MANAGEMENTS DISCUSSION AND ANALYSIS REPORT
The Management has taken up detailed discussion of the risk factors related to our
Company in specific and industry in general and attempts to lay down the impact of the
same on the companys performance. Please find reproduced hereunder a summary of
Managements Disc
INTERNAL RISK FACTORS
1. The growth rate of NBFCs largely builds upon the ability to develop brand name for
its financial products which compete the Industry.
We believe that promoting and positioning our brand is necessary for achieving
recognition of our services. Brand promotion activities may not yield increased revenues
and even if they do, increased revenues may not offset the expenses we incur in brand
building. If we fail to promote our brand, our business, financial condition and result of
operation could be affected
2. Our business is vulnerable to interest rate risk. Changes in interest rate may
affect our income from operation and adversely affect our financial performance and
profitability.
In our NBFC business, we are exposed to the risk of higher interest rates. If the yield
on our Companys interest -earning assets does not increase at the same time or to the
same extent as our cost of funds, or our cost of funds does not decline at the same time
or to the same extent as the yield on its interest earning assets, our net interest income
and net interest margin would be adversely impacted. This could have a material adverse
effect on the financial performance.
3. Our Company may experience delays in enforcing the collateral when borrowers default
on their obligations, which will result in failure to recover the expected value of
collateral and affect our financial performance
Our Company may not be able to realize the full value of the collateral as a result of
delays in bankruptcy and foreclosure proceedings, inability to foreclose, defects in the
title of collateral, fraudulent transfers by borrowers and other factors which includes
legislative changes and judicial pronouncements. The inability to recover the expected
value of collateral could expose our Company to losses, which will have impact on business
and financial performance
4. If our company fails attract and retain key employees, our operation could be
affected.
The Company believes that human resource is most important element for success of any
organization. The company takes every step to promote feeling of belongingness among its
employees and maintains a separate Human Resource department to care of concerns and well
being of employees. The staff turnover in the company is considerably less as compared to
the industry. In any case, skilled and/or trained manpower is available in the market. It
has a strong Culture & Corporate Core Values.
5. The changes in the regulations that govern our Company could cause the business to
suffer
NBFCs in India are regulated by the RBI. Any changes in the regulatory framework will
affect the profitability of our business and our future financial performance.
6. We may require additional funds to satisfy our capital needs, which we may not able
to procure.
We may need to raise additional capital from time to time, which we may not able to
procure. The Company may not be able to raise adequate funds on attractive terms and
conditions, which could have an adverse effect on our results of operations.
7. Our business is dependent on the financial performance of the market and financial
policy of the Government; it also depends upon the RBI point of view of the interest rates
for public and business class at large.
8. Our business is subject to regulation by several authorities, which could have an
adverse effect on our business and our results of operations. We are outsourcing entire
Financial and Corporate Advisory. We are being in the field of professional services
unable to market our products in an aggressive fashion.
EXTERNAL RISK FACTORS
1. A slowdown in economic growth in India could cause business to suffer:
The performance and growth of the company and the industry are dependent on the health
of the Indian economy as well the secondary industries. The economy could be adversely
affected by various factors such as political or regulatory action, including adverse
changes in liberalization policies, social disturbances, terrorist attacks and other acts
of violence or war, natural calamities, interest rates, commodity and energy prices and
various other factors. Any slowdown in the Indian economy may adversely impact business
and financial performance and the price of Equity Shares.
2. Political instability or changes in the government could delay the further
liberalization of the Indian economy and adversely affect economic conditions in India
generally, which could impact financial results and prospects.
Since 1991, successive Indian governments have pursued policies of economic
liberalization, including significantly relaxing restrictions on the private sector.
Nevertheless, the role of the Indian central and state governments in the Indian economy
as producers, consumers and regulators has remained significant.
The leadership of India has changed many times since 1996. The current central
government is headed by the Indian National Congress and is a coalition of several
political parties. Although the current government has announced policies and taken
initiatives that support the economic liberalization policies that have been pursued by
previous governments, the rate of economic liberalization could change, and specific laws
and policies affecting industry, foreign investment and other matters affecting investment
in securities could change as well.
3. Any downgrading of Indias debt rating by an independent agency may harm ability to
raise debt financing.
Any adverse revisions to Indias credit ratings for domestic and international debt by
international rating agencies may adversely affect ability to raise additional financing
and the interest rates and other commercial terms at which such additional financing is
available. This could have a material adverse effect on capital expenditure plans,
business and financial performance.
4. Terrorist attacks, civil unrest and other acts of violence or war involving India
and other countries could adversely affect the financial markets and our business.
Terrorist attacks and other acts of violence or war may negatively affect the Indian
financial markets and also adversely affect the worldwide financial markets. In addition,
any deterioration in relations between India and its neighboring countries might result in
investor concern about stability in the region, which could adversely affect the business.
India has witnessed civil disturbances in the past and it is possible that future civil
unrest as well as other adverse social, economic and political events in India could have
a negative impact. Such incidents could also create perception in the minds of investors
that, investment in Indian Companies involve a higher degree of risk.
5. Natural calamities could have a negative impact on the Indian economy and cause our
business to suffer.
India has experienced natural calamities such as earthquake, tsunami, floods and
drought in the past. The extent and severity of these natural disasters determines their
impact on the Indian economy, which have an adverse impact on our business
6. Factors affecting Indian economy in general
Like any other entity, our financial results are also affected by the macro economic
factors determining the growth of the Indian economy in general and continued growth of
the securities market. The Growth of our business and ability to maintain the growth is
influenced by the growth rate of the securities market indicators. Any slowdown in Indian
economy or slowdown in securities market or any changes in government regulation could
have an impact on our financial performance.
Risk Relating to our Industry:
• Risk of Bad Debts (Non-Performing Assets)
The risk of NPA s always a pertinent part of the lending business. There is always a
chance that accounts become bad due to fall or collapse in the value of the asset against
which funds have been advanced due to a variety of reasons. However, in our case, the
Company has put in place a strong asset verification and valuation processes.
• Interest Rates
The RBI had resorted to increasing the interest rates many times over the last eighteen
months in order to control Inflation. The volatility in interest rate and high interest
rate leads to default in re-payment and thus increase of interest rates would certainly
affect the business of the Company.
• Risk of Competition
With globalization and continuous flow of private as well as international institution
in the finance market the risk of competition in any business, and the finance business is
no different. We believe that competition spurs our team to innovate without losing sight
of the customer needs, the need for safety of funds deployed and the need to ensure
commensurate returns.
• Global Economic Uncertainties
The international events affect all financial markets of the world, and India is also
affected. The affect was clearly felt in the previous year as the Indian Rupee continued
to remain weak due to the crisis in Eurozone. This may results into to stay-away attitude
by foreign investors, volatility in crude price, inflation which may turned into further
stress on finance market. Company there for focusing on investing its fundsin assets that
are fully secured and that will have least impact of global uncertainty.
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