ANNEXURE- IV
Your directors are pleased to present the Management Discussion and Analysis Report for
the year ended 31st March, 2023.
NBFC
The Company is engaged in the Business of Non-Banking Financial Institution and it has
obtained a certificate of Registration from the Reserve Bank of India. The Company has not
accepted any deposit from the public. The Company has complied with the prudential norms
relating to the Income Recognition, Accounting Standards, asset classification and
provisioning for bad and doubtful debts as applicable to it in terms of Non-Banking
Financial (Non-Deposit taking non-systematic Accepting or Holding) Companies Prudential
Norms (Reserve Bank) Directions -2007.
Since the last decade, the NBFC sector has held critical importance in the Indian
Financial Services sector. The main objective of NBFCs has been serving the underserved
segment of the Indian economy such as MSME, microfinance and other retail segments. Over
the past few years, NBFCs have undergone a significant transformation and today they form
an important component of Indias financial system. NBFCs are harnessing technology to
reinvent traditional business models and offer loans in a faster, customized and more
convenient way to the underbanked population of India. NBFCs especially those catering to
the urban and rural poor namely NBFC-MFIs and Asset Finance Companies have a complimentary
role in the financial inclusion agenda of the country.
ECONOMIC OVERVIEW
For India, 2022 was special. It marked the 75th year of Indias Independence. India
became the worlds fifth largest economy, measured in current dollars. Come March, the
nominal GDP of India will be around US$ 3.5 trillion. In real terms, the economy is
expected to grow at 7 per cent for the year ending March 2023. This follows an 8.7 per
cent growth in the previous financial year. The rise in consumer prices has slowed
considerably. The annual rate of inflation is below 6 per cent. Wholesale prices are
rising at a rate below 5 per cent. The export of goods and services in the first nine
months of the financial year (April - December) is up 16 per cent compared to the same
period in 2021-22. Although the high oil price this year compared to last inflated Indias
import bill and caused the merchandise trade deficit to balloon, concerns over the current
account deficit and its financing have ebbed as the year rolled on. Foreign exchange
reserve levels are comfortable and external debt is low.
Indias economic growth in FY23 has been principally led by private consumption and
capital formation. It has helped generate employment as seen in the declining urban
unemployment rate and in the faster net registration in Employee Provident Fund. Still,
private capex soon needs to take up the leadership role to put job creation on a fast
track. Recovery of MSMEs is proceeding apace, as is evident in the amounts of Goods and
Services Tax (GST) they pay, while the Emergency Credit Linked Guarantee Scheme (ECGLS) is
easing their debt servicing concerns. The Mahatma Gandhi National Rural Employment
Guarantee Scheme (MGNREGS) has been directly providing jobs in rural areas and indirectly
creating opportunities for rural households to diversify their sources of income
generation. Schemes like PM-Kisan and PM Garib Kalyan Yojana have helped in ensuring food
security in the country, and their impact was also endorsed by the United Nations
Development Programme (UNDP)l. The results of the National Family Health Survey (NFHS)
also show improvement in rural welfare indicators from FY16 to FY20, covering aspects like
gender, fertility rate, household amenities, and women empowerment.
As we head into 2023, global economic developments are expected to complicate the
outlook further, and therefore continued vigilance is a critical aspect in maintaining
Indias external resilience. Going forward, India needs to focus on medium-term challenges
such as securing technology and resources for energy transition and skilling its youth for
the 21st century economy, while staying the course on fiscal consolidation. With
continuous efforts during the last several years, a strong platform has been erected on
which the superstructure of a middle-income economy can be constructed.
OPPORTUNITIES & THREAT
Digital ecosystem development pushed by the government as well as regulators and other
market participants offer opportunities to provide better customer experience and become
more efficient. With the increase in usage of smart phone across various geographies and
continuous growth in data connectivity adoption, the Company foresees a big opportunity to
understand customers better and offer more personalized services and offerings in a
cost-efficient way. In addition, the need for finance and new investment opportunities in
a growing economy like India are positives for the Company. The main factors that may pose
a threat to the Companys business are the uncertainties that may prevail due to
increasing competition in the Financial Market.
The Company has achieved consistent and sustained growth over the years on the back of
its choice of markets to cater to and products to offer. It has assiduously gauged which
segments offer promise for lenders and what the needs of these segments are, in terms of
lending structures. The size of these financially unserved markets presents a huge
opportunity. Over the years, the company has understood that an opportunity is nothing
without sound execution. The most significant threat for any lending activity is to
constantly exhibit operational excellence and contain the loss given defaults within the
acceptable limits. The Company believes that this task is to be worked upon continuously
through a very sharp learning and unlearning in order to achieve operational excellence.
Use of digital solutions for business/collections also one of the opportunities for the
Company.
Moreover, in the Indian economy, Market Size NBFC play a vital role as it has the
ability to cover inaccessible areas. In the Financial sector, it is considered as a
substitute for banks. In a comparison of banks, it is preferable because they have
expertise in niche segments. In the Indian financial sector, it is a third largest segment
of banks.
INDUSTRY OUTLOOK
The NBFCs would begin the year with sufficient capital buffers, stable margins and
sizeable on-balance sheet provisioning, while adequate system liquidity would aid funding.
Nevertheless, an expected increase in systemic interest rates and asset quality issues in
some segments due to the lagged impact of pandemic would be a drag on the operating
performance.
The sector has been facing increased regulatory oversight and push towards convergence
with banks through various measures such as scale-based regulation, realignment in asset
quality classification and Prompt Corrective Action norm. The incremental impact of the
notification on NPA recognition however will be moderate as the maximum impact has already
been seen in 3QFY22 figures and NBFCs are holding adequate provisions.
REGULATORY
The Reserve Bank of India (RBI) has been continually strengthening the supervisory
framework from NBFCs in order to ensure sound and healthy functioning and avoid excessive
risk taking. In furtherance of these objectives, RBI issued new guidelines during past
years. 1. Know your customer guidance - Anti money laundering Standards 2. Guidance on
classification, monitoring and reporting of frauds 3. Guidance on Securitization of
Standards Assets
SCALE BASED REGULATIONS fSBRj FOR NBFCS
The contribution of NBFCs towards supporting real economic activity and their role as a
supplemental channel of credit intermediation alongside banks is well recognized. Over the
years, the sector has undergone considerable evolution in terms of size, complexity, and
interconnectedness within the financial sector. Many entities have grown and become
systemically significant and hence it has been felt to align the regulatory framework for
NBFCs keeping in view their changing risk profile. The RBI therefore, came out with the
revised regulatory framework Scale Based Regulations (SBR) for NBFCs vide its circular
dated Oct 22, 2021. These directions are applicable w.e.f. Oct 1, 2022
UNION BUDGET 2022-23 HIGHLIGHTS
The Budget 2022 focused on digital and technology and sectors like infrastructure,
health, education and provision of e-services to the masses. This Union Budget laid a
foundation and blueprint of the economy over Amrit Kal of the next 25 years - from India
at 75 to India at 100.
India posted a 9.2% GDP growth, the highest among all economies. We are amid the
Omicron wave; the speed of our vaccination campaign has helped dramatically. The FM stated
that Sabka Prayaas will continue with strong growth. Budget 2022 has provided a sharp
increase in public investment and capital expenditure provision. Strategic transfer of
ownership of Air India has been completed.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has adequate internal control systems including suitable monitoring
procedures commensurate with its size and the nature of the business. The internal control
systems provide for all documented policies, guidelines, and authorization and approval
procedures. The statutory auditors while conducting the statutory audit, review and
evaluate the internal controls and their observations are discussed with the Audit
committee of the Board.
The Companys internal control systems are supplemented by periodic reviews by the
Management. The Audit Committee reviews its findings and recommendations at periodic
intervals. Companys internal control system is adequate considering the nature, size and
complexity of its business.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
Employees are our greatest strength and the foundation of our Company. They play a
pivotal role in offering better product quality, design and services to our customer. We
ensure that employees gain ample opportunities for personal and professional growth. High
quality recruitment supports the talent management practices of the Company. To augment
the journey of internationalization of the Company and create a multicultural work force,
strengthening leadership cadre with appropriate domain competencies have been done. The
Company continues to foster a high-performance culture by recognizing good performers and
providing them with career enhancing opportunities. Several HR initiatives have been taken
for the strategic alignment of the HR function with the business objectives. These
initiatives encompass employee engagement, learning & development besides
improved internal communication mechanism with employees.
FINANCIAL REVIEW
The Company has registered a turnover of Rs. 47.23 lakhs and made profit before
depreciation and tax of Rs. 1.90 Lakhs. The depreciation provided during the year was Rs.
0.13 lakhs and the Net Profit for the year after depreciation and tax was Rs. 1.38 Lakhs.
The above turnover is out of both operational activities.
CAUTIONARY STATEMENT
The statements in this Management Discussion and Analysis describing the companys
objectives, estimates, expectations may be "forward-looking statements" within
the meaning of applicable security laws and regulations. Actual results could differ
materially from those expressed or implied due to several factors which are beyond the
control of the management. In accordance with the Code of Corporate Governance approved by
the Securities and Exchange Board of India, Shareholders and readers are cautioned that in
the case of data and information external to the company, no representation is made on its
accuracy and comprehensiveness though the same are based on sources believed to be
reliable. Utmost care has been taken to ensure that the opinions expressed by the
management herein contain its perceptions on the material impacts on the companys
operations but it is not exhaustive. The Company assumes no obligation to amend or update
forward looking statements in future on the basis of new information, subsequent
developments or otherwise.
By order of Board of Director
For Ramchandra Leasing and Finance Limited
|
Sd/- |
Sd/- |
|
Pradeep Saremal Jain |
Harsha Hitesh Bhanshali |
| Place: Vadodara |
Director |
Director |
| Date: 31/08/2023 |
DIN:03363790 |
DIN: 08522254 |
+91-9892691696
