GCM Capital Advisors Ltd Management Discussions

ANNUAL OVERVIEW AND OUTLOOK

ECONOMIC OUTLOOK

The Reserve Bank of India on Friday lowered its FY27 GDP growth forecast to 6.6% from 6.9%, citing rising risks from the ongoing West Asia conflict, elevated energy prices, supply disruptions and weather-related uncertainties, while keeping the benchmark repo rate unchanged at 5.25%.

The central bank now expects GDP growth of 6.6% in the first quarter, 6.3% in the second quarter, 6.5% in the third quarter and 6.8% in the fourth quarter of FY27.

Announcing the Monetary Policy Committees decision, RBI Governor Sanjay Malhotra said the Indian economy had so far remained resilient despite the conflict, supported by strong private consumption, fixed investment, manufacturing activity and services exports.

The six-member MPC voted to keep the policy repo rate unchanged and retained its neutral stance, saying it would continue to remain data-dependent and closely monitor supply-side pressures and inflation expectations.

Malhotra also flagged weather-related risks, including a subnormal southwest monsoon and El Nino conditions, as key monitorables for the outlook, even as it noted that adequate food stocks and reservoir levels provide some buffer against supply shocks.

The latest GDP projections highlight the increasingly difficult balancing act facing policymakers.

While slowing growth would typically argue for a supportive monetary policy stance, rising energy prices and supply-side pressures are increasing the risk of higher inflation.

Economists broadly expect the RBI to prioritise inflation management if crude prices remain elevated for an extended period.

HSBC expects inflation to average 5.6% in FY27 and sees at least two quarters where headline inflation could breach the RBIs upper tolerance band of 6%.

Apart from inflation and growth, economists are also concerned about the impact of higher oil prices on Indias external accounts.

ICRA expects the current account deficit to widen to a four-year high of 1.7% of GDP under its baseline scenario, a sharp contrast to the surplus recorded during the pandemic period.

The rating agency also warned that government efforts to shield consumers from rising global energy prices may eventually become difficult to sustain, potentially forcing fuel-price adjustments that could feed into inflation.

Higher global uncertainty has already pushed government bond yields higher and increased concerns around fiscal slippage, adding another layer of risk to the economic outlook.

INDUSTRY OVERVIEW

The global capital markets are entering 2026 in a notably different posture after several years of pronounced volatility. Inflation shocks, rapid interest rate hikes, and geopolitical uncertainty defined the 2022–2024 period, forcing issuers and investors into defensive, short-term decision-making. Deal activity slowed, valuations reset, and access to capital became less predictable across markets.

By contrast, the environment taking shape for 2026 reflects a cautious but meaningful return to fundamentals. Capital allocation decisions are increasingly driven by profitability, cash flow durability, governance quality, and disclosure transparency rather than growth at any cost. This shift marks a broader recalibration in how risk is priced and how opportunity is evaluated across the capital market ecosystem.

Rather than signaling a full-cycle expansion or contraction, 2026 represents a transitional year. Activity is resuming across equity, debt, and private capital channels, but with greater scrutiny and selectivity. For corporate leaders, CFOs, and deal teams, understanding trends in finance and capital markets is essential as execution windows narrow and preparation becomes a competitive differentiator.

The Indian capital market is experiencing robust expansion, driven by rising retail investor participation, digital transformation of financial services, and strong domestic economic fundamentals. The market benefits from a growing middle class with increasing disposable income, enhanced regulatory frameworks supporting investor protection, and expanding financial literacy initiatives. Government reforms promoting ease of doing business and global bond index inclusions are further catalyzing market growth and foreign investment inflows.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

Your Company has in place adequate internal financial controls with reference to the Financial Statements commensurate with the size, scale and complexity of its operations. Your Company has an Internal Audit team that is responsible for independently evaluating the adequacy and effectiveness of all internal control designs and implementation, risk management, systems and processes. Internal Audit team is manned by appropriately skilled, experienced and qualified personnel. The Internal Audit plan is also aligned with the business objectives of the Company which is reviewed and approved by the Audit Committee.

FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

During the financial year under review, the Company earned revenue from operations of 227.93 lakh, along with other income of 2.04 lakh, taking the total income for the year to 229.97 lakh. While the Companys total expenses were greater than its total income, resulting in a net loss for the year, the revenue generated from operations played a meaningful role in meeting the day-to-day operational and financial requirements of the Company. This, in turn, helped reduce the Companys dependence on additional borrowings from the Directors and from banks/financial institutions to fund its working capital and other requirements.

The management remains focused on improving operational efficiency, expanding revenue streams and exercising tighter control over costs, with the objective of strengthening the Companys overall financial performance in the coming years. These efforts are also aimed at progressively reducing the Companys reliance on external sources of finance and building a more self-sustaining operational and financial structure going forward.

OPPORTUNITIES & THREATS

Opportunities

Infrastructure & Capex Push: Continued government focus on infrastructure scaling (public capex outlay of 12.2 lakh crore) and the Semiconductor Mission 2.0 offer significant long-term growth for core sectors.

Expanding Domestic Liquidity: The systemic rise of monthly Systematic Investment Plan (SIP) inflows provides deep, stabilizing domestic liquidity, mitigating potential pullbacks from foreign portfolio volatility.

Deepening Corporate Debt Market: New regulatory frameworks, including market-making mechanisms and total return swaps on corporate bonds, are creating new avenues for long-term investments.

Emerging Sectors: Investment avenues in renewable energy, Artificial Intelligence (AI), the electric vehicle (EV) ecosystem, and biopharma are expanding as India aligns with global supply-chain realignments.

Challenges

Regulatory Overhang in Derivatives: Regulatory shifts—such as increased margin requirements, contract lot size increases, and hikes in Securities Transaction Tax (STT) on options and futures—have significantly compressed profit margins for active derivative traders.

Macroeconomic Headwinds: Escalating geopolitical tensions and global energy shocks are driving up import bills, putting pressure on the Indian Rupee and ballooning the Balance of Payments deficit.

SME Market Normalization: Following the speculative boom in SME listings, heightened regulatory scrutiny and cooling retail enthusiasm pose risks for small businesses relying on the markets for easy, quick capital.

Global VUCA Conditions: Ongoing global market volatility, driven by shifting monetary policies abroad and changing multilateral trade relationships, demands that investors engage in disciplined stock selection rather than relying on broad market rallies.

RISKS AND CONCERNS

GCM Capital Advisors Limited (GCM) has exposures in the business of Investments in Indian Stock Market. GCM are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, competition risk, credit risk, liquidity and interest rate risk, human resource risk, operational risk, information security risks, regulatory risk and macro-economic risks. The level and degree of each risk varies depending upon the nature of activity undertaken by them.

MARKET RISK

The Company has quoted and/or unquoted investments which are exposed to fluctuations in stock prices. GCM continuously monitors market exposure in equity and, in appropriate cases, also uses various derivative instruments as a hedging mechanism to limit volatility.

LIQUIDITY AND INTEREST RATE RISK

The Company is exposed to liquidity risk principally, because of lending and investment for periods which may differ from those of its funding sources. Management team actively manages asset liability positions in accordance with the overall guidelines laid down by various regulators. The Company may be impacted by volatility in interest rates in India which could cause its margins to decline and profitability to shrink. The success of the Companys business depends significantly on interest income from its operations. It is exposed to interest rate risk, both as a result of lending at fixed interest rates and for reset periods which may differ from those of its funding sources. Interest rates are highly sensitive to many factors beyond the Companys control, including the monetary policies of the RBI, deregulation of the financial sector in India, domestic and international economic and political conditions and, inflation. As a result, interest rates in India have historically experienced a relatively high degree of volatility.

The Company seeks to match its interest rate positions of assets and liabilities to minimize interest rate risk. However, there can be no assurance that significant interest rate movements will not have an adverse effect on its financial position.

HUMAN RESOURCE DEVELOPMENT

The Company recognizes that its success is deeply embedded in the success of its human capital. During 2025-26, the Company continued to strengthen its HR processes in line with its objective of creating an inspired workforce. The employee engagement initiatives included placing greater emphasis on learning and development, launching leadership development programme, introducing internal communication, providing opportunities to staff to seek inspirational roles through internal job postings, streamlining the Performance Management System, making the compensation structure more competitive and streamlining the performance-link rewards and incentives.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES / INDUSTRIAL RELATIONS FRONT, INCLUDING NUMBER OF PEOPLE EMPLOYED:

There is no material development in Human Resources, Industrial Relations front etc. during the year under review.

KEY FINANCIAL RATIOS AND RETURN ON NET WORTH

Under the SEBI (Listing Obligations and Disclosure Requirements) Regulations, 2015, the Company is required to disclose significant changes (i.e. change of 25% or more as compared with the immediately previous financial year) in financial ratios, including debtors turnover, inventory turnover, interest coverage ratio, current ratio, debt equity ratio, operating profit margin and net profit margin or sector-specific equivalent ratios, as applicable and details of any change in Return on Net Worth as compared with the immediately previous financial year along with a detailed explanation thereof.

Financial ratios shows significant changes i.e. a variation of 25% or more compared with the immediately preceding financial year, has been disclosed in Note No. 27 of Notes to Accounts.

Return on Net Worth was in line, during the year, primarily on account of its activities in Capital Market as well as Interest Income on unsecured Loan.

CORPORATE SOCIAL RESPONSIBILITY INITIATIVES

The provision of the Companies Act, 2013 relating to CSR Initiatives are not applicable to the Company.

COMPLIANCE

The Compliance function of the Company is responsible for independently ensuring that operating and business units comply with regulatory and internal guidelines. The Compliance Department of the Company continues to play a pivotal role in ensuring implementation of compliance functions in accordance with the directives issued by regulators, the Companys Board of Directors and the Companys Compliance Policy. The Audit Committee of the Board reviews the performance of the Compliance Department and the status of compliance with regulatory/internal guidelines on a periodic basis.

The Company has complied with all requirements of regulatory authorities. No penalties/strictures were imposed on the Company SEBI or any other statutory authority on any matter related to capital market during the last three years.

Annexure – I

DETAILS OF RELATED PARTY TRANSACTIONS

A. (Pursuant to clause (h) of sub-section (3) of section 134 of the Act and Rule 8(2) of the Companies (Accounts) Rules, 2014)

All related party transactions entered during the year were in ordinary course of business and on arms length basis and the same have been disclosed under Note 36 of the Notes to Financial Statements.

No material related party transactions arising from contracts/ arrangements with related parties referred to in the Section 188(1) of the Companies Act, 2013 were entered during the year by the Company. The disclosure of related party transactions as required under Section 134(3)(h) of the Companies Act, 2013 in Form AOC-2 in Annexure III have been provided elsewhere in this Report.

B. Disclosures pursuant to Regulation 34(3) & 53(f) and Para A of Schedule V of SEBI (LODR) Regulations, 2015

Sl. No. In the Account of	Disclosures of amount at the year end and the maximum amount of loans/advances/Investments outstanding during the year.	Amount
1. Holding Company	o Loans and advances in the nature of loans to subsidiaries by name and amount	Nil
	o Loans and advances in the nature of loans to associates by name and amount	Nil
	o Loans and advances in the nature of loans to Firms/Companies in which directors are interested by name and amount	Nil
2. Subsidiary	o Loans and advances in the nature of loans to subsidiaries by name and amount	Nil
	o Loans and advances in the nature of loans to associates by name and amount	Nil
	o Loans and advances in the nature of loans to Firms/Companies in which directors are interested by name and amount	Nil
3. Holding Company	o Investment by the loanee in the shares of parent Company and subsidiary Company has made a loan or advance in the nature of loan.	Nil

Mumbai, August 29, 2026 By order of the Board For GCM Capital Advisors Limited

Sd/-

Registered Office : Manish Baid

805, Raheja Center, 214, Free Press Journal Marg, DIN: 00239347 Nariman Point, Mumbai-400021 Chairman & Managing Director