geojit financial services ltd share price Management discussions

Economy Overview Global Economy Overview

In 2021, the world economy recovered significantly from the disruptions caused by COVID-19 pandemic in 2020. While the global economy had not fully recovered from the pandemic, the Russia-Ukraine crisis had emerged. Before the war, supply-demand mismatches and government support during the pandemic caused inflation in many nations, forcing monetary policy tightening. Recent lockdowns in China could result in the formation of new bottlenecks in supply networks around the world. IMF predicts global economic growth of 3.6% in each year 2022 as well as in 2023, down from 6.1% in 2021. As geopolitical tensions persist, commodity prices remain elevated, and the withdrawal of monetary accommodation gathers speed, the global growth outlook remains uncertain. Emerging economies are susceptible to capital outflows and rising commodity prices, both of which contribute to inflationary pressures.

Indian Economy Overview

After the second wave of the pandemic, Indias economic recovery was well underway, and the resurgence of both industry and services were advancing steadily. Repeated COVID-19 variant outbreaks, disruptions in the supply chain, and, more recently, inflation have made policymaking increasingly difficult. To counteract these difficulties, a substantial increase in infrastructure spending was made to restore medium-term demand, and significant supply-side reforms were implemented to position the economy for long-term growth. According to the provisional estimates by the NSO on May 31, 2022, the GDP growth in 2021-22 was 8.7%.

The vaccine coverage, supply-side reforms, regulatory relaxation, export growth, and budgetary headroom to boost capital spending will all contribute to growth in FY 2022-23. According to an RBI study, the growth rate is projected to moderate to 7.2% in FY 2022-23. Indias economic expansion has been delayed by international challenges, while it has stayed resilient towards such obstacles. The Reserve Bank of India estimated headline Consumer Price Index (CPI) inflation stood at 5.4% in FY 2021-22 and 6.7% in FY 2022-23 (new base 2012=100). The inflation was mostly due to a significant increase in food and energy prices. The RBI increased the policy repo rate by 50 basis points to 4.90% in order to combat inflation. The rise in international commodity prices also increases trade and current account deficits. With digitalisation accelerating, Indias unicorn ecosystem is developing, reflecting a fast changing economy. For sustainable growth, government capital spending must be increased to promote private investment. Improving infrastructure, ensuring low and stable inflation, and sustaining macroeconomic stability are crucial for boosting economic growth in India.

Industry Overview Indian BFSI Sector

The banking business is crucial for mobilising funds and encouraging economic growth. Policy support, business fundamentals, product and service innovation, and under-penetrated sectors drive industry growth. Strong economic growth, higher disposable incomes, expanding consumption, and more credit availability have enhanced credit off-take in the past decade. Infrastructure spending, project delivery, and reforms have encouraged banking sector development. The increase in credit extended by scheduled commercial banks (SCBs) to the commercial sector surpassed double digits for the first time since August 2019 and increased to 11.1% on April 22, 2022, compared to 5.7% a year earlier. In March 2022, credit growth to industry grew to 7.1%, compared to a decrease of 0.4% in March 2021. In March 2022, the amount of credit given to medium-sized firms rose by 71.4% compared to the previous years figure of 34.5%. For FY 2021-22, total Bank credit stood at 11.98 lakh crore as compared to 5.87 lakh crore recorded in FY 2020-21. As in recent quarters, the retail and SME sectors are predicted to fuel the expansion of innovations. However, corporate loans, which had previously functioned as a drag on the total increase of industry credit, have begun to trend in a positive direction.

In FY 2021-22, Demand deposit with the banks stood at 3.02 lakh crore as compared to 2.86 lakh crore recorded in the previous year. In FY 2021-22, time deposits with the banks stood at 13.1 lakh crore as compared to 12.14 lakh crore recorded in the previous year.

With the return of economic activity, retail and SME-focussed lenders (banks, NBFCs) as well as the market for MFIs could experience stronger collections. The RBI reports that loan demand increased by 51.7% in Q4FY 2021-22 and is projected to increase by 46.6% in Q1FY 2022-23 while, loan demand for the assessment period was 46.6% and 44.8% in the third and fourth quarters of FY 2021-22, respectively. Knight Franks Wealth Report 2022 says Indias vast and growing consumer base aids in wealth building. In 2021, the numbers of UHNWIs (Ultra High-Net-Worth Individuals) in India with more than US$ 1 million were 7.97 lakh, while the numbers with more than US$ 30 million were 0.14 lakh. The UHNWIs with wealth more than US$ 1 million and with wealth more than US$ 30 million are expected to rise to 14 lakh and 0.19 lakh respectively by 2026.

The total number of digital payment transactions grew from 3,134 crore in FY 2018-19 to 5,554 crore in

FY 2020-21. FY 2021-22 has seen 7,422 crore digital transactions as of February 28, 2022. The digital payment market is growing due to the rise in e-commerce, huge active internet users, and increasing smartphone use. RBI estimates that the Indian digital payment market will exceed 21,700 crore transactions by 2026 due to increased popularity of traditional digital modes and novel payment solutions such as Buy-Now-Pay-Later programmes and offline payments. Indian banks have managed the global crisis successfully. Payments and small financing banks are new to Indias banking market. RBIs new rules may also promote the reform of the domestic banking industry.

Money and Capital Market

The Indian capital market represents one of the fastest-growing economies in the world. Capital markets indicate a countrys health and growth. Indias primary and secondary capital markets boost the countrys economy and corporate liquidity. The various segments of the Indian capital markets have grown throughout time. Short-term money market loans aids in reducing financial sector liquidity shortages. The Indian capital market has demonstrated its resilience in the face of unanticipated shocks like as the epidemic. In the past year, both equities and debt capital markets in India have experienced unprecedented levels of activity. Indias stock markets have altered its financial infrastructure and more companies have been using IPOs for financing.

The Average Daily Turnover in Capital Market segment in FY 2021-22 grew by 8% YoY to 667 billion in FY 2021-22 from 618 billion in FY 2020-21. SME (small and medium-sized enterprises) Emerge (+225% YoY), InvITs ((infrastructure investment trust)+115% YoY), and SGBs (Sovereign Gold Bonds) (+35% YoY) led the increase in average daily turnover in FY 2021-22. The SME Emerge segment grew from 38 million in FY 2020-21 to 122 million in FY 2021-22. The InvITs grew from 107 million to 229 million in FY 2021-22. The SGBs grew from 36 million to 48 million in FY 2021-22. While DIIs have been net buyers of CM in FY 2021-22, they have been net sellers of equity derivatives. Continued market capitalisation expansion will drive primary and secondary markets, bond markets, fund management, and currency and commodity markets.

Equity Markets

In 2021, the Indian equity market outperformed both Asian and developed markets. Flushed liquidity, supportive monetary policy, a faster-than-expected post-pandemic economic rebound, and a successful vaccination programme boosted the Indian equity market in the first nine months of FY 2021-22. However, the performance of Indian equity market was impacted in the fourth quarter of FY 2021-22 owing to faster-than-expected monetary tightening in the U.S., bond rates have surged, crude oil and other commodity prices have soared, and geopolitical tensions following Russias invasion of Ukraine.

According to the NSE Market Pulse report for April 2022, the Hang Seng Index (Hong Kong) and the Nikkei 225 Index (Japan) both fell 22.5% and 4.7% over the preceding 12 months through March 2022. Indian equities followed global markets in volatility, but exceeded developing and developed market counterparts. In FY 2021-22, the Nifty 50 Index and Nifty 500 Index rose 18.9% and 21%. Nifty Midcap 50 and Nifty Small-Cap 50 Indexes rose 20.9% and 18.4% in FY 2021-22. Global developments caused foreign investment to move to safer and less expensive asset groups. Strong local institutional investment and direct investor acquisitions have somewhat mitigated the outflow of foreign money from Indian markets.

Domestic investors are optimistic due to the economys near-complete recovery and considerable budgetary support. The RBIs unexpected repo rate hike could affect equity markets in the short run.

Commodity Markets

The Indian commodity futures landscape is developing, and India is a top producer or consumer of many commodities. Futures or options contracts are majorly used for commodities trading. There are 6 national commodity derivative exchanges. Since 2003, MCX is Indias largest commodity market. MCX categorises the commodities market into four types, such as bullion, base metals, energy products and agri commodities. The Indian commodity derivatives market recovered fast from the first shock of the COVID-19 pandemic lockdown. A diligent regulatory system and durable exchange trading mechanisms supported the recovery. Value of futures traded on the Indian commodities market decreased to 72 trillion in FY 2021-22 from 84 trillion in FY 2020-21. The ADT in MCX commodity futures fell 17% YoY from 31,595 crore in FY 2020-21 to 26,178 crore in FY 2021-22. The major commodity metals contracts included aluminium, copper, lead, nickel and zinc totalling 81,500 tonnes in FY 2021-22 from 59,848 tonnes in FY 2020-21.

Derivatives

When COVID unexpectedly shut down the global economy, global futures and options markets experienced record trade volume and unprecedented volatility. This time of stress uncovered numerous long-standing bottlenecks in the trading and clearing infrastructure that result in significant delays in the processing of trades. Customised procedures and the lack of interoperability between systems have hampered efforts to improve the trading and clearing processs workflow. In FY 2021-22, the ADT (Average Daily Turnover) for equities derivatives increased by 20.2% year-over-year to reach 1,466 billion, as compared to 1,219 billion in FY 2020-21. In FY 2021-22, the average daily turnover of single stock derivatives climbed by 18.7% YoY to 890 billion, while the average daily turnover of index derivatives increased by an even greater 22.7% YoY to 575 billion. The number of futures and options contracts in equity derivative increased from 8.5 trillion in FY 2020-21 to 18.66 trillion in FY 2021-22, with a turnover of 1,69,52,331 lakh crore, compared to 6,43,618 lakh crore in FY 2020-21.

Insurance

External factors such as the pandemic and financial services industry innovations like digitisation, economic formalisation, payment disruption etc. have contributed equally to the insurance industrys evolution in recent years. The industry has transformed due to the rise of insure-techs and digital transformation. IRDAIs efforts to boost awareness and uptake are largely responsible for this rise, as well as the industrys low level of penetration. Non-life insurance businesses collected 2,206 billion in premiums for FY 2021-22, up 11% over the previous years total of 1,980 billion. First-year life insurance premiums rose from 2,788 billion to 3,143 billion in FY 2021-22, registering a growth rate of 12.7%. Structurally, the development would be fuelled by a rise in FDI, insurance firm values, capital markets activity, and health and life insurance awareness. Rising digital consumer preparedness, remote underwriting, contactless processing, and video onboarding will drive the insurance segment going forward.

Mutual Funds

Equities mutual funds especially SIPs have become an attractive investment destination due to lower returns from traditional investments. Strong stock market performance and net inflows into equity schemes boosted mutual fund sector assets. Indias mutual fund AUM rose by 20% from 31.43 lakh crore in FY 2020-21 to 37.57 lakh crore in FY 2021-22, a record high. Net mutual fund equity collection grew to 3.5 lakh crore in FY 2021-22 from 0.13 lakh crore in FY 2020-21. The average monthly SIP inflows for FY 2021-22 were 0.10 lakh crore, up from 0.08 lakh crore in FY 2020-21.

According to AMFI, the proportional share of equity-oriented schemes increased from 42.6% in March 2021 to 48.9% of industry assets in March 2022. In March 2021, the proportion of debt-oriented schemes decreased to 23.1% of industrial assets, from 31.1% in March 2021. Exchange Traded Funds (ETFs) market share increased significantly from 9.4% in March 2021 to 11.6% in March 2022. In March 2022, the remaining 16.4% of the industrys assets were contributed by liquid/ money market schemes.

In FY 2021-22, 19.3 million new investors registered as compared to 9 million registered in FY 2020-21. The mutual fund industry accounts increased from 9.79 crore in March 2021 to 12.95 crore in March 2022, incorporating 3.2 crore new accounts in FY 2021-22. Approximately, 91% of the mutual fund accounts were held by individual investors. i.e around 11.79 crore while the institutional investors and HNI accounted for 0.9 crore and 1.01 crore accounts respectively.

Financial Planning and Advisory

Financial planning, as everyone knows, is a process-oriented professional method to managing personal money. It involves every facet of a persons financial decision-making, from savings to investments, risk management to liabilities and tax planning. Its a fee-based strategy where the client hires a financial planner for a year to design a plan and manage her/ his finances. The Companys business approach is differentiated by its process-oriented and comprehensive operations. It delivers product-oriented and particular financial advice, unlike traditional guidance, and the service is fee-based. Certified Financial Planner (CFP^CM) arrived at India as part of global accreditation granted by Financial Planning Standards Board, US, which is present in 26 countries.

In India, financial planning has been around for more than 20 years, but its not widely used due to low penetration and awareness. Most service is in metros and Tier II cities. The demand for financial advisers and their services has risen in recent decades. In India, a relatively new, growing financial sector, a surge in the number and complexity of financial products and the boom in fintech have increased demand for financial consulting services. This, combined with governmental action to provide unbiased and competent counsel to customers, fuelled the expansion of financial planning over the past decade.

In India, families are strong and extended, and individuals are responsible for their parents, grandparents, childrens education or marriage, etc. This requires a long-term financial plan. As people become more aware of this, they require professional help for retirement planning and contingency planning. Major areas of interest for millennials include retirement planning, tax planning, obligation management, and more. A recent survey indicated that 57% of pre-millennials and 40% of millennials invest primarily for retirement, while 63% of pre-millennials and 48% of millennials invest to cover emergencies. Financial planning service fills the gap in professional service efficiently.

Major Growth Drivers

Increased Demand for Financial Products anticipated in Rural and Semi-Rural Areas

Two-thirds of Indias population resides in rural areas, where financial services have only lately taken hold. In contrast, rural India has had a steady increase in income, resulting in a growing demand for financial services. Due to growing financial literacy, mobile penetration, awareness, and the development of Jan Dhan bank accounts, the demand for financial products has expanded in smaller cities and rural areas.

Increasing emphasis on Financial Inclusion

Deposits under Pradhan Mantri Jan Dhan Yojana (PMJDY) have climbed to 1.67 lakh crore with a total of 45.41 crore bank accounts established in India, as of May 2022. It has provided a significant number of Indians with financial inclusion, dignity, and agency. Jan Dhan Yojana has also increased transparency in the financial markets.

Investments in capital markets fuelled by rising domestic savings

Indias Gross Savings Rate was 28.2% in March 2021. Falling interest rates and low returns from traditional investments like gold and real estate shifted retail interest toward capital markets like stocks, debentures, and mutual funds. Individual investors share of NSE turnover climbed from 38.8% in 2019-20 to 44.7% in April-October 2021, according to the Economic Survey Report 2021-22. Reduced physical asset investments and rising individual engagement in financial markets indicate better consumer penetration, which bodes well for future growth.

Enhanced revenue streams resulting from widespread use of distribution services

Bancassurance, internet distribution, and NBFCs have offered market participants additional access while reducing their operational costs. Several prominent corporations have entered fee-based industries including mutual fund distribution and capital markets financing to diversify their income sources. Most brokers also use internet platforms, which helps them attract digitally savvy clients eager to spend more for technology, automation, value-added services, and product safety. In addition, Fees, dividends, and interest revenue supplement their income. Brokers rely on fund-based operations like margin funding and lending against shares to develop long-term profitability.

Huge Youth Population

With a median age of only 28, India is one of the few countries that can claim to have the youngest population. The local financial business ought to experience a rapid expansion due to the industrys strong demand and supply. Indicators of market development potential for established financial service providers in India include a big working population, expected economic growth, more urbanisation, and rising per capita earnings.

Innovation in Engineering

Technical advancements and smartphone use are driving the brokerage industrys growth. Brokers can extend their reach and market share by investing in the internet trading systems, which have cut transaction times and lowered transaction costs. Due to the increasing spread of mobile and internet, India could become a major digital market. Cross-channelling in India expands financial services reach.

Demand for standardised products will increase overall sales of insurance

The COVID-19 pandemic increased insurance penetration and shifted product mix towards term, life, and health insurance. The Union Budget 2021-22 increased the FDI threshold in the insurance sector from 49% to 74%. Insurance market investments boost market competition. This may give customers more options, leading to improved services, competitive goods and pricing, technical upgrades, etc., boosting the insurance industrys potential.

Company Overview Company Performance

Geojit Financial Services Limited (hereafter referred to as "the Company" / "Geojit") is a leading provider of investment services in India with an expanding presence in the Middle East. Established in 1987, the Companys history on the Indian Capital Market spans over three decades. The Company is a one-stop shop for all investing needs and provides its 11,98,700 customers with a comprehensive array of financial products and services. Its product and service categories consist of stock and currency derivatives, portfolio management services, margin trading, mutual fund and insurance product distribution, online financial planning, and commodity derivatives.

Through subsidiaries, joint ventures, and partnerships with local banks and financial institutions, the Company has a strong presence in the Middle East region. The Companys extensive distribution network consists of 473 offices spread over 19 states and two union territories in India and four Middle Eastern nations. The Company has a strong presence in Tier II and Tier III cities in India and maintains excellent client relationships. It has approximately 63,975 crore under custody and management.

Geojit was a pioneer in the introduction of Internet and mobile trading, internet-based depository transactions, an integrated trading system for both cash and derivative segments, and the introduction of commodity trading in rubber, cardamom, gold, and silver futures. TraderX, Selfie, Online Financial Planning Tool, and

Fund Genie, among other creative and user-friendly solutions, are among those offered by the Company.

In India, like the US discount brokerage has been bolstered by a tectonic shift in the participation pattern of investors and traders. Although the intention is lowering prices and increasing accessibility to attract new investors, this also has long-term unintended consequences. As a result of increasing smartphone adoption and internet revolution, it is a lot easier for investors to capitalise on market opportunities by placing trading orders on discount broker platforms. During COVID-19 pandemic, a large number of students and young people began to invest in the market to earn quick money and to enjoy the ecstasy of winning a bet like an online game! Two years of one-way directional upward movement aided the growth of this universe of traders. However, due to lack of proper knowledge, research and analysis, most of them started losing their capital when the market paused and reversed. A lot many investors had also started shifting their accounts to discount broking portals to take advantage of the lower transaction cost. The empirical analysis indicate that lower transaction cost simultaneously became a motivation for lower investment horizon resulting in long-term investors getting unknowingly converted into traders in the market. While a lot many of them have started realising the folly of being an active amateur trader and started returning into serious investing, the challenges remain for our industry which is likely to continue for some more time. Your Company aims to convert those millennials and amateur traders into knowledgeable investors thus helping them create wealth over long term.

Launched at the end of 2019, Smart Folios offer baskets of stocks selected by specialists and powered by data intelligence to simplify investment. The Company has also launched a WhatsApp channel through which clients may interact with the dealers for stock trading, invest in mutual funds, track fund transfers, and see Geojit research via their registered mobile numbers.

Financial Performance

During the period under review, the consolidated operational income increased from 424.9 crore to 500.3 crore in FY 2021-22. The growth was primarily driven by the increase in revenue from equity and equity-related segment, followed by the increase in income from insurance distribution. In FY 2021-22, total revenue reached 426.8 crore, a 17% increase from the previous year. Profit before Tax (before extraordinary item) grew by 22% between FY 2020-21 and FY 2021-22, from 165.2 crore to 202.3 crore. Comprehensive income or after-tax profit totalled 154.1 crore, representing an 22% rise over the previous year.

Segment-wise Performance Equity

Despite interruptions caused by renewed waves of COVID-19 and fears about its influence on the economy, equity markets demonstrated resiliency in FY 2021-22 and rewarded investors with excellent returns, as the benchmark Sensex gained by more than 17% in FY 2021-22. The Nifty 50 Index as well as Nifty 500 index grew by 17.5% and 19.4% during FY 2021-22. The rally was fuelled by liquidity and considerable domestic investor buying activity.

In FY 2021-22, the revenue from stock and equity-related income increased by 11% to 355 crore, up from 320 crore in FY 2020-21. The increase was attributed to the growth in the brokerage services, depository services as well as from the interest income from the clients.

Online delivery volume climbed by 5.5% YoY in FY 2021-22, while mobile trading revenue jumped by 5% from 120 crore in FY 2020-21 to 126 crore in FY 2021-22. Similarly, income from total online brokerage, including mobile, increased to 160.30 crore from 156.2 crore in FY 2020-21.

In FY 2021-22, the Company earned 230 crore in brokerage income from the cash market, compared to 227 crore in FY 2020-21. In FY 2021-22, the income from the derivative segment, which includes futures and options, increased to 60 crore from 48 crore in FY 2020-21.

During the year, client base rose by about 88,700 new clients to reach 11,98,700 and assets under management and custody increased to 63,975 crore from 51,648 crore in March 2021.

The Companys office network encompasses 473 locations throughout 19 states and 2 union territories in India, as well as four GCC nations in the Middle East, including Kuwait, Bahrain, UAE, and Oman.

Mutual Fund

The Mutual Funds distribution income increased by 42% YoY to 61 crore in FY 2021-22, compared to 43 crore in FY 2020-21. The rise is mostly attributable to improved equities market performance and the Companys ability to persuade clients to maintain their investments through SIP culture. Increased income and client retention have resulted from a heightened emphasis on promoting mutual funds, namely SIPs.

The Company is deliberately broadening its business items to improve the customer purchasing experience. In FY 2021-22, the Company successfully diversified its business stream into insurance distribution, generating 18 crore in revenue compared to 13.5 crore in FY 2020-21.

Portfolio Management Services (PMS)

The Companys commitment to securing business success is demonstrated in its unrelenting focus on segment expansion and effective client management. Geojit has formed Dakshin Fund with a focus on South Indian businesses. The PMS AUM increased by 39.1% YoY to 359.41 crore in March 2022, compared to 258.44 crore in March 2021.

Depository Services

The number of depository accounts climbed to 7.96 lakh at the end of March 2022, up from 7.24 lakh at the end of March 2021, a YoY rise of 10%.

Overseas Operations

Barjeel Geojit Securities in the UAE, BBK Geojit Securities in Kuwait, and QBG Geojit Financial in Oman continue to record healthy commercial operations and are likely to grow profitability in the next years.

Investment Advisory Services and Financial Planning

The suitability of financial advice is of utmost importance in investments, where different products and solutions are available to meet the individual needs of investors. A sound investing decision should be informed by risk profiling, asset allocation, and scheme selection.

Geojits Investment Advisory & Financial Planning Division provides unbiased and suitable guidance to clients. Millennials search for professional help in financial decision-making like they do in medicine, legal counsel, etc. More consumers want ongoing counsel from a family financial doctor who is available year-round. Geojit, an industry first in various projects, introduced its fee-only financial advisory services branch, STEPS.

STEPS - The Financial Planning Division

The Company began offering financial planning and investment advising fee-based services in January 2020. The Company aims to strategically and systematically create wealth for its clients. Geojit has the appropriate certifications, and the division is supported by trained financial advisers, research analysts, and financial risk managers. The division will be accompanied by central advisory, which will transmit advice and investment ideas. Eventually, all of the Companys offices will have a financial planning and advice desk, and relationship managers will focus more on financial advisory than speculative transaction-based trading. In the days of pandemic and lockdown, individuals felt the necessity for a professional plan-based paradigm. Geojit will streamline this new business venture by adding more branches and qualified professionals and advisers.

Risk Evaluation & Mitigation Product risk: The Company has been a pioneer in introducing a variety of products. New product introductions always expose the Company to the possibility that consumers might dislike them. Due to the capital-intensive nature of the product, any failure would negatively affect financial performance of the Company.

Risk mitigation: The Company has successfully created and introduced numerous products, such as TraderX, Selfie and Fund Genie, among others. The Companys strategies and new product launches take risks and difficulties into account. The Company offers a diverse assortment of financial products with consulting and individualised service to assist consumers in protecting and growing their wealth while fostering long-term relationships to encourage cross-sales. In addition, the Company offers the assistance of professional financial consultants to assist customers in locating the optimal financial solution.

Regulatory risk: The Company operates in a highly competitive environment governed by numerous Statutory Bodies, Regulators, and Regulations. Enhanced regulatory supervision and unfavourable changes to regulations could have a negative impact on the Companys operations. In addition, any infringement or noncompliance with criteria may result in the revocation or imposition of fines, as well as a loss of reputation.

Risk mitigation: The Company has a dedicated compliance team that provides real-time support to the corporate function in the event of major changes in regulatory environment. Additionally, the Company employs extensive internal review procedures to verify compliance with legislative requirements and standards.

Operational risk: The Company is vulnerable to the risk of loss stemming from inadequate or failing internal processes, people, or systems, as well as external occurrences. Any lack of action, omission, miscommunication, misrepresentation, or wrongdoing on the part of a large number of personnel in different places may result in a loss of the Companys good name and financial resources.

Risk mitigation: The Company has built risk control self-assessment methods and systems across hierarchies and locations for its important business operations. A MIS and periodic audits are conducted to monitor these procedures. This was further facilitated by a maker/checker process, which greatly eliminates such hazards.

Business risk: The Company is susceptible to a number of external risks that have a direct impact on its profitability and sustainability. Variations in the macro environment, customer preferences, regulatory laws, and financial market behaviour may have a negative impact on the operating and financial performance of the Company.

Risk mitigation: Through its extensive reach and customer-centricity, the Company has established itself as a reputable brand in the financial services business. The Companys well-diversified product portfolio, extensive presence in India and the Middle East, and many trade channels, such as the Internet, phone, WhatsApp, and branches, help to mitigate any concentration risks, geographical risks, or product-specific risks.

Technological risk: With increased performance expectations in terms of quality, timeliness, and cost, technical upkeep is essential to be competitive in the face of technological risk. The risk of disruptive innovations provided by new and developing technologies is constantly there, and any failure in technological adaption could have a negative effect on the Companys operations and competitiveness.

Risk mitigation: Investments in technical innovation and upgrading are an important risk reduction strategy that the Company pursues in order to ensure its long-term success. Geojit has a powerful technological platform capable of addressing client demands from sourcing through transactions, delivering an unrivalled value position in portfolio evaluation, robotic advisory, and financial planning. The Company creates customised online trading platforms and other services using cutting-edge technology. In order to take the business to new heights, the Company will continue to invest in cutting-edge technologies that will minimise operational expenses and increase its efficacy.

Competition risk: The industry in which the Company works is extremely competitive. Aggressive pricing, significant advertising, and expensive marketing and sales charges may have a negative impact on the growth and earnings trajectory of the Company as a whole.

Risk mitigation: The Companys broad and diversified product portfolio, customer-centric strategy, technological innovation, many sales channels, expansive reach, and strong retail brand enable it to stay ahead of the competition.

INTERNAL CONTROLS

The Companys system of internal control is consistent with its size and kind of operations. To increase internal controls, the Company has implemented well-defined processes, guidelines, and procedures, as well as suitable internal information systems.

The Company has designed and implemented internal financial controls at each business process to ensure rigorous adherence and compliance with legislation and regulations. Checks and balances and control mechanisms have been built to ensure that assets are safeguarded, utilised with proper authorisation, and accounted for. There is an organisation-wide definition of roles and responsibilities that ensures information flow and monitoring. Regular internal audits and checks are undertaken, and the recommendations of the internal auditor are considered for enhancing systems and procedures.

The Audit Committee of the Company analyses the internal control system and investigates the findings of the external and internal auditors. This comprises a review of the Companys approved policies and processes for assuring the orderly and effective operation of its business, as well as assigning responsibility for all controls. The design evaluation was followed by management testing of controls across processes and correction of any business operations aberrations. The Audit function provides reasonable assurance for the efficacy and efficiency of operations, the protection of assets, the accuracy of financial records and reports, and the observance of applicable laws and regulations.

HUMAN RESOURCES

The Companys HR policies strive to give its skilled and diverse staff with a long and rewarding career and are centred on their all-around development and advancement. Employees are the driving force behind Geojits continued expansion across all market categories. Training and staff motivation are essential components of the business.

The Company provides meaningful possibilities for learning and progress and encourages its employees to expand their professional horizons in order to ascend the corporate ladder. In order to increase productivity and efficiency, employees with the best work performances are also awarded. As of March 31, 2022, the total number of permanent employees, excluding temporary and contract workers, was 2,174.

CAUTIONARY STATEMENT

This document contains some statements about expected future events, financial and operating results of Geojit Financial Services Limited, which are forward-looking. By their nature, forward-looking statements require the Company to make assumptions and are subject to inherent risks and uncertainties. There is significant risk that the assumptions, predictions and other forward-looking statements will not prove to be accurate. Readers are cautioned not to place undue reliance on forward-looking statements as a number of factors could cause assumptions, actual future results and events to differ materially from those expressed in the forward-looking statements.