Helpage Finlease Ltd Management Discussions

? Overview:

HelpageFinlease 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 (SMEs)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 CICs (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 Companys 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 managements 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 Managements 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 Indias 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 Indias 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 growthhave 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 percent.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

Indias 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 SMEs 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 Companys 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:

? Total Revenue from operations increased from Rs. 2,79,71,900/- to Rs. 45,513,800 ? Net Profit for the year increased from Rs.6086400/- toRs.87,34,500/-. ? Earnings per share (diluted) had increased from Rs. 0.61 to Rs.0.88.

? Human Resources/Industrial Relations:

The Company recognize thatemployees 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.

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 Companys 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.