explicit finance ltd Management discussions

The Management Discussion and Analysis forms an integral part of this Report and gives details of the overall industry structure, economic developments, performance and state of affairs of your Companys various businesses, internal controls and their adequacy, risk management systems and other material developments during the financial year 2020-21.

A. INDUSTRY STRUCTURE & DEVELOPMENT IMPACT OF CORONAVIRUS (COVID-19)

Amid the 2^nd wave of coronavirus pandemic, several countries across the world resorted to partial lockdowns to "flatten the curve" of the infection. The world economy is expected to shrink considerably

Indian economy may be seen contracting in 2021-22 also, but not like 2020-21, under 2^nd wave of Covid impact. Economic activity in India slowed down due to partial lock down by various states.

RISKS AND CONCERNS

1. In recent times, NBFCs have been found to be constantly facing problems with managing their liquidity positions owing to multiple factors such as increase in borrowing costs, asset -liability mismatches, nature of assets and reluctance of lenders/investors.

2. The cash-strapped non-banking financial company (NBFC) sector is bracing for another challenge. Moratorium becomes crucial for NBFCs and HFCs as disbursements and collections will take a hit because of 2nd wave of the coronavirus pandemic, resulting in cash flow problems.

3. Small and medium-sized NBFCs are most at risk due to the disruption caused by the Covid-19 outbreak. The economic disruption brought about by the COVID-19 2^nd wave will have a severe impact on the incomes of such borrowers for several months depending on the intensity of the outbreak.

4. Banks choke NBFC lifeline by parking more funds with RBI. Funding challenges could mount for NBFCs as banks become more selective in extending credit

OPPORTUNITIES

• Equity Markets all over the world has hit new highs and are still in the upward mode. Credit offtake may increase significantly.

• Some business like pharma, retailers have shown tremendous growth.

• With normal monsoon and availability of vaccine may significantly improve the business scenario around the world.

INTERNAL CONTROL SYSTEMS AND THEIR ADEQUACY

Internal Control measures and systems are established to ensure the correctness of the transactions and safe guarding of the assets. Considering the size and nature of activities, the company has adequate internal control system covering both accounting and administrative control. In addition the internal audit is carried out periodically. The management ensuring an effective internal control system so that the financial statements and reports give a true and fair view and during the year under review no material or serious observation has been received from the Internal Auditors of the Company for inadequacy or ineffectiveness of such control.

B. HUMAN RESOURCES

The company always regards human resources as its most valuable asset and continuously evolves policies and process to attract and retain its substantial pool of managerial resources through friendly work environment that encourages initiatives by individuals and recognizes their performance.

C. CAUTIONARY NOTE

Certain Statements in the Management Discussion and Analysis describing the companys views about the industry, expectations, objectives, etc. may be understood forward looking statement within the meaning of applicable laws and regulations. Factors like changes in Government regulations, tax laws and other factors such as industrial relations and economic developments etc. may further influence the companys operations or performance. Actual results may differ substantially or materially from those expressed or implied.