gujarat investa ltd Management discussions

Your Directors have pleasure in presenting the management discussion and analysis report for the year ended on March 31, 2022.


As per report of United Nations, Global economic recovery hinges on a delicate balance amid new waves of COVID- 19 infections, persistent labour market challenges, lingering supply-chain constraints and rising inflationary pressures. After a global contraction of 3.4 per cent in 2020 and following an expansion of 5.5 per cent in 2021, the highest rate of growth in more than four decades, the world economy is projected to grow by 4 per cent in 2022 and 3.5 per cent in 2023. World gross product in 2021 was 1.9 per cent higher than in 2019 but still 3.3 per cent below the level of output projected prior to the pandemic. These aggregate growth figures, however, mask marked divergences in the pace of recovery across countries and regions.

Global recovery in output in 2021 was largely driven by robust consumer spending and some uptake in investment. Trade in goods bounced back, surpassing the pre-pandemic level. But growth momentum slowed considerably by the end of 2021 including in big economies like China, the European Union and the United States of America, as the effects of fiscal and monetary stimuli dissipated and major supply-chain disruptions emerged. Growth impetus generally has been weaker in most developing countries and economies in transition. While higher commodity prices have helped commodityexporting countries at large, rising food and energy prices have triggered rapid inflation, particularly in the Commonwealth of Independent States (CIS) and Latin America and the Caribbean.

The effects of the Ukraine crisis on developed and developing countries are substantial, especially at a time when these economies are just beginning to recover from the COVID-19 crisis. Most CIS countries, especially members of the Eurasian Economic Union are strongly exposed to the Russian economy through trade and finance flows. The conflict has accelerated the upward trend in oil and natural gas prices, along with the prices of metals and other commodities. Prices of agricultural commodities and base metals, such as aluminium, copper, crgo, steel, cobalt, nickel, palladium, and titanium, have also spiked. If those prices increase remains elevated, industrial sectors, in particular, heavy engineering, automotive and electronics, will be hit hard across the globe.

Higher prices of oil and natural gas have also driven up the price of coal. The combination of output shocks to Russia, Ukraine and other CIS countries with a sustained energy price shock could reduce global output by around 0.8 per cent in 2022, according to UN DESA estimates. Many European economies may face a severe economic slowdown in 2022.


Indias GDP is estimated to grow at 7.4 per cent in the financial year 2022-23 with rising prices triggered by the RussiaUkraine conflict posing as the biggest challenge to the global economic recovery, as per Ficcis Economic Outlook Survey conducted in March 2022. According to the survey, the Reserve Bank of India (RBI) is likely to start a rate hike cycle in the second half of 2022, while a repo rate hike of 50-75 bps is expected by the end of the current fiscal. By this time, RBI has already hiked the repo rates twice.

"The latest round of Ficcis Economic Outlook Survey puts forth an annual median GDP growth forecast for 2022-23 at 7.4 per cent with a minimum and maximum growth estimate of 6 per cent and 7.8 per cent respectively," the industry body said.

The median growth forecast for agriculture and allied activities has been put at 3.3 per cent for 2022-23. Industry and services sectors are estimated to grow by 5.9 per cent and 8.5 per cent, respectively. However, it said, the downside risks to growth remains escalated.

While the threat from the COVID-19 pandemic is still looming, the continuation of Russia-Ukraine conflict is posing a significant challenge to global recovery, the survey said.

Rising international commodity prices is the biggest risk emanating from the ongoing conflict as Russia and Ukraine are global suppliers of key commodities, it said. The conflict, if continues for a longer period, will further hit supplies of major raw materials, including crude oil, natural gas, food, fertilizers, and metals, it added.

The economists who participated in the survey have also opined that the global inflation is likely to peak out in the first half of 2022 and moderate thereafter.

With India being a net importer to meet its energy requirements, the sharp rise in crude prices represents a significant shock to Indias macro-economic framework. Moreover, the impact on economy is expected to be more serious if the conflict prolongs, the survey said.


NBFCs have become important constituents of the financial sector and have been recording higher credit growth than scheduled commercial banks (SCBs) over the past few years. NBFCs are leveraging their superior understanding of regional dynamics and customised products and services to expedite financial inclusion in India. Lower transaction costs, quick decision making, customer orientation and prompt service standards have typically differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, they are well-suited to bridge the financing gap in a large country like India. Systemically Important NBFCs have demonstrated agility, innovation, and frugality to provide formal financial services to millions of Indians.

India has a diversified financial sector consisting of commercial banks, insurance companies, non-banking financial companies, housing finance companies, cooperatives, pension funds, mutual funds, and other smaller financial entities. The financial services industry plays an important role in ensuring the efficiency of capital allocation and driving high- return investments. In addition, the industry plays an important role in enabling more people to have access to capital. Financial inclusion driven by RBI has expanded the target market to semiurban and rural areas. NBFCs especially those catering to the urban and rural poor namely NBFC-MFIs and Asset Finance Companies have a complementary role in the financial inclusion agenda of the country. The financial services sector is expected to rapidly grow this decade driven by rising incomes and heightened government focus on financial inclusion and digital adoption - Indias digital payments could pass $1 trillion by 2030.

Given the systemic risks that the sector poses, the RBI issued ‘Scale Based Regulation (SBR): A Revised Regulatory Framework for NBFCs on 22 October 2021 to make the financial sector sound and resilient while allowing a majority of NBFCs to continue under the regulation-light structure. The objective behind this scalebased approach is the principle of proportionality for regulating the non-banking financial companies. The purpose is to calibrate the degree of regulatory prescriptions based on the systemic importance of NBFCs and the contagion risk they pose to other entities in the financial system.


During the year under review, the Company has incurred Profit after tax of Rs. 3.13 Lakhs as compared to the profit after tax of Rs. 2.86 Lakh earned during the previous financial year 2020-21. The Directors are hopeful that company will do better during the current Financial Year.


There is stiff competition amongst major NBFC companies as of today, the company has managed to maintain its profitability, which is due to timely adoption of prudent business strategies, measures taken to reduce cost of funds and cost of operations, improved fund management and effective steps taken to maintain the level of the company. The company has also strengthened its financial position.


The Government is committed to encourage the healthy growth of Capital Market for development of the Economy. While the government seems committed to reforms to address the challenges, political compromises and high populist spending in an election year will mean that tough decisions are more likely to be deferred. However, steps by RBI to stabilize the exchange rate by reducing liquidity support to the banking system will create a challenging environment for investments


The company has primary segments for revenue generation in finance.


The Company continues to explore the possibilities of expansion and will make the necessary investments when attractive opportunities arise. The company remains confident of the long term growth prospects & opportunities ahead of it in its business.


Effective risk management is central to ensuring arobust and healthy finance for the Company. The Company is exposed to specific risks that are particular to its business, including interest rate volatility, economic cycle, market risk and credit risk. The management continuously assesses the risks and monitors the business and risk management policies to minimize the risk.


The Company has in place, adequate internal control systems commensurate with the nature and volume of its business. Efficient maintenance of accounts is facilitated by the executives and employees of the Company. Thereafter, the same is audited periodically by the Internal Auditors. The scope of internal audit is well defined and is very exhaustive to take care of all crucial functions and business of the Company. Based on their report, steps are taken at regular intervals to further strengthen the existing systems and procedures. Their significant observations are discussed in the Audit Committee Meetings regularly. Besides, as mandated under Companies Act, 2013, the Statutory Auditors have certified as part of their Audit Report, the effectiveness of Internal Financial Control over financial reporting.

The Directors have appointed M/s. Kamal M. Shah & Co, Chartered Accountants as the Internal Auditors of the Company for the Financial Year 2022-23.


Human resources have always remained one of the most important assets and a key variable in achieving operational performance. Company continues to provide them with a safe and comfortable working environment. During the difficult pandemic times, the company has taken numerous precautions to protect its staff and workers. The Company believes that the human resources are vital in giving the Company a Competitive edge in the current business environment. The Companys philosophy is to provide congenial work environment, performance orientedwork culture, knowledge acquisition / dissemination, creativity and responsibility. While selecting the training programme, the Company lays emphasis on development of skill and knowledge of its executives in the new vistas of Finance and Information Technology, besides developing the leadership and managerial skills for the future.

The Company continues to run an in-house training program held at regular intervals and aimed at updating their knowledge about issues.


During the under review, all the accounting treatments are done as per the prescribed sections and IND AS applicable to the company.


Statements in the Management discussion and analysis describing the companys objectives, projections, estimates and expectations may be "forward looking statements" within the meaning of applicable 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 economic conditions affecting demand/supply and prices, conditions in the domestic and overseas markets in which the company operates/ going to operate, changes in government regulations, tax laws and other statutes and other incidental factors.

For and on behalf of the Board
Palce : Ahmedabad Purshottam R. Agarwal
Dated : 12th August 2022 Chairman