Abhinav Capital Services Ltd Management Discussions.

Non Banking Finance Companies ("NBFC") are an integral part of the Indian financial system, enhancing competition and diversification in the financial sector and complementing the banking system. NBFCs play a vital role in furthering the objective of financial inclusion by serving the credit demand of the small and medium scale and retail sectors.

Finance is the most critical lubricant for accelerating economic growth. .Non-Banking Finance Companies (NBFCs) continue to play a critical role in making financial services accessible to a wider set of Indias population and are emerging as strong intermediaries in the retail finance space.


We are amidst unprecedented times. The COVID-19 pandemic has spread across the world . With lockdowns spreading across countries accounting for over 50% of the worlds gross domestic product (GDP), it has caused disruptions on an unimaginable scale. Nobody really knows how long the pandemic will last; whether it will increase in the winter of 2020-21 and i f so how, and what will be its final toll on lives and livelihood. The International Monetary Fund (IMF) projects that world will slip into a recession in 2020 over COVID-19 induced global lockdown and the resulting suspension of economic activity Also, the global trade volume in goods and services will slip into a degrowth of 11.0% in 2020 from an already weak growth of 0.9% in 2019, before growing by 8.4% in 2021. COVID-19 has interrupted manufacturing supply chains and sharply reduced energy and commodity demand.


In India too, which implemented a lockdown since 25 March 2020, the pandemic has created shocks ripping through society and the world of business. After a nationwide lockdown involving 1.35 billion people over 55 continuous days, the debate is now on how to gradually open the economy without seriously risking a major spike in infections —

In India, growth softened in 2019 as economic and regulatory uncertainty, There was a strong hope of recovery in the last quarter of 2019-20. However, the COVID-19 pandemic made this recovery extremely difficult in the near to medium term. The GDP growth for 2019-20 touched 4.2% vis-a-vis 6.1% in 2018-19. In response, governments across the world have unleashed massive fiscal measures to protect economic activity and Dramatically strengthen health services and testing. Central banks, too, have initiated multiple monetary and regulatory measures. India, too, has initiated relief measures. The Government of India announced a slew of wide-ranging reforms across varied sectors amidst a comprehensive package aggregating Rs. 20 lakh crore — or approximately 10% of nominal GDP In India, Growth softened in 2019 as economic and regulatory uncertainty, together with concerns about the health of the non-banking financial sector, weighed on demand. The sluggish demand is attributed to the decline in consumption growth (tightening of credit terms and poor consumer sentiment), investment and exports. The pandemic has presented fresh challenges for the Indian economy now, causing severe disruptive impact on both demand and supply side elements.


The likely duration, intensity and the spread of COVID- 19 have brought escalating uncertainty into the global and domestic economic outlook. The concerns is the the impact of imports from China on domestic supply chains

In the current situation, lending businesses face truly daunting challenges of disruption in business acquisition & providing customers adequate relief on their debt servicing Obligations, the Indian economy will rebound as the impact of the pandemic recedes, with improving economic growth momentum in the second half of 2020 and positive GDP growth of 6.7 per cent in the 2021-22 financial year. Industry body Ficci said its Economic Outlook Survey has projected the countrys annual median GDP growth for 2020-21 at (-) 4.5 per cent. With the rapid spread of COVID-19 pandemic

Indian Financial Services Industry indias financial services sector plays a critical role in driving the countrys economic growth by providing a wide spectrum of financial and allied services to a large consumer cross- section. In India, the market for financial services sector is still largely untapped. Digital technology, which has transformed the way business is conducted across the world, is projected to be one of the major drivers for the growth of this sector in India as well. An extensive range of financial products are increasingly being sold and delivered using the electronic platform to millions of customers in India

India has a diversified financial sector undergoing rapid expansion with many new entities entering the market along with the existing financial services firms. The sector comprises commercial banks, insurance companies, NBFCs, housing finance companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The RBIs continued focus on financial inclusion has expanded the target market to semi-urban and rural areas. NBFCs, especially those catering to the urban and rural poor namely Non-Banking Financial Company-Micro Finance Institutions (NBFC-MFIs) and asset finance companies, have a complementary role in the financial inclusion agenda of the country. After the COVID-19 impact gradually tapers off, the financial services sector is poised to grow eventually on the back of strong fundamentals, adequate liquidity in the economy, significant government and regulatory support, and the increasing pace of digital adoption. In fact, digital transactions will play a larger role in the financial eco-system than hitherto witnessed. The shift of savings to financial instruments from physical assets and bank deposits has been largely on account of high inflation and high interest rate scenario over the period. Tax policy has been used to provide incentives and promote savings in financial assets and encouraging long term savings The financial services sector is witnessing growing digitization. The digitisation efforts have seen accelerated growth in financial services sector, and it is set to grow significantly, by 2021

NBFC Sector

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.

Over the past few years, NBFCs have undergone a significant transformation and today they form animportant component of Indias financial system. Playing a critical role in the development of infrastructure, transport and employment generation, NBFCs are changing the business loan landscape in the country. Most NBFCs, leverage alternative and tech-driven credit appraisal methodologies to assess the credit worthiness of prospective Borrowers. With the introduction of e-KYC,making borrowing an instant and hassle-free experience, NBFCs are already offering the right financial products to consumers and small businesses in a customised manner. The use of technology to optimise business processes also keeps cost overheads to a minimum, enabling credit to be availed at highly competitive interest rates.


The NBFC sector has been stung by a crisis set off by the shock collapse of non-bank lender group in 2018The situation further worsened with another Housing Finance Company (HFC) defaulting in loan repayment in 2019. According to Care Ratings, NBFCs borrowing profile has changed significantly from capital market instruments tobank borrowings. Banks lending to NBFCs registered a growth of 34.7% from September 2018 to January 2020. Managing asset quality is likely to gain prominence over loan growth in 2020-21, as the major asset classes funded by non-banks face strong headwinds. India expects

NBFCs to grow their portfolio at 8-10% in 2020-21, and the growth would be driven by retail- focused NBFCs with a long track record


1) Delayed EMI repayment may increase NPA level overtime. And thereby, slowdown of disbursement would impact GDP

2) Uncertainty on potential credit loss in portfolio will result in lower securitization deals thus impacting the fund raising ability of NBFCs

3) NBFCS have to make right cash flow vis a vis extending moreterium to the borrower

The actual impact of Covid -19 is very difficult to predict, and it will depend on time frame to curn pandemic and various relief measures and support extended from government NBFCs that are well prepared with their business continuity and contingency plans can quickly bounce back in the post COVID-19 era. With proper planning and strategic, NBFCs can limit and overcome the impact of this disruption.


NBFCs with robust business models, strong liquidity mechanisms and governance & risk management standards are poised to reap the benefit of the market opportunity. NBFCs that are well prepared with their business continuity and contingency plans can quickly bounce back in the post COVID-19 era. With proper planning and strategic initiatives, NBFCs can limit and overcome the impact of this disruption India has a huge proportion of un-banked and under banked consumers and businesses. Hence, there is a lot of potential for NBFCs, which can still be tapped for future growth.

Company is registered with the Reserve Bank of India as an NBFC. With a plethora of retail finance options in its arsenal, Abhinav is focused on fulfilling the requirements of various income groups of the society. The Company offers a range of financial services.. The market for this activity offers high potential for growth.

Company is operating business from Mumbai.

Financial performance

Particulars Current Year 2019-20 (Rs.) Previous Year 2018-19(Rs.)
Revenue from Operations 4,24,50,449 3,39,99,298
Other lncome 9,93,340 56,92,612
Income from operations 4,34,43,789 3,96,91,911
Less: Interest Expenses 1,11,53,720 59,11,476
Less : Depreciation & Amortisation Expenses 74,448 1,08,257
Less: Other Expenses 1,86,53,429 14,80,707
Less : Employee Benefits Expenses 19,22,450 7,55,123
Less Exceptional Items 87,346 -
Profit/(Loss) Before Tax & Exceptional Items 1,15,52,395 3,14,36,348
Less : Current year Taxation 70,00,000 65,00,000
Less : Short Provisions for Prior Years (5,84,297) (12,31,220)
Less: Deferred Tax (51,99,890) 32,471
Less : Tax Expenses of Discontinuing Operations - -
Profit After Tax 1,03,36,582 2,61,35,097
Less: Appropriation Transfer to General Reserve _ _
Proposed Dividend - -
Tax on Dividend - -
Surplus carried to Balance Sheet 1,03,36,582 2,61,35,097
TOTAL 1,03,36,582 2,61,35,097

The year under review has been one of the most challenging years for your Company Your company posted total income and net profit of Rs. 4,34,43,789/- and Rs. 1,03,36,582/- respectively, for the financial year ended March 31, 2020 as against Rs. 3,96,91,911/- and Rs. 2,61,35,097/- respectively from the previous year. The Company has earned sizable interest income inspite of non-Conductive economic condition, Detailed analysis is given in Management discussion and analysis report appended hereto The outbreak of COVID-19 pandemic has resulted in further slowdown in economic activities across the country, which even otherwise was on a slow pace.. As an organization, your Company has been strictly adhering to social distancing norms and lockdown announcements in accordance with the directives issued by the Central, State Government and Local Administration Guidelines. your Company focused on strengthening its systems to reduce risk and enhance customer centricity. The NBFC sector continued to experience liquidity problems in the financial year 2019-20


Your Company is having very limited Client Base . Company is managed by professionals. Company is always following strict norms as prescribed by the management for disbursement of Loan . Management is of the opinion that Companys NPA will be within the limit as prescribed by the Management . Company is hopeful of recovery in the financial year 2020 - 2021. Management has also decided to find out new avenue in the Financial Market

SWOT analysis


Distinguished financial services provider, with local talent catering to local customers. Simplified and prompt loan request appraisals and disbursements. Product innovation and superior delivery. Innovative resource mobilization techniques and prudent fund management practices.


Regulatory restrictions - continuously evolving government regulations may I mpact operations. Uncertain economic and political environment.


Demographic changes and under penetration. Large untapped markets. Use of digital solutions for business/collections.


High cost of funds. Rising Non-Performing Assets (NPAs). Competition from other NBFCs and banks

Human Resources

Company conducts various programmes aimed towards strengthening skills, enhancing productivity and building sense of ownership among its employees. The Company undertake regular training programme for development of Employees skills. To promote & develop

upcoming managerial talent, advance training programmes were extended to select skilled talents who have displayed high potential to take additional responsibilities in the challenging business environment.

Risk Management

Your Company, being in the business of finance, has to manage various risks. These risks include credit risk, liquidity risk, interest rate risk and operational risk. The stock market the barometer of Economy is not done well. Further it seems that retail investors are not investing in capital market. In todays complex business environment, almost every business decision requires executives and managers to balance risk and reward. Effective risk management is therefore critical to an organizations success. Todays operating environment demands a rigorous and integrated approach to risk management. Timely and effective risk management is of prime importance to our continued success Increased competition and market volatility has enhanced the importance of risk management in Share Trading business. The sustainability of the business is derived from the following:

* Identification of the diverse risks faced by the company.

* The evolution of appropriate systems and processes to measure and monitor them.

* Risk management through appropriate mitigation strategies within the policy framework.

* Monitoring the progress of the implementation of such strategies and subjecting them to periodical audit and review.

* Reporting these risk mitigation results to the appropriate managerial levels.

There is the risk of loss from inadequate or failed systems, processes or procedures. These may be attributed to human failure or technical problems given the increased use of technology and staff turnover.

Internal Control Systems and their adequacy

Companys Internal Audit Department has been reviewing all control measures on periodical intervals also recommending improvements wherever necessary. Thus an effort is made for evaluating the effectiveness of Internal Control System.

Such internal control is being managed by highly qualified and experienced personnel and reports directly to the Audit Committee of the Board. The Audit Committee regularly reviews the audit findings as well as the, an Information Security Assurance Service is also provided by independent external professionals. Based on their recommendations, the Company has implemented a number of control measures both in operational and accounting related areas, apart from security related measures.

Fulfilment of RBI Norms and Standards

The Company has fulfilled all RBI Norms and complied with it.

Cautionary Statement

This report describing the companys activities, projections about future estimates, assumptions with regard to global economic conditions, government policies, etc may contain "forward looking statements" based on the information available with the company. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the companys operations are affected by the many external and internal factors, which are beyond the control of the management. Hence the company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

Company follows all Mandatory Accounting Standards.