Indbank Merchant Banking Services Ltd Management Discussions

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 (Equity & Derivatives segments), BSE (Equity & Derivatives), 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.

During the year your company has earned a gross income of Rs.2680.88 lakhs as against Rs.2494.83 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.15709.18 crores during the year as against Rs.12067.72 crores in the previous financial year. Your company also provides Depository services to institutions and retail customers and has 91360 accounts under DP operations and 50319 accounts under broking operations.

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.

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.

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.1656.66 lakhs for FY 2024-25 from Rs.1540.34 lakhs for the pervious FY 2023-24 registering an increase of 7.55%.

2. Income from DP operations has decreased by 0.52% to Rs.322.97 lakhs from Rs.324.67 lakhs for the previous year ended 31.03.2024 due to decrease in off market transactions.

3. Income under Merchant Banking has decreased by 1.88% to Rs.5.62 lakhs from Rs.7.50 lakhs for the previous year ended 31.03.2024.

4. Income from distribution of Mutual Funds has increased by 2.02% to Rs.25.37 lakhs from Rs.23.35 lakhs for the previous year ended 31.03.2024.

5. Other income has increased by 11.90% to Rs.670.26 lakhs from Rs.598.97 lakhs for the previous year ended 31.03.2024 due to increase in interest income and 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 7.46% to Rs.2680.88 lakhs from Rs.2494.83 lakhs for the previous year ended 31.03.2024.

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 of your company comprise a mix of 3 Officers on deputation from Indian Bank and 97 employees on direct rolls. The employees are well qualified and experienced in their field of operations.

The Share Capital of your company comprises 44378200 number of Equity shares of Rs.10/- each. Your companys shares are listed in BSE and The National Stock Exchange. There is no change in share capital of the company during the year.

The accumulated profits of the pervious years has been carried over to the reserves and the Reserves & surplus stands at Rs.4727.35 lakhs as on 31.03.2025.

The current liabilities have increased to Rs.2643.84 lakhs from Rs. 2297.04 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.167.78 lakhs from Rs.159.26 lakhs on account of additional provisions made for encashment of leave on actuarial valuation as at the end of the year.

Property plant and equipment have decreased by Rs.15.90 lakhs in view of disposal of old assets. Investment property has decreased by Rs.7.66 lakhs due to provision of depreciation and impairment.

Other Investments at FVTPL of your company comprise of quoted shares and unquoted investments. Net investments have decreased to Rs.182.86 lakhs as on 31.03.2025 as against Rs.244.24 lakhs in the previous year in view of reduction in the fair value of quoted investments as on 31.03.2025.

Non-current Other Financial Assets have increased from Rs.8304.97lakhs to Rs.9314.76 lakhs due to increase in fixed deposits having maturity period above 12 months.

During the year the company has withdrawn provision of to the extent of Rs.13.41 lakhs towards deferred tax asset in the profit and loss account. Accordingly, the net deferred tax assets have increased from Rs.150.39 lakhs in the previous year to Rs.163.80 lakhs in the current year.

The current assets have increased to Rs.1875.40 lakhs as on 31.03.2025 from Rs.1602.64 lakhs as on 31.03.2024 in view of increase in trade receivables and increase in current tax assets as on 31.03.2025.

Due to increase in the volume of business in stock broking activities, the fee based income from stock broking operations has increased to Rs.1656.66 lakhs for FY 2024-25 from Rs.1540.34 lakhs for the pervious FY 2023-24 registering an increase of 7.55%.

Income from DP operations has decreased by 0.52% to Rs.322.97 lakhs from Rs.324.67 lakhs for the previous year ended 31.03.2024 due to decrease in off market transactions. Income under Merchant Banking has decreased by 1.88% to Rs.5.62 lakhs from Rs. 7.50 lakhs for the previous year ended 31.03.2024. Income from distribution of Mutual Funds has increased by 2.02% to Rs.25.37 lakhs from Rs.23.35 lakhs for the previous year ended 31.03.2024.

Other income has increased by 11.90% to Rs.670.26 lakhs from Rs.598.97 lakhs for the previous year ended 31.03.2024 due to increase in interest income and net gain on fair value changes in investments on equity shares.

Direct cost has increased from Rs.149.86 lakhs to Rs.157.49 lakhs due to increase in volume of transactions as compared to the previous year. Employee benefit expenses have increased from Rs.836.77 lakhs in the previous year to Rs.897.50 lakhs in the current year mainly due to increase in performance linked incentive by Rs.16.08 lakhs due to increase in brokerage income, increase in expenditure on leave encashment by Rs.5.53 lakhs on account of changes in service regulations and balance increase due to absorption of contract employees on rolls of the company, promotion of employees and increase in DA given for employees.

Depreciation and amortization expenses has increased to Rs.43.79 lakhs in FY 2024-25 from Rs.37.91 lakhs in FY 2023-24.

Finance Cost has increased from Rs.7.13 lakhs to Rs.12.18 lakhs due to increase in overdraft interest charged by bank for more utilization of OD limit in the current year.

Other expenses have increase from Rs.279.84 lakhs to Rs.394.86 lakhs mainly due to increase in data center charges by Rs.52.78 lakhs towards hosting charges and managed service cost for hosting of our servers at AWS Cloud (AWS Cloud hosting charges for FY 2023-24 were Rs.3.62 lakhs due to free of cost provision of servers by AWS) and expenditure of Rs.15.77 lakhs towards software upgradation and hosting charges of Indwealth Mutual fund software.

Your company will continue to focus its efforts to increase its activities under fee-based business in addition to concentrating on recovery of overdues 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.

The preparation of financial statements of Indbank Merchant Banking Services Limited for the year ended 31 March 2025 in accordance with the financial reporting framework prescribed under the Companies Act, 2013 (Act) is the responsibility of the management of the company. The statutory auditors appointed by the Comptroller and Auditor General of India under section 139 (5) of the Act are responsible for expressing opinion on the financial statements under Section 143 of the Act based on independent audit in accordance with the standards on auditing prescribed under Section 143(10) of the Act. This is stated to have been done by them vide their Audit Report dated 24.04.2025. I, on behalf of the Comptroller and Auditor General of India, have decided not to conduct the supplementary audit of the financial statements of Indbank Merchant Banking Services Limited for the year ended 31 march 2025 under section 143 (6) (a) of the Act.