Secmark Consultancy Ltd Management Discussions

Overview of Industry and Business Performance

Industry is growing and so is the business of your Company.

The financial services industry and more so the Stock Broking business has adopted innovation over the last few years.

Though to a limited extent, AI is also becoming a part of the ecosystem and its role will keep on increasing.

As the economy of our country grows, we are experiencing an overall expansion of the financial markets with increase in issuers and capital raisers, investors and consequentially the market participants who service the issuers and investors.

This offers a great opportunity to your Company and over the past few years, SecMark Consultancy Limited has strived hard to become a one stop shop for all products and services in the financial market space, more specifically the Stock Brokers and the Depository Participants.

Today SecMark Consultancy Limited has almost the entire product suite required by its clients including:

1. e-KYC platform;

2. Mobile and Web trading platforms;

3. Middleware that connects to the Order Management System (OMS) and Risk Management System (RMS) solutions through APIs;

4. Back Office solutions;

5. PMLA solutions and;

6. Compliance solution.

Your Company still has a void in its own OMS and RMS solutions, which it intends to fill in soon by developing its own state of art OMS and RMS solution.

The journey has been quite exciting and over these years the product portfolio expansion along with client expansion has resulted in a growth of turnover from just above Rs. 5 Crores for the year ended March 2020 prior to the IPO to close to Rs. 39 Crores for the year ended March 2026. This comes to a compounded annual growth at about 40% per annum over a period of 6 years.

Your Company is also delighted to share that it is now close to becoming the only one stop shop that offers all these solutions, thus allowing greater opportunities for cross selling and also brings longevity of relationship with clients. Apart from this your Company also becomes a preferred vendor, where the management of a prospective or existing client is of the view of having only one vendor for all products to ensure smooth coordination and better functioning.

Looking at the current scenario of the markets and the growth of product portfolio and team coupled with the commitment of the Management to work tirelessly for the growth of the Company it appears that the Company try to do well in years to come.

The Companys revenue from operations (Total Operating Income) increased from Rs. 3511.31 Lakhs in FY 2024–25 to Rs. 3753.72 Lakhs in FY 2025–26, registering a growth of 6.90%. The total revenue including other income was Rs.3,882.34 lakh versus Rs. 3,596.12 lakh, representing 7.95% growth. The Company reported a reduced Profit After Tax of Rs. 256.72 Lakhs during FY 2025-26 as against Rs. 425.08 Lakhs in the previous year.

Financial Results and Growth:

(Amount in Rs. Lakhs)

Your Company has substantial cash outflows due to purchase of these software applications and for availing support for the software purchase, detail of which is as under:

- Sales Commission is payable at a rate of 50% of sales in the next year for sales in previous year. If the total sales for the period April 1, 2024 to March 31, 2026 is less than Rs. 20 Crores then the minimum amount payable will be Rs. 10 Crores across the span of 3 years and if the sales are more than Rs. 20 Crores, then the sales commission will be paid at 50% of sales value subject to a maximum of Rs. 15 Crores over a span of 3 years.

Our Competitive Strength

We believe that the following strengths contribute to our success and position us well for future growth:

1. Qualified and Experienced Team

2. Company is managed by professionals having a varied experience in financial services. The team of the Company exhibits a synergy of both, qualified professionals (Chartered Accountants, Cost and Management Accountants, Company Secretaries, Advocates, CISAs, DISAs, Engineers, Technology Experts, Management Professionals etc.) as well as experienced personnel having diversified experience in the fields of Software Development, Operations, Outsourcing, Corporate Consultancy and Compliance, and the like. Since management has been actively involved in the Financial Services Industry and has gained requisite domain knowledge, experience and industry networks, going forward they would be able to take benefits of opportunities in the Financial Services Industry thereby improving our operational performance and brand value.

3. The Tech Initiatives:

Companys major clientele are brokers and depository participants and they require the following major type of software / services:

i. E-KYC Software – for client on-Boarding.

ii. Trading and Risk Management Software – for enabling clients to transact on stock exchanges.

iii. Back Office Software – for handling back-office operations of Broking and DP businesses.

iv. PMLA Software – for client screening and transaction monitoring.

v. Compliance Software – for managing compliance activities.

4. Your Company had shared in the previous annual report that it has all Software Applications in its fold except Trading and Risk Management Software.

5. Long-term relationships

Long term client relationships provide the foundation for our business. Client list includes stock brokers, depository participants, stock exchanges, wealth managers, research analysts, insurance companies, insurance brokers, corporate agents, portfolio managers, investment advisors, merchant bankers, NBFCs, banks etc. Companys track record of delivering solutions to complex business problems backed by demonstrable industry and technology expertise has helped to forge strong relationships with clients.

The relationship with clients has grown with a good interest in the latest products of Compliance Management and E-KYC. Both these products are seeing good traction.

Opportunities and Threats

Opportunities

- Your Company has increased its offerings by acquisition of software and added several clients. There is further scope of increasing the business and adding more clients.

- Favourable market conditions on the back of overall growth in the sector.

- Government push to increase securities market out reach across India and increase in products offering for different types of investors

- Acceptance of outsourcing as a suitable business model.

- Technology driven services.

- Regulatory stringent approach requiring specialized teams to handle tasks and situation.

- Using technology to reduce transactions cost, improve compliance.

Threats:

- Global uncertainties, high inflation in various countries and possibilities of wars can pose a significant risk to business as it will reduce the spending capacity of the clients of your Company.

- Changing regulatory landscape.

- Large scale influx of competitors (Requires several capabilities which cannot be acquired overnight)

- Cyber Attacks (Controls to be placed for prevention, detection and correction).

- Technological advancements.

Outlook

- As aforesaid, with the increase in products on offer there is higher possibility of business with each client. Also, addition of clients can result in substantial growth in business. The overall outlook of the business looks positive.

Risks and Concerns

Your Company has substantial foreseeable cash outflows for the consultancy services for software applications it acquired and this will have an impact on the profitability in the near term.

The Company recognizes the importance of well-structured system to identify and manage the different elements of risk. The management of the Company regularly identifies reviews and assesses risks involved in its various business activities and work out guidelines for mitigating the same.

The risk factors have been determined on the basis of their materiality. The following factors have been considered for determining the materiality.

1. Some events may have material impact qualitatively instead of quantitatively;

2. Some events may not be material individually but may be found material collectively;

3. Some events may not be material at present but may be having material impact in future.

Our systems are potentially vulnerable to data security breaches, whether by our employees, or our service providers or others that may expose sensitive data to unauthorized persons. We process and transfer data, including personal information, financial information and other confidential data provided to us by our clients. Although we maintain systems and procedures to prevent unauthorized access and other security breaches, it is possible that unauthorized individuals could improperly access our systems, or improperly obtain or disclose sensitive data that we process or handle. Data security breaches could lead to the loss of intellectual property or could lead to the public exposure of personal information (including sensitive financial and personal information) of our clients investors or our employees. Any such security breaches or compromises of technology systems could result in institution of legal proceedings against us and potential imposition of penalties, which may have an adverse effect on our business and reputation.

Internal control systems and their adequacy.

The Company has proper and adequate systems of internal controls. These have been designed to provide reasonable assurance that all assets are safeguarded and protected against loss from unauthorized use or disposition and that all transactions are authorized, recorded and reported correctly and the business operations are conducted as per the prescribed policies and procedures of the Company.

Discussion on financial performance with respect to operational performance.

The key highlights pertaining to the business of the Company for the financial year ended have been given hereunder. In the Consolidated Financial Statements, total income was Rs. 3882.47 and Rs. 3600.54 lakhs for the Financial Year 2026 and 2025 respectively. Profit/(Loss) after Tax for the similar fiscal years mentioned above were Rs. 256.72 and Rs 429.39 lakhs respectively. For the Standalone Financial Statements, total income was Rs. 3882.34 and Rs. 3596.12 lakhs for the Financial Year 2026 and 2025 respectively. Profit/(Loss) after Tax for the similar fiscal years mentioned above were Rs. 256.72 and Rs. 425.08 lakhs respectively.

Note:

During the year under review,

- The Company acquired software applications and related intellectual property rights from Codifi Finserv Private Limited and Codifi Soft Tech Private Limited for Rs. 8,00,00,000/- (Rupees Eight Crores Only), plus applicable GST.

- The Company entered into a consultancy agreement with the management persons / entities of Codifi Soft Tech Private Limited for software development and support services from December 30, 2025 to December 30, 2028, for an aggregate remuneration of Rs. 20,00,00,000/- (Rupees Twenty Crores Only), plus applicable GST.

Your Company has grown its topline by more than 6.90%.

The Board of your Company is reasonably satisfied with the performance and intends to perform better in the years to come.

Material developments in Human Resources / Industrial Relations front, including number of people employed.

The Directors want to place on record their appreciation for the contribution made by employees at all levels, who through their steadfastness, solidarity and with their co-operation and support have made it possible for the Company to achieve its current status. Human resource is the key element for our Companys growth strategy and handling the day to day activities within the organization. We focus on attracting and retaining the best possible talent. Our team is a blend of experienced, professional with expertise in capital markets. Our Company strongly believes that its human resources are the key enablers for the growth of the Company and important asset. Hence, the success of the Company is closely aligned with the goals of the human resources of the Company. Currently our Company has employed 101 employees. Taking into this account, our Company continued to invest in developing its human capital and establishing its brand on the market to attract and retain the best talent. The employee relations continue to be cordial and harmonious.

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 detailed explanations therefore:

Details of any change in Return on Net Worth as compared to the immediately previous financial year along with a detailed explanation thereof:

Disclosure of Accounting Treatment

While preparation of financial statements, treatment as prescribed in the Accounting Standards has been followed.