NBI Industrial Finance Company Ltd Management Discussions

GLOBAL ECONOMY AND MARKETS:

The World Economic Outlook Report of April 2024 from IMF describes the Global Economic situation as "Steady but Slow". It says as global inflation has descended from its mid-2022 peak, economic activity has grown steadily. Growth in employment and incomes have held steady, resulting in increased consumption demand. The unexpected growth in consumption is a residual effect of the substantial savings accumulated by households during the pandemic.

Global growth, estimated at 3.2 percent in 2023, is projected to continue at the same pace in 2024 and 2025. Global headline inflation is expected to fall from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and 4.5 percent in 2025.

Oil prices have remained volatile having risen to near the $90 per barrel-mark, with supply worries high given the escalating Middle East tensions between Iran and Israel and back-to-back attacks on energy infrastructure between Ukraine and Russia. The price has since corrected but remains above USD 80-85.

2024-The year of elections world over:

2024 is not just an election year. Its perhaps the election year! Globally, more voters than ever in history will head to the polls as at least 64 countries (plus the European Union)—representing a combined population of about 49% of the people in the world—are meant to hold national elections, the results of which, for many, will prove consequential foryears to come.

Eurozone:

The Eurozone presents a promising outlook, with economic activity indicators surpassing expectations. Core inflation tracking towards the European Central Banks target of 2% is supported by various factors including falling energy prices and real wage gains.

Japan:

Japans macroeconomic shift, marked by increasing inflation expectations and wage growth, presents favorable investment opportunities. Corporate behavior reforms driven by initiatives from the Tokyo Stock Exchange contribute to improved return on equity, signaling a positive trajectory for investments in the region.

United States:

Despite challenges such rising default rates on credit obligations, the U.S. economy remains resilient. The S&P 500 Index is poised to continue its upward trajectory, fueled by positive momentum and investor enthusiasm.

India:

India continues to shine as a bright spot. It is the fifth-largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. Its GDP growth remained buoyant at 7.3% in FY 2023-24 as against 7.2% in FY 2022- 23 was supported by robust domestic demand, moderate inflation, a stable interest rate environment, and strong foreign exchange reserves. The International Monetary Fund (IMF) commended Indias economic resilience, robust growth, and notable progress in formalization and digital infrastructure.

Indias economic outlook is optimistic as it reaps the benefits of demographic dividend, physical and digital infrastructure enhancements, increased capital expenditure and the governments proactive policy measures such as Production Linked Incentive (PLI) Schemes. According to the IMF, the Indian economy is expected to expand steadily at 6.5% in 2024.

Indian Equity Markets FY 23-24:

The Indian stock market delivered an exceptional year. The Nifty50 spiked up an impressive 28.6% in FY24, outperforming most major market indices globally.

The broader market recorded a much higher return with overall market cap of all listed companies appreciating 47.91%.

NBFC INDUSTRY& BUSINESS UPDATE

Indias financial sector is a highly diversified one comprising commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The sector is predominantly driven by banking and non-banking financial companies (NBFCs). Over the past few years NBFCs have emerged as important financial intermediaries, particularly for the small-scale and retail sectors in underserved and unbanked areas. The sector has turned out to be growth engine in an environment where significant importance is assigned to financial inclusion and have aided the economy in employment generation and wealth creation by making credit available to the rural segment.

COMPANYS POSITION

The Company NBI is registered with the RBI as a Non-Banking Financial Institution and is categorized as Non-Deposit taking NBFC" (NBFC-ND). The operations of the company continue to be centered around investments in shares and securities. The main income of the Company is dividend income on long-term investments and profit from sale of investments. The results of the Companys operations for the financial year ended 31st March, 2024 have been dealt with in the Directors Report.

The Company, being into finance and investment activity, the impact of movement of stock markets affects its profitability. The Company has long-term orientation in its investments and mainly invests in listed equities. The objective of investments portfolio is to balance risk with adequate return.

OUTLOOK

A significant portion of the Companys income arises from investment and share sale / purchase operations, which are largely dependent on the condition of the stock market. The stock market activity depends largely upon the economic growth momentum and a combination of other factors like inflation, domestic savings, corporate earnings, stable tax regime, surging portfolio investments into India etc. The unusual developments in the global economy may pose uncertainties and challenges for the emerging market economies like India. However, the Company has investment policy wherein it invests in those securities which have easy liquidity, betteryieldand potential for price appreciation in medium to long run.

INTERNAL CONTROL SYSTEM ANDTHEIR ADEQUACY

The Company has implemented a system of internal controls and risk management for achieving operational efficiency, optimal utilization of resources, credible financial reporting and compliance with local laws.

The system is aimed at covering all areas of operations. All transactions entered into by the Company are duly authorized and recorded correctly. The internal financial controls within the Company are commensurate with the size, scale and complexity of its operations. It has implemented suitable controls to ensure that financial transactions are reported with accuracy and that there is strict compliance with applicable laws and regulations. These controls are regularly reviewed internally for effectiveness. The Company has robust policies and procedures which, inter alia, ensure integrity in conducting its business, safeguarding of its assets, timely preparation of reliable financial information, accuracy and completeness in maintaining accounting records and the prevention and detection of frauds and errors.

KEY FINANCIAL RATIOS

In accordance with SEBI (Listing Obligations and Disclosure Requirements) Regulations, the details of significant changes (i.e. change of 25% or more as compared to the immediately previousfinancialyear)in key financial ratios are as follows:-

CAUTIONARY STATEMENT

Certain statements under "Management Discussion & Analysis" describing the Companys objectives, estimates, expectations or predictions may be forward looking statements within the meaning of applicable securities laws and regulations. Although the expectations are based on reasonable assumptions, the actual results could materially differ from those expressed or implied, since the Companys operations are influenced by many external factors beyond the control of the Company. Investors are cautioned that the Company assumes no responsibility to publicly amend, modify, revise or update any forward looking statement or opinion, on the basis of any subsequent developments, events or information.