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GSB FINANCE LIMITED
ANNUAL REPORT 2011-2012
MANAGEMENT DISCUSSION AND ANALYSIS
FORWARD LOOKING STATEMENTS
This report contains forward-looking statement, which may be identified by
their use of words like 'expects', 'will' or other words of similar
meaning. Forward-looking statement is based on certain assumptions and
expectations of future events and the Company cannot guarantee that these
assumptions and expectations are accurate or will be realized. The Company
.assumes no responsibility to publicly amend or revise the forward-looking
statements or any loss to the investors in the shares of the Company making
investments relying on such forward-looking statements. '
1) INDUSTRY STRUCTURE AND DEVELOPMENTS
The last decade (2001-2011) has been the most eventful period for the
Indian securities market during which it took major strides to carve a
niche for itself in the global securities markets. The major developments
which hastened this incredible journey can broadly be observed under three
categories, viz.improved market microstructure, introduction of new
products and progressive changes in the regulatory framework.
2) OPPORTUNITY AND THREATS
Opportunities
GSB Finance Limited is engaged into business of trading and investment of
shares and securities . Apart of the fast growing economy of India and
revival of global economy, the demand for Issues coming from ever
increasing size of securities market, a key opportunity is the launch of
SME Exchanges by BSE and NSE and disinvestment of PSUs . Your company is
considering being a first mover in these exchanges and taking advantage of
the huge potential market size of this segment.
Threats
FY 2011-12 was a challenging year. The global economy, barely a year after
recession, witnessed lower economic growth, resulting primarily from the
Euro Zone debt crisis and high oil prices, which were fuelled by
uncertainties of supply. The European economies stagnated and the US
witnessed a downgrade in its credit rating, while the growth engines of the
global economy, China and India were forced to tighten liquidity to tame
rising inflation.
3) SEGMENT-WISE PERFORMANCE
Presently your Company is dealing in only one segment i.e. investment &
financial services.
4) OUTLOOK
The growing economy and ever increasing capital market provides a good
scope of revival of stock markets. Your Company is very well prepared to
grab the opportunities. The management is very optimistic about the future
of the Company.
5) RISKS AND CONCERNS
GSB is at present dependant on the movement of stock markets. Any adverse
effect on the capital market could affect the performance and profitability
of the Company.
6) INTERNAL CONTROL SYSTEMS
The Company has an adequate system of internal controls that ensure that
all assets are protected against loss from unauthorized use or disposition
and all transactions are recorded and reported in conformity with generally
accepted accounting policies.
7) FINANCIAL PERFORMANCE
During the year company has achieved a turnover of Rs.2,813.34 Lacs as
against the in the previous year at Rs, 12,192.64 Lacs. However, as the
market was very volatile, therefore, trading in security , equity , mutual
fund investment, equity derivatives were affected and Directors are of the
view that in spite of various constrain company has fared reasonably good.
8) HUMAN RESOURCE AND INDUSTRIAL RELATIONS
The industrial relations (with various financial intermediaries) remained
cordial during the year under review.
9) CAUTIONARY STATEMENT
Statements in this report on management discussion and analysis describing
the company's objectives, projections, estimates, expectations and
prediction are based on certain assumption and expectation of future
events. Actual result could differ materially from those expressed or
implied. The Company assumes no responsibility to amend, modify or revise
any of the statements on the basis of subsequent developments, information
or events.
For and on behalf of the Board
For GSB Finance Limited
Sd/-
Place: MUMBAI Girdhari S. Biyani
Date : 15th June, 2012 Chairman/CEO
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GSB FINANCE LIMITED
ANNUAL REPORT 2010-2011
MANAGEMENT DISCUSSION AND ANALYSIS
PERFORMANCE:
During the year company has achieved a turnover of Rs. 1219.10 Lacs as
against the in the previous year at Rs. 1028.90 Lacs. However, as the
market was very volatile, therefore, trading in equity derivatives not
resulted in gain during the year and it affected profitability for the
year.
ECONOMIC OUTLOOK:
The Indian economy has come through with resilience and strength in the
year 2010-11. Swift and broad based growth has put the economy on to its
pre-crisis growth trajectory. Dynamism in the rural economy due to scaled
up flow of resources to rural areas has added to overall economic growth.
Due to a better than average monsoon, agricultural sector performed
reasonably well compared to previous year. Services sector also clocked
robust performance.
KEY RISK FACTORS:
Key risk to economic growth forecasts come from inflation. WPI inflation
accelerated from 11.04% in March 2010 to a high of 11.23% in April 2010 and
continued around similar levels till June 2010. Inflation continued around
8% to 9% thereafter till date. Despite the Reserve Bank of India's (RBI)
monthly assessment of WPI inflation coming down below 7.5% by March 2011,
it read at 8.98% leading to a perception that RBI will continue rate hikes
during the currentfiscalaswell.
MONETARY POLICY HIGHLIGHTS:
In the RBI Monetary Policy issued on May 3, 2011, RBI strongly expressed
its view that controlling inflation is imperative to sustaining growth over
the medium-term. As such, RBI signaled that the conduct of monetary policy
will continue to condition and contain perceptions of inflation in the
range of 4.0-4.5% to be in line with the medium-term objective of 3.0%
inflation consistent with India's broader integration into the global
economy.
Instead of its earlier calibrated approach to fighting inflation, RBI took
a large step hiking key policy rates by 50 basis points. Accordingly, the
Repo and Reverse Repo rates have moved up to 7.25% and 6.25% respectively.
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GSB FINANCE LIMITED
ANNUAL REPORT 2008-2009
MANAGEMENT DISCUSSION AND ANALYSIS
FINANCIAL RESULTS:
(Rs. in Lacs)
2008-2009 2007-2008
Profit before Depreciation & Tax (384.55) 345.01
Depreciation 1.64 1.61
Provision for Taxation (Incl. Fringe Benefit Tax) (3.38) 101.78
Deferred Tax Debit / (Credit) 126.88 -
Profit / (Loss) after Tax (259.41) 241.62
Less: Transfer to Special Investment Reserve - 69.00
Transfer to General Reserve - 50.00
Add: Transfer From General Reserve 45.00 -
Add: Balance brought forward from Previous Year 216.66 128.82
Balance For Appropriation 2.25 251.44
Which Directors have appropriated as under:
(i) Proposed Dividend - 29.73
(ii) Tax on Dividend - 5.05
Total - 34.78
Balance to be carried forward 2.25 216.66
PERFORMANCE:
The Indian economy faced significant slowdown in growth momentum in 2008-
09, driven by a severe downturn in the global economy on the back of
sustained pressure on the global financial system. For India, estimates of
2008-09 GDP growth range from 6.0%-7.0% against an average growth rate of
8.8% per annum over the period 2003-2008.
The key stock to India's growth has come from external sources, largely by
way of lower exports and a marked reduction in inflow of foreign capital.
While export growth entered into negative territory in the third quarter of
the financial year 2008-2009 against a growth rate of around 27% during the
same period last year. This has dampened domestic investment momentum which
was earlier a key growth driver of the Indian economy. Growth in gross
capital formation in the last quarter of the financial year 2008-2009 fell
to 5.3% from 13.7% a year ago.
The industrial sector has been the largest casualty of the marked slowdown
in both investment and imports, slowing from a growth rate of 8.9% in the
year ended March 31, 2008. to possibly 4-4.5% in the year ended March
31,2009. Services, particularly financial services and trade & transport-
have also been impacted by the cyclical downturn in industry and the
external pressure from a tough global financial environment.
Indian equity markets have fallen significantly over the course of the last
financial year due to a sharp pull out by portfolio flows and risk aversion
buying in the global markets. However, the domestic equity markets could
improve towards the latter half of the next financial year once global
investors start pricing in a global recession as Indian economic
fundamentals still remain strong and attractive in absolute terms.
Risks and Concerns
At present, a recovery in consumption holds the key to a more stable growth
outlook for the Indian economy. High inflation and a tight monetary
environment acted as primary dampeners for consumption in the first half of
2008-09, with growth in consumption declining much before the financial
crisis acquired global proportion. Growth in private final consumption
expenditure fell to 5.3% in Q2FY09 as compared to 7.6% a year ago. Recent
monetary easing alongside a sharp fall in inflation is likely to provide
some support to consumption in the financial year 2009-10.
Outlook
The Indian economy is likely to continue to see further pressure in the
year ahead. Growth is likely to slowdown further from 6.7% in the year
ending March 31, 2009 to around 5.8% next year as industrial growth
continues to decelerate. Investment momentum is likely to remain subdued
amidst flat local demand even as an accommodative monetary policy alongside
receding inflationary risks, provide some support to growth. However India
will remain one of the fastest growing economies in the world and if risk
appetite and global stability were to stage a come-back by the end of 2009-
10, India will remain an attractive foreign investment destination.
Going forward, Congress-led UPA Government has come back to power at Centre
and Eqquity Market have welcome this factor as it shall provide continuity,
stability and inclusive growth and equitable development. This development
has given good momentum to Equity valuation and market is looking forward
with revival in current year.
Your Company in spite of adverse prevailing market condition have been able
to restrict operating losses to Rs.382.91 Lacs as against operating profit
of Rs.343.40 Lacs in previous year.
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