MANAGEMENT DISCUSSION AND ANALYSIS REPORT
The Financial Year 2023 was a turbulent year for the global capital markets due to
multiple stress factors weighing on the global economy. The excessive stimulus disbursed
during the pandemic led to a severe inflationary pressure which was further exacerbated by
the supply chain disruptions due to the war in Ukraine. To control the inflation, the
global central bankers had to undertake multiple rate hikes which continue even today and
is likely to go on for the near future. These successive shocks have caused a recessionary
situation in many developed economies, particularly in Europe. It may be a while before we
see inflation coming down to normal levels.
According to the World Economic Outlook announced by International Monetary Fund in
April 2023, "the baseline forecast is for growth to fall from 3.4 percent in 2022 to
2.8 percent in 2023, before settling at 3.0 percent in 2024. Advanced economies are
expected to see an especially pronounced growth slowdown, from 2.7 percent in 2022 to 1.3
percent in 2023. In a plausible alternative scenario with further financial sector stress,
global growth declines to about 2.5 percent in 2023 with advanced economy growth falling
below 1 percent. Global headline inflation in the baseline is set to fall from 8.7 percent
in 2022 to 7.0 percent in 2023 on the back of lower commodity prices but underlying (core)
inflation is likely to decline more slowly. Inflations return to target is unlikely
before 2025 in most cases".
India, during this period of high volatility, was not as impacted as some of its peers
due to its non-alignment policy and stable asset quality of its financial system. In this,
the Government of India deserves strong credit in managing these shocks successfully. In
its latest meeting, the Reserve Bank of India (RBI) has maintained its GDP growth
projection for the fiscal year 2023-24 at 6.5%, noting that the Indian economy and
financial sector remain resilient amidst global challenges. In its June 2023 Monetary
Policy Statement, RBI projected the CPI inflation is projected at 5.1 per cent for
2023-24, with Q1 at 4.6 per cent, Q2 at 5.2 percent, Q3 at 5.4 per cent and Q4 at 5.2 per
cent(Chart 1); and real GDP growth for 2023-24 is projected at 6.5 per cent with Q1 at 8.0
percent, Q2 at 6.5 per cent, Q3 at 6.0 per cent, and Q4 at 5.7 per cent (Chart 2).
With respect to its stock markets, despite a flat performance in its index, India still
outperformed most of its global peers during the FY 2023. The Nifty 50 & SENSEX ended
this financial year on a flat note owing to a prevailing uncertainty in the global economy
with respect to financial stresses, geopolitics and inflation. The BSE SENSEX increased by
around 0.72 per cent in FY 2023 while the broader Nifty50 index of the National Stock
Exchange (NSE) decreased by around 0.60 per cent. While the performance for FY 2023 has
been sluggish, the markets are expected to make a decent recovery in FY 2024 backed by
falling cost pressures and a robust economic activity led by strong demand in FMCG,
Automobile, and Infrastructure sectors of the economy.
OPPORTUNITY
• Positive long-term economic outlook will lead to opportunity for financial
services
• Increased digitalisation allowing AMCs to expand services and improve
penetration
• Growing popularity of SIPs, with large-scale campaigns improving outreach.
• Regulatory reforms would aid greater participation by all class of investors
• Corporates looking at consolidation / acquisitions / restructuring opens out
opportunities for the corporate advisory business.
We are very pleased to inform you that your company is now servicing 99 Institutional
Clients and look forward to become one of the premier brokerage houses for Institutions/
Corporates /Banks and FIIs in years to come.With a positive outlook on DII and Mutual
Funds Flows we look forward to generating more business and servicing even more
institutional clients.
THREAT
• Short term economic slowdown impacting investor sentiments and business
activities
• Credit risk, interest rate risk, liquidity risk and operational risks are the
major risks the company faces.
• High employee turnover and attraction of fresh talent continues to be a
challenge.
• Regulatory reforms would aid greater participation by all class of investors
• Increased intensity of competition from local and global players
STRENGTH
Strong Brand Name
We are enhancing our service capabilities, providing good quality research and
efficient market information to our clients. With a strong Brand name Wallfort is a
well-established brand among institutional investors in India and Broking Community.
Wallfort believes that its brand is associated with high quality research and advice as
well as corporate values like integrity and excellence. The company intends leverage its
brand to grow its businesses, build relationships and attract and retain talented
individuals.
Experienced Top Management
The top management team comprises qualified and experienced professionals, with a
successful track record is in charge of the corporations goals, policies, and procedures.
Strong Risk Management
Strong Risk Management Risk exposure is monitored and controlled through a variety of
separate but complementary financial, credit, operational, compliance and legal reporting
systems. Risk management department analyses this data in conjunction with the companys
risk management policies and takes appropriate action where necessary to minimize risk.
RISK AND CONCERN
• Impact of markets on our revenues and investments, sustainability of the
business across cycles, sharp movements in prevailing interest rates in the market.
• Risk that a client will fail to deliver as per the terms of a contract with us
or another party at the time of settlement.
• Risk due to uncertainty of a counterpartys ability to meet its financial
obligations to us.
• Inability to conduct business and service clients in the event of a contingency
such as natural calamity, breakdown of infrastructure, etc.
OUTLOOK
The performance of stock markets depends on the perception of overall economic growth
of the country and the Indian economy has overcome a lot since the last few years such as
Banking Crisis, Economic Slowdown, Pandemic, Geopolitical Pressures and the current Rate
Hike Cycle. All of this led the government to quicken its pace of reforms to place India
in a structurally strong position and improve its growth outlook.
While FY 2023 was a muted year for the capital markets, the FY 2024 is likely to do
much better in light of robust demand and falling cost pressures. There are signs of
global markets adapting to the prevailing stress factors and finding newer and more
innovative ways to once again progress towards stability and growth.
As for stock markets, the key indexes - SENSEX/NIFTY50 have started showing signs of
recovery. However, its performance continuity will depend on how quickly the advanced
economies are able to come back out of the current phase of slowdown.
RISK MITIGATION
Although the Company has long been following the principle of risk minimization as is
the norm in every industry, it has now become a compulsion.
In todays challenging and competitive environment, strategies for mitigating inherent
risks in accomplishing the growth plans of the Company are imperative. The common risks
inter alia are changing regulations, competition, business risk, technology obsolescence,
retention of talent, and expansion of facilities. Business risk, inter alia, further
includes financial risk, political risk, fidelity risk, and legal risk. As a matter of
policy, these risks are assessed and steps are taken to mitigate the same.
INTERNAL CONTROL SYSTEMS AND ADEQUACY
The Company has appointed M/s. Jigna Sheth & Associates., Chartered Accountants as
the Internal Auditors as mandated under Section 138 of the Companies Act, 2013 who examine
and ensure that internal checks and control procedures are adequate. They also ensure
proper accounting, records authorization, control of operations and compliance with law.
An appropriate and adequate system of internal controls exist in your Company to ensure
that all assets are safeguarded and protected against loss or from misuse or disposition,
and that the transactions are authorized, recorded and reported suitably. Internal control
systems ensure effectiveness of operations, accuracy and promptness of financial reporting
and observance with laws & regulations. The internal control is supplemented on an
ongoing basis by an extensive internal audit which is conducted each year by an
independent audit firm.
The internal audit report along with management comments thereon are reviewed by the
Audit Committee of the Board comprising of independent and non-executive Directors on a
regular basis. Implementation of the suggestions is also monitored by the Audit Committee.
The internal controls are designed to ensure that the financial and other records of the
Company are reliable for preparing financial statements and other data, and for
maintaining accountability of assets.
FINANCIAL PERFORMANCE
Amount in Thousands
| Particulars |
For the year ended 31 March, 2023 |
For the year ended 31 March, 2022 |
| Revenue from Operations |
1,99,114.24 |
2,81,240.21 |
| Other Income |
1233.40 |
294.80 |
| Total Income |
2,00,346.65 |
2,81,535.01 |
| Finance Cost |
1,797.62 |
1,585.95 |
| Employees Benefit Expense |
33,269.92 |
32,474.38 |
| Depreciation and Amortization Expense |
2,929.83 |
3,000.05 |
| Other Expense |
1,01,723.41 |
79,298.38 |
| Total Expense |
1,39,720.78 |
1,16,358.76 |
| Profit Before Tax |
60,625.88 |
1,65,176.25 |
| Current Tax |
16,131.49 |
3,060.90 |
| Defered Tax Charge/(Credit) |
-5,955.24 |
24,907.81 |
| Short/(Excess) Provision for tax for earlier years |
- |
- |
| Total Tax Expense |
10,176.25 |
27,968.71 |
| Profit After Tax |
50,449.63 |
1,37,207.54 |
a) INCOME
The Companys revenue from operations stood at INR 19.91 crore compared to INR 28.12
crore in the previous year. Other income stood at INR 12.33 lacs compared to INR 2.94 lacs
in the previous year.
b) EXPENDITURE
Total expenditure for the year increased by 20.12% to INR 13.97 crore, as against INR
11.63 crore in the previous year. Employee benefit expenses for the year were INR 3.33
crore as against INR 3.24 crore in the previous year - an increase of 2.78%.
Depreciation for the year decreased to INR 29.30 lacs as against INR 30.00 lacs in the
previous year - a decrease of 2.33%. Other expenses for the year were INR 10.17 crore as
against INR 7.92 crore in the previous year - a increase of 28.25%.
c) PROFIT AFTER TAX
The Profit for the year stood at INR 5.05 crore as against INR 13.72 crore in the
previous year - an decrease of 63.19%.
DEVELOPMENTS IN HUMAN RESOURCES
It is your Companys belief that people are at the heart of corporate and constitute
the primary source of sustainable competitive advantage. The trust of your Companys human
resource development efforts, therefore, is to create a responsive and market driven
organization. Your Company continues its focus on strengthening competitiveness in its
business. Your directors look forward to the future with confidence. The Company has
followed a conscious policy of providing training to management staff through in-house and
external programs for upgrading personal and technical skills in relevant areas of
functional disciplines.
SIGNIFICANT CHANGES IN KEY FINANCIAL RATIOS (25% or MORE)
There was no change of 25% or more in Key Financial Ratios as compared to previous
financial year.
CHANGES IN RETURN ON NETWORTH
| Return on Networth |
2022-2023 |
2021-2022 |
|
4.22% |
12.03% |
|
By Order of the Board |
|
For Wallfort Financial Services Limited |
|
Sd/- |
|
Ashok Bharadia |
| Date: 11/08/2023 |
Chairman & Managing Director |
| Place: Mumbai |
(DIN - 00407830) |
+91-9892691696
