MANAGEMENT DISCUSSION AND ANALYSIS Overview - Financial Performance Standalone Results Your Company has recorded a good performance during the year under review. The Company has received during the year, Income by way of Dividend of Rs. 1,901.35 Lacs, Interest of Rs. 2,658.99 Lacs, Pledge Fees of Rs. 474.58 Lacs, the Total Income is Rs. 5,034.92 Lacs as against Total Income of Rs. 4,935.74 Lacs in the brvious year. The Profit before dépréciation and tax is Rs. 4,682.67 Lacs. After providing for dépréciation of Rs. 1.88 Lacs and Tax of 1 1,020.00 Lacs, the Net Profit is Rs. 3,660.79 Lacs as against Rs. 3,671.02 Lacs in the brvious year, a decrease of around 0.28%. Outlook Major activities The Company continues to carry on the business permitted to CIC in terms of the Core Investment Companies (Reserve Bank) Directions, 2011. As a br - requisite condition the Company is required to have 90% of its investments, loans, advances, etc in its Group Companies. Therefore the Company in its ordinary course of business grants loans/advances and provides guarantees/ securities to only its Group Companies. The Company continues to hold significant investments in Equity Shares of JSW Steel Limited besides certain other investments in other O. R Jindal Group of Companies. The Company will continue to focus on making long-term stratégie investments in various new ventures promoted by JSW Group, a part of O. R Jindal Group, besides consolidating the existing investments through further investments in the existing companies. Future Prospects India is the world's third-largest producer of crude steel and is expected to become the second-largest producer by end of 2016. The growth in the Indian steel sector has been driven by domestic availability of raw materials such as iron ore and cost-effective labour. Consequently, the steel sector has been a major contributor to India's manufacturing output. The Indian steel industry continued to showease trends of higher consumption of finished steel. Currently, the steel consumption in India is second only to China. The Indian steel sector enjoys advantages of domestic availability of raw materials and cheap labour. Iron ore is also available in abundant quantities. This provides major cost advantage to the domestic steel industry. With rising income levels expected to make steel increasingly affordable, there is vast scope for increasing per capita consumption of steel. Private-sector investment in the steel industry is likely to remain slow. During F.Y. 2015-16, steel investment has been hit by factors such as global excess capacity, leading to a significant decline in steel prices, increased imports, stagnant real estate sector and financial stress on existing domestic companies. With domestic prices falling in line with international prices in F.Y 2015-16, exports are likely to marginally improve and go up by 2-3 percent. The Government is focusing on its 'Make in India' campaign and taking steps to encourage Indian exports. These measures will augur well for exports of steel in 2016-17. The Steel industry welcomes the steps taken by the government in imposing provisional safeguard duty on certain grades of hot-rolled coils and increasing tariffs on steel products. The minimum import price fixed by the Government has corne as breather for steel industry. It is very good step by Government which covers 173 items and almost 80% of current import. In F.Y. 2016-17, we expect a pick-up in global demand for steel. This will help in the recovery of international steel prices. We expect import realizations to go up by 5.8 percent. Domestic steel prices have followed suit and increased substantially towards the end of financial year. Increase in demand and reduced brssure from imports are likely to aid the recovery in prices. Your Company is looking forward for a sustainable growth in its investee Companies in the coming years which would enhance the shareholders' value. Considering the forecasted growth in the economy as a whole and the steel industry in particular, the Company expects to enhance its entrenched value for the benefit of the shareholders' at large. Opportunities & Threats India's economy is expected to expand 7.5 percent in 2015-16 and at a slightly faster 7.8 percent in 2016-17, and 7.9 percent in 2017-18, India needs faster growth to generate jobs for millions of young people joining the workforce each year, and the economy remains hobbled by weak private sector investment. The World Bank had estimated India to grow at 7% by 2017-18 and China by 6.9% in 2017, the two growth rates were not comparable. This was because China's growth was computed on the basis of GDP at market prices and India's at GDP at factor cost (which excludes indirect taxes). While India's economy was projected to grow at higher rate each year compared to the brvious one, China's economy was forecast to grow at less pace. Retail inflation has averaged 4.8 percent this fiscal year so far. The report stated, "Although India may be able to achieve fast GDP growth without export growth for a short period, sustaining high rates of GDP growth over a longer period will require a recovered of export growth" adding that though India is well positioned to weather the global volatility in the short-term, the country will not remain immune to a slowdown in global demand and heightened volatility in the medium term. The domestic investment activity is yet to pick up. This is largely due to lack of demand. Exports are falling across sectors and the external economy is not favorable. This is causing strain in certain sectors. At the same time, lot of imports are coming into India. Imports are increasing in sectors where there is surplus capacity. So imports are increasing in quantitative terms and exports are falling, domestic demand is not robust and investment cycle is yetto revive. Thus, we are seeing lot of stress in the economy, especially in the manufacturing sector. The report raised concerns about the high level of bad loans in the country's state-run banks. The World Bank said the increase in non-performing assets of banks is largely because of financially stressed infrastructure companies. This is reflected in the banking sector by way of increasing bad loans. Government is moving in the right direction. The issue is some transformational reforms such as GST, land and labour reforms need to be done at a faster pace. But these are not happening at the pace the industry would like. At the same time, some of the things that have been done cannot be undermined. Having said, that there are some positives including the lending rate eut and the macro economy is looking better than what it was a few years back. Though firms in the power, roads and ports sectors are under most stress, electricity distribution companies are also a significant fiscal risk. Besides, there has been a decline in credit growth particularly in public-sector banks as moderating inflation rates has reduced need for working capital loans. Analysts said it was 'likely' that the government would pass the land acquisition bill, which would make it easier for businesses to buy land, or a goods and services tax (GST), which would transform the economy into a single market, by the end of this year. In November, a government panel recommended hiking the wages of about 10 million current and former government employees by nearly 25 percent. Pay rises could boost economies growth through higher demand. Risk and Concerns The Company is mainly exposed to market risks in the form of reduction in value of its investments and fall in returns due to dip in the investee company's performance. Delay in repayment by borrower companies can affect liquidity & redeployment scope. The Company is also exposed to the fluctuations of economy and industry cycles/downturns. Internal Control Systems The Company has an Internal Control System, commensurate with the size and nature of its business. Corporate Audit Division develops an annual audit plan based on the risk profile of business activities of the organization. The audit plan is approved by the Audit Committee, which regularly reviews compliances to the plan. During the year, the Audit Committee met regularly to review reports submitted by the Corporate Audit Division. All Audit observations and follow-up actions thereon were reported to the Audit Committee. The Audit Committee also met the Company's Statutory Auditors to ascertain their views on the financial statements, including the financial reporting System, compliance to accounting policies and procedures, the adequacy and effectiveness of the internal control and Systems followed by the Company. The Management acted upon the observations and suggestions of the Audit Committee. Human Resources Management The Company brsently has 2 employees who are professionals in their field and are given independent responsibilities to perform significant roles in the Company's development. The Company will strengthen its operative staff as and when the need arises. Cautionary Statement Statement in this Management Discussion and Analysis Report, describing the Company's outlook, projections, estimates, expectations or brdictions may be "Forward Looking Statements" within the meaning of applicable securities laws or regulations. Actual results could differ materially from those exbrssed or implied |