Secmark Consultancy Ltd Management Discussions

Overview of Industry:

SecMark is one of the leaders in offering services to financial market participants including stock exchanges, stock and commodity brokers, depository participants, portfolio managers, alternative investment funds, investment advisors, research analysts etc.

Financial markets have performed well and there is a significant growth in the business of your Company with addition of new clients and increase in revenues from existing clients.

The overall picture of the economy of the country and the growth in the number of financial market participants looks positive and this would be helpful in the growth of your Company. Your Company will focus on growing its business while adding new clients to the best of its capabilities. It also intends to add more products at opportune time.

As can be observed from the financial results, your Company has been able to post a fairly reasonable growth in its topline from 2,528.37 Lakh in the year 2023-2024 to 3,600.54 Lakh in the year 2024-2025 effectively resulting in a growth of over 42%. The profit after tax of your Company have came up to Rs. 429.39 Lakhs in the year from loss of Rs. 236.46 Lakhs in the previous year. The revenues have grown by 42% and the over all growth is of 282% compared to losses of previous year to profit of current year.

Particulars	31.03.2023	31.03.2024	31.03.2025
Total Operating Income	1743.72	2459.17	3511.31
Employee Costs	504.61	664.89	788.14
Other Expenses	1744.86	1670.93	1791.53
Profit/(Loss) Before Interest Depreciation and Taxation	(505.75)	193.15	1016.45
Particulars	31.03.2023	31.03.2024	31.03.2025
Depreciation	239.63	408.16	414.18
Profit/(Loss) Before Interest and Taxation	(745.38)	(318.99)	563.43
Finance Cost	37.25	103.96	38.84
Operating Profit/(Loss) Before Tax	(782.63)	(318.99)	563.43
Non-Operating Income /(Expense)	45.97	-	-
Profit/ (Loss) Before Tax	(699.41)	(318.99)	563.43
Current Tax	-	-	-
Provision for Deferred Tax	(173.18)	(82.53)	138.35
Profit/ (Loss) After Tax	(526.23)	(236.46)	425.08

Industry structure and developments:

In the financial year, there has been significant global turbulence, but our country has been able to sustain its growth and this has percolated in the performance of financial markets. With the GDP growth for last few financial years being around 7% our countrys economy has performed exceedingly well.

This has resulted in addition of more financial market participants and growth in the business of existing financial market participants.

Your Company provides consulting, technology, outsourcing and auditing services to financial market participants. Your Company also acquired 4 software applications in last few years and this has allowed your Company to offer more products to its clients and grow its business. 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:

Software	Apr 1, 2024 to Mar 31, 2025	Apr 1, 2025 to Mar 31, 2026	Apr 1, 2026 to Mar 31, 2027	Apr 1, 2027 to Mar 31, 2028	Apr 1, 2028 to Mar 31 ,2029
TradePlus Back Office product suit (For Consultancy)	Nil	Nil	Nil	Nil	Nil
Comtek Bizsoft Pvt. Ltd. for software purchase )	Nil	Nil	Nil	Nil	Nil
Comtek Bizsoft Pvt. Ltd. (For Consultancy)	150	200	Nil	Nil	Nil
Comtek Bizsoft Pvt. Ltd. (For Sales Commission)*	328.56	599.60	Nil	Nil	Nil
ComTek Software Systems LLP (For software purchase)	Nil	Nil	Nil	Nil	Nil
ComTek Software Systems LLP (For Consultancy)	200	150	150	200	Nil

* 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 as 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 clients are brokers and depository participants and they require the following 5 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 transaction costs, 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.

Segment-wise or product-wise performance

As the Company is dealing in only in one industry and offers products and services that are interlinked to each other segment reporting is not applicable to the Company. There is no identical geographical segment of the Company as there are no major differences in factors affecting the segment of market.

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 safe guarded 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 the year ended have been given hereunder. In the consolidated financial statements, total income was Rs

3.600.54 and Rs. 2,528.97 Lakhs for the financial year 2024-2025 and 2023-2024 respectively. Profit/(Loss) after Tax for the similar fiscal years mentioned above were Rs. 429.39 and Rs (243.14)* Lakhs respectively. For the standalone financial statements, total income was Rs.

3.600.54 and Rs. 2,459.17 Lakhs for the financial year 2024-2025 and 2023-2024 respectively. Profit/(Loss) after Tax for the similar fiscal years mentioned above were Rs. 425.08 and Rs. (236.46)* Lakhs respectively.

*Note:

The Company has incurred expenses of Rs. 828.56 Lakh on software purchase / consultancy / commission as under:

• Rs. 478.56 Lakh for iBeats software applications

• Rs. 350 Lakh for Busiwin software applications

Your Company has grown its topline by more than 42% and has been able to reverse the trend of losses in the past two years with a profit after tax of Rs. 429.39 Lakh.

Ill

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 your 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. Your 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 your Company has employed 78 employees. Taking into this account, your 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:

Ratios	2024-25	2023-24	Growth	Reason for variance
Debt Service Coverage Ratio (in times)	3.68	0.39	839%	The Company has repayed short term borrowings with better cash flows and revenue. Further shareholders equity has been improved due to profits this year.
Trade Receivables Turnover Ratio (in times)	18.19	22.81	-20.26%	The Company has been able to grow, its sales with a little long repayment cycle, resulting in increased average receivables.
Trade Payables Turnover Ratio (in times)	5.41	7.53	-28%	The decrease is mainly on account of increase in dues for consultancy fee for the services related to the software applications purchased by the Company.
Net Capital Turnover Ratio (in times)	4.26	-14.49	-129%	Decreased is mainly Increased in proportion of required working capital more than proportion of increase in revenue from operation in current financial year as compare to previous year on account of payment due in relation to software purchased by the Company.
Net Profit Ratio (in %)	0.12	-0.10	-226%	Company has earned profit this year compared to the losses booked in previous years.
Ratios	2024-25	2023-24	Growth	Reason for variance
Return on Capital Employed (in %)	0.23	0.09	-366%	Company has earned profit this year compared to the losses booked in previous years.

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

Particulars	2024-25	2023-24	Growth Reasons
Return on Networth	0.23	-0.15	-65%	Company has earned profit this year compared to the losses booked in previous years.

Disclosure of Accounting Treatment

While preparation of financial statements, treatment as prescribed in an Accounting Standard has been followed.