Quest Capital Markets Ltd Management Discussions

Overview

NBFCs have emerged as the crucial source of finance for a large segment of the population, including SMEs and economically unserved and underserved people. They have managed to cater to the diverse needs of the borrowers in the fastest and most efficient manner, considering their vast geographical scope, understanding of the various financial requirements of the people and extremely fast turnaround times. Nonbank money lenders have played an important role in the financial inclusion process by supporting the growth of millions of MSMEs and independently employing people. The sector has grown significantly, with a number of players with heterogeneous business models starting operations. The last few years have seen a transformation in the Indian financial services landscape. The increasing penetration of neo-banking, digital authentication, rise of UPI and mobile phone usage as well as mobile internet has resulted in the modularisation of financial services, particularly credit.

Opportunities and Threats

NBFCs are uniquely placed in the Indian financing setup unlike the banks which focus on funding largescale infrastructure projects. Given this flexibility on the ticket size as well as risk profiles, there is no shortage of avenues. For instance, financing climate and transition funding across MSMEs and startups, or segments such as EVs or niche products for clean tech equipment manufacturing. This offers NBFCs a compelling advantage to invest in green product development to cater to nuanced loan structures and financing for the sustainable shift. Indias growing middle class, consumption demand, and increased penetration of formal credit channels drive opportunities. NBFCs are better suited to cater to niche areas like vehicle financing, gold loans, housing finance for low-income groups, consumer durables, and education loans which offers tremendous opportunities of growth given the rising income level of middle class.

The RBIs implementation of LCR has compelled NBFCs to maintain high-quality liquid assets. This ensures short-term liquidity resilience but demands a reassessment of liquidity management strategies. The regulatory directive will increase in risk weights for consumer lending to 125 per cent from 100 per cent. This, in turn, will impact the NBFCs with higher share of such loans in their portfolio.

Cyber security is one of the significant threats firms are currently facing and it consistently ranks among the top risks globally. According to some estimates, the Indian financial services sector witnessed approximately 1.3 millionl cyberattacks last year, which proves that cyber threats outpace technology advancements.

The generation, collection, processing and storage of vast amounts of data raises several concerns on the privacy front. Accordingly, regulators globally have recognised the need to maintain accountability when collecting and processing personal data of customers. This will require NBFCs to build controls around personal data processing activities to avoid penalties and disruptions. It is imperative to integrate privacy/preserving controls/practices in the operating strategy for NBFCs.

Outlook

NBFCs have adapted their product offering to meet the specific characteristics of a customer group and are focused on meeting appropriate needs by carefully analysing this target segment and customising pricing models. NBFCs are now reaching out to Tier 2, Tier 3 and Tier 4 markets, distributing the loan across several customer touchpoints. In addition, they are building a connected channel experience that provides an omnichannel, seamless experience of sales and service 24 hours a day, seven days a week,. The advent of GenAI and LLMs will revolutionise NBFC operations with adoption for sourcing, servicing, collections etc RBIs push for digital credit enablement through its frictionless platform and the advent and adoption of ONDC and Open Credit Enablement Network (OCEN) are also expected to improve credit penetration.

NBFCs in India face a challenging yet transformative landscape. By exploring alternative funding sources and aligning strategies with regulatory measures, these financial entities can secure their future growth and resilience.

Business Segment Analysis

During the period under review, the Companys activities was majorly restricted to Capital Market, NBFC and related fields which specifically involve in trading and dealing in Securities and Mutual Funds.

Financial Results

The financial performance of the Company, for the year ended 31st March 2025 is summarized below:

Particulars	Year Ended 31st March 2025 ( in Lakhs)
Profit Before Tax	2537.12
Net Profit After Tax	1962.57

Management Discussion & Analysis Report

Comment on current years performance

Revenue	Total Revenues of the Company has decreased in comparison to previous year due to decrease in interest income.
Operating Expenses	Operating & Administrative expense have increased considerably in comparison to previous year.
Operating Profit	Operating profit decreased during the year due to increase in administrative and other expenses and employee benefit expenses
Finance cost	Finance cost has marginally increased during the year
Net Profit	Net profits of the Company during the year have slightly declined in comparison to previous year due to lower interest income and increase in operating expenses.

Calculation and Explanation of Major Ratios

Particulars	Standalone
	31- March- 2025	31- March- 2024
Current Ratio	151.13	206.26
(Total Current Assets/Current Liabilities) Reason for variance: Due to fixed deposit invested and short term debt mutual funds in Non- Current Investment
Operating Profit Margin (%) Operating profit/ Revenue from operations	98.30%	98.55%
Net Profit Margin (%) Reason for variance= Increase in dividend income	76.04%	76.17%
Capital to Risk weighted assets ration Reasons for variance : due to decrease in risks weighted assets	122.40%	137.15%

Note: Debt Equity Ratio and Interest Coverage ratio is not relevant as Company has zero debt as on 31^st March, 2025.

Human Resources

We have believed that our people are our most important asset and our HR function always places a great emphasis on employee engagement, capability building, nurture talent, and focus on training and individual development. We have always been committed to create environment where all individuals are treated with respect and dignity and cultivating an atmosphere where individuals enjoy the right to work in professional environment to deliver their best results.

Internal Controls

The Company has a proper and adequate system of internal controls befitting its size to ensure that all its assets are safeguarded and protected against loss from unauthorized use and disposal and that all transactions are authorized and reported correctly.

The internal controls are supplemented by internal audits, reviewed by Audit Committee of Board of Directors. The internal control ensures that appropriate financial records are available for preparing financial statements and other data for showing a true and fair picture of the state of affairs of the Company.

	For and on behalf of the Board
	Quest Capital Markets Limited
	Mr. Atul Lakhotia	Mr. Harish Toshniwal
Dated: 15th May, 2025	Director	Director
Place: Kolkata	DIN: 00442901	DIN: 00060722