somayajulu company ltd Management discussions

SOMAYAJULU AND COMPANY LIMITED ANNUAL REPORT 2005-2006 MANAGEMENT DISCUSSION AND ANALYSIS FINANCIAL PERFORMANCE Your Company has achieved satisfactory revenue and profits, despite of severe competition in the industry. Your Company turnover increased by Rs.14695.00 lakhs compared to previous year. Despite of higher turnover, the brokerage income has declined to Rs.239.18 lakhs from Rs.298.69 lakhs, in the previous year due to stiff competition in the industry. The decrease in the brokerage income is due to drastic changes in wholesale debt market (WDM), as many brokers were cut off from this segment, due to introduction of new trading platform for trading in the government securities and structural changes in the wholesale debt market (WDM). Under the changed market environment in WDM, many brokers could not participate in the new trading arrangements. Hence we lost considerable income from this segment. The company has continued to focus on efficient utilization of working capital and improvement in business in addition to rationalising of costs across the business divisions and cost centers. We hope these efforts will result in better results in the coming year. OPERATIONS The Company witnessed a significant progress in its operational performance during the year under review due to various initiatives undertaken by the Management. Your Company has acquired membership on the BSE as a trading member from 29.03.2006. Your company has applied as Depository participant in CENTRAL DEPOSITORY SERVICES (INDIA) LIMITED [CDSL]. The company is expanding their branches to enable the company to reach a larger volume of brokerage income in the coming financial year. The company is restructuring its operations regarding wholesale debts market segment to meet the changes. The company is focusing on the expansion of retail business and is in the process of opening new branches across the country.