Prudent Corporate Advisory Services Ltd Management Discussions

Global Economic Outlook:

In 2023, the world economy experienced a growth rate of 3.2%. While stable, this rate is considered low by historical standards. The feared hard landing, due to factors such as restrictive monetary policies, the after effects of the COVID-19 pandemic, and geopolitical tensions, particularly the war in Ukraine, did not materialise. Instead, hopes for a soft landing have strengthened due to easing global inflation. Growth in advanced economies was modest at 1.6%, reflecting the impact of high borrowing costs and the withdrawal of fiscal support. Meanwhile, emerging markets and developing economies achieved a slightly higher growth rate of 4.1%, driven by more robust domestic demand and resilient trade activities despite global challenges.

According to the IMF, the outlook for the world economy in 2024 remains steady, with global growth projected to continue at the same pace as in 2023, maintaining a rate of 3.2%. Advanced economies are anticipated to grow slightly, supported by easing financial conditions and recovery in real incomes. Though regional differences will persist, emerging markets and developing economies are projected to maintain stable growth. Global headline inflation is projected to decline from an annual average of 6.8 percent in 2023 to 5.9 percent in 2024 and further to 4.5 percent in 2025. This overall decrease is anticipated to occur more swiftly in advanced economies, where inflation is expected to drop by 2.0 percentage points in 2024, in contrast to a slower reduction in emerging markets and developing economies, which will experience significant declines only by 2025. Advanced economies are likely to return to their pre-pandemic inflation rates of around 2.0 percent by 2025, while emerging markets and developing economies are forecasted to stabilise near a 5.0 percent inflation rate during the same period.

Central banks worldwide that have significantly raised policy interest rates over the past two years to counter rising inflation are likely to continue adjusting their policies to balance economic growth and inflation control, cautiously avoiding overtightening that could stifle economic activity. Interest rate projections for 2024 indicate that central banks will likely maintain their current rates with a cautious approach to potential rate cuts. The Federal Reserve is expected to keep rates steady, focusing on inflation control. At the same time, the European Central Bank and the Reserve Bank of India are projected to maintain a balanced approach.

The global bond markets have seen a mixed performance, reflecting varying monetary policy actions across different economies. Long-term borrowing rates have declined since late 2023 as inflation moved towards target levels and market expectations adjusted to anticipated policy rate cuts. This decline has contributed to easing overall global financial conditions. Conversely, the equity markets have benefited from this environment, with rising equity prices reflecting investor optimism amid easing financial conditions and expectations of lower interest rates.

The global currency markets experienced notable fluctuations, with the US dollar strengthening significantly against other major currencies in 2023. This appreciation was driven by aggressive monetary tightening by the Federal Reserve, which increased interest rates to combat inflation. Consequently, the dollars value rose by 2% against advanced economy currencies and 5% against emerging market currencies in nominal terms. This shift put pressure on global trade, making US exports more expensive and reducing demand. Conversely, the depreciation of other currencies against the dollar supported their export demand, partially offsetting tighter domestic financial conditions. As central banks worldwide adjusted their policies to navigate these challenges, the dynamic interplay between currency values and economic policies remained a critical factor shaping the global financial landscape.

According to the Global Financial Stability report by IMF, global investor sentiment has been buoyed by optimism surrounding a potential soft landing for the global economy and the anticipation of easing financial conditions. This positive outlook has led to a broad-based rally in global equity markets, with significant gains in Japan and the United States. Investor confidence has been further reinforced by improving earnings projections and a more substantial risk appetite, particularly for the technology and materials sectors. However, the Chinese stock market has significantly underperformed due to persistent concerns about economic growth and property market downturns.

Indian Economic Overview:

Amidst global uncertainty, the Indian economy demonstrated resilience during 2023-24, with real GDP growth increasing to 7.6% from 7.0% in 2022-23, driven by robust fixed investment. On the supply side, economic activity was bolstered by improved profitability in the manufacturing sector, benefiting from lower input prices, and sustained momentum in the services sector, offsetting the agricultural sectors slowdown.

IMF expects India to remain one of the fastest-growing major economies, with the economy expanding at a robust rate of 6.8% in 2023, driven by strong domestic demand and a recovery in investment activity. For 2024, the growth rate is projected to moderate slightly to 6.3% due to tighter financial conditions and global economic uncertainties. Despite this slight deceleration, India continues to benefit from structural reforms and a favourable demographic profile, maintaining its position as a leading growth economy.

Headline inflation in India moderated to 5.4% in 2023 from 6.7% the previous year, mainly due to monetary policy tightening, supply management measures, and easing input cost pressures. Core inflation fell significantly from 6.1% to 4.3%, although food inflation remained volatile. Looking ahead to 2024, inflation is expected to ease further, supported by a broad-based softening in core inflation and favourable monsoon predictions. However, the increasing frequency of climate shocks, low reservoir levels, and volatile international crude oil prices pose significant risks to the inflation outlook.

The inclusion of India in key global bond indices has led to substantial capital inflows, with foreign investors investing around Rs. 7,800 crore into eligible sovereign bonds since JPMorgans announcement in September. This has positively impacted corporate bonds and boosted foreign exchange reserves to a record high of $600 billion. The inflows are expected to continue, supporting the rupee and enhancing market performance. The Reserve Bank of India has actively managed increased dollar flows to stabilise the rupee.

The Indian equity market thrived on strong macroeconomic fundamentals and robust corporate profitability, with the BSE Sensex gaining 24.9% to close at 73,651 at the end of March 2024, outperforming global peers. The buoyant secondary market boosted resource mobilisation in the primary market, maintaining steady IPO issuances and increasing preferential allotments and QIPs. Broader market indices outperformed, with BSE Mid Cap and Small Cap indices rising by 63.4% and 60.1%, respectively. FPIs made net purchases of Rs. 2.1 lakh crore, and mutual funds bought Rs. 2.0 lakh crore in 2023-24.

Growth Drivers of the Indian Economy:

Rise of working age population:

EY, in its Indian@100 report on Indias demographic dividend, highlights that by 2030, 68.9% of Indias population will be working age, with the dependency ratio dropping to 31.2%. Indias median age is 28.4 years, much lower than the global average, giving it a competitive workforce advantage. Approximately 26% of the population is under 14, and 67% is between 15 to 64 years. The report emphasises the potential of Indias young population to drive economic growth, particularly in services, manufacturing, and consumption-driven sectors.

Rise of the Aftluent population:

The Goldman Sachs report outlines how India could become the worlds second-largest economy by 2075, driven by favourable demographics, capital investment, and increased labour force participation. Key growth drivers include innovation, worker productivity, and capital investment, with significant digitalisation and green energy potential. Goldman Sachs projects that Indias aftluent population will reach 100 million by 2027, driven by rapid economic growth and rising incomes. This demographic shift will likely result in substantial monetary and market impacts, reflecting Indias evolving economic landscape.

Service Sector Dominance:

Indias services sector has become a global leader, contributing over 50% to the countrys GDP. Key factors include a young, tech-savvy workforce, cost competitiveness, and strong growth in IT and business process management. The sector was the largest recipient of foreign direct investment (FDI) inflows, attracting US$ 109 billion between April 2000 and March 2024. In FY24 alone, the services sector received US$ 6.6 billion in FDI equity inflows, reflecting its continued appeal to global investors. Supported by a vast pool of English-speaking professionals and robust digital infrastructure, India has firmly positioned itself as a preferred destination for global services. Goldman Sachs Researchs most favourable scenario for the growth of Indias services exports assumes a higher real GDP as well as higher manufacturing exports over the middle term. In this scenario, services exports would form 12.4% of GDP by 2030, valued at $900 billion.

Rise of the Manufacturing Sector:

Indias manufacturing sector is rapidly advancing in areas like automobiles, pharmaceuticals, and electronics, with new investments and breakthroughs enhancing its high-tech capabilities. This progress is boosting global confidence in Indias manufacturing environment. The sector is projected to grow from 15% to 20% of the economy by 2030, driven by increased consumption, investments, and exports. This growth positions Indian manufacturing as a compelling multi-decadal investment opportunity. A key driver of this growth has been the Production-Linked Incentive (PLI) scheme, announced in 2021 with an outlay of 1.97 lakh crore. The scheme has been instrumental in catalysing growth, attracting over Rs. 1.03 lakh crore in investments and generating employment for over 6.78 lakh people by November 2023.

The PLI scheme is expected to draw an additional 3-4 lakh crore in investments and create 2 lakh more jobs over the next four years, with major projects in sectors like semiconductors and solar modules set to launch. This initiative is crucial in enhancing Indias manufacturing capabilities and fuelling its ambition to become a global manufacturing hub.

Rise of Formal Economy:

Indias traditional growth drivers, such as transitioning from agriculture to industry and urbanisation, are being reinforced by new factors. These include rapid digitalisation driven by Aadhaar and mobile-linked bank accounts, financialization with a shift towards financial products over gold and real estate, industry formalisation through

GST and regulatory changes, and a surge in local manufacturing supported by government incentives. According to a recent report by SBI Research, India has successfully reduced the size of its informal economy to 23.7% in 2022-23, down from 25.9% in 2015-16. This shift represents a growth of Rs. 26 lakh crore in the countrys formal economy.

Overview of the Financial Distribution Industry:

As India continues to grow at nearly twice the global average rate, international agencies are optimistic about its emergence as a financial powerhouse. A recent report by HDFC Mutual Fund projects Indias per capita income to increase by 139% to $5,442 by 2031. With an expected average annual real GDP growth rate of 6%, India is poised to become the worlds third-largest economy by 2031.

In the next decade, household income distribution is expected to shift significantly, with GDP per capita projected to more than double. The share of households earning less than $5,000 annually is set to drop from 38% to 13%, while those in the $10,000 to $35,000 bracket will rise from 24% to 46%. Additionally, households earning over $35,000 are expected to increase from 2% to 7%. This trend indicates a growing middle and upper-income population, with the rising middle-class households expected to propel accelerated growth in financial savings.

The latest MoSPI data on National Accounts Statistics 2024 also emphasises the rising trends in Gross financial savings. In recent years, Indian households have demonstrated a notable shift in saving towards mutual funds, stock and insurance products. In 2022-23, gross financial savings rose by 11.03% to Rs. 29.73 lakh crore from Rs. 26.11 lakh crore in the previous year. This rise is indicative of households efforts to diversify their investment portfolios and seek better returns.

Despite the shift towards physical assets, financial assets have continued to attract significant investments.

The Indian economy is gradually moving towards greater financialization, as evidenced by the changing composition of household savings. The proportion of deposits in overall gross financial savings has been decreasing. Deposits accounted for 37.28% of gross financial savings, down from 56.97% in 2012-13. This decline reflects a shift from low-yield savings accounts to more lucrative investment options. Investments in financial instruments such as mutual funds, stocks, and insurance products have increased significantly. Mutual funds and stocks now constitute 6.02% and 6.94% of gross financial savings, respectively, up from 0.77% and 1.6% in 2012-13.

Despite this rise in the financialisation of household savings, the penetration rates of mutual funds, insurance, and pension funds in India remain low compared to their global counterparts. In India, mutual fund penetration is around 14% of GDP, significantly lesser compared to developed markets who have a ratio of nearly 100%. Insurance penetration is similarly modest, with life insurance premiums accounting for about 4% of GDP, compared to the global average of 7%. Pension fund penetration also lags, with Indias National Pension Scheme (NPS) and other pension products covering a relatively small population segment. In contrast, pension assets are significantly higher in developed economies. This comparison underscores the potential for further growth and development in Indias financial sector to match global standards.

Overview of the Mutual Funds Industry:

Fiscal 2024 proved to be an exceptional year for the domestic mutual funds industry, with assets under management (AUM) soaring by nearly Rs. 14 lakh crore to reach a record Rs. 53.40 lakh crore by March 2024, compared to Rs. 39.42 lakh crore in March 2023. The substantial increase in industry assets was led by a sharp marked to market movement, increasing participation of retail through SIPs and a substantial growth in new mutual fund investors. During the year, the number of SIP accounts increased by 33% to touch 8.39 crores & the count of unique mutual fund investors increased by 18% to 4.46 crores.

Individual investors dominated mutual fund categories such as equity, hybrid, and solution-oriented schemes, significantly contributing to the industrys growth. These three categories accounted for nearly 58% of the industrys assets and 80% of the folio count as of March 2024, up from 45% in March 2019, highlighting their increasing influence.

Equity-oriented mutual fund categories grew by 55% in fiscal 2024 to Rs. 23.50 lakh crore, driven by strong inflows and mark-to-market (MTM) gains. The category experienced net inflows of Rs. 1.84 lakh crore during the fiscal year, up from Rs. 1.47 lakh crore in the previous fiscal. This growth was bolstered by sharp gains in the underlying equity markets, with the Nifty 50 Total Return Index (TRI) and Nifty 500 TRI increasing by approximately 33% and 44%, respectively.

The Flexi Cap category emerged as the largest fund category with assets exceeding 3.50 lakh crore as of March 2024, followed by large-cap funds with Rs. 3.14 lakh crore in assets. In terms of percentage growth, the multi-cap fund category led the way with an 85% increase in fiscal 2024, followed by small-cap funds, which grew by 82%.

Rising participation from Individual Investors:

Individual investors now hold a larger share of industry assets, increasing to 60.6% in May 2024 from 57.7% in May 2023. In contrast, institutional investors account for 39.4% of the assets, with corporates comprising 95% of this segment. The remaining portion includes Indian and foreign institutions and banks. Equity-oriented schemes are predominantly held by individual investors, accounting for 88% of their assets, while institutional investors dominate liquid and money market schemes (88%), debt-oriented schemes (62%), and ETFs, FoFs (89%).

The value of assets held by individual investors in mutual funds surged by 43.48%, from Rs. 24.77 lakh crore in May 2023 to Rs. 35.54 lakh crore in May 2024. Similarly, institutional assets grew by 26.86%, from Rs. 18.18 lakh crore in May 2023 to Rs. 23.06 lakh crore in May 2024, indicating a rising trend in individual investor participation in the mutual fund industry.

Rising participation from Urban and Semi-Urban:

Over these years, the dominance of the top 5 cities (Mumbai, Delhi, Bengaluru, Pune, and Kolkata) has decreased, with their share of total Assets Under Management (AUM) declining from 61.8% in 2019 to 52.6% in 2024. Meanwhile, the share of AUM from the following 105 cities has remained relatively stable, fluctuating around 23% to 24.6%. Notably, the contribution of other towns has increased significantly, rising from 9.9% in 2019 to 18.7% in 2024. This trend indicates a diversification of mutual fund investments beyond the major metropolitan areas, highlighting the increasing financial inclusion and investment activity in smaller cities.

SIP remains a favourite route for individual investors:

Systematic Investment Plan (SIP) is a popular investment method offered by mutual funds, allowing investors to periodically invest a fixed amount in a mutual fund scheme, typically monthly, rather than making a lump-sum investment. The SIP instalment can be as small as Rs. 500 per month, making it accessible to many investors. Like a recurring deposit, SIP involves regularly depositing a fixed amount, conveniently debited from the investors bank account each month without manual intervention.

SIP has gained significant popularity among Indian mutual fund investors due to its benefits like Rupee Cost Averaging and the ability to invest in a disciplined manner without worrying about market volatility or timing. Since December 2014, the number of investor folios has steadily increased from 4.03 crore to 17.79 crore in March 2024, with 91.4% of these accounts held by retail investors.23 In FY24 alone, 4.28 crore new SIPs were registered, contributing to an annual SIP contribution of around Rs. 2 lakh crores. This consistent growth underscores the preference of individual investors for SIPs, with contributions doubling from Rs. 96 thousand crores in FY21 to around Rs. 2 lakh crores in FY24, highlighting its status as the favoured investment route.

A recent report by Axis Capital forecasts that the Indian mutual fund industry will likely achieve Rs. 100 lakh crore in Assets Under Management (AUM) by 2030. This projection is anchored in the industrys current growth trend and the increasing financialization of household savings. This strong growth trajectory suggests a promising future for the mutual fund industry in India, with significant potential for further expansion and deeper market penetration.

Economies of Scale Working in Favour of National Distributors (NDs)

Prominent National Distributors (NDs) have leveraged robust technology platforms to facilitate seamless customer onboarding and enable Mutual Fund Distributors (MFDs) to conduct transactions efticiently. The use of technology has significantly reduced transaction costs. According to CRISIL Research, the ability to invest in advanced technological tools and provide exceptional convenience to customers has become a critical differentiator for MFDs.

Small MFDs, due to their limited scale and resources, offen struggle to invest in technology. As a result, they seek partnerships with more prominent players who can offer access to sophisticated technology platforms. MFDs have increasingly collaborated with NDs that have developed their online platforms to enhance service offerings. Leading NDs have adopted the B2B2C (Business-to-Business-to-Consumer) model to expand their operations. As of March 31, 2024, Prudent Corporate Advisory Services had successfully onboarded 29,605 MFDs on its platform, accounting for 20.70% of the total MFDs in the country.

Company Overview

Company Overview:

Prudent Corporate Advisory Services Limited, incorporated on June 4, 2003, in Ahmedabad, Gujarat, envisions becoming Indias leading independent retail wealth management services group. The Company leverages technology and comprehensive investment solutions to meet the evolving financial needs of its clients while expanding its presence across both online and offline channels. Over the years, Prudent Corporate has grown significantly, establishing itself as one of Indias rapidly expanding financial services groups.

Prudent Corporates success can be attributed to its unique business-to-business-to-consumer (B2B2C) model, complemented by a technology-driven investment and financial services platform. This comprehensive approach enables the Company to offer end-to-end solutions crucial for distributing financial products. Supported by a dedicated team of 1,250 highly skilled professionals and a robust network of 29,605 well-trained and qualified channel partners, Prudent has secured a prominent position as one of the top mutual fund distributors in terms of assets under management and commissions received.

With operations in 119 locations across 21 states, Prudent Corporate has established a strong phygital presence to cater to the evolving needs of its clients. Its extensive services portfolio includes distribution of mutual fund, insurance products, stockbroking, national pension schemes, unlisted securities, bonds, fixed deposits, portfolio management schemes, alternative investment funds, small cases, and peer-to-peer lending. This broad range of financial solutions positions Prudent as a key player in Indias wealth management sector. Committed to offering a technology-enabled, comprehensive investment and financial services platform, Prudent ensures exceptional service quality, fosters innovation, and empowers mutual fund distributors (MFDs) to grow their businesses and better serve retail investors across India.

Verticals	Key Metrics	Platforms
Mutual Funds	AUM: 833,838 million	FundzBazar: Online investment platform
	No. of investors: 16.86 Lac	PrudentConnect: Virtual office for MFDs
	No. of MFDs: 29,605
	AUM per MFD: 24.5 million
	AUM per investor: 0.5 million
	No. of AMCs associated: 42
Insurance	Premium: 5,567 million	Policyworld: Online platform offering insurance solutions
	No. of policies: 1,41,994
	Average premium per policy: 0.04 million
	No. of life insurance companies associated: 32

(Rs. in crore)

Particulars	FY-24	FY-23	YoY (%)
Closing AUM	83384	56189	48.40%
Total Revenue from Operations	805.1	611.3	31.70%
Operating Profit	193.1	173.3	11.43%%
Operating Profit Margin (%)	23.99%	28.35%	- 436 bps
Profit After Tax	138.7	116.7	18.90%
Profit After Tax Margin (%)	17.23%	19.09%	- 185 bps
Earnings Per Share	33.51	28.18	18.90%

Business Overview:

Asset Under Management:

As of March 31, 2024, the Companys Assets Under Management (AUM) from the mutual fund distribution business increased by 48.40% year-on-year, reaching Rs. 83,384 crore, with 96.2% of the total AUM being equity-oriented. This growth was driven by Systematic Investment Plan (SIP) inflows, which also increased by 40.42% to reach Rs. 726 crores, growing from Rs. 517 crores last year. Gross Equity Flows through SIPs provide stability to net sales with the same growing at a CAGR of 22% FY19-24 & now almost every second rupee of flows comes from SIPs. With 25.53 Lac live SIPs, our SIP AUM now stands at 44.4% of our total equity AUM.

Revenue from operations:

Revenue from operations grew 31.7% YoY to Rs. 805.1 crores. Mutual funds trail revenue remains our strength, contributing around 79% of our total revenues. Other revenue streams like insurance and stockbroking are also gaining traction, showing a growth rate of 57.0% and 36.0%, respectively, over the last year.

Revenue from the distribution of insurance products now contributes 13.8% of our total revenues compared to 11.6% last year. In comparison, Stock Broking and Allied Services and Other Financial and Non-Financial Products contribute 3.5% and 3.3% respectively.

Operating Profit and Operating Profit Margins:

The Companys operating profit grew by 11.43%, reaching Rs. 193.1 crore compared to Rs. 173.3 crore last year.

PAT and PAT Margins:

The Companys Profit after tax grew by 18.9% YoY, reaching Rs. 138.7 crore compared to Rs. 116.7 crore last year. We have achieved a significant landmark with Profit After Tax on a standalone basis, reaching Rs. 100+ crore in FY24.

Earnings per Share:

The Companys Earnings per Share has increased from 28.18 in FY23 to 33.51 in FY24, with an increase of around 18.90%.

Reaching the last mile by Growing the MFD base:

As part of our business strategy, our Company is actively focusing on the aggressive expansion of our MFD base, who serve as the backbone of our operations. As of March 2024, we have grown our MFD network to 29,605, up from 26,949 the previous year. Our AUM per MFD has also increased from Rs. 2.09 crore to Rs. 2.45 crore.

According to AMFI data, individual assets constitute more than 60% of the industrys total AUM and are primarily distributor-driven. 54% of the assets of individual investors are from T30 cities, brought in by distributors.

Direct investments account for 25% of individual assets wherein 6% comes from B30 and 19% from T30. This data indicates that the future growth centres for the industry, which are Tier 2 and Tier 3 cities, mainly rely on distributors.

This is where Prudents strength lies. With around 50% of our branches and 30% of our MFDs from B30 cities, we are well-prepared to reach the last mile. As of March 2024, we have covered more than 85% of total pin codes, with a presence in more than 98% of districts in India.

There is a growing recognition among MFDs of the importance of collaborating with technology-based platforms to serve their clients efticiently, and we are capitalising on this opportunity. Currently, the penetration of MFDs within the country remains relatively low. While approximately 2.6 million insurance agents are operating in India, the number of AMFI Registration Number (ARN) holders authorised as individual mutual fund distributors is just 1.43 lakh. This highlights the significant potential for growth as more MFDs enter the industry.

We anticipate that as the industry attracts many MFDs, our Company will experience incremental benefits. By actively expanding our MFD network and leveraging technology-driven platforms, we aim to strengthen our market position and enhance our services to clients nationwide.

Creating additional income sources for MFDs.

Prudent has effectively leveraged its extensive Mutual Fund Distributor (MFD) network through its multi-product distribution platform. The Company has strategically utilised this network to explore the potential of cross-selling insurance products. Prudent has successfully converted 11,331 existing MFDs and their family members into ‘Point of Sales Person (POSP), empowering them to sell insurance products. Notably, 3,581 of these POSP were added in FY24 alone, constituting approximately 31% of our total POSP. This aggressive focus on the insurance segment underscores its importance as a second pillar of growth.

In the current financial year, insurance revenues account for 13.68% of Prudents overall revenue stream. This diversification of revenue sources highlights the successful integration of insurance offerings within Prudents comprehensive multi-product distribution platform, strengthening the Companys financial performance.

Encouraging MFDs to build solid AUM with the help of SIPs

Prudent has always believed in the purchasing power and savings appetite of Indian households. This is evident from our 25.53 lakh live SIP book, which contributed a gross inflow of Rs. 7,177 crore during FY24. We have achieved a distinctive position in the retail wealth management segment, enabling the Company to generate granular flows. This granular business book provides a solid foundation and enhances visibility on net sales performance.

A significant milestone was reached in March 2024, when the monthly Systematic Investment Plan (SIP) inflow surpassed the Rs. 725 crore mark. SIPs have thus proven to be a robust organic growth driver for Prudent, offering promising prospects for the future. This growth has also helped our MFDs build higher AUMs, with our AUM per MFD improving to Rs. 2.45 crore as of March 31, 2024.

Threats, Risks and Concerns

Prudent Corporate Advisory Services actively identifies and evaluates various sources of risk, their impact areas, and potential consequences. The Company employs a robust risk management framework involving department heads and senior management under the guidance of the Board or Risk Management Committee. They develop and implement risk mitigation plans to address identified risks, broadly categorised into internal and external risks. These encompass technological, financial, operational, strategic business, legal and regulatory compliance, cyber security, competition, and intellectual property rights risks.

1. Competition Risk:

The financial services industry is experiencing rapid evolution driven by technological advancements and changing customer preferences, leading to intense competition from existing and new players. To mitigate this risk, Prudent proactively upgrades its technology infrastructure across various business aspects, including sales, risk management, fraud detection, client service, and settlement. Prudent mitigates the risks associated with intense market competition by staying ahead in technological adoption, maintaining operational efticiency, and focusing on customer-centric practices.

2. Regulatory Changes:

Operating in an environment with ongoing and significant regulatory changes poses a critical risk. Historical regulatory changes have impacted the business, such as the ban on upfront commissions and the rationalisation of Total Expense Ratio (TER) rates. The Company maintains a strong vigilance regarding evolving legislation and regulatory focus, ensuring compliance and adapting its operations accordingly. Addressing regulatory challenges involves significant costs and resource allocation, but Prudent is committed to upholding a robust regulatory framework.

3. Operational Risk:

Operational risk arises from inadequate or failed processes, human errors, or external events.

Prudent strives to maintain consistent and seamless business operations, establishing resilience and recovery capabilities within its processes. Ensuring reliability in technology systems, real estate services, and third-party suppliers mitigates our operational risks. Proactively addressing these risks safeguards the Companys operations, protects customers, and maintains its reputation.

4. New and Emergent Technology:

While technological advancements offer opportunities for innovation, they also introduce inherent risks. Increased adoption of electronic payment systems and direct access to trading markets can lead to cost reductions but may also result in lower commissions, fees, and transaction margins. Prudent carefully evaluates and manages the potential risks associated with new technologies, maintaining a proactive approach to risk assessment throughout the implementation process to ensure security and stability.

5. Reputation Risk:

Reputation risk impacts the Companys trustworthiness and competency. Any significant lapse in integrity, compliance, customer service, or operational efticiency can harm Prudents reputation. The Board of Directors plays a crucial role in managing reputation risk by formulating and enforcing a robust strategy, ensuring high standards of integrity and compliance, and building stakeholder trust.

6. Cybersecurity Risk:

Given the increasing reliance on digital platforms, cybersecurity risk is significant. Cyber threats and data breaches can lead to financial losses, reputational damage, and legal consequences. Prudent focuses on enhancing its cybersecurity measures, regularly update its security protocols, and conduct ongoing employee training to safeguard against cyber risks.

7. Economic and Market Volatility:

Economic downturns, market volatility, and geopolitical events can affect investor sentiment and financial markets, impacting Prudents AUM and revenue. To mitigate this risk, Prudent has started diversifying into insurance & we also maintain a strong liquidity position to mitigate these risks.

Internal Control

Prudent has implemented a robust and comprehensive risk management and internal control system to manage risks effectively across all its business operations. The primary objective of the Companys risk management framework is to identify, measure, and mitigate various risks while establishing policies, procedures, and standards to address these risks and ensure a systematic response in the event of their occurrence.

To support this process, the Company has engaged M/s. Deloitte Haskins & Sells, Chartered Accountants, as its Statutory Auditor, and M/s. Pramodkumar Dad & Associates, Chartered Accountants, as its Internal Auditor. The Companys Board of Directors oversees the risk management efforts and has established a dedicated Risk Management Committee (RMC) for formulating and reviewing risk management processes and controls.

In compliance with the SEBI Listing Regulations, the Company has adopted a Risk Management Policy to create and safeguard shareholder value by minimising potential threats and losses while identifying and capitalising on opportunities. This policy ensures that effective risk management is integral to every employees role.

Risk identification involves recognising risk sources, areas of impact, events, underlying causes, and potential consequences. The heads of various departments and senior management personnel at different organisational levels, under the guidance of the Board or the Risk Management Committee, are responsible for developing risk mitigation plans and ensuring their effective implementation.

By implementing a robust risk management framework and involving key stakeholders, the Company aims to proactively address risks, safeguard shareholder value, and promote a culture of risk awareness and mitigation throughout the organisation.

Information Technology

The rapid evolution of information technology continues to revolutionise the financial services industry. This dynamic landscape presents both opportunities and challenges for Prudents businesses. The Company recognises the critical role of its IT capability in ensuring the efticient operation and performance of its various businesses, making it a key driver of success.

Prudent has made significant strategic investments in IT and continues to prioritise innovation and investment in this area. As of March 31, 2024, the Company had a team of 70 skilled IT professionals dedicated to developing, maintaining, and enhancing its diverse digital assets. Prudent remains committed to the ongoing development, maintenance, and utilisation of IT across its various business activities.

By leveraging technology, Prudent aims to significantly improve the quality of client service through enhanced connectivity and the provision of personalised value-added products and services. The Company recognises the transformative potential of technology in delivering superior client experiences and remains dedicated to harnessing these advancements to provide innovative and customised solutions to its clients.

Human Resource

Prudent understands that its culture and human capital are crucial to its business success. As of March 31, 2024, the company employs 1,250, skilled and talented individuals.

Recognizing the need to build a strong foundation of knowledge and expertise for the future, Prudent is committed to attracting, training, and retaining young talent.

To support a motivated and productive workforce, Prudent has implemented various policies aimed at motivating employees, improving retention rates, and boosting overall productivity. These initiatives are designed to foster a positive work environment, acknowledge and reward employee contributions, and offer opportunities for professional growth and development.

Prudent places great value on the skills and potential of its employees, investing in their long-term success. By promoting a culture of continuous learning and offering meaningful incentives, the company aims to cultivate a dedicated, high-performing team that drives its ongoing growth and delivers exceptional value to its clients.

Disclaimer

Statements in the Management Discussion and Analysis that describe the Companys objectives, projections, estimates, and expectations may be considered "forward-looking statements" under securities laws and regulations. Actual results may differ from those stated or implied. Economic conditions affecting demand-supply and price conditions in domestic and international markets are crucial factors that could impact the Companys operations. Additionally, government regulations, tax laws, other statutes, and various incidental factors influence how the Company operates.

NOTICE is hereby given that the 21st (Twenty First) Annual General Meeting of the members of Prudent Corporate Advisory Services Limited (CIN: L91120GJ2003PLC042458) will be held on

Thursday, 26th day of September, 2024 at 11.00 a.m. through Video Conferencing (VC)/Other Audio Visual Means (OAVM) to transact the following businesses:

Ordinary Business:

1. To receive, consider and adopt the Audited Standalone Financial Statements of the Company for the Financial Year ended 31st March, 2024 and the Report of the Board of Directors and Auditors thereon and the Audited Consolidated Financial Statement of the Company for the Financial Year ended 31st March, 2024 and Report of Auditors thereon.

"RESOLVEDTHAT the Audited Standalone and Consolidated

Financial Statements of the Company comprising of Balance Sheet as at March 31, 2024, Profit and Loss Account, Cash Flow Statement and Statement of Change in Equity for the year ended on that date along with schedules and notes thereon and the Boards Report and Auditors Report as at March 31, 2024, as circulated to the members with the Notice of Annual General Meeting and submitted to this meeting be and are hereby received, considered and adopted."

2. To declare final dividend of ft2.00 (Two Rupee) per Equity Share of ft5/- each for the Financial Year ended on 31st March, 2024.

"RESOLVED THAT the final dividend of Rs. 2.00/- per equity share for the Financial Year 2023-24 be and is hereby declared and approved and the same be paid to those shareholders whose name appears in the register of members as on Friday, September 13, 2024, being the record date for the purpose of final dividend."

3. To appoint a Director in place of Mr. Chirag Ashwinkumar Shah (DIN: 01480310), who retires by rotation and, being eligible, offers himself for re-appointment.

Explanation: Based on the terms of appointment, Executive Directors and the Non-Executive Directors (other than Independent Directors) are subject to retirement by rotation. Mr. Chirag Ashwinkumar Shah, who has been as Director (Category – Executive) since 24th September, 2018 and whose office is liable to retire at this AGM, being eligible, seeks re-appointment. Based on the performance evaluation, the Board recommends his re-appointment. Therefore, the Members are requested to consider and, if thought fit, to pass the following resolution as an Ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Section 152 and other applicable provisions of the Companies Act, 2013, Mr Chirag Ashwinkumar Shah (DIN: 01480310), Director of the Company, who retires by rotation at this meeting and being eligible offers himself for re-appointment, be and is hereby re-appointed as Director of the Company, liable to retire by rotation."

4. To consider and if thought fit, to approve reappointment of M/s. Deloitte Haskins & sells, Chartered Accountants as the Statutory Auditors of the Company for a Second Term of 4 (Four) years from F/Y 01.04.2024 to 31.03.2028 and to pass, with or without modification(s), the following resolution as an ordinary Resolution:

"RESOLVED THAT pursuant to the provisions of Section 139, 142 and other applicable provisions, if any of the Companies Act, 2013 read with the Companies (Audit and Auditors) Rules, 2014 (including any statutory modification(s) or re-enactment (s) thereof for the time being in force) and pursuant to the recommendation of the Audit Committee, the board be and is hereby recommend to the members, re-appointment of Deloitte Haskins & sells, Chartered Accountants (Firms Registration No. 117365W) as the Statutory Auditors of the Company, to hold office for the Second Term for a period of 4 (four) consecutive years commencing from the conclusion of this 21st Annual General Meeting till the conclusion of the 25th Annual General Meeting of the Company to be held in the financial year 2027-2028, at such remuneration, as recommended by the Audit Committee and as may be mutually agreed upon between the Board of Directors of the Company and the Statutory Auditors from time to time."

	By Order of the Board of Directors,
	For Prudent Corporate Advisory Services Limited
Date: August 08, 2024	Kunal Chauhan
Place: Ahmedabad	Company Secretary
	Membership No. ACS- 60163
Registered Office:
Prudent House, 3 Devang Park Society,
Panjarapole Cross Road, Ambawadi
Ahmedabad, Gujarat - 380015.
Website: www.prudentcorporate.com