Golechha Global Finance Ltd Management Discussions

INDUSTRIAL STRUCTURE AND DEVELOPMENT

NBFCs (Non-Banking Financial Companies) play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. NBFCs do play a critical role in participating in the development of an economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in rural segments and to support financially weaker sections of the society. Emergency services like financial assistance and guidance is also provided to the customers in the matters pertaining to insurance.

NBFCs are financial intermediaries engaged in the business of accepting deposits delivering credit and play an important role in channelizing the scarce financial resources to capital formation. They supplement the role of the banking sector in meeting the increasing financial needs of the corporate sector, delivering credit to the unorganized sector and to small local borrowers. However, they do not include services related to agriculture activity, industrial activity, sale, purchase or construction of immovable property. In India, despite being different from banks, NBFC are bound by the Indian banking industry rules and regulations.

NBFC focuses on business related to loans and advances, acquisition of shares, stock, bonds, debentures, securities issued by government or local authority or other securities of like marketable nature, leasing, hire-purchase, insurance business, chit business.

The banking sector would always be the most important sector in the field of business because of its credibility in supporting manufacturing, infrastructural development and even being the backbone for the common mans money. But despite this, the role of NBFCs is critical and their presence in a country would only boost the economy in the right direction.

INDUSTRY OVERVIEW

An on bank financial institution (NBFI) is a financial institution that does not have a full banking license and cannot accept deposits from the public. However, NBFIs do facilitate alternative financial services, such as investment (both collective and individual), risk pooling, financial consulting, brokering, money transmission, and check cashing. NBFIs are a source of consumer credit (along with licensed banks). Examples of nonbank financial institutions include insurance firms, venture capitalists, currency exchanges, some microloan organizations, and pawn shops. These non-bank financial institutions provide services that are not necessarily suited to banks, serve as competition to banks, and specialize in sectors or groups.

Non-banking financial companies may grow at 13-15% during fiscal 2024, primarily driven by retail assets, according to ICRA Ltd. The growth outlook has been revised upward, and the ratings agencys estimates suggest that the NBFCs retail assets under management is likely to expand by about 18-20% in fiscal 2024 in comparison to the previous estimate of 12-14%. The housing finance companies are expected to grow at 12-14%, and the NBFC infrastructure segment is likely to grow at 10-12%, according to ICRAs estimates.

The growth of net interest margin and other income is expected to moderate due to an increase in the cost of funds. Even the operating expense is expected to increase, like many other banks, as issuers continue to expand in the fiscal, according to ICRA. A marginal uptick in credit is expected due to higher stage one provisions. The sector is also expected to shift focus towards long-term funding especially that coming from banks, the rating agency said. ICRA estimated that the NBFCs and the HFCs would need incremental funding of about Rs 4.7-5 trillion in the current fiscal to manage the 13-15% AUM growth.

The sector is expected to witness healthy growth and steady expansion in overall bank credit, while the trend of healthy market issuances and strong securitisation demand are expected to ensure the availability of funds, it said. The unsecured loan segment is powering the overall growth of the NBFCs, according to ICRA. This is primarily due to digitisation, cross-selling, and a sharp rise in the share of personal loans as the sector expanded at a 33% compound annual growth rate in the last five years. The share of unsecured loans may touch 26% by next March, rising sharply from 16% in March 2019. In the personal-loan segment, the NBFCs are primarily focused on small-ticket loans, according to ICRA

Source:https://www.bqprime.com/economy-finance/heres-why-icra-upwardly-revised-nbfcs-2023-24-growth-outlook

OPPORTUNITY & THREATS

India is an attractive investment destination and the Companies here are the part of Indias growth story and through this we have also get hold of immense opportunities to expand, strengthen and enhance our business. We have enough headroom available to enlarge our network and at the same time educate number of customers to tie-up with us.

However due to continuing recession throughout world markets, a slowdown in financial flows into the economy and lingering impact of global credit crunch are seen as the greatest risk faced by NBFCs. Further the volatility in the Indian equity markets and the huge liquidity crunch due to global financial meltdown would be a threat for the Companys business growth.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE:

Your company is not dealing in any kind of product as the companys principal business is lending business only and during the year under review, the interest income from loans granted was Rs. 32.03 Lakhs as against Rs. 47.37 Lakhs for the previous year. The operations of the Company have resulted in Profit after Tax of Rs. 147.76 Lakhs as against Rs (174.86) Lakhs in the previous year.

OUTLOOK

The Companys present business operations are preponderantly that of Loans & Advances, future of which largely depends upon financial and capital markets. The income from the advances/lending business is steadily growing, contributing significant volume to the overall business of the Company. The Management is optimistic, expects to maintain its performance in FY 2023-24 and hopes to grow at a rate faster than the growth of bank credit. The approach would be to continue the growth momentum while balancing risk. As before, it will continue to invest in strengthening risk management practices; and in maintaining its investment in technology and human resources to consolidate its position as a leading NBFC in India.

RISK AND CONCERNS

The Companys risk philosophy involves the developing and maintaining a healthy portfolio within its risk appetite and the regulatory framework. While the Company is exposed to various types of risk, the most important among them are credit risk, market risk (which includes liquidity risk and price risk) and operational risk. The measurement, monitoring and management of risk remains key focus areas for the Company which manages this risk by maintaining prudent and commercial business practices.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has in place proper and adequate internal control systems commensurate with the nature of its business, size and complexity of its operations. Internal control systems comprising of policies and procedures designed to ensure reliability of financial reporting, timely feedback on achievement of operational and strategic goals, compliance with policies, procedure, applicable laws and regulations, and that all assets and resources acquired are used economically.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:

(In Lakhs)

Particulars	2023-24	2022-23
Total Income	1747.36	2223.58
Total Expenses	1566.22	2461.59
Profit Before Taxation	1.82	(234.11)
Profit after Tax	1.47	(174.85)
Earnings per Equity share - Basic & Diluted	2.69	(3.18)

During the year under review, the interest income from loans granted was Rs.32.03 Lakhs as against Rs. 47.37 Lakhs for the previous year. The operations of the Company have resulted in Profit after Tax of Rs. 147.77 Lakhs as against Rs. (174.85) Lakhs in the previous year. During the period and under review Company has invested in the shares of other companies and the income from sale of shares during the current year is Rs. 1715.33 Lakhs against Rs. 2176.21 Lakhs in the previous financial year.

KEY FINANCIAL RATIOS:

S.No Particulars	2023-24	2022-23	Variation in percentage
1 Debtors Turnover	NA	NA	NA
2 Inventory Turnover	3.22	5.75	Lower sales compared to previous year resulted in variation,
3 Debt to Equity Ratio	NA	NA	NA
4 Interest Coverage Ratio	NA	NA	NA
5 Current Ratio	287.89	171.61	Reduction in current liability resulted in variation
6 Operating Profit Margin	12.26	-8.87	Positive operating profit earned during current year as compared to loss in previous year.
7 Net Profit Margin	8.46	-7.85	Profit earned during the year resulted in positive variation
8 Return on Net Worth	17.06	-24.33%	Positive returns earned during current year as compared to loss incurred in previous year.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

Your Company considers its Human Resources as the key to achieve its objectives. Keeping this in view, your Company takes utmost care to attract and retain quality employees. The employees are sufficiently empowered and such work environment propels them to achieve higher levels of performance. The unflinching commitment of the employees is the driving force behind the Companys vision. Your Company appreciates the spirit of its dedicated employees. There is no material development in the human resources employed in the FY 2023-24 and there are no material developments in the human resources utilized in the Company.

By The Order Of The Board

For Golechha Global Finance Limited

Sd/-

Gyan Swaroop Garg

Chairman & Managing Director

(DIN: 00602659)

Place : Kolkata

Date : 13.08.2024