Shardul Securities Ltd Management Discussions.

(i) Financial Performance:

Your Company has posted a net profit of Rs. 484.72 lakhs as against a net profit of Rs. 917.55 lakhs during the previous year. An extraordinary income during the last year contributed to an increased levels of profit during the last year.

(ii) Industry Structure and developments:

The on-going global depression has continued to affect the economies all around the world as a result of which India also has suffered economically in many sectors like Steel, Cement, Consumer Goods and other services. Notwithstanding the efforts of the Government to gear up the economy, the off take has been low resulting in lower turnover and profits during the year under report. The huge losses provided for by the public sector banks would be an indication of depleted economic activities in many sectors of our economy. The brighter side of the picture however is the increase in the foreign exchange reserves that has crossed 360 billion dollars and relative stability of the Indian currency.

The Stock Exchange markets witnessed lower volumes and high volatility with index falling considerably depriving trading opportunities and profitability.

The drought conditions that prevailed during the year under report also affected the agricultural income and the consequent output levels causing inflationary trends and as a result, the interest level in general was also not lowered by the Banks to the expected levels to give a boost to the industrial activities.

However, during the ensuing year the monsoon is expected to be better, economic activities are likely to pick up and the global economy also might perform better which provides hopes for better performance.

(iii) Business Review:

Despite a general economic depression, your Company did well to maintain the average levels of income and profitability. The company however looks forward for better performance during the current year for various reasons stated above.

(iv) Opportunities and Threats:

The GDP is expected to grow around 7.6% in the coming year. The Government has taken many steps to hasten economic reforms, especially in the telecommunication, defense, and agricultural sector besides launching an aggressive campaign on Make In India programme to encourage industrial activities on a larger scale. The foreign exchange reserves have already exceeded 360 Billion Dollars and if the Government is able to bring about changes in the GST Act and also tax reforms, it will boost more Foreign Direct Investments in many of the sectors. These steps would help to improve the economic activities manifolds resulting in a more vibrant capital market.

(v) Segment-wise - Product-wise reporting:

Your company is mainly engaged in the business of investment and broking activities and all other activities revolve around the same and as such there are no separate reportable segments.

(vi) Outlook:

With positive developments stated as above, your company anticipates the market conditions to improve and achieve a better growth in the coming years. Your company always looks for opportunities to exploit any advantages the market would offer to improve the shareholders wealth.

(vii) Risks, Concerns and its Management:

Your companys activities which are essentially in the capital market segments. The Risk perception of our activity could be discerned as under:

Market Risk: Your Companys major investments are mostly in Capital market Instruments like Shares, Mutual funds and Bonds and any volatility could erode the capital value of the investments. No doubt, your Company would keep a close vigil on movement of prices and take appropriate steps to minimize this risk.

Interest risk: The changes in interest rates by RBI and Banks could result in fluctuations in prices and consequently the income of various investments and borrowings by the company. Your company has put in measures to hedge this risk but this cannot be eliminated totally.

Operation Risk: The stock market operations are fraught with certain risks associated with market judgments by operational executives and their decision making process based on certain perceptions prevailing at any given time and these could change suddenly resulting in unexpected adverse positions. As the operations are human dependent, the error factor is always inbuilt in this activity. Some of the risks could be wrong data input, deviations from the rules of SEBI or Exchange due to oversight, lack of coordination amongst the dealing and back office, administrative delays in adhering to schedules etc. This is not exhaustive and your company strives to minimize this type of risk through adequate training and motivation periodically.

(viii) Internal Control Systems and their Adequacy:

Your company has in place adequate interest control measures. There is continuous monitoring of all the activities and necessary creative measures are taken periodically to manage any unforeseen risk factors.

(ix) Human Resources:

Your company has adequate trained professionals to manage the affairs of the company in the most prudent manner.