Balgopal Commercial Ltd Management Discussions

MACROECONOMIC REVIEW

The Indian economy is robust and remains the fastest growing large economy despite global uncertainties and strife. The second advance estimates of national accounts data, released last week by the National Statistics Office, puts the FY2025 GDP growth at 6.5% for the full year. India is likely to meet its fiscal deficit target comfortably for the year. In the fourth quarter, Jan-March 2025 of the financial year, GDP growth was pegged at 7.4%, which was higher than the consensus estimate of analysts prior to the NSO release of the second advance estimates. The gross value added (GVA) for the fourth quarter of 2024-25 was 6.8%.

For the full year, the private final consumption expenditure (PFCE) showed a growth of 7.2% - much higher than the 5.6% growth in PFCE clocked in the previous year. Agricultural growth was 4.6% for the financial year, significantly higher than the 2.7% in the previous year. The construction sector grew by 9.4% YoY, lower than the 10.4% growth seen in the previous year. India has surpassed Japan to become the fourth-largest economy in the world and is projected to surpass Germany in the near future, to become the third-largest economy globally.

The Indian economy is projected to grow 6.5% for the current financial year (2025-26) as well. While this a respectable growth rate for an economy of Indias size, it is lower than the GDP growth in the past three years. And though 6.5% is a good growth rate, India will need to strive for 8% plus growth, if it wants to become a developed country by 2047.

Monetary Policy and RBI annual report

With the consumer price index (CPI) moderating, the Reserve Bank of Indias Monetary Policy Committee is expected to cut repo rates by 25 basis points for the third consecutive time this week. Economists also expect the MPC to vote for keeping the policy stance as accommodative. Bar any sudden spike in inflation, economists also expect the RBI to cut repo rates in the subsequent policy review as well, after the current one. The RBI also released its Annual Report for 2024-25. The report shows a good growth in RBIs balance sheet by 8.21% over the previous year. In terms of assets, gold holdings grew by 52.09%. Domestic investments also rose by 14.32% though foreign investments grew much more modestly by 1.70%. While household savings have gone up, so have household liabilities.

INDUSTRY STRUCTURE AND DEVELOPMENTS

The Indian derivatives market has witnessed exponential growth in recent years, bolstered by increased retail participation, higher liquidity, regulatory support, and advancements in trading infrastructure. With the introduction of weekly options, increased product offerings by exchanges (NSE, BSE, MCX), and enhanced algorithmic access, the ecosystem continues to mature. The increased use of technology and data-driven trading models has also reshaped how participants engage with the market.

The construction and real estate sectors are evolving with a focus on sustainability, urbanization, and technology adoption. Demand for residential and commercial properties remains strong, driven by ongoing urbanization and shifts in work patterns. The industry is facing challenges such as labor shortages, rising material costs, and supply chain disruptions.

OPPORTUNITIES

Regulatory reforms would aid greater participation by all class of investors Leveraging technology to enable best practices and processes

Corporates looking a t consolidation / a cquisitions / restructuring opens out new opportunities for investors

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

RISKS AND CONCERNS

The financial market industry is mainly dependent on economic growth of country and financial market is also further affected by number of issues arising out of International policies of foreign government as well any change in international business environment. The industrial growth is very sensitive which is dependent on many factors which may be social, financial, economic or political and also natural climatic conditions in the country.

The Company has exposure to the following risks arising from financial instruments: Credit risk Liquidity risk Market risk Interest rate risk Legal & regulatory risk Economic and Political risks

OUTLOOK:

The outlook for FY 2025 26 remains cautiously optimistic. While macroeconomic uncertainties persist, they also present opportunities for experienced derivative traders. We expect continued growth in derivatives volume.

The Company has set itself the objective of achieving excellence in its business. As a part of its growth strategy, the Company believes in adopting the ‘best practices that are followed in the area of Corporate Governance. The Companys Philosophy on corporate governance oversees business strategies a nd ensures fiscal a ccountability, ethical corporate behavior a nd fairness to all stakeholders comprising regulators, employees, customers, vendors, investors and the society at large. Looking ahead, we remain cautiously optimistic about both business segments.

Derivatives Trading Outlook

We expect market volatility to persist, providing opportunities for profitable trades. Our strategy remains focused on leveraging market trends, enhancing our trading algorithms, and expanding our portfolio of tradable instruments.

Construction and Real Estate Outlook

In the construction sector, we will continue focusing on high-margin residential and commercial projects. We are particularly focused on urban renewal and sustainable construction, which are expected to grow in demand. We also aim to address current supply chain issues by strengthening relationships with key suppliers.

FINANCIAL REVIEW:

The summarized standalone audited financial performance of the Company is as follows:

Amount ‘Rs.000

		(Amount in ‘000)
Particulars	2024-25	2 0
Total Revenue	87,010.93	2,88,371.38
Total Expenses	12,742.40	1,46,907.53
Profit Before Tax & Provision	74,268.53	1,41,463.86
Less: Current Tax/ Deferred Tax	10,897.34	9,800.62
Profit After Tax available for appropriation	63,371.19	1,31,663.24
Basic Earnings Per Share	3.73	7.97
Diluted Earnings Per Share	3.55	7.97

DETAILS OF SIGNIFICANT KEY FINANCIAL RATIOS:

Ratios	24-25	24-23
Debtors Turnover		-
Inventory Turnover	0.06	4.37
Interest Coverage Ratio	-	-
Current Ratio	2.50	2.23
Debt Equity Ratio	-	-
Return on Equity	0.15	0.60
Net Profit	0.73	0.77

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

The Company has suitable and adequate system of Internal Controls commensurate with its size and nature of operations primarily to ensure that The assets are safeguarded against loss from unauthorized use or disposition; - The transactions are authorized, recorded and reported correctly and - Code of conduct, Policies and applicable statutes are duly complied with.

The Company is conscious of importance of systems control and so continuously assesses the quality of integrated software package. Continuous reporting of these systems is made to the Board and Audit Committee for their review to upgrade, revise and to focus on determination of adequacy of the Control Systems.

ENVIRONMENT AND SAFETY

The Company is conscious of the importance of environmentally clean and safe operations. The Companys policy requires the conduct of all operations in such manner so as to ensure safety of all concerned, compliance of statutory requirements for environment protection and conservation of natural resources to the extent possible.

RISK MANAGEMENT

As a diversified company, we face risks across both business segments, including market volatility, regulatory changes, and operational risks. Risk is an integral part of the business process. To enhance the risk management process, the company has mapped the risks. Risk arising in achieving business objectives are identified and prioritized. Risk mitigation plans are established and executed as and when need arises. Periodical reviews are carried out to assess the risk levels.

HUMAN RESOURCES

Human resources development, in all its aspect like training in safety and social values is under constant focus of the management. Relations between management and the employees at all levels remained healthy and cordial throughout the year. The management and employees are dedicated to achieve the corporate objective and the targets set before the Company.

CAUTIONARY STATEMENT

Readers are cautioned that this discussion and analysis contains forward looking statements that involve risks and uncertainties. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise. Actual results, performances or achievements, risks and opportunities could differ materially from those expressed or implied in these forward-looking statements. Readers are cautioned not to place undue reliance on these forward-looking statements as these are relevant at a particular point of time & adequate restrain should be applied in their use for any decision making or formation of an opinion.