lohia securities ltd Management discussions

A. Industry Structure and Developments

Your Company is one of the leading stock brokers and depository participants of eastern India. It has membership of National Stock Exchange of India Limited (NSE), BSE Ltd., Metropolitan Stock Exchange of India Ltd. (MSEI), Calcutta Stock Exchange Limited and a depository participant of National Securities Depository Limited (NSDL). Your Company is an active participant in cash market, equity derivative, currency derivative and Interest rate future and debt market through NSE; cash market, equity derivative, currency derivative and Interest rate future and debt market through BSE; and currency derivative and Interest rate future through MSEI. Your Company has also membership of commodity derivative segment of NSE and BSE.

A stock exchange is a platform for facilitating price discovery and risk management of various instruments available for trading. Stock exchanges play an important role in the efficient allocation of resources in any economy as the prices discovered provide a signal for efficient allocation of financial resources across corporations. Apart from providing platforms for trading, stock exchanges have also been entrusted with various regulatory responsibilities for ensuring market integrity and for protecting investors interests. The stock exchanges regulatory functions include issuer regulations, member regulations, trading regulations, investor protection, maintaining investor protection funds (IPFs) and product design. They also undertake a wide array of support functions like training and education, information/data services and technology solutions.

Every stock broker is required to be a member of a stock exchange as well as registered with SEBI. Stock brokers are governed by SEBI Act, 1992, Securities Contracts (Regulation) Act, 1956, Securities and Exchange Board of India (Stock brokers) Regulations, 1992], Rules, Regulations and Bye laws of stock exchange of which it is a member as well as various directives/ circulars of SEBI and stock exchange issued from time to time.

A Depository Participant (DP) is described as an agent of the depository. They are the intermediaries between the depository and the investors. A depository is an organisation which holds securities (like shares, debentures, bonds, government securities, mutual fund units etc.) of investors in electronic form at the request of the investors through a registered depository participant. It also provides services related to transactions in securities.

Performance of Stock Exchanges

The National Stock Exchange (NSE) Index (S&P CNX Nifty) which was at 17,464.75 on 31st March 2022, moved up to 17359.75 on March 31, 2023, registering decrease of 105.00 points (-0.60%) as compared to the level at the close of previous financial year. The BSE Sensitive Index (Sensex) which was 58568.51 on 31st March 2022 increased to 58991.40 on 31st March 2023 (up by 422.89 points) registered increase of

0.72%.

Performance of Indices (As per SEBI Bulletin April 2023)

Index	Category	2022-23	2021-22	Changes	% of changes
S&P BSE Sensex	High	63,583.07	62,245.53	1,337.54	2.15
	Low	50,921.22	47,204.50	3,716.72	7.87
	Close	58,991.52	58,568.51	423.01	0.72
NSE Nifty 50 Index	High	18,887.60	18,604.45	283.15	1.52
	Low	15,183.40	14,151.40	1,032.00	7.29
	Close	17,359.75	17,464.75	-105.00	-0.60

On 1st December, 2022, BSE Sensex reached a high of 63,583.07 and NSE S&P CNX Nifty 18,887.60. On June 17, 2022 BSE Sensex was lowest at 50,921.22 while the NSE (S&P CNX Nifty) Index recorded its lowest level of 15,183.4 points during the financial year.

In the cash segment, the turnover at NSE lowered by 19.69 percent during 2022-23. The turnover of BSE was down by 23.12 percent during 2022-23 in comparison to last year.

Stock Exchanges	2022-23 ( in crore)	2021-22 (in Crore)	Changes (in Crore)	% Change
BSE	10,28,865	13,38,225	-3,09,360	-23.12
NSE	133,05,073	165,66,257	-32,61,184	-19.69

In the equity derivative segment the gross turn over at NSE rose by 125.47 per cent during 2022-23. The gross turnover in the derivative segment of BSE lowered by 48.07 per cent during 2022-23.

Stock Exchanges	2022-23 ( in crore)	2021-22 (in Crore)	Changes (in Crore)	% Change
BSE	3,43,15,313	6,60,78,328	-3,17,63,015	-48.07
NSE	382,23,26,468	169,52,33,134	212,70,93,334	125.47

The turnover in the currency derivative segment of BSE decreased by 2.83 % and NSE grew by 79.86 per cent in comparison to FY 2021-22. The Turnover of MSEI increased by 156.38 per cent in comparison to last FY. During 2022-23, the total turnover was highest at NSE (380.86 lakh crore) followed by BSE ( 62.72 lakh crore) and MSEI ( 2.31 lakh crore). NSE accounted for 85.41 per cent of the total turnover in the currency segment followed by BSE (14.06 per cent) and MSEI (0.52 per cent).

Stock Exchanges	2022-23 ( in crore)	2021-22 (in Crore)	Changes (in Crore)	% Change
BSE	62,71,864	64,54,526	1,82,662	-2.83
NSE	380,86,873	211,75,555	169,11,318	79.86
MSEI	2,31,435	90,270	1,41,165	156.38
Total	445,90,172	277,20,351	172,35,145	62.17

Interest-rate derivatives (IRD) are often used to hedge risk by institutional investors, banks, companies and individuals to protect themselves against changes in interest rates and they can also be used to increase or refine the holders risk profile. Gross turnover in IRD segment of BSE decreased by 45.43 per cent to 23,552 crore in 2022-23 as compared to 43,164 crore in 2021-22. Gross turnover in IRD segment of NSE during the financial year 2022-23 was 26,296 crore compared to 26,357 crore in 2021-22. Thus the fall in turnover was 61 crore. However, there was no trading activity reported in the IRD segment of MSEI during the financial year 2022-23 and 2021-22.

Stock Exchanges	2022-23 ( in crore)	2021-22 (in Crore)	Changes (in Crore)	% Change
BSE	23,552	43,165	-19,613	-45.43
NSE	26,296	26,357	-61	-0.23
MSEI	-	-	-	-
Total	49,848	69,522	-19,674	-45.66

BSE and NSE launched trading in commodity derivatives during the year 2018. At BSE, while both agri as well as non-agri commodities are permitted to trade. Future trading on agricultural segment of NSE commenced from 1st December 2020. Future trading in copper base metals of non-agricultural segments commenced at NSE on 22nd February, 2021. BSEs turnover in future commodities segment was 3,433 crore during the financial year 2022-23 compared to 4,959 core in last year. The turnover of NSE was 14 crore during the financial year 2022-23 compared to 2272 crore of last year in commodities future segment. Option contracts on NSE and BSE were launched from June 2020. Turnover on Options contracts upto 31st March, 2022 on BSE and NSE were 765036 and 17472 crore respectively. The turnover of BSE decreased to 4,933 crore and that of NSE increased to 17741 crore during the financial year 2022-23

At NSE, trading in Gold Mini Options was started w.e.f. 08, June 2020. Option contracts were launched at BSE and NSE from June 2020

Stock Exchanges	2022-23 (in crore)	2021-22 (in Crore)	Changes (in Crore)	% Change
BSE Future	3,433	4,959	-1,526	-30.77
NSE Future	14	2,272	-2,258	-99.38
BSE Options	4,933	7,65,036	-7,60,103	-99.36
NSE Options	17,741	17,472	269	1.54

Demat accounts eliminate many problems that investors have to face while dealing with physical securities. They minimise paperwork that is involved with the ownership, trading, and transfer of securities. It facilitates faster transactions and makes trading in securities extremely convenient and safe. At the end of March 2023, there were 283 lakh demat accounts at the National Securities Depository Limited (NSDL) and 588 lakh demat accounts at the Central Depository Services (India) Limited CDSL); Further, 5,843 companies had signed up for dematerialisation at NSDL and 6043 at CDSL. The quantity of dematerialised securities at NSDL increased by 13.07 per cent to 68,059 crore as at end 2022-23 from 60191 crore as at end 2021-22. At CDSL, the quantity of dematerialised securities increased by 12.02 per cent to 30,945 crore as at end 2022-23 from 27,625 crore as at end 2021-22. The ratio of dematerialised equity shares to total outstanding shares of listed companies (market value) was 85.0 per cent at NSDL and 13.0 per cent at CDSL at the end of 2022-23.

Progress Report of Depositories NSDL

Segment	Unit	Mar-23	Mar-22	Changes	% Change during the year
Number of listed companies signed up to make their shares available for dematerialization	Number	5843	5,846	-3	-0.05
Number of Depository Participants (registered)	Number	283	277	6	2.17
Number of Stock Exchanges (connected)	Number	4	4	0	0
Number of Investors Accounts	Lakh	315	267	48	17.98
Quantity of Shares dematerialized	crore	68,059	60,191	7,868	13.07
Value of Shares dematerialized	crore	2,22,61,191	2,29,38,892	50,47,226	22.00

lAs per SEBI Bulletin April 2023)

Progress Report of Depositories CDSL

Parameter	Unit	Mar-23	Mar-22	Changes	% Change during the year
Number of listed companies signed up to make their shares available for dematerialization	Number	6,043	5,886	157	2.67
Number of Depository Participants (registered)	Number	588	584	4	0.68
Number of Stock Exchanges (connected)	Number	3	3	0	0.00
Number of Investors Accounts	Lakh	830	630	200	31.75
Quantity of Shares dematerialized	crore	30,945	27,625	3,320	12.02
Value of Shares dematerialized	^crore	34,05,158	32,28,356	1,76,802	5.47

(As per SEBI Bulletin April 2023)

Your Company has a note-worthy presence in the eastern region of the Indian Capital Market. Your Company is a Trading and Clearing Membership on the Capital Market of NSE and BSE. Your Company is a trading member of Equity Derivative Market Segment on NSE and BSE. Your Company is Trading Member on Currency Derivative Market on NSE, BSE and MSEI. Globe Capital Market Limited is acting as the clearing member of the Company on Equity derivative, Currency derivative and Commodities derivatives segments. The Company is also a depository participant of National Securities Depository Limited (NSDL). A summary of membership of various exchanges/ depository as on 31st March, 2023, are as below:

Name of Exchange/ Depository	Segment	Type of Membership	Clearing Membership, if any
NSE	Capital Market	Trading cum Self Clearing Membership	Self Clearing
	Equity Derivative Market	Trading Membership	Globe Capital Market Limited (Since 02/05/2019)
	Currency Market	Trading Membership	Globe Capital Market Limited (Since 02/05/2019)
	Commodities	Trading Membership	Globe Capital Market Limited (Since 31/12/2018)
	Securities Lending and Borrowings (SLBM)	Trading cum Self Clearing	Self Clearing
BSE	Capital Market	Trading cum Self Clearing Membership	Self Clearing
	Equity Derivative Market	Trading cum Clearing Membership	Globe Capital Market Limited (Since 05/07/2019)
	Currency Market	Trading Membership	Globe Capital Market Limited (Since 05/08/2019)
	Commodities	Trading Membership	Globe Capital Market Limited (Since 05/08/2019)
	Securities Lending and Borrowings (SLBM)	Trading cum Self Clearing	Self Clearing
MSEI	Currency Market	Trading Member	Globe Capital Market Limited (Since 31/12/2018)
NSDL	-	-	-

The stock broking and depository services have huge growth opportunities due to existing low penetration levels. However, these businesses are facing tremendous competitive pressures and regulatory compliances. As per SEBI, as on 31st March, 2023 there were 2,799 (last year: 2,840) brokers (Cash market), 2,319 (last year: 2,348) Equity Derivative Brokers (Trading and Clearing members), 1,801 (1,830) Brokers for Currency Derivatives, 1,534 (1,632) Brokers for Commodity Derivative Segment and 871 (861) Depository participants. Stockbrokers and Depository Participants have to comply with various laws. The advances in technologies have also affected these businesses. Your Company is gearing up well to face all such developments by increasing its reach across geographical areas and client segments, improving its infrastructure and technological, financial and human resources.

B. Opportunities and Threats

The long-term economic outlook looks positive and will lead to opportunity for capital market services. The Indian economy is growing at healthy rate leading to more investment and capital requirements. It will ultimately lead to higher share of the financial service industry in the disposable income. With the change in attitude from wealth safeguard to wealth growth, there will be more opportunity for service providers. The scope of diversification of household savings from banks to other channels like mutual funds, equities, bonds and commodities are immense. The implementation of regulatory reforms would win the confidence of public in large and it would help in greater participation of all classes of investors in the capital market.

The increase in the number of large broking houses with their financial muscle power pose a threat to the existence of small and medium broking houses. With the lowering of income from brokerage and fees from DP services and increase of the cost of services, it is posing a great threat for the survival of intermediary business. Retention of skilled manpower especially arbitrageur is also a threat to the Company. The short term economic slowdown may impact investor sentiments and business activity. Your Board had taken a decision to merge Trade City Commodities Private Limited, Trade City Real Estate Private Limited and Trade City Securities Private Limited, all wholly owned subsidiaries with the Company under section 230-232 of the Companies Act, 2013, with the approval of NCLT and other authorities to take advantage of economies of merged units. The Company is concentrating its activities to a cross section of society across India and has branches in Kolkata, Mumbai, Patna, and Purulia as on 31st March, 2023. It is providing professional, value added, comprehensive and integrated financial and wealth growth solutions across equities, derivatives, and currency derivatives segment and depository participant division. This feature helped the Company in generating more business than its competitors. The Company has a wholly owned subsidiary Trade City Barter Private Limited which is engaged in the business of NBFC activities.

C. Activity-wise performance

Your Company has performed satisfactorily despite the stiff competition in broking industry. Total Turnovers of the Company are as below:

( in Lakhs)

Exchange	Segment	2022-23	2021-22	Changes	Changes in (%)
NSE	Cash Market	5,51,238.96	5,81,137.97	-29,899.01	-5.14
	Equity Derivative	31,38,897.78	26,11,606.86	5,27,290.92	20.19
	Currency Derivative	15,95,026.65	4,85,805.65	11,09,221.00	228.33
	Commodities	-	-	-	-
BSE	Cash Market	11,520.00	14,866.00	-3,346.00	-22.51
	Equity Derivative	669.00	521.00	148.00	28.41
	Currency Derivatives	34,455.00	19,389.00	15,066.00	77.70
	Debt	-	-	-	-
	Commodities	-	-	-	-
MSEI	Currency Derivative	14,308.98	29,930.98	-15,622.00	-52.193
NSDL&CDSL	Services as Depository Participant	19.33	22.86	-3.53	-15.442

Performance of the Company was not good on the Capital market on NSE and BSE. There was decrease of 5.14% on turnover on NSE cash market as compared to last year. Similarly, on the BSE capital market the turnover declined by 22.51% in comparison to last year. On equity derivative segment of NSE the turnover improved by 20.19% as compared to last year. There was a jump in the turnover of 28.41% on the equity derivatives segment of BSE. Performance of the Company also improved on currency derivatives of BSE by 77.70% and on NSE by 228.33%. The turnover of the Company on Currency Derivative Segment on MSEI exchange decreased by 52.193% compared to last year.

There were no transactions on the Commodity derivative of NSE and BSE during the year. From the sale of products your Company has earned 24,351.09 lakhs during the year in comparison to 9,678.07 lakhs of last year, (an increase of 151.61%)

During the year, the Broking activities of the Company posted a gross revenue of 349.34 lakhs as compared to 377.49 lakhs for the year ended 31.03.2022 resulting in annualized decrease of 7.46%. The Depository managed to bring in revenue of 19.33 lakhs during the year as compared to 22.86 lakhs of last year, decrease of 15.44% as compared to last year.

D. Outlook

The growth of the Indian economy has been steady during the previous year. However, there were signs of growth slowing down towards the end of the year owing to the impacts of rising global trade tensions and the credit squeeze in domestic markets. With the expectation of stability in governance and growth oriented policies, it is expected that the growth rates would improve in the coming years.

Investor sentiments seem to be building up in light of the stability in certain macro indicators, as well as the evolving political scenario over the elections. Investor sentiments improved and activity levels increase following the election results. The year marked the return of the retail investors through direct equities and through mutual funds. Cash markets volumes, including delivery, increased significantly this year. However, primary market activity is yet to pick up in big way.

In the given situation, the mantra for this year will be improving operating efficiency and reduction of operating cost of the Company.

We are confidant of garnering our share with long term Indian growth story in view of our diversified model. Starting from a single product company in 1995, we now encompass many businesses and have a wide product range. Your Company has an active role in trading in capital as well as derivative market of NSE and BSE. It is also engaged in the Currency Derivative segment of NSE, MSEI, and BSE. The Company is concentrating to increase trade in currency options.

All our efforts are being made to keep the expenses under check so that resources would be deployed more gainfully. The Company is encouraging its workforce to acquire more and more knowledge about the market and its intermediation works.

E. Risks and Concerns

Your Company recognizes the importance of a comprehensive Risk Management system. The Company believes in a practical, responsible approach to risk. It is our constant effort to ensure that every risk we take has been thoroughly assessed, and that all risks are according to their potential return. Towards this end, we have made significant investments in manpower and technology for risk management during the year under review. This system will help not only to meet and comply with regulatory requirements but also to bring about an improvement in asset quality and profitability. It will eventually increase the shareholders value. The Market risk and Operational risk need to be identified, assessed, controlled and managed for effective and efficient operation. Your Company has endeavored to bench-mark its Risk Management System on lines of market best practices and emerging regulatory norms.

A comprehensive risk evaluation methodology and processes for early identification and mitigation of all kinds of risks being in place, except for unforeseen circumstances and marginal exposure to financial risk in retail capital markets division, your Company is quite a risk free business. We have worked to strengthen our enterprise wide risk management process and practices through our risk philosophy, whose core lies in the identification, measurement, monitoring and action.

F. Internal Control System

The Company has an adequate system of internal control implemented by the management towards achieving efficiency in operations, optimum utilization of resources and effective monitoring thereof and compliance with applicable laws.

The philosophy of the Company with regard to internal control systems and their adequacy has been formulation of effective systems and their implementation to ensure that assets and interests of the Company are safeguarded with required checks and balances in place to determine the accuracy and reliability of accounting data.

The Company has an independent appraisal function to examine and evaluate the adequacy and effectiveness of the Companys internal control system. It appraises periodically about its activities and audit findings to the Audit Committee, Statutory Auditors and top management.

Internal Audit ensures that systems are designed and implemented with adequate internal controls commensurate with the size and operations; transactions are executed in accordance with the Companys policies and authorisation. The internal audit department undertakes extensive programmes of both pre and post audit checks and reviews and also carries out regular follow-up on observations made. The Audit Committee of the Board reviews the internal audit reports and internal control system from time to time.

G. Discussion on financial performance with respect to operational performance

During the year, due to active participation of retail investors in Indian Capital Market, the Company could attain expected performance. Clear understanding of business dynamics, emphasis on efficient recovery system along with an integrated approach to risk management has enabled the Company to make the best use of the available resources and achieve better results.

Particulars	Standalone Year Ended		Consolidated Year Ended
	( in lakh)		( in lakh)
	31st March, 2023	31st March, 2022	31st March, 2023	31st March, 2022
Turnover (Net)	24,386.91	29,988.32	24,405.13	30,005.12
Operating Profit (PBIDT)	3,718.49	2,866.71	3,736.22	2,883.49
Finance Cost	384.65	367.89	384.66	367.78
Depreciation	79.93	37.35	80.01	37.43
Profit Before Tax (PBT)	3,253.91	2,461.47	3,271.55	2,478.28
TAX	833.13	633.11	638.85	269.20
Profit After Tax (PAT)	2,426.46	1,828.36	2,442.62	1,842.83

The managements relentless focus was on assets productivity, strengthening of internal efficiency, cost consciousness and improved realization on turnovers. Total revenue was down by 18.68% to 24,386.91 lakhs against last years 29,988.32 lakhs. Thus there was a fall in the revenue in business of 5,601.41 lakhs, in the Company, as compared to last year, primarily driven by fall of (a) 17,225.67 lakh in sale of products, (b) 31.66 lakh of Fees and Commission and (c) 9.02 lakh on Other operating Income and (d) 1.75 lakh of other Income. There was increase of (a) Interest Income of 171.24 lakh (b) Dividend Income of 4.52 lakh (c) Net gain on Fair Value Changes of 1,472.89 lakh

The fall in the total expenses by 6,393.85 lakhs in comparison to last year has not affected the performance of the Company during the year, due to decrease in total revenue, as explained above. The fall in total expenses was mainly due fall in purchase of stock in trade by 8,856.44 lakh and Impairment on financial instruments of 15.09 lakh. However, the increase in (a) finance cost of 16.76 lakh (b) fees and commission of 4.50 lakh(c) Changes in inventories by 1,909.71 lakh (d) Employee Benefit expenses by 470.96 lakh (e) depreciation of 42.58 lakh and other expenses 2.99.

The Profit before tax during the year was 3,253.91 lakhs in comparison to last years Profits before tax of 2,461.47 lakhs (an increase by 792.44 lakhs in comparison to last year) while Net Profit after tax was at 2,426.46 lakhs during the year against last years Net Profit of 1,828.36 lakhs (an increase by 598.10 lakhs in Net Profit in comparison to last year).Earnings per share (EPS) for the year stand at 48.69 (compared to last years of 36.69). Cash generated from Operations aggregated 3,145.54 lakhs compared to last years 864.54 lakhs (increased by 2,281.00 lakhs).

Details of Significant changes in Key financial ratios, alongwith detailed explanation therefor

Ratio Analysis	2022-23		2021-22		Remarks
Debtor Turnover (Credit Sales or income/Average receivables)	5,874.38/24,386.91	0.24	2,908.00/29,988.32	0.10	Increased by 147.50%
Inventory Turnover (COGS/Average Inventory)	788.77/24,38,6.91	0.03	1,542.26/29,988.32	0.05	Decreased by 40.00%
Operating Profit Ratio % (EBIT/Total Turnover)%	3,638.56/24,386.91	0.15	2,829.36/29,988.32	0.09	Increased by 66.67%
Net Profit Ratio% (PAT/ Total Turnover)%	2,426.46/24,386.91	0.10	1,828.36/29,988.32	0.06	Increased by 66.67%
Debts Equity Ratio (Total Liabilities/Equity)	5,020.52/8,535.86	0.59	2,753.35/6,122.72	0.45	Increased by 31.11%
Interest Coverage Ratio% (EBIT/Finance cost)	3,638.56/384.65	9.46	2,829.36/367.89	7.69	Increased by 23.02%
Current Ratio (current Assets/Current Liabilities)	11,847.79/4,987.12	2.37	7,318.55/2,744.67	2.67	Decreased by 11.24%
Return on Net-worth % PAT/Net Worth	2,426.46/8,535.86	0.28	1,828.36/6,122.70	0.30	Decreased by 6.67%

H. Material developments in human resource, industrial relation including number of people employed

The Company recognizes that its employees are its biggest source of strength and that highly engaged workforce delivers high performance and improved productivity. The relationship between the Management and the Employees at various levels has been quite cordial. To improve efficiency and for a more effective manpower utilisation, the Company has been constantly providing opportunities for learning and competitive remuneration. A challenging work environment has always been encouraged so as to create awareness amongst the employees for evaluation of their performance against the demanding standards. The employees are encouraged to improve their performance. They are provided training on job as well as outside. Periodic group and individual meetings are conducted with employees and their feedback is taken.

The number of persons employed in the Company as on 31st March, 2023 was 282 (last year: 254).

	On behalf of the Board of Directors
	Mahesh Kumar Bajaj	Sudheer Kumar Jain
Place : Kolkata	Whole-time Director (Institutional trade)	Whole-time Director
Date : 14th August, 2023	DIN:00080157	DIN:00075103