Dear Sheru,

Trust you and your family are safe and in good health. The COVID-19 pandemic scene continues to get better, with the number of new cases in India declining steadily. The COVID-19 scene is improving in Sharekhan too, even as I write this column, there is only one positive case in the company and I wish the Sheru a speedy recovery. With the economy on the mend, we are also in an unlockdown mode, having decided to open up in a phased manner. We continue to monitor the situation closely and will inform you of the next phase of the unlockdown.

Our business performance in the last month was marred by the outbreak of a war between Russia and Ukraine which significantly weakened market sentiment. There was panic and heavy selling in the stock market but there was some positive news too on both the economic and the business front. Come let us take a look.

• The RBI and the Economic Survey estimate real GDP to grow at 7.8% and 8.0-8.5% in FY2022-23 respectively.
• The economic growth estimates for the next fiscal are higher than the pre-COVID 15-year average of 7.3%, according to Centre for Monitoring Indian Economy.
• Sharekhan turned 22 on February 8, 2022.
• The company’s customer base crossed 25 lakh customers on February 11, 2022.
• The customer base also expanded by 5,000 MoM in February this year.
• Our F&O, commodity and currency turnover increased by 6%, 7% and 15% MoM respectively last month.
• More than 10,000 branch-mapped broking clients were reactivated as part of FFP in February this year.
• In the MF distribution business, we ended February with a positive net inflow of Rs.37 crore in spite of a weak investment environment.
• Our SIP inflows also increased during the month, crossing the Rs.60-crore mark.
• We launched the three-month SIP ka Sher contest for the front-line staff to boost our SIP business.
• LAS disbursements surged by 73% MoM on the back of two good ESOP deals in February.
• Three new senior professionals joined Sharekhan in leadership roles in February this year.
• The number of COVID-19 cases in India has declined steadily in the past few weeks.
• The country’s active caseload constitutes 0.1% of total COVID-19 cases.
• Sharekhan is opening up and returning to work from office in a phased manner, so we will see each other soon. ☺

In February 2022, the Indian equity market understandingly fell by over 3% due to the Russia-Ukraine conflict. Reflecting weak market sentiments, our daily average revenue declined by 9% month on month (MoM) in February this year. Daily client activity dropped by 14% during the month as investor sentiment took a hit. We lost market share in all three segments: down 1%, 3% and 12% in the cash, futures & options (F&O) and commodity segments respectively. The cash retail market turnover declined by 14% MoM whereas the overall turnover also fell by 15% MoM in the same period, resulting in the declining market share.

On the other hand, our F&O, commodity and currency turnovers showed an uptrend and grew by 6%, 7% and 15% MoM respectively in the same period. What’s more, our new client additions also increased by a good 20% MoM and we crossed the milestone of 25,00,000 customers on February 11, 2022. Good work, Sherus! Keep it up! At present, the forecast for India’s economic growth is encouraging with the Reserve Bank of India (RBI) and Economic Survey estimating real gross domestic product (GDP) to grow at 7.8% and 8.0-8.5% in FY2022-23 respectively. That is higher than the pre-COVID 15-year average of 7.3%, according to Centre for Monitoring Indian Economy. Good economic growth prospects, no doubt, augur well for our business and I am confident of our ability to remain on a growth path, occasional blips apart.

The Front Foot Programme (FFP) had another positive growth month in February this year. The FFP facilitated the reactivation of almost 10.1K branch-mapped clients during the month. What’s more, the efforts of the Business Partners resulted in the reactivation of another 4.5K clients in the same period. The trailing 12-month (TTM) active client count stood at 765.4K in the same month. The trend remains that reactivations are also good for revenue growth. Close to 4.5% of the clients who got reactivated in February have also traded in F&O already. Also, a large proportion of the reactivations have continued beyond just one or two transactions. Almost 42% of the reactivations that took place last month have conducted three or more transactions already. My best wishes to the entire front-line team as well as our Business Partners for the continued success.

A big congratulations to all Sherus on the milestone of crossing 2.5 million customers on February 11 this year. In the same month we also happened to celebrate Sharekhan’s 22nd anniversary! Both are big achievements and your hard work, loyalty and commitment made them possible. Interestingly, February appears to be an auspicious month for us. It was on February 8, 2020 that we had acquired our two millionth customer! We have come a long way from our 2001 dream of achieving one million customers (the dream was, incidentally, realised in 2011). Given that only a tiny part of India’s huge population invests in the equity market, our customer base has the potential to grow tremendously. So here’s looking forward to the three millionth customer soon and whatever good things the February of 2023 may bring!

Sharekhan’s mutual fund (MF) assets under management (AUM) declined by approximately Rs.200 crore MoM to end at Rs.5,865 crore during February 2022. This was largely due to negative investor sentiment on weak global cues, poor equity market performance and market volatility. Equity markets saw a decline across market capitalisation, ranging from a 3.15% fall in the large-cap stocks to an 11.44% plunge in the small-cap stocks compared with the previous month. In spite of a weak investment environment, our front-line was able to collect Rs.102 crore in gross sales and the month ended with a positive net inflow of Rs.37 crore. Inflow into Systematic Investment Plans (SIPs) also increased by Rs.88 lakh MoM during the month, crossing the Rs.60-crore mark, bucking the negative industry trend. We announced SIP ka Sher contest for the staff of the Sales and the Onboarding, Super Investor, Super Trader and Retail teams to boost our SIP inflows by helping investors build wealth through the recurring form of investment. All the best to the contestants, may the force be with you!

Our Exchange Margin Funding (EMF) business contracted by about 9% MoM in February 2022 due to the geo-political tensions which dampened investor sentiment. The EMF book stood at Rs.892 crore at the end of the second month of the year. Our Branch Network contributed 64% of the total funding, with the Business Partners accounting for the remaining 36%. The contraction should not worry us too much as EMF is a useful leverage tool that allows our clients to earn more profits with less funds. The performance will recover once the Russia-Ukraine crisis settles down and market sentiment recovers.

Our Loan Against Securities (LAS) disbursements increased by a whopping 73% MoM in February this year as our disbursements for Employee Stock Option Plans (ESOPs) touched an all-time high during the month. We cracked a new relationship with LatentView Analytics for funding the ESOPs of the company’s employees and disbursed about Rs.50 crore to them in just one month. We also disbursed about another Rs.50 crore to HDFC to help their employees exercise their ESOPs. The deals were possible due to excellent customer service and effective marketing. Our total LAS disbursements stood at Rs.292.26 crore at the end of the month. In terms of channels, ie the direct channel, Branch Network, Business Partners, direct selling agents and ESOPs accounted for Rs.14.13 crore, Rs.64.79 crore, Rs.6.28 crore, Rs.107.48 crore and Rs.99.52 crore of the total disbursements respectively. Good work with the ESOP deals! I thank the Risk team; Channaraj KJ, Business Head; Henadeep KS, Deputy Vice President – PCG; and Devang Kamdar, Head – Sharekhan One for collaborating and successfully cracking the LatentView Analytics deal. Way to go!

Last month, Parminder Varma, Anshuman Das and Andrea Saldanha joined Sharekhan in the positions of Director and Chief Business Officer, Chief Information Officer and Head – Operational Permanent Control respectively. We are excited to have them join our team and look forward to working together to help achieve Sharekhan’s vision.

Last month we announced the results of two critical staff surveys conducted in 2021, the India Pulse Survey, and the Conduct, Diversity and Inclusion Survey. The former sought to understand the staff’s perception of the COVID support initiatives rolled out by the company during the pandemic; the latter’s aim was to understand how the staff perceived the application of the Code of Conduct and the Diversity & Inclusion (D&I) policy within the group companies. The results of the first survey showed that about 82% of the staff were satisfied with the COVID related staff support initiatives rolled out by the company. The second survey revealed a high favourable response rate of 94% for Conduct and an even better score of 96% for D&I in Sharekhan. We thank you for sharing your feedback with us and assure you we have taken note of it all and will continue to work towards improving the employee experience in Sharekhan. Surveys are an important communication platform and we encourage you to use them more and more to tell us how we can improve the employee experience in the company.

The COVID-19 pandemic is not officially over yet, so continue to follow all COVID protocols, ie maintain social distancing; wear a mask; stay indoors as much as possible; wash your hands frequently; keep rooms well-ventilated; and cough away from others into your elbow to stay safe. If you still have not vaccinated yourself against COVID-19, we encourage you to get yourself vaccinated as soon as possible, as vaccination can help protect you from getting the disease. Besides, some state governments have already mandated that only fully vaccinated staff should be allowed to work from office and that each staff must submit his/her final COVID-19 vaccination certificate to his/her employer. Get in touch with the Human Resources team in case you need any help in obtaining the vaccine or claiming reimbursement for the vaccine cost for you and your eligible dependants. Please continue to take care of yourself and your loved ones, stay safe.

Thank you.

Best regards,
Jaideep Arora
Director and Chief Executive Officer, Sharekhan