helpage finlease ltd share price Management discussions

Overview:

Helpage Finlease Limited is a non-deposit taking and non-systematically important Non-Banking Financial Company (NBFC) registered with the Reserve Bank of India (RBI) under Section 45-IA of Reserve Bank of India Act, 1934, listed on Bombay Stock Exchange (BSE).

The Company is engaged into the lending business mainly focused for catering the financial needs of small and medium enterprise (SME’s) which eventually have a high role to play to boost the growth of developing country like India. The Company has also obtained registration with four CIC’s (Credit Information Companies) and maintaining the data as required.

The Management Discussion and Analysis Report (MDAR) provide an insight into the performance of the Company in the previous years, in the current year and its future plans besides the risks, and uncertainties associated with the Company’s business along with the management perception and vision to win over the anomalies of future business situations. The Management Discussion and Analysis Report (MDAR) contain management’s interpretation of financial performance of the Company more over actual results are reflected in the financial statements which should be studied in consonance with the Management’s Perspective.

Macro-Economic performance of Industry and Outlook:

NBFCs forms an integral segment of the Indian Financial Sector of the Country; complementing the Banks in catering the credit needs of the different sectors of the economy. They have emerged as the driving force behind India’s rapid economic growth. NBFCs are stronger and more resilient today, and better positioned in almost all operationally critical parameters.

After weathering countless challenges over the past three fiscals, due to Covid-19 pandemic and Russia-Ukraine War, the Financial Year 2022-2023 has brought growth back into focus for NBFCs. The economic damage from the conflict contributed to a significant slowdown in global growth in 2022 and added to the inflation. However, due to India’s strong underlying economic fundamentals, the impact of such short-term turbulence on the long-term outlook were marginal. According to ASSOCHAM and CRISIL Ratings Comprehensive Knowledge Paper, Assets under management (AUM) of NBFCs is projected to increase 13-14% over the past three fiscals (2020-22) which will improve economic activity, strengthened balance sheet buffers, capitalize growth opportunities and better asset quality metrics.

According to IMFs World Economic Outlook (Apr23), World economy could achieve a soft landing with inflation coming down and steady growth have receded amid stubbornly high inflation and recent financial sector turmoil. The baseline forecast, which assumes that the recent financial sector stresses are contained, is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before rising slowly and settling at 3.0 percent in 2024.

According to ICRA Ratings, retail-focused NBFCs are expected to grow 12-14 per cent while the housing finance companies may grow by 10-12 per cent. Multilateral efforts to respond to the humanitarian crisis, prevent further economic fragmentation, maintain global liquidity, manage debt distress, tackle climate change, and end the pandemic are essential.

Over the years, NBFCs have considerably evolved in terms of operations, profitability and regulatory architecture, with their focus, right from the beginning, has been towards providing support and

	financial assistance to the economies. Also, NBFCs with wide coverage and deep penetration in rural
	India can play a pivotal role in serving these areas.
	Further, The MSME sector comprises nearly 63 million enterprises, which contribute 30 per cent to
	India’s GDP, 45 per cent to manufacturing, 40 per cent to exports, and provides employment to over
	113 million people, per government data and is one of the most underserved segments in terms of
	credit access (Source: PIB site). A majority of MSMEs in India do not receive formal credit, leaving these
	companies under-financed or financed through informal sources which ends up being more expensive
	than formal debt. The Government of India took suitable steps to improve the credit access to the
	MSME and eventually increase their contribution. Ministry of MSME, vide notification no. S.O. 4926 (E)
	dated 18.10.2022, has amended Notification No. S.O. No. 2119(E) dated 26.06.2020 to extend the non-
	tax benefits to MSMEs.
	Your Company is committed to address these changes strengthen by its potency in market position,
	strong execution capabilities, Committed Team and Excellent Management foresight.
	Strengths
	Large untapped markets in rural areas and small towns
	Judicious fund management techniques
	Flexible operations & ability to innovate
	Cost advantages
	Weakness
	Weak Brand Name and Poor recoveries
	High Resource Cost structure
	Dynamic Political environment
	Negative effects of Economic downturn
	Opportunities
	Untapped potential of markets
	Low entry barriers
	Govt. reliefs provided to the NBFC sector amidst the Covid pandemic
	Meeting working capital needs of SME’s sector
	Threats
	Competition with banks and peer groups
	Risks associated with liquidity stress
	Deterioration of asset quality and mounting off Non-performing Assets (NPAs).
	Exposure to abnormal industrial risk factors of interest rate volatility, economic cycle and credit risk
	Risk Management:
	Risk management forms an integral part of our Company’s Business. Being a lending institution, there

are inherent financial and nonfinancial risks. We have a proper risk management framework to identify, assess, monitor and manage various types of internal and external risks. The company identifies and monitors risks periodically.

Performance highlights:

The highlights of the Company’s performance are as under: -

Total Revenue from operations decreased from Rs. 2,86,04,131/- to Rs. 2,79,71,900/-. Net Profit for the year decreased from Rs. 64,47,465/- to Rs. 60,86,397/-. Earnings per share (diluted) had decreased from Rs. 0.65 to Rs. 0.61.

Human Resources/Industrial Relations:

The Company recognize that employees are the wealth of an organization which can help it in achieving its goals. It continues to lay emphasis on people, its most valuable resource and developing industrial relations. In an increasingly competitive market for human resources, it seriously focuses on attracting and retaining the right talent. It provides an equal opportunity to employees to deliver results.

Internal Control Systems & Adequacy:

The Company has a disciplined approach to cost and follows prudential norms in every sphere of its activities. The Company has established internal control systems for ensuring optimum use of resources, safeguarding the assets, avoid errors and frauds and systematic control of business activities. A dedicated concurrent audit team functioning within the Company supported by an outsourced concurrent audit team confirms that the activities are in compliance with its policies and occurrences of deviations are reported to the Management. The Company has further strengthened its internal audit function by investing in domain specialists to increase effectiveness of controls. The audit committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls regularly to ensure compliance and suggests measures for improvements.

Key Financial Ratios:

There have been significant changes (i.e., change of 25% or more) in the ratios as compared to previous financial year.

Particulars	Current	Previous	% CHANGE	Reason for >25%
	Year	Year		Change
Current Ratio	3.76	2.13	76.55	Increase in current assets and decrease in current liabilities
Debt-Equity Ratio	1.85	2.05	-9.76	-
Debt Service Coverage Ratio,	0.10	0.10	3.97	-
Return on Equity Ratio	0.04	0.05	-9.64	-
Inventory turnover ratio	NA	NA	NA	-
Trade Receivables turnover ratio	0.40	0.46	-12.57	-
Trade payables turnover ratio	0.70	0.47	49.04	Decrease in average creditor
Net capital turnover ratio	0.19	0.21	-6.40	-

Net profit ratio	0.22	0.23	-3.46	-
Return on investment	NA	NA	NA	-
Interest Service Coverage Ratio	1.61	1.66	-3.01	-
Operating Profit Margin (%)	0.29	0.31	-7.39	-
Net Profit Margin (%)	0.22	0.23	-3.46	-

Disclosure of Accounting Treatment:

There has been no change in the preparation of financial statements, a treatment different from that prescribed in an Accounting Standard.

Cautionary Statement:

The statements made in this report describing the Company’s objectives, projections, estimates and expectations, may constitute ‘forward-looking statements’ within the meaning of applicable laws and regulations. Although the expectations are based on reasonable assumptions, the actual results might differ.

By the order of Board

For Helpage Finlease Limited

	Sd/-
	Sidharth Goyal
Date: 18th May, 2023	Managing Director
Place: Delhi	DIN: 02855118