MANAGEMENT DISCUSSION AND ANALYSIS INTRODUCTION The Company and its wholly owned subsidiary Pioneer Money Management Ltd. are SEBI registered Category - I Merchant Banker, and provide Investment Banking and Financial Advisory Services. The Company offerings include formulating capital structure, raising capital, debt restructuring, project financing, coal consultancy and other corporate advisory services. Its Wholly Owned Subsidiary provides services in the area of Secondary capital market like open offer in Takeovers, Right issue, Buy-back, Mergers and Amalgamation, and valuation assignment. CORPORATE STRUCTURE The structure of its Company's Subsidiaries and their nature of Activities are as below: 1. Infinity.Com Financial Securities Ltd. - Trading cum Clearing Member of NSE, BSE & Depository Participant- CDSL, Trading member in currency Derivatives of MCX-SX; 2. Pioneer Wealth Management Services Ltd. - SEBI Registered Portfolio Manager; 3. Pioneer Fund invest Pvt. Ltd. - a Non Banking Finance Company (Not accepting Public Deposit); 4. Pioneer Commodity Intermediaries Pvt. Ltd. - Trading cum Clearing Member of NCDEX and MCX and Trading Member of ICEX; 5. Pioneer Money Management Ltd.- SEBI Registered category - I Merchant Banker; and 6. Pioneer Investment Advisory Services Ltd. - Advisory & Consultancy. INDUSTRY STRUCTURE AND DEVELOPMENTS The Industry in which the Company belongs is highly competitive and also in consolidated phase and there are very few niche players who are able to click big ticket deals. However overall positive sentiments would results in increase in credit off take, and your Company is confident to take advantage of the same which may result in improvement in overall performance of the Company. OPPORTUNITIES AND THREATS Opportunities • Being part of the India's growth story • Growth and positive sentiment in economy and financial market • SEBI's recent steps on improving sentiments in Primary and Secondary Market Threats • Fiscal deficit and current account deficit • Volatile Global Economic conditions • Competition • attracting and retaining talent and training them for the right culture SEGMENT WISE PERFORMANCE The Company on a standalone has two segments i.e. Income from Merchant banking and Advisory fees and Income from Shares and Securities. On a consolidated basis, Group Income comprises of three segments, i.e. Income from Merchant Banking and Advisory fees, Income from Shares and Securities, Equity Brokerage and Related Income. On a year to year comparison its Income from Merchant Banking and Advisory fees has decreased due to lackluster Credit Growth and Capital Market conditions and Group's Brokerage and Related Income was stagnant. However Groups Income from Shares and Securities has shown good performance during the year end under review as compared to last year Investment Income. OUTLOOK Global Factors As per IMF estimates (World Economic Outlook, January 2015), World GDP growth remained unchanged at 3.3% in 2014. Global economic growth continued to remain uneven - while advanced economies like the US, Eurozone, and UK are expected to have gained traction in 2014, emerging economies like China, Russia, Brazil, etc. are expected to see a slowdown in their respective economies. Overall, it appears that the pace of economic recovery is getting marked by specificity. Two important financial market developments that stood out during 2014 was the apbrciation of the US dollar and the sharp fall in global commodity prices. Indian Economy India's economy is poised to return to its high-growth path, thanks to lower fiscal and current account deficits, falling inflation, benign commodity prices, and structural reforms to boost investments. Monetary policy is also likely to be supportive with the Reserve Bank of India (RBI) having moved to flexible inflation targeting. The manufacturing sector is likely to benefit from lower interest rates. The share of investments in Gross Domestic Product (GDP) is at 29% (compared to 33% in 2007) and is expected to pick up. However, productivity and capital efficiency improvement are likely to drive near-term growth. Company's Outlook for its business segments The Company is well brpared to take advantage of improved economic conditions and further consolidating its position in both Equity and Debt segments of Investment Banking business. The Company is continuously taking steps to increase its team strength in Investment Banking, to take advantage of near term opportunities in the Capital Market and impetus to manufacturing Sector by the stable Central Government. RISK AND CONCERN At a global level, employment in the US remains quite volatile, and there are mixed signals with regards to whether the recovery is robust or not. In Japan, coordinated monetary and fiscal stimulus have been successful in bringing the economy out of a deflationary zone; but the recent sales tax hike poses some risks for the domestic demand. In Europe, although the economy is out of recession, deflationary risks are still been debated on. China is going through a rebalancing phase, where growth has dipped below its long-term average, though it still remains one of the fastest growing economies globally. Inflation in these economies, however, has undershot projections, on account of recent commodity price declines, and is also reflective of still large output gaps. All these international challenges do not mean the risk of a double dip recession. However, it is the pace of recovery that could be lower than anticipated, and thus it is important to remain constantly vigilant. On the domestic front, it is widely anticipated that the rural growth story is losing steam, and as such, is likely to offer limited upside to growth in FY 2015-16. Moreover, the possibility of El Nino continues to pose a risk to rural growth. While, we expect average CPI inflation to decline in FY 2015-16, development of El Nino could potentially raise the downside risk to growth, and increase the upside risk to inflation. In such a scenario, revival of external demand, and recovery in the capex cycle would have to play a key role in driving the economy ahead. Beside these, domestic issues like weak monsoon, inflation brssure and tightening of status quo on rate tightening by RBI, pose a challenge to the economic activities, thus affecting the Indian Economy. The business of the Company is dependent on the international and domestic economic conditions. Global factors like geopolitical tension, economic slowdown are a potential risk to the company's performance. Further increase in competition among the financial market intermediaries is a concern and this can impact the performance of the company. INTERNAL CONTROL SYSTEMS The Company has in place adequate internal control system Commensurate with its requirements and the size of its business. DISSCUSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE The Company's overall financial performance during the year under review was improved resulting in consolidated total income of the Company increased to Rs.3447.77 lakhs as against Rs.3090.47 lakhs and net Profit after Tax was Rs.620.24 lakhs as against Loss of Rs.2085.60 lakhs(due to one time exceptional item). The overall Operational Performance both at Stand alone and also at Consolidated level has improved significantly in terms of reduction in Employment cost, Total cost as well as financial cost resulting in reductions in Long term borrowings and other long term liabilities of the Company and the Group as a whole. MATERIAL DEVELOPMENT AND HUMAN RESOURCES During the year under review, Company continues to balance its human resources with recruitment at both senior and mid level executives with an experience of around 8 to 10 years, to strengthen its Investment Banking Department, which continues to be the focus area. |