Moongipa Capital Finance Ltd Management Discussions

GLOBAL ECONOMIC OVERVIEW

Despite three turbulent years which witnessed a global pandemic, supply chain disruptions, conflict in Ukraine, and elevated interest rates to counter high inflation, India emerged as the fastest growing major economy of the world. Notwithstanding conflicts in Europe and Gaza and rising tensions in West Asia, a global recession that experts thought was imminent has not occurred. Indeed, the key indicators have turned positive: inflation is falling across all major countries; unemployment has not risen as economists thought it would; and the major central banks have put an end to monetary tightening, though they have not yet begun reducing their key interest rates.

According to the IMFs World Economic Outlook (April 2024), inflation is falling faster than expected in most regions; and it has forecasted global headline inflation to fall to 5.9% in 2024 and further to 4.5% in 2025, with the possibility of the 2025 forecast being further revised downwards. In a milieu where the IMF has projected the worlds real GDP growth at 3.2% in 2024 and 3.2% in 2025, its forecasts for India are impressive: 6.8% in 2024 followed by yet another stint of 6.5% in 2025. Indeed, the IMF has placed India as the fastest growing major economy in the world.

In China, without a comprehensive response to the troubled property sector, growth could falter, hurting trading partners. Amid high government debt in many economies, a disruptive turn to tax hikes and spending cuts could weaken activity, erode confidence and sap support for reform and spending to reduce risks from climate change. Geoeconomic fragmentation could intensify, with higher barriers to the flow of goods, capital, and people implying a supply-side slowdown. On the upside, loosening fiscal policy than necessary and assumptions in projections could raise economic activity in the short term, although risking more costly policy adjustment later on. Inflation could fall faster than expected amid further gains in labour force participation, allowing central banks to bring easing plans forward. Artificial intelligence and stronger structural reforms than anticipated could spur productivity.

INDIAN ECONOMIC OVERVIEW

The Asian Development Bank (ADB) upgrades Indias gross domestic product (GDP) growth forecast for fiscal year (FY) 2024 ending on 31 March 2025 from 6.7% to 7% and 7.2% in FY2025, driven by robust public and private investment and strong services sector.

The triggers for growth in FY2024 will come from higher capital expenditure on infrastructure development both by central and state governments, rise in private corporate investment, strong service sector performance and improved consumer confidence. Growth momentum will pick up in FY2025 backed by improved goods exports and an increase in manufacturing productivity and agricultural output.

The Government of Indias efforts to boost infrastructure development while undertaking fiscal consolidation and provide an enabling business environment will help in increased manufacturing competitiveness to augment exports and drive future growth.

A healthy rise of 17% in central government capital expenditure in FY2024 compared to the previous fiscal year together with transfers to state governments will boost infrastructure investment. A new government initiative to support urban housing for middle-income households is expected to further spur housing growth. Private corporate investment is expected to get a boost with stable interest rates. With inflation moderating to 4.6% in FY2024 and easing further to 4.5% in FY2025, monetary policy may become less restrictive, which will facilitate rapid offtake of bank credit. Demand for financial, real estate and professional services will grow while manufacturing will benefit from muted input cost pressures that will boost industry sentiment. Expectations of a normal monsoon will help boost growth of the agriculture sector.

MOONGIPA CAPITAL FINANCE LIMITED - AN OVERVIEW

Moongipa Capital Finance Limited (‘MCFL or ‘the Company) is a growing Non-banking Financial Company ("NBFC") undertaking the Business of portfolio investment and trading in equity shares, preference shares, stocks, debentures (convertible and non-convertible), Company deposits and to deal in Government Securities, including Government Bonds, Loans, National Saving Certificates, Post Office saving Schemes, units and all other Financial Instruments.

The Company also serving the credit requirements and financial assistance to industries by way of advance, deposit or lend money, securities and properties to or with any company, body corporate, firm, person or association whether falling under the same management or otherwise.

INDUSTRY STRUCTURE AND DEVEL OPMENT S

Your Company is engaged in the business of portfolio investment and trading in equity shares, preference shares, stocks, debentures (convertible and non-convertible), and to deal in Government Securities, including Government Bonds, Loans, National Saving Certificates, Post Office saving Schemes, units and all other Financial Instruments and providing retail loans and advances for industrial and other purpose. MCFL is registered with the Reserve Bank of India (RBI) as a Non- Systematically important, non-deposit taking NBFC, bearing Registration No. 14.01051 dated 10^th Day of August, 1998.

The activities of Finance and investment Companies in India have undergone qualitative changes over the years. They have become prominent in a wide range of activities. By now, there role as effective financial intermediaries has been well recognized as they have inherent ability to take inherent decisions, assume greater risks, apply innovative marketing strategies and customize their products and services according to the needs of the clients. In order to have a healthy financial and investment sectors in a country like ours, there has to be a sustainable marriage between the primary lending institutions (Banks and FIIs) and the intermediaries so that both of them stick to their core competencies and not to compete with other unnecessarily.

Your company has built a strong presence in the market through its cumulative experience as well as sound systems and processes.

OPPORTUNITIES AND THREATS

The growth of the company is subject to opportunity and threats as are applicable to the Industry from time to time.

Being loan provider, company is exposed to specific risks that are particular to its business and the environment within which it operates including credit risk, economic cycle, and market risk.

As the demand for financial Services is a derived demand, developments in the industrial sector exert a significant influence on the business of financial sector. Your company strives to continually understand the implication to its business of the various changes, as also effect of altered economic policies and international developments.

SEGMENT WISE / PRODUCT WISE PERFORMANCE

The Company engaged in investment activities and other financial services during the year under review, hence the requirement of segment-wise reporting is considered irrelevant.

FUTURE OUTLOOK

In the near future, the Company intends to continue to focus on its current business of portfolio investment, trading in shares and lending to grow on larger scale, set new targets.

RISK AND CONCERN

While risk is an inherent aspect of any business, the Company is conscious of the need to have an effective monitoring mechanism and has put in place appropriate measures for its mitigation including financial risk, legal risk and internal process risks. The Company has made appropriate provisions for mitigation of risk factors which may occur from Borrowers. Apart from this, Company has taken necessary measures to safeguard its assets/interests etc.

There are a lot of uncertainties on the interest front in the economy and there is the likelihood of the hardening of interest and the said situation may create a lot of turmoil in the market.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The company has adequate internal control systems commensurate with the Size of the business duly supplemented with an internal audit to ensure against any unauthorized use or disposition of assets.

The internal controls are periodically reviewed by the Audit Committee to ensure their adequacy and effectiveness.

Rule 8(5)(viii) of Companies (Accounts) Rules, 2014 requires the information regarding adequacy of Internal Financial Controls with reference to the financial statements to be disclosed in the Boards report. To ensure effective Internal Financial Controls the Company has laid down the following measures the Company has a well placed, proper and adequate IFC system which ensures that all assets are safeguarded and protected and that the transactions are authorised, recorded and reported correctly.

According to Section 134(5)(e) of the Companies Act, 2013 the term Internal Financial Control (IFC) means the policies and procedures adopted by the company for ensuring the orderly and efficient conduct of its business, including adherence to companys policies, the safeguarding of its assets, the prevention and detection of frauds and errors, the accuracy and completeness of the accounting records, and the timely preparation of reliable financial information.

DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial statements are prepared in compliance with the requirements of the Companies Act, 2013 and the Indian Accounting Standards prescribed by the Institute of Chartered Accountants of India. The financial performance of the Company for the year 2023-24 is described in the Directors Report under the head Financial Performance of the Company.

FINANCIAL YEAR OF THE COMPANY

The Financial Year of the Company continues to remain of twelve months starting with 1^st April of every financial year.

OPERATIONS

Your Company continuously taking effective steps in broad basing of its range and activities. From last financial year, your company shows a good profit and it has the further potential to make huge profits in the future. Apart from financial term, it is immense pleasure to inform you that your company render service to pan India basis and recorded a sound numerous of satisfactory customers.

HUMAN RESOURCES

The Company seeks respects and values of the diverse qualities and background that its people bring to it and is committed to utilizing the richness of knowledge, ideas, experience that this diversity provides.

The proper training and Personality Developments sessions were conducted for upgradation of employees, so that employees can get familiar with Companys rules and regulations. The Company has built a resource base and cross-functional managers to take care of multi dimensional businesses

Your Company has required manpower to manage its activities keeping in view its emphasis on cost reduction. The Company recognizes the importance of human resources in achieving success in its commercial pursuits and follows a good man management policy.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

DISCLOSURES

During the year, the Company has not entered into any transaction of material nature with its promoters, the Directors or the management, their subsidiaries or relatives, etc. that may have potential conflict with the interest of the Company at large.

CAUTIONARY STATEMENT

Statements in this "Management Discussion and Analysis Report" describing the Company objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include global and India demand supply conditions, cyclical demand and pricing in the Companys principal markets, changes in Government regulations, tax regimes, and economic developments within India.