vck capital market services ltd Management discussions

INDUSTRY OVERVIEW

Non-Banking Financial Companies (NBFC) are an integral part of the Indian Financial system, augmenting competition and diversification in the financial sector and complementing the banking system. The Indian NBFC sector has been providing credit to customers in the underserved and unbanked areas. Their channeling the savings and investments of customers and the subsequent capital formation is necessary for Indias economic growth and development. Their ability to innovate products in conformity with the needs of their clients is well established.

Classification of NBFCs based on activities undertaken

1. Asset Finance Company (NBFC-AFC) - Financing of physical assets supporting productive/economic activity, including automobiles, tractors and generators.

2. Loan Company- Providing finance by extending loans or otherwise for any activity other than its own but does not include an AFC.

3. Investment Company- Acquiring securities for the purposes of selling.

4. Infrastructure Finance Company (NBFC-IFC)- Providing infrastructure loans.

5. Systemically Important Core Investment Company (CIC-ND-SI) - Acquiring shares and securities for investment in mainly equity shares.

6. Infrastructure Debt Fund (NBFC-IDF)- For facilitating flow of long-term debt into infrastructure projects.

7. Micro Finance Institution (NBFC-MFI)- Extending credit to economically disadvantaged groups as well support Micro, Small and Medium Enterprises (MSMEs).

8. Factor (NBFC-Factor)- Undertaking the business of acquiring receivables of an assignor or extending loans against the security interest of the receivables at a discount. 9. NBFC Non-Operative Financial Holding Company (NOFHC)

- For permitting promoter groups to set up a new bank.

10. Mortgage Guarantee Company (MGC)

- Undertaking mortgage activities.

11. Account Aggregator (NBFC-AA)

- Collecting and providing the information of customers financial assets in a consolidated, organized and retrievable manner to the customer or others as specified by the customer.

12. Non-Banking Financial Company

- Peer to Peer Lending Platform (NBFC-P2P) providing an online platform to bring lenders and borrowers together to help mobilize unsecured finance.

NBFCs operate at higher yields mainly because they cater to underserved markets. Their operating cost as well as bad debt expenditure is lower compared to banks due to: - Better risk appreciation and management.

- Lower cost due to lean and focused business models.

- Better service through faster response and personalized approach.

INDUSTRIAL OVERVIEW

The Capital Market plays a very important role in promoting economic growth through the mobilization of long-term savings and the savings get invested in the economy for productive purpose. The capital market in India is a well-integrated structure and its components include stock exchanges, developed banks investment trusts, insurance corporations and provident fund organization. There are two important operations carried on in these markets. The raising the new capital and Trading in the securities already issued by the companies. Capital market deals in both, debt and equity. In these markets productive capital is raised and made available to the corporate. Securities and Exchange Board of India (SEBI) has undertaken regulatory framework in the primary market and approved many progressive measures.

According to CRISIL, NBFCs in India are expected to see 18% Compounded Annual Growth Rate (CAGR) for the next two-and-a-half years and raise their share in total credit to 19% by 2021. The home loans segment, the largest business segment for NBFCs, is expected to grow at a steady CAGR of 18% over the next three years as they focus on self-employed customers and lower ticket size.

The NBFCs market share in the wholesale finance business is expected to increase from 12% in 2014 to 19% in 2021. Home loans, the largest business segment for non-banks, is expected to grow at a steady CAGR of about 18% over the next three fiscals, owing to sharper focus of HFCs on self-employed customer segment and lower ticket sizes. With regulatory guidelines and government policy driving developers to focus on the affordable housing market, there lies huge opportunity for growth by investing and financing these properties. Since the Pradhan Mantri Awas Yojana provides home buyers with a Credit Linked Subsidy Scheme, the effective rate of interest payment falls below rental yields. This, in turn, improves the conditions for buying affordable housing property, empowering Housing Finance Companies (HFCs) and NBFCs to invest more in this segment.

FUTURE OUT LOOK

NBFCs continue to be an integral part of the countrys financial service ecosystem. The expected reforms and drive towards various core sectors will provide more opportunities to the NBFCs to create significant financial inclusion and employment opportunities across the country. In line with the governments vision to achieve inclusive growth, the next key step is to include the unbanked population in the formal financial system. This will empower them and result in a significant increase in the average per capita income. Government policies, combined with the financial services industrys efforts to look for growth, will augment financial inclusion.

CAUTIONARY STATEMENT

Certain statements made in the Management Discussion and Analysis Report relating to Companys objectives, projections, outlook, expectations, and estimates may constitute forward looking statements within the meaning of the current market and economic scenario with applicable laws and regulations. Actual results may differ from such expectations, projections in the capital market. Several other factors also could make a significant difference to the Companys operations such as economic condition, Government regulations and taxation, etc.

FOR SHRYDUS INDUSTRIES LIMITED

FORMERLY KNOWN AS VCK CAPITAL MARKET SERVICES LIMITED

Sd/-

SHREY PREMAL PAREKH

MANAGING DIRECTOR

DIN: 08513653

Place : Kolkata

Date : September 07th, 2023