assam entrade ltd share price Management discussions

Macro-economic Overview

During the financial year 2022-23, Indias economy exhibited a notable rebound from the pandemic- induced downturn. The countrys Gross Domestic Product (GDP) experienced a resurgence, propelled by increased consumer spending, a revitalized industrial sector, and renewed investor confidence. Despite this economic recovery, inflation emerged as a significant challenge, stemming from disruptions in supply chains, elevated fuel and food prices, and global commodity trends. The Reserve Bank of India (RBI) adopted a cautious approach to monetary policy, seeking to balance growth support with measures to contain inflation.

Indias financial year 2022-23 exhibited a recovery in economic growth, underscored by fiscal measures, structural reforms, digital advancements, and sustainability initiatives. While progress was notable, the country remained vigilant in addressing persistent challenges for a more inclusive and sustainable economic trajectory.

Industry structure and developments

Throughout the financial year 2022-23, the Non-Banking Financial Company (NBFC) sector in India underwent a phase of significant transformation and adaptation. As the economy rebounded from the pandemic-induced slowdown, the NBFC sector found itself at the intersection of challenges and opportunities. Regulatory reforms continued to be a prominent theme, with measures aimed at enhancing the sectors resilience and risk management. Implementation of liquidity coverage ratios and capital adequacy norms remained a priority, underscoring the regulators commitment to ensuring stability and safeguarding the financial system.

The NBFC sectors embrace of digital innovation gained further momentum during this period. Faced with changing consumer behaviors and the imperative to streamline operations, numerous NBFCs accelerated their digital transformation journeys. Online lending platforms, digital payment solutions, and automated underwriting processes became pivotal in not only improving customer experiences but also optimizing operational efficiency. The sectors pivot toward digitization mirrored broader trends in the financial industry, where technology-driven solutions were instrumental in meeting evolving demands.

However, amidst the positive strides, the NBFC sector confronted challenges related to asset quality and credit risk. As economic uncertainties persisted, ensuring the soundness of lending portfolios became paramount. NBFCs reevaluated their credit assessment frameworks, doubling down on due diligence, and adopting sophisticated risk assessment models to maintain the balance between expanding credit access and upholding loan quality standards.

While contributing to Indias economic resurgence by extending financial services to diverse segments, the NBFC sector continued to navigate regulatory scrutiny and market expectations. As a critical link in the financial ecosystem, the sectors ability to innovate while adhering to prudent risk management practices remained a focal point. Overall, the financial year 2022-23 marked a period of transition for the NBFC sector, where its role in providing credit access, embracing technology, and managing risk underscored its importance in Indias economic revival.

Company Outlook

There is little slowdown in growth, moderating inflation and uncertain outlook. However your company will continue to strive for meaningful growth, focusing as always on superior credit quality, a balance portfolio mix and efficient cost management in order to sustain profitability.

The government has taken various steps to kick start investment. Policy rate cuts by Reserve Bank of India and improving business sentiment could also support revival in investment.

Your company is fully aware that the opportunities in the infrastructure and real estate will be many and diverse in nature. While this provides impetus for our sustainable growth, your company is also duly careful that from amongst the multiple choices of attractive businesses available we always make the right choice. Your companys business model and its risk management policies and mechanisms are being constantly reviewed and upgraded to insure this.

Risks and concerns

Risks to a varying degree, is inevitable in all business transactions in an organization which is in financial services. Your company, being in the business of financing and investment has to manage various risks. These risks include credit risk, Liquidity risk. Interest rate Risk and operational risk hence, strong risk management capabilities are critical for a growing company operating in a rapidly changing environment. The Risk Management committee reviews and manages the risks at periodic intervals.

The risk management framework of the company is driven by the following fundamentals:-

• .Identification of key risks faced by the company

• .Evaluating the probability of their occurrences and their impact

• .Set an appropriate balance between risk and reward in order to maximize shareholder return

• .Set tolerance limits and established adequate review mechanisms to monitor control the risks.

• .Incorporate robust reporting mechanism and adoption of appropriate mitigation processes

The company manages credit risks through stringent credit norms established through several years of experience in this line of business and continues to follow the time tested practices of personally assessing every borrower, before committing to a credit exposure. This process ensure that the expertise in lending operation acquired by the company over the period is put to best use and acts to mitigate credit risk. Liquidity risks and interest risk arising out of maturity mismatch of assets and liabilities are managed through regular monitoring of the maturity proceeds.

Human Resource Development

The company continues to give priority to its human assets. The company provides a fair and equitable work environment to all its employees. The company is working continuously working to create and nurture an atmosphere which is highly motivated and result oriented.

Financial performance

The financial performance of the company for the year under review is discussed in detail in the Directors Report.

By order of the Board of Directors
For Assam Entrade Limited
Sd/-
(Nishant Gupta)	Date: 05/09/2023
Managing Director	Place: Kanpur