Palash Securities Ltd Management Discussions.

Economic Overview

Global prospects remain highly uncertain one year into the pandemic. The COVID pandemic created havoc across the globe as economies implemented lockdowns and economic growth came to a standstill. The global economy is climbing out from the depths to which it had plummeted during the Great Lockdown. But with the COVID-19 pandemic continuing to spread, many countries have slowed reopening and some are reinstating partial lockdowns to protect susceptible populations. The COVID-19 pandemic is inflicting high and rising human costs worldwide, and the necessary protection measures are severely impacting economic activity. Despite setbacks, an uneven global recovery continues.

While the global growth outlook has improved, led by robust rebound in China and the United States, surging COVID-19 infections and inadequate vaccination progress in many countries threaten a broad-based recovery of the world economy. New virus mutations and the accumulating human toll raise concerns, even as growing vaccine coverage lifts sentiment. Economic recoveries are diverging across countries and sectors, reflecting variation in pandemic-induced disruptions and the extent of policy support.

India has emerged as the fastest growing major economy in the world and is expected to be one of the top three economic powers in the world over the next 10-15 years, backed by its robust democracy and strong partnerships. As per International Monetary Fund, the Indian economy would stage a strong recover in the Financial Year 2022.

India has been particularly affected by a brutal second wave, which is overwhelming the public health system in large parts of the country. The second wave of the Covid-l9 pandemic has taken a vicious toll on Indias health. A major concern of the second wave is that the virus has spread into Indias hinterland and could wreak havoc in villages, towns and small cities. Yet growth should accelerate gradually without triggering arise in inflation or interest rates, despite much higher government debt. The country has expanded vaccine eligibility and is ramping up supply in every possible manner, but access to vaccines is unequal and insufficient to meet the massive demand. Given the fluid situation, Indias growth outlook is highly fragile.

Industry Structure and Developments

The long-term growth perspective of the Indian economy remains positive due to its young population and corresponding low dependency ratio, healthy savings, and investment rates, increasing globalisation in India and integration into the global economy. The Finance Minister has provided the much-required relief to the pandemic-hit Indian economy with the tax proposals and have endeavored to make India a more attractive destination for investments.

The digitalization of everyday life, the trend toward more flexible work arrangements, the deceleration of globalization, the weakening of multilateralism, the expansion of the state or the vulnerability of cities - all of these developments were already underway prior to the virus outbreak.Thecurrent disruption has forced companies (especially midcaps) to rework their business models right from sourcing to manufacturing to distribution. Many smaller companies have adapted and embarked on prudent cost-cutting and reduced debt to clean up balance sheets.

India slipped into a technical recession due to the economic fallout from a lengthy lockdown to slow the spread of the coronavirus outbreak. While corporate earnings are likely to be impacted due to the Covid-triggered lockdown and mobility curbs, it is believed markets are likely to look through this disruption. As consumers emerge from lockdown, excess savings are likely to drop sharply. Resurgent demand for leisure travel and other services will strain the capacity of industries gutted by the pandemic. The deflationary impact of business closures could give way to the potentially inflationary impact of supply shortages.

Indias non-bank financial institutions (NBFI) face renewed asset quality and liquidity risks amid a second wave of coronavirus infections. It is believed that authorities have gained experience in balancing the trade-off between tighter restrictions and maintaining economic activity over the past year. Consumers and businesses are also likely to better adapt their economic activity to the second wave of restrictions, as seen in other countries. Regulators appear keenly aware of the credit and liquidity implications of any broad, extended movement curbs, while NBFIs day-to-day operations are also likely to be able to continue under the latest rules.

Further, the reopening of markets and the availability of vaccinations will eventually spark a new wave of travel and service spending. The budget for the fiscal year from April 2021 to March 2022 also points to a shift towards demand-side stimulus, with an uptick in public investment (particularly in transport infrastructure) for the coming fiscal year.

Trade has normalised faster than the rest of the economy, with both exports and imports scaling pre-pandemic levels. Indias gross domestic product growth to rebound in fiscal 2022. But recovery would not be easy, with scars of the pandemic running deep for small businesses and the urban poor; the rural economy has been more resilient versus the urban, and services are lagging manufacturing in recovery.

Opportunities and Threats.

Your Company being an Investment Company it seeks opportunities in the capital market. Budget 2021 was expected to address a number of concerns to stimulate growth and to put the economy backon a roll. Domestic equity markets saw a broad-based rally during the March quarter. Among market caps small caps and mid cap stocks gained the most. Among market caps small caps and mid cap stocks gained the most. The rising momentum in the vaccination drive further contributes to growth in the economic activities. Corporate earnings growth continues to trend positive. Governments focus on impetus to manufacturing sector and infrastructure thrust cumulatively bodes well for structurally sustainable growth for the economy.

Against this backdrop, and with a view to nurture the recovery, certain additional measures are being announced by the Reserve Bank of India. In response to the COVID-19 shock, the Government and the Reserve Bank of India took several monetary and fiscal policy measures to support vulnerable firms and households, expand service delivery (with increased spending on health and social protection) and cushion the impact of the crisis on the economy. Thanks in part to these proactive measures, the economy is expected to rebound - with a strong base effect materializing in FY22 - and growth is expected to stabilize.

The food processing industry is a high growth industry and the same applies for it in Indian market.The government of India has acknowledged the food processing sector as a high priority industry and is currently promoting it with various fiscal reliefs and incentives. India has one of the largest working populations in the world. With increasing disposable incomes, this segment can be regarded as the biggest consumer of processed foods in the country.

Moreover, there is growth in the organised food retail sector and increase in urbanisation. MSMEs are playing a vital role in Indias food processing chain through various advancements in skills and technology. The online food ordering business in India is witnessing an exponential growth. There is high demand for packaged, healthy and immunity booster snacks. There is a shift in focus from loose to branded packaging and lastly the governments Atmanirbhar Bharatinitiative places priority on this sector and offers support through various policies.

Due to the rise in disposable income and emergence of middle class, processed food is finding a lot of demand in the Indian market. Initially, the disruption in supply chain was humungous because of the lockdown and many essential goods could not move freely which further impacted consumption. At the same time, demand for protective equipment and gear spiked and there were significant shortages witnessed in these items which resulted in both hoarding and profiteering. All of this was at the cost of the viability of the food services industry.

There is huge opportunity amid this Covid-19 crisis for Indian food sector. The coming few months is crucial for leveraging to the Indias advantages in terms of exports.

However, the management took possible steps to cash in on various opportunities and at times also observed closely which may lead to the erosion of investments.


The Company operates in single segment which is to invest, deal etc in securities. The businesses of the Company are carried out by its Wholly- owned Subsidiaries/Subsidiary. The first three being wholly owned subsidiaries of the Company viz: OSM Investment & Trading Company Limited; Champaran Marketing Company Limited; Hargaon Investment &Trading Company Limited and are registered NBFC with RBI and primarily engaged in investment activities and whereas Hargaon Properties Ltd is a step down subsidiary engaged in investment of properties. And the other Subsidiary Company Allahabad Canning Ltd is engaged in the Food Processing Business thereby producing all types of Canned

Fruits & Vegetables, Jams Jellies, Marmalades, Juices, Tomato Ketchup/Puree/Sauce, Vegetable Sauces, Squashes, Breakfast cereals like cornflakes, chocos, white oats etc.

The Company aims to create sustainable vision to grow the business and make long-term strategic investments in various new ventures promoted by the Company and its subsidiaries.

Apart from its operations in investment in securities including through its Wholly Owned Subsidiaries, the Company also continues to be engaged in business of food processing through its subsidiary Company i.e Allahabad Canning Limited. There has been no change during the year under review in the nature of business pursued by the Company.


The Disclosure w.r.t. details of significant changes in key financial ratios as stipulated under Regulation 34(3) read with Schedule V Clause B of SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015 are as follows:

SI. No. Particulars 31.03.2021 31.03.2020
(i) Debtors Turnover 0 0
(ii) Inventory Turnover 0 0
(iii) Interest Coverage Ratio 23.89 N.A
(iv) Current Ratio 27.33 0.75
(v) Debt Equity Ratio 10.40% 6.71%
(vi) Operating Profit Margin (%) 86.40% N.A
(vii) Net Profit Margin (%) 86.40% Loss
(j) details of any change in Return on Net Worth 28.76% Loss


India has a diversified financial sector undergoing rapid expansion, both in terms of strong growth of existing financial services firms and new entities entering the market. The sector comprises commercial banks, insurance companies, non-banking financial companies, co-operatives, pension funds, mutual funds and other smaller financial entities. The country is experiencing a lopsided economic recovery with some sectors performing better than others. However, the scars of the pandemic are deep, and the economy is likely to witness stress even if there is a V-shaped recovery.

India is struggling with a second wave of the pandemic with more than 3,00,000 daily new coronavirus cases being reported, and hospitals in several states are reeling under a shortage of medical oxygen and beds.

In the domestic economy, the focus must now be on containing the spread of the virus as well as on economic revival - consolidating the gains achieved so far and sustaining the impulses of growth in the new financial year 2021-22. A key aspect of this strategy will be to strengthen the bedrock of macroeconomic stability that has anchored Indias revival from the pandemic. This will help stakeholders in taking efficient spending decisions over longer horizons, thereby improving the investment climate. Public investment in key infrastructure sectors is a force multiplier with historically proven ability to revive the broader economy by directly enhancing capital stock and productivity, and by attracting private investment.

The recent surge in COVID-19 infections, however, adds uncertainty to the domestic growth outlook amidst tightening of restrictions by some state governments. In India, we are now better prepared to meet the challenges posed by this resurgence in infections. Fiscal and monetary authorities stand ready to act in a coordinated manner to limit its spillovers to the economy at large and contain its fallout on the ongoing recovery.

Internal Control Systems and Their Adequacy

The Company has an Internal Control System, commensurate with the size, scale and complexity of its operations.The Audit Committee periodically reviews the efficacy of Internal Financial Control Systems and risk mitigation process. Your Board believes that appropriate procedures, controls and monitoring assessment procedures are in place and considered adequate.

The Company has an adequate system of internal control implemented by the management towards achieving efficiency in operations, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws. The Internal Auditors were suggested with audit plan based on the risk profile of business activities of the organization, which were approved by the Audit Committee.The adequacy of the internal control system is reviewed by the Audit Committee of the Board of Directors. The efficacy of the internal checks and control systems are verified by the Internal Auditors as well as the Statutory Auditors. The Audit Committee reviews the internal audit plan, adequacy and effectiveness of the internal control system, significant audit observations and monitors the sustainability of remedial measures.

Your Board believes that appropriate procedures, controls and monitoring assessment procedures are in place and considered adequate.

Human Resources

Steps have been taken to inculcate a performance-oriented culture by focusing and laying more emphasis on the performance management system. It has been Companys endeavour to attract talent from the most reputed institutions to meet the requirements of various functions. The Company will strengthen its operative staffs as and when need arises.

Cautionary Statement

Statements in this Management Discussion and Analysis describing the Companys outlook, objectives, projections, estimates and expectations may be forward looking statement within the meaning of applicable laws or regulations. Actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in Government regulations and tax- regime, economic developments within India and abroad, financial markets, etc. The Company assumes no responsibility in respect of forward- looking statements that may be revised or modified in future on the basis of subsequent developments, information or events. The financial statements are prepared under historical cost convention, on accrual basis of accounting, and in accordance with the provisions of the Companies Act, 2013 (the Act) and comply with the Accounting Standards notified under Section 133 of the Act read with the Companies (Accounting Standards) Rules, 2006. The management has used estimates and judgments relating to the financial statements on a prudent and reasonable basis, in order that the financial statements reflect in a true and fair manner, the state of affairs and profit/ loss for the year.The narrative on our financial condition and result of operations should be read together with our audited consolidated financial statements and the notes to these statements included in the annual report