Consolidated Finvest & Holdings Ltd Management Discussions

ABOUT CONSOLIDATED FINVEST & HOLDINGS LIMITED

Consolidated Finvest & Holdings Limited ("CFHL" or "Company"), registered with the Reserve Bank of India ("RBI") as a non-deposit taking Base Layer Non-Banking Financial Company ("NBFC") is engaged in lending and Investment mainly in group Companies.

Despite gloomy predictions, the global economy remains remarkably resilient, with steady growth and inflation slowing almost as quickly as it rose. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, an energy and food crisis triggered by Russias war on Ukraine, a considerable surge in inflation, followed by a globally synchronized monetary policy tightening. Globally, economic activity remains resilient, with Chinas economy growing 5.3% year-on-year and the U.S. economy expanding at 1.3% annualised rate in March quarter amid signs of inflation easing, strengthening hopes of a pickup in Indias exports. Growth in the euro area is rebounding but from very low levels, as past shocks, and tight monetary policy weigh on activity.

Indias economy grew at a faster-than-expected pace of 7.8% year-on-year in the first three months of 2024, helped by a strong performance in the manufacturing sector, and economists expect the momentum to continue this year (Reuters). As per the recent report released by Ministry of Finance, The Indian economy is set to achieve nearly 7% growth in the financial year 2024-25. The report attributes this positive outlook to the robust domestic demand that has propelled the country to a growth rate exceeding 7% over the past three years. India is forecasted to achieve a USD 4 trillion economy by 2024-25, surpassing Japan to become the worlds fourth largest economy.

In general, equities in India continued to have a bull run and accelerated to jovial spirits after the general elections, with strong corporate earnings and higher-than-expected GDP growth adding to why domestic players—both direct and indirect—have been major players in the markets, as foreign interest recedes. The robust buying activity across various market participants has been a key factor in propelling the markets to new heights. Indian stock market benchmarks—Sensex and Nifty 50—achieved remarkable gains in the first half of 2024. The Nifty 50 surged by 10.5 percent, reaching a record high of 24,174, while the Sensex climbed by 9.4 percent, peaking at an all-time high of 79,671.58, which are still moving forward.

Indias financial services sector plays a critical role in driving the countrys economic growth by providing a wide spectrum of financial and allied services to a large consumer cross-section. The Sector comprises commercial banks, insurance companies, NBFCs, housing finance companies, co-operatives, pension funds, mutual funds and other smaller financial entities. In India, the market for financial services sector is still largely untapped. Financial services sector is poised to grow eventually on the back of strong fundamentals, adequate liquidity in the economy, significant government and regulatory support, and the increasing pace of digital adoption. Digital technology, which has transformed the way business is conducted across the world, is projected to be one of the major drivers for the growth of this sector in India as well. Greater use of digital technology is helping the sector to lower transaction cost, generate higher productivity and reach unexplored markets in the financial ecosystem.

Non-Banking Financial Companies ("NBFCs") remain one of the most important pillars for ushering financial inclusion in India, reaching out to a hitherto under/ unserved populace and in the process leading to "formalization" of the credit demand. NBFCs cater to the needs of both the retail as well as commercial sectors and, at times, have been able to develop strong niches with their specialized credit delivery models that even larger players including banks, have found hard to match. NBFC play a key role in providing funds to the weaker sections of the society. As against traditional banks, NBFCs supply long-run credit to trade and commerce industry. NBFCs cater to a wide variety of customers – both in urban and rural areas. They finance projects of small-scale companies, which is important for the growth in rural areas. They also provide small-ticket loans for affordable housing projects. All these helps promote inclusive growth in the country.