INTRODUCTION
Management Discussion and Analysis mainly comprises of the statements which,
inter-alia, involve predictions based on perceptions and may, therefore, be prone to
uncertainties. It is the sum total of the Companys expectations, beliefs, estimates and
projections which are forward looking within the meaning of applicable laws and
regulations. The actual results could differ materially from those expressed herein
specifically or impliedly.
GLOBAL ECONOMY
Titled A Rocky Recovery, the IMFs World Economic Outlook - April 2023 reported that
on the surface, the global economy appears poised for a gradual recovery from the
devastation caused by the pandemic and, later, the conflict between Russia and Ukraine.
The reopening of the Chinese economy has also contributed to the rebound and supply-chain
disruptions have been unwinding, while the dislocations to energy and food markets caused
by the war are receding. However, it also observed that below the surface turbulence is
building, and the situation is quite fragile, as evidenced by the recent bout of banking
instability.
At the same time, the report pointed out that the large scale and synchronised
tightening of monetary policy by most central banks should start to bear fruit, with
inflation moving back toward its targets.
The IMF (International Monetary Fund) forecast that global growth will bottom out at
2.8% in 2023 before rising modestly to 3.0% in 2024. It also expects global inflation to
decrease, although more slowly than initially anticipated, from 8.7% in 2022 to 7.0% in
2023 and 4.9% in 2024.
The growth is expected to come from emerging market and developing economies, which are
already powering ahead with growth rates that are nearer 4%. The advanced economies,
especially the Euro area and the United Kingdom, are creating the drag with growth
expected to fall to 0.7% and -0.4%, respectively, in 2023 before rebounding to 1.8% and
2.0% in the two regions in 2024.
The IMF cautioned that policymakers across the globe have a narrow path to walk to
improve prospects and minimise risks. It suggested that fiscal policymakers should
buttress monetary and financial policymakers actions in getting inflation back to target
while maintaining financial stability. Overall, it advised that governments should aim for
a tight stance while providing targeted support to those struggling most with the
cost-of-living crisis.
INDIAN ECONOMY
Despite the distressed global economic landscape, the Indian economy is expected to
grow at a robust 7% (in real terms) during the year ending March 2023, after posting a
growth of 8.7% in FY 2021-22 according to the Economic Survey - 2023.
Some of the growth drivers were the credit growth to the MSME sector, which was
remarkably high, at over 30.5% on average, during Jan-Nov 2022. The capex of the central
government, which increased by 63.4% in the first eight months of FY 2022-23, was another
growth driver of the Indian economy. The optimistic growth forecasts also stem from a
number of positives like the rebound of private consumption, which led to a boost in
production activity.
While several advanced economies struggling with banking sector turmoil, bank failures,
and contagion risks, the Indian banking and non-banking financial service sectors remained
healthy, and financial markets evolved in an orderly manner, according to the Monetary
Policy Committee (MPC) of the Reserve Bank of India (RBI).
Outlook
The Indian economy is expected to witness GDP growth of 6.0% to 6.8% in FY 2023-24,
depending on the trajectory of economic and political developments globally, according to
the Economic Survey 2023. The survey also projects a baseline GDP growth of 6.5% in real
terms in FY 2023-24. The RBI projects headline inflation at 6.8% in FY 2022-23, which is
outside its target range. A surge in the growth of exports in FY 2021-22 and the first
half of FY 2022-23 resulted in acceleration in production.
Looking ahead, the RBI MPC expects that higher rabi production will improve the
prospects for the agriculture sector and rural demand, while steady growth in
contact-intensive services is likely to drive urban demand. If these impulses play out,
the consumption story will continue to power growth. Moderating commodity prices are also
providing tailwinds.
Manufacturing and investment activity are expected to provide a strong thrust to
growth, with the governments focus on capital expenditure and capacity utilisation
reaching above its long-period average. The only concern is that despite the positive
outlook, the global headwinds could impact the Indian economy through a drag from net
external demand.
To monitor these positive and negative risks, the RBI assured that it will continue to
balance financial conditions in line with the productive requirements of the economy, even
as monetary policy moves decisively to withdraw accommodation. The MPC predicts real GDP
growth of 6.5% for 2023-24, with the overall outlook remaining dynamic and fast-evolving.
INDIAN FINANCIAL SERVICES INDUSTRY
The Indian financial services industry is a dynamic and evolving sector, poised for
further growth and innovation. It is a vital component of the countrys economy, providing
a range of financial products and services to individuals and businesses alike. The sector
has seen significant growth in recent years, expanding into segments that were previously
underserved or overlooked in a bid to promote financial inclusion. The industry is
diverse, with a mix of traditional players such as commercial banks, insurance companies,
and NBFCs, along with newer entities such as payment banks and small finance banks. The
sector is well-regulated by the RBI, which has also allowed fintech companies to enter the
fray, bringing innovation and efficiency to the industry. The adoption of digital
technology has been a game-changer, enabling organisations to enhance customer engagement
and deliver services with speed and transparency.
According to IBEF, rising incomes in India are driving the demand for financial
services across income brackets. Further, there are over 2,100 fintechs operating
currently, positioning India to become one of the largest digital markets, aided by the
rapid expansion of mobile and internet.
NBFCs in India
The Non-Banking Financial Companies (NBFCs) sector plays a significant role in the
Indian economy, providing credit to individuals, small and medium-sized enterprises, and
rural areas, among others. NBFCs have emerged as a key segment in the financial sector,
bridging the gap between banks and borrowers who are underserved or excluded from
traditional banking services. In recent years, the sector has witnessed significant
growth, fuelled by a rise in demand for credit and the emergence of new players. The
sectors resilience and ability to innovate have been tested during times of economic
turmoil, such as the COVID-19 pandemic.
As the economy has moved past the impact of the pandemic, the NBFCs sector is
anticipated to experience a substantial growth in both FY2023 and FY2024, following the
rebound of the economy. ICRA Ratings predicts that during these fiscal years, the sector
will witness a loan growth of 10-12% and a rise in profitability by 50 basis points. The
PCA framework implemented by RBI has created a level playing field for NBFCs with banks,
thus enhancing corporate governance and leading to sustainable growth in the sector.
COMPANYS OVERVIEW
Virat Leasing Limited was founded in 1984 and is a registered Non-Banking Finance
Company (NBFC) regulated by the Reserve Bank of India (RBI). The Company operates in the
state of West Bengal and specialises in providing financial services.
OPPORTUNITIES & THREATS
VLL constantly monitors the external environments and internal situation so that it is
aware of the opportunities and threats that emerge. This enables the Company to tap into
the positive prospects that come its way while overcoming or bypassing the challenge of
threats.
Opportunities
• Diverse loan book presence to accelerate growth
• Efficient Business Model helps to minimise risk and operating cost
• Adequate capitalisation to support medium-term growth plans
• Operates in "B2B" business segment with huge growth potential
Threats
• Unpredictable policy changes by the Government
• Increasing competition from local and global players
• Higher exposure to semi-formal and informal sector customers
SEGMENT WISE PERFORMANCE REVIEW
The Company has only one line of business, i.e., Financing and Investment Activities
during the year under review, hence no segment wise information is required. The Company
has no activity outside India. Therefore, there is no geographical segment.
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 Securitisation of Standards Assets
INTERNAL CONTROL SYSTEMS & ITS ADEQUACY
The Company has appointed M/ s Srimal Jain & Co., Chartered Accountants, an outside
agency as its Internal Auditors, who conduct internal audit for various activities. The
Company has developed adequate internal control system commensurate to its size and
business. Personnel of the Internal Auditor conduct periodic audits in all the areas to
ensure that the Companys control mechanism is properly followed and all statutory
requirements are duly complied with. The reports of Internal Auditors are submitted to the
Audit Committee which further reviews the adequacy of Internal Control System.
CAUTIONARY NOTE
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.
For and on behalf of the Board M/s Virat Leasing Limited
Sd/-
Rajeev Kothari Managing Director DIN: 00147196
Sd/-
Jitendra Kumar Goyal Director DIN: 00468744
Date: 1st September, 2023 Place: Kolkata
+91-9892691696
