SCIL Ventures Ltd Management Discussions

SCIL VENTURES LIMITED (FORMERLY KNOWN AS SECURITIES CAPITAL INVESTMENTS (INDIA) LIMITED) ANNUAL REPORT 2011-2012 MANAGEMENT DISCUSSION AND ANALYSIS INDUSTRY STRUCTURE AND DEVELOPMENTS: We had mentioned in earlier years that the Company has jointly promoted a portfolio management business called Securities Investment Management Private Limited (SIMPL) which started operations in September, 2009. The operations of SIMPL have for the first time reported profits. The Companys performance has been encouraging and we are exploring other alternatives for developing the investment management and advisory business. OPPORTUNITIES AND THREATS: We are focussed on the investment management business which has potential for growth. We therefore continue to emphasize process, philosophy and performance rather than scale in the initial stages as longer term success can be achieved only by sustaining quality performance delivered in a professional manner. OUTLOOK: The Company sees the opportunities for profitable deployment of funds limited by the increasing rates at which income tax is charged on such income. The Minimum Alternate Tax (MAT) rate along with surcharge @ 19.05% has a meaningful impact on post-tax returns. This disadvantage is not shared by individual investors or those who invest through mutual funds. RISKS AND CONCERNS: As an aftermath of the global financial crisis in 2008, global financial markets continue to be in turmoil. Growth outlook in developed economies and, in more recent times, emerging economies, is subdued. There are fears that emerging economies are heading towards a period of high inflation, high interest rates and slower growth. In the current year the growth outlook in India is further subdued by significant slowdown in agriculture expected because of weak monsoons which are estimated to be deficient by 15-20%. This may put further pressure on the fiscal deficit leaving little scope for decisive policy action by the Central Government to revive growth. INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY: The Company has an adequate system of internal controls, commensurate with its size and complexity of operations. There is a continuous programme of internal audit and an independent Chartered Accountant submits an audit report to the Board of Directors every quarter. An independent Company Secretary has similarly certified to the Board of Directors that all Regulatory Compliances are satisfactorily adhered to during the period the shares of the Company were listed on The Bombay Stock Exchange Ltd. in compliance with the directives issued by the SEBI. An Audit Committee is constituted which reviews the adequacy of internal controls and reviews the quarterly and annual financial statements prior to their submission to the auditors for quarterly audit and annual audit. CAUTIONARY STATEMENT: The statements made in this report may be forward looking statements that setforth anticipated actions and results based on management plans and assumptions. These statements are likely to have addressed the Companys growth opportunities and plans for deployment of funds. Developments on these fronts and results are subject to risks, uncertainties and inaccurate assumptions. Should known or unknown risks or uncertainties materialize, or should underlying assumptions prove inaccurate, actual results could vary materially from past results and from those anticipated, estimated or projected. The most significant factor that can affect the Companys performance is the outlook and stability of the financial markets.