Vani Commercials Ltd Management Discussions

The Companys main object is to conduct Non-banking Financial operations and the market for this activity offers high potential for growth. The Company is carrying on business of NBFC and is operating from its registered office situated at New Delhi.

0 INDUSTRY STRUCTURE AND DEVELOPMENTS

Non-Banking Finance Companies (NBFCs) are an integral part of the countrys financial system because of their complementary as well as competitive role. They act as a critical link in the overall financial system catering to a large market of niche customers. Further, despite of strong competition faced by the NBFCs, the inner strength of NBFCs viz local knowledge, credit appraisal skill, well trained collection machinery, close monitoring of borrowers and personalized attention to each client, are catering to the needs of small and medium enterprises in the rural and semi urban areas. However, as a result of consolidation and restructuring in the financial sector and liberalization and globalization of markets only few strong NBFCs now remain in business.

On the regulatory front, NBFCs are regulated by the Reserve Bank of India (RBI) almost at par with banks. All the prudential norms for asset classification, income recognition, provisioning etc., are applicable to NBFCs in India. Given the continuously high levels of inflation throughout the year, the Reserve Bank of India (RBI) has no option but to tighten the monetary policies. This has resulted in an increase in the domestic interest rates which has negatively impacted the sentiments of industries. Measures of risk aversion have not arisen, even though the equity markets in most regions have posted significant gains and financial stresses in the markets have been limited.

During the last financial year, there was also continuing improvement in the asset quality of banks and non-bank financial companies (NBFCs). Asset quality of commercial banks continued to show an upward trend, with their gross non-performing asset (GNPA) ratio falling to a 12-year low of 2.8 per cent at the end of March 2024 from 3.2 per cent in September last year. Net NPA ratio also fell to 0.6 per cent from 0.9 per cent during the same period, the biannual Financial Stability Report of the Reserve Bank of India (RBI) showed on 27^th June, 2024 (Figure.8). Better regulatory compliance and transparent norms governing the recognition of bad loans has led to this continuing improvement in the asset quality of banks and NBFCs.

MACROECONOMIC OVERVIEW

Real GDP growth in India was a robust 7.6 per cent in FY 2023-24 (Second Advanced Estimate, Central Statistical Organisation), up from 7 per cent in FY 2022-23. The growth spurt in FY 2023-24 was driven by double digit growth of 10 per cent in capital formation (Capex) which, in turn, was led by high public sector capex. At the sectoral level, high non-agricultural growth was broad based with 9 per cent growth in industry and 7.5 per cent growth in services. However, agriculture performed poorly, recording a growth of only 0.7 per cent. This is mainly due to uneven rainfall, volatile weather conditions, and reduction in wheat acreage in response to softening of wheat prices with the easing of Black Sea supply disruption.

The Second Advance Estimates (SAE) of National Income, 202324 as well as Quarterly Estimates of Gross Domestic Product

(GDP) for the Third quarter (October-December) of 2023-24 (Q3, 2023-24) at both Constant (2011-12) and Current Prices are given.

Real GDP or GDP at Constant (2011-12) Prices in the year 2023-24 is estimated to attain a level of 172.90 lakh crore, against the FRE of GDP for the year 2022-23 of 160.71 lakh crore. The growth rate of GDP during 2023-24 is estimated at 7.6 percent as compared to growth rate of 7.0 percent in 2022-23. 3. Nominal GDP or GDP at Current Prices in the year 2023-24 is estimated to attain a level of 293.90 lakh crore, against 269.50 lakh crore in 2022-23, showing a growth rate of 9.1 percent. 4. GDP at Constant (2011-12) Prices in Q3 of 2023-24 is estimated at 43.72 lakh crore, against 40.35 lakh crore in Q3 of 2022-23, showing a growth rate of 8.4 percent. GDP at Current Prices in Q3 of 2023-24 is estimated at 75.49 lakh crore, as against 68.58 lakh crore in Q3 of 2022-23, showing a growth rate of 10.1 percent.

NNI is an indicator of the total economic activity in a country, and is defined by the OECD as gross national income minus the depreciation of fixed capital assets (dwellings, buildings, machinery, transport equipment and physical infrastructure) through wear and tear and obsolescence.

The below table from the NSO shows Indias per capita gross domestic income (GDP), per capital gross national income (GNI), and the per capita private financial consumption expenditure (PFCE) at 2011-12 prices between 2020-21 and 2022-23.

Per Capita Income, Product, and Final Consumption - Second Advance Estimates of National Income and Expenditure Components of GDP, 2023 -24 (at 2011-12 Prices)
Item	2021-22	2022-23	2023-24	Percentage change over previous year
	(Second Revised Estimates)	(First Revised Estimates)	(Second Advanced Estimates)	2022-23	2023-24
Population (in million)	1369	1383	1395	0.86%
Per capita GDP (INR)	1,09,762	1,16, 16	1,23,945	5.90%	6.70%
Per capita GNI (INR)	1,08,345	1,14, 78	1,22,110	5.70%	6.70%
Per capita NNI (INR)	94,054	99, 04	1,06,134	5.70%	6.80%
Per capita PFCE (INR)	63,807	67, 23	68,857	5.70%	2.10%

As input prices and therefore production costs remain high, due to global uncertainties among other factors, companies in most industries are passing on higher spending to final consumers to preserve earnings margins.

This is why India is currently witnessing a K-shaped economic recovery post-pandemic as consumption is slowing down and household savings decline. Wage growth is also under pressure in the lower half of the income pyramid.

The RBI, meanwhile, is attempting to rein in the inflation with policy rate hikes.

CPI inflation is projected at 5.4 per cent for 2023-24, with Q2 at 6.2 per cent, Q3 at 5.7 per cent and Q4 at 5.2 per cent, with risks evenly balanced.

As the government pursues redistributive policies, results need to be delivered on equitable access to healthcare, quality education, and jobs. Often, numbers get inflated during time of release near elections and budget season as welfare programs incentivize short term gigs.

Size of Indias economy fifth in the world

Still, in absolute terms, India remains a bright spot on the world stage, as it grows steadily from a relatively low base. Last year, India overtook the UK to become the worlds fifth biggest economy, after the US, China, Japan. and Germany.

Multiple initiatives to ease doing business and expand the manufacturing share of the economy as well as the push for skill development - offers promise to convert Indias human capital into a talent base that feeds higher quality development. According to its central bank, the Reserve Bank of India, at current prices and exchange rates, India is estimated to be US$ 5 trillion economy in 2024-25, remaining fifth in the world standings.

0 OPPORTUNITIES AND THREATS

Opportunities

Our long-standing relationship with our major customers has been one of the most significant factors contributing to our growth. Our commitments to quality and customer service practices have been strong contributing factors to our robust customer relations. Over the years, we have steadily developed a robust base of customers for our products in national level.

To overcome the challenges and competition, we have taken various initiatives to reduce the operational costs, to develop new value added products, improve the performance and quality of existing value-added products as well as to explore new markets domestically and globally.

The digitization, unparalleled expertise and an excellent corporate strategy has resulted in an unprecedented growth of the company over the years. We have an experienced and dedicated team of professionals, catering to the needs of clients, delivering products at reasonable interest rates and timely.

Threats

Change in Policy and Regulations. New entrants in the market and intense competition by existing players. Technology may become obsolete due to Innovation in Technology

0 RECENT TREND AND FUTURE OUTLOOK

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 transaction 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. NBFCs have demonstrated agility, innovation, and frugality to provide formal financial services to millions of Indians.

This is an enviable track record despite the business models of the NBFCs being severely tested by four large external events in the last few years, namely, (i) demonetization, (ii) GST implementation, (iii) failure of few large NBFCs, and (iv) the pandemic. The fact that many NBFCs have managed to overcome these stresses without significant impact on financial position is a testimony to their resilience and agility.

Financial institutions play a crucial role in ensuring economic stability for households and businesses at critical junctures. The pivotal role of NBFCs in driving sustainable fiscal growth is well recognized, given their last-mile connectivity and agile system. The sector has played a decisive role in accelerating last-mile funding and understanding the credit requirement of the Unbanked and Underserved. Aided by the governments thrust towards a digital economy, the sector has also undertaken significant digital transformation and invested heavily to become tech-agile institutions offering personalized products and services, ensuring faster credit disbursement.

As India strategizes post-pandemic economic recovery through fiscal measures and businesses aim to expand capacities, NBFCs have an enormous opportunity to assist in achieving the noble goal of Aatmanirbhar Bharat through the fast-tracked flow of credit to businesses and households. As the latest data on Udyam Portal shows, a significant proportion of registered businesses are micro businesses, Union budget 2023-24 offers an opportunity to bring in a targeted scheme for expanding credit to micro businesses.

We believe that NBFCs with superior capital adequacy, better margins, frugal cost management, prudent risk management and those incorporating above four key cornerstones in their business models will continue to deliver sustainable growth in the foreseeable future.

0 INTERNAL FINANCIAL REPORTING AND CONTROL

Internal financial reporting and control are functional as, checks and controls are being exercised by us keeping in mind all the factors, whether financial or Non-Financial. The Company has adequate systems of internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business.

Supply chain

The Supply chain of the Company has improved as compared to the last financial year. New customers have been identified by the Company after making on-field visits at customers place for the collection of various documents; and various other measures in order to establish the creditworthiness and genuineness of the prospective borrower.

Demand for its products/services

Though the demand for availing loan products has not declined, yet, considering the present financial crunch in the economy, we are following a cautious approach in fresh financing to new customers. The Company has been trying to reduce the probability of non-repayment of outstanding dues by the customers which had arisen due to financial crisis that was witnessed by many people on account of stagnant business activities across the globe caused by Civil wars outbreaking throughout the world in the previous years.

Existing contracts/agreements where non-fulfilment of the obligations by any party will have significant impact on the listed entitys business:

The Company endeavors to perform its duties as agreed to in various executed operational contracts / agreements. There has been no failure in performance by the Company of its obligations envisaged in contract / agreement entered into by it. Presently, there are no such existing contracts / agreements where nonfulfillment of the obligations by any party will have significant impact on the Companys business.

Other relevant material updates about the listed entitys business:

There are no other relevant material updates at present. The Companys opinion on various matters as envisaged above, are forward-looking statements which are based on certain assumptions, risks, uncertainties and expectations of future events. The actual results, performance or achievements can thus differ from those projected, depending on various factors over which, the Company does not have any direct control.

In todays complex business environment, almost every business decision requires executives and managers to balance risk and reward. Effective risk management is therefore critical to an organizations success. Globalization, with increasing integration of markets, newer and more complex products and transactions and an increasingly stringent regulatory framework has exposed organizations to newer risks. As a result, todays operating environment demands a rigorous and integrated approach to risk management. Timely and effective risk management is of prime importance to our continued success. Increased competition and market volatility has enhanced the importance of risk management. The sustainability of the business is derived from the following:

• Identification of the diverse risks faced by the company.

• The evolution of appropriate systems and processes to measure and monitor them.

• Risk management through appropriate mitigation strategies within the policy framework.

• Monitoring the progress of the implementation of such strategies and subjecting them to periodical audit and review.

• Reporting these risk mitigation results to the appropriate managerial levels.

• RISKS AND CONCERNS

In todays complex business environment, almost every business decision requires executives and managers to balance risk and reward. Effective risk management is therefore critical to an organizations success. Globalization, with increasing integration of markets, newer and more complex products & transactions and an increasingly stringent regulatory framework has exposed organizations to newer risks. As a result, todays operating environment demands a rigorous and integrated approach to risk management. Timely and effective risk management is of prime importance to our continued success. Increased competition and market volatility has enhanced the importance of risk management. The sustainability of the business is derived from the following:

• Identification of the diverse risks faced by the company.

• The evolution of appropriate systems and processes to measure and monitor them.

• Risk management through appropriate mitigation strategies within the policy framework.

• Monitoring the progress of the implementation of such strategies and subjecting them to periodical audit and review.

• Reporting these risk mitigation results to the appropriate managerial levels.

• DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The brief on Financial Performance of the Company is already provided in the Boards Report of the Company.

• MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED

The Companys relations with the employees continued to be cordial. It emphasized engagements with employees by providing an enriched workplace, challenging job profile and regular dialogues with the management.

During the year, two employees, including one Key Managerial Personnel were employed by the Company.

• KEY FINANCIAL RATIOS:

(i) Interest Coverage Ratio

EBITDA/Interest Expenses

EBITDA	1,75,46,346
Interest Expenses	1,15,05,158
	1.53:1

(ii) Current Ratio

Current Assets/ Current Liabilities

Current Assets	60,22,190
Current Liabilities	27,15,343
	2.22:1

(iii) Debt Equity Ratio

Total Liabilities/ Total Shareholder Fund

Total Liabilities	40,21,22,800
Total Shareholder Fund	13,40,41,562
	3.00:1

(iv) Operating Profit Margin (%)

Operating Profit /Total Revenue

Operating Profit	1,75,46,346
Total Revenue	3,15,41,871
	55.63 %

(v) Net Profit Margin (%)

Net Profit/ Total Revenue

Net Profit	32,58,595
Total Revenue	1,75,46,346
	18.57%

(vi) Return on Net Worth

Total Net Profit	32,58,595
Total Shareholders Equity	13,40,41,562
	0.02%

• DETAILS OF ANY CHANGE IN RETURN ON NET WORTH AS COMPARED TO THE IMMEDIATELY PREVIOUS FINANCIAL YEAR

The Net Worth for the Financial year 2023-24 is INR 1340.41 Lacs as compared to that of financial year 2022-23 which was INR 1308.039 Lacs. There is a slight increase in the Return on Net Worth of the Company which was 0.28 in financial year 2023-24.

• SEGMENT-WISE OR PRODUCT WISE PERFORMANCE

The company operates in only single segment. Hence segment wise performance is not applicable.

• INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has strong internal control procedures in place that are commensurate with its size and operations. The Board of Directors, responsible for the internal control system, sets the guidelines and verifies its adequacy, effectiveness and application. The Companys internal control system is designed to ensure management efficiency, measurability and verifiability, reliability of accounting and management information, compliance with all applicable laws and regulations, and the protection of the Companys assets. This is to timely identify and manage the Companys risks (operational, compliance-related, economic and financial).

• CAUTIONARY STATEMENT

This report describing the companys activities, projections about future estimates, assumptions with regard to global economic conditions, government policies, etc. may contain "forward looking statements" based on the information available with the company. Forward-looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the company assumes no responsibility in respect of forward-looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

• DISCLOSURE ON ACCOUNTING TREATMENT

Company follows all Mandatory Accounting Standards and the financial statements of the Company have been prepared in compliance with the requirements of the Companies Act, 2013, Regulation 33 of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015. Our Management accepts responsibility for the integrity and objectivity of these financial statements, as well as for the various estimates and judgments used therein. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner the form and substance of transactions, and reasonably present our state of affairs, profits and cash flows for the year.

For and on behalf of Board of Directors For Vani Commercials Limited

Date: 30th August, 2024	Sd/-	Sd/-
Place: New Delhi	Vishal Abrol	Binal Jenish Shah
Vani Commercials Limited	Managing Director	Director
Regd. Off.: Khasra No. 19/4, Kamruddin Nagar, Near Butterfly Sr. Sec School, Najafgarh Road, Nangloi, Delhi-110041	DIN:06938389	DIN:09371388
CIN: L74899DL1988PLC106425
Email ID: infa@vanicommercials.com