Gretex Corporate Services Ltd Management Discussions

We are a Merchant Banker registered with SEBI under Category I, boasting a proven track record exceeding a decade in the field of Merchant Banking. We are offering diversified financial and consultancy services in the areas of Capital Markets, Corporate Finance, Corporate Restructuring, Debt Syndication, Compliance advisory. Our expertise has been recognized through prestigious accolades, such as being honoured as the Top Volume Performer for SME IPO in India for both FY 2017-18, FY 2020-21, FY 20212022 and FY 2022-23 by BSE Limited. On August 9, 2021, our company became listed on BSE SME India. During the Year under review, the Company has also filed application with BSE and NSE for migration to Main board which is under process. During the month June 2024, the company has completed and Listed one of its client Company on Main Board platform of BSE Limited and NSE Limited. Since our establishment, our primary goal has been to offer a comprehensive range of financial and capital market services to esteemed clients throughout India. Our Registered and corporate offices are in Mumbai, while our branch offices operate in Kolkata.

For more than eight years, our company has been actively engaged in the SME segment of the primary market, reflecting our deep commitment to supporting small and medium-sized enterprises. The SME platform offers an investor-friendly ecosystem that enables businesses across India-many of which were previously part of the unorganized sector—to transition into a regulated and structured environment. It serves as a vital avenue for SMEs and start-ups to raise capital for growth and expansion, while also attracting early-stage investors.

Building on our experience and success in the SME space, we have also expanded our participation to the main board of the stock exchange. This strategic involvement allows us to support more mature enterprises with broader capital requirements, providing them with enhanced visibility, improved liquidity, and access to a wider investor base. Our dual presence across both platforms reinforces our commitment to fostering growth across all stages of business development.

As a Category I Merchant Banker, our role encompasses various responsibilities. We lead and syndicate large, small and mediumsized IPOs, FPOs, rights issues, composite issues, QIPs, PIPE deals, and other fund raising activities. We offer advisory for mergers and acquisitions, open offers, delisting offers, buybacks, compliance health checks, and the issuance of due diligence certificates. Additionally, we offer valuation and advisory services for foreign investments, ESOP certifications, fairness opinions for amalgamation schemes, mergers, spin-offs, and more. Our income primarily stems from merchant banking fees, and we have built a strong reputation in the primary market through the successful execution of 52 SME IPOs.

Since our inception, our companys objective has been to offer innovative and out-of-the-box solutions to our clients while ensuring compliance and delivering optimal client satisfaction. Our team is actively working towards listing more SME IPOs and Main Board IPOs on both NSE and BSE.

Global Economic Landscape: Growth Tested Amid Trade Disruptions

The global economy weathered FY 2024-25 amid intensifying headwinds. Following the United States sweeping tariff announcements in early 2025, global trade policy uncertainty surged to its highest levels in decades. The IMF revised its global growth outlook to 2.8% for 2025, down from 3.3% in its January forecast, citing trade frictions, softening consumer demand, and tightening financial conditions. Advanced economies are expected to grow at a subdued 1.4%, while emerging markets, including large Asian economies, are forecast to expand by 3.7%.

Disinflation progressed unevenly across regions. While inflationary pressures eased, global headline inflation is expected to average 4.3% in 2025, still above many central banks targets. With core inflation proving sticky and services inflation elevated, monetary authorities in both advanced and emerging economies largely maintained a cautious stance. The US Federal Reserve held rates at elevated levels (5.25%-5.5%) through most of FY24-25, while select emerging economies began pivoting toward rate cuts to revive growth.

Capital markets reflected macroeconomic volatility. Bond yields climbed amid higher term premiums and fiscal uncertainty, and equity indices witnessed valuation corrections, particularly in developed markets exposed to global supply chains. Industrial activity remained mixed, with strength in parts of Asia offset by persistent weakness in European manufacturing hubs.

These shifts are reshaping global financial intermediation. Fragmenting supply chains, a renewed tilt toward strategic regionalism, and tightening capital access are amplifying the role of agile, mid-market financial platforms. For merchant banking firms like Gretex, these dynamics present both risk and opportunity — requiring heightened focus on capital efficiency, regulatory fluency, and cross-border syndication.

Outlook for FY 2025-26

As of Q1 FY 2025-26, forward-looking indicators suggest a cautiously improving macro environment. The IMFs reference forecast anticipates global growth stabilizing at 3.0% in 2026, contingent on easing trade tensions and fiscal prudence. Early signs of monetary easing in select economies — including India, Brazil, and parts of Southeast Asia — could boost investment sentiment. However, downside risks persist, including geopolitical spillovers, policy divergence across central banks, and fragility in lowerrated sovereigns and corporates.

In the context of capital markets, a mild uptick in IPO activity and cross-border M&A is expected, particularly in sectors aligned with digital infrastructure, green energy, and industrial realignment. For FY 2025-26, financial intermediaries that remain agile in deal origination, compliance, and structured financing will be better placed to harness market recalibration.

Source: World Economic Outlook April-25 - International Monetary Fund Indias Economy: Anchored in Stability, Poised for Transition

Indias macroeconomic framework continued to exhibit resilience through FY 2024-25, with steady growth, moderating inflation, and a calibrated policy environment amidst global volatility. GDP growth for the year is estimated at 6.5%, driven by private consumption and steady government expenditure, while Gross Value Added (GVA) expanded by 6.4%, supported by the agriculture and services sectors. Despite global trade tensions and capital flow uncertainty, India maintained internal macroeconomic equilibrium, distinguishing itself as a relative outlier among major economies.

The disinflationary cycle in India was more measured than in advanced economies. While headline CPI inflation spiked to 6.2% in October 2024 due to food price shocks, it moderated significantly by February 2025 to 3.6%, aided by a sharp drop in vegetable inflation and subdued core inflation. This guided the Reserve Bank of India (RBI) to transition from a restrictive stance to neutral, initiating a 25-bps repo rate cut in February 2025, bringing the rate down to 6.25%, its first rate cut since February 2023.

On the external front, the current account deficit (CAD) was effectively contained at 1.2% of GDP in Q3 FY25, largely due to a record-high services trade surplus, and monthly merchandise trade deficit averaging USD 19-20 billion. Forex reserves surged to over USD 645 billion by March 2025, translating to over 10 months of import cover, offering significant insulation from external shocks.

Indias fiscal metrics reflected continued commitment to consolidation. The fiscal deficit for FY24 was 5.8% of GDP, in line with revised targets, supported by buoyant tax revenues. GST collections averaged Rs1.7 lakh crore/month, registering double-digit growth over FY23, and capital expenditure formed nearly 22% of total government spending, a marked improvement in expenditure quality.

Bond markets responded favourably to this stability, with 10-year G-sec yields softening to ~7.1% by the end of FY25 from ~7.32% at the start. The benchmark yield moderation signals investor confidence in Indias inflation trajectory, fiscal prudence, and real policy rates. These movements bear significance for capital markets, particularly for primary issuances, corporate debt markets, and IPO pipelines — areas directly tied to the merchant banking ecosystem in which Gretex operates.

Indias public market activity reflected this macroeconomic confidence. While global equity indices remained volatile, India attracted sustained flows into equity and hybrid instruments. Strong domestic institutional participation and deepening capital markets continue to underpin Indias growth financing. These factors have created a structurally supportive backdrop for merchant banks, capital market advisors, and SME-focused IPO facilitators like Gretex.

Outlook for FY 2025-26

India is projected to grow at 6.7% in FY26, as per RBIs baseline estimates, supported by a better-than-expected rabi output, steady industrial recovery, and revival in investment momentum. Inflation is expected to remain moderate, with headline CPI projected at 4.2%, contingent on a normal monsoon and stable food prices. Importantly, fiscal consolidation will continue, with a central deficit target of 4.4% for FY26, and the recent inclusion of Indian G-secs in global bond indices is likely to enhance capital inflows, reduce borrowing costs, and deepen market liquidity.

This evolving macro environment offers fertile ground for financial intermediation. With broad-based improvements across demand, liquidity, and confidence metrics, Indias capital markets are expected to enter a more accommodative and expansionary phase.

Source: Economic Survey 2024-25 - Ministry of Finance: Monetary Policy Report April-25 - Reserve Bank of India

IPO Mandates in FY 2025 and Evolution of Execution Practices

The accompanying table provides a comprehensive analysis of IPOs executed by Gretex during FY25, detailing each transactions issuing company, exchange platform, issue type, and offering size. This data serves as a foundation for assessing the evolution in Gretexs IPO mandate profile and execution capabilities.

Companys Name	Exchange	Platform	Issue Type	Size (In Rs Crores)
Associated Coaters Ltd.	BSE	SME	Fixed Price	5.11
Akme Fintrade (India) Ltd.	BSE	Mainboard	Book Building	132.00
Rapid Multimodal Ltd.	BSE	SME	Fixed Price	8.49
Shubham Papers Ltd.	BSE	SME	Book Building	93.70
Paramount Dye Tec Ltd.	NSE	SME	Book Building	28.43
Rapid Fleet Management Services Ltd.	NSE	SME	Book Building	43.87
Retaggio Industries Ltd.	BSE	SME	Fixed Price	15.50

IPO Methodology Framework

In the Indian capital markets, Initial Public Offerings are primarily executed through two distinct methodologies:

Fixed Price Issues: The offer price is pre-determined and disclosed in the offering documents, with investor demand evaluated after the issue opening.

Book Building Issues: Employing a market-driven price discovery mechanism wherein investors submit bids within a specified price band. Final allocation is determined based on demand from various investor categories, including Qualified Institutional Buyers (QIBs), High Net Worth Individuals (HNIs), and retail participants.

Book Building issues typically correspond to larger offerings with more complex structures. These issues are subject to enhanced regulatory oversight and require comprehensive investor outreach programs. A merchant bankers proficiency in executing Book Building IPOs is generally indicative of its institutional credibility, operational sophistication, and market position.

Strategic Shift in Execution Approach

Historically, Gretexs IPO portfolio has been predominantly weighted toward Fixed Price offerings, with a cumulative track record of 36 Fixed Price issues compared to 16 Book Building transactions.

However, FY24 marked a significant inflection point in this distribution, with 13 of the total 16 Book Building IPOs being executed since that fiscal year. This strategic pivot correlates directly with the substantial increase in average transaction size managed by the firm, suggesting that the transition toward Book Building methodologies represents a strategic response to the firms expanding mandate scope.

Transaction Size Progression:

The evolution in execution methodology is underpinned by a material expansion in average IPO transaction value. The mean issue size has increased by approximately 20-fold, from Rs2.29 crore in FY20 to Rs46.73 crore in FY25. This progression demonstrates Gretexs enhanced capacity to structure and execute larger capital market transactions within the mid-market segment.

Strategic Implications

The transformation in Gretexs mandate profile evidences the progressive institutionalization of the firms capital markets practice. The increasing prevalence of Book Building IPOs—concurrent with larger transaction sizes—indicates a meaningful advancement in the firms operational scale and execution sophistication. These transactions necessitate broader institutional investor engagement, more rigorous regulatory compliance frameworks, and robust price discovery mechanisms—all hallmarks of more sophisticated capital market offerings.

The firms increasing participation in such mandates underscores the development of its technical capabilities, the deepening of its investor relationships, and its expanding strategic position within Indias mid-market merchant banking landscape.

Capital Market Sectoral Coverage

Since inception, the company facilitated public offerings across a diverse set of sectors, reflecting the breadth of economic activity within the segments it serves. A review of historical transactions indicates that the majority of mandates have been concentrated within the Consumer Goods, Industrial Products, and Services sectors, which together account for a substantial share of overall IPO activity executed.

Within the consumer segment, issuers have spanned sub-categories such as jewelry, apparel, decorative materials, and lifestyle- oriented products, representing discretionary demand across both urban and semi-urban consumption bases. The industrial segment, by contrast, has comprised businesses involved in engineering components, packaging solutions, lift systems, and recycled materials, pointing to capital formation activity aligned with infrastructure, logistics, and manufacturing ecosystems.

The resulting sectoral distribution reflects the companys operational exposure to both consumption-led and core economy sectors, while also highlighting the role of public markets in supporting enterprises across a broad range of operating models and growth profiles.

Forward Looking Strategy

As part of its evolving capital markets strategy, Gretex Corporate Services Ltd. is transitioning from a predominantly SME IPO- focused model to a concentrated emphasis on Mainboard IPOs. This shift is informed by the changing dynamics of the Indian capital markets, the growing scale of investor appetite, and the companys readiness to engage with more complex, institutionally driven transactions.

The company believes that this strategic reorientation will enable it to focus on transactions in the INR 200-400 crore range, a significant step up in scale from prior mandates. These larger ticket transactions are expected to yield stronger fee economics, while also necessitating deeper institutional engagement across Foreign Institutional Investors (FIIs), Domestic Institutional Investors (DIIs), Qualified Institutional Buyers (QIBs), and Mutual Funds.

In line with this transition, the company has established an internal benchmark to selectively engage with SME IPOs. This ensures that Gretex continues to allocate resources efficiently and remain aligned with its long-term value creation objectives.

The shift to Mainboard transactions has broader implications beyond revenue and transaction size. It requires a more sophisticated approach to diligence, transaction structuring, regulatory engagement, and investor outreach. As a result, the company is strengthening its internal capabilities, including the upskilling of execution teams and integration of advanced analytical tools. This will enable a higher quality of output, aligned with the standards expected in Mainboard listings.

Furthermore, this evolution marks a meaningful progression in the firms institutional positioning. As deal complexity and visibility increase, the firm expects to build deeper relationships with market regulators, stock exchanges, and large issuer groups. Over time, this could enhance the companys ability to shape industry best practices and participate in broader policy dialogue.

On a strategic level, the company views this transition not merely as a shift in segment focus, but as the foundation for a wider institutional evolution. Mainboard IPOs offer the potential to expand into adjacent advisory services such as qualified institutional placements (QIPs), M&A advisory, and corporate restructuring mandates. This would allow the firm to diversify its revenue base and offer integrated capital market solutions to a more sophisticated client base.

Importantly, this transformation is mirrored in the companys own corporate journey. Gretex Corporate Services Ltd. has initiated the necessary steps to migrate from the SME platform to the Mainboard. The regulatory filings and procedural formalities are already underway as of the reporting date. This transition is both symbolic and strategic, reinforcing the companys intent to operate in a more demanding and opportunity-rich segment of the market.

While this repositioning introduces new challenges—including longer deal cycles and increased exposure to market volatility—the company remains confident that its focused approach, institutional discipline, and commitment to execution excellence will serve as strong foundations for sustainable, long-term growth.

Risks and Concerns/ opportunities and threats

The company operates in a domain that is structurally sensitive to capital market conditions and regulatory oversight. As a merchant banker facilitating public market access, its operating environment is shaped by a combination of macroeconomic cycles, investor sentiment, transaction readiness, and the evolving expectations of both clients and regulators. While the company endeavours to maintain business continuity and compliance, the following risks warrant particular attention:

Market Dependency and Capital Cycle Sensitivity: The merchant banking business is inherently linked to capital market cycles. During periods of ample liquidity, elevated valuations, and high-risk appetite, the volume of IPO mandates typically rises. Conversely, in times of valuation compression or volatile market conditions, companies tend to defer listing plans, resulting in revenue variability. This cyclicality remains a structural risk that is partly mitigated by diversification across sectors and issue sizes but cannot be eliminated.

Economic and Government Policy: Merchant banking activity is closely tied to overall economic conditions and government policy direction. Slowdowns in growth, reduced public spending, or shifts in fiscal priorities can dampen market sentiment and reduce fundraising activity. Uncertainty in economic outlook or policy execution may delay transactions and impact client mandates, making the industry vulnerable to macroeconomic and policy-driven fluctuations.

Talent Concentration and Attrition Risk: Merchant banking is a knowledge- and relationship-driven business. The ability to originate, structure, and execute public issues rests significantly on the experience and capabilities of qualified professionals. Any unanticipated attrition, particularly of senior personnel or deal leads, can impact business momentum, execution bandwidth, and client confidence.

Technology Disruption and Cost Competitiveness: The increasing digitization of regulatory filings, issue documentation, and investor engagement is transforming the economics of capital markets intermediation. Larger, more capitalized firms with early adoption of workflow automation may be able to offer comparable services at lower cost, thereby exerting pricing pressure on mid-sized players. Maintaining process efficiency and technology adaptability is critical to remaining competitive.

Reputational and Regulatory Exposure: Given the public nature of capital market transactions, reputational risk is pronounced. Any perceived lapse in due diligence, non-compliance with disclosure norms, or association with underperforming issuers can

have outsized impact on brand credibility and regulatory standing. In high-profile mandates, execution missteps may translate into sustained scrutiny or business loss. The company continues to maintain rigorous review processes to mitigate these risks.

Regulatory and Disclosure Compliance Risk: The evolving regulatory environment, especially in the SME segment, requires consistent alignment with changing norms issued by SEBI and stock exchanges. Enhanced scrutiny of merchant bankers, tighter timelines, and mandatory technology-led disclosures introduce compliance risks and potential penalties in case of deviations.

Issuer Quality and Market Feedback Loop: In segments such as SME IPOs, where company fundamentals are sometimes nascent, market feedback post-listing can influence perceptions of the merchant banker. Repeated association with issuers that underperform post-listing could affect investor sentiment and impact future mandate flow.

Sectoral and Promoter Concentration Risk: Concentration of mandates in particular sectors or among specific promoter groups can introduce idiosyncratic exposure, especially if those segments experience regulatory headwinds or investor aversion. Similarly, delays arising from legal disputes, documentation errors, or procedural non-compliance may increase execution risk, affecting both revenue visibility and stakeholder confidence.

Fee Compression and Competitive Pressure: As the number of registered merchant bankers increases and issuer cost sensitivity rises, competitive bidding often leads to fee compression. Without scale advantages or differentiated offerings, margin sustainability may come under pressure over time.

INTERNAL CONTROL SYSTEM AND THEIR ADEQUECY:

The Company has established a well-framed internal control system tailored to the nature and size of its business. It safeguards the Companys assets, detects and prevents errors and frauds, addresses the evolving risks in the business, prepares reliable financial statements in a timely manner, maintains accurate and comprehensive accounting records, and evaluates the reliability of financial controls and compliance with laws and regulations.

The Companys Statutory/Internal Auditors conduct audits of all departments to ensure the implementation of internal controls, presenting Quarterly Reports to the Audit Committee for review. The Audit Committee regularly examines these Reports to ensure seamless operations and minimise the risk of fraud or discrepancies. Additionally, the Statutory Auditors review the Companys internal financial control system and rectify any variances as necessary. The Management implements corrective actions when necessary. No significant inefficiencies were reported during the year.

SEGMENT - WISE OR PRODUCT WISE PERFORMANCE

The Company has delivered a satisfactory financial and operating performance for 2024-25. The total revenue from operations increased to Rs2069.80 Lakhs from Rs1944.13 Lakhs in the previous year, reflecting a strong demand for our services. This growth is attributed to our strategic initiatives/investments and market positioning.

ANALYSIS OF FINANCIAL PERFORMANCE / DISCUSSION OF FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

Due to improvement in markets coupled with a few good assignments for Merchant Banking, we could post a decent performance. The summary of previous two years financial results are given below:-

Financial Highlights	Standalone		Consolidated
	2024-25	2023-24	2024-25	2023-24
Income from operations	2069.80	1,944.13	25886.04	10,899.48
Net Profit after Tax	1249.46	747.55	181.51	3,664.11

THE DETAILS OF SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS

During the financial year, the details of significant change in the key financial ratios i.e. change of more than 25% as compared to the previous year along with the detailed explanation is summarized below on standalone basis:

Sr. No. Key Financial Ratio	FY 2024-25	FY 2023-24	% Variance	Reason
01 Current	2.37	2.46	-3.62%	Current liabilities grew by 279%, slightly outpacing the 265% growth in current assets, resulting in a marginal and acceptable decrease
02 Debt-Equity	0.03	0.00	100%	Increase due to short-term borrowings for working capital requirements in FY25
03 Debt-Service Coverage	0.55	309.98	-99.82%	Decline due to higher finance and lease costs, alongside lower EBITDA in FY25 compared to FY24
04 Return on Equity	0.08	0.09	-8.39%	Lower ROE due to higher equity base following a rights issue, despite higher PAT in FY25
06 Trade Receivables Turnover	31.51	14.22	121.57%	Faster collection efficiency, with the average collection period reducing from 26 days in FY24 to 12 days in FY25
08 Net Working Capital Turnover	3.53	2.87	22.89%	Driven by a 6.46% increase in revenue alongside a 13.37% reduction in the working capital base
09 Net Profit	60.37%	38.45%	56.99%	Includes the impact of abnormally high gains on divestments of equity holdings
10 ROCE	10.14%	12.35%	-17.92%	Lower ROCE due to a higher capital base from the Rights Issue; EBIT includes gains from equity holdings divestment
11 ROI	10.07%	2.85%	253.38%	Due to the impact of significantly high other income

The Return on Net Worth during the FY 2023-24 was 0.09 % as compared to 0.16 % in FY 2022-23. The Return on Net Worth has improved compared to the previous financial year, driven by increased profitability and better operational efficiency. This positive change reflects our strategic initiatives and strong market position.

CAUTIONARY STATEMENT

Statement made in the Management Discussion and Analysis describing the various parts may be "forward looking statement" within the meaning of application securities laws and regulations. The actual result may differ from those expectations depending upon the economic conditions, changes in Government regulation and amendments in tax laws and other internal and external factors.