Dear Sheru,

I hope you are doing well. Our business is going through a rough patch, what with the stock market continuing to correct for four months in a row. In March too the benchmark indices closed in red, thereby pulling down the performance of our key businesses of broking, mutual fund (MF) distribution, exchange margin funding (EMF) and Loan Against Securities (LAS). Before we pore over the business performance of March 2023, let us quickly take a look at the high points of the month.

• The daily average revenue from all segments of our broking business taken together grew by 10% MoM in March this year.
• The trailing 12-month active client count was 6,94,334 at the end of March 2023. Though less than the February-end number, Sharekhan's performance on this metric (in terms of the % of growth/decline) was relatively better than that of both the overall industry and the full-service broking category market leader in the same period.
• Close to 10K branch-mapped broking clients were reactivated as part of the MRP in March this year.
• The ADTO from the commodity broking business increased by 28% MoM in March this year.
• Our market share in the commodity broking business grew by 13% MoM in March this year.
• The number of new commodity broking accounts doubled to 900 new accounts in the first quarter of 2023 from about 400 new accounts added per month during April-December 2022.
• Revenue of the commodity and currency broking businesses grew by 25% and 18% MoM respectively in March this year.
• Our MF AUM closed in green in March 2023 even though the stock market closed in red in the same month.
• Our net MF collection jumped by 50% MoM in March this year.
• March of 2023 witnessed the return of the annual Branch Manager and Franchisee meets after a long gap.
• Sharekhan rolled out online nomination facility for NRI clients in March this year.
• In March, we found a new head for our Contact Centre as the existing head availed of mobility to try his hand at something new in Sharekhan.
• Talent was identified, and growth opportunities and mobility were offered in the Branch Network in March this year as the Group Head team got reorganised.

The slide in the Indian stock market continued for the fourth consecutive month, as the benchmark indices, Nifty and Sensex, closed March of 2023 down by about 1% each month on month (MoM) on concerns of inflation and global uncertainties. The performance of our equity broking business was in line with the market performance. During the month, our cash market share contracted by 8% MoM; daily client activity slipped by 7% MoM and new client additions fell by 5% MoM. However, our daily average revenue grew by 10% MoM as even though the gross brokerage from the equity broking business was in negative compared with the previous month, its impact was nullified by the double-digit growth in the daily average revenue from the commodity & currency broking business in the same period. The correction in the stock market presents a good opportunity for clients to invest in fundamentally strong stocks at low valuations. Let us give them the right advice and hand-hold them through the continued volatility in the stock market.

In the commodity broking business, our monthly report card looked good in March 2023 with many double-digit growth figures. The average daily turnover (ADTO) increased by more than 28% MoM, revenue grew by 25% MoM, market share increased by nearly 13% MoM and the number of traded clients rose by nearly 4% MoM in March this year. The number of franchisees active in the commodity segment also inched up in the same period. In quarterly terms, the number of new commodity broking accounts added by the Sales team doubled to 900 new accounts compared with the 350-400 new accounts added per month during the period of April-December last year. The surge in the new accounts can be attributed to the recognition programmes run by the Commodity business team to boost business. Let us do our best to maintain the new momentum in the business.

In the currency broking business, though our revenue grew by more than 18% MoM, market share was maintained and number of traded clients grew by 8% MoM, we saw a dip of 1.1% MoM in the ADTO and a drop of 6.1% MoM in the number of franchisees active in the currency segment in March this year. Things are looking up in both the commodity and currency segments and let us continue to do the right things to regain the lost glory in the business.

Our MF assets under management (AUM) increased marginally by 0.46% MoM to Rs.6,382 crore in March this year. The increase was despite the weak performance of the broader equity market on a month-on-month basis. The gross inflow for the month stood at Rs.155.52 crore and the net collection was positive at Rs.32.21 crore, which was a 50% jump from the previous month’s net collection of Rs.21.46 crore. The inflows into systematic investment plans (SIPs) witnessed a marginal fall during the month as compared to the previous month, taking the total SIP collection to Rs.52.56 crore (as against Rs.52.78 crore in February 2023). We expect the momentum in the SIP collection to pick up in the coming few months owing to the SIP Rewards Dhamaka contest. The contest will close this month and we have winners across roles that will take home good rewards.

Our EMF business contracted by about 2% MoM in March this year mainly due to lower cash market volume and a lack of loan offtake by retail clients in the absence of good market opportunities. Our Branch Network contributed almost 67% of the total funding and the Business Partner channel accounted for the rest in March this year.

Our LAS loan book reduced mildly by 3.56% MoM and our Employee Stock Ownership Plan (ESOP) book contracted by 13.74% MoM in March 2023. The primary reason was the steadily hardening interest rate scenario wherein customers are preferring to reduce their exposures and monthly outgo. Similarly for ESOPs, a few customers repaid their dues while some others opted to reduce their loans by selling their shares in the open markets due to improved stock prices. Mimicking the trend, new disbursements were down in March this year -- by 12.48% MoM -- and total disbursements for the month stood at Rs.49.72 crore, the lowest in the last one year.

Channelwise break-up of LAS disbursements in March 2023

The Mission Reconnect Programme (MRP) had another robust month in March this year. The trailing 12-month (TTM) active client count was 6,94,334 at the end of March 2023. Though less than the February-end number, Sharekhan's performance on this metric (in terms of the % of growth/decline) has been relatively better than that of both the overall industry and the full-service broking category market leader. Sharekhan has moved a rank up to become the ninth largest broking firm in terms of TTM active clients at March end. The programme facilitated the reactivation of almost 10K branch-mapped clients during the month. What’s more, the efforts of the Business Partners resulted in the reactivation of another 3.8K clients in the same period.

The trend remains that reactivations are also good for revenue growth. Close to 6% of the clients who got reactivated in March have also traded in futures & options already. Also, a large proportion of the reactivations have continued beyond just one or two transactions. Almost 36% of the reactivations that took place in March 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. Let us work harder to achieve our dream of delighting 10 lakh hearts in 2023.

In March this year, the NRI and PDG divisions of our Operations department rolled out a facility to allow our non-resident Indian (NRI) clients to update their nominees online. It was a welcome move for the clients located abroad as they can now seamlessly update their nominees online. I congratulate the NRI, PDG and IT teams for collaborating and getting this done on a priority basis.

After a long gap, two most-awaited annual events of Sharekhan made a comeback in March this year. The Franchisee Business Acquisition and Franchisee Business Servicing teams organised the annual Business Partner Meet in Jaipur on March 4 and 5, 2023. The convention was attended by the top 250 Business Partners and 125 staff from the Head Office (HO), including all Directors, and the regional teams. Besides updating the Business Partners on the developments in the company, Vision 2025, its goals and the role the Business Partners will play in achieving the vision were discussed at the convention. Additionally, 24 top performing Business Partners were recognised at the convention. The event, the first such get-together in five years, was a great success as it gave us an opportunity to interact with our Business Partners and exchange business ideas as well as motivated the Business Partners to grow their business and be part of more such events in future.

A few days later, the Network Management team organised the annual Branch Managers’ Meet in Mumbai on March 14, 15 and 16, 2023. More than 350 staff from the Branch Network and HO got under one roof again for the first time post-COVID. At the business meet, the focus was on Vision 2025 and its targets for 2023. With a clear guidance from the management, which broke down the targets to individual and branch levels, the Branch Managers appeared motivated about achieving their targets. All were very happy to meet each other, the HO teams and the Directors in person after a long time. This event too was a great success and ended on a high note.

Supriya Shetty joined Sharekhan as Head – Customer Service in March 2023 as Merwyn Monteiro, the leader of the Contact Centre, decided to avail of internal mobility to do something new starting from April this year. Both are positioned to play a significant role in helping us achieve Vision 2025, given that customer is at the core of our vision. Supriya is focussing on improving the customer service experience and creating more engaged customers. On the other hand, Merwyn as the head of Network Projects is focussed on making our branches more efficient by overseeing the implementation of various branch projects excluding the information technology projects.

A key goal of Vision 2025 is to identify, nurture and promote talent, encourage internal mobility and offer growth opportunities to Sherus in order to make Sharekhan a great aspirational workplace. In March, we identified talent in our branches and announced some role changes and/or mobility in the Group Head category as we reorganised the Group Head structure following the implementation of the Zonal structure in the Branch Network earlier this year. The internal mobility has enabled these talents to apply their experience and skills to manage a new group of branches across different geographies. We will continue with our efforts to make Sharekhan a great workplace and achieve our Vision 2025.

Thank you for taking out time to read my column, I hope you enjoyed the read.

Thank you.

Best regards,
Jaideep Arora
Chief Executive Officer
Sharekhan