Himadri Credit & Finance Ltd Management Discussions.

(a) Industry Structure and Developments

The NBFC sector in India has undergone a significant transformation over the past few years. It has been recognized as one of the important components of the financial system and has shown consistent year-on-year growth. NBFCs play a vital roie in the core development of infrastructure, transport, employment generation, wealth creation opportunities, and financial support for economically weaker sections; they also make a huge contribution to state exchequer.

The growth in the Indian economy together with the growth in the Capital markets will have better future for your Company. Non-Banking Finance Companies play major role in financing, inspite of presence of large number of Foreign as well as Nationalized Banks in this field, the role of NBFCs is established. Due to growing economy of the country there is a further scope of development in NBFCs sector. The economic indicators for the future are also strong. Your Company hopes to explore the opportunities thrown up by the economy.

(b) Opportunities And Threats

The Company believe that despite the current headwinds, the long-term India growth story is intact which will create a way for diversification in financial services in which your Company operates. We see immense opportunities coming our way in FY17 and beyond as under:

? India is already recording the fastest rate of growth within the large economies in the world and various projections for FY17 by the World Bank or IMF etc., indicate that India will continue to occupy the top position. With this, we see large opportunities for us to grow our various diversified businesses in financial sector.

The recent Government initiatives in respect of Digital India will also open up access to a wider way leading to a change in the manner of financial services rendered by the Company.

? Headed by the policy of liberalisation and forward-looking regulatory changes, moving the growth chart of the markets upwards will make available wider opportunities for providers of financial services.

Blessed with the above mentioned opportunities, simultaneously we perceive following threats for growth of the Company:

? Slow recovery of macro economy, domestically as well as globally, can delay the return of growth.

Inability of Government to push the major economic reforms and fiscal policy attributing the unnecessary delay in the growth of the Company.

? Accelerating the interest cost and inflation is big threat to the enhancement growth of the Company.

(c) Outlook

In the backdrop as sluggish GDP growth rate, the long term growth of the financial sector in which the Company operates, is expected to grow in-line with the combination of blueprint with cornerstones as profitability, scalability, constant focus on risk and growth in adjacent markets, building leadership and maintaining culture.

The financial sector is expected to grow once the economic conditions start improving, early signs of which are already visible along with which the NBFCs are expected to continue to be an effective channel for credit dispensation.

(d) Risks and Concerns

Risk is synonym with NBFCs which is inherent part of their business. Your Company is also subjected to various types of such risks. Your Company has identified these risks and guarded itself by adopting a range of strategies and measures to reduce the impact of such risks.

The Board of Directors of the Company oversees the risk management process which includes the risk assessment and procuring the measures to curb the risk. The Board of Directors are responsible for implementation of risk measures. They ensure that the risk involved in the business line of the Company are regularly assessed at a periodic interlude and proper vigilance is placed. Credit risk is considered to be major risk being faced by NBFCs. In your Company the credit risk is minimum, as major investments are made in Companys group companies. Your Company has evolved various policies and systems for credit risk to closely monitor the same. Your Company also follows provisioning norms of RBI.

(e) Internal Control System & their Adequacy

As per the Companies Act, 2013, the Companies need to ensure that they have laid down internal financial controls and that such controls are adequate and were operating effectively. A robust system of internal control commensurate with the size of its business, forms an integral part of the Company policies. The Company has an adequate system of internal control over financial reporting of all transactions, and these are closely monitored by the Directors.

The Audit Committee of the Board of Directors of the Company closely monitors the adequacy of the Internal Financial Control system in close co-ordination and support of the in-house Internal Audit Team who periodically submits its findings on the efficacy and adequacy of their internal control system, its compliance with the companys operating system and Accounting Standards and policies. Based on the report of the in- house Audit Team, their findings and submissions of the Audit Committee have elaborate discussions and do make recommendations to the senior management to undertake corrective measures wherever necessary to strengthen the control of the Company. The subject process of the Internal Financial Control is a continuous one and in due compliance with the provisions of the Companies Act, 2013. During the FY 2016 there had been no reportable weakness in the design or operation as observed.

(f) Governance requirements

The Compliance Officer ensures compliance with the SEBI Listing Regulations and provisions of the Companies Act, 2013. All NBFCs were required to comply with governance requirements, such as the Fair Practices Code (FPC). A comprehensive review of the NBFC regulations was conducted by the RBI in 2014.

(g) Material Development in Human Resources

The Company policy on people is deep rooted in building and nurturing talent and leadership within the organisation. We believe that our people have always been the drivers of innovation, efficiency and productivity leading to our consistent track record of growth. Operating in the service industry, your Companys performance is heavily dependent on the knowledge and expertise of its personnel. The Company is having dedicated team of persons,


The investors are hereby informed that statements in Boards Report and Management Discussion and Analysis describing the objectives, projections, estimates, and expectations of the Company which may be of forward looking statement, within the meaning of applicable securities laws and regulations. The actual results could differ materially from those expressed or implied. The factors that could affect the Companys performance are the economic and other factors that affect the demand - supply balance in the domestic market as well as in the international markets, changes in government regulations* tax laws and other statutes and host of other incidental implications.