1. COMPANY OVERVIEW:
Apex Capital and Finance Limited is an NBFC and engaged in the business of providing
various financial services, such as loans, advances, investments, leasing, hire-purchase,
insurance, and more, but they do not hold a banking license. Instead, they are regulated
by the Reserve Bank of India (RBI) under the framework of the RBI Act, 1934. The main
objective of the Company is to finance various individuals, corporates, firms, societies
and Industrial enterprises by way of making loans and advances in India and to carry out
all such activities as may be ancillary to the achievement of main objectives of the
Company.
2. INDUSTRY STRUCTURE AND DEVELOPMENT:
Non-banking financial companies (NBFCs), public and private banks, and financial
institutions form the four broad constituents of the credit ecosystem of the Indian
financial sector, with NBFCs being a key pillar therein. Over the past few decades, NBFCs
have navigated several storms, some of them unprecedented. After several challenging
years, fiscal 2023 has brought growth back into focus for NBFCs. To be sure, NBFCs have
demonstrated an innovative and resilient streak over the years, adapting efficiently, even
during the Covid-19 pandemic, to an evolving credit landscape.
NBFCs are stronger and more resilient today, and better positioned in almost all
operationally critical parameters. Provisioning levels have also increased in the past
couple of years, as NBFCs created management overlays to provide for uncertainty
pertaining to the pandemic. Overall, the sector has much stronger balance sheets today.
NBFCs also contribute to capital formation in the economy by channelling savings into
productive investments. They mobilize funds from various sources and invest them in
projects and businesses that require financing. NBFCs indirectly contribute to overall
economic growth. Their role in credit intermediation helps in stimulating consumption and
investment, leading to economic expansion.
Your Companys performance for the F.Y. 2023-24 has to be viewed in the context of
aforesaid economic and market environment.
II. OPPORTUNITIES AND THREATS:
The establishment of Non-Banking Financial Companies (NBFCs) in India is driven by
various threats and challenges that traditional banking institutions may not be equipped
to address adequately. These risks include potential asset-liability mismatches, credit
concentration risks, and operational vulnerabilities. As a result, regulatory oversight is
crucial to ensure the stability of the NBFC sector and protect the interests of consumers
and investors. The Reserve Bank of India (RBI) closely monitors NBFCs and implements
prudential regulations to mitigate these risks and promote a robust and resilient
financial system in the country.
NBFC creates an opportunity in creating for the Indian financial system, contributing
significantly to economic growth, financial inclusion, and credit availability. Following
are the areas where NBFC sector played a crucial role in Indias1 overall development over
the years:
1. Credit Penetration and Financial Inclusion: NBFCs have been instrumental in
increasing credit penetration in India, especially in regions and sectors where
traditional banks have limited reach. They have been successful in catering to the needs
of underserved and unbanked segments of the population, contributing to financial
inclusion.
2. Diverse Financial Products: NBFCs have introduced innovative and specialized
financial products to meet the specific needs of different customer segments. From
microfinance for the economically weaker sections to housing finance and vehicle loans,
NBFCs have diversified the range of financial services available in the country.
3. Complementing Banking Sector: NBFCs complement the role of banks by providing
additional channels for credit intermediation. They have been crucial in easing the
pressure on the banking sector by taking up certain types of lending and serving niche
markets, thereby promoting a more balanced and diversified financial system.
4. Supporting MSMEs and Infrastructure Development: NBFCs play a significant role in
supporting the growth of Micro, Small, and Medium Enterprises (MSMEs), which are vital
contributors to the Indian economy. They also contribute to infrastructure development by
financing projects in this sector.
5. Job Creation: The growth of the NBFC sector has led to increased employment
opportunities in various financial services-related roles. This has a positive impact on
the overall economy by generating income and increasing consumer spending.
6. Enhanced Competition and Innovation: The presence of NBFCs has spurred healthy
competition in the financial sector, leading to innovation in products and services. This
benefits consumers as they get access to a broader range of financial products at
competitive rates.
7. Rural and Agricultural Finance: NBFCs have played a significant role in rural and
agricultural finance. They have supported farmers and rural businesses by providing credit
and financial services tailored to their needs.
In conclusion, the NBFC sector has significantly contributed to Indias overall
development by expanding credit access, promoting financial inclusion, supporting economic
growth, and offering innovative financial products. Its continued growth and evolution
will remain vital for sustaining and strengthening Indias financial ecosystem in the
future.
III. SEGMENT-WISE PERFORMANCE:
The Company is engaged in a single segment i.e. finance/lending. Details of performance
have been provided in this report.
IV. OUTLOOK:
While NBFCs have seen decadal low growth in fiscals 2020 and 2021, they are expected to
ride on the tailwinds of improved macroeconomic fundamentals and strengthened balance
sheets, and expand 1314% in fiscal 2024.
Thankfully, 2022-23 (FY2023) saw the effects of Covid abate significantly, with
citizens as well as businesses finally reverting to normalcy. However, the flip side was
the impact of inflationary trends, supply chain disruptions emanating from China, and the
Russia-Ukraine conflict impacting commodity prices. Indias retail, or consumer price,
inflation remained high and for much of the year was above 6%. To combat this, the RBI
regularly raised its policy repo rate, starting May 2022, with cumulative increase being
250 basis points. In addition, thanks to higher global commodity prices and depreciation
of the Indian rupee, the current account deficit increased.
However, despite these critical challenges, India emerged as the fastest growing major
economy in the world.
World over, the support from the governments and the central banks, has brightened the
global growth outlook for 2023. With massive vaccination drives underway, risks to
recovery are likely to abate, thus leading to a gain in the momentum of economic
activities.
Apex Capital and Finance Limited expects to improve its performance in financial year
2023-24. The approach would be to continue with the growth momentum while balancing risk.
The Company will continue to invest in strengthening risk management practices; and in
maintaining its investment in human resources to consolidate its position as a potential
NBFC in India.
V. RISK MANAGEMENT:
In view of the growing volatility in the operating environment impacting global
businesses on an unprecedented scale, we are reinforcing the risk management and
mitigation mechanism. It is a fundamental aspect of good governance and prudent business
practices, contributing to the long-term success and sustainability of the organization.
Incorporating risk management as an integral part of the business strategy requires a
systematic approach, involving risk assessments, risk appetite determination, risk
monitoring, and periodic reviews. It also necessitates a risk-aware culture where
employees at all levels understand their roles in managing risks and are encouraged to
report potential issues promptly. Ultimately, effective risk management strengthens a
companys resilience and contributes to its long-term success in a dynamic and
unpredictable business landscape.
VI. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Companys internal control system is designed to ensure operational efficiency,
protection and conservation of resources, accuracy and promptness in financial reporting
and compliance with laws and regulations. The internal control system is supported by an
internal audit process for reviewing the adequacy and efficiency of the Companys internal
controls, including its systems and processes and compliance with regulations and
procedures. Internal Audit Reports are discussed with the Management and are reviewed by
the Audit Committee of the Board which also reviews the adequacy and effectiveness of the
internal controls in the Company. The Companys internal control system is commensurate
with the size, nature and operations of the Company.
VII. DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
The financial performance of the Company during the year under reference was reasonably
good. For detailed information, please refer to Directors Report, which forms part of
this Annual Report.
VIII. MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/ INDUSTRIAL RELATIONS FRONT, INCLUDING
NUMBER OF PEOPLE EMPLOYED:
We recognize people as our most valuable asset and we have built an open, transparent
and meritocratic culture to nurture this asset. Talent Management is a key people planning
tool that provides an integrated means of identifying, selecting, developing and retaining
top talent within our Organization. Attrition has been managed well and has been below
industry benchmarks. Apex Capital and Finance Limited has kept a sharp focus on employee
engagement. We have a strong system of grievance handling too. No concern of our people
goes without addressing. We strive for excellence by thriving on our positivity.
For and on behalf of the Board of Directors of Apex Capital and Finance Limited
Place: New Delhi |
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Date: 10.08.2023 |
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Sd/- |
Sd/- |
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(Sumit Choudhary) |
(Shekhar Singh) |
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Director |
Managing Director |
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DIN:02586702 |
DIN:00039567 |
+91-9892691696
