Aastamangalam Finance Ltd Management Discussions

INDUSTRY STRUCTURE AND DEVELOPMENTS:

Indias economy continues to grow at a steady and confident pace, standing out as the fastest growing major economy in the world. Gross Domestic Product (GDP) is a measure of size and health of the economy. In 2024-25, GDP growth was estimated at 6.5 per cent. The Reserve Bank of India expects the same rate to continue in 2025-26. This performance comes at a time when the global economy faces uncertainty, making Indias steady momentum all the more significant.

The Indian Non-Banking Financial Companies (NBFCs) sector is experiencing robust growth, driven by a rising middleclass, enhanced focus on financial inclusion and supportive government policies.

OPPORTUNITIES AND THREATS:

NBFCs have tremendous opportunity in the rural and semiurban areas, as the majority of people lack access to traditional banking institutions. NBFCs can capitalise on this opportunity by offering loans with flexible terms. These areas have growing demand, especially among first-time borrowers, small traders and farmers. The Indian government and the RBI are working to increase financial access for all citizens. NBFCs cater to underserved segments, driving financial inclusion.

Liquidity challenges may create an adverse impact on the sectors lending capability. Unforeseen changes in the regulatory landscape may require the NBFCs to modify their operations significantly. Also geopolitical uncertainties may impact the macro economic environment for the NBFC sector.

SEGMENT WISE / PRODUCT WISE PERFORMANCE:

The Company is engaged in lending activities during the year under review. Hence the requirement of segment-wise reporting does not arise.

BUSINESS OUTLOOK:

Indias economy will remain supported by the Governments efforts to accelerate growth, secure inclusive development and invigorate private sector investments. With recent tax cuts, it is anticipated to boost middle-class household savings and consumption. Further, as inflation declines, it is expected to bolster consumer spending and support economic growth.

RISKS AND CONCERNS:

When individuals or businesses do not repay their loans, NBFCs face challenges known as defaults. A rise in defaults reduces the capital available for NBFCs to extend new loans, which in turn affects their profitability and investor confidence. Over time, rules for NBFCs have become stringent, causing these institutions to follow more guidelines. While this enhances safety, it also increases operational costs and reduces flexibility.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has an adequate system of internal controls to ensure accuracy of accounting records, compliance with all laws & regulations and compliance with all rules, procedures & guidelines prescribed by the applicable statues. The Control is also ensured by the Internal Audit process.

FINANCIAL PERFORMANCE AND OPERATIONAL REVIEW:

The Financial performance and operational review is provided under the head Financial Highlights in Directors Report.

HUMAN RESOURCES:

During the year under review, there has been no material development on the Human Resource / Industrial Relations front. The Companys focus is on recruitment of good talent and retention of the talent pool.

KEY FINANCIAL RATIOS: