Amrapali Fincap Management Discussions


The Managements views on the Companys Performance and outlook are discussed below:

ECONOMIC OUTLOOK:

Indias economic growth that had slowed to 4.4% in the third quarter of FY23, picked up to 6.1% in the last quarter, taking the growth for the full fiscal 2022-23 to 7.2% which is above the 7% projection made by the RBI and Government earlier. The growth has been driven by pick up in private investments, capital spending by the Government and sharp growth in service exports. Rural economy, as evidenced by growth in agriculture, tractor sales and growth in credit to the agricultural sector, has been steady. All parts of the services sector, construction and real estate continue to do well. This is also borne out by increased cement and steel sales, an increase in both freight and passenger traffic and IIP numbers for construction and growth in banking credit to the services sector. The manufacturing sector after contracting in Q2 and Q3 of FY23 grew by 4.5% in Q4, putting the overall growth in positive territory at 1.1% for FY 23. Growth in credit to manufacturing, especially large industry, has reduced sharply since September 2022. However, credit flow to the cement and steel industries is up 20%, reflecting the impact of the enhanced Government spending on infrastructure and strength of the construction and real estate sectors. An important factor to take into account is the absence of any expansion in bank credit within the infrastructure sector.

FY 2022-23 ended on a positive note, due to higher-than-expected agriculture output and strong government spending. However, high inflation, in particular for energy and food, and the ensuing monetary tightening to anchor expectations are weighing on purchasing power and household consumption, particularly in urban areas. Tighter financial market conditions are reflected in weakening credit-supported demand for capital goods, a good proxy for business investment. The merchandise trade deficit was 40% larger in FY 2022-23 than in FY 2021-22, with trade in petroleum accounting for over two-fifths of the deterioration. Although services export growth remains brisk and the sectoral surplus rose by 35%, it is insufficient to offset the imbalance in goods trade. Low labour productivity is affecting the competitiveness of "Made in India" goods and participation in global value chains. The current account deficit narrowed in the October-December quarter to 2.2% of GDP, from 2.7% in the same period in FY 2021-22. Headline inflation has fallen below 6% (the central banks upper bound of the tolerance band) since March 2023, mostly due to lower food prices, as well as base effects. Employment and wage estimates suggest improving labour market conditions in rural areas, while export-oriented service firms report increasing difficulties filling vacancies.

In nominal terms, 2022-23 was a decent year for BSE Sensex as the index closed 422.9 points higher on March 31, 2023 from a year ago. In percentage terms, the Sensex moved higher by only 0.7% in 2022-23, the worst performance in the past three years. To be sure, the stock market saw a lot of volatility through the year. It had a poor performance in the first half of the fiscal 2022-23, gained momentum in the second half and suffered heavily after the release of Hindenburg report on Adani Group of Companies on February 1. BSE Sensex lost 745.9 points in the month of February. However, the market recovered in March to close higher than last years value.

To be sure, 2022-23 has done away with some of the exuberance which has been typical of Indian equity markets in the past few years. The PE multiple it measures the ratio of stock price and profits per share for BSE Sensex fell from 25.77 on March 31, 2022 to 22.4 on March 31, 2023. The fall is much sharper if one compares the average during the entire fiscal (22.9 in 2022-23 from 29.5 in 2021-22). The 2022-23 PE multiple value is also the lowest in the past four years. A cross comparison of BSE Sensex with 10 major world-indices (across 10 countries) shows that Indias stock market performance was not the worst amongst all. Asian economies such as Korea, Hong Kong, Singapore saw a sharper fall in their stock metrics in the last fiscal, while BSE Sensexs performance was at par with Shanghais SSE and Japans Nikkei

225. Overall, it had the fifth best performance in the world.

The Russian invasion of Ukraine in February 2022 led to a sharp increase in international commodity prices. Data from the ministry of petroleum shows that the price of Indian baskets crude oil surged to $116 per barrel in June 2022 from $94 per barrel in February 2022. The subsequent months recorded a cooling of oil prices and it ended at $78.3 per barrel on March 31, 2023. This gradual moderation raised hopes that energy prices would be benign in 2023-24 which will conclude with the 2024 general elections. However, the surprise decision by the Organisation of Petroleum Exporting Countries (OPEC) to cut oil production (by around 1.16 million barrels per day) has led to a sharp increase in crude oil prices in April and most analysts have made upward revisions to their oil price forecasts.

The Indian rupee ended this years last trading day on March 31 as Asias worst-performing currency. The Indian Rupee declined by 8.4% against the US dollar over the last fiscal, followed by Chinese yuan (8.3%), Korean won (7.9%) and Taiwan dollar (7.1%). Only the Singapore dollar appreciated in value by 1.7% against the dollar over the same period. Other emerging market currencies such as Malaysian Ringgit, Indonesian Rupee, Philippines peso, Thai Bhat and Hong Kong Dollar suffered a depreciation of 5% or below. To be sure, the depreciation in Asian currencies is more a result of an appreciation in the dollars value due to interest rate hikes in the US than a reflection of economic fundamentals in individual countries. The rupee could have lost more value without RBIs intervention in foreign exchange markets. Indias foreign exchange reserves RBIs currency market interventions use this went down by $30 billion in 2022-23 (till March 24).

INDUSTRY STRUCTURE AND DEVELOPMENTS

This development stands as evidence of the Companys reputation for being well-managed, with strong fundamentals, high standards of governance and ethics, a motivated and capable workforce led by a highly skilled leadership team, a customer-centric approach, an attractive product portfolio marketed through a well-balanced distribution network, and a strong brand image. The Company owes its success to the dedication and contributions of its exceptional employees, who have significantly influenced the overall performance. However, it is important to note that the credit growth has not shown a corresponding increase, remaining at its lowest level in several years. This can be attributed to the lack of overall demand, leading to a sluggishness in capital investments by the corporate sector. Despite favorable liquidity conditions and lower interest rates, banks have faced challenges in increasing lending due to the burden of high non-performing assets (NPAs) in their loan portfolios.

OPPORTUNITIES AND THREATS

Over the past decade, the Indian stock market has undergone significant changes due to globalization and the electronic age. This has led to the emergence of high-tech and transparent markets that have expanded geographically, providing a wide range of trading avenues with diverse liquidity pools. The Company has the opportunity to tap into a market with high purchasing power, as more people seek investment opportunities. There is also potential for growth in the rural market, the urban youth segment with increasing earnings, and educating individuals about the benefits of investments to expand the target audience. Additionally, the Company can aim for greater penetration in growing cities. However, there are threats to consider, such as stringent economic measures imposed by the Government and Reserve Bank of India (RBI), the entry of foreign finance firms into the Indian market, increased competition leading to pressure on market share and margins, and the impact of increased regulatory compliances on margins and operations. In fiscal year 2023, the Company will continue to execute its strategy based on these dimensions. The retail market segments served by the Company face both challenges and opportunities stemming from the COVID-19 pandemic and its impact on the economy. The Companys strategy will focus on providing advice and assistance to clients as they navigate these market conditions, particularly in areas such as process digitization, migration to cloud-based technologies, workplace transformation, and business model transformation.

Strength

Weakness

Our Strategy

A well-defined and scalable organization structure

Limited geographical coverage.

Expansion of existing activities

Experienced and stable management team

Dependent upon growth in stock market and overall fiscal growth.

Financial Management/Advisory Service

The Companys biggest strength is its trained manpower and team back up by promoter Director.

Differentiated Services

Which enables Smooth Conduct of operation

RISK AND CONCERNS

The very nature of the Companys business makes it susceptible to various kinds of risks. The Company encounters market risk, credit risk and operational risks in its daily business operations. The Company has framed a comprehensive Risk Management Manual which inter-alia lays down detailed process and policies in the various facets of risk management function. The risk management review framework provides complete oversight to various risk management practices and process. The framework and assessment remains dynamic and aligns with the continuing requirements and demands of the market. The Company has also implemented surveillance mechanism to deal with various trades related risks and adopted a surveillance policy in line with the regulatory requirements.

INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal audit programmers adopted by our Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management. The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.

FINANCIAL HIGHLIGHTS: (AMOUNT IN LAKHS)

Particulars

F.Y. 2022-23 F.Y. 2021-22
Revenue from operation 11517.06 1252.43
Other Income 80.41 97.10

Total Revenue

11597.47 1349.53
Less: Total Expenses before Depreciation, Finance Cost and Tax 11530.75 1222.9

Profit before Depreciation, Finance Cost and Tax

66.72 126.63
Less: Depreciation 1.88 1.00
Finance Cost 0.76 68.34

Profit Before Tax

64.08 57.29
Less: Current Tax 15.50 14.94
Deferred tax Liability (Asset) (5.16) (0.05)
MAT Credit (5.53) (6.00)

Profit after Tax

59.28 48.39

FINANCIAL PERFORMANCE:

During the year under review, Company has earned total income of 11597.47 Lakhs as against the total income of 1349.53 lakhs of previous Financial Year 2021-22. The Total Income of the company was increased by 759.37% over previous year. The major Increase in total income of the Company is due to Increase in revenue from operation. The Revenue from Operation has increased about 819.58% as compared to previous Financial Year 2021-22.

Further, profit before tax in the financial year 2022-23 stood at 64.08 Lakhs as compared to 57.29 Lakhs of last year and net profit after tax stood at 59.28 Lakhs compared to net profit of 48.39 Lakhs for previous year. The Net Profit of the Company Increased about 22.50% as compared to previous financial year. The major Increased in profit is due to decreased in total income of the Company.

HUMAN RESOURCES

Human resource plays a vital in role in developing, reinforcing, and enhancing the culture of an organization. The Companys human resource department is aligned with its business strategy to drive digital solutions to build a strong culture of transparency and service orientation within the organization. The Company emphasizes on people-friendly policies and practices first and focuses on adopting the best HR policy practices.

One of the key pillars of the Companys business is its people. The Companys HR policies and practices are built on Amrapali Group core values of Integrity, Passion, Speed, Commitment and Seamlessness. The Companys focus is on recruitment of good talent and retention of the talent pool. The Company is hopeful and confident of achieving the same to be able to deliver results and value for our shareholders. As on March 31, 2023, the total employees on the Companys rolls stood at 05.

Details of Significant Changes (i.e. Change of 25% Or More as Compared to the Immediately Previous Financial Year) In Key Financial Ratios, Along With Detailed Explanations Therefore)

Particulars

F.Y. 2022-23

F.Y. 2021-22

Reason

Debtors Turnover - - -
Inventory Turnover

93.57

-

Due to inventory levels increased throughout the year, this had a positive impact on the ratio.

Interest Coverage Ratio

-

1.84

Due to the absence of any borrowings made during the year has had a negative impact on the ratio.

Current Ratio

82.616

2.10

Due to an increase in current assets from inventory purchases made during the year, the ratio is positively affected.

Debt Equity Ratio - - -
Operating Profit Margin

(%)

-0.14

2.28

Due to the lower operating margin compared to turnover, the ratio is negatively affected.

Net Profit Margin (%)

0.01

0.359

Due to the lower profit margin compared to turnover is causing a negative impact on the ratio.

Return on Net Worth

0.40

0.33

Due to an increase in profits compared to the previous year, the ratio has been positively affected.

CAUTIONARY NOTE

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. 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 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.