MKVentures Capital Ltd Management Discussions

We submit herewith the "Management Discussion and Analysis Report" on the business of the Company as applicable to the extent relevant.

COMPANY OVERVIEW

MKVentures Capital Limited ("Company") is a Listed company and was incorporated on 17th January, 1991 in India with its registered office 11th Floor, Express Towers Nariman Point Mumbai 400021"Maharashtra". The Company is a Non-Banking Financial Company (NBFC), registered with Reserve Bank of India as a NBFC -Non Deposit taking-

Non-Systemically Important (‘NBFC-ND-NSI).

The Company provides financial services through simple processes and procedures in sanction and disbursement of credit as well as timely, friendly, and flexible terms of repayment aligned to the unique features of its clientele. Company has reported 21.08 Cr of profit after tax in FY24 vs16.30 Cr of Net profit in FY23 registering a growth of 29.33%. This is despite de-growth in the overall AUM on a closing basis in FY24 over FY23 and in line with our philosophy of prioritizing profitability over expanding balance sheet.

Company took a conservative step in FY24 to recalibrate growth in near term on both asset and liability side. Focus is to build a sustainable growth trajectory for asset/liability side within regulatory framework. Accordingly, company repaid its entire borrowings in FY24 and had nil debt outstanding as of FY24 end. Loan book came down from 309 Cr to 103 Cr as of FY24 end.

During the year company raised 40 Cr through successful completion of rights issue. Company issued 4.27 lakh shares at a price of 936 Rs per share. With conclusion of rights issue, company is now fully compliant from SEBI perspective on shareholding front Going forward, focus is to strengthen the NBFC business by way of raising growth capital as well as strengthening senior management team and board of directors. We would like to foray into newer business segments including alternative asset management. We would like to focus on building the liability side in a calibrated manner going forward.

Company is looking forward to finalizing its long term business plan by FY25 end including newer areas of growth as well as onboarding key partners.

INDUSTRY STRUCTURE AND DEVELOPMENT

NBFCs play a critical role in critical role within the entire financial space in meeting the vast funding needs country and significantly contributing to the overall economic growth of the nation.

NBFCs have been expanding their reach, particularly in underserved regions with credit growth driven by unsecured loans and MSME lending.

NBFCs are far better capitalized and have been outpacing growth compared to Scheduled commercial banks. CRAR stood at 26.6 pct as of Mar-24 for NBFCs which is well above regulatory requirement.

As per latest Financial Stability Report (FSR) of RBI, aggregate lending by NBFCs grow by ~18% in Mar-24 which was primarily driven by high growth in personal loans ~30% yoy and agricultural loans ~~40%.

Profitability ratios have improved on the margin along with healthy growth trend. As per the report, aggregate RoA ratio has been rising, the cost-to-income ratio has maintained a declining trend in the post-pandemic period and the NIM stood strong during FY24.

Key challenge for NBFC sector continues to be on the liability side. Co-lending has emerged as a key source of funding for lot of NBFCs and expect this trend to continue. Cost of capital continues to be on the higher side with deposit mobilization becoming increasingly difficult for banks. Increase in risk weights for NBFC lending for banks is an additional headwind from liability side.