Anupam Finserv Ltd Management Discussions

Industry Structure and Development:

The Company is registered as a Non Deposit taking Non Systematically Important Base Non-Banking Finance Company. On overall analysis of the NBFC sector, and the liquidity position of the Company and its quality of assets, the management is very optimistic of the future growth and prospectus of the Company.

The Company has also forayed into green asset financing like granting credit facilities for rooftop solar panel installation to housing societies and loans for purchase of EV Batteries.

Apart from above the Company is expanding its operations by granting Credit for Supply Chain Financing and Bills/Invoice Discounting.

Opportunity and Threats:

Being a Loan NBFC, fluctuating interest rates, quality of loan book and nonperforming assets pose a threat to the business of the Company. However the same can be converted into opportunities by focusing on proper planning and implementation, conservative liquidity management, strengthening collections, operating expense management and robust credit underwriting process.

Segment Wise/ Product Wise Performance:

Apart from the NBFC business, the Company has ventured into operating lease of vehicles. The revenue in this segment accounts for around 36.98% of the total operational revenue of the Company.

Business Outlook:

The Management of the Company is looking for steady growth of the Company and aims at maximizing the shareholders wealth by earning maximum profits at low costs. Due to the willingness of the management of the Company to keep on exploring various opportunities, the future of the Company is promising and growth centered.

Risk/ Concerns and Mitigation:

1. Despite having NPA ratio below 3%, there can be no assurance that we will be able to maintain our NPA ratio at levels with our peers. We cannot assure the credit performance of our customers and that our credit and our underwriting analysis, servicing and collection systems and controls will be adequate. Further, our peers may have better asset quality, with lower GNPA and NNPA ratios than us. In the event of any further deterioration in our NPA portfolio, or if our provisioning coverage is insufficient to cover our existing or future levels of NPAs, we may be able to raise additional capital and debt funds to mitigate the same.

2. There may be Unsecured loans granted by us and we may not be fully able to recover the full value of outstanding under defaulted loans in a timely manner which could adversely affect our business, results of operations and financial condition.

3. We also make investments in listed securities and mutual funds as a part of our business activity. Any erosion in the value of the securities due to the fluctuations in the market could have an adverse impact on our financial condition

4. Our inability to meet our obligations, including financial and other covenants under our debt financing arrangements could adversely affect our business, results of operations and financial condition.

5. Any disruption in our sources of funding or increase in costs of funding could adversely affect our liquidity and financial condition.

6. We are affected by volatility in interest rates for both our lending and fund raisings operations, which could cause our net interest income to decline and adversely affect our results of operations and profitability.

7. We operate in a highly competitive industry and our inability to compete effectively may adversely affect our business.

8. We rely on the accuracy and completeness of information concerning borrowers and counterparties for credit evaluation and risk management. Any misrepresentation, inaccuracies, or omissions in such material information could have a negative impact on our business and financial results.

9. Despite having internal rules, processes, and controls in place to prevent and identify any AML activity and maintain KYC compliance, we cannot guarantee that we will be able to entirely manage instances of any possible or attempted violation. Any failure or ineffectiveness of our control system to detect such activities completely and immediately may subject us to regulatory action, including fines and penalties, and have a negative impact on our business and reputation.

10. We as an NBFC have to adhere to certain exposure limits and prudential norms as approved by the Board of Directors of our Company and the regulatory authorities. Any change in the regulatory regime viz net owned funds, provisioning norms, prudential norms on asset classification, income recognition etc. may adversely affect our business, financial condition and results of operations.

11. We, as an NBFC have to adhere to several regulatory norms prescribed by RBI from time to time. Any non-compliance with such norms or any adverse change in the norms could negatively affect our Companys operations, business, financial condition and the trading price of Equity Shares.

12. We have not paid any dividend during the last 3 years. Our Company aims at retaining all our earnings including future earnings, if any, for use in the operations, and expansion of our business. As a result, we may not declare dividends in the foreseeable future. Any future determination as to the declaration and payment of dividends will be at the discretion of our Board of Directors and will depend on factors that our Board of Directors deem relevant, including among others, our results of operations, financial condition, cash requirements, business prospects and any other financing arrangements. Accordingly, realization of a gain on shareholders investments may largely depend upon the appreciation of the price of our Equity Shares.

13. Despite our best efforts to ensure the integrity of our systems, it is possible that we may not be able to anticipate or to implement effective preventive measures against all security breaches.

Internal Control System and their adequacy:

The Company has an in-house internal audit department which examines and ensures adequate internal checks and control procedures. It also ensures proper accounting, records authorization, control of operations and compliance with law.

Further, the Internal Auditor and Audit committee periodically reviews the effectiveness of the Internal Financial control and makes suggestions for constant improvements.

The company also believes in the importance of technology and systems in improving controls at various levels and strives to enhance them on a continuous basis. Further the Company is continuously working to improve and strengthen internal check and control system to align with the expected growth in operations.

Discussion on Financial Performance with respect to Operational performance:

At Anupam Finserv Limited, our constant endeavor is to grow. The company has accelerated its operations and is progressing.

Human Resources and Industrial Relations:

The Company considers human resource as a valuable ingredient of the Company. The Company has appropriate policies in place for recruitment, training, skill development and compensation for its employees and staff. The Company makes an effort to keep on building good relationship with its associates and all its stakeholders.

Disclosure of Accounting Treatment

In Preparation of Financial Statements, a treatment as prescribed in Accounting Standard has been followed and hence no disclosures required with respect to the same.