Unisys Software and Holding Industries Ltd Management Discussions.

MACRO ECONOMIC ENVIRONMENT

The past year has been marked by some major reforms. The transformational Goods and Services Tax (GST) was launched in July 2017. With a policy change of such scale, scope, and complexity, the transition unsurprisingly encountered challenges of policy, law, and information technology systems, which especially affected the informal sector. Expeditious responses followed to rationalize and reduce rates, and simplify compliance burdens.

Macroeconomic developments this year have been marked by swings. In the first half, Indias economy temporarily "decoupled," decelerating as the rest of the world accelerated – even as it remained the second-best performer amongst major countries, with strong macroeconomic fundamentals. The reason lay in the series of actions and developments that buffeted the economy: demonetization, teething difficulties in the new GST, high and rising real interest rates, an intensifying overhang from the TBS challenge, and sharp falls in certain food prices that impacted agricultural incomes.

In the second half of the year, the economy witnessed robust signs of revival. Economic growth improved as the shocks began to fade, corrective actions were taken, and the synchronous global economic recovery boosted exports. Reflecting the cumulative actions to improve the business climate, India jumped 30 spots on the World Banks Ease of Doing Business rankings, while similar actions to liberalize the foreign direct investment ( FDI) regime helped increase flows by 20 percent. And the cumulative policy record combined with brightening medium-term growth prospects received validation in the form of a sovereign ratings upgrade, the first in 14 years.

OPPORTUNITIES

Non-Banking Financial Companies ( NBFCs) have played a critical role in stimulating the growth of the Indian economy and have made a significant contribution towards supporting the governments agenda of extending financial inclusion. In fact, they have emerged as key financiers to businesses, especially the high-potential, credit-hungry MSME sector.

RBI data shows that, in FY17, NBFCs and housing finance companies cumulatively extended Rs 2.59 lakh crore in credit to commercial enterprises, meeting 18 percent of their total credit needs. This marked a year-on-year increase of 28 percent in NBFC lending from FY16 – a sharp contrast to the banking system, which has been grappling with a mountain of bad loans for quite some time now.

This shift in borrower sentiment has unlocked a tremendous opportunity for NBFCs to capitalise on. In the last two years, NBFCs have registered multi-fold growth to double their market share in SME and wholesale loan categories, in addition to making significant inroads into other consumer loan categories.

On the other hand, SEBI initiatives to clean stock market is certainly positive for long term prospective. Regulators are on the mission of curbing black money, identifying Shell Companies. They are also applying new surveillance measures for the Companies who are having high pricing with low profitability and non-regular business activities. Such measures will certainly clean the stock market environment and thus will increase investors faith in Stock market. We feel that all these steps will certainly benefit to the market participants, particularly investors category, with a long term prospectus.

On the Computer software and hardware front, new innovations and rapid developments will certainly benefit to both the traders and consumers and is bound to boost the profitability, if traders matches with the rapid pace of developments.

THREATS & CONCERNS

NBFCs operate under certain regulatory constraints, which put them at a disadvantage vis--vis banks. While there has been a regulatory convergence between banks and NBFCs on the asset side, on the liability side, NBFCs still do not enjoy a level playing field. This needs to be addressed to help NBFCs realise their full potential and thereby perform their duties with greater efficiency.

On the Capital market front, additional surveillance and fast action of regulators will certainly pressurize traders and investors to stay away from market for the time being unless they are not able to match the pace of such quick reforms. Identification and categorization of shares in to Large, Mid and Small-cap segment will add risk and pressure for investors in near term as all additional surveillance are meant for Mid and Small-cap segment, where small investors have more investments. Investors would have been happier, if such steps were being taken after thorough research and keeping out quality stocks from the requirements of additional margin, putting them in to T2T category and allowing trading in near circuit filter of 5 or 2%.

HUMAN RESOURCES

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2018-2019, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

CORPORATE SUSTAINABILITY AND SOCIAL RESPONSIBILITY

The provision of the Section 135 and Schedule VII of the Companies Act, 2013 as well as the provisions of the Companies ( Corporate Social Responsibility Policy) Rules, 2014 effective from April 1, 2014 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company is continued to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company by stock exchanges or SEBI or any statutory authority on any matter related to capital market during the last three years.

Kolkata, May 29, 2019 By order of the Board
For Unisys Softwares & Holding Industries Ltd.
Registered Office : Jagdish Prasad Purohit
75C, Park Street, (DIN : 00083125)
Basement, Kolkata-700 016. Chairman & Managing Director