VLS Finance Ltd Management Discussions

Financial Review

During the year under review, profit before tax was Rs.1838.54 lakhs as compared to Rs. 5071.08 lakhs for the previous year. The profit after tax stood at Rs. 1484.83 lakhs as compared to Rs. 3749.59 lakhs during the previous year.

Industry Structure and Development

The global economy growth according to Goldman Sachs economic survey estimation is now at 4 percent and growth of developing Asian economies is estimated to be 6 percent, by Asian Development Bank (ADB) report. The financial markets have been showing a confident run as compared to last financial year. ADB report pegs Indian economy to grow at 7.3 percent for the current financial year. However, increasing divergence in monetary policies and volatility of capital flows coupled with foreign economic decisions viz. Brexit, United States trade agreement re-negotiations etc. paints an uncertain time ahead for our economy.

The growth prospects of the Emerging Asian economies (Southeast Asia, China and India) are expected to remain robust over the medium term amid global economic uncertainty. The Asian region is expected to grow at 6 percent in 2018-2019.

Outlook, Risks and Concerns

The countrys equity markets remains promising for both global and domestic investors. The underlying strength of Indian consumption and demand, continues to remain healthy. The performance of your Company is closely linked to those of the stock markets. The growth tendencies for 2018-2019 are expected to be mostly reflective of the developments in these areas. Your Company has been making use of available opportunities in the capital markets for its operations, keeping in view its business objectives.

Our approach to risk management is based on our extensive experience and well placed risk management framework. The Company is exposed to normal industry risks such as credit, interest rate, economic, currency, political, market and operational risks. The Company views risk management as integral to its business for creating and maintaining best practices in business operations and administration.

Opportunities and Threats

The continuing emphasis on ‘Make in India by government is expected to infuse further capital investment in the country and thus more opportunity for financial sector. The relaxation of foreign investment rules has received a positive response from the financial sector. The Company is looking forward to grasp the available opportunities. The Company will also focus on permitted avenues as a member of the Stock Exchange. The uncertain state of the global economy however remains a cause of concern.

Adequacy of Internal Financial Control Systems

The management in consultation with Internal Auditors monitor and evaluate the efficacy and adequacy of internal financial control systems in the Company, its compliance with operating systems, accounting procedures and policies at all levels of the Company and its subsidiaries. The audit observations and the corrective actions thereon are presented to the Audit Committee of the Board. The control framework is established and maintained by the Company. The observations by the internal and statutory auditors are perused by the Management, the Audit committee as well as the Board for proper implementation. The Companys internal financial controls have been found to be adequate and effective.

Segment wise Performance

Accounting Standard (AS-17) relating to "Segment Reporting" has been complied with. The gross operating income and profit from the other segment is below the norms prescribed in AS-17, hence separate disclosure has not been made.

Cautionary Statement

The statements in the above analysis, describing the Companys estimates, expectations or predictions may be ‘forward looking statements within the meaning of applicable securities laws and regulations. The actual results may differ from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in government regulations, tax regimes, economic developments within the country and abroad, and other related factors.