sps finquest ltd Management discussions

To avoid duplication of certain information in Directors Report and Management Discussion & Analysis, the Board of Directors of your Company has presented the composite summary of performance and functions of the Company.

INDUSTRY STRUCTURE AND DEVELOPMENT:

Your Company is Non-banking Finance Company mainly engaged in the stock financing and providing inter-corporate loans. NBFCs are strictly regulated by Reserve Bank of India by its guidelines and notifications.

As per the provisional estimates of Central Statistics Office (CSO), the Indian Economy is estimated to grow at 7% in the financial year 2081-19 as against 7.2% growth registered in the last year. Despite marginal slow down over the last year, India has cemented its credentials as the worlds fastest expanding major economy in the world. Going forward, the economy is expected to display a better performance, considering the pick-up in consumption and private investments. Besides, a low inflation expectation for financial year 2019-20 has created further room for monetary easing by the RBI, which is expected to support the growth momentum.

The recent elections have led to formation of a stable government at the Centre. The government is expected to carry forward the reforms agenda. It will continue to focus on building infrastructure. Higher spending on roads, railways, airports, waterways and affordable housing will boost the economy and provide economic opportunities for citizens to grow and improve their income levels. While global economy is likely to remain muted on the back of the ongoing trade dispute between US and China, the domestic economy should benefit from the governments investment momentum. In addition, the governments boost to rural India in the form of direct benefit transfer will give an impetus to consumption.

As far as Non-Banking Finance sector is concerned, comprehensive reforms has become the need of the day. The entire NBFC sector is facing the liquidity crunch. Recent scams in some of the NBFCs have further added the fuel in the fire with the result Banks, which used to be the main source of finance, are now reluctant and extra cautious to finance the NBFCs.

REGULATIONS

The Capital Market is regulated by stringent rules and regulations of the Securities & Exchange Board of India (SEBI) and the stock exchanges. The Company, being registered with the Reserve Bank of India as Non-Banking Finance Company (NBFC), is also subjected to strict rules and guidelines notified by the Reserve Bank of India from time to time. Your Company is committed to the best Corporate Governance practices based on conscience, openness, fairness, transparency, compliances and ethical practices towards attaining performance with integrity and accountability thereby paving the way for enhanced investors and stakeholders confidence. Thus, ensuring long term success.

PERFORMANCE

Total revenue including other operating income for the financial year ended 31^st March, 2019 was Rs.3,59,74,185/- as against Rs.42,73,552/- in the previous year. The Company earned a pre-tax profit of Rs.1,36,04,879/- as against a loss of Rs.87,73,528/- a year ago. Due to higher provisions for Income Tax and Deferred Tax liabilities, the Company incurred a loss of Rs.18,48,957/- as against a loss of Rs.7,09,386/- in the previous year.

Your Directors do not propose to transfer any amount to general reserve or to Reserve Fund in terms of Section 45 IC(1) of RBI Act, 1934.

MATERIAL CHANGES AND COMMITMENT

There have been no material change and commitment affecting the financial position of the Company between the end of the financial year to which the financial statements relate and the date of this report.

OPPORTUNITY AND THREATS

The recent elections have led to formation of stable government at the centre. The government is expected carry forward the reforms agenda. Higher spending on infrastructure and affordable housing will boost the economy and improve the income of masses at all levels. In addition, the governments boost to rural India in the form of direct benefit transfer will give an impetus to consumption.

Ongoing trade dispute between US and China, trade protectionism, volatile crude oil prices and geopolitical disturbance are the main areas of concern.

FUTURE OUTLOOK

India is the worlds fastest growing major economy. Considering the pick-up in consumption and private investments, the economy is expected to display a better performance. Indian economy is on strong trajectory. So far as your Company is concerned, the Company is well poised to raise the finance and do not depend much on banks. Thus, the Company is better insulated from liquidity crunch being faced by the NBFCs in general. Directors of your Company are confident that all these will augur well for your Company in medium to long term.

CAUTIONARY STATEMENT

Statements in the Annual Report, particularly those which relate to Management Discussion and Analysis may constitute forward looking statements within the meaning of applicable laws and regulations. Although the expectations are based on the reasonable assumption, the actual results might differ.