Adharshila Capital Services Ltd Management Discussions.


Adharshila Capital Services Limited (ACSL) is a Non-Banking Finance Company ("NBFC"), holding a Certificate of Registration from the Reserve Bank of India ("RBI"). The ACSL is non deposit accepting NBFC engaged in financial services. The ACSL is an entity of Uttam Group. The Company has its registered office in Delhi and Corporate office at Noida.


The ferocity of the COVID-19 second wave has overwhelmed India and the world. War efforts have been mounted to stop the second surge in its tracks. Real economy indicators moderated through April-May 2021.The biggest toll of the second wave is in terms of a demand shock - loss of mobility, discretionary spending and employment, besides inventory accumulation, while the aggregate supply is less impacted. Among major economies, US growth is projected to reach 6.8 per cent this year, reflecting large-scale fiscal support and the easing of pandemic restrictions. Growth in other advanced economies is also firming, but to a lesser extent. Among emerging markets and developing economies, China is anticipated to rebound to 8.5 per cent this year, reflecting the release of pent-up demand, the Bank said in its report.

"Globally coordinated efforts are essential to accelerate vaccine distribution and debt relief, particularly for low-income countries. As the health crisis eases, policymakers will need to address the pandemics lasting effects and take steps to spur green, resilient, and inclusive growth while safeguarding macroeconomic stability,".


Indias economy is expected to grow at 8.3% for Fiscal Year 2021-22 as per the World Banks latest projections. This rate, however, masked the damage caused by the "enormous" second wave of COVID-19, the Bank said in its June 2021 Global Economic Prospects released on Tuesday. The world economy is expected to expand 5.6%, the fastest post-recession growth rate in eighty years, but global output will still be 2% below pre-pandemic projections by year-end.

In 2021, many NBFCs will continue to see growth in rural product loans, especially agricultural products and primary services. Besides this, gold loans NBFCs will continue to do well in the NBFC segment as unlike other asset classes, gold loans had not faced any major issues in collection and disbursement, or re-pledge of loans.


NBFCs have become integral for all business services, including loans and credit facilities, retirement planning, money markets, underwriting and merger activities. As such these companies play an important role in providing credit to the unorganized sector and for small borrowers at local level. Additionally, hire purchase finance is also the largest activity of NBFCs and the rapid growth of NBFCs has gradually blurred the lines between banks and NBFCs although commercial banks have retained importance. These NBFCs facilitate long term investment and financing, which is challenging for banking sector, and the growth of NBFCs widens range of products available for individuals/ institutions with resources to invest.

Several NBFCs are today facing an existential threat. Once a stressed NBFC defaults, the resultant downgrading not only dents its reputation, it closes most avenues of resource mobilization, virtually ending its chances of a revival. The failure of a few NBFCs can have a domino effect forcing many MSMEs to go belly-up. Also, it is worth noting that NBFCs can fill in a void created by banks, but the converse is not possible, as NBFCs enjoy certain inherent strengths and advantages which the banks cannot match. In the present scenario of financial situation, there is a huge need for NBFC as the banks alone cannot sufficiently fulfill the needs of the society. There is a wide range of services provided by NBFCs such as providing loans, investments, equipment finance, hire-purchase finance, housing finance, and various other things.


Non-banking financial companies (NBFCs) have played a pivotal role in meeting the financial needs of individuals and business that have traditionally remained un-served or underserved by banks. But the regulations for NBFCs have become stricter in recent times, the cost of borrowing has increased and NBFCs are focusing on niche markets and personalised products and services. NBFCs are now more focused on developing innovative products and catering to low-income, urban customers in unorganised sectors. In such a scenario, NBFCs are adopting business and operational models powered by technologies that seamlessly facilitate the design, launch, implementation and execution of tailored products and services. Non- performing assets have been a challenge not only the banks but as well as for the NBFCs. With the new credit customers, the risk remains higher as compared to those customers who have a credit history. Therefore, NBFCs continuously works on checking and balancing so as to make sure that the EMIs are on time and records of the Customers remains up to date and any issues are notified immediately.

Further, NBFCs involves less paper work. The NBFCs are performing in a unique way, by which it can access creditworthiness of the people and provide them loans with less paperwork. For example, the NBFC provides loans to MSMEs making base of their invoices due for the payment. Such credit people are the greatest opportunity for NBFC as there are no competitions due to probable risk and the new to credit segment provides a huge opportunity for NBFCs to expand their market base in villages and tier 2 & 3 towns across the country. Majority of population in India lives in areas where banks would not provide loans and financial services because of the absence of requisite paperwork. And such people look for financial help and are capable of returning the loan but face the problem due to paperwork and are denied loans. There NBFCs, becomes a source of help to provide financial aid as it involves less paper work.


During the year under review, the company has incurred a profit after tax of Rs. 1,75,694/- as against the Profit of Rs. 44,94,656/- in the previous year.


During the Financial Year 2020-21, no fund has been raised by Adharshila Capital Services Limited (ACSL) from market by way of public deposits. There were no allotment of shares / debentures or other securities have been made during the financial year.


Adharshila Capital Services Limited (ACSL) has invested Rs. 20,82,63,279/- in the Securities of other body corporates as on March 31, 2021. Adharshila Capital Services Limited (ACSL) aims at better returns by a good asset quality and asset mix to achieve good returns.


NBFC plays a very important role in providing financial assistance to those in need and it supplements the role of traditional banks by meeting the financial requirements of the unorganized and organized sectors. There are many challenges & opportunities for the future of NBFC in India and therefore, it is necessary for them to work properly so as to create financial stability and protect the interest of the borrowers and depositors.

NBFC have been contributing to the Indias GDP to the extent that the NBFCs are favourites right now for Indian government and government have been coming forward and will do so in future to protect the interests and help NBFCs emerge as they have been providing financial help and services with ease to the people of the country which is the agenda of the government in first place. NBFC are in business of profit and their contribution in growth of Indian GDP displays the perfect picture how well NBFCs has been working since these past years.


Risk is present in any industry and differs only in terms of the level in which it obtains across industries. Hence, risk management is undertaken by the industry concerned by putting in place the right mechanism to mitigate risk if not eliminate risk. The Board has a committee with the name "Risk Management Committee" as per the requirement of Regulation 21 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Risk Management Committee is responsible for monitoring and reviewing of the risk and taking steps to mitigate the same.

The due diligence is important to optimize the default risk. Since the customers who avail borrowings from NBFCs do not have any credit history, it becomes quite difficult to verify their financial credentials. There NBFCs have to take up additional resources for on- ground visits, reference checks, and etc. all of this adds to the operational cost and becomes difficult to service this segment. Further, since, new to credit customers do not have any experience on getting financial services, they may not naturally engage with the NBFC to take loans for their business of personal requirements. Therefore, to attract the customers, the NBFCs have to spend additional resources in educating and financial literacy and awareness.


"Senior management should have responsibility for implementing strategies and policies approved by the board; developing processes that identify, measure, monitor and control risks incurred by the bank; maintaining an organizational structure that clearly assigns responsibility, authority and reporting relationships; ensuring that delegated responsibilities are effectively carried out; setting appropriate internal control policies; and monitoring the adequacy and effectiveness of the internal control system. Internal Controls may be incorporated within computerised accounting systems. However, the internal control system extends beyond those matters which relates directly to the accounting system." Your Company ensures that a reasonably effective internal control framework.


The cardinal principle of Human Resource Management is to consider each employee as a human being who has needs, aspirations and expectations which he likes to be fulfilled by his association with the organization. Organization must also recognize the right of expression of the workers and give them adequate opportunity to have a say in the management of affairs directly affecting their lives. Thus, management of human resources encompasses not only employment, training, compensation, appraisal, maintenance, etc., but also achieving good human relations which are a prerequisites to attainment of higher quality and productivity.

Here human resource planning and staffing play a strategic role in ensuring recruitment and selection procedures source individuals whose goals and values fit with the Total Quality Management philosophy, and whose attributes suggest they will be suited to a flexible, team-based environment. Some are also committed in providing their employees with ample opportunities to learn and advance in their career in their quest for having a satisfied work force. Adharshila Capital Services Limited (ACSL) endeavors to offer favourable workplace of a best in class standard.


Ratios are used to make a holistic assessment of financial performance of the entity, and also help evaluating the entitys performance vis--vis its peers within the industry. The NBFC sector is growing rapidly with borrowings comprising the largest source of funding. The financial performance of NBFC-D and NBFC-ND-SI sector has shown a consistent year-to-year growth in the financial ratios over the last few years.

The key financial ratios of the company for F.Y. 2020-21 have not shown improvements due to decrease in the revenue of the company. The Company has no Non-Performing Assets (NPA), hence ratios related to NPAs are not applicable. The significant changes in the other applicable key financial ratios are as follows:

Name of Ratios F.Y. 2020-21 F.Y. 2019-20 Change (%) Reasons for change
Current Ratio 11.86 10.14 17.19% Decrease in current liabilities and Decrease in current assets
Debt Equity Ratio 0.02 0.02 0.00% No Change During the Year
Net Profit Margin -0.17 7.25 (102.34)% Decrease in profit


Return on Net Worth (RONW) is a measure of profitability of a company expressed in percentage. Return on Net Worth for the financial year 2020-21 is 3.88% while the Return on Net Worth for the financial year 2019-20 is 4.30%. The downward in Return on Net Worth is mainly due to the decrease in revenue of the company while the shareholders equity has remained the same. The company is making continuous effort to make optimum utilization of the shareholders fund and perform better in the time to come.


Statements made in this Management Discussion and Analysis (MDA) Report may contain certain forward-looking statements based on our projections and assumptions on the Companys present and future business strategies.