Northern Arc Capital Annual Report, Balance Sheet & Financials

Northern Arc Capital Limited Balance Sheet (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
Financial assets
Cash and cash equivalents	23,233.95	71,517.38
Bank balances other than cash and cash equivalents	19,025.87	8,734.44
Derivative financial instruments	6,104.84	151.85
Trade receivables	2,861.42	1,918.38
Loans	6,88,860.57	5,20,875.53
Investments	1,76,273.36	1,76,575.11
Other financial assets	5,058.96	6,965.42
Non-financial assets
Current tax assets (net)	2,911.60	4,208.70
Deferred tax assets (net)	3,517.88	1,369.07
Property, plant and equipment	381.46	195.33
Right of use asset	966.7	1,121.79
Intangible assets under development	98.87	28.44
Other intangible assets	1,337.09	942.97
Goodwill	2,407.02	174.63
Investments in Associate	2,726.64	-
Other non- financial assets	1,390.89	2,632.42
Total assets	9,37,157.12	7,97,411.46
LIABILITIES AND EQUITY
LIABILITIES
Financial liabilities
Derivative financial instruments	227.59	643.82
Trade payables
Total outstanding dues of creditors other than micro enterprises and small enterprises	10,961.20	5,581.73
Debt securities	1,22,431.55	1,34,359.68
Borrowings (Other than debt securities)	5,77,029.86	4,59,942.61
Subordinated liabilities	3,995.07	3,993.47
Other financial liabilities	11,019.30	6,694.35
Non-financial liabilities
Provisions	3,335.35	2,245.69
Deferred tax liabilities (net)	20.02	72.26
Other non-financial liabilities	1,364.13	666.72
EQUITY
Equity share capital	8,903.13	8,890.75
Instruments entirely equity in nature	8,264.64	8,264.64
Other equity	1,78,374.85	1,56,752.34
Equity attributable to the owners of the Company	1,95,542.62	1,73,907.73
Non-controlling interest	11,230.43	9,303.40
Total liabilities and equity	9,37,157.12	7,97,411.46

Northern Arc Capital Limited Profit & Loss Statement (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
Interest income	1,14,838.77	78,084.53
Fee and Commission income	8,561.60	8,604.54
Net gain on fair value changes	5,062.45	4,264.87
Net gain on derecognition of financial instruments	2,034.23	-
Total revenue from operations	1,30,497.05	90,953.94
Other income	622.98	700.53
Total income	1,31,120.03	91,654.47
Finance costs	55,744.89	41,067.24
Fees and commission expense	12,142.03	5,273.22
Impairment on financial instruments	3,921.38	3,650.85
Employee benefits expenses	14,892.45	9,794.17
Depreciation and amortisation	1,204.43	957.44
Other expenses	10,905.02	6,072.66
Total expenses	98,810.20	66,815.58
Share of loss from Associates	-187.27	-
Profit before tax	32,122.56	24,838.89
Current tax	9,702.26	5,050.20
Deferred tax charge / (benefit)	-1,801.24	1,594.92
Profit for the year	24,221.54	18,193.77
Other Comprehensive Income
Remeasurements of the defined benefit asset/ (liability)	80.67	-195.31
Income tax relating to items that will not be reclassified to profit or loss	-26.59	49.17
Fair valuation of Financial Instruments through other comprehensive income (Net)	-900.02	-1,981.66
Income tax relating to items that will be reclassified to profit or loss	140.74	346.56
Net movement on effective portion of cash flow hedges	-1,010.85	-2,092.39
Income tax relating to items that will be reclassified to profit or loss	254.44	526.65
Other comprehensive income for the year (net of income taxes)	-1,461.61	-3,346.98
Total comprehensive income for the year (net of income taxes)	22,759.93	14,846.79
Profit for the period attributable to
Owners of the Company	23,001.06	17,249.97
Non-controlling Interest	1,242.30	943.8
Other comprehensive income for the year (net of income taxes)
Owners of the Company	-1,268.84	-3,079.97
Non-controlling Interest	-192.77	-267.01
Total comprehensive income for the year (net of income taxes)
Owners of the Company	21,732.23	14,170.00
Non-controlling Interest	1,049.53	676.79
Earnings per equity share of INR 10 each
Basic (in rupees)	25.85	19.52
Diluted (in rupees)	17.38	13.09

Northern Arc Capital Limited Consolidated Cash Flow Statement (Rs in Lakhs)

Particulars	31-03-2023	31-03-2022
Cash flow from operating activities
Profit before tax	32,122.56	24,838.89
Adjustments for:
Depreciation and amortisation	1,351.02	957.44
Write off of intangible assets under development	-	71.36
Mark-to-market gain on derivative contracts	-	-406.54
Unrealised gain on alternative investment funds designated at fair value through profit or loss	258.72	-708.38
Interest income on loans, fixed deposits and investments	-1,10,497.72	-77,994.14
Gain on mutual funds investments designated at fair value through profit or loss	-776.65	-420.47
Profit on sale of investments	-1,680.78	-169.11
Impairment on financial instruments (net)	3,892.37	3,650.85
Employee share-based payment expenses	148.75	320.67
Profit on sale of plant, property and equipment’s	-23.87	-
Gain on account of lease foreclosed	-	-40.97
Gain on account of lease rental concession received	-	-3.1
Amortisation of discount on commercial papers	1,037.81	1,333.65
Amortisation of ancillary costs relating to borrowings	-	3,077.50
Interest on income tax refund	-146.16	-
Net gain on derecognition of financial instrument	-2,050.13	-
Provision for leave encashment	-127.51	-
Finance costs	50,121.10	36,656.09
Operating profit before working capital changes	-26,370.49	-8,836.26
Changes in working capital and other changes:
(Increase) / Decrease in other financial assets	232.84	-6,491.45
(Increase) in trade receivables	-940.2	-65.19
(Increase) in loans	-1,98,579.56	-1,50,812.33
(Increase) in other non-financial assets	1,306.77	-2,149.74
(Increase) / Decrease in other bank balances	-9,792.93	-1,538.49
(Increase) / Decrease in Investments	1,424.89	-
Increase in other financial liabilities	374.73	-
(Decrease) / Increase in other non-financial liabilities	1,215.53	-
(Decrease) / Increase in trade payables, other liabilities and provisions	10,960.73	6,286.89
Cash used in operations	-2,20,167.69	-1,63,606.57
Proceeds from de-recognition of financial assets recognised at amortised cost	38,538.00	-
Interest income received on loans, fixed deposits and investments	1,14,877.15	76,463.23
Finance cost paid	-54,542.00	-39,831.26
Income tax paid (net)	-8,604.24	-5,679.73
Net cash flow used in operating activities	-1,29,898.78	-1,32,654.33
Cash flows from investing activities
Purchase of property, plant and equipment	1,066.20	-1,230.04
Proceeds from disposal of right of use of assets	-	104.18
Purchase of mutual fund investments	-4,52,544.99	-1,94,300.00
Proceeds from sale of investments in mutual fund	4,54,704.66	1,93,167.42
Term deposit with scheduled banks	-358.03	-
Purchase of other investments	-2,31,056.85	-3,40,343.94
Proceeds from sale of other investments	2,25,629.62	3,04,105.14
Payment towards acquisition of business	-8,435.91	-
Payment towards transfer of business to subsidiary	-279.55	-
Investment in subsidiary	-485.06	-
Change in the ownership interest in funds	-	49.39
Net cash provided by investing activities	-11,759.91	-38,447.85
Cash flow from financing activities
Proceeds from issue of debt securities	87,710.00	76,429.72
Repayment of debt securities	-99,890.78	-1,07,360.47
Proceeds from borrowings (other than debt securities)	4,16,298.64	3,25,100.00
Repayment of borrowings (other than debt securities)	-3,08,704.48	-92,258.76
Payment of lease liabilities	-515.64	198.94
Proceeds from issue of equity share capital including securities premium	131.24	1,136.17
Capital Contributions by NCI	-	547.6
Distributions made to Investors including Dividend Distribution Tax	-2,087.48	-981.21
Net cash generated from financing activities	92,941.50	2,02,811.99
Net increase in cash and cash equivalents	-48,717.19	31,709.81
Cash and cash equivalents at the beginning of the year	71,517.38	39,807.57
Additions on account of acquisition	433.76	-
Cash and cash equivalents at the end of the year	23,233.95	71,517.38
Components of cash and cash equivalents:
Cash on hand	0.32	-
Balances with banks
in current accounts	21,229.92	23,659.48
in deposit accounts free of lien	2,003.71	47,857.90
Total	23,233.95	71,517.38

Here is a summary of the Cash Flow Statement for the years 2023 and 2022:

Cash Flow from Operating Activities

Profit Before Tax:

The profit before tax increased significantly from ₹24,838.89 million in 2022 to ₹32,122.56 million in 2023, reflecting robust financial performance.

Adjustments to Profit:

Depreciation and Amortization: Increased from ₹957.44 million in 2022 to ₹1,351.02 million in 2023, indicating higher non-cash expenses related to asset depreciation.

Write off of Intangible Assets under Development: No write-offs in 2023 compared to ₹71.36 million in 2022.

Mark-to-Market Gain on Derivative Contracts: No gains recorded in 2023 compared to a gain of ₹406.54 million in 2022.

Unrealized Gain on Alternative Investment Funds: Shifted from a loss of ₹708.38 million in 2022 to a gain of ₹258.72 million in 2023, indicating better performance of these investments.

Interest Income on Loans, Fixed Deposits, and Investments: Increased significantly from ₹77,994.14 million in 2022 to ₹110,497.72 million in 2023.

Gain on Mutual Funds Investments: Increased from ₹420.47 million in 2022 to ₹776.65 million in 2023.

Profit on Sale of Investments: Increased from ₹169.11 million in 2022 to ₹1,680.78 million in 2023.

Impairment on Financial Instruments: Increased from ₹3,650.85 million in 2022 to ₹3,892.37 million in 2023.

Employee Share-Based Payment Expenses: Decreased from ₹320.67 million in 2022 to ₹148.75 million in 2023.

Profit on Sale of Plant, Property, and Equipment: A profit of ₹23.87 million in 2023 with no such gains in 2022.

Gain on Account of Lease Foreclosed and Lease Rental Concession: No gains recorded in 2023 compared to gains of ₹40.97 million and ₹3.1 million respectively in 2022.

Amortization of Discount on Commercial Papers: Decreased from ₹1,333.65 million in 2022 to ₹1,037.81 million in 2023.

Amortization of Ancillary Costs Relating to Borrowings: No amortization costs in 2023 compared to ₹3,077.50 million in 2022.

Interest on Income Tax Refund: ₹146.16 million in 2023, with no comparable figure for 2022.

Net Gain on Derecognition of Financial Instruments: A gain of ₹2,050.13 million in 2023 with no such gains in 2022.

Provision for Leave Encashment: A decrease in provision by ₹127.51 million in 2023.

Finance Costs: Increased significantly from ₹36,656.09 million in 2022 to ₹50,121.10 million in 2023.

Operating Profit Before Working Capital Changes:

The operating loss before working capital changes increased from ₹8,836.26 million in 2022 to ₹26,370.49 million in 2023.

Changes in Working Capital:

Increase/(Decrease) in Other Financial Assets: Shifted from a decrease of ₹6,491.45 million in 2022 to an increase of ₹232.84 million in 2023.

Increase in Trade Receivables: Increased significantly from ₹65.19 million in 2022 to ₹940.2 million in 2023.

Increase in Loans: Increased substantially from ₹150,812.33 million in 2022 to ₹198,579.56 million in 2023.

Increase in Other Non-Financial Assets: A decrease of ₹2,149.74 million in 2022 to an increase of ₹1,306.77 million in 2023.

Increase/(Decrease) in Other Bank Balances: Increased from a decrease of ₹1,538.49 million in 2022 to ₹9,792.93 million in 2023.

Increase/(Decrease) in Investments: Increased from a decrease of ₹0 in 2022 to ₹1,424.89 million in 2023.

Increase in Other Financial Liabilities: A minor increase of ₹374.73 million in 2023.

(Decrease)/Increase in Other Non-Financial Liabilities: Increased from ₹0 in 2022 to ₹1,215.53 million in 2023.

(Decrease)/Increase in Trade Payables, Other Liabilities, and Provisions: Increased significantly from ₹6,286.89 million in 2022 to ₹10,960.73 million in 2023.

Cash Used in Operations:

The cash used in operations increased significantly from ₹163,606.57 million in 2022 to ₹220,167.69 million in 2023.

Proceeds from De-Recognition of Financial Assets:

Proceeds of ₹38,538.00 million in 2023 with no comparable figure for 2022.

Interest Income Received on Loans, Fixed Deposits, and Investments:

Increased from ₹76,463.23 million in 2022 to ₹114,877.15 million in 2023.

Finance Cost Paid:

Increased from ₹39,831.26 million in 2022 to ₹54,542.00 million in 2023.

Income Tax Paid (Net):

Increased from ₹5,679.73 million in 2022 to ₹8,604.24 million in 2023.

Net Cash Flow Used in Operating Activities:

Marginally decreased from a negative cash flow of ₹132,654.33 million in 2022 to ₹129,898.78 million in 2023.

Cash Flow from Investing Activities

Purchase of Property, Plant, and Equipment:

A significant decrease from ₹1,230.04 million in 2022 to ₹1,066.20 million in 2023.

Proceeds from Disposal of Right of Use of Assets:

No proceeds in 2023 compared to ₹104.18 million in 2022.

Purchase of Mutual Fund Investments:

Increased significantly from ₹194,300.00 million in 2022 to ₹452,544.99 million in 2023.

Proceeds from Sale of Investments in Mutual Fund:

Increased significantly from ₹193,167.42 million in 2022 to ₹454,704.66 million in 2023.

Term Deposit with Scheduled Banks:

No comparable figure for 2022, with a ₹358.03 million figure for 2023.

Purchase of Other Investments:

Decreased from ₹340,343.94 million in 2022 to ₹231,056.85 million in 2023.

Proceeds from Sale of Other Investments:

Decreased from ₹304,105.14 million in 2022 to ₹225,629.62 million in 2023.

Payment Towards Acquisition of Business:

A significant outflow of ₹8,435.91 million in 2023 with no comparable figure for 2022.

Payment Towards Transfer of Business to Subsidiary:

A minor outflow of ₹279.55 million in 2023 with no comparable figure for 2022.

Investment in Subsidiary:

A minor outflow of ₹485.06 million in 2023 with no comparable figure for 2022.

Change in Ownership Interest in Funds:

No changes in 2023 compared to ₹49.39 million in 2022.

Net Cash Provided by Investing Activities:

A reduced outflow from ₹38,447.85 million in 2022 to ₹11,759.91 million in 2023.

Cash Flow from Financing Activities

Proceeds from Issue of Debt Securities:

Increased from ₹76,429.72 million in 2022 to ₹87,710.00 million in 2023.

Repayment of Debt Securities:

Decreased from ₹107,360.47 million in 2022 to ₹99,890.78 million in 2023.

Proceeds from Borrowings (Other Than Debt Securities):

Increased significantly from ₹325,100.00 million in 2022 to ₹416,298.64 million in 2023.

Repayment of Borrowings (Other Than Debt Securities):

Increased from ₹92,258.76 million in 2022 to ₹308,704.48 million in 2023.

Payment of Lease Liabilities:

Decreased from ₹198.94 million in 2022 to ₹515.64 million in 2023.

Proceeds from Issue of Equity Share Capital Including Securities Premium:

Decreased from ₹1,136.17 million in 2022 to ₹131.24 million in 2023.

Capital Contributions by Non-Controlling Interest (NCI):

No contributions in 2023 compared to ₹547.6 million in 2022.

Distributions Made to Investors Including Dividend Distribution Tax:

Increased from ₹981.21 million in 2022 to ₹2,087.48 million in 2023.

Net Cash Generated from Financing Activities:

Decreased significantly from ₹202,811.99 million in 2022 to ₹92,941.50 million in 2023.

Net Increase/(Decrease) in Cash and Cash Equivalents

A decrease from an increase of ₹31,709.81 million in 2022 to a decrease of ₹48,717.19 million in 2023, reflecting higher outflows compared to inflows.

Cash and Cash Equivalents at the Beginning and End of the Year

At the Beginning of the Year: Increased from ₹39,807.57 million in 2022 to ₹71,517.38 million in 2023.

Additions on Account of Acquisition: Increased from ₹0 in 2022 to ₹433.76 million in 2023.

At the End of the Year: Decreased from ₹71,517.38 million in 2022 to ₹23,233.95 million in 2023.

Components of Cash and Cash Equivalents

Cash on Hand: Minor amount of ₹0.32 million in 2023 with no comparable figure for 2022.

Balances with Banks in Current Accounts: Decreased from ₹23,659.48 million in 2022 to ₹21,229.92 million in 2023.

Balances with Banks in Deposit Accounts Free of Lien: Decreased significantly from ₹47,857.90 million in 2022 to ₹2,003.71 million in 2023.

Total Cash and Cash Equivalents: Decreased from ₹71,517.38 million in 2022 to ₹23,233.95 million in 2023.

Financial Ratios of Northern Arc Capital Limited

Particulars	2023	2022
Debt-equity ratio	3.65	3.49
Total debts to total assets	0.76	0.76
Gross Non-Performing Assets (GNPA) Ratio	0.76%	0.51%
Net Non-Performing Assets (NNPA) Ratio	0.36%	0.18%
Capital adequacy ratio (CRAR)	20.77%	0.18%
Asset cover over listed non-convertible debentures	1.14	1.09
Net profit margin (%)	17.05%	15.61%

Here is a summary of the financial and operational metrics for Northern Arc Capital Limited for the year 2023 & 2022:

Debt-Equity Ratio

2023: 3.65

2022: 3.49

Insight: The slight increase in the debt-equity ratio indicates a marginal rise in the company’s leverage, suggesting a higher reliance on debt financing relative to equity.

Total Debts to Total Assets

2023: 0.76

2022: 0.76

Insight: The ratio remains unchanged, indicating that the proportion of the company’s assets financed through debt has stayed consistent over the year.

Gross Non-Performing Assets (GNPA) Ratio

2023: 0.76%

2022: 0.51%

Insight: The increase in the GNPA ratio points to a rise in non-performing assets, which could indicate a decline in asset quality or increased credit risk.

Net Non-Performing Assets (NNPA) Ratio

2023: 0.36%

2022: 0.18%

Insight: The NNPA ratio has also increased, suggesting that a higher portion of the company's loans and advances have turned problematic after accounting for provisions.

Capital Adequacy Ratio (CRAR)

2023: 20.77%

2022: 18.49%

Insight: The improvement in the CRAR indicates a stronger capital base, providing a buffer against potential losses and supporting the company's ability to absorb financial shocks.

Asset Cover Over Listed Non-Convertible Debentures

2023: 1.14

2022: 1.09

Insight: An increase in this ratio suggests better coverage of the company's non-convertible debentures by its assets, indicating improved financial security for debenture holders.

Net Profit Margin

2023: 17.05%

2022: 15.61%

 

Insight: The rise in net profit margin reflects enhanced profitability, implying better cost control or higher revenue generation relative to expenses.