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GLOBAL ECONOMY

Throughout the fiscal year 2022-23, the global economic situation remained challenging. The rise in inflation, which began in early 2021, accelerated significantly throughout 2022. In response to the spike in inflation, which reached between two and seven decade highs in the majority of developed nations in 2022, there has been a rapid global increase in policy interest rates. While inflation reached its

Global real GDP growth and growth expectation (in %)

	2022	2023	2024
World	3.4	2.8	3.0
Advanced Economies	2.7	1.3	1.4
Emerging Market Economies	4.0	3.9	4.2
France	2.6	0.7	1.3
Germany	1.8	(0.1)	1.1
Japan	1.1	1.3	1.0
United Kingdom	4.0	(0.3)	1.0
United States	2.1	1.6	1.1
Brazil	2.9	0.9	1.5
Mexico	3.1	1.8	1.6
China	3.0	5.2	4.5
India	6.8	5.9	6.3

Source: International Monetary Fund

Despite the fact that actual growth in many countries in 2022 was higher than had been anticipated, with aggressive policy tightening, geopolitical uncertainties, rising protectionism, and deteriorating business and consumer sentiments, the global growth outlook for the current and the subsequent year remains subdued.

The most recent projections from the World Economic Outlook of the International Monetary Fund indicate that the global economy is not likely to enter a recession in the current or the following year. However, with two consecutive quarters of negative GDP growth, there could be a technical recession in Europe and possibly even in the United States. However, according to the IMFs projections, the US economy is unlikely to experience a GDP contraction in the current or following year.

INDIAN ECONOMY

India, like many other nations, is experiencing a decline in economic growth. The demand for private consumption and domestic investment remains robust, however. The growth deceleration in India is primarily due to a decline in export demand, which reflects a slowdown in global growth. In addition, as a result of robust domestic demand and to complement monetary policy in inflation control, Governments final consumption scaled down, which peak in most countries during the last fiscal year and has declined significantly since then, current inflation rates in the majority of nations remain well above the average for the decade preceding the pandemic. As a result, monetary policy tightening continues in most countries. In addition, the majority of central banks have begun withdrawing the liquidity that was injected during the pandemic, resulting in a tightening of the financial markets.

has had a negative effect on Indias economic growth. According to the estimates of the IMF and numerous domestic agencies, India will likely experience a significant growth deceleration in the current fiscal year compared to the previous one. During the current fiscal year, Indias growth is likely to range between 5.8% and 6.2%, which would be nearly one percentage point lower than the previous years growth.

Indias real GDP growth (in %)

	2019	2020	2021	2022	2023
GDP	6.5	3.9	(5.8)	9.1	7.0
Private Consumption	7.1	5.2	(5.2)	11.2	7.3
Government Consumption	6.7	3.9	(0.9)	6.6	1.2
Investment	6.2	(6.0)	(11.6)	22.2	9.1
Exports	11.9	(3.4)	(9.1)	29.3	11.5
Imports	8.8	(0.8)	(13.7)	21.8	18.8

Source: Government of India

Notwithstanding the growth slowdown, Indias GDP growth rate would be the highest among all systemically significant nations, a position the country has held almost continuously since 2015. Other macroeconomic indicators,

such as bank credit and deposit growth, tax collection, goods movement, industrial production, electricity consumption, and infrastructure output, indicate that, despite a general trend of growth deceleration, the Indian economy is in better shape than the majority of its peers.

In 2021 and a portion of 2022, India, like other economies, experienced a spike in inflation. A substantial portion of this inflation was due to supply-side factors and food price increases. In contrast to the advanced nations, Indias inflation rate was nowhere near the decades peak. Moreover, Indias inflation rate has declined significantly and entered the Reserve Bank of Indias target range in recent months.

In order to control inflation and normalise the policy rate from the pandemic-induced lows, the Reserve Bank of India (RBI) increased the policy rate by 250 basis points. In accordance with the decline in inflation, the RBI kept the policy rate unchanged in its most recent policy. However, as a result of the past aggressive monetary policy tightening, interest rates on both the debt and credit markets have risen significantly. This has also played a significant role in the countrys GDP growth slowdown.

Not only is India the brightest spot in an otherwise bleak global landscape, but the countrys dramatic transformation over the past two decades has significantly improved its prospects. India, which was the 16^th largest economy 25 years ago, is now the 5^th largest economy in the world. According to our estimates, India will likely surpass Japan and Germany to become the worlds 3^rd largest economy before the turn of the current decade.

INDIAN CAPITAL MARKETS

The Indian capital markets play a crucial role in facilitating the transfer of funds from savers to borrowers and in mobilising savings. It provides a platform for investors to invest their savings in a variety of securities and earn returns, while corporations and governments gain access to the necessary capital to facilitate investment and promote growth.

Due to digitalisation, the capital market industry has undergone a revolution, resulting in the development of novel financial products and services that employ technologies such as artificial intelligence (AI), machine learning (ML), and distributed ledger. These developments have increased the markets depth and liquidity, rendering it more efficient, transparent, and accessible to investors. Mobile applications and online trading platforms have further enhanced the customer experience. India is poised to evolve into a developed economy with a dynamic capital market due to the growing participation of individuals in the capital market.

EQUITY MARKETS

Rising inflation and interest rates, liquidity withdrawal by central banks, growth slowdown, rising geopolitical uncertainties, and a deterioration in investor sentiments in 2022 follow the generally robust performance of major equity markets over the preceding three years. Despite a low rate of return, the Indian stock market was one of the best performing major markets in 2022.

Equity return in major markets (in %)

	2019	2020	2021	2022	2023 Apr
Canada	19.1	2.2	21.7	(8.7)	6.5
China	36.1	27.2	(5.2)	(21.6)	4.1
France	26.4	(7.1)	28.9	(9.5)	15.7
Germany	25.5	3.5	15.8	(12.3)	14.4
India	14.4	15.8	22.0	4.4	0.4
Japan	18.2	16.0	4.9	(9.4)	10.6
United Kingdom	12.1	(14.3)	14.3	0.9	5.6
United States	22.3	4.4	18.2	(11.5)	2.4

Source: CEIC database

As a result of global investors reducing their allocation to equities, there was a significant outflow of capital from the majority of major equity markets, including India. Foreign institutional investors withdrew nearly US$16.5 Billion from the Indian equity markets in 2022.

Normally, a foreign portfolio equity outflow of this magnitude would have precipitated a severe correction in the Indian equity market. However, substantial inflows from domestic investors, particularly under the systematic investment plan into equity mutual fund schemes, largely offset the outflow of foreign portfolio equity investment. Consequently, the Indian equity market was one of the few global markets which generated a positive return during 2022.

Debt Market

The Indian bond market has experienced significant volatility in recent years. Bond yields in India, as in the majority of other nations, fell sharply in 2020 as a result of large stimulus measures, such as liquidity infusion and rate cuts. In 2021, rates remained within a narrow range due to a largely accommodating monetary policy, the absence of a significant inflationary uptick, and a decrease in government market borrowing. In 2022, however, bond yields spiked due to a sharp increase in inflation, aggressive monetary tightening across the globe, including India, and the withdrawal of liquidity.

Debt market yield in India (in %)

	2019	2020	2021	2022	2023 Apr
Minimum
1-Y	5.27	3.40	3.50	4.24	6.78
5-Y	6.24	5.00	5.13	6.01	6.97
10-Y	6.34	5.76	5.85	6.46	7.02
Average
1-Y	6.07	4.11	3.91	5.83	7.04
5-Y	6.79	5.61	5.79	6.92	7.23
10-Y	7.00	6.09	6.19	7.18	7.32
Maximum
1-Y	6.88	5.52	4.35	7.17	7.39
5-Y	7.42	6.60	6.08	7.68	7.45
10-Y	7.65	6.67	6.49	7.60	7.47

Source: Clearing Corporation India Limited

In 2023, the situation has changed significantly. The RBI has already implemented a rate pause in response to a consistent decline in inflation and the expectation of further softening. Barring an unexpected inflation spike, it is unlikely that the RBI will increase rates again this year. With the rate increase in early May 2023, the US Federal Reserve appears to have reached the apex of its cycle of rate increases during this time. Bond yields have already begun to decline globally, including in India, and this trend is expected to continue.

In tandem with the less restrictive stance of monetary policy, there has been substantial improvement in government finances, with the fiscal deficit and market borrowing plan declining substantially. This would also contribute to bond yields falling below their current levels.

Key Growth Drivers for the Wealth Management Business in India

INDIAN WEALTH MANAGEMENT INDUSTRY

The Indian wealth management industry plays a critical role in managing the wealth of High Net-worth Individuals (HNIs) and Ultra High Net-worth Individuals (UHNIs), which includes overseeing their financial assets, real estate, gold and other physical assets. Through a structured and personalised approach, wealth managers help clients to navigate complex financial markets, minimise risks, and optimise returns on their investments. They work closely with their clients to understand their financial goals and provide wealth management services that align with their long-term objectives.

As the Indian economy continues to expand and progress, the demand for efficient wealth management witnesses an increase. In recent years, the wealth management industry in India has seen a surge in the number of services offered, new players entering the market, and investments in cutting-edge technology.

The industry has experienced tremendous growth over the last one decade. The drivers, propelling this growth are further increasing the number of domestic millionaires and billionaires. Moreover, according to the IMF projection, Indias GDP is slated to rank third in the world by 2030. Additionally, the Indian Governments focus on the development of financial infrastructure and improved regulation of the sector has created an environment, conducive to investments and private wealth.

The rise of India as an increasingly wealthy economy has led to the anticipation of a drastic surge in the number of HNIs in the country. The number of HNIs is expected to almost double at a CAGR of 12% from 7.97 Lakhs in 2021 to 14.07 Lakhs in 2026, with most of the increase being driven by young Indians getting wealthier.

Indias popularity as a business destination has been on the rise, with a growing influx of foreign direct investments and its establishment as a global manufacturing hub, as perceived by multinational corporations. This is due to several factors, including a favourable business environment, a large and skilled labour force, and a vast market size, which have contributed to Indias economic development. As a direct consequence, the rising income levels are expected to offer an immense opportunity in the form of the growing market size for the Indian wealth management industry.

ii. Underpenetrated Markets

The availability of financial products in the Indian market is comparatively limited compared to other countries. Indias mutual fund Assets under Management (AUM) to Gross Domestic Product (GDP) ratio stands at only 15.9%, as opposed to the global average of 63%. Various factors, such as low levels of financial literacy and cultural attitudes towards savings and investments, contribute to the low demand for mutual funds among people residing outside major cities. However, with the increasing availability of information and a recent surge in retail participation, there is hope for greater market penetration in these areas.

A significant trend observed in Indias urban wealth management industry is the wider accessibility of advice from major banks and wealth management firms to a larger investor base. However, for mutual fund advice, the mass affluent clients are relying on Independent Financial Advisors (IFAs). As a result, there is an enormous potential emerging from previously unexplored markets.

iii. Easing Regulations

In recent years, Indias regulatory framework has strengthened, creating several new investment opportunities for the general public. The Governments efforts towards financially educating the community has led to a growing confidence among households to participate in the financial markets.

Several noteworthy developments have simplified the process of investing in complex financial instruments. These include changes in tax structure of debt mutual funds and non-principal protected

Gross Financial Savings as % of GDP at current prices

To ensure a sustained flow of funds for investments, household financial savings need to increase. Financial savings of households saw a decline from Rs. 30.54 Lakh Crores in 2020-21 to 25.98 Lakh Crores in 2021-22. While some part of the decline could be explained on account of pent-up demand, the decline, nevertheless, was substantial.

As a percentage of GDP, households financial savings declined from 15.4% in 2020-21 to 11.1% in 2021-22. Even in the pre-Covid year, the gross structured products, PMS distribution fees, recent AIF developments affecting PIPE and VC Fund regulations, caps on investments in investee companies, and the introduction of accredited investors. Fair reforms encourage both fund managers and investors to contribute to the development of enduring partnerships between them.

iv. Financialisaton of Savings

High growth in savings and investments are key to Indias sustained long-term growth. Indias aggregate saving rate has seen a moderation in recent years.

Financial savings as percentage of GDP was higher. The ratio of 11.1% in 2021-22 is the lowest since 2017-18. Concomitantly, savings in physical assets by households saw a jump in 2021-22. Savings in physical assets rose from 10.9% GDP in 2020-21 to 12.1% in 2021-22.

In 2021-22, gross financial savings of households saw a dip as compared to the previous year and savings in physical assets saw a rise.

Households save in financial instruments and physical assets. The financial savings of households are held in cash, bank deposits, mutual funds (MFs), insurance and pension funds. Households also save in physical assets such as gold and real estate. During the past five years (2015-16 to 2019-20), the savings in physical assets ranged between 55-60% of the household savings. Last year, the share of savings in physical assets jumped from 49% in 2020-21 to 61%.

Investments by households in real estate saw a boost last year. Investment in gold also increased but real estate was far ahead.

Over the past few years, financial savings have been witnessing a compositional shift with more households diversifying their portfolio and shifting away from traditional instruments such as bank deposits to small savings, provident & pension funds and mutual fund. However, last year saw profound changes in the savings and investment pattern of households. Mutual funds and equity emerged as an important instrument for financial savings.

Indian Household Financial Savings Mix

Investments in	2017-18	2018-19	2019-20	2020-21	2021-22
Bank Deposits	25.4%	34.3%	35.6%	39.3%	30.0%
Provident and Pension Funds	18.0%	17.9%	19.5%	15.9%	21.6%
Life Insurance Funds	16.7%	17.1%	14.6%	18.6%	17.1%
Small Savings (excl PPF)	7.6%	9.1%	11.5%	8.7%	10.7%
Currency	23.6%	12.3%	12.2%	12.5%	10.4%
Investment in Mutual Funds	6.7%	6.7%	2.7%	2.1%	6.2%
Other Investments (excl MF)	1.9%	0.9%	1.4%	1.4%	2.1%
Non-Banking Deposits	0.0%	1.5%	2.4%	1.3%	1.8%
Trade Debt (Net)	0.2%	0.2%	0.2%	0.1%	0.2%
Total	100.0%	100.0%	100.0%	100.0%	100.0%
Gross Financial Savings ( Lakhs Crore)	20.56	22.64	23.25	30.54	25.98

Source: National Accounts Statistics 2023, NSO, MOSPI

There has been a shift in the composition of gross financial savings over the past decade. In 201112, bank deposits dominated household financial savings, contributing more than half of it. For the year ending March 2022, bank deposits constituted 30% of the households financial savings. The contribution of provident and pension funds has seen a gradual rise over the last decade, though the rise is not consistent. In 2011-12, provident and pension funds accounted for 10% of the financial savings. Last year, the share had risen to 22%, indicating greater move towards a formalised economy. They had the second highest share in 2021-22. These were followed by life insurance funds and small savings.

A noteworthy change is the increase in the share of mutual funds and equity in households financial savings, particularly in 2021-22. The share of mutual funds (MF) in households financial savings stood at 6.2%, a more than 4% rise from 2020-21. The record rise in MF investments came amid a boom in the stock market in 2021.

Substantial liquidity pumped in by global central banks, stimulus package announced by the Government, rotation of foreign investments from China to India and a record number of Initial Public Offerings contributed to the stock market rally and encouraged greater retail investor participation in 2021-22.

Poor inflation adjusted returns from traditional instruments, such as bank deposits, also lured investors towards the stock markets. Direct exposure to equity instruments has also seen a sustained rise.

i. Technological Integration

The wealth management industry in India is undergoing rapid transition. The drivers, enabling the change, include technological advancements, increasing sophistication of investors, and availability of new financial products. In recent years, the industry has witnessed an influx of new players such as digital- first start-ups and independent financial advisors. These players are disrupting the market and bringing innovative products and services to the table.

As technology continues to play an increasingly vital role in the sector, it is anticipated that the industrys landscape will continue to evolve in the coming years. Moreover, there has been a growing trend towards technology-enabled solutions, such as automated services and advisory, that emerged as a desirable option for investors, seeking financial advice.

The emergence of digital banking services has created fresh avenues for wealth managers to reach a broader customer base and offer enhanced services. This is especially true for rural and semi-urban areas, where these services were previously not available or affordable. By using digital banking platforms, wealth managers can now expand their customer base in these areas.

The emergence of fintech companies has also paved the way for tremendous opportunities. Fintech companies are able to offer economical and effective automated services to fund managers and management companies. Thus, enabling them to access a range of financial services, while limiting the need for an extensive network of relationship managers.

vi. Holistic Financial Planning

Todays investors are more conscious than ever about the significance of comprehensive financial planning that aligns with their long-term goals. New- age investors recognise the fact that successful financial planning involves a holistic approach, encompassing their individual needs and objectives. Hence, by offering guidance on a wide range of investment options, wealth managers help investors in structuring a plan that aligns with their unique circumstances and goals.

Furthermore, investors are now looking beyond the traditional goal of wealth maximisation. They are seeking a more comprehensive and structured approach to investment options, which takes into account a broader range of objectives such as retirement planning, impact investing, estate planning, and social welfare.

vii. Personalisation of Services

In the present-day scenario, personalisation is not just a client preference, but rather an expectation that must be fulfilled. Definitely rapid progress in technology has accelerated the rise of robo-advisory services. However, it is generally accepted that technology cannot entirely duplicate the distinctive comprehension that an advisor has about a clients requirements and desires. In the wealth management industry, trust remains a crucial driver. Trust is built through consistently delivering the highest standards of service, while recommending well- researched solutions.

Thus, the demand for personalised service continues to be prevalent in modern times. To this end, the innovative phygital model has emerged as a promising solution that seeks to combine the power of human expertise with technological solutions. This approach seeks to deliver enhanced and cost-effective services by harnessing the strengths of both worlds.

Outlook

The rapidly evolving landscape of the wealth management industry in India is offering a plethora of opportunities for both providers and consumers, alike. The demand for wealth management services has increased significantly due to the availability of a wide range of investment options. These include mutual funds, insurance products and pension schemes. These services aim to align financial decisions with long-term goals.

The disruptive technological advancements have provided leading wealth management firms with an opportunity to offer a unique value proposition. By adopting a scalable business model with technology at its core, these firms have been able to reduce costs significantly, resulting in an effective strategy for serving the mass affluent segment.

Despite the abundance of opportunities, the wealth management industry in India faces several challenges. The entry of new players has led to stiff competition for customers, thereby exerting greater pressure on fees and services. Furthermore, stringent regulations have increased compliance costs and subjected the industry to additional scrutiny from regulatory bodies.

The growth potential of wealth management services in India is poised to replicate the rapid increase in income levels and the number of HNIs that the country is expected to witness. This shift in mindset towards managing wealth has created a positive sentiment in the wealth management space, indicating positive outlook for the industry.

Company Overview

Since 2002, Anand Rathi Wealth Limited, AMFI registered as a Mutual Fund Distributor, been in the business of Private Wealth, catering to high and ultrahigh net worth individuals (HNIs & UHNIs). It has around Rs. 37,950 Crores of assets under management (AUM) across 8,352 clients in India and globally. We have 293 Relationship Managers (RMs) operating from offices across in India - Mumbai, Bengaluru, Delhi, Gurugram, Hyderabad, Kolkata, Chennai, Pune, Chandigarh, Jodhpur, Noida, Vishakhapatnam, Coimbatore, Nagpur and Ahmedabad and we have a representative office in Dubai.

We have achieved a dominant position in the distribution of financial products, with a focus on the growing HNI segment through an uncomplicated, holistic and standardised offering, delivered through an entrepreneurial team of private wealth professionals, known as RMs.

We believe, the HNI segment of clients (i.e., individuals with net worth between Rs. 5 Crore to Rs. 50 Crores), is an attractive and underserved segment in terms of quality of service and creating a platform to serve this segment is often time consuming and difficult to build. In our experience, Clients belonging to the HNI segment are less price sensitive and appreciate the high quality and personalised services we offer.

Our process-driven approach aims to achieve consistent Client outcomes through a standardised investment strategy, augmenting our RM capability. With regards to mutual fund distribution, we have devised in-house methodologies that consider a defined set of parameters for mutual fund selection. Non-PP Structured Products (Non-PP SPs) form an integral part of our model portfolios enabling more predictable and stable returns, with lower risk as compared to equity investment over a medium to long term period. Our relatively simple product mix of mutual funds and Non-PP SPs, further positions us well to capture our target clientele.

As part of our holistic approach to clients, we also facilitate Estate planning, Succession planning and create Wills as part of our core objectives, without charging our clients.

We have been certified as a Great Place to Work from last four years, which endorses the culture at our organisation.

In addition to the Private Wealth segment, ARWL has two other business verticals, namely, Digital Wealth (DW) and Omni Financial Advisors (OFA). The DW vertical uses fintech to provide wealth solutions to the mass wealthy sector through a phygital channel (a blend of human contact and technology), while the OFA vertical provides a technology platform for Mutual Fund Distributors (MFDs) to service its clients and grow their business. Strengths that Differentiate Us

i. Focus on HNI Segment

Our research has revealed that a group of affluent individuals with net worth between Rs. 5 Crores to Rs. 50 Crores, value exceptional quality and are willing to pay a premium for value-added services. ARWL aims to enhance the value proposition it offers to this lucrative market segment. In this effect, the Company, with its expertise and experience, has implemented a standardised and research-driven approach. Its focus is to continuously improve its offerings and maintain its competitive edge.

ii. Objective-Driven Approach

The Company has adopted an uncomplicated and objective-oriented approach to help clients define their wealth objectives and make informed investment decisions. By following its systematic approach, the Company offers standardised wealth solutions to its customers. The Companys methodology involves a well- balanced combination of mutual funds and Non-PP SPs, which is designed to be easily understandable. This blend is intended to provide clients with both liquidity and minimal capital risk, enabling the Company to generate long-term value for its esteemed clients.

iii. Value-Added Services

The Company takes a comprehensive and holistic approach to serving its clients, which includes providing Estate planning, Succession planning, and Will creation services. This ensures the protection of the wealth of the Companys clients and enables a smooth transfer of assets, fostering strong long-term relationships.

iv. Highly Experienced Team

ARWL is led by proficient leaders with extensive expertise in the private wealth industry. They lead by example and prioritise data and logic over positions within the Company. As the Company moves forward, the leadership team is expected to continue playing a pivotal role in shaping the culture of the Company and guiding it towards even greater achievements. The RMs and Account Managers (AMs) are equally competent and highly skilled, with excellent academic and professional backgrounds.

v. Competent Relationship Managers

The Company attach top priority to recruiting and retaining Relationship Managers (RMs). The Company has implemented a range of measures to attract and retain the best talent in the industry. The Company has spent over 15 years, building a culture that fosters the development of future RMs and provides ongoing support to help RMs achieve their full potential. With its sustained effort, the Company has been able to retain an increasing number of RMs for more than five years, which further validates its value proposition.

The Companys Relationship Managers (RMs) are highly experienced and possess the skills required to conduct a comprehensive analysis of a clients entire balance sheet. They take into account the clients risk tolerance and recommend solutions to maximise returns using a defined process and strategy.

vi. Entrepreneurial Work Approach

At ARWL, the Company is committed to creating a work environment and culture that is constantly evolving and improving. It believes in promoting an entrepreneurial work culture, an integral part of its business strategy. The Companys RMs are encouraged to prepare their own business plans, focus on acquiring new clients without any geographical restrictions, collaborate with other team members, and actively mentor new hires.

To foster a true entrepreneurial culture, the Company offers a revenue-based uncapped incentive policy, which has been in place since its inception. It follows a transparent and standardised formula-based approach across the board to ensure fairness and consistency.

All the employees in leadership roles, including unit heads and team leaders, actively work as RMs and manage client relationships. This approach ensures that the Company thrives on a unique customer-centricity at all levels of organisation.

vii. Unique Hiring Strategy

ARWL adopts a distinctive approach to RM hiring. The Company recruits Account Managers who hold a business management degree from top B-schools; or are either rank holders or cleared CA in their first attempt. These AMs work alongside RMs, typically on a one-on- one basis, to serve clients. The Companys focus on development and nurturing includes comprehensive training and guidance to prepare them in their transition into RMs.

viii. Digital Offerings

At ARWL, the Company recognises the significance of Information Technology in ensuring smooth operations. As part of its commitment to digital wealth management, it has equipped its human resources and channel partners with digital tools. Through the Companys adaptable business model, it offers a comprehensive Digital Wealth (DW) solution that utilises the latest technology. The Companys Omni Financial Advisor (OFA) platform provides a co-branded mobile-first integrated technology to IFAs and its clients, serving the retail industry. By leveraging technology, the Company delivers innovative and efficient wealth management solutions to its clients. Thus, enabling them to easily track their investments, manage their accounts, and access advice and insights online.

Risk Management

Anand Rathi Wealth Limited is a financial services company that provides comprehensive wealth management solutions to its clients. Like any other financial services company, ARWL is exposed to various risks that could affect its operations and reputation. Effective risk management is therefore critical to its success. By identifying, assessing, and mitigating risks, ARWL can protect its clients assets, maintain its reputation, and capitalise on opportunities.

Risk	Impact	Mitigation
Operational Risk	Operational failures or breaches can negatively impact the Companys reputation and financial position, leading to legal or regulatory penalties.	The Company implements robust internal controls, conducts regular risk assessments, and invests in technology and resources to bolster cyber security, prevent fraud and cyber attacks
Regulatory Risk	Non-compliance with regulations can result in legal or regulatory penalties, damaging the Companys reputation, and resulting in loss of clients or business opportunities.	The Company stays up-to-date with regulatory changes, ensuring compliance with all applicable regulations, and building strong relationships with regulators.
Human Capital Risk	A shortage of skilled talent can impact the Companys ability to deliver quality services to clients and negatively impact its business performance.	The Company invests in its employees through training and development programmes, provides competitive compensation and benefits, and fosters a positive work culture.
Technology Risk	A technology failure or security breach can impact the Companys ability to deliver services to clients, resulting in financial losses, and damage to its reputation.	The Company invests in technology and cyber security measures, conducts regular risk assessments, and maintains business continuity plans.
Counterparty Risk	The Company is exposed to counterparty risk when it enters into transactions with other parties, such as financial institutions or clients.	The Company conducts due diligence on counterparties, diversifies exposure, and uses collateral and risk mitigation techniques.
Liquidity Risk	Inadequate liquidity can result in the Company being unable to meet its obligations or take advantage of business opportunities.	The Company maintains adequate liquidity buffers, diversifies funding sources, and monitors cash flow.

Internal Control Systems

Anand Rathi Wealth Limited has established an internal management control department that operates independently, and is tailored to the Companys size and scope. This department is responsible for evaluating the effectiveness of all internal controls and procedures, ensuring compliance with regulatory and legal requirements, and reviewing internal audit reports. The Company has bolstered its internal audit function by recruiting domain specialists with expertise in key areas, thus improving the efficiency of controls. The Board of Directors Audit Committee regularly assesses the sufficiency and effectiveness of internal controls, and reviews internal audit reports. Environmental, Social and Governance (ESG) ARWL acknowledges the significance of environmental, social, and governance (ESG) factors in making sound investment decisions. The Company has developed a robust ESG framework to identify companies that align with its clients values and investment objectives. By incorporating ESG factors into investment decisions. The Company aims to help clients build a diversified and sustainable investment portfolio. The objective is to not only provide financial returns but also contribute positively to the betterment of society and the environment.

Environmental

The environmental aspect of the ESG framework focuses on identifying companies that are committed to sustainable environmental practices. It concentrates on companies that work steadfastly towards reducing their carbon footprint, improving energy efficiency, minimising waste, conserving natural resources, and managing their impact on the environment. Companies that are committed to sustainable environmental practices are more likely to be viewed favourably by investors. Additionally, they are seen as better positioned to adapt to changing environmental regulations and mitigate environmental risks.

Social

The social aspect within the ESG framework focuses on identifying companies that demonstrate a commitment to strong social practices. This includes factors such as promoting diversity and inclusion, ensuring amicable labour practices and employee relations, protecting human rights, and contributing to community development. Companies that prioritise social factors are viewed as more responsible and ethical, making them more attractive to customers and employees who share similar values.

Governance

The governance aspect of the ESG framework focuses on identifying companies that have good corporate governance practices. This includes factors such as board independence, executive compensation, shareholder rights, risk management, and transparency. Companies that prioritise good corporate governance practices are seen as more accountable and trustworthy. For these companies, the propensity to be involved in scandals or controversies are expected to be minimal, thus bolstering their financial performance.

Human Resources

Anand Rathi Wealth Limited firmly believes that its employees are essential to the Companys success. The Company is committed to providing a work environment that fosters growth and development of every employee. The Companys commitment to promoting a positive and productive work culture is reflected in its ongoing efforts to enhance the workplace atmosphere.

To cultivate an entrepreneurial mindset, the Company offers uncapped incentives to its Relationship Managers. It takes pride in its seasoned management team that leads by example. The Company strives to cultivate a professional, ethical, and collaborative work environment that supports development and growth. Its efforts have been recognised with the Great Place to Work designation, which acknowledges the Companys positive work culture.

The HR practices of the Company are designed to attract and retain talented individuals in an increasingly competitive market. The Company is dedicated to fostering a work culture that provides the employees with the best opportunities to reach their full potential. The employees are recognised and rewarded, based on their performance and contributions, which are evaluated using specific metrics, immediately reflecting in their earning potential. This approach encourages employee ownership and engagement at all levels of the organisation, including frontline staff. Additionally, the Company takes every opportunity to offer incentives and bonuses to the employees as a token of appreciation for their hard work and dedication.

Learning and Development

The Company invests in the regular training and development of its RMs and AMs, in its pursuit of delivering exceptional service to the clients. Each week, Relationship Managers and Account Managers receive approximately three hours of training, allowing them to continuously improve their skills and knowledge. The Companys intensive training and guidance is aimed at helping the Account Managers in developing necessary skills to transition smoothly into the role of a Relationship Manager. This approach has been successful, with 79 AMs having progressed to become RMs in last 3 years.

As of March 31, 2022, the Companys (all the three businesses namely PW, DW and OFA) total employee strength was 827 and has grown to 941 as on March 31,2023.

Cautionary Statements

The Management Discussion and Analysis of the Company may contain forward-looking information regarding its goals, plans, or projections, but it is important to note that actual results may differ from what is stated. This is because various factors such as intense competition, economic conditions affecting demand-supply and price conditions in domestic and international markets are crucial factors that could affect the Companys operations. Government regulations, tax laws, other statutes, and other incidental factors could significantly impact the Companys operations.