MANAGEMENT DISCUSSION AND ANALYSIS Industry Structure and development Cni Research Ltd is in online media as well as qualitative research house covering economy, capital market and small cap and mid cap companies. Cni is the only company which sells research to investors domestic as well as global. There is a big vacuum in the industry as most of the analysts are chasing large cap companies. Cni Research Ltd is positioned itself to specialize in this field to fill the vacuum. Cni Research Ltd. has succeeded in creating a niche space for itself as slowly India is catching its global peers for research. NSE and BSE too have made initiatives to make some research available on their web sites so that investors can take informed decision. However, for quality conscious investors and traders there is no choice than the professional researchers like CNI. More than 2700 FII read CNI research through all acclaimed global distributors. There is growing requirement from international investors to tap the small cap as well as mid cap companies at the entry point and for that they require qualitative research. Cni has tied up with many global agencies discussed elsewhere to distribute their research to domestic as well as global investors. Your company so far were partnering with global players for selling or distribution of contents to major FII overseas through the various agencies. However, now for the first time your company has opened its doors to small and medium entrebrneurs, qualified professional, brokers and sub brokers to become partner of CNI Research Ltd through becoming a franchisee partners. The franchisee partnership scheme is yet to catch momentum due to continued sluggish market conditions. Opportunities and threat The demand in international market is growing for domestic research as India has become a favorite destination of overseas investors. Post global crisis the emerging markets are getting huge response due to higher growth as compared to their counterparts. Therefore there are enormous opportunities for the company in this segment. Your company is looking forward for further tie ups with reputed global players The fall of capital market will always remain a major threat and challenge. In fact last Four years post Lehman issue we have seen de grown in the retail investors and practically 80 to 90% investors have deserted capital market. Apart for the economic slowdown, high bank rates, high inflation, retail investors were hurt on policy issues which favors only FII and large investors. Risks and Concerns The growth of capital market is inevitable with the rising level of globalization and India is especially on the verge of expanding its wings by allowing major cross investments and mergers and acquisitions. Internet business is still in nascent stage and availability of funds to such business is always a risk and may impact delivery of several green field ventures. Internal control system and their adequacy The auditors are reviewing the control systems and processes in the operations of the company. The Audit committee and Board are reviewing the findings of the Auditors. Discussion of financial performance with respect to operational performance Your company has reported profit of Rs 1.01 crs. Your company though is heavily dependent on the stock market, every time the market has corrected your company has emerged stronger. Your company has reported strong volume growth which is seen from the graph below. Materialdevelopmentinhumanresources/industrialrelationsfrontincludingnoofpeopleemployed Realignment and skill was a key priority of the company during this year. Occupational health, Safety and Environmental management was also paid due attention at all levels. There are no industrial relations in your company as it is into net based technology driven research and on line media business. MARKET SCENARIO After recovering from the shock LEHMAN market tested 21000 which was call of your company. Your company first issued report on Sensex target of 14300 in April 2009 which was attained in 45 days. Your company then revisited the numbers to 20000 which happened in 2010 and just ahead of DIWALI your company brdicted 21000 on DIWALI day and that too happened. This time your Company had brdicted 272 seats win for NDA and Sensex 25000 which again seen light of the day. We had brdicted 30K Sensex in calendar year 2014, but it happened in Financial Year. We are now brdiction Sensex of 35K Plus in Financial Year 2015-16. The testimony of the facts told by your company appears in the CNI news clipping section in website where all the media clippings are made available to viewers on line. We believe if policy makers help investors with dynamic reforms and aggressive stance, the day is not too far where we can see our market test at 10000 Nifty. Yet, the index is expected to kiss 45k mark in next 3 to 4 years which would keep the demand going for financial services like those provided by us. We expect our top & bottom lines to grow further although there might be brssures on the margins. To overcome the threat from the lower margins Cni Research Limited has been seeking new avenues one of which is making sizeable investments in growth companies to reap the benefits from investments. Even new business opportunities through such investments and alliances are being worked out. Last 2 years Index have recovered and are very close to earlier highs through rise in many index based companies. However, even at 21000, the mid cap and small cap companies are nowhere to the peak of 2007 and hence there is a real discomfort among the small investors. 2005 to 2007 was an extra ordinary period small and mid cap segment and we believes that 2013 and 2014 will be the same kind of euphoria will be seen where stock prices are likely to rise by 1000%. TTK Health now trading at Rs 3000 was picked at Rs 90 by Cni Research team as investment idea. Every market brings out some new investment ideas and the coming years will give real comfort to small investors provided they do not repeat their old mistakes. FY 2013-14 began on very disappointing note with heavy volatility. Rupee gave real cause of concern. It kept on debrciating at rapid speed. One can really see the 346% drop in Rupee (1 US$=Rs. 17.5 in 1990 to Rs. 60 in 2013) against greenback USD. This is disturbing the CAD, fiscal deficit, imports and foreign debts. The main reason for such debrciation could be high attitude trading in currency with a margin requirement of as low as 2%.equity cult needs to be developed with slew of capital market reforms. We now believe that rate cut and rupee hedge could see rupee rising once again towards 57/$. The steep fall in oil prices & Government intention to reduce import bill of oil by 50% in next few years could spark rally in rupee. Wealth creation never happens through trading but by picking smart stocks in investments. India's no 1 fund manager now residing in Australia had made most in Infosys by picking Infosys at Rs 100. There are few investors who made their fortunes by picking Hero Honda and Bharati at Rs 40. Wealth creation is possible only by picking right stock at right price at right time. This is possible if the cult of stock picking through education is done and CNI is leaving no stone unturned to make this feasible. However FY 2014-15 began with big bang br election and post election meeting the ends of hungry investors. We expect FY 2015-16 could be repeat of FY 2014-15. PARTNERSHIPS & ALLIANCES CNI Research Ltd, has entered into a content sharing agreement with Thompson Reuters, Capital IQ a division of Standard & Poor's, Dow Jones Factiva a division of Dow Jones and TheMarkets.com LLC, USA, Blue Matrix and ISI Emerging markets UK, and host of other alliances in domestic arena. Recently we have also signed with Bloomberg too making CNI the only agency sharing content with multi agencies. PEOPLE INITIATIVES Our employees are the key to our sustained success. Using our own HR Management Solution the entire performance appraisal process has been automated to bring in better transparency and accountability. The Company is particularly fortunate in having created a team of dedicated employees who share a common passion and vision to provide service of the highest quality. This has given the Company a substantial competitive edge. For and on behalf of Board sd/- (Kishor P. Ostwal) Director Place: Mumbai Date: 22nd August, 2015 |