Margo Finance Ltd Management Discussions

1. INDUSTRY STRUCTURE AND BUSINESS OUTLOOK

Non Banking Financial Company ("NBFC") have played a vital role in the financial system over the last decade. NBFCs have become important constituents of the financial sector and have been recording higher credit growth than scheduled commercial banks (SCBs) over the past few years. Lower transaction costs, quick decision making, customer orientation and prompt service standards have typically differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, they are well-suited to bridge the financing gap in a large country like India.

Margo Finance Limited ("the Company") is a NBFC registered with the Reserve Bank of India (RBI) and is classified as an NBFC-Core Investment Company (NBFC-CIC). The Company is engaged in Investment activity and is Non Deposit accepting NBFC.

The growth of NBFCs was slower in FY 2023-24, due to the risk perception for players with higher exposure to wholesale lending, asset-liability mismatches, capital adequacy and perceived corporate governance. This led to a scenario where NBFCs with riskier exposures and ALM mismatches finding it difficult to access capital market over the near to medium term.

The growth in the Indian economy together with the growth in the Capital markets will have better future for your Company. NBFCs play major role in financing, inspite of the presence of large number of Foreign as well as Nationalized Banks in this field, the role of NBFCs is established.

Due to growing economy of the country, there is a scope of NBFCs. The economic indicators for the future are also strong. Your Company hopes to explore the opportunities thrown up by the economy.

2. OPPORTUNITIES, THREATS, RISK & CONCERNS

Risk is synonym with NBFCs which is inherent part of their business. Your Company is also subjected to various types of such risks. Your Company has identified these risks and guarded itself by adopting a range of strategies and measures to reduce the impact of such risks.

Credit risk is considered to be major risk being faced by NBFCs. Your Company has evolved various policies and systems for credit risk to closely monitor the same. Your Company is having appropriate pre disbursal and post disbursement monitoring and regular follow up of the collection process. A low level of NPA proportion in the assets of your Company reflects its sound risk management policies. Your Company also follows provisioning norms of RBI.

Business Opportunities for NBFCs are enormous. As the new areas and segments are being explored, there is a large scope of small size NBFCs like ours, for certain segment of customers, which remain unserved by Banks and large size NBFCs.

The major threat being faced by NBFCs are from aggressive marketing of Banks and low rates of financing offered by them.

3. INTERNAL CONTROL AND THEIR ADEQUACY

Foundation of your Companys control mechanism vests in Management Information systems (MIS). Your Company has devised effective systems so that assets and business of the Company are safeguarded. The internal control is regularly reviewed and augmented by the Audit Committee. The management feels that the systems of internal controls are adequate considering the size of operations of the Company.

4. HUMAN RESOURCES

As on 31^st March, 2024, Company has only two (2) employees on its payroll.

5. DISCUSSION ON FINANCIAL PERFORMANCE

During the financial year under review, the Companys total income and net profit after tax is Rs81.62 lakhs and Rs24.28 lakhs respectively. Your Company is looking for an opportunity for future due growth prospects.

6. COMPLIANCE WITH INDIAN ACCOUNTING STANDARDS (IND-AS)

In the preparation of the financial statements, the Company has followed the Indian Accounting Standards (Ind-AS) notified by Ministry of Corporate Affairs from time to time. The significant accounting policies which are consistently applied have been set out in the Notes to the Financial Statements.

7. CAUTIONARY STATEMENT

The statement in the "Management Discussion and Analysis Report" describes Companys objectives, estimates, and expectations which may be "Forward Looking Statement" within the meaning of applicable laws and regulations. The actual results could differ materially from those expressed or implied, depending upon the economic and climate conditions, government policies, taxation and other incidental factors.

	On behalf of the Board of Directors
	Anil Kumar Jain
Date: 29th May, 2024	Chairman
Place: Mumbai	DIN: 00086106