FINANCIAL REVIEW:
The Company has profit of Rs. 3.49 (lacs) for the financial year ended March 31, 2023
compared to loss of Rs -4.13 lacs in the previous year. The Company has negative Net worth
as on March 31, 2023 of Rs. 69.06 lacs. The Company needs further capital infusion.
RESOURCES AND LIQUIDITY:
The Company has not accepted any fixed deposits from the public during the year 2022-23
and there are no outstanding liabilities to banks or depositors. The company has borrowed
interest free loan from Sterling Investments (India) Ltd., outstanding amount payable as
on 31-03-2023 is Rs.70.00 lacs.
INDUSTRY STRUCTURE AND DEVELOPMENTS, OPPORTUNITIES AND CHALLENGES OF CORE BUSINESS:
Sterling Guaranty & Finance Limited has 35 years experience of financial services
in India. Range of services include as Tax Advisory on investments, Risk Advisory and
Security Valuation, Arbitrage Strategy and Investment. Our services are currently used
restricted to group companies. These services are rendered in diverse terms and forms to
meet the group demands. To keep the industry norms, we have aligned with knowledgeable
experts who have years of experience of this realm.
The Financial sector continues to face competitive pressures from the banking sector
and financial institutions, due to their increased penetration in the Securities market,
with comparatively low cost of funds at their disposal.
1. Legal Consultancy
Our legal advisory services aim to ensure strict compliance with relevant compliance
regulations of MCA, NSE, BSE, SEBI, RBI and Income Tax. Company Legal Compliance is now
viewed as a separate service because of its complexity and because it is becoming more
complex. We help interpret and comply with the rules and regulations in order for clients
to continue to operate in their chosen sectors. There are many sections of the Companies
Act where we are in a position to provide guidance and/or assistance with interpretation
pertaining to Company Law and Income Tax, secretarial matters, Accounting matters such as
statutory disclosures, deadlines and ICAI Standards, Matters affecting share capital,
Statutory provisions relating to various meetings like AGM, EGM and BOD. Matters related
to Ministry of Corporate Affairs & SEBI, Company Law Compliance, SEBI Regulations and
Compliance etc.
Areas of practice:
? Company Law Matters concerning legality, management obligations, transfers,
investigation etc. ? Advisory services in corporate law matters including FEMA, foreign
direct investment, ECBs, takeovers, securities laws, stamp law, etc. ? Indirect taxation
queries and compliance of GST. ? Mergers, de-mergers, corporate restructuring, schemes and
arrangements. ? Company law formalities such as incorporation, Board Structure, Statutory
Compliance, Audit Committee, Risk Management Committee, Nomination and Remuneration
Committee, Shareholder relationship committee.
As an investment consultant we provide investors with investment products, advice
and/or planning. Our advisory is based on Long-term, responsible and enterprising
investing, a rational framework a based on fundamental analysis draws support from
Quantitative, Technical, Global and Domestic Macro Analysis. We do in-depth work on
formulating clients investment strategies, helping them fulfill their needs and reach
their financial goals and make suitable investment decision. We advise on various kinds of
opportunities available in the market which includes:
Arbitrage
"Arbitrage is the coordinated purchase and sale of shares in cash and futures
market and or between different series of Futures to profit from a difference in the
price. It is a trade that profits by exploiting the price differences of identical or
similar financial instruments on different markets or in different forms. If the Company
takes one side risk in buying or selling the return increase.
NSE Cash Future Arbitrage Opportunity
Cash future arbitrage is basically an opportunity to earn risk-free profit from an
unusual difference between cash and future prices in the stock market. There is normally
an appreciable and exploitable difference between the Cash price and future price,
especially at the beginning of the month. This difference is known as basis (basis = cash
price - future price). Smart investors having investible sum as small as in the range of 3
to 5 lakhs can earn risk free profit using cash future arbitrage. In a cash-futures
arbitrage, a trader sells the futures that are quoting at a premium (or buys the future
that is quoting at a discount) to the stock, and buys (or sells) an equivalent quantity of
the underlying shares, the difference between the two being his profit. Closer to the
derivative expiry when both future and spot prices almost coincide, the trader squares of
his positions in both segments - buying futures and selling shares or selling future and
buying shares. This strategy yields the best returns when the futures are quoting at a
significant premium or discount to the spot price. To help investors benefit from cash and
future arbitrage. We identify the arbitrage opportunity available on NSE on opening of the
Market. Sterling does business on prosperity basis and do not do for third party.
Types of Arbitrage Strategy
There are basically two types of cash and future arbitrage strategy:
Day Strategy In this strategy, the arbitrager tends to square up on the same day when
the difference between cash and future price shrinks. For example, say the Reliance share
cash price is Rs 950 and the futures price is Rs 960. Since the markets are at times very
choppy, the cost of carry between the futures and spot varies. Supposing one initiates a
trade at a cost of carry of Rs 10. Whenever the difference shrinks to Rs 5 to 6 in the
same day, the arbitrager reverses the position.
Monthly Strategy In this strategy, the arbitrager enters the arbitrage position at the
beginning of the month and holds it till the expiry day. On the expiry day, when the cash
and future prices converge, he closes both the positions pocketing the price difference at
the beginning of the month as the profit. For example, say the Reliance spot price is Rs
950 and futures is at Rs 960, with 28 days to expiry of the futures contract. Arbitrager
will keep this arbitrage position open till the expiry day when the spot and futures start
trading at parity. Once the prices converge, he will close both the positions and keep Rs
10 Transaction charges as risk free profit.
Investment in Securities
Sterling has in his team of Directors and employees have more than 50 years experience
of securities market.
Major Equity Securities in Nifty 50/ Sensex are tracked for their price movement,
trading data, volatility and related news & events. This enables the Company to Invest
in Cash Market and sale or sale in derivatives and buys. Mostly the decision remains on
profit side but if it turns out not as per expectations then security is hold for delivery
and/or traded out or averaged.
Experience of the Company has been encouraging. Depending on funs deployed it can
generate adequate profitability to service the Capital.
Dealing in Business of Stressed Assets
The stressed asset investment landscape in India has come of age and the time is ripe
for discerning investors to step in and pick "value" assets. Over the last two
years, there has been a remarkable change in the resolution process for non-performing
loans (NPLs) on banks balance sheets. While India has had a fair share of stressed assets
at regular intervals, investors have stayed away from the space in the absence of robust
legal, regulatory and resolution frameworks. Lacks of creditor-friendly laws have allowed
promoters to exploit the system and banks have continued "ever greening" loans
with lax oversight. The Insolvency and Bankruptcy Code (IBC) and RBI stance have changed
the game. It has given stressed asset resolutions a legal structure, well-defined
processes, responsibilities and timelines. The initial cases before the National Company
Law Tribunal (NCLT) indicate that the authorities are being proactive in ironing out new
challenges.
Distressed asset investments are exciting because of their inherent "buy low-sell
high" potential and low correlation to other asset classes. The emphasis is on buying
good underlying assets with potential for a turnaround, at reasonable valuations. As
investors in a distressed asset, it is crucial to perform in-depth due diligence to avoid
traps, whether related to pricing, litigation or operations.
Unlike a blue-chip equity investment, distressed asset investments need considerable
handholding after the initial financial assistance. It is important that the market begins
to see value in the business, as the price you can command at exit would depend on this.
Apart from capital restructuring, excess value can be created by changing the management,
aligning incentives for stakeholders and restructuring operations and setting liabilities.
While global entities are waiting to see how the new frameworks play out, domestic ones
have already started working actively in the space to acquire assets at discounted prices.
With increasing competition in retail finance, banks and Financial Institutions are faced
with unique challenge of providing competitive rates to secure more business for increased
top line yet maintain a healthy bottom line.
Bottom line of banks and Financial Institutions get reduced due to high default
percentages which are written off in books of accounts and termed as stressed assets or
non-performing assets. Efficient management of the stressed asset offers significant
tangible and intangible benefits to the financial services companies.
We, at Sterling Guaranty & Finance Ltd who was earlier a Category 1 Merchant Bank
address the challenge of Stressed Assets Management by making use of our experience. We
offer tailored solutions based on the asset class. Our Company has experience of
delivering great value for all asset classes which includes unsecured to secured and low
ticket to very high ticket size borrowers. We also undertake skip tracing and field
investigations to facilitate the collection output. Our affiliated team shares the status
of each & every case on real time basis. To ensure banks and Financial Institutions
control over recoveries all negotiations are routed to banks and Financial Institutions
for approval through system, monetary collection is executed post valid approval from
banks or as per the banks matrix. Sterling sees good future in dealing the buying selling
of stressed assets.
OUTLOOK:
However as discussed above the Company is hopeful of bright future in above core
business.
INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY:
The Company has adequate control system to ensure operational efficiency, protection
and conservation of resources, accuracy and promptness in financial reporting and
compliance of laws & regulations. The Audit Committee of Directors reviews the
adequacy of internal control periodically.
CAUTIONARY STATEMENT AND CONCERNS:
The company is exposed to specific risks of interest rate fluctuations, credit risk,
lack of resources which are peculiar to its businesses and the environment within which it
operates. Statements in "Management Discussion and Analysis" describing the
Companys objectives, projections, estimates, expectation or prediction may be
"forward looking statements" within the meaning applicable securities law&
regulations.
Actual results could differ materially from those expressed or implied. Many unforeseen
factors may come into play and affect results, which could be different from what the
Management envisages in terms of performance and outlook.
Place: Mumbai Dated: 30.05.2023
For and on behalf of the Board of Directors
| Sd/- |
Sd/- |
| Rajankumar Shah |
Dharmen Mehta |
| DIRECTOR |
DIRECTOR |
| (Din : 08619751) |
(Din : 00036787) |
+91-9892691696
