S P Capital Financing Ltd Management Discussions

OVERVIEW

The financial statements have been prepared in compliance with the requirements of the Companies Act, 2013, guidelines issued by the Securities and Exchange Board of India (SEBI), prudential norms issued by RBI, Ind AS i.e. Indian accounting standards prescribed by the Institute of Chartered Accountants of India. Our Management accepts responsibility for the integrity and objectivity of these financial statements. The estimates and judgments relating to the financial statements have been made on a prudent and reasonable basis, so that the financial statements reflect in a true and fair manner and reasonably present our state of affairs, profits and cash flows for the year.

INDUSTRY STRUCTURE & DEVELOPMENTS

Indias NBFC Investment sector continues to be a critical link between growing capital markets and long-term investment avenues. FY 2024 25 unfolded as a year of contrasts: while the economy showed resilience with a growth of GDP, capital markets saw significant volatility with subdued investor confidence. Equities remained relatively flat, with benchmark indices like Sensex and Nifty delivering returns that failed to outperform basic bank fixed deposits raising concerns about valuation sustainability. Foreign institutional investors (FIIs) pulled out over $13 billion from Indian equities during the year, particularly from IT, FMCG, and power sectors, even as telecom and services maintained a modicum of interest. However, the markets did witness areas of dynamism small and mid-cap indices delivered impressive 20 25% returns in pockets, underscoring selective investor interest. Additionally, IPO-driven activity gained strength, with FY 2024 25 becoming a landmark year for public offerings. Over 1.7 lakh crore was raised through 320 IPOs, and mutual fund participation surged with retail investors, especially from Tier III cities.

OPPORTUNITIES AND THREATS

The opportunities ahead are immense and company is fully geared to make the most of them.

Opportunities:

Growing participation of retail investors in equities and mutual funds.

Expanding scope of capital markets, including alternative investments and debt instruments. Favourable demographic and macroeconomic fundamentals driving long-term investment demand. Technological developments enabling efficient monitoring and diversification of portfolios.

Threats:

High dependence on capital market movements, making investment companies vulnerable to volatility. Global economic uncertainties, interest rate fluctuations, and inflationary pressures. Stringent regulatory compliance and reporting requirements. Geopolitical risks impacting investor sentiment and market stability.

SEGMENT PERFORMANCE

The Company is registered as a Non-Banking Financial Company Investment Company with the Reserve Bank of India. In line with its principal business, the Companys operations are primarily focused on holding and managing investments in shares, securities, and other financial instruments. Accordingly, the Company operates in a single reportable segment, and its performance is directly linked to developments in the Indian capital markets.

During FY 2024 25, capital markets witnessed significant volatility. Against this backdrop, the Company adopted a cautious and balanced investment approach, prioritising liquidity and risk management while selectively participating in opportunities. The Companys investment income and profitability during the year reflect these market conditions and its conservative strategy.

OUTLOOK

The Global and domestic equity markets are experiencing the notable movement. The Indian Stock market has witnessed a mixed performance across various sectors. The stock market remains dynamic, influenced by both domestic and global factors. The Stock Market remains volatile, but your company is been diversifying the portfolio through investments in various multiple assets.

RISK AND CONCERNS

As the stock market remains volatile, no stocks or products are risk-free. The Stock prices are unpredictable subject to different market and economic factors both locally and internationally. The major risks in the stock markets are global risk, business risk, liquidity risk and policy risk. Your company is making proper investments strategy to avoid unpredictable risks and continuously try to predict the market conditions.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has a good system of internal controls in all sphere of its activity. The internal control system is supplemented by effective Internal Audit. The audit committee regularly reviews the findings of the internal auditors and effective steps to implement the suggestion /observation of the auditors are taken and monitored regularly. In the opinion of the Board, an effective internal control system commensurate to the size of the Company exists.

MATERIAL DEVELOPMENT IN HUMAN RESOURCES

Your Company continues to lay great stress on its most valuable resource - people. Continuous training, both on the job and in an academic setting is a critical input to ensure that employees at all levels are fully equipped to deliver a wide variety of products and services to the rapidly growing customer base of your Company. It is our endeavor to create an environment where people can use all of their capabilities in support of the business. Therefore, your Company encourages its employees to balance their work and personal responsibilities. The Company is actively working on developing a culture driven by the collective spirit of experience and c ompanywide ownership. Assignment, empowerment and accountability will be the cornerstone of the people lead processes.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Your company earned the gross income of Rs. 561.56 Lacs as against Rs. 255.10 Lacs in previous year. The total expenditure during the year under review was Rs 409.72 Lacs as against Rs. 181.34 Lacs in the previous year. The Net Profit after tax was Rs 87.77 Lacs as against Rs. 56.37 Lacs in the previous year.

ENVIRONMENT, OCCUPATIONAL HEALTH AND SAFETY

Your Company is committed to conducting its operations with utmost concern towards the environment and ensuring a safe and healthy workplace for all employees. The collective endeavor of the Companys employees at all levels is directed towards sustaining and continuously improving standards of environment management, and occupational health & safety.

CAUTIONARY STATEMENT

Management discussion and analysis report contains statements which are forward looking based on assumptions. Actual results may differ from those expressed or implied due to risk and uncertainties which have been detailed in this report. Several factors as listed in this report could make significant difference to the Companys operations. Investors, therefore, are requested to make their own independent judgments and seek professional advice before taking any investment decisions.