<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS REPORT
</dhhead>
Indian Economy Overview
Despite the distressed global economic landscape, the Indian
economy is expected to grow at a robust 7% (in real terms) during the year ending March
2023, after posting a growth of 8.7% in FY 2021-22 according to the Economic Survey —
2023.
Some of the growth drivers were the credit growth to the MSME
sector, which was remarkably high, at over 30.5% on average, during Jan-Nov 2022. The
complex of the central government, which increased by 63.4% in the first eight months of
FY 2022-23, was another growth driver of the Indian economy. The optimistic growth
forecasts also stem from a number of positives like the rebound of private consumption,
which led to a boost in production activity
Another factor that contributed to growth was the near universal
vaccination coverage, which enabled people to spend on contact-based services, such as
restaurants, hotels, shopping malls, and cinemas. Private consumption as a percentage of
GDP stood at 58.4% in Q2 of FY 2022-23, the highest among the second quarters of all the
years since FY 2013-14, supported by a rebound in contact-intensive services.
The return of migrant workers to cities, to work in consumption
sites, led to a significant decline in housing market inventory. This was also supported
by a strengthening of the balance sheets of corporates and the robust capitalisation of
public sector banks, which were ready to increase their credit supply.
While several advanced economies struggling with banking sector
turmoil, bank failures, and contagion risks, the Indian banking and non-banking financial
service sectors remained healthy, and financial markets evolved in an orderly manner,
according to the Monetary Policy Committee (MPC) of the Reserve Bank of India (RBI).
OUTLOOK
Global growth is forecasted to slow from 3.4% in 2022 to 2.8% in
2023 as per International Monetary Funds (IMF) World Economic Outlook, April 2023. A
sustained inflation in many economies, rising interest rates and negative global spillover
effects from the war in Ukraine is expected to dampen trade growth in the calendar year
2023. This is reflected in the lower global trade growth forecast by the World Trade
Organisation at 1% in 2023 from 3.5% in 2022.
The Indian economy is expected to witness GDP growth of 6.0% to
6.8% in FY 2023-24, depending on the trajectory of economic and political developments
globally, according to the Economic Survey 2023. The survey also projects a baseline GDP
growth of 6.5% in real terms in FY 2023-24. The RBI projects headline inflation at 6.8% in
FY 2022-23, which is outside its target range. A surge in the growth of exports in FY
2021-22 and the first half of FY 2022-23 resulted in acceleration in production.
Looking ahead, the RBI MPC expects that higher rabi production
will improve the prospects for the agriculture sector and rural demand, while steady
growth in contact-intensive services is likely to drive urban demand. If these impulses
play out, the consumption story will continue to power growth. Moderating commodity prices
are also providing tailwinds.
Manufacturing and investment activity are expected to provide a
strong thrust to growth, with the gov ernment’s focus on capital expenditure and
capacity utilisation reaching above its long-period average. The only concern is that
despite the positive outlookthe global
headwinds could impact the Indian economy through a drag from net external demand. To
monitor these positive and negative risks, the RBI assured that it will continue to
balance financial conditions in line with the productive requirements of the economy, even
as monetary policy moves decisively to withdraw accommodation. The MPC predicts real GDP
growth of 6.5% for 2023-24, with the overall oudook remaining dynamic and fast-evolving.
POSSIBLE THREATS
Technology has been the most disruptive component in the broking
industry. For brokerages to sustain in the business, adapting to changing realities and
focusing on adding value to investors hold the key. Redundancy due to constant
technological and digital advancement remains a threat to the broking industry. New market
entrants always are breaking through established markets, coming up with more customer
friendly solutions developed from the scratch and unencumbered by legacy systems.
Customers always demand better services, seamless experiences regardless of channel, and
more value for their money.
RISK & CONCERNS
Being a NBFC, India Finsec Limited is exposed to various types
of risks like interest rate volatility, economic cycle, credit risk, market risk,
operational risk and other external risk. Such risks are matter of concern for every NBFC.
Many of the large corporate houses and banks have also diversified into lending and
lending related businesses focusing into niche segments. However, with a rise in number of
players, the competition in sector has intensified and impact of stiff competition in the
market needs to be observed NBFCs faces high competition from public sector, private
sector and foreign banks competing in similar markets. Banks play an important role in
smooth functioning of the economy and provide funding to corporate and individuals. Thus,
stability of businesses and individuals is crucial for the banking industry. In this
scenario, a global slowdown would affect small and mid-size companies more acutely.
Business loans especially to these small and medium enterprises are at risk due to the
forced shutdown.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
There are well-established procedures for Internal Controls for
operations of the company. The finance & audit functions are well equipped with
professionally experienced qualified personnel & play important roles in implementing
the statutory obligations. The company has constituted Audit Committee for guidance and
proper control of affairs of the company.
HUMAN RESOURCES
Human Resources are highly valued assets at India Finsec
Limited. The company seeks to attract, retain and nurture technical & managerial
talent across its operations and continues to create, sustain the environment that brings
out the best in our people with emphasis on training, learning & development. It aims
at career progression and fulfilling satisfactory needs. Performance is recognized and
rewarded through up gradation & job enrichment, performance incentives.
The Company strongly believes that in a service industry like
banking and finance, it is only through people and their contributions that most of the
objectives like offering products to various customer groups and servicing the poor can be
achieved. Your Company believes in spreading the risk, and financing of Loans, Inter
Corporate Deposits, and Funding of IPO etc. The Management has a healthy relationship with
the officers and the Employees.
SEGMENT-WISE PERFORMANCE
The Company is exclusively engaged in the Non-Banking Finance
activities and revenues are mainly derived from this activity. The details with regard to
segment performance of the Company are mentioned in the notes forming part of the
Financial Statements
FINANCIAL PERFORMANCE AND OPERATIONAL PERFORMANCE
The Company is engaged primarily in the business of advancing
loans and investing/trading in securities. We provide tailor-made services to our clients.
During the Financial Year 2022-23, under consideration the performance of the Company was
remarkable. The Company has recorded profit of Rs. 12,96,430/- for the year 2022-23 and
the Total
Revenue for the year ended March 31, 2023 is Rs. 68,04,290/-.
The Company is planning to increase its investment strategy for the growth of the
business.
SIGNIFICANT CHANGES IN FINANCIAL RATIO
During the year following significant changes have been taken
place in the financial ratios on a standalone basis and consolidated basis:
On standalone Basis:
S.No. Particulars |
31st March 2023 |
31st March 2022 |
% change from March 31, 2022 to March 31, 2023 |
12Capital to risk -weighted asset ratio (CRAR) |
0.04 |
0.11 |
-64.02% |
13 Tier I CRAR |
0.04 |
0.11 |
-64.02% |
| 216 valign=top style=width:162.05pt;padding:0in 5.4pt 0in 5.4pt> 14 Tier II CRAR |
0.00 |
0.00 |
0.00% |
15 Liquidity Coverge Ratio |
77.28 |
69.86 |
10.62% |
Reasons for variance of more than 25% in above ratios
(j) Capital to risk -weighted asset ratio (CRAR) |
Investment increased |
(ii) Tier I CRAR |
Investment increased |
On Consolidated Basis:
S.No. Particulars |
As at 31st March 2023 |
As at 31st March 2022 |
% change from March 31, 2022 to March 31, 2023 |
1 Capital to risk -weighted asset ratio (CRAR) |
0.22 |
0.33 |
-27.30% |
2 Tier I CRAR |
27,23,864.46 |
17,49,547.71 |
51.07% |
3 Tier II CRAR |
- |
|
0.00% |
4 Liquidity coverge ratio |
-0.08 |
0.05 |
-13.42% |
Reasons for variance of more than 25% in above ratios
Capital to risk -weighted asset ratio
1 (CRAR) |
Due to increase in risk weighted asset. |
2 Tier I CRAR |
Due to increase in risk weighted asset. |
RESPONSIBILITY FOR THE MANAGEMENT DISCUSSION AND ANALYSIS
REPORT
The Board of Directors have reviewed the Management Discussion
and Analysis prepared by the Management, and the Independent Auditors have noted its
contents. Statement in this report of the Companys objective, projections, estimates,
exceptions, and predictions are forward looking statements subject to the applicable laws
and regulations. The statements may be subjected to certain risks and uncertainties.
Companys operations are affected by many external and internal factors which are beyond
the control of the management. Thus the actual situation may differ
from those expressed or implied. 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.
By
the Order of the Board For India Finsec Limited |
Mukesh
Sharma Director |
DIN-00274217 |
Gopal
Bansal Managing Director |
DIN-01246420 |
Date:31.07.2023 |
Place:Delhi |
+91-9892691696
