Bharat Bhushan Finance & Commodity Brokers 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 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.
With the improvement in the economic scenario, there have been various investments in different 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 the year 2018-19 the 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.
During the year the Proceeds through Initial Public Offers (IPO) in India reached US$ 5.5 billion in 2018 and US$ 0.9 billion in Q1 2018-19. The 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.
In India, growth is projected at 7.5 per cent in FY2019/20 (April 1, 2019 to March 31, 2020), and to stay at this pace through the next two fiscal years," the World Bank said in its report.
Indian Capital Market
The Indian economy has shown excellent growth in the last few decades post liberalisation. A robust capital market supplemented by technological advancement and a strengthened legal framework has played a major role in driving the growth thus far.
Calendar year 2018 (CY18) turned out to be an eventful year that saw the S&P BSE Sensex and the Nifty50 react to the rise in oil prices, fall in rupee, rate hikes, trade war fears, FII outflows, worsening macros (twin deficits - fiscal and current), confusion over long-term capital gains tax among the Budget proposals and the IL&FS crisis.On a year-to-date (YTD) basis, the S&P BSE Sensex and the Nifty50 have gained nearly 7per cent and 4 per cent, respectively. Analysts expect calendar year 2019 (CY19) to be equally volatile for the markets with a host of global and domestic factors impacting the sentiment.
Indian capital Market outperformed several major global markets, including the developed ones like the US and the UK as well as developing economies like China and Brazil, with double digit returns in the fiscal ended March 2019 despite numerous global and domestic headwinds, data shows. The Indian market benchmark indices also improved on their own performance in the previous fiscal, with the Sensex (17%) giving relatively better returns than the NSEs Nifty (15%) in 2018-19.
The year 2018 has been a yoyo year in debt markets. From a clamour for rate hikes to a whisper of rate cuts, the markets have seen a large move in both directions over the course of the year. The year was also an eventful one for debt market participants. From the flip flop on policy action to the spat between the Reserve Bank of India (RBI) and the government to the IL&FS default (pegged as Indias so-called Lehman moment) and the risk of contagion in the NBFC (non-banking financial company) space, the year has been an eventful one. Despite 2018 being a year of negatives, the bond market outperformed equity markets for the year. The year 2019 is likely to be a year of reversals, furthering the investment case for debt markets.
MUTUAL FUNDS AND THE INDUSTRY
Growing investor interest in mutual funds has led to an addition of over 1.11 crore new folios in the financial year 2018-19, taking the total to an alltime high of 8.24 crore at the end of March 2019. Although the additions were lower than the 1.6 crore investor accounts in FY18 fiscal, it was higher than 67 lakh folios added in FY17 and 59 lakh in FY16.
Over the last few years, investor accounts have increased following robust contribution from retail investors, especially from smaller towns and large inflows in equity schemes.Fund managers attributed the addition in equity fund folios to the matured behaviour of retail investors who were seeing the market fall as an opportunity to invest their surplus money.
The Assets Under Management (AUM) of Indian Mutual Fund as on May 31, 2019 has crossed a landmark of 25 Lakh crore and almost touched a new high of 26 Lakh crore. AUM as on 31-May-2019 stood at 25,93,560 crore.The AUM of the Indian MF Industry has grown from 6.64 trillion as on 31st May, 2009 to 25.94 trillion as on 31st May, 2019, almost 4 fold increase in a span of 10 years.
COMMODITY MARKET OVERVIEW
Indian commodity market consists of both the retail and the wholesale market in the country. The commodity market in India facilitates multi commodity exchange within and outside the country based on requirements. Commodity trading is one facility that investors can explore for investing their money. The Indian Commodity market has undergone lots of changes due to the changing global economic scenario; thus throwing up many opportunities in the process.
Despite having a robust economy, Indias share in the global commodity market is not as big as estimated. Except gold the share in other sectors of the commodity market is not very significant. India accounts for 3% of the global oil demand and 2% of global copper demand. In agriculture Indias contribution to international trade volume is rather less compared to the huge production base available. Various infrastructure development projects that are being undertaken in India are being seen as a key growth driver in the coming days.
The profitability of the Company in the current financial year has increased 4.45% as compared to profitability of the Company in the previous financial year. The details are as follows:
|Particulars||Financial Year||Financial Year||Change|
|Administrative and other Expenditure||29.61||28.55||3.71%|
|Profit before Tax||77.04||74.79||3.01%|
|Profit after depreciation & tax||62.16||59.51||4.45%|
|Current Liabilities & Provisions||33.68||38.12||
|Net Current Assets||82.10||123.91||
|Reserve & Surplus||575.72||558.38|
During the financial year 2018-19, the Companys total revenue was Rs. 106.65 Lacs as compared to Rs. 103.33 Lacs in the previous year
2017- 18 and the total expenditure was Rs. 29.61 Lacs as compared to Rs. 28.55 Lacs in the previous year.
The company has earned a profit before tax for the financial year ended 2018- 19 of Rs. 77.04 Lacs as compared to Rs. 74.79 Lacs in the previous year 2017-18 and its profit after tax for the financial year ended 2018-19 is Rs. 62.16 Lacs as compared to Rs. 59.51 Lacs in the previous year.
FUTURE PROSPECTS AND OUTLOOK
The Indian economy started the fiscal year 2018-19 with a healthy 8.2 percent growth in the first quarter on the back of domestic resilience. Growth eased to 7.3 percent in the subsequent quarter due to rising global volatility, largely from financial volatility, normalized monetary policy in advanced economies, externalities from trade disputes, and investment rerouting. Further, the Indian rupee suffered because of the crude price shock, and conditions exacerbated as recovery in some advanced economies caused faster investment outflows.
The Indian economy is likely to sustain the rebound in FY2018-19;growth is projected to be in the 7.2 percent to 7.5 percent range and is estimated to remain upward of 7 percent for the year ahead. These projections could be attributed to the sustained rise in consumption and a gradual revival in investments, especially with a greater focus on infrastructure development. The improving macroeconomic fundamentals have further been supported by the implementation of reform measures, which has helped foster an environment to boost investments and ease banking sector concerns. Together, these augur well for a healthy growth path for the economy. India has already surpassed France to become the sixth-largest economy. By 2020, it may become the fifth-largest economy, and possibly the third-largest in 15 years.
While higher government investments have helped retain a somewhat healthy sentiment for capital formation, the stretch in government expenses has already become evident in the expansion of fiscal deficit net. The fiscal deficit target was amended previously, but the recent budget announcement expanded it further to 3.4 percent of GDP for both FY2018-19 and FY2019- 20. This became necessary given the expected higher expenditure toward income support scheme for farm households, pension scheme for the unorganized sector workers, and income tax rebate.
OPPORTUNITIES & THREATS Opportunities
Indias Growth Rate
Focus on Digital and affluent customers
Utilize technology to provide solution to customers
Increase distribution strength
Fiscal deficit and current account deficit
Attracting and retaining talent and training them, for the right culture
Inflation and economic slowdown
Risk Management is an ongoing process. Effective risk management is therefore critical to any organizational success. Globalization with increasing integration of markets, newer and more complex products and transactions and an increasingly stringent regulatory framework has exposed organizations to and integrated approach to risk management. Timely and effective risk management is of prime importance to our continued success. The sustainability of the business is derived from the following:
Identification of the diverse risks faced by the Company.
The evolution of appropriate systems and processes to measure and monitor them.
Risk Management through appropriate mitigation strategies within the policy framework.
Monitoring the progress of the implementation of such strategies and subjecting them to periodical audit and review.
Reporting these risk mitigation results to the appropriate managerial levels.
There is the risk of loss from inadequate or failed systems, processes or procedures. These may be attributed to human failure or technical problems given the increase use of technology and staff turnover. Our Company has in place suitable mechanisms to effectively reduce such risks. All these risks are continuously analyzed and reviewed at various levels of management through an effective information system.
INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has a robust internal controls systems (including Internal Financial Controls) that facilitates efficiency, reliability and completeness of accounting records and timely preparation of reliable financial and management information. The internal control system ensures compliance with all applicable laws and regulations facilitates optimum utilization of resources and protect the Companys assets and investors interests.
The Companys well-defined organizational structure, documented policy guidelines, defined authority matrix and internal controls ensure efficiency of operations, compliance with internal policies and applicable laws and regulations as well as protection of resources.
The Company has a vigil mechanism/ whistle blower policy to address fraud risk. The Audit Committee of the Board regularly reviews significant audit findings of the Internal Audit system covering operational, financial and other areas.
The Company believes that in Service Sector the employees are the backbone of the Company. The Company is providing an equal opportunity to all the employees to utilize their full potential and grow with the organization.
The statement in the Management Discussion & Analysis describing the
Companys objectives, projections, estimate, expectations are forwardlooking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operation include economic conditions affecting demand/supply and price conditions in the domestic and overseas markets in which the Company operates, changes in the government regulations, tax, corporate and other laws.
|For & on Behalf of the Board of Directors|
|For Bharat Bhushan Finance & Commodity Brokers Limited|
|NISHA AHUJA||VIJAY BHUSHAN|
|Place : New Delhi||DIRECTOR||DIRECTOR|
|Date : 23th August, 2019||(DIN :00001875)||(DIN : 00002421)|