Minda Finance Ltd Management Discussions

BUSINESS OVERVIEW:

Minda Finance Limited ("MFL" or "the Company") is a group Company of the diversified UNO MINDA N.K. Minda Group. MFL is registered under the Category-B, Non-Acceptance of Public Deposit Company with the Reserve Bank of India and to carry on NBFC activities under section 45-IA of the Reserve Bank of India Act, 1934.

The core business of Minda Finance Limited is to provide Bills Discounting Facility to the UNO MINDA N.K. Minda Group companies including its Suppliers and the Vendors. In addition to this, the Company also provides the inter-corporate loan(s) and to do the investments in shares of companies.

MFL has one subsidiary Bar Investments and Finance Private Limited ("BARINV"), which is also registered as Category-B, Non-Acceptance of Public Deposit Company with the Reserve Bank of India.

THE COVID-19 PANDEMIC:

The COVID-19 pandemic has spread across the globe — leading to 2,12,94,845 confirmed infections & over 7,61,779 deaths. India also has had 25,89,682 confirmed infections & 49,980 deaths as per COVID-19 Situation Report–200 of World Health Organisation (WHO) dated 16 August 2020. COVID-19 has caused disruptions on an unimaginable scale. The pandemic has presented fresh challenges for the Indian economy now, causing severe disruptive impact on both demand and supply side elements.

While India was battling with its own form of slowdown in form of liquidity crisis in NBFCs, poor consumption, weak investments, and consumer sentiments; a combination of fiscal stimulus and financial sector reforms was sought to help boost investments and consumption. Reforms to simplify taxation, lighten business regulations, lending rate cuts and upgrade infrastructure together formed Indias efforts to support a recovery in growth.

To fight this, Government of India announced a 1.7-trillion-rupee economic stimulus plan providing direct cash transfers and food security measures to give relief to millions of poor people hit by a nationwide lockdown over COVID-19.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Over the past few years, NBFCs have undergone a significant transformation and today they form an important component of Indias financial system. Playing a critical role in the development of infrastructure, transport and employment generation, NBFCs are changing the business loan landscape in the country. The use of technology to optimize business processes also keeps cost overheads to a minimum, enabling credit to be availed at highly competitive interest rates.

The RBIs moratorium measures for customers is likely to put additional stress on many NBFCs. On one hand, NBFCs have to offer such moratoriums to their customers; while on the other, their market borrowings must be repaid on due dates.

The Reserve Bank of India (RBI) announced the following measures in March 2020 to mitigate the risk of an economic fallout due to COVID -19:

Permitted all lending institutions to allow a moratorium of three months on repayment of instalments for term loans outstanding between March 1, 2020 and May 31, 2020.

Permitted all lending institutions to allow the deferment of three months on payment of interest with respect to all such working capital facilities outstanding as of March 1, 2020.

Announced a Rs 3.74 lakh crore of liquidity package for Indian banking system. Slashed the Cash Reserve Ratio (CRR) by 100 basis points to 3% of bank deposits.

Allowed banks to borrow an additional 1% from their investment of Statutory Liquidity Ratio (SLR) securities.

Cut repo rate by 75 bps to 4.40%.

Cut the reverse repo rate or the rate at which it accepts excess funds from banks by 90 basis points to 4% widening the existing policy rate corridor from 50 bps to 65 bps.

OPPORTUNITIES:

The Board feels the Government of Indias (GOI) efforts to increase banking penetration through its Jan Dhan Yojna and the integration of PAN and Aadhar are expected to enhance the savings in financial assets. The shift of savings to financial instruments from physical assets and bank deposits has been largely on account of high inflation and high interest rate scenario over the period. The financial services sector is also witnessing growing digitisation. The digitisation efforts have seen accelerated growth in financial services sector, and it is set to grow significantly, according to the RBI. The financial sector is leveraging digitisation to increase internal efficiencies, provide value-added customer services, minimize risk and support Indias expanding economy.

Over the past few years, NBFCs have undergone a significant transformation and today they form an important component of Indias financial system. Playing an important role in the development of infrastructure, transport and employment generation, NBFCs are changing the business loan landscape in the country. The difference in approach allows NBFCs to meet loan requirements of individuals and businesses left traditionally underserved by banks. With the introduction of e-KYC, making borrowing an instant and hassle-free experience, NBFCs are already offering the right financial products to consumers and small businesses in a customised manner. The use of technology to optimise business processes also keeps cost overheads to a minimum, enabling credit to be availed at highly competitive interest rates.

THREATS:

India has seen a sharp deceleration in GDP growth owing to liquidity crisis, agrarian community stress, complication in adapting to new policies and the most recent COVID-19 outbreak. If the overall economy continues facing setbacks at the same pace, a pick-up in the financial sector would be delayed.

The Board also feels that other than the GDP growth, high cost of funds, Rising Non-Performing Assets (NPAs), Restrictions on deposit-taking NBFCs, Competition from other NBFCs and banks are threats for the organization.

SEGMENT–WISE PERFORMANCE:

The Company is engaged in single segment of finance and thus separate segment wise performance details cant be given.

OUTLOOK AND FUTURE PROSPECTS:

Going forward, it is expected that the industry would witness robust growth as the sector is yet to tap its full potential. Besides, several measures taken by Securities and Exchange Board of India (SEBI) and Reserve Bank of India (RBI), the regulators, will help increase the penetration of funds. Some of the factors that will drive the growth in 2020 include the untapped potential, rising investor awareness about financial sector amongst customers.

RISK AND CONCERNS:

A well-defined risk management framework forms an integral part of our business strategy. The major risk involves economic situation, Pandemic risk, Liquidity Risk, Interest Rate Risk, Operational Risk, Credit Risk, Business Risk, Regulatory Risk and Information Technology Risk.

However, your company ensures adherence to best practice and has necessary internal system and control in place to manage the risk. Further the strict regulations and guidelines imposed by the regulatory authorities like SEBI, Stock exchange and NSDL with reference to capital market operation and Depository functions are sufficient in controlling the market related financial and technical risks. All these guidelines of the regulatory authorities whether it for margin money in capital market transaction or otherwise are being strictly adhered to by your company.

INTERNAL CONTROLS SYSTEMS AND THEIR ADEQUACY:

Our effective internal control system plays a crucial role in our efficient daily operations. The company has adequate internal control systems to ensure operational efficiency, protection and conservation of resources, accuracy and promptness in financial reporting and compliance of law and regulations.

The internal control system is supported by the internal audit process. The reports, thereby prepared, are reviewed in the Audit Committee meetings. Corrective measures to strengthen the internal controls are suggested and taken in consideration. The Audit Committee of the Board reviews the Internal Audit reports and the adequacy and effectiveness of internal controls.

FINANCIAL PERFORMANCE:

Financial performance with the financial data and figures, have been given in detail in Directors Report.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

The relationship with the employees continues to be cordial. The Company recognizes the importance and contribution of its employees for its growth and development and constantly endeavors to train nurture and groom its people The Company puts emphasis on attracting and retaining the right talent.

The company places emphasis on training and development of employees at all levels and has introduced methods and practices for Human Resource Development.

CAUTIONARY STATEMENT:

Statements in this Management Discussion and Analysis describing the companys objectives, projections, estimates and expectations may be forward looking statement within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy.

3. Details of top 10 employees in terms of remuneration drawn:

Name of Employee	Designation	Nature of Employment (contractual or otherwise)	Qualification and experience	Date of Joining	Age	Previous Employment	Remuneratio n (In Rs.)	% age of Shares Held	Name of Relative of any Director or Manager
1. Mr. Pramod Kumar Garg	Whole- time Director	Permanent (on roll)	B.Com	14.08. 2014	65	N.A.	11,52,000	0.10	N.A.
2. Mr. Lalit Khubch andani	Company Secretary	Permanent (on roll)	CS, M.Com, B.Com	15.11. 2018	33	DLF Home Developers Limited	6,15,888	Nil	N.A.