Monarch Networth Capital Ltd

BUILDING A STEADY AND STABLE GROWTH TRAJECTORY

We remain optimistic about the growth momentum of our business verticals while continuing our commitment towards strengthening our core capabilities – people, technology and products.

Manju Bafna

Chairman & Whole time Director – MNCL

Dear Stakeholders,

I am delighted to share with you MNCL's Annual Report for FY23. During the year, we have focussed on strengthening our key pillars of the business, viz., technology, people, and extensive research-backed product portfolio to generate greater brand visibility and create lasting value for all our stakeholders.

FY23 was a year of mixed outcomes. The year began with global situations like the ongoing Russia-Ukraine war exerting supply chain challenges worldwide and rising inflationary pressure resulting in the slowing down of the global economy. However, the situation began to slowly improve as inflation moderated mainly due to the normalisation of activities on the easing of supply-side bottlenecks.

The trade front also generated varied outcomes across sectors. The Indian Rupee depreciated by 7.8% (one of the highest figures for a year) Vs the USD in FY23 Vs 3.0% in FY22 mainly due to foreign selling of Indian stocks. On a year-on-year (y-o-y) basis, non-food bank credit registered a growth of 15.4% in March 2023 compared to 9.7% a year ago. Real credit growth would have been higher if inflation had lowered during this period. Growth was seen to be uneven with credit to industry slowing to 5.7% against 7.5% witnessed at the end of FY22. However, retail credit rose significantly to 20.6% in FY23 Vs. 12.6% in FY22 backed by robust consumption though there was a lag in investments.

Despite such challenges, the Indian economy displayed strong momentum and stabilised with a GDP growth of 7% in FY23. The main propellant for the economic rebound has been government capex and domestic consumption, though the private sector has stayed on the sidelines due to the Covid-19 impact and the well-recognised twin balance sheet problem.

The market activity took a meaningful breather in FY23 compared to the intense FY22. The benchmark Nifty 50 went from 17,670 on April 1, 2022 to 17,360 on March 31, 2023, declining by a modest 1.8% on a point-to-point basis despite treading a tumultuous journey. BSE cash and derivatives (ex-commodity) turnover slipped by 23% and 44% respectively. For the NSE, cash turnover declined by 20% but derivatives were up by 17%. Foreign portfolio investment (FPIs) net sold stocks worth

1,98,639 cr, whereas domestic institutional investment (DIIs) bought net 2,55,236 cr (cash market only) lending stability to the markets even as FPIs pulled out of emerging markets in the wake of geopolitical conflicts.

The investment banking sector was distinctly muted in FY23 compared to FY22. The IPO market raised approximately

15,600 cr in FY23 Vs. 1,46,145 cr in FY22. Publicly disclosed M&A deals went from 57,904 cr in

FY22 to 22,440 cr in FY23 while disclosed private equity deals stood at 70,150 cr in FY23 Vs 72,540 cr in FY22.

The Alternative Investment Fund (AIF) industry continued its upward growth trajectory in FY23. Within Category II, the largest of the three, actual investments made went up from

1,99,452 cr in FY22 to 2,42,915 cr in FY23. Under Category III where MNCL is present, figures stood at 60,809 cr and 71,055 cr respectively. Offering better, cost-effective and focussed solutions for high-net worth investors, the AIF sector has been growing in significance.

AUMs of mutual funds (MF) and portfolio management services (PMS) also grew in FY23. MF AUM increased from 37,56,683 cr in FY22 to 43,20,468 cr in

FY23, whereas PMS AUM grew from 24,19,270 cr in FY22 to 27,79,604 cr in FY23 though at a slower pace compared to AIF.

Backed by our core capabilities and diversification strategy, we continued to generate stable cashflows during the year. Your Company's consolidated total revenue from operations stood at 155.9 cr in FY23 over 144.5 cr reported in FY22.

We reported an exceptional growth of 175% in our investment banking segment across all business parameters of revenue, profitability and number of deals on a y-o-y basis at 22.7 cr Vs

8.3 cr reported in FY22. The year also saw the investment banking division's first ever mainboard IPO launch of Dharmaj Crop Guard Limited witnessing a whopping total subscription of over 37 times. We also acted as sole advisors for our first M&A transaction when Borosil Limited acquired Goel Scientific Glass Works Limited.

Our wealth and third party products distribution saw robust growth of 140%.

2,55,236 cr

Net stock bought by Domestic Institutional investment in FY23

15,600 cr

Amount raised by IPO market in FY23

During FY23, the market mood, in general, was sombre which led to a decline in retail volumes. Briefly, the markets also saw a meaningful reduction in their active client base. After a strong FY22 for our broking business, FY23 saw our revenues under the Fees & Commission Income head reducing to 85 cr from 92.8 cr in FY22.

On the other hand, our cost increased primarily on account of employee benefits that led to profits after tax (after exceptional items but before other comprehensive income) declining to 43 cr over 54 cr generated during the previous year.

We also faced two major challenges related to talent and compliance. The market for talent continued to be tight during the year as financial services companies (including commercial banks) performed very well attracting a major chunk of the talent. To address this issue, we amped up our talent acquisition function within HR and efficiently catered to more open positions.

By diversifying and setting up new business lines, we have stabilised our revenue streams and reduced risks while tapping new business opportunities. We continued to invest in the latest technology, strengthen our team capabilities and increase our social media platform to enable more stable and robust growth for the Company.

We have also closed our first AIF – MNCL Capital Compounder Fund – in May 2023, ahead of schedule and returned money to investors, after delivering a CAGR return of 23.5% since its inception in October 2020 helping reinforce our investor trust. We are in the process of launching our third Category III AIF soon aspiring to raise 500 cr

- 1,000 cr for that fund.

The pivot of our organisation is research, and continued improvements in this front during the year have given us and our stakeholders significantly greater market visibility. Our fundamental and technical research, the key USP (for both retail and institutional clientele) has played a vital role in garnering clients' trust and attention while generating superior returns (in many cases alpha) as the market normalised.

Since its initiation in 2019, our research calls have generated 35% XIRR returns outperforming the broader markets handsomely.

To improve our operational efficiency, we have appointed the well-known consulting brand – Deloitte, to study the processes adopted across businesses, identify gaps, and provide suggestions for effective functioning.

For enabling digital transformation, we have made significant investments in technology, revolutionising our digital platforms and transforming the way we engage with our clients. We are about to launch our mobile trading app ‘RE ' directed to offer a seamless trading experience to a larger customer base.

Our efforts to build strong customer relationships is an ongoing process. Also, we continued to introduce innovative ways to strengthen our brand recall during the year while forging long-lasting customer connections. We continue to engage our employees with our robust HR initiatives for enhancing their overall well-being while improving workplace productivity and retention.

Looking ahead, we remain optimistic about the growth momentum of our business verticals while continuing our commitment towards strengthening our core capabilities – people, technology and products. Staying at the forefront of technological advancements and innovation, we will also leverage our research development front to further strengthen our brand recall and enhance customer experience. We are working on a very strong pipeline of investment banking deals which will augment our business to new heights.

We have also closed our first AIF – MNCL Capital Compounder Fund – in May 2023, ahead of schedule and returned money to investors, after delivering a CAGR return of 23.5% since its inception in October 2020 helping reinforce our investor trust. We are in the process of launching our third Category III AIF soon aspiring to raise 500 cr - 1,000 cr for that fund.

In conclusion, I would like to express my gratitude towards all our stakeholders for their unwavering trust in our capabilities.

With your continued support, we look forward to creating more milestones while achieving stable growth and long-term value for all our stakeholders.

Manju Bafna

Chairman & Whole time Director

– MNCL