Despite the challenges, growth momentum is expected from reopening the Chinese economy and easing supply chain pressures. Global trade remains weak but is expected to recover as trade flows normalise with the reopening of the Chinese economy and global growth recovery.
Global Economic Overview:
The global economic outlook remains cautious amid various risks. While there have been sharp falls in inflation, which is expected to alleviate recent challenges, central banks are approaching the end of the tightening cycle, partly in response to rising tensions in financial markets. Supply chain pressures are easing, and labour markets are showing resilience, which should support the recovery. However, uncertainty about the outlook is increasing.
According to the World Economic Situation and Prospects, as of mid-2023, a slowdown in global growth is projected. The forecast indicates a decline from 3.1 percent in 2022 to 2.3 percent in 2023, which represents an upward revision of 0.4 percentage points compared to the January forecast. As for global inflation, it is projected to decrease from 7.5 percent in 2022 to 5.2 percent in 2023. This decline can be attributed to lower food and energy prices, as well as soRsening global demand.
While inflationary pressures are easing, the global economy is expected to gain momentum in 2024. However, growth is projected to remain modest at 2.5 percent, significantly below the longer-term average (2000-2019) of 3.1 percent. This indicates a continued subdued growth trajectory for the global economy in the coming years.
Global energy prices have returned to pre-Ukraine invasion levels, and base eRsects from the energy price rise are diminishing, putting downward pressure on inflation. The prices of other commodities and global food have also eased. Although the inflation outlook has improved significantly, central banks remain cautious due to concerns that inflation expectations are embedded in pricing behaviours and wage expectations, potentially leading to stubbornly high core inflation and widespread price rises.
Recent tensions in the banking system triggered by the collapse of certain banks may complicate matters for central banks. Uncertainty and tightening credit conditions could arise, aRsecting monetary tightening. Fiscal policy is considered a potential tool for economic growth, but public finances have deteriorated significantly, with historically high levels of public debt limiting the scope for expansionary fiscal measures.
Despite these challenges, growth momentum is expected from reopening the Chinese economy and easing supply chain pressures. Global trade remains weak but is expected to recover as trade flows normalise with the reopening of the Chinese economy and global growth recovery. Consumer demand is projected to pick up, particularly in China and Europe, where excess savings accumulated during the pandemic could be deployed. However, risks remain, such as potential falls in house prices due to rising interest rates and tighter credit conditions, which could impact consumer confidence and spending.
2.3%
According to the World Economic Situation and Prospects global growth to remain at 2.3%in 2023.
The labour market is tight in most countries, and significant rises in unemployment are not expected. This supports households incomes and consumer spending, despite the squeeze on real incomes from high inflation levels. The gradual recovery of households purchasing power is anticipated as wage increases outpace inflation in the medium term.
Overall, global economic growth is expected to be modest over the next two years, remaining below its long-term average. The recovery of the Chinese economy and strong growth in emerging markets are anticipated to be the primary drivers of global growth. In contrast, the Eurozone and US economies are expected to contribute less. Risks to the forecasts are skewed to the downside due to the volatility in financial markets and the lingering impact of significant shocks experienced in recent years.
Overall, global economic growth is expected to be modest over the next two years, remaining below its long-term average. strong growth in emerging markets is anticipated to be the primary drivers of global growth. In contrast, the Eurozone and US economies are expected to contribute less.
6.5%
The Reserve Bank of India projects a growth rate of 6.5% for India in FY 2023-24.
India Economic Overview:
The Indian economy has demonstrated resilience and potential in recent years, characterised by diverse strengths and challenges. With a population of over 1.3 billion people, India holds the distinction of having the worlds fiRsh-largest economy in terms of nominal GDP, making it a significant player in the global marketplace.
In terms of economic growth, the Reserve Bank of India projects a growth rate of 6.5% for India in FY 2023-24. Additionally, the International Monetary Fund (IMF) has projected an average growth rate of 6.1% over the next five years. Various factors, including robust domestic consumption, favourable demographics, and ongoing structural reforms, underpin this steady growth trajectory.
One noteworthy aspect of Indias economic stability is its low recession probability. While many developed and developing countries face significant recession risks, India stands out with a 0% recession probability in 2023, according to Recession Probabilities Worldwide data. This resilience positions India as an attractive investment destination, particularly when compared to countries like the UK, the USA, Canada, and Germany, which face higher recession probabilities.
Inflation, a critical factor in any economy, has witnessed some fluctuations in India. As measured by the consumer price index (CPI), retail inflation reached a two-year low of 4.25% in May 2023, while wholesale price index (WPI) inflation stood at -0.92% in April 2023.
While many developed and developing countries face significant recession risks, according to Recession Probabilities Worldwide data, India stands out with a 0% recession probability in 2023.
The governments focus on managing inflationary pressures and maintaining price stability is crucial for sustained economic growth and improving citizens living standards.
Indias debt-to-GDP ratio, a measure of fiscal health, is projected to remain stable despite the challenges posed by the COVID-19 pandemic. The IMF expects Indias debt-to-GDP ratio to hover around 83.6% until FY 2028, indicating a favourable debt management strategy compared to other countries that have experienced a surge in public debt.
In terms of merchandise exports, India has achieved a remarkable milestone during the fiscal year 2022-23, reaching an all-time high annual export value of USD 447.46 billion. This represents a growth rate of 6.03% compared to the previous fiscal year (FY 2021-22) record exports of USD 422.00 billion. Services exports have played a pivotal role in driving this export expansion, projected to establish a new record annual value of USD 322.72 billion during FY 2022-23, exhibiting an impressive growth rate of 26.79% over FY 2021-22.
Indias foreign exchange reserves have witnessed a steady upward trajectory, nearing the $600 billion mark. As of May 5, 2023, forex reserves stood at $595.976 billion, supported by inflows and prudent management. These reserves are crucial in stabilising the currency, mitigating external risks, and providing a buRser against global economic uncertainties.
The Indian stock market has exhibited a mix of volatility and resilience. In FY 2023, the NiRsy ended marginally lower, while the Sensex recorded a modest gain. Despite challenges such as aggressive monetary policies, high inflation, and geopolitical tensions, India has outperformed several emerging markets, thanks partly to solid domestic investor inflows.
Industry Overview:
Overview of the Financial Distribution Industry In India
The adoption of financial products in India, including mutual funds, Insurance, and pension schemes, remains significantly low. The Mutual Fund Assets Under Management (AUM) to GDP ratio in India stands at a mere 15.9%, well below the global average of 75%. Similarly, insurance penetration is only 3.2%, leaving a substantial portion of the population without adequate coverage. The penetration rate for national pension schemes is around 3.7%, indicating limited access to formal retirement plans. Furthermore, traditional savings instruments such as fixed deposits and provident funds continue to dominate, with 50% of savings invested in these instruments. These low penetration rates can be attributed to factors such as limited awareness, aRsordability challenges, complex procedures, and a lack of trust in financial products.
Several key measures need to be implemented to promote financial inclusion and unlock the potential for long-term financial security in India. Enhancing financial literacy among the population is crucial to improve understanding and awareness of various financial products. Simplifying procedures and reducing complexities associated with accessing and utilising financial services will enhance aRsordability and convenience. Developing innovative and aRsordable financial products tailored to the needs of diRserent population segments will also play a significant role in increasing adoption. Building trust through transparency, accountability, and robust regulatory frameworks is essential to instil confidence in financial products and institutions. Addressing these challenges and promoting financial inclusion will expand financial products reach and improve Indias overall penetration rates. This, in turn, will foster long-term financial security and empower individuals to participate more actively in the formal financial system.
Enhancing financial literacy among the population is crucial to improve understanding andawareness of various financial products. Simplifying procedures and reducing complexities associated with accessing and utilising financial services will enhance affordability and convenience.
Growth of the Mutual Funds Industry
The mutual funds industry has demonstrated impressive growth in recent years, as evidenced by the substantial increase in both the number of folios and the average assets under management (AUM). This growth reflects the growing popularity and trust that investors have placed in mutual funds.
In March 2021, the industry had base of 9.78 crore folios. Within just one year, by March 2022, this number soared to 12.95 crore, showcasing a remarkable growth rate of nearly 32%. The expansion of the industry continued steadily, with the number of folios reaching 14.57 crore by March 2023, representing an impressive increase of approximately 12%.
12%
With an increase of 12% number of folios reached 14.57 crore by March 2023.
The positive trend continued, with the average AUM further rising to INR 40,04,637.60 crore by March 2023, demonstrating a consistent upward trajectory and a growth rate of approximately 6%.
Furthermore, the average assets under management (AUM) also witnessed substantial growth during the same period. In March 2021, the average AUM stood at INR 32,17,194.64 crore. Within a year, by March 2022, this figure surged to INR 37,70,295.79 crore, reflecting a substantial growth rate of approximately 17%. The positive trend continued, with the average AUM further rising to INR 40,04,637.60 crore by March 2023, demonstrating a consistent upward trajectory and a growth rate of approximately 6%.
These figures highlight the robust growth and increasing investor participation in the mutual funds industry. The significant increase in the number of folios and the substantial growth in average AUM indicate a growing acceptance and trust among investors, underscoring the industrys positive trajectory and potential for continued expansion.
Consolidation within National Distributors
Within the overall distribution channel, the share of National Distributors (NDs) increased by 43 basis points to 23.3%. The top three NDs include NJ, Prudent & ICICI Securities. Prudents AUM grew at the fastest pace within the top three NDs. Additionally, the concentration moved towards the top three NDs. The share of the top three NDs in the overall ND channel improved by 123 basis points to 50.5%. Over the years, the top 3 National Distributors (NDs) in the non-banking sector have witnessed a substantial increase in market share due to commission structure rationalisation and technological disruption.
Driving growth:Technology platforms empowering Mutual Fund Distributors
Prominent National Distributors (NDs) have established robust technology platforms that facilitate the seamless onboarding of customers and enable Mutual Fund Distributors (MFDs) to conduct transactions conveniently. The utilisation of technology has resulted in reduced transaction costs. According to CRISIL Research, the ability to invest in technology and provide advanced tools that oRser exceptional convenience to customers and MFDs has become a crucial factor that sets one distributor apart.
Due to their limited scale and resources, small MFDs face challenges in investing in technology. Consequently, they seek partnerships with more prominent players who can provide them with access to technology platforms. MFDs have collaborated with NDs that have developed their own online platforms to enhance their service oRserings to customers. Leading National Distributors have already embraced the B2B2C (Business-to-Business-to-Consumer) models to expand their business operations. As of March 31st, 2023, Prudent Corporate Advisory Services had successfully onboarded 26,949 MFDs on its platform, accounting for 22.1% of the total MFDs in the country.
Strong SIP Flows Leading to Industry Growth
SIPs have played a pivotal role in boosting the participation of retail investors in the mutual fund industry. By mitigating behavioural weaknesses during uncertain market periods, SIPs assist investors in saving and investing systematically across various market cycles. The monthly inflows into mutual funds through SIPs have witnessed a remarkable growth trajectory, surging from Rs80.55 billion in March 2019 to Rs142.76 billion in March 2023, representing a Compound Annual Growth Rate (CAGR) of 15.4%. This surge can be attributed to the lower minimum investment requirements for SIPs, which have made mutual fund investments more accessible, even for lower-income households.
As of May 2023, the average monthly assets under management (AUM) in cities beyond the top 30 (B30) amounted toRs 7.30 trillion, a substantial increase fromRs 1.39 trillion in March 2014.
Increasing penetration in Semi-urban and Urban Geographies
As of May 2023, the average monthly assets under management (AUM) in cities beyond the top 30 (B30) amounted to
Rs 7.30 trillion, a substantial increase from
Rs1.39 trillion in March 2014. This B30 Monthly Average AUM (MAAUM) growth reflects a Compound Annual Growth Rate (CAGR) of approximately 19.8% between March 2014 and May 2023. The key driver of this growth is the expanding presence of distributors in B30 regions. CRISIL Research emphasises that more robust connections between individual distributors, technology adoption, and increased investor interest due to improved disposable income will contribute to strong AUM growth in B30 geographies.
According to data from the Association of Mutual Funds in India (AMFI) in May 2023, 17% of the total assets in the mutual fund industry were sourced from B30 cities. Considering the under-penetration in B30 cities, a significant portion of the industrys growth is expected to come from these regions.
Rs
142.76bnMonthly inflows into mutual funds through SIPs have reached Rs142.76 billion in March 2023.
MF Industry AUM to sustain a double-digit pace between Fiscals 2021 and 2026
The Indian Mutual Fund Industrys Average Assets Under Management (AAUM) stood at Rs41.53 Lakh Crore (Rs41.53 Trillion) for April 2023. Going forward, continued growth will be driven by the pickup in corporate earnings, growing disposable income and savings, financialisation of savings and deeper regional penetration and awareness.
Company Overview:
Background
Established in 2003 and headquartered in Ahmedabad, Prudent Corporate Advisory Services has emerged as one of Indias rapidly growing financial services groups. With a dedicated team of 1,119 highly skilled professionals and a strong network of 26,949 well-trained and qualified channel partners, we have secured a prominent position as one of the top mutual fund distributors in terms of assets under management and commission received.
Our success stems from our unique business-to-business-to-consumer (B2B2C) model, complemented by our technology-driven investment and financial services platform. This comprehensive approach allows us to oRser end-to-end solutions crucial for distributing financial products.
As of March 31, 2023, the Companys AUM from the mutual fund distribution business grew by 13.6% YoY toRs 561,890 million, with 93.5% of total AUM being equity-oriented.
Operating through 120 locations across 21 states, we have established a robust digital presence to cater to the evolving needs of our clients. Our services include mutual fund distribution, insurance products, stockbroking, national pension schemes, unlisted securities, bonds, fixed deposits, portfolio management schemes, alternative investment funds, small cases, and peer-to-peer lending.
With our extensive reach, advanced technology, and diverse product oRserings, we have earned a reputable position as a trusted distributor of financial products in India.
Verticals |
Key Metrics (FY2023) |
Platforms |
Mutual Funds |
AUM: Rs561,890 million No. of investors: 15.31 Lac No. of MFDs: 26,949 AUM per MFD: Rs 20.9 million AUM per investor: Rs0.4 million No. of AMCs associated with 39 | FundzBazar: Online investment a platform that oRsers a variety of investment products PrudentConnect: Virtual oRsice for MFDs registered |
Insurance |
Premium: Rs4,534 million No. of policies: 1,24,229 Average premium per policy: Rs0.04 million No. of life insurance companies associated with - 37 | with us. Policyworld: An online platform which oRsers a variety of insurance solutions |
Financial & Operational Performance
Particulars (Rs in crore) |
FY-23 | FY-22 | YoY (%) |
(Consolidated) |
|||
| Closing Assets Under Management | 56189 | 49473 | 13.6% |
| Total Revenue from Operations | 611.3 | 450.8 | 35.6% |
| Operating Profit | 173.3 | 115.2 | 50.5% |
| Operating Profit Margin (%) | 28.4% | 25.5% | 28 bps |
| Profit ARser Tax | 116.7 | 80.3 | 45.3% |
| Profit ARser Tax Margin (%) | 19.1% | 17.8% | 13 bps |
| Earnings Per Share | 28.18 | 19.42 | 45.1% |
| Return On Average Net Worth | 39.7% | 40.7% | -10 bps |
Business Overview
Assets Under Management
As of March 31, 2023, the Companys AUM from the mutual fund distribution business grew by 13.6% YoY to Rs561,890 million, with 93.5% of total AUM being equity-oriented. Growth in AUM was led by Systematic Investment Plan (SIP) flows & acquisition of Karvys mutual fund folios. We ended March 2023 with a monthly SIP flow of Rs517 crore, with almost a second rupee of gross inflow coming from SIP.
Revenue from Operations
Revenue from operations grew 36% YoY to
Rs611.3 crores, led by 33% growth in yearly average assets under management (AUM) in the mutual fund vertical, coupled with insurance revenues almost doubling.
Operating Profit
Operating profits grew 51% YoY to
Rs173.3 crore, led by the benefits of operating leverage and a larger share of Insurance in overall revenue composition.
Profit ARser Tax
Profit ARser-tax growth at 45.2% YoY was slightly slower than operating profit growth. This was due to higher depreciation expense due to the amortisation of amount paid on account of acquisition of Karvy assets. Depreciation expenses were higher by 79.10% YoY.
Growing the base of MFDs
As part of our business strategy, our Company is actively focused on the aggressive expansion of our Mutual Fund Distributors (MFDs), who serve as the backbone of our operations. As of March 31, 2023, we have successfully empanelled 22.1% of the total MFDs in the country, demonstrating our strong market presence.
There is a growing recognition among MFDs regarding the importance of collaborating with technology-based platforms to serve their clients eRsiciently, and we are capitalising on this opportunity. Currently, the penetration of MFDs within the country remains relatively low. While approximately 2.6 million insurance agents are operating in India, the number of AMFI Registration Number (ARN) holders authorised individual mutual fund distributors is just 1.22 lakh. This highlights the significant potential for growth as more MFDs enter the industry.
We anticipate that as the industry attracts significant number of MFDs, our Company will experience incremental benefits. By actively pursuing the expansion of our MFD network and leveraging technology-driven platforms, we aim to strengthen our position in the market and enhance our services to clients across the country.
51%YoY
Operating profits grew 51% YoY to Rs173.3 crore, led by the benefits of operating leverage and a larger share of Insurance.
Cross Selling other Products like Insurance
Through its multi-product distribution platform, Prudent has eRsectively utilised its extensive Mutual Fund Distributor (MFD) network. The Company has strategically leveraged this network to tap into the potential of cross-selling insurance products. Prudent has successfully converted 7,750 existing MFDs and their family members into ‘Point of Salespersons (POSP), empowering them to sell insurance products as well. This initiative has significantly contributed to the growth of insurance revenues, achieving a remarkable Compound Annual Growth Rate (CAGR) of 61% from FY2020 to FY2023, albeit starting from a relatively low base. In the current financial year (FY2023), insurance revenues constitute 11.6% of Prudents overall revenue stream. This diversification of revenue sources highlights the successful integration of insurance oRserings within Prudents comprehensive multi-product distribution platform, strengthening the Companys financial performance.
Rs
6,000 croreOur SIP inflows could reach approximately
Rs 6,000 crore for the fiscal year 2023-2024.
Encouraging & Educating MFDs to build Granular Flows
Prudent has achieved a distinctive position in the retail wealth management segment, enabling the Company to generate granular flows. This granular business book provides a solid foundation and enhances visibility on net sales performance. In a significant milestone, the monthly Systematic Investment Plan (SIP) inflow for March 2023 surpassed the Rs500 crore mark for the first time, amounting to Rs517 crore. Extrapolating this figure annually, our SIP inflows could surpass Rs6,000 crore for the fiscal year 2023-2024. This amounts to 11% of the opening AUM (Assets Under Management) for FY2024. Thus, SIPs serve as a robust organic growth driver for Prudent, oRsering promising prospects for the future.
Accelerated Growth going Forward
The favourable industry conditions are providing an additional boost to our business. It took Prudent approximately 16 years to achieve an Assets Under Management (AUM) of Rs10,000 crore. However, in a remarkable feat, we managed to scale it up to Rs50,000 crore in less than six years. This rapid growth trajectory and the presence of attractive inorganic opportunities align well with the strong investor enthusiasm towards mutual funds. As a result, Prudent is well-positioned to capitalise on these factors and has ample room for significant growth, aiming to reach the milestone of Rs1,00,000 crore AUM within the next three years. This projection reflects our confidence in the Companys potential to leverage market dynamics and continue an upward growth trajectory.
Threats, Risks and Concerns
The Company actively identifies and evaluates various sources of risk, areas of impact, and events, along with their underlying causes and potential consequences. To ensure eRsective risk management, the heads of diRserent departments and senior management individuals within the organisation, under the guidance of the Board or Risk Management Committee, are responsible for developing risk mitigation plans and ensuring their successful implementation.
The key risks that the Company currently focuses on can be broadly categorised into internal and external risks, encompassing areas such as technological risks, financial risks, operational risks, strategic business risks, legal and regulatory compliance risks, cyber security risks, competition risks, and risks associated with intellectual property rights. During the risk identification process, all key risks are assessed qualitatively and quantitatively to determine their likelihood of occurrence and the potential magnitude of their impact.
Risk assessment involves various methods to grade risks and evaluate the probability of their occurrence and the extent of damage they could cause. To mitigate these risks, the Company formulates a risk mitigation strategy that involves identifying various options for managing the risks, evaluating those options, and preparing and implementing risk treatment plans. These strategies may include implementing new internal controls, accepting certain risks, obtaining insurance coverage, and, when necessary, avoiding activities that pose unacceptable risks.
Through a comprehensive and proactive approach to risk management, the Company strives to identify, assess, and eRsectively mitigate risks across its operations to safeguard its interests and ensure sustainable growth.
Competition Risk:
Our market is subject to intense competition from existing and new players, which may impact our market share and overall financial performance. The financial services industry is experiencing rapid evolution, driven by technological advancements and changing customer preferences. This evolution opens the door for potential competition from new entrants who leverage technology to oRser products and services like ours.
To address this risk, our Company proactively takes measures to stay ahead of the competition. We prioritise continuously upgrading our technology infrastructure across various aspects of our business, including sales, risk management, fraud detection, client service, and settlement. By incorporating the latest technological developments into our platform, we ensure that we remain competitive and can eRsectively meet the evolving needs of our customers.
We also maintain an eRsicient and cost-eRsective operation, contributing to sustained profitability and growth. Our Company is committed to placing customer-centricity at the core of our operations. We constantly strive to enhance the customer experience and improve our relationships, ensuring their satisfaction and loyalty.
By embracing technological advancements, maintaining operational eRsiciency, and focusing on customer-centric practices, we mitigate the risks associated with intense competition in the market. These strategies enable us to adapt to the changing landscape and maintain a competitive edge in the financial services industry.
Regulatory Changes
The Company operates in an environment with ongoing and significant regulatory changes and increased scrutiny. Regulatory risks has
It took Prudent approximately 16 years to achieve an Assets Under Management (AUM) ofRs 10,000 crore. However, in a remarkable feat, we managed to scale it up toRs 50,000 crore in less than six years.
played out in the past in the form of ban of upfront commissions in October 2018, rationalization of Total Expense Ratio rates in April 2019 & B-30 incentives kept in abeyance since February 2023. There is also a consultation paper published in May 2023 to review the Total Expense Ratio. Therefore, regulatory risk remains a crucial area of focus for senior management. Developing and implementing more rigorous regulatory approaches and enhanced supervisory standards could adversely aRsect the Companys business, capital, and risk management strategies. It may also prompt the Company to consider modifications to its legal entity, capital and funding structures, and business portfolio, or even the decision to exit certain business activities altogether. These decisions could be made despite the potential attractiveness of those activities.
To navigate this regulatory landscape, the Company maintains a strong vigilance on evolving legislation and areas of regulatory focus. This requires considerable attention, resources, and investment from management. The Company understands the importance of staying abreast of regulatory changes to ensure compliance and adapt its operations accordingly. It acknowledges that addressing regulatory challenges may involve significant costs and the allocation of resources.
The Company aims to mitigate regulatory risks and uphold compliance standards by proactively monitoring and responding to regulatory developments. This approach demonstrates the Companys commitment to maintaining a robust regulatory framework and adapting its strategies as necessary to meet evolving regulatory requirements.
Operational Risk
Operational risk refers to the potential loss that the Company may incur due to inadequate or failed processes or systems, human errors, or external events, excluding credit and market risks. Operating in a highly competitive market, the Company strives to maintain consistent and seamless business operations, as expected by market participants. The loss or disruption of business processes poses a significant inherent risk for the Company and the broader financial services industry. Such disruptions can arise from various factors, including technology system failures, issues with real estate services (including retail branch networks), or the availability of personnel and services provided by third parties.
The Company must establish resilience and recovery capabilities within its business processes to mitigate this risk. This involves ensuring that the Companys technology systems, real estate services, and third-party suppliers are reliable and capable of sustaining uninterrupted operations. Failure to build resilience or recovery capabilities may lead to severe consequences, including customer harm, costs associated with reimbursing customer losses, and damage to the Companys reputation.
By proactively addressing operational risks and implementing robust risk management practices, the Company aims to safeguard its operations, protect its customers, and maintain its reputation as a reliable financial services provider. This includes continuously assessing and improving its business processes resilience and recovery capabilities and closely monitoring and managing potential disruptions arising from external events or internal factors.
New and Emergent Technology
Technology is vital to the Companys business and financial services industry. The continuous evolution of technology oRsers opportunities for the Company to explore innovative ways of conducting its operations. This includes developing new solutions internally and collaborating with third-party companies to leverage their expertise.
While the increased adoption of electronic payment systems and direct access to trading markets can potentially lead to cost reductions for the Company, it may also result in lower commissions, fees, and transaction margins. This, in turn, could significantly negatively impact the Companys business, financial condition, and prospects.
Introducing new technologies, however, also comes with inherent risks. It is crucial for the Company to carefully evaluate, actively manage, and closely monitor the potential risks associated with technological advancements at all stages of its business development. Failure to do so could expose the Company to vulnerabilities and security flaws, adversely aRsecting its business operations, financial performance, and overall outlook.
The Company recognises the importance of balancing the benefits and risks of technology implementation. By maintaining a proactive approach to risk assessment and management throughout the entire technological implementation process, the Company aims to minimise potential vulnerabilities and ensure the security and stability of its operations. This approach allows the Company to leverage the advantages of technology while mitigating any adverse eRsects on its business, financial position, and prospects.
Reputation Risk
Reputation risk refers to the potential impact on the Companys trustworthiness and competency caused by actions, transactions, investments, events, decisions, or business relationships. Any significant lapse in maintaining high standards of integrity, compliance, customer service, or operational eRsiciency can pose a reputation risk.
Given the ever-changing expectations of stakeholders, reputation risk is dynamic and can vary across diRserent geographical regions, companies, and individuals. A risk that arises in one area of the business can potentially negatively aRsect the Companys overall reputation. Furthermore, as key stakeholders perceive, any transaction, investment, or event can erode trust in the Companys integrity and competency.
At Prudent, reputational risk management begins at the Board of Directors level. The Board exercises active and diligent oversight in relation to the formulation of a robust strategy, its execution, and the establishment and enforcement of associated policies. This approach is essential to ensure the Company upholds its reputation and meets stakeholders expectations.
By prioritising reputation risk management, the Company aims to maintain its integrity, build trust among stakeholders, and safeguard its standing in the industry. The Boards engagement in developing and implementing a comprehensive strategy, coupled with strict policy adherence, plays a crucial role in mitigating reputation risks and preserving the Companys reputation for integrity and competence.
By implementing a robust risk management framework and involving key stakeholders, the Company aims to proactively address risks, safeguard shareholder value, and promote a culture of risk awareness and mitigation throughout the organisation.
Internal Control
Prudent has implemented a robust and comprehensive risk management and internal control system across all its business operations to manage the risks it faces eRsectively. The primary objective of the Companys risk management framework is to identify, measure, and mitigate various risks, while establishing policies, procedures, and standards to address these risks and ensure a systematic response in the event of their occurrence.
To support this process, the Company has engaged M/s. Deloitte Haskins & Sells, Chartered Accountants as its Statutory Auditor, and M/s. Pramodkumar Dad & Associates, Chartered Accountants as its Internal Auditor.
The Board of Directors of the Company oversees the risk management eRsorts. It has established a dedicated Risk Management Committee (RMC) for formulating and reviewing risk management processes and controls. In compliance with the SEBI Listing Regulations, the Company has adopted a Risk Management Policy to create and safeguard shareholder value by minimising potential threats and losses and identifying and capitalising on opportunities. This policy ensures that eRsective risk management is integral to every employees role.
Risk identification involves the identification of risk sources, areas of impact, events, and their underlying causes, along with their potential consequences. The heads of various departments and senior management personnel at diRserent organisational levels, under the guidance of the Board or the Risk Management Committee, are responsible for developing risk mitigation plans and ensuring their eRsective implementation.
By implementing a robust risk management framework and involving key stakeholders, the Company aims to proactively address risks, safeguard shareholder value, and promote a culture of risk awareness and mitigation throughout the organisation.
Information Technology
The rapid evolution of information technology has and will continue to revolutionise the marketing, trading, distribution, and settlement of mutual funds and other financial products. This dynamic landscape presents both opportunities and challenges for Prudents businesses. The Company recognises the critical role of its IT capability in ensuring the eRsicient operation and performance of its various businesses, making it a key driver of the Companys success.
Prudent has made significant strategic investments in IT and continues to prioritise innovation and investment in this area. As of March 31, 2023, the Company had a team of 58 skilled IT professionals dedicated to developing, maintaining, and enhancing its diverse digital assets. Prudent remains committed to the ongoing development, maintenance, and utilisation of IT across its various business activities.
By leveraging technology, Prudent aims to significantly improve the quality of client service through enhanced connectivity and the provision of personalised value-added products and services. The Company recognises the transformative potential of technology in delivering superior client experiences and remains dedicated to harnessing these advancements to provide innovative and customised solutions to its clients.
Human Resource
Prudent acknowledges that its culture and human capital play a vital role in driving the success of its business. As of March 31, 2023, the Company had a workforce comprising 1078 skilled and talented individuals. Recognising the importance of cultivating a solid foundation of knowledge and expertise for the future, Prudent focuses on attracting, training, and retaining young employees.
To foster a motivated and productive workforce, Prudent has implemented various policies to incentivise its employees, improve retention rates, and enhance overall productivity. These policies are designed to create a positive work environment, recognise, and reward employee contributions, and provide opportunities for professional growth and development.
Prudent values the skills and capabilities of its employees and believes in investing in their long-term success. By nurturing a culture of continuous learning and providing meaningful incentives, the Company strives to create a dedicated and high-performing team that drives its ongoing growth and delivers exceptional value to its clients.
Employee Engagement Activities List (Date: 1 April 2022 to 31 March 2023)
National Voluntary Blood Donation Day (1st October 2022)
On occasion of National Voluntary Blood Donation Day, we have arranged a blood donation drive where Employees, their friends, colleagues, partners have participated and Donated Blood.
Christmas Potluck Lunch Party
On Eve of Christmas, we have organized potluck lunch party where employees can bring their favorite food to be shared with everyone.
Mental Health Awareness Month
To promote Mental Well-being and Mindfulness in the Workplace, we have arranged session to cover crucial topics of stress prevention, symptoms of mental health, depression and mindfulness in the Workplace.
Summer Kick oRs Ice cream Party
Cool summer kickoRs ice cream party was arranged to beat the Summer Heat.
Relish the taste of Monsoon with "Deep Fried Fritters"
We have arranged "Deep Fried Fritter party" to relist the taste of monsoon.
International Yoga Day
To raise awareness about yoga as a holistic practice for mental and physical well being we have arranged "Yoga at your Desk" session.
New Years Eve
Brain Teaser Quiz was arranged on occasion of "New Years Eve"
Celebration of Makarsankranti
Makarsankranti was celebrated by organizing festival special lunch for Employees.
International Womens Day 2023
To celebrate all our Incredible Women on occasion of IWD 2023, we have arranged session on Cervical Cancer Awareness, followed by Snacks and online testimonial by all StaRs.
Plantation Drive
We have organized Plantation Event to create awareness on many environmental issues like deforestation, erosion of soil, desertification in semi-arid areas, global warming and hence enhancing the beauty and balance of the environment.
Disclaimer
Statements in the Management Discussion and Analysis that describe the Companys objectives, projections, estimates, and expectations may be considered "forward-looking statements" under the securities laws and regulations. Actual results may diRser from those stated or implied. Economic conditions aRsecting demand-supply and price conditions in domestic and international markets are crucial factors that could aRsect the Companys operations. Government regulations, tax laws, other statutes, and other incidental factors aRsect how the Company operates.
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