Virat Leasing Ltd Management Discussions.

GLOBAL ECONOMY:

Financial Year 2020 was a challenging year for Indian market. NDA secured second term in the general elections and announced several economic measures to revive domestic economic growth that has slumped to lowest in decade led by weak auto sales, muted growth in personal and consumer loans and sluggish rural demand. The year saw various domestic events like default of a major housing finance company, removal of Article 370 of the Constitution of India, revival of a major private bank, merger of public sector banks etc.

On global front, the major events that made headlines include escalation in US China trade tensions and subsequently agreement on phase I of trade deal, sharp rate cuts by US Fed and European Central Bank (ECB) bringing it back to all-time lows, completion of BREXIT, and fall in oil prices etc.

However, the biggest calamity was the outbreak of coronavirus in the beginning of Calendar Year 2020, which grew from a local problem in China to a global pandemic in a matter of weeks in early calendar year 2020. Lockdowns in most of the affected countries saved lives but were a huge blow to economic activities and the impact will be felt for a long time to come. This also resulted in a fall in most asset classes including equities, commodities and currencies.

In India, to check the spread of the virus, Government of India announced lockdown for 21 days until April 14 and later on extended it to May 31. Government first announced an economic stimulus package worth Rs. 1.7 trillion to help millions of low-income cope with lockdown and a second package of Rs. 20 Lakh crore later on to revive the countrys economy. Hosts of measures were taken by RBI to help liquidity conditions in the economy, which included Repo rate cut by 115 bps to 4%, moratorium of three months of EMIs on all outstanding loans, which was later on extended by another three months until August end, auction of targeted long-term repo operations worth Rs 1 crore etc.

The Companys principal business being investment in shares and securities, the Company looks forward to increased activities in this segment. However, the Management will continue to review the business strategy from time to time depending on the changes in the policy of Government and Reserve Bank of India. During the year under review favorable conditions prevailed in the market which have been reflected in the profitability of the Company.

EQUITY MARKETS:

Market had a roller coaster ride in Financial Year 2020. Both Sensex and Nifty closed at an all-time high of 42,273 and 12,430 respectively in the month of January. Then came corona virus and as the pandemic rampaged across the world, Sensex and Nifty ended the year with large negative returns. With India in midst of a complete lockdown, Sensex and Nifty closed at 29,469 and 8,598 levels respectively in March 2020.

OPPORTUNITIES AND THREATS Opportunities

• Long-term economic outlook positive, will lead to opportunity for Financial services.

• Growing Financial Services industrys share of wallet for disposable income.

• Regulatory reforms would aid greater participation by all class of investors

• Leveraging technology to enable best practices and processes

• Corporates looking at consolidation / acquisitions / restructuring opens out opportunities for the corporate advisory business

Threats

• Execution risk

• Short term economic slowdown affecting investor sentiments and business activities

• Slowdown in global liquidity flows

• Increased intensity of competition from local and global players

• Market trends making other assets relatively attractive as investment avenues

While NBFCs have witnessed substantial growth over the years, there are few areas of concern, which need to be addressed. For instance, while NBFCs have enjoyed an edge over banks in semi-urban & rural markets where banking network is not yet strong, they have limited spread in urban markets. Nonetheless, in recent years, NBFCs have begun to create niches for themselves that are often neglected by banks. These primarily include providing finance to non-salaried individuals, traders, transporters, stockbrokers, etc.

In the past few years, the increased competition from banks in the retail finance segment has led to excess diversification by NBFCs from their core business activities. The sector has witnessed introduction of various innovative products such as used vehicles financing, small personal loans, three-wheeler financing, IPO financing, finance for tyres & fuel, asset management, mutual fund distribution and insurance advisory, etc. Besides, NBFCs are aspiring to emerge as a one-stop shop for all Financial services.

OUTLOOK

Amidst the Covid-19 crisis, Fitch Ratings lowered Indias economic growth estimate for Financial Year 2020-21 to 0.8%, citing a fall in consumer spending and fixed investment and disruption in economic activities. However, it expects a sharp rebound in Indias growth to 6.7% in Financial Year 2021-22. Besides, favorable international oil prices are likely to keep Indias inflation rates within manageable bounds and lower its current account and fiscal deficit.

As earlier stated, not only World Bank but other authorities also appear to be optimistic about the growth potential of Indias economy. The Financial results of the year under review have improved compare to the previous year in such pandemic situation and it is expected that the current year may produce even better results barring unforeseen circumstances.

Your company is fully aware that the opportunities in the infrastructure and real estate will be many and diverse in nature. While this provides impetus for our sustainable growth, your company is also duly careful that amongst the multiple choices of attractive businesses available we always make the right choice. Your companys business model and its risk management policies and mechanism are being constantly reviewed and upgraded to ensure this.

RISK AND CONCERN

As stated earlier, the Companys business is very much dependent on economic and fiscal policies of Government and RBI. The Management critically examines the difficulties of the Market and this is a matter of constant concern for the Management. The business strategy needs to be reviewed and corrected suitably to meet the changed situation.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUACY

The Company has proper and adequate system of internal control to ensure that all assets are safeguarded and protected against loss from unauthorized use or disposition and that transaction are authorized, recorded and reported correctly. The Company has effective system in place for achieving efficiency in operations, optimum and affective utilization of resources, monitoring thereof and compliance with applicable laws. The Company has an Internal Audit Department, which reports to the Audit Committee of the Board of Directors of the Company comprehensive audit of functional areas and operations of the Company are undertaken to examine the adequacy of and compliance with policies, plans and statutory requirements. Significant audit observations and follow up actions thereon are reported to the Audit Committee. The Audit Committee reviews adequacy and effectiveness of the Companys internal control environment and monitors the implementation of audit recommendations.

The audit committee of the Board of Directors comprising Independent Directors also review the system at regular intervals.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The Financial performance of the Company for the year under review is discussed in detail in the Directors Report.

The Financial performance of the company has shown a growth. The Management expects to maintain positive result in the coming quarters.

SEGMENT WISE OR PRODUCT WISE PERFORMANCE

The overall Revenue from operations has increased as compared to the last Financial year. However, during the Financial year company has earned profit compared to previous year, as there Iwas a additional other operating income (i.e reversal of impairment loses) and further there was an increases in other income of the company

INDUSTRY STRUCTURE & DEVELOPMENTS

The Company continues to be a Non-Deposit Taking, systemically not important, Non-Banking Financial

Company and holds the RBI certificate in this behalf. The company has followed the RBI Norms as applicable and has complied with all the statutory obligations.

MATERIAL DEVELOPMENT IN HUMAN RESOURCE / INDUSTRIAL RELATIONS FRONT INCLUDING NUMBER OF PEOPLE EMPLOYED

The Management maintains healthy relation with its employees at all levels and however the number of employees in the company is low but with the growth of operations, the management believes the employee base to grow.

HUMAN RESOURCE DEVELOPMENT

The Company continues to give priority to its human assets. The Company provides a fair and equitable work environment to all its employees. The Company is working continuously to create and nurture an atmosphere that is highly motivated and result orient

CAUTIONARY STATEMENT

Statements in the Management Discussion and Analysis describing the Companys and its subsidiaries objectives, projections, estimates and expectations may be forward-looking Statements within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important developments that could affect the Companys operations include among others, climatic conditions, economic conditions affecting in the domestic markets in which the Company operates, changes in the Government regulations, tax laws and other statutes and other incidental factors.

Place: Kolkata By Order of the Board of Directors
Date: 09/11/2020 For Virat Leasing Limited
Rajeev Kothari
Managing Director
(DIN 00147196)