The year 2019-20 has been a remarkable one for us at Emkay. As we celebrate25 glorious and uninterrupted years in business there is a sense of highspirit and pride at what we have achieved so far. Adopting the best industrypractices has helped us keep in sync with the change all this while. Ourclients are always at the core of everything we do. This approach is the reasonbehind the excellence of our journey despite various headwinds at differentintervals. Together these factors have helped us evolve and mature whilecreating value for all the key stakeholders: employees investors and society.
Over the last two decades the Indian capital markets have witnessed varieddevelopments right from dematerialisation and screen-based trading to thegrowth of derivative market mutual funds and Exchange Traded
Funds (ETF). Earlier in 1990's stock market was surrounded by a lot ofstigma as most Indians associated it with distrust and risk. This beliefgradually changed with time and instead managed to evince a tremendous amountof interest amongst general public. This change was because of the growingknowledge and awareness about the financial market.
It was only a matter of time before retail investors from both metropolitanand tier-II and III cities started contributing to the stock market's successstory. Today people from a wider age bracket right from young collegeenthusiasts to middle class salaried people are seen channelling a part oftheir household savings into the stock market.
Driven by Experience
Having worked in other brokerages for over 7-8 years we gained an insightof observing and understanding the industry closely. Making this work to ouradvantage in the mid-90s after the era of Liberalisation Privatisation andGlobalisation (LPG) we embarked on our journey with a 20-member team in a 300square feet office. What started out as a standalone brokerage house has overthe years grown into a full-fledged and all round services company with theability to offer a gamut of services across equity research/broking commodityand currency advisory and broking equity capital market and merchant bankingdebt advisory asset management wealth management and succession and estateplanning to training of budding and seasoned investors.
Principles of Growth Then Now and for the Future:
Client always comes first
Honest communications with all stakeholders
Never cut corners
Always think and act long term
Constantly keep reinvesting earnings in the business
Change is a constant keep reinventing yourself and the firm to stayrelevant
Always be compliant with all laws and regulatory requirements
It takes years to earn trust of clients/employees/ regulators. Always workon maintaining that trust and transparency
Our successful launch of the Rs. 75 crore IPO and the firm's listing onBSE/NSE in 2006 created waves and made it to the news headlines. A listingbrings its own sense of respect and responsibility. It also gave us theresources to expand the business. We commenced commodity broking in 2006followed by Emkay Investment Managers in 2008 to drive our asset managementbusiness and Investment Banking division which has attracted many EquityCapital Markets (ECM) and merchant banking transactions over the years. In2012 we commenced currency broking. In the same year we acquired our corporateoffice a 25000 square feet state of the art space that was truly reflectiveof the cutting-edge solutions we deliver to our clients. In 2017 we inked apact with DBS Vickers Singapore for co-branding and distribution of equityresearch to the latter's global clients.
The remarkable journey continued with setting up of the wealth managementvertical in 2018. Further with the acquisition of 27 per cent stake inFinlearn Edutech
Pvt. Limited we forayed into the business of Trading &
Investment education. All this progress resulted in the total income of Rs.119.72 crore in 2019-20 from Rs. 4.58 crore in 1998-99. During the same periodour net worth increased from Rs. 6.57 crore to Rs. 120.27 crore. Today wecompete on a larger scale through our strong network of 173 retail outletsacross the country.
As it is rightly said achievements always give you the energy to acceleratefurther. But emerging out of bad experiences and challenging scenarios makesyou stronger and resilient. Over the past 25 years we have been throughseveral challenging encounters. During the 2008 Lehman crisis we had todownsize our operations to restrict losses. Then came the major error trade of5th October 2012 leading to a case of legal battle. We took a hit of Rs. 52crore on the chin and were still up and running without impacting any of ourfinancial or other obligations. Our efforts and commitment were recognised byall the stakeholders
. The foundation of the Company was strong and this event proved beyonddoubt that the trust and respect the
Company had earned over the years was impeccable. We also overcame theinstance of increasing ‘shadow banking' causing a ripple effect acrossthe industry and economy.
Realising this brink we reinforced our internal control and risk managementinfrastructure. We also further reviewed our strategies to sharpen our focustowards the Company's vision.
On the economic frontier India witnessed a GDP growth rate of 4.2 per centin 2019-20 as compared to 6.1 per cent in 2018-19. This deceleration was mainlydue to subdued consumption triggered by job stress meagre wage hike anddistress in rural India resulting in weak demand thereby shrinking theprivate and public investment in the country while softening the supply. Toaddress this the Government announced a slew of measures to boost economicgrowth.
Among these were liberalisation of FDI Corporate Income and GST tax ratecuts and increase in Minimum Support Price (MSP) for the farmers. RBI too wasseen stepping in at various intervals to inject liquidity into the system as itslashed repo rate five times in 2019 and purchased
Government bonds. These actions were anticipated to foster some greenshoots. But then came March 2020 with the public health scare in the form ofCovid-19. The pandemic altered the country's growth outlook in no time.
This alteration can largely be attributed to the nationwide lockdown whichbrought the whole ‘Just in time' supply system to a screeching halt. TheGovernment then decided to step in to provide some relief to the nation byannouncing a handsome fiscal stimulus package.
A prevailing weak economy and a polarised equity market saw a select fewstocks outperforming and hence resulted into a general investor apathy. Thelarge cap indices touched new all-time highs during the year while the smallcap/mid cap indices delivered negative returns. By the end of the financialyear the Sensex and Nifty indices witnessed a downfall in the range of 22-26per cent as compared to the previous year's in the light of Covid-19. Withthis overseas investors started divesting from the emerging markets to moveback to the safety of Dollar-backed assets. Even the domestic mutual fundindustry saw decrease in the net inflows as compared to the year earlier.However on the positive side there was an increase in the number of Demataccounts and IPO fund raised. This indicated a positive sign from bothinstitutional and non-institutional investors. With every other crash in theIndian stock market like the Asian crisis Tech bubble and Lehman crisis ourindices bounced back to grow stronger. Going forward we are expecting similarresults in the case with Covid-19 as well.
Committed to vision
We acquired 27 per cent stake in FinLearn Edutech wherein customers areeducated in trading and investment through physical classroom and onlineplatform. This acquisition offers a tremendous opportunity as an increasingnumber of people from non-financial background are seen taking interest inthe stock market. Therefore we offer our users the most affordable andeffective learning methodologies and resources so they can master the nuancesof the stock market. We want our customers to move beyond theoretical conceptand apply those skills in real market scenarios.
Our goal is to primarily facilitate a sense of self-amongst our customersin the longer term by way of tools platforms and continuous flow ofeducation. Adding to this under the current Covid-19 landscape a sudden shifttowards online learning has been seen. With the growing digital adoption weare sure online learning will persist even post-pandemic.
2. Catalysing change driving progress
In terms of changes we aspire to expand in every corner of the organisationfrom technological infrastructure physical presence to engaging ourstakeholders through digital presence: During the year we opened new wealthoffice branches at key strategic locations like New Delhi Bengaluru Chennaiand Hyderabad. The team was further strengthened with the addition of rightresources across locations. Technology has been our greatest assistance on ourpath of progress through change. For this we upgraded our core firewall formaximum throughput. We also moved to NTT Netmagic at our administrative officefor better stability and performance of internet-based trading and otherinternet-based applications. At the same time several initiatives were takento strengthen the cyber security to safeguard our end-users.
Moreover through our virtual presence websites and social mediaplatforms we were able to actively engage with our stakeholders. Every now andthen our spokespersons share insights on economy sectors and stocks on oursocial media channels while our websites are updated with the operational andfinancial highlights. Scan the below QR code to access our YouTube channel:
Business Highlights: Built on Trust
Our team of 36 analyst did a research coverage of 347 stocks in 18 sectors
Our institutional research team won significant awards and accolades in therecently concluded Asiamoney Polls
Our institutional equities' team touched a new milestone with the highestsingle day cash equities volume of Rs. 1200 crore in September 2019
Asset management: Launched two new products ‘Emkay's 12 and GEMS'under ‘Smart alpha approach'
Our flagship annual conference ‘Emkay Confluence' featured 2000meetings across 2 days with 100 corporates and over 400 investors
Launched Emkay Wealth mobile app to improve clients' transaction andportfolio viewing experience Continued growth trajectory in currency segmentwith 63 per cent and 81 per cent growth in revenue and volumes respectively.Commodity business grew by 21 per cent
We have never seen or experienced any crisis like this before. And this isexactly what makes it challenging to determine how each one of our businessverticals will pan out. Given the scenario we quickly adapted the arrangementof working from home (WFH) in a secured manner by strengthening our technologysetup. We must mention here that in the course of our 25 years' experience wehave faced several headwinds and yet Covid-19 is one of its kind. But despitethe uncertainty looming over Covid-19 pandemic we are certain of navigatingthrough this crisis using our expertise and experience. We are hopeful ofbringing prosperity to our shareholders and customers while adding even morereliability to our business model. Our steady commitment towards customers willfurther help us improve and move ahead seamlessly in the years to come.
In the near term financial sector is expected to remain under pressure dueto the weak investor sentiments caused by Covid-19. But we are a country withvast opportunities and for years to come the economy will gradually startunlocking its real potential. With the companies now trading at attractivevaluation a plethora of opportunities for DII and
FII to invest in the market have also cropped up. Similarly the currentsituation may also unleash a wave of merger and acquisition activities goingforward. Being a diversified financial services Company we take an active rolein catering the needs of the institutional and non-institutional clients in anefficient way and guiding them in the right direction.
We wish to extend our appreciation to the Board Members.
Over the years they have been extremely supportive and understanding of allbusiness initiatives. They have shared their expert opinions and guided theCompany well through its thick and thin. We would like to record ourappreciation of all previous and current Board Members for their continuingadvice.
We would also like to acknowledge our Team for their continued efforts anddedication. All this would not have been possible without many team members whojoined in this journey at various points of time. We appreciate them for thefaith and belief they had in the organisation's vision principles and theapproach. We have always believed in a collaborative and partnership-basedgrowth model. Several of our team members have enjoyed the fruits of ESOPsvested in them over the years. As the Company continues its growth journeyseveral employees will further look forward to the vesting of the ESOPs grantedto them. We would like to take this opportunity to thank each and every teammember who has contributed to Emkay over the years. We wish all of them thebest at Emkay and in their future endeavours. Finally we wish to express ourgratitude for the undeterred support and patience shown by our shareholders. Wewish to continue with the same determination and focus to create new landmarksand success stories for the next 25!
Krishna Kumar Karwa