Decillion Finance Ltd Management Discussions

INTRODUCTION

Management Discussion and Analysis mainly comprises of the statements which, inter-alia, involve predictions based on perceptions and may, therefore, be prone to uncertainties. It is the sum total of the Companys expectations, beliefs, estimates and projections which are forward looking within the meaning of applicable laws and regulations. The actual results could differ materially from those expressed herein specifically or impliedly.

MACRO-ECONOMIC ENVIRONMENT

Global economic activity is experiencing a broad based and sharper than expected slowdown. The cost-of-living crisis, tightening financial conditions in most regions, increasingly visible impact of monetary policy tightening by most major central banks and stresses in the Chinese economy all weight heavily on the world economic outlook.

Global interest rates have peaked in the current monetary policy tightening cycle, though macroeconomic conditions remain too fragile and uncertain for a definite view on growth and inflation conditions going forward. Global economy faces multiple challenges, including prospects of slowing growth, large public debt, increasing economic fragmentation, and prolonging geopolitical conflicts. less supportive fiscal policies from countries, Cyber risk and climate-related risk are also factors affecting business. Global growth has stabilized towards the end of the year but the improvement is fragile.

Despite multiple geopolitical disruptions, global growth is expected to slowly but steadily recover. The global economy grew by 2.3 percent in 2023 and is projected to grow at the same rate in 2024 and 2025. Growth in advanced economies is expected to increase slightly from 1.6 percent in 2023 to 1.7 percent in 2024 and 1.8 percent in 2025. Emerging and developing economies are projected to grow at 4.2 percent in both 2024 and 2025. There are significant variations in growth across different countries. In the United States, growth is projected to rise to 2.7 percent in 2024 before siowing to 1.9 percent in 2025. In the Euro area, growth is expected to increase from 0.4 percent in 2023 to 0.8 percent in 2024 and 1.5 percent in 2025. Growth in China is expected to slow to 4.6 percent in 2024 and 4.1 percent in 2025 due to the ongoing crisis in the property sector.

Despite global uncertainties, the Indian economy had a strong year in 2023. It closed the year with a GDP of US$ 3.73 trillion and a GDP per capita of US$ 2.610. The projected GDP growth rate was 6.3 percent, compared to the global average of 2.9 percent. Real GDP growth in India was 7.6 percent in FY 2023-24, up from 7 percent in FY 2022-23, according to the Second Advanced Estimate by the Central Statistical Organisation. This growth was driven by a 10 percent increase in capital formation (Capex), led by high public sector investment. Non- agricultural growth was strong, with industry growing by 9 percent and services by 7.5 percent.

Inflation remained at 5.4 percent in FY 2023-24, within the Reserve Bank of Indias 6 percent upper limit. Inflation had exceeded this limit in July and August 2023 due to high prices of vegetables, pulses, and milk products. Food price inflation was high at 7.5 percent, while energy prices declined from September 2023. Core inflation was decreasing throughout FY 2023-24 but rose in the last two months, mainly due to services.

INDIAN ECONOMY

The Indian economy demonstrated resilience, recording a robust growth of 7.6 percent in FY24, surpassing the previous fiscal year. Strong domestic demand, favourable government policies and growth trends across critical sectors drove this increase. Despite the global economic slowdown, Indias growth rate exceeds that of many comparable economies, indicating resilient domestic consumption and reduced reliance on global demand. The Indian economy has risen from being 10th to 5th largest globally, the per capita income has doubled and increased to Rs. 1.97 lakhs in 9 years. Domestic consumption and infrastructure spending contributed to growth, and government initiatives such as Gati Shakti will boost industrial competitiveness and future growth.

NBFC

As per RBI reports, NBFCs have solidified their foothold in the Indian financial sector by extending credit and financial products to previously unbanked and underserved areas. Substantial capital buffers, improving asset quality and robust earnings have increased the resilience of the NBFC sector: the Capital to Risk-Weighted Assets Ratio at 27.6 percent in September 2023 remains well above the regulatory minimum of 15 percent; the Gross Non-performing Assets ratio has declined from a high of 7.2 percent in December 2021 to 4.6 percent in September 2023; and Net Interest Margin and Return on Assets stood at 5.1 percent and 2.9 percent, respectively, in September 2023.

The Supervisory and Regulatory (SBR) framework for NBFCs was issued on 22^nd October, 2021 and became effective from 1^st October, 2022. The initial assessment suggests that the NBFC sector has become stronger and resilient post introduction of the SBR framework. As on 30^th September, 2023, NBFCs in the base, middle and upper layers constituted 6 percent, 71 percent and 23 percent of the total assets of NBFCs, respectively.

OUTLOOK

The Companys present business operations are preponderantly that of an investment company, future of which largely depends upon financial and capital markets. Your Company has investments in equity/debt instruments (including through mutual funds), financially sound companies grtcl immovable properties. The income from interest and dividends will continue to contribute to the income c(f phf Company. The management is optimistic about the future outlook of the Company. The Company will expand its activities, consistent with its status as a NBFC

COMPANYS OVERVIEW

Decillion Finance Limited was founded in 1995 and i^zT>egistered Non-Banking Finance Company (NBFC) regulated by the Reserve Bank of India (RBI). The Company operates in the state of West Bengal and specialises in providing financial services. The mainstay of your Companys operations continued to be investments in various companies, under which steady interest iqgome flows into the Company coupled with sustained appreciation in capital. During the year under review, your Company has earned income in the form of interest, and profit on sale of investments.

OPPORTUNITIES & THREATS

DFL constantly monitors the external environments and internal situation so that it is aware of the opportunities and threats that emerge. This enables the Company to tap into the positive prospects that come its way while overcoming or bypassing the challenge of threats.

Opportunities

Diverse loan book presence to accelerate growth Efficient Business Model helps to minimise risk and operating cost Adequate capitalisation to support medium-term growth plans Operates in "B2B" business segment with huge growth potential

Threats

Unpredictable policy changes by the Government Increasing competition from local and global players Higher exposure to semi-formal and informal sector customers

SEGMENT WISE PERFORMANCE REVIEW

The Company has only one line of business, i.e., Financing and Investment Activities during the year under review, hence no segment wise information is required. The Company has no activity outside India. Therefore, there is no geographical segment.

REGULATORY

The Reserve Bank of India (RBI) has been continually strengthening the supervisory framework from NBFCs in order to ensure sound and healthy functioning and avoid excessive risk taking. In furtherance of these objectives, RBI issued new guidelines during past years.

1. Knowyourcustomerguidance-Anti money laundering Standards

2. Guidance on classification, monitoring and reporting of frauds

3. Guidance on Securitisation of Standards Assets

INTERNAL CONTROLSYSTEMS & ITS ADEQUACY

The Company has appointed M/s Srimal Jain & Co., Chartered Accountants, an outside agency as its Internal Auditors, who conduct internal audit for various activities. The Company has developed adequate internal control system commensurate to its size and business. Personnel of the Internal Auditor conduct periodic audits in all the areas to ensure that the Companys control mechanism is properly followed and all statutory requirements are duly complied with. The reports of Internal Auditors are submitted to the Audit Committee which further reviews the adequacy of Internal Control System.

CAUTIONARY NOTE

Statements in this Management Discussion and Analysis describing :K^Companys objectives, projections, estimates and expectations may be forward looking within the meaning of applicable laws and regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in Government regulations and tax regime, economic developments within India and abroad, financial markets, etc.

The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in future on the basis of subsequent developments, information or events. The financial statements are prepared in accordance with the Indian Accountjhg Standards (Ind AS) notified under Section 133 of the Companies Act, 2013 read with Companies (Accounts) Rules, 2014. The Management of the Company has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the state of affairs and profit/loss for the year. The narrative on our financial condition and result of operations should be read together with our audited consolidated financial statements anci the no tes to these statements included in the Annual Report.

		For and on behalf of the Board
		Decillion Finance Limited
	Jitendra Kumar Goyal	Priyanka Mohta
Place: Kolkata	Managing Director	Director
Date: 12th August, 2024	DIN: 00468744	DIN:08853818