Sarthak Global Ltd Management Discussions

GLOBAL ECONOMIC

The global economy displayed a resilient performance in 2023 after a turbulent year. Despite tumultuous geopolitical events, increased volatility in energy and commodity markets, and aggressive monetary tightening to combat stubborn inflation, global economic growth has decelerated but not halted. According to the International Monetary Fund (IMF), economic growth is estimated to be slower at 3.2% in 2024, same as in 2023.

Economic growth in several emerging markets and developing economies has surpassed expectations in 2023. Another silver lining is the strongest recovery of the US economy among major economies, marked by a stronger performance in private consumption. The GDP of the US increased from 1.9% in 2022 to 2.5% in 2023. The European Union has so far weathered shocks that are unprecedented in recent history, triggered by the prolonged Russia-Ukraine war, and the lingering effects of tight monetary policy as well as higher interest rates and energy costs. Its GDP growth slowed from 3.6% in 2022 to 0.6% in 2023. On the other hand, Chinas economy expanded by 5.2% in 2023 from 3.0% in 2022.

Global inflation continues to recede at a faster pace from 8.7% in 2022 to 6.8% in 2023, fostering optimism for further easing of financial conditions and improvement of monetary policy frameworks, although uncertainty about the timing of interest rate reduction persists.

Moreover, the average price of Brent crude oil decreased to USD 83 per barrel in 2023, down from USD 101 per barrel in 2022, and crude oil price volatility has remained low for most of the first quarter of 2024. The average annual price for Australian coal saw a decrease from USD 344.9/tonne in 2022 to USD 172.8/tonne in 2023. While coal demand continues to thrive in emerging and developing economies, the International Energy Agency (IEA) predicts global coal demand to decline by 2026 due to expansion of global renewable capacity and a shift towards alternative energy sources, away from fossil fuels in response to increasing environmental concerns.

(Source: IMF Economic Outlook, April 2024; EIA; World Bank; IEA; RBI MPC Meeting 2024)

OUTLOOK

The Reserve Bank of India projects global growth to remain steady in 2024. The IMF forecasts a global growth of 3.2% for both 2024 and 2025.

Region-wise growth (%)

Region	2023	2024(E)	2025 (P)
Global Economy	3.2	3.2	3.2
Advanced Economies (AEs)	1.6	1.7	1.8
Emerging Markets and Developing Economies (EMDEs)	4.3	4.2	4.2

(E - Estimates, P - Projections) (Source: International Monetary Fund)

The global economic outlook for 2024 faces the risk of persistence of elevated interest rates and core inflation, withdrawal of fiscal support amid high debt weighing on economic activity, and economic uncertainties. Furthermore, heightened geopolitical tensions could pose downside risks to the global economy through tightening of energy and commodity prices. However, with faster disinflation and steady growth, the possibility of a severe economic downturn has diminished, and risks to global economic expansion are broadly balanced. Other positive factors, such as stronger-than-expected economic performance of the US and several large emerging market and developing economies, economic stimulus in China, the resilience of Europe amid the ongoing war and the easing of supply chain bottlenecks will bolster the outlook of the global economy. After rapid expansion in 2023, the Asia-Pacific (APAC) region is expected to be the fastest-growing region of the world economy in 2024, supported by robust domestic demand in East Asia and India.

(Source: IMF Economic Outlook, April 2024; RBI MPC Meeting 2024; S&P Global)

INDIAN ECONOMIC OVERVIEW

Amid a challenging global economic landscape and deteriorating geopolitical conditions, India has been a bright spot. It is the fifth- largest economy in the world and is poised to retain its position as the worlds fastest-growing major economy. Its GDP growth remained buoyant at 7.6% in FY 2023- 24 as against 7% in FY 2022-23, supported by robust domestic demand, moderate inflation, a stable interest rate environment, and strong investment activity. Furthermore, an accelerated pace of economic reforms and increased capital expenditure facilitated construction activities and created extensive employment opportunities across the country.

Region	FY 21-22	FY 22-23	FY 23-24 (E)
Real GDP growth (%)	9.1	7.0	7.6

(E - Estimates) (Source: Ministry of Statistics & Programme Implementation)

The Governments thrust on infrastructure investments and emphasis on expanding the share of manufacturing in the GDP were seen to have supported GDP growth in FY 2023-24 through a growth of 10.7% in the Construction sector and 8.5% growth in the Manufacturing sector. The Index of Industrial Production (IIP) growth rate for FY 2023-24 indicates a 5.8% increase compared to the previous year. Furthermore, Indias per capita income is estimated to have reached Rs. 2.14 lakhs in FY 2023-24, achieving remarkable growth of 8.0%. Rising levels of disposable income have led to an upswing in household consumption, thereby stimulating demand across various sectors.

Despite repetitive food price shocks, Indias CPI inflation is on a downward trajectory and eased to 4.83% in April 2024. The RBI has thus far maintained the policy repo rate at 6.50% with an aim to achieve the target of 4% inflation while supporting economic growth. It is expected that structural interventions implemented by the government will continue to strengthen the infrastructural and manufacturing base, create economies of scale, increase exports and make India an integral part of the global value chain. ‘Make in India has made significant achievements and is now focussing on 27 sectors under ‘Make in India 2.0 to make India a manufacturing hub. The government has also implemented an investor-friendly Foreign Direct Investment (FDI) policy, allowing 100% FDI in most sectors through the automatic route, except for specific strategically important sectors. In the power sector, 100% FDI is allowed under the automatic route for generation from all sources (except atomic energy), transmission and distribution of electric energy, and Power Trading.

(Source: Ministry of Statistics & Programme Implementation; Ministry of Finance; RBI; Ministry of Commerce & Industry) OUTLOOK

Indias economic outlook remains positive as it reaps the benefits of demographic dividend, a skilled and productive workforce, physical and digital infrastructure enhancements, increased capital expenditure, and the governments proactive policy measures. According to the IMF, the Indian economy is expected to advance steadily at 6.8% in 2024 and 6.5% in 2025. On the other hand, the RBIs forecast is more optimistic, projecting a higher GDP growth of 7.0% for FY 2024-25, while CPI inflation is expected to decline to 4.5% in FY 2024-25.

Potential risks to Indias economic outlook arise from headwinds from geopolitical tensions, volatility in international financial markets and geoeconomic fragmentation. However, Indias advantageous geopolitical position will help it capitalise on supply chain diversification and reshoring, increase its global competitiveness and boost exports. Amid a volatile global macro environment, the Indian economy is poised to ascend as a global economic powerhouse and become the third-largest economy in the world by 2030. The Interim Budget 2024-25 outlines a multi-pronged economic management strategy, including infrastructure development, digital public infrastructure, taxation reforms and proactive inflation management. It sets the foundation for the vision of a Viksit Bharat (Developed India) by 2047.

(Source: IMF Economic Outlook, April 2024; Economic Times; RBI; Ministry of Finance)

Industrial Structure and Developments

Your Company is a registered Share Transfer Agent from SEBI since 1995. It is successfully handling share transfer activities for various client Companies & serving more than 1,00,000 shareholders. In compliance with SEBIs circular of single point share transfer & Demat activities, the Company has taken direct electronic connectivity from both the depositories i.e. the National Securities Depository Ltd. (NSDL) & the Central Depository Services (India) Limited (CDSL).

Opportunities and Threats

Our long-standing relationship with our major customers has been one of the most significant factors contributing to our growth. Our commitments to quality and customer service practices have been strong contributing factors to our robust customer relations. To overcome the challenges and competition, we have taken various initiatives to reduce the operational costs, improve the performance and quality of existing services as well as to explore new markets domestically and globally.

We have an experienced and dedicated team of professionals, catering to the needs of clients, delivering products at reasonable interest rates & timely.

Opportunities

• Indias Growth Rate

• Financial Inclusion

• Utilize technology to provide more efficient solutions

• Increased retail participation in capital markets

• Regulatory reforms would aid greater participation by all class of investors.

Threats

• Volatile environment

• Fiscal deficit and current account deficit

• Inflation and economic slowdown

• Competition

• Technology may become obsolete due to Innovation in Technology Outlook

Your Company is now exploring opportunities to get more business from corporate in the field of share transfer & other capital market activities. The management is optimistic about the future outlook of the Company. The industry witnessed testing times with global economic slowdown and weakening profitability and tightening of financial conditions, still the Company has demonstrated its ability to withstand the challenges posed by the current environment.

Risk and concerns

The Company like any other Company is exposed to specific risks that are particular to its business and the environment within which it operates. The company is exposed to the market risk, which inter alia includes economic/business cycle, interest rate volatility and credit risk. While the Indian economy has shown sustained growth over the years, the Company is confident of managing these risks by maintaining a conservative financial profile, and by following prudent business and risk management practices.

Competition from existing and prospective registrar & share transfer agents may affect the profitability of the company. The Company is exposed to risks from change in policy of similar Companies; changes in Govt. Policies/SEBI policies, etc. which may affect profitability and working of the Company.

Internal Control System and their adequacy

Your Company has good and effective internal control systems, which provide efficiency of operations, financial reporting, proper recording and safeguarding of assets, compliance with applicable laws and regulations, etc.

The adequacy of the same has been reported by the statutory auditors of your Company in their report.

Financials

Your Company has succeeded in achieving satisfactory results for the financial year 2023-2024:

(Amount Rs. in lacs)

Balance Sheet	As at March 31,2024	As at March 31,2023
Share Capital	300.00	300.00
Reserve & Surplus	-133.80	-135.70
Non-current Liabilities	1518.94	1488.45
Current Liabilities	277.73	627.77
Non-current Assets	14.75	78.94
Current Assets	1948.12	2201.57

(Amount Rs. in lacs)

Profit and Loss Account	For the year ended March 31,2024	For the year ended March 31,2023
Total Revenue	549.45	403.98
Profit/ (Loss) before tax and depreciation	6.69	-1.67
Depreciation and amortization	0.72	4.29
Profit after tax	1.90	2.62
Earnings Per Share	0.06	0.19

Human Resource Development and Industrial Relations:

The Company is being equipped with all the modern amenities like Intranet, Internet & latest models of computers & printers. By intensive training from both the depositories and upgradation of systems & software, transfer & Demat work is being managed successfully.

Your Company considers the quality of its human resources to be the most important asset and constantly endeavors to attract and recruit best possible talent. Our training programs emphasize on general management perspective to business. The Company continues to empower its people and provide a stimulating professional environment to its officers to excel in their respective functional disciplines.

The industrial relations of the Company continue to remain harmonious and cordial with focus on improving productivity and quality. The number of permanent employees on the rolls of Company as on 31.03.2024 is 12.

Changes (change of 25% or more) in Significant Key Financial Ratios and Return on Net Worth

As per the latest amendment as introduced by SEBI via SEBI (Listing Obligations & Disclosure Requirement) (Amendment) Regulations, 2018 on May 09, 2018 effective from April 01, 2019, new sub-clause (i) has been inserted in Clause I in Part B of Schedule V of SEBI (Listing Obligations & Disclosure Requirement), Regulations, 2015 according to which the listed entity shall provide the details of significant changes (i.e. change of 25% or more as compared to the immediately previous financial year) in key financial ratios, along with the detailed explanations thereof, including:

S. No. Particular	Numerator	Denominator	2023 2024	2022 2023	Remarks
1. Debtors Turnover Ratio (Times)	Total Sales	Avg. Accounts Receivable	3.31	1.15	There was significant reduction in carrying value of trade receivables. It resulted in improved ratio in current year.
2. Interest Coverage Ratio (Times)	EBIT	Interest	1.08	1.03	EBIT has increased which resulted in improvement of ratio
4. Current Ratio (Times)	Current Assets	Current Liabilities	7.01	3.51	Payment of significant amount to creditors and significant repayment of current borrowings lead to improvement in current ratio.
5. Debt Equity Ratio (Times)	Total Debt	Shareholders Equity	10.69	11.55	Significant decrease in borrowing leads to decrease in debt-equity ratio
6. Operating Profit Margin (% terms)	Operating Profit (EBIT)	Sales	0.25	0.32	Operating margin declined which resulted in downfall in ratio
7. Net Profit Margin (% terms)	Net Profits after taxes	Sales	0.00	0.02	There is sharp decline in net profit after tax. It resulted in decline in this ratio.
8. Return on Net Worth (% terms)	Net Profits after taxes	Net Worth (Average Shareholders Funds)	0.01	0.03	The sharp decline in net profit after taxes as compared to the net profit in preceeding year has resulted in decline in this ratio.

Cautionary Statement

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be “forward looking statements” within the meaning of applicable laws and regulations. Actual results could differ materially from those expressed or implied. Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors

Disclosure of Accounting Treatment in Preparation Of financial statements:

The Company has followed the guidelines of accounting standards as mandated by the Central Government in preparation of its financial statements.