INDUSTRY STRUCTURE, DEVELOPMENTS:
The Indian capital market represents one of the fastest-growing economies in the world.
Capital markets indicate a countrys health and growth. Indias primary and secondary
capital markets boost the countrys economy and corporate liquidity. The various segments
of the Indian capital markets have grown throughout time. Short-term money market loans
aids in reducing financial sector liquidity shortages. The Indian capital market has
demonstrated its resilience in the face of unanticipated shocks like as the epidemic. In
the past year, both equities and debt capital markets in India have experienced
unprecedented levels of activity. Indias stock markets have altered its financial
infrastructure and more companies have been using IPOs for financing.
Equity capital markets in India have shown resilience amidst one of the most turbulent
times, the amount raised in FY 202223 is still the third highest ever in terms of IPO
funds raised after FY 2021-22 and FY 2018-19. The market throughout the year remained
volatile as a result 2/3rd of the IPO came in just 3 months (May, November and December).
37 corporates raised over 52,000 crore through IPOs in FY 2022-23 as compared to 53
corporates that raised over 1.1 lakh crore through IPOs in FY 2021-22.
The global economy continued to man oeuvre 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.
The brokerage industry is expected to have a record year in FY 2022-23, because of
strong participation from individual investors and favourable systemic liquidity,
according to ICRA. According to a recent report by ICRA, the industry is expected to
generate total revenue of 27,000-28,000 crore in FY 2021-22, representing a 28-33% YoY
increase. Moreover, with a projected industry total turnover of 28,500-29,000 crore in
FY 2022-23, revenue growth is expected to moderate to 5-7%; and will be dependent on
capital market performance and maintaining similar yields as in prior years.
INDIAN CAPITAL MARKET:
After witnessing some of the sharpest rallies in FY21-22, following the steep decline
induced by the pandemic, Indian equity markets performed reasonably well in FY22-23. It
had to grapple with several headwinds, such as the continuous northward movement of crude
oil prices coupled with supplyside disruptions, which led to inflationary pressure that
drove up commodity and food prices. The markets saw relentless selling by foreign
investors along with the emergence of new COVID variants, the hawkish stance of the US Fed
and geopolitical conflict.
Despite these developments, the benchmark stock market indices in India - Sensex and
Nifty 50 - surged by 18.3% and 18.9%, respectively. This performance was supported by
strong corporate earnings, sharp rise in COVID-19 vaccination, opening up of business
establishments across the country and, more importantly, explosive growth in the size of
Indias retai l investor segment that is increasingly looking at equity investments as a
viable and sustainable option to the sublime returns offered by risk free assets.
GLOBAL CAPITAL MARKETS
The countrys financial services sector consists of capital markets, the insurance
sector and non-banking financial companies (NBFCs). Indias gross national savings (GDS)
as a percentage of Gross Domestic Product (GDP) stood at 30.73% in 2020. The number of
Ultra High Net Worth Individuals (UHNWI) is estimated to increase from 6,884 in 2021 to
11,198 in 2025. Indias UHNWIs are likely to expand by 63% in the next five years. India
is expected to have 6.11 lakh HNWIs in 2025.
The Government of India has taken various steps to deepen reforms in the capital
market, including simplification of the IPO process, which allows qualified foreign
investors (QFIs) to access the Indian bond market. In 2019, investment in Indian equities
by foreign portfolio investors (FPIs) touched a five-year high of Rs. 101,122 crore (US$
14.47 billion). Investment by FPIs in Indias capital market reached a net US$ 1.42
billion (Rs. 11,631 crore) in April 2023. Investment by FPIs in Indias capital market
reached a net US$ 177.73 billion (Rs. 12.52 lakh crore) between FY21 (till August 10,
2020). In FY22, US$ 14.55 billion was raised across 127 initial public offerings (IPOs).
The number of companies listed on the NSE increased from 135 in 1995 to 5,311 as of
January 2023.
Developed markets outperformed emerging markets (EMs), with the MSCI World Index rising
by 20.1%, on the back of positive returns for the third year in a row. MSCI Emerging
Markets Index ended 2021 with a loss of 4.6% as a result of significant underperformance
of Chinese equities, unfavorable regulatory actions and concerns around global policy
tightening.
Across the globe, asset classes are witnessing unparalleled growth, driven by enhanced
liquidity and prospects of a strong post-pandemic economic recovery. Retail investors are
one of the primary drivers for this growth in liquidity.
MACRO-ECONOMIC OVERVIEW
Indian economy has emerged strongly from a pandemic induced, technical recession
witnessed in FY21. Industry and services, two key pillars of the economy witnessed steady
recovery during the year under review. Growth-oriented policies of the central government,
along with the accommodative stance of the Reserve Bank of India (RBI) helped this
improvement. Reducing interest rates, all-encompassing stimulus measures and rapid
vaccination were other key enablers for economic recovery. Indias economy is expected to
grow by 8.9% in FY22 as compared to a contraction of 6.6% in FY21.
According to the survey report of RBI, economic growth could moderate to 7.5% in FY23.
However, India will still remain the fastest growing major economy in the world during
2021-24, going by the projections of the World Bank and the International Monetary Fund.
Gains from supply-side reforms, sustained export growth, and availability of budgetary
space to ramp up capital spending will all contribute to growth in FY23. The year ahead
looks promising for private sector investment, with the banking system in a strong
position to help the economy recover.
On the flip side, persistent supply-side bottlenecks, steadily rising international
crude oil prices, increasing raw material costs and rising inflation could pose challenges
for economic growth. Emergence of any new variant/s of coronavirus and the ongoing
geopolitical crisis owing to the Russia-Ukraine war must be monitored closely. In this
scenario, it is anticipated that the RBI will start hiking rates soon.
OPPORTUNITIES
• The need for superior quality and process execution.
• Increasing disposable income and investment in financial products.
• Acceptance of a new and innovative range of financial products creates an
opportunity to innovate in the financial services space.
• Rise in urban youth awareness about the benefits of investment.
• Need for leadership in sophisticated solutions to enable our clients to optimize
the efficiency of their businesses.
• Constant upgradation of the technology enables us to emerge as a leader in this
fast-paced financial services environment.
• Consolidation/acquisitions/restructuring opens out opportunities for the
corporate advisory business.
THREATS:
• Enhanced competition from both local and global players and the rise of
disruptive business models in financial services and the emergence of new technology, the
company runs the risk of obsolescence.
• A dependence on technology and third-party platforms exposes us to threats posed
on the internet such as virus attacks leading to execution failures and disclosure of
client information.
• Our business operations have a heavy reliance on technology and servers to
execute trades on the exchanges. This May lead to a threat due to execution risk.
• Our business is exposed to macroeconomic changes and operates in a highly
regulated industry. Its performance not only depends on a slowdown in global liquidity
flows but also on change in regulatory frameworks
BUSINESS PERFORMANCE:
1) REVIEW OF OPERATIONS:
The Total Income of the Company stood at Rs. 4670.88 lacs for the year ended March 31,
2023 as against Rs. 7330.58 lacs in the previous year. The Company made a net profit of Rs
148. 78 lacs for the year ended March 31, 2023 as compared to the net profit of Rs. 32.47
lacs in the previous year.
2) INTERNAL CONTROL SYSTEMS AND THETR ADEQUACY:
The company has an Internal Control System commensurate with its requirement and size
of business to ensure that the assets and interest of the company assets are safeguarded.
The adequacy and effectiveness of the internal control across various activities, as well
as compliance with laid down system and policies are comprehensively and frequently
monitored by your companys management at all the levels of the organization. The company
has established well defined policies and processes across the organization covering all
major activities including authority for approvals. In all cases where monetary decisions
are involved, various limits and authorities are in place.
The Companys internal controls are structured in a manner that ensure reasonable
assurance with regard to recording and providing reliable financial and operational
information, complying with applicable statutes, safeguarding assets from unauthorized use
or losses, executing transactions with proper authorization and ensuring compliance of
corporate policies, laws and accounting standards.
With a strong monitoring system in place, the Company has an Audit Committee, the
details of which have been provided in the Corporate Governance Report .The Audit
Committee of the Board of Directors review the existing audit procedures and internal
systems of control on an ongoing basis keeping in mind the organizations requirements,
growth prospects and ever evolving business environment. They also review the internal
audit findings and recommendations and ensure that corrective measures are implemented.
Suggestions for improvement are considered and the Audit Committee follows up on the
implementation of corrective actions
3) RISKS AND CONCERN:
Risk is an integral part of the business and we aim at delivering superior shareholder
value by achieving an appropriate balance between risks and returns. The financial
services industry is subject to continuously evolving legislative and regulatory
environment due to increasing globalization, integration of world markets, newer and more
complex products & transactions and an increasingly stringent regulatory framework.
Our senior management identifies and monitors the risks on an ongoing basis and evolves
processes/systems to monitor and control the same to contain the risks to minimum levels.
Periodic monitoring by our officials helps in identifying risks in early stage. If
required, a risk event update report is periodically placed before the Board of Directors
of the Company.
Regulatory framework, focused on maintaining controls on domestic businesses but even
inadvertently creating more favorable regulatory environment for global entities operating
in India is a matter of concern. We actively participate in dialogue in industry bodies
and with regulators to point these out and to recommend appropriate changes.
4) RISK MANGEMENT:
For Aryaman Capital Market Limited, an effective risk management policy lies at the
core of our business philosophy, which is centered on delivering higher and better returns
to all our stakeholders. With ups and downs, volatility and fluctuations in the financial
business in which the Company operates, Aryaman Capital Market Limited is exposed to
various risk5s and uncertainties in the normal course of our business. Since such
variations can cause deviations in the results from operations and affect our financial
state, the focus on risk management continues to be high.
Aryaman Capital Market Limited, risk management strategy has product neutrality, speed
of trade execution, reliability of access and delivery of service at its core. Multiple
products and diverse revenue streams enable the Company to ensure continued offering of
customized solutions to suit client needs at all times - good and bad.
State-of-the-art technology, experienced professionals, a highly qualified IT team for
in-house software develop5ment, coupled with adequate back-up systems and compliance with
regulatory norms insulate Aryaman Capital Market Limited from the vagaries of the
financial business. The Number of Employees are Five (5).
5) KEY RATIOS
| PARTICULARS |
2022-23 |
2021-22 |
Change in ratios in % |
| Current ratio |
1.19 |
1.44 |
-17% |
| Debt- Equity Ratio |
1.43 |
1.68 |
-15% |
| Debt Service Coverage Ratio |
0.84 |
0.49 |
71% |
| Inventory turnover Ratio |
2.35 |
2.98 |
-21% |
| Debtors Turnover Ratio |
460.50 |
849.79 |
-46% |
| Interest Service Coverage Ratio |
1.57 |
1.19 |
32% |
| Long term debt to working capital |
N.A |
N.A |
N.A |
| Bad debts to accounts receivable ratio |
N.A |
N.A |
N.A |
| Current liability ratio |
1.00 |
0.92 |
9% |
| Total debts to total assets |
0.57 |
0.62 |
-7% |
| Return on Equity Ratio |
0.06 |
0.02 |
251% |
| Trade Payable Turnover Ratio |
887.88 |
296.45 |
200% |
| Net Capital Turnover Ratio |
5.55 |
5.76 |
-3% |
| Net Profit Ratio |
0.03 |
0.004 |
636% |
| Return on Capital Employed |
0.07 |
0.06 |
21% |
| Return on Investment |
0.06 |
0.03 |
64% |
REASONS FOR MORE THAN 25% VARIANCE
| RATIOS WITH VARIANCE MORE THAN 25% |
REASONS FOR VARIANCE |
| Debt Service Coverage Ratio |
Due to increase in earnings available for debt service. |
| Debtor Turnover Ratio |
Due to decrease in revenue from operations of current year and increase in average
debtors. |
| Interest Service Coverage Ratio |
Due to increase in Earnings before interest and taxes. |
| Return on Equity Ratio |
As proportionate increase in net profit after tax is more than the increase in total
equity. |
| Trade Payable Turnover Ratio |
Due to decrease in trade payables. |
| Net Profit Ratio |
Due to increase in net profit after tax in current year . |
| Inventory Turnover Ratio |
Due to proportionate increase in investment is more than the increase in income. |
6) HUMAN RESOURCES:
Aryaman Capital Markets Ltd. is part of a dynamic and progressive group that actively
fosters a challenging work environment and encourages Entrepreneurship. With trust being
the critical part of our business belief, we lay a strong emphasis on integrity, teamwork,
innovation, performance and partnership. Our professional staff with diverse backgrounds
brings varied talent, knowledge and experience to the Group, helping our businesses to
remain competitive, achieve greater success and newer milestones. Our management team and
board of directors are resolved to do what, we believe, is best for our shareholders,
clients and associates.
At Aryaman Capital Market limited, we recruit for skill, experience, right attitude,
commitment and diversity. However, the one common trait that runs through the DNA of every
employee is entrepreneurship. We encourage our employees to act as owners, partners and
managers of their individual functions while providing a conducive environment for them to
be creative and productive.
7) OUTLOOK:
On the stock market front, out of 39 companies among the top 50 companies that have
declared its fourth quarter results till now, 30 companies have reported increase in
profitability quarter on quarter which is encouraging. Commodity Upstream companies in
general and Metals and Mining Sector in specific is expected to perform good during this
Financial Year due to global increase in commodity prices whereas the margins of
downstream companies like Auto Sectors margins are expected to be under pressure. Covid
second wave lockdowns and increased crude oil prices can further weigh on their demand and
profitability.On the rural front the demand remains strong and is expected to remain
strong this year. Due to this the FMCG, Tractor, and other Agri related businesses are
expected to show good growth momentum during the year.
8) SAFE HARBOUR:
This document contains statements about expected future events, financial and operating
results of the businesses, which are forward-looking. By their nature, forward-looking
statements require the businesses to make assumptions and are subject to inherent risks
and uncertainties. There is significant risk that the assumptions, predictions and other
forward-looking statements will not prove to be accurate. Readers are cautioned not to
place undue reliance on forward-looking statements as a number of factors could cause
assumptions, actual future results and events to differ materially from those expressed in
the forward-looking statements. Accordingly, this document is subject to the disclaimer
and qualified in its entirely by the assumptions, qualifications and risk factors referred
to in the managements discussion and analysis of Aryaman Capital Market Limiteds Annual
Report, FY202
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