Dhunseri Investments Ltd Management Discussions

i. Industry Structure and Developments:

Global economy

The global economy has been in better shape than anticipated at the start of the year, having demonstrated some signs of growth, as reflected in the various high-frequency indicators. However, elevated debt levels and continuing geopolitical hostilities aggravate risks to global growth and inflation outlook in the medium-term. In Calendar Year (CY) 2023, the global economy showcased remarkable resilience, with projections indicating continued stability. Global growth is expected to remain at 3.2% in CY 2024, and to be stable in CY 2024 & CY 2025. This upturn is propelled by robust government and private expenditures, buoyed by real disposable income gains, lowering fuel prices and fading supply chain pressures. Global headline inflation is expected to decline to 5.8% in CY 2024, followed by a further drop to 4.4% in 2025, a downward revision from previous forecasts. This decline is attributed to the alleviation of supply-side constraints and the implementation of restrictive monetary policies, leading to a faster-than-anticipated recession in most regions. India, given its structural reforms, strengthening physical and digital infrastructure, as well as upbeat business and consumer confidence, is in a better position to overcome these multiple challenges and emerge stronger. India is on track to become the third-largest economy by 2027, overtaking Japan and Germany.

Industry Overview

Indias NBFC sector has emerged as a powerful financial inclusion and economic growth driver. NBFCs have leveraged digitalisation to offer faster, more efficient loan options, particularly to the underserved MSME sector. This digital transformation is a game-changer, and NBFCs are increasingly using super apps to reach and partner with customers, creating a superior customer experience. Technology, data, and analytics are poised to play an even greater role across the NBFC value chain, impacting credit assessment, collections, fraud management, and cyber security. On June 8, 2023, RBI issued guidelines on Default Loss Guarantee in Digital Lending (DLG guidelines) to provide a framework for recognising NPAs and disclosing loan loss provisions.

ii. Opportunities and Threats:

The Company being a Non-Banking Financial Company is primarily engaged in the business of making investments in shares and securities. On account of Government of Indias efforts to improve economic growth in the Country by providing opportunities for start-up and infrastructure development is giving hopes to entrepreneurs for exploring new opportunities. The Company is looking forward to use the opportunity at the right moment.

In a volatile stock market, the Company is exposed to the risk of fluctuation in share prices. This however is not likely to affect the working of the Company as a major part of the investments are held on long term basis and temporary fluctuations of those shares in the stock market do not have much financial implication to the Company.

However, the company gives continuous effort to frequently examine the ups and downs of the market particularly taking into consideration that the Company being a small size NBFC and there are plenty of hindrances which may hamper its growth.

iii. Segment Wise Performance:

The Company operates under the following segments the details with respect to each of the reported business segments are as follows:

Treasury- The treasury operations relates to holding treasury assets for capital appreciation and other related gains.

Tea- Tea segment comprise revenue from tea operations and revenue from investments in equity instruments of tea companies and consequently assets and liabilities related to tea segment.

iv. Outlook:

The Indian economy is getting insulated to world and creating a mark on global level. The Management has to regularly monitor the changing market conditions and the trends. Further, any slowdown of the economic growth or volatility in the financial market could adversely affect the companys performance. However, the nature of capital market in which the Company operates is not predictable with certainty.

v. Risk and Concern:

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 Policy which inter-alia lays down detailed process and policies in the various facets of the 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.

vi. Internal Control System & their adequacy:

The company maintains a system of internal controls design to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the reliability of financial controls and compliance with applicable laws and regulations.

The Company has put in place an adequate system of Internal Controls that commensurate with its size, requirements and the nature of operations. It ensures operational efficiency, accuracy in Financial Reporting and Compliance of applicable Laws and Regulations. The Company has in place policies and procedures required to properly and efficiently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare financial reports in a timely and reliable manner. The system is also reviewed from time to time. During the year such controls were tested by the Internal and Statutory Auditors with reference to financial statements and no reportable material weakness on the designs or operations were observed. A seamless system has been put in place to ensure that any major discrepancies or lapse in controls are reported to the Audit Committee and Board of Directors of the Company and action is taken to control any breach.

vii. Discussion on Financial Performance with respect to Operational Performance:

This section is covered in the Boards Report under the section of Financial Results and Operations.

viii. Material Developments in Human Resources/ Industrial Relations front including number of people employed:

There is no Material Development in Human Resources front. The Company maintains harmonious relationship with its employees. The Company is having 6 persons employed currently.

ix. Details of Key Financial Ratios and Significant Changes:

x. Change in return on Net Worth:

The return on Net Worth for the F.Y. 2023-24 is 7.23 % and for F.Y. 2022-23 is 2.07 % resulting in increase in the return on net worth by 249.28% due to increase in the net profit of the Company in absolute terms in F.Y. 2023-24 as compared to F.Y. 2022-23.

xi. Cautionary Statement:

Statements in this Management Discussion and Analysis Report describing the Companys projections, estimates and expectations have been made in good faith and may be forward looking statements within the meaning of applicable laws and regulations. Many unforeseen factors may come into play and affect the actual results, which may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry-global or domestic or both, significant changes in political and economic environment in India, applicable statues, litigations etc.