sarthak global ltd Management discussions

GLOBAL ECONOMIC

Overview: The global economic growth was estimated at a slower 3.2% in 2022, compared to 6% in 2021 (which was on a smaller base of 2020 on account of the pandemic effect). The relatively slow global growth of 2022 was marked by the Russian invasion of Ukraine, unprecedented inflation, pandemic- induced slowdown in China, higher interest rates, global liquidity squeeze and quantitative tightening by the US Federal Reserve.

The challenges of 2022 translated into moderated spending, disrupted trade and increased energy costs. Global inflation was 8.7% in 2022, among the highest in decades. US consumer prices increased about 6.5% in 2022, the highest in four decades. The Federal Reserve raised its benchmark interest rate to its highest in 15 years. The result is that the world ended in 2022 concerned that the following year would be slower.

The global equities, bonds, and crypto assets reported an aggregated value drawdown of US$ 26 trillion from peak, equivalent to 26% of the global gross domestic product (GDP). In 2022, there was a concurrently unique decline in bond and equity markets; 2022 was the only year when the S&P 500 and 10-year US treasuries delivered negative returns of more than 10%.

Gross FDI inflows - equity, reinvested earnings and other capital - declined 8.4% to US$ 55.3 billion in April- December. The decline was even sharper in the case of FDI inflows as equity: these fell 15% to US$ 36.75 billion between April and December 2022. Global trade expanded by 2.7% in 2022 (expected to slow to 1.7% in 2023).

The S&P GSCI TR (Global benchmark for commodity performance) fell from a peak of 4,319.55 in June 2022 to 3,495.76 in December 2022. There was a decline in crude oil, natural gas, coal, lithium, lumber, cobalt, nickel and urea realisations. Brent crude oil dropped from a peak of around US$ 120 per barrel in June 2022 to US$ 80 per barrel at the end of the calendar year following the enhanced availability of low-cost Russian oil.

Regional growth (%)	FY 2023	FY2022
World output	3.2	6.1
Advanced economies	2.5	5.0
Emerging and developing economies	3.8	6.3

Performance of major economies

United States: Reported GDP growth of 2.1% compared to 5.9% in 2021.

China: GDP growth was 3% in 2022 compared to 8.1% in 2021.

United Kingdom: GDP grew by 4.1% in 2022 compared to 7.6% in 2021.

Japan: GDP grew 1.7% in 2022 compared to 1.6% in 2021.

Germany: GDP grew 1.8% compared to 2.6% in 2021.

Outlook

The global economy is expected to grow 2.8% in 2023, influenced by the ongoing Russia-Ukraine conflict. Concurrently, global inflation is projected to fall marginally to 7%. Despite these challenges, there are positive elements within the global economic landscape. The largest economies like China, the US, the European Union, India, Japan, the UK, and South Korea are not in a recession. Approximately 70% of the global economy demonstrates resilience, with no major financial distress observed in large emerging economies. The energy shock in Europe did not result in a recession, and significant developments, including Chinas progressive departure from its strict zero-Covid policy and the resolution of the European energy crisis, fostered optimism for an improved global trade performance. Despite high inflation, the US economy demonstrated robust consumer demand in 2022. Driven by these positive factors, global inflation is likely to be still relatively high at 4.9% in 2024. Interestingly, even as the global economy is projected to grow less than 3% for the next five years, India and China are projected to account for half the global growth.

(Source: IMF)

INDIAN ECONOMIC OVERVIEW

Overview: Even as the global conflict remained geographically distant from India, ripples comprised increased oil import bills, inflation, cautious government and a sluggish equity market. Indias economic growth is estimated at 6.8% in 2022-23. India emerged as the second fastest-growing G20 economy in 2022-23. India overtook UK to become the fifth-largest global economy. India surpassed China to become the worlds most populous nation (Source: IMF, World Bank)

Growth of the Indian economy

	FY 20	FY 21	FY 22	FY23E
Real GDP growth (%)	3.7	-6.6	8.7	6.8
Growth of the Indian economy quarter by quarter, 2022-23
	Q1FY23	Q2FY23	Q3FY23	Q4FY23
Real GDP growth (%)	13.1	6.3	4.4	4.9

(Source: Budget FY24; Economy Projections, RBI projections)

According to the India Meteorological Department, the year 2022 delivered 8% higher rainfall over the long-period average. Due to unseasonal rains, Indias wheat harvest was expected to fall to around 102 million metric tons (MMT) in 2022-23 from 107 MMT in the preceding year. Rice production at 132 million metric tonnes (MMT) was almost at par with the previous year. Pulses acreage grew to 31 million hectares from 28 million hectares. Due to a renewed focus, oilseeds area increased 7.31% from 102.36 lakh hectares in 2021-22 to 109.84 lakh hectares in 2022-23.

Indias auto industry grew 21% in 2023; passenger vehicle (UVs, cars and vans) retail sales touched a record 3.9 million units in 2023, crossing 3.2 million units in 2019. The commercial vehicles segment grew 33%. Two-wheeler sales fell to a seven-year low; the three- wheeler category grew 84%.

Till the end of Q3FY23, total gross non- performing assets (NPAs) of the banking system fell to 4.5% from 6.5% a year ago. Gross NPA for 2023 was expected to be 4.2% and a further drop is predicted to 3.8% in 2023-24.

As Indias domestic demand remained steady amidst a global slowdown, import growth in 2023 was estimated at 16.5% to US$ 714 billion as against US$ 613 billion in 2022. Indias merchandise exports were up 6% to US$ 447 billion in 2023. Indias total exports (merchandise and services) in 2023 grew 14 percent to a record of US$ 775 billion in 2023 and is expected to touch US$ 900 billion in 2024. Till Q3FY23, Indias current account deficit, a crucial indicator of the countrys balance of payments position, decreased to US$ 18.2 billion, or 2.2% of GDP. Indias fiscal deficit was estimated in nominal terms at ~ Rs. 17.55 lakh crore and 6.4% of GDP for the year ending March 31, 2023. (Source: Ministry of Trade & Commerce)

Indias headline foreign direct investment (FDI) numbers rose from US$ 74.01 billion in 2021 to a record US$ 84.8 billion in 2021-22, a 14% Y-o-Y increase, till Q3FY23. India recorded a robust US$ 36.75 billion of FDI. In 2022-23, the government was estimated to have addressed 77% of its disinvestment target (Rs. 50,000 crore against a target of Rs. 65,000 crore).

Indias foreign exchange reserves, which had witnessed three consecutive years of growth, experienced a decline of approximately US$ 70 billion in 2022, primarily influenced by rising inflation and interest rates. Starting from US$ 606.47 billion on April 1,2022, reserves decreased to US$ 578.44 billion by March 31,2023. The Indian currency also weakened during this period, with the exchange rate weakening from Rs. 75.91 to a US dollar to Rs. 82.34 by March 31,2023, driven by a stronger dollar and increasing current account deficit. Despite these factors, India continued to attract investable capital.

The countrys retail inflation, measured by the consumer price index (CPI), eased to 5.66% in March 2023. Inflation data on the Wholesale Price Index, WPI (calculates the overall price of goods before retail) eased to 1.3% during the period. In 2022, CPI hit its highest of 7.79% in April; WPI reached its highest of 15.88% in May 2022. By the close of the year under review, inflation had begun trending down and in April 2023 declined below 5%, its lowest in months.

Indias total industrial output for FY23, as measured by the Index of Industrial Production or IIP, grew 5.1% year-on- year as against a growth of 11.4% in 2021-22.

India moved up in the Ease of Doing Business (EoDB) rankings from 100th in 2017 to 63^rd in 2022. As of March 2023, Indias unemployment rate was 7.8%.

In 2022-23, total receipts (other than borrowings) were estimated at 6.5% higher than the Budget estimates. Tax-GDP ratio was estimated to have improved by 11.1% Y-o-Y in RE 2022-23.

The total gross collection for 2023 was Rs. 18.10 lakh crore, an average of Rs. 1.51 lakh crore a month and up 22% from 2021-22, Indias monthly goods and services tax (GST) collections hit the second highest ever in March 2023 to Rs. 1.6 lakh crore. For 2022-23, the government collected Rs. 16.61 lakh crore in direct taxes, according to data from the Finance Ministry. This amount was 17.6% more than what was collected in the previous fiscal.

Per capita income almost doubled in nine years to Rs. 172,000 during the year under review, a rise of 15.8% over the previous year. Indias GDP per capita was 2,320 US$ (March 2023), close to the magic figure of US$ 2500 when consumption spikes across countries. Despite headline inflation, private consumption in India witnessed continued momentum and was estimated to have grown 7.3% in 2022-23.

Outlook: There are green shoots of economic revival, marked by an increase in rural growth during the last quarter and appreciable decline in consumer price index inflation to less than 5% in April 2023. India is expected to grow around 6-6.5% (as per various sources) in 2024, catalysed in no small measure by the governments 35% capital expenditure growth by the government. The growth could also be driven by broad-based credit expansion, better capacity utilisation and improving trade deficit. Headline and core inflation could trend down. Private sector investments could revive. What provides optimism is that even as the global structural shifts are creating a wider berth for Indias exports, the country is making its largest infrastructure investment. This unprecedented investment is expected to translate into a robust building block that, going ahead, moderates logistics costs, facilitates a quicker transfer of products and empowers the country to become increasingly competitive. This can benefit Indias exports in general, benefiting several sectors. The construction of national highways in 2022-23 was 10,993 km; the Ministry of Road Transport and Highways awarded highway contracts of 12,375 km in the last financial year (Source: IMF).

The global landscape favours India: Europe is moving towards a probable recession, the US economy is slowing, Chinas GDP growth forecast of 4.4% is less than Indias GDP estimate of 6.8% and America and Europe are experiencing its highest inflation in 40 years.

Indias production-linked incentive appears to catalyse the downstream sectors. Inflation is steady. India is at the cusp of making significant investments in renewable energy and other sectors and emerging as a suitable industrial supplement to China. India is poised to outpace Germany and Japan and emerge as the third-largest economy by the end of the decade. The outlook for private business investment remains positive despite an increase in interest rates. India is less exposed to Chinese economic weakness, with much less direct trade with China than many Asian peers.

Broad-based credit growth, improving capacity utilisation, governments thrust on capital spending and infrastructure should bolster investment activity. According to our surveys, manufacturing, services and infrastructure sector firms are optimistic about the business outlook. The downside risks are protracted geopolitical tensions, tightening global financial conditions, and slowing external demand.

UNION BUDGET 2023-24 PROVISIONS

The Budget 2022-23 sought to lay the foundation for the future of the Indian economy by raising capital investment outlay by 33% to Rs. 10 lakh crores, equivalent to 3.3% of GDP and almost three times the 2019-20 outlay, through various projects like PM Gatishakti, Inclusive Development, Productivity Enhancement & Investment, Sunrise Opportunities, Energy T ransition and Climate Action, as well as Financing of Investments. An outlay of Rs. 5.94 lakh crore was made to the Ministry of Defence (13.18% of the total Budget outlay). An announcement of nearly Rs. 20,000 crores was made for the PM Gati Shakti National Master Plan to catalyse the infrastructure sector. An outlay of Rs. 1.97 lakh crore was announced for Production Linked Incentive schemes across 13 sectors. The Indian government intends to accelerate road construction in 2023-24 by 16-21% to 12,000-12,500 km. The overall road construction project pipeline remains robust at 55,000 km across various execution stages. These realities indicate that a structural shift is underway that could strengthen Indias positioning as a long-term provider of manufactured products and its emergence as a credible global supplier of goods and services.

Industrial Structure and Developments

Your Company is a registered Share Transfer Agent from SEBI since 1995. It is successfully handling share transfer activities for various client Companies & serving more than 1,00,000 shareholders. In compliance with SEBIs circular of single point share transfer & Demat activities, the Company has taken direct electronic connectivity from both the depositories i.e. the National Securities Depository Ltd. (NSDL) & the Central Depository Services (India) Limited (CDSL).

Opportunities and Threats

Any geopolitical changes especially between Russia-Ukraine, any policy change by OPEC may change the outlook of Crude prices. Energy prices are key to the price trend of other commodities. A deep slowdown in Europe may affect the global demand and it may demolish the other countries as well.

Accordingly as of March 31, 2023, based on the facts and circumstances existing as of that date. Due to COVID-19 pandemic and Russia-Ukraine war, the situation is uncertain and it is difficult to predict when economies will fully normalize. Hence, FY 2023-24 is likely to be a challenging year.

Opportunities

• Indias Growth Rate

• Financial Inclusion

• Utilize technology to provide more efficient solutions

• Increased retail participation in capital markets

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

Threats

• Volatile environment

• Fiscal deficit and current account deficit

• Inflation and economic slowdown

• Competition Outlook

Your Company is now exploring opportunities to get more business from corporate in the field of share transfer & other capital market activities. The management is optimistic about the future outlook of the Company. The industry witnessed testing times with global economic slowdown and weakening profitability and tightening of financial conditions, still the Company has demonstrated its ability to withstand the challenges posed by the current environment.

Risk and concerns

The Company like any other Company is exposed to specific risks that are particular to its business and the environment within which it operates. The company is exposed to the market risk, which inter alia includes economic/business cycle, interest rate volatility and credit risk. While the Indian economy has shown sustained growth over the years, the Company is confident of managing these risks by maintaining a conservative financial profile, and by following prudent business and risk management practices.

Competition from existing and prospective registrar & share transfer agents may affect the profitability of the company. The Company is exposed to risks from change in policy of similar Companies; changes in Govt. Policies/SEBI policies, etc. which may affect profitability and working of the Company.

Internal Control System and their adequacy

Your Company has good and effective internal control systems, which provide efficiency of operations, financial reporting, proper recording and safeguarding of assets, compliance with applicable laws and regulations, etc.

The adequacy of the same has been reported by the statutory auditors of your Company in their report.

Financials

Your Company has succeeded in achieving satisfactory results for the financial year 2022-2023:

(Amount in lacs)

Balance Sheet	As at March 31,2023	As at March 31,2022
Share Capital	300.00	300.00
Reserve & Surplus	-135.70	-141.33
Non-current Liabilities	1488.45	918.08
Current Liabilities	627.77	1617.15
Non-current Assets	78.94	477.15
Current Assets	2201.58	2216.75
Profit and Loss Account For the year ended For the year ended March 31,2023 March 31,2022
Total Revenue	403.98	554.96
Profit/ (Loss) before tax and depreciation	-1.67	-409.15
Depreciation and amortization	4.29	4.11
Profit after tax	2.62	-413.27
Earnings Per Share	0.19	-13.77

Human Resource Development and Industrial Relations:

The Company is being equipped with all the modern amenities like Intranet, Internet & latest models of computers & printers. By intensive training from both the depositories and upgradation of systems & software, transfer & Demat work is being managed successfully.

Your Company considers the quality of its human resources to be the most important asset and constantly endeavors to attract and recruit best possible talent. Our training programs emphasize on general management perspective to business. The Company continues to empower its people and provide a stimulating professional environment to its officers to excel in their respective functional disciplines.

The industrial relations of the Company continue to remain harmonious and cordial with focus on improving productivity and quality. The number of permanent employees on the rolls of Company as on 31.03.2023 is 11.

Changes (change of 25% or more) in Significant Key Financial Ratios and Return on Net Worth As per the latest amendment as introduced by SEBI via SEBI (Listing Obligations & Disclosure Requirement) (Amendment) Regulations, 2018 on May 09, 2018 effective from April 01,2019, new sub- clause (i) has been inserted in Clause I in Part B of Schedule V of SEBI (Listing Obligations & Disclosure Requirement), Regulations, 2015 according to which the listed entity shall provide the details of significant changes (I.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with the detailed explanations thereof, including:

S. No. Particular	Numerator	Denominator	2022 2023	2021 2022	Remarks
1. Debtors Turnover Ratio (Times)	Total Sales	Avg. Accounts Receivable	1.15	0.44	The unrealizable trade receivables were written off in preceeding year. It resulted in improved ratio in current year.
2. Inventory Turnover Ratio (Times)	Cost of goods sold OR sales	Average Inventory	9.73	6.07	Increase in carrying amount of Inventories.
3. Interest Coverage Ratio (Times)	EBIT	Interest	1.03	-6.04	The Company incurred significant expenses under the head other expenses in preceeding year which resulted in losses before tax. It also resulted in negative
4. Current Ratio (Times)	Current Assets	Current Liabilities	3.51	1.37	Payment of significant amount of creditors lead to improvement in current ratio.
5. Debt Equity	Total Debt	Shareholders	11.55	6.36	Significant increase in borrowings lead to Ratio (Times) Equity increase in debt-equity ratio
6. Operating Profit Margin (% terms)	Operating Profit (EBIT)	Sales	0.32	-0.74	The Company incurred significant expenses under the head other expenses in preceeding year which resulted in losses before tax. It also resulted in negative ratio in preceeding year. However, the company earned profits in current year and ratio improved
7. Net Profit Margin (% terms)	Net Profits after taxes	Sales	0.02	-0.86	The Company incurred significant expenses under the head other expenses in preceeding year which resulted in losses before tax. It also resulted in negative ratio in preceeding year. However, the company earned profits in current year and ratio improved
8. Return on Net Worth (% terms)	Net Profits after taxes	Net Worth (Average Shareholders Funds)	0.03	-1.13	The Company incurred significant expenses under the head other expenses in preceeding year which resulted in losses before tax. It also resulted in negative ratio in preceeding year. However, the company earned profits in current year and ratio improved.

Cautionary Statement

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors

Disclosure of Accounting Treatment in Preparation Of financial statements:

The Company has followed the guidelines of accounting standards as mandated by the Central Government in preparation of its financial statements.