DJS Stock & Shares Ltd Management Discussions.

MACRO ECONOMY: REVIEW AND OUTLOOK

Goldilocks 2017 gave way to a volatile 2018. Rise of trade tensions between the US and China impacted the business sentiments, while US Feds monetary tightening contributed to the global liquidity tightening. This liquidity tightening amid relatively high levels of global debt slowed down the growth momentum in the global economy in the second half of 2018.

Against this backdrop of tightening global liquidity coupled with rising crude oil prices, India witnessed a reversal in capital flows and a Balance of Payments (BoP) squeeze, thus putting pressure on exchange rate. At the same time, default by an AAA rated entity in September 2018, further impacted the sentiments in the money markets, leading to a near-freeze at one point. Bond spreads shot up significantly and risk appetite among NBFCs weakened, with focus shifting to preserving liquidity rather than chasing growth. However, as BoP situation improved and rupee stabilised towards end of 2018, RBI began to inject liquidity into the banking system. In addition, Feds unexpectedly dovish tilt in January 2019, also supported flows to Emerging Markets.

However, these interim market dislocations impacted Indias growth momentum. Exports slowed down in a broad-based manner, while liquidity tightening and NBFCs risk aversion impacted pockets of leveraged consumption such as cars, two wheelers and commercial vehicles. However, there are segments in the economy which are holding up quite well. For example, infrastructure/construction growth is running at a healthy pace helped by government spending.

Overall Outlook

While global growth has been moderating for last six months, there are early signs of stabilisation. If there is any rebound in global growth, Indias exports are likely to benefit. On the domestic front, monetary policy transmission is the key monitorable. Also, the political rhetoric is shifting towards stimulating the rural economy, which augurs well for the consumption pockets of the economy. Expansionary monetary and fiscal policy, both together, is a rare event and is expected to provide a significant boost to the economy. Even banking sector NPA problems are largely behind us, helped by Insolvency & Bankruptcy Code (IBC), and government has made significant progress on PSU banks recapitalisation.

Therefore, it is expected that economic activity should start to gain traction gradually during the course of FY20 though the first half may be muted. The downside risk arises from the way oil prices behave on how the US sanctions against Iran pan out, how the ongoing US China trade war ends and a sharper than expected slowdown in the global economy, which may hurt not only exports but also capital flows and sentiments.

Segment-wise/Product-wise Performance

Your Company has only one reporting segment. The revenue for the year was Rs. 123.21 lakh and incurred loss of Rs. 456.43 lakh for the year.

Outlook

The markets presently are volatile and how sooner it will get stabilized is not easy to predict. However, with the industrys increasing preparedness, the evolving opportunities can be better harvested.

Risk Management

Risk management is integral part of business for the Company. The good risk management practices of the Company have facilitated navigating through environmentally turbulent times. While we have been managing various risks, a need for holistic approach to risk management led us to embrace yet another long journey towards Enterprise Risk Management (ERM). This we believe would strategically benchmark our practices to the best in class levels in ensuing years.

Internal Control System

Your Company has a planned internal control system through internal checks and reviews it periodically to strengthen it and safeguard Companys assets. Management Information System is given upmost importance.

Financial Performance w.r.t. Operational Performance

During the year under review, the Company has earned Total Revenue of Rs. 134.20 lakh in comparison to Rs. 80.44 lakh during the previous year. The Company has incurred a loss of Rs. 456.43 Lakhs in comparison to profit of Rs. 7.68 lakh during the previous year. The profitability was adversely affected due to onetime loss on impairment of investment.

Safety, Health and Environment

Your Company as a matter of policy gives greater importance to safety, health and environment and also ensures compliance with applicable legislative requirements.

Human Resources

Your Company recognizes the importance of Human Resource in achieving its objectives and strategies as human resource plays an important role in the success and growth of Company. Your company gives priority in honing and utilizing their skills through in house training programs.

Key Financial Ratios:

In accordance with the Securities and Exchange Board of India (Listing Obligations and disclosures Requirements) (Amendment) Regulations, 2018, the Company is required to give details of significant changes (change of 25% or more as compared to the immediately previous financial year) in Key sector-specific financial ratios.

The Company has identified the following ratios as key financial ratios:

Particulars F.Y. 2018- 2019 F.Y. 2017- 2018
Debtors Turnover Ratio1 Not Applicable
Inventory Turnover Ratio2 Not Applicable
Interest Coverage Ratio3 Not Applicable
Current Ratio4 144% 154%
Debt Equity Ratio5 Not Applicable
Operating Profit Margin (%)6 Not Applicable
Net Profit Margin (%)7 9% 10%
Return On Net-worth (%)8 1% 1%

1. The company is a stock broker; therefore this ratio is not applicable to the company.

2. The company is a stock broker; therefore this ratio is not applicable to the company.

3. The Company does not have not long term debt; therefore this ratio is not applicable to the company.

4. No significant change in the ratio.

5. The Company does not have any long term debt; therefore this ratio is not applicable to the company.

6. Due to the nature of business of the company, this ratio is not applicable to the company.

7. No significant change in the ratio.

8. No significant change in the ratio.

Cautionary Statement

The report contains forward looking statements describing expectations, estimates, plans or words with similar meaning. Your Companys actual result may differ from those projected depending on various factor. Your Company cannot guarantee that the assumptions and estimates in the forward looking statements are accurate or will be realized.

CHIEF EXECUTIVE OFFICER / CHIEF FINANCIAL OFFICER CERTIFICATION:

[Pursuant to Regulation 17(8) of the Securities and Exchange Board of India (Listing Obligations and Disclosure Requirements) Regulations, 2015.]

I, Anish Kumar Sawarnya, Chief Financial Officer and Director of the Company, to the best of my knowledge and belief, certify that:

(a) I have reviewed financial statements and the cash flow statement for the year ended 31st March, 2019 and that to the best of my knowledge and belief:

(i) these statements do not contain any materially untrue statement or omit any material fact or contain statements that might be misleading;

(ii) these statements together present a true and fair view of the Companys affairs and are in compliance with existing accounting standards, applicable laws and regulations.

(b) There are, to the best of my knowledge and belief, no transactions entered into by the Company during the year which are fraudulent, illegal or violative of the Companys Code of Conduct.

(c) I have reviewed the internal controls and procedures, and to the best of my knowledge and information, I affirm that the Company has adequate internal controls and procedures.

(d) Based on my knowledge and information:

(i) There has not been any significant changes in internal control over financial reporting during the financial year ended 31st March, 2019;

(ii) There has not been significant changes in the accounting policies during the financial year ended 31st March, 2019

(iii) I have not become aware of any significant fraud or involvement therein, if any, of the management or any employee having a significant role in the Companys internal control system over financial reporting

Place: Mumbai Anish Kumar Sawarnya
Dated:30th May, 2019 Chief Financial Officer