INDIAN ECONOMY OVERVIEW:
Financial Year 2022-23 (FY2023) began on a mixed note. On the positive side, after two
years, the impact of the Covid-19 pandemic on lives and livelihoods started receding
thanks to a successful mass immunization programme and the advent of a less virulent
variant called Omicron. However, the impact of inflationary trends, supply chain
disruptions emanating from China, and the Russia-Ukraine conflict have been impacting
commodity prices. In FY2023, the Indian economy faced multiple challenges.
The countrys retail inflation indicator, consumer price inflation (CPI) went above the RBIs tolerance range
of 6% in January 2022. It remained above this range for almost ten months, right up to
October 2022. Rising international crude prices coupled with inimical domestic weather
conditions kept food prices high, fuelling retail inflation. The government cut excise and
customs duties and restricted exports to cool off inflation. Like other central banks, the
RBI raised the monetary policy rates and reduced excess systemic liquidity. Major areas of
concern were elevated commodity prices, higher retail inflation, depreciation of the
Indian rupee and a rising current account deficit (CAD). However, despite these
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 tightening across the world. For
the first three quarters of FY2023, the CAD stood at 2.7% of GDP.
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 a nd 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. It has budgeted for 10 lakh crore
towards capital expenditure for FY2024, an increase of 33% year-on-year.
INDUSTRY STRUCTURE AND REVIEW:
Your Company is a NBFC registered with the RBI to carry out NBFC activities under
Section 45(IA) of the Reserve Bank of India Act, 1934 and it is engaged primarily in the
business of investing / trading in securities and advancing loans. The Company is also
involved in providing fund based financial services and funding solutions to the Indian
Corporate, institutions, SMEs etc.
NBFCs have been playing a complementary role to the other financial institutions
including banks in meeting the funding needs of the economy. They help fill the gaps in
the availability of financial services that otherwise occur in bank-dominated financial
systems. NBFCs have traditionally focused on customer segments which were not served by
banks like MSMEs, construction, mining and farm equipment, commercial vehicles (new and
used) and plant and machinery; etc. NBFCs typically are specialized vehicles both in terms
of products and the geographies in which they operate. This specialization provides them a
unique framework to assess the risk in the undertaken business. The ability of NBFCs to
produce innovative products in consonance with needs of their clients is well recognized.
This, in addition to the proximity to the clients, makes the NBFCs distinct from its
banking sector counterparts.
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
customized products and services to expedite financial inclusion in India. Lower
transactions costs, quick decision making, customer orientation and prompt service
standards have typically differentiated NBFCs from banks. Considering the reach and
expanse of NBFCs, they are well-suited to bridge the financing gap in a large country like
India.
FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE:
Share Capital:
The paid up equity share capital of the Company as on 31st March 2023 stands
at Rs. 9,32,25,500 divided into 9,322,550 equity shares of Rs. 10/- each fully paid up.
Net Worth:
The Net Worth of the Company increased to Rs. 11926.44/- Lakhs from Rs. 11265.25/-
Lakhs.
Secured Loans:
The secured loans decreased from Rs. 62.76/- Lakhs to Rs. 50.83/- Lakhs.
Revenue & Profit:
Companys Revenue from operations as on 31st March, 2023 was Rs. 1649.36/-
Lakhs against Rs.1526.64/- Lakhs recorded in the previous year.
Considerable Net Profit (after tax) of the Company of Rs. 644.27/- Lakhs as against Net
Profit of Rs. 755.45/- Lakhs of previous year.
SEGMENT WISE PERFORMANCE:
The Company is engaged in the business of financing industrial enterprises and
accordingly this is the only single reportable segment.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:
The Company has set up internal control procedures commensurate with its size and
nature of the business. These business procedures ensure optimum use and protection of the
resources and compliance with the policies, procedures and statutes. The internal control
systems provide for well-defined policies, guidelines and authorizations and approval
procedures. The prime objective of such audits is to test the adequacy and effectiveness
of the internal controls lay down by management and to suggest improvements.
An extensive internal audit is carried out by independent firm of Chartered
Accountants. Based on the report of internal audit function, the Company undertakes
corrective action in their respective areas and thereby strengthens the controls.
Significant audit observations and recommendations along with corrective actions thereon
are presented to the Audit Committee of the Board.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:
Your Company has senior qualified professionals in the areas of operations and is
looking at fresh recruitment to support the growth and diversification of business i.e.
planned, Getting fresh talent is a critical input to ensure and equip the organization to
deliver a wide variety of products and services to growing customer base of your Company.
It is our endeavor to create an environment where people can use all of their capabilities
in support of the business. Therefore, your Company encourages its employees to balance
their work and personal responsibilities. There were total of 13 employees in the company
as on 31st March, 2023.
OPPORTUNITIES AND THREATS:
Opportunities:
The company is exploring new opportunity in the line of business where it has
expertise. Few opportunities were examined in business. The company will continue its
efforts.
Non-Banking Finance Companies (NBFCs) continue to play an important role in making
financial Services accessible to a wider set of Indias population and
are emerging as strong intermediaries in the retail finance space. Going forward, one
should expect NBFCs to further strengthen their presence in retail finance and grow at a
reasonably healthy pace.
The regulatory vigil over the NBFCs continues with focus on four key cornerstones of
(i) Responsible financial innovation, (ii) Accountable conduct, (iii) Responsible
governance, and (iv) Centrality of the customer.
Threats:
The recent shift of central banks across the globe from their accommodative stance to
inflation control measures will result in high cost of funds.
Despite the large vaccinations, the recent resurgence in the COVID-19 infections has
raised the threat of fresh pandemic restrictions, which will hamper the operations and
further delay the smooth recovery of the economy. Any such restrictions will create stress
in the assets and will lead to higher provisioning, NPAs and restructuring, etc., which
will deteriorate the asset quality in the NBFC sector.
INDUSTRY OUTLOOK:
NBFCs have been progressively increasing their share in the total credit market. With
liquidity conditions expected to improve in the long-run, NBFCs are poised to grow further
at a faster pace and cater to the financial needs of the country. The long term prospects
for highly rated and good quality NBFCs remain robust, and once things get back to normal,
the segment will continue to catalyze Indias economic growth.
Considering the stiff competition from similar market players, the Company is following
a cautious approach in fresh financing and is poised to initiate all possible efforts to
recover losses booked in the earlier financial years.
As regards the money changing business, the Company is expecting a consistent
profitability from this area of business.
With the Governments commitment and initiatives for the growth of the Financial Sector
in India, this arena now poses a very promising growth potential in India in the near
future.
The Indian Financial Sector is currently witnessing a structural transformation towards
being a complete organized sector on account of multiple initiatives by the Government.
Considering the fact that, India is a growing economy, the expected outlook for the
Financial Sector continuous to remain positive and improving over time.
Further, believes there are multiple drivers in the vehicle finance and real estate
finance segments that will, in the coming years, pose good opportunities for NBFCs to
invest and expand within. The most significant driver of growth will be the ability to
create innovative products, delivered efficiently through the use of technology.
CAUTIONARY NOTE:
Management discussion and analysis report contains Statements which are forward looking
based on assumptions. Actual results may differ from those expressed or implied due to
risk and uncertainties which have been detailed in this report. Several factors as listed
in this report could make significant difference to the Companys operations. Investors,
therefore, are requested to make their own independent judgments and seek professional
advice before taking any investment decisions.
+91-9892691696
