Maxvalue Credits and Investments Unlisted Shares

Annual Report Summary

The Annual Report 2021-22 for Maxvalue Credits and Investments Ltd. covers a period of significant challenge and adaptation for the company. The company experienced a net loss during the financial year, primarily attributed to a high level of Non-Performing Assets (NPAs) stemming from the economic slowdown related to the COVID-19 pandemic.

Chairman's Overview:

• The Chairman acknowledged the impact of the COVID-19 pandemic, which necessitated holding the Annual General Meeting (AGM) virtually.
• He highlighted the company's net loss for the year due to high NPA levels but expressed optimism about improving loan collections and easing NPA pressures.
• Expansion plans were announced, including exploring operations in Telengana, Tamil Nadu, Goa, and Maharashtra, building on the profitability of existing branches in Karnataka and Andhra Pradesh.
• The company aimed to expand its equity base and replace maturing long-term borrowings with cheaper funding sources.
• Efforts to address challenges such as bad debts, low-yielding loan schemes, and loss-making branches were underway.

Notice to Shareholders and Corporate Governance:

• The 27th Annual General Meeting was scheduled for September 16, 2022, to be conducted virtually.
• The agenda included adopting the audited financial statements, appointing directors, and special resolutions for issuing Non-Convertible Debentures (NCDs), mortgaging company assets, and increasing the authorized capital.
• Details regarding e-voting procedures, participation in virtual meetings, and contact information for inquiries were provided.
• Directors retiring by rotation and eligible for re-appointment were Mr. Nandakumar Kottarath and Mr. Gireesh Kumarapanicker.
• The authorized share capital was proposed to be increased from Rs. 200,00,00,000 to Rs. 500,00,00,000.
• Explanatory statements related to the special business items (issue of NCDs, mortgage, and increasing authorized capital) were included.

Directors' Report:

• The company's financial performance indicated total income of Rs. 1,57,08,39,011 and total expenditure of Rs. 1,94,57,03,297, resulting in a net loss of Rs. 37,17,37,967. No dividend was recommended.
• Business operations involved providing various loans and investment opportunities, adhering to Reserve Bank of India (RBI) guidelines.
• The report acknowledged the recovery from the pandemic-induced slowdown but also recognized the challenges of rising inflation and policy corrections.
• The company aimed to improve yield through gold loans and traders' loans, focusing on cost-efficiency in Karnataka and Andhra Pradesh.
• An NPA monitoring and recovery mechanism was established to reduce gross NPAs by 50% during 2022-23 and to less than 4% of total assets by 2023-24.
• The company repaid Rs. 6.47 Cr towards redemption of matured NCDs and Rs. 11.587 Cr towards matured subordinated debts but did not raise any additional borrowings during the year.
• As of March 31, 2022, the company had 71 branches in Kerala, 50 in Karnataka, and 4 in Andhra Pradesh, with plans to open 35 to 40 new branches in 2022-23.
• Internal audit and control systems were in place, with a Risk Management Committee to monitor risks.
• The company had 1632 employees as of March 31, 2022.
• The company is a Systemically Important Non-Deposit taking NBFC registered with the RBI.
• A policy on related party transactions is in place.
• The Board met on 9 occasions during the year.
• Details on directors' attendance at meetings were provided.
• The Board confirmed compliance with applicable laws and regulations.
• M/s. Unnikrishnan & Co were appointed as Statutory Auditors.
• M/s. Prasanth and Associates were appointed as the Secretarial Auditor, and their report was attached.

Secretarial Audit Report:

• The report confirmed compliance with the Companies Act, Depositories Act, and Foreign Exchange Management Act (FEMA).
• The report identified the following laws as specifically applicable to the company: All the Rules, Regulations, Guidelines and Circulars applicable to Non-banking Financial Companies under the RBI Act 1934 and The Sexual Harassment of Women at Workplace (Prevention, Prohibition and Redressal) Act, 2013.

Management Discussion and Analysis Report:

• The report provided an overview of the NBFC industry structure, opportunities, and threats.
• The NBFC sector faced severe disruptions in Q1:2020-21 due to the COVID-19 pandemic, followed by a revival aided by policy support.
• A SWOT analysis highlighted strengths in financing against gold jewelry, adequate capitalization, and a stable funding profile. Challenges included non-gold loan segments and operational risks. Opportunities included untapped potential in gold loans and technology innovations. Threats included gold price decline, regulatory changes, interest rate risk, and credit risk.
• Details on segment-wise (vehicle loan, gold loan, business loan, consumer loan) financial performance for March 2022 were presented.
• The company’s outlook emphasized reducing NPAs, managing the company’s portfolio, expansion into other states.
• The company has board approved Enterprise Risk Management Policy

Financial Statements & Notes:

• The balance sheet as of March 31, 2022, showed total equity and liabilities of Rs. 84,468.97 Lakhs and total assets of Rs. 84,468.97 Lakhs.
• The profit and loss statement for the year ended March 31, 2022, indicated a total revenue of Rs. 15,708.39 Lakhs and a loss before tax of Rs. (3,748.25) Lakhs.
• Cash flow statement for the year ended 31st March 2022 show net cash flows from operating activities of Rs. 2,336.13 Lakhs
• Detailed notes on share capital, reserves and surplus, long-term borrowings, trade payables, provisions, revenue from operations, deferred tax assets, cash and bank balances, and other financial items were provided.
• The audit opinion was unmodified, but vendor confirmations showed a balance of Rs. 73,72,827.31 with most being confirmed.
• It was observed that based on the inspection conducted by the RBI during the period September 18 to September 27, 2019, RBI directed that:The Company shall restrict expansion of its risk weighted assets.

Other Key Points:

• The report included information on related party transactions (AOC-2),
• Remuneration of Directors.
• A report from the independent auditor included information on internal financial controls, emphasizing their effectiveness as of March 31, 2022.

In summary, the Maxvalue Credits and Investments Ltd. Annual Report for 2021-22 detailed a year marked by financial losses due to NPA challenges stemming from the COVID-19 pandemic. Despite these challenges, the company outlined plans for expansion, improved efficiency, and strategies to address NPAs and reduce funding costs. The report also detailed the company's adherence to regulatory requirements, corporate governance practices, and risk management protocols.