Adharshila Capital Services Ltd Management Discussions.

BACKGROUND

Adharshila Capital Services Limited (ACSL) is a Non-Banking Financial Company ("NBFC") holding a Certificate of Registration under section 45 IA of the Reserve Bank of India Act. The company is Non-deposit accepting "NBFC" engaged in financial services. The ACSL is an entity of Uttam Group. The Company has its Registered Office in Delhi and Corporate office in Ghaziabad.

GLOBAL ECONOMY

The World Bank forecasts global economic growth to edge up to 3.1 percent in 2018 after a much stronger-than- expected 2017, as the recovery in investment, manufacturing, and trade continues, and as commodity-exporting developing economies benefit from firming commodity prices.

However, this is largely seen as a short-term upswing. Over the longer term, slowing potential growth—a measure of how fast an economy can expand when labor and capital are fully employed—puts at risk gains in improving living standards and reducing poverty around the world, the World Bank warns in its January 2018 Global Economic Prospects.

INDIAN ECONOMY

In the midst of global slowdown and the transient impact of demonetization, the Indian economy turned out resilient, marked by both internal and external stability. While economic growth moderated in 2016-17, there were visible signs of improvement in macroeconomic fundamentals - low inflation, and modest current account deficit and fiscal deficit. Going forward, even as the recent launch of the Goods and Services Tax (GST) gains traction across the country, strengthening fiscal consolidation, particularly at the sub-national level; reviving bank credit, and bringing investment back on rails, remain a challenge.

STRUCTURE AND DEVELOPMENTS OF NBFC SECTOR

Non-Banking Finance Companies (NBFCs) play an important role in promoting inclusive growth in the country, by catering to the diverse financial needs of various categories. Further, NBFCs often take lead role in providing innovative financial services to Micro, Small, and Medium Enterprises (MSMEs) most suitable to their business requirements. NBFCs have also been supplementing the role of the organized banking sector by bridging the credit gaps, i.e., in meeting the increasing financial needs of the corporate sector, delivering credit to the unorganized sector and to small local borrowers.

The NBFC sector has grown considerably in the last few years despite the slowdown in the economy. In terms of year-over-year growth rate, the NBFC sector beat the banking sector in most years between 2006 and 2013. On an average, it grew 22% every year. This shows, it is contributing more to the economy every year.

Non Banking Financial Companies (NBFCs) are governed by the Reserve Bank of India vide powers conferred under chapter III- B of Reserve Bank of India Act, 1934.

From time to time, the Central Government as well as Reserve Bank of India has been working towards regulation of these NBFCs. The Department of Non-Banking Supervision of RBI has been indulged in these activities of regulating as well as supervising the NBFCs.

OPPORTUNITIES AND THREATS

The NBFC sector in India is large with significant growth potential and has consistently created value for its shareholders. The NBFCs business model has strengthened considerably over the past few years in terms of access to varied funding sources. The growth in the sector appears sustainable as India has a low GDP to credit penetration. Further, many structural factors are supportive of NBFC growth namely weak banks, initiatives of the Reserve Bank of India ("RBI") on policy alignment and latent credit demand in certain segments not catered to by banks. In order for the sector to sustain its advantages, companies in the sector need to grow in a prudent manner while focusing on financial innovation, analytics, digital and adequate risk management systems and procedures. The RBI constantly issues new regulations and / or modifies existing regulations endeavoring to balance the multiple objectives of financial stability, consumer and depositor protection and regulatory arbitrage concerns. The RBI, however, implements major changes

in a structured manner providing companies operating in the sector adequate time to adapt and adjust. When it comes to lending, NBFCs are generally regarded to be complementary to banks and are often able to offer better services and products to their customers.

ADHARSHILA CAPITAL SERVICES LIMITED (ACSL) sees huge growth opportunities in each of its existing business areas, and will also be expanding the focus of activities to new areas, arising from the strong growth momentum in the economy.

As the Companys main motive is to provide financing facilities within the Group, Company is not having internal or external threat. But still the NBFCs in India are facing stiff competition from banks and financial institutions, due to ability of banks to raise low cost funds which enable them to funds at much cheaper rate. More stringent capital adequacy norms have been stipulated by RBI for NBFCs which is making difficult for them to give cheaper finance.

FINANCIAL PERFORMANCE

During the year under review, the company has incurred a loss of Rs. 12,81,119 as against the loss of Rs. 1,90,341/- in the previous year.

RESOURCES AND LIQUIDITY

During the Financial Year 2017-18, no fund has been raised by Adharshila Capital Services Limited (ACSL) from market by way of public deposits. There were no allotment of shares / debentures or other securities have been made during the financial year.

REVIEW OF OPERATIONS OF THE COMPANY

Adharshila Capital Services Limited (ACSL) has invested Rs. 4,48,24,000/- in the Securities of other body corporates as on March 31, 2018. Adharshila Capital Services Limited (ACSL) aims at better returns by a good asset quality and asset mix.

OUTLOOK

Non-Banking Financial Companies (NBFCs) continues to provide services to every part of the population and playing a vital role in economic growth of the country. The financial sector in India is in a process of rapid transformation. Reforms are continuing as part of the overall structural reforms aimed at improving the productivity and efficiency of the economy. The ACSL management team consisting of professional directors intends to take advantage of the competitive edge built over a period of time by increasing the penetration levels with the main objective of maximizing the value for all stakeholders concerned.

ADEQUACY OF INTERNAL CONTROL SYSTEMS

Your Company has an adequate system of internal controls for business processes, operations, financial reporting, fraud control, and compliance with applicable laws and regulations, among others. These internal control and systems are devised as part of the principles of good governance; and are accordingly implemented within the framework of proper check and balances. Your Company ensures that a reasonably effective internal control framework operates throughout the organization, which provides assurance about safeguarding the assets, reliability of financial and operational information, compliance with applicable statues, execution of transactions as per the authorization and compliance with the internal policies of the Company.

MATERIAL DEVELOPMENTS IN HUMAN RESOURCES/INDUSTRIAL RELATIONS FRONT

The Companys Human Resources philosophy is to establish and build a strong performance and competency driven culture with greater sense of accountability and responsibility. Adharshila Capital Services Limited (ACSL) endeavors to offer favourable workplace of a best in class standard. Your Company believes that its experienced workforce is its most important asset. To ensure that an effective and the right resource are selected, your Company endeavors to strengthen its hiring mechanism. The Company values human development as one of the cardinal principle in the growth of the Company. The organization has steadfastly stuck to its vision to enhance knowledge, skills and competencies of the human resources. To achieve all this, The Company provided various compensation packages and performance-based incentives. It organized training programmes and motivated its employees to attain greater efficiency and competence, leading to effective retention. With these progressive steps, your Company has been able to maintain cordial relations with its employees even in this crucial time.