Share India Securities Ltd:Annual Report 2023-24 Analysis

Share India Securities Ltd.: A Comprehensive Overview #

About the Company #

• Year of Establishment and Founding History: Share India Securities Ltd. was established in 1990.
• Headquarters Location and Global Presence: The company is headquartered in Mumbai, India. They primarily operate within the Indian financial markets.
• Company Vision and Mission: Information is not publicly available regarding the specific vision and mission statements of Share India Securities Ltd.
• Key Milestones in Their Growth Journey:
  • Share India Securities has grown from a traditional brokerage firm to a technology-driven financial service provider.
  • They have expanded into various segments like equity derivatives, currency derivatives, commodities, mutual funds, and investment banking.
  • The company has focused on developing in-house technology platforms for trading and investment management.
• Stock Exchange Listing Details and Market Capitalization: Share India Securities Ltd. is listed on the Bombay Stock Exchange (BSE: 540725) and the National Stock Exchange (NSE: SHAREINDIA). Market capitalization can be obtained from financial websites like Google Finance, Yahoo Finance, or the BSE/NSE websites.
• Recent Financial Performance Highlights: Recent financial performance can be found in the company’s quarterly and annual reports, available on their website and the BSE/NSE websites.
• Management Team and Leadership Structure: Information on the management team can be found on their investor relations page.
• Any Notable Awards or Recognitions: Award and recognition details can be found on the company website or through press releases.

Their Products #

• Complete Product Portfolio with Categories:
  • Brokerage Services: Equity trading, commodity trading, currency trading, derivative trading.
  • Investment Services: Mutual fund investments, IPOs, fixed income products.
  • Investment Banking: Corporate advisory services, mergers and acquisitions, capital market solutions.
  • Wealth Management: Portfolio management services, financial planning.
  • Research: Equity research reports, market analysis.
• Flagship or Signature Product Lines: Their brokerage services, especially facilitated through their in-house developed technology platforms, can be considered a flagship.
• Any Unique Selling Propositions or Technological Advantages: Their focus on technology is a key differentiator, enabling them to offer efficient trading platforms and algorithmic trading solutions.
• Recent Product Launches or R&D Initiatives: Details on recent product launches can be found on the company website.

Primary Customers #

• Target Industries and Sectors: Financial services.
• Geographic Markets (Domestic vs. International): Primarily focused on the Indian market.
• Major Client Segments: Retail investors, high-net-worth individuals (HNIs), institutional investors, and corporate clients.
• Distribution Network and Sales Channels: Online trading platforms, a network of branches, and authorized persons/sub-brokers.

Major Competitors #

• Direct Competitors in India and Globally: Zerodha, Upstox, Angel One, ICICI Securities, HDFC Securities, Kotak Securities, Motilal Oswal Financial Services.
• How they differentiate from competitors: Share India Securities differentiates itself through its focus on technology, offering advanced trading platforms and algorithmic trading solutions.
• Industry challenges and opportunities:
  • Challenges: Increased competition from discount brokers, regulatory changes, market volatility, cybersecurity risks.
  • Opportunities: Growing financial literacy in India, increasing participation in the stock market, development of new financial products, and expansion into underserved markets.
• Market positioning strategy: The company is positioning itself as a technology-driven financial services provider catering to a diverse range of clients.

Future Outlook #

• Expansion plans or growth strategy: Growth plans may include expanding their branch network, enhancing their technology platform, and introducing new financial products.
• Industry trends affecting their business:
  • Increased adoption of online trading platforms.
  • Rise of algorithmic trading and artificial intelligence in finance.
  • Growing demand for personalized financial advisory services.
• Long-term vision and strategic goals: Information about long term goals are not widely publicized.

Share India Securities Limited - Financial Analysis (FY24) #

Financial Position #

Balance Sheet Analysis #

Due to data availability, a detailed 3-year Balance Sheet comparison is limited. A 2-year comparison for key consolidated items (FY24 vs FY23) and a 3-year trend for Consolidated Profit After Tax (PAT) are presented.

Consolidated Profit After Tax (PAT) Trend (FY22-FY24) #

(Source: Financial Prudence section graph & Board’s Report)

Consolidated Balance Sheet Summary (FY24 vs FY23) #

(Source: Consolidated Balance Sheet; Amounts in ₹ Lacs)

Detailed Analysis #

Cash Management: A Deep Dive into Cash Flow and Liquidity Analysis #

Cash Flow Analysis (Standalone vs. Consolidated) #

All figures are in ₹ Lacs.

Operating Cash Flow (OCF) #

Standalone OCF: #

• FY24: ₹(22,094.94) (Net Cash Flow from/(used in) Operating Activities)
• FY23: ₹(35,038.85)

Analysis: Standalone OCF remained negative in FY24 but showed improvement (lesser outflow) compared to FY23. The negative OCF is primarily driven by significant working capital changes, particularly increases in ‘Bank Balance other than cash & cash equivalents’ (₹57,650.80 outflow in FY24) and ‘Loans for margin trading’ (₹7,046.20 outflow in FY24), offset by increases in ‘Trade Payables’ (₹4,096.58 inflow) and ‘Other financial liabilities’ (₹6,042.71 inflow). Profit before tax was ₹39,954.26 in FY24.

Consolidated OCF: #

• FY24: ₹(31,043.33)
• FY23: ₹(16,829.22)

Analysis: Consolidated OCF worsened in FY24, with a larger net cash outflow from operations. This was despite a higher Profit Before Tax of ₹55,697.56. Key working capital changes include outflows for ‘Bank Balance other than cash & cash equivalents’ (₹59,904.16) and ‘Loans’ (₹18,028.60), partially offset by inflows from ‘Trade Payables’ (₹987.48) and ‘Other financial liabilities’ (₹5,950.45). The increase in loan disbursements by the NBFC subsidiary likely contributed to this outflow.

Investing Cash Flow (ICF) #

Standalone ICF: #

• FY24: ₹(4,081.45) (Net Cash Flow from/(used in) Investing Activities)
• FY23: ₹(30.11)

Key Components FY24: Purchase of Property, Plant & Equipment ₹(1,481.94); Purchase of investments ₹(34,364.57); Disposal of investments ₹31,765.06.

Analysis: Significantly higher net cash outflow in FY24 primarily due to increased net investment activity compared to FY23.

Consolidated ICF: #

• FY24: ₹(4,914.79)
• FY23: ₹(1,000.97)

Key Components FY24: Purchase of Property, Plant & Equipment ₹(1,931.87); Purchase of Intangibles and Assets under development ₹(56.90); Purchase of investments ₹(35,135.36); Disposal of investments ₹31,896.26.

Analysis: Consolidated ICF also saw a larger outflow in FY24, driven by net investments and higher capex on PPE compared to FY23.

Financing Cash Flow (FCF) #

Standalone FCF: #

• FY24: ₹30,702.84 (Net Cash Flow from/(used in) Financing activities)
• FY23: ₹28,892.46

Key Components FY24: Proceeds from issue of Equity shares (from warrant conversion) ₹29,521.77; Increase in borrowings ₹10,763.08; Dividend Paid ₹(4,510.62); Finance cost paid ₹(5,071.39).

Analysis: Positive FCF in both years, largely due to proceeds from warrant conversions and increased borrowings, partially offset by dividend payments and finance costs

Financial Analysis of Share India Securities Limited (FY 2023-24) #

Revenue and Profitability #

• Consolidated revenue from operations reached ₹1,482.81 crore, a 36.26% increase from ₹1,088.23 crore in FY 2022-23.
• Standalone revenue from operations grew by 36.49% to ₹1,119.02 crore from ₹819.84 crore in the previous fiscal year.
• Consolidated Profit After Tax (PAT) for FY 2023-24 stood at ₹425.76 crore, a 28.76% year-over-year (YoY) growth from ₹330.66 crore.
• Standalone PAT increased by 32.05% to ₹301.71 crore in FY24 from ₹228.47 crore in FY23.

Market Position and Competitive Landscape #

• NSE - Cash Market (CM): 1.3%
• NSE - Futures: 2.5%
• NSE - Options (premium turnover): 3.7%
• NSE - Currency Futures: 6.3%
• NSE - Currency Options: 10.6%
• BSE - Cash Market (CM): 1.0%
• Commodity (NCDEX/MCX): >10%
• Aims to be a leader in the fintech industry through uTrade Solutions and Algowire Trading Technologies platforms.
• Proposed acquisition of Silverleaf Capital Services to bolster competitive stance.

Performance of Key Business Operations #

• Broking and Distribution: Average daily turnover exceeding ₹11,000 crore. Broking client base grew by 22% YoY to 35,380 in FY24.
• NBFC (Share India Fincap Private Limited): Loan book over ₹260 crore, serving a client base of 69,389.
• Algo Trading: Core focus with platforms like uTrade Algos.
• Investment Banking (Share India Capital Services Private Limited): Completed 12 SME IPOs and filed 6 Draft Red Herring Prospectuses (DRHPs) in FY24.
• Other Services: Proprietary trading, depository participant services, wealth management, and research.

Geographic Presence and Market Expansion #

• Established domestic footprint with offices across 15 states, 121 branches and franchisees, and 61 NBFC branches.
• Strategic focus on international expansion, including GIFT City IFSC and through its Singapore-based subsidiary.

Capital Allocation and Returns #

• Return on Average Net Worth (RONW): 30.64% in FY 2023-24 (down from 44.79% in FY 2022-23).
• Return on Capital Employed (ROCE): A declining trend in ROCE for FY23 and FY24.

Financial Analysis Report: Share India Securities Limited (FY 2023-24) #

Overall Financial Performance & Position #

Share India Securities Limited (SISL) reported robust financial performance for FY 2023-24. Consolidated revenue from operations increased by 36.26% YoY to ₹1,48,281.45 Lacs, and consolidated Profit After Tax (PAT) grew by 28.76% YoY to ₹42,575.88 Lacs. Standalone revenue from operations saw a 36.49% YoY increase to ₹1,11,901.11 Lacs, with PAT rising by 32.05% YoY to ₹30,099.18 Lacs. This growth is attributed to initiatives in technology, product diversification, and an expanding client base.

The company’s market share in key segments as of the report date includes: NSE-CM (1.3%), NSE-Futures (2.5%), NSE-Options (3.7% - premium turnover only), NSE-Currency Futures (6.3%), NSE-Currency Options (10.6%), BSE-CM (1.0%), and >10% in Commodity (NCDEX/MCX).

Key financial ratios show a decline in Return on Net Worth (RoNW) to 30.64% in FY24 from 44.79% in FY23 (Consolidated). This is attributed to equity expansion from rights issues, warrant conversions, and ESOP allotments. The Debt Equity Ratio remains low at 0.06 times (Consolidated FY24). The average daily turnover exceeded ₹11,000 Crore. The NBFC loan book stood at over ₹260 Crore with a client base of 69,389. Broking clients grew by 22% YoY to 35,380.

A final dividend of ₹1.00 per share (face value ₹10) was recommended, bringing the total dividend for FY24 to ₹9.00 per share. A stock split in the ratio of 1:5 (face value ₹10 to ₹2) was approved post-FY24, effective June 27, 2024.

Risk Analysis #

Strategic Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing due to dynamic market and technological landscape.

Analysis:

• Competition: The financial services and broking industry is highly competitive, with pressure from traditional players and agile fintech startups. SISL’s strategy to be a “go-to fintech company” implies significant competitive pressure.
• Technological Disruption: The company identifies as “technology-driven” and has invested in uTrade Solutions and Algowire. The risk lies in the ability to continually innovate, integrate acquisitions effectively (e.g., proposed Silverleaf Capital Services amalgamation), and adapt to new technologies like AI faster than competitors. Failure to do so could impact market share and relevance.
• Market Expansion (Retail & International): Strategies for deeper retail penetration (“Har Ghar Algo”) and international expansion (GIFT City, Singapore) present execution risks, cultural adaptation challenges, and exposure to new regulatory environments.
• Product Diversification: Expansion into NBFC, insurance broking, merchant banking, and wealth management diversifies revenue but also introduces risks associated with managing varied business lines and their specific market dynamics.

Mitigation Strategies:

• Continuous investment in technology (AI-based platforms, uTrade solutions for back-testing and retail algos).
• Strategic acquisitions (Algowire, uTrade, proposed Silverleaf) to enhance tech capabilities and market presence.
• Focus on customer-centric models and innovative product development.
• Leveraging GIFT City IFSC and Singapore subsidiary for international growth.
• Building a strong brand based on “differentiation and trust.”

Control Effectiveness: The company’s consistent PAT CAGR (76% over 7 years, though this specific figure is for standalone PAT) and revenue growth suggest effective strategy execution to date. The Board’s composition is stated to support strategic initiatives.

Potential Financial Impact: Failure to execute strategically could lead to market share erosion, reduced profitability, and slower growth than projected. Successful execution can lead to sustained high growth and increased shareholder value.

Operational Risks #

• Severity: Medium to High
• Likelihood: Medium
• Trend: Increasing with scale, technological complexity, and international operations.

Analysis:

• System Latency & Reliability: As a technology-driven institution focusing on latency-based, high-tech trading solutions, system performance and uptime are critical. Any significant downtime or latency issues could lead to financial losses and reputational damage.
• Algorithmic Trading Execution: Reliance on algorithmic trading platforms (uTrade Algos, Algowire) means any flaws in algorithms, back-testing, or execution engines could lead to significant trading losses.
• Cybersecurity: With increasing digitization and online platforms (IBT for retail), the risk of cyber-attacks, data breaches, and system vulnerabilities is significant. The BRSR identifies “Data Security & Customer Privacy” as a risk.
• Human Capital & Talent Management: Expansion and technological advancements require skilled personnel. Attracting, training, and retaining talent in a competitive market is crucial. The BRSR lists “Human Capital and Talent Management” as an opportunity, implying it’s also a risk if not managed well. Employee turnover rate for permanent employees in FY24 was 37.08%.
• Business Continuity & Disaster Recovery: Dependence on technology necessitates robust BCP and DR plans (referenced as “DR Site” under strengths).
• Integration of Acquisitions: Integrating new entities like uTrade, Algowire, and potentially Silverleaf presents operational challenges in aligning systems, processes, and culture.

Mitigation Strategies:

• State-of-the-art risk management systems using decentralized tech, AI, Stress Test, Kill Switch, DR Site.
• Focus on low latency trading platforms.
• Internal controls and internal audit function reporting to the Audit Committee.
• Employee training programs (though BRSR indicates 0% of KMPs and Board received training on “Nature of Industry, Role and Responsibility, Business Model” in FY24, which seems contradictory to familiarization programs mentioned elsewhere).
• Policies on cyber security and data privacy.

Control Effectiveness: The company highlights “Deep tech expertise” and “Superior technology competence” as strengths. The internal audit function and Audit Committee oversight are in place. The Independent Auditor’s Report on Internal Financial Controls (Standalone & Consolidated) expressed an unmodified opinion on adequacy and operating effectiveness.

Potential Financial Impact: Operational failures could lead to direct financial losses, client compensation, regulatory penalties, and severe reputational damage impacting client trust and acquisition.

Financial Risks #

• Severity: High
• Likelihood: High (inherent in the industry)
• Trend: Stable to Increasing, given market volatility and business expansion.

Analysis:

• Market Volatility: The company’s revenues, particularly from broking and proprietary trading, are directly exposed to stock market volatility, which can impact trading volumes and the value of securities held. The MD&A notes the market’s resilience but also acknowledges inherent volatility.
• Credit Risk:
  • NBFC Operations: The ₹260+ Crore NBFC loan book (Share India Fincap) carries credit risk.
  • Client Funding: Providing margin funding to clients in the broking business exposes the company to default risk if clients cannot meet margin calls.
• Liquidity Risk: Ensuring sufficient liquidity to meet operational needs, margin requirements, and client settlements is crucial, especially during volatile market conditions.
• Interest Rate Risk: Changes in interest rates can affect the profitability of NBFC operations and the cost of borrowings.
• Currency Risk: Expansion into international markets (Singapore subsidiary, IFSC operations) and proprietary positions in currency derivatives expose the company to foreign exchange rate fluctuations. The BRSR states foreign exchange risk of proprietary positions is managed by hedging.
• Capital Adequacy: Maintaining adequate capital to support business growth, meet regulatory requirements, and absorb potential losses. The recent rights issue and warrant conversions aimed to strengthen the capital base.

Mitigation Strategies:

• Robust risk management systems for trading activities.
• Hedging foreign currency exposures for proprietary positions.
• Collecting upfront margins from customers and monitoring positions (Mark-to-Market).
• Diversified product portfolio to reduce reliance on a single revenue stream.
• Strong net worth (Consolidated: ₹17,471.76 Lacs as of March 31, 2024) and access to capital pool.
• Prudent asset-liability management.
• Credit ratings obtained (e.g., ACUITE A+/A1+, Infomerics IVR A1+) for bank facilities and commercial paper.

Control Effectiveness: The company emphasizes its “robust capital pool” and “state-of-the-art risk management system.” The Risk Management Committee oversees these aspects. The low Debt-Equity ratio (0.06) indicates a conservative leverage position.

Potential Financial Impact: Adverse market movements can significantly impact trading income and investment values. Credit defaults can lead to write-offs. Liquidity crunches can impair operational capability.

Compliance/Regulatory Risks #

• Severity: High
• Likelihood: Medium
• Trend: Increasing due to evolving regulatory landscape and international operations.

Analysis:

• The financial services industry is heavily regulated by SEBI, RBI, Stock Exchanges, etc. Non-compliance can lead to penalties, reputational damage, and license revocation.
• The MD&A notes that “Regulations set by SEBI govern the operations… Changes in regulations can affect brokerage business models and profitability.”
• Specific areas include SEBI (LODR), Insider Trading regulations, KYC/AML norms, data privacy laws, and regulations specific to NBFCs, insurance broking, and international jurisdictions (Singapore, IFSC).
• The company has a Code of Conduct

Strategic and Management Analysis #

Financial Analysis Report: Share India Securities Limited (FY 2023-24) #

Long-Term Strategic Goals and Progress #

Share India Securities Limited (SISL) articulates its long-term vision as becoming the “go-to’ fintech company for every Indian,” aiming to “democratize algo trading” with a mission of “Har Ghar Algo.” Core strategic pillars include shareholder wealth maximization, expansion of new products, and continuous improvement through innovation and technology, alongside international expansion.

Progress against these goals in FY 2023-24 is evidenced by:

• Financial Growth: Consolidated revenue from operations reached ₹1,482.81 crore (a 36.26% YoY increase), and Profit After Tax (PAT) grew by 28.76% to ₹425.76 crore. Standalone revenue from operations increased by 36.49%, with PAT up by 32.05%.
• Client Base Expansion: Broking clients increased by 22% YoY to 35,380.
• Technological Advancement: Launched the retail platform “IBT” and “uTrade Algos” for automated trading. Continued focus on AI-based trading platforms.
• Market Penetration: Achieved an average daily turnover exceeding ₹11,000 crore. Notable market shares include 3.7% in NSE Options (premium turnover) and over 10% in Commodity (NCDEX/MCX).
• International Footprint: Efforts to expand presence in GIFT City IFSC and Singapore are underway to strengthen market share in strategy-based trading overseas.
• Shareholder Value: Declared a total dividend of ₹9 per share (face value ₹10) for FY24 and implemented a 1:5 stock split, indicating a focus on shareholder returns and liquidity.
• Diversification: NBFC loan book stands at ₹260+ crore, with 69,389 clients. Merchant banking completed 12 SME IPOs.

Competitive Advantages and Market Positioning #

SISL’s competitive advantages are rooted in:

• Technological Prowess: A core strength is its technology-driven approach, emphasizing latency-based, high-tech trading solutions, algorithmic trading (via Algowire and uTrade), and AI-driven platforms. This positions SISL as a fintech leader.
• Diversified Portfolio: Offers a comprehensive suite of financial services including broking (equities, F&O, commodity, currency), depository services, NBFC operations, insurance broking, investment banking, wealth management, and research. This diversification mitigates segment-specific risks.
• Market Expertise and Agility: Nearly three decades of experience, coupled with rapid adoption of market changes and technologies.
• Robust Risk Management: Employs a state-of-the-art system featuring decentralized tech solutions, AI, Stress Test, Kill Switch, and DR Site.
• Operational Scalability and Cost-Effectiveness: Large-scale operations enable cost efficiencies, benefiting clients.
• Strong Capital Base: Consolidated net worth supports access to a large capital pool and reduces credit risks for institutional clients. As of March 31, 2024, consolidated equity attributable to owners stood at ₹17,490.39 Lacs.
• Pan-India and Growing International Presence: Physical offices in 15 states and expansion initiatives in GIFT City and Singapore.

SISL positions itself as a technology-first financial institution transforming the trading experience for both HNI/institutional and retail investors, particularly new-age investors, with a focus on democratizing algorithmic trading.

Innovation Initiatives and R&D Effectiveness #

Innovation is central to SISL’s strategy, driven by:

• Platform Development:
  • uTrade Algos: Launched for automated trading, expanding algo trading to a wider clientele.
  • IBT Platform: A new digitally-enabled online account opening and trading platform targeting retail clients.
  • Development of AI-based trading platforms using machine learning and research methodologies.
• Technological Integration: Acquired majority stakes in Algowire Trading Technologies and uTrade Solutions, enhancing its fintech capabilities. uTrade solutions are leveraged to enhance back-testing capabilities.
• Focus on Retail: Aiming to provide institutional-grade trading tools and simplified algo techniques to retail investors, including mobile access.

ESG Analysis #

Environmental Metrics and Targets #

Energy Consumption (FY 2023-24) #

• Total energy consumed from non-renewable sources: 5,734.49 GJ (electricity: 3,704.61 GJ; fuel: 2,029.88 GJ). This is an increase from 5,189.43 GJ in FY 2022-23.
• Energy consumption from renewable sources was reported as nil for both FY 2023-24 and FY 2022-23.
• Energy intensity per rupee of turnover was 0.00000513 GJ/lakh (standalone operations).
• No independent assessment/evaluation/assurance for energy consumption figures was indicated.

Water Management (FY 2023-24) #

• Total water withdrawal (from third-party sources): 43,499.96 kilolitres, an increase from 27,424.58 kilolitres in FY 2022-23. This includes bottled water and water used based on National Building Code 2016 calculations.
• Total water consumption: 43,499.96 kilolitres.
• Water intensity per rupee of turnover: 0.0003887 kilolitres/lakh (standalone).
• Total water discharged (sent to third-parties, no treatment): 43,499.96 kilolitres.
• The company states Zero Liquid Discharge treatment is not applicable due to the nature of its business (financial services).
• No independent assessment/evaluation/assurance for water figures was indicated.

Air Emissions #

• Data for NOx, SOx, Particulate Matter (PM), Persistent Organic Pollutants (POP), Volatile Organic Compounds (VOC), and Hazardous Air Pollutants (HAP) were reported as Not Applicable (NA).
• Greenhouse Gas (GHG) Emissions (Scope 1 and Scope 2): Data for total Scope 1 and Scope 2 emissions (in metric tonnes of CO2 equivalent) and intensity were reported as being under compilation for FY 2023-24 and FY 2022-23.
• The company states it does not have specific projects aimed at lowering GHG emissions but has taken efforts like pool buses for employees.

Waste Management (FY 2023-24) #

• Data for total waste generated (plastic, e-waste, bio-medical, construction & demolition, battery, radioactive, other hazardous, other non-hazardous including paper, dry, wet) and waste intensity were reported as being under compilation.
• The company’s waste management practices focus on e-waste and stationary trash (paper), disposed of by selling to third-party vendors. Digitization efforts aim to reduce paper use. Plastic use is minimized, and recycling is encouraged through registered vendors.

Environmental Targets #

• The BRSR mentions specific ESG goals in domains like waste management. However, explicit, quantified, time-bound environmental targets for energy, water, emissions, or waste reduction are not detailed in the provided sections.

Ecologically Sensitive Areas #

• The company reports that it does not have operations/offices in/around ecologically sensitive areas requiring environmental approvals/clearances.
• No Environmental Impact Assessments were reported as undertaken during the financial year.

Social Responsibility Programs #

CSR Initiatives (FY 2023-24) #

• Total CSR obligation: ₹3,61,65,088 (2% of average net profit).
• Total amount spent on CSR projects (other than ongoing): ₹3,61,70,714 (slightly exceeding the obligation).
• No amount was spent on administrative overheads or impact assessment for CSR.
• Key CSR project areas and investments:
  • Education and Skill Development:
    • Supporting The Learner International School (with Los Amigos Society): ₹1.15 Crore (700 beneficiaries).
    • Running four free education centers and two sub-centers (with Shatakshi Educational & Welfare Trust) in Gopal Ganj, Bihar: ₹10,00,000 (651 beneficiaries).
    • Remedial classes for female students (with Hindu Kanya College): ₹12,00,000 (100 beneficiaries).
    • Support for civil service aspirants (free coaching/hostel): ₹8,89,000 (up to 100 coaching, 35 hostel beneficiaries).
    • Online educational program for hearing-impaired children (with Orjet Foundation): ₹15.5 Lakh (71 beneficiaries).
    • Provision of school supplies and winter clothing (Project Siksha ki Kiran): ₹7.54 Lakh (750 beneficiaries).
  • Health and Well-being:
    • Acquiring a flow cytometer for Dr. Shroff’s Charity Eye Hospital: ₹24.78 Lakh.
    • Constructing an Operation Theater at Balak Ram Hospital (with Rotary Foundation): ₹18 Lakh.
    • Support for Ayushmaan Hospital & medical college (Gyan Chetna Educational Society): ₹1.5 Crore (250 lives benefited).
• Three capital assets were created/acquired through CSR funds (Modular OT equipment, Cytometer, Hospital Building).

Employee Well-being (BRSR - Principle 3) #

• Permanent Employees (3,718 total):
  • Health Insurance: 17.07% coverage (Male: 16.67%, Female: 18.94%).
  • Accident Insurance: 10.62% coverage (Male: 11.11%, Female: 8.19%).
  • Maternity Benefits: 100% coverage for eligible female employees (16.76% of total workforce).
  • Paternity Benefits: 100% coverage for eligible male employees (83.24% of total workforce).
  • Day Care Facilities: 100% coverage.
• Retirement Benefits: PF (28.59% employees covered), Gratuity (100% eligible employees covered), ESI (9.49% employees covered).
• Workplace Accessibility: Premises stated to be accessible to differently-abled employees (elevators, ramps). Equal Opportunity Policy as per Rights of Persons with Disabilities Act, 2016 is in place.
• Grievance Redressal: Mechanisms include discussions with superiors, HR Head, Grievance Redressal Policy, POSH Policy with ICC, and Whistle Blower Policy.
• Training: 100% of employees trained on health and safety measures; 1.61% on skill upgradation.
• Performance Reviews: 16.68% of employees had performance/career development reviews.

Human Rights (BRSR - Principle 5) #

• 100% of permanent employees received training on human rights issues/policies.
• Median remuneration for employees (other than BoD/KMP) was ₹3,75,000 for males and ₹4,58,960 for females. 97.20% of permanent employees paid more than minimum wage.
• No complaints reported regarding sexual harassment, discrimination, child labor, forced labor, wages, or other human rights issues in FY 2023-24.
• Human Rights Policy and Whistleblower Policy are in place.

Community Engagement (BRSR - Principle 8) #

• The company identifies stakeholders including local communities and engages with them through CSR activities, emails, physical meetings, website, and digital platforms.
• Focus on social upliftment, environmental protection, empowering rural youth, and enhancing healthcare in rural communities.

Governance Structure and Effectiveness #

Board Composition (as of March 31, 2024) #

• Total 18 Directors: 5 Executive (including Promoter Chairman & MD, Promoter CEO & WTD), 2 Non-Executive Non-Independent (Promoters), and 11 Independent Directors (including 2 Women Independent Directors).
• Compliance with Regulation 17 of Listing Regulations (at least 50% Independent Directors as Chairman is a Promoter Executive Director).
• Chairman & MD: Mr. Parveen Gupta. Joint MD: Mr. Kamlesh Vadilal Shah. CEO & WTD: Mr. Sachin Gupta.
• Independent Directors have provided declarations of independence and compliance with proficiency tests.

Board Committees #

• All mandatory committees are constituted.
  • Audit Committee: 10 members (Chairperson: Yogesh Lohiya, Independent). Met 10 times. Comprises more than two-thirds Independent Directors.
  • Nomination and Remuneration Committee (NRC): 5 members (Chairperson: Ananta Singh Raghuvanshi, Independent, appointed March 28, 2024; previously Sanjib Singh). Met 6 times.
  • Stakeholders Relationship Committee (SRC): 5 members (Chairperson: Subhash Chander Kalia, Independent, appointed March 28, 2024; previously Rajesh Gupta). Met 1 time. Resolved 18 investor complaints during the year, with nil pending.
  • Corporate Social Responsibility (CSR) Committee: 6 members (Chairperson: Sachin Gupta, Executive). Met 4 times.
  • Risk Management Committee (RMC): 6 members (Chairperson: Kamlesh Vadilal Shah, Executive, appointed March 28, 2024; previously Parveen Gupta). Met 2 times.

Board Effectiveness #

• Nine Board meetings held in FY 2023-24.
• Annual performance evaluation of the Board, its Committees, and individual Directors conducted.
• Familiarization programs for Independent Directors are conducted.
• Code of Conduct for Board Members and Senior Management Personnel is in place; compliance affirmed.
• Whistle Blower Policy/Vigil Mechanism established, with direct access to Audit Committee Chairman. No personnel denied access.
• Policy on Related Party Transactions is in place; all FY 2023-24 transactions were at arm’s length and in the ordinary course of business.
• Anti-corruption/anti-bribery policy in place; zero tolerance stated. No disciplinary actions for bribery/corruption against Directors/KMPs/employees reported. No complaints regarding conflict of interest for Directors/KMPs.
• Secretarial Audit conducted; no qualifications reported for the parent company. Material subsidiaries’ secretarial audits also annexed.

Director Changes (FY 2023-24 and subsequent) #

• Several resignations and appointments of Independent Directors occurred, with reasons cited as pre-occupation/prior commitments. Tenure completion for one Independent Director post FY end.

Sustainability Investments and ROI #

R&D and Capex for Environmental/Social Impact (BRSR - Principle 2) #

• For FY 2023-24 and FY 2022-23, R&D investments in specific technologies to improve environmental/social impacts were reported as 0%.
• Capex investments in such technologies were also reported as 0%.
• The company notes that relevance is largely restricted to IT capex due to its financial services nature.

Technological Advancements #

• The company emphasizes its technology-driven approach, with investments in uTrade Solutions and Algowire Trading Technologies to enhance trading platforms, algo trading capabilities, and AI-based solutions. These are strategic business investments aimed at improving customer experience, efficiency, and market reach rather than explicit sustainability ROI.

Financial Performance Analysis: Share India Securities Limited (FY 2023-24) #

Key Financial Highlights #

Share India Securities Limited (SISL) reported strong financial results for FY 2023-24:

• Consolidated Revenue: ₹1,482.81 crore (36.26% YoY growth)
• Consolidated PAT: ₹425.76 crore (28.76% YoY growth)
• Standalone Revenue: ₹1,119.01 crore (36.49% YoY growth)
• Standalone PAT: ₹300.32 crore (32.05% YoY growth)
• Client Base: Expanded by 22% YoY to 35,380 clients
• Average Daily Turnover: Exceeded ₹11,000 crore
• NBFC Loan Book: Over ₹260 crore, serving 69,389 clients
• PAT CAGR (7 years): 76%

Segment-Wise Market Share #

• NSE - Cash Market (CM): 1.3%
• NSE - Futures: 2.5%
• NSE - Options (Premium Turnover): 3.7%
• NSE - Currency Futures: 6.3%
• NSE - Currency Options: 10.6%
• BSE - CM: 1.0%
• Commodity (NCDEX/MCX): >10%

Strategic Initiatives and Growth Drivers #

SISL’s growth strategy focuses on four key pillars:

• Retail Expansion: Developing AI-based trading platforms, enhancing uTrade solutions, and expanding the uTrade Algos platform.
• Algo Trading Penetration: Maximizing retail client engagement by offering simplified algo techniques and enabling automated trading through uTrade Algos (vision of ‘Har Ghar Algo’).
• International Expansion: Utilizing technology expertise to enter global markets, focusing on GIFT City IFSC and leveraging the Singapore-based subsidiary.
• Diversification: Expanding services across mutual fund advisory, insurance distribution, institutional business operations, merchant banking, and NBFC operations.

The proposed acquisition of Silverleaf Capital Services is expected to enhance competitiveness.

Capital Structure and Shareholder Returns #

• Rights Issue & Warrants: Funds raised through rights issue and warrant conversions utilized as specified.
• Employee Stock Option Schemes (ESOS): “Share India ESOS 2022” and “Share India ESOS II” in place.
• Stock Split: 1:5 stock split (₹10 FV to ₹2 FV) effective June 27, 2024. Authorized Share Capital is now ₹50 crore.
• Dividend: For FY 2023-24, the company paid three interim dividends.

Audit and Compliance Analysis #

Auditor’s Opinion and Qualifications #

The Statutory Auditors, M/s. SVP & Associates, Chartered Accountants, issued an unmodified opinion on the standalone and consolidated financial statements of Share India Securities Limited for the financial year ended March 31, 2024. The audit reports state that the financial statements give a true and fair view in conformity with the Indian Accounting Standards (Ind AS) and other accounting principles generally accepted in India. No qualifications, adverse remarks, or disclaimers were made in either the standalone or consolidated auditor’s reports.

The consolidated financial statements include audited financial statements of nine subsidiaries and unaudited financial statements of one subsidiary. The auditor’s opinion on the consolidated financial statements, in so far as it relates to the amounts and disclosures included in respect of these subsidiaries audited by other auditors, is based solely on the reports of such other auditors. The unaudited subsidiary was deemed not material to the Group.

Key Accounting Policies #

Share India Securities Limited has prepared its financial statements in accordance with Indian Accounting Standards (Ind AS). Key accounting policies include:

• Basis of Preparation: Financial statements are prepared on an accrual and historical cost basis, except for certain financial instruments, securities held for trading, share-based payments, derivative financial instruments, and defined benefit plans, which are measured at fair value or as per actuarial valuation.
• Revenue Recognition: Revenue from contracts with customers is recognized based on a five-step model under Ind AS 115. Brokerage income is recognized on a trade date basis. Interest income is recognized on a time proportion basis. Dividend income is recognized when the right to receive payment is established. Proprietary trading income is recognized as per Ind AS 109 when the trade is executed.
• Financial Instruments (Ind AS 109): Financial assets are classified at amortized cost, Fair Value Through Other Comprehensive Income (FVOCI), or Fair Value Through Profit or Loss (FVPL). Financial liabilities are generally measured at amortized cost, except for derivatives and those designated at FVPL. Expected Credit Losses (ECL) are recognized for financial assets not at FVPL.
• Property, Plant and Equipment (PPE): Stated at cost less accumulated depreciation. Depreciation is calculated using the diminishing balance method over estimated useful lives prescribed under Schedule II to the Companies Act, 2013 (one subsidiary uses SLM).
• Intangible Assets: Measured at cost less accumulated amortization and impairment. Software is typically amortized over 3-5 years, and other intangibles over 5-10 years using the diminishing balance method (two subsidiaries use SLM for depreciation/amortization). Intangible assets under development are capitalized if criteria are met.
• Leases (Ind AS 116): Right-of-use (ROU) assets and lease liabilities are recognized for leases. ROU assets are depreciated on a straight-line basis. Short-term leases and leases of low-value assets are expensed on a straight-line basis.
• Impairment of Non-Financial Assets: Assessed at each reporting date for indicators of impairment.
• Employee Benefits: Short-term benefits are recognized as an expense. Defined contribution plan contributions are charged to profit or loss. Defined benefit plans (gratuity) are accounted for using the projected unit credit method, with actuarial gains/losses recognized in OCI.
• Share-Based Payments (Ind AS 102): Equity-settled share-based payments are measured at fair value on the grant date and expensed over the vesting period.
• Consolidation (for Consolidated Financial Statements): Subsidiaries are fully consolidated. Associates are accounted for using the equity method. Intercompany transactions and balances are eliminated. Non-controlling interests are presented separately.

No significant changes in accounting policies were highlighted for the financial year 2023-24. The company has complied with applicable Ind AS standards issued and effective as of March 31, 2024.

Internal Control Effectiveness #

The Independent Auditor’s Report on Internal Financial Controls under Section 143(3)(i) of the Companies Act, 2013, for both standalone and consolidated financial statements, states that the Company has, in all material respects, an adequate internal financial control system over financial reporting and such internal financial controls were operating effectively as at March 31, 2024. This opinion is based on the audit conducted in accordance with the Guidance Note on Audit of Internal Financial Controls Over Financial Reporting issued by the ICAI. For consolidated statements, this opinion also considers the reports of other auditors for subsidiary companies incorporated in India.

The Board’s Report and Management Discussion & Analysis also affirm the adequacy and operating effectiveness of the Company’s internal control systems, stating they are commensurate with its size, scale, and complexity. The Audit Committee actively reviews these systems.

Regulatory Compliance Status #

The Directors’ Report, Report on Corporate Governance, and Secretarial Audit Reports indicate a general state of compliance with applicable laws and regulations.

• The Company has affirmed compliance with Secretarial Standards (SS-1 and SS-2).
• The Secretarial Audit Report for the Company (Share India Securities Limited) for FY 2023-24 does not contain any qualifications, observations, or adverse remarks. Similar clean reports were issued for material subsidiaries Share India AlgoPlus Private Limited and Share India Fincap Private Limited.
• The Corporate Governance report states compliance with mandatory requirements of SEBI Listing Regulations.
• The Practicing Company Secretary’s Certificate on Corporate Governance confirms compliance with conditions of Corporate Governance as stipulated in Listing Regulations.
• The Certificate Regarding Disqualification of Directors confirms no director is debarred or disqualified.
• The Report on Corporate Governance notes that during the ordinary course of business, SEBI/exchange(s) have levied minor penalties, which do not have any material impact on the operations of the Company.
• The Board’s Report confirms no application has been made or proceedings are pending under the Insolvency and Bankruptcy Code, 2016 against the Company, and no one-time settlement has been entered into with any Bank or Financial Institution.

Legal Proceedings and Potential Impact #

As per the Notes to the Standalone Financial Statements (Note 41) and Consolidated Financial Statements (Note 43):

• Guarantees:
  • The Company has given corporate guarantees for financial assistance taken by its wholly-owned subsidiary, Share India Algoplus Private Limited, amounting to ₹19,800 Lacs (Standalone) as of March 31, 2024.
  • Bank guarantees have been provided aggregating to ₹1,52,775.00 Lacs (Standalone) and ₹1,59,722.00 Lacs (Consolidated) for meeting margin requirements and security deposits with various exchanges (NSE Clearing, BSE, ICCL, MCX Clearing, NCCL). These are secured by pledged fixed deposits and properties.
• Income Tax Matters:
  • Standalone: Outstanding demands include ₹9.14 Lacs (AY 2008-09), ₹2.68 Lacs (AY 2015-16), and ₹78.41 Lacs (AY 2013-14, appeal filed with CIT(Appeals) and pending).
  • Consolidated: In addition to the above, demands include ₹16.78 Lacs (AY 2017-18, appeal filed with CIT(Appeals)), ₹36.10 Lacs (AY 2021-22), and ₹4.76 Lacs (AY 2022-23 & 2018-19).
  • The Company/Group is contesting these demands and believes its position will likely be upheld, hence no provision has been accrued. Management believes the ultimate outcome will not have a material adverse effect.
• No other significant and material orders passed by Regulators or Courts impacting the going concern status and future operations were reported.

The potential impact of these income tax matters, if adverse, could lead to cash outflows. However, management’s assessment is that no material adverse effect is expected. The guarantees represent contingent liabilities that would crystallize if the primary obligors default.

Related Party Transactions #

The Company has transactions with related parties including subsidiaries, Key Management Personnel (KMP), relatives of KMP, and entities where KMP and their relatives have significant influence.

• Policy: All related party transactions during FY 2023-24 were on an arm’s length basis and in the ordinary course of business. The Company has a related party transaction policy.
• Key Transactions (Standalone - Note 53, Consolidated - Note 54 provide detailed breakdowns; summary from Board’s report and general nature):
  • Subsidiaries: Transactions include loans given/taken and repaid, brokerage received, interest received/paid, corporate guarantee charges, license fees, investment made, and donations for CSR.
  • KMP & Relatives: Remuneration, rent paid/received, brokerage received, director sitting fees, dividend paid, interest paid/received, proceeds from rights shares/warrants, and disposal/acquisition of shares.
  • Entities with Significant Influence: Brokerage received, dividend paid, manpower charges, rent, interest paid/received, loans taken/repaid, and corporate guarantee charges.
• Standalone Outstanding Balances (as of March 31, 2024 - Note 53):
  • Loan to wholly-owned foreign subsidiary Share India Global Pte Ltd: ₹668.88 Lacs (related to ordinary business for trading in securities/derivatives).
  • Investments in subsidiaries: ₹4,708.70 Lacs (at cost).
  • Trade Payables to related parties: ₹508.83 Lacs.
  • Loan taken from Share India Fincap Private Limited: ₹1,969.43 Lacs.
• Consolidated Outstanding Balances (as of March 31, 2024 - Note 54):
  • Loans taken from related parties: ₹3,003.69 Lacs (KMP & relatives), ₹6,535.45 Lacs (Entities with significant influence).
  • Loans given to related parties: ₹43,857.99 Lacs (Entities with significant influence, primarily for business operations).

All transactions are reported as being conducted in the ordinary course of business