Management Discussion and Analysis Report Industry structure and developments Indian markets were one of the best performing markets globally in 2014. The BSE Sensex and NSE Nifty jumped 30% buoyed by hopes of a better economy and reforms by the brsent government. India also emerged as one of the strongest economies amongst the emerging markets. Currently the markets are negative for the year, but most analysts are of the opinion that the current sell-off is a periodic correction of the markets. The key drivers for growth in India will continue to be reforms. Strong reforms in various sectors will be an important catalyst for the markets in 2015. Markets cheered the reforms introduced by the new government in 2014 such as diesel deregulation, FDI in construction and re-allocation of coal blocks. Decline in interest rates will be an important trigger for the markets. India has been battling with high inflation. However, inflation contracted sharply in 2014 due to lower food, oil and commodity prices. The Reserve Bank of India has started cutting rates in the first quarter of the calendar year, but it may not exceed 0.5-0.7% this year. The last four-five years witnessed large outflows from the equity markets into other asset classes like real estate and gold. Going forward, it is expected that this may reverse. DSP BlackRock Mutual Fund expects domestic inflows of about $10-15 billion into Indian equities. They believe relative returns from equities would be better than other asset classes in 2015. With a gradual pick-up in demand, fall in raw material prices as well as the improvement in economic conditions, corporate earnings are expected to gather momentum in the coming quarters. Corporate profits may rise at least 1718% in each of the next two years, according to brokerage firm IIFL. The Eurozone is already facing slowdown-related issues. On top of this, talks of Greece exiting the Eurozone are back. Will Eurozone be able to handle another crisis in Greece? Markets are speculating whether EU countries will slip into recession again. If that happens, markets around the world may slump. This could affect Indian markets too. The price of oil is down nearly 55% in value since June 2014, and shows no signs of abating. This week, prices slipped below $50 a barrel, its lowest since 2009. Analysts expect prices to remain weak in the medium term. Oil prices could rise if consumption picks up or if output is cut. In such a case, oil import-dependent India could suffer. The year ahead will be challenging on the interest rate and credit quality front, however, India has stable Government, and we can see improvement in asset quality and return growth. The economic environment brvailing in the country affected the NBFC sector also. Opportunities and Threats Government has announced a number of policy measures to kickstart investments. This includes an investment allowance for manufacturing companies, policy measures for creating affordable housing and addressing requirements of agriculture sector through measures other than price supports. Steps are being taken to address requirements of mining and power generation sectors which will remove supply bottlenecks to a number of sectors. Improvement in connectivity to rural areas will result in robustness of demand from semi urban and rural areas. With the government's initiative to boost infrastructure projects, NBFCs can also look for growth in asset financing. Capital market activities in which most of our activities depend on is also influenced by global events and hence there is an amount of uncertainty in the near term outlook of the market. Growth of the company's asset book, quality of assets and ability to raise funds depends significantly on the economy. Unfavorable events in the Indian economy can affect consumer sentiment and in turn impact consumer decision to purchase financial products. Competition from a broad range of financial services providers and changes in Government policy / regulatory framework could impact the Company's operations. Outlook The markets will continue to grow and mature leading to differentiation of products and services. Each financial intermediary will have to find its niche in order to add value to consumers. The company is cautiously optimistic in its outlook for the year 2015-16. Fixed Deposits The company is a non-deposit accepting company-NBFC. The Company has not accepted any fixed deposit during the period under review. Internal Control Systems and their adequacy The Company has satisfactory internal control system. The Company has an adequate system of internal controls to ensure accuracy of accounting records, compliance with all laws & regulations and compliance with all rules, procedures & guidelines brscribed by the management. An extensive internal audit is carried out by independent firm of Chartered Accountants. An internal team of inspection also regularly visits branches for ensuring regulatory compliance. Post audit reviews are also carried out to ensure follow up on the observations made. Risk Management The Company recognizes the importance of risk management and has accordingly invested in appropriate processes, people and a management structure. The Board of Directors of the Company reviews the asset quality at frequent intervals. The asset quality of the company continues to remain healthy. Combrhensive risk management practices form an integral part of the operations at BTFL. The nature of business the company is engaged in exposes it to a slew of complex and variable risks. The rapid and continuous changes in the business environment have ensured that the organization becomes increasingly risk focused to achieve its strategic objectives. BTFL's policies ensure timely identification, management and mitigation of relevant risks, such as credit risk, liquidity risk, interest rate risk, operational risk, reputational and regulatory risks, which help the company move forward with vigour. Financial Performance with respect to Operational Performance Share Capital The paid up equity share capital of the Company as on 31st March, 2015 stands at Rs. 3,50,27,000 divided into 35,02,700 equity shares of Rs.10/- each fully paid up. Total Income During the year under consideration total income was Rs. 438.61 Lacs as against Rs.153.73 Lacs in the brvious year. Profit before tax During the year under consideration, profit before tax was Rs.13.39 Lacs as against Rs.7.38 Lacs in the brvious year. Interest and Finance Charges During the year under consideration total interest and finance charges were Rs.403.63 Lacs against Rs.136.48 Lacs in the brvious year. Tax Expense During the year under consideration, the tax expense were Rs.2.55 Lacs RBI Guidelines The company has complied with all the applicable regulations of the Reserve Bank of India. Human Resources/ Industrial Relations The Company has a dedicated team who has been contributing to the progress and growth of the Company. The manpower requirement at the offices of the Company is assessed continuously and recruitment is conducted accordingly. Performance During the year During the year under review, the Company earned a profit before tax of Rs.13.39 Lacs as compared to the a profit before tax of Rs.7.38 Lacs during the brvious year. By Order of the Board of Directors Bhilwara Tex-Fin Limited Sd/-Satish Kumar Sharma Director (DIN: 00536970) Sd/- Sanjay Hasija Director (DIN: 00090672) Place: New Delhi Date: 28th August , 2015 |
