Directors are pleased to present the Management Discussion and Analysis Report for the
year ended 3pt March, 2023.
The Management Discussion and Analysis have been included in consonance with the Code
of Corporate Governance as approved by The Securities and Exchange Board of India (SEBI).
Investors are cautioned that these discussions contain certain forward-looking statements
that involve risk and uncertainties including those risks which are inherent in the
Companys growth and strategy. The company undertakes no obligation to publicly update or
revise any of the opinions or forward looking statements expressed in this report
consequent to new information or developments, events or otherwise.
The management of the company is presenting herein the overview, opportunities and
threats, initiatives by the Company and overall strategy of the company and its outlook
for the future. This outlook is based on managements own assessment and it may vary due
to future economic and other future developments in the country.
Global Economy
Steering through challenges in the previous year, the global economy has positioned
itself with better prospects this year. Post Covid-19 pandemic, the global economy is
gradually recovering from a series of disruptions with supply-chain disruptions easing and
energy and food markets stabilising after the Russia-Ukraine crisis. Additionally, most
central banks have tightened monetary policy extensively and synchronously, which is
expected to result in inflation, the most pressing issue in 2022, moving back towards its
target range. According to the International Monetary Funds latest forecast, global
growth is expected to reach 2.8% in 2023 and will rise to 3.0% in 2024.
Outlook
The global economy is currently bracing itself for slower growth, primarily due to the
disruptive impact of the Russia-Ukraine conflict and the tightening of monetary policy.
These factors have led to significant supply-side disruptions, creating challenges for
economies around the world. However, amidst this uncertain outlook, certain economies are
expected to exhibit resilience and drive global growth. The Union Budget outlined measures
to increase capital spending, emphasis on infrastructure development, promote sustainable
and environment friendly activities and strengthen financial markets. These policies are
expected to stimulate job creation and economic growth in India. With a strong emphasis on
macroeconomic stability in recent years, the Indian economy is likely to benefit from
these actions in the coming years.
Indian Economy
The Indian economy has demonstrated an exceptional performance during FY 2022-23,
positioning itself as one of the fastest-growing economies. According to the International
Monetary Fund (IMF), India is expected to maintain its position as a more favourable
contributor to the global economy, contributing around 15% to global economic expansion.
The Union Budget FY 2023-24 aimed at enhancing the nations positioning with increased
capital expenditure to Rs. 10 Lakh crore, marking an increment of 33% in capital outlay as
compared to FY 2022-23. The governments focus on capital expenditure, strong
manufacturing capacity utilisation, double-digit credit growth, and moderation in
commodity prices are likely to enhance manufacturing and investment activities. This is
highly optimistic for key industries like manufacturing, infrastructure and healthcare
coupled with the Governments introduction of various measures to support economic growth.
1. INDUSTRYSTRUCTURE AND DEVELOPMENTS
The financial institutions have a vital role in promoting stability and implementing
regulatory measures to support households and businesses, especially amid economic crises.
Non-Banking Financial Companies (NBFCs) have started to compete with traditional banks by
offering an array of financial services such as loans, credit facilities and investment
products. NBFCs have a crucial role in providing credit to segments of the economy that
are usually underserved by mainstream banks, such as low-income households, small and
medium-sized businesses and rural communities. Their lending criteria is more amenable to
the segments they operate in, while being quicker in taking credit decisions than banks.
Customers in recent years have shown an inclination towards NBFCs due to their nimbler
and more adaptable services to add to their increasing geographical reach. NBFCs are
increasingly making use of technology to streamline lending processes and provide
personalised customer experiences, such as online applications, digital loan disbursements
and repayments. Additionally, the expansion of the economy and growing middle class
increase the need for financial services, creating a favorable environment for NBFCs to
grow. Regulatory support and government efforts towards financial inclusion, especially in
rural and semi-urban areas, also offer an opportunity for NBFCs to expand their reach
where traditional banking channels may not have reached. It is expected to see a gradual
and sustained improvement in new business for NBFCs in the coming year. Some of the
sectors which have been lagging in revenue recovery in the previous years are expected to
show improvements this year. The Company sees the good opportunity and development in
coming years.
2. OPPORTUNITY AND THREATS
Opportunities
Non-banking financial companies (NBFCs) have the potential to seize growth
opportunities by catering to underserved segments of the population, such as small
businesses and low-income households. Embracing technology to streamline their operations
and expand their customer base, collaborating with fintech companies and government
initiatives promoting financial inclusion and digital payments further create room for
NBFCs to explore.
NBFCs have played a significant role in boosting credit flow to MSMEs, especially in
under banked areas of the country. These companies have adopted innovative tools,
unconventional risk modeling and personalised offerings to cater to the specific
requirements of small businesses. Additionally, NBFCs have leveraged technology for data
analytics and streamlined their processes for faster disbursement of credit.
Threats & concerns
NBFCs must also contend with several threats, such as borrower defaults, competitive
pressure from traditional banks and fintech startups and regulatory changes that can
impact their operations and profitability. Moreover, rising interest rates and inflation
leading to an increase in the cost of funds for NBFCs poses pressure on margins. To
mitigate risks, NBFCs may consider prioritising strong underwriting practices,
diversifying their portfolios and enhancing their risk management systems to minimize
borrower default risks.
3. SEGMENTWISE PERFORMANCE
Presently your Company is dealing in the following segments:
1. Auto Loan,
2. Gold Loan,
3. Microfinance,
4. Traders Loan.
4. OUTLOOK
The growing economy and ever-increasing capital market provide a good scope of
expansion of financial service sector. Your Company is very well prepared to grab the
opportunities. As the market and customer expectations mature, differentiated customer
acquisition and deeper customer engagement through the lifecycle assumes importance. With
the economy projected to continue growing, the Company with its diversified product
portfolio, broad reach through its network of branches across the country and the
management is very optimistic about the future of the Company.
S. RISKS AND CONCERNS
The Company as a participant in the financial service industry is faced with various
risks including credit, operational, liquidity, digital lending and information security
risks. A robust risk management framework has been put in place to ensure effective
assessment, measurement and monitoring of these risks. The Board of Directors oversees all
risks and has established specific committees to provide focused oversight of identified
risks. The Company has adopted a focused approach towards risk management in the form of a
corporate insurance program which has the goal of optimizing the financing of insurable
risks by using a combination of risk retention and risk transfer. The ultimate goal is to
achieve an optimal balance of return for the risk assumed while remaining within
acceptable risk levels.
The program covers all potential risks relating to business operations of the Company
at its various locations.
The Companys business critical software is operated on a server with regular
maintenance and back-up of data, connected with two physically separated servers. The
systems parallel architecture overcomes failures and breakdowns. Reliable and permanently
updated tools guard against virus attacks. Updated tools are regularly loaded to ensure a
virus free environment.
6. INTERNAL CONTROL SYSTEMS
The Company has implemented a comprehensive system of internal control and risk
management systems for achieving operational efficiency, optimal utilization of resources,
credible financial reporting and compliance with local laws. These controls are regularly
reviewed by both internal and external agencies for its efficiency and effectiveness.
Management information and reporting system for key operational activities form part of
overall control mechanism.
7. FINANCIAL PERFORMANCE
The Company has achieved a turnover of Rs. 1236.33 Lakh and the profit of Rs. 25.65
Lakh during the year under review.
8. HUMAN RESOURCE AND INDUSTRIAL RELATIONS
Your company has been able to employ and retain qualified professionals by offering the
challenging work environment and compensation. The Company provides in house training to
its employees.
i. The Management believes in maintaining cordial relations with its employees. The
management recognizes the importance of Human Resources and effective steps will be taken
to strengthen the same depending on the requirements.
ii. The Company provided excellent working environment so that the individual staff can
reach his/her full potential.
iii. The Company is poised to take on the challenges and march towards accomplishing
its mission with success.
iv. The Company maintained good Industrial/Business relation in market, which enhanced
the market reputation of the company and acceptance among the clientele we are targeting
and serving.
9. INSURANCE
The Company has insured its assets and operations against all insurable risks including
fire, earthquake, flood, and etc. as part of its overall risk management strategies
10. KEY FINANCIAL RA TIOS
Details in key financial ratios:
(i) Capital Adequacy Ratio - 43.28% (ii) Debt Equity Ratio - 2.17%
11. CAUTIONARY STATEMENT
Statements in this report on management discussion and analysis describing the
companys objectives, projections, estimates, expectations and predictions are based on
certain assumptions and expectations of future events. Actual result could differ
materially from those expressed or implied. The Company assumes no responsibility to
amend, modify or revise any of the statements on the basis of subsequent developments,
information or events.
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For and on behalf of the Board of Directors |
|
Joby George |
|
Chairman & Managing Director |
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(DIN:06429801) |
Place:Kochi |
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Date:31st July, 2023 |
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+91-9892691696
