Swastika Investmart Ltd Management Discussions

Economic Overview

Global Economy

The global economy remains remarkably resilient, with growth holding steady as inflation returns to target. The journey has been eventful, starting with supply-chain disruptions in the aftermath of the pandemic, a Russian-initiated war on Ukraine that triggered a global energy and food crisis, and a considerable surge in inflation, followed by a globally synchronized monetary policy tightening. Yet, despite many gloomy predictions, the world avoided a recession, the banking system proved largely resilient, and major emerging market economies did not suffer sudden stops.

Leading indicators are also suggesting an upturn in global economic activity. The global composite PMI registered an uptick in March 2024 with quicker expansion across both manufacturing and service sectors. The global manufacturing PMI has been improving and stood at a 21-month high in March 2024. The improvement is across major economies reflecting a broad-based growth and building up of confidence across governments and businesses.

Despite an uptick in growth in major economies, the IMF remains cautious in its outlook on the global economy going forward. In its World Economic Outlook (WEO) April 2024 report, IMF has projected global growth to remain steady at 3.2 per cent in 2024 and 2025, marginally higher than 3.1 per cent in its January 2024 update. The slow pace of expansion is mainly attributed to high borrowing costs, withdrawal of fiscal support, and continued impact of conflict in Europe, weak productivity growth, and increasing geoeconomic fragmentation.

Against this backdrop, the Outlook lays out a series of policy recommendations, highlighting the need to ensure a durable reduction in inflation, establish a budgetary path that will address rising fiscal pressures and undertake reforms that improve prospects for medium-term growth.

Indian Economy

The Indian economy closed FY24 strongly with its growth surpassing market expectations, despite strong external headwinds. Early indications suggest a continuation of the economic momentum during the first quarter of FY25. The emerging robust trends in important high-frequency indicators of growth like the GST collections, e-way bills, electronic toll collections, sale of vehicles, purchasing managers indices and the value and number of digital transactions attest to the growing strength of the economy.

Over the course of the last decade (2014-2024), India has showcased a robust and resilient growth story driven by perseverance, ingenuity, and long-term vision in spite of unprecedented challenges such as COVID-19 pandemic and evolving geopolitical situations.

"In 10 years, India has moved from the 10th largest economy of the world to the 5th largest economy of the world.In 10 years boasting a $3.4 trillion GDP, India is now seen as a country with immense potential which is backed by impressive performance." In the next three years, India is expected to become the third-largest economy in the world, with a GDP of USD 5 trillion. The government has, however, set a higher goal of Further becoming a developed country by 2047. With the journey of reforms continuing, this goal is achievable. The reforms will be more purposeful and fruitful with the full participation of the state governments.

There are several positive factors for the Indian economy. While healthy balance sheets of banks and corporates, supply chain normalization, business optimism and robust government capital expenditure are favourable for a renewal of the capex cycle, however the private capital investment cycle needs to take off.

As per IMF report "Growth in India is projected to remain strong at 6.8 per cent in FY25 and 6.5 per cent in FY26, with the robustness reflecting continuing strength in domestic demand and a rising working-age population".

GDP Growth Forecast % for FY 2024-25

Forecast By	Earlier	Revised
IMF	6.5	6.8
WORLDBANK	6.4	6.6
FITCH	6.5	7.0
ADB	6.7	7.0
CITIBANK	6.4	6.8

Industry Overview & Developments

Capital Market Overview

Capital markets play a crucial role in the economic development of a country. They provide the financial resources required for the long-term sustainable development of the economy. Capital markets are therefore considered an important element as it enables higher productivity growth, higher real-wage growth, greater employment opportunities and greater macroeconomic stability.

In FY 2023-24,The Indian stock market experienced significant volatility marked by record highs in the run up for Elections and notable corrections following the Elections results with the market nose diving to a four-year low as investor sentiment was dented. Both institutional and domestic investors-at-large anticipated Indias Prime Minister Mr. Narendra Modi to secure a landslide victory, the expectation of which was crushed as the Modi-led Bharatiya Janata Party failed to secure a clear majority.

Despite this, third term of Prime Minister Mr. Narendra Modi is expected to bring continued economic reforms, infrastructure development, and political stability, all of which are likely to positively influence the stock market. Further, investors should remain mindful of implementation challenges and global economic conditions that can also affect market dynamics.

Further, the future outlook for the Indian stock broking industry remains promising, driven by several key factors. According to a report, the industry is expected to grow at a CAGR of around 15-20% over the next few years, fuelled by increasing financial literacy, the expansion of the investor base, and the adoption of digital trading platforms. By embracing technological advancements, offering innovative products and services, and providing value-added advisory services, stock broking firms in India can position themselves for success in this dynamic and competitive landscape.

Market Trend and development

The Indian stock market had a rather belter of a year. Indias benchmark equity indices, sensex and Nifty concluded the fiscal year 2023-24 with impressive gains, reflecting broader bullish trend in global equities. The benchmark Sensex and Nifty50 jumped 24.85 percent and 28.61 percent in FY24, while the broader BSE Midcap and Smallcap indices jumped 63.4 percent and 60 percent.

In the FY 2023-24 nearly 3.7 crore demat accounts were added, marking the largest increase ever, averaging over 30 lakh accounts a month, driven by a rally in the market. The number of demat accounts opened with two depositories - the Central Depository Services (CDSL) and the National Securities Depository (NSDL) -- jumped 11.9 percent year-on-year, to 15.14 crore from 11.45 crore.

This upward momentum in market was propelled by widespread buying across various sectors, despite challenges such as a depreciating rupee affecting market sentiment. The positive close for the fiscal year is attributed to robust demand in power, auto and metal stock, aligning with the bullish wave as seen in the international markets.

Market experts believe FY24 was an outstanding year for the Indian stock markets as there are number of possible triggers, including strong economic growth and solid corporate results, contributed significantly to the bullish trend and boosted investor optimism. Moreover, strong inflows from both domestic and foreign institutional investors, further supported market sentiment over the year.

Further another factor that contributed was the IPO market, which flourished during FY24, witnessing a surge in activity with approximately 75 new issues launched. Companies like the Indian Renewable Energy Development Agency (IREDA), Netweb, and Signature Global delivered returns of over 150% post-listing, contributing to the markets bullish sentiment. The average listing gain saw a notable increase to 29%, underscoring investor enthusiasm for these new Offerings.

Company Overview and Outlook

Incorporated in 1992, Swastika Investmart Limited ("herein after referred as "Swastika" or "Company") is a one-stop platform providing a diverse range of products and services to customers, helping them identify the right investment opportunities, given domain expertise and knowledge base. We are providing the entire bouquet of financial services to the clients under one roof such as stock broking across equity, commodity and currency segments, Depository Participant, research services, investment advisory, margin funding, mutual fund, third party financial product distribution, Investment Banking and, Portfolio management Services etc.

In addition, through our subsidiary Company Swastika Insurance Broking Services Limited we are also actively providing insurance broking servicing and customized products to our clients which includes Motor Insurance, Health Insurance and, Life insurance. Also, we are providing loan facility through Swastika Fin-mart Private Limited which is Non-Banking Financial Company licensed by RBI. Service offering beyond broking has started supporting the overall growth and expansion strategy for our company. With more than two decades of market knowledge, research capabilities, advanced trading and investment platforms and a wide branch network, will continue to live our purpose for creating and protecting customers wealth, and achieve long-term financial goals.

In FY 2024,your company tied up with several Fin-tech company to provide better tools to its clients to aid their decision making either investment or trading. Your Company is providing Algo trading services with exchange approved strategies using U-Trade. Your Company also successfully launched its curated portfolio product named Wealth bag backed by a team of experienced research analysts that helps our clients to build diversified, long-term as well as short term portfolios.

The company also has a strong base of capital as well as the personnel of more than 652 employees which includes IITians, CAs, CS, MBAs who are providing us there knowledge and services to create the strong base of the company in the competitive market.

In order to upgrade our next phase of growth, our Promoter group members and our strategic investor, Share India AlgoPlus Private Limited (a wholly-owned subsidiary of Share India Securities Limited), have committed an aggregate investment of 32.97 crores during this year. This investment will be facilitated through the issuance of fully convertible equity warrants on a preferential basis to enhance our business activities. We believe that with this funding, the company will optimize its capacities, consolidate its market share, and reach new heights in both existing and new product categories.

Swastika group is focussed towards enlarging its empire and bringing diversified business and operations under its ambit for the customer support and satisfaction. The company in its growth path is also focussed on the core values which makes the company different from others and policies and strategies are made keeping these values in mind.

At Swastika, we follow our tradition with the advancement of technology as we are available for our clients to help them manually for uninterrupted familiar services and trading experience. Our company is increasing its service efficiency by introducing new framework aimed at optimizing client and franchise/Authorized personnel interactions through the establishment of centralized communication channels, Swift Communication.This scheme offers two primary modes of communication: a dedicated Helpdesk and Email correspondence.

Being technological driven company, we are continuously adding new features in our Mobile trading App in order to enhance trading experience and to make it more convenient. Your Company also believe in educating clients and investors through financial planning, wealth creation, physically and through our digital communication platform.

In FY2024-25, our key focus areas will be to strengthen our capabilities across the entire value chain of the business, as we introduce more products and service offerings, leading to expanding revenue streams and better margins. Additionally, we are committed to exploring opportunities in the Margin Trading Facility (MTF). Through strategic partnerships, technological advancements, and a persistent pursuit of excellence, we are confident in our ability to navigate the evolving landscape of the financial markets and deliver sustainable value to our stakeholders.

Investment Banking Division

Our company is successfully working in the field of Investment banking services in order to help the clients to scale up its business through raising of funds in primary market, Start Up funding, Venture Capital Funding to provide assistance to new business which leads to economic growth and development.

In FY 2023-24,Our Company has successfully launched 4 SME IPOs,all of which have been listed successfully. We are also supporting small and medium sized enterprises to guide in expanding its business and also providing financial assistance for driving economic growth and development and ensure consistent support and help to expand and diversify the business to the greater possible extent. In addition to that, we have a promising pipeline with a large number of potential IPOs in various stages of development, reflecting strong market position and ability to utilize the opportunities promptly.

In addition to our IPO successes, we are actively engaged in a range of pre-IPOs and equity deals, valuations, and other advisory transactions including private equity advisory, preferential allotments, and open offers. We are also focusing on strengthening our presence in the investment banking sector by opening more branches across different geographies to tap the huge potential in this segment.

The Company during the financial year under review has made substantial investments in people, processes and technology and continues to focus on delivering steady performance. It is cognisant of the changes in the capital market and brokerage segment and well prepared to overcome challenges and sustain performance.

Our Business Strategies:

Build client relationship

We have successfully reached 4.02 lakhs active clients in our business based on building strong and lasting relationships with clients. We have focused on providing excellent customer service, offering personalized investment advice, and keeping our clients informed about market trend. Our motto is not only to create the clients for long run but also to retain them by maintain healthy business environment .A satisfied client is more likely to refer others which in return, contributes to our growth.

Leveraging Technology

In the era of digital age, technology plays an essential role in every business and we ensure to provide user-friendly platform and tools with latest technology for trading and other info that will help to attract clients. As this field is dynamic we team are regularly updating our tools and systems.

Consistency in providing training and support

In-depth understanding of financial markets and trading strategies are required to achieve success in the stock broking business, therefore we provide comprehensive training and support to our team which includes both theoretical knowledge about the stock market and practical insights into trading and investment strategies.

Promoting marketing and branding

We are promoting our business through effective marketing strategies by utilizing digital marketing, social media, and local advertising that will create brand awareness. We highlight our unique selling points and through positive word-of-mouth significantly contribute to our success. Our company is not only focussed on marketing itself but also comply with the ethical values in relations to the same.

Financial Management

We keep a close eye on our expenses, revenues, and profitability as effective financial management is the backbone of any successful business. Therefore we allocate resources carefully to utilize funds to the optimum possible extent for sustainable and continues growth.

Financial Performance

Throughout this year, Swastika has experienced notable achievements, marking it as a period of significant growth and resilience for your organization. Our steadfast commitment to excellence has not only been demonstrated in our financial performance but also in the trust and confidence bestowed upon us by our valued clients. Our strategy of ramping up scale of clients helped us acquire new clients and now we are having total 4.02 Lakhs clients at year end.

On Standalone basis Company reported revenue from operation of 11092.23 Lakhs as against 8546.11 Lakhs in the previous year, recording an increase of 29.79% revenue growth YoYand profit after tax of 1211.45 lakhs as against previous year in which Company has earned amounting to 593.86 Lakhs registered growth of 104% PAT growth YoY.

On Consolidated basis, Company reported revenue from operation of 11417.38 Lakhs as against 8833.53 Lakhs in the previous year, recording an increase of 29.25% YoYand earned profit after tax of 1228.50 lakhs as against previous year in which Company has earned amounting to 614.78 Lakhs registered growth of 100% YoY.The consolidated financials reflect the cumulative performances of Swastika Investmart Limited along with its subsidiaries. Detailed description about the business carried out is contained in the Management Discussion and Analysis report.

Key Ratio Analysis

Details of significant changes, if any, in key financial ratios, along with detailed explanations:

Ratios	2023-24 (%)	2022-23 (%)	Variance %
1 Interest coverage ratio1*	4.58	6.26	-26.87%
2 Current ratio	1.23	1.29	-4.79%
3 Debt equity ratio	0.14	0.16	-11.56%
4 Operating profit margin2*	15.91	7.08	124.76%
5 Net profit margin3*	10.87	6.93	56.83%
6 Return on Net Worth4*	17.23	12.41	38.85%
7 Debtors Turnover ratio	NA	NA	-
8 Inventory Turnover ratio	NA	NA	-

1. Interest Coverage Ratio decreased from 6.26 times to 4.58 times due to increase in net earning of the Company in FY 2023-24 as compare to FY 2022-23 i.e. from 950.51 lakhs to 2091.34 lakhs.

2. Operating profit Margin has increased from 7.08% to 15.91% due to increase in revenue to 11092.23 lakhs in FY 24 from 8546.11 lakhs in FY23.

3. Net profit margin ratio improved from 6.93% to 10.87% mainly on account of increase in revenue to 11146.43 lakhs in FY24 from 8569.64 lakhs in FY23 and increase in profits to 1211.45 lakhs in FY24 as compared to profit of 593.86 lakhs in FY23

4. Return on Net Worth improved from 12.41% to 17.23% mainly on account of increase in profits to 1211.45 lakhs in FY24 as compared to profit of 593.86 lakhs in FY23.

Segmental Reporting

The Companys operations predominantly relate to equity, currency and commodity broking and its related activities business and is the only operating segment of the Company on standalone basis.

However on Consolidated basis Company have two reportable segments i.e. finance and insurance division in wholly owned subsidiaries. Further segment performance is also being present in note No. 53 of consolidated financial statement.

The two segments as presented in the consolidated form are as follows:

Segments	For the year ended 31st March 2024
		(Rs in lakhs)
	Total Income	Profits/losses (after tax)
Insurance (Swastika Insurance Broking Services Limited)	106.94	(17.88)
Financial Services (Swastika Fin-Mart Private Limited)	247.96	34.97

SWOT analysis and research

Strengths

Low-cost Trading

Company offers low-cost brokerage while keeping operational costs low and utilising the available resources to the best possible extent.

Technology

Swastika being technological driven company offers an outstanding trading platform and tools to its clients.

Costs Effective

The most effective approach to expand its business is word-of-mouth referrals which is helpful to avoid unwanted marketing costs. And satisfied consumers will naturally refer to their friends.

Weaknesses

Tendency of an Indians being conservative and prefer investing in Gold and land

Due to conservative approach of Indians, they still prefer to invest more into gold and land so awareness towards stock market is still required.

Dependency on market performance

The brokerage firms revenue is directly dependent on the performance of the market. During a bear market, the number of transactions reduces, and the firms revenue goes down. This dependence poses a risk to the businesss sustainability in the long run.

Opportunities

Expansion into new geographic regions

Swastika can leverage their expertise and expand their operations into new areas, catering to clients with different investment needs and preferences.

Acquisition of new clients

With the growing interest in investments, Company can focus on acquiring new clients, especially from the younger demographic who are increasingly getting interested in investing.

Diversification of services

Company can offer a wider range of investment products and services that can help the company to attract new clients and retain existing ones. Approach to personalize Investment Advice Company can provide clients with customized investment advice based on their financial goals and risk tolerance.

Threat

Intense competition

Stock broking business has a low barrier to entry, which means a high number of players compete in the market and competition make it challenging to differentiate from the rest and gain market share.

Regulatory changes

Changes in regulations and compliance requirements can be a major threat to the company as failure to comply with regulatory standards can result in fines or even legal action.

Economic volatility

Economic factors such as recessions, inflation, and fluctuations in interest rates can affect the financial markets and directly impact the companys revenue. This can lead to decreased demand for investments and a reduction in brokerage earnings.

Cyber security risks

Cyber-attacks and data breaches can lead to loss of confidential client information, damage to the reputation of the brokerage firm and potential legal action.

Risk Management

Risk Management is a set of processes followed by our Company to identify, assess, respond to, monitor and report the risks that have the potential to hinder the efficient functioning of our business unless kept under check. Risk Management plays a key role in business strategy and planning discussions. The risks could be caused by internal or external factors.

The Companys risk management framework helps in conducting business in a well-controlled environment. Strict internal processes and controls enable the Company to effectively manage the business risks it encounters on daily basis. Risk Management Framework of the company ensures achievement of its strategic objectives; the framework is supported by risk processes, identification, assessment, response, action, mitigation and control. Risk Management framework of the company proactively addresses risks and seizes opportunities so as to gain competitive advantage, and also protects and creates value for the stakeholders.

Human Resource Management

At Swastika, we believe our employees to be the catalysts of our long-term growth. They are the key drivers of our journey of sustained business growth and value creation for our customers and other stakeholders. Our team at Swastika comprises 652 permanent employees. They guide our strategic approach, and enable the realisation of our vision and goals. We deeply value the contributions our employees make in shaping our success. We demonstrate this by prioritizing a safe and healthy working environment for all team members.

Our Human resource department has continued to implement industry friendly policies and processes to align the employees with the business and providing solutions relating to it and it also take initiatives to provide training through learning platforms for developing skill and knowledge and updating the staff and employees with the industry and enhancing overall development. Company is providing an environment which promote professional work force and proper leadership without any discrimination or biasness which drives to strong employee engagement that helps to develop and retain highly motivated team.

It also emphasis on performance evaluation to recognize the working of the employee and introduce recognition programme by awarding spot and dedication bonus and mementos to motivate the employees to achieve best out of their abilities and build ownership and trust towards the organisation. In a resounding celebration of accomplishments, our Company hosted the prestigious award ceremony in our Annual Business meet at Indore, honoring the remarkable achievements of individuals and teams from PAN India branches. The event commenced with a warm presence of our directors and, industry experts.

As we move forward, we remains steadfast in our commitment to driving growth, nurturing talent, and fostering a culture of excellence.

Internal Control System and their adequacy

In accordance with the scale, nature, and complexity of its business and operations, Swastika has incorporated comprehensive processes, guidelines, and procedures into its internal control systems. Strong internal controls assure the resilience and adaptability of business operations, resulting in high operational efficacy. A management information and monitoring system is in place to support internal controls.

Internal Audit is conducted by our Internal Auditor on regular basis to assess the internal control and procedures and their reports are reviewed by the Audit Committee of the Board. Accordingly timely and corrected actions, if required will be taken on the inputs taken from internal auditor. The internal control system was designed with a firm commitment to complying with all applicable laws and Audits guarantee the integrity of internal control systems and adherence to management policies.

Internal control system also enables to safeguard sensitive information, maintain accounting control, ease auditing process which helps to reinforce strong commitment to provide customer with secure technology and transparency and helpful to detect error and fraud.

Cautionary Statement

Statements in this Management Discussion & Analysis describing the Companys objectives, projections, estimates, expectations or predictions may be "forward looking statements" within the meaning of applicable securities laws and regulations. Actual results could differ materially from those expressed or implied. The company assumes no responsibility to publicly amend, modify or revise any such statements on the basis of subsequent developments, information or events.

There are various factors like conditions in global financial markets, regulatory intervention and other acts of violence which may lead to situations unpredictable for any one Important factors that could make a difference to the Companys operations include economic developments in the country and improvement in the state of capital markets, changes in the Government regulations, tax laws and other status and other incidental factors.