Capital Trade Links Ltd Management Discussions

MANAGEMENT DISCUSSION AND ANALYSIS REPORT

1. Companys Overview

Capital Trade Links Limited (the Company) is a BSE-listed, Non- Deposit taking, Non-Systemically Important Non-Banking Financial Company (NBFC-ND- NSI) registered with the Reserve Bank of India (RBI). It is engaged in the business of providing personal loans, auto loans, business loans and consumer durable loans to enterprises from all spectrum. With financial inclusion at its heart, Capital T rade Links Limited caters to unmet credit needs of enterprises and individuals belonging to diverse segments, who are otherwise left out by formal banking system.

We have operational footprint spread all over India and branches spread across five states (Delhi, Uttar Pradesh, Gujrat, Rajasthan and Uttarakhand). We caters to credit needs of both micro and macro entrepreneurs in important and essential segments by extending loans ranging from ticket size of INR 1,00,000 to 15,00,00,000 with tenure ranging from 3-36 months.

The company portfolio comprises business loans, Personal Loans, LAP (Loan Against Property), Mobile Loan and Vehicle Loan and fulfils working capital requirement, among others, of individual, partnership firms, entrepreneurs, body corporate/business clients and other legal entities.

The Asset Under Management (AUM) as on March 2023 of the company is as depicted in Diagram Below.

Key Strengths:

> Technical Partner: Your company has engaged with Fintech Companies and using their web/app-based platform for disbursing loans. Fintech Companies provide the onboarding, verification, collection services and create visibility of short-Term personal loan product in order to attract qualifying customers desirous of obtaining loans thereby expanding customer base with help of technology.

> Top to Bottom Knowledge of Market: With consistent Research, steady client commitment, project observing and pragmatic involvement in the industry, we have built a comprehensive understanding of the Clients and their financial needs.

> Fast Disbursement of Loan: We have set up an effective advanced disbursement process, which is buttressed by technology at every stage. With appropriate and accurate documentation and built-in flexibility, our loans are usually disbursed promptly.

2. FORWARD - LOOKING STATEMENTS

This Report contains forward - Looking Statements. Any explanation that tends to form assumptions or forecasts about the future, including however not restricted to articulations about the Companys strategy and growth, product development, market position, expenditures and financial results, are forward looking statements. Forward looking statements are based on specific presumptions and assumptions for future development. The Company cant ensure that these presumptions are precise and will be realized. The Companys actual results, performance or achievements could in this way vary physically from those projected in any such forward-looking statements.

3. INDUSTRY STRUCTURE AND CURRENT SCENARI

Over the past few years, Non-Banking Financial Companies (NBFCs) have played a prominent role in the Indian financial system. They provide financial inclusion to the underserved section of the society that does not have easy access to credit. NBFCs have revolutionized the Indian lending system and have efficiently leveraged digitization to drive efficiency and provide customers with a quick and convenient financing experience. The plethora of services include vehicle financing, business financing, personal financing, and other retail segments The Government has consistently worked on the measures to strengthen the systemic importance of the NBFCs.

NBFCs have come a long way in terms of their scale and diversity of operations. They now play a critical role in financial intermediation and promoting inclusive growth by providing last-mile access of financial services to meet the diversified financial needs of less-banked customers. Over the years, the segment has grown rapidly, with a few of the large NBFCs becoming comparable in size to some of the private sector banks. The sector has also seen advent of many non-traditional players leveraging technology to adopt tech-based innovative business models.

4. OPPORTUNITIES & THREATS

On-going stress in public sector banks (PSUs) because of increasing bad debt, lending in rural areas deterioration has provided NBFCs with the opportunity to increase presence. The success of these NBFCs can be attributed to product lines, lower cost, wider and effective reach, strong risk management capabilities to check and control bad debts, and a better understanding of customer segments versus banks. NBFCs have witnessed success in the passenger and commercial vehicle finance segments as well as growing AUM in personal loan and housing finance sector. Additionally, improving macro-economic conditions, higher credit penetrations, consumption themes and disruptive digital trends have influenced NBFC credit growth. Stress in public sector units (PSUs), underlying credit demand, digital disruption for MSMEs and SMEs as well as increased consumption and distribution access and sectors where traditional banks do not lend are major reasons for the switch from traditional banks to NBFCs.

Growth of the Companys asset book, quality of assets and ability to raise funds depend significantly on the economy. The performance of capital market in India has a direct correlation with the prospect of economic growth and political stability. Despite great opportunities, there are significant factors presenting threats to our businesses: -

• Slowing economy and continued high inflation leading to decelerating investment demand;

• Regulatory changes across the world impacting the landscape of business;

• Attrition of employees caused by strong demand from ever increasing number of competitors

5. AREA & PRODUCT WISE PERFORMANCE

Companys AUM grew by almost 2.5 times in FY23 to INR 143 crores and AUM is well diversified across geographies and products thus lending stability to portfolio quality.

Amount in lakhs

6. SEGMENT WISE PERFORMANCE

The Company has only one line of business, i.e., Financing and Investment Activities during the year under review, hence no segment wise information is required. The Company has no activity outside India. Therefore, there is no geographical segment.

7. OUTLOOK

The NBFCs are being recognised as being vital for the growth of Indian economy. NBFCs are here to stay and play an important role in economic growth and financial inclusion. As Indias economy grows, the requirement for credit will rise more than proportionately. We need both Banks and NBFCs to rise to the occasion and power the economy with free flowing credit lines. NBFCs with robust business models, strong liquidity mechanisms and governance & risk management standards are poised to reap the benefit of the market opportunity.

The Company is mainly engaged in the business of financing and investment in body corporate in order to yield greater revenue for its stakeholders. The Company is planning to expand and diversify the operational activities in the coming years ahead in order to tap higher revenues.

8. RISK AND AREAS OF CONCERN

The Companys Board of Directors has overall responsibility for the establishment and oversight of the Company risk management framework. Company is exposed to specific risks that are particular to its business and the environment within which it operates including economic cycle, market risk, interest rate risk, liquidity risk, regulatory & compliance risk and credit risks. Managing risk effectively also helps in achieving the desired outcome, while fixing responsibility and accountability. The Company is especially focused on improving sensitivity to assessment of risks and improving methods of computation of risk weights.

9. CAPITAL MANAGEMENT

The Companys capital management strategy is to effectively determine, raise and deploy capital so as to create value for its shareholders. As on 31st March, 2023, the Capital to Risk Assets Ratio (CRAR) of your Company was 26.97% which is above the minimum requirement of 15% CRAR prescribed by the Reserve Bank of India.

Capital Trade Links diversified its funding sources by adding 7 new lenders in FY23 including the leading PSU Bank i.e. State Bank of India , taking the total lender count to 21 as of March 2023. New lenders in FY23 included- Faridabad Paper Mills Pvt Ltd, Goyal Achal Sampatti Vikas and Niyojan Nigam Limited, Pro Fin Capital Services Limited, Shivom Investment & Consultancy Limited, SIIA Advisory Private Limited, SKAEL Enterprises Private Limited. Total debt raised was INR 115.28 crore in FY23 which is phenomenal in terms of growth in leverage as compared to previous INR 15.85 in FY 22. Continued support from existing lenders and addition of 7 new lenders demonstrates the confidence of the lenders in Capital Trade Links s credit processes, asset quality, collection efficiency and the management team.

10. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has appointed CA Chiranjivi Abhishek, as its Internal Auditors, to conduct internal audit for various activities. The Company has developed adequate internal control system commensurate to its size and business. Personnel of the Internal Auditor conduct periodic audits in all the areas to ensure that the Companys control mechanism is properly followed and all statutory requirements are duly complied with. The reports of Internal Auditors are submitted to the Audit Committee which further reviews the adequacy of Internal Control System and submits it recommendation to Board of the company.

STRONG MANAGEMENT:

We are run by Board of Directors and dynamic team of professionals having diverse and senior level experience in Micro-loans industry, Company Law, Capital Markets & Financial Services. In addition to strong and dynamic management team, it has coveted independent directors on its Board.

11. FINANCIAL PERFORMANCE

PERFORMANCE AT A GLANCE	FY23	FY22	% YOY
Income & Profitability (INR crore)
Interest Income	14.00	7.82	79%
Total Revenue	16.83	9.75	72.6%
Profit (Loss) Before Taxes	3.73	3.13	19.6%
Asset Size	143	42.42	237%
Capital Position (INR crore)
Equity as of 31st March	6.09	6.09	-

PROFITABILITY AND OPERATION GROWTH:

Total Income from Operations for FY23 was INR 16.8 crores compared to INR 9.70 crores in FY22, reporting a phenomenal growth of 73% on YoY basis. We witnessed exceptional expansion of INR 101 crores in asset size from Rs. 42 crores in FY 2021-22 to 143 crores in FY 2022-23 backed by strengthening funding sources from diverse lender.

With recognition of current tax expenses of INR 121.06 lakhs in FY23, Net Profit for FY23 was INR 2.49 crores compared to a Net Profit of INR 2.47 crores last year.

HUMAN RESOURCE DEVELOPMENT:

The Company attaches importance to the dignity of employee irrespective of position and highly values the cultural diversities of employees. Human Resource is valued as an extremely important and strategic resource and your Company believes in employee empowerment across the entire organization in order to achieve organizational effectiveness. As on March 31, 2023, the Company had 18 employees.

We ensured that all the rightful claims of the employees like salary, increments, and bonuses, are timely extended.

We consider our people as our biggest asset and hence we make sure we hire the right talent with the right skill set. All employees go through a rigorous interview and onboarding process. The senior management is personally involved in each and every hiring, giving the importance it deserves.

We are building an inclusive working culture which is based on trust, respect and transparency. We will continue to invest in our people through various training programs, providing growth opportunities in both functional and cross-functional roles and provide mentorship for shaping their careers.