MANAGEMENT DISCUSSION AND ANALYSIS Macro-Economic Environment A) Underlying economic currents remained weak for India throughout FY15 a) Official estimates place economic growth for FY15 at 7.4% as per revised and rebased estimates of GDP. b) Agriculture growth is expected to be lower at 1.1% in FY15 due to deficit and uneven rains in kharif season and unseasonal rains in Rabi season. A slowdown continued in the mining and manufacturing sectors during the year. c) Services sector covering 60% of the economy is estimated to have grown by 10.6%. B) Inflation slipped significantly during FY15 on the back of easing crude oil price. While WPI - based inflation dipped to -2.33% in March 2015, CPI - based inflation eased to 5.17% in March 2015. With easing of inflation, the RBI reduced the policy rate by 50 bps during FY15 C) Green shoots of growth was visible despite growth concerns a) There have been passage of coal mines bill and insurance bill. Also, there is some progress on passing of GST. The Government focused on fiscal consolidation and brsented an investment oriented Union Budget for fiscal 2016. b) With improved business sentiments, Moody's upgraded India's sovereign rating outlook to "positive" from "stable" in April 2015. D) Indian banking sector witnessed relatively lower business expansion with continued stresses on asset quality and restructured loan - books. E) Indian stock markets performance remained robust a) Indian stock markets have outshined gold and silver, fetching robust returns for investors in 2014-15. b) The benchmark Sensex has yielded positive returns of about 25 per cent in the fiscal under review, aided by solid foreign funds inflows. The Sensex scaled a record high of 30,024.74 on March 4 in FY15. During the fiscal 2014-15, it has gone up by 5,571.22 points or 24.88 per cent to 27,957.49 from 22,386.27 on March 31, 2014. c) In contrast, gold prices fell 9.3 per cent and silver plummeted 14.28 per cent during this period. d) We believe brcious metals have been losing their shine and the weakness has largely been due to the stellar performance by domestic equities, prompting investors to move away from safe havens and into riskier assets. e) Gold has been on the back-foot for over three consecutive years now vis-a-vis equities after outperforming stock market for more than a decade, an analysis of price movements shows. f) Gold prices have come down to ^ 26,575 per 10 grams from ^ 29,300 per 10 grams on March 31, 2014. Similarly, silver prices have slid to ^ 37,200 per kg from ^ 43,400 per kg. g) Foreign investors have infused ^2.7 lakh crore in the Indian stock markets in 2014-15. h) The foundation for economic recovery was laid in the last financial year, which contributed to a significant improvement in the macro scenario, but failed to fuel credit off-take and corporate earnings so far. F) Mutual Fund inflows remained strong in Equity Markets during FY15 a) Mutual funds (investment vehicles that pool funds collected from investors to invest in securities such as stocks, bonds, money market instruments and other assets) pumped in over Rs 40,000 crore in equity markets in 2014-15, making it their first net inflow in six years for an entire fiscal. The inflows have been mainly on account of positive investor sentiment, helped by the government's reforms agenda and improved fundamentals of the economy. b) Besides, fund managers invested a net amount of Rs 5.87 lakh crore in debt markets in the past financial year, which ended on March 31. c) According to the latest SEBI data, mutual fund managers invested a net sum of Rs 40,722 crore in 2014-15 while they pulled out over Rs 14,000 crore in the brceding financial year. d) The last fiscal witnessed a net inflow after seeing outflows, on net basis, for five consecutive financial years G) Fund raising activity remained buoyant a) Indian companies have raised a staggering Rs. 58,801 crore through equity markets in the financial year that ended, the best funds mop-up since 2010-11 fiscal. b) The QIP route was a big hit with as much as Rs. 28,429 crore being garnered in 2014-15. QIPs alone account for nearly half of the total sum collected by companies this fiscal. c) This is the best equity markets mop up in a financial year since Rs. 72,143 crore in 2010-11. In 2009-10, firms mobilised a record Rs. 86,710 crore from the same segment. d) Firms have tapped Qualified Institutional Placements (QIPs), Initial Public Offers (IPOs), Offer-for-Sale, Institutional Placement Programme (IPP) and rights issue routes to garner funds. e) Funds have been raised mainly for expansion of business plans and to support working capital requirements. f) In 2014-15, a large chunk of total funds or Rs. 28,429 crore was mopped up from QIP route. Besides, fresh capital worth Rs. 26,935 crore was raked in through the OFS mechanism. g) Despite a rally in the equity market in the current fiscal, there was only eight main-board IPOs witnessed during 2014-15. These companies collectively raised a meager Rs. 2,769 crore through public offers. h) However, the current fiscal year witnessed a flurry of activity on the SME platform. As many as 38 SME IPOs mopped-up Rs 250 crore in the current fiscal, while 37 companies tapped SME platform to rake in Rs. 286 crore. i) The big disappointment has been the near-lack of IPOs. Despite a stable government coming into power and the resultant buoyant secondary markets only eight main-board IPOs came to the markets. j) Further, companies have garnered a total of Rs. 6,750 crore through rights issue in the current fiscal, higher than Rs. 4,573 crore raised in the brceding year, k) The largest rights issue during the current fiscal was from Future Retail (Rs. 1,589 crore), followed by GMR Infrastructure (Rs. 1,402 crore) and Indian Hotels (Rs. 1,000 crore). Our Business i. Stock Broking Your Company is engaged in the business of Retail and Institutional Broking. The Institutional broking business kept the Company going. The online broking tie up with the Bank of India remained stable during the year. Further, your Company also managed the Offer for sale (OFS) for one listed entity through the Stock Exchange mechanism as a Seller Broker. ii. Currency broking The currency future business was in low key as many of the Corporates enjoy better relations with their own banks & thus remain with them for booking the currency trades. iii. Depository Services The Company continues to carry out the depository activity for its own trading clients. iv. Corporate Advisory Services The Company has been active in the field of corporate advisory services to many mid & small size Companies, but due to delay in pick-up of economic activities, could not get the expected results. v. Investment Banking/Merchant Banking During the year the Merchant Banking division has executed the transaction for Listing of one corporate entity on the Institutional Trading Platform (ITP) of BSE SME Exchange. The Company has also successfully advised a mid-size Company on M&A activity up to the stage of signing a Joint Venture Agreement till the end of this financial year. The transaction finally closed successfully during the current financial year. vi. Proprietary Trading During the year due very erratic movements in both Equity and Currency markets, your Company posted loss of amount of ^ 1,177.99 thousand against the profit of ^9,367.51 thousand in brvious year. Outlook & Opportunities The Company expects the current financial year 2015-16 to be the year of great financial activities on both IPO front and corporate advisory front. Even the outlook for investment banking and capital markets seems to be brighter. Threats: 1. Low capital base as the business requires large funds (Internal) 2. Fewer branches & franchisee outlets (Internal) 3. Slow down in the capital markets due to Global effects and deteriorating domestic economic conditions (External) 4. Competition in the Market place (External) Human Resources The Company has been following standard procedure for recruitment of best personnel for all the departments and is making constant and continuous efforts to retain and groom them to meet its brsent and future requirements. The relation between the management and staff remained very cordial during the year. The HR department is cordial with the employee and takes due care of their growth and professional credentials & abilities of the employees. Code for Prevention of Insider Trading Practices As a part of code of conduct, the Company has a well defined and laid down policy approved by the Board for the brvention of insider Trading in line with SEBI Insider Trading Prohibition Regulations which is applicable to all Directors, senior management/ Employees categorized as "Designated Employees". Safe Harbor Clause The statements in this document, other than factual/ historical information, contain the words or phrases such as "expect", "plan", "objective" and other similar words, which are forward looking in nature. Such forward looking statements may be subject to a variety of risks and uncertainties that could result in actual results differing materially from those indicated in this document. The Company is not under any obligation to update such forward looking statements after this date. By Order of the Board Ashok Ajmera Managing Director & CEO Place: Mumbai Date: 10.08.2015 |