tokyo finance ltd Management discussions

STRUCTURE AND DEVELOPMENTS, OPPORTUNITIES AND THREATS, PERFORMANCE, OUTLOOK, RISKS AND CONCERNS:

The Reserve Banks MPC also thinks the headline inflation is expected to remain above 4% throughout FY 2023-24.

The RBI Governor had earlier said taking a pause on the repo rate depends on the situation on the ground. I am driven by whats happening on the ground, what is the outlook, what are the trends, how is the inflation build-up.

The global economy is facing headwinds from the lingering geopolitical conflict, elevated inflationary pressures from across countries, and tighter financial conditions on the back of monetary policy tightening by major central banks across the world.

According to the Reserve Bank of India estimates, the economic growth for the first two quarters will increase, and it has cut the estimates for the last two quarters of the fiscal year. The countrys gross domestic product (GDP) is estimated to grow at 6.5% in 2023-24, with real GDP in Q1 forecast to grow at 8%, Q2 at 6.5%, Q3 at 6% and Q4 at 5.7%.

Industry Structure and Developments:

"Indian NBFCs Set to Keep Rising In 2023"

The world seems to be recovering from the aftermath of the challenges posed in the last few years. Overall despite the challenges,

India has emerged as a bright spot in terms of economic growth amidst an outlook of global slowdown. The World Bank has reported that India is better positioned to navigate global headwinds and handle global spill overs, as compared to other major emerging economies.

Also, it is heartening to see that the RBI and policymakers recognise the contribution of NBFCs in supporting real economic activity and meeting the credit demand, especially reaching the unbanked. RBI Scale based norms implemented last year have strengthened the sector while offering operational flexibility to meet the increasing credit demand and aid Indias economic growth.

During the last financial year, despite geopolitical events, extremely high global volatility in commodities, currencies, financial markets and increase in interest rates globally to tame the high inflation, NBFCs in India have weathered the storm well and exhibited resilience.

In 2023, NBFCs are expected to play a larger role in supporting the socioeconomic construct of the Indian economy. The opportunity for credit penetration remains very high in India. The NBFCs can set a new benchmark by introducing new business models with personalised offerings through digital platforms.

Opportunities & Threats:

RBI Policy document states that the risks for GDP are evenly balanced but the protracted geo political tensions pose downside risk to the growth.

In its last policy meeting held on April 06, 2023 RBI exercised pause and kept the Policy rate at 6.50%. Since March 2022, RBI has increased the policy rates by 4.50%.RBI has projected that during FY 2024 Indias GDP is expected to grow at 6.50% and inflation is expected to soften towards 5.20%. Price stability, sustainable growth and financial stability to remain at the core of RBI. Based on the above the nominal GDP is expected to grow at 11.70%

On the conclusion of the recent 27th meeting of Financial Stability and Development Council (FSDC) headed by honorable Finance Minister Smt. Nirmala Sitharaman, she said that "We see that global financial situation is daunting but at the same time, the Indian economy and financial sector is well protected and well regulated. We have to be cautious and be on our toes and need to take timely steps to mitigate any vulnerability.

India is positioned to grow much better than its peers as and when the global environment improve. Well Capitalised NBFCs having good client profiling risk management system will outpace the growth of the economy..

(Data Sources: Industry, RBI and Rating Agency reports)

IndianAccounting Standards (IndAS):

The Ministry of Corporate Affairs (MCA), based on its notification in the Official Gazette vide Notification G.S.R. 111(E) and G.S.R. 365(E)dated February 16, 2015 and March 30, 2016 respectively, notified the Indian Accounting Standards (Ind AS) applicable to certain class of companies. Ind AS has replaced the Indian GAAP prescribed under section 133 of the Companies Act, 2013 read with Rule 7 of the Companies (Accounts) Rules, 2014. These notifications are applicable to our company effective April 1, 2019.

INTERNAL CONTROL SYSTEMSANDTHEIRADEQUACY:

The Company has adequate Internal Control System commensurate with its size and nature of business. All transactions are properly authorized, recorded and reported to the management. The internal control systems are designed to ensure that the financial statements are prepared based on reliable information. The Internal Audit is continuously conducted by in house Internal Audit department of the Company and Internal Audit Reports are reviewed by the Audit Committee of the Board periodically.

SEGMENT WISE PERFORMANCE:

The Company is operating in a single segment. Hence, no separate segment wise information is given.

HUMAN RESOURCES DEVELOPMENT AND INDUSTRIAL RELATIONS:

The Company recognizes human resources as a key component for facilitating organizational growth and shareholder value creation. Various initiatives have been taken to strengthen human resources of the Company. Relation with the employees and workers were cordial. Your Company is dedicated to partnering with employees and strengthening its talent pool by providing them with growth and career enhancement opportunities.

CAUTIONARY STATEMENT:

Statements in the Management Discussion and Analysis and Directors Report describing the Companys strengths, strategies, projections and estimates, are forward-looking statements and progressive within the meaning of applicable laws and regulations. Actual results may vary from those expressed or implied, depending upon economic conditions, Government Policies and other incidental factors. Readers are cautioned not to place undue reliance on the forward looking statements.

REPORT ON CORPORATE GOVERNANCE

Corporate governance is an ethically driven business process that is committed to values aimed at enhancing an organizations brand and reputation. This is ensured by taking ethical business decisions and conducting business with a firm commitment to values, while meeting stakeholders expectations.

At Tokyo Finance Limited it is imperative that our company affairs are managed in affair and transparent manner .This is vital to gain and retain the trust of our stakeholders.

Pursuant to Regulation 15(2) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, compliance with the certain provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not mandatory for the time being for Companies having paid up equity share capital not exceeding Rs.10 crore and Net Worth not exceeding Rs.25 crore, as on the last day of the previous financial year.

Since our Company falls in the ambit of aforesaid exemption, compliance with the certain provisions of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 is not mandatory for our Company. Consequently our Company is not required to provide separate section on Corporate Governance.

However, our Company has complied with all the disclosures and requirements which are applicable under all the rules, regulations for the time being in force.

Affirmation of Compliance with Code of Conduct

Pursuant to the requirements of Regulation 34(3) read with Schedule V of the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, I hereby confirm that the Company has received affirmations on compliance with Code of Conduct of the Company for the financial year ended 31st March, 2023 from all the Board Members and the Senior Management Personnel.

Sd/-

Velji L. Shah

Chairman & Managing Director

DIN: 00007239

Place: Mumbai

Date: 28thApril, 2023