Pariksha Fin-Invest-Lease Ltd Management Discussions.


Pariksha Fin-Invest-Lease Limited (PFIL) is a Non-Banking Finance Company ("NBFC"), holding a Certificate of Registration from the Reserve Bank of India ("RBI"). The PFIL is non deposit accepting NBFC engaged in financial services. The PFIL is an entity of Uttam Group. The Company has its registered office in Delhi and Corporate office at Ghaziabad.


The World Bank has forecast that India will continue to remain the fastest growing major economy in the world in 2018-19. In a report the World Bank said Indias Gross domestic Product (GDP) will grow at 7.3 per cent during the ongoing financial year. This will further climb up to 7.5 per cent in the next two financial years. The World Bank reasons that this is a result of increased consumption and investment. Besides, it says that the economy is regaining after a temporary slowdown due to demonetisation and the implementation of GST.

These predictions have been made in a report prepared by the World Bank titled: ‘Global Economic Prospects: Darkening Skies. The report says that most world economies stare at dark times in this financial year. However, it has projected a brighter picture for India and the South Asian region as a whole.

Meanwhile, growth among advanced economies is forecast to drop to 2 per cent this year. Slowing external demand, rising borrowing costs, and persistent policy uncertainties are expected to weigh on the outlook for emerging market and developing economies. Growth for this group is anticipated to hold steady at a weaker-than-expected 4.2 percent this year.


According to the World Bank, Indian economy has benefitted from robust performances in manufacturing sector driven by increased consumer spending. India has made rapid progress in economy doubling its GDP in less than past 10 years and emerged as the engine of economic growth in Asia. Indias GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups.

Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors, according to a study by ASSOCHAM and Thought Arbitrage Research Institute.

Indias foreign exchange reserves were US$ 405.64 billion in the week up to March 15, 2019, according to data from the RBI.


NBFCs (Non Banking Financial Companies) play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of bank excluded customers. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. NBFCs do play a critical role in participating in the development of an economy by providing a fillip to transportation, employment generation, wealth creation, bank credit in rural segments and to support financially weaker sections of the society. Emergency services like financial assistance and guidance is also provided to the customers in the matters pertaining to insurance. For the economy, credit delivery through NBFCs is superior for two levels of capital cushion, lower cost of last mile delivery and specialised underwriting and collection skills. NBFCs now account for more than one-third of incremental credit. This is not a small sector and plays a vital role in economys growth and this sector is here to stay. But the latest regulatory crisis has been a wake-up call. People who have been trying to work on the edge in terms of liquidity or in terms of managing their cost of funds have got a wakeup call and hopefully some balance will be achieved. The liquidity situation has improved significantly since the last fortnight of September, immediately following the IL&FS default. Availability of funds has improved, and the rate of interest has dropped. The scare of default by some NBFCs or HFCs (housing finance NSE 0.67 % companies) has now passed. It seems, the industry has been able to tide over the short-term liquidity crunch.

Regardless of recent panic and meltdown in the market values of NBFCs, they are here to stay and will play an important role in the economic growth and financial inclusion. In fact, as the economy becomes larger and grows faster, the need for credit will rise disproportionately. We need both banks and NBFCs to rise to the occasion and provide the economy with its lifeblood, i.e. credit.


The NBFC sector in India is large with significant growth potential and has consistently created value for its shareholders. The NBFC sector has a double digit credit market share and has consistently gained market share from banks over the last 10 years. The RBI constantly issues new regulations and / or modifies existing regulations endeavouring to balance the multiple objectives of financial stability, consumer and depositor protection and regulatory arbitrage concerns. The RBI, however, implements major changes in a structured manner providing companies operating in the sector adequate time to adapt and adjust.

Newer regulatory updates pose a constant challenge for smooth operations of the Company. The Company needs to be equipped to quickly adapt to the constant changes in regulations and competitive landscape. With new entities entering the market place, the Company needs to maintain its competitive edge through constant adaptation and creating strategies to protect its niche. The implementation of the IND AS will pose its own set of challenges for the Company and NBFC sector as a whole.


PFIL gross income from operations for the financial year ended March 31, 2019 is Rs.93,91,968/- as against Rs.67,94,688/- in the previous year. The working of Pariksha Fin-Invest-Lease Ltd. (PFIL) for the year under review resulted in profit of Rs.13,41,835/- as against profit of Rs.43,546/- (before tax) in the previous year.


During the year under review, PFIL has not raised any funds from the market by way of allotment of shares/bonds/ warrants/debentures, or by raising public deposits etc.


PFILs investment portfolio stood at Rs. 1,25,48,013/- as on March 31, 2019, at cost. Further Rs. 1,66,76,630/- is also stood as Loans to others. PFILs strategy for its portfolio is to focus on asset quality and asset mix to achieve good returns.


India continues to be one of the fastest growing economies in the world and this is expected to continue in financial year 2019-20, as per the latest economic survey, finance sector being the key growth sectors of the economy. The Outlook of the Company for the year ahead is to drive profitable growth. Non Banking Financial Companies are competing with the banks in providing financial services and has been playing a complementary role with other financial institutions in the Indian Economy.

The Management of PFIL is concentrating on the core area of investment and finance. Capital market is improving and PFIL will explore the opportunities available in the Capital Market and other financial areas. The persistent challenges in the operating environment resulted in higher delinquency levels for the NBFCs.


As in the case of any lending entity, the entire proposition of the Company – providing finance to various segments of the economy is on the fundamentals of managing the risk rather than avoiding it. With proper operational systems in place, the Company successfully manages these risks which also help in achieving the desired outcome, while fixing responsibility and accountability. The Board is responsible for monitoring and reviewing of the risk and taking steps to mitigate the same.


The Company has an internal control system to commensurate with the size, scale and complexity of its operations and nature to ensure smooth business operation to provide reasonable assurance that all assets are safeguarded and protected from any kind of loss or misuse, transactions are authorized, recorded and reported properly and that all applicable statutes and corporate policies are duly complied with.


The Company takes pride in the commitment, competence and dedication of its employees in all areas of the business. The Company is committed to nurturing, enhancing and retaining its top talent through superior learning and organizational development. This is a critical pillar to support the organizations growth and its sustainability in the long run. The Company also has zero tolerance for harassment of women at workplace. The overall industrial relations atmosphere continued to be cordial.


Ratios are used to make a holistic assessment of financial performance of the entity, and also help evaluating the entitys performance vis--vis its peers within the industry. The NBFC sector is growing rapidly with borrowings comprising the largest source of funding. The financial performance of NBFC-D and NBFC-ND-SI sector has shown a consistent year-to-year growth in the financial ratios over the last few years.

The key financial ratios of the company for F.Y. 2018-19 have shown improvements due to increase in the revenue of the company while the liability has decreased during the year in concern. The Company has no Non-Performing Assets (NPA), hence ratios related to NPAs are not applicable. The significant changes in the other applicable key financial ratios are as follows:

Name of Ratios F.Y. 2018-19 F.Y. 2017-18 Change (%) Reasons for change
Current Ratio 38.76 5.37 620% Reduction in current liabilities and increase in current assets
Debt Equity Ratio 0.02 1.01 98.20% Repayment of borrowings
Net Profit Margin 14.29 0.64 2100% Increase in profit
Capital Adequacy Ratio 2.25 0.59 280% Repayment of borrowings and interest there on.


Return on Net Worth (RONW) is a measure of profitability of a company expressed in percentage. Return on Net Worth for the financial year 2018-19 is 18.04% while the Return on Net Worth for the financial year 2017-18 is 11.51%. The improvement in Return on Net Worth is mainly due to the increase in revenue of the company while the shareholders equity has remained the same. The company is making continuous effort to make optimum utilization of the shareholders fund and perform better in the time to come.


Statements made in this Management Discussion and Analysis (MDA) Report may contain certain forward-looking statements based on our projections and assumptions on the Companys present and future business strategies.