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 COVID-19 pandemic is a once in a lifetime occurrence that has brought with it unimaginable suffering to people and to almost all sections of the economy. When the pandemic struck and led to nationwide lockdowns to curtail the transmission of disease, it was natural to fear that the global economy would stay in extreme stress of the kind not seen since the Great Depression and would have a long-lasting economic impact. To counter the crippling impact of the lockdowns on economies, the worlds policymakers have resorted to fiscal and monetary measures never seen before in global economic history. It still remains to be seen if these relief measures sufficed, and whether actions taken by Governments across the globe adequately compensated for the disruptions created in the lives of people. Fortunately, science prevailed. Multiple vaccines were found with impressive efficacy levels in less than a year — which will probably rank as among one of the most incredible achievements in science. The announcement of successful development of vaccines seemed to lift spirits around the world. Unfortunately, the advent of winter saw several countries battle second waves of COVID-19 infections, including more virulent strains leading to partial lockdowns. The race between vaccines and variants is heating up as massive vaccination drives are underway. Much depends on blocking transmission and not just the disease. The only three preventives are masks, social distancing and vaccinations. However, to vaccinate even half of the worlds population of 7.8 billion is going to take years. The production, storage and distribution challenges require that Governments prioritise the vaccinations in a judicious manner so as to limit the human toll. Fortunately for India, which is home to some of the largest vaccine makers in the world, the supply constraints should be limited and temporary. Moreover, our experience in implementing large scale vaccination programmes should help in vaccinating our vulnerable population. Even so, with many states in India witnessing a seriously full-blown second surge of COVID-19, the vaccination challenge is enormous. After an estimated historic correction of (3.3%) in 2020, the International Monetary Fund (IMF) has projected the global economy to grow 6% in calendar year 2021 and 4.4% in 2022 on the back of the fiscal and monetary support provided by Governments of the world over coupled with widespread vaccination. We know that India can ill afford another country-wide lockdown such as was imposed from March to June 2020. The impact on the economy and employment was severe in the first instance; and cannot be repeated yet again. The lockdown that continued throughout the first quarter of the FY2021 saw Indias GDP for April-June 2020 contracting by a massive 24.4%. Even the second quarter was terrible, with GDP shrinking by 7.3% in July-September 2020. Thereafter, we have seen a rebound — thanks to the resilience of our citizens, our entrepreneurs and of our economy. The third quarter (October-December 2020) saw a small positive growth of 0.4% compared to the same period in the previous year. The second advance estimates of national income for FY2021 released by the Central Statistics Office (CSO) on 26 February 2021 anticipates the total contraction for FY2021 to be 8% — implying a significant ‘V shaped bounce-back in the second half of the year. The most recent IMF forecast has also raised Indias GDP growth estimate for FY2022 from 11.5% to 12.5%. If that were to occur, it will be the most significant growth turnaround among all the major nations of the world, including China. The only grey cloud at present is the huge surge in infections that started with the second wave beginning in early March 2021. Hopefully, a serious increase in the pace of vaccinations across the country will bring this surge down; and if we keep all enterprises and workers open for business, it should not affect the economy in any significant manner.


The degrowth in GDP was much larger than expected. For April-June 2020, real GDP contracted by a massive 24.4%. India had never recorded a quarter of negative growth since it began issuing such data publicly in 1996. No other large economy shrank so much during the pandemic. In the second quarter, July-September 2020, GDP again contracted by 7.3%. The consensus was that growth in the second half of the fiscal year would be far less than what was needed to erase the effect of the deep recession in the first half. Thankfully, we began to witness early signs on resumption of economic activity in the second half of the year with several high frequency indicators suggesting that the economy was back on to positive growth. The third quarter (October-December 2020) recorded a GDP growth of 0.4%. And, as mentioned earlier, the second advance estimates of national income for FY2021 released by the CSO indicates a negative GDP growth of 8% for FY2021.


NBFCs have become important constituents of the financial sector and have been recording higher credit growth than scheduled commercial banks (SCBs) over the past few years. NBFCs are continuously leveraging their superior understanding of regional dynamics, well-developed collection system and personalised services to expedite financial inclusion in India. Lower transaction costs, quick decision making, customer orientation and prompt provision of services have typically differentiated NBFCs from banks. Considering the reach and expanse of NBFCs, these are well-suited for bridging the financing gap. Systemically important NBFCs have demonstrated agility, innovation and frugality to provide formal financial services to millions of Indians.


Financial sector is the backbone of any economy. NBFC sector in India have already started witnessing a slowdown with businesses almost coming to a standstill. The impact of the virus on the NBFCs sector has only begun, NBFC Sector might face threats such as Liquidity Crunch, it includes Lockdown, delay order, Increase in Insolvency threshold, Three month Moratorium, credit rating affect, cost cutting, difficulty in generate business, fierce Competition etc The NBFC Sector has adopted new opportunities during this COVID-19 Pandemic. The NBFCs have also been fast in adopting newer technology led processes e.g. API based validation of KYC documents, eSignature, eKYC, GPS based address filling, video based customer engagement, IOT (Internet of Things) based data collection, expand into allied products from own bouquet, Expand into value chain of banks, insurance companies, credit card companies, Focus on different models of fee


PFIL gross income from operations for the financial year ended March 31, 2021 is Rs.53,30,618/- as against Rs. 55,06,873/- in the previous year. The working of Pariksha Fin-Invest-Lease Ltd. (PFIL) for the year under review resulted in loss of Rs. 6,52,94,903/- as against loss of Rs. 5,66,846/- (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. 53,134,035 as on March 31, 2021, at cost. PFILs strategy for its portfolio is to focus on asset quality and asset mix to achieve good returns.


NBFC is facing its own set of financial challenges with the future outlook looking bleak at the moment.COVID-19 pandemic is likely to disrupt non-banking finance companies (or NBFCs) more than banks. Non-banks are better prepared to manage as they have ramped-up defences in the form of stronger capitalisation buffers and better on-balance sheet liquidity buffers. Indias non-bank financial institutions (NBFC) face renewed asset quality and liquidity risks as a second wave of coronavirus infections sweeps the country and could delay recovery in the sector.

The Management of PFIL is concentrating and focusing 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.


NBFCs should focus more on "liquidity" than on "growth" in these times as lack of liquidity could pose challenges around "going concern" for them. "Liquidity should be most important now for companies We can talk about growth when we survive this crisis. We should prepare response plan for each shape of recovery (whether V or U or W). This will not only help companies mitigate risk in future, but also identify new revenue streams, NBFCs should upfront share with banks their long term business model and try to avail the money in the two government announced schemes of liquidity window and partial credit guarantee,


The Company is maintaining an efficient and effective system of Internal Financial Control for the facilitation of speedy and accurate compilation of financial statements. The Companys internal control system is designed to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance with laws and regulations as well as procedures. Further, the auditors of the Company have verified the systems and processes and confirmed that the internal financial controls system over financial reporting is operating effectively.


The Company recognizes people as its most valuable asset and it has built an open, transparent and meritocratic culture to nurture this asset. The Company is of firm belief that the Human Resources are the driving force that propels a Company towards progress and success. The Company has a team of able and experienced professionals to look after the affairs of the Company. The Company takes pride in the commitment, competence and dedication of its employees in all areas of the business. The Company is in equipping organizations to meet the challenges of an expanding and increasingly competitive sector. The functions are responsive to current staffing needs, but can be proactive in reshaping organizational objectives. 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. 2020-21 have not shown improvement due to decrease in the revenue of the company 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. 2020-21 F.Y. 2019-20 Change (%) Reasons for change
Current Ratio 51.67 33.27 18.4% Reduction in current liabilities
Debt Equity Ratio 0.02 0.02 0.0% No change during the Year
Net Profit Margin (12.25) (10.29) (1.96)% Decrease in profit


Return on Net Worth (RONW) is a measure of profitability of a company expressed in percentage. Return on Net Worth for the financial year 2020-21 is 14.21% while Return on Net Worth for the Financial year 2019-20 is 14.38% . The downward in Return on Net Worth is mainly due to the decrease 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.