Aryaman Capital Markets Ltd Management Discussions.

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.

The Average Daily Turnover in Capital Market segment in FY 2021-22 grew by 8% YoY to 667 billion in FY 2021-22 from 618 billion in FY 2020-21. SME (small and medium-sized enterprises) Emerge (+225% YoY), InvITs ((infrastructure investment tmst)+115% YoY), and SGBs (Sovereign Gold Bonds) (+35% YoY) led the increase in average daily turnover in FY 2021-22. The SME Emerge segment grew from 38 million in FY 2020-21 to 122 million in FY 2021-22. The InvITs grew from 107 million to 229 million in FY 2021-22. The SGBs grew from 36 million to 48 million in FY 2021-22. While Dlls have been net buyers of CM in FY 2021-22, they have been net sellers of equity derivatives. Continued market capitalisation expansion will drive primary and secondary markets, bond markets, fund management, and currency and commodity markets.

Indian equities started the calendar year 2022 on a strong note, as global markets hit new highs, boosting domestic investors confidence. Despite headwinds from high inflation, manufacturing activity in India improved in April 2022, on the back of quicker increases in production, factory orders and international sales. The month of April marked 10 straight months of expansionary readings above 50, even as there is a gradual loss since the beginning of CY2022. Robust corporate earnings, favourable liquidity in both international and local markets, increasing internet penetration, and retail engagement have all contributed to a rise in equity market activity. During FY 2021-22, the average daily turnover in the cash market increased by 9.6% YoY to 725 billion, compared to 663 billion in FY 2020-21.

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, following the steep decline induced by the pandemic, Indian equity markets performed reasonably well in FY22. It had to grapple with several headwinds, such as the continuous northward movement of crude oil prices coupled with supplyside dismptions, 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 retail 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 year 2021 started on an optimistic note for the global capital markets, with the successful rollout of vaccines and release of pent-up demand acting as tailwinds. Further, central banks of all major economies remained accommodative, supporting strong performance at the capital markets. Although unpredictability returned towards the end of November due to the emergence of the new Omicron variant, it was short-lived. Despite persistent inflationary pressures and prospects of tightening monetary policy weighing on investor sentiment, corporate earnings remained robust. Global equities exited 2021 with positive returns.

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, unfavourable 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% inFY22 as compared to a contraction of 6.6% inFY21.

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 coronavims 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/restmcturing 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 vims 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 7330.58 lacs for the year ended March 31, 2022 as against Rs 13509.69 lacs in the previous year. The Company made a net profit of 32.47 lacs for the year ended March 31, 2022 as compared to the net profit ofRs 25.41 lacs in the previous year.

2) INTERNAL CONTROL SYSTEMS AND THEIR 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 6 (Six).

KEY RATIOS

PARTICULARS 2021-22 2020-21 Change in ratios in %
Current ratio 76.84 67.10 -14.52
Debt- Equity Ratio 1.71 1.59 -7.75%
Debt Service Coverage Ratio 0.49 0.42 -16.13%
Inventory turnover Ratio 3.00 4.18 28.15
Debtors Turnover Ratio 849.79 1058.01 19.68%
Interest Service Coverage Ratio 1.19 1.13 -5.98%
Long term debt to working capital 0.74 0.69 -6.39%
Bad debts to accounts receivable ratio - - 0.00%
Current liability ratio 0.02 0.02 17.282%
Total debts to total assets 0.62 0.60 -2.30%
Return on Equity Ratio 0.02 0.01 -25.18%
Trade Payable Turnover Ratio 296.45 663.21 55.30%
Net Capital Turnover Ratio 1.75 3.32 47.46%
Net Profit Ratio 0.00 0.00 -136.44%
Return on Capital Employed 0.06 0.07 14.78%
Return on Investment 0.03 0.03 -11.86%

REASONS FOR MORE THAN 25% VARIANCE

RATIOS WITH VARIANCE MORE THAN 25% REASONS FOR VARIANCE
Inventory Turnover Ratio Decrease due to decrease in revenue from operations
Return on Equity Ratio Increase due to increase in net profit
Trade Payable Turnover Ratio Decrease due to decrease in revenue from operations
Net Capital Turnover Ratio Decrease due to decrease in revenue from operations
Net Profit Ratio Decrease due to decrease in revenue from operations
Inventory Turnover Ratio Decrease due to decrease in revenue from operations

5) 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 tmst 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.

6) 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 cmde oil prices can further weigh on their demand and profitability. Sugar, Fertilizer and Chemicals are the sectors which have performed really well in FY 2021-22 and expected to perform well for few more quarters.

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.

7) 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, FY2022.