rajath finance ltd Management discussions

"ANNEXURE - IV" TO DIRECTORS REPORT OF RAJATH FINANCE LIMITED

INDUSTRY OVERVIEW:

The countrys financial services sector consists of Capital Markets, Insurance Sector and Non-Banking Financial Companies (NBFCs). Indias gross national savings (GDS) as a percentage of Gross Domestic Product (GDP) stood at 30.50 % in the year 2019 and continuously increasing thereafter. Further, raising income is driving the demand for financial services across the income brackets. Credit, Insurance and investment penetration is rising in the rural area. NBFCs contribute largely to the economy by lending to the infrastructure projects, which are very important to a developing country like India. The banking sector would always be the most important sector in the field of business because of its credibility in supporting manufacturing, infrastructural development and even being the backbone for the common mans money. But despite this, the role of NBFCs is critical and their presence in a country would only boost the economy in the right direction.

ECONOMY OVERVIEW:

Non-Banking Financial Companies (NBFCs) play an important 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 most suitable to their business requirements. NBFCs also 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 section of the society. In terms of year-over-year growth rate, the NBFC sector beat the banking sector and is contributing more to the economy every year.

SEGMENTS:

Rajath Finance Limited does not have multiple segments, and hence, comments are not required.

PERFORMANCE:

During the year under Report the Company has recorded total revenue from operations of Rs. 37,15,870/-. Major part of the revenue of the Company is generated through interest income. During the year under review the Company had incurred Net Profit of Rs. 1,73,737/- as compared to loss of Rs. 7,69,800/- during the previous financial year 2019-20. Management of the Company has made total effort to convert its loss into profit and had succeeded.

OPPORTUNITIES AND THREATS:

There are some of the opportunities for the future of NBFC in India which would help them to growth and emerge and contribute in the economy. One of the biggest opportunities for NBFC is its new to credit investment customers. Such customers are those people who belong from the rural area and have never borrowed credits or loans from any financial institution in the past. The NBFC industry also holds immense potential and the Government of Indias increased focus towards financial inclusion has created various opportunities for existing NBFC to leverage on their established customer base in rural areas. The huge market size undoubtedly presents a huge opportunity too. Over the years, Rajath Finance Limited has understood and hence anchors to the belief that every opportunity is as good as its execution. The most significant threat for any lending activity is to constantly exhibit operational excellence and contain the loss given defaults within the acceptable limits. The Company believes that this task is to be worked upon continuously through a very sharp learning and unlearning in order to achieve operational excellence.

For supporting the growth of NBFCs includes better product lines, wider and effective reach, quick turnaround time, short risk management capability and better understanding of customer segment. The young generation of India is rapidly adopting Technology to interact and to transact with the world. New technology such as cloud and analytics are gaining importance. This all would provide a huge opportunity to nimble and innovative players in the financial sector to use technology to strengthen their business. Technology can be used to reach the customers in a cost-effective manner and better risk control and pricing.

In the financial service industry security of data is of utmost importance. A regular and continuous threat for the firms is data theft malicious malware and email. Technology has not only increased the player, vendors and customers but has also added multiple threats to the business. Cyber threats are getting larger in scale and size.

INTERNAL CONTROL SYSTEM

The Company has designed and implemented proper and adequate systems of internal control to ensure that all assets are safeguarded and protected against loss from any unauthorized use or disposition and all transactions are authorised, recorded and reported correctly. The System ensures appropriate information flow to facilitate effective monitoring. The internal audit system also ensures formation and implementation of corporate policies for financial reporting, accounting, and information security.

RISK MANAGEMENT AND COMPLIANCE:

As company is not a part of the top thousand entity based on the Market Capitalization as list out by the Stock exchange, therefore constitution of the Risk Management Committee is not applicable to the company. The Company ensures compliance of all applicable laws and changes in the law and applicable regulations including Company laws, SEBI Act and regulations, BSE Listing regulations, employment and immigration, taxation, health safety and environment, data privacy, anti-bribery and anti-corruption regulations. 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 tried and tested credit models and robust operational systems in place, the Company successfully manages these risks.

CAUTIONARY STATEMENTS :

All statements made in Management and Discussion Analysis has been made in good faith. Many unforeseen and unexpected factors may come into play and affect the actual results, which could be different from what the Management envisages in terms of performance and outlook. Market data, industry information etc. contained in this Report have been based on information gathered from various published and unpublished reports and their accuracy, reliability, and completeness cannot be assured.

Factors such as economic conditions affecting demand/supply and priced conditions in domestic & international markets in which the Company operates, and changes in Government regulations, tax laws, other statues and other incidental factors, may affect the final results and performance of the Company.

Date : 03/09/2021 Place : Rajkot	By Order of the Board of Directors For, RAJATH FINANCE LIMITED,
	Sd/- (HITESH BAGDAI)
	MANAGING DIRECTOR
	Sd/- (BHAVDEEP VALA)
	DIRECTOR
	(DIN: 00575732)
	(DIN: 00153775)