1) OPERATING RESULTS
During the year under review, the Companys Total Revenue is Rs.
52.88 Lakhs as compared to Rs. 54.82 Lakhs in the previous year. The Company incurred
total expenses amounted to Rs. 32.19 Lakhs as compared to Rs.34.99 Lakhs during the
previous year. ProfitaftertaxstoodatRs.21.08LakhsasagainstProfitof Rs.19.87 Lakhs in the
previous year.
2) INDUSTRY STRUCTURE AND DEVELOPMENTS
NBFCs have emerged as the principal institutions providing credit
financing to the unorganised and underserved sectors. NBFCs have revolutionised the
lending system in India by providing financial inclusion for those who lack easy access to
credit. They offer a range of services, including MSME financing, home finance,
microfinance, gold loans and other retail segments.
Considering the evolution of NBFCs in terms of size, complexity, and
interconnectedness within the financial sector and as a part of the overall objective of
aligning the regulatory/ supervisory framework with their changing risk profile, important
strides in the areas of risk management, regulatory compliance and enforcement, and
consumer education and protection were made during the year. The Reserve Bank had put in
place a scale-based regulation for NBFCs in October 2021 to align the regulations for
NBFCs with their changing risk profile. This framework categorises NBFCs in base layer
(NBFC-BL), middle layer (NBFC-ML), upper layer (NBFC-UL) and top layer (NBFC-TL).
In addition to that, several other guidelines were issued by RBI during
the year, pertaining to digital lending, review of regulatory framework for Asset
Reconstruction Companies (ARCs), establishment of digital banking units (DBUs), and a
revised regulatory framework for Urban Co-operative Banks (UCBs) to strengthen the
financial system. Further, in order to alleviate COVID-19 related stress in the financial
markets and specific segments of the economy, the Reserve Bank had used a number of
targeted and system-level liquidity measures as part of unconventional monetary policies.
3) OPPORTUNITIES AND THREATS
The Indian financial markets remained resilient notwithstanding
persistent impact global spillovers. Indias stock market outperformed most of its
EME peers in 2022-23 on the strength of macroeconomic fundamentals and favourable growth
prospects. However, primary segment of the equity market witnessed moderation in
fundraising amid volatile market conditions.
Investment companies is influenced by a multitude of factors, and the
investment landscape is inherently unpredictable. Investment companies must conduct
thorough research, monitor market trends, and adapt their strategies to changing
circumstances to navigate the future successfully. Consulting with financial professionals
and conducting comprehensive due diligence is crucial when making investment decisions.
Our Company will continue to look for opportunities to invest in companies which have
consistent growth prospects with high quality earnings.
4) FUTURE PROSPECTS AND OUTLOOK
The Indian economy demonstrated an exceptional performance during FY
2022-23, positioning itself as one of the fastest-growing economies. Despite global
macroeconomic challenges and tighter domestic monetary policies aimed at addressing
inflationary pressures, the growth momentum remained steady, showcasing the underlying
strength of Indias economy in recovering and revitalizing growth drivers.
Currently, Indian economy is facing few challenges, such as the balance
of payments risk, sticky inflation, and tighter global financial conditions. On the other
hand, there are noteworthy positives as well, such as solid momentum in GST collections
and the Government Capex push. As per IMF, India continues to be a bright spot in an
uncertain global economy. There could be some moderation in growth in FY 2023-24, owing to
weak exports and the impact of past interest rate tightening on Indias domestic
demand. But overall, the Indian economy has a strong long-term potential.
5) RISKS AND CONCERNS
The Company like any other Company is exposed to specific risks that
are particular to its business and the environment within which it operates. The Company
is exposed to the market risk (including liquidity risk) and also the factors that are
associated with capital market, which inter alia includes economic/business cycle,
fluctuations in the stock prices in the market, besides the interest rate volatility and
credit risk.
Risk Management Policy
The Company has implemented a systematic process to assist in the
identification, assessment, treatment and monitoring of risks which provides the necessary
tools and resources to management and staff to support the effective management of risks.
The Company is primarily engaged in investment in Securities viz. Equity Shares,
Preference Shares, Mutual Funds etc. which involves macroeconomic risks, investee company
specific risks, market wide liquidity risks and execution risks relating to the Company /
its intermediaries.
(a) The macroeconomic risks, investee company specific risks are
covered by investment decisions based on third party research and internal assessment.
(b) Market wide risks are assessed and managed by investment timing
decisions.
(c) The execution risk is managed by dealing with reputed
intermediaries and through own back office discipline re accounting and follow up of
trades.
(d) All investment decisions are made after distinguishing among
alternative courses of action with identification of expected risks. The Company also
faces credit default risks, concentration risk and industry specific risk while making
Inter corporate loans to other body corporate. The Company performs the credit check on
the prospective borrower considering various factors relating to the loan such as loan
purpose, credit rating, and loan-to-value ratio and estimates the effect on yield (credit
spread). The Company mitigates the concentration risk, industry specific risks by
diversifying the borrower pool relating to different industries. The Company periodically
monitors and reviews the financial condition, credit rating, debt to equity ratio to
minimize the credit default risks associated with the borrowers. The Company has
established Internal Financial Control Systems to provide reasonable assurance regarding
safeguarding of assets, maintenance of proper accounting records and the reliability of
financial reporting.
The Company controls the operational risks associated with its business
activities by way of prescribing / amending processes, imposing controls and defining
roles and responsibilities. The Company assesses the effectiveness of its risk management
plan through structured continuous improvement processes to ensure risks and controls are
continually monitored and reviewed.
6) INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has put in place an effective internal control system to
synchronise its business processes, operations, financial reporting, fraud control, and
compliance with extant regulatory guidelines and compliance parameters. Strict internal
control and systems are devised as a depiction of the principles of the highest standards
of governance. The Company ensures that a standard and effective internal control
framework operates throughout the organisation, providing assurance about safekeeping of
the assets and execution of transactions as per the authorisation in compliance with the
internal control policies of the Company.
The Audit Committee of the Board of Directors actively reviews the
adequacy & effectiveness of the internal control system at periodic intervals in close
coordination with the Internal Auditors. Internal Audits are also carried out to review
the adequacy of the internal control systems, compliance with policies and procedures.
7) FINANCIAL PERFORMANCE
a) Share Capital: The Companys Issued and Subscribed Share
Capital consists of Equity Share Capital only. The Paid-up Share Capital of the Company as
at 31st March, 2023 stood at Rs. 11,06,27,310/- comprising of 11062731 Equity
Shares of Rs.10/- each.
b) Financial Assets and Non-Financial Assets: The Financial Assets
and Non-Financial Assets for the year under review stood at Rs. 239.82 Lakhs and Rs. 74.75
Lakhs respectively as against Rs. 224.35 Lakhs and Rs. 70.77 Lakhs for the previous year.
c) Financial Liabilities and Non-Financial Liabilities: During
the year under review, the Financial Liabilities and Non-Financial Liabilities stood at
Rs. 13.42 Lakhs and Rs. 52.62 Lakhs respectively as against Rs. 16.40 Lakhs and Rs. 50.32
Lakhs during the previous year.
d) Key Financial Ratios:
| Ratio |
Numerator |
Denomi- nator |
31st March, 2023 |
31st March, 2022 |
% Vari- ance |
Reasons for change in ratio by more
than 25% as compared to the previous year |
| Capital to risk-weighted assets ratio (CRAR) |
Tier I Capital + Tier II Capital |
Total risk weighted assets |
187.70% |
198.99% |
-5.67% |
NA |
| Tier I CRAR |
Tier I Capital |
Total risk weighted assets |
157.52% |
165.16% |
-4.63% |
NA |
| Tier II CRAR |
Tier II Capital |
Total risk weighted assets |
30.18% |
33.83% |
-10.79% |
Change in ratio, due to decrease in Tier
II capital |
| Liquidity Coverage Ratio* |
NA |
NA |
NA |
NA |
NA |
NA |
| Return on Net Worth |
Net Profit before Tax |
Total Sharehold- er Equity |
1.89 |
1.80 |
NA |
NA |
* The Company is a non-deposit taking/accepting Non-Banking Financial
Company and asset size of the Company is less than Rs. 100 crores, so Liquidity Coverage
ratio is not applicable to the Company.
8) HUMAN RESOURCES
The Company has adequate human resources which is commensurate with the
current volume of activity and is reviewed by the management periodically and the Company
would induct competent personnel on increase / expansion of the activity.
9) CAUTIONARY STATEMENT
Statements in this "Managements Discussion and
Analysis" describing the Companys objectives, projections, estimates,
expectations or predictions 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 interest rates and changes in the Government
regulations, tax regimes, economic developments and other factors such as litigation etc.
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