Naga Dhunseri Management Discussions


(a) Industry Structure and Developments:

Global economy

As per the latest April 2023 World Economic Outlook (WEO) report,the baseline forecast is for growth to fall from 3.4 percent in 2022 to 2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3 percent in 2023. In a plausible alternative scenario with further nancial sector stress, global growth declines to about 2.5 percent in 2023 with advanced economy growth falling below 1 percent. Global headline in ation in the baseline is set to fall from 8.7 percent in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core) in ation is likely to decline more slowly. In ations return to target is unlikely before 2025 in most cases.

Industry Overview

After the COVID-19 pandemic, India was quick to get back on the pre-pandemic growth trajectory, surpassing the UK to become the fth-largest economy in the world. As per the National Statistical Of ce, the Indian economy grew at 7.2% in FY 2023, compared to 9.1% in FY 2022.

NBFCs have a competitive edge in their superior understanding of regional dynamics, well-developed collection systems and personalised services in the drive to expand nancial inclusion in India. Lower transaction costs, quick decision making, customer orientation and prompt provision of services have typically differentiated NBFCs from banks. The reach and last mile advantages of NBFCs have empowered them with agility, innovation and a cutting edge in providing formal nancial services to underbanked and unserved sections of the society.

(b) Opportunities and Threats:

The Company being a Non-Banking Financial Company is primarily engaged in the business of making investments in shares and securities. On account of Government of Indias efforts to improve economic growth in the Country by providing opportunities for start-up and infrastructure development is giving hopes to entrepreneurs for exploring new opportunities. The Company is looking forward to use the opportunity at the right moment.

In a volatile stock market, the Company is exposed to the risk of uctuation in share prices. This however is not likely to affect the working of the Company as a major part of the investments are held on long term basis and temporary uctuations of those shares in the stock market do not have much nancial implication to the Company.

However, the company gives continuous effort to frequently examine the ups and downs of the market particularly taking into consideration that the Company being a small size NBFC and there are plenty of hindrances which may hamper its growth.

(c) Segment Wise Performance:

The Company being a Non-Banking Financial Company operates mainly under a single segment viz Investments in Shares

and Securities.

(d) Outlook:

The Indian economy is getting insulated to world and creating a mark on global level. The Management has to regularly monitor the changing market conditions and the trends. Further, any slowdown of the economic growth or volatility in the nancial market could adversely affect the companys performance. However, the nature of capital market in which the Company operates is not predictable with certainty.

(e) Risk and Concern:

The very nature of the Companys business makes it susceptible to various kinds of risks. The Company encounters market risk, credit risk and operational risks in its daily business operations. The Company has framed a comprehensive Risk Management Policy which inter-alia lays down detailed process and policies in the various facets of the risk management function. The risk management review framework provides complete oversight to various risk management practices and process. The framework and assessment remains dynamic and aligns with the continuing requirements and demands of the market.

(f) Internal Control System & their adequacy:

The company maintains a system of internal controls design to provide a high degree of assurance regarding the effectiveness and ef ciency of operations, the reliability of nancial controls and compliance with applicable laws and regulations.

The Company has put in place an adequate system of Internal Controls that commensurate with its size, requirements and the nature of operations. It ensures operational ef ciency, accuracy in Financial Reporting and Compliance of applicable Laws and Regulations. The Company has in place Policies and Procedures required to properly and ef ciently conduct its business, safeguard its assets, detect frauds and errors, maintain accuracy and completeness of accounting records and prepare nancial reports in a timely and reliable manner. The system is also reviewed from time to time. During the year such controls were tested by the Internal and Statutory Auditors with reference to nancial statements and no reportable material weakness on the designs or operations were observed. A seamless system has been put in place to ensure that any major discrepancies or lapse in controls are reported to the Audit Committee and Board of Directors of the Company and action is taken to control any breach.

(g) Discussion on Financial Performance with respect to Operational Performance:

This section is covered in the Boards Report under the section of Financial Results and Operations.

(h) Material Developments in Human Resources / Industrial Relations front including number of people employed:

There is no Material Development in Human Resources front. The Company maintains harmonious relationship with its

employees. The Company is having 9 persons employed currently.

(I) Details of Key Financial Ratios and Signi cant Changes:

Sl. No. Particulars F.Y. 2022-23 F.Y. 2021-22 Variance (%) Reason
a. Current Ratio 227.67 231.16 (1.15%) Due to increase in Current Liabilities
b. Operating Pro t Margin (in %) 77.06 66.00 16.40% Due to increase operating in Pro t
c. Net Pro t Margin (in %) 66.82 63.64 5.00% Due to increase in Pro t after tax expenses
d. Return on Net worth (in %) 3.84 2.15 78.60% Due to increase in Pro t after tax expenses

(j) Change in return on Net Worth:

The return on Net Worth for the F.Y. 2022-23 is 3.84 % and for F.Y. 2021-22 is 2.15 % resulting in increase in the return on net worth by 78.60% due to increase in the net pro t of the Company in absolute terms in F.Y. 2022-23 as compared to F.Y. 2021-22.

(k) Cautionary Statement:

Statements in this Management Discussion and Analysis Report describing the Companys projections, estimates and expectations have been made in good faith and may be forward looking statements within the meaning of applicable laws and regulations. Many unforeseen factors may come into play and affect the actual results, which may differ substantially or materially from those expressed or implied. Important developments that could affect the Companys operations include a downtrend in the industry-global or domestic or both, signi cant changes in political and economic environment in India, applicable statues, litigations etc.