Your Directors are pleased to present the Management Discussion and Analysis Report for
the year ended 31st March, 2023.
NBFC Company:
The Non-Banking Financial Companies (NBFCs) sector plays a significant role in the
Indian economy, providing credit to individuals, small and medium-sized enterprises. NBFCs
have emerged as a key segment in the financial sector, bridging the gap between banks and
borrowers who are underserved or excluded from traditional banking services. In recent
years, the sector has witnessed significant growth, fuelled by a rise in demand for credit
and the emergence of new players. The sectors resilience and ability to innovate have
been tested during times of economic turmoil.
As the economy has moved past the impact of the pandemic, the NBFCs sector is
anticipated to experience a substantial growth in both FY2023 and FY2024, following the
rebound of the economy. ICRA Ratings predicts that during these fiscal years, the sector
will witness a loan growth of 10-12% and a rise in profitability by 50 basis points. The
PCA framework implemented by RBI has created a level playing field for NBFCs with banks,
thus enhancing corporate governance and leading to sustainable growth in the sector.
The NBFC sector has witnessed an improvement in asset quality, with higher collections
and a lower-than-anticipated share of restructured portfolio. The rising interest rates
may put some pressure on net interest margins, but this impact has been offset by the
limited rate hikes passed on to borrowers. With stable margins and moderation in credit
cost, NBFCs are expected to report a return of 2.6-2.9% on managed assets in FY 2023.
ECONOMIC OVERVIEW
Titled ‘A Rocky Recovery, the IMFs World Economic Outlook April 2023 reported
that on the surface, the global economy appears poised for a gradual recovery from the
devastation caused by the pandemic and, later, the conflict between Russia and Ukraine.
The reopening of the Chinese economy has also contributed to the rebound and supply-chain
disruptions have been unwinding, while the dislocations to energy and food markets caused
by the war are receding. However, it also observed that below the surface turbulence is
building, and the situation is quite fragile, as evidenced by the recent bout of banking
instability.
The growth is expected to come from emerging market and developing economies, which are
already powering ahead with growth rates that are nearer 4%. The advanced economies,
especially the Euro area and the United Kingdom, are creating the drag with growth
expected to fall to 0.7% and 0.4%, respectively, in 2023 before rebounding to 1.8% and
2.0% in the two regions in 2024.
At the same time, the large scale and synchronised tightening of monetary policy by
most central banks should start to bear fruit, with inflation moving back toward its
targets. The IMF forecast that global growth will bottom out at 2.8% in 2023 before rising
modestly to 3.0% in 2024. It also expects global inflation to decrease, although more
slowly than initially anticipated, from 8.7% in 2022 to 7.0% in 2023 and 4.9% in 2024.
OPPORTUNITIES & THREATS
Company 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 and pan-India presence to accelerate growth Unique Business Model
helps to minimise risk and operating cost Adequate capitalisation to support medium-term
growth plans
Brand recognition among lower income and middle income groups of the society spread
across urban, semi urban, and rural areas
Operates in underpenetrated business segment with huge growth potential Successful
track record of catering to the MSME sector Initiatives by the Government to further boost
MSME sector
Threats
Unpredictable policy changes by the Government Increasing competition from local and
global players Higher exposure to semi-formal and informal sector customers
UNION BUDGET 2023-24 HIGHLIGHTS
India is gaining momentum and opening a new path by forging a futuristic and inclusive
vision for the next 25 years. Our countrys position as the fifth largest economy in the
world is testimony to the phenomenal transformation the country has witnessed over the
last few years. The calibrated approach by our policymakers, be it in tackling the
pandemic or setting up aggressive goals under the Atmanirbhar Bharat vision to make our
country a self-reliant nation or the institutionalised inflation control framework, has
shown India with the muscle to tackle fiscal and growth challenges. The pace of reforms
has picked up in the post-pandemic era with a firm focus on asset creation without
ignoring essential welfare spending. Hence, the forthcoming budget will offer an
opportunity to set the groundwork for the economy to guide itself over the next 25 years
on the path to becoming a developed nation. Financial institutions play a crucial role in
ensuring economic stability for households and businesses at critical junctures. The
pivotal role of NBFCs in driving sustainable fiscal growth is well recognized, given their
last-mile connectivity and agile system. The sector has played a decisive role in
accelerating last-mile funding and understanding the credit requirement of the Unbanked
and Underserved. Aided by the governments thrust towards a digital economy, the sector
has also undertaken significant digital transformation and invested heavily to become
tech-agile institutions offering personalized products and services, ensuring faster
credit disbursement.
As India strategizes post-pandemic economic recovery through fiscal measures and
businesses aim to expand capacities, NBFCs have an enormous opportunity to assist in
achieving the noble goal of Aatmanirbhar Bharat through the fast-tracked flow of credit to
businesses and households. As the latest data on Udyam Portal shows, a significant
proportion of registered businesses are micro businesses, Union budget 2023-24 offers an
opportunity to bring in a targeted scheme for expanding credit to micro businesses.
INDIAN FINANCIAL SERVICE INDUSTRY
India has a diversified financial sector undergoing rapid expansion with many new
entities entering the market along with the existing financial services firms. The sector
comprises commercial banks, insurance companies, NBFCs, housing finance companies,
co-operatives, pension funds, mutual funds and other smaller financial entities. The RBIs
continued focus on financial inclusion has expanded the target market to semi-urban and
rural areas. NBFCs, especially those catering to the urban and rural poor namely
Non-Banking Financial Company -Micro Finance Institutions (NBFC-MFIs) and asset finance
companies, have a complementary role in the financial inclusion agenda of the country.
After the COVID-19 impact gradually tapers off, the 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. In fact, digital transactions will play a larger role in the financial
eco-system than hitherto witnessed.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY
The Company has adequate internal controls and standardised operating processes that
are envisaged to protect assets and business efficiency. The Company has established
strong and well-entrenched internal control procedures commensurate with its size and
operations and relevant to its broad domain of the lending business. The Companys
internal control systems are supplemented by periodic reviews by the Management. The Audit
Committee reviews its findings and recommendations at periodic intervals. Companys
internal control system is adequate considering the nature, size and complexity of its
business.
Internal financial controls have been developed for and implemented at every business
process across the Company. This ensures strict adherence and compliance with statutes and
laws. Checks and balances and control systems have been established to ensure that assets
are safeguarded, utilised with proper authorisation, and recorded in the books of account.
HUMAN RESOURCES/INDUSTRIAL RELATIONS
Company recognises the crucial role played by its employees in driving its growth and
success. To this end, the Company prioritises providing a supportive work environment that
fosters employee satisfaction and motivation to achieve both personal and professional
goals. MAS has cultivated an inclusive work culture that values responsibility and instils
a sense of pride in its employees, resulting in a high retention rate. The Company
regularly reviews its business and people policies to identify opportunities for
improvement. It has implemented strong talent management practices that include
development programs, productivity initiatives, and reward mechanisms aimed at achieving
organisational goals and retaining employees. Furthermore, MAS is committed to supporting
the continuous growth and development of its workforce through Learning &
Organisational Development initiatives.
FINANCIAL REVIEW
Key ratios of Goyal Associates Limited on a consolidated Basis:
Particulars |
2022-23 |
2021-22 |
Operating Profit Ratio |
28.45% |
-13.82% |
Return on Capital Employed (ROCE) |
20.58% |
-6.79% |
Earning Per Share (In Rupees) |
0.12 |
-0.10 |
CAUTIONARY STATEMENT
Statements in the Management Discussion and Analysis describing the Companys
objectives, projections, estimates, expectations may be ‘forward looking statements
within the meaning of applicable securities laws and regulations. Actual results could
differ materially from those expressed or implied. Important factors that could make a
difference to the Companys operations include financial position of the company, economic
conditions affecting demand / supply, price conditions in the domestic and overseas market
in which the company operates, changes in the government regulations, tax laws and other
statutes.
|
For and on behalf of the Board of Directors |
Place: Vadodara |
Vuppala Nagamlleshwarao |
Date: 05/09/2023 |
Chairman & Director |
|
(DIN: 08858080) |
+91-9892691696
