Aagam Capital Ltd Management Discussions.
India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers of the world over the next 10-15 years, backed by its strong democracy and partnerships.
Indias GDP is estimated to have increased 7.2 per cent in 2017-18 and 7 per cent in 2018-19. India has retained its position as the third largest startup base in the world with over 4,750 technology start-ups.
Indias labour force is expected to touch 160-170 million by 2020, based on rate of population growth, increased labour force participation, and higher education enrolment, among other factors. Indias foreign exchange reserves were US$ 405.64 billion in the week up to March 15, 2019, according to data from the RBI.
With the improvement in the economic scenario, there have been various investments in various sectors of the economy. The M&A activity in India reached record US$ 129.4 billion in 2018 while private equity (PE) and venture capital (VC) investments reached US$ 20.5 billion. During 2018-19 (up to February 2019), merchandise exports from India have increased 8.85 per cent year-on-year to US$ 298.47 billion, while services exports have grown 8.54 per cent year-on-year to US$ 185.51 billion. Net direct tax collection for 2018-19 had crossed Rs 10 trillion (US$ 144.57 billion) by March 16, 2019, while goods and services tax (GST) collection stood at Rs 10.70 trillion (US$ 154.69 billion) as of February 2019.Proceeds through Initial Public Offers (IPO) in India reached US$ 5.5 billion in 2018 and US$ 0.9 billion in Q1 2018-19.Indias Foreign Direct Investment (FDI) equity inflows reached US$ 409.15 billion between April 2000 and December 2018, with maximum contribution from services, computer software and hardware, telecommunications, construction, trading and automobiles.Indias Index of Industrial Production (IIP) rose 4.4 per cent year-on-year in 2018-19 (up to January 2019).Net employment generation in the country reached a 17-month high in January 2019.
The interim Union Budget for 2019-20 was announced by Mr Piyush Goyal, Union Minister for Finance, Corporate Affairs, Railways and Coal, Government of India, in Parliament on February 01, 2019. It focuses on supporting the needy farmers, economically less privileged, workers in the unorganised sector and salaried employees, while continuing the Government of Indias push towards better physical and social infrastructure. Total expenditure for 2019-20 is budgeted at Rs 2,784,200 crore (US$ 391.53 billion), an increase of 13.30 per cent from 2018-19 (revised estimates).Numerous foreign companies are setting up their facilities in India on account of various government initiatives like Make in India and Digital India. Mr. Narendra Modi, Prime Minister of India, has launched the Make in India initiative with an aim to boost the manufacturing sector of Indian economy, to increase the purchasing power of an average Indian consumer, which would further boost demand, and hence spur development, in addition to benefiting investors. The Government has also come up with Digital India initiative, which focuses on three core components: creation of digital infrastructure, delivering services digitally and to increase the digital literacy.
Indias gross domestic product (GDP) is expected to reach US$ 6 trillion by FY27 and achieve upper-middle income status on the back of digitisation, globalisation, favourable demographics, and reforms. Indias revenue receipts are estimated to touch Rs 28-30 trillion (US$ 385-412 billion) by 2019, owing to Government of Indias measures to strengthen infrastructure and reforms like demonetisation and Goods and Services Tax (GST).India is expected to be the third largest consumer economy as its consumption may triple to US$ 4 trillion by 2025, owing to shift in consumer behaviour and expenditure pattern, according to a Boston Consulting Group (BCG) report; and is estimated to surpass USA to become the second largest economy in terms of purchasing power parity (PPP) by the year 2040, according to a report by PricewaterhouseCoopers. Exchange Rate Used: INR 1 = US$ 0.0145 as on March 29, 2019.
NON BANKING FINANCIAL SECTOR IN INDIA
RBI has tightened regulations this year by putting in place rules requiring shadow lenders to appoint a chief risk officer and proposing stringent liquidity requirements. India is stamping out shadow financiers at the fastest pace in recent years, in the latest blow to a beleaguered sector battling a prolonged funding crunch due to rising wariness toward it in the nations credit markets.The central bank canceled registrations of 1,851 non-bank finance companies in the year ended March 31, more than 8 times those in the previous year, according to data received from the Reserve Bank of India in response to a Right to Information request. The number of lenders dropped to about 9,700, the lowest in at least a decade, as a result. Firms may be failing to secure the minimum funds needed to operate due to the cash crunch. RBI cancelled permits of these NBFCs as they couldnt raise even Rs 2 crore" to meet regulatory requirements. The lobbying body for the financiers had been demanding a liquidity window for NBFCs through banks as a lifeline. The government plans to bolster the central banks authority over shadow lenders and has transferred the regulation of housing finance companies to the RBI from National Housing Bank last month. RBI is already working closely with shadow banks after detecting signs of fragility in some of the 50 housing finance and other non-bank lenders its monitoring.
INTERNAL CONTROL SYSTEMS
Your Company has an effective internal financial control and risk mitigation system, which are constantly assessed and strengthened with new revised standard operating procedures. The Companys internal control system is commensurate with its size, scale and complexities of its operations. The internal and operational audit is entrusted to M/s. Dhawan & Co, Chartered Accountants. The Audit Committee actively reviews the adequacy and effectiveness of the internal financial control systems and suggests improvements to strengthen the same.
Human resources continue to be one of the critical assets of the organization. Attracting relevant talent remains the Companys key focus. It pays special attention to training, welfare and safety of its people, strengthening human capabilities.
The net loss for the period ended 31st March,2019 is Rs. 38,32,654 as against profit of Rs. 8,35,479 during previous year. The total income of the company increased from Rs. 16,84,633 to Rs.17,98,582. The EPS of the company for the year under review is Rs. (0.77). The management ensures that it will work out some effective and efficient strategy to make the venture profitable during the current year.
Management discussion and analysis report contains statements which are forward looking based on assumptions. Actual results may differ from those expressed or implied due to risk and uncertainties which have been detailed in this report. Several factors as listed in this report could make significant difference to the Companys operations. Investors, therefore, are requested to make their own independent judgments and seek professional advice before taking any investment decisions.