Srestha Finvest Management Discussions

Industry Structure and Developments

Srestha Finvest Limited is a non-banking finance company registered with the Reserve Bank of India (RBI) and is classified as an NBFC - Investment and Credit Company (NBFC - ICC). Your company currently operating in the finance, Loans, investment, Consultancy, dealing in securities activity and it anticipates that there appears to be huge potential for growth. Also, the company is now poised to grow, building a reputation of quality, craftsmanship and expertise.

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 leveraging their superior understanding of regional dynamics and customised products and services to expedite financial inclusion in India.

The RBI introduced scale-based regulation for NBFCs which came into effect from October 01, 2022. Under the new framework, NBFCs - based on their size, activity, and perceived risks-were classified under four layers: Base Layer (BL), Middle Layer (ML), Upper Layer (UL), and a possible Top Layer (TL). NBFCs in the BL will be non-deposit-taking NBFCs, with assets worth up to ^ 1,000 crores. These will be broadly subjected to extant regulations for non-deposit-taking NBFCs, except for changes in governance and prudential guidelines.

NBFCs not availing public funds and not having customer interface bear a different risk profile and hence deserve a differential regulatory treatment. It has been decided that Reserve Bank will come out with separate regulations for such NBFCs in due course. Till such time, the extant regulations will continue to apply.

Opportunities, Threats, Risks and Concerns

In a dynamic industry such as financial sector the company has added opportunities and risks and is inherent aspect of business. The opportunities which the company is looking to harness are as mentioned below:

• Opening up of financial sector reforms in India

• Fast growing requirement for Industrial clusters leading to credit demand.

• Monetary measures of the government tightening the credit line from banks would open doors for non-banking finance companies to explore those avenues.

The companys business, results of operations and financial condition are affected by number of risks, so the risk management function is of paramount importance and integral to the functioning of the company.

The risk management framework is based on assessing risks through analysis and understanding of the underlying risks before undertaking any transactions and changing or implementing processes and systems. This risk management mechanism is supported by regular review, control, self- assessment, and monitoring of key risk indicators.

Segment wise / product wise performance

The company is currently engaged in two segments, financing and investment activities and is in line with the accounting standard on segment reporting.


India is among one of the most observed emerging markets. Implementation of policies and reforms by the Government would help sector grow at faster phase. As per market research reports, disbursement growth in the personal loan space is expected to reach 18 - 20% in FY 2024 due to a healthy credit demand. NBFCs market share in terms of value in the personal loan space is currently at 21% and is expected to increase to 22% in FY 2024. The reports also state that the business loan segment will see a growth of 15 - 18% in FY 2024 and NBFCs are expected to grow faster in this space at 18 - 20%.

Financial Performance

The Company foresees a better business prospects in the year 2022-2023.

Internal Control System and Adequacy

The Company has adequate system of internal control in place. The Company believes that strong internal control system and processes play a critical role in the health of the Company. The Company has implemented required controls through systems and processes ensuring a robust control framework. This is to ensure that assets are safeguarded, all transactions are authorized, recorded and correctly reported and to ensure operational excellence. The Board and the Audit Committee reviews the performance of the audit and compliance functions and reviews the effectiveness of controls and compliance with regulatory guidelines. In the opinion of Board, internal control systems are well placed and working in an efficient manner.

Disclosure of Accounting Treatment

The financial statements of the Company have been prepared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) to extent and in accordance with the Indian Accounting Standards (IND AS) as per the Companies (Indian Accounting Standards) Rules 2015 as amended to comply with the Accounting Standards notified under Section 133 of the Companies Act, 2013 read with relevant Rules issued thereunder. The financial statements have been prepared on accrual basis under the historic cost convention. The accounting policies adopted in the preparation of the financial statements are consistent with those followed in the previous year.

Cautionary Statement

This Report is based on the current situation, past experience and information available to the Company about its various businesses and assumptions regarding economic and industrial scenario, Governmental and other regulatory policies. The Performance of the Company is, to a great extent, dependent on these factors. The future performance may be materially influenced by the changes in any of these factors, which are beyond the control of the Company and may affect the views expressed in or perceived from this Report. Therefore the investors are requested to make their own independent judgments by taking into account all relevant factors before any investment decision.

Key Ratios

The Key Ratios as applicable to the Company are disclosed in the Notes to the Financial Statements