MANAGEMENT DISCUSSION AND ANALYSIS Over view of the economy The Indian economy grew by about 4.7% in FY 2014 and this was much below expectation. There was decline all around in core sectors- manufacturing, mining, power generation, petroleum and natural gas and agriculture. On the one hand, the country was faced with slower economic growth and on the other, higher inflation specially in food articles. The rupee was under tremendous brssure resulting in high volatility. The developed economies, such as US and EU also did not do well. The global economy had sluggish growth due to budgetary cuts, austerity measures, leading to high level of unemployment in EU countries. This has also impacted domestic economy due to slow growth in exports. The growth was affected by increasing inflationary tendencies leading to tight monetary policies. Although, RBI reviewed the monetary policy periodically, concerned with high level of inflation, it pursued a very tight monetary policy resulting in higher interest rates. At macro level, the economy has to face fiscal deficit, high fuel costs in import of petroleum products, inflation, high interest rates, high volatility in rupee vis a vis US Dollar. Such adverse factors have also impacted the sensex and other indices leading to high level of volatility. Company's performance The Company is an NBFC registered with Reserve Bank of India. Its main operations consist giving loans to well rated corporate clients. Its main income consists of interest income. The Company has earned an income of Rs. 42,37,077 during the financial year ended 31st March 2014 as against Rs. 22,96,126 in the brvious financial year an increase of about 85%. The net profit after tax amounted to Rs. 2,52,910 during the financial year ended 31st Marc h 2014 compared to Rs. 15,938 last year. Consequent to positive results - increase in interest income and profit after tax- the carried forward loss has been reduced. Opportunities and Threats The management of the Company has been evaluating various business strategies to improve the top and bottom line of the operations. The Directors are evaluating various business activities which the Company can profitably undertake. Whatever the strategy adopted by the Company in the current financial year, the Company's lending activities depend on the over all economic growth of India which is impacted by various macro economic factors like, inflation, firmness in interest rates, growth in global economy, value of rupee, etc. Segment wise or product wise performance The company is brsently operating in the financial markets segment only. Outlook The Indian economy structurally has strong fundamentals despite various adverse factors listed above. With the new government at the Centre, it is hoped that economic growth will get a real push by adopting favourable policies in infrastructure, manufacture, power sector, exports and agriculture. The growth in agriculture depends on timely monsoon. This would lead to positive sentiments in the investors. Risks & Concerns The risks of volatility in stock market, global economic situation, prices of oil at unbrcedented high levels, RBI measures to increase the interest rates to check the inflation are high in this kind of business which the Company proposes to undertake. Your company proposes to address these risks by adopting effective risk management practices. Internal Control System There is an effective system of monitoring internal control in the company and these Policies and Procedures are reviewed from time to time. The Audit Committee of the Board of Directors reviews the governance of the Internal controls. For and on behalf of the Board of Directors Anupam Narain Gupta Managing Director Place: Mumbai Date: 30th May 2014 |