OVERVIEW
The financial statements for the year have been prepared in compliance with the
requirements of the Companies Act, 2013 and rules made thereunder, guidelines issued by
the Securities and Exchange Board of India (SEBI), the Accounting Standards prescribed by
the Institute of Chartered Accountants of India and the Generally Accepted Accounting
Principles in India and Secretarial Standard issued by the Institute of Company
Secretaries of India. Management accepts responsibility for the integrity and objectivity
of these financial reported statements. The estimates and judgments relating to the
financial statements have been made on a prudent and reasonable basis, so that the
financial statements reflect in a true and fair manner and reasonably present our state of
affairs, profits and cash flows for the year.
GLOBAL ECONOMY
The on-going geopolitical disturbances beginning from late February
2022 delivered a brutal blow to the global economy already reeling from the COVID
pandemic supply chain and logistics disruptions, elevated inflation and bouts of financial
market turbulence. Since then the global economy has been overcast with inflation and
massive supply chain disruptions brought about by economic costs of war and retaliatory
sanctions with emerging markets and developing economies bearing the brunt. Fuel and food
prices have increased rapidly, hitting vulnerable populations in low-income countries
hardest. Global growth is projected to slow from an estimated 6.1% in 2021 to 3.6% in 2022
and 2023. War-induced commodity price increases and broadening price pressures have led to
2022 inflation projections of 5.7% in advanced economies and 8.7% in emerging market and
developing economies. Likewise, the World Bank estimates global growth is forecast to edge
up only slightly to a still-subdued 3% in 2023 as high commodity prices and continued
monetary tightening are expected to persist. Moreover, the outlook is subject to various
downside risks, including intensifying geopolitical tensions, growing stagflationary
headwinds, rising financial instability, continuing supply strains, and worsening food
insecurity sharply limiting policy space.
Since the RBIs meeting in June 2022, the global economic and financial environment
deteriorated with the combined impact of monetary policy tightening across the World and
the persisting war in Europe heightening risks of recession. Gripped by risk aversion,
global financial markets experienced surges of volatility and large sell-offs. The US
dollar index soared to a two-decade high in July 2022. Both advanced economies (AEs) and
emerging market economies (EMEs) witnessed weakening of their currencies against the US
dollar. EMEs are experiencing capital outflows and reserve losses which are exacerbating
risks to their growth and financial stability.
INDIAN ECONOMY
Spillovers from geopolitical shocks are imparting considerable uncertainty to the
inflation trajectory. More recently, food and metal prices have come off their peaks.
International crude oil prices have eased in recent weeks but remain elevated and volatile
on supply concerns even as the global demand outlook is weakening. The appreciation of the
US dollar can feed into imported inflation pressures. Rising kharif sowing augurs well for
the domestic food price outlook. The shortfall in paddy sowing, however, needs to be
watched closely, although stocks of rice are well above the buffer norms. Firms polled in
the Reserve Banks enterprise surveys expect input cost pressures to soften across sectors
in H2.
Cost pressures are, however, expected to get increasingly transmitted to output prices
across manufacturing and services sectors. Available information for April-May 2022
indicates a broadening of the recovery in economic activity. Urban demand is recovering
and rural demand is gradually improving. Merchandise exports posted robust double-digit
growth for the fifteenth month in a row during May 2022 while non-oil non-gold imports
continued to expand at a healthy pace, pointing to recovery of domestic demand. CPI
headline inflation rose further from 7.0% in March 2022 to 7.8% in April 2022 eased to
7.0% during May – June 2022. Food inflation has registered some moderation,
especially with the softening of edible oil prices, and deepening deflation in pulses and
eggs. Fuel inflation moved back to double digits in June 2022 primarily due to the rise in
LPG and kerosene prices. While core inflation (i.e., CPI excluding food and fuel)
moderated in May – June 2022 due to the full direct impact of the cut in excise
duties on petrol and diesel pump prices, effected on May 22, 2022, it remains at elevated
levels.
The RBI, which had maintained the Repo Rate at 4.00% since May 2020 onwards, increased
the Repo Rate to 4.40% in May 2022 and then to 4.90% in June 2022. On August 5, 2022 the
RBI further increased the Repo Rate by 50 basis points to 5.40%. Consequently, the
Standing Deposit Facility (SDF) rate stands adjusted to 5.15% and the Marginal Standing
Facility (MSF) rate and the Bank Rate to 5.65%. The RBI has chosen to remain focused on
withdrawal of accommodation to ensure that inflation remains within the target going
forward, while supporting growth of the economy.
The Indian economy remains resilient in the face of formidable global headwinds.
Knock-on effects of geopolitical spillovers are visible in several sectors, tapering the
pace of recovery. In spite of this overwhelming shock, there are sparks in the wind that
ignite the innate strength of the economy and set it on course to becoming the fastest
growing economy in the world. Rural consumption is expected to benefit from the
brightening agricultural prospects. The demand for contact-intensive services and the
improvement in business and consumer sentiment should bolster discretionary spending and
urban consumption. Investment activity is expected to get support from the Governments
capex push, improving bank credit and rising capacity utilisation. As per the RBIs
industrial outlook survey, Companies expect sequential expansion in production volumes and
new orders in Q2:2022-23, which is likely to sustain through Q4. However, protracted
geopolitical tensions, the upsurge in global financial market volatility and tightening
global financial conditions continue to weigh heavily on the outlook. Taking into account
these factors and on the assumption of a normal monsoon in 2022 and average crude oil
price (Indian basket) of US$ 105 per barrel, RBI has retained the inflation projection at
6.7% in 2022-23 and the real GDP growth projection for 2022-23 at 7.2%.
1. COMPANYS BUSINESS AND SERVICES OFFERRED
Your Company is a Category-I Merchant Banker registered with the Securities &
Exchange Board of India (SEBI). The Company offers following Services to the Corporate
Sector:
1. Merchant Banking Services:
a) Syndication of Funds through Equity Capital Market – Initial Public Offers
(IPOs), Offer For Sale, Rights Issue, Qualified Institutional Placements (QIPs).
b) Other Merchant Banking Services – Alternative Investment Funds (AIF)
Certifications, Buyback, Takeover, Delisting, Fairness Opinion, etc.
2. Mergers and Acquisition Advisory services.
3. Syndication of Funds through Seed Funding, Venture Capital, Angel Investors, Family
Offices, Private Equity Funds, etc.
4. Syndication of Debt through Banks, Financial Institutions, Non-Banking Finance
Company, etc.
5. Channel Financing
6. Advisory on Project Financing, Debt Restructuring, Debt Refinancing and One Time
Settlement (OTS)
7. Valuation services for:
• Overseas Direct Investment transactions
• Foreign Direct Investment transactions
Transactions coming under the purview of Income Tax
Rules
• Requirements under Companies Act
• Requirements under SEBI Regulations
8. ESOP Advisory services including Fair Market Value
Certification
9. Corporate Advisory Services
10. Arrangers to shares of Unlisted / Pre-IPO companies
FINANCIAL REVIEW:
Consolidated
Your Company earned the total consolidated revenue of Rs.695.48 Lakhs as against Rs.
629.08 Lakhs in the previous year. The total expenditure during the year is Rs. 708.53
Lakhs as against Rs. 588.40 Lakhs in the previous year. The net profit for the year under
review was Rs. 38.81 Lakhs as against net loss of Rs. 15.53 Lakhs in the previous year.
Standalone
During the year under review, the total standalone revenue was Rs.256.27 Lakhs as
against Rs. 223.67 Lakhs in the previous year. The total expenditure during the year is
Rs. 274.59 Lakhs as against Rs. 217.58 Lakhs in the previous year. The net loss for the
year under review was Rs. 13.91 Lakhs as against net loss of Rs. 4.83 Lakhs in the
previous year.
KEY FINANCIAL RATIOS
Sr. Ratio |
31.03.2023 |
31.03.2022 |
Key Ratio Analysis |
No. |
|
|
|
| 1 Debtors Turnover Ratio |
3.79 |
4.63 |
- |
| 2 Inventory Turnover Ratio |
Nil |
Nil |
- |
| 3 Interest Coverage Ratio |
-2.25 |
2.13 |
The decrease in profit before tax led to the in the ratio |
| 4 Current Ratio |
17.13 |
5.31 |
There is increase in current ratio due to increase in current assest |
| 5 Debt Equity Ratio |
0.010 |
0.038 |
- |
| 6 Operating profit Margin |
-0.060 |
0.05 |
The decrease in profit before tax led to the change in the ratio |
BUSINESS OUTLOOK:-
As part of its service areas, your Company is striving hard for getting mandates across
business verticals which includes Private Placements involving PE/VC Funds, managing
Initial Public Offers, Rights Issues, Follow on Offers, Qualified Institutional Placements
and Preferential Placements to institutional and strategic investors, Valuation Services
and Corporate Advisory Services. Our expertise in due diligence, structuring, pricing and
distribution combined with independent, unbiased and objective recommendation as corporate
advisory has enabled us to face competition and to provide a wide range of investment
banking services to a rich pipeline of marquee clients.
Your Company is also actively involved in providing Certification for proposed /
existing Schemes of AIFs and arranging shares of Unlisted/ Pre-IPO Companies.
Inspite of the continuous effects of the COVID-19 pandemic and disruptions caused by
the geopolitical tensions in Europe, your Company foresees immense growth opportunities
due to the subsequent pick-up in economic activity, increased preference for India as an
investment destination and also as a substitute for China, increasing role of the private
sector, possible opening up of the Agriculture sector, further removal of Trade barriers,
increased privatisation of PSUs, etc. All these factors will usher in a period of
sustained growth, opening vast opportunities for your Company in its core areas of
business.
4. RISKS AND CONCERNS:-
The current business environment is increasingly complex, competitive and continuously
evolving and thus subject to increasingly stringent regulatory and legislative framework.
Risk is an integral part of the financial services industry and almost every business
decision requires the management to balance risk and reward with the ultimate aim of
delivering superior shareholder value.
Your Company lays great importance on Risk Management and Risk Management has been an
important and integral part of the operations of your Company. This ensures meeting the
objectives of maintaining robust asset quality alongside growth in business. The
Management regularly identifies, evaluates and reviews the various risks on an on-going
basis and develops risk mitigation plans to minimize the overall impact of the various
risks involved. The Companys operational processes are well defined and adherence to
Maker/Checker mechanism ensures precise compliance with laid-down procedures.
Additionally, independent Internal Audit firms have been appointed to review and report on
the business processes. Being engaged in the business in a highly regulated industry; we
are presented with risk containment measures in the very regulations.
The companys business could potentially be affected by the following factors:-
• Risk that a client will fail to deliver as per the terms of a contract with us
or another party at the time of settlement;
• Impact of volatility in markets on our revenues and investments, sustainability
of the business across cycles;
• Risk due to uncertainty of a counter partys ability to meet its financial
obligations to us;
• Inability to conduct business and service clients in the event of a contingency
such as a natural calamity, breakdown of infrastructure, etc.
5. OPPORTUNITIES AND THREATS:-Opportunities:
Low retail penetration of financial services / products in India;
• Increased participation by Retail Investors in Stock Market leading to greater
channelling of savings to equity markets;
• Regulatory reforms leading to greater transparency and better governance in
listed entities;
• Focus on "Make in India" to boost various sectors of the economy;
• Focus on continuous reforms by the Government of India;
Growth in the Rural economy stimulating rural demand;
• Increased availability of credit for MSME / SME companies and increasing
investments in Indian Companies by PE / VC Funds;
• Favourable demographics like large young population with high disposable income,
willingness to take risk, etc.
Threats:
• Continuous effects of COVID 19 leading to decline / disruption in economic
activity;
Geo-political tensions with China and in Europe leading to disruption in supply chains;
• Increased incidence of frauds in NBFC, Banking and Broking sectors affecting
overall availability of credit and leading to tightening of norms;
• Factors like excessive monsoon, rise in crude oil prices due to geo-political
tensions, etc. may delay capex plans and impede growth;
• Increasing costs of compliance due to Regulatory changes;
• Increased competition from local and global players operating in India;
Continuous downward pressure on the fees, commissions and brokerages caused by
heightened competition and willingness of most players to deliver services at very low
fees;
• Execution risk;
• High attrition rate of skilled and experienced human capital.
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