Northlink Fiscal & Capital Services Ltd Management Discussions.


Global Economy Overview

None of us would have imagined while welcoming dawn of the year 2020 that it will bring us face to face with a catastrophic event of such a magnitude. The raging COVID-19 pandemic is wreaking havoc worldwide bringing economy after economy down to its knees. The pandemic has exposed the vulnerabilities of economies of the world, irrespective of level of their development. The world is staring down the barrel of an uncertain future. Foremost requirement of the present times is to protect lives and to build infrastructure to enable health care systems to discharge their responsibilities ethically and efficiently. Mammoth isolation facilities are required for isolating patients with due sensitivity to their age, gender, comorbidities etc. strict lockdowns, bringing economic activities to grinding halt, were imposed by the Governments worldwide to contain the virus. . The health crisis, therefore, is having a severe impact on economic activities and as a result the global economy is projected to contract sharply by 5.2% in 2020-21, much worse than 2008 09 financial crises.

Need of the hour is to devise effective policies to prevent further economy slump and to undertake necessary measures to contain and reduce contagion. Because the economic fallout is acute in specific sectors, policymakers will need to implement substantial targeted fiscal, monetary, and financial market measures to support affected households and businesses domestically. Strong multilateral cooperation is essential at international level to overcome the effects of the pandemic, including financial aid to constrained countries facing health and funding shocks to enable these countries to ramp up their weak health care systems.

(Source: IMF, World Bank)

Indian Economy outlook

The Indian economy grew 4.2 per cent in 2019-20, which is slowest in last 11 years, made worse further by Covid-19. The unprecedented lockdown imposed by the Government of India brought the economy down to its knees and causing unfathomable human suffering. The economic downturn resulted in “World Bank” sharply scaling down its growth projections for Indias economy for the fiscal year 2020-21.

The Asian Development Bank (ADB) in the Asian Development Outlook (ADO) 2020 released on 03 April 2020 has projected India growth to slow down to 4% in the current fiscal year, citing weak global demand and the governments Covid-19 containment efforts. The outlook for India remains subdued, with growth slowing from 5.0% last fiscal year to 4.0% this year.

(Source: ADB, World Bank)

A nationwide lockdown was imposed on March 25, 2020 but business activity had begun grinding to a halt a few weeks before that. The core sector contracted by a record 38% in April as the lockdown hit all eight infrastructure sectors. Cement output fell 86% while fertilisers and crude oil shrank 4.5% and 6.4%, respectively, in Apr20.

In view of nationwide lockdown during April 2020 due to Covid-19 pandemic, various industries coal, cement, steel, natural gas, refinery, crude oil etc. experienced substantial loss of production.

(Source: Economic Times)

In view of pandemic global and local impact, the World Bank expects Indias economy to contract 3.2% in the current fiscal year, a sharp downgrade from its April projection of 1.5% -2.8% growth, citing stringent lock-down and spill overs from weaker global growth. The GEP report said the lock-down would severely curtail activity despite fiscal and monetary stimulus. Further, weaker global economic performance and balance sheet stress in the financial sector would also weigh on activity. The latest report expects the economy to make a modest recovery to 3.1% growth in the next fiscal year, in comparison to the 6.1% expansion projected in the January report.

A number of firms including Goldman Sachs and Nomura have projected a contraction of as much as 5% for India in F.Y.21. The report said the pandemics impact would be particularly hard on emerging markets and developing economies (EMDEs) with large informal sectors, like India. It would “take an especially heavy humanitarian and economic toll on these economies”, it said

The vulnerabilities associated with informality like widespread poverty, deficient public health and medical resources, and weak social safety nets have amplified the economic shock to livelihoods from Covid-19, according to the GEP report.

(Source: Business Standard)

Non-Banking Financial Companies (NBFCs) have become an integral part of Indias financial system. In recent times NBFCs have emerged as lenders to both companies and individuals. When it comes to lending, NBFCs are generally regarded to be complementary to banks and are often able to offer better services and products to their customers. In spite of strong competition face by the NBFCs, the inner strength of NBFCs viz. local knowledge, credit appraisal skill, well trained collection machinery, close monitoring of borrowers and personalized attention to each client, are catering to the needs of small and medium enterprises in the rural and semi urban areas. NBFCs are playing significant role in financing needs and have reached the gross root level through Micro finance.

NBFC Sector Analysis

NBFCs have served the unbanked customers by pioneering into retail asset-backed lending, lending against securities and microfinance. NBFCs are rapidly gaining prominence as intermediaries in the retail finance space. While NBFCs finance more than 80% of equipment leasing and hire purchase activities in India, there market share in commercial loans stood at 26.6% in FY19. NBFCs aspire to emerge as a one-stop shop for all financial services. Non-Banking Financial Companies are expected to raise their share to 19-20% by 2020 through recapitalisation program for public sector and New RBI guidelines on NBFCs with regard to capital requirements, provisioning norms and enhanced disclosure requirements are expected to benefit the sector in the long run.

Although the balance sheet size of the NBFCs constitutes 18.6 per cent of Scheduled Commercial Banks, it has emerged as an important pillar of the Indian financial system. The sector, which had witnessed a robust expansion in 2017-18, experienced headwinds in

2018-19 and 2019- 20 (up to September) as market sentiments turned negative post-IL&FS event and recent defaults by some companies. Although GNPA ratio showed an uptick, their capital position remained stable. HFCs experienced deceleration in credit growth and muted profitability as market confidence in the sector waned.

The Reserve Bank and the government have taken several measures to restore stability in the NBFC space. The Reserve Bank took measures to augment systemic liquidity, buttress standards of asset-liability management framework, ease flow of funds by relaxing ECB guidelines and strengthen governance and risk-management structures. The government provided additional support through the partial credit guarantee scheme, encouraging PSBs to acquire high-rated pooled assets of NBFCs. Furthermore, the Finance Bill 2019 through amendments in the RBI Act, 1934 conferred powers on the Reserve Bank to bolster governance of NBFCs. These measures are geared toward allaying investors apprehensions and aiding NBFCs in performing their role better.

(Source: RBI)


The company bears the normal risk in terms of inherent business risk in the kind of business the company is into. The Board of the company has taken a balanced approach for investing in these activities. After bad experience in the past, the Board is adopting a cautious approach and not an aggressive one. After stabilization for existing business, the company will foray into other related areas to have good growth in future.


Internal control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. The control systems set on place and further supplemented by MIS which provided for planned expenditure and information in disposal and acquisition of assets.


The Company has achieved total revenue 1126.61 Lakh and earned profit after tax of Rs. 19.84 Lakh.



Your company continues to lay great stress on its most valuable resource people. Continuous training, both on the job and in an academic setting, is a critical input to ensure that employees at all levels are fully equipped to deliver a wide variety products and services to the customers of the company. The company had employed 8 persons during the financial year 2019-20.


Statements in the Management Discussion and Analysis Report describing our company objectives, expectations or predictions may be forward looking within the meaning of applicable regulations and other legislations. Actual results may differ materially from those expressed in the statement. Important factors that could influence company operations include global and domestic financial market conditions affecting the interest rates, availability of resources for the financial sector, market for lending, changes in regulatory directions issued by the Government, tax laws, economic situation and other relevant factor.