GLOBAL ECONOMIC OVERVIEW
The global economy post recovery from COVID-19 pandemic was just beginning to show some
green shoots of economic activity when an unexpected unanticipated crisis of
Russia-Ukraine conflict took place. As a result of this pent-up demand, supply
disruptions, and rising commodity prices, inflation reached multi-decade highs in a number
of economies in CY22, prompting central banks to aggressively tighten monetary policy in
order to return inflation to target levels. The global economy, which grew by 3.4% in
CY22, is anticipated to grow by 2.8% in CY23 and by 3.0% in CY24. Recent bank failures in
the United States serve as a reminder of the difficulties posed by the interaction between
tightened monetary and financial conditions and the accumulation of vulnerabilities. As a
response to such a crisis, governments and authorities acted swiftly and have successfully
contained the financial crisis. The advanced economies are anticipated to experience a GDP
growth rate of 1.3% in CY23 and 1.4% in CY24, as compared to 2.7% in CY22. Chinas
reopening in CY22 and stable global financial conditions have contributed to an effective
start for emerging markets in CY23. The emerging markets and developing economies, which
grew by 4.0% in CY22, are expected to witness growth of 3.9% in CY23 and then 4.2% in
CY24.
INDIAN ECONOMY
Financial year 2023 began on a mixed note. On the positive side, after wreaking havoc
for almost two years, the impact of the COVID-19 pandemic on lives and livelihoods started
receding. This was aided by a mass immunisation programme and the advent of a less
virulent variant called omicron. However, the flip side was the impact of inflationary
trends, supply chain disruptions emanating from China, and the start of the Russia-Ukraine
conflict impacting commodity prices.
In FY2023, the Indian economy faced multiple challenges. The countrys retail inflation
indicator, consumer price inflation (CPI) inched above the RBIs tolerance range in
January 2022. It remained above the target range for almost twelve months before
retracting within the upper tolerance of 6% in November 2022. Rising international crude
prices coupled with domestic weather conditions like excessive heat and unseasonal rains
kept food prices high, fuelling retail inflation. The Government cut excise and customs
duties and restricted exports to cool off inflation. The RBI, like other central banks,
raised the monetary policy rates and reduced excess systemic liquidity. Major areas of
concern for the economy were elevated commodity prices leading to a depreciation of the
Indian rupee, higher retail inflation (both core and food inflation) leading to the RBI
raising interest rates and rationalising systemic liquidity, and a rising current account
deficit (CAD). However, despite these critical challenges, India emerged as the fastest
growing major economy in the world.
INDUSTRY STRUCTURE AND DEVELOPMENT
Non-Banking Financial Companies ("NBFCs"), are one of the most critical
pillars for financial services in India. They play a critical role in supporting economic
growth across income levels, sectors as well as geographies, and in doing so, leading to
more employment opportunities and greater wealth creation. However, the challenging
macroeconomic environment, weaker than expected demand, liquidity concerns, and lower
investor confidence in the sector, led to a significant moderation in the financial
performance in FY 2022-23.
The growing importance of NBFCs is reflected in the consistent rise of their credit as
a proportion to GDP as well as in relation to credit extended by SCBs to the NBFC sector.
Given the increasing importance of NBFCs, the RBI, in the last few years, has increased
its regulatory oversight over the sector. Multiple guidelines such as (i) vigil over
asset-liability management practices, (ii) maintaining liquidity ratios, (iii) increased
reporting requirements, and (iv) scale-based regulation, have led to NBFCs adopting
practices in line with banks. The regulatory vigil is based on four key cornerstones of:
(i) responsible financial innovation, (ii) accountable conduct, (iii) responsible
governance, and (iv) centrality of the customer.
We believe that NBFCs with superior capital adequacy, better margins, frugal cost
management, prudent risk management and those incorporating above four key cornerstones in
their business models will continue to deliver sustainable growth in the foreseeable
future.
STRENGTHS
High Capital Adequacy Ratio
Diversified Product & Customer Profile
Adequate Internal Control System
Experienced Promoters
Brand Name of SRG Group in Rural Sector
Speedy processing and sanctioning of loan
Hassle-free documentation process offering maximum flexibility to the Customers
OPPORTUNITIES & THREATS
SRGSFL has been able to explore new areas for its business. The major opportunity for
the Company lies in grasping the new areas and niche markets which are untapped by Banks
and other large NBFCs. Increasing trend in conversion of cash sales to financed sales also
provide a boost to a business like ours.
In the current year, a sharp increase in cost of funds and tightening of regulations by
the Reserve Bank of India (RBI) may pose challenges to Non-Banking Financial Companies
(NBFCs). In a rising interest scenario, the cost of borrowings for NBFCs was raised in
2022-23.
SEGMENT REPORTING
The Company is exclusively engaged in the Finance business and revenues are mainly
derived from this activity. Accounting Standard 17 regarding Segment-wise Reporting issued
by the Institute of Chartered Accountants of India and notified under the Companies
(Accounting Standards) Rules, 2006 does not apply to your Company since revenues are
derived from only one segment i.e. from finance activity.
RISKS AND CONCERNS
Your Company is exposed to internal and external risks. The internal risks relates to
the risks within the Company due to change in management, personnel and policies, lapses /
inadequacy in existing infrastructure facilities, delinquencies on the part of employees,
staff attrition, misfeasance etc. The external risks can be associated to those factors
which are not within the control of the Company like change in interest rates, government
regulations, competition from others operating in similar business, etc.
RISK MANAGEMENT
Your Company is exposed to internal and external risks. The internal risks relates to
the risks within the Company due to change in management, personnel and policies, lapses /
inadequacy in existing infrastructure facilities, delinquencies on the part of employees,
staff attrition, misfeasance etc. The external risks can be associated to those factors
which are not within the control of the Company like change in interest rates, government
regulations, competition from others operating in similar business, etc.
INTERNAL CONTROL SYSTEMS & ADEQUACY
SRGSFL has an adequate system of internal control in place which has been designed to
provide a reasonable assurance with regard to maintaining of proper accounting controls,
monitoring of operations, protecting assets from unauthorized use or losses, compliance
with regulations and for ensuring reliability of financial reporting. SRGSFL has
documented procedures covering all financial and operating functions.
SRGSFL has robust internal audit programme, where the internal auditors, an independent
firm of chartered accountants, conduct a risk-based audit with a view to not only test
adherence to laid down policies and procedures but also to suggest improvements in
processes and systems. Internal audit observations and recommendations are reported to the
Audit Committee, which monitors the implementation of such recommendations.
INFORMATION TECHNOLOGY
Pursuant to RBI Master Direction - Information Technology Framework for the NBFC
Sector, the Company having asset size below 500 crores, adopted the measures as mentioned
under Section-B of Master Direction-Information Technology Framework for the NBFC Sector.
The board has approved the Information technology policy. The Company has adopted various
measures for physical/ logical access controls, well-defined user role, a Maker-checker
concept to reduce the risk of error and misuse and to ensure reliability of
data/information, information security and cyber security, BCP Policy etc. Your Company is
currently using in-house software for operations and accounting. Adequate arrangements
have been made for backup of data.
DISCUSSION ON FINANCIAL PERFORMANCE AND OPERATIONAL HIGHLIGHTS
The financial and other operational performance of the Company for the year under
review has been discussed in detail in the Directors Report. The Cash-Flow Statement and
the Balance Sheet are annexed to this Annual Report.
KEY CHANGES IN FINANCIAL INDICATORS
The Key financial ratios of the company are as under:-
Sr. Ratios No. |
As on 31.03.2023 |
As on 31.03.2022 |
Growth/degrowth % |
| 1 Capital Adequacy Ratio% |
102.30 |
108.90 |
-6.06% |
| 2 Net Interest Margin(NIM)% |
16.17 |
16.22 |
-0.31% |
| 3 Cost to Income ratio% |
72.62 |
71.71 |
1.27% |
| 4 Return on Average Asset% |
3.63 |
2.03 |
78.82% |
| 5 Return on Average Equity% |
3.79 |
2.92 |
29.79% |
| 6 Revenue(Rs. In Lakhs) |
213.02 |
209.74 |
1.56% |
| 7 PAT(Rs. In Lakhs) |
51.91 |
38.61 |
34.44% |
NET WORTH
Net worth as on 31st March 2023 is Rs 1394.66 Lakhs as compared to Rs.
1342.43 Lakhs of previous year.
HUMAN RESOURCES
The Board values and appreciates the contribution and commitment of the employees
towards performance of your Company during such a challenging period of COVID. We have
also supported our employees during such period and we have not witnessed any salary cut.
Human resource development is considered vital for effective implementation of business
plans. The Company aims to align HR practices with business goals, motivate people for
higher performance and build a competitive working environment. Productive high performing
employees are vital to the Companys success. In pursuance of the Companys commitment to
develop and retain the best available talent, the Company continued to offer in house
training programme to staff members in executive development, leadership and management
skills. Employee relations remained cordial and the work atmosphere remained congenial
during the year. SRGSFLs staff strength as at March 31, 2022 was 5.
RELATED PARTY TRANSACTIONS:
Transactions with related parties entered into by the company in the normal course of
business were placed before the audit committee. None of the transactions with any of the
related parties were in conflict with the interests of the company. The details of
transactions with the company and related parties are given for information under notes to
accounts.
LOAN PRODUCTS AND PROCESS:
SRGSFL is primarily engaged in the business of providing Vehicles, construction and
mining equipments and Business Loan by offering: (i) Equipment Finance (ii) Vehicle
Finance (iii) Business Loan and (iv) Loan Against Property. Entire operations of the
Company are handled at the Registered Office in Udaipur, Rajasthan along with the
branch/Satellite offices of Group Company.
Company has a well-established and streamlined credit appraisal process. The loan
approval & Disbursement process mainly consists of our simple steps (i)Appraisal(ii)
Security Evaluation(iii)Loan Sanction(iv) Loan Disbursement.
LOANS ANCTIONS AND DISBURSEMENTS:
Your company has not made any new sanction or disbursement during the year.
ACCOUNTING STANDARDS:
Your Company has complied with the Accounting Standards issued by the ICAI, Accounting
Standards and Schedule III of Companies Act, 2013.
OTHER COMPLIANCES:
As required under Section 215 of the Insolvency and Bankruptcy Code, 2016, the Company
has registered itself with National E-Governance Services Limited (NeSL) authorized by
IBBI obtained and an agreement is executed with NESL.
The Company has complied with all the applicable Regulations of Companies Act, 2013 and
related Rules there under, SEBI (LODR) Regulations and circulars, notifications etc.
issued by SEBI.
Other related statutory Guidelines/ Directions as applicable to the Company from time
to time have also been strictly adhered to. Compliance of all Regulatory guidelines of
RBI/other statutes is periodically reviewed at Audit Committee/Board.
CAUTIONARY STATEMENT:
Statements in this Directors Report and Management Discussion and Analysis describing
the Companys objectives, projections, estimates, expectations or predictions may be
"forward-looking statements" within the meaning of applicable laws and
regulations. Actual results could differ materially from those expressed or implied. These
statements are based on certain assumptions and expectations of future events over which
the Company has no direct control. Important factors that could make a difference to the
Companys operations include performance of the overall economy; rate of interest position
in the economy; performance of the real estate market and other relevant external and
internal factors.
Statements in this report, describing the companys objectives, estimations,
projections, expectations are
"forward looking statements" based on the managements current expectations
and beliefs concerning future developments and their potential effect upon the Company.
Several factors could make significant difference to the companys operations. These
include economic conditions affecting demand and supply, Government regulations and
taxation, natural calamities, etc. over which the company does not have any direct
control. SRGSFL assumes no responsibility in case the actual results differ materially due
to change in internal or external factors
OUTLOOK:
Consequent to the outbreak of COVID-19 pandemic and its multiple waves the business
operations of the company were impacted and being risk averse company has not performed
any disbursement from last 3 years.
The Management looking to the opportunities in market and will act accordingly. NBFCs
have an opportunity to increase market share and also fill the latent credit demand for
micro, small, medium and emerging client segment. Your Company stands resilient and
prepared for the inevitable recovery.
Place: Udaipur
Date: 05-09-2023 For and on behalf of the Board of Directors
| Sd/- |
Sd/- |
| Vinod K. Jain |
Seema Jain |
| Managing Director |
Director |
| DIN: 00248843 |
DIN: 00248706 |
+91-9892691696
