dhenu buildcon infra ltd Management discussions

Dhenu Buildcon Infra Limited is Non-Banking Financial Company (NBFC),primarily engaged in the business of Investment in securities. The Management discussions and analysis is given hereunder:-

INDIAN ECONOMY:

The COVID-19 pandemic has impacted most countries, including India. This resulted in countries announcing lockdown and quarantine measures that sharply stalled economic activity. Several countries took unprecedented fiscal and monetary actions to help alleviate the impact of the crisis.

Government of India had announced various measures to support the economy during this period. The Reserve Bank of India had also announced several measures to ease the financial system stress, including enhancing system liquidity, reducing interest rates, moratorium on loan repayments for borrowers, asset classification standstill benefit to overdue accounts where a moratorium had been granted amongst others to alleviate the economic stress induced by the pandemic which had an impact across sectors that were already showing signs of a slowdown even before the outbreak.

International Monetary Fund (IMF), in its World Economic Outlook April 2021 has projected a stronger global recovery, with global growth projected to be 6 percent in 2021 and 4.4 percent in 2022. IMF expects India to see a GDP growth of 12.5% in 2021. These projections are further backed by independent rating agencies like CRISIL, which expects Indias gross domestic product (GDP) growth to rebound to 11% in fiscal 2022, after an estimated 8% contraction this fiscal. Going by these projections, India Is expected to be one of the spearheads of global economic recovery through fiscal 2022.

Even with high uncertainty about the path of the pandemic, a way out of this health and economic crisis is increasingly visible. Thanks to the ingenuity of the scientific community, we have multiple vaccines that can reduce the severity and frequency of infections. In parallel, adaptation to pandemic life has enabled the global economy to do well despite subdued overall mobility, leading to a stronger-than-anticipated rebound, on average, across regions.

NBFCs PERFORMANCE:

The consolidated balance sheet of NBFCs grew at a slower pace in Q2 and Q3:2020-21 following the pandemic and muted credit demand. NBFCs continued to disburse credit despite disruptions caused by the pandemic, albeit at a slower pace. The retail sector benefitted from incremental credit from NBFCs, partly aided by their low GNPA (Gross NonPerforming Asset) ratios and the ability of NBFCs to adapt to customer preferences. The profitability of the NBFCs improved in Q2:2020-21 compared to the corresponding quarter of the previous year as fall in expenditure was steeper than fall in income. The asset quality of NBFCs witnessed improvement in 2020-21 so far, compared to Q4:2019-20 on account of regulatory forbearance; the full effect of the pandemic on asset quality, however, may only become evident over time.

PERFORMANCE IN FINANCE SECTOR:

While the Indian economy was losing growth momentum for several years before the pandemic, the exceptionally bad growth performance in 2020-21 is largely on account of the 68-day long hard lockdown which was imposed on March 25, 2020 to prevent the spread of Covid-19 infections in the country, and continuing restrictions on economic and recreational activities for the rest of the year.

The economy has been recovering with the easing of restrictions. Indias GDP re-entered growth territory in the quarter ending December 2020.

Some recent developments that have happened in this sector are:

• The ratio of the transaction was increased with the share ratio and deposit system

• Prime Minister Narendra Modi has launched the long awaited India Post Payments Bank (IPPB) in order to ensure financial inclusion for the masses.

• Treating NBFCS with large gold loan assets separately like asset finance companies and infrastructure asset companies.

• Non-taxability for income from NPAs.

• Opening-up of avenues to raise long term funds to reduce the asset liability mismatch.

• Credit, insurance and investment penetration is rising in rural areas.

• Rising income is driving the demand for financial services across income brackets.

OUR BUSINESS OPERATIONS:

Dhenu Buildconis a medium size NBFC engaged in the sole business segment of financial services. Due to losses in the previous years, Company is striving to recover the losses and are exploring the other prospective growth avenues so as to restore the Companys financial position. A rapid fluctuation in market activities due to ongoing amendments in business sector are the challenges which Company is facing and striving to find news ways to come back in the profit track.

OPPORTUNITIES AND THREATS:

NBFCs have played an important role by providing funding to the unbanked sector by catering to the diverse financial needs of the customers. In the current year, the challenges for NBFCs have moved from liquidity to asset quality with the COVID -19 outbreak and the impact on customers repayment capacity to repay loans. Liquidity covers of the NBFCs are largely dependent on the repayments that they receive from their customers.

The second wave of COVID-19 and its potential impact has now raised questions on the economic growth and credit offtake in India. Imposition of sudden lock downs / delay in vaccination program, could result in a deeper economic recession in near future posing threats for our lending business and may impact disbursals and consequent growth in the portfolio.

The economist fraternity is expecting a sharp V-shaped recovery in the economy and are projecting Indias GDP to grow in double digits which will result in increase in credit offtake and consumer spending.

Company is taking proper steps to mitigate the business risk.

SEGMENT-WISE PERFORMANCE:

The Company is operating on only one broad segment.e. financial services. Hence separate segmental reporting is not applicable. The Company has no activity outside India.

OUTLOOK:

Due to the impact of the coronavirus (COVID-19) pandemic NBFCs are going to face challenge demand may fall due to uncertainty in the global economy and capital markets. Workforces are facing the risk of infection, and governments are beginning to enact restrictions on movement and both add an unpredictable dimension to the crisis.

However, Your Company is expanding its business activity and putting continuous efforts to attain further efficiencies. Further, the Company is confident that in spite of the possible recessionary conditions in the industry it will perform better in view of the strong fundamentals of the company and hope to improve its performance as well.

RISK AND CONCERNS:

Your Company, in pursuit of its business objectives, is exposed to certain risks such as credit risk, market risk, liquidity risk and operational risk. These risks have the potential of impacting the financial strength, operations and reputation of your Company. Keeping this in mind, Your Company continues to have an effective risk management. The Management continuously oversees the risk management process including identification, impact assessment and drawing mitigation plans.

INTERNAL CONTROL SYSTEM:

The Company has in place adequate internal control systems and procedures commensurate with its size and nature of business. The systems are designed to ensure that the financial and other records are reliable for preparing financial statements.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATING PERFORMANCE:

The operating performance of the Company has been discussed in Directors Report under the head ‘Financial Highlights and Operations and Overall Performance in the current Year.

HUMAN RESOURCES AND INDUSTRIAL RELATIONS:

The Companys human resource continues to be the valuable asset of the company. The team has remained as committed as ever and produced results that are considered significant.

RATIOS WHERE THERE HAS BEEN A SIGNIFICANT CHANGE FROM FINANCIAL YEAR 2020 TO FINANCIAL YEAR 2021

During the year under review, the detail of changes made in the following key financial ratios as compare to the immediately previous financial year. The details of the same in a form of comparison is provided as:-

S.No. Particulars of Ratio	Financial Year 2020-21	Financial Year 2019-20
1 Debtors Turnover Ratio	NA	NA
2 Inventory Turnover Ratio	NA	NA
3 Interest Coverage Ratio	NA	NA
4 Current Ratio	55.60	25.55
5 Debt Equity Ratio	0.01	0.03
6 Operating Profit Margin	NA	NA
7 Net Profit Margin	(2.43)	NA
8 Return on Net worth	(0.39)	(0.29)

CAUTIONARY STATEMENT:

The Management Discussions and Analysis describe Companys projections, expectations or predictions and are forward looking statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied,. Important factors that could make a difference to the Companys operations include economic conditions affecting demand and supply and price conditions in domestic and international market, changes in Government regulations, tax regimes, economic developments and other related and incid,ental factors.