Geojit BNP Paribas adds 15105 clients in Jun qtr

 Consolidated Revenues of Geojit BNP Paribas stood at Rs 64.45 crore as compared to Rs 76.69 crore for the same quarter of the previous fiscal (a decline of 16%) while Net Profit stood at Rs 6.19 crore as against Rs 13.25 crore (a decline of 53%).On standalone basis the revenue decreased by 25% to Rs. 59.88 crores and the Net profit declined by 56 % to Rs.12.83 as against Rs.28.92 crores. However, It should be noted that in the last year same quarter a dividend income of Rs 10 crores received from one of the subsidiary was included.


Brief of Management Discussion

1. The volumes in the retail segment of NSE cash market were down by 36 % during the period under review whereas Geojit’s retail volume was down by 24 % only. The management took note of the growth in the NSE retail market share from 3.10 % in Q1 of last year to 3.61% for the current quarter. The first quarter of last financial year was the best for the country’s stock market during that year when the Bombay Stock exchange’s Sensex  moved up from 9500 points to 15500 points thereby pushing the market volumes. For the quarter under review the market was generally flat and saw some net outflows of FII investments resulting in lesser market activity. The board also noted that over the period of last 12 months the number of retail outlets has grown from 486 to 520 many which are yet to start making profits.

2. For the end of quarter ended June 2010, the company added 15105 clients and the Asset under management was Rs 11084 crores which included the depository asset and the AUM with various Mutual Fund under the group.

3. The board was also pleased to note that the percentage of income from Internet trading has increased substantially over the corresponding period of last year as a result of the launch of the new internet trading platform called FLIP. The margins from trades through net are higher compared to margins from offline and telephone trades.

4. The income from the distribution of Insurance and Mutual Fund saw a decline of 20% YOY, which was primarily attributed to the decline in commission rates due to regulatory changes which has happened in both, insurance as well as Mutual Fund industry. The management discussed the possibility of increasing the number of staff employed for MF sales activities to give a dedicated push for advice based selling as well as pushing the NSE trading system for Mutual Fund distribution. The outlets will have to concentrate on converting MF holdings into demat form since this facility is now provided by NSDL. While there has been a decline in commission rates the board has taken note of the fact that such reduction in charges will help the investors to get higher returns and will eventually help attracting large number of new investors into the market.

5. The board also noted the impressive performance of the PMS division of the company; it has given a return of 257 % compared to 137% of theNifty for the last five year period. The management also gave a presentation as how they intend to increase the corpus from the present Rs 70 crores to Rs 1000 crores in 3 years time. It was also decided to employ specialized people across the country to mobilize funds for PMS. The company will try to reduce the entry level of PMS to five lacs from the current level of 10 lacs.

6.It was noted that the JV in Saudi Arabia has shown a loss of Rs.85 Lacs (Geojit’s share). The board has noted the fact that the Licenses required to service NRI’s in Saudi Arabia for Indian capital market would be received by this month end and post which a turnaround in the company is expected. Aloula Geojit has also received the license for portfolio management and fund management in the Kingdom. Aloula Geojit being the only Indian brokerage in KSA the NRI business should give a thrust in the days to come.

7. The 50:50  JV with BNP Paribas which does institutional business based out Bombay declared a loss of Rs. 2.87 Crores (Geojit’ s share) for the  quarter. The performance of this JV was satisfactory in the area of customer acquisition and research. Around 160 Institutions have been empanelled so far and the JV has recently completed the appointment of most of the senior sales people required to capitalize on these empanelments. BNP Paribas’s global network is actively engaged in customer acquisition and service.

8. The Joint Venture in UAE Barjeel Geojit Securities LLC, did comparably well, as it has changed its focus from the traditional Indian MF routes to selling International Funds

9. The Management also stated that there will be a cautious approach for opening outlets for this Financial Year. The target was to open 75 more outlets with major emphasis on branches in south India.

10. Geojit Technologies Ltd. a subsidiary of the company, in which BNP Paribas holds 35% stake has received orders from BNP Paribas group companies for various software needs and the same is expected to be recurring for the full year.