OVERVIEW
This managements discussion and analysis is designed to provide you
with a narrative explanation through the eyes of our management of how we performed, as
well as information about our financial condition and future prospects. As the
managements discussion and analysis is intended to supplement and complement our
financial statements and the Management Discussion and Analysis Report has been prepared
in accordance with the provisions of Regulation 34(2) (e) of SEBI (LODR) Regulations, 2015
read with Schedule V(B) thereto, with a view to provide an analysis of the business and
Financial Statement of the Company for FY 2022-23 and hence it should be read in
conjunction with the respective Financial Statements and notes thereon.
ECONOMIC OVERVIEW
The Indian economy grew by 7.2 per cent in the financial year ended
March 2023, which is 20 basis points higher than governments estimate, but sharply lower
when compared to 9.1 per cent growth registered in 2021-22. Reversing the downward trend,
the gross domestic product (GDP) expanded by 6.1 per cent in the fourth quarter of
2022-23, helped by an uptick in manufacturing activities. In the second advance estimate
released in February, the National Statistical Office (NSO) had pegged January-March
quarter growth at 5.1 per cent. Better than expected growth in the January-March quarter
augurs well for the economic expansion in the current financial year.
Indias real GDP or GDP at constant prices in the year 2022-23 is
estimated to attain a level of Rs 160.06 lakh crore, as against the first revised
estimates of GDP for the year 2021-22 of Rs 149.26 lakh crore, as per data released by the
National Statistical Office (NSO). Nominal GDP or GDP at current prices in the year
2022-23 is estimated at Rs 272.41 lakh crore, as against Rs 234.71 lakh crore recorded in
the previous year, showing a growth of 16.1 per cent. “GDP expansion in Q4 FY2023 was
appreciably higher than expected while remaining uneven and confirming the hopes of a
sequential pick up in the pace of growth of economic activity,” The GDP growth in the
October-December quarter was reported to be 4.5%.The National Statistical Office had
released its revised estimate of economic growth for FY22 at 9.1%. It was estimated at
8.7% in May last year. Separately, the production growth of eight key infrastructure
sectors slowed down to a six-month low of 3.5% in April 2023. This was due to a decline in
the output of crude oil, natural gas, refinery products and electricity. In April 2022,
the core sector growth was 9.5%. In March 2023, the key infra sectors recorded a growth
rate of 3.6%. The growth rate in April was the lowest since October 2022 when the sectors
expanded by 0.7%. The RBI has projected Indias GDP growth at 6.5% for FY24 and has
predicted inflation to subside at 5.2% with governments focus on capital expenditure,
better capacity utilisation and moderate commodity prices. As per the latest Monetary
Policy, quarterly inflation for FY24 is projected for Q1 at 5.1%, Q2at 5.4%, Q3 at 5.4%
and Q4 at 5.2%. The wide pipeline laid down by Government of India in the FY24 budget for
capital spend will encourage project commissioning and will assist investment demand. The
quarterly GDP growth projections for FY24 is Q1 at 7.8%, Q2 at 6.2%, Q3 at 6.1% and Q4 at
5.9%. India is expected to achieve its fiscal deficit target of 5.9% (of GDP) against 6.4%
for FY23 and stabilize the debt to GDP ratio. The Government aims to bring down the fiscal
deficit below 4.5% by FY26. Export of services has been a stronghold and will continue to
grow robustly and strengthen Indias overall balance of payments position.
INDUSTRY STRUCTURE AND DEVELOPMENT - OVERVIEW:
The Non-Banking Financial Companies (NBFCs) comprise a whole host of
institutions that offer nearly all banking services except for issuing self-drawn checks
and demand drafts. Acting as financial intermediaries they can raise funds from the
public, be it directly or indirectly, and process loans to parties with pay-back capacity.
This group could include businesses such as wholesale/ retail traders, small and medium
enterprises, or self-employed individuals. The overall loan book of NBFCs is projected to
grow by ~13% to reach "50 Trillion by March 2024. The RBI has been appreciative of
the efforts of NBFCs including their efforts towards covering individuals beyond the
financial fold. NBFCs are expected to focus upon new business such as unsecured loans and
the SME segment which promises a higher growth prospect as compared to the traditional
products. Additional funding of “2.9 to 3.3 Trillion in FY24 would be required to
achieve the projected growth. NBFC-Retail sector AUM is projected to grow at the rate of
12- 14% in FY24 and reach "14.7 Trillion by March 24. NBFCs are being instrumental to
leverage technology for quicker paperless disbursals and wider coverage in terms of
people. NBFCs are expected to focus on improving the asset quality and further improve
their profitability. NBFCs spread across segments are looking to knit together in a
community with the help of technology to offer a bouquet of products which will also help
smaller and mid-sized NBFCs to scale and grow among the established.
Going forward, the latent credit demand of an emerging India will allow
NBFCs to fill the gap, especially where traditional banks have been wary to serve.
Additionally, improving macroeconomic conditions, higher credit penetration, increased
consumption and disruptive digital trends will allow NBFCs credit to grow at a
healthy rate over the next five years. Clearly, NBFCs are here to stay.
At the end of the calendar year 2022, banks outstanding credit to
non-banking financial companies (NBFCs) rose by 35.5% (y-o-y) breaching the “13 Lakh
Crore mark to reach “13.2 Lakh Crore. NBFCs funding as a percentage of total
bank lending increased significantly in calendar year 2022 from 8.5% at the beginning of
the year to 9.9% at the end of the year. The banks credit exposure to NBFCs had crossed
four crucial thresholds in calendar year 2022, i.e., "10 Lakh in January 2022,
"11 Lakh Crore in June 2022 and “12 Lakh Crore in October 2022. The growth has
remained robust due to high growth in the NBFC asset book and as additional borrowings
moved to banks due to differentials between market yields and interest rates offered by
banks and lower borrowings in the overseas market.
OPPORTUNITIES, THREATS, RISKS AND CONCERNS :
NBFC has played an important role in contributing towards Indias
GDP to the extent that the government is also coming forward and will do so in future to
protect the interests and help the NBFCs to grow and emerge as they have been providing
financial help and services with easy procedure to the people of the country. The business
of NBFC is of profit and their contribution in the growth of the Indias GDP shows
that NBFCs are working for a better in these past years.
In NBFC, credit customers do not have any experience on getting
financial services, they may not naturally engage with the NBFC to take loans for their
business of personal requirements. Therefore, to attract the customers, the NBFCs haveto
spend additional resources in educating and financial literacy and awareness. On the other
hand, once these customersare made aware of the benefits of obtaining a loan from an NBFC,
there is an extreme likelihood to convert the lead into real business.
On the part of Non- performing assets have been a challenge not only
the banks but as well as for the NBFCs. With the new credit customers, the risk remains
higher as compared to those customers who have a credit history. Therefore, NBFCs
continuously works on checking and balancing so as to make sure that the EMIs are on time
and records of the customers remains up to date and any issues are notified immediately.
RBI and Government restrictions: With more stringent norms governing
the functioning of NBFC and certain government restrictions act as a hindrance in smooth
functioning of NBFC.
FUTURE OUTLOOK:
As per a report by the RBI, the share of NBFCs in the total credit
extended to the economy increased from 16.4 per cent in December 2022 to 29.1 per cent in
February 2023. With a promising future ahead, they are projected to expand at a CAGR of
18.5 per cent between 2021 and 2026, as per Research and Markets.
In the dynamic financial landscape of India, non-banking financial
companies (INBFCs) have emerged as catalysts of economic growth, transforming lives and
empowering small businesses. These institutions offer a wide array of financial services,
filling the gaps left by traditional banks and catering to underserved segments of
society. Regulated by the Reserve Bank of India (RBI) and the Securities and Exchange
Board of India (SEBI), NBFCs have emerged as a vital source of credit for micro, small,
and medium-sized enterprises (MSMEs). As per a report by the RBI, the share of NBFCs in
the total credit extended to the economy increased from 16.4 per cent in December 2022 to
29.1 per cent in February 2023.
With a promising future ahead, they are projected to expand at a CAGR
of 18.5 per cent between 2021 and 2026, as per Research and Markets. This article explores
the pivotal role of NBFCs in fostering economic growth and empowering small businesses in
India. One of the significant contributions of NBFCs is the promotion of financial
inclusion in India. Traditional banks have faced challenges in meeting the credit needs of
certain segments of the population, leaving a significant portion underserved.
Recognising this credit gap, NBFCs have stepped in to address the
issue, particularly in rural and semi-urban areas. They provide credit facilities to
farmers, small and medium-sized enterprises (SMEs) and low-income households, thereby
bridging the credit gap and extending financial services to those who need them the most.
Government programs such as ‘Pradhan Mantri Jan Dhan Yojana"
(PM]JDY), ‘Mudra Yojana, and ‘Standup India provide financial
services to unbanked and underbanked individuals. NBFCs support these programs and the
provision of credit to the beneficiaries.
As India grapples with the current economic crisis that is impacting
the world, NBFCs looked up to the upcoming Budget with high expectations, hoping for
exemptions, liquidity support, and other measures that could help them navigate through
these challenging times. With an average annual growth rate of 22 per cent during their
initial stages, NBFCs have shown resilience and continued expansion despite economic
slowdowns and challenges.
These institutions have become vital participants in the financial
sector, introducing innovative credit distribution strategies that have had a significant
positive impact on the Indian economy and the overall financial system. Moreover, NBFCs
collaboration with the government and the private sector has played a crucial role in
improving the living conditions of the general population.
As we move forward, the importance of NBFCs in fostering economic
growth and empowering small businesses cannot be underestimated. Their ability to provide
financial services to underserved segments and their remarkable growth potential make them
invaluable in shaping Indias financial future. In the words of a renowned economist,
"NBFCs are the driving force behind Indias economic transformation, fueling progress
and unlocking opportunities for businesses and individuals alike."
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has a proper and adequate system of internal control in all
spheres of its activities to ensure that all its assetsare safeguarded and protected
against loss from unauthorized use or disposition and that the transactions are
authorized, recorded and reported diligently.
The Company ensures adherence to all internal control policies and
procedures as well as compliance with all regulatory guidelines.
Also, the Company has an adequate system of internal control to ensure
that the resources are used efficiently and effectively so that: * Assets are safeguarded
and protected from unauthorized use or disposition. * All significant transactions are
authorized, recorded and reported correctly. * Financial and other data are reliable for
preparing financial information.
* Other data are appropriate for maintaining the accountability of
assets. The internal control system is supplemented by an extensive internal audits
programme, review by management, documented policies, guidelines and procedures
FINANCIAL AND OPERATIONAL PERFORMANCE/ SEGMENT-WISE OR PRODUCT- WISE
PERFORMANCE:
The Company is a Non-Banking Finance Company (INBFC). It has only one
segment in the Company. Please refer Directors Report for financial performance.
MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT
NUMBER OF PEOPLEEMPLOYED:
Your Company has cordial relations with its employees. The Company
commends the commitment, dedication and competence shown by its employees in all aspects
of business. With the growing requirements of the Company, Company has taken necessary
initiatives to ensure not only the retention of the employees but also their growth and
development.
CAUTIONARY STATEMENT:
The Board of Directors have reviewed the Management Discussion and
Analysis prepared by the Management. Statementin this report of the Companys objective,
projections, estimates, exceptions, and predictions are forward lookingstatements subject
to the applicable laws and regulations. The statements may be subjected to certain risks
and uncertainties. Companys operations are affected by many external and internal factors
which are beyond the control of the management. Thus the actual situation may differ from
those expressed or implied. The Company assumes no responsibility in respect of forward
looking statements that may be amended or modified in future on the basis of subsequent
developments, information or events.
ACKNOWLEDGEMENT
Your directors take this opportunity to place on record their
appreciation to all employees for their hard work, spirited efforts,dedication and loyalty
to the Company.
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By the order of the Board |
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For SIDH AUTOMOBILES LIMITED |
Date: |
26.08.2023 |
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oo Sharma . |
Deepak |
Kumar |
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anaging rector |
rector |
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Place: |
New |
Delhi |
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DIN: 02928210 |
DIN: 02936689 |
+91-9892691696
