jindal capital ltd share price Management discussions

Overview

NBFCs play a major role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. NBFCs being financial intermediaries engaged in the business of accepting deposits deliver credit and play an important role in channelizing the scarce financial resources to capital formation. They supplement the role of the banking sector in meeting the increasing financial needs of the corporate sector, delivering credit to the unorganized sector and retail customers in underserved, unbanked and financially weaker sections of the society. They are emerging as an alternative to conventional Banking and have become an integral part of Indian Financial System and have commendably contributed towards Governments agenda of Financial Inclusion.

NBFCs are playing a vital role in uplifting the Infrastructure, creation of wealth and employment generation. They are providing tailor-made products offering and products to the customers and uplifting the business model through improved efficiency and enhanced experience. The future of NBFCs is witnessing good growth in consumer lending. NBFCs in India have recorded marked growth in recent years. After their existence, they are useful and successful for the evolution of a vibrant, competitive and dynamic financial system in Indian money market. The success factors of their business has been by making the most of their ability to contain risk, adapt to changes and tap demand in markets that are likely to be avoided by the bigger players. Thus, the need for uniform practices and level playing field for NBFCs in India is indispensable.

Industry Structure and Developments

A major driver of growth in an emerging economy such as India is sustained investment by the private sector. For triggering as well as sustaining investments, a critical factor is stable availability of credit. Historically in the Indian economy, credit has grown faster than gross domestic product (GDP). NBFCs, as their name suggests, are nonbanks that provide credit like banks. The relevance of NBFCs as providers of commercial credit increased significantly in the past years, especially since the banking sector began experiencing acute asset quality stress after 2015. The average growth rate of incremental credit flows disbursed by NBFCs is more than the credit grew by the banks.

NBFCs have been playing crucial role in the Indian financial landscape, intermediation and promoting inclusive growth by providing last-mile access of financial services to meet the diversified needs of less-banked customers. Over the years, the segment has grown rapidly, with a few of the large NBFCs becoming comparable in size to some of the private sector banks. The sector has also seen advent of many non-traditional players leveraging technology to adopt tech- based innovative business models. NBFCs have come a long way in terms of their scale and diversity of operations.

Opportunities

• They are emerging as an alternative to conventional Banking

• They thrive due to their ability to contain risk, adapt to changes and tap demand in markets that are likely to be avoided by the bigger players.

• They are form an integral part of Indian Financial System and have commendably contributed towards Governments agenda of financial Inclusion.

• The relevance of NBFCs as providers of commercial credit increased significantly in the past years, especially since the banking sector began experiencing acute asset quality stress after 2015

• They provide last-mile access of financial services to meet the diversified financial needs of less-banked customers

Challenges/Threats

Being an important part of the Indian Financial Sector, they are exposed to various risks like financial risk, political risk, fidelity risk, legal risk. Increased competition effects the functioning of the Sector. Other threats being:

• NBFCs, like other financial intermediaries, are increasingly exposed to counterparty, funding, market and asset concentration risks,

• COVID-19 pandemic have majorly impacted the financial markets and severely disrupted the business operations.

• It is huge task to safeguard its assets and resources against loss, unauthorized use or disposition.

Strength:

The senior management of the Company comprises of qualified persons having efficiently financial knowledge and experience in handling the business operations of the Company.

Internal Control Systems and their adequacy

The Companys internal control system and procedures are commensurate with the size of operation and are adequate to ensure safeguarding its assets and resources against loss, unauthorized use or disposition, compliance with the statutes and regulatory policies and framework and all transactions are authorized, recorded and reported correctly. The Internal Audit department evaluates the functioning and quality of internal control and provides assurance of periodic reporting. The Audit Committee reviews the Internal Audit Reports and the adequacy on regular basis which also acts as a tool for minimizing any possible risks in the operations of the Company.

Outlook, risks and concerns

This section lists forward-looking statements that involve risks and uncertainties. Our actual results could differ materially from those anticipated in these statements as a result of certain factors. Our Outlook, risks and Concerns inter-alia as follows:

1. Our revenues and expenses are difficult to predict and can vary significantly from period to period.

2. Our success depends in large part upon our management team and key personnel, and our ability to attract and retain them.

Segment-wise or product-wise performance/State of affairs

During the year 2022-23, interest income is 89.99 Lakhs (as compared to Previous years figure of 33.32 Lakhs) and 406 Lakhs from turnover (as compared to Previous years figure of 826 Lakhs).

Human Resources

Our Company is well versed with the importance of human resources for effective and efficient work culture. Proper care is taken including development, healthy environment for such.

Discussion on Financial Performance With Respect To Operational

Performance

The profits of the company have increased in comparison to the last year figures. It has marked significant growth in the operations of the Company.

Significant Financial Ratios

S.No. Particulars	Formulas	Amounts		Amounts
1 Capital to risk- weighted assets ratio(CRAR)	Tier 1+ Tier 2	88,690,526		86,747,558
	Risk Weighted Assets	88,997,293	0.995	73,445,548	1.006
2	Tier 1 Capital	85,157,529		84,615,308
Tier I CRAR	Risk Weighted Assets	88,997,293	0.995	73,445,548	1.006
3	Tier 2 Capital	3,532,997		2,132,250
Tier II CRAR	Risk Weighted Assets	88,997,293	NA	73,445,548	NA
4 Liquidity Coverage ratio	High quality liquid asset amount (HQLA)	16,201,804	(0.199)	14,491,542	2.064
	Total net cash flow amount	11,094,027		(1,261,665)

* Tier 1 capital includes shareholders equity and retained earnings.

Tier 2 capital includes revaluation reserves, hybrid capital instruments and subordinated term debt, general loan-loss reserves, and undisclosed reserves.

Risk-weighted assets includes the loans and other assets of a bank, weighted (that is, multiplied by a percentage factor)

CAUTIONARY STATEMENT:

Statements in this report on Management discussion and analysis relating to the Companys objectives, projections, estimates, expectations or predictions may be forward looking statements within the meaning of applicable security laws or regulations. These statements are based upon certain assumptions and expectations of future events. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in government regulations and tax structure, general economic developments in India and factors such as litigation, industrial relations and other unforeseen events. The Company assumes no responsibility in respect of forward looking statements made herein which may undergo changes in future on the basis of subsequent developments, information or events. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

DISCLOSURE OF ACCOUNTING TREATMENT:

In preparation of the financial statements, the applicable provisions of Companies Act, 2013, Indian Accounting Standards and other applicable Laws have been strictly adhere to. The Financial Statements of the Company along with the notes are further discussed in this Report.

For and on behalf of the Board of Directors

Sd/-	Sd/-
Divya Aggarwal	Sadhu Ram Aggarwal
Director	Chairman-cum- Managing Director
DIN:07684118	DIN: 00961850
Place: Delhi
Date: August 30, 2023