PMC Fincorp Ltd Management Discussions.


The Management Discussion and Analysis Report is an integral part of the Companys Annual Report to the Shareholders, in which the management provides an overview of the previous years operations and how the Company performed financially. The purpose of the Management Discussion and Analysis Report is to provide a narrative explanation, through the eyes of the management, of how the Company has fared in the past, its financial condition, and its future prospects. Management Discussion and Analysis Report represents the thoughts and opinions of the management and provides a forecast of future operations. It also contains the discussions on forthcoming year by outlining future goals and approaches to new projects which may involve risks and uncertainties, including but not limited to the risk inherent to the Companys growth strategy, change in regulatory norms, economic conditions and other incidental and business factors. Actual results could differ materially from those expressed or implied.


The Company being a registered NBFC with the Reserve Bank of India has been engaged in the business offinancing activities, investment in Securities of Listed and Unlisted Companies and fee based advisory services in the field of Money market.

For FY 2018-19 on a standalone basis, the Companys profit after tax stood at 159.35 Lakhs as against 101.35 Lakhs in the PY.

Your Company, as in the last few years, continues to evaluate investment opportunities in asset based transactions with good growth prospects.


India remains the fastest growing economy in the world. However, the Central Statistical Office (CSO) estimates Indias growth rate at 7.0% in FY19, slower than 7.2% in FY18, due to growth moderation in government spending (9% vs. 15% in FY18; 11% share in GDP) and capital formation (9% YoY vs. 10% in FY18; 33% share in GDP). For FY20, the IMF has projected growth at 7.3% YoY on account of recovery of investment and robust consumption, aided by expansionary stance of monetary policy and some expected boost from fiscal policy.

According to the World Bank Report on Global Economic Prospects, Indias growth accelerated to an estimated 7.3% in FY 2018 - 2019 and GDP is forecast to grow 7.5% after 2019. However, strong domestic demand is envisioned to widen the current account deficit to 2.6% of GDP next year. Inflation is projected to rise somewhat above the midpoint of the Reserve Bank of Indias target range of 2 to 6%, mainly owing to energy and food prices.

Domestic vulnerabilities are being exacerbated by fiscal slippages and rising inflation, escalation in political uncertainty, and the possibility of delays in the needed structural reforms to address weaknesses in balance sheets of banks and non- financial corporates. Key external risks include a further deterioration in current accounts and a faster-than-expected tightening of global financing conditions.


During FY2018-19, Indian NBFCs faced liquidity crunch, as a result of scepticism regarding their repayment abilities and higher cost of funds. Despite these headwinds, we demonstrated a resilient performance, riding on our diversified business, conservative asset-liability management and robust underwriting standards. Our business model enabled us to maintain strong traction and demonstrated how growing at a measured pace with an emphasis on risk-adjusted profitability facilitates progress even in a challenging market scenario. Going forward, we are confident of continuing our momentum with a stable government and its strong policies, positive economic trends and our focus on expanded offerings and innovative initiatives.


As the demand for financial services is a derived demand, developments in the industrial sector exert a significant influence on the business of financial sector. Your company strives to continually understand the implication to its business of the various changes, as also effect of altered economic policies and international developments.


Growth of the Companys asset book, quality of assets and ability to raise funds depend significantly on the economy. Unfavorable events in the Indian economy can affect consumer sentiment and in turn impact consumerdecision to purchase financial products. Competition from a broad range of financial service providers, unstablepolitical environment and changes in Government policies / regulatory framework could impact the Companysoperations.


In this era of globalization, the financial service sector has been integrated with the global markets and is becomingmore complex and competitive with introduction of newer and complex products & transactions, stringent legislativeand regulatory environment. The ability to manage risks across geographies, products, asset classes, customersegments and functional departments is of paramount importance for the hindrance-free growth of the organisationwhich helps in delivering superior shareholder value by achieving an appropriate tradeoff between risks andreturns.

Risk is inevitable in business and there are various risks associated with your Company as well like portfolio risk,industry risk, credit risk, internal control risk, technology risk, regulatory risk, human resources risk and competitionrisk. The Companys focus of risk management is all about risk reduction and avoidance. It has comprehensiveintegrated risk management framework that comprise of clear understanding of the Companys strategies, policies,initiatives, norms, reporting and control at various levels. Timely and effective risk management is of primeimportance to our continued success. The risk for the Company arises mainly out of the risks associated with theoperations we carry. Experienced professionals review and monitor risks in our Company. We have comprehensiverisk management policies and processes to mitigate the risks that are encountered in conducting businessactivities. The management also periodically reviews the policies and procedures and formulates plans for controlof identified risks and improvements in the systems.

A risk/compliance update report is regularly placed before the Audit Committee/Board of Directors of the Company. The Directors/Audit Committee review the risk/ compliance update reports and the course of action taken or to betaken, to mitigate and manage the risks is taken.


The Company recognizes that employees are its direct assets and their engagement contributes to lower turnover and absenteeism, higher productivity and better customer service.

The Companys future success depends substantially on the continued service and performance of members ofits management team and employees. There is intense competition for experienced senior management andother qualified personnel, particularly office managers, field executives and employees with local knowledge inclient procurement, loan disbursement and installment collections. Inability to hire additional or retain existingmanagement personnel and employees, may impair the Companys ability to expand its business and adverselyaffect its revenue. Failure to train and motivate its employees properly may result in an increase in employeeattrition rates, require additional hiring, divert management resources, adversely affect its origination and collectionrates, increase the Companys exposure to high-risk credit and impose significant costs.

The Company has taken several actions to ensure that the talent pipeline for the Company is strong especiallywhen it comes to key management positions. The Company also has a strong focus on ensuring that its employeesare adequately trained in their job functions and on all compliance related trainings.


Effective internal control reduces the risk of asset loss, helps to ensure that information is complete and accurate, financial statements are reliable and reported accurately in a timely manner, and operations are conducted in accordance with the provisions of applicable laws and regulations.

The concurrent audit report is reviewed by the Internal Auditors, M/s. KPSP & Associates, a reputed firm of practicing Chartered Accountants (FRN:019471N). Internal Auditors review systems and operations of the Company and ensure that the Company is functioning in accordance with all the applicable statutes. Any internal control weaknesses, non-compliance with statutes and suggestions for improvements in existing practices are reported by the Internal Auditors.

The Internal Audit Report is reviewed by Statutory Auditors while performing audit functions to confirm that there are no transactions conflicting with the interests of the Company and regulatory stipulations. The Audit Committee reviews the Internal Audit Report and the quarterly Compliance Report placed before the Committee and ensures that observations pointed out in these reports are addressed in a timely and structured manner by the Management.


NBFCs have emerged as substantial contributors to the countrys economic growth by having access to certaindeposit segments and catering to the specialized credit requirements of certain classes of borrowers. Goingforward, the governments initiatives like Make in India, Start up India and Digital India are expected to bolsterdevelopment in India.

For a large and diverse country like India, ensuring financial access to fuel development and entrepreneurship iscritical. With the launch of government-backed schemes (such as the Pradhan Mantri Jan-Dhan Yojana [PMJDY]), there has been a substantial increase in the number of bank accounts. As traditional banks are already understress; NBFCs would be of vital importance and can fill the necessary credit demand gap.

Therefore, the NBFCs need to be well integrated into the financial system to cater to the growing requirements of the economy. Additionally,the Indian consumer is aggressively adopting digital technology in his/her daily life. Thus, NBFCs need to rethinkon their strategies to enhance their product portfolio, processes and customer experience. Besides, they alsoneed to leverage on digital data for better credit decisions (based on analytics) and social media to serve customersbetter


The Statements in this Management Discussion and Analysis Report describing the Companys objectives, projections, estimates and expectations may be forward looking statements within the meaning of applicable laws and regulations. Actual results might differ materially from those expressed or implied. The Company is notunder any obligation to publicly amend, modify or revise any forward looking statements on the basis of anysubsequent developments, information or events.