golechha global finance ltd Management discussions

INDUSTRIAL STRUCTURE AND DEVELOPMENT

Non-banking finance companies (NBFCs) form an integral part of the Indian financial system. They play an important role in nation building and financial inclusion by complementing the banking sector in reaching out credit to the unbanked segments of society, especially to the micro, small and medium enterprises (MSMEs), which form the cradle of entrepreneurship and innovation. NBFCs ground-level understanding of their customers profile and their credit needs gives them an edge, as does their ability to innovate and customize products as per their clients needs. This makes them the perfect conduit for delivering credit to MSMEs.

However, NBFCs operate under certain regulatory constraints, which put the mat a disadvantage vis-?-vis banks. While there has been a regulatory convergence between banks and NBFCs on the asset side, on the liability side, NBFCs still do not enjoy a level playing field. This needs to be addressed to help NBFCs realize their full potential and thereby perform their duties with greater efficiency.

Moreover, with the banking system clearly constrained in terms of expanding their lending activities, the role of NBFCs becomes even more important now, especially when the government has a strong focus on promoting entrepreneurship so that India can emerge as a country of job creators instead of being one of job seekers. Innovation and diversification are the important contributors to achieve the desired objectives.

INDUSTRY OVERVIEW

Non-banking financial companies may grow at 13-15% during fiscal 2024, primarily driven by retail assets, according to ICRA Ltd. The growth outlook has been revised upward, and the ratings agencys estimates suggest that the NBFCs retail assets under management is likely to expand by about 18-20% in fiscal 2024 in comparison to the previous estimate of 12-14%.The housing finance companies are expected to grow at 12-14%, and the NBFC infrastructure segment is likely to grow at 10-12%, according to ICRAs estimates.

The growth of net interest margin and other income is expected to moderate due to an increase in the cost of funds. Even the operating expense is expected to increase, like many other banks, as issuers continue to expand in the fiscal, according to ICRA. A marginal uptick in credit is expected due to higher stage one provisions. The sector is also expected to shift focus towards long-term funding especially that coming from banks, the rating agency said. ICRA estimated that the NBFCs and the HFCs would need incremental funding of about Rs 4.7-5 trillion in the current fiscal to manage the 13-15% AUM growth.

The sector is expected to witness healthy growth and steady expansion in overall bank credit, while the trend of healthy market issuances and strong securitisation demand are expected to ensure the availability of funds, it said. The unsecured loan segment is powering the overall growth of the NBFCs, according to ICRA. This is primarily due to digitisation, cross-selling, and a sharp rise in the share of personal loans as the sector expanded at a 33% compound annual growth rate in the last five years. The share of unsecured loans may touch 26% by next March, rising sharply from 16% in March 2019. In the personal-loan segment, the NBFCs are primarily focused on small-ticket loans, according to ICRA

OPPORTUNITY & THREATS

India is an attractive investment destination and the Companies here are the part of Indias growth story and through this we have also get hold of immense opportunities to expand, strengthen and enhance our business. We have enough headroom available to enlarge our network and at the same time educate number of customers to tie-up with us.

However due to continuing recession throughout world markets, a slowdown in financial flows into the economy and lingering impact of global credit crunch are seen as the greatest risk faced by NBFCs. Further the volatility in the Indian equity markets and the huge liquidity crunch due to global financial meltdown would be a threat for the Companys business growth.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE:

Your company is not dealing in any kind of product as the companys principal business is lending business only and during the year under review, the interest income from loans granted was Rs.47.37Lakhs as against Rs. 99.30Lakhs for the previous year. The operations of the Company have resulted in Profit after Tax of Rs.(174.86) Lakhs as against Rs.40.12 Lakhs in the previous year

OUTLOOK

The Companys present business operations are preponderantly that of Loans & Advances, future of which largely depends upon financial and capital markets. The income from the advances/lending business is steadily growing, contributing significant volume to the overall business of the Company. The Management is optimistic, expects to maintain its performance in FY2022-23 and hopes to grow at a rate faster than the growth of bank credit. The approach would be to continue the growth momentum while balancing risk. As before, it will continue to invest in strengthening risk management practices; and in maintaining its investment in technology and human resources to consolidate its position as a leading NBFC in India.

RISK AND CONCERNS

The Companys risk philosophy involves the developing and maintaining a healthy portfolio within its risk appetite and the regulatory framework. While the Company is exposed to various types of risk, the most important among them are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The measurement, monitoring and management of risk remains key focus areas for the Company which manages this risk by maintaining prudent and commercial business practices.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its operations. Internal control systems comprising of policies and procedures designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations, and that all assets and resources acquired are used economically.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

(In Lakhs)

Particulars	2022-23	2021-22
Total Income	2223.58	119.68
Total Expenses	2461.59	66.178
Profit Before Taxation	(234.11)	53.507
Profit after Tax	(174.85)	40.121
Earnings per Equity share - Basic & Diluted	(3.18)	0.73

KEY FINANCIAL RATIOS:

S.No Particulars	2022-23	2021-22	Reason for Variation
1 Debtors Turnover	NA	NA	NA
2 Inventory Turnover	NA	NA	NA
3 Debt to Equity Ratio	NA	NA	NA
4 Interest Coverage Ratio	NA	NA	NA
5 Current Ratio	171.61	113.68	Reduction in current liability resulted in variation
6 Operating Profit Margin	-24.33	4.23	lossess incurred during the year resulted in negative variation
7 Net Profit Margin	-7.85	33.61	lossess incurred during the year resulted in negative variation
8 Return on Net Worth	-10.52	44.71	lossess incurred during the year resulted in negative variation

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees. There is no material development in the human resources employed in the FY 2022-23 and there are no material developments in the human resources utilized in the Company.

By The Order Of The Board

For Golechha Global Finance Limited

Sd/-

Gyan Swaroop Garg

Chairman & Managing Director

(DIN: 00602659)

Place : Kolkata

Date : 14.08.2023