Nouveau Global Ventures Ltd Management Discussions.
This report covers the operations and financial performance of the Company for the year ended March 31, 2019 and forms part of the Directors Report.
INDIAN ECONOMY OVERVIEW AND INDUSTRY STRUCTURE AND DEVELOPMENTS
As per the macro view of financial year 2018-19 by the Ministry of finance- Government of India, India continues to remain the fastest growing major economy in the world in 2018-19, despite a slight moderation in its GDP growth from 7.2 per cent in 2017-18 to 6.8 per cent in 2018-19. The services sector is not only the dominant sector in Indias GDP, but has also attracted significant foreign investment flows, contributed significantly to exports as well as provided large-scale employment.
According to analysis from Source Global Research, the largest consumer of consulting services is the financial services industry, at 30% of the total amount. The rapid growth in the Indian consulting market has placed it amongst the biggest markets on the international stage. This year, the 6% growth registered by India. The Financial sector grew at 7.4 per cent in 2018-19, higher as compared to 6.2 per cent in 2017-18. This sector amounts for more than 20 per cent of overall Gross Value Added of the economy.
As per the Federation of Indian Chambers of Commerce and Industry-Ernst & Young (FICCI-EY) Media & Entertainment Report (2019), India is the worlds biggest producer of films with 1,776 domestic film releases in 2018. Indian film industry grew at 12 per cent in 2018 with revenue of Rs. 17,450 thousand crore. The highest number of films were released in Kannada (243) followed by Hindi (238) and Telugu (237).
Indias share in global trade (merchandise and services) was 2.1% (481.74 USD billion out of total 23,044 USD billion) for exports and 2.6% (600.62 USD billion out of total 23,112 USD billion) for imports in 2017. Exports have been growing on a regular basis since 2016-17 for almost three years and total exports reached a new peak of more than half a trillion dollars, for the first time in 2018-19.
COMPANY OVERVIEW (SEGMENTWISE OR PRODUCT-WISE PERFORMANCE)
Nouveau Global Ventures Limited ("NGVL" or "the Company") is functioning in various segments such as Multimedia, Financial Consultancy, dealing in securities and Trading Division. During the year the total turnover of the Company was Rs. 264.40 Lakhs as compared to Rs. 1114.45 Lakhs in the previous year i.e. 2018 at the same time the consolidated turnover of the Company also shows the same position of Rs. 264.40 Lakhs as compared to Rs. 1114.45 Lakhs in the previous year i.e. 2018.
During the year under review, the Company has generated revenue from selling of film rights of Rs. 172 Lakhs as compared to Rs. 80 Lakhs in the previous year i.e. 2018. Additionally, the Multimedia segment of Company has added a positive growth in revenue with Rs. 172.94 Lakhs as compare to Rs. 152.33 Lakhs, in the previous year i.e. 2018.
The Financial Consultancy segment has earned a revenue of Rs. 20.85 Lakhs as compare to the negative growth of Rs. 1.63 Lakhs, in the previous year i.e. 2018.
The trading division has also performed well with a revenue of Rs. 2.72 Lakhs as compare to nil revenue in the previous year i.e. 2018.
Except, the trading division, all the other Segments of Company have made a positive stand in the market, during the year under review.
The Indian Media and Entertainment (M&E) industry is a sunrise sector for the economy and is making high growth strides.
The year ahead promises to be a time of exciting change as new trends and technologies drive innovation, disruption, and opportunities for growth in media and entertainment.
The Indian media and entertainment industry is estimated to touch $52,683 million (around Rs 3.73 lakh crore) by 2022.
Besides the traditional media such as TV and cinema, new-age digital platforms such as over-the-top (OTT) services would play a key role. TV, cinema and OTT will collectively account for 46 per cent of the overall growth in the Indian entertainment and media industry for the period 2017 to 2022.
For better trading and long term investment, one can trade in sectors, namely, Information Technology, Fast moving consumer goods (FMCG), Housing finance Companies, Automobiles and Infrastructure. These are the topmost fast growing sectors from the point of view of investing.
The consulting space is massive. Even if it were to shrink by 50%, there would still be money for the people who know how to do it. Currently, the business world desperately needs consulting assistance. It is projected that by the next three years, there would be more than 2.2 lakh people getting employment in almost 10,000 consultancy firms across the nation.
Opportunities of the Company are:
1. Expand its media activities;
2. Target distribution subsidiary;
3. Diversify business into related media and entertainment sectors;
4. New distribution platforms like DTH and IPTV will only increase the subscriber base and push up subscription revenues;
5. Home video segment becoming more profitable with increasing sifts of VCDs and DVDs;
6. Reduction in domestic bandwidth rate by 70% may increase the download of films through internet;
7. Indian Entertainment & Media (E&M) industry has out-performed the Indian economy and is one of the fastest growing sectors.
Account takeover is the biggest threat in Media and Entertainment Industry. Because media organizations invest millions into building followers, engaging and turning social reputation in dollars, attackers value these accounts too.
The cyber criminals bread and butter, spearphishing, performs incredibly well on social media.
The major weaknesses of Indian consulting organizations, which has hindered the export growth of consulting sector in the country, are low quality assurance, low local presence overseas, low equity base, lack of market intelligence, and low level of Research & Development.
Threats of the Company are:
1. Increasing competition in the industry;
2. Further drop in sales volume due to spread of radio, cheap VCDs and MP3 pirated discs;
3. Cyclical or seasonal fluctuations in the operating results;
4. Only promoted products will attract consumers share of wallet which could be a threat for traded catalogue;
5. Changes in the foreign exchange control regulations, interest rates and tax laws in India;
6. International business weakening further due to piracy and parallel import.
The company is putting continuous efforts to attain further efficiencies. Further, the Company is confident that in spite of the challenges and competition in the industry it will perform better in view of the strong fundamentals of the Company and hope to improve its turnover. The Company is expecting to enhance its presence globally to rationalize its significance by entering into the new alliance.
RISK & CONCERNS
Fiscal year 2018-19 has been a year of economic consolidation after implementation of GST and demonetization. GDP growth is expected to be around 7.5% aided by significant export growth. However, for India to sustain this growth rate, the new government will have to adopt a non-populist economic policy. The USA appears to have reversed its earlier projection of interest rate hikes fearing a slowdown in the economy. China and some other European countries also seem to be slowing down, which may affect world economic growth. Rising protectionism and disruptions caused by US sanctions on countries like Iran may hurt world growth. The US China trade war and events like BREXIT are all impediments to growth. Indian exports are mainly capital intensive and therefore, need to harness cheap labour to sustain double digit growth in case of slowdown in world economy. Small incremental reforms will not suffice and further reforms in labour and land laws, education and health will be required to sustain a 7.5% growth rate and be counted as a Miracle Economy in the world.
Further,the management of risk does not imply risk elimination but prudent risk management. We can withstand the competition despite an increasing number of new players. In a highly competitive environment, we may face margin pressures. In any business, risks and prospects are inseparable. As a responsible management, the Companys principal endeavour is to maximize returns. The Company continues to take all steps necessary to minimize its expenses through detailed studies and interaction with experts.
INTERNAL CONTROLS SYSTEMS AND ADEQUACY
Your Company has an adequate system of internal controls to ensure that transactions are properly authorised, recorded, and reported, apart from safeguarding its assets. The internal control system is supplemented by well documented policies and procedures and reviews carried out by the Companys Internal Auditor which submits reports periodically to the Management and the Audit Committee of the Board.
MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING EMPLOYEMENT.
People are one of the key and critical success factors for the Company. The Companys HR philosophy is to establish and build a high performing organization, where each individual is motivated to perform to the fullest capacity to contribute to developing and achieving individual excellence and departmental objectives and continuously improve performance to realize the full potential of our personnel. Industrial relations are cordial and satisfactory. The company expects to continue to get their unflinching support in future also. During the year under review, industrial relations have generally remained healthy, cordial and harmonious. Company has also increased the professional staff during the year to enhance quality and level of working culture in the organization. Company has also retained maximum old staff who proves to be an asset to the management and add cooperation in business.
RATIOS WHERE THERE HAS BEEN A SIGNIFICANT CHANGE FROM FINANCIAL YEAR 2018 TO FINANCIAL YEAR 2019
During the year under review, the detail of changes made in the following key financial ratios at Standalone and Consolidated level as compare to the immediately previous financial year. The details of the same in a form of comparison is provided as:-
|S. No. Particulars of Ratio||Financial Year||Financial Year|
|1 Debtors Turnover Ratio||29.42||15.38|
|2 Inventory Turnover Ratio||2.16||1.63|
|3 Interest Coverage Ratio||1.20||-18884.76|
|4 Current Ratio||0.56||1.92|
|5 Debt Equity Ratio||1.50||1.78|
|6 Operating Profit Margin||0.34||-1.04|
|7 Net Profit Margin||0.35||-1.09|
|8 Return on Net worth||1.95||-1.83|
Statements in foregoing paragraphs of this report describing the current industry structure, outlook, opportunities, etc., may be construed as "forward looking statements", based on certain assumptions of future events over which the Company exercises no control. Therefore, there can be no guarantee as to their accuracy. These statements involve a number of risks, uncertainties and other factors that could cause actual results to differ materially from those that may be implied by these forward looking statements. Such risks and uncertainties include, but are not limited to: growth, competition, domestic & international economic conditions affecting demand, supply & price conditions, changes in Government regulations, tax regimes and other statutes.
|By and on behalf of the Board|
|For Nouveau Global Ventures Limited|
|Krishan Khadaria||Manoj Bhatia|