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 Ghaziabad.


More than a decade after the global financial crisis, the world is struggling with the health and economic effects of a profound new crisis caused by the COVID-19 pandemic. Advanced economies entered this crisis with interest rates at historical lows and public debts, on average, higher than they had been over the past 60 years. They will come out from the crisis with even higher public debts. Drawing on analysis completed before the emergence of the pandemic, this chapter examines policymakers options to respond to adverse shocks and build resilience when rates are low and debts high.

The COVID-19 pandemic is impacting emerging markets through an unprecedented mix of domestic and external shocks whose combined effects are very hard to predict. Among these, emerging markets are confronting a sharp tightening in global financial conditions. Advanced economies now suffering the worst outbreaks of the virus will bear the brunt of the plunge in activity. The U.S. economy will contract 5.9% in 2020, with a rebound to 4.7% growth in 2021 under the Funds best-case scenario.

A resurgence of COVID-19 in 2021 could leave economies struggling for years to come. The combination of a longer initial pandemic and 2021 resurgence would yield an even worse downturn, the organization said. Global GDP would sharply contract in 2021 and leave "additional scarring” as credit health deteriorates.


Indias economic growth is forecast to slow to 1.2 per cent in 2020, a further deterioration from the already slowed growth of 4.1 per cent in 2019. India, which grew at 6.8 per cent in fiscal year 2018, is forecast to recover slightly and clock a 5.5 per cent growth rate in 2021. "The national lockdown in India, for example, is expected to depress economic growth to just 1.2 per cent, much lower than the already disappointing growth in 2019,” the report said.

"This will revive aggregate demand in the second half of 2020, allowing a shallower contraction of 1.4 per cent of world output in 2020 and a more robust rebound of 6.1 per cent in 2021,” it added. The report projected that GDP growth in developed countries will plunge to 5.0 per cent in 2020, while output of developing countries will shrink by 0.7 per cent.


Non-Banking Finance Companies (NBFCs) are playing a critical role for development of core infrastructure, transport, employment generation, wealth creation, economic development, to finance economically weaker sections, and considerable contribution to the state exchequer. The NBFC sector in India has undergone a significant transformation over the past few years and has come to be recognised as systemically important components of the financial system and it is growing quite consistently year-on-year.

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.

The banking sector would always be the most important sector in the field of business because of its credibility in supporting manufacturing, infrastructural development and even being the backbone for the common mans money. But despite this, the role of NBFCs is critical and their presence in a country would only boost the economy in the right direction.


The regulatory regime for NBFCs is lighter and different in many respects from that for the banks. The steady increase in bank credit to NBFCs over recent years means that the possibility of risks being transferred from the more lightly regulated NBFC sector to the banking sector in India can no longer be ruled out. That said, given the growing importance of this segment of the financial system, it has become equally important to ensure that the dynamism displayed by NBFCs in delivering innovation and last mile connectivity for meeting the credit needs of the productive sectors of the economy is not curbed. There has emerged therefore a need to rationalise the type and nature of NBFCs being regulated so that the objectives of regulation are met in an optimal and balanced manner.

Additional regulatory measures have been introduced in a calibrated manner to reflect the RBIs emerging focus on non-deposit taking NBFCs and systemic risk related issues. Thus there is a low level of service differentiation. The Company needs to diversification in work to adopt the constant changes in regulations and competitive landscape.

NBFCs focused on infrastructure and real estate lending are experiencing stress in their loan books as evidenced by the growing level of non-performing assets (NPAs). Additionally, NBFCs are facing stiff competition from new-age FinTechs which have been capturing a greater market share with their technology-heavy low-cost operating models and by setting new gold standards for customer experience.”


During the year under review, the company has incurred a profit after tax of Rs. 44,94,192 as against the Profit of Rs. 928,974/- in the previous year.


During the Financial Year 2019-20, 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. 2,64,938,451/- in the Securities of other body corporates as on March 31, 2020. Adharshila Capital Services Limited (ACSL) aims at better returns by a good asset quality and asset mix to achieve good returns.


NBFCs have played a critical role as a key contributor to the economy by providing a fillip to infrastructure, employment generation, wealth creation and access to financial services for the rural and weaker sections of society. The Government has taken a series of measures to generate demand and ease the liquidity by ensuring public sector banks lend further to NBFCs, introducing partial credit guarantee scheme, organizing loan mela etc.

The overall economic outlook is currently challenging, we do expect demand to pick up as we expect some favourable actions by the Finance Minister in the next budget. These could include a change in personal tax rules in order to put more money in the hands of the common man for a consumption-led revival of the economy, measures to prop up the health and lending abilities of NBFCS, policies to fast track digital adoption in tier 3, tier 4 towns, etc. The ACSL explore the opportunities available in the market and other financial areas. With the consumer of today evolving and accessing digital media like never before, NBFCs have embarked on new and better ways to engage with the customer.


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.

In addition to the measurement of structural and dynamic liquidity, NBFCs are also mandated to monitor liquidity risk based on a "stock” approach to liquidity, the central bank said, adding that the monitoring shall be by way of predefined internal limits as decided by the board for various critical ratios pertaining to liquidity risk, Adharshila Capital Services Limited (ACSL) is exposed to specific risks including interest rate volatility, economic cycle and market risk and risk arising from change of laws/regulations. With proper operational systems in place, the Company successfully manages these risks which also help in achieving the desired outcome.


"Internal Control System comprises the control environment and control procedures. It includes all the policies and procedures (internal controls) adopted by the directors and managements of an entity to assist in achieving their objective of ensuring, as far as practicable, the orderly and efficient conduct of its business, including adherence to internal policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information. 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.


Non-Banking Finance Companies as any other Companies have always considered their employees as the backbone of their Companies and they are aimed at providing employee satisfaction enabling them to deliver better results year over year. 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.

Human Resource is concerned with the people dimension in an organization, hence the trend in organizations to re-designate Personnel Department into Human Resource Department. The functions undertaken by Human Resource Department are to recruit, select, train and develop employees for an organization. Today with companies having a global mix of employees, developing an understanding of employees is a tough task for the Human Resource Department. This affects employees job satisfaction overtime.


Ratios are used to make a holistic assessment of financial performance of the entity, and also help evaluating the entitys performance vis-a-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. 2019-20 have shown improvements due to increase in the revenue of the company while the liability has decreased during the year in concern. 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. 2019-20 F.Y. 2018-19 Change (%) Reasons for change
Current Ratio 10.14 11.10 (8.65)% Increase in current liabilities and increase in current assets
Debt Equity Ratio 0.02 0.02 0.00% No Change During the Year
Net Profit Margin 7.25 37.66 (80.75)% 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 2019-20 is 4.26% while the Return on Net Worth for the financial year 2018-19 is 4.96%. 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.