The Indian economy have went through a rising phase of GDP growth in the year 2014-15 and the same trend is assuming in 2015-16 fiscal year also. Our country's economy is showing its potentials.
The country has witnessed a historical election cycle in the months of April and May in the year under review. A stable and strong Government has emerged in the centre for next five years. The new Government is committed to put the economy on growth path with a focus on expand the business & creation of jobs. It is committed to give impetus to manufacturing activity which has shown a negative trend during several years in past.
The 2015-16 Central Budget announced by the Government in February gave directional push to the economy with a commitment to boost infrastructure activities and open up several job opportunities. The focus is on affordable Housing, road connectivity and investment push and it augurs well for the Company's business plans for the year 2015-16 and beyond.
OUTLOOK FOR THE INDUSTRY
In financial services sector, the company competes with NBFC's as well as large commercial banks due to this there is significant competition in the Indian financial services market. Since, dealing in the secondary market is one of the main businesses of the company hence the growth of the company largely depends on stock market's movements. The market shows upward movement during the year and Nifty and Sensex have touch the new heights in the FY-2014-15, due to improvement in economic conditions and boost in sentiments on a stable government post the general elections. This trend is also looking to continue in future that could provide more opportunities to the company.
Providing of loans/advances to SME's and individuals is another business of the company which depends on the growth of manufacturing, service & trading sector collectively referred to as business sector. The newly formed government has done various measures and is committed to do more such measures to give boost to the business sector consequently the company is benefited in terms of higher demand for loans by business sector and reduced rate of default in loans.
OUTLOOK FOR THE COMPANY
Due to improvement in growth rate of the manufacturing sector and upward movement in stock market the management of Dhanuka Commercial Limited ("DCL") is of the view that company has lot of opportunity in coming financial years as well. The company has made its niche market in the unsecured funding sector thereby reduces competition. The company has in its loan portfolio small and medium enterprises which are the backbone of the country and the company as well. Inter Corporate Deposits (ICDs) are offered to companies for short/long term financing, bridge loans for short term working capital requirement. The management is of the view that the company has enough opportunities to explore in the current year and in the years to come, also the company plans to introduce new products which includes loan against shares/Retail IPO funding, loan against property and Financial & Management Consultancy.
OPPORTUNITIES AND THREATS
The company has made a niche market for itself in loans and advances sector and wide experience of our directors and management in the finance and securities market can create opportunities for the company even in the conditions not favorable to the company. Since last two years, the market conditions of Indian economy were in improvement phase and coupled with its innovative ideas and techniques the company can introduce several new instruments and products in the loan segment which can create opportunities to the company in future. The international penetration by several means such as merger/acquisitions/restructuring has thrown open wide arena for Indian Corporate to establish its hold in the international market.
Any default in repayment of the loan amount by the customers could add to the non performing assets which will result in deterioration of the quality of the loan portfolio. The company has adopted Modern system of analyzing the loan applications and has not done away with traditional route of scrutinizing loan applications; this practice much reduces the chances of a loan converting into NPA. Further, the Company has always maintained sufficient liquid funds, so that its operations are not affected. Constantly sticking on to the traditional values and ethics and with the support of efficient and dedicated resources, we are able to phase out any difficulties in our area of operation. Threat is posed primarily from the fact that unsecured funding and securities market operations involve inbuilt risk and uncertainty. With the innovative marketing strategies, the Company is able to add new customers and retain existing clientele.
RISKS AND CONCERNS
The company has inbuilt risk of "default in unsecured loans provided to the customers" and "risk in dealing in securities market" due to its nature of business apart from other common risks which includes change in management/personnel and policies, lapses/inadequacy in existing infrastructure facilities, delinquencies on the part of employees, staff attrition, misfeasance, change in interest rates, government regulations, competition from others operating in similar business, etc. The Company is taking proactive steps in implementing management principles well adapted to the demands of the changing environment. The company has the policy of assess the risk and manage the business. The company is operating on a well defined plan and strategy; hence we are equipped to face any change in regulatory risk.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a well placed proper and adequate internal control system commensurate with the size and nature of its business. The Board has appointed Internal Auditors to more strengthen the internal control system. Internal Auditors directly reports to the Audit Committee or Board of Directors of the Company. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Company's internal control environment and monitors the implementation of audit recommendations.
The primary objective of the internal control system is to ensure that all its assets are safeguarded and protected and prevent any revenue leakage and losses to the Company. The Company has proper system of checking and/or review of functioning of the employees. Every employee has to report to his/her immediate boss. Audit Committee of the Board periodically reviews the functioning of the company to examine the adequacy and effectiveness of the internal control systems.
The present reporting structure ensures independence of the internal audit function and embodies best corporate governance practices.
Please refer Director's Report for financial performance of the company. Segment/product wise performance is not applicable to the company.
The Company has required number of employees on its roll and whenever there is need for any recruitment the same has done as per the policy & procedures of the company. Except resignation of Mr. Sunil Goel, Relationship Manager, there was no other change in the human resources of the company. The company has focus to retain its manpower by providing good working conditions thereby reduce turnover ratio. Focus has also been extensively on internal training, complemented by external training and development programs for improving the competency and self development of employees.
Statements in the Management discussion and analysis, describing the Company's objectives, outlook, opportunities and expectations may constitute "Forward Looking Statements" within the meaning of applicable laws and regulations. The actual result may vary materially from those expressed or implied in the statement. Several factors make a significant difference to the company's operations including the government regulations, taxation and economic scenario affecting demand and supply condition and other such factors over which the Company does not have any direct control.
For and on behalf of the Board of Directors
Dhanuka Commercial Ltd