ANNUAL OVERVIEW AND OUTLOOK
Indias economy expanded 5.4 percent year-on-year in the last quarter of 2021,
following an upwardly revised 8.5 percent advance in the previous period and below market
expectations of 6 percent. It was a fifth straight quarter of expansion, driven by the
festive season boost to consumer demand, policy support, and rapid fall in coronavirus
cases. By sectors, service activity growth was supported by increases in trade, hotels,
transport & communication (6.1%); financial, real estate & professional services
(4.6%); and public administration, defense & other services (16.8%). In addition,
output rose for manufacturing (0.2%); mining & quarrying (8.8%); utilities (3.7%);
construction (2.8%) and agriculture (2.6%). Considering the full 2021/22 fiscal year, the
economy expanded 8.2 percent, compared with a 9.2 percent growth projected in the first
advance The most important and the fastest growing sector of Indian economy are services.
Trade, hotels, transport and communication; financing, insurance, real estate and business
services and community, social and personal services account for more than 60 percent of
GDP. Agriculture, forestry and fishing constitute around 12 percent of the output, but
employs more than 50 percent of the labour force. Manufacturing accounts for 15 percent of
GDP, construction for another 8 percent and mining, quarrying, electricity, gas and water
supply for the remaining 5 percent.
INDUSTRY OVERVIEW
In 2022-23, amid hope and excitement that the pandemic might soon be behind us as
vaccines are distributed, investors may actually find it tougher to generate the kind of
stock market returns we saw last year in the midst of COVID-19. Strange I know, but as we
saw last year, equity returns need not align with what is the current state of the
economy. Instead, stocks this year may resemble their performance in 2010, i.e., year two
of the bull market that started in 2009. After the S&P 500 Indexs stunning 68% return
from the March 2020 low to the end of the year, stocks likely need to take a breather,
much as they did in the second quarter of 2010. Importantly, however, overall returns of a
second year of a bull market are historically positive, like in 2010. Companies that were
impacted the most by the effects of the pandemic-induced recession, whose valuations are
at lows relative to their history, i.e. value stocks3 for example, banks, movie theatres
and cruise lines may present a compelling opportunity particularly in an economy where the
consumer is strong. Historically, the best time to own value stocks has been when the
economy is exiting a recession. As a group, these value stocks began their recovery in
2020, but as we begin 2021, these stocks are still cheaper relative to their historical
levels.4 In our current economic recovery, we see opportunity in value stocks, focusing on
those companies with strong balance sheets. We should therefore brace ourselves for a lot
more stock market volatility in 2021. This will likely shake out the reluctant bulls,
those who only recently put their cash to work in equities, at the exact wrong time. Based
on history, investors should hold tight and keep eyes on the longer term. The second year
of a new bull market historically performs quite well overall, though it tends to be more
gut-wrenching along the way.
OPPORTUNITIES & THREATS Opportunities
As investor and consumer preferences shift to more acutely focus on environmental and
social issues, businesses may need to realign their priorities in response. Capital and
Money markets firms will have an immense opportunity to assist the businesses affected by
these changing preferences. Social and sustainable financing instruments, including green
bonds and loans, consist of a variety of fixed-income or loan instruments whereby the
proceeds are used exclusively to finance projects with social and/or environmentally
sustainable benefits. This in turn leads to more projects promoting a positive social
impact or environmentally sustainable outcomes. As the markets continue to see consumer
behaviors and preferences affect asset values (remember GameStop?), social and sustainable
financing options offer banking and capital market participants a unique opportunity to
help finance a more responsible future while driving growth.
Threats
The continuing global challenges and potential existential threat posed by the ongoing
COVID-19 pandemic. Political divisiveness and polarization, Social and economic unrest,
Gridlock, Artificial intelligence (AI), automation and other rapidly developing digital
technologies, Rapid shift to virtual, remote work environments, Changes in the
geopolitical landscape, Shifting customer preferences and demographics, Fragile supply
chains, Wildfires and hurricanes, Volatile unemployment levels and record low interest
rates, Escalating competition for specialized talent. Immigration challenges, Cyber
breaches on a massive scale, Terrorism, Big data analytics, Future of work etc. are
notable threats to the very industry including Finance & Investment industries. These
and a host of other notable risk drivers are all contributing to significant levels of
uncertainties, making it extremely difficult to anticipate what risks may lie just over
the horizon. Unanticipated events are unfolding at record pace, leading to massive
challenges to identify the best next steps for organizations of all types and sizes,
regardless of where they reside in the world. No one is immune to the significant levels
of uncertainty, and C-suites and boards need to be vigilant in scanning the horizon for
emerging issues. Because no one can possibly anticipate everything that lies in the
future, organizations must focus on building trust-based, resilient cultures, led by
authentic leaders that can pivot at the speed of change.
RISKS AND CONCERNS
NCL Research & Financial Services Limited (NCL) has exposures in various line of
business. NCL are exposed to specific risks that are particular to their respective
businesses and the environments within which they operate, including market risk,
competition risk, credit risk, liquidity and interest rate risk, human resource risk,
operational risk, information security risks, regulatory risk and macro-economic risks.
The level and degree of each risk varies depending upon the nature of activity undertaken
by them.
MARKET RISK
The Company has quoted investments which are exposed to fluctuations in stock prices.
NCL continuously monitors market exposure in equity and, in appropriate cases, also uses
various derivative instruments as a hedging mechanism to limit volatility.
LIQUIDITY AND INTEREST RATE RISK
The Company is exposed to liquidity risk principally, because of lending and investment
for periods which may differ from those of its funding sources. Management team actively
manages asset liability positions in accordance with the overall guidelines laid down by
various regulators. The Company may be impacted by volatility in interest rates in India
which could cause its margins to decline and profitability to shrink. The success of the
Companys business depends significantly on interest income from its operations. It is
exposed to interest rate risk, both as a result of lending at fixed interest rates and for
reset periods which may differ from those of its funding sources. Interest rates are
highly sensitive to many factors beyond the Companys control, including the monetary
policies of the RBI, deregulation of the financial sector in India, domestic and
international economic and political conditions and, inflation. As a result, interest
rates in India have historically experienced a relatively high degree of volatility. The
Company seeks to match its interest rate positions of assets and liabilities to minimize
interest rate risk. However, there can be no assurance that significant interest rate
movements will not have an adverse effect on its financial position.
HUMAN RESOURCE DEVELOPMENT
The Company recognizes that its success is deeply embedded in the success of its human
capital. During 2022-2023, the Company continued to strengthen its HR processes in line
with its objective of creating an inspired workforce. The employee engagement initiatives
included placing greater emphasis on learning and development, launching leadership
development programme, introducing internal communication, providing opportunities to
staff to seek inspirational roles through internal job postings, streamlining the
Performance Management System, making the compensation structure more competitive and
streamlining the performance-link rewards and incentives.
CORPORATE SOCIAL RESPONSIBILITY INITIATIVES
The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable
to the Company.
COMPLIANCE
The Compliance function of the Company is responsible for independently ensuring that
operating and business units comply with regulatory and internal guidelines. The
Compliance Department of the Company continues to play a pivotal role in ensuring
implementation of compliance functions in accordance with the directives issued by
regulators, the Companys Board of Directors and the Companys Compliance Policy. The
Audit Committee of the Board reviews the performance of the Compliance Department and the
status of compliance with regulatory/internal guidelines on a periodic basis.
The Company has complied with all requirements of regulatory authorities except delay
in complying with the provisions of SEBI LODR Regulations, 2015. No penalties/strictures
were imposed on the Company SEBI or any other statutory authority on any matter related to
capital market during the last three years.
Secretarial Audit report of NCL Research & Financial Services Limited For the year
ended 31st March 2023
FORM MR-3
[Pursuant to Section 204(1) of the Companies Act, 2013 and Rule No. 9 of the Companies
(Appointment and Remuneration of Managerial Personnel) Rules, 2014]
The Members,
NCL Research & Financial Services Limited, Mumbai
We have conducted the secretarial audit of the compliance of applicable statutory
provisions and adherence to good corporate practices by NCL Research & Financial
Services Limited. (hereinafter called as the Company). The secretarial audit was
conducted in a manner that provided me a reasonable basis for evaluating the corporate
conducts/statutory compliances and expressing my opinion thereon. Based on my verification
of the books, papers, minute books, forms and returns filed and other records maintained
by the Company and also the information provided by the Company, its officers, agents and
authorised representatives during the conduct of secretarial audit, I hereby report that
in my opinion, the Company has, during the audit period covering the financial year ended
on 31st March 2023, complied with the applicable statutory provisions listed
hereunder and also that the Company has proper Board processes and compliance mechanism in
place to the extent, in the manner and subject to the reporting made hereinafter: We
further report that maintenance of proper and updated Books, Papers, Minutes Books, filing
of Forms and Returns with applicable regulatory authorities and maintaining other records
is responsibility of management and of the Company. Our responsibility is to verify the
content of the documents produced before us, make objective evaluation of the content in
respect of compliance and report thereon. We have examined on test basis, the books,
papers, minutes books, forms and returns filed and other records maintained by the Company
and produced before us for the financial year ended 31st March, 2023 according
to the provisions of:
i. The Companies Act, 2013 (the Act) and the rules made thereunder;
ii. The Securities Contracts (Regulation) Act, 1956 (‘SCRA) and the rules made
thereunder;
iii. The Depositories Act, 1996 and the Regulations and Bye-laws framed thereunder;
iv. Foreign Exchange Management Act, 1999 and the rules and regulations made thereunder
to the extent of Foreign Direct Investment, Overseas Direct Investment and External
Commercial Borrowings;
v. The following regulations and guidelines prescribed under the Securities and
Exchange Board of India Act, 1992 (‘SEBI Act) to the extent applicable:
a) The Securities and Exchange Board of India (Substantial Acquisition of Shares and
Takeovers) Regulations, 2011;
b) The Securities and Exchange Board of India (Prohibition of Insider Trading)
Regulations, 2015, as amended;
c) The Securities and Exchange Board of India (Issue of Capital and Disclosure
Requirements) Regulations, 2009 and The Securities and Exchange Board of India (Issue of
Capital and Disclosure Requirements) Regulations, 2018;
d) The Securities and Exchange Board of India (Issue and Listing of Non-Convertible
Securities) Regulation, 2021; (not applicable to the Company during audit period)
e) The Securities and Exchange Board of India (Share Based Employee Benefits)
Regulations, 2014;
f) The Securities and Exchange Board of India (Issue and Listing of Debt Securities)
Regulations, 2008;
g) The Securities and Exchange Board of India (Registrars to an Issue and Share
Transfer Agents) (Amendment) Regulations, 2006 regarding the Companies Act and dealing
with client;
h) The Securities and Exchange Board of India (Delisting of Equity Shares) Regulations,
2009;
i) The Securities and Exchange Board of India (Buy-back of Securities) Regulations,
1998 and The Securities and Exchange Board of India (Buy-back of Securities) Regulations,
2018; and
j) The Securities and Exchange Board of India (Listing Obligations and Disclosure
Requirements) Regulations, 2015, as amended.
k) The Securities and Exchange Board of India (Depositories and Participants)
Regulations, 2018; vi. Rules, regulations and guidelines issued by the Reserve Bank of
India as per Reserve Bank of India Act, 1934 and its circulars, Master circulars,
directions and notifications; to the extent as applicable to Non-Deposit taking
Non-Banking Financial Companies. vii. Non-Banking Financial Company-Systemically important
non-deposit taking company (Reserve Bank) Directions, 2016. viii. Prevention of Money
Laundering Act, 2002 and its circulars, notifications. ix. Anti-Money Laundering
Regulation issued by RBI and various circulars and Guidelines thereunder. x. Employee Laws
The Payment of Gratuity Act, 1972 and Payment of Gratuity (Central) Rules, 1972 The
Payment of Bonus Act, 1965 and Payment of Bonus Rules, 1975 The Employees State Insurance
Act, 1948
The Employees Provident Fund and Miscellaneous Provisions Act, 1952 & the scheme
provided thereunder xi. Acts as prescribed under Shop and Establishment Act of State and
various local authorities. xii. The Negotiable Instrument Act, 1881 xiii. The Indian Stamp
Act, 1899 and the State Stamp Acts xiv. The Sexual Harassment of Women at Workplace
(Prevention, Prohibition and Redressal) Act, 2013.
We have also examined compliance with the applicable clauses of the following:- i.
Secretarial Standards pursuant to section 118(10) of the Act, issued by the Institute of
Company Secretaries of India. ii. Listing Agreements entered into by the Company with BSE
Ltd. as per SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. We
have verified systems and mechanism which is in place and followed by the Company to
ensure Compliance of these specifically applicable Laws as mentioned above, to the extent
of its applicability to the Company and we have also relied on the representation made by
the Company and its Officers in respect of systems and mechanism formed / followed by the
Company for compliances of other applicable Acts, Laws and Regulations and found the
satisfactory operation of the same. During the period under review the Company has
complied with the provisions of the Act, rules, regulations, directions, guidelines,
standards, etc. mentioned above, except the following
1. The Company being the NBFC Company has not registered itself to National
E-Governance Services Limited (NeSL) and no return has been filed by the Company;
2. As per RBI guidelines for the compulsory registration of NBFCs with Experian
Credit Information Company of India Private Limited and CRIF High Mark Credit Information
Services Private Limited. The Company is yet to register itself with these agencies.
We further report that the Board of Directors of the Company is duly constituted with
proper balance of executive directors, non-executive directors and independent directors
including one woman director. Following appointments of Key Managerial Personnel were
filled during the period under review on MCA portal: Ms. Sudipta Bhattacharya (DIN:
09708283) was appointed as an Additional Director on 11th October, 2022 and
further regularized as an Independent Director by way of Companies (Postal Ballot)
Regulations, 2018 results of which was declared on 15th December 2022. Ms.
Haimonti Das (DIN: 09705524) was appointed as an Additional Director on 11th
October, 2022 and further regularized as an Independent Director by way of Companies
(Postal Ballot) Regulations, 2018 results of which was declared on 15th
December 2022. Mr. Raj Kumar Chhakra (DIN: 00465157) was appointed as an Additional
Director on 3rd June, 2022. Further, he has resigned from the Board w.e.f. 11th
October 2022. Mr. Purushottam Khandelwal (DIN: 00319202) was appointed as an Additional
Director on 3rd June, 2022. Further, he has resigned from the Board w.e.f. 11th
October 2022.
We further report that, the compliance by the Company of applicable financial laws such
as direct and indirect tax laws and maintenance of financial records and books of accounts
have not been reviewed in this audit since the same have been subject to review by the
statutory financial auditors, tax auditors, and other designated professionals. We also
report that adequate notices have been given to all directors to schedule the Board
meetings, agenda and detailed notes on agenda were sent at least seven days in advance and
a system exists for seeking and obtaining further information and clarifications on the
agenda items before the meeting and for meaningful participation at the meeting by the
directors. The decisions were carried unanimously. Based on the representation made by the
Company and its Officers, we herewith report that majority decisions are carried through
and proper system is in place which facilitates / ensure to capture and record, the
dissenting members views, if any, as part of the minutes. Based on the representation
made by the Company and its Officers explaining us in respect of internal systems and
mechanism established by the Company which ensures compliances of Acts, Laws and
Regulations applicable to the Company, we report that there are adequate systems and
processes in the Company commensurate with the size and operations of the Company to
monitor and ensure compliance with applicable laws, rules, regulations and guidelines. We
further report that during the audit period under review, there were no specific event /
action that can have a major bearing on the Companys affairs. Note: This report is to be
read with our letter of even date which is annexed as ‘Annexure A and forms an
integral part of this report.
S/d- KRITI DAGA
Practicing Company Secretaries ACS No.: 26425,
C. P. No. 14023 PRB: 2380/2022
Place: Kolkata
Date: April 29, 2023
UDIN: A026425E000228682
+91-9892691696
