BUSINESS OVERVIEW:
Minda Finance Limited ("MFL" or "the Company") is a
group Company of the diversified UNO MINDA N.K. Minda Group. MFL is registered under the
Category-B, Non-Acceptance of Public Deposit Company with the Reserve Bank of India and to
carry on NBFC activities under section 45-IA of the Reserve Bank of India Act, 1934.
The core business of Minda Finance Limited is to provide Bills
Discounting Facility to the UNO MINDA N.K. Minda Group companies including its Suppliers
and the Vendors. In addition to this, the Company also provides the inter-corporate
loan(s) and to do the investments in shares of companies.
MFL has one subsidiary Bar Investments and Finance Private Limited
("BARINV"), which is also registered as Category-B, Non-Acceptance of Public
Deposit Company with the Reserve Bank of India.
THE COVID-19 PANDEMIC:
The COVID-19 pandemic has spread across the globe — leading to
2,12,94,845 confirmed infections & over 7,61,779 deaths. India also has had 25,89,682
confirmed infections & 49,980 deaths as per COVID-19 Situation Report–200 of
World Health Organisation (WHO) dated 16 August 2020. COVID-19 has caused disruptions on
an unimaginable scale. The pandemic has presented fresh challenges for the Indian economy
now, causing severe disruptive impact on both demand and supply side elements.
While India was battling with its own form of slowdown in form of
liquidity crisis in NBFCs, poor consumption, weak investments, and consumer sentiments; a
combination of fiscal stimulus and financial sector reforms was sought to help boost
investments and consumption. Reforms to simplify taxation, lighten business regulations,
lending rate cuts and upgrade infrastructure together formed Indias efforts to
support a recovery in growth.
To fight this, Government of India announced a 1.7-trillion-rupee
economic stimulus plan providing direct cash transfers and food security measures to give
relief to millions of poor people hit by a nationwide lockdown over COVID-19.
INDUSTRY STRUCTURE AND DEVELOPMENT:
Over the past few years, NBFCs have undergone a significant
transformation and today they form an important component of Indias financial
system. Playing a critical role in the development of infrastructure, transport and
employment generation, NBFCs are changing the business loan landscape in the country. The
use of technology to optimize business processes also keeps cost overheads to a minimum,
enabling credit to be availed at highly competitive interest rates.
The RBIs moratorium measures for customers is likely to put
additional stress on many NBFCs. On one hand, NBFCs have to offer such moratoriums to
their customers; while on the other, their market borrowings must be repaid on due dates.
The Reserve Bank of India (RBI) announced the following measures in
March 2020 to mitigate the risk of an economic fallout due to COVID -19:
Permitted all lending institutions to allow a moratorium of three
months on repayment of instalments for term loans outstanding between March 1, 2020 and
May 31, 2020.
Permitted all lending institutions to allow the deferment of three
months on payment of interest with respect to all such working capital facilities
outstanding as of March 1, 2020.
Announced a Rs 3.74 lakh crore of liquidity package for Indian
banking system. Slashed the Cash Reserve Ratio (CRR) by 100 basis points to 3% of bank
deposits.
Allowed banks to borrow an additional 1% from their investment of
Statutory Liquidity Ratio (SLR) securities.
Cut repo rate by 75 bps to 4.40%.
Cut the reverse repo rate or the rate at which it accepts excess
funds from banks by 90 basis points to 4% widening the existing policy rate corridor from
50 bps to 65 bps.
OPPORTUNITIES:
The Board feels the Government of Indias (GOI) efforts to
increase banking penetration through its Jan Dhan Yojna and the integration of PAN and
Aadhar are expected to enhance the savings in financial assets. The shift of savings to
financial instruments from physical assets and bank deposits has been largely on account
of high inflation and high interest rate scenario over the period. The financial services
sector is also witnessing growing digitisation. The digitisation efforts have seen
accelerated growth in financial services sector, and it is set to grow significantly,
according to the RBI. The financial sector is leveraging digitisation to increase internal
efficiencies, provide value-added customer services, minimize risk and support
Indias expanding economy.
Over the past few years, NBFCs have undergone a significant
transformation and today they form an important component of Indias financial
system. Playing an important role in the development of infrastructure, transport and
employment generation, NBFCs are changing the business loan landscape in the country. The
difference in approach allows NBFCs to meet loan requirements of individuals and
businesses left traditionally underserved by banks. With the introduction of e-KYC, making
borrowing an instant and hassle-free experience, NBFCs are already offering the right
financial products to consumers and small businesses in a customised manner. The use of
technology to optimise business processes also keeps cost overheads to a minimum, enabling
credit to be availed at highly competitive interest rates.
THREATS:
India has seen a sharp deceleration in GDP growth owing to liquidity
crisis, agrarian community stress, complication in adapting to new policies and the most
recent COVID-19 outbreak. If the overall economy continues facing setbacks at the same
pace, a pick-up in the financial sector would be delayed.
The Board also feels that other than the GDP growth, high cost of
funds, Rising Non-Performing Assets (NPAs), Restrictions on deposit-taking NBFCs,
Competition from other NBFCs and banks are threats for the organization.
SEGMENT–WISE PERFORMANCE:
The Company is engaged in single segment of finance and thus separate
segment wise performance details cant be given.
OUTLOOK AND FUTURE PROSPECTS:
Going forward, it is expected that the industry would witness robust
growth as the sector is yet to tap its full potential. Besides, several measures taken by
Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI), the
regulators, will help increase the penetration of funds. Some of the factors that will
drive the growth in 2020 include the untapped potential, rising investor awareness about
financial sector amongst customers.
RISK AND CONCERNS:
A well-defined risk management framework forms an integral part of our
business strategy. The major risk involves economic situation, Pandemic risk, Liquidity
Risk, Interest Rate Risk, Operational Risk, Credit Risk, Business Risk, Regulatory Risk
and Information Technology Risk.
However, your company ensures adherence to best practice and has
necessary internal system and control in place to manage the risk. Further the strict
regulations and guidelines imposed by the regulatory authorities like SEBI, Stock exchange
and NSDL with reference to capital market operation and Depository functions are
sufficient in controlling the market related financial and technical risks. All these
guidelines of the regulatory authorities whether it for margin money in capital market
transaction or otherwise are being strictly adhered to by your company.
INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY:
Our effective internal control system plays a crucial role in our
efficient daily operations. The company has adequate internal control systems to ensure
operational efficiency, protection and conservation of resources, accuracy and promptness
in financial reporting and compliance of law and regulations.
The internal control system is supported by the internal audit process.
The reports, thereby prepared, are reviewed in the Audit Committee meetings. Corrective
measures to strengthen the internal controls are suggested and taken in consideration. The
Audit Committee of the Board reviews the Internal Audit reports and the adequacy and
effectiveness of internal controls.
FINANCIAL PERFORMANCE:
Financial performance with the financial data and figures, have been
given in detail in Directors Report.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:
The relationship with the employees continues to be cordial. The
Company recognizes the importance and contribution of its employees for its growth and
development and constantly endeavors to train nurture and groom its people The Company
puts emphasis on attracting and retaining the right talent.
The company places emphasis on training and development of employees at
all levels and has introduced methods and practices for Human Resource Development.
CAUTIONARY STATEMENT:
Statements in this Management Discussion and Analysis describing the
companys objectives, projections, estimates and expectations may be forward looking
statement within the meaning of applicable laws and regulations. Actual results may vary
significantly from the forward-looking statements contained in this document due to
various risks and uncertainties. These risks and uncertainties include the effect of
economic and political conditions in India, volatility in interest rates, new regulations
and Government policies that may impact the Companys business as well as its ability
to implement the strategy.
3. Details of top 10 employees in terms of remuneration drawn:
| Name of Employee |
Designation |
Nature of Employment (contractual or
otherwise) |
Qualification and experience |
Date of Joining |
Age |
Previous Employment |
Remuneratio n (In Rs.) |
% age of Shares Held |
Name of Relative of any Director or
Manager |
| 1. Mr. Pramod Kumar Garg |
Whole- time Director |
Permanent (on roll) |
B.Com |
14.08. 2014 |
65 |
N.A. |
11,52,000 |
0.10 |
N.A. |
| 2. Mr. Lalit Khubch andani |
Company Secretary |
Permanent (on roll) |
CS, M.Com, B.Com |
15.11. 2018 |
33 |
DLF Home Developers Limited |
6,15,888 |
Nil |
N.A. |
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