sarvottam finvest ltd share price Management discussions

The Management Discussion and Analysis Report has to be read in conjunction with the Companys financial statements, covering overall performance and outlook of its activities which read as follows:


The calendar year 2023 began on a promising note with improved supply conditions, resilient economic activity, and some degree of stability in financial markets. In just a few weeks of March 2023 the sentiment changed as fresh headwinds emerged from the banking sector turmoil in some advanced economies. Bank failures in the USA and Switzerland with their contagion risks came to the forefront. However, the banking and non-banking financial services sector in India remained healthy and evolved in an orderly manner.

In FY2023, the Indian economy faced multiple challenges. The country’s retail inflation indicator, consumer price inflation {CPI} inched above the RBIs tolerance range in January 2022. It remained above the target range for almost twelve months before retracting within the upper tolerance of 6% in November 2022. Rising international crude prices coupled with domestic weather conditions like excessive heat and unseasonal rains kept food prices high, fuelling retail inflation. The Government cut excise and customs duties and restricted exports to cool off inflation. The RBI, like other central banks, raised the monetary policy rates and reduced excess systemic liquidity. Major areas of concern for the economy were elevated commodity prices leading to a depreciation of the Indian rupee, higher retail inflation (both core and food inflation) leading to the RBI raising interest rates and rationalizing systemic liquidity, and a rising current account deficit (CAD). However, despite these critical challenges, India emerged as the fastest growing major economy in the world. The second advance estimate of national income released by the central statistics office (CSO) on 28 February 2023 expects real GDP growth in FY2023 to be 7.0%.

The current account deficit (CAD) widened in FY2023 on account of (i) rising commodity prices, (ii) appreciation of the US dollar and {iii} a slowdown in economic growth and world trade owing to aggressive and synchronized monetary policy tightening across the world. For the first three quarters of FY2023, the CAD stood at 2.7% of GDP. Consumer price inflation (CPI) remained at elevated levels during the year. Though it dropped from 7.79% in April 2022 to 5.72% in December 2022, it again rose to 6.52% in January 2023 before dropping to 5.66% in March 2023. In May 2022, the RBI increased the policy repo rate by 40 basis points (bps); and thereafter continued to increase policy repo rates by 50 bps in June 2022, August 2022 and September 2022. This was followed by smaller increases of 35 bps in December 2022 and 25 bps in February 2023. The cumulative increase in FY2023 was 250 bps. This was preceded by the introduction of the Standing Deposit Facility (SDF) at a rate 40 bps higher than the fixed rate reverse repo. Thus, the effective rate hike during the year has been 290 bps.

At its Monetary Policy Committee (MPC) meeting held in April 2023, the RBI unanimously decided to keep the policy rates unchanged with an emphatic statement that the pause was only for this meeting and the MPC would not hesitate to take further action as may be required in future. The MPC also decided to remain focused on withdrawal of accommodation which was favored by five out of six members.

The Government of India announced a growth oriented and expansionary budget for the FY2024. It has tried to strike balance between fiscal consolidation and growth by continuing its focus on capital expenditure and creating fiscal space for that by curtailing revenue expenditure. It has set a target of reducing the central governments fiscal deficit to 5.9% of the GDP in FY2024 from 6.4% (revised estimate or RE) in FY2023, while using the infrastructure capex tool to support the economy. The Government has budgeted for H 10 trillion towards capital expenditure for FY2024, an increase of 33% year-on-year. On balance, we believe that the Indian economy has weathered the external shocks reasonably well. The proof of it is that the country has emerged as the fastest growing major economy in the world. The general expectation is that India’s GDP for FY2024 would record a growth in excess of 6%. Of course, much depends on a normal rainfall in the coming year. The risk of monsoon falling below normal levels {after four consecutive years of normal rainfall) remains a wildcard and could hit agricultural production and impact food prices.


NBFCs have become important constituents of the financial sector and have been recording higher credit growth thanscheduled commercial banks (SCBs) over the past few years. NBFCs are leveraging their superior understanding of regional dynamics and customized products and services to expedite financial inclusion in India. Lower transaction costs, quick decision making, customer orientation and prompt service standards have typically differentiated NBFCs frombanks. Considering the reach and expanse of NBFCs, they are well-suited to bridge the financing gap in a large countrylike India. Systemically Important NBFCs have demonstrated agility, innovation, and frugality to provide formal financialservicestomillionsofindians. In recent years as the impact of the second COVID-19 wave waned and the third wave turned out to be shortlived, the NBFC sector regained momentum, cushioned by proactive policy measures announced by the RBI and the Government. The economic survey has observed that credit extended by NBFCs is picking up momentum, with the aggregate outstanding amount at H 31.5 trillion as on September 2022. NBFCs continued to deploy the largest quantum of credit to the industrial sector, followed by retail, services, and agriculture. Loans to the services sector {share in outstanding credit being 14.7%) and personal loans (share of 29.5%) registered a double-digit growth. Given the increasing importance of NBFCs, the RBI, in the last few years, has increased its regulatory oversight over the sector. Multiple guidelines such as {i} vigil over asset-liability management practices, (ii) maintaining liquidity ratios, (iii) increased reporting requirements, and (iv) scale-based regulation, have led to NBFCs adopting practices in line with banks. The regulatory vigil is based on four key cornerstones of: (i) responsible financial innovation, {ii} accountable conduct, {iii} responsible governance, and (iv) centrality of the customer. The recently adopted changes to the finance bill withdrawing exemptions on long term capital gains to investors in debt mutual funds is estimated to have minimal impact on the NBFC sector given limited exposure of mutual funds in long term papers of NBFCs.


Sarvottam Finvest Limited ("The Company") is a registered Non-Banking Financial Company {NBFC). The performance ofthe Company is discussed in the Directors’ Report. The Company is listed on Calcutta Stock Exchange Limited andBombay Stock Exchange. The financial statements of the Company are prepared in compliance with applicable provision of the Companies Act, 2013 and applicable Indian Accounting Standards. The Company has earned income from financing, providing loans and advances trading ofsecurities, interest and dividend. The Company will extend the business further through hide notification of promising investment opportunities, through leveraging its resources. Company is also looking forward to expand its operations in the other fields permitted by the regulator, in conformitywith its present status. The Company is engaged in the businesses permitted for Non-Banking Financial Company andoffered a wide range of fund based financial services to its customers. Nearly 100 percent of the operating profits were contributed by core businesses viz., lending, trading in securities and investments.


India’s financial services sector comprises of commercial banks/co-operative banks, non-banking financial companies, insurance companies, pension / mutual funds and other various entities. India is expected to be fourth largest privatewealth market globally by 2028. The NBFC sector plays important role in financial inclusion by meeting credit needs ofretail and MSME sector. The NBFC sector provides efficient credit distribution reach to untapped and under- penetratedregions and customer class. It brings the much-needed diversity to the financial sector by providing consumer credit, including automobile finance, home finance and consumer durable products finance, wholesale finance products such as bills discounting forms all and medium companies and fee based services such as investment banking and underwriting. NBFCs have carved niche business areas for them within the financial sector space and are also popular for providing customized products. Few NBFCs have upheld their position in this market. However, intense competition, dynamic environment, compliance framework and stricter regulations are forcing companies to change its framework. TheCompanyishelpingenterprisestorationalizeandmakingbusinessoperationallyefficientandremaincostcompetitive in market. The Company is in process of creating a separate nichein market. The Companys strategy for long term profitable growth is based on continuous scaling and updated to its core businesses, while investing in new customers, services, markets and industries. TheCompanysstrategyofstrengtheningthecurrentbusinessandinvestinginf uturerevolvesaround:

1. Customer centricity.

2. Proximity to client’ location.

3. Transparent communication.

4, Flexible control systems


Non-Banking Financial Companies (“NBFCs”) remain one of the most important pillars for ushering financial inclusion inlndia, reaching out to a hitherto under/unserved populace and in the process leading to “formalization” of the creditdemand. The NBFCs cater to the needs of both the retail as well as commercial sectors and, at times, have been able todevelop strong niches with their specialized credit delivery models that even larger players including banks, have foundhard to match. This has further provided a fillip to employment generation and wealth creation and in the process, bringing in the benefits of economic progress to the weaker sections of the society.


The Company aims to operate within an effective risk management framework to actively manage all the material risks faced by the organization and make it resilient to shocks in a rapidly changing environment. It aims to establish consistent approach in management of risks and strives to reach the efficient frontier of risk and return for the organization and its shareholders. Broad categories of risk faced by the Company are CreditRisk, MarketRisk, Operational Risk, Fraud Risk, Compliance Risk, Cyber Security and Reputation Risk. The risk management policies are well defined for various risk categories supplemented by periodic monitoring through the sub committees of the Board (i) The Company reviews its risk factors annually in order to keep it aligned with the changing global risks. (ii) The Company manages such risks by maintaining a conservative financial profile and following prudent business and risk management practices. (iy The company is operating on a well-defined planand strategy; hence we are equipped to face any change in regulatory risk. (iv) The risk appetite is enunciated by the Board from time to time.


We have a robust risk management framework covering all elements of risk management which is aligned to RBIrequirements and also other international best practices. The company regularly monitors the changes in legislation pertaining to employment, labour and immigration laws across the globe to ensure total compliance assisted by regularaudits. The key areas where the Company needs to introduce new policies or modify the existing policies to remaincompliant are identified and acted upon. The Company has complied with all the regulations and guidelines of RBI applicable to a Non-Banking Finance Company.


The Company has adequate internal control system commensurate with its size and nature of business. Conforming to the requirements of the regulatory authorities such as the RBI and the SEBI and consistent with the requirements of the Listing agreements with the Stock Exchanges, the company has institutionalized an elaborate system of control processes designed to provide a high degree of assurance regarding the effectiveness and efficiency of operations, the adequacy of safeguards for assets, reliability of financial controls and compliance with applicable laws and regulations. These systems are designed in a manner to provide reasonable assurance about the integrity and reliability of the financial statements. The Internal Auditors are mandated to carry out periodical audit and report on areas of non- compliances/weaknesses. Corrective actions in case of reported deficiencies, if any, are taken actively to further strengthen the internal control systems. These reports are reviewed by the Audit Committee of the Board of Directors for follow-up action and instructions are issued for taking necessary measures. The Companys present business operations are preponderantly that of a Loan Company, future of which largely depends upon financial and capital markets. The Company has exposure in financially sound entities. The management is optimistic about the future outlook of the Company. Further, more promising areas of activity are being explored on a sustained basis. The Company will expand its activities, consistent with its status as a Non-Banking Finance Company.


The Company firmly believes that intellectual capital and human resources is the backbone of the Companys success. The Company always treats human resources as its most valuable assets and continuously evolves policies and process to attract and retain its substantial pool of managerial resources through friendly work environment. The Company has always aimed to create a work place where every person can achieve his optimum potential. In view of this, the Company encourages its people to balance their professional and personal responsibilities leading to a more productive tenure of its employees. The Company lays great emphasis on building a motivated work force, which can participate constructively in the growth of the Company.


The statement in the Managements Discussion and Analysis Report detailing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. These statements being based on certain assumptions and expectation of future events, actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in Government regulations and tax regime, economic developments within India and abroad, financial markets etc. The Company assumes no responsibility in respect of forward-looking statements that may be revised or modified in future on the basis of subsequent developments, information or events. The management of the Company has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect true and fair picture, the state of affairs and profit/loss for the year. The following discussions on our financial condition and result of operations should be read together with our audited financial statements and the notes to these statements included in the Annual Report.