delta leasing finance ltd Management discussions

OVERVIEW

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2) (e) of SEBI (LODR) Regulations, 2015 read with Schedule V(B) thereto, with a view to provide an analysis of the business and Financial Statement of the Company for FY 2018-19 and hence it should be read in conjunction with the respective Financial Statements and notes thereon.

ECONOMIC OVERVIEW

In 2018, the global economy began its journey on a firm footing with estimated global economic growth of 3.6% (Source: World Economic Outlook by International Monetary Fund (IMF)). During the second half of 2018, this rate of development gradually declined, owing to impending US-China trade dispute and some slowdown across developed markets. Germany is likely to be impacted by weak private consumption, industrial production and foreign demand; Italy by weak domestic demand and higher borrowing costs; and France by negative impact of street protests and industrial action.

Emerging and developing markets of Asia maintained their steady progress at 6.4% during 2018. However, its important to note that Indias economy expanded by 7.1% in 2018 vis--vis 6.7% in 2017, whereas Chinas growth deteriorated from 6.9% in 2017 to 6.6% in 2018 (Source: IMF). Sub-Saharan Africas economy also sustained a steady rise of 3% during the year.

India continues to be one of the fastest growing major economies in the world and is expected to be among the worlds top three economic powers in the next 10-15 years. The Indian economy is expected to improve and close the year 2019 with a GDP growth of 7.3% (Source: IMF). Today, India is the worlds seventh largest economy in real terms, backed by strong demand, positive consumption pattern and rising disposable income.

INDUSTRY STRUCTURE AND DEVELOPMENT OVERVIEW :

Indian economy is going through a period of rapid "financial liberalisation". Today, the "intermediation" is being conducted by a wide range of financial institutions through a plethora of customer friendly financial products. The segment consisting of NBFCs, such as equipment leasing/hire purchase finance, loan and investment companies, etc. have made great strides in recent years and are meeting the diverse financial needs of the economy. These NBFCs provide a variety of services including fund-based and fee-basedactivities and cater to retail and non-retail markets and niche segments. They are being recognized as complementary to the banking sector due to their customer-oriented services, simplified procedures, attractive rates of return on deposits, flexibility and timeliness in meeting the credit needs of specified sectors.

With virtually all finance company business lines coming under greater competitive pressure, defining strategic initiatives and backing each with the necessary resources has become imperative for success. On the consumer side of the business, the ability to compete in various product offerings often is dictated by operational efficiencies and economies of scale. In this respect NBFCs face problems of high cost of funds because they lack the nation wide branch network and have a comparatively lower Tier-I and Tier- II capital base.

We witness that NBFC sector, in India are facing stiff competition from different banks and financial institutions. The cost of funds of banks is lower as compared to NBFCs. Not only this, they have a very wide network and huge capital base which makes them more attractive then NBFC. However as the market is volatile in nature, the long term growth of capital market calls for a matter of concern.

OPPORTUNITIES, THREATS, RISKS AND CONCERNS :

Being a Financial company, DLFL is exposed to specific risks that are particular to its business and the environment within which it operates, including interest rate volatility, economic cycle, credit risk and market risk. The most important among them are credit risk, market risk and operational risk. The measurement, monitoring management of risk remains key focus areas for the company.

Your Company has operations in Leasing and Finance. The independent finance industry issues debt and lends the proceeds to individuals (consumer finance companies) and corporations (commercial finance companies) on both a secured and unsecured basis. Unlike the commercial banks, whose deposit taking ability adds significantly to funding availability, finance companies rely almost exclusively on institutional borrowings and access to the public debt markets for funding. Consequently, the ability to access the short, medium and long-term markets at competitive rates is critical to their ongoing viability. Your company faces tough competition from Nationalized, Foreign and Private Sector Banks due to their inability to grant loan at a considerably low rate of interest.

The company has its own specific risks that are particular to its business including default risk, fluctuation of interest rates, economic cycles etc. Moreover existing banks are moving into retail sector and regional banks like Assamese banks are coming into play, which poses major concern for your company. The volatility in the market is a matter of concern. However economic parameters being strong will upsurge the economy. Your company has a well defined and prudent business practice and a comprehensive Risk Management Policy to manage this risk.

FUTURE OUTLOOK :

Your Company is currently engaged in NBFC activities & Financial Management Services. The Company intends to continue focusing on NBFC activities including financing, Inter-corporate Investments & Capital Market activities. At the same time the company has plans to expand its business by offering a wide array of financial products and services.

With a dedicated team of people, the Company expects to establish growth ahead of market in the coming years. It would definitely try to establish itself and remain as a strong player in the finance industry. With the Capital market expected to be in a better mode than the previous few years and with our efforts we can look forward to a prosperous year for the Company.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY :

The Company has a proper and adequate system of internal control in all spheres of its activities to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded and reported diligently.

The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines.

FINANCIAL AND OPERATIONAL PERFORMANCE :

Please refer Directors Report for financial performance.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT NUMBER OF PEOPLE EMPLOYED :

The Company has been able to maintain its existing resources by keeping pace with the changing business environment and by ensuring staff continuity. The Company has a team of able and experienced industry professionals and employees. The Company believes that people are the key ingredient to the success of an organization. Looking after people makes good business sense because, if people are motivated, service excellence will follow. The relations remain cordial throughout the year between employees and the management.

CAUTIONARY STATEMENT :

The Board of Directors have reviewed the Management Discussion and Analysis prepared by the Management. Statement in this report of the Companys objective, projections, estimates, exceptions, and predictions are forward looking statements subject to the applicable laws and regulations. The statements may be subjected to certain risks and uncertainties. Companys operations are affected by many external and internal factors which are beyond the control of the management. Thus the actual situation may differ from those expressed or implied. The Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.

DISCLOSURES UNDER REGULATION 34(3) READ WITH CLAUSE B OF SCHEDULE V OF SECURITIES AND EXCHANGE BOARD OF INDIA (LISTING OBLIGATIONS AND DISCLOSURE REQUIREMENTS)REGULATIONS, 2015 (SEBI LODR, 2015)

S.No.	PARTICULARS	2017-18	2018-19	REASON FOR CHANGE IN KEY FINANCIAL RATIOS
a)	Debtors Turnover	-	-	-
b)	Inventory Turnover	-	-	-
c)	Interest Coverage Ratio	2.85	0	There is no interest expense of the company.
d)	Current Ratio	43.45	174.13	The ratio has increased on account of increase in current assets and current liabilities declined.
e)	Debt Equity Ratio	-	-	Company has no debt during the year.
f)	Operating Profit	0	0	The operating profit as well as net sales has decreased during the year. Consequently , there was no change in the ratio as compared to previous year.
g)	Net Profit Margin (%)	0	0	The net profit as well as net sales has decreased during the year. Consequently, there was no change in the ratio as compared to previous year.
h)	Return on Net Worth	0	0	No Change