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A.K.Capital Services Ltd Management Discussions

1,300
(-2.14%)
Dec 30, 2024|03:42:00 PM

A.K.Capital Services Ltd Share Price Management Discussions

1. Indian Economy

Indian economy in the financial year 2022-23 successfully navigated through global headwinds showing strong resilience and continues to be one of the fastest-growing major economies in the world. The economy is expected to post a real Gross Domestic Product (GDP) growth of 7.0% in the financial year i.e., FY 2022-23 as per the NSOs second advance estimates despite the omicron wave, the Russia-Ukraine offensive with subsequent elevated crude prices, and persistent global supply chain disruptions. Financial assistance provided during the COVID period and pent-up demand created inationar y pressure across the major economies. This was accompanied by a tightening monetary policy stance, which in turn created a ripple effect in global markets. Despite inationar y pressures and global macroeconomic uncertainties, the Indian economy grew by 13.2% in Q1 FY23, 6.3% in Q2 FY23, and 4.4% in Q3 FY23 on the back of strong private consumption and investment and x ed investment growth, as well as a strong recovery of demand in the services sector, replacing the export stimuli. Private consumption as a percentage of GDP stood at 61.6% in Q3 of FY23, supported by a rebound in contact-intensive services such as trade, hotels, and transport. The increase in private consumption has also increased industrial activity, which has resulted in an uptick in capacity utilization across industries to 74.3% in Q3 FY23 from 74.0% recorded in Q2 FY23, as per RBI data.

The scal and monetary levers of macroeconomic policy have both been used to manage the problems that have arisen during the past year. In order to control ination and encourage economic growth, the Reserve Bank of India (RBI) implemented monetary and liquidity measures. In addition, the Central Government cut excise duty on fuel and took supply-side measures to ease food ination. In the year under review, India overtook the United Kingdom to become the fth-largest economy in the world. Capital expenditure by the government remained one of the primary growth drivers of Indias economy; as per the Ministry of Finance, central government capex during AprilF ebruary 2023 was 21.7% higher compared to the corresponding period of the previous year. The Centres budgeted capex for FY24 stands 33% higher than the previous year at 3.3% of the GDP and is expected to provide additional thrust. Buoyancy in tax collection, a 13% increase in GST revenue, and a 20.33% increase in gross direct tax collection Y-o-Y in FY23 have enabled the Central Government to stay on the capital expenditure path without deviating from the scal consolidation path. In the Union Budget of 202324, the government has retained Indias scal decit target at 6.4% of GDP for FY23 while reducing its decit target to 5.9% of GDP for FY24.

On the external front, Indias CAD rose to 2.7% of GDP during AprilDecember 2022 from 1.1% in April December 2021 on account of a sharp increase in the merchandise trade decit. The estimated value of services exported for FY23 registered a growth to USD 322.72 billion as compared to USD 254.53 billion in FY22. Overall, the estimated trade decit stood at USD 122 billion in FY23 compared to USD 85 billion in FY22, owing to a slowdown in external trade in the last quarter of FY23. On the financing side, net FDI ino ws remained strong at USD 22.3 billion during AprilDecember 2022. Interest rate hikes by the Federal Reserve resulted in an outo w from emerging countries, and FPI remained a net seller in Indian Capital Market in FY23. According to World Bank, India has one of the highest holdings of international reserves that can act as a buffer against global spillovers, totaling USD 578.4 billion as on 31st March, 2023.

2. The Growth Environment

The financial year started with a sense of careful optimism as pandemic-related restrictions were lifted worldwide and economic activities appeared to be gradually recovering. However, the conict between Russia and Ukraine resulted in supply chain disruption, leading to a surge in commodity prices, which exacerbated already surging global ination. The implementation of Chinas zero-COVID policy led to frequent lockdowns, reduced demand, and disruptions in the supply chain across Asia. In an effort to address inationar y pressures, central banks in both advanced and emerging market economies adopted measures such as quantitative tightening, which further contributed to the slowing of demand. Amid financial sector turmoil, high ination, the ongoing effects of the Russia-Ukraine war, and three years of COVID, the IMFs April 2023 world economic outlook publication forecast global growth to fall from 3.4% in 2022 to 2.8% in 2023 before settling at 3.0% in 2024. With ination gradually declining and a gradual recovery from the Ukraine war, the pace of growth is projected to pick up from 2024.

India recovered quickly from the pandemic-induced slowdown, and growth in the upcoming year will be supported by solid domestic demand and a pickup in capital investment. The normal monsoon forecast by the India Meteorological Department (IMD), the scal thrust on infrastructure, the bumper Rabi harvest would strengthen rural demand, and sustained buoyancy in contact-intensive services augur well for Indian growth. With corporate balance sheets strengthening and the consequent rise in credit financing it has been able to generate, a sustained increase in private capex is also imminent. The Economic Survey 2022-23 and the RBI project the Indian economy to register a real GDP growth rate of 6.5% in FY24. IMFs Aprils WEO projects India as the fastest growing economy at 5.9% for the current scal FY 2023-24.

3. Industry Structure and Bond Market Developments

Indias economic activity rapidly recovered in the financial year 2022-23 despite high inationar y pressures both internally and externally. RBIs main focus during the last scal year was to curb ination, which involved steps such as modulation of liquidity through variable repo rate auctions in the second half of FY 2021-22, the introduction of the standing deposit facility in April 2022 at a rate 40 bps above the x ed rate reverse repo rate of 3.35%, and a cumulative increase of 250 bps in the policy repo rate during 2022-23. With the help of supply side measures, headline CPI ination gradually decreased from its peak of 7.8% in April 2022 to 5.66% in March 2023. The RBI predicts that ination will further ease to 5.2% in FY 2023, a reduction of 150 basis points compared to 6.7% ination recorded in FY 2023. However, although monetary policy has achieved signicant disination, there is still a long way to go before ination reaches the target of 4%, on a sustainable basis. Furthermore, there are still risks to ination projections due to OPEC+ output cuts and uncertainty related to the monsoon.

In late FY 2023, the failure of mid-sized banks in the US and Europe triggered by the faster-than-expected policy rate hike by central banks in a bid to tame high ination heightened the vulnerability of the financial system in emerging countries like India. However, Indias financial system is expected to remain insulated as banks are limited to investing around 23% of deposits in held-to-maturity securities. Further, they use an investment fluctuation fund to absorb losses from changes in the value of their securities investments. The top 10 Indian banks are relatively immune to yield hikes because loans make up more than 50% of all of their assets. Also, 63% of deposits are made by households, which are regarded as sticky. Additionally, because public sector banks hold more than 60% of deposits, Indian depositors is reassured that their money is safe.

During the year, SEBI announced the establishment of the Corporate Debt Market Development Fund (CDMDF). The main aim of this fund is to increase investor condence in the corporate debt market by providing a backup facility for the purchase of investment grade corporate debt securities during times of stress or market dislocation. Additionally, the fund will also enhance the liquidity of the secondary market. The CDMDF will be an AIF category 1 fund and SBI Mutual Fund has been given the responsibility to manage it. The CDMDF is expected to be established with an initial capital of INR 3,000 crore, which will be contributed by mutual funds. The fund has received government approval to leverage up to 10 times its initial corpus, which means that the CDMDF could potentially raise additional funds up to INR 30,000 crore.

In the previous financial year RBI issued two trenches of green bonds of INR 8,000 crores each amounting to INR 16,000 crores. This makes India as one the largest issuers of sovereign green bonds. The framework for the issuance was published in October, 2022, aligning itself with International Capital Market Associations Green Bond Principles. The issue obtained oversubscription of more than four times; enabling primary market spread compression of 2 bps on the 10-year, and 3 bps basis points on the 5-year tranche. The yields on these bonds were inside the Yield curve of corresponding maturity resulting in an unexpected Greenium. The strong demand from domestic investors for sovereign green bond in local currency creates an opportunity for the private sector to utilize the sustainable nance market as a means of raising capital to facilitate the transition. Further, RBI has notied the issuance of Sovereign Green Bonds in the second half of the scal year 2023-24.

4. Our Business

i. A. K. Capital Services Limited (AK Capital/ Compan y ), incorporated on October 5, 1993, is Flagship Company of the AK Group, and is registered with SEBI as a Category I Merchant Banker since April 1, 1998 which is valid permanently unless suspended/ cancelled by SEBI.

AK Capital is one of the countrys leading merchant bank managing private placements as well as public issues of debt. AK Capital is primarily engaged in providing various fee-based services such as fund mobilisation through issue of debt, structured hybrid instruments, pass through certicates , direct assignments etc. for over 250 clients including Indias premier central and state Government undertakings, public and private sector banks, financial institutions and private corporates. AK Capital aspires to facilitate making the debt markets accessible to retail investors and relentlessly strives towards fullling its motto of Building Bonds. AK Capital is acknowledged for its unmatched management consultancy, advisory services, financial restructuring etc. and is also one of the few merchant bankers who has direct access as counterparty to almost all domestic banks / institutions.

The Company has also acquired certicate of registration to act as an Investment Advisor. The registration is valid permanently. The Company provides advisory services in x ed income securities to many of the renowned retirement trusts, PF and PT Trusts.

AK Capital has 5 subsidiaries and 2 step down subsidiaries which conduct their operations through a network of branches spread over 7 cities of India and 1 at Singapore. The group has interests in diversied business elds and the subsidiaries have been incorporated to specialize and operate in each business area.

ii. A. K. Capital Finance Limited (AK Capital Finance ), a subsidiary of AK Capital, is registered with the Reserve Bank of India as a Systemically Important Non Deposit Accepting Non-Banking Financial Company (NBFC-ND-SI) and categorised as Investment and Credit Company (NBFC-ICC) and classied as Middle Layer NBFC as per Scale Based Regulation issued by RBI. AK Capital Finance is engaged in the business of investment and lending activities. The Company primarily operates a hybrid business model, under which the revenue streams comprises of a regular and stable interest income from its loan book, fees income and treasury income from its investment & treasury book. AK Capital Finance is amongst one of the few NBFCs having CBLO (Collateralized Borrowing and Lending Obligation) membership given by the Clearing Corporation of India Limited (CCIL) which enables the company to access fund on tap against pledge of SLR securities like G-Secs at very competitive cost. AK Capital Finance in its onward lending segment has a strong risk management policies and credit appraisal system in place thereby having maintained strong asset quality, which is reected by the fact that there are 0.02% NPAs in its portfolio as on March 31, 2023.

iii. A. K. Stockmart Private Limited (AK Stockmart ), a wholly owned subsidiary of AK Capital incorporated in 2006 is full service brokerage house with membership of Indias two stock exchanges viz., National Stock Exchange of India Limited and BSE Limited.

AK Stockmarts services span across equity and debt markets. Further, AK Stockmart is also registered as a Depository Participant with the Central Depository Services (India) Limited (CDSL ) and National Securities Depository Limited (NSDL ) for seamless settlement and clearing of securities.

From FY 2019-20 till date, AK Stockmart has distributed debt products of private sector companies as well as public sector company such as Tata Capital Financial Services Limited, Tata Capital Housing Finance Limited, L&T Finance Limited, Mahindra & Mahindra Financial Services Limited, Cholamandalam Investment and Finance Company Limited, Muthoot Finance Limited, Shriram Transport Finance Company Limited, Piramal Capital & Housing Finance Ltd., Poonawalla Fincorp Limited (formerly Magma Fincorp Limited), Navi Finserv Limited (formerly Navi Finserv Private Limited), Credit Access Gramin Limited, JM Financial Products Limited, Shriram City Union Finance Limited, Indiabulls Housing Finance Limited, Indore Municipal Corporation, National Highways Infrastructure Trust (NHAI InvIT) and Power Finance Corporation Limited.

iv. A. K. Wealth Management Private Limited (AK Wealth ), incorporated in November 2006 and a wholly owned subsidiary of AK Capital, is registered with SEBI as a Portfolio Management Company. AK Wealth is in the business of providing portfolio management services, private wealth management, asset management, investment advisory and research backed investment solutions to ensure returns commensurate to risk appetite of its clients. As on March 31, 2023, AK Wealth had 69 clients with Asset Under Management of INR 64.68 Crores.

v. A. K. Capital Corporation Private Limited (AK Capital CorporationA), incorporated in November 2006 is a wholly owned subsidiary of AK Capital.

vi. A. K. Capital (Singapore) Pte. Ltd. (AK Singapore ), domiciled in Singapore, was incorporated on July 29, 2013 as a wholly owned subsidiary of AK Capital. AK Singapore is registered with Monetary Authority of Singapore as a financial services company and provides financial advisor y services to its clients across the globe. It offers cross border funding solutions by identifying potential investors to meet the fund raising needs of its clients. AK Singapore also offers the full range of money market operations in India to meet both the lending and borrowing needs of its clients. The companys research team has conducted in-depth studies of foreign markets and is well-equipped to apply the gained technical information to help accelerate the companys expansion in India and other nascent debt markets.

vii. Family Home Finance Private Limited (Family Home Finance A), is a step-down subsidiary of AK Capital through AK Capital Finance. Family Home Finance is registered as a Housing Finance Company with the National Housing Bank and classified as Middle Layer NBFC as per Scale Based Regulation issued by RBI. Family Home Finance primarily offers Home Loans, LAP and secured lending products through co-lending, strategic partnership, Securitization and DA model with channel partners.

viii. A. K. Alternative Asset Managers Private Limited (AK Alternative A), incorporated in December 2022 is a step-down subsidiary of AK Capital through AK Wealth. AK Alternative shall act as an Investment Manager and provide Investment Management Services to SEBI registered Alternative Investment Funds. During the year, A.K. Alternative did not commence its operations to act as Investment Manager.

5. Execution and other services

AK Capital has marked a glorious journey of over 30 years and has gained expertise as well as recognition in various facets of the corporate bond markets by undertaking and successfully executing various landmark transactions.

AK Capital has been reckoned as a leading arranger for private placement of secured/ unsecured, senior/ subordinated, redeemable, non-convertible debentures/ bonds, perpetual bonds, pass through certicates , redeemable preference shares, etc. for a diverse prole of issuers comprising of:

a. Central Public Sector Undertakings;

b. State Government Undertakings;

c. Public and Private Sector Banks;

d. Public Financial Institutions;

e. Private Corporates;

f. Non-Banking Finance Companies;

g. Housing Finance Companies;

h. Infrastructure Finance Companies;

i. Infrastructure Development Funds;

j. Core Investment Companies;

k. Infrastructure Investment Trusts (InvITs);

l. Real Estate Investment Trusts (REITs);

m. Infrastructure Developers; and

n. Manufacturing and Services sector companies.

The Company acted as Sole Lead Manager and was instrumental in successfully closing the Maiden Public issue of NCDs by Credit Access Grameen Limited which is one of Indias Largest NBFC Micronance Institution. The NCD issue got listed on November 25, 2022 at National Stock Exchange. The NCD Issue aggregating to INR 500 Crores saw oversubscription on the first day of the Issue opening, getting oversubscribed by 3 times over the base issue size.

The Company also acted as a Lead Manager to Green Bonds Issue of INR 244 Corers by Indore Municipal Corporation (IMC). The Issue received bumper response from investors with total bids received worth INR 720 Corers viz. 5.9 times against the basic issue size of INR 122 Corers.

Also, the Company acted as a Lead Manager to Bonds Issue of INR 1,500 Crores by National Highways Infrastructure Trust (NHAI InvIT) which had tenor of upto 25 years. The Issue received bumper response from investors with total bids received worth INR 5,201 Crores viz. 6.69 times against the basic issue size of INR 750 Crores.

6. Recognition, Awards & Accolades

i. The Company has been awarded In vestment Banker / Merchant Banker of the year by Associated Chambers of Commerce and Industry of India (ASSOCHAM) at the 5th National Summit & Awards Corporate Bond Market 2022 organized on May 12, 2022 at Mumbai.

ii. The Company has been awarded the prestigious international title of India Bond House of theYear 2018 by IFR Asia. With this achievement, AK Capital marked its presence along with other Asian countries bond houses like HSBC, Credit Suisse, CIMB, ANZ & Bank of China.

iii. Ms. Aditi Mittal Non-executive Woman Director of the Company was invited as an esteemed panelist for a panel discussion on the theme Inno vative Solutions for Financing Infrastructure organized by IIFCL a Government of India undertaking under Ministry of Finance on January 6, 2023.

iv. The Company has been awarded Issuer Investment Banker / Merchant Banker of the year - Runner Up by Associated Chambers of Commerce and Industry of India (ASSOCHAM) at the 6th National Summit & Awards Corporate Bond Market 2023 organized on August 3, 2023 at Mumbai.

v. A. K. Stockmart Private Limited has been rated as No. 1 Mobiliser of subscription in public issues of bonds/debentures over a decade (01-Apr-2012 to 31-Mar-2022) having mobilized INR 60,101.13 Crores in 123 public issues of bonds/ debentures

(Source: PRIME Database).

vi. The Company is one of the few merchant banking groups to have CBLO _ CCIL membership.

vii. Besides private placements and public issues of debt, the Company and its subsidiaries have demonstrated their progressive presence in undertaking and executing transactions in the following segments:

a. Loan syndication, project nancing, syndication of short term debt (CPs etc.)

b. Syndication for Venture Capital Funds, Infrastructure Development Funds, structured hybrid financial products

c. Asset backed nancing, investment and trading in debt securities, loan against property, loan against securities, IPO funding (including debt public issues), real estate funding etc.

d. Direct assignment and securitization of pool of receivables

e. Trading/investment in Government Securities and Corporate Bonds

f. Stock broking, WDM broking and Depository services

g. Providing portfolio management services, private wealth management, asset management and investment advisory

h. Retirement fund advisory

i. Global financial advisory, cross border funding solutions, foreign currency bonds.

7. Outlook and Strategy

In the first quarter of FY 2023, the Reserve Bank of India (RBI) shifted its focus from crisis management to crisis prevention by prioritizing its ination goals over growth. This resulted in the RBI implementing policy actions in each month of the quarter, including off-cycle repo rate hikes and increasing the cash reserve ratio to 4.50%. The RBI is giving more information about their future plans on macroeconomic data to help the government borrow money smoothly in a market that is unpredictable. The global economy has been affected by ination driven by geopolitical events, resulting in central banks following the hawkish path set by the US Federal Reserve. Amid this global turmoil, the RBI faced the undesirable trade-off between ination and growth amid relentless rupee depreciation. The Indian bond market was also impacted by declining liquidity amid hardening interest rates across the yield curve. However, the year of 2022 also saw innovations with the potential to have a lasting impact on the Indian financial system, including the launch of pilot trials of the Digital Rupee, Indias Central Bank Digital Currency (CBDC) in both wholesale and retail segments, nalization of the framework for Indias first Sovereign Green Bond (SGrB) issuance and opening up of the channels for Indias trade settlement in the rupee. The RBI Governor has indicated that future actions will be carefully calibrated to the incoming data and evolving scenario without being constrained by conventional approach to policy making.

During FY 2022-23, the regulatory authorities have initiated structural reforms towards bond market in India:

a) Streamlining the process of debt public issues and redressal of Investor grievances.

b) Issue of regulatory framework for issue and listing of Non-convertible Securities, Securitized Debt Instruments, Security Receipts, Municipal Debt Securities and Commercial Paper.

c) Standardized framework for industry classication across sectors and in securities market for credit rating agency.

d) Review of provisions pertaining to Electronic Book Provider platform for private placement of debt securities.

e) Credit Ratings supported by Credit Enhancement. f) Firewall between Credit Rating Agencies and their Afliates .

g) Disclosures and compliance requirements for Issuance and Listing of Municipal Debt Securities under SEBI (Issue and Listing Municipal Debt Securities) Regulations, 2015, which fall within the denition of g reen debt security.

h) Registration and regulatory framework for Online Bond Platform Providers.

i) Reduction in denomination for debt securities and non-convertible redeemable preference shares.

j) Transaction in Corporate Bonds through Request for Quote (RFQ) platform by Alternative Investment Funds (AIFs).

k) Introduction of future contracts on Corporate Bond Indices.

l) Enhanced guidelines for debenture trustees and listed issuer companies on security creation and initial due diligence.

m) Extension of compliance period fund raising by large corporates through issuance of debt securities to the extent of 25% of their incremental borrowings in a financial year.

n) Green Debt Securities for issue and listing of Non-Convertible Securities (NCS), Securitized Debt Instruments (SDI), Security Receipts (SR), Municipal Debt Securities and Commercial Paper (CP).

o) Fully Accessible Route for Investment by Non-residents in Government Securities Inclusion of Sovereign Green Bonds.

8. Opportunities and Challenges Opportunities

A.Debt markets have witnessed an exponential growth in the Country over last decade which may be seen from the table given below:

Private Placement of Debt (Non-Convertible Debentures/ Bonds)

FY 2022-23 FY 2012-13
Total No. of issues Amount (INR in Crores) Total No. of issues Amount (INR in Crores)
204 2,75,531.19 150 80,705.62

Challenges

Like any other market:

a. Corporate bond markets are venerable to market risks originating from volatility in interest rates;

b. Operations in corporate bond markets may be vulnerable to competition thereby affecting margins;

c. Besides market risks, corporate bonds may be vulnerable to credit risk;

d. Growth and performance of domestic corporate bond markets is dependent upon a host of domestic and global macro and micro-economic factors. India offers moderate-risk, high-yielding debt investment opportunities to offshore investors. However, any signicant tightening of monetary policy rates by the global central banks may lead to ight of capital and pose competition to Indian markets.

9. Segment wise performance

Companys whole business is being considered as one segment, viz. proving merchant banking services within India. The Company has only one segment of activity in accordance with the denition of Segment covered under Indian Accounting Standard (Ind AS) 108 on Operating Segments.

10. Financial and Operational Performance of the Company

On standalone basis, your Company earned total revenue of INR 11,534.52 Lakhs during the financial year under review. The profit before tax is INR 3,906.26 Lakhs. After making provision for tax, the net profit of your Company is INR 3,071.41 Lakhs.

The consolidated total revenue of your Company stood at INR 40,680.68 Lakhs for the financial year ended March 31, 2023. The consolidated profit before tax is INR 11,793.98 Lakhs for the current financial year. After making provision for tax, the consolidated net profit of your Company is INR 8,841.58 Lakhs.

Details of signicant changes in key financial ratios along with explanation

In compliance with the requirement of the Listing Regulations, the key financial ratios of the Company along with explanation for signicant changes (i.e., for change of 25% or more as compared to the immediately previous financial year will be termed as signicant changes), has been provided hereunder:

Sr. No. Particulars Financial Year 2022-23 Financial Year 2021-22
1. Debtors Turnover Ratio 23.37 19.46
2. Interest Coverage Ratio* 2.40 3.53
3. Debt Equity Ratio 1.08 1.04
4. Operating profit margin 33.85% 38.00%
5. Net profit margin 26.63% 30.29%
6. Return on net worth# 6.59% 5.97%
7. Inventory Turnover Ratio Not Applicable
8. Current Ratio Not Applicable

* Interest Coverage Ratio: On a standalone basis, the Interest Coverage Ratio as on March 31, 2023 stood at 2.40 as against 3.53 as on March 31, 2022. The decrease is on account of increase in borrowings of the Company.

# Return on net worth: On a standalone basis, the Return on net worth as on March 31, 2023 stood at 6.59% as against 5.97% as on March 31, 2022. The increase is on account of increase in profit s .

11. Human Resource

Our employees continue to be our core asset. We understand that our workforce has a life beyond our doors. Our development activities are focused on creating opportunities that help them achieve the right work-life balance and grow in their respective roles and even beyond them. We remain committed to make AK Group a place, wherein the determination and dedication of our employees helps to serve our large clientele & generate long-term value for our shareholders.

Health and safety of all our employees is of utmost concern and priority. During the Covid-19 situation, appropriate measures were taken to ensure that employees and their families remained safe.

As on March 31, 2023, the Company had 102 employees on its payroll.

i. Diversity & Inclusion

At AK Group; diversity is our strength. We hire from different cultural and social backgrounds and have a non-discriminatory approach to acquiring talent. Openness and inclusion makes AK Group a place where you would like to work. Our focus is on developing skills, encouraging talent and helping people do the best they can each day. We work with our employees as partners and provide opportunities for high quality learning, get coaching from industrys best and offer a challenging yet rewarding workplace.

We intend to develop and sustain a diverse workforce which strives to meet the unique needs of our diverse client base and the sectors in which we operate.

Our Management Trainee program is designed to provide opportunities to freshers from Management as well as Professional Institutes. The program focusses on nourishing young talent which are mentored by industry veterans within the Company and make them industry ready.

ii. Teamwork & Leadership

We believe a lot in teamwork, as all our employees work in different teams and also across multiple offic es . These teams have their own areas of expertise but they all have shared responsibility and to achieve this, our employees have to work e xibly and collaboratively.

In AK Group, we expect everyone at the r m to be a leader wherein one is not only just an employee. The Company identies and recruits people who share their commitment towards business in addition to their intellect and experience.

iii. Employee Programs

We invest in every step of our employees careers and ensure their long term interests remain closely aligned with those of our clients and shareholders. Our goals are to reinforce the r ms culture, maximize individual potential and expand our employees professional opportunities and abilities. We hold varied employee engagement activities, offer development workshops and create an environment of openness where learning is always a possibility and asking questions is the norm rather than the exception.

Annual cricketing event which involved participation of employees from various functions which fostered team spirit. This employee engagement activity proved to be an ice breaker between new incumbents & fostered inter-functional and inter-department communication.

Birthday celebrations, Festive celebrations & Team outings are another method in which an environment is created for employees to connect, celebrate & discuss ideas.

12. Risk and Concern

As a diversied enterprise, your Company continues to focus on a system-based approach to business risk management. The management of risk is embedded in the corporate strategies that best match organizational capability with market opportunities, focusing on building distributed leadership and succession planning processes, nurturing specialism and enhancing organizational capabilities. Accordingly, management of risk has always been an integral part of the Companys Strategy.

13. Internal Control Systems and their Adequacy

The Company has adequate internal control systems to commensurate with the nature of business and size of operations for ensuring: i. orderly and efcient conduct of business, including adherence to Companys policies and procedures; ii. safeguarding of all our assets against loss from unauthorized use or disposal; iii. prevention and detection of frauds and errors; iv. accuracy and completeness of accounting records; v. timely preparation of reliable financial information; and vi. compliance with applicable laws and regulations.

Policies, guidelines and procedures are in place to ensure that all transactions are authorised, recorded and reported correctly as well as provides for adequate checks and balances.

Adherence to these processes is ensured through frequent internal audits. The internal control system is supplemented by an extensive program of internal audit and reviews by the senior management. To ensure independence, the internal audit function has a reporting line to the Audit Committee of the Board.

The Audit Committee of the Board reviews the performance of the audit and the adequacy of internal control systems and compliance with regulatory guidelines. The Audit Committee of Board provides necessary oversight and directions to the internal audit function and periodically reviews the findings and ensures corrective measures are taken. This system enables us to achieve efciency and effectiveness of operations, reliability and completeness of financial and management information and compliance with applicable laws and regulations.

14. Safe Harbour

The statements made in this report describe the Companys objectives and projections that may be forward looking statement within the meaning of applicable laws and regulations. The actual result might differ materially from those expressed or implied depending on the economic conditions, government policies and other incidental factors which may be beyond the control of the Company.

The Company has obtained all market data and other information from sources believed to be reliable or its internal estimates, although its accuracy or completeness cannot be guaranteed. We are under no obligation to publicly amend, modify or revise any forward-looking statements on the basis of any subsequent developments, information or events and assume no liability for any action taken by anyone on the basis of any information contained herein.

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