vibrant global capital ltd Management discussions

Your company is a NBFC which has been in existence for more than two and a half decades. Your Company is registered with the RBI as a NBFC without accepting public deposits under section 45 IA of the RBI Act, 1934 and has been in the business of providing short term and long-term loans and advances, investing in equity products for a substantial long time now.

Your Company is a professionally managed company with registered office at Mumbai with team of experts to ensure optimal utilization of the assets and improve the overall profitability and financial efficiencies of the company.

MACROECONOMIC OVERVIEW:

In a world that is more interconnected than ever before, all countries are getting impacted by whats happening in other countries. The uncertainty caused by the evolving global scenario is weighing heavily on the outlook for economies across the globe. Amidst this, the Indian economy remains a bright spot and has positioned itself to grow at 7% in 2022-23, making it the fastest growing major economy in the world for third time in a row.

India is also set to act as an important contributor of global economic recovery in the current year. The International Monetary Fund (IMF) expects emerging economies to account for four-fifth of global growth this year, with India alone expected to play the role of a global growth engine and contribute more than 15%. The stable growth of the Indian economy is aided by sustained government capital expenditure, deleveraging of the corporate sector, lower gross non-performing assets in the banking sector, and moderation in commodity prices.

Further, a clutch of high frequency indicators has also been posting robust performance in recent months. GST collections have continued to soar upwards. PMI manufacturing has continued to stay in the expansionary zone for nineteen continuous months. Bank credit growth has been growing upwards of 15% since August 2022. On the services front, air passenger traffic has gained momentum, while services PMI has also inched higher.

The corporate sector performance for 2000 odd non-financial listed companies (Eg. -oil & gas), the third quarter shows a slowdown in topline growth, and a marginal improvement in the net margins due to tapering off of commodity prices from their recent highs.

To support the ongoing growth momentum, Union Budget 2023-24 stuck a commendable balance between growth and fiscal consolidation. Particularly noteworthy is the Governments announcement of enhancing the capital expenditure outlay by INR 10 lakh crores, an increase of 33% from last years print. This amounts to 3.3% of Indias GDP and will immensely bolster economic growth and employment through a multiplier effect.

The capex boost has been complimented by a concerted push towards digitization, which has boosted the productivity levels in the economy. India today has made its own success models in the space of digitization, which it is offering to the world. The Unified Payments Interface (UPI) is a perfect example of technology boosting financial inclusion in the country and among its peers. Recently, Indias UPI and Singapores Pay Now got integrated, which would enable faster remittances between two countries at a competitive rate.

Strong macro-economic fundamentals, therefore, combined with reform-oriented approach of the Government are building Indias economic growth trajectory. However, despite the resilience shown by the Indian economy, there are certain risks hovering on the horizon. Inflation, which emerged as a big challenge post the geo-political conflict between Russia and Ukraine, has averaged 6.8% between April-January FY23 as compared to 5.3% in the same period last year. It has remained above the RBIs upper tolerance band of 2%-6% for most parts of the year except in the two lone months of November-December 2022. The core inflation, too, has remained sticky at around 6%, which is likely to be the key monitorable from RBIs monetary policy trajectory point of view going forward. To fend off the inflationary pressures, RBI on its part has so far raised the key repo rate by a cumulative 250 basis points to take it to 6.5%. The central bank has indicated that it will remain vigilant, monitor every incoming information and data, and act appropriately to maintain price stability in the interest of strengthening medium-term growth.

The domestic monetary tightening has been synchronized with the interest rates being increased by the key global central banks. Admittedly, while the pace of rate hikes has slowed recently, major central banks have reaffirmed their hawkish stance on inflation. There is a high likelihood that entrenched inflation may prolong the tightening cycle, and therefore, borrowing costs may stay ‘higher for longer.

On the external front, exports demand has been affected by a slowdown in global economy including Indias major export destinations such as US, EU and China. The impact has been quite evident as seen by the contraction in merchandise exports in the recent months. Imports too turned negative in January 23, although continued to outpace exports growth, thus pressuring the trade deficit. Going forward, the World Trade Organization (WTO) expects merchandise trade growth in 2023 to slow down to 1% from 3.5% in 2022. This prognosis from WTO is expected to exacerbate the external headwinds, thus necessitating the need for adequate support from domestic growth impulses for sustaining the aggregate demand.

Challenges and Resilience despite Challenges:

As the economy steps into a new fiscal year, the road ahead does not look easy with risks mainly emanating from a weak global environment. In an increasingly globalized world, the prospects of Indias future growth come against the backdrop of a difficult global macroeconomic scenario, thus raising the headwinds for domestic growth.

In FY2023, the Indian economy faced multiple challenges. The countrys retail inflation indicator, consumer price inflation (CPI) inched above the RBIs tolerance range in January 2022. It remained above the target range for almost twelve months before retracting within the upper tolerance of 6% in November 2022. Rising international crude prices coupled with domestic weather conditions like excessive heat and unseasonal rains kept food prices high, fueling retail inflation. The Government cut excise and customs duties and restricted exports to cool off inflation. The RBI, like other central banks, raised the monetary policy rates and reduced excess systemic liquidity. Major areas of concern for the economy were elevated commodity prices leading to a depreciation of the Indian rupee, higher retail inflation (both core and food inflation) leading to the RBI raising interest rates and rationalising systemic liquidity, and a rising current account deficit (CAD). However, despite these critical challenges, India emerged as the fastest growing major economy in the world.

The upshot, however, is that the fundamentals of the Indian economy remain resilient on the back of a strong reforms agenda being pursued since last decade or so. Specifically, support to economic growth will come from the expansion of public digital platforms and lagged impact from the path-breaking measures announced such as PM Gati Shakti, National Logistics Policy and the PLI scheme to boost manufacturing output in the last few years. The Governments continued heavy lifting on the capex front will also help drive in the private sector greenfield capex, which via its multiplier effect will help support domestic growth.

The second advance estimate of national income released by the central statistics office (CSO) on 28 February 2023 expects real GDP growth in FY2023 to be 7.0%.

Table 1: Real GDP and GVA and growth, India	FY2CZ0 (2nd HE)	FYZ021 (2nd RE)	FY2022 (1st RE)	FYZ023 [2nd AE)
Real GUP(T in trillion]	145.2	1369	149.3	159.7
Real GVA(T in trillion]	132.2	126.8	138-0	147.1
Real GUP growth	3.794	(5.790	9.194	7.096
Real GVA growth	3.8%	(4.190	8.894	6.696

Source: Government of India, Central Statistics Office (CSC). AE denotes Advance estimate, and RE denotes revised estimate.

Key Performance Indicators for Indian Economy 2022-23:

Some Key Performance Metrics worth mentioning reflecting the economic performance of 2022-23 that resulted in overall GDP growth of 7.0 % were as under:

The Indian economy expanded 6.1% year-on-year in Q1 2023, higher than an upwardly revised 4.5% in Q4 2022 and well above market forecasts of 5%. The expansion was mainly boosted by private consumption, services exports and manufacturing amid easing input cost pressures.

Services have emerged as a major driver, comprising more than half of GDP.

Private spending rose at a faster 2.8% (vs 2.2% in Q4 2022),

Public expenditure rebounded (2.3% vs -0.6%)

GFCF rose faster (8.9% vs 8%).

Stocks recovered (5.9% vs -0.1%)

Exports (11.9% vs 11.1%) increased way more than imports (4.9% vs 10.7%).

On the production side, the manufacturing sector grew for the first time in three quarters (4.5% vs -1.4%) and faster increases were recorded for the farm sector (5.5% vs 4.7%), construction (10.4% vs 8.3%), financial and real estate (7.1% vs 5.7%), and public administration (3.1% vs 2%).

Chart A depicts Indias real GDP growth over the same period by quarters for the last four financial years.

The quarterly trend of GDP growth in FY2023 pegs the year-on-year growth of 5.1% in Q4 FY2023, 4.4% in Q3 FY2023, 6.3% in Q2 FY2023 and 13.2% in Q1 FY2023. Private consumption showed some signs of slowdown. A weaker trend in government final consumption expenditure is understandable as the spend on welfare schemes has moderated in comparison to what was spend during the pandemic. Government led capital expenditure has continued to be an important driver of the economy with gross fixed capital formation (GFCF) expected to contribute to 34.0% of the GDP in FY2023 versus 32.7% of the GDP in FY2022.

Economic Outlook for India

The Government of India announced a growth oriented and expansionary budget for the FY2024. It has tried to strike balance between fiscal consolidation and growth by continuing its focus on capital expenditure and creating fiscal space for that by curtailing revenue expenditure. It has set a target of reducing the central governments fiscal deficit to 5.9% of the GDP in FY2024 from 6.4% (revised estimate or RE) in FY2023, while using the infrastructure capex tool to support the economy. The Government has budgeted for INR 10 trillion towards capital expenditure for FY2024, an increase of 33% year-on-year. On balance, we believe that the Indian economy has weathered the external shocks reasonably well. The proof of it is that the country has emerged as the fastest growing major economy in the world.

The calendar year 2023 began on a promising note with improved supply conditions, resilient economic activity and some degree of stability in financial markets. In just a few weeks of

March 2023 the sentiment changed as fresh headwinds emerged from the banking sector turmoil in some advanced economies. Bank failures in the USA and Switzerland with their contagion risks came to the forefront. However, the banking and non-banking financial services sector in India remained healthy and evolved in an orderly manner. The general expectation is that

Indias GDP for FY2024 would record a growth in excess of 6%. and will be around 6.80%. Of course, much depends on a normal rainfall in the coming year. The risk of monsoon falling below normal levels (after four consecutive years of normal rainfall) remains a wildcard and could hit agricultural production and impact food prices.

OVERALL PROSPECTS:

The Overall Prospects seem good with the economy expected to grow at around 6.80%. The optimistic growth forecast of 6.8% for the year 2023-24 is based on number of positives like the rebound of private consumption given a boost to production activity, higher Capital Expenditure (Capex), near-universal vaccination coverage enabling people to spend on contact-based services, such as restaurants, hotels, shopping malls, and cinemas, as well as the return of migrant workers to cities to work in construction sites leading to a significant decline in housing market inventory, the strengthening of the balance sheets of the Corporates, a well-capitalized public sector banks ready to increase the credit supply and the credit growth to the Micro, Small, and Medium Enterprises (MSME) sector to name the major ones.

NBFC OUTLOOK WITH RESPECT TO INDUSTRY

After weathering countless challenges over the past three fiscals, further aggravated by the Covid-19 pandemic, fiscal 2023 has brought growth back into focus for NBFCs. This is expected to continue into fiscal 2024, with assets under management (AUM) of NBFCs projected to increase 11-13% vis-a-vis single-digit growth over the past three fiscals (2020-22). The acceleration will ride on improving economic activity, strengthened balance sheet buffers, and better asset quality metrics.

Indeed, NBFCs are critical to overall credit delivery in India, as indicated by exponential increase in AUM from INR 3.6 lakh crore in fiscal 2008 to ~INR 27 lakh crore at present. For a better understanding of their criticality in the credit space, NBFCs accounted for almost 16% share of overall credit in fiscal 2022. Over the past three fiscals, NBFCs largely focused on liquidity, capital and provisioning buffer. These, combined with the consistent improvement in economic activity, have put the sector in a better position today to capitalize on growth opportunities.

That said, two key monitorable remain. First, intensifying competition from banks, especially in the traditional retail segments of home loans and vehicle finance. Second, rising interest rates have increased the cost of borrowing for NBFCs, which is limiting their competitiveness in some asset classes. To be sure, NBFCs are realigning their portfolio strategies to combat these challenges. Their focus is shifting towards non-traditional asset classes unsecured loans; micro, small and medium enterprise (MSME) finance; and used vehicle finance which are expected to post higher growth. Consequently, these segments are garnering higher share in incremental disbursements. While the traditional segments will also grow, the rate is unlikely to surpass the pre-pandemic levels. As large NBFCs tap new segments, co-lending and partnerships with the emerging and mid-sized NBFCs will gain traction. With this shift and NBFCs being able to pass on the increase in cost of borrowing to consumers, at least in incremental disbursements, gross spreads are likely to compress 40-60 basis points (bps) this fiscal. However, improvement in asset quality will provide some cushion.

NBFCs have created substantial management overlays in the past few fiscals, which will provide support going forward. In fact, NBFCs are expected to dip into previously created management overlays, which along with improving asset quality metrics should lower credit costs. Net-net, the overall earnings profile for NBFCs is expected to remain stable

BUSINESS RISK MANAGEMENT:

The execution of risk-management techniques in the sector to guarantee that the business models remain viable, sufficiently ring-fenced, and sustainable continues to be difficult against the background of an obvious expansion in the scope of operations and growing regulatory rigor.

Asset quality standards will highlight any weaknesses in the frameworks credit risk management. In contrast, risk-adjusted yields on investments, treasury earnings, and "mark to market" commitments can highlight market risk management issues.

Any operational risk management (OPM) slackness within the company cannot be brought to light immediately, which causes its difficulty to build up. Appropriate OPM strategies are needed to cover the entire entity from bottom to top and vice versa.

We realize the imperative to be able to de-risk the company in the long run and the need to be able to establish strict standard operating procedures. Additionally, standardizing operational risk management practices and obtaining certification might assist in reducing hazards.

The sustainability of the organizations may be threatened if operational risks are not controlled. Beyond being successful in expanding their businesses, NBFCs face a challenging task in controlling operational risk. A sound risk prioritization strategy can help businesses thrive in the thriving economy that is about to emerge in the coming years.

To avoid market risk, management has to periodically evaluate its business model, taking into account the segments in which it plans to operate. They have to stay competitive and adjust their markets as needed, and management regularly analyses how its peers in the industry stack up against one another.

Credit assessment with robust risk controls enables an institution to evaluate risks and ensure adherence to stringent standards of governance and regulatory requirements. Inadequacies can be found and rectified before they develop into crises if efficient risk management models and risk management methods are implemented in the NBFC Sector.

As you are aware, The Company has quoted investments which are exposed to fluctuations in stock prices. The Company continuously scans the environment, be it market or regulatory or industry trends and its concurrent movements to assess and realign market exposure for equity. Based on that, it takes remedial and preemptive measures. Thus, portfolio Risk Management Strategy is a key imperative for Managing risk of our business.

Managing overall portfolio risk

We as a company are aware that we can optimize profits and build a portfolio that is compatible with investment goals and risk tolerance by using these strategies that are well established:

Diversification Strategy The goal of the diversification strategy is to lower the portfolios total risk by investing in various assets. With diversity, losses in one asset can be compensated by gains in another asset because not all investments will perform poorly at the same time.

Asset Allocation Strategy that includes distributing a portfolio among various asset classes, including stocks, bonds, and cash. In order to build a portfolio that is compatible with the investors risk tolerance and investing objectives, asset allocation is used.

Hedging Strategy Using financial instruments to counter a portfolios risk, such as options or futures contracts, is a method known as hedging. An investor who is worried about the value of a particular stock declining, for instance, can buy a put option to hedge against losses.

Portfolio Management and optimization Strategy that entails choosing the best combination of assets to increase a portfolios expected return while lowering its risk.

By analyzing various investing scenarios using mathematical models, the best portfolio is chosen.

Active Management Strategy Making investment selections based on market conditions and in-depth security analysis.

Budgeting for Risk Allocating risk among various investing strategies or asset classes. Making a portfolio that is compatible with companys risk tolerance and investment objectives is the aim of our risk budgeting.

HUMAN RESOURCES RISK MITIGATION:

We, as a company do believe that Human Risk Management aimed at developing strategies to mitigate business risk due to human capital has to the holistic, proactive and with due consideration to human capabilities and limitations. The effective management of human resource-based risks is a cornerstone factor of corporate success. Technology, in the absence of human resources is not yet self-sufficient. Human factors are still essential in most functions and activities performed by businesses where either intense or moderate technologies are used. Managing human factor-based risks requires both more systematic decision frameworks and new assessment tools such as risk shaping factors and risk score. The Human Factor Risk Management (HFRM) model adopted by our company intends to maximize the benefits of existing functions and activities in all departments via a human-centric approach. Expected additional benefits are includes: 1. a strategy for human factors risk management across the organization 2. a generic framework, which enables flexible and tailored approaches 3. a systematic managerial tool for the best management of human factors-based risks 4. a common language and culture for corporate risk management 5. a tool for increasing human based opportunities and decrease human based threats 6. a common approach for internal monitoring, control, and review 7. a strong managerial tool for continuous control of Human Factors based risks

Performance Influencing Factors (PIFs) are identified in the organisation to boost Human Capital output by identifying and working on both internal and external PIFs as below:

Internal PIFs

Emotional state

Intelligence

Motivation/attitude

Perceptual abilities

Skill level

Social factors

Strength / endurance

Stress level

Task knowledge

Training/experience

External PIFs

Appropriate and adequate workspace and layout

Facilitating environmental conditions

Adequate Human Capital design

Appropriate training and job aids

Good supervision and Work Enrichment.

OPERATIONAL RISK MANAGEMENT:

Operational Risk Management is viewed very critically as a corner stone for success of the organization by us and we adopt the five-pronged steps as under:

Step 1: Risk Identification

Risks are identified so these can be controlled. Risk identification starts with understanding the organizations objectives. Risks are anything preventing the organization from achieving its objectives. Asking "What could go wrong?" is the way we adopt by brainstorming and identifying risks.

Step 2: Risk Assessment

Risk assessment is being done as a systematic process for rating risks based on likelihood and impact. The outcome of the risk assessment is a prioritized listing of known risks, along with the risk owner and risk mitigation plan, also known as a risk register. Prioritization out of this is critically done for the management of operational and requisite actions are initiated with responsibilities clearly assigned and defined with deadlines.

Step 3: Risk Mitigation

The risk mitigation step adopted by us involves developing and choosing a path for controlling specific risks. In the Operational Risk Management process, we exercise four options for addressing potential risk events: transfer, avoid, accept, and mitigate.

Transfer: Transferring shifts the risk to another organization. The two most common means for transferring are outsourcing and insuring.

Avoid: Avoidance prevents the organization from entering into a risk-rich situation or environment

Accept: Based on the comparison of the risk to the cost of control, company decides to accept the risk and move forward with the consequence evaluated before hand

Mitigate: Mitigating risks involves implementing action plans and controls that reduce the likelihood of the risk and/or the impact it would have if the risk were realized.

Step 4: Control Implementation

Once risk mitigation decisions are made, action plans are formed, and residual risk is captured, the next step is implementation. Controls are designed specifically to address and mitigate the risk in question. The control rationale, objective, and activity are formally documented so the controls are clearly communicated and executed

Step 5: Monitoring

Control monitoring involves testing the control for appropriateness of design, and operating effectiveness. Any exceptions or issues are raised to appropriate levels in the hierarchy with action plans established.

Within the monitoring step in Operational Risk Management, we have adopted continuous monitoring or early warning systems built around key risk indicators (KRIs). Key risk indicators are metrics used by us to provide an early signal of increasing risk exposure in various areas of the enterprise

CONSOLIDATED SEGMENT-WISE PERFORMANCE

A table showing Brief on the Segment-wise revenue is stated as below:

(INR in Lakhs)

	Consolidated
Particulars	FY 2022-23	FY 2021-22
Capital Market	4,912.63	12,213.97
Trading	6,525.31	9,991.71
Manufacturing	7,831.58	5,740.97
Unallocated	461.78	419.27
Total	19,731.30	28,365.93

The capital revenue stood at INR 4,912.63 Lakhs during current fiscal year as compared to INR 12,213.97 Lakhs during previous year. Trading revenue stood at INR 6,525.31 Lakhs during current fiscal year as compared to INR 9,991.71 Lakhs during previous year. There was increase in the Manufacturing revenue which stood at INR 7,831.58 Lakhs during current year as compared to INR 5,740.97 Lakhs for previous year. This was primarily due to very aggressive participation in Government tenders and increased revenues from this segment of business.

Detailed Segment revenue-wise revenue forms part of notes to consolidated financial statements.

SYNERGY & STRENGTH DERIVED FROM OUR GROUP AND SUBSIDIARY COMPANIES:

Our company is a part of "Vibrant Global Group" with the operation of our group and

Subsidiaries and Associate companies spanning from Manufacturing of Iodized Edible Salt, Trading of steel products and polyester films.

A brief highlight of the revenues of our subsidiaries for FY 2022-23 is as follows:

(INR in Lakhs)

Name of the Company	Revenue	PAT/ LAT
Vibrant Global Trading Pvt. Ltd. Subsidiary Company	8,957.44	(570.53)
Vibrant Global Salt Pvt. Ltd. Subsidiary Company	10,506.03	12.56

The increased revenues in Vibrant Global salt Pvt ltd was primarily due to very aggressive participation in Government tenders and increased revenues from this segment of business. In trading, since steel market did not present favourable conditions for required margins, the sales was strategically curtailed.

Experienced Management Team

Our core management team has substantially contributed to the growth of our business operations. Our Company is managed by Mr. Vinod Garg, Managing Director and Mr. Vaibhav Garg, Whole Time Director and Chief Financial Officer. Our professionally qualified Directors have added to our operational and business strengths.

PERFORMANCE DURING THE YEAR

On Standalone Business:

The standalone total income decreased to INR 388.24 Lakhs during current fiscal year as compared to INR 6,151.20 Lakhs during FY 2021-22. The Company recorded loss (after Tax) of INR 207.74 Lakhs during current fiscal year as compared to profit (after Tax) of INR 4,608.74 Lakhs during FY 2021-22.

On Consolidated Business:

The consolidated total income decreased to INR 19,731.30 Lakhs during current fiscal year as compared to INR 28,354.98 Lakhs during previous FY 2021-22. The Company recorded loss (after tax) of INR 781.71 lakhs during current fiscal as compared to profit (after Tax) of INR 4,670.55 Lakhs during previous FY 2021-22.

As on 31^st March, 2023, total market value of quoted investment stood at INR 7,891.67 Lakhs whereas unquoted investments were recorded at INR 2,221.68 Lakhs.

CAUTIONARY STATEMENT

Statements made herein describing the Companys expectations or predictions are "forward-looking statements". The actual results may differ from those expected or predicted. Prime factors that may make a difference to the Companys performance include market conditions, Government policies & regulations, economic development within/outside country etc.