indus finance ltd share price Management discussions

MANAGEMENT DISCUSSIONS AND NALYSIS OF INDUS FINANCE LIMITED

FINANCIAL HIGHLIGHTS AND PERFORMANCE

	[Rs. In Lakh]
PARTICULARS	2021-22	2020-21
Income from operations	58.34	351.86
Other Income	34.34	-
Gross Receipts	92.68	351.86
Expenses	243.04	292.14
Depreciation & Amortization	0.69	0.94
Total Expenses	243.73	293.08
PBT	(151.05)	58.78
TAX	(187.03)	9.22
PAT	(338.08)	49.56
Proposed Dividend/Dividend	-	-
Proposed Dividend Tax/Dividend Tax	-	-
Transfer to Statutory Reserve	(338.08)	49.56

FINANCIAL PERFORMANCE WITH REFERENCE TO OPERATIONAL PERFORMANCE

During the financial under review, your Companies Income from operations is lower by 83.4% to that of compared to that of the previous year. The decrease is attributed to the impact of Covid 2019 and its economic impact on the industry. The profit before tax for the year under review is Rs. (151.05) Lacs than that of previous year Profit before tax of Rs. 58.78 Lacs. The Profit after tax of your Company for the year under review is Rs. (338.08) Lacs as against Rs. 49.56 Lacs for the previous year. In view of the inadequate profit, your Company is not in a position to recommend dividend for the year under review.

MARKET SCENARIO:

2021-22 witnessed recovery and consolidation by the Indian Industry with most of them attaining pre-pandemic levels of activity. The Pandemic caused by Covid-19 had deeply impacted the performance of NBFCs during the 1^st quarter of FY 2021-22. The Russia-Ukraine war crisis since February 22, further added to its woes pushing up fuel and commodity prices and squeezing supplies further. The economys short-term prospects have been further impacted by a spike in its retail inflation which shoots up to 7.8% in April. The ongoing conflict will reportedly have major ramifications for the global economy, which is just recovering from the stress of the coronavirus pandemic. World Bank in its Economic Update for March 2022 noted "Even prior to the war, the global recovery had already been decelerating alongside intensifying geopolitical tensions, continued COVID-19 flare-ups, diminishing macroeconomic support, and lingering supply bottlenecks, The prolonged Russia-Ukraine conflict has led to a number of export restrictions in several countries which contributed to high food prices, particularly of wheat and corn. According to the IMF, economies reliant on oil imports would see wider fiscal and trade deficits along with more inflationary pressure. In the long term, the war may fundamentally alter the global economic and geopolitical order should there be a reconfiguration of supply chains, fragmentation of payment networks, shift in energy trade and countries rethink reserve currency holdings, it said.

The Domestic economic conditions started gaining strength in spite of COVID picking up in some parts of the country. However, with over 90% of the adult population fully vaccinated living with COVID is becoming a norm. As per the second advance estimates (SAE) of national income released by the National Statistical Office (NSO) on February 28, the Indian economy clocked a growth of 8.9 per cent in 2021-22. With restrictions on goods movement completely removed and service sectors such as restaurants and cinema fully operational Indian economy appears to be on track but for the raising price rise attributed to Global scenario particularly the Russian-Ukrainian war and dormant US economy which are causing great anxiety.

ROAD AHEAD

NBFCs have played a key role in the process of ensuring adequate credit flow to every segment of the society, particularly the unorganised and those area where the commercial banks found it difficult to stretch. After having experienced multiple challenges over the past three fiscals, made worse by the Covid-19 pandemic, nonbanking financial companies (NBFCs) in the private sector have achieved only a nominal growth and are expected to see their assets under management (AUM) grow in the range of 6 to 8% next fiscal. The impact of the Russia-Ukraine war crisis further pushed up fuel and commodity prices and lingering supply bottle necks the world over, leading to inflationary pressures and slower economic growth. The Government has announced several economic stimulus packages announcing significant fiscal support to heavily impacted sector of the economy. It is estimated that NBFCs will continue to experience only nominal growth if the credit flow does not stop, and the risk mitigation mechanisms improve. According to ICRA, NBFCs profitability is likely to improve partially in the current financial year and climb to levels close to those that existed before the pandemic by 2022-23 (April- March). NBFC Sector (including HFCs) has assets worth more than Rs.54 lakh Crore, equivalent to about 25% of the assets size of the banking sector as on March 31, 2021. There are 9651 NBFCs across twelve different categories focussed on a diverse set of products, customer segments and geographies. Over the last five years the NBFC sector assets have grown at the cumulative average growth rate of 17.91%. Therefore, there can be no doubt regarding its significance and role within the financial system in meeting the credit needs of a large segment of the society. Non-banking finance companies are likely to see normalisation of business activities in the fiscal year 2022-23, in the absence of any negative event, India Ratings and Research, observed. With this background having waited a couple of years with cautious approach your Company has decided to expand the business particularly secured lending within the regulatory guidelines. In this regard your company wishes to substantially increase the net- owned funds by doing diluting the investment portfolio it already has or by augmenting the working funds by way of debt or additional equity.

OPPORTUNITIES & THREAT

NBFCs play an important role in economic development and financial inclusion. A large number of retail consumers and micro & small businesses find it difficult if not impossible to have access to bank finance owing to lack of income records or adequate credit history or even sometimes tough bank procedure besides turnaround time. Considering relatively high cost of such finance and the small ticket size the selection becomes economically unviable to the banks and NBFCs have always filled such gap. During the last couple of years NBFCs witnessed good growth in consumer lending. With the liquidity position having improved, the stricter regulatory norms is bringing in good discipline in the internal control which should see that the regulated NBFCs live through the difficult times.

The failure of one of the large NBFCs had huge impact on the survival of many NBFCs and the rumour mills on the social media have resulted in panic withdrawal of credit from almost every lender. Non- performing assets have been a challenge not only for the banks but as well as for the NBFCs. With the new credit customers, the risk remains higher as compared to those customers who have a credit history. Therefore, NBFCs continuously works on checking and balancing so as to make sure that the EMIs are on time and records of the customers remains up to date and any issues are notified immediately.

RISKS & CONCERNS

CRISIL in its review on NBFC said, NBFCs are facing three headwinds. First, intensifying competition from banks that, flush with liquidity, have sharpened focus on retail loans, which are the mainstay of NBFCs. Second, gross non-performing assets (GNPAs) are expected to increase, mostly because of the recent regulatory clarification in recognition norms and, to some extent, due to slippages from the restructured book. And third, funding access is yet to fully normalise for some of the players.Net-net, growth will be driven by NBFCs with strong parentage and better funding access in the two largest segments - home loans and vehicle finance. Organic consolidation is also underway, with larger NBFCs gaining share. In the three fiscals through 2021, the market share of the top 5 NBFCs has raised 600 basis points to 46%. The ability to identify niches that cater to the relatively difficult-to-address customer segments and asset classes will fuel long-term growth for the sector. Going forward, the Asset Quality performance will drive the sectors future. The recent regulatory clarification in NPA recognition norm to a daily due date basis instead of the month-end will have implications as NBFCs ramp up collection activity between the due date and the month-end - the reason their overdue reduces by the end of the month.

However, this flexibility is no longer available. However, the increase in GNPAs because of the regulatory clarification in recognition norms will be largely an accounting impact because, given the improving economy, the credit profiles of borrowers are not expected to deteriorate. Consequently, ultimate credit losses are not expected to change significantly.

Players with low leverage, high liquidity and strong parentage are expected to benefit from better funding access at optimal rates. For the rest - especially mid-sized and smaller players - co-lending, securitization, or other partnerships with banks will facilitate a funding-light business model.

In addition to both internal and external risks hitherto experienced, IFL also experienced the serious impact of Pandemic caused by covid-19" like the rest of the world. The management followed all the statutory and regulatory guidelines issued in dealing with the situation. While Your Company has suitable policies in place to manage the interest, liquidity, market and credit risk, it has also evolved proper standard operating procedure [SOP] to deal with the Corona virus outbreak and its continuity. As mentioned in our earlier years reports, the cautious wait & watch approach adapted by the Company for the last couple of years has enabled to survive the vulnerable market conditions. Your company wishes to have the same approach for the current fiscal also.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

Current Ratio for 2021-22 is 1.34 times & for 2020-21 is 0.17 times Debt Equity Ratio for 2021-22 is 0.38 times & for 2020-21 is 0.456 times Operating Profit = Rs.(151.05) Lacs Net Profit = Rs.(338.08) Lacs

DETAILS OF RETURN ON NET WORTH

Net worth for year 2021-22 = (0.045%)

Net worth for year 2020-21 = 0.04%

SHARE CAPITAL

During the year under review, your Company has not issued any type of Shares. Hence there is no change in the share capital of the company.

TRANSFER TO RESERVES

The Company transferred Rs. 70.17 Lacs to the statutory Reserves during the under review.

CASH FLOW STATEMENT

In compliance with the provisions of Section 134 of Companies Act, 2013 and Regulation 34(2) (c) of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Cash flow statement for the financial year ended March 31, 2022 forms part of this Annual Report.

NUMBER OF MEETINGS OF BOARD

Indus Finance Ltd, held 4 Board Meetings during the year ended 31^st March 2022. These were on 29^th June 2021, 10^th August 2021, 12^th November 2021 and 10^th February 2022 and the details of the attendance of the Directors are as follows:

Name of Directors	No. of Meetings attended
Mr. Niranjan R. Jagtap	4
Dr. K.R. Shyamsundar	4
Mr. Bala V Kutti	4
Ms. K B K Vasuki	4

DISCLAIMER

The management Discussion and Analysis contained herein is based on the information available to the Company and assumptions based on experience in regard to domestic and global economy, on which the Companys performance is dependent. It be may materially influenced by changes in economy, government policies, environment and the like, on which the Company may not have any control, which could impact the views perceived or expressed herein.

	For and on behalf of the Board of
	INDUS FINANCE LIMITED
	Niranjan R. Jagtap	Bala V Kutti
Place: Chennai	Director	Director
Date: 8.8.2022	DIN:01237606	DIN: 00765036