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Tuesday, March 02, 2021

The Budget connection: ‘New generation entered trading-investment activities… boon for broking business’

Shah’s firm, Saurin Financial Services Pvt Ltd, has 14-15 employees. “There was a salary cut across the board, but this was recouped from the third quarter. Branch operations were curtailed with technology and a new way of doing business. These were the major impacts (of the pandemic),” he says.

Written by Sohini Ghosh | Ahmedabad |
Updated: February 2, 2021 10:31:32 am
Saurin Shah, 58, Ahmedabad: Shah, CEO of his own service brokerage firm, is optimistic about the market and Budget. (Express photo by Nirmal Harindran)

Saurin Shah (58), the chief executive officer at his own service brokerage firm, continued to work from the office in Ahmedabad during the lockdown as well as post-lockdown months. The unforeseen circumstances called for a recalibration of his business model, but he remains optimistic.

All businesses were affected by the Covid-19 pandemic and the broking business was no exception, Shah says. “But when we entered the second quarter of financial year 2020-21, there was a change in the basic culture, office operations were revolutionised. A new generation entered trading-cum-investment activities on a large scale… which proved a boon for the broking business.

The Budget Connection

The bold reforms in banking and insurance sector, and an overall expenditure push that is expected to provide a fillip to growth, will spur the stock markets. The Sensex jumped 5 per cent on Budget day, setting tone for the year ahead.

Shah’s firm, Saurin Financial Services Pvt Ltd, has 14-15 employees. “There was a salary cut across the board, but this was recouped from the third quarter. Branch operations were curtailed with technology and a new way of doing business. These were the major impacts (of the pandemic),” he says.

“Four of us were working from office. Commuting was not an issue as we had SEBI permission to operate. Some staffers need to directly deal with clients, and the back office (who had to come to office) coordinates the operations. Our back office operations have been largely restricted, especially since banking operations can be executed online and are mostly automated,” Shah explained.

While he and his family were not infected by COVID-19, an office employee was. “He was hospitalised, and quarantined for three weeks after discharge. He was working from home, and subsequently resumed operations from office,” he adds.

Shah’s clientele is mostly based in and around Ahmedabad. A new generation of investors has taken to online and digitised platforms, including discount brokerage options such as Zerodha, and in the backdrop of COVID-19, service brokerage firms such as Shah’s have had to restructure broking fees, which had otherwise been competitive, says Shah.

The way they worked saw a complete change, Shah says. “Zerodha, ICICI Securities, JM Financial were offering online broking businesses. So the client directly approached them. The new generation is turning to technology-driven businesses. Broking business has been divided into two segments — one completely focusing on online broking business, and second, the traditional broking houses which have evolved into a service-oriented broking business, providing customised plans based on financial requirements of the client.”

Regarding the impact on them, Shah explains, “We did not see our clients — who have been with us for decades — switch to this new technology. Young people prefer the tech-based brokerage systems. We did not get the benefit of the emerging demand, but globally broking business is technologically driven, so COVID-19 has compelled business models to accept and accelerate these changes.”

Regarding the Budget, Shah is relieved that there has been no increase in income tax rates, long term capital gains tax or introduction of a Covid cess or security transaction tax. “But what will pinch every citizen is the agri cess,” he says.

Shah is optimistic about the market and looking at a three-year horizon. “We touched 50,000 points, driven by enthusiasm on the back of strong foreign institutional investors’ inflows. The correction has already set in since the last six trading sessions. There may be a further correction of 2-3 per cent, but we can definitely see 80,000-plus BSE Sensex levels before 2024 general elections. That is how economic recovery will take place, corporate performance will improve the top line growth and bottom line.”

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