance services attached to the whole sort of reporting paradigm. So in terms of the offerings at cart, we do — we have we have a IT-enabled platform as well as a very well defined frameworks across various industries to carry-out the ratings. And we want to do a whole lot of set of comprehensive consultancy assignments in which we handhold the companies in terms of developing their ESG strategies as well as moving them the up on the entire ESG curve.

Varun Bang — Bryanston Investments — Analyst

Okay in non-rating business in both corporate advisory and research and advisory, what are the USPs, that you are looking at building and how do you think it will transpire inyour opinion?

Mehul Pandya — Managing Director & Chief Executive Officer

I think the USPs that we are trying to develop are in both the subsidiaries. At the end-of-the day it has to revolve around our core expertise which is in the analytics domain. So be it on the corporate advisory side or through the ESG aspect or any kind of a customized research in cart, our offerings are always oriented towards giving value addition in the analytics domain. And coming to the digital solutions business as well which is a part of the other subsidiary. Over there also, the product offerings, which have been there from our side, we are having a focused approach in terms of augmenting them but continues to revolve around the analytics domain. So we like, we believe that we have a greater understanding in that as compared to any other domain, which potentially could be, I would say available as far as the activities of the subsidiaries are concerned, but we’d like to focus in terms of the analytics domain to continue to remain as the driver for our non-ratings business as well.

Varun Bang — Bryanston Investments — Analyst

Okay and in last one year or so, how do you look at our progress in non-rating business. And I think initially we might have to prove our capabilities and then clients would come. So is it a long-drawn process? So based on your assessment, what could be the timelines for visible success in this business?

Mehul Pandya — Managing Director & Chief Executive Officer

Okay. I think the non-rating businesses are always slightly challenging in terms of growing them. Considering the fact that, as I mentioned that we hope — the expertise drawn on the analytics domain, the teams that we have over there, both in terms of the consulting advisory subsidiary as well as in the Risk Management Solutions subsidiary, the teams which are there currently, they are pretty strong. It takes a slightly longer time in terms of developing this business and getting traction in that. But what is heartening for me is the fact that as far as cart is concerned, we have done some very good assignments during FY ’23 which gives the foundation or capitalizing on the experience drawn from both kind of assignment and to extrapolate it to similar kind of, I would say, client set, as well as the multilateral institutions in the quarters and the year to come. Under Risk Management Solutions side, I think the greater aspect has been in terms of ensuring that the product development that we had envisaged when we were going for a complete reboot of the entire business ecosystem over there, that has sustained itself. And it is taking time. And then once again, mentioning that these businesses take slightly longer time to get to a stage where they’re giving us a lot of traction, but we are on the right track. That is something which is the computing factor for us.

Varun Bang — Bryanston Investments — Analyst

And just one last thing. In this context, can we look at any acquisition to greater ready foundation and maybe it can be built from there on? So maybe that can help us reduce this — I mean reduce the timelines for success in this business. So if you can just share your thoughts.

Operator

I’m sorry to interrupt. We lost the line of the management. Reconnecting the line. Kindly stay connected. And sir, you may need to repeat your question. Please stay connected while I reconnect them. Please stay connected.

[Operator Instructions]

Sir, you may please repeat your question again. Thank you.

Varun Bang — Bryanston Investments — Analyst

Yeah, so, sir, you said the success timeline could be longer in non-rating piece. So can we look at any acquisition to get a ready foundation and maybe the business can be built from there on, so that sort of can help us reduce the success timelines in this business. So if you can just share your thoughts on acquisitions.

Mehul Pandya — Managing Director & Chief Executive Officer

Sure. I think from a growth perspective, all options are open. So while until now, we have been focused on organic growth, but if any good opportunity comes our way, we have an open mind on that, we do believe that a combination of various strategies that need to be deployed in terms of ensuring that we get to that stage in terms of having the requisite traction and the scale of these entities in as shorter time that could be practically possible. I would only like to limit my submission to state that all options are being open for us, and any opportunity coming our way, we should be looking at it in detail.

Operator

We’ll take our next question from the line of Deep Sankara Narayanan from TrustLine PMS. Please go-ahead.

Deep Sankara Narayanan — TrustLine PMS — Analyst

Good afternoon, everyone. Thanks a lot for the opportunity. Firstly, with capex cycle turning positively and credit growth has been picking-up for bank strongly. So do we foresee double-digit growth in rating business over three to five years now?

Mehul Pandya — Managing Director & Chief Executive Officer

I think it will be too much of a forecasting prematurely in terms of giving any specific number whether it is double-digit or single-digit in this regard. But what is important as far as our business is concerned is that the credit growth in the corporate lending, that will be driven by few themes. Number-one is the government push from the infra capex. So the government haven’t been consistently expanded its infra digital capex, particularly in the roads and railway segment for the last three years consistently now, we believe that the multiplier effect would come into play and that should augur well for the segments like EPC players, capital goods and infra product companies. The second is in terms of the growing focus on the green areas including the decarbonization. So both the government and the private entities are taking this pretty much seriously. And this segment also should be giving us a lot of capex related opportunities. The third in terms of improving logistics efficiency where once again the investments in the dedicated freight corridor, coupled with multiple multimodal logistics cost on and so forth, that will also be requiring lot of capex and the debt requirements in this regard. And finally, the push that we are expecting or rather pull-in this regard could be in terms of the deleverage balance sheet for the Indian corporate. Now the fact that the Indian corporates have significantly deleveraged, that should augur well in terms of their ability to contract further debt to capitalize on the capex-related opportunities in this regard. So a combination of all these factors that should augur well as far the overall rating industry growth is concerned because there indeed would be debt requirements pertaining to this and as one of the main rating agencies in the country, we should be in a position to capitalize it to our benefit.

Deep Sankara Narayanan — TrustLine PMS — Analyst

Okay. So all this growth will be mainly driven by volumes itself or we are foreseeing realization improvement also coming in future because of strong demand?

Mehul Pandya — Managing Director & Chief Executive Officer

I think it’s been a combination of both, higher-volume also and in one of the earlier remarks which I made, we are quite focused in terms of better realization as well. So that is one area where we consistently focused upon on a year-on year basis to track our progress. And I’m happy to report that it is showing a positive traction on that. So a combination of both is something which gives us the confidence in terms of capitalizing on these opportunities as they come our way with an overall industry led growth.

Deep Sankara Narayanan — TrustLine PMS — Analyst

Okay, okay, and lastly from my side, in terms of employee cost, so have we reached the industry level benchmark and we are able to retain them successfully. If it is so, then, do we foresee better operating leverage from hereon picking-up for us. So underlying cost growth could be much less that our revenue growth?

Mehul Pandya — Managing Director & Chief Executive Officer

Yeah, see on an overall business we are growing gradually nearer to the industry benchmarks as far as the employee cost is concerned. And from the perspective of retention of this talent. So our attrition rate, that is also come down significantly. So which is — which is a factor of the consistent efforts that we’ve been putting in terms of ensuring that the market-related benchmark pay across the quarters, they are implemented complemented by the fact that lot of other employee friendly initiatives in terms of retaining — attracting and retaining this talent that they all have been implemented during this year. On an overall basis, what I can feel is that our employee cost as a percentage of the operating revenue, that shall remain range-bound. So in certain quarters if at all if we feel that certain skill-sets are indeed required to be on-boarded by all means, we shall be going for that. Because at the end-of-the day, this is a people led business. So the onboarding of the right talent that shall remain a focus area for us. But nevertheless, we do believe that it shall be remaining range-bound and it won’t be increasing substantially from what the current levels are.

Operator

[Operator Instructions]

Take the next question from the line of Hitesh Agarwal from Fair Value Capital. Please go-ahead.

Hitesh Agarwal — Fair Value Capital — Analyst

Congratulations, sir on good set of numbers. My first question is we have taken an impairment loss of INR1.73 crores in standalone statement in Q4 quarter. Could you give more details on this?

Mehul Pandya — Managing Director & Chief Executive Officer

Yeah, sure. This pertains to our assessment of our investment in our subsidiary, which is the tech subsidiary, CARE Risk Solutions. So in this regard, as a matter of good governance, you are aware that we have more infused INR33.5 crores as equity in this subsidiary during FY ’23. But from a good governance perspective, we keep on evaluating the overall things in this regard and we felt that as a prudent measure, we should be taking this impairment in quarter-four and that is something that we have done. But our commitment in terms of growing the subsidiaries that sustains. At the same time, the decision in this regard, that is the more from a good governance perspective.

Hitesh Agarwal — Fair Value Capital — Analyst

Are we expecting any further impairments maybe in the coming quarters on this related?

Mehul Pandya — Managing Director & Chief Executive Officer

We do not anticipate anything substantial in this regard, because as I said that the efforts which are going-in terms of turning around this company, they are in the right direction while it is taken slightly longer in this regard, but nevertheless, we are in the right direction and that is something that we are hopeful in terms of having the improved performance in the coming quarters and the year.

Hitesh Agarwal — Fair Value Capital — Analyst

Okay. As I look at the tax-rate for FY ’21 and FY ’22, it was around 22% to 23%, whereas for FY ’23, the total tax-rate is at 32%. So could you throw color why this bit of variation this?

Mehul Pandya — Managing Director & Chief Executive Officer

Surely, I like my CFO Jinesh to answer that. Jinesh please.

Jinesh Shah — Chief Financial Officer

Yeah, hi. So if you’ve seen, there are certain impediment in FY ’23 for whole year. So because of that, we don’t get a tax credit of that and let this allowed. So that is why the tax-effective tax-rate increased to 32%, what you said. And in the previous year, obviously that was allowable as series and all. So if you compare two year effect that is that difference only for the impediment on the incentive.

Hitesh Agarwal — Fair Value Capital — Analyst

Okay, sir. And what can we expect as the tax-rate for going-forward for FY ’24?

Jinesh Shah — Chief Financial Officer

It would be nearly to current tax-rate, that is 25% to — between 25% to 27%, because there are certain adjustment on deferred tax. So that we can’t predict on DTA. So the tax expense consists of current tax and the deferred tax. So that’s why I’m giving you a range above.

Hitesh Agarwal — Fair Value Capital — Analyst

Okay sir. Sir, my last question is, could you share — throw details on the attrition level which was there for Q4 and for the whole year of FY ’23?

Jinesh Shah — Chief Financial Officer

Overall I think the attrition level from the previous year, they have come down significantly. And for FY ’23, it was around 28%.

Hitesh Agarwal — Fair Value Capital — Analyst

Okay, and in Q4?

Jinesh Shah — Chief Financial Officer

We don’t have a quarterly because at times like that there would be onboarding also which keeps on happening across the quarters. Quarter-to-quarter, attrition rate is not something that we check, it’s more on a yearly basis, which is more reflective of the overall trend in this regard.

Operator

Thank you. We take the next question from the line of Keshav Garg from Counter Cyclical PMS. Please go-ahead.

Keshav Garg — Counter Cyclical PMS — Analyst

Sir thank you very much for this opportunity. Sir, it is very encouraging to know that the rating business is gaining traction. Sir but our other subsidiaries, the non-rating business, sir the losses are increasing drastically. They have tripled year-on-year whereas the revenue has fallen. Sir had the revenue also grown, then it would be encouraging that at least the business is picking-up, but if the revenue is declining and losses are increasing, then sir, where is the light at the end-of-the tunnel for the non-rating business when you think that this segment can breakeven?

Mehul Pandya — Managing Director & Chief Executive Officer

I think when we are talking of the non-rating businesses, I would say the major loss which has been there is on digit solution subsidiary. As far as the consulting subsidiary is concerned, it has largely been closer to breakeven during FY ’23. So there was only a marginal loss which was there. And it was largely a cash cash-flow positive outcome for us. Both these businesses, they require a significant, I would say, deployment of the resources to get attraction in the market. For the infrastructure in terms of the human resources that needs to be created first, especially on the Risk Management Solutions side, considering the fact that a lot of product development efforts have been going on over there. So from that angle, this commitment to the resources, having the right team working those product developments that entails investment from our side in this regard. But despite that, this product going to the go-to-market stage and start generating the revenue, it has got delayed a bit in this regard and that is why the resulting losses which have been there. But nevertheless, we do believe that the product which are getting developed and the prioritization of these products from the management side, that is with a very clear-cut focus strategy and we should be seeing an improvement in this regard as we move forward, but nevertheless I will also like my colleague and CEO of CARE Risk Solutions Kiran to give his perspective and how he’s witnessing this trend and how he would like to take this forward on this. Kiran?

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

Sure. So as we say this particular year has been year of constructing all our production solutions to the new norms of BASF [Phonetic] and that time which is going to be taken to get these solutions to the market was where we envisaged this investment which was done. However, now our first few products or into the GTM stage and we see a very strong traction over there. And as we all speak this current particular tenure where we were developing the applications, we all know the software industry went into a very large turmoil for resources and availability of resources globally. It’s a well-known fact. So these couple of things which we have been able to arrest over the last quarter plus and all our products are following the timelines on development and are adhering to the release dates shows us positive signs on the sign of how revenue would be generated from the products.

Keshav Garg — Counter Cyclical PMS — Analyst

Sure, Sir. Sir also sir, lastly, wanted to touch upon the share buyback issue, which has been raised multiple times in the past and company also attempted to do the same, but the pricing was incorrect so the buyback was unsuccessful. So as soon as the one year timeline gets over, kindly consider another share buyback. Sir, because you will see our earning per share, way back in 2012 was INR38, which has now declined to INR28 and this is not adjusting for inflation. And moreover, the ESOPs are further diluting the share capital and reducing the EPS and also share buyback is more tax-efficient and it will help us increase our EPS growth also. Sir so I hope you will appreciate the same and do a share buyback. Thank you.

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

Yeah, I take your point and certainly, I’ll suggest to the Board for an appropriate decision in this figure. Thank you.

Operator

Thank you. We’ll take our next question from the line of Vikram Kotak from Ace Lansdowne Investment Services. Please go-ahead.

Vikram Kotak — Ace Lansdowne Investment Services — Analyst

Yeah, question, one for Mehul and one for Jinesh, if I missed earlier, if you answered it earlier, you can give pass. So one is on the tech side. I missed the answer. So, what’s the likely tax rate going-forward next two years after this one spike in the last quarter as well as this year?

Jinesh Shah — Chief Financial Officer

Yeah, it can be in the range of 24% to 28% or 25% to 28%.

Vikram Kotak — Ace Lansdowne Investment Services — Analyst

Okay. So you will back to the normal in next year?

Jinesh Shah — Chief Financial Officer

Yeah, yeah, definitely.

Vikram Kotak — Ace Lansdowne Investment Services — Analyst

Okay, and second for Mehul bhai for you is this slide number seven, on the presentation, which you talk about the rating stability in sync with the industry average. Can you little elaborate on this one, because it’s very interesting slide and I just want to understand this slide.

Mehul Pandya — Managing Director & Chief Executive Officer

I didn’t see what we always keep on checking as far as the leading performance is concerned, that ratings overall, this should be number-one this thing ordinality in the sense that the higher rating categories, they should be displaying a greater stability and on an overall basis the investment-grade ratings, we also should be continuing to display a greater stability. In fact this rating performance has to be checked consistently, gels with our overall philosophy of quality led growth because at the end-of-the day, that’s something rating agency, which has completed 30 years and we are looking for to a substantial time in the future also, right. So we have to develop that kind of robust systems and processes to sustain the rating performance. I’ll also request my colleague, Sachin, who is our Chief Rating Officer to give his perspective on this also. Sachin, over to you.

Sachin Gupta — Executive Director & Chief Rating Officer

Yeah, thanks, Mehul. So if you look at the slide on rating stability, I think there are two key takeaways from that. One is, if you see year-on year, the darker blue bar is talking about the period of 2018 to 2022 and the next one is talking about the current — more recent five-year, that is 2019 to 2023. So as you can see, there is a improvement in the stability rates in the earlier five-year period to the current five-year period. That is one. So our rating stability is improving over the period. So that is point number one. Second is, we have also compared it to the average of the industry and there if you noticed, the gap while it was always slightly higher than average even earlier, now the gap is even increasing. So we are better-off than the industry average in terms of rating stability. So that is the second point. The other point which I just wish to add on the same thing is that our another matrix that we look at is investment-grade defaults, apart from the stability, wherein we very simply say that, at the beginning of the year in my total portfolio of entities which were in investment-grade. By the end-of-the year, how many such entities have gone into default? And obviously, the lower the number is, the better it is. So you’ll be happy to note that in the current year, we had only one such instance wherein the investment-grade entity went into default. The similar numbers in the prior-period were you know in double-digits and even last year, it was a number of about five. So we have been very sharply improving our performance in this respect. And for the current year, our performance is actually either better or same as the other top rating agencies in the country. So in that respect, our performance of ratings is quite strong. And that is largely because of the multiple actions that we’ve taken over the last few years, including things like we have now specialized — sector specialized rating team. We have dedicated teams to look after highly-rated entities and especially the entities which have high amount of debt. We also have oversight from external committees like ERSB, which is our rating supervisory committee. And in general, there has been strong focus within the organization to make sure that our rating actions are very timely, more objective. And that is also getting reflected in our — the various mutual funds and other investors who use our ratings. Having more confidence in our ratings. Thank you.

Vikram Kotak — Ace Lansdowne Investment Services — Analyst

Sachin, what we are trying to say and I’m very happy to see the BBB and BB offering a good improvement, that shows that you already in-process actually kind of showing a much improvement than earlier years. That’s what I have to read in the slide. Right.

Sachin Gupta — Executive Director & Chief Rating Officer

So if you notice, it is also in the higher rating category. Higher rating category should find like, say for AA, the number has moved up from 92.43% to 93.61%. The point is, you also have to note this is a five-year data. So if we had say weak performance in the year 2019 and 2020, that is not, so therefore the curve is not that sharp. Right. So if I were to play it only for the current year, it will be much sharper improvement but because it is a five year average, the delta is not looking as sharp. But nonetheless, there is clearly a discernible improvement across all rating categories.

Operator

[Operator Instructions]

We take the next question from the line of Sanjay Kumar from ithought Financial Consulting. Please go-ahead.

Sanjay Kumar — ithought Financial Consulting — Analyst

Hi, thanks for the opportunity. Just a follow-up on the rating stability. I mean, you shouldn’t be using the average of the industry right. I mean company like us should be benchmarking ourselves against the leader, [Indecipherable] and one observation was our AAA and AA stability seems to be behind them, whereas our AA and BBB is even better than someone like it, why is this divergence if there is any? If you could talk about this.

Mehul Pandya — Managing Director & Chief Executive Officer

Sachin, you would like to answer? Yeah you take it.

Sachin Gupta — Executive Director & Chief Rating Officer

The data that we have given here is only for the industry average. And I take your point that we should compare ourselves to the industry, people who are in the same industry position as ours. And maybe next time we will kind of do it like that. So point taken. But if you look at the improvement, if I were to compare across the industry, in the chart, it is clear that we are better-off than industry across all rating categories. So I didn’t get your second part of the question that you’re saying.

Sanjay Kumar — ithought Financial Consulting — Analyst

For example, our BBB stability rate is around 90%, 91%, we’ve improved to 91%. But if I look at say someone like ICRA, they’re still at 87%, so we are better than them in BBB whereas we are lagging behind in AAA and AA.

Sachin Gupta — Executive Director & Chief Rating Officer

Correct. So you know, your point is valid. So CARE, if you see historically our reaching stability in BBB and BB category has been fairly strong. We had submit of mishaps in AA and AAA categories during the 2017, ’18 and ’19 period, and that is where the — the data is kind of showing us in a relatively weak position. But if you look at the data for the more recent period and that’s what I shared on the earlier question, if you look at the last two years, our performance is kind of at par or even better than some of the names that you’ve mentioned on the rating stability and on default statistics.

Sanjay Kumar — ithought Financial Consulting — Analyst

Okay. Perfect. Okay, all right. And in earlier question, you gave the volume. Can you also give the client base for the initial ratings in FY ’22 and FY ’23, how much has that is growing.

Sachin Gupta — Executive Director & Chief Rating Officer

That we will not be able to disclose as a part of the public disclosure but what we can state very clearly has been that our overall growth in terms of the incremental, incremental business, which is — which we measure in terms of the addition of the new clients, that has been very robust. And that is a momentum, which is sustaining all through the last five quarters that I talked about starting from quarter four FY ’22, and till quarter four FY ’23, it is a very clear growth over there, which has been helping us in terms of posting good results and we’d like to sustain that.

Sanjay Kumar — ithought Financial Consulting — Analyst

Okay, and is a bit of pricing involved or do you think it’s down to credibility, expertise?

Sachin Gupta — Executive Director & Chief Rating Officer

I think pricing is always there — has always been there in terms of the market-led phenomena. The industry is like this or for that matter any other industry where the competition is always intense. Right. So the pricing is generally driven by the market dynamics. But at the end-of-the day-in this kind of a business, what matters is the kind of number-one, you are knowledge expertise in the various sectors, which are going-in for the rating, contracting new debt, as also the fact that how much of an outreach that you are having in terms of explaining your positions, your knowledge to them which can create the requisite pull for this. It is a combination of both this aspect, which has been serving us very well in this regard.

Sanjay Kumar — ithought Financial Consulting — Analyst

Okay, okay and second question on the non-ratings business. I mean, looking at the P&L, we will not be able to conclude anything. So if you could give us give us any internal metrics that you monitor for your non-ratings subsidiaries, how many AMCs have you signed-up for ESG? How many banks for management or regulatory reporting and so on. So can you give us what kind of internal metrics that you guys are tracking so we can get a better picture outside of the P&L?

Sachin Gupta — Executive Director & Chief Rating Officer

I think so as far as the consulting advisory business is concerned, we track it in terms of the number of clients that onboarded across the offerings, the beat in terms of the customized research or the corporate advisory and the ESG offering. And as far as the risk management solutions company is concerned, we track it in terms of once again the clientele across their business lines, in terms existing product suite on the ALM, credit risk, those kind of solutions going into the new domains in terms of the data analytics, as Kiran mentioned in his submission that some of the products which given developing, they are almost at the stage of go-to-market something that’s already been done so-far and some more would be getting to the GTM stage over the next two quarters. So this is the kind of metrics with which we keep on tracking both these businesses. And on both these aspects, subsidiaries have done well. In terms of the key aspects or these figures pertaining to this, may I request Swati to give her perspective in terms of the consulting advisory and Kiran on the risk management solution. Swati first you.

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

Yeah. So in terms of the clients added, we bought something like about. In total, make about 100 new clients were on-boarded and they could be across various industry spectrum or across various product offerings, whether it is the ESG or whether it is industry research of whether it is the consulting business. And particularly in the ESG space, we are currently working roughly, I mean instead of giving the exact number, I’ll probably say that we’re roughly in the high-end of the 20s that we are working on the number of assignments that we are working currently. Kiren you want to?

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

Yes, so from CRS skilled perspective, we’ve been able to add not only customers in India, but having marquee customers in Canada and also customer in UAE. So as we — we also been able to add some marquee customers on the lines from the financial organization. So going further, we look towards our products once they are ready, very exploratory market in the [Indecipherable] line. So we see a lot of.

Operator

Thank you. We’ll take our next question from the line of Devansh Nigotia from SIMPL. Please go-ahead.

Devansh Nigotia — SIMPL — Analyst

Yeah, thanks for the opportunity. And sir, regarding ESG, you mentioned that in ESG rated around the ESG in exclusive we have covered around 900 companies. So in our other segment, can you help us understand how much we have booked for ESG disclosures, EGS ratings and ESG four AMCs?

Mehul Pandya — Managing Director & Chief Executive Officer

Yes. Swati, you will take it?

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

So that breakup in terms of you know I would just say that at this point of time, the ESG offerings if you really look at it, we are about a year-old in this and we have revenue booking from all the three segments if there is ESG ratings, I mean, ESG grating, whether it is ESG assessments whether it is the, comprehensive services. So it’s all across the spectrum and a lot of work is undergoing. So may not be very fair for me to comment further on this, but it’s spread all across the various product offerings that we have under the ESG.

Devansh Nigotia — SIMPL — Analyst

And based on the experience over the last one year, can you [Indecipherable] revenue that we generate in all these three subsegments. Even a direction you can give, even that would be.

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

Yeah okay. So from a directional perspective, see, if you also look at it, there are new regulations that are coming out and we really have to go through the SEBI paper to understand because the SEBI paper and these charges, some kind of accreditation with SEBI in terms of the ESG rating providers. So in terms of, you know, it’s not be fair to give a guidance as such, but as far as our product portfolio is concerned, we’ll be concentrating on the consulting business, as well as on the ESG grading side.

Devansh Nigotia — SIMPL — Analyst

Okay. And as of now, how many entities are eligible to do all three — who are accredited with SEBI?

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

Accredited with SEBI is a phenomena which is just coming. AMFI registered are there. There is something called AMFI registered who are the ESG rating providers. And to best of my knowledge, I think there are four or five guys who are AMFI, or four or five guys who are AMFI in bandwidth. Consulting services, so if you really look at the bucket, your office, it’s essentially the big four at some of the other larger players Accent, so of the larger other competitors of US. So they are providing all the consulting services.

Devansh Nigotia — SIMPL — Analyst

So would include ESG disclosures and ESG ratings, is that the right understanding?

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

No, consulting essentially also means helping the company to all of its ESG strategy. So that is a whole comprehensive set of services, it helps because the company make it ESG plan, ESG disclosures, ESG strategy, etc.

Devansh Nigotia — SIMPL — Analyst

Last, one year we have done ESG, but our revenues in other segments have actually declined. So I’m just trying to understand is it insignificant in last one year or can you just help us understand how within other revenue mix and move within different sub-segments.

Swati Agrawal — Chief Executive Officer – CARE Advisory Research and Training

So I don’t think that’s the right — that’s the right conclusion. I think if you look at cards revenue, we’ve only grown over last year. So I don’t think that’s a fair conclusion to say that our other products or products have gone down or we’ve outgrown all across all segments.

Operator

Thank you. We’ll take our next question from the line of Himanshu Upadhyay from o3 PMS. Please go-ahead.

Himanshu Upadhyay — o3 PMS — Analyst

Yeah, hi, congratulations on good set of numbers. See I — we had seen our presentation on analytical driven risk solution, okay where we are targeting various types of services like pattern recognition and targeted advertisement and sentimental analysis. Are these products more automated and because of automation, will there be a non-linearity in the business profile of these type of products? And hence, once the product gets wider acceptance, teams can be much better or how — what is the nature of these services what we are trying to develop or it would be something like credit rating only where mentors or we’ll be pricing it, odds on that.

Mehul Pandya — Managing Director & Chief Executive Officer

Kiran, you’ll take it?

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

Yeah, sure, so mostly on analytical products are — the analytical offerings are more towards our credit. So this kind of market risk offerings which we are producing under our solution line. So there are certain elements like network analysis, which is new or graph databases, which are new, which we added to our portfolio. Sentiment analysis or a particular type of analysis is a subset of the overall analytics portfolio that we give. But coming back to the story, what we are doing is more on the lines of fraud analytics, early warning system network analysis, industry based analytics and stress related to portfolio. So these are the offerings that we have where they definitely are a lot of value to the organizations who are into lending or probably would take market situation based on our analysis, but they are opening as an product and not as an service, because these are very personalized analytics that we are into.

Himanshu Upadhyay — o3 PMS — Analyst

So it is something like a core just example I am taking, something like a core banking software type of product, where it’s just an example where our customer fees based on license fee and then renewal fee type of business model it will be.

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

So there are two offerings. One is the risk as a service, where we are into a smaller model, which is for NBFCs who cannot afford complete software and hardware. So there we are offering along with a couple of clouds like Oracle and Azure, or the cloud we are tied-up with, we are already offering this. We are already in a prototype to offer to 180 cooperative banks but that’s still in POC state. So one model is definitely risk as a service with the subscription with but banks still in India prefer that they need on-site model. So we have both the model.

Himanshu Upadhyay — o3 PMS — Analyst

Okay, and can we take this business to beyond lending institutions because some of these things may be useful for the institutions also or organizations or we will focus only on that side of the business?

Kiran Surve — Chief Executive Officer – CARE Risk Solutions

No. So, we have built our CFO offering which has IFRS-9 as a mandate and accounting standards, Indian Accounting Standards. These are the two new small packages, but they’re not very big that can be offered to non-financial organizations also. We however are keeping this very small right now. And we would like to grow in a very structured manner in the BFSI sector. But yes, it can be offered.

Himanshu Upadhyay — o3 PMS — Analyst

And lastly, the cost increase and the subsidiaries, means that is majorly to the employee cost, which was increased from INR20 crores to INR30 crores, okay. So the majority of cost of employee, which has grown is to develop these products and how good is the sales team? Have we also invested into the sales part of the team and are both the activities, the production and the sales are completely ready or do you think we will be needing to further invest to drive these businesses, especially on the sales side.

Mehul Pandya — Managing Director & Chief Executive Officer

I’ll give you a perspective on this. See the investment as far as the people in the subsidiary is concerned, has been on all these accounts, it is on the product side, it is on the practice and the delivery side as well as on the sales side. As Kiran mentioned, lot of effort has been going on in terms of developing new products, as well as augmentation of the existing products to make them more value-accretive for us going-forward. So for that, developing the requisite skills set, having the right people on-board to do these things and coming out with the developed products in a time-bound manner that had been the focus. That has resulted into higher-cost, which has resulted into the losses also at this stage. Going-forward also, our focus sustains in terms of ensuring that these products where we have invested in terms of right people, they get to the GTM at the earliest, combined with the focus in terms of the augmentation of the sales team so that the requisite business traction comes our way, in a much faster manner. Certainly like the focus on in terms of building up the sales team continues to remain and it cannot always be in terms of only the product development. So fuse team and the product development team working in tandem to ensure that we generate a traction at the earliest should remain our focus.

Himanshu Upadhyay — o3 PMS — Analyst

And outside India also, we are trying to sell this product. So have the — what would be the sales channel, I mean, would we be doing on our own or you would like to piggybank on some consultants or what is the move to develop the business outside India, what you said about a in your opening comments?

Mehul Pandya — Managing Director & Chief Executive Officer

Yeah, so our focus will remain in terms of tapping these opportunities as they arise and generating new opportunities in this regard. So what matters to us is that when we are tapping the geographies outside India, we should be looking at the opportunities in totality. So wherever we are in a position in terms of getting the business on our own, certainly, we’ll be going for that, considering the fact that it’s always be giving us a better margin on this, but we are also equally open in terms of going for the partnership model in this regard that wherever we can partner with anybody else that also remains as a part of the overall strategic framework. It’s a combination of both these things. It should be ensuring that we have the overall right product and the market fit to give us the requisite traction at the earliest in terms of the tapping the geographies. It can be only one strategy in this, it has to a combination of both.

Himanshu Upadhyay — o3 PMS — Analyst

Okay, thank you very informative and very helpful. One small suggestion, okay. The company is going through a very interesting phase where we are entering newer businesses also. If we can do a call at least once in six months, mid-year and year end, it would be helpful rather than just at year-end.

Mehul Pandya — Managing Director & Chief Executive Officer

Point taken and thank you for your position here.

Operator

Ladies and gentlemen, due to time constraints, that was the last question. I’d now like to hand the conference back over to Mr. Mehul Pandya for closing comments. Over to you sir.

Mehul Pandya — Managing Director & Chief Executive Officer

Yeah, sure. As I mentioned in my opening remarks, we are fully geared up in terms of unlocking the full potential at the Group level. We are quite positive when it comes to the opportunities that are before us. And as also in terms of the determination that as the entire senior leadership team across the group that we are having on the growth trajectory, which is the runway that was set in FY ’23 and shall continue determinately on that path in the future quarters and the year as well. I would like to once again thank everyone for their continued support and we count on it for the days ahead. We wish you all a very fruitful FY ’24. Thank you so much.

Operator

[Operator Closing Remarks]