mehta securities ltd Management discussions

To,

The Members/ Shareholders,

ECONOMIC REVIEW :

Global Economy : The world economy grew at a pace of 3.4% in 2022. Among the major economies, the US recorded a growth rate of 2.1%, China grew at a below trend of 3%, and India is projected to grow at 7% (FY23). The year gone by was characterized by the accelerated rate hikes by central banks across the world to tackle high inflation propagated via lose monetary & fiscal policy response created during the previous years because of Covid-19 Pandemic. However, in the past quarter most developed market central banks seem close to hitting a pause on rate changes going forward. China abandoned its Zero COVID policy abruptly at the end of 2022, resulting in a sharp services-led rebound in activity in Q1 2023. Certain forward-looking indicators and survey-based measures are pointing towards an impending recession, but central banks are hopeful of slowing growth to a below-trend level to cool inflation without triggering a recession.

Indian Economy : Indias real GDP growth in FY23 is estimated to be 7.0% y-o-y on a real basis, and 15.9% y-o-y on a nominal basis. If we look at across the board amongst major economies our growth has been the highest, making India attractive growth destination amongst the world. Even though our recent growth looks sharp – but on a cumulative basis, the economy has just grown by only 3.2% CAGR since FY20, suggesting that significant catch-up is still needed to fully recover from the pandemic-inflicted losses. However, despite the general slowdown across the world, India stands out with its positive growth impulses and strong outlook on its long term prospects.

Economic recovery was supported by private consumption growing by 7.35% while the government consumption remained muted. The gross fixed capital formation and exports witnessed healthy growth, and services exports are seeing a strong pickup. However, imports growth was also very strong on the back of higher commodity prices that has a dampening impact on GDP. On a sectoral basis, growth in agriculture remained healthy, while industrial was dragged down by low growth in the manufacturing sector. The services sector posted strong growth as it recovered from the pandemic. The construction sector and housing demand also displayed healthy growth. As seen around the world, inflation in India too remained elevated, averaging above the RBI tolerance band at 6.7%, driven both by high food inflation and sticky and high core inflation. Rising global commodity prices also contributed to inflation. RBI responded forcefully to elevated inflation with rapid monetary tightening, increasing the policy Repo rate by 250 bps and effective policy rate by 315 bps. The rapid pace of monetary tightening resulted in a broad-based increase in interest rates in the economy

INDUSTRY STRUCTURE AND DEVELOPMENTS

Broking industry has seen lot of changes and evolvement in past decade led by disruptions from discount brokers, buoyancy in equity markets, digitalization and increased interest among various investor groups. Indian brokerage industry has been undergoing structural shift from percentage led business model to flat brokerage & subscription based model. Discount brokers continued to gain majority of incremental clientele as well as market volume.

Recent trends clearly suggesting consumer preference shifting towards service oriented product offering i.e. discount brokerage plans, traditional brokers have now started launching their own discount plans in order to attract clients. We believe this is because of focused service offerings wherein traders need not bear cost burden of other services like advisory, research etc which is offered as a whole bunchy by traditional brokers. Top traditional brokers too have started to offer discount plans. Your company keeps seeking for opportunities in the capital market to capitalize on the dynamic industry trend.

OPPORTUNITIES AND THREATS: Opportunities :

• Increasing per-capita GDP

• Opportunity to cross sell services

• Opening of financial sectors in India along with introduction of innovative products

• Law retails penetration of financial services/product in India.

• Extensive distribution reach and strong brand recognition

• Changing demographic profile of the Country in the favour of the young

• Adequate capitalization to support medium-term growth plans.

Threats :

• Regulatory Changes

• Execution risk

• Higher exposure to semi-formal and informal sector

• Competition from local and multinational players

• Inflationary pressure, slowdown in policy making and reduction in household saving in financial products

• Attraction and retention of human Capital

• Increasing competition from local and global players

RISKS AND CONCERNS:

The capital market industry is mainly dependent on economic growth of country and capital market is also further affected by number of issues arising out of International policies of foreign government as well any change in international business environment. The industrial growth is very sensitive which is dependent on many factors which may be social, financial, economical or political and also natural climatic conditions in the country. However, with the positive attitude of country which can mitigate the avoidable risks. Geopolitical tensions, raising crude oil prices, rising US bond yields, scams in the banking sector are some of the affecting factors that the country witnessed during the year under review. The country faced the said concerns with positive measures by way of making amendments or introducing new laws that can assist to grow the economy. Foreign investors are very positive for India and trust its policies which are very much investor friendly. It is expected that the said efforts shall continue during the coming years irrespective of the Government which is in power.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY:

The Company has implemented proper system for safeguarding the operations/business of the Company, through which the assets are verified and frauds, errors are reduced and accounts, information connected to it are maintained such, so as to timely completion of the statements.

The Company has adequate systems of Internal Controls commensurate with its size and operations to ensure orderly and efficient conduct of business. These controls ensure safeguarding of assets, reduction and detection of fraud and error, adequacy and completeness of the accounting records and timely preparation of reliable financial information. The Company has internal audit and verification at regular intervals.

The requirement of having internal auditor compulsory by statue in case of listed and other classes of companies as prescribed shall further strengthen the internal control measures of company.

DISCUSSION ON FINANCIAL PERFORMANCE WITH RESPECT TO OPERATIONAL PERFORMANCE

The financial performance of the Company for the financial year 2022-23 is described in the Directors Report under the head "Financial Performance".

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES:

The cordial employer- employee relationship also continued during the year under the review. The Company has continued to give special attention to human resources.

CAUTIONARY STATEMENT:

Statement in this management discussion and analysis report, describing the Companys objectives, estimates and expectations may constitute "forward looking statements" within the meaning of applicable laws or regulations. Actual results may differ materially from those either expressed or implied. The Company undertakes no obligation to publicly update or revise any forward-looking statements, whether as a result of new information, future events, or otherwise.

DISCLOSURE OF ACCOUNTING TREATMENT

In preparation of financial statements, a treatment as prescribed in an Indian accounting standard has been followed.

For and on behalf of Board of Directors,

Place: Ahmedabad	Bhavna D. Mehta	Chirag D. Mehta
Date : 02rd September, 2023	Chairperson & Managing Director	Director
	(DIN: 01590958)	(DIN: 00484709)