SW Investments Management Discussions


overview

The Management Discussion and Analysis Report has been prepared in accordance with the provisions of Regulation 34(2)(e) of Listing Regulations, read with Schedule V(B) thereto, with a view to provide an analysis of the business and Financial Statements of the Company for FY2022-23 and should be read in conjunction with the Companys financial statements, the schedules and notes thereto and other information included elsewhere in the Report. The objective of this report is to convey the Managements perspective on the external environment and our industry, as well as strategy, operating and financial performance, material developments in human resources and industrial relations, risks and opportunities and internal control systems and their adequacy in the Company during the FY2022-23. The Companys financial statements have been prepared in accordance with Indian Accounting Standards (Ind AS) complying with the requirements of the Companies Act, 2013, as amended and regulations issued by the Securities and Exchange Board of India (SEBI) from time to time.

industry structure and developments

A. Global Economy

With the prolonged conflict between Russia and Ukraine, the global economy is currently witnessing a slowdown and uncertainty, resulting in rising inflation and financial sector stress. In order to limit inflation, monetary policies have been tightened. Unfortunately, this has resulted in a quick spike in fuel and food prices, hitting vulnerable populations in low-income countries disproportionately. The International Monetary Fund (IMF) forecasts 3.0% global growth in fiscal year 2024. China, as the worlds second-largest economy and most populous country, has a significant impact on the global economy. Its economic performance has far-reaching ramifications for other countries and the global economy. Despite rising inflation, consumer spending in the United States remains stable, while expenditure on goods has fallen for the third consecutive quarter.

B. Indian Economy

The Indian Economy witnessed a remarkable recovery in the post-Covid environment and delivering one of the best performances in terms of economic output. The Indian economy remained remarkably resilient to the external environment owing to ongoing policy reforms and prudent regulatory measures which ensured strong macroeconomic fundamentals and helped the country navigate global and domestic challenges. Expansion of manufacturing footprint by both global and Indian firms, aided by Government policies and higher government spending on infrastructure sector supported investment growth during the year. Strengthening of Indias digital infrastructure in the last few years and the widespread adoption of real-time digital payments also contributed to the growth of the country. However, monetary tightening by the RBI, widening of current account deficits and decline in growth of exports capped economic growth prospects. Inflation headwinds were also felt by the Indian economy with increase in crude oil prices.

While Indias retail inflation rate peaked at 7.8% in April 2022, above the RBIs upper tolerance limit of 6%, the overshoot of inflation above the upper end of the target range in India was however one of the lowest in the world. FY 2023 saw the trade sector make a robust return expanding to 15%. Agriculture sector was steady having growth of 3.8% compared to 3.0% in FY 2022. The Financial, Real Estate and professional services showed significant growth in FY 2023 compared to 4.2% in FY 2022.

opportunities and threats

The Company endeavours to address the changes boosted by its strengths in market position and extensive use of analytics for risk mitigation and resource allocation. It will ensure to take advantage of the tailwinds that may emerge during the course of the year. The Company is looking forward for a sustainable growth in its investee Companies in the coming years which would enhance the shareholders value.

segment wise / product wise performance

The Company is engaged in investment activities during the year under review, hence the requirement of segment-wise reporting is considered irrelevant.

outlook

The Companys growth prospects remain positive as it is well equipped to handle any exigency. The Company is consistently adding its revenue sources while containing costs and work upon disruptions to its advantage. The Company has adequate capital and financial resources to run its business operations and has adequate internal financial reporting and control.

Your Company will continue to look for opportunities to invest in companies which have consistent growth prospects with high quality earnings. In new age companies where valuations are a concern and whose earnings will fructify at a later stage in their development, the Company has made a small allocation of capital.

business overview

The Company is an Investment Company holds INR Rs. 155.70 lakhs of its assets in form of investment in Equity shares and Debentures. The thrust of the business is to hold and continue to hold securities in various companies. The financial and securities market since the year end has revived with overall improvement in sentiments.

highlights of financial performance with respect to operational performance

Total Income from Operations: Rs. 10.04 lakhs (Rs. 4.61 lakhs in FY 21-22)

Profit before Tax: Rs. 3.53 Lakhs (Rs. 38.30 lakhs in FY 21-22)

Net Profit: Rs. 2.69 Lakhs (Rs. 28.66 lakhs in FY 21-22)

Basic EPS: Rs. 0.30 (Rs. 1.64 in FY 21-22).

risks and concerns

The Companys income is mainly from commission, interest and dividends that may be receivable on investments held by it /maybe held in future. The Company has quoted investments which are exposed to fluctuations in stock prices. These investments represent a portion of the Companys capital and are vulnerable to fluctuations in the stock markets. Any decline in these quoted investments has an impact on its financial position and results of operations. Any slowdown in the growth of the Indian economy or future volatility in the global financial market, could also affect the business.

Liquidity risk is the risk of being unable to raise necessary funds from the market at optimal costs to meet operational and debt servicing requirements. The Company tracks the potential impact of prepayment of loans at a realistic estimate of its near to medium-term liquidity position.

Business cycle risk is the risk associated with the seasonal or cyclical nature of a business. As customers include both individuals and business, loan products are used by customers in various industries, trade cycles and have limited impact on Companys business.

internal control systems and adequacy

The Company has adequate internal control systems to ensure operational efficiency and accuracy in financial reporting and compliance of applicable laws and regulations. The internal control is supplemented by review of internal auditors. Observations of the internal auditors are subject to periodic review and compliance monitoring. The Audit Committee of Directors reviews the Internal Audit process and the adequacy and effectiveness of internal audit and controls periodically.

human resources

During the year under review there has been no material development on the Human Resource/Industrial Relations front.

cautionary statement

Certain Statements in this document may be forward-looking statements. Such forward-looking statements are subject to certain risks and uncertainties like regulatory changes, local political or economic developments, technological risks and many other factors that could cause our actual results to differ materially from those contemplated by the relevant forward looking statement. SW Investments Limited will not be in any way responsible for any action taken based on such statements and undertakes no obligation to publicly update these forward-looking statements to reflect subsequent events or circumstances.