<dhhead>MANAGEMENT DISCUSSION AND ANALYSIS</dhhead>
Indian Economic Outlook for FY 2022-23 Global Economy wades through
uncertainties
The global economy continued to manoeuvre through uncertainties in
FY23. Uncertainties pertaining to the likely escalation of Russia-Ukraine war, continuous
disruption in global supply chain leading to inflation globally due to closing down of
China were amongst the major events that provided maximum volatility to the markets.
Expectation of an imminent recession got stronger as major central banks continued to
tighten monetary conditions. However, on a positive note in mid FY23, notable improvement
in supply chains led to easing inflationary pressures and entire commodity prices
moderated, Brent crude prices peaked in FY23 and moderated ~35% by year end. Global growth
projections were lowered to 2.9% for 2023 by IMF from 3.4% in 2022.
Indian Economy remains resilient with elevated inflation
Indian economy demonstrated resilience throughout FY23 even as global
macroeconomic environment threw challenges in the form of tight monetary policy, reduced
global demand, high commodity prices especially crude. India’s prudent fiscal
planning aided in meeting the fiscal deficit target of 6.4% of GDP in FY23, moreover a
lower Fiscal Deficit target for FY24 (5.9% of GDP) and record high capex allocation (10tn)
reflected the government’s strong intent to continue on its fiscal consolidation
path, while carefully balancing the growth requirement of the economy. The uptick in
benchmark yields (10yr Gsec) was marginal (50bps) even though the repo rates was hiked by
250 bps during this period, reflecting the confidence of the bond markets in the economy.
GST collections have been consistently clocking above 1tn mark since last 21 months,
collections reached record high of 1.6tn in Mar’23. India’s trade deficit
reached as high as USD 29.3bn in Sep’22 vs USD 15.9bn avg. during FY22, which reduced
significantly by the end of FY23 (USD 17.4bn in Feb). The positive improvement in trade
balance was on account of sharp fall in imports vs exports, decline in oil prices and
resilient services exports helped cushion the Current Account Deficit. The import cover
ratio averaged 9.5 times during this period.
The global uncertainties hampered RBI’s ability to provide a clear
policy path going forward, and on the growth front RBI scaled down the GDP growth
projections for FY23 to 6.8% from 7.2% earlier. The scale down of the inflation projection
(6.5% vs 6.7% earlier) for FY23 reflected that the RBI expects inflation to remain
elevated with shallow moderation.
Sticky inflation keeps monetary conditions tight
The fall in pace of rate hikes (50bps in Sep’22 to 25bps in
Feb’23) reflected RBI’s comfort in growth and inflation dynamics in the country.
The central bank continued to remain hawkish throughout FY23 as inflation hovered above
the 6% mark, systemic liquidity reduced sharply from 6.6tn (Apr’22) to 1tn in
Mar’ 23, it even turned deficit during Mar’ 23 calling for RBI’s
intervention. The tightening liquidity condition was evident in the steep rise in
overnight call money rates (6.4% vs 3.3% in Apr’22).
The repo rate at 6.5% has already reached pre-pandemic levels. RBI like
other central banks is targeting to bring down inflation decisively within the accepted
tolerance band (4% + - 2%).
Resilience in external economy amidst global uncertainties
The external sector has continued to remain resilient amidst the global
uncertainties and expectations of the spillover effects due to an imminent slowdown in the
developed market economies. India’s exports reached an all-time high of USD 750bn in
FY23 from USD 672bn in FY22. The growth in merchandise exports on a FYTD basis
(Apr-Feb’23) moderated to 7% vs 47% earlier, while imports growth moderated to 19% vs
59% earlier, trade deficit widened to USD 251bn vs USD 173bn earlier. However, robust
services balance (USD 125bn vs USD 93bn earlier) helped cushion the Current Account
Deficit (CAD) in FY23. Software exports constitutes majority of India’s services
exports and the consistent growth in this category is not reflecting the spillover effect
of growth slowdown in DM economies (~ 90% of India’s software exports is concentrated
in US and Europe). India’s forex reserves fell USD 39bn during FY23, but remained at
comfortable levels of USD 579bn which comes to an import cover ratio of 9.5times.
> CY21 was a great year for investors from a returns perspective
> We are positive on economy facing sectors like select financials,
industrials and real estates.
> We are constructive on equities in 2022 but prepared for higher
volatility ahead.
> India could witness a strong capex cycle over the next 2-3 years
> The structural reforms by the Indian government over the last 2-3
years could potentially increase India’s GDP growth by a percentage or two over the
medium term.
Since the covid-19 pandemic struck, the Indian stock market became
unpopular for moving in the direction opposite to the ground reality, an anathema it broke
in 2023 when the stock market embraced shoots of domestic growth coupled with injection of
funds by foreign portfolio investors (FPIs). Data reveals FPIs have invested INR 37,316 cr
in Indian Equity Markets.
Opportunities and Threats
Opportunities
• Long-term economic outlook positive, will lead to opportunity
for Investment activities
• Regulatory reforms would aid greater participation by all class
of investors
• Corporates looking at consolidation / acquisitions /
restructuring opens out opportunities for good investment.
Threats
• Execution risk
• Short term economic slowdown impacting investor sentiments and
business activities
• Slowdown in global liquidity flows
• Increased intensity of competition from local and global players
• Market trends making other assets relatively attractive as
investment avenues Strengths
• Experienced top management
With over three decades of experience of the Chairman of the company in
Capital Market Operations and good business acumen of picking up the right stocks for
investment and trading the business of the company could improve during the current
financial year 2022-23.
The top management team comprises qualified and experienced
professionals, with a successful track record. The company believes that its
management’s entrepreneurial spirit, strong technical expertise, leadership skills,
insight into the market and customer needs provide it with a competitive strength, which
will help to implement its business strategies.
BUSINESS RISK MANAGEMENT
The company is functioning under the dynamic leadership and guidance of
the experienced CEO and hence the risks connected with the investments in equity market
will be balanced. Further the Investment Committee will also assist to manage the risk in
a prudent manner.
INTERNAL FINANCIAL CONTROL SYSTEMS AND THEIR ADEQUACY
The Company has adequate system of internal control to safeguard and
protect from loss, unauthorized use or disposition of its assets.
All the transactions are properly authorized, recorded and reported to
the Management. The Company is following all the applicable Accounting Standards for
properly maintaining the books of accounts and reporting financial statements.
All the investments related activities are done under the direct
supervision of the Chairman of our company. Based on the nature of the business the Audit
Committee has suggested formation of Investment Committee and the investments of the
company are done as per the decisions taken by the Investment Committee. This will augur
well for this financial year also.
Considering the size and nature of business the company has appointed
an Internal Auditor for the company from the financial year 2016-17 to ensure proper and
adequate systems and procedures commensurate with its size and nature of its business.
Internal Auditors continue to monitor the operations and administration of the company.
VIGIL MECHANISM / WHISTLE BLOWER POLICY
In order to ensure that the activities of the Company and its employees
are conducted in a fair and transparent manner by adoption of highest standards of
professionalism, honesty, integrity and ethical behavior, the company continues to pursue
a vigil mechanism policy framed during the financial year 2016-17.
REMUNERATION POLICY
The Board has, on the recommendation of the Nomination &
Remuneration committee framed a policy for selection and appointment of Directors, Senior
Management and their remuneration. The Remuneration Policy is stated in the Corporate
Governance Report.
DIRECTORS’ AND COMMITTEE MEETINGS
During the year Six (6) Board Meetings, Four (4) Audit Committee
Meetings, Four (4) Stakeholders’ Relationship and Investor Grievances Committee
Meetings, One Meeting of Corporate Social Relationship Committee, Two (2) Meetings of
Nomination and Remuneration Committee, One Meeting of Directors other than Independent
Directors for evaluation of performance of Independent Directors and One Meeting of
Independent Directors for evaluation of performance
of other Directors were held. The Details of which are given in
Corporate Governance Report. The provisions of Companies Act, 2013 and listing agreement
were adhered to while considering the time gap between two meetings.
AUDIT COMMITTEE
The company is having an audit committee comprising of the following
directors:
Shri B.K.Rai - Chairman of the Committee - Non Executive &
Independent Director Ms. Dipti Dinesh Sakpal - Member - Non Executive & Independent
Director Mrs.Suguna Raghavan - Member - Non Executive & Independent Director
STAKEHOLDERS’ RELATIONSHIP COMMITTEE
The company is having a Stakeholders/Investors Grievance and Share
Transfer Committee comprising of the following directors:
Ms. Dipti Dinesh Sakpal -Chairperson of the Committee - Non Executive
& Independent Director Shri B.K.Rai - Member - Non Executive & Independent
Director Mrs.Suguna Raghavan - Member - Non Executive & Independent Director
NOMINATION AND REMUNERATION COMMITTEE
The company is having a Nomination and Remuneration Committee
comprising of the following directors:
Ms. Dipti Dinesh Sakpal - Chairperson of the Committee - Non Executive
& Independent Director Shri B.K.Rai - Member - Non Executive & Independent
Director Mrs.Suguna Raghavan - Member - Non Executive & Independent Director
CORPORATE SOCIAL RESPONSIBILITY (CSR) COMMITTEE
The company is having a Corporate Social Responsibility Committee
comprising of the following directors:
Shri Sundar Iyer- Chairman of the Committee - Executive Director
Shri B.K.Rai - Member - Non Executive & Independent Director
Ms. Dipti Dinesh Sakpal - Member - Non Executive & Independent
Director
RELATED PARTY TRANSACTIONS
As per the requirements of the Companies Act, 2013 and SEBI (LODR)
Regulation 2015, your Company has formulated a Policy on Related Party Transactions which
is also available on Company’s website at www.tcms.bz .
The Policy intends to ensure that proper reporting; approval and
disclosure processes are in place for all transactions between the Company and Related
Parties. This Policy specifically deals with the review and approval of Material Related
Party Transactions keeping in mind the potential or actual conflicts of interest that may
arise because of entering into these transactions.
All Related Party Transactions are placed before the Audit Committee as
well as Board for review and approval. Prior omnibus approval is obtained for Related
Party Transactions on a quarterly basis for transactions which are of repetitive nature
and/ or entered in the Ordinary Course of Business and are at Arm’s Length.
There were no contract / arrangement / transactions entered in to
during the year ended March 31, 2023 which were not at arm’s length basis.
All the material related party transitions exceeding ten percent of the
annual consolidated turnover as per the last audited financial statement were entered
during the year by the company are disclosed in accordance with section 134 (3) (h) of the
Companies Act, 2013, in Form AOC2 as per Annexure "2" of this report.
CORPORATE GOVERNANCE
As per the provisions of the Listing Agreement with the Stock
Exchanges, a separate section on corporate governance practices followed by the Company,
together with a certificate from the Company’s Secretarial Auditor (which is attached
to this Annual Report as ANNEXURE IV) confirming compliance forms an integral part of this
Report.
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