nagreeka capital infrastructure ltd Management discussions

As the economy steps into a new fiscal year, the road ahead did not look easy with risks mainly emanating from the current global environment. The irony is that energy shortages, inflation and banking crises in the Western hemisphere are strangely similar to situations in ASEAN countries faced in the late 1990s, except that given the luxury and comfort of being global currencies, the West is not reeling under a currency depreciation crisis.

The Economic scenario namely, growth, individual sustenance, fiscal deficits, and central bank balance sheet expansion are now markedly different when we compare Europe, USA to the large ASEAN nations. During the Covid-19 pandemic, the governments doled out free monies resulting in a consumption frenzy. Despite tariffs and logistics issues in 2021, the average consumer in US remained on a buying spree. Finally, the Ukraine war and the resultant shortages brought about a sudden rise in inflation. The US Fed began to battle inflation, albeit with a lag, resulting in a sharp increase in US Fund Rates. This sudden increase in rates did not allow investors to rebalance their portfolios and thus are left with Mark-to-Market (MTM) losses on their safest asset government securities. Consequently, the US Fed is now dealing with an unforeseen banking crisis.

These events over the past year have impacted investor sentiments negatively. Investors are now more than ever, investing with caution. Further, the turbulence in global financial markets and ensuing uncertainty in gold prices has once again made it a safe heaven. The “de-dollarization” strategy being adopted by central banks has led to this incremental demand. It may be observed that the global uncertainties have driven re-allocation of capital towards precious metals resulting in increased returns over the past five years. Equity investors need to remain cautious that this trend does not extrapolate itself going forward

(b) Indian Economy

India is today one of the most vibrant global economies on the back of robust banking and insurance sectors. The relaxation of foreign investment rules has received a positive response from many companies announcing plans to increase their stakes in joint ventures with Indian companies. Over the coming quarters, there could be a series of joint venture deals between global giants and local players.

Growth in the fintech industry has seen an upward trajectory which shows that the trend is not just a passing phase. It is well known that the deepening of the fintech industry helps in the overall development of the economy. Building on this momentum, India has emerged as one of the fastest growing fintech markets in the world.

The present growth rate of financial sector in India is about 8.5% p.a. An increase in growth rate is equivalent to growth of our economy. Over the past few years, there have been reforms in monetary policies, economic policies, opening up of financial markets, development of other financial sectors etc. The Reserve Bank of India has also played a major role to help in growth of financial sector of India

The Indian economy is staging a broad-based recovery across sectors, from pandemic-induced contraction, international geo-political conflict and inflation and is well positioned to ascend to pre-pandemic growth path. It has been remarkably resilient in the face of a deteriorating external environment. The Governments continued heavy lifting on the capex front will also help drive private sector greenfield capex, which via its multiplier effect will help support domestic growth. RBI forecast for GDP growth for FY 24 is at 6.5% as against provisional estimate of GDP growth for FY 23 at 7.0%. India is likely to maintain its position as the fastest growing major economy

Indias financial services industry has experienced huge growth in the past few years. This momentum is expected to continue. Indias private wealth management Industry shows huge potential. India is expected to have 6.11 lakh HNWIs by 2025. This will indeed lead India to be the fourth largest private wealth market globally by 2028.

The IMF reduced Indias growth forecast for FY2025 by 50 basis points to 6.3%. Despite these downward revisions, India will still maintain its position as one of the fastest-growing major economies globally. The Indian economy has demonstrated remarkable resilience in the face of the deteriorating global situation due to strong macroeconomic fundamentals. Steps to promote ease of doing business, skilled manpower, presence of natural resources, liberal FDI policies, huge domestic market and prospects of healthy GDP growth have made India an attractive destination for foreign investors. Thus, going forward, India is expected to see relatively stronger growth

The Company carries on the Business of an Investment Company to invest in and acquire and hold and otherwise deal in shares, stocks, debentures, debenture-stocks, bonds, and securities. The year started with ongoing Russia-Ukraine geopolitical tensions, accelerated monetary tightening by major central banks, volatility in commodity prices etc. Equity markets, which were down during the first quarter, bounced back with Sensex and Nifty achieving an all-time high of 63,284 and 18,812 respectively in the month of December 2022. The key factors that supported the bullish run were relative strong domestic growth, robust corporate earnings, optimistic growth outlook, large inflows into domestic institutional investors etc.

Sensex and Nifty closed at 58,992 and 17,360 respectively in March 2023, down from all-time high due to US banking crisis where multiple banks were declared insolvent. Still, India was the secondbest equity market performer among the emerging markets in FY2023 after South Africa.

India recorded FII outflows for the second consecutive year to the tune of 376 crore. June 2022 witnessed monthly FII outflows at 50,203 crore, 2nd highest ever after March 2020. On the contrary, DIIs recorded highest ever inflows of 2.6 lakh crore

India remains a bright spot and we remain optimistic that Indian equity indices may record double-digit returns in FY 2023-24. A bull market provides opportunities to earn profits from investment and trading activity. With shifting educational reforms and government regulations aimed at educating investors and raising trading awareness among the general public, there is a growing opportunity for Indian stock market. Stock market is also expected to benefit from rising income levels of young working class and self-employed professionals, entrepreneurs and increase of savings. Positive long-term economic outlook will lead to opportunity for investment Leveraging technology to enable best practices and processes

Threats

The competition has increased from Domestic and other developed countries. Because firms can enter and quit an industry with few limitations, the number of substitutes in the same product line at different prices poses a risk of losing to market share from Indian companies. Threats for this Industry are very common and every person is aware of the threats and the risks involved with this Industry. Execution risk Short term economic slowdown impacting investor sentiments and business activities Slowdown in global liquidity flows Increased intensity of competition from local and global players Market trends making other assets relatively attractive as investment avenue

The Company is exposed to various risks such as pandemic risk, credit risk, economic risk, interest rate risk, liquidity risk, cash management risk, technology risks, etc.

Your Company manages its liquidity risk in accordance with its Board approved Liquidity Risk Management Framework which incorporates the stipulations laid down by the RBI. The Company follows a prudent approach for managing liquidity and ensures availability of adequate liquidity buffers to overcome mismatches in case of stressed market environment

To effectively manage market risk on its investment portfolio, Your Company follows a prudent investment approach which guide its investment decisions. The Company has invested its surplus funds mainly in liquid and arbitrage funds; and deposits with banks and highly rated financial institutions. The Company calibrates the duration of investment portfolio to balance the twin objectives of maintaining liquidity for business and minimum adverse fair value change on its investment portfolio.

The Company has well defined and adequate internal control system to safeguard all assets and ensure operational excellence. These systems are being regularly reviewed and wherever necessary are modified or redesigned to ensure better efficiency and effectiveness. The systems are subjected to supervision by the Board of Directors and the Audit Committee, duly supported by Corporate Governance. Company complies with all applicable statutes, policies, procedures, listing requirements and management guidelines.

Human resource is considered as key to the future growth strategy of the Company, Company looks to focus its efforts to further align human resource policies and processes to meet its business needs. The Company aims to develop the potential of every individual associated with the Company as a part of its business goal. Respecting the experienced and mentoring the young talent has been the bedrock for the Companys growth. Human resources are the principal drivers of change. They push the levers that take futuristic businesses to the next level of excellence and achievement.

This report contains forward-looking statements extracted from reports of Government Authorities / Bodies, Industry Associations etc., available in the public domain, which may involve risks and uncertainties including, but not limited to, economic conditions, government policies, dependence on certain businesses, and other factors. Actual results, performance, or achievements could differ materially from those expressed or implied in such forward-looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto. The Company does not undertake to update these statements. .