pyxis finvest ltd Management discussions

Industry structure and developments

The Non-Banking Financial Company (NBFC) sector has become to be recognized as one of the systemically important components of the financial system, showing consistent year-on-year growth.

It plays an important role in developing entrepreneurship and financial inclusion agenda by complementing the banking sector in delivering credit to the unbanked segments of society, especially to the micro, small, medium and emerging client segment. The success of NBFCs can be clearly attributed to better product lines, lower cost, wider and effective reach, strong risk management capabilities to check and control bad debts, and better understanding of their customer segments.

Opportunities and Threats

The banking and non-banking financial company (NBFC) sector in India has witnessed significant market-driven and regulatory events in the last decade. Cumulatively, these have had a profound impact on the industry. Some of the noteworthy developments include the issuance of new bank licenses for universal banks, the introduction of a new category of banks (small finance banks and payments banks); insolvency processes and the resolution of a few significant non-performing assets (NPA) situations; and consolidation of public sector banks (PSBs) among others.

There is a need for financial institutions to assess and evaluate their current business model and take a strategic call on their commercial and operational framework to anticipate newer ways of doing business.

Outlook

With the ongoing stress in the banks, NBFCs have an opportunity to increase market share and also fill the latent credit demand for micro, small, medium and emerging client segment. Their contribution to the economy is expected to grow in double digits. While bank will compete on low cost of funds and strong corporate relationships, NBFCs can script success based on flexible processes, ability to take quick credit calls and structuring deals with risk mitigating solution.

NBFC that are able to create a sustainable proposition in terms of client segment, product and size will step ahead in the race.

Industry Overview

Non-Banking Finance Companies (NBFCs) form an integral part of the Indian financial system. It is recognized as one of the systemically important components of the financial system and has shown consistent year-on-year growth. NBFCs 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.

The NBFC sector in India has undergone a significant transformation over the past few years. The NBFCs ground level understanding of a customers profile and credit needs, in conjunction with their ability to innovate and customise products as per a customers requirements, makes them strongly competitive in the market place.

Though the SME and MSME sector has been growing and contributing to the economy substantially, they face significant challenges. Lack of adequate capital, poor infrastructure facilities, lack of access to modern technology and access to markets are the key hindrances. NBFCs have been partnering SMEs and MSMEs to ease some of these problems.

Major Risks, Concerns Industry Related Risks

The current overall macro-economic scenario where NBFCs face various challenges: The liquidity crisis has worsened in the Financial Year 2022-23

Clients are facing increasing stress due to economic slowdown that has also resulted in consequential stress in the asset book. The start of the current Financial Year 2023-24 has deepened the downward curve and all organisations across sectors will now be facing a ‘new normal.

Internal Control Systems and their Adequacy

The Company has adequate internal control systems and procedures covering all financial and operating functions commensurate with the size and nature of operations. Continuous efforts are being made to see that the controls are designed to provide a reasonable assurance with regard to maintaining of accounting controls and protecting assets from Unauthorized use or losses. The Audit Committee looks into all internal control aspects and advices corrective actions, as and when required.

The internal control system has been developed to ensure accurate and reliable financial reporting and preparation of financial statements in accordance with applicable laws, Regulations and generally accepted accounting principles.

Discussion on Financial Performance and Outlook

The Company is into the business of providing loans and financial facilities. During the year under review, your Company has recorded total profit of Rs. 1,19,63,120/- against Rs. 1,67,10,407/- in the previous year. Profit before Taxation for the financial year ended March 31, 2023 recorded Rs. 2,09,76,494/- as compared profit to Rs. 1,72,10,407/-in the previous year.

Material Developments in Human Resources / Industrial Relations front, including number of people employed

There were no major developments during the year under review. The Company has no permanent employees on the rolls.

Details of significant changes in key financial ratios:

Sr. No. Particulars	FY 2023	FY 2022	YoY Change
1. Interest coverage ratio (times)	233.35	51.53	181.82
2. Current Ratio (times)	0.50	2.57	2.07
3. Debt Equity Ratio (times)	-	0.01	0.01
4. Debt Service Coverage Ratio	NA	7.02	NA
5. Asset Coverage Ratio	NA	68.03	NA
6. Operation Profit Margin Ratio (%)	NA	NA	NA
7. Net Profit Margin Ratio (%)	53.96	90.83	36.87
8. Return on Net Worth (%)	6.65	9.95	3.30

Cautionary Statement/Disclaimer (for this Report)

Certain statements in this Report which describe the Companys objectives, predictions may be “forward-looking statements” within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document, due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and government policies that may impact the Companys business, as well as its ability to implement the strategy. The Company does not undertake to update these statements.