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Stellar Capital Services Ltd Management Discussions

4.5
(3.45%)
Jul 19, 2024|12:00:00 AM

Stellar Capital Services Ltd Share Price Management Discussions

Your Company is a NBFC focused on providing bespoke financing solutions to its customers and has been in existence for more than two decades. At present, the Company falls within the category of "Non-Banking Finance Company - Non-Deposit taking Company". Your Company is registered with the RBI as a NBFC not accepting public deposits under section 45 IA of the RBI Act, 1934.

Stellar has an in-house team of experts to evaluate, value and estimate marketability of all kinds of assets. The Companys product suite is as follows:

Working Capital Loan

• Short-term financial support for hassle-free management of day-to-day operations.

• Easy option to cover recurring expenses like inventory management, accounts payable and payroll.

• Flexible options to cater to seasonal fluctuations in business.

Project Finance

• Capital funding to mid-range and emerging corporates, based on projected cash flows and sufficient collateral.

• Financial assistance for expansion, diversification, funding for capital expenditure and other growth-oriented strategies of businesses.

• Well-defined processes backed by credit appraisal and secured by project assets. Loan Against Property

• Easy loans against property collateral for various corporate requirements, ranging from debt consolidation to take over of existing facilities.

• Equitable or registered mortgage over the financed property, with personal guarantee and corporate guarantee.

• Enhanced focus on collateral valuation and loan serviceability.

Project Finance - Real Estate

• Project-specific funding to facilitate the acquisition, construction and development of residential, commercial, retail, township and industrial real estate projects.

• Long-term loans for re-development projects and property development ventures.

Structured Finance

• Customized term loans, inter-corporate deposits, subscription to debt instruments and convertible preference shares.

• Tailormade structured financial services to support acquisitions, expansions, buyouts and diversifications.

• Promoter funding secured against property, pledge of marketable securities or fixed deposits, guarantee of corporate entity, owner or promoter, debt service reserve account, etc.

Our Strengths

Over its long existence of over two decades, Your Company has gained rich experience and developed core expertise in serving the large and medium corporate customers. Your Company has channelized financial assistance across all major sectors of economy and built a well-diversified portfolio in infrastructure, real estate, manufacturing, services, and NBFC sectors.

Experienced, highly motivated and dedicated management team

We have an experienced, highly motivated and dedicated senior management team, with significant experience in the banking, financial services, consultancy and infrastructure sectors. Our new and dynamic senior management team has already implemented a number of changes in the Company for steady growth of the business. One of the changes was to diversify our lending focus to become sector agnostic and lend with a focus on good quality collateral asset.

Our employee-friendly and inclusive policies, health and fitness benefits ensure safe and secured environment for employees at workplace.

Our Strategies

Focus on Emerging Corporate / SME segment borrower category:

Emerging corporates and SME players add to the growth story of India. As part of Portfolio diversification strategy, your company intends to lend to this segment which is fast growing and provides a healthy Portfolio on Companys balance sheet. Your Companys management has decade long experience in financial services and understands this segment so as to lend judiciously.

RISK MANAGEMENT

In view of the growing volatility in the operating environment impacting global businesses on an unprecedented scale, we are reinforcing the risk management and mitigation mechanism. It will be regularly reviewed by the Board and corrective actions will be implemented with diligence.

Risk management process

The risk management system includes the following key elements:

A strategy that is driven by objectives and principles.

1. Clearly defined assignment of responsibilities across hierarchies.

2. A framework and reporting cycle to identify, assess, manage, monitor and report the risks that the Company is or may be exposed to.

3. A combination of ‘top down and "bottom up approach to risk assessment and management process.

4. A risk monitoring plan that outlines the review, challenge and oversight activities.

5. Reporting procedures which ensure risk information is actively monitored, managed and appropriately communicated at all levels within the Company.

6. Embedding a robust and resilient risk-management culture across all hierarchies of the Company.

Developing risk appetite statements with the strategic planning process subsequently monitoring and reporting on these statements

The risk management framework is based on a meticulous assessment of risks through proper analysis and understanding of the underlying risks before undertaking any transactions and changing or implementing processes and systems. This risk management mechanism is supported by regular review, control, self assessments and monitoring of key risk indicators.

POSSIBLE THREATS

Our Industry has faced certain challenges in the period under review, related to Liquidity and defaults by Large Companies, therefore there may be significant roadblocks to the growth of the Company in shorter term. Even the fall in Interest rates have not boosted the Liquidity for NBFCs, and there has been instances of Rating downgrades of NBFC and certain Housing Finance Companies, of which Reliance Home Finance is the recent example. Changes in interest rates are expected to have significant impact on the Companys business and operations. Finance costs are dependent on various external factors, including Indian and global credit markets and, in particular, interest rate movements and adequate liquidity in the debt markets. Changes in RBI repo rates could affect the interest charged on interest-earning assets and the interest rates paid on interest-bearing liabilities. Adverse conditions in the global and Indian economy resulting from economic dislocations or liquidity disruptions may adversely affect availability of credit, and decreased liquidity may lead to an increase in interest rates. Despite recent push by the RBI, the resolution of stressed assets in the system is likely to take more time. Also, the effect of various loan waivers on credit culture in the rural areas is still to be seen. Your Company acknowledges these possible negative factors and has a plan to mitigate them through its deep domain knowledge, strong risk framework and an efficient collection mechanism under the stewardship of the management team.

DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS IF MORE THAN 25 % CHANGES

The details of significant changes in Key Financial Ratios are as under:

Year 2020-21 2019-20
1. Debtors Turnover Ratio -
2. Inventory Turnover Ratio 2.63 2.88
3. Interest Coverage Ratio 2.94 5.04
4. Debt Equity Ratio 0.09 0.15
5. Operating Profit Margin 59.34% 46.60%
6. Net Profit Margin 23.61% 9.40%
7. Current Ratio 12.58 7.58

CAUTIONARY STATEMENT

Certain statements in the Management Discussion and Analysis describing the Companys objectives, predictions may be "forward-looking statements" within the meaning of applicable laws and regulations. Actual results may vary significantly from the forward-looking statements contained in this document due to various risks and uncertainties. These risks and uncertainties include the effect of economic and political conditions in India, volatility in interest rates, new regulations and Government policies that may impact the Companys business as well as its ability to implement the strategy. The Company does not undertake to update these statements.

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