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Octal Credit Capital Ltd Management Discussions

29.4
(5.00%)
Jul 18, 2024|12:00:00 AM

Octal Credit Capital Ltd Share Price Management Discussions

Overview

The Company is registered with the Reserve Bank of India (RBI) as a non-deposit accepting NBFC. As per RBIs Scale Based Regulations (SBR), the Company shall be classified as NBFC- Base Layer (NBFC-BL) as the Company has no public deposits. The Company is listed with Bombay Stock Exchange Ltd and the Calcutta Stock Exchange Ltd.. The Company is principally into lending and investing in Shares and Securities.

I. Industry structure and developments

The global economy is exhibiting resilience and fortitude. There are, however, multiple challenges emanating from still elevated inflation, tight monetary and financial conditions, escalating geopolitical tensions, rising geoeconomic fragmentation, disruptions in key global shipping routes, high public debt burdens and financial stability risks. Global financial markets are on edge, with recurrent bouts of volatility as every incoming data increases uncertainty around monetary policy trajectories of major central banks.

Amidst global challenges, Indian economy exhibited robust growth in 2023-24, underpinned by strong investment activity, amidst subdued external demand. Manufacturing and services sectors were the key drivers on the supply side while agricultural activity slowed down due to uneven and deficient monsoon rainfall. The growth outlook remains buoyant, given the governments sustained focus on capital expenditure while maintaining fiscal consolidation. Strong corporate balance sheets, rising capacity utilisation, double digit credit growth, healthy financial sector, and the ongoing disinflation are likely to be other growth levers. Indian economy boasted an impressive growth rate of 7.8% in the 2023-24 fiscal year (FY) and exceeded the average G20 rate of 3.4%.

The Indian governments high capital spending has brought the fiscal deficit to 5.8% in FY 2023-24 and the combined debt-GDP to above pre-pandemic levels.

The RBI paid a higher than expected dividend payout of Rs 2.1 trillion to the government, vs the expected Rs 0.9 trillion. This is likely to lead to lower market borrowings in the second half of the year and consequently lower bond yields.

Indian stock markets have generated an impressive performance during the FY 2023-24. The Nifty 50 index delivered a substantial return of 29 percent in FY 24. According to the data shared by the National Stock Exchange (NSE), the growth of the Indian markets has marked the eighth consecutive year of positive returns. Notably, the last instance of negative returns in the Indian market dates back to 2015, highlighting the consistent upward trajectory of Indian equities.

Capital and asset quality of banks and NBFCs remain healthy, supporting the growth in bank credit and domestic activity. Pre-emptive regulatory measures aimed at curbing excessive consumer lending and bank lending to NBFCs, and investments in alternate investment funds (AIFs) are expected to contain the build-up of potential stress in balance sheets of financial intermediaries and contribute to financial stability. While domestic banks and NBFCs have exhibited the interest rate risk, banks may have to address both trading and banking book risks. Accordingly, the RBI is striving to make its regulations more principle based, activity-oriented and proportionate to the scale of systemic risk, rather than entity-oriented.

II. Opportunities and threats

The RBI has been continually strengthening the supervisory framework for NBFCs in order to ensure sound and healthy functioning and avoid excessive risk taking. It has issued several new guidelines in the recent past. The uncertainties and volatility in the financial market are a continuing threat to the organizational performance. However, the twin features of foresightedness and focused analysis of the market have challenged the threat of adverse performance

III. Financial condition

Refer to the Standalone and Consolidated financial statements in this Annual Report for detailed schedules and notes.

• No movement in equity shares during the year.

• 20% of the net profit is transferred to the Special Reserve Account created pursuant to Section 45 IC of RBI.

• Non-financial liabilities include deferred tax liability created on investment in equity instruments measured at fair values through other comprehensive income.

• Financial assets includes Loans and Advances and Investments in equity shares of quoted and unquoted companies.

• Non-financial assets include current tax assets and other assets.

IV Results of operations

The Company has earned a net profit of Rs. 234.60 lakhs during the financial year 2023-2024. The Company has generated major income this year from Interest on Loan and Sale of Shares and Securities, dividends received on equity instruments and other interest income.

V. Outlook, risks and concerns

Your Company is exposed to normal industry risk such as interest rates, market and operational risks. In order to mitigate the risk, your Company invest the surplus funds in growth schemes primarily seeking to generate long term capital appreciation commensurate with prudent risk from a portfolio comprised substantially of high quality securities and large cap companies.

VI Internal Financial Control System and their adequacy

The Company believes in the system of internal controls and has provided for proper checks and control at various operational levels.

VII Material developments in human resources/ industrial relations, including number of people employed

There has been positive working relationship between the Company and the employees of the Company during the year. The Company strives to provide conducive working environment to its employees and to maintain the pace with the economic situations, Company has always focused on enhancing the efficiency of the employees including restructuring their compensation, working conditions e.t.c. Accordingly, the Company has also provided work from home facility to its employees and evaluated the performance of employees during the year under review to retain the motivation among the employees of the Company.

CAUTIONARY STATEMENT

This statement made in this section describes the companys objectives, projections, expectation and estimations, which may be forward looking statements within the meaning of applicable securities laws and regulations. Forward- looking statements are based on certain assumptions and expectations of future events. The company cannot guarantee that these assumptions and expectations are accurate or will be realised by the company. Actual result could differ materially from those expressed in the statement or implied due to influence of external factors, which are beyond the control of the company. The company assumes no responsibility to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments.

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