acme resources ltd Management discussions

MANAGEMENT DISCUSSION AND ANALYSIS

Indian Economy - Industry Structure and Development - Overview :

Manoeuvrings through challenges in 2022, the global economy has positioned itself with better prospects in 2023 and onwards. Post Covid-19 pandemic, the global economy is gradually recovering from a series of disruptions with supply-chain disruptions easing and energy and food markets stabilising after the Russia-Ukraine crisis. Additionally, most central banks have tightened monetary policy extensively and synchronously, which is expected to result in inflation, the most pressing issue in 2022, moving back towards its target range. According to the International Monetary Funds latest forecast, global growth is expected to reach 2.8% in 2023 and will rise to 3.0% in 2024.

On its part, Acme and its subsidiaries are focusing on capital preservation, Balance Sheet protection, conservative liquidity management, operating expenses management and strengthening collections.

Reserve Bank of India (RBI) Policy Measures

NBFCs have gained systemic importance in the Indian financial services industry with a growing share in credit. NBFCs credit intensity measured by the credit/ GDP ratio reached a high of 13.7% in 2022.

NBFCs operate in a wide variety of asset classes ranging from granular retail loans (e.g., personal loans, vehicle loans, small business loans, gold loans, microfinance loans, etc.) to large-ticket wholesale loans (e.g., lending to corporates, infrastructure, real estate and structured credit).

NBFCs have carved a niche for themselves in the Indian financial sector through their differentiated business models and credit appraisal methods, targeting the relatively un-banked borrower segments with niche domain expertise. They provide last mile credit delivery and have been significantly using technology to achieve better operational efficiency and risk management

Opportunities, Threats, Risks and Concerns:

As an NBFC, Acme is exposed to credit, liquidity, market and interest rate risk. It continues to invest in talent, processes and emerging technologies for building advanced risk management and underwriting capabilities. Over years, sustained efforts to strengthen its risk framework have resulted in lower risk costs for the Company.

Acme balanced approach to portfolio management coupled with a rigorous portfolio review mechanism has enabled it to pick up early warning signals and take corrective actions. The portfolio continues to remain healthy across most lines of businesses. With use of sophisticated analytics, Acme has maintained a healthy portfolio quality and takes risk mitigating policy actions with agility and precision.

A strong governance framework ensures that the Board of Directors and its committees approve risk strategies and delegates credit authorities. Robust underwriting practices and continuous risk monitoring ensure that portfolios stay within acceptable risk levels. Acme has deeply invested in its risk organisation structure that includes dedicated credit risk units for each business vertical; business specific units such as underwriting, risk containment and fraud control; and horizontal risk analytics, business intelligence and operational risk management units.

Your company is exposed to external and internal risks associated with the business. It is exposed to strong competitive pressures and financial risks from changes in interest rate, economic cycles, etc.

Your company is taking steps to ensure effective risk management by maintaining a prudent and commercial business practices and a comprehensive risk management policy.

Reducing Credit Losses (NPAs)

Interacting closely with customers helps us pre-empt and reduce credit losses. However, in some stray cases where the loan assets slip into NPAs, our responsiveness coupled with an efficient recovery system helps us minimise losses.

Segment-wise or product-wise performance:

The company has 2 business segments i.e. NBFC Business including the financing activities & Sales/purchase of properties. The total revenue from NBFC business during the year was reported at Rs. 329.75 lacs.

Outlook:

The global economy is currently bracing itself for slower growth, primarily due to the disruptive impact of the Russia Ukraine conflict and the tightening of monetary policy. These factors have led to significant supply-side disruptions, creating challenges for economies around the world. However, amidst this uncertain outlook, certain economies are expected to exhibit resilience and drive global growth.

Your Company intends to invest in businesses related to infrastructure etc. In the coming years since it sees growth in it. This will definitely help the Company to establish itself and remain as a strong player in the finance industry. With the Capital market expected to be in a buoyant mood than the previous few years and with our efforts we can look forward to a rewarding year for the Company.

Internal Control Systems and their adequacy:

The Company has in place adequate internal control systems and procedures commensurate with the size and nature of its business. These procedures are designed to ensure:-

• That all assets and resources are used efficiently and are adequately protected,

• That all internal policies and statutory guidelines are complied with in letter & spirit, and

• The accuracy and timing of financial reports and management information.

Risk Management:

Risk management is an ongoing process at the Company. The Board of Directors have constituted a risk management Committee comprising three members, a majority of whom are Directors. The Board has also defined the roles and responsibilities of the risk management Committee and has delegated the monitoring and reviewing of the risk management plan to the committee.

Material Development in Human Resources / Industrial Relations number of people employed:

The Company believes that people are the key ingredient to the success of an organization. Looking after people makes good business sense because, if people are motivated, service excellence will follow. The Company recognizes the importance and contribution of its Human resources towards its growth and development and is committed to the development of its people.

Financial and Operational Performance:

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013 and Generally Accepted Accounting Principles (GAAP) in India. During the year 2022-2023 (on a standalone basis), the Companys total income increased to Rs. 329.75 lakhs and Company registered a profit of Rs. 1,110.07 lakhs.

Cautionary Statement:

This report contains forward looking statements that involve risks and uncertainties including, but not limited to, risks inherent in the Companys growth strategy, dependence on certain businesses, dependence on availability of qualified and trained manpower, economic conditions, government policies and other factors. Actual results, performance or achievements could differ materially from those expressed or implied in such forward- looking statements. This report should be read in conjunction with the financial statements included herein and the notes thereto.

Additional Information :-

1. During FY2023, the Company has not sanctioned loans to any of its directors and there are no outstanding loans to directors as on 31 March 2023.

2. None of the employees of the Company are related to any of the directors.

3. Barring the impact of COVID-19 pandemic as described in the Management Discussion and Analysis no significant event has taken place which will have an impact on the performance of the Company during FY2022-23, from the date of the Balance Sheet till the date of this report.

Circulation of Annual Reports in electronic form :-

The Ministry of Corporate Affairs (MCA) has exempted companies from circulation of physical copies of Annual Report for FY2022-23. Accordingly, the Annual Report of the Company for FY2022-23 is being sent only by email to the members, and all other persons/ entities entitled to receive the same. This Annual Report, along with other documents, is also available on the Companys website at https:/ / www.acmeresources.in

The Company made special arrangements with the assistance of its Registrar & Transfer Agent during AGM of 2022 for registration of e-mail addresses of those Members whose email ids were not registered to enable them to receive the Notice of AGM along with the Annual Report including e- Voting credentials electronically.