Stanrose Mafatlal Investment & Finance Ltd Management Discussions.

FINANCIAL REVIEW

The total income for the year was Rs. 39.00 Lacs as compared to Rs.147.00 Lacs in the previous year.

Depreciation was Rs. 40.60 Lacs (Previous Year Rs. 34.52 Lacs). The Provision for Taxation: (i) for the year under report was NIL. (ii) Adjustments of earlier year tax was Rs. (3.29) Lacs.Loss after tax was Rs. 813.68 Lacs.

This year, the company has decided not to transfer any funds to General Reserve and Statutory Reserve Fund pursuant to Section 45IC of RBI Act, 1934.

The Net Worth of the Company as at 31st March, 2020 stood at Rs. 4,921.10 Lacs as against Rs. 6,527.02 Lacs on 31st March, 2019.

NBFC INDUSTRY

The NBFC (Non-Banking Finance Company) sector has evolved considerably in terms of its size, operations, technological sophistication and entry into newer areas of financial services and products. NBFCs are now deeply interconnected with the entities in the financial sector, on both sides of their balance sheets.

Being financial entities, they are exposed to risks arising out of counterparty failures, funding and asset concentration, interest rate movement and risks pertaining to liquidity and solvency, as any other financial sector player.

Business Review

The Companys operations continue to be mainly focused in the areas of Inter- corporate Investments, Capital Market activities and Financing.Segment-wise brief outline of financial and operational performance during the year under report is as under:

(i) Investments

The Companys investment portfolio is reviewed from time to time to buy securities to add to the Portfolio or to sell in order to make Capital gains. Details of the Companys investments are given under Note No. 8 to Financial Statements of the Company for the year ended on 31st March, 2020. The total worth of Companys Quoted and Unquoted Investments in Shares and Securities (Including Stock-in-trade) as at 31st March, 2020 is Rs.2,330.67 Lacs (Previous Year Rs. 4,022.55 Lacs). The Company has adopted IND-AS from 1st April, 2019. Under IND-AS, investments are valued at fair value whereas in case of IGAAP, Long term investments were valued at lower of cost or fair value.

During the year under report the Company:

(a) has made disinvestment of Rs. 805.46 Lacs from its Non-current Quoted and Non-Quoted Equity Investments as against Rs. 281.84 Lacs in the Previous Year.

(b) booked a net profit of Rs. 726.40 Lacs on sale of Non-Current investments as against Rs. 352.59 Lacs in the previous year.

(c) earned income by way of Dividend of Rs. 32.97 Lacs against Rs. 137.67 Lacs in the previous year.

After the close of the Financial Year ended on March 31,2020, the Company has booked Net Capital Gain of Rs. 36.79 Lacs on sale of certain Non-Current Investments in shares of the aggregate book value of Rs. 276.96 Lacs.

(ii) Finance

Interest on Inter-corporate Deposit:

During the year under report the Company earned interest income on Inter Corporate Deposits of Rs. NIL as against Rs. 3.67 Lacs in the previous year.

Changes in Key Financial Ratios

Sr. No. Ratios F.Y. F.Y.
2019-20 2018-19
1. Current Ratio 12.92 34.31
2. Debt Equity Ratio 0.23 0.23
3. Operating Profit Margin (%) -0.21 13.06%
4. Net Profit Margin (%) -20.86% 13.78%
5. Return on Net Worth (%) -205.07% 17.72%

Note: The Company is not having any Debt/Borrowings as at 31st March, 2020. Also, the Company is not into the Customer based products which are manufactured/produced by the Company. Hence, as required under Part B of Schedule V to the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, ratios such as Debtors Turnover Ratio, Inventory Turnover Ratio and Interest Coverage Ratio have not been provided.

Opportunities and Threats

As various factors are posing constant threats and high volatility in the Capital Markets, it appears beneficial to diversify the portfolio to reduce the risk and insulate from the vagaries of stock-market. Mutual Funds help to reduce risk through diversification and professional management and therefore, the Company invests its surplus funds in debt/equity oriented Mutual Funds. One of the biggest advantages of Mutual Fund investment is Liquidity. Open- end funds provide option to redeem on demand, which is beneficial during rising or falling markets. The management is exploring other avenues of business.

Outlook

The Company intends to continue focusing on capital market activities including trading in securities and emerging products in derivatives.

Risk and Concern

The Company is exposed to specific risks that are particular to its business and the environment within which it operates, including interest rate volatility, economic cycle, credit and market risks. The Company has quoted investments which are exposed to fluctuations in stock prices. These investments represent a material portion of the Companys business and are vulnerable to fluctuations in the stock markets. Any decline in prices of the Companys quoted investments may affect its financial position and the results of its operations. It continuously monitors its market exposure and tries to manage these risks by following prudent business and risk management practices.

Adequacy of Internal Control

The Company has a proper and adequate system of internal control in all spheres of its activities to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition and that the transactions are authorized, recorded and reported diligently. The Internal control is supplemented by an effective internal audit being carried out by an external firm of Chartered Accountants.

The Company ensures adherence to all internal control policies and procedures as well as compliances with all regulatory guidelines.

The Audit Committee of the Board of Directors reviews the adequacy of internal controls.

Human Resources

Relations remained cordial with employees at all levels during the year.