Sulabh Engineers Management Discussions


Over the course of the past year, the global economy has experienced numerous challenges in the form of geopolitical tension, rising interest rates, high inflation levels. Due to geopolitical conflicts, crude oil prices soared, global trade was impacted and inflationary pressures worsened. To rein in inflation, Central Banks across the world, including the US Federal Reserve, responded with synchronized rate hikes. A stronger boost from pent-up demand in numerous economies or a fall in inflation is expected in the course of 2023. The emerging and developing economies of the world are likely to play a major role in accelerating global economic growth.


Last two years have been the struggling to overlap crises, the latest being the liquidity trouble in a series of global bank crises. Global economic activity is experiencing a broad based and sharper than expected slowdown .The cost of living crisis ,tightening financial conditions in most regions , Russias invasion of Ukraine and the lingering Covid -19 pandemic all weight heavily on the world economic outlook.

Global growth slowed in 2022 to 3.2% more than 1 percentage point weaker than expected, mainly weighed down by Russias war of aggression in Ukraine .Global growth has stabilized towards the end of the year but the improvement is fragile.

These uncertainties continue to undermine the confidence among consumers and business to spend impacting economic growth. Despite this gloom market analysis this could well be Indias decade.

Despite continuing the global uncertainties Indian economy has fared better than previous years. The Indian economy expanded 4.4% year on year in the three months to December of 2022.

Exports performed well, probably because of the depreciated currency against the dollar. We are positive that investment will likely see a turnaround soon. In fact, the next two years will be crucial for investment to gain momentum before the economy takes off on a sustained and rapid growth path.


The Indian economy remained remarkably resilient to global challenges in F.Y. 2022-23. This is evident by robust domestic demand and upbeat investment activity. Sectoral analysis reveals that growth was driven by robust construction activity aided by increased infrastructure investment both by the Central Government and State Governments, which paved the way for large-scale employment opportunities. Building on the gains of first half of the fiscal year, the second half continued to see a gradual upswing in demand and economic activity. While post-covid, private investment recovery is still at a nascent stage, there are early signals, which indicate that India is poised for a stronger investment up cycle in both manufacturing and services sectors. The number of private investment projects under implementation in the manufacturing sector is also steadily growing.

Outlook According to the International Monetary Fund (IMF), global growth is predicted to bottom out at 2.8% in 2023, and then grow to 3.0% in 2024. Along with improvement in growth rate, inflation is expected to moderate from 8.7% in 2022 to 7.0% in 2023, before reaching 4.9% in 2024. IMF identifies that inflation, though moderating, has mostly been sticky. The reduction reflects severe reversal in energy and food prices, but core inflation (excluding food and energy prices) may not have peaked yet.

Major regulatory updates

Company has complied with the guidelines issued by RBI and other regulatory authorities regarding accounting guidelines, prudential norms for credit rating, Know Your Customer (KYC) guidelines and Anti Money Laundering (AML) Standards, Fair Practices Code, grievance Redressal mechanism, recovery of dues. The Company has provided for impairment of loans and advances as per IND AS 109 prescribed under section 133 of the Companies Act, 2013 and as per the Master Directions of RBI.

The Reserve Bank of India (RBI) released Circulars for Clarification on Master Circular on Prudential norms on Income Recognition, Asset Classification, and Provisioning pertaining to Advances (IRCAP) dated October 1, 2021. These circulars are expected to impact income/asset recognition for NBFCs.

1. Due dates as per RBI circulars:

a) As per November 12, 2023 Circular i) NPA classification in case of interest repayments, Increasing Consumer Awareness among the borrowers to be complied - March 31, 2023 ii) Specification of Due date/repayment date - December 31, 2021 b) As per February 15, 2023 Circular i) Paragraph 10 of the Circular stipulates that loan accounts classified as NPAs may be upgraded as ‘standard asset only if entire arrears of interest and principal are paid by the borrower. NBFCs shall have time till September 30, 2023, to put in place the necessary systems to implement this provision.

2. Daily tagging:

Lending institutions must flag loan accounts as SMA/NPA as part of their day-end operations.

3. Upgradation of loan accounts classified as NPAs:

NPAs may be upgraded as ‘standard assets only if entire arrears of interest and principal pertaining to all the credit facilities are paid in full by the borrower. a) With a view to increasing awareness among the borrowers, lending institutions shall place consumer education literature on their websites, explaining with examples, the concepts of date of overdue and NPA classification and upgradation, with specific reference to day-end process.

b) Lending institutions may also consider displaying such consumer education literature in their branches by means of posters and/or other appropriate media. Further, it shall also be ensured that their front-line officers educate borrowers about all these concepts, with respect to loans availed by them, at the time of sanction/disbursal/renewal of loans.


Unanticipated changes in regulatory Norms

The appropriate supervision and regulation of NBFC sector is a prerequisite for Indias overall financial development. Non-bank lenders regulatory structure has been changing over time to ensure prudent supervision and regulation. However, unexpected regulatory changes and restrictions, may increase compliance costs and adversely impact the way current products or services are produced or delivered.

Technology disruption

In India, the NBFC business is undergoing rapid technological development. Technology-based innovation has become essential to the Companys success. It has become critical to stay on top of the competition when it comes to new generation digital innovations. The potential of disruptions induced by developing technologies, however, always remain.

Liquidity squeeze

NBFCs rely on external funding to fulfil the financing needs of their customers. A liquidity crunch arising from reduced loan recovery, external funding or other unforeseen events could adversely impact the loan disbursement cycle of the NBFCs leading to subdued performance.

Global economic slowdown

The global scenario is as complex as it is uncertain. A global economic downturn might be disastrous for emerging economies. Erratic capital flows, currency volatility, migration restrictions, and global trade barriers might all have adverse impacts on the productivity and business of the NBFC sector.

Global geopolitical crises

India being an emerging global economy faces notable risks due to global relations. A shift in developed and emerging countries interest rates, policies and protectionism along with trade and capital market conditions may hamper businesses locally. Geopolitical and trade tensions in the global market post further risk to the Indian NBFC industry.


The Company has put in place an adequate internal control system to safeguard all its assets and ensure operational excellence. The system also meticulously records all transaction details and ensures regulatory compliance. The Company also has a team of internal auditors to conduct internal audit which ensure that all transactions are correctly authorized and reported. The reports are reviewed by the Audit Committee of the Board. Wherever necessary, internal control systems are strengthened, and corrective actions initiated. For and on behalf of the Board of Directors.


The Company believes that the quality and dynamism of its human capital has enabled it to significantly enhance customer experience and stakeholders value. In order to sustain its growth the company works relentlessly towards being customer-focused, and ready for the future. The Company is focused on creating a competitive and cordial working environment and strengthens the talent pool by providing employees with career enhancement opportunities.

Cautionary Statement

The statements made in this report describing the Companys objectives, estimations, expectations or projections, outlooks constitute forward-looking statements within the meaning of applicable securities laws and regulations. Actual results may differ from such expectations, projections, among others, whether express or implied. The statements are based on certain assumptions and future events over which the Company has no direct control. The Company assumes no responsibility to publicly amend, modify and revise any of the statements on the basis of any subsequent developments, information or events.