Management Discussion & Analysis Report
Areas of Business Operations
Your company is engaged in Stock Broking, Depository Participant operations, Distribution of Mutual Fund & other investment products and Merchant Banking. Your company is a member of NSE & BSE (Equity & Derivatives segments), registered with NSDL and CDSL as a Depository Participant and registered with SEBI as a Merchant Banker. Your company is also registered with Association of Mutual Funds of India (AMFI) for distribution of Mutual Fund products.
Operations during the year
During the year your company has earned a gross income of Rs.2494.83 lakhs as against Rs.1832.01 lakhs in the previous year. Under Stock Broking your company has a mix of institutional and individual clients and has achieved a turnover of Rs. 12067.72 crores during the year as against Rs. 10720.50 crores in the previous financial year. Your company also provides Depository services to institutions and retail customers and has 81800 accounts under DP operations and 44990 accounts under broking operations.
Opportunities and Threats Opportunities
Indian economy is fast growing and amongst top growing economies in the world. Seeing the recent trends of money inflow into various mutual funds, it is evident that there is a significant shift from physical assets to financial assets. We are seeing large number of corporates both SMEs and large companies prefer raising funds from the capital markets. There has been robust retail participation in good quality IPOs. Going forward there lies a huge potential and unmatched opportunities for stock broking firms given the steady increase in institutional and public activity in the financial markets.
Threats
Industry as a whole is seeing significant shift and usage of latest and modern technology such as Artificial Intelligence (AI), Data Analytics and various other applications in broking business irrespective of their costs. Online Zero/free brokerages pose a serious threat and disruption for the industry as a whole.
Segment-wise or product-wise performance.
1. Due to increase in the volume of business in stock broking activities, the fee based income from stock broking operations has increased to Rs.1601.09 lakhs for FY 2023-24 from Rs.1244.14 lakhs for the pervious FY 2022-23 registering an increase of 28.69%.
2. Income from DP operations has increased by 38.66% to Rs.324.67 lakhs from Rs.234.14 lakhs for the previous year ended 31.03.2023 due to increase in volume of business under stock broking operations.
3. Income under Merchant Banking has decreased by 91.72% to Rs.7.50 lakhs from Rs.90.54 lakhs for the previous year ended 31.03.2023.
4. Income from distribution of Mutual Funds has increased by 107.25% to Rs.21.45 lakhs from Rs.13.12 lakhs for the previous year ended 31.03.2023.
5. Other income has increased by 122.94% to Rs.538.22 lakhs from Rs.241.42 lakhs for the previous year ended 31.03.2023 due to net gain on fair value changes in investments on equity shares.
6. On the basis of the aforesaid segmental income, total income has increased by 36.18% to Rs.2494.83 lakhs from Rs.1832.01 lakhs for the previous year ended 31.03.2023.
Risk Management & Internal Control Systems
The major risks among others that your company manages include credit risk, liquidity risk, interest rate risk and operational risk. In view of the discontinuance of fund based activities the credit risks on appraisal and disbursement do not arise. The company has put in place an aggressive recovery mechanism for realisation of existing fund-based exposures.
Your company has detailed operating manuals and well laid down delegation of powers to ensure that operational controls are maintained on the business. The policies and procedures are continuously reviewed through interaction between office heads and other support functional heads. Your company also has an adequate internal audit system to ensure feedback on adherence to the defined policies and procedures and regulatory guidelines.
Human Resources
Human Resources of your company comprise a mix of 3 Officers on deputation from Indian Bank and 96 employees on direct rolls. The employees are well qualified and experienced in their field of operations.
Financial Performance Balance Sheet Share Capital
The Share Capital of your company comprises 44378200 number of Equity shares of Rs.10/- each. Your companys shares are listed in BSE and NSE. There is no change in share capital of the company during the year.
Reserves & Surplus
The accumulated profits of the pervious years has been carried over to the reserves and the Reserves & surplus stands at Rs.3899.09 lakhs as on 31.03.2024.
Current Liabilities
The current liabilities have increased to Rs.2297.04 lakhs from Rs.2287.67 lakhs mainly in view of increase in credit balances available in clients accounts under Stock Broking compared to previous year. The provision for leave encashment has increased to Rs.159.26 lakhs from Rs.140.93 lakhs on account of additional provisions made for encashment of leave on actuarial valuation as at the end of the year.
Fixed Assets
Property plant and equipment have decreased by Rs.13.08 lakhs in view of disposal of old assets. Investment property has decreased by Rs.7.76 lakhs due to provision of depreciation and impairment.
Investments
Other Investments at FVTPL of your company comprise of quoted shares and unquoted investments. Net investments have increased to Rs.244.24 lakhs as on 31.03.2024 as against Rs.136.96 lakhs in the previous year in view of fresh investments in quoted shares.
Non-current Other Financial Assets
Non-current Other Financial Assets have increased from Rs.7099.86 lakhs to Rs.8304.97 lakhs due to increase in fixed deposits having maturity period above 12 months.
Deferred Tax Assets
During the year the company has provided Rs.81.01 lakhs towards deferred tax asset in the profit and loss account. Accordingly, the net deferred tax assets have decreased from Rs.237.40 lakhs in the previous year to Rs.150.39 lakhs in the current year.
Current Assets
The current assets have decreased to Rs.1602.64 lakhs as on 31.03.2024 from Rs.1908.78 lakhs as on 31.03.2023 in view of increase in fixed deposits having maturity period more than 12 months.
Profit and Loss account
Revenue from Operations
Due to increase in the volume of business in stock broking activities, the fee based income from stock broking operations has increased to Rs.1601.09 lakhs for FY 2023-24 from Rs.1244.14 lakhs for the pervious FY 2022-23 registering an increase of 28.69%.
Income from DP operations has increased by 38.66% to Rs.324.67 lakhs from Rs.234.14 lakhs for the previous year ended 31.03.2023 due to increase in volume of business under stock broking operations.
Income under Merchant Banking has decreased by 91.72% to Rs.7.50 lakhs from Rs.90.54 lakhs for the previous year ended 31.03.2023.
Income from distribution of Mutual Funds has increased by 107.25% to Rs.21.45 lakhs from Rs.13.12 lakhs for the previous year ended 31.03.2023.
Other income has increased by 122.94% to Rs.538.22 lakhs from Rs.241.42 lakhs for the previous year ended 31.03.2023 due to net gain on fair value changes in investments on equity shares.
Expenses
Direct cost has increased from Rs.114.10 lakhs to Rs.149.86 lakhs due to increase in volume of transactions as compared to the previous year.
Employee benefit expenses have increased from Rs.758.74 lakhs in the previous year to Rs.836.77 lakhs in the current year mainly due to periodic revision of DA payable to employees, promotion of employees with effect from 01.01.2023, salary arrears paid to staff on deputation from Indian Bank due to wage revision and increase in premium paid towards Group Gratuity scheme for employees.
Depreciation and amortization expenses has increased to Rs.37.91 lakhs in FY 2023-24 from Rs.37.13 lakhs in FY 2022-23.
Finance Cost has decreased from Rs.88.90 lakhs to Rs.7.13 lakhs.
Other expenses have decreased from Rs.302.89 lakhs to Rs.279.84 lakhs mainly due to decrease in expenses incurred towards professional services, CSR expenditure and maintenances expenses.
Details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with detailed explanations therefore :
| Particulars | 2023-24 | 2022-23 | Variance in % | Reason for change |
| (i) Interest Coverage Ratio | 167.98 | 6.99 | 2302.36 | Due to increase in operating profit and decrease in interest expenses |
| (ii) Operating Profit Margin Ratio | 46.45 | 31.90 | 45.60 | Due to increase in revenue from operations. |
| (iii) Net Profit Margin Ratio | 35.53 | 18.41 | 92.99 | Due to increase in operating profit. |
| (iv) Current Ratio | 0.70 | 0.83 | -15.66 | Due to reduction in fixed deposits which are less than 3 months. |
Details of change in Return on Net Worth:
| Particulars | 2023-24 | 2022-23 | Variance in % | Reason for change |
| (i) Return on Net Worth | 0.106 | 0.045 | 134.84 | Due to increase in revenue from operations and net profit. |
Financial Results
| Rs.Lakhs | ||
| Sl. No. Particulars | FY2023-24 | FY2022-23 |
| Revenue from Operations | ||
| 1 Interest Income | 415.19 | 319.47 |
| Dividend Income | 1.93 | 1.03 |
| Rental Income | 16.21 | 4.05 |
| Fees and commission Income | 1956.61 | 1590.59 |
| Net gain on fair value changes | 102.47 | (87.51) |
| Total Revenue from operations | 2492.41 | 1827.63 |
| 2 Other Income | 2.42 | 4.38 |
| Total Income (1 + 2) | 2494.83 | 1832.01 |
| 3 Expenses | ||
| Finance Costs | 7.13 | 88.90 |
| Fees and commission expense | 149.86 | 114.10 |
| Impairment on financial instruments | 18.06 | 21.73 |
| Provisions and Write Offs | 0.00 | 0.00 |
| Employee Benefits Expenses | 836.77 | 758.74 |
| Depreciation, amortization and impairment | 37.91 | 37.13 |
| Others expenses | 279.84 | 302.89 |
| Total Expenses | 1329.57 | 1323.49 |
| 4 Profit / (loss) before exceptional items and tax | 1165.26 | 508.52 |
| 5 Exceptional items | 0.00 | 0.00 |
| 6 Profit/(loss) before tax | 1165.26 | 508.52 |
| 7 Tax Expense: | ||
| (a) Current Tax | 278.54 | 168.22 |
| (b) Current Tax -Previous years | (4.16) | 0.00 |
| (c) Deferred Tax | 87.01 | 67.08 |
| Profit / (loss) for the period from continuing operations | 803.87 | 273.22 |
| Profit/(loss) from discontinued operations (After tax) | 96.00 | 77.00 |
| 8 Profit/(loss) for the period | 899.87 | 350.22 |
| Other Comprehensive Income | ||
| Items that will not be reclassified to profit or loss | ||
| (i) Re-measurement gains and (losses) on defined benefit obligations (net) | (18.04) | (17.27) |
| (ii) Income tax relating to items that will not be reclassified to profit or loss | 4.54 | 4.35 |
| Total Other Comprehensive Income (i) + (ii) | (13.50) | (12.92) |
| Total Comprehensive Income for the period | 886.37 | 337.30 |
| Paid up equity share capital | 4437.82 | 4437.82 |
| Earnings per equity share - Basic and Diluted | 2.03 | 0.79 |
Outlook
Your company will continue to focus its efforts to increase its activities under fee-based business in addition to concentrating on recovery of over dues and reduction of Non Performing Assets, disinvestment of quoted and unquoted investments. Your companys involved management network, satisfied clientele, quality manpower, profitable expansion and diligent internal control and cost control measures will enable your company to continue to report better performance in the coming years.
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