Smart Finsec Ltd Management Discussions

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 thus differ materially from those projected in any such forward-looking Statements.

Industry Structure and Current Scenario

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 Government has consistently worked on the governance 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.

Opportunities and Threats

The government is taking several measures to ease the challenging situations prevailing in the sector by way of providing liquidity support 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 the businesses: - Slowing economy and continued high inflation leading to decelerating investment demand; Regulatory changes across the world impacting the landscape of business; Competition from local and multinational players Attrition of employees caused by strong demand from ever increasing number of competitors

Area /Product Wise Performance

The Company is a Non-Banking Finance Company (NBFC). It is engaged in the business of investment, lending and real estate segment in the Company. Hence, the results for the year under review pertain to only financing activity and real estate.

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 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.

Risk and Areas of Concern

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 level and degree of risk varies depending upon the nature of activity undertaken. The Company is especially focused on improving sensitivity to assessment of risks and improving methods of computation of risk weights.

Internal Control Systems and their Adequacy

The Company has proper and adequate system of internal controls commensurate with its size and nature of operations to ensure accuracy of accounting records, compliance with applicable laws, rules & regulations, and ensure that all its assets are safeguarded and protected against loss from unauthorized use and disposal. During the year, such controls were tested and no reportable material weaknesses in the design or operation were observed.

Financial Performance

The paid up equity share capital of the Company as on March 31, 2023 stands at Rs. 3,00,000,00 divided into 30,00,000,00 equity shares of Rs. 1/- each fully paid up and 1,40,000 Non-Convertible Cumulative Redeemable Preference Shares of Rs. 100/- each. The Companys financial performance, for the year ended 31st March, 2023 is summarized as below:

Particulars	F.Y. ended 31.03.2023	F.Y. ended 31.03.2022
Revenue from Operation	3,075.48	5081.99
Other Income	Nil	Nil
Depreciation	5.45	5.45
Profit/ (Loss) before Tax	191.91	454.96
Profit/ (Loss) after Tax	141.25	345.84

Human Resource Development

Human Resource is valued as an extremely important and strategic resource and Your Company is focussed on building a high-performance culture with a growth mindset where employees are engaged and empowered to be the best they can be in order to achieve organizational effectiveness. Developing and strengthening capabilities of all employees in your Company has remained an ongoing priority.