THE NBFC FINANCIAL STRUCTURE
NBFCs have come to be regarded as important financial intermediaries
particularly for the small-scale and retail sectors with the growing importance assigned
to financial inclusion. NBFCs in India numbering 9443 in 2023 are an integral part of the
Indian financial system, enhancing competition and diversification in the financial
sector, spreading risks specifically at times of financial distress and have been
increasingly recognized as complementary of the banking system at competitive prices.
NBFCs have been pioneering at retail asset-backed lending, lending against securities,
microfinance, etc.
KEY DEVELOPMENTS IN NBFC SECTOR
It is an established fact that the Indian economy remains one of the
fastest growing economies in the world. In consonance, major BFSI indicators, except
insurance, grew at a healthy rate. Some of the important positive indicators are:
Absolute profit for the NBFC sector increased 39% YOY in FY23 driven by
Diversified (68%) and MFI (220%) NBFCs.
The profit was driven by reduction in credit costs (38bps YoY) and
higher NIM (37bps YoY). The reduction in credit cost is worth noting, despite RBI hiking
Repo Rate six times in the FY23, aggregating 250 bps to 6.5%.
NBFCs recorded higher credit growth (17%).
Asset quality of NBFCs is reaching pre-pandemic levels even as they are
witnessing a huge jump in credit demand.
Asset quality improved for all NBFC segments except Gold loan NBFCs in
FY23.
Despite few NBFCs opting to cut capital buffer, NBFC sector remains
well capitalized to withstand shocks.
NBFCs diversifying funding resources, product portfolio (sectors) and
service models Issuance of NCDs by NBFCs almost doubled in FY23 and surpassed the FY20
levels Addition of newer products to drive growth Breaking traditional grid-locks with aid
from FinTechs.
Post the pandemic, an accelerated shift is witnessed in Digital
adoption by NBFCs.
OPPORTUNITIES
In general, NBFCs have big opportunities in lending last mile, where
the banks cannot reach. Such sectors could be retails, infrastructure, affordable housing,
renewable energy, small business loans, vehicle loans, etc. These sectors offer robust
growth with high margin. The sector is expected to grow more than 14%. So, the expected
credit growth is a significant opportunity for NBFCs. The growth in demand for credit is
driven by the increase in consumer spending, the rise of e-commerce, and the expansion of
small and medium-sized enterprises. NBFCs can leverage this opportunity by expanding their
offerings and catering to the diverse needs of their customers. Another opportunity for
NBFCs is the growth of digital payments and the adoption of digital technologies in the
financial sector. The rise of digital payments has led to a surge in the number of digital
transactions, which has created a vast amount of data. NBFCs can leverage this data to
offer personalized financial products and services to their customers. The use of digital
technologies such as Artificial Intelligence (AI) and Machine Learning (ML) can help NBFCs
to automate their processes, reduce costs, and enhance customer experience.
THREATS
One of the significant challenges faced by Kalyan Capitals is the
liquidity crunch. It needs to be well-capitalised.
Competition from banks and big NBFCs is always posing a challenge.
INITIATIVES BY KALYAN CAPITALS
Considering the positive growth trends in NBFC sector, Kalyan Capitals
has initiated the following steps:
Building strategic partnerships with larger financial institutions or
fintech companies to access funding, technology, and expertise.
Investing in modern technology infrastructure and automation solutions
to streamline processes, improve efficiency, and enhance customer experience.
Prioritizing regulatory compliance through dedicated compliance
personnel, regular training, and leveraging external consultants when needed.
Developing a strong risk management framework by hiring experienced
professionals and implementing robust risk assessment processes.
Implementing effective customer acquisition and retention strategies,
including targeted marketing, personalized customer service, and loyalty programs.
Exploring collaborations and associations with industry bodies to
access market data, industry insights, and credit-scoring models.
Developing a proactive liquidity management strategy that includes
contingency plans, diversification of funding sources, and stress testing.
SEGMENT
The Company currently operates only in one segment, i.e., investment in
securities and the entire income as reported in the financial statements pertains to this
business activity only.
CAUTIONARY STATEMENT
Statements in this "Management Discussion and Analysis
Report" describing the Company objectives, projections, estimates, expectations or
predictions may be "forward looking statements" within the meaning of applicable
securities laws and regulations. Actual results could differ materially from those
expressed or implied. Important factors that could make a difference to the Company?s
operations include global and India demand supply conditions, cyclical demand and pricing
in the Company?s principal markets, changes in Government regulations, tax regimes,
and economic developments within India.
The details of significant changes in financial ratios, along with
detailed explanation there of as per the SEBI (LODR) Amendment Regulations, 2018
| Particulars |
FY |
FY |
Reason for variations during FY 2022- |
|
2023 |
2022 |
23 |
| Debtors Turnover |
- |
- |
As there is no trade receivables during the year under
review. |
| Inventory Turnover Ratio |
- |
- |
Therefore, debt or turnover ratio is nil. There is no
inventory during the year under review. |
|
|
|
Therefore, Inventory turnover ratio is nil. Due to increase
in Interest cost. |
| Interest |
1.18 |
1.19 |
|
| Coverage Ratio |
|
|
|
|
|
|
As Current Liabilities are less as compared to |
| Current Ratio |
1.17 |
1.09 |
Current Assets. This improvement is primarily attributed to
enhanced working capital management practices and reclassification of financial statements
during the year under review. |
|
|
|
The Company has successfully maintained a |
| Debt Equity Ratio |
2.83 |
3.22 |
low debt-equity ratio, which further declined during the year
on account of additional capital raised through preferential issue and higher growth in
net profits. |
| Operating Profit |
|
|
|
| Margin (%)* |
- |
- |
- |
| Net Profit Margin (%) |
11.00 % |
10.18 % |
As the net profit of the company has been increased during
the financial year 2022-23 as compared to net profit in the previous financial year, Net
Profit Margin also increases. |
| Return on Net Worth |
6.00 % |
1.98 % |
As the net profit of the company has been increased during
the financial year 2022-23 as compared to net profit in the previous financial year,
Return on Net Worth also increases. |
|
|
By the order of the Board |
|
|
For Kalyan Capitals Limited |
| Date: April 28th, 2023 |
Sd/- |
Sd/- |
| Place: Delhi |
Rabindra Kumar Das |
Sunil Kumar Malik |
|
CEO & Director |
Director |
|
DIN: 00233306 |
DIN: 00143453 |
|
Add: 801, Raheha Majestic |
Add: 159, Gagan Vihar |
|
Manamala Tank Road |
New Delhi-110051 |
|
Mahim West, |
|
|
Mumbai-400016 |
|
+91-9892691696
