Geojit Financial Services Ltd Management Discussions.


The global economy recorded the lowest growth rate of 2.4% in 2019, mainly due to the protracted trade disputes. This is the slowest global economic growth expansion since the global financial crisis in 2008-09, with growth trending down in all major economies. Although, it was expected that growth would pick up on the back of softening of commodity prices, revival in emerging nations and lower base effect, world witnessed one of the severest health crises. The novel Coronavirus pandemic crippled economic activity across the world due to continued lockdowns by various countries. According to World Bank - Global Economic Prospects June 2020, global economic growth is expected to contract by 5.2% in 2020, much worse than the global financial crisis of 2008-09.

The health and economic uncertainty bring multilayered challenges for policymakers across the globe, comprising health and safety, changing consumer behavior, plummeting external demand, capital outflows, and collapse in the commodity prices. The pandemic led to economic turmoil in financial markets

across the globe. The rapidly worsening risk sentiment prompted central banks across the globe to provide stimulus measures including a series of rate cuts, liquidity support measures and large asset purchase programs.

Since the outbreak of pandemic in the first quarter of 2020, energy and metal prices fell sharply, reflecting the pause in economic activities. Restrictions in travel and storage shortages led to sharp decline in oil prices in the early 2020. Further, due to non-agreement between OPEC coalition partners, oil prices declined to historic levels of USD 20 per barrel in March 2020. Later in April 2020, it recovered due to the arrangements between OPEC coalition partners.

Future Outlook

Policymakers across the globe are taking swift actions to contain the pandemic and re-boot the economic activity. In addition to fiscal and monetary measures, governments have adopted other measures including direct cash transfers to public using technology, enhancing healthcare systems, subsidies, tax relief and

relaxations in credit policies to businesses etc. The global economy is set to witness one of the deepest recessions since the Great Depression of 1930s.

Emerging market and developing economies (EMDEs) are expected to contract by 2.5% in 2020, and economic activity in advanced economies is forecasted to shrink by 7%, due to the disruption caused by the pandemic.

Global growth rate is expected to rebound in 2021 at 4.2%. The rebound is dependent on the pandemic fading in the second half of 2020, allowing containment efforts to be gradually scaled back and restoring consumer and investor confidence. The estimated recovery assumes that policy actions are effective in preventing widespread firm bankruptcies, extended job losses, and system-wide financial strains.

EMDEs are expected to grow at 4.6% and advanced economies at 3.9% in 2021. However, the downside scenario is more severe - the global economy could shrink this year by as much as 8% (5% for EMDEs), followed by a weak recovery at just above 1% growth next year. (Source: World Bank)


As per the provisional estimates of Central Statistics Organisation (CSO), India registered a GDP growth rate of 4.2% in FY 2019-20, as compared to 6.1% in FY 201819. The Indian economy faced growth deceleration in FY 2019-20 due to structural and cyclical factors. Slowdown in investment, decrease in consumption demand, and the liquidity crunch, among others, impacted the Indian economy. The government has initiated various measures to bring the economy back on the growth path.

Inflation rate measured by the Consumer Price Index (CPI), moderated to 5.9% by March 2020 from the peak 7.6% in January 2020. This was largely due to the decline in food prices. RBI expects inflation to remain firm in the first half of 2021 and to fall below the target of 4% in the second half of 2021, driven by expectations of a normal monsoon, softening of food prices and fall in crude oil prices.

COVID-19 and its potential impact: COVID-19 pandemic presents fresh challenges with falling demand and supply chain disruptions. The subsequent nationwide lockdown paralyzed most economic and commercial activities and caused severe disruptive impact on demand and supply side factors. Spill-over effects from weak global growth and balance sheet stress also weighed down on economic activity. The fast and

continual spread of the pandemic and the resultant restrictions are already having an adverse impact on consumption and investment in the Indian economy.

The MSME sector that contributes around one-third to Indias GDP has been hit particularly hard by the current crisis. Given the large share of Indias workforce, the slowdown in this sector is likely to have severe repercussions on employment and the economy.

Monetary support post COVID-19

Policymakers announced substantial fiscal, monetary and financial market measures to support the economy in a post COVID-19 scenario. On the fiscal front, the government first rolled out a Rs. 1.7 trillion relief package for Indias marginalized population, to help them tackle the challenges caused by the pandemic. Later, a Rs. 20 trillion economic package under the Atmanirbhar Bharat Abhiyan was announced to help the economy tide over the crisis, which is approximately 10% of the countrys GDP. This was aimed at infusing credit flow into the severely impacted sectors and to create a multiplier effect on the economy. The package includes a series of relief measures, guarantees, relaxations and liquidity infusions primarily focusing on four themes - MSMEs, rural economy, liquidity support and long- lasting policy reforms.

The RBI also reduced the repo rate by a cumulative 115 bps to 4.0% and reverse repo rate by 155 bps to 3.35%. It also slashed the cash reserve ratio by 100 bps to release Rs. 1.37 lakh crore across the banking system. In addition, it allowed commercial banks and non-bank finance companies to offer their customers a three-month moratorium on payment of installments on their loans. Further, in May 2020, it extended such moratorium period by another three months to 31st August 2020. These measures are expected to provide adequate liquidity into the system and help mitigate the impact of COVID-19 pandemic.

Future Outlook

The International Monetary Fund (IMF) in its World Economic Outlook - June 2020 has projected a sharp contraction of 4.5% for the Indian economy in 2020, believing that the lockdown impacted the economy considerably. However, it believes that as the lockdown unwinds and the economy opens up, country is expected to bounce back in 2021 with a robust 6% growth rate.

RBI expects Indias GDP growth in 2021 to remain in the negative territory. India, like rest of the world, is in unchartered territory in the pandemic. The pandemic and the lockdown resulted in the stoppage and even

collapse of several economic activities. Considering the pandemic-related economic slowdown, the next years fiscal deficit is expected to rise further. On the positive side, India has a considerable cushion in foreign exchange reserves at USD 501.7 billion, as on 5th June 2020. The economic disruption caused by the pandemic would result in demand and supply shocks, combined with large scale job losses, countering any recovery anticipated earlier in the year.


Indian BFSI Sector

The Indian banking sector demonstrated tremendous strength in transforming and leaping ahead in the last decade to become the backbone of economy. Several factors including policy support, improving business fundamentals, product and services innovation and severe under-penetration played a critical role for the development of the sector. During FY 2016-20, Indias credit off-take grew by a CAGR of 11% from USD 1.15 trillion in FY 2015-16 to USD 1.93 trillion in FY 2019-20, supported by economic growth, increasing consumerism and easier access to credit. During the period, deposits grew by a CAGR of 4.84% from USD 1.5 trillion in FY 2015-16 to USD 1.9 trillion in 2020 due to higher savings amid rising income levels and better penetration.

However, the year under review was challenging as credit growth declined, affecting the overall credit growth, particularly in the informal sector. Bank credit growth decelerated to an over five-decade low of 6.14% in FY 2019-20, from 13.3% during FY 2018-19. This was due to muted economic growth, lower working capital requirements and risk aversion among lenders, which compressed the incremental credit growth.

Deposits under the Pradhan Mantri Jan Dhan Yojana (PMJDY) have increased to Rs. 1.35 lakh crore with 39.19 crore accounts opened in India as of May 2020. The Unified Payments Interface (UPI) recorded 1.23 billion transactions in May 2020, valued at Rs. 2.18 lakh crore (USD 29.26 billion).

According to Knight Franks Wealth Report 2020, Indias economic advantage is its large and growing consumer base, which helps in general wealth creation. The number of ultra-high net worth individuals (UHNWIs with net worth of more than USD 30 million or about Rs. 220 crore) in India is expected to grow by a whopping 73% in the next five years to 10,354 in 2024 - from 5,986 in 2019.

The Mutual Fund industry added over 72 lakh new folios in FY 2019-20, taking the total to an all-time

high of approximately 9 crore by end of March 2020, from 8.24 crore in March 2019. India scored a perfect 10 in protecting shareholders rights on the back of reforms implemented by the capital market regulator, the Securities and Exchange Board of India (SEBI), in the World Banks Ease of Doing Business 2020 Report. During FY 2019-20, equity markets witnessed 13 IPOs and raised a total amount Rs. 20,350 crore, which represents an increase of 38% YoY, as compared to Rs. 14,719 crore raised in FY 2018-19 with 14 IPOs.


• Trading turnover at NSE from the capital market (CM) segment was Rs. 89.98 lakh crore with a market capitalization of Rs. 112.43 lakh crore in FY 2019-20.

• The net assets managed by the Mutual Fund industry in India declined by 8% from Rs. 24.28 trillion in FY 201819 to Rs. 22.26 trillion in FY 2019-20. This is mainly due to the fall in equity markets and corporates withdrawing from debt funds.

• SIP contribution by Investors increased to Rs. 100,084 crore in FY 2019-20 from Rs. 92,693 crore in FY 201819, registering 8% increase over the previous financial year.

• Mutual Funds SIP accounts increased to 3.12 crore as on March 2020 from 2.62 crore in March 2019. AMFI data shows that the MF industry added about 9.95 lakh SIP accounts monthly on an average during FY 2019-20 as against 9.13 lakhs added in FY 201819. The average ticket size of SIP stood at Rs. 2,750 in FY 2019-20 vs. Rs. 3,070 in the previous year.

• Net inflows into equity funds, which also include equity-linked saving schemes (ELSS), were Rs. 81,600 crore in FY 2019-20 as against Rs. 1.11 lakh crore in the previous fiscal as the equity markets were highly volatile.

• Indian asset management industry is among the fastest growing in the world with 44 Asset Management Companies operating in the country.

Money and Capital Market

Capital markets play a crucial role in the economic development of a country. They provide financial resources required for the long-term sustainable development of the economy. Capital markets are therefore considered an important element as it enables higher productivity growth, higher real-wage growth, greater employment opportunities and greater macroeconomic stability.

In terms of size, all the major segments of the capital market, viz., Central Government securities (G-Sec) market, market for State Development Loans (SDL), corporate bond market and equity market - the so- called cash markets - have experienced consistent growth during the past few decades in terms of primary issuance, market capitalization (for equity market) and trading volumes in the secondary market. Equity market continues to remain the largest segment, even as G-Sec, SDL and corporate bond markets have grown steadily.

The Mutual Fund industry has made significant contribution to the Indian capital market by bringing small ticket investors into the fold of investing. During the year under review, the MF distribution space witnessed product innovation in the form of SIPs and alternative investment funds; improved reach and penetration in conjunction with channel partners to bring smaller investors into the pool; and generated investor interest through focused marketing and awareness campaigns. Regulatory changes focused on standardization of MF schemes, disclosure transparency, reduction in total expense ratio (TER) and commission guidelines have been essential enablers of growth while protecting investors interest.

Equity Markets

Equity markets continued to remain volatile due to the general election, slowdown in GDP growth and also due to the coronavirus pandemic. The sentiment in the stock markets across the world has been gloomy. This is reflected in frequent crashes in the equity markets in all parts of the world. Financial markets in India also have been witnessing sharp volatility as a result of the fallout in global markets.

Indias main stock indices in FY 2019-20 logged their worst performance in a financial year since the fiscal ending March 2009 as the turmoil in the market since February 2020 triggered by the global outbreak of the Coronavirus erased all the gains made in almost 11 months. During the month of March 2020, all the sectoral indices witnessed negative trends due to the impact of the COVID-19 pandemic. Consequently, Nifty 50 closed at 8,598 and S&P Sensex closed at 29,468 at the end of March 2020, representing a negative return of 26% and 24%, respectively, from its levels touched in March 2019. Markets across large, mid, and small caps corrected sharply from their peaks. During FY 2019-20, the BSE mid-cap 150 fell by 29%, while the Sensex fell by 24%. Investors across the Asian markets witnessed their wealth erode by 10% to 15% in their respective

equity markets between the period February to May 2020, with only China showing signs of resilience.

Commodity Markets

India is one of the top producers of a large number of commodities, and also has a long history of trading in commodities and related derivatives. For an emerging market like India, commodities are an important driver of the capital market and commodity derivatives have a huge potential in such a market. The Indian commodity market has a huge untapped potential as it is largely underdeveloped and less explored when compared with some developed nations. The commodity derivative market in India has witnessed a rapid transformation in the last decade. It is currently undergoing a number of reforms, aimed at broadening and deepening the market. Intermediaries and Exchanges are being strengthened and more products and participant categories, most notably institutional participants, are being progressively allowed in this market.

The commodity market in India has gradually grown with newer options (agricultural as well as nonagricultural commodities) becoming increasingly available to customers. Metals, base metals, crude oil, energy and soft commodities like palm oil, and coffee among others, are getting traded in the market. MCX was one of Indias first commodity exchanges to be set up. Today, 6 national level commodity derivative exchanges are functioning. The total turnover in futures trading rose 27% to Rs. 83.97 lakh crore in FY 2019-20, driven by a surge in bullion and energy turnover. The

average daily turnover increased 26.42% to Rs. 32,423 crore during this period, from Rs. 25,647 crore in FY 201819. According to data, MCXs Bullion turnover increased by 93% YoY to Rs. 29.15 lakh crore, while that of energy was up 56% YoY to Rs. 38.13 lakh crore.


In India, equity derivative market is rapidly growing. Currently, 3 indices and 162 securities are traded as underlying assets in the futures and options segment on the NSE. The market regulator has initiated the process of improving the equity derivative market in the country by seeking views from market participants. Among the three exchanges in the equity derivative market ecosystem, NSE has a market share of 99.6% and BSE registered a share of 0.40%. The total turnover in the derivatives segment in FY 2019-20 increased by 45% to Rs. 34.54 lakh crore. Over the last five years, equity derivatives daily average turnover has increased by 70% - from about Rs. 52,371 crore in CY 2015 to Rs. 88,772 crore in CY 2019. NSE has become the worlds largest exchange by trading volumes in 2019, outpacing US-based CME group, the worlds largest derivatives marketplace.


The insurance industry is critical to the economic development and growth of a country, as it boosts risk-taking and at the same time securing growth. The Indian insurance sector is at the cusp of exponential growth. The life insurance industry in India collected new business premiums of Rs. 2.59 lakh crore in FY 2019-

20, implying a growth of 20.6% over the corresponding year. The massive growth in the industry was driven by state-owned LIC which witnessed a rise of 25.2% YoY in its new business premium collection at Rs. 1.78 lakh crore in FY 2019-20. This amplified its market share in terms of new business premium to 68.7% in FY 201920 - from 66.2% last year. The new business premiums of private life insurers increased 12% in FY 2019-20 to Rs. 80,919 crore.

The 23 private life insurance and 27 private non-life insurance companies in the Indian market accounted for 42% of the total new business premium in FY 2019-20. The total number of life insurance policies in FY 201920 increased marginally by 0.7% to 2.89 crore. Enabling policy reforms, increasing adoption of technology, positive demographic changes, young insurable population and growing awareness of the need for protection and retirement planning will support the growth of Indian life insurance. In addition, innovative products, distribution channels and growing use of Internet are expected to push this demand further.

India remains vastly under-insured, both in terms of penetration and density. Globally, Indian insurance market stood at 17th in terms of penetration. As per FICCI, India currently has 605 million people below the age of 25 and 225 million in the age group of 1019 years. The insurable population is expected to touch 750 million by 2020.

Gross direct premiums of non-life insurers in India increased by 11.7% to Rs. 1.89 lakh crore in FY 201920 from Rs. 1.69 lakh crore in FY 2018-19. General insurance contributed 87% of Gross Direct Premiums and recorded an increase by 9.5% YoY. While that of Standalone Private Health insurers and Specialized PSU insurers increased significantly by 27% and 30% YoY to Rs. 14,470 crore and Rs. 10,613 crore in FY 2019-20, respectively.

The insurance industry in India is expected to reach USD 280 billion by 2020. Life insurance industry in the country is expected to grow 12-15% annually over the next three to five years. Gross premium collected by life insurance companies in India increased from Rs. 2.56 trillion (USD 39.7 billion) in FY 2011-12 to Rs. 7.31 trillion (USD 94.7 billion) in FY 2019-20. During FY 2012-20, premium from new business of life insurance companies in India increased by 15% CAGR to reach Rs. 2.13 trillion (USD 37 billion).

As per Union Budget 2019-20, 100% foreign direct investment (FDI) was permitted for insurance intermediaries. Pradhan Mantri Jan Arogya Yojna

(PMJAY), the worlds largest social health scheme, is expected to provide coverage to around 50 crore people. A Fund of Rs. 6,400 crore (USD 887 million) has been allocated for FY 2020-21, which is thrice that of last year. Enrollments under the Pradhan Mantri Suraksha Bima Yojana (PMSBY) reached 154.7 million till December 2019 since its launch.

Going forward, increasing life expectancy, favorable savings and greater employment in the private sector is expected to fuel demand for pension plans. CARE Ratings projects the insurance industry to continue growing at around 14% to 15% per annum. The momentum is expected to be maintained owing to factors like growing awareness, increasing urbanization, product innovation, multi-channel distribution, and tax benefits, among others.

Mutual Funds

The average AUM of the Indian MF Industry has grown by 10% to Rs. 27.03 trillion on 31st March 2020 as against Rs. 24.48 trillion on 31st March 2019. The industrys AUM had crossed the milestone of Rs. 10 trillion ( 10 lakh crore) for the first time in May 2014 and in a short span of about three years, the AUM size had increased more than twofold and crossed Rs. 20 trillion ( 20 lakh crore) for the first time in August 2017. As on 31st March 2020, the total number of accounts (or folios as per mutual fund parlance) stood at 8.97 crore, of which 89.9% i.e. 8.07 crore is accounted for by retail investors. The top three scheme types across number of folios are under Equity, Hybrid and Solution Oriented Schemes accounting for 71.8%, 10.6% and 6.1%, respectively.

Growing investor interest in Mutual Funds led to an addition of over 72 lakh new folios in FY 2019-20, taking the total to an all-time high of 8.97 crore at the end of March 2019. Over the last few years, investor accounts have increased following robust contribution from retail investors, especially from smaller towns and huge inflows in equity schemes.

Equity-oriented schemes witnessed good inflows in March 2020, whereas all other categories witnessed huge outflows amid the ongoing COVID-19 crisis. In FY 2019-20, investors pumped in 0.84 lakh crore in equity-oriented mutual fund schemes, compared to an inflow of Rs. 1.11 lakh crore in the previous financial year. The average assets under management (AUM) of equity MFs declined by 25% to Rs. 6.50 lakh crore, as against Rs. 8.67 lakh crore in March 2019. A prime reason for this drop is the fall in equity markets. During the year, the large-cap index fell by almost 27%, whereas mid-cap and small-cap indices fell by 32% and 37%, respectively. Better net inflows in equity MFs led to a slower decline

in AUM, compared to the decline recorded in equity indices. Liquid funds ended the year with net outflow of Rs. 75,130 crore vs net inflows of Rs. 76,092 crore in the previous year.

However, the COVID-19 crisis did not impact retail investors as they continued investing via the SIP route. During FY 2019-20, the SIP (Systematic Investment Plans) accounts grew by 117.94 lakh to 3.12 crore - up from 2.62 crore in March 2019. The industry added about 9.95 lakh SIP accounts every month on an average during the year, with an average SIP size of about Rs. 2,750 per account. Instead of exiting their investment in equity funds, retail investors not only held on, but added more AUMs and Folios through SIPs, recording the highest ever equity monthly mobilization in March 2020. This led to the highest annual SIP mobilization of Rs. 100,084 crore in FY 2019-20 up from Rs. 92,693 crore in the preceding fiscal year.

Growth drivers

Savings-oriented culture: Indias household savings rate stands at around 18.2% of its GDP. Household savings dominated overall savings in India, with a contribution of 60% in gross savings. The share of financial savings in gross household savings reached ~58% in FY 2018-19. With regulatory tightening, investors are moving away from physical assets such as gold and real estate and moving more towards financial assets. Further, Indians are also increasingly moving away from physical savings towards financial savings, owing to the realization that to beat inflation they will have to shift from traditional saving options to equities and mutual funds.

Digitization: The pace of change in Indias financial system has the potential to be faster than in other countries due to the rapid take-up of digital devices, combined with Indias track record of economic innovation. With a population of 1.3 billion, the number of Internet subscribers considering both broadband and narrowband put together stood at 687.63 million at the end of September 2019. The number of subscribers accessing internet via wireless phones etc. was 665.37 million at the end of September 2019. According to a Cisco report, Internet and mobile usage in India is set to cross the 900-million mark by 2023, with nearly two-thirds of the population estimated to have Internet access and a mobile device. India will have about 2.1 billion networked devices by 2023, of which 1.4 billion will be mobile-connected devices and 697.4 million wired/Wi-Fi connected devices. Smartphones will account for 38% of all networked devices, with connected TVs accounting for 12%.

Financial Inclusion: The Government of India has made financial inclusion a top priority by launching and expanding multiple programs, creating and strengthening transparency and digital systems, and enforcing regulatory measures to increase competition. Over the last decade, the acceleration of financial inclusion in India was largely due to political will along with high- impact government initiatives like Pradhan Mantri Jan Dhan Yojana (PMJDY), Direct Benefit Transfer (DBT) and issue of RuPay cards, among others. According to Global Findex Database by the World Bank, over 80% of Indians (aged 15+ years) had account ownership at a financial institution or with a mobile-money service provider, a massive increase from 35% in 2011.

Aadhaar Linkage: The total number of Aadhaar cards issued by Unique Identification Authority of India (UIDAI) has crossed the 1.25 billion mark. As on 29th February 2020, Aadhaar has been issued to 90.1% of Indians. Aadhaar linkage enables biometric digital authentication, as part of broader digital ecosystems with additional functionality. Over the years, the Aadhaar card has evolved as a primary identification document for a number of purposes in India, such as opening a bank account, getting a mobile connection, doing e-KYC, among others.

Recapitalization Package: In March 2020, the

government announced a Rs. 20 trillion economic package representing 10% of Indias GDP. The liquidity support measures are focused on the key areas of MSME, NBFC, MFIs, power distribution companies, and real estate. RBI has taken various steps to inject large liquidity into the system, improving asset quality, facilitating and incentivizing banks credit flows and safeguarding stability in the financial markets. Some of these measures include refinancing facilities to NABARD, SIDBI, and NHB, open market transactions, reducing cash reserve ratios, reverse repo rate, and providing six months moratorium on loan, among others.

Insolvency and Bankruptcy Code: As per the Economic Survey released in January 2020, the Insolvency and Bankruptcy Code (IBC) has improved resolution processes in India. The proceedings resulted in recovery of 42.5% of the amount involved, as compared to 14.5% under the Securitisation and Reconstruction of Financial Assets and Enforcement of Securities Interest (SARFAESI) Act. IBC has made material progress in addressing the logjams with faster recovery of stressed assets and quicker resolution timelines. ICRA expects financial creditors to realize about Rs. 60,000-70,000 crore in FY 2020-21 through the IBC process, against the Rs. 100,000 crore realized in 2020.


Services sector is the biggest in India and contributes more than half of Gross Value Added (GVA). As per the second advance estimates for GVA, services sector shares reached 55.39% in FY 2019-20. Services sector GVA grew at a CAGR of 1.45% to USD 1,064.8 billion in FY 2019-20 from USD 1,005 billion in FY 2015-16. The sector provides employment to a large share of Indian population. Moreover, services sector is the the largest recipient of FDI (Foreign Direct Investment) in India with inflow of USD 80.67 billion between April 2000 and December 2019.

Foreign Portfolio/Institutional Investments (FPI/FII) have been one of the biggest drivers of Indias financial markets. Foreign investors have invested around Rs. 12.33 trillion (USD 178.28 billion) in India between FY02-20 (till 16th June 2020). Strong mandate at the Centre led to a strong performance of capital markets and is expected to attract a further pick-up in foreign investments.


Most stock markets across the globe improved in 2019 from the lows of the previous year. The Indian markets increased too, albeit to a lesser extent. Macro-economic concerns resulting from continuing trade tensions between the US and China, lower crude prices reflected in declining manufacturing activity persisted into the current calendar. These have only exacerbated with the on-going pandemic which has resulted in lockdowns and ceasing of business activity in global economy. Many countries have had to look at various options including capital infusion, fiscal stimulus and rate cuts to support their economies. The overall environment, however, continues to be uncertain. While liquidity appears to have improved, the view is still circumspect with regard to economic growth. Banks and rating agencies have been periodically ending their growth outlook and the present broad view is that of sharp contraction in the current year and a sharp growth in FY 2021-22.

However, as several countries looking at alternative manufacturing locations post the pandemic to de-risk their geographical concentration in supply chains, India with its large skilled labor base, ports availability, FDI promoting policies appears well positioned to benefit in the long term.


Geojit Financial Services Limited (hereinafter to be referred as the Company) is a leading investment services provider with more than three decades of rich experience in the Indian Capital Market. The Company offers a complete bouquet of financial products and

services to its 1-million customer base. Its product and services categories include equity and currency derivatives, portfolio management services, margin trading, loan against shares, distribution of mutual funds and insurance products, online financial planning and commodity derivatives.

The Company has a wide distribution network of 457 offices across 21 states and union territories in India and 07 offices in the Middle East. It has over Rs. 28,435 crore of Assets under Custody and Management, having an SIP book size of Rs. 176 crore, (including STP of Rs. 12 crore) with around 4 lakh accounts. It has been a pioneer in launching Internet and mobile trading, online depository transactions, cash and derivate integrated trading system and launch rubber trading in commodity futures. The Company offers several innovative and customer-friendly products, such as Selfie, Online Financial Planning Tool, and Fund Genie, among others.


During the year under review, consolidated operational income stood at Rs. 305.34 crore. The growth is majorly driven by increase in revenue from financial product mainly Insurance distribution income which was partially offset by decline in revenues from other product segments. Total income stood at Rs. 306.37 crore, registering 1.10% decline over the previous year. Profit before Tax stood at Rs. 69.62 crore, registering 20.43% increase over the previous year. The Company has adopted to pay corporate tax at concessional rate effective from 1st April 2019 as per the Taxation Laws (Amendment) Ordinance, 2019. Hence, the total tax expense reduced from Rs. 27.85 crore in FY 201819 to Rs. 18.72 crore in FY 2019-20. Consequently, the Total Comprehensive Income stood at Rs. 50.56 crore, registering a significant increase by 81% over the previous year.

Segment-wise Performance

Equity: Indian equity markets remained highly volatile in FY 2019-20 led by various factors starting from the general election to the slowing economy and the coronavirus pandemic. Indias main stock Indices, Nifty and Sensex, tumbled nearly 25% in FY 2019-20. The highest decline in equity indices was reported in the last three months of the financial year as the turmoil in the market triggered by the global outbreak and subsequent nationwide lockdown in March 2020. Equity trading increased with the increased use of online trading platform SELFIE. Online trading volume grew by 21% in FY 2019-20, Revenue from Mobile Trading was Rs. 64.50 crore in FY 2019-20 from Rs. 60 crore in FY 2018-19, an increase of 7%. Similarly, income from internet broking, including mobile, stood at Rs. 86 crore in FY 2019-20.

During the year, our client base increased by around 50,950 new clients to reach 1,046,500 and Assets Under Management and Custody stood at Rs. 28,435 crore, as on March 2020, from Rs. 40,160 crore in the earlier year. Our network of offices stands at 457 across in 19 States and 2 Union Territories in India and 07 offices in Middle East.

Mutual Fund: The Mutual Fund distribution income was at Rs. 38.32 crore in FY 2019-20, compared to Rs. 39.69 crore in FY 2018-19, registering a decline by 3.58% YoY. The decrease is mainly attributed to regulatory interventions such as decreasing the TER, enlarging B-15 scheme to B-30 and implementation of full trail model of commission. During the year under review, the Company recorded net inflow of Rs. 610 crore for equity and equity hybrid schemes compared to Rs. 1,062 crore recorded in the previous year. This is primarily due to the fluctuation of the market. The SIP book alone has also been steadily improving - from Rs. 76 crore to Rs. 164 crore over the last three years. A sharper focus and full-scale efforts in promoting Mutual Funds, particularly SIPs, have led to higher revenues. The Company is focusing on diversifying its business products for better buying experience for customers. In FY 2019-20, the Company has been successful in diversifying its revenue stream into insurance distribution, the income from which stood at Rs. 11.42 crore in 2020. Consequently, the share of income from Insurance distribution in total income increased from 0.41% in 2019 to 3.74% in 2020.

Portfolio Management Services: Our serious intentions to secure business growth are well reflected in a relentless focus on growth of the segment and efficient client handholding. We have launched Dakshin Fund focused on companies in South India.

Depository Services: With a growing number of clients, the number of depository accounts increased to 6.69 lakhs at the end of March 2020, from 6.32 lakhs in March 2019, registering about 6% growth YoY.

Overseas Operations

Although the situation continued to be tough in the Gulf region with uncertainty mounting due to several economic austerity measures, our business continued to be insulated from any negative and adverse impact. Our Subsidiaries/joint ventures, Barjeel Geojit Financial in the UAE, BBK Geojit Securities in Kuwait and QBG Geojit Securities in Oman continued to record robust business operations and are expected to improve their profitability in the coming years.


COVID-19 outbreak was declared as a global pandemic by World Health Organisation (WHO) on 11th March 2020. Indian authorities have followed an approach of complete lockdown since 24th March 2020 starting with three-week complete lockdown, during which only defined essential services were operating with limited capacity. The lockdown kept on getting extended with gradual and modest relaxations. Stock broking service has been declared as an essential service and accordingly, the Company has been in operation consistently with minimal permitted staff. Accordingly, as of 31st March 2020, based on the facts and circumstances existing as of that date, the Company does not anticipate any material uncertainties which affects its liquidity position and also ability to continue as a going concern. However, the impact assessment of COVID-19 is a continuing process given the uncertainties associated with its nature and duration.

RISK EVALUATION AND MITIGATION Product risk: The Companys future performance is dependent on the success of product acceptance by customers. Every new product launch involves capital investment and the failure of the product will thereby lead to negatively impact financial performance.

Risk mitigation: The Company has a well-diversified bouquet of products and services including brokerage, mutual fund distribution and portfolio management. It has been pioneered in launching several new products in Indian market, including online depository operations, rubber future trading, internet and mobile trading. The Company also launched several other innovative products like Selfie and Fund Genie to meet the needs of its aspiring customers.

Regulatory risk: As the Company operates as a financial services provider, it is governed by several regulations, statutory bodies and regulators. Any non-compliance of laws or non-adherence to the guidelines may pose significant risks to business operations. The failure could be due to omission, misinterpretation, lack of knowledge or communication.

Also, in the past few years, with an objective to bring transparency and trust in the industry, regulators like SEBI and AMFI took several initiatives, which may result in short-term business performance, namely promoting direct MF sales and reducing commissions.

Risk mitigation: The Company has a dedicated team of experienced professionals for the compliance function. This team supports the corporate function on a realtime basis, in case of any material changes in compliance requirements. In addition, the internal auditor also keeps a vigil on compliance and regulatory matters.

Operational risk: The Company operates in varied and complex transactions related to several products and services through a large pool of employees, spreading across locations. Due to this reason, any lack of action, omission, miscommunication, misrepresentation or misdeed may lead to reputational and financial loss for the Company.

Risk mitigation: The Company has well-defined processes and systems across hierarchies and location for the critical business operations. To monitor these processes, MIS and audits are undertaken at regular intervals. In addition, the Company has a maker/checker mechanism, which reduces such risks to a great extent.

Financial risk: The Company is operating in a fast-paced industry. Any changes in the macro-environment, consumer preferences, regulatory policies, and financial market behaviors may create an adverse impact on the Companys operating and financial performance.

Risk mitigation: Over the past three decades, the Company has become a reputed brand in the financial services industry through its wide reach and customer centricity. The Companys well-diversified product portfolio with widespread distribution in its areas of operations mitigates any concentration risks, regional, or any product-specific risks.

Technological risk: In the past few years, technology has become the backbone of the financial services sector. Any redundancies, obsoleteness or failure in technology adaptation may adversely impact the Companys competitiveness and operations.

Risk mitigation: Investments in upgradation and innovation in IT & systems is under the focus strategy of the Company. A dedicated team foresees future requirements and implements available technologies to enhance its efficiencies. Its robust systems, a dedicated professional team and continuous upgrade helps the Company mitigate its technology-related risks.

Strategy risk: To achieve growth, the Company takes several strategic decisions in terms of products, pricing, marketing, and technology. In case of any failure in strategy, the financial performance of the Company can be adversely impacted.

Risk mitigation: With an experience of over three decades and direct connect with clients, the Companys strategies are future-oriented with prudent capital allocation and well considerate of risks and challenges.

Competition risk: The Company is operating in high growth and a fiercely competitive industry. Aggressive pricing, heavy advertising, high marketing and sales costs may adversely impact the financial performance.

Risk mitigation: The Companys utmost focus on customer satisfaction, technology innovation and wide reach has enabled to build a strong retail brand.


The Company has internal audit system which is effective and commensurate with the size of its operations. Well-defined processes, guidelines and procedures and adequate internal information systems enable the Company to enhance the internal controls. The Company maintains adequate records and documents as required by law and decisionmaking is made easier due to proper information flow.

Internal audits and checks are regularly conducted and internal auditors recommendations are considered for improving systems and procedures. The Companys robust internal control systems enables safeguarding sensitive data, ease out audit process, maintenance of proper accounting controls, monitoring of operations and conservation of assets. Internal controls also ensure strict adherence and compliance with statutes and laws.

The Companys Audit Committee reviews the internal control system and looks into the observations of the statutory and internal auditors. Appropriate actions, as deemed necessary to ensure sustainability and future growth prospects of the Company, are taken in a timely fashion. The Audit function provide reasonable assurance regarding the effectiveness and efficiency of operations, safeguarding of assets, reliability of financial records and reports and compliance with applicable laws and regulations. The internal controls facilitate prompt detection and redressal of any deviations in business operations. The controls put forth an accurate summary of the organizations position at all times.


The Companys HR policies ensure working together with the employees for their personal and professional development. Training and employee motivation is an integral part of the Company. High retention rate is achieved as capable employees are provided with ample growth opportunities and rewards to climb up the corporate ladder. Employees are also rewarded for excellent work in day-to-day work enhancing productivity and efficiency. As on 31st March 2020, the total strength of the Companys employees stood at 2,031 excluding casuals & contract staffs.


This document contains some statements about expected future events, financial and operating results of Geojit Financial Services Limited, which are forwardlooking. 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.