Veeram Securities Ltd Management Discussions.


Global growth for 2018 is now estimated at 3.7% as in the October 2018. World Economic Outlook (WEO) forecast. Despite weaker performance in some economies , notably Europe and Asia. The global economy is projected to grow at 3.5 percent in 2019 and 3.6 percent in 2020. At the beginning of FY 2019 there was an expectation of higher growth as the economy seemed to have overcome the teething troubles of the Goods and Service Tax (GST). However, a rise in the current account deficit (CAD), concerns relating to rising non-performing assets (NPAs), decline in liquidity, tighter bank credit to industry, and relatively lacklustre sectoral performance contributed to uncertainties around whether India would actually post higher GDP growth. The second advance estimates of national income for financial year 2018-19 (FY 2019) released by the Central Statistics Office (CSO) on 28 February 2019 suggest that growth has slowed down. The CSO estimates real GDP growth in FY 2019 at 7% versus 7.2% in FY 2018. Quarterly growth also reduced -from 8 % in Q1 FY2019 to 7% in Q2 and then to 6.6% in Q3 Growth in real GDP and GVA, india

Particulars FY 2016 FY 2017 FY 2018 FY 2019
Real GDP Growth 8.2% 7.1% 7.2% 7.0%
Real GVA Growth 8.1% 7.1% 6.9% 6.8%

Thanks to a widening trade deficit, the current account deficit (CAD) rose to 2.6% of GDP during April-December 2018 up from 1.8% a year ago. There was a net outflow of US$ 17.5 billion of foreign currency reserves in April-December 2018 versus a net inflow of US$ 30.3 billion over the same period a year earlier.

The good news was inflation. In January 2019, the consumer price index (CPI) inflation reached a 19-month low of 1.9% It picked up marginally in February to 2.6%, thanks to a low base and an uptick in prices of some food categories Even so, the RBI has projected headline inflation to remain soft in the near term : 2.4 % in 04 FY2019 , 2 9% to 3% in H 1 FY2020, and 3.5% to 3.8% in H2 FY2020. It has, however, acknowledged the monsoon risk from El Nino conditions and highlighted uncertainties in oil price movement.

That the RBI does not see inflation as a material risk has been underscored by the maiority of the members of the RBls Monetary Policy Committee (MPC) -which recommended two successive cuts of 25 bps each in the policy rates and maintained a neutral monetary stance.

Gross NPA of Scheduled Commercial banks declined from 11.5% in March 2018 to 10.8% in September 2018 thus creating hopes of an orderly resolution in reasonably quick time. However these were belied when the Supreme Court intervened on 2 April 2019 and set aside the RBls circular of 12 February 2018 which had asked banks to replace several existing restructuring schemes by a uniform process under the Indian Bankruptcy Code. This decision has created considerable ambiguity regarding bad loans and NPA resolutions. The RBI has issued a statement that it will take necessary steps, including issuing a revised circular for expeditious and effective resolution of stressed assets . Until such a circular is issued, the classification of NPAs and provisioning requirements would be left to individual banks -which may accentuate an already deep malaise.

Banking credit continued to post double-digit growth , registering 14.1% increase on-year as of 15 March 2019. Unfortunately, this growth was not broad-based. Bank credit to industry grew anaemically, while the service sector and the retail segment saw fairly strong growth.


The NBFC sector in india has undergone a significant transformation over the past few years. it has come to recognized as one of the systemically important components of the financial system and has shown consistent year-on-year growth. NBFCs play a critical role in the core development of infrastructure, transport, employment generation, wealth creation opportunities, and financial support for economically weaker sections; they also make a huge contribution to state exchequer.

For a large and diverse country such as India, ensuring financial access to fuel growth and entrepreneurship is critical With the launch of government-backed schemes (such as the Pradhan Mantri Jan-Dhan Yojana [PMJDY]), there has been a substantial increase in the number of bank accounts; however, a mere 15% of adults have reported using an account to make or receive payments. The government and regulatory bodies have taken decisive steps to increase this number (and subsequently financial access) by granting in principal licenses to as many as 21 players to establish specialty banks over the next 18 months. This is over and above the focused approach of the other industry bodies such as the National Payments Corporation of India (NCPI) to further strengthen and augment the payments ecosystem by launching the Unified Payment Interface (UPI) and Bharat Bill Payments System.

The introduction of such specialized players and systems will truly transform the banking value chain in its entirety This presents a strategic opportunity for NBFCs to ensure sustainable growth over a long term. Partnerships with payments banks, bill payment providers and other financial institutions, such as insurance and asset management companies will help NBFCs offer the complete proposition-that is, from deposits to lending, investments and transactions. The reach of NBFCs, along with their strong understanding of the market, can help them position themselves as a better alternative to the traditional ways of banking.


Reports from the World Bank indicate that Non Banking Financial Institutions act as critical pillars contributing to macroeconomic stability and sustained economic growth and prosperity, due to their ability to finance firms and individual at a reasonable cost, reduce volatility by providing multiple sources to finance and park funds and enable creation of a competitive environment characterized by a diverse array of products. This has been proven time and again in developed markets.

Non-Banking Finance Companies (NBFCs) continue to play a critical 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 biggest challenge before NBFCs is that they are facing stiff competition from banks and financial institutions, due to their ability to raise low cost funds which enables them to provide funds at much cheaper rate. More stringent capital adequacy norms have been stipulated by RBI for NBFGs which is making difficult for them to give cheaper finance

Ever-increasing competition from commercial counterparts whose capacity to absorb losses is higher, counter-party failures, recommendations being made to increase the purview of monitoring by regulatory authorities increase the threat of losing the essence of Non-banking Finance Companies which are specifically designed to reach out and finance certain target groups.


NBFCs have proven their mettle in many other specialized financial services such as factoring, lease finance. venture capital finance, financing road transport and also in the business of securities-based lending such as Loan against Shares , Margin Funding, IPO Financing, Promoter Funding etc. They have also been providing a major boost to Micro Small and Medium enterprises and other avenues where banks exercise cautious lending. All the above factors further emphasize the potential and opportunities in store for NBFCs and the regulations when designed to provide the right environment, provides impetus to the growth of the sector.

The Company hence wishes to diversify its lending activities in the coming period and shall embark on this path and move forward once the existing investments , which are at an incubating stage begin to bear fruits


The Company recognizes that risk is an integral and unavoidable component of business and is committed to managing the risk in a proactive and effective manner. In todays challenging and competitive environment , strategies for mitigating inherent risks in accomplishing the growth plans of the Company are imperative. The common risks for the Company are financial risks. credit risk, liquidity risk, market risk etc. The Company adopts a systematic approach to mitigate risks associated with accomplishment of objectives, operations, revenues and regulations. The Company believes that this would ensure mitigating risks proactively and help to achieve stated objectives .

The NBFC industry in general faces the risk re-entry and new entry of players and existence of several unorganized regional players increasing the competition which mainly affects the asset quality. This is further characterized by captive NBFCs floated by other business houses. The ever existing systemic and delinquency risks and fluctuations in interest rates and risk weight make the companies more vulnerable. Deployment of funds in sensitive and volatile sectors increases the risk exposure while concentration risk increases dependency.


Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. The Management ensures adherence to all internal control policies and procedures as well as compliance with regulatory guidelines. The audit committee of the Board of Directors reviews the adequacy of internal controls. This has improved the management of the affairs of the Company and strengthened transparency and accountability.


Company has Changed its main object from jewellery business to non banking financial business in year 2018. Our company is a small sized, BSE listed. The Companys total Revenue from Operations during the year were Rs. 15.50 Lakhs and the net profit after tax is Rs. 30 Lakhs


The Company always considers its human resources as a valuable asset and is committed towards their development for continuous growth . Focus on training to enhance the skill-sets of employees in line with the business and market requirements continued throughout the year. The Company has 8 permanent employees as on 31st March 2019.


Statements in the Management Discussion and Analysis Report describing the Companys objectives , projections estimates, expectations or predictions may be "forward looking statements" within the meaning of the applicable laws and regulations. Important factors that could influence the Companys operations include economic and political conditions in which the Company operates, interest rate fluctuations, changes in Government I RBI regulations, Tax laws, other statutes and incidental factors .