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.

Economic Scenario


The global economy expanded by 3.1% in 2016. Economic activity gained momentum in the second half of 2016, especially in advanced economies. The US economy strengthened following a sluggish start in 2016, primarily driven by strong labour markets and improved household balance sheets. The IMF in its latest World Economic Outlook has revised its projected growth upwards for the United States, reflecting the assumed fiscal policy easing and an uptick in business and consumer confidence, especially after the November elections. If this positivity persists, it will reinforce the cyclical momentum.

In Europe, industrial activity has recovered and economic expectations have risen across several large developed economies. However, it must be admitted that the geopolitical environment continues to be volatile and a matter of concern. The rising tide of protectionism across major economies may also impact global trade and commerce. Besides, there are major structural impediments (low productivity growth and high-income inequality), which continue to hinder a stronger recovery, especially over the medium term in advanced economies.

Among emerging markets and developing economies (EMDEs), the Chinese economy grew by 6.7% in 2016, marginally lower than the 6.9% growth recorded in 2015. This growth was supported by fiscal stimulus policies, encouraged by the Chinese Government, as well as by the continuation of an accommodative monetary policy. In addition, there was weaker than expected activity in some Latin American countries (Argentina, Brazil and Turkey) which faced a sharp contraction in tourism revenues. The Russian economy performed better than expected, in part reflecting firmer oil prices.


Global growth is projected to touch 3.6% in 2018, from 3.5% in 2017. Global economic growths will on fast track in 2017 as investment, manufacturing and trade rebound. The improvement in the emerging markets and developing economies with proper investment in human and physical capital will help to facilitate the growth. Growth projections for Germany, Japan, Spain and the United Kingdom have also been estimated to be upwards, on account of a stronger than expected performance during the preceding year.


India continues to be one of the worlds fastest growing economies, despite operating in a volatile global environment. The GDP for F.Y. 2016-17 touched 7.1%, demonstrating the fact that the countrys economic fundamentals continue to be strong.

India also became the sixth largest manufacturing country in the world, rising from the previous ninth position, and thus retaining its bright spot in the global economic landscape. The decline in consumption in the wake of demonetisation, along with slowdown in the industrial sector has resulted in moderated growth rate towards the end of 2017. However, the agricultural sector demonstrated enhanced performance, owing to a favourable monsoon after two consecutive years of drought. The Index of Industrial Production (IIP) was largely subdued during the fiscal due to weakness in the capital goods segment. The Government of India is expected to meet its fiscal deficit target of 3.5% of GDP in 2017, as tax revenues are predicted to increase, in view of income disclosure scheme announced by the Government in 2017.


Demonetisation of two highest denomination notes. This was done with a purpose to restrain corruption, counterfeiting and to stop the use of high denomination notes for terrorist activities. Although this policy development had short-term hardships, it is expected to generate long-term benefits.

A constitutional amendment is paving the way for the implementation of Good and Services Tax (GST). It would replace all the indirect taxes currently in motion at all levels. Levied on manufacture, sale and consumption of goods and services at the national level, it will be a path breaking initiative on jurisdiction free assessment. It would further improve efficiency and bring down corruption while removing the geographic boundaries and enhancing the convenience of e-environment. It would considerably scale down the overall tax burden on goods, augment free movement of goods from one state to another and would also reduce paperwork to a large extent. All these would ultimately result in benefitting end-consumers and will bolster investment and growth


GDP growth is expected to surpass the 7% mark in 2018, after being temporarily impacted by the governments demonetisation initiative in the initial months of 2017.

Demonetisation is likely to leave a positive impact on the economy through greater tax compliance, increased digitalisation and investments in capital formation. The projected fiscal deficit for 2017- 18 is 3.2% of the GDP. The fiscal deficit target is achievable, given the expected drive in tax collection after the implementation of GST; and also greater tax compliance after demonetisation. Going ahead, the governments policy measures to boost the economy, corporate earnings and global liquidity are likely to remain the key market drivers.


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. Greater use of digital technology is helping the sector to lower transaction cost, generate higher productivity and reach unexplored markets in the financial ecosystem.

In the current situation where the Government seeks to reduce the economys dependence on cash, the increased focus on technology acceptance promises to take the sector on a path of rapid growth. The Governments monetary policy initiatives to rationalise interest rates, licence to foreign reinsurance, monetisation alternatives in infra and realty sectors through Real Estate Investment Trusts / Infrastructure Investment Trusts (REITs/INViTs), and focus on micro and SME finance in rural markets are likely to have a positive impact for the sector.


The Non-Banking Financial Companies (NBFCs) sector is integral to the Indian financial landscape. It aids in boosting financial inclusion initiative by lending services to the unbanked population in rural/ semiurban and urban areas. It also provides services to the micro, small and medium enterprises (MSMEs) segment. Some of the reasons for the success of the sector include cost efficiency, refined product lines and better customer services. Niche segmentation, simplified procedures and a focused credit approach are believed to be the key factors bolstering the profitability of NBFCs, making them one of the highest value creating business models within the Indian economy.


As per the Financial Stability Report, December, 2016, the overall balance sheet size of all the NBFCs grew by 15.5% during 2015-16 and 8.5% during the first half of 2016-17.

The NBFC sector reported 10.5% growth in loans and advances at the end of September 2016 vis-a- vis 16.6% at the end of March 2016. During the first half of 2016-17, the NBFCs reported Gross Nonperforming Assets (GNPA) of 4.9%, which was 4.6% at the end of 2015-16. In terms of capital adequacy, the sector has not been able to perform well, during the preceding one and a half years. The overall capital adequacy stood at 23.1% at the end of first half of 2016-17 and 24.3% at the end of 2015-16.


NBFCs have emerged as substantial contributors to the countrys economic growth by having access to certain deposit segments and catering to the specialised credit requirements of certain classes of borrowers. Going forward, the governments initiatives like Make in India, Start up India and Digital India are expected to bolster development in India. For a large and diverse country like India, ensuring financial access to fuel development and entrepreneurship is critical. With the launch of government-backed schemes (such as the Pradhan Mantri Jan-Dhan Yojana [PMJDY]), there has been a substantial increase in the number of bank accounts. As traditional banks are already under stress; NBFCs would be of vital importance and can fill the necessary credit demand gap. Therefore, the NBFCs need to be well integrated into the financial system to cater to the growing requirements of the economy. Additionally, the Indian consumer is aggressively adopting digital technology in his/her daily life. Thus, NBFCs need to rethink on their strategies to enhance their product portfolio, processes and customer experience. Besides, they also need to leverage on digital data for better credit decisions (based on analytics) and social media to serve customers better.

The Companys main object is Non-banking Finance activities. The market for this activity offers high potential for growth.

Company is operating business from Mumbai.

From the perusal of the accounts for the year ended 31st March 2017, you will observe that the Company has earned a Net profit of Rs.3,20,51,626/- during the year Compare to Rs.2,29,94,228/- last year. The Companys total income increased from Rs. 4.01 Crores to Rs. 4.40 Crores. The Companys INTEREST

INCOME DECREASED FROM Rs.2.97 Crores to Rs.2.37 Crores. Inspite of non Conductive economic condition, your Company has managed excellent growth during the year under review.The Directors are hopeful that the Company will do better during the current year. The Company has made profit of Rs.2.01 Crores from sale of investment during the year under review.


The performance of capital market in India has a direct correlation with the prospect of economic growth and political stability. There is lot of opportunities for investment in capital market. Your Company is having separate research department, which analyze the market and advice the management in building good portfolio. Our business performance may also be impacted by increased competition from local and global players operating in India, regulatory changes and attrition of employees. With growing presence of players offering advisory service coupled with provision of funds for the clients needs, we would face competition of unequal proportion. We continuously tackle this situation by providing increasingly superior customized services.The more-than-comfortable capitalization levels of the Company present multiple opportunities in terms of adding product lines and/or growing inorganically, should a worthwhile opportunity present itself. Company focused on traditional data sources & invested in technology and analytics to develop advanced credit scoring models that incorporate non- traditional data sources. The greater resources at the Companys command are also expected to enable it to improve its reach in its existing markets. We believe that strong urban demand and an increase in credit penetration will continue to drive the growth in the consumer finance segment. However, there may be a period of muted growth from the rural sector.

In financial services business, effective risk management has become very crucial. As an NBFC, Your Company is exposed to credit risk, liquidity risk and interest rate risks. Your company has in place suitable mechanisms to effectively reduce such risks. All these risks are continuously analyzed and reviewed at various levels of management through an effective information system.

The Company is having excellent Research Department. The Company is having team of Expert advisor, who is helping the Company in making good Investment. The Company is exposed to all risks & threat which Financial Market &Non-Banking Finance Company faces. The company is also facing risk of heavy ups and down in stock market which can be minimize due to risk management system of our company. The ever evolving regulatory aspects, sluggish investment climates and technology driven competition would be the environment in which the companys growth strategies will be tested.


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.


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.


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.


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


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.

For and on behalf of the Board of Directors,
For Abhinav Capital Services Limited
Place: Mumbai Chetan Karia
Date: 11th August,2017 Chairman