GCM Securities Ltd Management Discussions

ANNUAL OVERVIEW & OUTLOOK

India continued to demonstrate strong macroeconomic resilience in FY26, with real GDP growth estimated at approximately 7.6%, maintaining its position among the fastest-growing major economies globally. Growth was primarily driven by robust domestic demand, supported by improving consumption, continued formalization of the economy and stable macroeconomic conditions.

Private consumption remained a key driver, with Private Final Consumption Expenditure (PFCE) growing by 7.7% Y-o-Y (at constant prices), reflecting improving purchasing power and a supportive policy environment. These trends, along with rising financial awareness, are increasingly translating into higher household participation in formal financial markets.

Indias financial ecosystem continued to strengthen, underpinned by improving macro fundamentals, disciplined fiscal management and a stable banking sector. Fiscal deficit moderated to approximately 4.4% of GDP, while strong foreign exchange reserves provided resilience against external financial volatility.

This improving macroeconomic and financial stability is increasingly being reinforced by rapid digitization of the economy. Enhanced digital infrastructure is expanding financial access, deepening market participation and supporting inclusive growth across geographies. Smartphone penetration of ~76% in rural areas and 86% in urban areas amongst 15 years and above population coupled with significant reduction in mobile data costs of nearly 97% since 2014, led to over 4x jump in internet connections of over 1 billion by December 2025. This is materially expanding access to digital financial services.

INDUSTRY OVERVIEW

The Indian capital markets entered a phase of democratization and structural maturity in FY26, marked by healthy retail participation. Geopolitical tensions and shifts in global trade policies acted as retroactive forces, leading to a muted domestic equity market performance of -5.1% and -7.1% for the Nifty 50 and BSE Sensex respectively. Domestic Institutional Investors (DIIs) (DMF + Banks, FI and Insurance) ownership in NSE listed universe of companies increased to 16.6% as of December 2025, at par with foreign portfolio investment (FPI) holdings, underscoring the growing influence of domestic investors in Indias equity markets and the shift toward local capital as a primary stabilizing force amid negative FPI flows.

Retail participation reached historic milestones in FY26. The number of unique investors with demat accounts, based on Permanent Account Number (PAN), reached over 129 million mark in March 2026, whilst total demat accounts in India reached nearly 225 million by March 2026, following addition of approximately 32 million new accounts during the fiscal year. This surge reflects a fundamental shift in how Indian households allocate savings; the share of equity and mutual funds flows in annual household gross financial assets rose from 1.8% in FY12 to over 15.1% in FY25. This financialization is increasingly broad-based, with significant participation originating from Tier 2 and beyond cities

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 Nil revenue from operations. Other income includes 55.53 lakh towards Interest income. 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

Entering FY26, Indian credit and debt markets were characterised by transition from prolonged tightening to more accommodative stance, supported by stable macroeconomic fundamentals and receding inflation. The Reserve Bank of India (RBI) aggressively lowered the policy repo rate by a cumulative 100 basis points in FY26, bringing it to 5.25% by December 2025. This decisive easing was made possible as headline CPI inflation averaged 2.1% during the fiscal year, well within the central banks tolerance band.

The credit market witnessed sustained expansion alongside structural shifts in funding and risk calibration, with systemwide retail credit growing by 18.1% Y-o-Y to approximately C163 trillion by December 2025 (Source: CRIF High Mark). Within this, Home Loans, Gold Loans, Personal Loans and Auto Loans account for over half of the industrys retail credit book. Personal Loans segment, the largest in terms of active loans, remains a critical growth engine, driven by consumption demand and young borrowers. Importantly, fintechs are addressing the structural credit gap by deepening access and digitising credit delivery. These trends reflect a credit ecosystem that is not only growing but also becoming more granular, technology-driven and inclusive with fintech-led models materially widening participation beyond traditional banking channels.

Indias asset management ecosystem continues to benefit from rapid advancements in technology, digitization and data analytics, supported by a strong digital public infrastructure. Increasing adoption of digital payments and mobile platforms is simplifying investment journeys and expanding financial inclusion across the country. Significant growth opportunities remain in Tier 2, Tier 3 and beyond markets, where rising financial awareness and expanding network are driving participation. Younger investor cohorts, including Gen Z and millennials, are increasingly entering financial markets early, reinforcing long-term investing behavior. Despite strong momentum, financial asset penetration in India remains relatively low, indicating substantial headroom for expansion. Continued regulatory support, alongside ongoing technological innovation and investor education, is expected to further deepen market participation and sustain the industrys long-term growth trajectory.

Challenges

In FY26, the regulatory landscape for Indias capital markets continued to evolve towards a more transparent, technology-aligned and investor-centric framework, led by the Securities and Exchange Board of India (SEBI). The year saw a clear shift toward building regulatory structures that are responsive to the growing digitization of financial services, while reinforcing market integrity and investor confidence.

During the year, India proposed the Securities Markets Code (SMC), 2025, representing a significant step toward modernizing and consolidating the countrys capital markets regulatory framework. The bill has been referred to the Parliamentary Standing Committee on Finance for review, before it becomes a law.

A key focus of the code is to enhance ease of doing business and regulatory clarity, especially for market intermediaries, fintech platforms and new-age investment products. It seeks to introduce clear definitions, streamline approval processes and strengthen governance norms, while also enabling faster regulatory responses to innovation in areas such as algorithmic trading, digital distribution and new asset classes.

The SEBI, through its circular on the Framework for Intraday Position Limits Monitoring for Equity Index Derivatives, introduced a more real-time, risk sensitive approach to derivatives market oversight. The framework requires exchanges and brokers to monitor client positions continuously throughout the trading session, ensuring that exposures always remain within prescribed limits, rather than being assessed only at end-of-day. This shift significantly reduces the buildup of excessive intraday leverage and mitigates the potential for abrupt market dislocations. For investors, it provides stronger safeguards against unintended or outsized positions, while for intermediaries, it enhances accountability through tighter supervision and more robust risk controls. Overall, the framework represents an important step toward strengthening market discipline and resilience, ensuring that participation in complex instruments such as index derivatives remains aligned with prudent risk boundaries on a real-time basis. Key regulatory interventions during the year included the tightening of the Order-to-Trade Ratio (OTR) framework, along with a recalibration of margin requirements, including a reduction in calendar spread benefits as contracts approach expiry.

RISKS AND CONCERNS

GCM Securities Limited (GCM) has exposures in 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, high 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 during the last three years.

Mumbai, September 3, 2026	By order of the Board
	For GCM SECURITIES LIMITED
	Sd/-
Registered Office :	I. C. Baid
805, Raheja Center, 214, Free Press Journal	DIN: 00235263
Marg, Nariman Point, Mumbai-400021	Chairman