INDUSTRY AND ECONOMIC OVERVIEW
Indian Financial Services Industry
Indias financial services sector consists of the capital market, insurance sector,
Banking Sector, Co-operative Banks and Non-Banking Financial Companies (NBFCs). Further,
the RBI has given license to various companies to set-up of payments bank that is expected
to revolutionise the financial sector in India as it focuses to conduct banking activities
primarily through mobile phones. As a step forward for the financial inclusion, the
Reserve Bank has also given license to various micro-finance companies to setup Small
Finance Bank. Banks with a small finance bank license can provide basic banking service of
acceptance of deposits and lending. The aim behind these to provide financial inclusion to
sections of the economy not being served by other banks, such as small business units,
small and marginal farmers, micro and small industries and unorganised sector entities.
The Government of India has introduced several reforms to liberalise, regulate and enhance
this industry. With a combined push by both government and private sector, India is
undoubtedly one of the worlds most vibrant capital markets.
Pawansut Holdings limited is a Non-Banking Financial Company registered with Reserve
Bank of India.
SUBSIDIARY COMPANY
As there are no subsidiaries of the Company, Investment made in Subsidiaries is NIL.
OUTLOOK AND OPPORTUNITIES
The Non-Banking Financial companies (NBFCs) sector forms an integral part of the Indian
financial system. The sector plays a vital role in Indias economic growth and
development. It aids in boosting Financial Inclusion initiative by lending services to
the unbanked population in rural/ semi-rural or few urban areas. They provide product and
services such as personal loans, housing loan, gold loan, insurance and loan for
purchasing commercial vehicles, machinery, and farm equipment amongst others. NBFCs
ability to understand their customer profile, their credit portfolio and deliver on
customized products and services makes them as one of the fastest growing sectors
providing innovation in financial products. NBFCs are rapidly gaming importance as
financial intermediary in the retail finance. The growth is driven not only by the
traditional NBFC products like commercial vehicle financing but also in the areas of loans
financing like personal and housing etc. The success of the sector is attributed to the
cost efficiency, bad debt control, customized products and better customer services. Along
with on-going stress in the public sector banks due to mounting debts, the lending
potential of the banks are going to deteriorate further, thereby providing opportunity for
NBFCs to increase their reach.
The various opportunities available to the NBFCs include:
• With the appetite of banks to extend credit likely to remain weak in the future
as well, this offers opportunities to NBFCs to address the gap NBFCs play an important
role in promoting inclusive growth in the country, by catering to the diverse financial
needs of bank excluded customers. The coverage of unbanked (self-employed or small
businesses) provides the due impetus to government schemes like Start-up India or Make in
India. By ensuring finances to such segments with low or no income proofs, NBFCs have
directly or indirectly helped the economic growth and self sustainability of the country.
• Digital trend to provide disruptive opportunities for innovation and
partnerships.
• Demand from geographic areas and customer segments that traditional banks do not
cater to.
SEGMENT - WISE OR PRODUCT - WISE PERFORMANCE-NIL RISK MANAGEMENT
Risks are an inherent feature of any business that can negatively impact the growth of
the Company if not handled properly. The risk management techniques and processes enable
early identification of problematic loans. These include early default analysis, product
analysis, and probability of default. The company works with strong analytic data to
leverage areas of opportunity in a highly competitive industry scenario. As a lending
entity, the Company is exposed to various risks such as credit risk, market risk,
liquidity risk, legal risks, interest rate risk and operational risk. The Company is
conscious of these factors and places emphasis on risk management practices to ensure an
appropriate balance between risks and returns. The Companys Risk Management Committee
continuously works towards identifying various risks that can impact its business and
undertakes necessary actions to mitigate them. These risks and mitigations are
periodically reviewed to determine its effectiveness. Some of the risks identified by the
Company include:
Liquidity Risk Management and measures for mitigation The Company may face an asset-
liability mismatch caused by difference in maturity profile of its assets and liabilities.
This risk may arise from the unexpected increase in the cost of funding anasset portfolio
at the appropriate maturity and the risk of being unable to liquidate a position in a
timely manner at a reasonable price. This risk may also arise due to inability of the
Company to procure liquid funds, as per expected terms, as and when required that could
result in lack of adequate funds to provide financing, thus impacting the overall business
growth. The Company actively monitors its liquidity position to ensure that it can meet
all borrowers and lenders related funds requirement. The Risk Management Committee
comprising of senior management lays down policies and quantitative limits and apprises
the Audit Committee periodically on the asset liability mismatch and liquidity issues. The
company has also strong equity backing from various leading private equity players.
Further, it maintains all the financial parameters within the specified norms to enhance
safety.
Interest Rate Risk Management and measures for mitigation The Company being a NBFC
leverage on its capital and largely depends on resources raised from the banking system,
NBFCs and market instruments to carry on its operations. The company is therefore
significantly vulnerable to interest rate movement in the market and has to closely align
with the directions of key benchmark rates. The risk also includes inability of the
Company to source lowcost funds and provide them on credit at higher rates can lead to
losses and decline in net fund availability over the years.
Credit Risk Management and measures for mitigation Credit risk is a risk of loss due to
failure of a borrower/ co-borrower to meet the contractual obligation of repaying debt as
per agreed terms. This risk is due to lack of stringent scrutiny and inability of the
Company to judge the creditworthiness of the borrowers may result in rising NPAs and
impact the cash flows. The Company, through years of experience in the field, has
established detailed procedures, guidelines and norms that it stringently follows for
determining the creditworthiness of the customer. The Company assesses every customer
personally and through an external compliance team before committing to a credit exposure.
Moreover, it regularly updates these guidelines and procedures to ensure the safety of its
credit exposure.
Operational Risk Management and measures for mitigation Operational risk can result
from a variety of factors, including failure to obtain proper internal authorizations,
improperly documented transactions, failure of operational and information security
procedures, failure of computer systems, software or equipment, fraud, inadequate framing
and employee errors. Inefficiency in operations and lower turnaround time due to various
internal (inadequate or failed internal processes, people and systems) and external
factors may result in decline in growth and profitability. Operational risk is mitigated
by maintaining a comprehensive system of internal controls. Additionally, establishing
systems and procedures to monitor transactions, maintain key back-up procedures, by
undertaking regular contingency planning and providing employees with continuous training.
Further, a well-defined set of rules and policies reduces repetition and elimination on
unnecessary processes.
THREATS
• Natural Calamities like flood, drought, earthquake. The business and the credit
risk of the proposed bank can be affected by local conditions, natural calamities and
others.
• High cost of funds for NBFCs pose threat to the NBFC sector more particularly
when RBI is issuing license for small finance Banks.
INTERNAL CONTROL SYSTEMS
The Company has adequate system of internal controls for business processes, with
regard to operations, financial reporting, fraud control, compliance with applicable laws
and regulations, etc. The Company has internal control systems commensurate to the size
and nature of business it operates in. The internal control and systems form a part of
good governance and is
implemented to check that the proper checks and balances are in place. The internal
controls are framed in such a way to minimize the risk of fraud and safeguard of Companys
assets.
The internal audit adopts a risk based audit approach and conducts regular audits of
all the branches/offices of the Company and evaluates on a continuous basis, the adequacy
and effectiveness of the internal control mechanism, adherence to the policies and
procedures of the Company as well as the regulatory and legal requirements. The company
has well drafted policies and procedure in the form of manuals.
These policies and procedures are well established and followed meticulously. The
company adheres to audit process which encompasses risk identification, risk assessment,
risk address and reviewing & reporting risk. The Company has established risk
management and audit framework to identify, assess, monitor and manage credit, market,
liquidity and operational risks. This is extremely important as many of our borrowers do
not have any assets and also do not have adequate literacy skills. Thecompany has three
levels of the audit which include surprise branch audit, Pre disbursement audit for client
identification and checking of credit worthiness of the clients and post disbursal audit.
Under the post disbursal audit, the loan utilization is checked. The internal audit
department also tracks the attendance of client in the centre meeting.
The Internal Audit Department reports to the Managing Director and conducts both
routine and as well as surprise audits and special audits. The internal audit reports are
placed before the Audit Committee for review. The Audit Committee reviews die adequacy and
effectiveness of the internal audit function, including the structure of the internal
audit department, annual audit plan, staffing etc., and ensures effective and independent
review process. The audit recommendations are actively followed up and implemented. As
part of the effort to evaluate the effectiveness of the internal control systems, our
Companys internal audit department reviews all the control measures on a periodic basis
and recommends improvements, wherever appropriate. In addition to in house internal audit
department, the company has engaged independent internal auditor who submits its report to
the board.
HUMAN RESOURCES
People are PHL main resource in realizing its ambition. Therefore, Human Resources
Management (HRM) is an integral part of the business strategy and an important line
responsibility. The company conducts its diversified activities through business units,
which report directly to the Board of Directors.
Attracting and retaining competent talent, for an emerging business, such as ours,
while focusing on training needs a development is absolutely imperative.
The company recognizes that Human Resources are an extremely important and critical and
long term investment. The companys top management honors the dignity of each individual
irrespective of the position and highly values the feelings and emotions of the people.
Industrial relations with the Union are cordial and peaceful.
TECHNOLOGY
Digitisation has been the core focus for the technology function across mobility,
analytics, core applications and infrastructure domains, as the company strongly believes
that digital technology would be an integral component for business growth.
PHL has made significant strides in the area of technology by continuously investing
into systems taking into account the future growth of (he Company. The Company recognises
the need for a robust information security overlay in a connected world and has invested
significantly in globally accepted platforms and solutions for Enterprise Security
solutions.
PERFORMANCE REVIEW
During the financial year ended 31stMarch 2022, Revenue from Operations
decreased tol6,20,523/- as against 61,28,486/- in the financial year ended 31slMarch
2021, a downfall of 73.55%. The Loss after Tax for the financial year ended 31st
March 2022 is Rs. (6,934.00)/- as against (23,79,889.00)/- in the financial year ended 31stMarch
2021.
Review of Financial Performance of the Company for the year under review:
| Particulars |
2021-22 |
2020-21 |
| Revenue |
16,20,523.00 |
61,28,486.00 |
| Profit before tax |
(6,934.00) |
(23,79,889.00) |
| Net Profit |
(6,934.00) |
(23,79,889.00) |
| Share Capital |
11,31,39,050.00 |
11,31,39,050.00 |
| EPS |
0.00 |
0.00 |
KEY FINANCIAL RATIOS
There were no significant changes (i.e change of 25% or more as compared to the
immediately previous financial year) in key financial ratios.
RETURN ON NET WORTH
Return on Net worth was -0.02 % in the previous year while return on networth in the
current year is -0.002%. There has been a change in the return on Net Worth was impacted
due to change in Net Worth.
DISCLAIMER / CAUTIONARY STATEMENT
The Management Discussion and Analysis report containing statements used for describing
the Companys objectives, projections, estimates, expectation or predictions are forward
looking1 in
nature. These statements are within, the meaning of applicable securities laws and
regulations. Though, Company has undertaken necessary assessment and analysis to make
assumptions on the future expectations on business development it does not guarantee the
fulfillment of same. Various risks and unknown factors could cause differences in the
actual developments from our expectations. The key factors that can impact our assumptions
include macroeconomic developments in the country, state of capital markets, changes in
the Governmental regulations, taxes, laws and other statues, and other incidental factors.
The Company undertakes no obligation to publicly revise any forward looking statements to
reflect future/likely events or circumstances.
| Ajeet Agarwal |
Ram KJshSreBansal |
| Director |
Managing Director |
| DIN: 08057120 |
DIN: 05195812 |
+91-9892691696
