Aryan Share & Stock Brokers Ltd Management Discussions.

Global Economic Overview

The global economy grew 2.9% in 2019 compared to 3.6% in 2018. This sharp decline was precipitated by an increase in global trade disputes that affected the cross-border movement of products and services, a slowdown in the global manufacturing sector, weak growth coming out of some of the largest global economies and the impact of Brexit. The result was that global trade grew a mere 0.9% in 2019, pulling down the overall economic growth average. The ‘Great Lockdown, as a result of the pandemic Covid-19, is projected to shrink global growth significantly starting from the calendar year 2020. (Source: World Economic Outlook, April 2020, CNN, Economic Times, trading economics, Statista, CNBC)

Indian Economic Overview

India emerged as the fifth-largest world economy in 2019 with a gross domestic product (GDP) of US$2.94 trillion. India jumped 14 places to 63 in the 2020

World Banks Ease of Doing Business ranking. There was a decline in consumer spending that affected Indias GDP growth during the year under review.

Indias growth for FY2019-20 was estimated at 4.2% compared with 6.1% in the previous year. Sensexfellby 42273.87 to25638.90. A sharp slowdown in economic growth and a surge in inflation weighed on the countrys currency rate; the Indian rupee emerged as one of the worst performers among Asian peers, marked by a depreciation of nearly 2% since January 2019. Retail inflation climbed to a six-year high of 7.35% in December 2019. During the last week of the financial year under review, the national lockdown affected freight traffic, consumer off take and a range of economic activities.

Operating results & financial performance:

The Aryan Shares & Stock Brokers Limited is a listed Company. The Company is engaged in single line of business i.e. stock broking The Companys total income for the year under review is Rs. 191.50Lacs and Profit after tax amounts to Rs. 6.96Lacs on standalone basis.

Industry trend and business analysis:

Indian business sentiment turned negative for the first time in more than a decade, reflecting pessimism on activity and profits following the coronavirus outbreak. Market had a roller coaster ride in FY2020. Both Sensex and Nifty closed at an all-time high of 42,273 and 12,430 respectively in the month of January. Then came corona virus and as the pandemic rampaged across the world, Sensex and Nifty ended the year with large negative returns. With India in midst of a complete lockdown, Sensex and Nifty closed at 29,469 and 8,598 levels respectively in March, 2020. On account of the COVID-19 impact, brokerage companies are expected to report a marginal reduction in revenue and profitability across businesses. The outlook over a longer period would be contingent on the extent of the outbreak, resultant impact on the economy, the expectations of turnaround coupled with policy measures as undertaken by the government from time to time and investor sentiment.

Opportunities and Threats: Opportunities

1. Regulatory reforms would aid greater participation by all class of investors.

2. With the government prioritising digitisation in the economy with the Digital India project, digital payments are going to rise in the near future. It will be a catalyst for the growth of brokers in India in future. 3. Once this pandemic is over with normalcy returning to business and economy, the stock market will start moving in a positive direction, and as witnessed in the past, recovery would be faster than expected.

Threats

1. Short term economic slowdown impacting investor sentiments and business activities. 2. Slowdown in global liquidity flows.

3. Slow implementation of regulatory reforms and lack of consensus on important legislations can further delay growth.

Future prospects and outlook:

The Companys present business operations are stock broking which forms part of financial services and there is no other segment apart from the main one. The management is optimistic about the future outlook of the Company. The industry witnessed testing times with global economic slowdown and weakening profitability and tightening of financial conditions, still the Company has demonstrated its ability to withstand the challenges posed by the current environment.

Risk and concern:

The Company like any other Company is exposed to specific risks that are particular to its business and the environment within which it operates. The company is exposed to the market risk, which inter alia includes economic/business cycle, interest rate volatility and credit risk. While the Indian economy has shown sustained growth over the years, the Company is confident of managing these risks by maintaining a conservative financial profile, and by following prudent business and risk management practices.

Internal control system and their adequacy:

The Company has proper and adequate system of internal controls to ensure that all its assets are safeguarded and protected against loss from unauthorized use or disposition of assets and that the transactions are properly recorded. The Company ensures adherence to all internal control policies and procedures as well as compliance with all regulatory guidelines. Besides, the Audit Committee reviews the internal controls at periodic intervals.

Human Resource Development and Industrial Relations:

The company has adequate human resources, which is in commensurate with the current volume of activity. Companys management had always contributed to the promotion of the employees by enhancing their skills and efficiency by arranging regular training to the new and existing employees.

Cautionary statement:

Statements in this ‘Managements Discussion and Analysis report describing the companys objectives, projections, estimates, expectations or predictions may be ‘forward looking statements within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include changes in the Government regulations, tax regimes, economic developments and other factors such as litigation etc.