MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure & Developments: The Company is asset finance company focusing on rural, semi-urban & other under banked geographies of Gujarat & Maharashtra. Company has conceptualized simple & speedy, small cap, asset financing products with high yields. Threats & Risks: There may be drastic slowdown in demand for the two wheelers. However, company is confident to growing business due to withdrawal of NBFC's /Bank from this sector. There is always a greater difficulty of seizing NPA assets from rural than urban area due to non-co-operation of customers and local community brssure. Shalibhadra Finance Limited has mitigated this risk to a great degree by keeping the average loan size small and financing a maximum of 75% of the vehicle, along with a robust hypothecation policy, besides building relationships with locals with human face. However, a major slowdown in economy, fluctuation in interest rates, liquidity availability, extraordinary increase in fuel prices or vehicle taxes, floods or such calamities can drastically affect Shalibhadra Finance Limited business growth and asset portfolio in non-urban segments. Operations & Control Systems: Shalibhadra Finance Limited has a very good brsence in Gujarat and Maharashtra, being "the dominant player" in its segment of financing 2 wheelers in rural, semi rural and under banked areas. Shalibhadra Finance Limited operates in small towns, villages and city outskirts where the customer is not very literate and highly unorganized. Shalibhadra Finance Limited has its grip on the right pulse of the market segment in question, and has mastered the art of keeping excellent relations with its clients without compromising on growth and bottom-line, resulting in return business and word of mouth publicity. Shalibhadra Finance Limited has tie up's with various dealers, brokers and service station sbrad across around 50km, range of each branch from where regular business is generated. Our company believes that normal collection through post dated cheques will not work in rural areas due to poor banking habit & poor banking penetration. The company has tied up with various Co-operative banks to collect on behalf of company which has received good response from customers. Company dose not operate on franchise or DSA model but put up its own branches in owned brmises. The company thinks that this small loan business is highly service oriented & requires physical brsence & can not be done from a long distance. We have to be physically brsent & be face-to-face to give service to rural borrower. Company covers up to 50km. of area from each branch to keep its high standard of service & be in touch with customers directly. Company employs local rural people who know local market well, know local language properly & can easily establish good relationship with local customers. This also helps in keeping employee cost down and keep attrition rate low. Shalibhadra Finance Limited have a reasonably de-centralized decision making system with the first contact employee empowered to initiate sanction of loans under supervision of branch heads upto certain amounts. All disbursements of loan are done from head office. All branches are fully computerized and are linked on line. Once loan is sanctioned there is strong MIS system which is centralized at head office. Monthly reporting system of all overdues and follow-ups with customers are in place. All documents pertaining to hypothecation are kept at branches. IMOC are sent from Head office. The company has also got all its documents digitized by an outside agency. People having extremely low income are served by Microfinance institutions. The company does not target them as they usually do not have means/ income to buy any vehicles. The company wants to finance people who are in slightly higher income bracket. Company has just started financing white goods in rural areas. Initial reports are positive & this will open new avenues of growth. There is practically no finance available for white goods in rural areas. The company has got rating of BBB- (Stable) from ICRA. This will help in raising funds at cheaper rate. Company is trying to increase its geographical brsence. It is planning to open 6 new branches in Maharashtra this year. The company is also considering opening its first branch in Madhya Pradesh this year. The company has moved out of 3/4 wheeler segment & concentrating only on small ticket loans where yields are better. With share of white goods & old two wheeler financing increase, the yields will improve. Company has implemented new software while has improved efficiency. Future Outlook: Due to withdrawal by Banks /NBFC from Two wheelers financing business we have great opportunity to tap this market The Indian rural landscape is rapidly changing, brsenting various growth opportunities. The rural customer (>75% of the population) is becoming more market savvy, and aspires for a higher life quality. Shalibhadra Finance Limited objective is to grow its customer base to over 1,00,000 customers, 50 braches and a vehicle finance portfolio of Rs 1000 million by March 2017. Shalibhadra Finance Limited plans to concentrate further on smaller but upcoming towns to avoid margin competition. Shalibhadra Finance Limited customers are generally salaried class, agriculturist and self employed. This industry in growing in double figure rates and competition from other NBFC's and banks is practically non-existent due to relatively small & wide market and high service oriented business. B. Clause 32: Cash flow statement pursuant to clause 32 listing agreement is provided along with Notes to Accounts. Cautionary Statement: As stated in the beginning, this report Shareholders is in compliance with the corporate Governance Standard incorporated in the listing Agreement with the stock Exchanges and as such cannot be constructed as holding out of any forecasts, projections, expectations, invitations, offers etc, within the meaning of applicable securities, laws and regulations. This report basically seeks to furnish information, as laid down with in the different headings provided under the sub-head Management Discussion and Analysis to meet the Listing Agreement requirements. Financial Performance During the year the operations have been satisfactory and profitable insofar as the Company has generated revenue of Rs.1250.45 Lacs (Previous year Rs. 1058.46 Lacs) and a profit after tax of Rs. 379.33 Lacs (Previous Year Rs 300.61 Lacs). |