Amrapali Fincap Ltd Management Discussions

GLOBAL ECONOMIC REVIEW

In 2023, the global economy stabilized, with the US leading the recovery and emerging markets showing resilience despite geopolitical tensions. These tensions led to supply chain disruptions and inflationary pressures, prompting coordinated policy responses from global leaders. As supply-side issues eased and monetary policies tightened, inflation was successfully moderated. Although balanced risks persisted, the threat of a hard landing diminished. Structural reforms and fiscal consolidation became crucial to enhancing productivity and addressing debt concerns. Policymakers focused on managing inflation while adjusting monetary policy and prioritizing multilateral coordination to tackle issues like debt resolution and climate change mitigation for sustainable economic development. The global economy reported an estimated growth of 3.2% in 2023, exceeding initial projections. Advanced economies, driven largely by stronger-than-expected growth in the US, reported an estimated growth of 1.6%

OUTLOOK

The global economic outlook remains cautiously optimistic, with growth projected to continue at 3.1% in 2024. Headline inflation is expected to decrease from an annual average of 6.8% in 2023 to 5.9% in 2024, and further to 4.5% in 2025, indicating a favourable trajectory. While risks persist, proactive policy measures and international cooperation will help navigate uncertainties and drive sustainable economic growth in the coming years.

INDIAN ECONOMIC REVIEW

In FY24, the Indian economy demonstrated strong growth, estimated at 7.8%, an improvement from 7.2% in 2022-23. This robust performance was primarily driven by the mining and quarrying sectors, manufacturing, and select segments of the services sector. India maintained its position as the worlds fifth-largest economy. The Indian rupee showed relative stability, opening at INR 82.66 against the US dollar at the start of 2023 and ending at INR 83.35 on December 27, a modest depreciation of 0.8%. Consumer Price Index (CPI) inflation averaged 5.4%, with rural inflation surpassing urban levels. Food inflation spiked due to lower production and erratic weather patterns, while core inflation averaged 4.5%, a sharp drop from 6.2% in FY23. The moderation in global commodity prices contributed to this decline in core inflation. Indias foreign exchange reserves reached a historic USD 645.6 Bn. The credit quality of Indian companies remained strong, bolstered by deleveraged balance sheets, sustained domestic demand, and government-led capital expenditure. Rating upgrades outpaced downgrades in the second half of FY24. The Unified Payments Interface (UPI) continued its remarkable growth, with transaction volumes up by 56% and value by 43% year-on-year.

FY24s economic growth was the highest since FY17, excluding the 9.7% post-COVID rebound in FY22. However, the 2023 monsoon was the weakest in five years, with August marking the driest month in a century. The June-September rainfall was only 94% of the long- term average. Despite these challenges, wheat production was projected to reach a record 114 Mn tonnes in the 2023-24 crop year. Conversely, rice production was expected to decline to 106 Mn metric tons (MMT) from 132 MMT in the previous year. Kharif pulses production was estimated at 71.18 lakh metric tonnes, lower than the prior year due to adverse weather.

According to the National Statistical Office (NSO), manufacturing sector output was expected to grow by 6.5% in 2023-24, up from 1.3% in the previous year. The mining sector was projected to grow by 8.1%, compared to 4.1% in 2022-23. Financial services, real estate, and professional services were estimated to grow by 8.9%, up from 7.1% in FY23. Real GDP was estimated at INR 171.79 lakh Cr for 2023-24, a 7.3% increase compared to 7.2% in 2022- 23. Nominal GDP was projected at INR 296.58 lakh Cr, up from INR 272.41 lakh Cr in the previous year. The gross non-performing asset (NPA) ratio for scheduled commercial banks fell to 3.2% as of September 2023, down from 3.9% in March 2023. Indias exports of goods and services were expected to reach USD 900 Bn in 2023-24, up from USD 770 Bn the previous year, despite global economic headwinds. Merchandise exports were projected between USD 495 Bn and USD 500 Bn, while services exports were expected to hit USD 400 Bn. Net direct tax collection increased by 19% to INR 14.71 lakh Cr by January 2024, with gross collections up by 24.58% year-on-year. Gross GST collections for FY24 were INR 20.1 lakh Cr, an 11.7% increase, with an average monthly collection of INR 1,68,000 Cr, surpassing the previous years average of INR 1,50,000 Cr.

India reached a crucial phase in its development, characterized by rapid urbanization, industrialization, rising household incomes, and increasing energy consumption. The country emerged as the fifth-largest economy, with a GDP of YSD 3.6 Tn and a nominal per capita income of INR 123,945 in 2023-24. The Nifty 50 index grew by 30% in FY 2023-24, with Indias stock market becoming the fourth-largest globally, boasting a market capitalization of USD 4 Tn. Foreign investment in Indian government bonds surged in the last quarter of 2023. India ranked 63rd among 190 economies in ease of doing business, according to the World Banks latest ratings. Unemployment declined to 3.2% in 2023, down from 6.1% in 2018.

INDUSTRY STRUCTURE AND DEVELOPMENT

During FY24, the S&P BSE Sensex index reached multiple new highs, with the market capitalization of companies listed on the BSE surpassing USD 4 Tn. The BSE Sensex recorded its second largest five-year gain of 24.85%, following the 68.01% surge in FY21 during the post-pandemic recovery. Since 2016, the Sensex has maintained a consistent upward trend, with a remarkable 187% increase from its low during the COVID-19 pandemic to the close of FY24.

The fiscal year concluded on a strong note for benchmark equity indices, Sensex and Nifty, spurred by significant investments in sectors such as power, automotive, and banking, along with favourable global market conditions. Throughout FY24, the BSE benchmark index climbed by 14,659.83 points, or 24.85%, while the Nifty rose by 4,967.15 points, or 28.61%.

Midcap and small-cap stocks also experienced substantial gains, with the NSE Midcap 100 and NSE Small Cap 250 indices surging by approximately 60.06% and 63.07%, respectively. Corporate earnings improved, aided by declining commodity prices that enhanced profitability and margins across various sectors. This positive momentum is expected to continue, driven by strong domestic demand, favourable macroeconomic factors, and a revival in private capital investments, which are likely to propel the Indian equity markets further. (Source: Mint, Business Standard)

The Rise of Retail Investors

The year 2024 stands out as a transformative period for the Indian capital markets, marked by an unprecedented surge in retail investor participation. By March 2024, the total number of Demat accounts in India had surpassed 151 Mn, driven by a record-breaking addition of 36.9 Mn new accounts during the year—making it the best annual performance to date. The National Stock Exchange (NSE) also reported a remarkable 26.0% year-on-year growth in its unique investor base, reaching an impressive 92 Mn as of March 2024.

This surge in numbers signifies more than just impressive statistics; it reflects a significant shift in investment behaviour and wealth creation across India, with retail investors increasingly taking charge of their financial futures. A deeper look at the geographical distribution of NSE-registered investors reveals a growing participation from states beyond the traditional top five, which accounted for 51.7% of the investor base in FY24, up from 47.2% in FY19.

Notably, states such as Rajasthan, Madhya Pradesh, Bihar, and Assam contributed 16.8% of NSEs investor base in FY24, with remarkable growth rates ranging from 4.5x to 11.1x over the FY19- 24 period, collectively adding 12 million investors. This broad-based participation from across the country is largely attributed to the rise of fintech platforms, which have democratized access to investment opportunities and empowered individuals nationwide to engage in wealth creation

OPPORTUNITIES AND THREATS

The following factors present specific opportunities across our businesses:

• Expected GDP growth coupled with reforms push by the government relating to project approvals, land acquisition, mining, and infrastructure will lead to huge investments by both the public and private sector companies. There will be large capital requirement to fund these investments which will present opportunities for investment banking and advisory business;

• Fall in global commodity prices will reinvigorate private consumption demand and lead to capacity expansion by the industry;

• Corporates are looking at expanding in domestic as well as overseas markets through mergers & acquisitions which offer opportunities for the corporate advisory business.

• Growing mid-size segment of corporates where the need for customized solutions is particularly high will present opportunities for our advisory businesses;

• With increase in the income levels, change in attitude from wealth protection to wealth creation and risk-taking abilities of the youth, there is also a huge market opportunity for wealth management service providers.

• Improved sentiments in the secondary markets will also enhance the participation of investors across segments thereby helping the prospects of equity brokerage business. We expect economic activity to pick up from grass root levels presenting opportunities in both lending and asset reconstruction business. Despite the above opportunities, our performance could be affected by following perceived threats to our businesses:

• Impact of abnormal monsoon, rising fiscal deficit, sustained high interest rates and high inflation;

• Geopolitical tensions across the globe;

• Regulatory changes impacting the landscape of business;

RISK AND CONCERN

The very nature of the Companys business makes it susceptible to various kinds of risks. The Company encounters market risk, credit risk and operational risks in its daily business operations. The Company has framed a comprehensive Risk Management Manual which inter-alia lays down detailed process and policies in the various facets of risk management function. The risk management review framework provides complete oversight to various risk management practices and process. The framework and assessment remains dynamic and aligns with the continuing requirements and demands of the market. The Company has also implemented surveillance mechanism to deal with various trades related risks and adopted a surveillance policy in line with the regulatory requirements.

INTERNAL FINANCIAL CONTROL SYSTEMS

Internal Control system and adequacy Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Thus, internal control is an integral component of risk management. The Internal control checks and internal audit programmers adopted by our Company plays an important role in the risk management feedback loop, in which the information generated in the internal control process is reported back to the Board and Management. The internal control systems are modified continuously to meet the dynamic change. Further the Audit Committee of the Board of Directors reviews the internal audit reports and the adequacy and effectiveness of internal controls.

FINANCIAL HIGHLIGHTS

(AMOUNT IN LAKHS)

Particulars	F.Y. 2023-24	F.Y. 2022-23
Revenue from operation	128.60	11517.06
Other Income	101.96	80.41
Total Revenue	230.56	11597.47
Less: Total Expenses before Depreciation, Finance Cost and Tax	210.70	11530.75
Profit before Depreciation, Finance Cost and Tax	19.86	66.72
Less: Depreciation	8.89	1.88
Finance Cost	0.08	0.76
Profit Before Tax	10.89	64.09
Less: Current Tax	1.70	15.50
Deferred tax Liability (Asset)	0.33	(5.16)
MAT Credit	1.16	(5.53)
Profit after Tax	7.70	59.28

HUMAN RESOURCE POLICY

Human resource plays a vital in role in developing, reinforcing, and enhancing the culture of an organization. The Companys human resource department is aligned with its business strategy to drive digital solutions to build a strong culture of transparency and service orientation within the organization. The Company emphasizes on people-friendly policies and practices first and focuses on adopting the best HR policy practices.

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 DETAILED EXPLANATIONS THEREFOR

Sr. No. Particulars	FY 2023 - 24	FY 2022 - 23	Remarks
1. Debtors Turnover Ratio	NA	NA	-
2. Inventory Turnover Ratio	NA	NA	-
3. Interest Coverage Ratio	NA	NA	-
4. Current Ratio	338.332	82.598	Due Change of grouping from Non-Current to Current assets during the year
5. Debt Equity Ratio	-	-	-
6. Operating Profit Margin (%)	-	-	-
7. Net Profit Margin (%)	0.060	0.005	Due to change of jump in revenue but not growth in last years profit
8. Return on Net Worth	0.001	0.004	Due to no Payment of interest in current year

CAUTIONARY NOTE

Statements in this Report, describing the Companys objectives, projections, estimates and expectations may constitute forward looking statements within the meaning of applicable laws and regulations. Forward looking statements are based on certain assumptions and expectations of future events. These statements are subject to certain risks and uncertainties. The Company cannot guarantee that these assumptions and expectations are accurate or will be realized. The actual results may be different from those expressed or implied since the Companys operations are affected by many external and internal factors, which are beyond the control of the management. Hence the Company assumes no responsibility in respect of forward looking statements that may be amended or modified in future on the basis of subsequent developments, information or events.