MANAGEMENT DISCUSSION AND ANALYSIS REPORT BASIS OF ACCOUNTING The financial statements of the Company have been brpared in accordance with the Generally Accepted Accounting Principles in India (Indian GAAP) under the historical cost convention on the accrual basis. The Company has brpared these financial statements to comply with all material aspects of the Companies (Accounts) Rules 2014 and the relevant provisions of the Companies Act, 2013. The accounting policies adopted in the brparation of financial statements are consistent with those of brvious year. FINANCIAL PERFORMANCE HIGHLIGHTS The year under review was a better year as compared to earlier financial years where the Company was able to make profits from the operations, on account of good business opportunities in buoyant capital market. Your Company has been able to earn a Standalone Profit After Tax of Rs. 74.73 lacs as against a Loss after Tax of Rs. 301.09 lacs for the Financial Year 2013-14. Similarly, the consolidated Profit After Tax for the Financial Year 2014-15 was Rs. 195.46 lacs as against Loss After Tax of Rs. 207.79 lacs for the Financial Year 2013-14. SUBSIDIARIES In accordance with the Accounting Standards AS21 on the Consolidated Financial Statements, the Audited Consolidated Financial Statements are provided in the Annual Report. Your Company's Material unlisted Indian Subsidiary, BLB Commodities Limited has performed well during the year under consideration and has achieved a turnover of Rs. 273.02 Crs. as against Rs. 213.95 Crs. during the brvious Financial Year. The Profit After Tax of BLB Commodities Limited has been Rs. 1.21 Crs. and Rs. 0.82 Crs. respectively for the Financial Year 2014-15 and 2013-14. MACRO ECONOMIC ENVIRONMENT Over the past Twelve months, the Indian stock market was one of the best-performing in the world. The bullish trend in Indian markets over the last one year was mainly driven by the government backed measures such as movement on new reforms, execution of past policy announcements, enhanced infrastructure funding, positive surprise on rate cycle and low oil prices. The new government has been trying to improve business sentiment and spur investments by domestic as well as foreign players in the country through lighter regulations and a simpler and stable tax regime. With current account deficit easing significantly, stable currency, shrinking inflation and improvement in the corporate earnings outlook, the prospects of Indian Economy has improved. There are other positive developments which augur well for India too. Meanwhile, India is a large oil importer and is also benefiting from the lower oil prices in terms of reduced Import costs and fuel subsidies thus also helping inflation to cool off. Now with inflation down, interest rates have moved downwards and while there will be expectation of further rate cuts and this may prove the catalyst for the investment cycle. Meanwhile, Government of India is trying to draw the attention of the foreign countries to do business with India. As regard to this, the government is moving aggressively with its campaign "Make in India". The overall scenario looks optimistic, although a lot is still awaited. The new Government inherited an economy in crisis the winners arise. However, the Government is taking decisive steps, which should help give clarity to the business community and boost economic activity. Once this happens, investor sentiments shall improving resulting into greater business opportunity. OPPORTUNITIES AND THREATS Opportunities — Long-term economic outlook positive, will lead to better opportunity for capital market players — Regulatory reforms would aid greater participation by all class of investors — Leveraging technology to enable best practice and processes Threats — Execution risk — Short term economic slowdown impacting investor sentiments and business activities — Slowdown in global liquidity flows — Increased intensity of competition from local and global players — Market trends making other assets relatively attractive as investment avenues RISK MANAGEMENT BLB has adequate Risk Management techniques and safeguards in place, to ensure that major risks are properly assessed, analyzed and appropriate mitigation tools are applied. BLB is active in various markets and in its course of doing business with various counterparties the organization is exposed to various risks. These risks can be broadly classified as Market Risks, Technology Risk, Operational Risk, Reputation Risk, Regulatory & Compliance Risk, constantly evaluates these risks & puts necessary mitigation measures in place on near real time basis. MARKET RISK BLB actively participates in various asset classes such as equity, commodities and foreign exchange markets. These asset classes experience volatility from time to time due to economic growth levels, inflation, prices, interest rates, foreign exchange rates and other macro and micro economic factors. Necessary care is taken for the evaluation and mitigation of risk. TECHNOLOGY RISK The management understands the importance of technology in the business segments. It operates and lays utmost emphasis on the system development and use of best technology available in the industry. The management keeps itself abreast of technological advancements in the industry and ensures continued and sustained efforts towards absorption of technology, adaptation as well as development of the same to meet the business needs and objectives. OPERATIONAL RISK BLB faces operational risks arising from people, systems and processes through which it operated. Operational risk broadly encapsulates other category of risks; inter alia, reputation risk, fraud risk, legal risk and environment risk. BLB has well defined processes and systems to check & mitigate operational risks at key points. A platform for exception reporting of violations is in place, which are reviewed regularly and remedial measures are being taken immediately. REPUTATION RISK Reputation risk is related to the trustworthiness of the business. It arises from the adverse perception of the Company in the mind of various stakeholders. Reputation risk is a very high risk and can cause long term and sometime irreparable loss of business/ revenue. We conduct our business with high levels of diligence, using best practices and in fair and transparent manner and endeavour to disseminate timely information to the shareholders, investors, associates, regulators etc. We continuously train and remind our employees to focus on doing business in a diligent and above board manner and to remain conscious about the first class reputation and importance of keeping it first class. REGULATORY AND COMPLIANCE RISK Most of our business as well as Company itself operate in strongly regulated business segments. The risk arising out of changes in laws and regulations governing our business. It could also arisen on account of inadequate compliance with regulatory requirements or difference in interbrtation of regulations vis-avis the regulators. Non-compliance with regulations may invite strictures, penalties and even punitive action from the Regulators. We have a team of experienced professionals who takes care of compliance with applicable laws, rules, regulations and guidelines affecting our businesses. We appoint well qualified professionals in respective functions in various offices and functions and also take external advice. BUSINESS CONTINUITY RISK In the event of disruption in the conduct of business in the event of incidents like fire, natural calamity, breakdown of infrastructure, acts of terrorism etc. We are exposed to the risk of loss of data, clients and/or business that can adversely affect our financial results. We have in place business continuity Plan (BCP) to mitigate the impact of any such exigencies. INTERNAL CONTROL SYSTEMS BLB has adequate internal audit and control system across all companies/business segments. Risk based internal audit, through external audit firms, are being conducted periodically to independently evaluate adequacy of internal controls, adherence of processes and procedures and compliance of regulatory and legal requirements. The internal audit programme is periodically reviewed by Audit Committee of Board, which is chaired by Independent Director, for its effectiveness and timely reporting. The internal control procedures include segregation of roles and responsibilities, independent confirmations, physical verifications and brventive checks on compliance risk. Statutory and standard auditing practices employed include, interalia, compliance to accounting and auditing standards, compliance of all relevant rules & regulations, tax laws and review of related party transactions. BLB believes in conduct of its affairs in a fair and transparent manner by adopting highest standards of professionalism, honesty, integrity and ethical behavior. HUMAN RESOURCE At BLB it has been our attempt to create an employee centric culture. It is our endeavour to take up new engagement initiatives year on year to take our employee engagement to another level. We believe that company grows when our people grow. Your company gives significant importance to its human capital and is dedicated for continuous enhancement of their skills and knowledge by way of training and development. The company also plans motivational activities for its employees. We have always strive to act as a catalyst in achieving the goals of the organization by developing the capabilities of the employees. CAUTIONARY NOTE All statements that address expectations or projections about future, but not limited to the company's / group's strategy for growth, product development, market position, expenditures and financial results may be forward - looking statements within the meaning of applicable rules and regulations. Since these are based on certain assumptions and expectations of future events, the company cannot guarantee that these are accurate or will be realized. The company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events. |