kmf ltd Management discussions

KMF LIMITED ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS The Macro Economic Environment Indias economic growth is likely to rise to 7.7 per cent in calendar year 2013, but growth rate through much of this year is likely to remain subdued, Organization for Economic Cooperation and Development has said. According to OECDs latest Economic Outlook, Indias growth rate is likely to slow to 7.1 per cent in 2012 from 7.3 per cent in 2011, but would inch up to 7.7 per cent in 2013. The governments fiscal consolidation plans this year would help reduce inflation narrow the current account deficit and promote more balanced growth, OECD said. However, further action in the monetary policy front would be constrained by inflationary pressures and limited spare capacity, OECD said, adding that spending pressures, notably on subsidies, are again likely to result in overruns. Economic worries over the past few months like rupee depreciation, high inflation and current account deficit have acted as big dampeners for the India growth story, which was seeing a growth rate of 8-9 per cent during pre-global crisis. The global financial crisis of 2008 pulled down Indias growth rate to 6.7 per cent in 2008-09. India has projected a growth rate of 7.6 per cent in 2012-13, up from 6.9 per cent recorded in the previous fiscal. The Indian economy has slowed owing to weakness in manufacturing and investment spending. Meanwhile, softening external demand and rising imports have resulted in a widening current account deficit (CAD). Industry Structure & Development Your company is engaged in providing financial services. Included hire purchase finance for commercial vehicles, Plant & Machinery, equipment, consumer durables and two wheelers, merchant banking and money changing. Opportunity & Threats The Finance sector is full of opportunities but on the same time it cannot be denied that is also full of threats. Following are few of the examples of both which your company is fore seeing:- * Good financial position creating a good reputation for future banks loans and borrowings. * Increased spending power in the Local/National economy. * Moving a product into a new market sector. * Skilled workforce means that they can be moved and trained into other areas of the business. * Broadband technology has been installed in the area (useful for Internet users). * Rising cost of Wages (Basic wage, etc) Large and increasing competition. * Increasing interest rates (increases borrowing repayments, etc) Segment- wise or Product wise Performance Currently your company is trying to diversify its finance into leasing and hire purchase and consumer credit and working capital requirements are met with finance against receivables .This service will be extended to customers approved on selective basis. Future Outlook The company is primarily engaged in providing financial services. Included hire purchase finance for commercial vehicles, Plant & Machinery, equipment, consumer durables and two wheelers, merchant banking and money changing. The finance sector is quite promising with various advantages, the few of them are as under:- * Employment and training opportunities in the field of finance. * There will a segregation of financial intermediation among banks, resulting in competitive efficiency, depth and resilience to the financial system. * Other types of financial intermediaries will complement banks and act as counter parties, in syndications and co-financing strategies, as also, in the sharing of risk. * Marker will acquire greater depth and liquidity, especially in the money and debt segments. * The spectrum of financial institution will bring about financial deepening and broad based intermediation, encouraging financial saving in the community. Risks & Concerns The concerns listed above in the point Opportunities & Threats will continue to be risks and concerns for your company. The company will leave no stone unturned to improve the net worth in coming year. Financial Performance Your company has registered all-round phenomenal growth for the FY 2011-12. The turnover of your company has increased by 600.00% approx i.e. from Rs.804861.00 in 2010-11 to Rs.5056901.00 in current year. PAT has increased from Rs. (19262.60) to Rs.1875886.00 Internal Control System Your company has adequate internal control systems commensurate with its size and operations, although not documented. Human Resources/Industrial Resources The company during the previous year continued its record of good industrial relations with its employees. During the year various initiatives had been taken to improve the performance and productivity levels in various departments of the company. The company has its in house technical centre in the plant to train the new recruits before their placement that helps in optimum utilisation of resources as well as maintaining quality standards. It also indulges into and implements various HR initiatives and activities including employee welfare, special rewards, performance review system and various employee motivation activities. Cautionary Statement This report contains certain statements that the Company believes and may be considered as forward looking statements. These forward looking statements may be identified by their use of words like plan, hope, will, expect, aim or such similar words or phrases. All such statements are subject to risks and uncertainties which could cause actual results to vary materially from those contemplated by the relevant forward looking statements.