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Nagarjuna Finance Ltd.

BSE: 506129 Sector: Financials
NSE: NAGARJUFIN ISIN Code: N.A.
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Nagarjuna Finance Ltd. (NAGARJUFIN) - Chairman Speech

Company chairman speech

1995 NAGARJUNA FINANCE LIMITED CHAIRMAN'S SPEECH Ladies & Gentlemen, It is my pleasure to welcome you all to this Twelfth Annual General Meeting of your Company. Past Year's Performance The year in retrospect was one of considerable achievement, in the fast changing environment characterised by continued deregulation, intense competition, credit stringency and depressed stock markets. We initiated a shift in our business culture to respond to changing customer needs. This is reflected in accelerated growth in most business segments. By far, the most remarkable performance has been in deposit mobilisation. The continued thrust on mobilisation pushed the deposit base at the end of the year to Rs. 161 crores, placing us amongst the top few Financial Services Companies in India. The accretion of 284% in deposits in just one year provides a sound base in the changed money market scenario, marked by dearer and restricted credit availability from banks/institutions to Non- Banking Finance Companies (NBFCs). Disbursements under Lease and Hire Purchase portfolio recorded an increase of 160% at Rs. 110 crores from Rs. 42 crores last year. The growth in this segment was complemented by a renewed emphasis on building up a quality portfolio and establishing effective risk assessment systems indicative of the need to maintain receivables at a low level. Bills Discounting business was further activised, paving the way for an increased presence in this expanding segment. Investment Banking, was given the much needed push. Issue Management assignments raising aggregate funds of Rs. 33 crores were handled during the year besides extending underwriting support to 86 floatations for Rs. 17 crores, against which there was no devolvepment. The marked shift in the division's current focus is on "Bought Outs". Several placements were made on syndicated basis establishing in the process our capability in wholesale marketing of issues as well. In the years ahead, our emphasis will be on value added advisory services. Funds handled during the year increased two fold at Rs. 304 crores, despite reduced support from institutions. Gross Income, spurred by increased business volumes, grew sharply by 77% at Rs. 64.24 crores. Net Profit after tax and adjustments at Rs. 9.69 crores rose by 55% after making substantially larger provision for depreciation of Rs. 11.11 crores as against Rs. 6.41 cores. Dividend payout has been retained at 30%. However, Members will be pleased to know that earnings per share has risen to Rs. 7.40 from Rs. 5.50 a year ago. Our Net Worth, which signifies leverage opportunities on borrowings, stood enhanced at the close of the year to over Rs. 50 crores, on account of additional inflows of Rs. 14.46 crores. There has been a delay in launching the Mutual Fund, but for the right reasons. Investor sentiment for the Industry has been relatively poor for a major part of the year borne by the adverse stock market conditions and the lacklustre performance of most existing private sector funds. We rightly believe that proper investor education accompanied by improved market conditions will bring about a shift in the investor perception, renewing prospects for this scheme. SUBSIDIARIES Stock Broking Consistent with our objective of tapping emerging business opportunities, Nagarjuna Securities Limited, our stockbroking subsidiary, has been enlisted as a member of the National Stock Exchange and the Hyderabad Stock Exchange. Membership on the Bangalore Stock Exchange and the OTCEI will follow during the current year. The broking subsidiary is committed to provide value added services, in the form of institutional placements, advisory services on portfolio selection and market making. With current capital market regulations, permitting issuers of corporate paper below Rs. 5 crores to go the OTCEI route, business opportunities for the subsidiary abound. Aqua Project I am pleased to inform you that the aqua farm at Nellore has been commissioned. The business is currently going through a period of uncertainty consequent to the severe disease that affected large areas in the eastern coast of India in November 1994. The large losses incurred by aqua farms in the region and the seventy of disease necessitated a `crop holiday' between November and May of this year as directed by the Marine Product Exports Development Authority (MPEDA). Extensive studies have been made on the cause of the disease and numerous guidelines issued by MPEDA and other agencies on the proper management of the farms. Whilst the disease cannot be fully eliminated, adherence to scientific systems would certainly help minimise such extensive recurrence. Our farm was still under construction and we were, hence, not affected by the disease. Having collaborated with the largest producer of shrimps in the world and with state-of-the-art technology, we have adopted the best practices from the very start. However, the long term viability of the business and the control of disease depends on the active cooperation of all farmers in the region. The lack of any major outbreak in the current year is an indication of the changed outlook of farming. In the current year, we expect to harvest our first crop and if the weather permits, we may start the second crop as well towards the beginning of 1996. Looking Ahead Financial Services are here to stay. It may be pertinent to note that this sector has been able to contribute to the country's GDP at a much faster pace than the other constituents. The ability to being about innovative solutions in meeting the resource needs of the corporate sector has been the mainstay of NBFCs in an ever shifting environment which has phased out entry barriers in erstwhile mutually exclusive areas of banking and leasing. The renewed constraints placed on NBFCs through credit regulations by the apex bank, have only helped in making resources dearer. The depressed conditions in the stock market do not augur well for investment banking and capital market operations. With ample opportunities come fierce competition and it is only by improved and responsive customised financial services can the need of the hour be met. The inevitable realities of the emerging business climate has spurred us to chalk out long term growth plans. It has become most imperative to augment our capital base. Hence we propose to issue Preference Shares; Rs. 25 crores with conversion rights and Rs. 10 crores on a redeemable basis, aimed at improving capital adequacy without diluting the earnings per share on the common stock. This alone can help us mobilise additional resources by way of loans and deposits. In summary, the outlook for the rest of this year and the early part of the next seems to be one of guarded optimism. Your sustained backing, immense trust reposed by the depositors, patronage from the growing clientele, combined with the cooperation from the committed team of professionals, gives us ample confidence of improving this year's performance. Acknowledgement My colleagues on the Board join me in thanking all the investors, bankers, institutions and fixed deposit holders for being so supportive. Our Management team, led by our very energetic and dedicated Managing Director, deserve our warm appreciation for their great contribution to our sustained growth. I am also beholden to my colleagues on the Board for their sustained involvement. Minoo R. Shroff Chairman Date : 29th September, 1995 This does not purport to be a record of the proceedings of the Twelfth Annual General Meeting of the Company held on Friday, 29th September, 1995.