GCM Commodity & Derivatives Ltd Management Discussions

ANNUAL OVERVIEW AND OUTLOOK

India enters 2026 with strong fundamentals: steady GDP growth, controlled inflation and a supportive policy environment. Public investment continues to drive infrastructure development, while private investment is gradually picking up. Consumption remains resilient, aided by tax reforms and income growth. Building on this backdrop, the India 2026: D&Bs Perspective report provides an overview of how these trends will shape the year ahead - a period expected to consolidate recent gains and set the stage for long-term growth. The focus is on stability, sectoral opportunities and structural changes that will define Indias economic trajectory.

Three key themes define Indias outlook for 2026. First, macroeconomic stability: steady growth, low inflation and a balanced monetary stance create room for private investment to grow. Second, system-level modernisation: investments in logistics, digital infrastructure and public capital spending are reducing costs and improving connectivity, opening new opportunities beyond major cities. Third, frontier transitions: blue economy, green hydrogen and technologies such as AI, are moving from planning to execution, creating new export prospects.

Over the past decade, India has built a robust digital infrastructure, anchored by platforms like UPI and Aadhaar, while simultaneously achieving a high degree of macroeconomic stability. In 2026, the focus will shift to turning these gains into higher productivity and global competitiveness. This is the essence of the India 2026: D&Bs Perspective report, moving from incremental growth to sustained transformation.

Indias economy is expected to remain resilient in 2026-27 despite rising geopolitical tensions and inflationary risks emanating from the West Asia conflict, the Reserve Bank of India (RBI) said in its Annual Report 2025-26.

The central bank projected Indias real GDP growth at 6.9 per cent for 2026-27, while warning that inflationary pressures could intensify due to elevated crude oil prices, supply disruptions and global uncertainty.

INDUSTRY OVERVIEW

The India capital market is witnessing an unprecedented surge in retail investor participation driven by widespread adoption of digital trading platforms and mobile applications. The democratization of investment access has enabled millions of first-time investors from tier-two and tier-three cities to participate in equity markets. User-friendly interfaces, zero-brokerage trading options, and simplified electronic KYC processes have significantly lowered entry barriers, transforming investment behavior across demographic segments. Rising financial literacy initiatives and social media- driven awareness around equity investing are further encouraging sustained retail participation in the market.

The India capital market is experiencing substantial growth in systematic investment plans, as investors increasingly embrace disciplined, long-term wealth creation strategies. Monthly contributions through systematic investment plans have reached record levels, reflecting growing financial literacy and changing investor preferences towards market-linked instruments. The popularity of passive investing through exchange-traded funds and index funds continues to rise as cost-conscious investors seek diversified exposure to market indices. Motilal Oswal Mutual Funds passive survey 2025 revealed that 68% of Indian investors used passive funds, while 93% of distributors plan to boost passive allocation in FY25-26.

The India capital market outlook remains positive, supported by strong economic fundamentals, favorable demographic trends, and continued regulatory reforms. The market generated a revenue of USD 3.8 Billion in 2025 and is projected to reach a revenue of USD 6.8 Billion by 2034, growing at a compound annual growth rate of 6.27% from 2026-2034. Growing financial awareness, increasing disposable incomes, and expanding digital infrastructure will continue to drive retail participation. The asset management industry is projected to witness substantial growth as mutual fund penetration deepens across smaller cities. Foreign portfolio investment flows are expected to remain supportive as India maintains its position as a preferred emerging market investment destination.

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 Rs. 4.23 lakh, along with other income of Rs. 84.00 lakh, taking the total income for the year to Rs. 88.23 lakh. While the Companys total expenses were more 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

As the new fiscal year begins, India is in a stronger position than many other nations in terms of domestic demand, GDP projections, banking stability, and long-term economic drivers. However, this does not mean that India is unaffected. Due to its significant crude oil imports, the nation is rapidly affected by both currency devaluation and increases in the price of oil globally. The largest shift at the moment is a slowdown in growth. Though at a slower pace than in previous years, the economy is still expanding.

One of the main reasons is higher oil prices. India depends heavily on oil imports. Brent crude oil moved from -$74 per barrel in March 2025 to -$110 per barrel in March 2026. This increase raises input costs for many industries. For example, sectors like logistics, aviation, chemicals, and manufacturing rely heavily on fuel and energy. When input costs rise, companies either have to absorb the cost or pass it on to customers. If they absorb it, their profit margins shrink. If they pass it on, demand may slow down.

Global demand is also weaker. Many economies in Europe and Asia are facing their own challenges. This affects Indias exports. Sectors like IT services and manufacturing may see slower growth. At the same time, interest rates globally are still high. The currency is another factor. Rupee weakened past the 95 mark against the US dollar for the first time hitting a record low despite recent steps taken by the Reserve Bank of India (RBI) to curb volatility. A strong US dollar puts pressure on the rupee. This makes imports more expensive. It adds to inflation and affects corporate profitability.

When it comes to financial markets, investors need to reset expectations. The kind of strong returns seen in recent years may not continue. This year is likely to be more balanced.

This does not mean the year will be bad. It simply means the approach needs to change.

Good companies will stand out. Weak ones may struggle. A simple way to understand this is to think of the market as a long journey. In the past, it felt like a fast run. Now it is more like a steady walk. Those who stay consistent are more likely to reach their goals.

Investors will need to focus on discipline. Frequent trading may not work as well as before. Selective investing will become important. Patience will play a big role. Those who stay invested in quality assets and avoid unnecessary risks are likely to do better.

Challenges

There are key risks that investors need to watch closely. The biggest one is oil. India imports nearly 85% of its crude oil requirement, so even a $10 increase in oil prices can significantly impact the import bill. If prices stay above $100, it can create pressure on the Indian economy.

Another important factor is the flow of foreign money. Foreign Portfolio Investors have been cautious due to global uncertainty. In some recent months, outflows have enlarged. However, India now has strong domestic support.

Domestic Institutional Investors have consistently invested in the markets during volatile periods. Alongside this, as of late 2025 and early 2026, the number of demat accounts in India has crossed 21 crores, compared to around 4 crores just five years ago. This shows how strong retail participation has become.

When we look at all these factors together, a clear picture begins to form. Global risks are high, costs are rising, and growth is moderating.

Even with all of this going on, there will still be chances. Businesses with strong reserves, minimal debt, and steady cash flows may be able to sustain profits. If companies can pass on cost increases to customers, they might be better equipped to safeguard their margins than others. Domestically driven industries may continue to expand even if global conditions remain unfavourable.

In the end, FY 2026-27 could be a year of learning. It will remind investors that markets dont always go up. It will show how important it is to stay calm and think things through before acting.

RISKS AND CONCERNS

GCM Commodity & Derivatives Limited (GCM) has exposures in the trading and investments in shares & securities. GCM are exposed to specific risks that are particular to their respective businesses and the environments within which they operate, including market risk, volatility 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 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.

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, except as detailed herein above.

Mumbai, September 5, 2026	For GCM Commodity & Derivatives Limited
By order of the Board	Sd/-
Registered Office : 806, Raheja Center, 214, Free Press Journal Marg, Nariman Point, Mumbai-400021	Amalesh Sadhu
	DIN: 00235198
	Chairman & Managing Director