GLOBAL ECONOMY
The beginning of 2022 was marked by optimism, driven by pent-up demand and the
expanding reach of vaccinations. However, in February, Russias attack on Ukraine caused
an unprecedented humanitarian and economic crisis. Driven by both the pandemic recovery
and the Ukraine conflict, prices of both fuel and non-fuel commodities significantly rose,
leading to an inflation rate of 8.7%. To combat inflation, central banks around the world
raised policy rates. However, commodity prices eventually stabilised as growth slowed.
Additionally, the Chinese economy reopening after strict lockdowns brought about a sense
of optimism, as it was expected to alleviate disruptions in the global supply chain. The
global economy reported a growth of 3.4% in 2022, from 6.1% in 2021. Economic damage from
the conflict is expected to contribute to a significant slowdown in global growth in 2022
and add to inflation. Fuel and food prices have increased rapidly, hitting vulnerable
populations in low-income countries hardest. As per IMF, global growth is projected to
slow from an estimated 6.1 percent in 2021 to 3.6 percent in 2022 and 2023. This is 0.8
and 0.2 percentage points lower for 2022 and 2023. On the monetary policy front there were
multiple rate hikes by various central banks however, the Nominal policy rates increased
less than near term inflation and as a result real ex post policy rate actually fell in
most countries from levels that were exceptionally low.
INDIAN ECONOMY
The RBI has projected Indias GDP growth at 6.5% for FY24 and has predicted inflation
to subside at 5.2% with governments focus on capital expenditure, better capacity
utilisation, and moderate commodity prices. As per the latest Monetary Policy, quarterly
inflation for FY24 is projected for Q1 at 5.1%, Q2 at 5.4%, Q3 at 5.4% and Q4 at 5.2%. The
wide pipeline laid down by the Government of India in the FY24 budget for capital spending
will encourage project commissioning and will assist investment demand. The quarterly GDP
growth projections for FY24 is Q1 at 7.8%, Q2 at 6.2%, Q3 at 6.1% and Q4 at 5.9%.
The quarterly trend of GDP growth in FY2023 pegs the year-on-year growth of 5.1% in Q4
FY2023, 4.4% in Q3 FY2023, 6.3% in Q2 FY2023 and 13.2% in Q1 FY2023. Private consumption
showed some signs of a slowdown. A weaker trend in government final consumption
expenditure is understandable as the spending on welfare schemes has moderated in
comparison to what was spent during the pandemic. Government-led capital expenditure has
continued to be an important driver of the economy with gross fixed capital formation
(GFCF) expected to contribute to 34.0% of the GDP in FY2023 versus 32.7% of the GDP in
FY2022.
FY24 is expected to see higher growth in investment, due to supportive government
policies, sound macroeconomic fundamentals, improved asset quality, and strong growth in
credit among the private and MSME sectors.
India is expected to achieve its fiscal deficit target of 5.9% (of GDP) against 6.4%
for FY23 and stabilise the debt to GDP ratio. The Government aims to bring down the fiscal
deficit below 4.5% by FY26. Export of services has been a stronghold and will continue to
grow robustly and strengthen Indias overall balance of payments position.
INFLATION RATES
The annual inflation rate in India fell to 4.25% in May of 2023 from 4.7% in the
previous month, the lowest since April 2021 and firmly below market forecasts of 4.42%
amid a fresh slowdown in inflation for food. The result drove inflation closer to the
RBIs target of 4% and extended the decline past the central banks upper limit of 6%,
paring concerns of an eventual resumption of its tightening cycle. Consumer food inflation
fell to 2.91% from 3.84% in the previous month, amid significant deflation for oils and
fats (-16.01% vs -12.33% in April), vegetables (-8.18% vs -6.5%), and meat and fish
(-1.29% vs -1.23%). In the meantime, inflation slowed for transport and communication
(1.1% vs 1.17%), housing (4.84% vs 4.91%), and fuel and light (4.64% vs 5.52%). On a
monthly basis, consumer prices rose at a steady pace from the previous month at 0.51%.
NBFC SECTOR
The financial institutions have a vital role in promoting stability and implementing
regulatory measures to support households and businesses, especially amid economic crises.
At present, the geopolitical conflicts have slowed down countries post-pandemic
recoveries, hastening the normalisation of monetary and fiscal policies. In India, NBFCs
have emerged as the principal institutions providing credit financing to the unorganised
and underserved sectors. NBFCs have revolutionised the lending system in India by
providing financial inclusion for those who lack easy access to credit. They offer a range
of services, including MSME financing, home finance, microfinance, gold loans and other
retail segments. On the back of digitalisation and technology, NBFCs are further offering
quick and convenient customer financing experiences, especially for low-income and
untapped segments of the creditworthy population. These companies have unlocked industrial
opportunities by leveraging a hybrid model of physical and digital delivery.
Despite facing competition from banks in traditional segments, NBFCs have raised Rs.
700 Billion in equity over the past 3.5 years, improving their gearing levels. With more
robust balance sheets, lower leverage and steadily improving funding access, NBFCs are
well-positioned to capitalize on credit demand. This could lead to an increase in Assets
Under Management (AUM) by 13-14% in FY 2023-24, with a strategic focus on non-traditional
segments such as unsecured loans, used vehicles and the MSME sector.
OUTLOOK FOR NBFC SECTOR
According to the Reserve Bank of India (RBI) data, outstanding bank credit to NBFCs has
significantly increased from Rs. 3.68 Lac crore in 2017 to Rs. 13.20 Lac crore as of
December 2022. NBFCs are expected to play a crucial role in financing Indias transition
from the worlds fifth-largest to the third-largest economy by the end of this decade. The
Government is also focusing on developing NBFCs with high emphasis on driving quality
corporate governance across these entities. Following sluggish years amid liquidity
stress, NBFCs have bounced back strongly with higher capital levels, reasonable stability
in delinquency accounts, better asset quality and larger balance sheets. Stronger risk
assessment frameworks, Government support such as debt moratorium and liquidity
enhancement measures and broader economic revival have helped them tide through these
challenges and pursue innovative strategies to meet evolving opportunities.
NBFCs are collaborating with various dealers, and vendors in the ecosystem to provide
finance beyond asset purchases, such as fuel and tyre credit, repairs and annual
maintenance of vehicles and leveraging third-party providers for insurance and security
needs. The growth momentum of CV industry in India remains intact owing to Governments
push on infrastructure development and improvements in economic activities.
OUTLOOK
The year under review has been one of the most profitable years for your Company. Your
company posted total income and net profit of Rs 13,24,28,000 /- and Rs. 9,68,24,000/-
respectively, for the financial year ended March 31, 2023 as against Rs. 6,72,01,000/- and
Rs.4,69,46,000/- respectively from the previous year, which is an increase of 97% in the
total income of the company and an increase of 106% in the net profit of the company. The
higher income and corresponding increase in the net profit is attributable to: Change in
Profit on Sale of Investments in Shares / MFs/ Derivative from 420.45 lakhs to 1054.97
lakhs in the current review year. The year under review has been one of the most
profitable years both for your Company and its customers. The company gained a massive
profit for sale of investments, shares and Mutual Funds, this year. The year was full of
opportunities. There was a Boost in the activities. Company is managed by
professionals. Company is always following strict norms as prescribed by the management
for disbursement of Loan. Management is of the opinion that Companys NPA will be within
the limit as prescribed by the Management.
OPERATION
Your Company is having net worth of approx Rs.60 Crores. Company is small NBFC
registered with RBI. Company is in the Business of Giving Corporate Loans & investment
activities. Your Company is having tie up with Expert Market research Team. They advise
the Company about the various Investment option. Currently, Company is having Investment
of Rs. 35 Crores.
Company is doing business only with reputed and long term associated clients only
Company is not in the business of retail funding or unsecured funding. Company is having
loan portfolio of Rs. 9.75 Cr. Your Directors Expect Improvement is Net profit for the
Current Financial year
Details of Investment is given in Note 6 in the balance sheet of the Company
Financial performance
| Particulars |
Current Year 2022-23 (Rs.) |
Previous Year 2021-22(Rs.) |
| Revenue from Operations |
1,324.28 |
672.01 |
| Other Income |
- |
- |
| Income from operations |
1,324.28 |
672.01 |
| Less : Financial Expenses |
48.48 |
22.84 |
| Less : Depreciation & Amortisation Expenses |
- |
0.25 |
| Less : Other Expenses |
30.21 |
30.89 |
| Less : Employee Benefits Expenses |
29.29 |
30.08 |
| Profit/(Loss) Before Tax & Exceptional Items |
1,216.31 |
587.95 |
| Less : Current year Taxation |
220.00 |
119.00 |
| Less : Deferred Tax Expense/(Income) |
24.51 |
(0.51) |
| Less : Tax Expenses of earlier years |
3.56 |
- |
| Profit After Tax |
968.24 |
469.46 |
| Add : Other Comprehensive Income (OCI ) |
|
|
| Items that will not be reclassified to Profit and Loss |
564.40 |
1,334.13 |
| Changes in Fair Value of fair value through OCI (FVOCI) equity instruments |
(142.05) |
(335.77) |
| Tax Impact on above |
422.35 |
998.36 |
| Other comprehensive Income |
1,390.59 |
1,467.81 |
| Total Comprehensive Income for the year |
|
|
Outlook
Financial Year 2023 is another momentous year for your company as it delivered its best
operating and financial performance. Your company continued to perform excellently during
FY 2023.
• Your companys books have gained a total income of Rs. 1,324.28 Lakhs in the
current FY 2023as compared to Rs 672.01Lakhs in the previous FY 2022, which is a rise of
97% in the total income of the company.
• The profits have been lifted by 106% by being mounting upto Rs. 968.24 Lakhs in
the current FY 2023 as compared to Rs.469.46 Lakhs in FY 2022.
• The higher income and corresponding increase in the net profit is attributable
to Change in Profit on Sale of Investments in Shares / MFs/ Derivative from 420.25 lakhs
to 1,054.97 lakhs in the current review year.
The company gained a massive profit from sale of investments, shares and Mutual Funds,
this year. The year was full of opportunities. Your Directors express their heartfelt
gratitude to all investors for being there with your Company in its growth journey.
SWOT analysis
Strengths
Distinguished financial services provider, with local talent catering to local
customers. Simplified and prompt loan request appraisals and disbursements.
Product innovation and superior delivery.
Innovative resource mobilization techniques and prudent fund management practices.
Weakness
Regulatory restrictions continuously evolving government regulations may Impact
operations.
Uncertain economic and political environment.
Opportunities
Demographic changes and under penetration.
Large untapped markets.
Use of digital solutions for business/collections.
Threats
High cost of funds.
Rising Non-Performing Assets (NPAs).
Competition from other NBFCs and banks
Human Resources
Company conducts various programs aimed towards strengthening skills, enhancing
productivity and building sense of ownership among its employees. The Company undertake
regular training program for development of Employees skills. To promote & develop
upcoming managerial talent, advance training programs were extended to select skilled
talents who have displayed high potential to take additional responsibilities in the
challenging business environment.
Risk Management
Your Company, being in the business of finance, has to manage various risks. These
risks include credit risk, liquidity risk, interest rate risk and operational risk. The
stock market the barometer of Economy is not done well. Further it seems that retail
investors are not investing in capital market. In todays complex business environment,
almost every business decision requires executives and managers to balance risk and
reward. Effective risk management is therefore critical to an organizations success.
Todays operating environment demands a rigorous and integrated approach to risk
management. Timely and effective risk management is of prime importance to our continued
success.
Increased competition and market volatility has enhanced the importance of risk
management in Share Trading business. The sustainability of the business is derived from
the following:
* The evolution of appropriate systems and processes to measure and monitor them.
* Risk management through appropriate mitigation strategies within the policy
framework.
* Monitoring the progress of the implementation of such strategies and subjecting them
to periodical audit and review.
* Reporting these risk mitigation results to the appropriate managerial levels.
There is the risk of loss from inadequate or failed systems, processes or procedures.
These may be attributed to human failure or technical problems given the increased use of
technology and staff turnover.
Internal Control Systems and their adequacy
Companys Internal Audit Department has been reviewing all control measures on
periodical intervals also recommending improvements wherever necessary. Thus, an effort is
made for evaluating the effectiveness of Internal Control System.
Such internal control is being managed by highly qualified and experienced personnel
and reports directly to the Audit Committee of the Board. The Audit Committee regularly
reviews the audit findings as well as the, an Information Security Assurance Service is
also provided by independent external professionals. Based on their recommendations, the
Company has implemented a number of control measures both in operational and accounting
related areas, apart from security related measures.
Fulfilment of RBI Norms and Standards
The Company has fulfilled all RBI Norms and complied with it.
Cautionary Statement
This report describing the companys activities, projections about future estimates,
assumptions with regard to global economic conditions, government policies, etc may
contain "forward looking statements" based on the information available with the
company. Forward-looking statements are based on certain assumptions and expectations of
future events. These statements are subject to certain risks and uncertainties. The
company cannot guarantee that these assumptions and expectations are accurate or will be
realized. The actual results may be different from those expressed or implied since the
companys operations are affected by the many external and internal factors, which are
beyond the control of the management. Hence the company assumes no responsibility in
respect of forward-looking statements that may be amended or modified in future on the
basis of subsequent developments, information or events.
Company follows all Mandatory Accounting Standards.
For and on behalf of the Board of Directors,
Abhinav Capital Services Limited
Sd/-
Chetan Karia
Director
DIN: 00015113
Place: Mumbai
Date: 14th August 2023
+91-9892691696
