ANNEXURE E TO THE DIRECTORS REPORT
OUTLOOK
Introduction
India has a diversified financial sector undergoing rapid expansion, both in terms of
strong growth of existing financial services firms and new entities entering the market.
The sector comprises commercial banks, insurance companies, non-banking financial
companies, co-operatives, pension funds, mutual funds and other smaller financial
entities. The banking regulator has allowed new entities such as payment banks to be
created recently, thereby adding to the type of entities operating in the sector. However,
financial sector in India is predominantly a banking sector with commercial banks
accounting for more than 64% of the total assets held by the financial system.
The Government of India has introduced several reforms to liberalise, regulate and
enhance this industry. The Government and Reserve Bank of India (RBI) have taken various
measures to facilitate easy access to finance for Micro, Small and Medium Enterprises
(MSMEs). These measures include launching Credit Guarantee Fund Scheme for MSMEs, issuing
guideline to banks regarding collateral requirements and setting up a Micro Units
Development and Refinance Agency (MUDRA). With a combined push by Government and private
sector, India is undoubtedly one of the worlds most vibrant capital markets. bined push
by Government and private sector, India is undoubtedly one of the worlds most vibrant
capital markets.
NBFC LICENSE:
The Company had submitted application for surrender of NBFC License and the same is in
process to receive approval from the concerned authority.
Market Size
As of May 2022, AUM managed by the mutual funds industry stood at Rs. 37.37 trillion
(US$ 477.55 billion) and the total number of accounts stood at 133.3 million. Inflow in
Indias mutual fund schemes via systematic investment plan (SIP) stood at Rs. 1.24 lakh
crore (US$ 15.91 billion) in FY22. Equity mutual funds registered a net inflow of Rs.
22.16 trillion (US$ 294.15 billion) by end of December 2021.
Another crucial component of Indias financial industry is the insurance industry. The
insurance industry has been expanding at a fast pace. The total first-year premium of life
insurance companies reached US$ 40.1 billion in FY22. In FY23 (until May 2022) non-life
insurance sector premiums reached at Rs. 36,680.69 crore (US$ 4.68 billion).
Furthermore, Indias leading bourse, Bombay Stock Exchange (BSE), will set up a joint
venture with Ebix Inc to build a robust insurance distribution network in the country
through a new distribution exchange platform. In FY22, US$ 14.55 billion was raised across
127 initial public offerings (IPOs). The number of companies listed on the NSE increased
from 135 in 1995 to 2,012 by FY22.
Leading AMCs in India (as of June 2021)
| Top 5 AMCs in India |
AUM (USS billion) |
| SBI Mutual Fund |
70.23 |
| HDRO Mutual Fund |
55.97 |
| ICICI Prudential Mutual Fund |
55.93 |
| Aditya Birla Sun Life Mutual Fund |
36.97 |
| Kotak Mahindra Mutual Fund |
33.10 |
According to the statistics by the Futures Industry Association (FIA), a derivatives
trade association, the National Stock Exchange of India Ltd. (NSE) emerged as the worlds
largest derivatives exchange in 2020 in terms number of contracts traded. NSE was ranked
4th worldwide in cash equities by number of trades as per the statistics maintained by the
World Federation of Exchanges (WFE) for CY2020.
Investments / Developments
The Financial Services Industry has seen major achievements in the recent past:
• In May 2022, Unified Payments Interface (UPI) recorded 5.95 billion transactions
worth Rs. 1,041,520.07 (US$ 132.86 billion).
• In May 2022, the number of transactions through immediate payment service (IMPS)
reached 471.62 million (by volume) and amounted to Rs. 4.44 trillion (US$ 55.72 billion).
• Indiass PE/VC investments were at US$ 77 billion in 2021, which was 62% higher
than 2020.
• In 2021, Prosus acquired Indian payments gaint BillDesk for US$ 4.7 billion.
• In September 2021, eight Indian banks announced that they are rolling
out—or about to roll out—a system called ‘Account Aggregator to enable
consumers to consolidate all their financial data in one place.
• In September 2021, Piramal Group concluded a payment of Rs. 34,250 crore (US$
4.7 billion) to acquire Dewan Housing Finance Corporation (DHFL).
• Digital payment platforms for rural India:
• In July, Dvara Kshetriya Gramin Financial Services Pvt Ltd., an NBFC operating
in remote rural areas of India, acquired TransactNow digital platform, an early phase
tech start-up that provides digital financial services to Indias unbanked and underserved
population.
• In August 2021, Neokred, an open banking stack that delivers curated versions of
issuance in the payment ecosystem, teamed with Virenxia, a provider of integrated and
sustainable solutions for rural transformation and development, to launch the "The
Kisan Card, a special payment card for Indian farmers.
• In May 2021, the Reserve Bank of India (RBI) granted authorisation to Eroute
Technologies to operate as a prepaid payment instruments (PPI) company.
• In February 2021, the Reserve Bank of India (RBI) cleared the Rs. 34,250 crore
(US$ 4.7 billion) acquisition of Dewan Housing Finance Corporation (DHFL) by the Piramal
Group.
• In January 2021, Sundaram Asset Management Company announced the acquisition of
Principal Asset Management for Rs. 338.53 crore (US$ 46.78 million).
• In January 2021, the National Stock Exchange (NSE) launched derivatives on the
Nifty Financial Service Index. This service index is likely to provide institutions and
retail investors more flexibility to manage their finances.
• In September 2021, Unified Payments Interface (UPI) recorded 3.65 billion
transactions worth Rs. 6.5 trillion (US$ 86.63 billion).
• The number of transactions through immediate payment service (IMPS) reached
384.88 million (by volume) and amounted to Rs. 3.18 trillion (US$ 43.19 billion) in
September 2021.
• In August 2021, Unified Payments Interface (UPI) recorded 3.55 billion
transactions worth Rs. 6.39 lakh crore (US$ 86.00 billion).
• The number of transactions through immediate payment service (IMPS) reached
377.94 million (by volume) and amounted to Rs. 3.18 trillion (US$ 42.85 billion) in August
2021.
• In May 2021, Unified Payments Interface (UPI) recorded 2.53 billion transactions
worth Rs. 4.91 lakh crore (US$ 67.40 billion).
• The number of transactions through immediate payment service (IMPS) increased to
279.81 million (by volume) and amounted to Rs. 2.66 trillion (US$ 40.85 billion) by value
in May 2021.
Government Initiatives
Some of the major Government Initiatives are
• In September 2021, the international branch of the National Payments Corporation
of India (NPCI), NPCI International Payments (NIPL), has teamed with Liquid Group, a
cross-border digital payments provider, to enable QR-based UPI payments to be accepted in
10 countries in north and southeast Asia.
• On September 30, 2021, the Reserve Bank of India communicated that the
applicable average base rate to be charged by non-banking financial company - micro
finance institutions (NBFC- MFIs) to their borrowers for the quarter beginning October 1,
2021, will be 7.95%.
• On September 30, 2021, the IFSC Authority constituted an expert committee to
recommend approach towards development of sustainable finance hub and provide road map for
the same.
• In August 2021, Prime Minister Mr. Narendra Modi launched e-RUPI, a person and
purpose- specific digital payment solution. e-RUPI is a QR code or SMS string-based
e-voucher that is sent to the beneficiarys cell phone. Users of this one-time payment
mechanism will be able to redeem the voucher at the service provider without the usage of
a card, digital payments app, or internet banking access.
• In July 2021, Rajya Sabha approved the Factoring Regulation (Amendment) Bill in
2020, enabling ~9,000 NBFCs to participate in the factoring market. The bill also gives
the central bank the authority to establish guidelines for improved oversight of the US$ 6
billion factoring sector.
• In July 2021, Indias largest commodities derivatives exchange, Multi Commodity
Exchange of India Ltd., and European Energy Exchange AG (EEX) signed a memorandum of
understanding (MOU) with the goal of knowledge sharing and expertise exchange on
electricity derivative products. This MoU will make it easier for the two exchanges to
collaborate in areas including knowledge sharing, education and training, and event
planning in the field of electricity derivatives.
• The government has approved 100% FDI for insurance intermediaries and increased
FDI limit in the insurance sector to 74% from 49% under the Union Budget 2021-22.
• In January 2021, the Central Board of Direct Taxes launched an automated
e-portal on the e- filing website of the department to process and receive complaints of
tax evasion, foreign undisclosed assests and register complaints against "Benami
properties.
Road Ahead
Indias financial services industry has experienced huge growth in the past few years.
This momentum is expected to continue. Indias private wealth management Industry shows
huge potential. India is expected to have 6.11 lakh HNWIs by 2025. This will indeed lead
India to be the fourth largest private wealth market globally by 2028. Indias insurance
market is also expected to reach US$ 250 billion by 2025. This will further offer India an
opportunity of US$ 78 billion of additional life insurance premiums from 2020-30.
India is today one of the most vibrant global economies on the back of robust banking
and insurance sectors. The relaxation of foreign investment rules has received a positive
response from the insurance sector, with many companies announcing plans to increase their
stakes in joint ventures with Indian companies. Over the coming quarters, there could be a
series of joint venture deals between global insurance giants and local players.
The Association of Mutual Funds in India (AMFI) is targeting a nearly five-fold growth
in AUM to Rs. 95 lakh crore (US$ 1.47 trillion) and more than three times growth in
investor accounts to 130 million by 2025.
Indias Fintech space is expected to further fuel this growth in various segments.
Indias mobile wallet industry is estimated to grow at a Compound Annual Growth Rate
(CAGR) of 150% to reach US$ 4.4 billion by 2022, while mobile wallet transactions will
touch Rs. 32 trillion (USD$ 492.6 billion) during the same period.
According to Goldman Sachs, investors have been pouring money into Indias stock
market, which is likely to reach >US$ 5 trillion, surpassing the UK, and become the
fifth-largest stock market worldwide by 2024.
Source: https://www.ibef.org
SWOT ANALYSIS:
Strengths: Ready contacts for business development: Our Company has strong
relationships with the well-established business houses in India cultivated through
several years of client servicing.
Promoted and Managed by qualified and experienced professionals: Our Company is
promoted by Mr. Hiten R Mehta, who has more than 20 years of experience in Securities
& Financial Market. The board of our Company comprises of qualified professionals,
experienced in the industry.
Weakness: Branding: Despite our ready contracts for business development and listing on
esteemed Exchange (BSE), our company is not a well-established brand among other players
who have access to larger financial resources.
Accessibility: We do not have branches on a Pan India basis, so we are not able to
explore the business opportunities in those regions.
Opportunities:
Large Market: The players in the our sector still have a lot of scope to cover larger
market and the rural markets are still untapped. Desire for status: With increased desire
of individuals to improve their standard of living , the Financial industry is getting
exposed to new category of Client (Individuals) in a big way with large share of business
coming from this segment apart from corporate clients.
Threats:
Economic Downturn: If the Economic downturn is prolonged it can reduce the financing
need of people duet shrinking business opportunities.
HUMAN RESOURCES
Our promoters, with their knowledge and experience are well-assisted by our Key
Managerial Persons who have helped us retain entrenched relations with existing customers
and also helped us engage new customers. We believe that our experience, knowledge and
human resources will enable us to drive the business in a successful and profitable
manner. Our Company is committed towards creating an organization that nurtures talent. We
have employed a prudent mix of the experienced staff and youth which gives us the dual
advantage. Our company also conducts regular training programs which is aimed towards
strengthening skills, enhancing productivity and building sense of ownership among its
employees.
INTERNAL CONTROL SYSTEMS AND ADEQUACY:
Internal Control System has been designed to provide reasonable assurance that assets
are safeguard, transactions are executed in accordance with managements authorization and
properly recorded and accounting records are adequate for preparation of financial
statements and other Financial Information. Internal Check is conducted on a periodical
basis to ascertain the adequacy and effectiveness of internal control system.
CAUTIONARY:
Statement in the Management Discussion and Analysis, describing the Companys
objectives, projections and estimates are forward looking statement and progressive within
the meaning of applicable laws and regulations. Actual result may vary from those
expressed or implied. Important developments that could affect the Companys Operations
are significant changes in political and economic environment in India, tax laws, RBI
Regulations, exchange rate fluctuations and other incidental factors.
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